Monthly Archives: February 2012
Leave a comment | posted in Banking, Capital Markets, Credit, crowdfunding, Economy, Finance, Lending, Marketing, New Social Age, Occupy Wall Street, Politics, Social Finance, Social Lending, Social Media
If you are a reasoned Democrat, or a moderate Independent, or a moderate Republican or Fiscal Conservative, you probably wander around scratching your head at where much of the legislation that flows through Congress comes from. I sure do.
Well, this seems to be the source of most of it. Today, occupiers in 80 American cities will hold the movement’s largest coordinated demonstration since fall: a huge protest against the American Legislative Exchange Council (ALEC).
Never heard of it? That’s the point.
“It’s an extremely secretive organization,” says David Osborn, an organizer with Occupy Portland‘s Portland Action Lab, which is spearheading the national protest (known on Twitter as #F29 and #ShutDownTheCorporations). “Our goal is to expose the destructive role that it plays in our society.”
Founded in 1973 as a “nonpartisan membership organization for conservative state lawmakers,” ALEC brings together elected officials and corporations like Walmart, Bank of America, and McDonald’s to draft model legislation that often promotes a right-wing agenda. It claims to be behind 10 percent of bills introduced in state legislatures.
Leave a comment | tags: ALEC, American Legislative Exchange Council, Arizona, ExxonMobil, Mark Pocan, McDonald, New York City, Occupy Portland, United States, Walmart, Wisconsin | posted in Banking, Capital Markets, Credit, crowdfunding, Economy, Finance, Lending, Marketing, New Social Age, Occupy Wall Street, Politics, Social Finance, Social Lending, Social Media
Note that the second highest number of site visitors are from the U.S. … where its is still illegal!
Leave a comment | posted in Banking, Capital Markets, Credit, crowdfunding, Economy, Finance, Lending, Marketing, New Social Age, Occupy Wall Street, Politics, Social Finance, Social Lending, Social Media
To paraphrase Michael Lewis, the former Salomon Bros. bond trader and author of Boomerang, Moneyball and The Big Short, break ’em up, make them small and don’t allow gamblers to give advice to investors.
Lewis famously points out in a Slate interview that future generations will look back at the crash of 2008, and wonder, “How did you not notice 24-year-olds were being paid $2 million a year who clearly didn’t know anything?” And, I would add “How did you expect to put people in a room with a machine that spun junk into gold and not expect them to use it?”
The amazing thing to me is, with all of the hand-wringing and posturing by our politicians following the crash and the subsequent bail-out, not one thing has changed. Dodd-Frank has no teeth in the areas that matter, and has yet to be implemented. I think it was actually passed way back in 2011. Glass-Steagall remains repealed, and there is no legislation in Congress which addresses any of the issues around the four provisions of the Banking Act of 1933 that limited commercial bank securities activities and affiliations between commercial banks and securities firms.
So, as best as I can tell, there is nothing to prevent Goldman or Citi or the rest from creating the equivalent of a credit default swap, taking a short position on it with its own money and peddling it to others, all the while knowing that it is made of junk. When the new credit default swap crashes and burns, its birth mother makes out like the bandits they are.
That is exactly what happened in the run-up to 2008, and when it all caught fire, we know who was left holding the bag. And, I don’t know how you feel, but I don’t want to go there again.
The simple fix is to break up the banks, making sure that none of them are large enough to hold anyone hostage again and to assure that the (Charles Schwab-like) investment advice is separated from the (Lehman Brothers-like) gamblers on the investment capital side. Make the banks go back to a wealth advisory role and make the gamblers become hedge funds. And, don’t ever hire any MBA’s under 30!
This, by the way, is the same Congress that is sitting on one of the potentially most important pieces of legislation introduced by this Congress, the Entrepreneur Access to Capital bill that seems completely stalled in the Senate. A bill that could lead to actual job growth, enormous capital formation through a new and exciting asset class, and some rocket fuel for an economy that is already sagging (orders for durable goods fell in January by the most in three years and the S&P/Case-Shiller index of property values in 20 cities fell 4 percent from a year earlier, reports showed yesterday).
Why is the Senate sitting on it? Because the same people who brought you the Bernie Madoff Ponzi scheme (which somehow managed to escape SEC attention even after four reviews), are concerned about protecting investors from fraud because, “There are lots of snake-oil salesmen on the Internet.” Really? You want snake-oil? Go down to lower Manhattan.
This fraud excuse is bogus for reasons other that that, however.
First, every crowdfunding site, including iSellerFINANCE, will have thoroughly vetted each offering before it gets posted to their platform, assuring that the same level of due diligence has been performed as would have been the case if a traditional Venture Capital firm had studied the deal.
