Alternative lender sees big growth

Santa Teresa-based Interstate Capital is expanding into El Paso, where it plans to bring 100 jobs to a tired Central El Paso neighborhood.

It may be the biggest finance company that most El Pasoans have never heard of. Executives expect to surpass $1 billion in annual funding to businesses sometime next year.

Interstate Capital is a big player in the world of invoice factoring, a type of alternative financing that has been around for hundreds of years but is not well known outside of the business world.

“Everybody knows what a credit union and a bank is, but unless you are in business and you need a factoring company, you may not know they exist,” said Tony Furman, Interstate Capital’s president and co-founder.

Basically, Interstate lends money to companies based on invoices they will collect in the future. Started 22 years ago by two El Pasoans, the company has expanded well beyond the El Paso region.

Furman and his partner helped pioneer the idea of offering invoice-factoring services over the Internet in 1994, and much of the company’s growth can be attributed to its web business, according to executives.

Less than a mile east of Downtown, the company has leased offices in a rundown, three-story building, which is undergoing extensive renovations. The building is located just off Interstate 10 at 2211 E. Missouri. Interstate Capital hopes to have 100 employees working there by 2017.

“We wanted to be in a neighborhood like this that really could stand some jobs,” Furman said.

Built in 1974, the building is familiar to anyone who has ever had to pay a red light camera traffic ticket. It’s old and creepy. Creaking elevators open to narrow halls with yellowing paint, stained vinyl flooring and often flickering fluorescent lighting.

The owners are moving forward with plans to modernize the building, but said they are not ready to comment further.

What is factoring

Businesses utilize factoring by selling their accounts receivable, their invoices, to a company like Interstate Capital, which are known as “factors.” The factor then advances the business the cash for a fee.

Fees vary but are typically around 2 percent, according to Furman. For large clients, they can be as low as 0.5 percent.

Factors are often used by small, fast growing businesses that need a quick cash infusion, but cannot qualify for traditional financing, Furman said. They are also commonly used by transportation companies and in the garment industry.

John Bennett is the owner of El Paso-based Sun Country Car Wash Systems Inc., a small business that builds, supplies and repairs car washes.

Some customers, he said, especially the big corporate ones, can take as long as 90 days to pay for a job. But he can’t always wait that long for payment when he has to buy parts and pay his employees in the meantime, Bennett said. It’s especially challenging if it is a large invoice and he has more than one job underway.

“If it is a $15,000 to $20,000 invoice, it can add up really quick,” he said.

So to prevent a cash flow squeeze, Bennett uses a factor to get the money right away.

Factors also handle collections and help businesses protect against losses by vetting customers, which is especially helpful for small businesses like his, Bennett said.

“They collect the money so we get paid in a timely manner. There is a benefit of basically having an accounts receivable department working for you,” Bennett said.

Interstate Capital is expanding into El Paso because it has outgrown its offices in Santa Teresa, New Mexico, at 1255 Country Club Rd. The principals of the company are El Pasoans, Furman said.

Interstate Capital has been growing rapidly. In October, the company signed 46 new clients and disbursed $83 million, a 29 percent year-over-year growth rate, according to the company. Three years ago, the company had 50 employees and now it has 100.

“We fund more in an hour today than we funded in maybe the entire first year of our operation,” Furman said.

Internet pioneer

Furman, who grew up in El Paso and graduated from Coronado High School, founded Interstate Capital in 1993 with Cliff Eisenberg, who had years of experience in the finance industry as president of American Finance and Investment Co.

At the time, the garment industry was thriving in El Paso and Furman and Eisenberg saw an opportunity to provide factoring services locally. But a year after they opened, the North American Free Trade Agreement, or NAFTA, was passed and El Paso’s garment industry began to unravel.

“I’m panicking, trying to think how to keep this business growing and, all of a sudden, the Internet comes around,” Furman said.

It was 1994. Google wouldn’t launch for another four years and the web hadn’t become a place where businesses went to do business yet. But Furman and his partner saw an opportunity and began marketing on the web. Its website is www.interstatecapital.com.

Now the company generates more than 50 percent of its business through its website and online advertising, according to Furman.

“The company,” he said, “would probably be a tenth of its size now if not for the Internet.

Email El Paso Inc. reporter Robert Gray at rsgray@elpasoinc.com or call (915) 534-4422 ext. 105. Twitter: @ReporterRobby.

Famed sports agent Leigh Steinberg partners with Philadelphia entrepreneur

Philadelphia-based entrepreneur, Cosmo DeNicola will become an investor and partner in well-known sports agent Leigh Steinbergs Steinberg Sports and Entertainment (SSE).

DeNicola runs Cosmo DeNicola Companies, a portfolio of businesses ranging from sports, entertainment, healthcare and technology. He is currently a co-owner of the Arena Football Leagues Philadelphia Soul and a Hollywood talent management firm. He will provide capital and business experience to drive SSEs client marketing services.

Steinberg, often credited with being the real life inspiration for the title character in the film Jerry Maguire, is a Los Angeles-based agent who has represented the No. 1 overall pick in the NFL draft a record eight times as well as 150 pro bowl players and seven NFL Hall of Fame inductees: Troy Aikman, Steve Young, Warren Moon, Thurman Thomas, Bruce Smith, Derrick Thomas and Howie Long.

But his career hit the skids a decade ago due to financial issues, substance abuse problems and legal troubles. It culminated with him filing for Chapter 7 bankruptcy protection in 2012.

