Starbuck’s CEO Doubles Down on Gay-Marriage Support

Starbucks CEO Howard Schultz recently announced to shareholders that they should sell stake in the coffee-giant if they don’t appreciate or respect his strong support for gay marriage.

Howard Schultz, the outspoken CEO of coffee empire Starbucks firmly defended his company’s support of gay marriage last week at a shareholder meeting.

In response to a contest from a shareholder that the company’s support of gay marriage was damaging the company’s stock price, Schultz calmly explained that it is not about the profit margins, but about “respecting diversity.”

Last year, Starbucks openly supported Washington state’s referendum that legalized gay marriage. As a result, the National Organization for Marriage launched a protest of the coffee giant. During the annual shareholder’s meeting in Seattle last week, shareholder Tom Strobhar voiced his opinion, suggesting that the boycott was affecting the company’s stock price, “In the first quarter following the boycott, our earnings and our sales were disappointing,” he expressed.

Schultz fired back at the shareholder, claiming that Starbucks’ endorsement of marriage equality was not bad for business, “If you feel that you can get a higher return than the 38 pe4rcent you got last year, it is a free country. You have the right to sell your shares and buy shares in another company. Thank you very much,” Schultz calmly stated, to a standing ovation from the audience.

Schultz; however was quick to underscore that the decision to support gay marriage did not revolve around economics. “We are making the decision to support gay marriage through the lens of our people. We employ over 200,000 people throughout this world, and we want to embrace diversity,” Schultz added.

Starbucks, which last year operated nearly 18,000 stores in 60 countries, endorsed the Washington state bill to legalize same-sex marriage, and released a statement saying the company “deeply dedicated to embracing diversity.” The bill eventually became affirmed as a law.

In his five years as CEO of Starbucks, Schultz has taken on a role as a political activist, launching campaigns calling for corporate social responsibility and political finance reform.

Source: Whitehouse.gov

Power Moves: Warren Buffet on Track to Become Top Goldman Shareholder

Warren Buffet’s Berkshire Hathaway is set to become a long-term investor in Goldman Sachs, as Buffet is well on his way to becoming one of Goldman Sachs’ 10 largest shareholders.

Goldman announced on Tuesday that Buffet’s company Berkshire Hathaway would receive a large chunk of the investment bank’s stock this October. The maneuver marks the outcome of Buffet’s $5 billion emergency cash infusion into the investment giant during the pinnacle of the financial crisis in 2008, when the vast majority of Wall Street firms were frozen in shock after the bankruptcy of Lehman Brothers.

During the peak of the financial crisis, Buffet procured preferred shares of Goldman Sachs worth $5 billion that provided a dividend of $500 million per year. Buffet also received warrants to purchase 43 million shares of Goldman stock for $115 per share by October of this year. If Buffet were to redeem his eventual Goldman shares at the company’s current stock price of roughly $146, his stake would balloon to $6.3 billion, for a healthy profit of $1.3 billion.

However, Buffet and Goldman announced on Tuesday that they had revised the options so that Berkshire would receive shares equal in value to that profit. At Goldman’s current stock price, which would mean an additional 9 million shares would be transferred to Berkshire. The added 9 million shares would be enough to rank Buffet as Goldman’s ninth largest shareholder in the investment bank.

“Berkshire plans to hold a significant state in Goldman Sachs, a firm that I conducted my first business transaction with more than 50 years ago,” said Buffet in a statement.

Goldman Sachs repurchased its preferred shares from Warrant Buffet in 2011; however, Berkshire continued to hold the warrants from its original investment. Shares of Goldman dropped a tad lower on Tuesday, while Berkshire was up roughly 1 percent.

Moving Average

A moving average is a tool used by investors in the stock market, and the purchase and sale of other financial instruments, that track trends and momentum in the market. A moving average is created by taking a set number of data points, representing the closing price of a particular stock on a particular day, and averaging them to create vector showing the way the financial instrument has traded over a period of time. For example, if you wanted to create a moving average for a particular stock over the past month you would take the closing price of the stock for the last 30 days; add them together; and divide by 30. This will give you the moving average.

If you were to continue to add to this average over a course of time the data points would become more and more diluted and tend to make the average meaningless. The moving average corrects this by deleting the last data point in the sequence for every addition to the moving average. For example, if you have a 30 day moving average, on the second day of your moving average you will delete day 1 as you add day 31. In how the definition of “moving” average comes about.