Second, the various forms of the bill now in the Senate, limit (or cap) the investment at a maximum of $10,000 or 10% of an investor’s annual income. So, someone may lose $10,000. That’s a Mitt Romney bet. Not a serious amount of money for average investors. And, the upside is enormous. $10,000 invested in Amazon, Apple and Google just 8 years ago would be worth a jaw-dropping $402,452 today.
Third, the fraud excuse is really driven by the lobbyists who are working hard on behalf of, guess who? The investment banking community, who will get cut out of whatever this action might turn out to be. Surprise, surprise! And then there is the emotional reason. Somehow, these same politicians are way OK with using crowdfunding for their own campaigns, and yet there is no mechanism in place to protect investors from what happens to them when these guys get in office.
Politicians go out to thousands of supporters and say, “Hey give me as much money as you can afford (capped, of course). Collectively it will add up to something substantive so that I can talk about my goals, build my team, market my message and get elected (or re-elected).” Entrepreneurs do the same thing (take an idea, make a proof of concept, build a company, and hire employees to market and grow) but only with accredited investors (aka millionaires). Here’s the ironic part. It is legal for politicians to go to the masses and advertise, but illegal (under SEC regs) for entrepreneurs to do the same thing. And the bill, in its current form still doesn’t allow “advertising” of these crowdfunding deals. How that gets worked out is anyone’s guess.
When it comes to crowdfunding, entrepreneurs are held to a different standard than politicians. Why are there rules on how much money one has to make in order to give to an entrepreneur but there are none when it comes to politicians? 100% of Americans can give to politicians of their choice but only 5% of the wealthiest Americans can invest in entrepreneurs to create jobs. Really? The rationale, according to the opponents to Crowdfund Investing is that Americans aren’t sophisticated enough to understand the risks inherent in investing in startups.
If they don’t think people are sophisticated enough to decide how to invest a few thousand dollars in a venture, why do they think these same people are smart enough to choose the right candidates? Why do we allow people the freedom to use their money as they wish when it comes to crowdfunding politicians, but we don’t give them the same freedom to use their money as they wish when it comes to investing in startups and entrepreneurs? Are we to assume that there’s no fraud in politics? Should the supporters of Representative Weiner or presidential candidate Herman Cain get refunds?
This election season, over half a billion dollars will go to fund the campaigns of many a politician.
Imagine the impact we could have on our economy if that amount of money went into starting new businesses? Businesses that create jobs; jobs that provide income; income which consumers spend with increased confidence. Increased consumer spending further stimulates the economy. This bill will get us out of this recession. It’s time to let your Senator know how you feel. Let’s get this done!
Leave a comment | tags: Big Short, Herman Cain, Lehman Brothers, Mitt Romney, Venture capital | posted in Banking, Capital Markets, Credit, crowdfunding, Economy, Finance, Lending, Marketing, New Social Age, Occupy Wall Street, Politics, Social Finance, Social Lending, Social Media
But what if there was potential for a financial return on these crowdsourced investments? If startups could offer stock to their small-stake supporters, some (including Amy Cortese in this New York Times Op-Ed) predict that the practice of crowdfunding would explode, opening up far more resources to entrepreneurs, spurring innovation, and creating jobs.
That’s exactly what the Entrepreneur Access to Capital Act (HR 2930) aims to achieve. The bill, has the support of President Obama and was passed by an overwhelming majority in the House in November but has been hung up in the Senate ever since.
“Create a regulatory framework to let private businesses use crowdfunding … to raise up to $2 million annually from investors pledging no more than $10,000, or 10 percent of their annual income.“
“The SEC is considering updating its own rules to foster capital formation. Earlier this month, an SEC advisory panel urged the agency to relax outdated rules that trigger public financial reporting for companies, but it stopped short of backing crowdfunding, citing concerns about investor protection.”
In a TechCrunch interview at the Techonomy conference last November, AOL founder Steve Case pointed out the irony in current rules that limit investing to the accredited, noting that you don’t have to be accredited to go to Las Vegas and lose $10,000 at a table in an hour.
But “there are real concerns,” as Cortese noted in her Times Op-Ed:
“The S.E.C. must balance its dual mission of facilitating investment and protecting investors, and as we all know, snake-oil salesmen are alive and well on the Internet. Furthermore, Wall Street banks are likely to fight any efforts to encourage crowdfunding because it cuts them out of the equation. But the potential rewards outweigh the risks. With such sums, the hazard to any single investor is limited. And information is more freely available today than in the 1930s, when the regulations were written.”
Just how great is the potential of the policy to spur economic growth? A Capital Creation and Crowdfunding Conference in Los Angeles next month promises to explore “how the rising private markets will lead the nation toward an era of economic prosperity.”
And the industry publication The Daily Crowdsource is hoping to figure it out for us. They’re using the crowdfunding platform RocketHub to raise capital to conduct a crowdsourcing market research report.