The goals of Steinberg Sports and Entertainment are to change the world through athletes serving as role models and our firm being a steward to bring about innovation in the intersections of sports, technology, health, green alliances, ethics, community and charity, Steinberg said in a statement. Partnering with an innovator like Cosmo, who shares those same goals, helps expand the horizons of these ideals and creates more opportunities for athletes to make a positive imprint on society.

DeNicola is co-owner of the Soul along with Ron Jaworski (Philadelphia Eagles and ESPN), Craig Spencer (CEO of the Arden Group), Pete Chiarrocchi (restaurateur), Marty Judge (The Judge Group and CAFL), and Marques Colston (wide receiver for the New Orleans Saints).

A Day With Jesse Jackson and a Look at the Failures of American Capitalism

Later on Jacksons birthday, the civil rights leader gave an auditorium full of Latino students at Chicagos Farragut Career Academy High School, a more nuanced, and more realistic, version of that capitalistic promise: Why is it that blacks, Latinos and whites can all succeed together on the football field? Why is it that people from all over the world – Mexico, Saudi Arabia – can succeed on the soccer field? Its because whenever the playing field is even, the rules are public, the goals are clear, referees are fair and the score transparent, we can do anything.

The prize that must always remain within the sightline of those sweating for justice is the boulder that levels the playing field. Rainbow/PUSH, under Jacksons leadership, is firing a rock from a slingshot at the Goliath of entrenched and embedded elite interests of American finance and government. The reach of PUSH seems to extend in vastly different directions, but it is always slamming into the slithering wall of discrimination and obstruction.

The march to reimagine the struggle then becomes the work of an engineer; closing the loop on the political, economic and cultural connections from the street to the suite, and from the classroom to the boardroom.

It begins in a place like Farragut High School. Jacksons sports metaphor was particularly resonant to its students, because Rainbow/PUSH established a relationship with Farragut after learning that the football team did not have adequate funding to equip and protect its players with enough helmets and pads. Many players were sharing helmets, which increases the risk of concussion, and many were unable to practice due to lack of padding. Rainbow/PUSH secured funding for the football team, and in the words of Farraguts assistant football coach, Now the players are safer.

Debates and disturbing discoveries about the dangers of football under any conditions aside, one doesnt need the imagination of Charles Dickens to realize that high schools on the wealthy, North Side of Chicago – or the rich suburbs – dont have a problem getting their football players the best, newest and safest equipment. The same is true for excellently trained teachers, current textbooks, classroom technology and basic infrastructure.

The playing field, in innumerable ways, is uneven for the children of Farragut. At birth, the child who lives in a neighborhood with high property taxes, and rich schools, is far ahead of a child in a neighborhood where bullets fly and families fall apart.

Jackson ended his speech at Farragut by asking all the students to stand and join him in the recitation of the I am somebody refrain he made famous in the 1960s. The students reacted with a roar, and shouted with the strength of a full-force gale – one girl, standing behind me, fighting back tears – If my mind can conceive it, and my heart can believe it, I know I can achieve it. I am somebody . . .

It was a moving affirmation of the students basic humanity, and it was an attempt to empower them to speak in the active voice and project themselves as actors, rather than as the acted upon.

The simple story of the dignity of everyday people is one that America often fails to amplify, especially when the invisible hand of the market clenches into a fist and strikes down ties of sympathy and solidarity.

11 healthcare industry bankruptcies in 2014

For many financially troubled healthcare organizations, 2014 has been a deciding year, with numerous organizations filing for bankruptcy protection this year.

Here is a list of the healthcare bankruptcies Beckers Hospital Review has covered this year, starting with the most recent.

1. CW Williams Community Health Center in Charlotte, NC, decided to file for Chapter 11 bankruptcy in December.

2. Fort Oglethorpe, Ga. -based Hutcheson Medical Center announced in October that its board of directors had voted to file for Chapter 11 bankruptcy.

3. Monroe Hospital in Bloomington, Ind., filed for Chapter 11 bankruptcy in August and shared plans to sell off its assets.

4. In late May, Portsmouth, NH-based Specialty Hospitals of America filed for Chapter 11 bankruptcy and sold two of its hospitals in Washington, DC, to investment firm Silver Point Capital, based in Greenwich, Conn.

5. Nicholas County Hospital, an 18-bed critical access hospital in Carlisle, Ky., filed for Chapter 7 bankruptcy and closed in May.

6. Palm Drive Hospital, a financially troubled facility in Sebastopol, Calif., closed its doors late in April after filing for Chapter 9 bankruptcy earlier that month.

7. Northern Berkshire Healthcare in North Adams, Mass., closed North Adams Regional Hospital, its home health facility and its three hospital-owned physician practices in March, and filed for Chapter 7 bankruptcy in early April.

8. In March, Natchez (Miss.) Regional Medical Center filed for Chapter 9 bankruptcy for the second time in the past five years.

9. Long Beach (NY) Medical Center filed for Chapter 11 bankruptcy in February and sold all assets to South Nassau Communities Hospital in Oceanside, NY

10. Gilbert (Ariz.) Hospital declared bankruptcy in February due to several lingering financial problems.

11. Casa Grande (Ariz.) Regional Medical Center filed for Chapter 11 bankruptcy in February, a maneuver executives said was needed to complete its sale to Phoenix-based Banner Health.

Investing in Equities? Focus on Growth.

1 Return periods include the most recent quarter, year-to-date returns, returns since the 2007 stock market peak and returns since the 2009 low.

