Opinion

Ben Walsh

from Felix Salmon:

Counterparties: The shortest CEO tenure ever

Ben Walsh
Jul 6, 2012 21:07 UTC

Welcome to the Counterparties email. The sign-up page is here, it’s just a matter of checking a box if you’re already registered on the Reuters website. Send suggestions, story tips and complaints to Counterparties.Reuters@gmail.com

On June 27, Bill Johnson, the CEO of Progress Energy, signed a contract to become the next CEO of Duke Energy. On July 2, the year-and-a-half-old merger agreement between Progress and Duke closed with the stipulation that Johnson would become the new company's CEO.

Yet, on July 3, Johnson's resignation was announced. Here's how Duke Energy explained what happened in its regulatory disclosure:

On July 3, 2012, Duke Energy announced that Mr. Johnson has resigned from all of his positions at Duke Energy and will no longer serve as President and Chief Executive Officer of Duke Energy or as a member of Duke Energy’s Board of Directors...effective as of 12:01 a.m. on July 3, 2012... Also, on July 2, 2012, the Board reappointed Mr. James E. Rogers as President and Chief Executive Officer of Duke Energy, effective as of 12:01 a.m. on July 3, 2012, in addition to his role as Chairman of the Board.

Yes, you're reading that right: Johnson served only one day as CEO. Here's Dealbreaker's Matt Levine: "I have no way of researching this but I’ll go out on a limb and say it’s unlikely that any company has ever previously announced the hiring and firing of a CEO within three paragraphs of each other in the same 8-K". The WSJ somehow needed to speak to actual sources to make following assertion: "New chief executives almost never quit days after accepting an employment contract, executive-compensation consultants said".

Reverse mortgages: the celebrity pitchmen aren’t even the worst part

Ben Walsh
Jul 5, 2012 22:32 UTC

For years, there’s been a steady stream of stories laying out what was wrong with the US mortgage market. Now, the Consumer Financial Protection Board (CFPB) is out with a report on reverse mortgages, which allow the elderly to tap into accumulated home equity without selling their homes. Monetization: it’s not just for the kids anymore!

In concert with their report, the CFPB has a good explainer of what exactly a reverse mortgage is. (Hint: “it is a loan”.) The NYT has a good wrap up of the some of the problems with reverse mortgages laid out by the CFPB. For starters, there other, cheaper ways of doing the same thing (home equity loans or lines of credit). Worse, seniors are increasingly choosing to take the lump sum payment to refinance their existing mortgage or pay off other debt. That’s a dire window into the finances of America’s grandparents.

Credit is tight and all but unavailable to many Americans who need it. It would be great if reverse mortgages were an incremental solution to that problem. However, indebted seniors using reverse mortgages to pay off other debts are more exposed to financial risks like unexpected medical bills or home repairs after taking out a reverse mortgage:

from Felix Salmon:

Counterparties: Romney’s tangled, murky finances

Ben Walsh
Jul 3, 2012 21:49 UTC

Welcome to the Counterparties email. The sign-up page is here, it’s just a matter of checking a box if you’re already registered on the Reuters website. Send suggestions, story tips and complaints to Counterparties.Reuters@gmail.com

In January, Mitt Romney released his 2010 and 2011 tax returns. Disclosing his 13.9% effective tax rate for 2010 didn't make the issue go away. Now, Vanity Fair's Nicholas Shaxson has a fascinating deep dive into the arcana and ambiguity of Romney's tax records: "The assertion that he broke no laws is widely accepted. But it is worth asking if it is actually true. The answer, in fact, isn’t straightforward."

Shaxson details Romney's stake in a series of inscrutable offshore corporations, one of which, Sankaty High Yield Asset Investors Ltd, is particularly hard to decipher, partly because it was absent from several Romney financial disclosures before he finally disclosed it in his 2010 tax return.

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