Why would Federal Prosecutors open a can opf worms that is directly connected to GW Bush's ex-partner, Richard Rainwater of Columbia Homecare Group, (Dallas Ft Worth Homecare) and an exctension of HCA. The crooks in Nashville!
Just look at what they dumped into Medshares, Inc in TN financed by NCFE...
ALL THE LOSERS from the PUBLICLY TRADED companies y of HCA and IHS!!!
National Century fraud case produces 1st acquittal
Prosecutors' case fell short, juror says
Thursday, December 18, 2008 3:29 AM
By Jodi Andes
THE COLUMBUS DISPATCH
The "not guilty" verdicts that came in federal court yesterday were not so much a vindication of the last National Century Financial Enterprises executive to stand trial, a juror said.
Instead, they were more a belief that federal prosecutors had not done their job, the juror said after he and his fellow jurors acquitted James K. Happ of five counts after 12 hours of deliberation.
"He very well may have been guilty. A lot of us thought he was," said the juror who wouldn't give his name. "But if he was, you gotta have the evidence."
Happ, 48, of Dublin, was tried on conspiracy, money-laundering conspiracy and three counts of wire fraud in connection with money advances that he authorized while in charge of purchasing National Century's accounts receivable.
He was the only one of 11 former National Century executives charged in the scam who walked out of the courtroom with a not-guilty verdict.
For Happ, the acquittal was vindication.
"Praise God. He answers prayers," Happ said. "I never believed I had any intent to defraud anyone."
But there was no doubt that fraud had occurred at National Century, the juror said.
The Dublin-based company bought accounts receivable from health-care providers and collected the money owed on them for a fee. Money generated from the sale of bonds to investors provided the funding.
However, investors didn't know that National Century also gave providers millions of dollars without purchasing accounts receivable to back up the loans. That's because a separate set of books hid that and the company's shrinking reserve accounts.
Investors lost $1.9 billion when National Century collapsed in 2002. It's considered to be the largest fraud case by a private company in U.S. history.
Witnesses testified that Happ was part of that deceit. But the witnesses were "tainted," the juror said.
The key witness, Sherry Gibson, had falsified National Century's books herself. Frank Magliochetti, who testified that Happ boasted he could never be prosecuted because he didn't sign anything, bragged about his own ties to organized crime.
Prosecutors should have brought in more witnesses and greater proof to show that Happ had personally been deceitful, the juror said.
Happ's attorneys admitted that he advanced money to health-care companies. But that's simply how National Century did business, his attorneys said, and auditors and banks oversaw company accounts.
They also argued that the advances had been made for eight years before Happ joined the company in 2000.
After leaving National Century, Happ went to work for Tender Loving Care, a client of National Century's that had received close to $100 million in unmerited advances.
TLC later filed for bankruptcy. But Happ, TLC's chief executive officer, oversaw the sale of company assets to repay National Century, the defense noted.
That did not make things right, Assistant U.S. Attorney Doug Squires told the jury.
"If someone takes your wallet and it later is recovered, does that mean that no crime is committed? No, it doesn't," Squires said.
After the verdict, the prosecutorial team of Squires, N. Nathan Dimock and Nicole Sprinzen declined to comment through the office spokesman, Fred Alverson.
"We appreciate the effort of all the (FBI and Internal Revenue Service) agents in preparation of the evidence," Alverson said. "And we respect the jury's decision."
The case was tried in U.S. District Court in Columbus before Judge Algenon L. Marbley.
jandes@dispatch.com
Showing posts with label Federal Regulation. Show all posts
Showing posts with label Federal Regulation. Show all posts
Saturday, January 3, 2009
Thursday, October 23, 2008
"...nation's largest private fraud case ..."
"...chief executive's criminal culpability in the nation's largest private fraud case depended..."
Maybe a look into the 'private' fraudulent financing company will reveal all the PUBLICLY TRADED companies 'DUMPING' their losing entities into NCFE!
Hint: James K Happ
Attorneys battle it out over Poulsen tapes
Alleged bribery of National Century exec at issue
Thursday, October 23, 2008 3:17 AM
By Jodi Andes
THE COLUMBUS DISPATCH
Lance K. Poulsen's recorded conversations were offered as evidence yesterday in his trial in connection with the collapse of his company, National Century Financial Enterprises.