2 Randolph B. Cohen, Christopher Polk, and Bernhard Silli, Best Ideas, MIT, LSE, Goldman Sachs, April 20, 2010.

3 Klass Baks, Jeffrey Busse, and Clifton Green, 2007. “Fund Managers Who Take Big Bets: Skilled or Overconfident?” American Finance Association meeting paper.

Congress avoids shutdown: Immigration, war, and climate change pay the price

The New York Times has reported a summary of the key points in the bill, which show some serious concessions made by the House Democrats. It seems that issues of immigration, war, finance, and climate change are paying the price to temporarily save America from a government shutdown that would cost America billions. The bill obviously has a heavy Republican feel to it, with Republicans finishing the week with the old mantra, Sometimes we need to make hard choices, meaning financial cuts in politics.

But are these hard choices really the best choices for what appears to be a temporary solution? Many Democrats are very upset about this bill, with a lot of them being concerned about key issues like climate change and finance. Specifically, changes to banking outlined in this bill are leaving many Democrats concerned about a relapse to the American economy not unlike the great bursting bubble of 2008.

Surprisingly enough Republicans have asked for cuts to well, just about everything. Everything that is but political contributions of course, theyve raised the roof on that one. These are anything but minor losses to the Dems. And one cant help but wonder what the Republicans arent saying about these cuts.

The bill was formulated in much the same way all bills in government are formulated. Anyone that has ever seen lawyers negotiate a settlement with each other can get an idea on how laws are made. Politicians talk, one has something that the other one wants, an agreement to mutually scratch backs is formed, and not long after that an attempt to push a 1600 page document, that nobody has read, through Congress occurs.

This time around it will be Democrats making a series of policy concessions on some things, in order to get what they want on others. Republicans have made some bold moves with this bill however, and there are Republicans jumping ship as a result. As Yahoo News reported yesterday, the bill was unveiled not soon enough for lawmakers to review it, but soon enough for many of them to become angry about it.

One of the biggest concerns in this bill that is upsetting Democrats the most are the changes to some of the biggest laws that Congress has passed since 2000 according to Yahoo News. Those laws involve American finance, and some rules have been put into this bill that Democrats are worried could lead to an economic relapse for America. What the Republicans want America to remember about those changes specifically is that the last time America had a government shutdown, it cost the country $24 billion dollars.

What they dont want America to remember is that the new Wall Street rules and regulations proposed by this bill could lead to financial ruin. The new bill will keep the government open for a little while longer but the Wall Street reform Congress passed in 2010 will no longer exist. The Dodd-Frank law that came out of the 2010 Democratic Congress outlawed banks from taking risks or swapping assets, a term known as trading derivatives, when the going got tough.

With this bill, the Dodd-Frank law goes bye-bye, banks can now do that again. This means American banks will be able to spin off any of their risks into subsidiary companies to isolate themselves from those risks. The Dodd-Frank law protected American taxpayers from being on the hook for any losses that were generated by those trades. That is no longer the case.

Another caveat of the 1600 spending bill includes stomping on the voices of the District of Columbia. Last month the District of Columbia voters passed legislation that would legalize the recreational use of marijuana, this bill over-rides that. Why? The Republican Congress will say, because we can. Because Washington DC does not have a State Senate and State legislature, the District of Columbia is under Congressional jurisdiction and does what Congress tells them to.

One thing the Republicans arent cutting of course are political contributions. They are making very sure that if you want to contribute up to $700,000, now you can. That caveat was entered on page 1,599 of the bill according to the Washington Post. Another thing the Republicans dont want you to know is that they didnt give the lawmakers enough time to get to that page before the vote.

Its not just Democrats that are upset by the proposed changes. Republican Raul Labrador for Idaho said to NBC News that on these matters, There was no debate. He also said that he wasnt even aware of the political contributions reform until he was asked about the topic by a reporter. As NBC News put it,

Indeed this should embarrass every Republican who promised more transparency and debate in 2010, or who railed against President Obamas executive actions….The good news: The government isnt going to shut down. Hooray! The bad news: Congress, once again, is discrediting itself to the American public.

Other matters that the lawmakers slipped in were in regards to immigration and war. Any Americans that are banking on the fact that they wont be going to war over ISIS can think again. This spending bill very neatly puts aside $5 billion dollars towards ISIS related activities alone.

Immigration reform also took a hit. Democrats that were applauding President Barrack Obamas recent executive action on immigration reform can hold the applause. Another key feature of this bill slipped in by Republicans has money for the Department of Homeland Security (DHS) set aside, but only for a little while. Come 2015 the Senate and the House are going to need to quibble over how to appropriate more funding for DHS. As it stands right now the GOP is looking for a way to withhold the funds required to implement Obamas immigration action.

Its not going to be easy for the GOP to defund the immigration reform, but it will be a battle. The DHS department that handles immigration status changes for example is funded entirely on the fees it secures from the applications, it doesnt rely on government funding. So the GOP will have some work ahead of them if they want to defund immigration reform. Even so, as Yahoo News reports,

Democrats are setting themselves up for a messy fight with Republicans about the immigration issue at a time when they will have much less leverage to get their way.

Another key bone of contention that will pinch later more than it pinches now are the cuts to both the IRS and the EPA. The IRS is experiencing a cut of $350 million, and the Environmental Protection Agency is only getting $8 billion in funding, a $60 million dollar cut from last year. Is it really a great idea to be slashing budget cuts with the tax man when Democrats are worried about another 2008 bubble bursting again?

But thats not the only potential fall-out from these changes. Fall outs from these cuts are expected to be managed in more detail in the new year when Republicans take control after swearing in. But what else has been tabled until the Republican new year? The issue of the Keystone XL pipeline.