1 Comment | tags: crowdfunding, Harry Reid, Kickstarter, SEC, Senate, TechCrunch, U.S. Securities and Exchange Commission, Wall Street Journal | posted in Banking, Capital Markets, Credit, crowdfunding, Economy, Finance, Lending, New Social Age, Occupy Wall Street, Politics, Social Finance, Social Lending, Social Media
While the global financial meltdown and its aftershocks have unleashed a flood of indignation, condemnation, and protest upon Wall Street, the crisis has exposed a deeper distrust and implacable resentment of capitalism itself.
Capitalism might be the greatest engine of prosperity and progress ever devised, but in recent years, individuals and communities have grown increasingly disgruntled with the implicit contract that governs the rights and responsibilities of business. The global economy and the Internet have heightened our sense of interconnectedness and sharpened our awareness that when a business focuses only on enriching investors, it implies that managers view the interests of customers, employees, communities and the fate of the planet as little more than cost trade-offs in a quarter-by-quarter game.
I think it’s time to radically revise the deeply-etched beliefs about what business is for, whose interests it serves, and how it creates value. We need a new form of capitalism for the 21st century, one dedicated to the promotion of greater well-being rather than the single-minded pursuit of growth and profits; one that doesn’t sacrifice the future for the near term; one with an appropriate regard for every stakeholder; and one that holds leaders accountable for all of the consequences of their actions. In other words, we need a capitalism that is profoundly principled, innately moral, fundamentally patient, and socially accountable.
This isn’t a new challenge, but it’s more urgent than ever, not just as an effort to escape reform and regulation from the outside, but to restore the public trust, to repair the moral fabric of the system, and to unleash the innovation required to tackle the world’s most pressing and important challenges.
So, here are the questions we must begin to answer as we think about how we can make each of our companies more principled, more patient and more socially responsible:
Capitalism degenerates into narrow self-interest without a strong ethical foundation.
How do we focus the entire organization on a higher purpose and embed such virtues as generosity and selflessness into everyday interactions, evaluations, and reward systems?
How do we measure the ethical or moral climate of a company, and what is the dashboard look like?
What does it mean for individuals at all levels to act as wise stewards of organizational values, resources, and stakeholder well-being?
What kind of a forum or process could we create that would allow individuals to freely share and discuss ethical dilemmas?
In what ways might extreme transparency preserve and promote the highest purpose of the organization?
Vision and perseverance are critical to value creation and highly vulnerable to short-termism.
How do we stretch management timeframes and perspectives?
What does it mean to articulate and instill a vision compelling enough to inspire sacrifice, stimulate innovation, and hedge against expediency?
How might we re-balance compensation and measurement systems to provide incentives for long-term value creation along with short-term performance?
What tactics or capabilities might we develop to earn some slack from investors?
What kind of incentives and measurement systems could we devise to encourage internal entrepreneurs and nurture a varied portfolio of opportunities?
Capitalism cannot operate in a social vacuum, and profits and shareholder return can no longer be the only measures of a company’s value-add.
How do we eradicate the pervasive zero-sum mentality in business and embed the positive-sum view of stakeholder interdependence into operations at every level?
How do we build the consideration of social return into every conversation and every decision at every level in the organization?
What kind of measurement and reward systems would give significant weight to social impact created by individuals and the wider organization?
These are the questions the management team at iSellerFINANCE are asking ourselves as we form this new company, which we hope will become the Amazon of social finance. Our vision is the empowerment of individuals, small businesses, communities, organizations and non-profits to fund their enterprises and projects via loans, investments and donations from like-minded individuals wanting to participate in the outcomes and earn substantial returns on these investments, in an open market, crowdsourced, capital environment.
We have a chance to create the kind of business that we idealize, a new capital model for the 21st century. Our team’s shared values are directly locked into the ideals of social responsibility, patient execution and a strong ethical foundation of what we call moral capitalism. Will we be able to walk the walk after we talk the talk? I think we are off to a great beginning. Stay tuned for updates.
1 Comment | tags: Business, Capitalism, Cost–benefit analysis, Individual, Organization, Social capitalism, Social entrepreneurship, Social responsibility, Wall Street | posted in Banking, Capital Markets, Credit, crowdfunding, Economy, Finance, Lending, Marketing, New Social Age, Occupy Wall Street, Politics, Social Finance, Social Lending, Social Media
Crowdfunding as a disruptor is growing exponentially, and there are suddenly 14 different platforms that can help raise money for everything from cultural, art and music projects to social enterprises, nonprofits, volunteer groups, sustainable businesses, community and food organizations. I am surprised that public schools haven’t climbed on board to fund things like after-school sports programs, music and art programs and all of the stuff that has been hacked off the table in public education budgets. Imagine, your $10 could get you a ball cap, paperweight or team jersey commemorating your contribution to keeping the your local high school tennis program going.