An investor can create a moving average for any amount of time he, or she, wishes. The goal in creating different moving averages of different lengths is to track short and long term trending of a particular financial instrument. Moving averages at or below 20 days are categorized as short term moving averages. Those between 20 and 100 days are considered to be medium term where above 100 are long term. Depending on the type of trading you are involved in you will want to design your moving average in a way that will be most beneficial to you. A day trader may want a moving average that recomputes every 50 minutes where someone looking at blue chip stocks may want to look at trends over a 300 day period.

There are two main types of moving averages. There is the simple moving average, SMA, and the exponential moving average, EMA. The simple moving average is prevalent amongst beginning investors in that it is, by its name, simple to compute. The Simple Moving Average is computed by weighing each data point equally. In contrast, the Exponential Moving Average is computed by weighing the most recent data points more heavily than those from farther in the past. The Exponential Moving Average is considered to be more reliable and better reflects current market trends.

Workforce Investment Act

WORKFORCE INVESTMENT ACT TEXT

What is the Workforce Investment Act of 1998?

The Workforce Investment Act of 1998 was passed as Public Law 105-220 by the 105th Congress. It preamble states:

To consolidate, coordinate, and improve employment, training, literacy, and vocational rehabilitation programs in the United States, and for other purposes.

As stated, the intention of this law was to replace existing federal job training schemes with standardized workforce development legislation that works in partnership with small businesses to improve worker education and advancement. The funds are allocated on a state-local level with local areas receiving 85% of funds and the remainder funding state-wide programs.

Who gets covered under the Workforce Reinvestment Act?

Adults and Dislocated Worker get priority status under the Workforce Reinvestment Act to enable them to find or keep their jobs by developing critical skills that increase their employment value and long term prospects. Vocational training is a major component of this initiative by targeting adults that lack a post-secondary education and the even smaller number of “basic skills deficient” adults. Adults living on public assistance or low incomes receive priority for educational and training services.

Low income youth are also target by this Act and obtain the skills and training they need to enter the workplace. There is a mandatory allocation of 30% of funds to help youth 14 – 21 not currently attending school. Services provided to youth include tutoring, internship and skills training.

Sources:

https://www.doleta.gov/usworkforce/wia/Runningtext.cfm

https://www.doleta.gov/regs/statutes/wialaw.txt

Workforce Investment Act Text

Title I – Workforce Investment Systems

This section defines the terms to be used throughout the bill and contains key definitions such as “basic skills deficient” to indentify individuals below and 8th grade standard of reading, math and writing skills. There are 53 definitions that qualify terms used to refer to the specific circumstances of workers that require training and the organizations that may train them. The key provision of the Workforce Investment Act is that the training and administration happen on a local level, so as to better indentify and understand key areas were the workers are skill deficient.

Chapter 1 provides for the establishment of State Workforce Investment Boards, created by the governors of each state to direct policy related to the Workforce Investment Act. The text stipulates that the board represent a variety of economic interests and areas of the state. The State Workforce Invest Boards are responsible for assessing the viability and success of the program and preparing annual assessments on the progress of employee training. These reports must identify the needs of the state in terms of skills and opportunities for workers. The State must also develop procedures for the disbursement of federal funds and work in consultation with local officials. Additionally the state has the right to administer drug tests to program participants and sanction offenders as necessary.

Chapter 2 deals with Local Investment Areas and how state authorities, with consultation from the State board and local officials might designate these areas. The text of the law suggests basing these areas around educational institutions, areas with high demand for skilled labor and accessibility to the most amounts of potential workers. This area is subject to performance evaluation so as to maximize the funding allocated to training workers. Local Investment Areas may encompass the entire state if that state is “small” as defined in the text of this bill.

There must be an additional Local Workforce Investment Board to administer to the Local Investment Area with the funding allocated by the State Board. As stipulated in Sec. 117, this board must include local business leaders, executives and educational officials, representatives of labor organizations and elected officials. This board is also tasked with oversight responsibility to ensure the maximum efficiency is attained in the disbursal of funds to various training programs. These boards must also develop a “local plan” that describes the:

– Workforce investment needs of businesses, jobseekers, and workers in the local area

– The current and projected employment opportunities in the local area

– The job skills necessary to obtain such employment opportunities

The report must also include assessments of services available to displaced and unskilled workers and the success of community youth programs.