Some Americans think they will get rich from the Keystone Pipeline XL and some Republicans definitely will if they get their way on the pipeline too. That is of course down the road, but not too far away. But make no mistake. Republicans want the middle class to see dollar signs when they hear the word pipeline. Just hours after the unveiling of the spending bill late Tuesday of this week, Investor Intel published a report titled Keystone pipeline would boost middle class.

The Keystone XL pipeline is not an actual thing for Americans right now, for them it is still just an idea. Thus it would not be mentioned specifically in this new Congressional spending bill. But matters related to it clearly are, showing that the idea of the Keystone XL pipeline is still very much on the minds of American politicians today.

Those politicians dont want America, or Canada, thinking about the fact that cutting funding to the EPA could have a huge impact on the pipeline situation. Obviously, if the environmental people have less money to fight it, that cant be a bad thing for those that support the pipeline. And the EPA has not exactly written glowing reports about the pipeline, in fact they have done just the opposite.

Early in November the Washington Post reported that President Obama was poised to deny any possible agreement regarding the Keystone XL Pipeline. His tone softened a little bit after the mid-term elections and the Democrats suffered an historic loss. A bill was pushed through to the Senate and fell just one vote shy of being passed. The Republicans have said, were not finished with this one yet.

The Keystone XL is obviously a two sided issue. The yes to the pipeline people think it will mean more money and more jobs for America, because thats what people told them to think. The no to the pipeline people, notably, the Environmental Protection Agency that just lost $60 million in funding thanks to the Republicans, say the Keystone XL is disastrous for climate change and the environment.

The Republicans are banking on a report that the State Department has written that reviews the effects the pipeline would have on the environment. According to the Washington Post, the State Departments report said,

A final environmental impact statement earlier this year concluded the construction of the pipeline would not have a major impact on global greenhouse gas emissions because Canadas bitumen reserves, which are processed into crude oil, would be exported by rail if the project was blocked.

That report from the State Department was based on the formula that involves the price of oil. The State Departments assessment of greenhouse gas emissions is only based on the variable of oil being sold over $75 per barrel. We all know that our wallets have felt a little more comfortable at the gas tanks recently. That is because oil is now hovering at the price of $70 per barrel.

In other words, the State Departments position on the potentially devastating effects of greenhouse gases from the Keystone XL pipeline is no longer accurate. With a lower price of oil, America makes less money and thus must transport more oil to compensate the losses. That process of course requires more industrialization, which, creates more greenhouse gases.

Its not just the price of oil that casts some doubt on the report from the State Department. The Environmental Protection Agency (EPA), the very same EPA that just lost $60 million dollars in government funding, also has a very big problem with the State Department review. According to the New York Times,

The Environmental Protection Agency has written a trenchant review of the State Departments most recent effort to assess the consequences of building the Keystone XL pipeline.

The letter from the EPA acknowledged the State Departments efforts in realizing that greenhouse gas emissions are an actual thing that devastate climate change. But what the EPA has a problem with is the State Departments tunnel vision, and their lack of thinking ahead to 50 years.

The EPA also criticized some key flawed assumptions of the State Department. According to the New York Times, the EPA highlighted one key flawed assumption of the State Department. That was that,

Oil sands crude will find a way to market with or without the Keystone pipeline. This is magical thinking. If this pipeline wont do…. the [State] Department says, oil sands production will go ahead full speed.

The EPA obviously has problems with that. But Secretary of State John Kerry says he is on it when it comes to climate change. For his own Earth Day statement he said,

The science is screaming at all of us and demands action.

As the New York Times puts it, putting a block to the pipeline idea would be one obvious response. Kiboshing a bill that cuts $8 billion to the EPA might be another. President Obama now has a history of waffling on this issue, might another executive action be in the pipeline? When appearing on The Colbert Report this past Monday, the Washington Post reported that even Obama conceded that the effects of the pipeline on climate change could be disastrous. He also wants people to rest assured that the pipeline isnt the money maker people think it is.

Weve got to make sure that its not adding to the problem of carbon and climate change. We have to examine that, and we have to weight that against the amount of jobs that its actually going to create, which arent a lot. Essentially this is Canadian oil passing through the United States to be sold on the world market. Its not going to push down gas prices here in the United States. Its good for Canada.

Is it really inconceivable to think that cutting $60 million dollars from the countrys lead Environmental Protection Agency is a bad thing for those against the Keystone XL? Not really. Reuters outlines some of the specific fall outs the Environmental Protection Agency will feel from the spending bill.

The bill is written so that the Republicans can rein in regulatory overreach with the EPA. In plain English that means, the Republicans want to ease up on some of the environmental regulations the EPA has in place, particularly in regards to greenhouse gases. Two endangered species are also in danger with this spending bill.

In this bill livestock producers will be exempted from current greenhouse gas emissions regulations. Mining permits will also be impacted, but with more flexibility so that miners arent restricted by pesky little things like environmental regulation. The spending bill also blocks the Department of Interior from designating two different species as endangered.

Why is the Department of Interior being blocked from protecting endangered species in this spending bill? Because identifying a species like the sage grouse as endangered puts a damper on gas and oil production in some Western states. In other words, according to this bill, making money in oil in Western regions is more important than protecting endangered species.

The Energy Department also currently has enforcement standards in place on light bulb standards. The Energy Department wants America to use more energy efficient incandescent light bulbs. This spending bill puts a stop to any funding that would go to the Energy Department to enforce this measure.

