Reuters Investigates

Coming to America, for a price

Jim Kelleher and Karin Matz teamed up with Reuters reporters in South Korea and China for a special report on what has become a cottage industry profiting from a program that allows foreigners who invest in certain small U.S. businesses to get on the fast track to U.S. residency and citizenship.

Chinese and South Koreans are the biggest customers. But a Reuters investigation indicates there are widespread problems in the way the program is promoted and the immigrants’ chances of winning permanent U.S. residency are more of a coin toss than a slam dunk

The U.S. EB-5 investor visa program, which allows foreign entrepreneurs to become U.S. residents if they invest money in businesses that create or save 10 jobs, is especially popular in Asia, where it is aggressively promoted by recruiters as a safe, surefire way to gain legal entry to the United States – and to make a potential profit in the bargain.

The number of immigrants applying for the U.S. EB-5 visa program has jumped in recent years. But that may be because the number of U.S. businesses participating in the program – and aggressively recruiting investors overseas – has grown geometrically over the past three years.

Read the special report, “Overselling the American dream overseas,” in multimedia PDF format here.

Making money for taxpayers from AIG?

The U.S. Treasury plans two large AIG stock sales in 2011 and is mulling ways to maximize its returns as it extricates itself from the unpopular bailout, we reported today in our special report “Inside AIG’s tortuous turnaround.”

Overall, a stock sale at more than around $30 per share would leave the Treasury with a hefty profit. Currently, AIG is trading above its book value of $48.24 per share as of Sept. 30. 

So how much could the Treasury make on its stake? Click on the graphic below for an interactive showing some of the scenarios for how much money the Treasury might make.

As an aside, one of the more curious things Paritosh Bansal, Kristina Cooke, David Lawder and Ben Berkowitz got their hands on for the story was this photograph – AIG was so worried at the height of the bailout about the safety of its staff that it changed its identity cards in the spring of 2009, replacing the familiar logo with a design that left off the company’s name.

This is the before and after shot provided by AIG:

Full disclosure, or not

Our latest special report, “For some professors, disclosure is academic,” examines the question of academic independence in the world of economics.

Emily Flitter, Kristina Cooke and Pedro da Costa reviewed 96 testimonies given by 82 academics to the Senate Banking Committee and the House Financial Services Committee between late 2008 and early 2010 — as lawmakers debated the biggest overhaul of financial regulation since the 1930s — and found no clear standard for disclosure. 

A growing number of critics are calling for change. They argue that disclosing industry relationships should be mandatory for academics who appear before the people’s elected representatives as independent experts.

One of the best known cases was chronicled in the movie “Inside Job” —  Frederic Mishkin, a former governor of the influential Federal Reserve Board in Washington now teaching at Columbia, wrote a glowing paper about Iceland’s financial system in 2006 – f or which he was paid by the Icelandic Chamber of Commerce. Two years later, the country’s financial system collapsed.

What do you think? Should academics who testify to Congress be required to disclose any and all links to corporations?

To read this special report in multimedia PDF format, click here.

Dumb money on Wall Street

Jonathan Spicer’s special report on dumb money in the stock market shows how a few powerful financial institutions make money from retail investors, and why the system is coming under scrutiny.

If you’re wondering what “dumb money” is, it basically refers to most trades by amateur investors like you and me.

To read the story in multimedia PDF format, click here.

Here’s what the Columbia Journalism Review had to say about it.

An economic giant’s Achilles heel

A year ago, Nick Carey went on a road trip around America for a project called “Route to Recovery” that took him to places hit hardest by the recession. Nick went to Saginaw, Michigan, this time for a follow-up special report on the manufacturing sector and structural unemployment: “Is America the sick man of the globe?”

One of the characters he met was Olen Ham, a retired GM worker and UAW member who is among the last of those who took part in the historic “Sitdown Strike” in 1936 that he says helped create America’s middle class. You can hear from Olen in this video:

Manufacturing has borne the brunt of the lay-offs in recent years, as this graphic shows:

Here’s another graph that shows how unemployment and manufacturing are closely linked.

Appraisal hell

Senior personal finance correspondent Linda Stern has been delving into the housing market for a special report on home appraisals — “What’s a home worth? Pick a number, any number”

It turns out a lot of people are in home appraisal hell.

The reasons for this new form of real estate limbo include new and proposed federal rules governing appraisals along with changes in the way appraisals are conducted. Plus, the uncertain housing market is creating price instability. The end result? Borrowers are missing out on low interest rates. And lenders are leery of the appraisals they get.