An example of disruption through Crowdfunding would be Sunday’s well-attended Progressive Opportunities conference in Berkeley, CA. The principle discussion centered around the roles of food and energy as a focal point for reshaping our world. “If there’s anywhere people have really gotten the importance of local change, it’s the food movement,” said Elizabeth Ü, one of the speakers at the event (which was produced by the East Bay Express). The speakers at Progressive Opportunities were level-headed pragmatists, with attainable goals and interesting stories. If anyone is going to create an alternate food economy, it’s probably these people.
At the conference, coordinator Al Weinrub delivered an overview of what he calls “decentralized energy systems.” To elaborate: “You could think about it as trying to move toward net-zero communities, where you essentially can generate as much energy locally as you need locally, so that you don’t have to buy a lot of energy from the grid,” he said. “The idea is that it’s a more sustainable approach to energy use, and also allows for a lot of economic development and jobs.”
In the end, Weinrub explained, a system emerges where wealth is held within a community rather than extracted by outside forces. Some of that wealth can take the form of investments in infrastructure, jobs, and businesses aimed at harvesting natural resources like solar, wind, geothermal, biomass, and biogas. Thus spent, the money then trickles through the community rather than leaving on a utility bill. It may seem a utopian vision, but Weinrub says it’s already technologically available. He also insists that such a transformation is more of a necessity than most realize. “We’re going to have to rethink how people work and live, and energy is a crucial part of that,” he said. “So we have to think about redesigning our energy systems in a serious way.”
The concept of growing new economies through the sustainable use of local resources is the focus of the Hoop Fund, a San Francisco-based crowd-funding platform that offers microfinance loans to small farmers and artisans. Similar to the micro-lending platform Kiva, individuals make loans as small as $25 and investments are paid back in small, gradual increments. In lieu of interest, Hoop Fund lenders earn discounted products from the entrepreneurs, fostering a strong sense of connection between the involved parties.
I sat in on several of the day’s workshops, but Crowdfunding for Local Food Economies was particularly interesting. The topic was nominally crowdfunding, but it encompassed a larger exploration of different ways food entrepreneurs (farmers, restaurants, artisans, etc.) can secure capital.
Lawyer Jenny Kassan, who’s CEO of Cutting Edge Capital, advises entrepreneurs on the distinctions between different types of investments. She also helps navigate the tricky SEC restrictions aspiring food businesses have to contend with. “It’s ridiculous that we need to hire lawyers to solicit investments from our own community,” Kassan lamented. Her presentation reviewed funding models like Kiva and Kickstarter that avoid securities regulation, as well as co-ops like Mandela Foods and Arizmendi Bakery. Hopefully, all of this changes soon when the Senate actually does something useful for this economy and approves an “Entrepreneur’s Access to Capital” bill.
Kassan also showcased Gather, the critically acclaimed vegetarian restaurant that certainly needs no financial assistance at this point. But several years ago, when owner Ari Derfel was trying to raise $400,000 to launch his business, he used a securities exemption that allows funding from up to 35 small, unaccredited sources. Not only did these non-bank investors give financial assistance, they also created a community support network that helped fill tables during Gather’s infancy.
Elizabeth Ü is the young firebrand director of Finance for Food, and is currently working on a book of the same name. She started with strong words of caution for food businesses in need of capital. “When you are offered money, I can’t stress enough that you should know exactly what strings are attached,” she said. “You don’t want to be forced to sell out your values later” (see Niman Ranch, Ben and Jerry’s, etc.). Ü had many suggestions for funding sources, including small “friends and family” loans and peer-to-peer lending, but she warned against venture capital for most small food startups.
The last speaker was Arno Hesse, co-founder of Slow Money and a trailblazer in the field of sustainable investment. Hesse just launched a crowdfunding platform for food businesses called Credibles. The tagline is “If you eat, you’re an investor” and it comes with a simple premise: Investments are returned in edible credits rather than cash. Some of Credible’s first entrepreneurs are Berkeley-based Gelateria Naia and Amber and Son Farm, a small chicken farm in Sebastopol. Investors in these companies will get their dividends in gelato bars and pasture-raised eggs.
All four speakers showed not only that alternative food and energy economies are within reach, but that they are well on their way.
So, the following is a list of crowdfunding websites that can help social enterprises, sustainable businesses, public shcools or nonprofit organizations get what they need to launch or sustain their programs. Check them out:
33 Needs: Connecting microinvestors & social entrepreneurs
33needs is a recent crowdfunding startup that connects microinvestors with social entrepreneurs who have big ideas in categories such as sustainable food, health, education and the environment. Investors can earn a percentage of revenue in exchange for their support.