Funding for anyone that wants to legally define fill material is also being blocked. With more legal room on the definition of fill material, miners now have more freedom in how they can dispose of waste. This move will allow miners to now freely dump any of their waste in streams and valleys.

More deregulation measures are in place for water purification as well. The EPA and the United States Army currently have a rule in place called the Clean Water Act that provides regulations to farmers or those in agriculture areas. This bill withdraws certain rules that provide exemptions, and this move will eventually produce more runoff of fertilizer as a result.

These are just a few of the ways the environment is going to pay the price for this spending bill. Other measures in this bill include cuts to the Affordable Care Act for any new funding. $5.4 million has been reserved for the fight against Ebola, both domestic and overseas. Budget cuts to multi-employer pension plans are also in play, as are policies that make nutrition standards in school lunch programs more flexible in a cause launched by Michelle Obama.

The bill still has to go to the Senate before it becomes official but nobody is expecting any surprises there. Although the bill has not specifically mentioned issues like the pipeline, the video shown here from a previous spending bill fight shows John Boehner being very adamant about relating matters like the spending bill to the Keystone XL pipeline. The slideshow shows the other side of the coin with the EPA, showing miners protesting outside the EPA headquarters in Washington DC in October over the very issue of regulation.

Once the government is saved, is it just a matter of time before another Republican bill gets pushed through to finalize the pipeline? Stranger things have happened in American politics. How do you feel about this new spending bill? What are your greatest concerns?

Forgotten Angels Christmas Party leads to college scholarship for deserving …

Clarence Adams and Shaneka Richardson cant stop smiling at each other when they meet for the first time at Xavier University. And I cant stop smiling at them.

Richardson, 18, is a freshman at Xavier, and the recipient of the first Forgotten Angels Scholarship. Adams, the administrator at Ozanam Inn, came up with the idea of providing a scholarship for a student undergoing hardship.

Ive really been wanting to meet you, Adams says, giving Richardson a hug.

The $3,000 scholarship is an offshoot of the Forgotten Angels Christmas Party for homeless children, started by Adams and a handful of others back in the 90s. This year marks the 17th celebration.

It has gotten to a real community event, and last year was the first time we had enough financial support to give a scholarship, Adams says.

Adams started working on the scholarship before last years party, after he got a call from a young woman who asked him how her college sorority might help the Forgotten Angels.

One of the things I mentioned was a scholarship, and then I told myself, Why are you suggesting this to someone else? Why dont you do it? he says.

He started talking to other volunteers, and everyone thought establishing a scholarship was a perfect fit for what Forgotten Angels is all about.

Nothings going to stop the party because it means so much to us, but to actually make a change in someones life, to help someone turn her life around, were very excited about that, Adams says.

This years Forgotten Angels Party will be Dec. 23 at the First Baptist Church on Canal Boulevard. For one afternoon, 400 children in the most difficult of situations will experience the magic of Christmas. Theyll eat a delicious meal prepared by some of New Orleans finest chefs, take part in fun activities, receive presents from under the Christmas tree, and have a chance to meet Santa.

Im expecting to have a photo booth, too, where the kids can get a picture to take home, Adams says.

Home for the angels he cares so much about means a shelter or transitional housing, not home as most of us think of it. But Richardson understands what those children have faced in their young lives. She felt scared herself when she was a young child, and this year her life turned upside-down when she became homeless.

Richardson was 7 when she, her twin sister, and their younger brother were removed from their house after teachers at their elementary school noticed welts and bruises on them. All three had been abused by their mother.

Maybe she had some mental issues. She just kept beating us, Richardson says sadly. Its something I want to be sure I never repeat. Im trying not to make the same mistakes she made.

The children were put in foster care and went to live with Julia and Ronald Richardson.

Granny had other foster children, but we were the only three with her last name, Richardson says.

Julia Richardson asked the children to call her Granny, probably because of her age. She called Richardson Red. She was around 70 when she and her husband became the only real parents the children hadeverknown. Theygave them stability and took them to the St. Bernard Community Baptist Church on Sundays.

The church has been very important in my life. That has been my second home for a long time, Richardson says. The pastor, Rev. Andrew Darby Jr., he calls to check on me.

When they arrived at their new home, the three children were bruised emotionally as well as physically.

We had therapy sessions through family services. Thats how we got through the abuse, Richardson says. We sat down and talked about it. And church is my therapy, too.

Her twin sister did not get along with Grannyand went to live with one of her teachers when she was 14. But Richardson couldnt understand why her sister left. She has nothing but positive things to say about her Granny, in spite of what happened in February.

She was a very good woman, but when I turned 18, she said I had to make my own way, Richardson says. I told her, I cant do that.

Richardson said she needed the money she made working at Popeyes for her senior expenses at Warren Easton High School, like ordering her cap and gown, and that she hoped to save some money for college.ThenGranny told her, if she couldnt contribute, she neededto move out of the house.

I took one uniform, my book bag and my work clothes, and I left, shesays.

But she had no place to go.

I was staying at a friends house down the street. She was a dropout, and I started missing school, she says.

She knew that could only lead to trouble, so she talked to her school counselor about going into Covenant House on North Rampart Street, a haven for homeless, neglected and at-risk youth. Its a place where young people have guidance, structure and caring adults to look out for them.

My counselor said, Thats a major step for you, Richardson says.

And now shes in the Rites of Passage Transitional Living program, where she has two things teenagers want and need: support and some degree of freedom.

She has to save most of the money she makes working 35 hours a week at Rouses, and she has chores to do at Covenant House. She has two grants to attend Xavier, and she has also taken out two loans for college expenses.