Chapter 3 and 4 provide for the consolidation of services into a “one-stop“option for convenience and administrative efficiency. It sets out regulations that define organization eligible to provide job training, youth activities and other organizations eligible for workforce investment funds. For example, provisions on youth activities recommend that eligible organizations provide training, mentoring and emotional support. Program elements should include tutoring, summer employment, leadership development and counseling. The identification of these elements are key for the board to decide on disbursing funding and the law goes into great detail about what organizations involved in workforce investment must achieve.

Title I also provides for national job programs such as Job Cops, Migrant and Seasonal Worker skills development and specialized programs for Native Americans. There are provisions to provide technical assistance to individual states and to initiate pilot programs for future use.

Title II – Adult Education and Literacy

This part of the Workforce Reinvestment Act is a joint governmental initiative to increase literacy amongst adults so that they may improve their lives and the education potential of their children.

Individuals covered by Title II are 16 or older, are not enrolled in secondary school, lack the English proficiency or necessary educational skills to function as effective members of society. Title II provides funding for organizations that work to increase adult literacy and a parent-child educational relationship. Grants are disbursed on the basis of a number of eligibility requirements with some restrictions on geographic location and population served.

There is an accountability system to measure if participating organizations are performing up to standard and making a meaningful impact on adult illiteracy. Like Title I, the local and state governments must produce plans for the disbursement of funds and ensure that the program operates as intended. Local administration is key to Title II and educational institutions apply for grants on the local level.

Remaining Sections

The remaining three titles provide for the establishment of national statistics to track the progress of the Workforce Reinvestment Act and provide incentives for states to meet federal standards for program success. There are provisions for a national Job Corps that aims to place qualified in employment opportunities that provide for long term skills growth. Lastly, emergency fund are set up to deal with disaster areas that may need to administer to dislocated workers in times of crisis.

Strengths of the Workforce Reinvestment Act

The primary strength of the Workforce Reinvestment Act is the local synergy of business, education, labor and political leaders to develop strategies to administer federal funding. An appropriate amount of regulation and administration is in place to prevent waste and abuse and the annual reporting on the progress and status of funds spent by the program enable the federal government to keep track of the program budget. Local determination helps tailor each program uniquely to meet local labor market needs that in turn benefits the long term prospects of local businesses and industry.

The “one stop” concept is also a useful administrative practice and encourages administrative efficiency in the disbursement of funds and relevant services to unskilled workers. The literacy programs of Title II represent long term investments in educational capital by increasing the proficiency of adults, with hopes that this has a residual effect on the literacy and education of their children.

Dodd-Frank Act

DODD-FRANK ACT TEXT

What is the Dodd-Frank Act?

The Dodd-Frank Wall Street Reform and Consumer Protection Act was a bill that was drafted by Representatives Barney Frank and Chris Dodd. It was passed by the Democratic controlled Congress and signed into law by President Barack Obama in 2010.

Background

The Dodd-Frank Wall Street Reform and Consumer Protection Act came about in response to the financial collapse of 2007 that led to, what is commonly known as, the Great Recession. The Great Recession was caused in large part because of two factors. The first being the de-regulation of the banking industry and the second being the sub-prime mortgage crisis and the high risk associated with mortgage backed securities.

A report documenting the financial collapse found that the financial meltdown was the result of a number of factors including: high risk, complex financial products; undisclosed conflicts of interest; and the failure of regulators, the credit rating agencies, and the market itself to monitor Wall Street. The failure of credit reporting agencies to monitor the mortgage-backed securities and the 1999 of the Glass-Steagall Act of 1933 effectively removed the separation that previously existed between Wall Street investment banks and depository banks.

THE GLASS STEAGELL ACT OF 1933 & ITS REPEAL

The Glass Steagall Act of 1933 was promulgated as a reaction to the Great Depression. The Act created a separation of bank types and prevented the banking industry from dealing in high risk ventures.

In 1999, in a Republican controlled Congress, the act was repealed. The reasons for its repeal were to stimulate growth in the banking industry. The arguments included the fact that other nations did not regulate their banking industry in this manner and, as such, American banking institutions were losing market shares.

A direct result of the de-regulation of the banking industry was that institutions, such as Citi-Group, were permitted to underwrite and trade mortgage-backed securities.

MORTGAGE BACKED SECURITIES

Mortgage backed securities involved high-risk investment in real property. Mortgages were taken by banks and the banks subsequently pooled the mortgages into the form of securities. The issue with this was that there was no oversight of the matter; due to the repeal of the Glass Steagall Act of 1933. Banks were quick to compete in this newly established market and as such they were involved in riskier mortgages. Consumers, who would not otherwise purchase homes, were able to do so under sub-prime mortgages. The banks did not evaluate whom they should be giving mortgages too. Sub-prime mortgages gave people the impression that they were paying a small interest payment on their mortgage only to realize later that the interest rate would skyrocket after a certain period of time. As a result, many people began defaulting on their homes; often abandoning them in the middle of the night.