But whether they proved the former chief executive's criminal culpability in the nation's largest private fraud case depended on who was asking the questions.
Peter Anderson, one of Poulsen's defense attorneys, said that the tapes showed Poulsen wasn't trying to bribe Sherry Gibson, a former vice president of the health-care lender, to forget certain facts when testifying against Poulsen.
She's the government's key witness in the fraud case.
Prosecutor Leo Wise used his questioning of FBI Special Agent Jeff Williams to try to show otherwise.
Wise said Poulsen's use of coded language, evident on tapes made by the FBI, along with the use of a middle man in conversations with Gibson and attempts to use phone lines thought to be secure show that Poulsen was trying to conceal the bribe.
Poulsen is being tried in U.S. District Court in Columbus on fraud charges tied to the company's implosion. When Dublin-based National Century filed for bankruptcy in November 2002, investors lost nearly $2 billion.
Poulsen's taped conversations with his friend Karl A. Demmler show that Poulsen believed Gibson got bad advice from her attorney when he advised her to plead guilty in connection with her role in the company's collapse, Anderson said.
In addition, Poulsen never met with Gibson or gave her any money, Anderson noted. Poulsen could be heard on the tape telling Demmler that he didn't want Gibson to lie, the defense attorney pointed out.
Poulsen's own taped statements show he did want Gibson to forget how she plugged investor reports with false numbers, the FBI agent testified.
In return, the National Century founder said he would also loan her money, "but of course that loan never needs to be repaid," Williams said, quoting Poulsen.
Furthermore, Poulsen did tell his attorney that he wanted to help Gibson find a new lawyer, but it's clear Poulsen didn't tell his own attorney everything he was offering to do for Gibson, Williams said.
"Only the three amigos know about the three amigos," Poulsen said on the tapes referring to himself, Demmler and Gibson.
Both Poulsen and Demmler were convicted in March of witness tampering and obstruction of justice in connection with their contacts with Gibson. Poulsen was sentenced to 10 years in prison; Demmler has yet to be sentenced.
The federal prosecution team of Wise, Doug Squires and Kathleen McGovern are expected to rest their case today after presenting one more witness.
jandes@dispatch.com
Maybe a look into the 'private' fraudulent financing company will reveal all the PUBLICLY TRADED companies 'DUMPING' their losing entities into NCFE!
Hint: James K Happ
Attorneys battle it out over Poulsen tapes
Alleged bribery of National Century exec at issue
Thursday, October 23, 2008 3:17 AM
By Jodi Andes
THE COLUMBUS DISPATCH
Lance K. Poulsen's recorded conversations were offered as evidence yesterday in his trial in connection with the collapse of his company, National Century Financial Enterprises.
But whether they proved the former chief executive's criminal culpability in the nation's largest private fraud case depended on who was asking the questions.
Peter Anderson, one of Poulsen's defense attorneys, said that the tapes showed Poulsen wasn't trying to bribe Sherry Gibson, a former vice president of the health-care lender, to forget certain facts when testifying against Poulsen.
She's the government's key witness in the fraud case.
Prosecutor Leo Wise used his questioning of FBI Special Agent Jeff Williams to try to show otherwise.
Wise said Poulsen's use of coded language, evident on tapes made by the FBI, along with the use of a middle man in conversations with Gibson and attempts to use phone lines thought to be secure show that Poulsen was trying to conceal the bribe.
Poulsen is being tried in U.S. District Court in Columbus on fraud charges tied to the company's implosion. When Dublin-based National Century filed for bankruptcy in November 2002, investors lost nearly $2 billion.
Poulsen's taped conversations with his friend Karl A. Demmler show that Poulsen believed Gibson got bad advice from her attorney when he advised her to plead guilty in connection with her role in the company's collapse, Anderson said.
In addition, Poulsen never met with Gibson or gave her any money, Anderson noted. Poulsen could be heard on the tape telling Demmler that he didn't want Gibson to lie, the defense attorney pointed out.
Poulsen's own taped statements show he did want Gibson to forget how she plugged investor reports with false numbers, the FBI agent testified.