AppBackr: Offset app development costs
A specialty crowdfunding site that may be useful to some social enterprises, AppBackr allows Apple developers to get funding upfront for iPhone, iPod and iPad apps in the concept stage by selling the app wholesale to backers, who receive a percentage of the profits for the apps they have purchased. Many app buyers also assist developers with marketing and promoting their apps to ensure that their investment is fully recouped. With a growing number of social enterprises tapping into the explosive apps market to raise awareness and sell products or services, AppBackr may be a useful tool to help offset app development costs, and even gain some extra promotional help.
Buzzbnk: Supporting a wide range of fields
Buzzbnk is a crowdfunding platform especially for social enterprises that allow funders to donate either money or time to support social enterprises working in a wide variety of fields. Though based in the UK, it is open to social ventures operating anywhere in the world. Social enterprises must submit their project proposal to Buzzbnk and the Buzzbnk team will work with the social enterprise to help develop appropriate fundraising targets and benefits or rewards to offer funders.
CauseVox: Fundraising pages for nonprofits
CauseVox offers nonprofit organizations a fully customizable fundraising page that makes collecting money from supporters easy. Supporters can also create their own personalized fundraising pages. Social media integration makes it easy to embed YouTube videos, Flickr slideshows and more.
Kickstarter: Supporting a wealth of creative projects
One of the best-known crowdfunding websites is Kickstarter, which rose to fame after the open source Facebook alternative Diaspora raised more than $200,000 on the site. Kickstarter funds creative projects such as independent films and music albums, books, software, citizen journalism, theatrical productions and more. Project creators are required to offer rewards to donors, such as bonus musical tracks, autographed books, signed prints, free performance tickets or something similar. Although Kickstarter cannot be used to fund social enterprise start-ups, it can be a great source of funding for social enterprises and nonprofits hoping to use creative projects to raise awareness of their cause, as well as for social-minded creative enterprises such as nonprofit theater companies and independent music producers. Other great crowdfunding sites focusing on creative projects include IndieGoGo, RocketHub, UK-based Crowdfunder and Australian-based Pozible.
ChipIn: Embed a widget, raise $
ChipIn is a simple widget that can be posted on blogs, websites and many social media profiles. It allows individuals, private groups, non-profits and others to raise money easily online.
Crowdcube: Equity-based investment community
UK-based Crowdcube bills itself as “the world’s first equity-based crowdfunding community dedicated to business investment.” In exchange for microinvestments of as little as £10, investors can fund worthy enterprises and in exchange gain a share of direct equity in the business. Crowdcube is currently available only to UK-based investors and entrepreneurs who have or can start a UK Limited Company, but hopes to expand to other regions in the future.
Give.fm: Create your own campaign
Give.fm allows nonprofits and individuals to set up a campaign to raise money for causes ranging from local soccer teams to international efforts to fight poverty, hunger, disease, environmental degradation and more. The site works by allowing donors to set up recurring microdonations of as little as 10 cents per day.
Peerbackers: Raise funds from your peers
Peerbackers offers entrepreneurs and nonprofits of all types the opportunity to raise funding for their idea from their friends, family and peers. Rather than receive financial returns or equity, backers receive rewards such as free or discounted versions of the products or services offered by the company.
FirstGiving: Raise funds for your favorite cause
FirstGiving has helped more than 8,000 nonprofit organizations connect with more than 13 million donors and raise more than $1 billion to date, it reports. The site allows nonprofit supporters to create their own fundraising page to raise money for the cause of their choice.
Razoo: Simple, secure tools to raise funds
Razoo is a crowdfunding platform for nonprofits and charities that allows individuals, organizations, corporations and foundations to set up a fundraising page to raise money for their own cause or their other cause of choice. Razoo also allows team campaigns.
Sponsume: Free fundraising platform
Sponsume is a crowdfunding startup, launched in 2010, that allows both creative projects and social enterprises to raise funding on the site. Sponsume is currently free to use, but does plan to start charging fees in the future.
Spot.us: Funding citizen journalism
Spot.us is a one-of-a-kind crowdfunding platform that supports citizen journalists by funding their investigations of specific topics. Spot.us can be a very useful tool for organizations seeking to raise awareness through hard-hitting investigative journalism, community reporting or similar means.
Start Some Good: New kid on the block
Start Some Good is a new crowdfunding startup that launched in February with the goal of connecting social entrepreneurs with crowdfunded venture capital. Start Some Good allows both for-profit and nonprofit social enterprises to post fundraising campaigns to the site. Team members will help review the campaign’s goals and rewards to ensure they’re a good match for Start Some Good’s philosophy.