I just know, If you want to do something, you put your mind to it, and you can do it, she says.

After Adams established the Forgotten Angels Scholarship, he contacted Covenant House to see if they had a deserving student.

Right away, they said, Oh, yes, he tells Richardson.

Even though she didnt leave the Richardsons home on the best ofterms, she and Grannykept in touch.

It hurt me when the told me to leave her house, Richardson says, but she knew that Granny still cared for her.

She kept calling me. She told me to go to church.

She was heartbroken in July when she learned that Grannyhad died suddenly at 81.

I talked to her the day before, and she said, Red, Im not feeling good, Richardson says. I went to her funeral. It was hard to see my father go through losing her.

Now, Richardson wants to look forward, to concentrate on doing a good job at Rouses and excelling in school.

Im very hard-working. Im not going backwards, she says.

You know what? Adams tells her, after he hears her story. I know nothing is going to stand in your way.

They exchange cellphone numbers, and Richardson tells Adams shell come to the Christmas party to meet the children who mean so much to him. When they share another hug, both of them are still smiling.

I feel absolutely blessed — thats the word, Richardson says. I am so appreciative and happy to go to school and have people willing to help me get an education. Im very thankful.

How to donate

To donate to the scholarship fund, send a check made out to Ozanam Inn-Forgotten Angels, and mail to Ozanam Inn: Attention Clarence Adams, 843 Camp St., New Orleans, La, 70130.

Gifts of new unwrapped toys, childrens books and clothing can be left through Dec. 19 at Ozanam Inn or at the following Walgreens stores taking part in the John Jenkins Forgotten Angels Toy Drive:

  • 1503 Metairie Road, Metairie
  • 4545 W. Esplanade Ave., Metairie
  • 220 W. Esplanade Ave., Kenner
  • 821 W. Esplanade Ave., Kenner
  • 4200 Chef Menteur Highway, New Orleans
  • 1826 N. Broad St., New Orleans
  • 1556 Lapalco Blvd., Harvey
  • 818 Westbank Expressway, Westwego
  • 11297 Lake Forrest Drive, New Orleans
  • 4600 Westbank Expressway, Marrero
  • 2570 Barataria Blvd., Marrero
  • 2418 Carrollton Ave., New Orleans
  • 89 Westbank Expressway, Gretna
  • 1891 Barataria Blvd., Marrero
  • 5501 Crowder Blvd.,New Orleans
  • 6201 Elysian Fields Ave., New Orleans
  • 718 S. Carrollton Ave., New Orleans
  • 4110 Gen Degaulle Drive, New Orleans
  • 7401 Read Blvd., New Orleans

Character: The Fundamental Basis Of Business And The Future Of Finance

Observations Concerning the Future of the Financial Industry

This article is the first in a series analyzing competitive trends in the financial services industry. Among these articles, I may feature specific banks or call out general trends. I have no current relationship with any of the banks I will highlight, though I have spent time working at a large commercial bank. I will note when I hold a position a company or ETF or plan on taking a position.

On Banking

In the 2011 Berkshire Hathaway letter to shareholders, Warren Buffett outlined the simple but universal rule: buy commodities, sell brands is one of the best ways to run a profitable business over the long term. This is the fundamental principle underlying finance. Banks are brands and finance – money and credit – is the ultimate commodity. What separates Goldman Sachs (NYSE:GS) and Morgan Stanley (NYSE:MS) from bucket shops (other than billions of dollars in shareholder equity)? The difference between them is their brands and the confidence and implied competence that these provide.

As interstate banking barriers have fallen and technological innovations allow greater scalability of retail and commercial footprints, I contend that we will see market divergence in commercial banking. As large banks are able to invest in new technologies that reduce costs and improve customer service, it is likely that the emphasis on brand and experience will create a strong competitive moat. A handful of large national banks will dominate commercial banking (with small community banks and credit unions maintaining a significant niche) and will play a powerful role in the investment banking world. Furthermore, the traditional broker-dealer/ investment bank business models will continue to diverge.

Commercial Banking

Net Interest Margin (NYSE:NIM) based business are poised to thrive should the Federal Reserve raise interest rates significantly over the next 3-5 years. This is due to the simple mechanics of interest spreads in commercial banking. The cost component of efficiency ratios among regional banks and balance sheet reliant money centers will likely to improve as well – the financial crisis allowed banks to justify trimming their staffs and geographic footprints while technological changes have reduced the cost to service customers.

Large money center institutions (NYSE:JPM), (NYSE:C), (NYSE:WFC), and (NYSE:BAC) have been dealing with the aftermath of their acquisitions during the Global Financial Crisis (reducing waste, legal ramifications, increased regulatory scrutiny, etc.) and are generally limited to organic growth. While there may be some appetite for more acquisitions, in the near term they are limited to digesting their most recent takeovers. Indeed, it is unlikely that regulators would allow anything more than small bolt-on acquisitions. No transformational acquisitions here.

However, large regional banks – super-regionals or universal regional banks – are on the rise. While others use the term super-regional (which in many cases is apropos) I prefer the term universal regional banks to describe this growing trend in regional banks. Regional banks tend to have strong consumer presences, even more so super-regionals. However a universal regional bank aspires to function much like a universal bank with a strong consumer franchise, commercial franchise, and investment banking and securities franchise.

These banks maintain decent efficiency and those that survived the crisis were generally more conservative, better managed banks. As such, they were often able to grow organically or through acquisitions. Many have strong wealth management businesses and have bought or grown small investment banking practices.