In return, the National Century founder said he would also loan her money, "but of course that loan never needs to be repaid," Williams said, quoting Poulsen.
Furthermore, Poulsen did tell his attorney that he wanted to help Gibson find a new lawyer, but it's clear Poulsen didn't tell his own attorney everything he was offering to do for Gibson, Williams said.
"Only the three amigos know about the three amigos," Poulsen said on the tapes referring to himself, Demmler and Gibson.
Both Poulsen and Demmler were convicted in March of witness tampering and obstruction of justice in connection with their contacts with Gibson. Poulsen was sentenced to 10 years in prison; Demmler has yet to be sentenced.
The federal prosecution team of Wise, Doug Squires and Kathleen McGovern are expected to rest their case today after presenting one more witness.
jandes@dispatch.com
Monday, September 29, 2008
Background of the Banks’ Role in the Enron Debacle
Although three banks (and others) have settled with the victims for $7.2 billion, several huge banks still named in this suit have not paid a penny to the victims of the fraud.
As the Court’s dissenting Judge summarized, the ruling “immunizes a broad array of undeniably fraudulent conduct from civil liability . . . effectively giving secondary actors license to scheme with impunity, as long as they keep quiet.”
"...testified that many of the banks’ transactions were contrived, deceptive deals done solely to create the false appearance of profits and cash flow. "
Merrill Lynch purchased Nigerian barges from Enron on the last day of 1999 only because Enron secretly promised to buy the barges back within six months, guaranteeing Merrill Lynch a profit of more than 20%. As a result of this fraud, Merrill Lynch ultimately paid $80 million to settle with the SEC.
Where did that $80million go?
Barclays entered into several sham transactions with Enron,
Credit Suisse First Boston engaged in “pre-pay” transactions with Enron
Background on the Enron Victims' Lawsuit to Recover Damages from Wall Street Banks that Orchestrated the Enron Fraud
Background of the Banks’ Role in the Enron Debacle
As a result of the massive fraud at Enron, shareholders lost tens of billions of dollars. Many Enron executives, Enron’s accounting firm and certain bank officials were indicted.
Andrew Fastow, Enron’s now-imprisoned former finance chief, testified that many of the banks’ transactions were contrived, deceptive deals done solely to create the false appearance of profits and cash flow. Internal Enron documents and testimony of bank employees detailed how the banks engineered sham transactions to keep billions of dollars of debt off Enron’s balance sheet and create the illusion of increasing earnings and operating cash flow. For example:
Merrill Lynch purchased Nigerian barges from Enron on the last day of 1999 only because Enron secretly promised to buy the barges back within six months, guaranteeing Merrill Lynch a profit of more than 20%. As a result of this fraud, Merrill Lynch ultimately paid $80 million to settle with the SEC.
Barclays entered into several sham transactions with Enron, including creating a “special purpose entity” called Colonnade, a shell company to hide Enron’s debt, named after the street in London where the bank is headquartered.
Credit Suisse First Boston engaged in “pre-pay” transactions with Enron, including serving as one of the stop-offs for a series of round-trip, risk-free commodities deals in which commodities were never actually transferred or delivered.
Although three banks (and others) have settled with the victims for $7.2 billion, several huge banks still named in this suit have not paid a penny to the victims of the fraud.
The Fifth Circuit’s Decision
After years of preparation and just a few weeks before trial, the Fifth Circuit Court of Appeals vacated the class certification order.
Although the 2-to-1 decision of the Fifth Circuit acknowledged that the banks’ conduct was “hardly praiseworthy,” it ruled that because the banks themselves did not make any false “statements” about their conduct, they could not be liable to the victims even if they knowingly participated in the scheme to defraud Enron’s shareholders.
As the Court’s dissenting Judge summarized, the ruling “immunizes a broad array of undeniably fraudulent conduct from civil liability . . . effectively giving secondary actors license to scheme with impunity, as long as they keep quiet.” In an extraordinary admission, the Court’s two-member majority acknowledged that their ruling runs afoul of “justice and fair play” (“We recognize, however, that our ruling . . . may not coincide, particularly in the minds of aggrieved former Enron shareholders who have lost billions of dollars in a fraud they allege was aided and abetted by the defendants at bar, with notions of justice and fair play.”)