Result of the financial collapse

Over 100 mortgage lenders went bankrupt during 2007 and 2008. Concerns that investment bank Bear Sterns would collapse in March 2008 resulted in a sale of the company to J.P. Morgan Chase. Other banks that went bankrupt do to the financial collapse included Lehman Brothers, Merrril Lynch, Washington Mutual, Wachovia and AIG. The Federal government also took control of the, lending institutions, Freddie Mac and Fannie May

As a result the Federal Government issued a bank bailout. In 2008 the United States government approved a $700 billion to buy troubled mortgage-backed securities in the hope of reining in a possible global depression. Included in the bailout, known as TARP, the federal government loaned billions of dollars to banking industries in order to prevent the collapse of the banking industry.

The Dodd-Frank Wall Street Reform and Consumer Protection Act

The Dodd-Frank Wall Street Reform and Consumer Protection Act was passed in response to this crisis. The Act's goal was to accomplish 3 things: regulate the banking industry, heighten consumer protection against banking and credit card institutions, and institute whistle blowing policies.

The oversight of the banking industry was rationalized based on the idea that the banking industry has high incentives to invest in high risk ventures that go against the best interests of the public. Part of the Dodd-Frank Act was to eliminate the ability of the federal government to bailout the banking institutions. The rationale was that if the banking industry knows it will be rescued by the federal government then they are more inclined to invest in high risk ventures.

The Frank-Dodd Act went further to regulate banking industry. The Act created many new agencies and strengthened others. The Frank-Dodd Act included a number of consumer protection rules and created a consumer protection bureau that handled oversight of the banking and credit card industries. Its goal is to hold credit card companies accountable for usurious actions. Part of the reforms made under the name of consumer protection include the disclosure of information to the customer, including the impact of interest rates on the balance of a credit card and the curtailing of predatory overdraft fees in the banking industry.

The Frank-Dodd Act also enhance whistle blowing incentives to wall street employees. Under the Frank-Dodd Act individuals who blew the whistle on illegal and fraudulent behaviors on wall street could be subject to as much as 30% of total penalties against a firm if the allegations lead to a securities fraud conviction.

In all, the Frank-Dodd Financial Recovery and Consumer Protection Act categorized into sixteen titles and by one law firm's count, it requires that regulators create 243 rules, conduct 67 studies, and issue 22 periodic reports.

To read the text of the Dodd-Frank Financial Reform and Consumer Protection Act pleas go to

https://docs.house.gov/rules/finserv/111_hr4173_finsrvcr.pdf

Bank Secrecy Act

BANK SECRECY ACT TEXT

The Full Facts on the Bank Secrecy Act of 1970

The Bank Secrecy Act of 1970, also called the Currency and Foreign Transactions Reporting Act or just the BSA, is an act that requires all financial institutions within the United States to assist all United States government agencies in detecting and preventing money laundering that may occur.

The primary purpose of the Bank Secrecy Act, besides making money laundering a more difficult task to propagate, is to act as a preventative measure against banks somehow becoming intermediaries unknowingly in illicit activity. The Bank Secrecy Act, anti-money laundering sections requires businesses to maintain records while also filing reports that have a high degree of practicality in when dealing with tax, regulatory, and criminal matters. The requested documents which are filed by institutions under the Bank Secrecy Act compliance requirements are strongly used by both international and domestic law enforcement agencies to detect, deter, and identify money laundering from occurring whether the activity is in continuance of terrorism, tax evasion, criminal enterprise, or other illegal activity.

The Bank Secrecy Act was passed originally in 1970 by the United States Congress. Since then it has been amended many times, for example to include the provisions found in title III which is found in the USA Patriot Act.

The Provisions of the Bank Secrecy Act of 1970

In order for the Bank Secrecy Act regulations and the Bank Secrecy Act training to help prevent money laundering in the financial industry, the Act requires all financial institution to maintain detailed records regarding cash purchases as well as file reports regarding cash purchase of negotiable instruments that are no less than $10,000. Any purchases or transactions that are $10,000 or more from one customer must be reported to the Financial Crimes Enforcement Network Department of the Treasury. More specifically, these transactions are reported if one is above the minimum limit, or multiple related transactions are greater than or equal to $10,000 and happen within a 24-hour period.