A prime example of the transformation from a regional to universal regional to universal bank is that of Bank of America (BAC). Once a small regional bank in the Southeast, Bank of America grew by leaps and bounds, gobbling up wounded competitors at opportune moments (and sometimes inopportune moments). Perhaps the most notable actors in the bank consolidation drama of the 1980s-2000s are Sandy Weill and Jamie Dimon whose actions led to the creation of both Citigroup and what is now JPMorganChase (JPM). C and JPM will be discussed further in this series.

US Bank (NYSE:USB) is generally seen as one of the best managed banks in the business (though they are also helped by their companys product mix). Their return on equity and efficiency ratio are consistently among the best in class (most recently the return on average common equity was 14.5% and the efficiency ratio was 52.4%). However, given their recent integration of Charter One in the Midwest, USB is unlikely to make any large acquisitions in the near future. USB will be discussed further in this series.

Others, such as PNC (NYSE:PNC) or SunTrust (NYSE:STI) have strong franchises and advantageous footprints that have benefited from the recent recovery in the American economy. Both banks have strong commercial presences, good consumer brands, and even small investment banking businesses. Both of them are on the verge of being universal regional banks. Other examples of potential universal regional banks include Mamp;T Bank (NYSE:MTB) and BBamp;T. In fact, since the original writing of this article, BBamp;T has announced its intent to acquire Susquehanna Bancshares, a strong move into the upper mid-Atlantic market. STI, PNC, and BBT will be discussed further in this series.

Some regional and aspiring universal regional banks have truly taken advantage of the crisis to grow or transform their businesses. Banks with the potential to become super-regionals and perhaps even universal regional banks include Bank of the Ozarks (NASDAQ:OZRK) and BankUnited (NYSE:BKU). These banks have transformed their businesses over the last 5 years. They have done an excellent job of leveraging their brands and they may have significant room for organic and inorganic growth in the future. BKU and OZRK will be discussed further in this series.

Suffice to say that with increased regulation, small regional banks and even large community banks face increased costs and may fall prey to growing universal regional banks that seek to rise in the food chain. As the need for a national brand grows in importance over the next decade, these universal regionals may feel forced to grow, lest they find themselves prey to organic declines or acquisition.

Investment Banks

Investment Banks on the other hand are dealing with a changed landscape after the Global Financial Crisis. Limitations on proprietary trading, regulatory requirements such as new minimum capital ratios, and new Fed oversight impact both the top and bottom line. Investment banking, perhaps even more so than commercial banking is built upon brand and trust.

Mamp;A advisory only thrives if companies can trust their advisor. Prime brokers have trouble drumming up business if they cannot convince their institutional clients that they will be solvent the next Monday. Investment banking is in the trust business and the trust of many stakeholders was shaken during the Global Financial Crisis. As a result, there have been tectonic shifts in the business models of the major investment banks.

Mamp;A advisory groups in bulge bracket investment banks, though still profitable, face increased competition from boutique advisory companies such as Moelis amp; Company (NYSE:MC), Evercore (NYSE:EVR), Centerview Partners, Greenhill amp; Co (NYSE:GHL), and smaller traditional investment banks such as Lazard (NYSE:LAZ) and NM Rothschild. With Paul Taubmans success with a kiosk-style advisory business (and his imminent move to lead Blackstones (NYSE:BX) soon to be spun-off advisory business) there are several competing business models challenging the bulge bracket one-stop shops. I may include an article or two about trends in the Mamp;A boutique market in this series.

The industry seems to be realizing that there is only so much room in the ecosystem for apex predators. Most large investment banks are scaling back operations in one area or another to de-risk. Most are emphasizing lines of businesses where they have relative strengths. Goldman Sachs and Deutsche Bank are among the few to maintain an emphasis on trading (though in recent quarters Morgan Stanley has done well in FICC as well). Others are refocusing on asset-management and reducing their FICC and even Mamp;A groups.

For example, Barclays has been shrinking its investment bank (the remnants of Lehman Brothers). UBS has done the same with its investment banking operations (the remnants of SG Warburg and several others) to capitalize on its leadership in the asset management space. Morgan Stanleys completion of its acquisition of the SmithBarney franchise from Citi has strengthened its brokerage business and has reduced its overall risk. These are likely to be smart strategic moves for these businesses as they must both reduce risk and maintain profitability. 2007-2009 showed the investment banking world the danger of banks being all things to all people.

What has become clear is that there is plenty of room for niche players in the businesses that comprise investment banking. There is the possibility that we will see proliferation of firms and greater specialization of firms such as was seen in the 1950s and 1960s rather than the universalization of investment banking franchises as was seen in the 1970s and 1980s. There may be more firms starting in the mold of Donaldson, Lufkin amp; Jenrette (DLJ), Cogan, Berlind, Weill amp; Levitt (CBWL), and Keefe, Bruyette amp; Woods (NYSE:KBW) over the next few years as the costs of doing business in a universal bank increases and sell-side research shrinks. Investment research is becoming privatized and brought in house for most institutional investors while also being democratized with small investment banks focusing on small caps and non-traditional outfits such as Zacks, the Street, an even Seeking Alpha provide individual (and occasionally institutional) investors a place to go for research.

There may be room for a few small firms to shine that provide high caliber research as did many of the smaller firms started in the post-war era. I will likely include an article or two on the middle-market investment banking space as well as a number of the industry specific investment banks. As such the trends to be considered in the investment banking industry includes specialization among larger bulge-bracket investment banks and proliferation of smaller businesses focused in advisory, restructuring, trading, and research.