Leave a comment | tags: Business, crowdfunding, finance, Kassan, Kickstarter, Kiva, Loan, San Francisco, Senate, Venture capital | posted in Capital Markets, Credit, crowdfunding, Economy, Finance, Lending, Marketing, New Social Age, Occupy Wall Street, Politics, Social Finance, Social Lending
One of the followers of this blog today accused me of being a Socialist, apparently because of the cartoon I posted on the blog “Wall Street Bankers Jailed for Destroying the Economy: Zero”. He said I had the right idea, but the wrong target. He said the politicians and economists should all be put in jail instead.
So, to set the record (and him) straight, I need to point out that I am a proud, card-carrying Capitalist and that I also hold membership in the dreaded one percent club. As many of you who are reasoned have figured out through reading my blog, I also have little patience with those who operate using opaque business practices and who play by rules designed to cause injury and harm to the least empowered among us. So, you could call me a Moral Capitalist. An Honest Capitalist. A Compassionate Capitalist. A Hippocratic Corpus Capitalist. But, never a Socialist. It is a depressing sign of a cultural tragedy when people are able to confuse Socialism with Moral Capitalism.
Do I think that the fools who paved the road to economic ruin, and then drove recklessly down that road, causing permanent damage, sickness and destruction to the global economy should pay some price, should suffer some ruin, should be sent to jail? You bet I do.
If Bill Clinton would simply say, “You know, when I beefed up the 1977 Community Reinvestment Act to force mortgage lenders to relax their rules to allow more socially disadvantaged borrowers to qualify for home loans, I think I made a mistake there. When in 1999, I repealed the Glass-Steagall Act, which ensured a complete separation between commercial banks, which accept deposits, and investment banks, which invest and take risks, I was probably wrong.” I would be OK with that. Clinton has done a ton of good since leaving the Presidency, and I think the scales are probably balanced.
Phil Gramm however, the former US senator from Texas, free market advocate with a PhD in economics who fought long and hard for financial deregulation, should be in jail right now. His work, encouraged by Clinton’s administration, allowed the explosive growth of derivatives, including credit swaps. In 2001, he told a Senate debate: “Some people look at sub-prime lending and see evil. I look at sub-prime lending and I see the American dream in action.” It is not that I have a problem with derivatives, or credit swaps. I have a problem with actions that have no consequences. I have problem with Senators that serve themselves instead of the American citizenry.
According to the New York Times, federal records show that from 1989 to 2002 he was the top recipient of campaign contributions from commercial banks and in the top five for donations from Wall Street. At an April 2000 Senate hearing after a visit to New York, he said: “When I am on Wall Street and I realise that that’s the very nerve centre of American capitalism and I realise what capitalism has done for the working people of America, to me that’s a holy place.” Not so holy now, Phil. Nowhere near soon enough, this asshole eventually left Capitol Hill to work for UBS as an investment banker. Of course he did.
Kathleen Corbet ran the largest of the big three credit rating agencies, Standard & Poor’s. The agencies were basically acting as cheerleaders throughout the 2005-2008 period, assigning the top AAA rating to collateralised debt obligations, the often incomprehensible mortgage-backed securities that turned toxic. Investigations by the Securities and Exchange Commission and the New York attorney general among others, have focused on whether the agencies were compromised by earning fees from the very banks that issue the debt they rate. Compromised? Do you think? The reputation of the industry was savaged by a blistering report by the SEC that contained dozens of internal emails that suggested they had betrayed investors’ trust. And Kathleen shouldn’t be in jail? Come on, Man.
How about every senior manager at AIG? AIG had a vast business in credit default swaps and therefore a huge exposure to a residential mortgage crisis. When AIG’s own credit-rating was cut, it faced a liquidity crisis and needed an $85B bail-out from the US government to avoid collapse and avert the crisis its collapse would have caused. It later needed many more billions from the US treasury and the Fed, but that did not stop senior AIG executives taking themselves off for a few lavish trips, including a $444,000 golf and spa retreat in California and an $86,000 hunting expedition to England. “Have you heard of anything more outrageous?” said Elijah Cummings, a Democratic congressman from Maryland. “They were getting their manicures, their facials, pedicures, massages while the American people were footing the bill.” Yes, they should all be in jail.
And, let’s not forget Dick Fuld, Ralph Cioffi and Matthew Tannin. Fuld, a former bond trader known as “the Gorilla”, encouraged risk-taking and yet, had really no idea what securitized products his traders had created. He knew they were probably worthless if the shit ever hit the fan though, and it is because of this cynical knowledge and his unwillingness to stop the flow of these products emanating from his own house, that he should be in jail. Cioffi and Tannin were Bear Stearns bankers recently indicted for fraud over the collapse of two hedge funds last year, which was one of the triggers of the credit crunch. They are accused of lying to investors about the amount of money they were putting into sub-prime, and of quietly withdrawing their own funds when times got tough. Jail.