These transactions must also be done in cash, meaning they are in a currency (both bills and coins) made from either the United States or other countries, or if they are a monetary instrument defined in the Bank Secrecy Act, such as bank drafts, cashier’s checks, money orders, or traveler’s checks. Personal checks do not apply to this definition of cash.

Furthermore, under the Bank Secrecy Act, these companies are also obligated to report any suspicious activity that may imply tax evasion, money laundering, or any other criminal activities on the part of a company. Because of the Bank Secrecy Act, many banks have ceased selling negotiable instruments the instruments are bought with cash, and instead require the purchase to be taken out from an account at the given institution.

An activity is thought to be suspicious if the transaction involves $5,000 or more in assets or funds that the financial institution thinks may possibly indicate a profit derived from an illegal activity or transacted with the intent of hiding an illegal activity. Besides traditional financial institutions like brokers or banks, there are many other institutions that are required to report any activity that is suspicious under the Bank Secrecy Act of 1970, such as casinos, businesses that redeem or issue money orders, and dealers who deal gemstones or precious metals.

Affected Transactions under the Bank Secrecy Act of 1970

There are three major transactions that are affected under the Bank Secrecy Act regulations and the Bank Secrecy Act training.

Currency Transaction Report

A currency transaction report, or CTR, is a report that must show all cash transactions that exceeded $10,000 within the same business day. The value or amount that exceeds $10,000 should be either in one single transaction or in a combination of related cash transactions. These currency transaction reports are filed with the records of the Internal Revenue Service.

Monetary Instrument Log

The monetary instrument log must explicitly state the cash purchases involved for monetary instruments, for example cashier’s checks, travelers checks, and money orders, that have a value totaling inclusively between $3,000 to $10,000. A Monetary instrument log form is needed to be maintained on the record at the financial institution, and should be produced at the request of an examiner or audit to verify the institution’s compliance with the Bank Secrecy Act regulations and the Bank Secrecy Act training. A financial institution must also maintain this log for at least 5 years.

Suspicious Activity Report

The suspicious activity report must report any transaction made with cash where the customer appears to be trying to make an active effort to avoid the reporting requirements placed by the Bank Secrecy Act regulations and the Bank Secrecy Act training by not filing any currency transaction reports or monetary instrument logs. An example of when a suspicious activity report must be used if the actions of a customer suggest that he or she is laundering money or in some other way violating a federal criminal law while committing wire transfer fraud, check fraud or other mysterious disappearances. A bank must not let a customer know that a suspicious activity report is being filed against them. These suspicious activity reports are filed by the banks with the Financial Crimes Enforcement Network.

The Effect of Bank Secrecy Act of 1970 on United States Citizens

Currency transaction reports include the bank account number, name, social security number, and address of the individual. The suspicious activity reports, which are required by the Bank Secrecy Act regulations and the Bank Secrecy Act training when transactions suggest suspicious behavior that try to elude currency transaction reports (or other types of suspicious behavior), include a bit more detailed information and typically contain efforts of covert investigation on behalf of the financial institution in order to gauge the nature or validity of the transactions.

One single currency transaction report filed for the account of a client is usually not concerning to the law enforcement authorities, but multiple currency transaction reports that come from different institutions or a suspicious activity report can suggest that the activity might be suspicious.

Under the Bank Secrecy Act regulations and the Bank Secrecy Act training, a financial institution cannot inform a consumer or business that a suspicious activity report is being filed against them. In addition, all the reports that are mandated by the Bank Secrecy Act are exempt from having to be disclosed according to the provisions found in the Freedom of Information Act.

Businesses that primarily deal in cash, such as restaurants or bars, can be exempted from the Bank Secrecy Act regulations and the Bank Secrecy Act training’s policy of having their withdrawals and deposits reported on currency transaction reports, although the exemption is hardly ever granted. Instead, many banks have computer systems that can retain information on currency transaction reports and allow duplicate currency transaction reports to be easily created.

Individual filing requirements under the Bank Secrecy Act of 1970

Under the Bank Secrecy Act regulations and the Bank Secrecy Act training, a United States citizen must file a FBAR if the individual has had a financial authority over, or interest in a foreign bank account that at any point in a year has an aggregate value of $10,000. Furthermore, a citizen must report this account on the Schedule B portion of the Internal Revenue Service’s Form 1040. The required FBAR should be separately filed with the United States Treasury before June 30.