For more background on the Enron lawsuit: www.universityofcalifornia.edu/news/enro
As the Court’s dissenting Judge summarized, the ruling “immunizes a broad array of undeniably fraudulent conduct from civil liability . . . effectively giving secondary actors license to scheme with impunity, as long as they keep quiet.”
"...testified that many of the banks’ transactions were contrived, deceptive deals done solely to create the false appearance of profits and cash flow. "
Merrill Lynch purchased Nigerian barges from Enron on the last day of 1999 only because Enron secretly promised to buy the barges back within six months, guaranteeing Merrill Lynch a profit of more than 20%. As a result of this fraud, Merrill Lynch ultimately paid $80 million to settle with the SEC.
Where did that $80million go?
Barclays entered into several sham transactions with Enron,
Credit Suisse First Boston engaged in “pre-pay” transactions with Enron
Background on the Enron Victims' Lawsuit to Recover Damages from Wall Street Banks that Orchestrated the Enron Fraud
Background of the Banks’ Role in the Enron Debacle
As a result of the massive fraud at Enron, shareholders lost tens of billions of dollars. Many Enron executives, Enron’s accounting firm and certain bank officials were indicted.
Andrew Fastow, Enron’s now-imprisoned former finance chief, testified that many of the banks’ transactions were contrived, deceptive deals done solely to create the false appearance of profits and cash flow. Internal Enron documents and testimony of bank employees detailed how the banks engineered sham transactions to keep billions of dollars of debt off Enron’s balance sheet and create the illusion of increasing earnings and operating cash flow. For example:
Merrill Lynch purchased Nigerian barges from Enron on the last day of 1999 only because Enron secretly promised to buy the barges back within six months, guaranteeing Merrill Lynch a profit of more than 20%. As a result of this fraud, Merrill Lynch ultimately paid $80 million to settle with the SEC.
Barclays entered into several sham transactions with Enron, including creating a “special purpose entity” called Colonnade, a shell company to hide Enron’s debt, named after the street in London where the bank is headquartered.
Credit Suisse First Boston engaged in “pre-pay” transactions with Enron, including serving as one of the stop-offs for a series of round-trip, risk-free commodities deals in which commodities were never actually transferred or delivered.
Although three banks (and others) have settled with the victims for $7.2 billion, several huge banks still named in this suit have not paid a penny to the victims of the fraud.
The Fifth Circuit’s Decision
After years of preparation and just a few weeks before trial, the Fifth Circuit Court of Appeals vacated the class certification order.
Although the 2-to-1 decision of the Fifth Circuit acknowledged that the banks’ conduct was “hardly praiseworthy,” it ruled that because the banks themselves did not make any false “statements” about their conduct, they could not be liable to the victims even if they knowingly participated in the scheme to defraud Enron’s shareholders.
As the Court’s dissenting Judge summarized, the ruling “immunizes a broad array of undeniably fraudulent conduct from civil liability . . . effectively giving secondary actors license to scheme with impunity, as long as they keep quiet.” In an extraordinary admission, the Court’s two-member majority acknowledged that their ruling runs afoul of “justice and fair play” (“We recognize, however, that our ruling . . . may not coincide, particularly in the minds of aggrieved former Enron shareholders who have lost billions of dollars in a fraud they allege was aided and abetted by the defendants at bar, with notions of justice and fair play.”)
For more background on the Enron lawsuit: www.universityofcalifornia.edu/news/enro
Friday, September 26, 2008
NCFE: Death-Dealing Side of the Bubble
NCFE, National Century Financial Enterprises, Inc., was a private Healthcare FINANCIAL company, the largest 'private' bankruptcy and dubbed by Federal Prosecutors in Columbus Ohio 'larger than Enron'.
