IBM Scientists First to Distinguish Individual Molecular Bonds

• Atomic force microscopy helps scientists to reveal the bond order and length of bonds within molecules
• Technique can be used to study future devices made from graphene

For details, click the link below:

http://www-03.ibm.com/press/us/en/pressrelease/38856.wss

How a Plan to Help Stockton, Calif., Pay Pensions Backfired

The following is an excerpt from an article in 

The New York Times
Tuesday, September 04, 2012

How a Plan to Help Stockton, Calif., Pay Pensions Backfired

By MARY WILLIAMS WALSH

Jeffrey A. Michael, a finance professor in Stockton, Calif., took a hard look at his city’s bankruptcy this summer and thought he saw a smoking gun: a dubious bond deal that bankers had pushed on Stockton just as the local economy was starting to tank in the spring of 2007, he said.

Stockton sold the bonds, about $125 million worth, to obtain cash to close a shortfall in its pension plans for current and retired city workers. The strategy backfired, which is part of the reason the city is now in Chapter 9 bankruptcy. Stockton is trying to walk away from the so-called pension obligation bonds and to renegotiate other debts.

After reviewing an analysis of the bond deal, underwritten by the ill-fated investment bank, Lehman Brothers, and watching a recording of the Stockton City Council meeting where Lehman bankers pitched the deal, Mr. Michael concluded that “Stockton is entitled to some relief, due to deceptive and misleading sales practices that understated the risk.”

“Lehman Brothers just didn’t disclose all the risks of the transaction,” he said. “Their product didn’t work, in the same way as if they had built a marina for the city and then the marina collapsed.”

Financial analysts and actuaries say essentially the same pitch that swayed Stockton has been made thousands of times to local governments all over the country — and that many of them were drawn into deals that have since cost them dearly.

Since virtually all pension obligation bonds turn on the same basic strategy that Stockton followed, Mr. Michael’s research could be a road map for avoiding more such problems, or perhaps for seeking redress. His analysis was part of his August economic forecast for the region, which he prepares as director of the Business Forecasting Center at the University of the Pacific.

There are about $64 billion in pension obligation bonds outstanding, and even though issuance has slowed, more of the bonds are coming to market, even now.

Officials in Fort Lauderdale, Fla., are scheduled to vote on a $300 million pension obligation bond on Wednesday, for instance. Hamden, Conn., has amended its charter to allow for the bonds to rescue a city pension fund that is wasting away. Oakland, Calif., recently issued about $211 million of the bonds, following the lead of several other California cities and counties.

For more, visit www.nytimes.com.

Municipal Bond Rule Languishes After Two Years in Legislature

The following is an excerpt from an article in 

The New York Times
Tuesday, August 14, 2012

Municipal Bond Rule Languishes After Two Years in Legislature

By MARY WILLIAMS WALSH

Financial reform was supposed to help protect local taxpayers from getting burned by municipal bond deals. But a measure that would require municipal bond advisers to put the interests of taxpayers first has been bogged down in a rule-making quagmire in Washington for nearly two years.

What’s more, a House bill, sponsored by Representative Robert J. Dold, Republican of Illinois, would eliminate the measure.

As part of the wide-ranging regulatory changes that followed the financial crisis of 2008, the Dodd-Frank Act included a provision that would make municipal advisers “fiduciaries,” meaning they must show an undivided loyalty to the communities that hire them, putting local residents’ interests ahead of their own.

That’s a much higher standard than the one for the banks that underwrite municipal bonds. The law in that case takes for granted that underwriters are looking out for their own interests in bond deals, and requires only that they deal fairly and not mislead.

Making advisers fiduciaries would be “the first time in the history of the securities laws that issuers of the securities have been protected,” said Robert W. Doty, president of AGFS, a consulting firm in Sacramento. He is a registered municipal adviser and favors the fiduciary mandate. But before that provision can take effect, the law calls for the Securities and Exchange Commission to define “municipal adviser.”

The S.E.C. proposed a definition 20 months ago, but it was swiftly beaten back by the banking, brokerage and engineering industries, among others. Opponents argued that the S.E.C. was overreaching and that they were already regulated and should not be given a new mandate.

In addition to serving as fiduciaries, municipal advisers would have to register with the commission, meet professional standards and allow periodic inspections. As fiduciaries, they would have to speak out when they see something amiss, even if it means going against powerful political forces and financial incentives.

Mr. Dold’s bill, introduced last summer, now has 35 other sponsors from both parties. In addition to ending the fiduciary mandate, it would exclude banks and other financial institutions from being deemed municipal advisers, even though bankers often do advise municipalities. A group of engineers that provide cost-benefit studies for municipal energy projects, typically financed with bonds, has also been calling for its members to be excluded.

For more, visit www.nytimes.com.