Angelo Mozilo, the former chief of Country-wide Bank, the nations largest lender of sub-prime loans is also a crook. BofA recently paid billions to settle investigations by various attorney generals for Countrywide’s mis-selling of risky loans to thousands who could not afford them. The company ran a “VIP program” that provided loans on favourable terms to influential people including Christopher Dodd, chairman of the Senate banking committee, the heads of the federal-backed mortgage lenders Fannie Mae and Freddie Mac, and former assistant secretary of state Richard Holbrooke. I know it’s a free country. I know Dodd, Holbrooke, et al, did nothing technically wrong in accepting these loans. I know Mozilo is in within his rights to create loans for people who clearly could not afford to pay them off. But, they all had a moral responsibility to themselves, their souls and to the American people.
I could go on for a long time here. George Bush, Gordon Brown, Greenspan, Stan O’Neal, Jimmy Cayne, Chris Dodd, Chuck Prince, Joe Cassano, Lew Ranieri, etc., etc., but you get my point. There are, in my mind, clear fiduciary and moral principles that these people all violated in the course of their work, and as the direct result of their actions, millions of people are now suffering through what will undoubtedly go down as the worst Global depression in history. This housing market has not hit bottom and will continue to be the Albatross around the neck of this recovery for years to come. It will only get worse, as another 4 million homes fall to foreclosure during the next few months. The government management team at Greece did almost exactly the same thing as the Wall Street Bankers did here (knowingly pushed a corrupt and ruptured system well past its breaking point), and in a few months, the entire Eurozone will begin to pay the price for that. And, then the rest of the world.
But, will anyone be thrown in jail? Not likely. So yes, I do feel more than a bit of empathy for the 99%. When they break the law, they almost always get sent to jail.
Leave a comment | tags: AIG, American International Group, Angelo Mozilo, Bank of America, Bill Clinton, Chris Dodd, Kathleen Corbet, New York, Phil Gramm, UBS, United States | posted in Banking, Capital Markets, Credit, Economy, Finance, Lending, Marketing, New Social Age, Occupy Wall Street, Politics, Social Finance
Quickly shooting up the social media pyramid, image sharing network Pinterest has gained a reputation for largely being a repository for photos of wedding dresses and floral arrangements, due to its huge female user base.
But a budding trend shows that sports teams are hopping aboard the Pinterest bandwagon. Many marketing managers say the network offers new ways to connect with and reward fans and provide different social opportunities. And they insist that Pinterest is not just a flash in the sports marketing pan.
Like most teams, the Celtics are very new to Pinterest, joining just in the past few weeks. A handful of other NBA teams have joined, too, along with some NFL and NHL franchises and a few college and women’s sports teams. More than 20 Major League Baseball teams have joined, although only a couple have active accounts. The Celtics have the largest follower count so far, with over 1,000.
Teams use Pinterest to showcase content from fans, display merchandise, create boards of photos from the past and present, and reflect team-associated culture and lifestyle trends. However, each team we spoke with is still considering the site’s female-centric audience.
“What intrigued us initially was that the platform seemed to be dominated by women. We certainly thought it was a great way to engage with that demographic and offer a different type of content than can be found on Facebook, Twitter, and Google+,” wrote Nilay Shah, director of digital media for the New York Giants, in an email.
Several teams feature boards solely to display women’s apparel or team-themed recipes, but Shah and others said they see Pinterest as more than just a tool for reaching female fans. “We’re looking at it as if it’s predominantly for women, but we’re not treating it as if it’s only for women,” says Stringer.
The Giants have a section dedicated to their supporters’ hearty tailgating culture. The Portland Trail Blazers have boards that collect team-themed wallpapers and photos of pets in Blazers gear. Most teams have boards displaying memorabilia and clothing for sale elsewhere online.
Because Pinterest isn’t a dialogue-heavy network and allows users to follow either a brand as a whole or just specific boards, teams are able to focus on particular niches of fandom. They’re also able to share things that wouldn’t be as feasible on Facebook or Twitter.
Melissa Marchionna, new media coordinator for the NHL’s Pittsburgh Penguins, said constantly tweeting or sharing fan artwork on Facebook would likely become annoying to users. But a Pinterest board dedicated to Pens-inspired paintings and drawings, she said, “is a great opportunity to give back to our passionate, talented fans and showcase their work.”
In college sports, the University of Washington uses Pinterest to flaunt what it offers prospective student athletes. Boards called “Best 4 Years of Your Life” and “Seatown Swag” show off student culture and the university’s prime location. Assistant athletic director Carter Henderson said the school created those boards in part because they noticed that collections themed around travel destinations were already popular on the network.