NCFE: Death-Dealing Side of the Bubbleby John Hoefle
As a private company not required to make public filings with the Securities and Exchange Commission, much about NCFE remains shrouded in secrecy. But one can tell a lot by looking at its board, which consisted of four of the company's founders and two executives of J.P. Morgan Chase, which controls 16% of the company through its Beacon Group III private equity fund. In addition, Morgan Chase and Bank One are trustees for NCFE's bond trusts. The bonds themselves were underwritten by Crédit Suisse First Boston, the investment-banking arm of Switzerland's Crédit Suisse banking/insurance giant. The top purchasers of the bonds included PIMCO, the world's largest bond fund and a subsidiary of insurer Allianz, the world's third-largest financial institution; Alliance Capital Management, an arm of French insurance giant Axa; and ING, the Dutch insurance/banking conglomerate.
It is this combination of monetary policy, deregulation and financial asset-grabbing which created the dot.com bubble, the related telecom bubble, and the Enron/energy pirates' Wall Street bubble; all of which have subsequently exploded and are now revealed to be what LaRouche had said they were—scams. Now, with the bankruptcy of NCFE, another aspect of this post-1998 looting comes out of the shadows and into the light.
The Asset-Backed Securities Danger
NCFE was basically a financial "factor," advancing cash to hospitals, physicians, and other health-care facilities in exchange for their receivables—the delayed payments made by insurance companies and government agencies for patients' treatment. NCFE would place these receivables into pools, then issue derivative securities—known as asset-backed securities—backed by the expected insurance payments.
All in all, NCFE appears to fit the profile of a looting operation, whose existence served mainly to divert a portion of the health-care income stream into the pockets of some of the biggest financial institutions in the world. Now it has collapsed, leaving a bankruptcy wave which is now spreading among medical providers, with disastrous consequences for the health-care system and its patients.
NCFE serves about 100 healthcare providers nationwide, including hospitals, nursing homes, home healthcare agencies, specialty clinic physician groups, durable medical equipment providers, laboratories and other disciplines within the healthcare
industry. NCFE buys medical providers' bills at a discount (reportedly up to 20% after various fees), securitize those receivables and sell bonds to institutional and other investors.
Collections and insurance reimbursements, in turn, pay down the
bonds. The excess of collections over what it pays to buy the
receivables is NCFE's income. Healthcare providers, when NCFE
pays, receive the benefit of immediate cash to fund their
operations without having to wait for reimbursement.
All of the Debtors' outstanding bonds at this time consist of:
Amount Issuer Indenture Trustee
------ ------ -----------------
$924,995,000 NPF VI, Inc. JP Morgan Chase & Co.
$2,047,500,000 NPF XII, Inc. Bank One, N.A.
In papers filed with the Bankruptcy Court this week, the Company
reports that, as of September 30, 2002, its books and records
reflected approximately $3.8 billion in assets and approximately
$3.6 billion in liabilities.
An Investor Report dated October 23, 2002, and delivered to Bank
One reports that:
(a) NCFE held $851,993 in a Seller Credit Reserve Account as
of October 1, 2002, when there was supposed to be around
$145 million in that account on Oct. 1;
(b) NCFE held $498,321 in an Offset Reserve Account on
Oct. 1, when $44 million should have been on deposit; and
(c) an Equity Reserve Account, supposed to have a $217
million deposit on Oct. 1, only had $10 million on
deposit.
When those facts bubbled to the surface, Bank One ran to the
state and federal courts in Ohio seeking appointment of a
Receiver and prompted agents from the Federal Bureau of
Investigation to descend on NCFE's corporate offices.
Lance Poulsen, the Company's founder, has resigned as chairman
and chief executive. The Company's workforce has fallen from 325
to 103 this week. The Company's main office is located in
Dublin, Ohio, and maintains three regional offices in Scottsdale,
Arizona; Durham, North Carolina; and Port Charlotte, Florida.
NATIONAL CENTURY DEBTORS' CHAPTER 11 DATABASE
-----------------------------------------------------------------
Debtor entites filing separate chapter 11 petitions:
Entity Case No.