The aforementioned trends in commercial banking and these trends in investment banking seem to be on a fascinating collision course. As larger regional banks aspire to become universal regional banks (a transformation that was only fairly recently taken by both Wells Fargo and Bank of America) they will likely try to build or bolster their investment banking practices through selective hiring or the acquisition of small but reputable firms. Therefore, while the investment banking industry will likely become more fractured over the next 5-10 years, there will likely be consolidation in the commercial banking industry. In fact, there may be several acquisitions of investment banking practices by aspiring universal regional banks.

Conclusion

Banking is built upon trust. JP Morgan said this over a century ago in a hearing before the Pujo Committee. When asked about what was most important when loaning money, he said character. When asked why trust mattered more than assets, Morgan said, Because a man I do not trust could not get money from me on all the bonds in Christendom. He continued, I think that is the fundamental basis of business.

The trust deficit in the financial industry and the growing importance of national brands in finance is going to be a driving force over the long duree of American finance. Throughout this series of articles, I will examine these trends in more depth and seek to elucidate upon their tangible effects on American business and finance.

Solving the Rubik’s Cube of Retirement Saving

Some people can solve a Rubiks Cube calmly and quickly. Others go round in circles for a few minutes and then quietly give it up. Still others make an intense effort that goes nowhere, and then smash the thing against the wall in frustration.

Those different approaches to a colorful puzzle are like the different approaches people take to retirement saving. Some handle it efficiently, some would rather ignore the problem and still others make destructive moves out of frustration. As with Rubiks Cube, the more you understand about the way retirement planning works, the better you can stay on track to the right solution even when the pieces have still seem out of place.

Breaking the puzzle into parts

Rubiks Cube has six sides, and retirement planning can be seen as having six sides as well. In each case, the trick is getting them all to line up at the same time:

  1. Wages. Think of this as the side of the puzzle you start on. Naturally, your wages have a lot to do with how much you save, but the trick is not assuming that future wage growth will make everything easier. Build retirement savings into every budget, even when you are just starting your career.
  2. Debt. Think of debt as the piece on the opposite side of the Rubiks Cube that keeps fouling up the side you are trying to get straight. Debt is the opposite of savings, so you cannot solve the savings problem without first eliminating debt — or at least having a viable plan to eliminate debt.
  3. Investment gains. Investments should help your nest egg grow, but the more you invest for growth, the less predictable your returns will be. This is like that side of the Rubiks Cube that looks promising one minute, and all out of whack the next. You have to just be patient, and stick to strategies most likely to make everything line up in the long run.
  4. Time. This is like the side of the puzzle that first seems one way, but then starts to change completely. At first, time is your friend — the longer you save and invest, the larger your savings are likely to be. However, as your time to retirement nears, and the years of retirement you need to fund stretch out before you, time can turn into an enemy.
  5. Cost of living. Inflation is a subtle problem that will gradually get worse over time if you dont watch it. This is the side of the puzzle that starts out fine, but slowly one square, then another, then another moves out of place.
  6. Income. The object of this exercise is to provide retirement income, and like the solution to Rubiks Cube, that can be elusive. When bank rates and bond yields started heading toward zero, it raised the amount of savings needed to provide a viable amount of retirement income.

The real point of any puzzle is the process of solving it. Looking at the process of retirement savings as a Rubiks Cube with six sides will help you account for all the different pieces that need to fall into place. That doesnt make it easy, but it beats focusing on just one or two sides of the puzzle and then finding that everything else is a mess.

Also by Richard Barrington:

  • The best savings account rates: A saver’s guide
  • Best states for retirees
  • Bank fees: Are your charges creeping up?

GreenPath Presents Free Financial Workshop In Pewaukee

GreenPath will present programs on ways to improve your credit and credit score, eliminate debt and build savings, as well as tips on ways to avoid future money mistakes.

This is a free community event featuring free credit report reviews, and the opportunity for residents to meet with experts one-on-one.

This will be a great opportunity to meet with local experts and get their questions answered about credit and debt, said Bill Druliner, GreenPath community engagement manager. We are excited to be partnering with the Workforce Development Center in helping our area residents learn more about their personal finance options.

The morning program will also be broadcast live to the Workforce Development Centers Ozaukee County (Mequon) and Washington County (West Bend) locations.

In addition, the workshops will be held again in 2015 on Jan. 8 and 29, as well as Feb. 19 and March 5.

Area residents can pre-register at www.greenpath.org/WDCregistration or can contact Jennifer Aldrich at 262.695.7989 or at jaldrich@wctc.edu.

The workshops are made possible through a Department of Labor Disability Employment Initiative grant awarded to the Waukesha-Ozaukee-Washington Workforce Development Board.

Keep up with GreenPath Debt Solutions on social media at www.facebook.com/greenpathdebt and www.twitter.com/greenpathdebt.

For more information, log on to www.greenpath.org or call (866) 648-8122.

About GreenPath Debt Solutions
GreenPath Debt Solutions is a nationwide, non-profit financial organization that assists consumers with credit card debt, housing debt, student loan debt, and bankruptcy concerns. Our customized services and attainable solutions have been helping people achieve their financial goals since 1961. GreenPath operates more than 55 offices in 12 states. They also deliver licensed services throughout the United States over the Internet and telephone. GreenPath is a member of the National Foundation for Credit Counseling, the Association of Independent Consumer Credit Counseling Agencies and is accredited by the Council on Accreditation (COA). The company also has an A+ rating with the Better Business Bureau.

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