Expect Pinterest’s influence to continue growing. Multiple team representatives say they plan to promote their boards more on official websites and other networks as soon as this weekend. A Golden State Warriors representative says that the franchise is investigating Pinterest strategies in anticipation of joining. Similar scenes are likely playing out in the marketing offices of several different leagues.
Dan Harbison, who directs interactive media and marketing for the Trail Blazers says he’s reminded of a different social network that is now ubiquitous in the sports world. “In ’07 we were the first team to get on Twitter, and this feels similar to that,” he says. “Success on Twitter didn’t happen for about two years — follower counts weren’t in the tens of thousands at all until then. We’re stil in the very baby stages of Pinterest, but I definitely see it being a different network than can gain some pretty good steam in sports.”
Leave a comment | tags: Boston Celtics, Facebook, Golden State Warriors, New York Giants, Peter Stringer, Pinterest, Portland Trail Blazers, Twitter | posted in Marketing, New Social Age, Social Media
Pinterest hasn’t just become a significant source of referral traffic for retailers; it’s also becoming a top traffic driver for women’s lifestyle, home decor and cooking magazines, some of which are seeing bigger referral numbers from the image-collecting service than from major portals like Facebook andYahoo.
Beginning this summer, Pinterest became the top social referrer for marthastewartweddings.com andmarthastewart.com, sending more traffic to both properties than Facebook and Twitter combined. Pinterest is on track to become the second highest traffic driver (after Google) to Cooking Light‘s website, up 6,000% from just six months ago. The social bookmarking site already drives three times the amount of traffic to Cooking Light compared to Facebook.
Elsewhere, Pinterest is the fourth largest source of traffic for Country Living, up 150% from August to the end of January, and accounts for 3% of all referrals. It was the ninth largest traffic source for both Elle Decor andHouse Beautiful last month, both of which have seen triple-digit percentage increases in referrals over the last six months, and was among the top 10 referral sites for Self magazine.
In most cases, the traffic began organically. Style, home decor, weddings and food are among the most popular pinning categories among the site’s more than 10 million registered users, the majority of whom are women. Pinterest users turned to the websites of lifestyle magazines early on for material, and many publishers moved quickly to harness Pinterest’s potential as a traffic driver by creating their own branded accounts.
Multiple editors contribute to Country Living’s Pinterest page.
Instead of assigning the account to a community or social media manager, Country Living has divvied up its boards among editors. The crafts editor, for instance, posts to the crafts board; the photo editor posts to aboard of inspiring images; and three market editors manage the shopping, style, and Etsy boards. An editors’ faves board contains repins from staffers’ personal boards. Much of the content is derived from Country Living‘s own evergreen and season-specific material, but content is also pinned and repinned from favorite bloggers, designers, stylemakers and photographers, Allison Mezzafonte, director of Hearst Digital Media’s Shelter Network, tells us.
“Creating Pinterest pages [for our magazines] allows us to share what we see around the web, and not just our own content. [Our audience] wants to know what we see, what we like, and what’s inspiring us beyond the beautiful images seen in the pages of our magazines,” Mezzafonte explains.
To build awareness of Country Living‘s Pinterest presence, the magazine also cross-posts some of its pins to Facebook and Twitter. Mezzafonte also monitors Country Living’s source page to track, Like and comment on what is being pinned from the site. “I think it makes [users] happy to know that we’re paying attention to what they’re pinning and what they like,” Mezzafonte says. “It’s also a very visual way for me, as the web editor, to see what people are looking at on our site… [To see] the images, projects and recipes that resonate most with our readers.”
It’s not just legacy print publications that are reaping the Pinterest boom, however. Pinterest recently passed Yahoo to become the number-four referral source to MyRecipes.com, accounting for roughly 6% of traffic in January. Referrals are up 246% from October, and up a whopping 2500% from July. A spokesperson for the MyRecipes.com noted that the site has its own frequently updated brand pages, but that the majority of the traffic is coming from users who pin recipes directly from the sites, and from the viral activity that happens organically on Pinterest.
Martha Stewart Weddings has added pin buttons to its site.
In some cases, publishers are also adding pin buttons to their sites, reminding readers to save their content to Pinterest. Martha Stewart Weddings recently added a pin button to its social toolbar, in between the Facebook Like and Google +1 buttons.
While publishers and retailers are both reaping the rewards of traffic increases, it’s still not clear whether they’ll be able to monetize that traffic further. Can magazines turn Pinterest referrals into subscribers? Can retailers turn Pinterest users into customers? The platform certainly has the potential to do both, meaning that the network could become even more central to their marketing efforts than it is at present. I think the better question should be, “Can the magazines and retailers reinvent themselves to capture this traffic, and forget about monetizing it until they have loyal followers?” That’s the way the social web has always worked.