According to Walt Molony of the National Association of Realtors:

…in October, one in 10 member agents said they’d had a contract canceled as a result of a low appraisal, 13 percent said they’d had a contract delayed, and 16 percent said they’d had a contract negotiated to a lower sales price as a result of a low appraisal.

If you have had a home appraised recently, did it go smoothly or did you encounter a similar form of appraisal hell?

Let us know.

How Mendax made WikiLeaks a sensation

By Mark Hosenball

On Tuesday, Julian Assange, the controversial Australian-born founder and frontman of the WikiLeaks website is scheduled to appear in a London courtroom for the latest hearing on a request by Swedish authorities that he be extradited to Sweden for questioning in a sexual misconduct investigation.

Assange has denied any wrongdoing in Sweden, and some of his supporters have dropped dark hints that the Swedish investigation could be part of some sinister conspiracy by the CIA or other WikiLeaks enemies to shut down both Assange and the website, which has lately roiled the world of international diplomacy by disclosing a cache of secret U.S. diplomatic cables.

Swedish prosecutors and the lawyer for two women who complained to the authorities about Assange’s behavior deny the sex investigation has anything to do with spy plots or politics. People who know the mercurial and sometimes imperious Assange say that even on best behavior, he can be a difficult person to deal with.

In this special report last week, we took you behind the Swedish investigation into the sex allegations against Assange, and explained how Assange himself might have avoided any investigation if he had been more accessible to two women who were anxious that he undergo medical tests which he apparently wanted to avoid.

In this new special report, “Julian Assange versus the world,” we look into the strange and colorful background that helped to shape Assange’s intellect and character. Also we report on his increasingly fractious dealings with both collaborators and journalists who helped him build WikiLeaks into a worldwide brand-name.

Some original source material might be of additional interest to readers who find Assange fascinating, compelling or repellent. One seminal article on the 39-year old former hacker and self-proclaimed “scientific journalist” is this profile, which the New Yorker magazine published shortly before the reputations of Assange and WikiLeaks became an international sensation.

China’s rebalancing act puts consumer to the fore

Wal-Mart, the world’s largest retailer, now has 189 stories in China, according to its website. Soon it will have many more.  The U.S. chain has announced plans to open a series of “compact hypermarkets”, using a bare-bones model developed in Latin America, the Financial Times said.

Wal-Mart stores are a bit different than the one’s you might find in, say, Little Rock Arkansas. They sell live toads and turtles for one thing, The Economist reported. But they also sell the appliances, gadgets, and housewares that Wal-Mart stores merchandise everywhere.

And business is booming. Third-quarters sales in China soared 15.2 percent from a year earlier, according to the Financial Times story, compared with a paltry 1.4 percent inthe United States.

China’s consumption has been growing. Quite fast, in fact. Yet it still acounts for just a third of GDP, compared with around 60 percent in Europe and about 70 percentin the United States. But that is starting to fundamentally change. A Reuters Special Report by Alan Wheatley, “The Chinese Consumer Awakens” notes that wages are rising fast. People are moving into new cities in China’s vast interior, and manufacturers and retailers are following them. Call it China’s great rebalancing act, as the government tries to promote more consumption and rely less on cheap exports from “the workshop of the world” for future growth.

Timothy Geithner certainly hopes to see this. The U.S. Treasury Secretary is counting on hundreds of millions of Chinese to spend more and save less. That way, Chinese factories would produce more for domestic consumption and less for export, helping to narrow the trade imbalances that are destabilizing the global economy.

Photo caption: Chinese vegetable vendor sleeping in open air market in Changzhi, Shanxi province. REUTERS/stringer

WikiLeaks: What really happened in Sweden

Some supporters of WikiLeaks founder Julian Assange see a conspiracy behind Swedish prosecutors’ efforts to question him there on sexual misconduct charges. The prosecutors deny their move is political.

Mark Hosenball’s special report “Fear of STDs sparked case against WikiLeaks boss” tells the story of what happened in August when Assange was visiting Sweden.

The robosigning story goes on

Shares Lender Processing Services Inc fell as much as 9.8 percent at one point on Monday after Scot Paltrow’s special report said the company, which helps banks manage mortgage foreclosure documentation, faces more serious legal troubles than it previously disclosed. The stock closed 5.77 percent down for the day.

Read the full report, “Legal woes mount for a foreclosure kingpin,” in multimedia PDF format here.

This graphic shows how the company’s share price surged in 2009 as the company profited on the foreclosure boom.