------ --------
National Century Financial Enterprises Inc. 02-65235
NPF XII Inc. 02-65236
National Premier Financial Services Inc. 02-65237
NPF VI Inc. 02-65238
Memorial Drive Office Complex LLC 02-65239
National Physicians Funding II Inc. 02-65240
Anesthesia Solutions Inc. 02-65241
NPF-CSL Inc. 02-65242
NPF-LL Inc. 02-65243
NPF-SPL Inc. 02-65244
NPF X Inc. 02-65245
NPF Capital Partners Inc. 02-65246
NPF Capital Inc. 02-65247
NCFE.com Inc. 02-65248
Chapter 11 Petition Date: November 18, 2002
Bankruptcy Court: United States Bankruptcy Court
Southern District of Ohio
Eastern Division
170 North High Street
Columbus, Ohio 43215
(614) 469-6638
Judge: Donald E. Calhoun, Jr.
LIST THE DEBTORS' 40-LARGEST UNSECURED CREDITORS
-----------------------------------------------------------------
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Bank One Trust Company Indenture Trustee $2,047,500,000
N.A. for secured notes
Darlington Cummings issued by NPF
Corporate Trust XII, Inc.
Account Adm.
OH1-0380
255 West Shrock Road
Westerville, OH 43081
Tel: 614-244-9356
Fax: 614-248-1123
J.P. Morgan Chase Bank Indenture Trustee $924,995,000
Structured Finance for secured notes
450 W. 33rd Street issued by NPF
14th Floor VI, Inc.
New York, NY 1001
Tel: 212-946-8600
Fax: 212-946-8302
Pacific Investment NPF XII, Inc. $283,300,000
Management Company Notes (unsecured
Mohan Phansalkar deficiency claim)
840 Newport Center Dr
Suite 300
Newport, CA 92660
Tel: 949-717-7022
Fax: 949-720-4590
Credit Suisse First NPF XII, Inc. $283,000,000
Boston Corp. Notes (unsecured
Michael Criscito deficiency claim)
New York Branch
11 Madison Avenue
New York, NY 10010
Tel: 646-935-0299
Fax: 212-325-8232
Alliance Capital NPF XII, Inc. $188,500,000
Management Corp. Notes (unsecured
Katalin E. Kutasi deficiency claim)
1345 Avenue of
Americas
38th Floor
New York, NY 10105
Tel: 212-969-1000
Fax: 212-969-6820
III Finance, Ltd. NPF XII, Inc. $180,000,000
Julio Maceira Notes (unsecured
c/o AVM, L.P. deficiency claim)
250 S. Australian Ave.
6th Floor
West Palm Beach
FL 33401
Metropolitan Life NPF XII, Inc. $102,600,000
Insurance Notes (unsecured
Charles Scully deficiency claim)
10 Park Avenue
Morristown, NJ 07962
Tel: 866-226-5638
Tax: 973-254-3052
Ambac Insurance Corp NPF XII, Inc. $54,000,000
Joe Ramos Notes (unsecured
One State Street Plaza deficiency claim)
New York, NY 1004
Tel: 212-607-2200
Fax: 212-797-5272
Lincoln Capital NPF XII, Inc. $49,500,000
Management Co. Notes (unsecured
Rick Schneider deficiency claim)
200 S. Wacker Drive
Suite 2100
Chicago, IL 60606
Tel: 3125592880
Howery, Simon, Arnold $2,147,888
& White, LLP
Gary Hall
1299 Pennsylvania Ave.
NW, Washington, DC
20004-2402
Tel: 202-383-7169
Fax: 202-383-6610
Purcell & Scott, LLP $470,801
Cary Purcell
6035 Memorial Drive
Dublin, OH 43017
Tel: 614-761-9990
Fax: 614-761-9474
Gerbig Snell/Weisheimer $413,566
& Associates
Bill O'Dell
500 Olde Worthington Rd.
Westerville, OH 43082
Tel: 614-643-6471
Fax: 614-848-3477
Westcott Strategic $127,273
Management
Novell, Inc. Trade Debt $121,350
Bricker & Eckler Trade Debt $114,290
Peabody & Arnold LLP Trade Debt $98,225
First Merit Bank Trade Debt $90,676
ISHI Systems Inc. Trade Debt $88,049
Crown Partners Trade Debt $87,991
Expert Technical Trade Debt $67,200
Consultants
Object Ovation, Inc. Trade Debt $61,420
Perlman & Assoc Trade Debt $60,646
Freeman & Mills, Inc. Trade Debt $54,354
CNA Insurance Trade Debt $41,450
SARK Trade Debt $39,842
Norman Reitman Company Trade Debt $36,944
Krivcher Magids PLC Trade Debt $34,917
Leitess, Leitess & Trade Debt $32,294
Friedberg
Insight Trade Debt $30,012
Solutions for Manage- Trade Debt $28,998
ment, Inc.
PricewaterhouseCoopers Trade Debt $27,648
LLP
Deloitte & Touche LLP Trade Debt $25,000
Jeanne Cabral Trade Debt $23,566
Architects
Dell Marketing, Inc. Trade Debt $20,209
Biomar Technologies Trade Debt $20,000
IOS Capital Trade Debt $19,627
Abby Lane Temps, Inc. Trade Debt $17,147
Rockey & Wahl, LLP Trade Debt $15,809
Great Lakes REIT Trade Debt $15,679
Results International Trade Debt $14,500
Systems
The Debtors name these known Sellers as Defendants in this
Adversary Proceeding:
Sellers to NPF XII
------------------
* Lincoln Hospital Medical Center, Inc.
* OrthoRehab, Inc.
* RX Medical Services Corp.
* CHC Clintwood Clinics, Inc.
* CareServices of the Heartland, LLC
* CareServices of South Florida, LLC
* CareServices of the Treasure Coast, LLC
* Mobile Medical Industries, Inc.
* Innovative Services, Inc.
* Emergystate, Inc.
* Med Express LLC
* Emergystat of Sulligent
* Extended Emergency Medical Services, Inc.
* ACCI/Allcare of Pennsylvania, Inc.
* BGI of Brandywine, Inc.
* BGI of St. Tammany, Inc.
* BGI of Pensacola, Inc.
* BGI of South Dakota, Inc.
* Comprehensive of Addiction Programs, Inc.
* Glalax Treatment Center, Inc.
* Stonehenge Convalescent Center, Inc.
* Wilmington Treatment Center, Inc.
* Greater Southeast Community Hospital Corporation I
* Pacifica of the Valley Corporation
* Garland Physicians' Hospital, Ltd.
* Thera-Kinetics, Inc.
* International Philanthropic Hospital Foundation
d/b/a/ Granada Hills Community Hospital
* Korman, LLC
* Living Hope Southwest Medical Services LLC
* Locumtenens Acquisition LLC
* Oak Park, Inc.
* Prime Med Pharmacy Services, Inc.
* Quantum Health
* Rock Glen Healthcare, Inc.
* SCCI Hospitals of America, Inc.
* SCCI Hospital Ventures, Inc.
* SIS Acquisition, LLC
* Safecare Ambulance Services, Inc.
* Braintree Manor Nursing, LLC
* Fall River Nursing LLC
* Hollingsworth Nursing LLC
* South Boston Nursing LLC
* Stoughton Nursing LLC
* PriMed Medical Corporation
* Pain Net Northern California Management Corporation
* National Psychiatric Services, Inc.
* Infusion Management Systems, Inc.
* Aurora Home Care, Inc.
Sellers to NPF VI
-----------------
* Chartwell Pennsylvania, LLC
* Chartwell Diversified Services, Inc.
* Chartwell Southern New England, LLC
* Chartwell Midwest Wisconsin
* Chartwell Home Therapies Limited Partnership
* Chartwell Midwest Indiana, LLC
* Chartwell UC Davis, LLC
* Chartwell Michigan, LLC
* Chartwell Mountain Regional Services
* Chartwell Ohio
* Chartwell Care Givers, Inc.
* Chartwell Care Givers of New York, Inc.
* Atlis Health Services, Inc.
* Hunt Country Home Health, Inc.
* Hunt Country Nursing Services, Inc.
* National Nurses Service, Inc.
* Oak Springs Nursing Home, LP
* ACCI/AllCare, Inc.
* ACCI/AllCare of Massachusetts, Inc.
* Brea Community Hospital
* Michael Reese Medical Center Corporation
* Pacin Healthcare-Hadley Memorial Hospital Corporation
* Highland Behavioral Health Services, Inc.
* Highland Hospital Association
* Lifecare Solutions East, Inc.
* Lifecare Solutions, West, Inc.
* New England Home Therapies, Inc.
* P.N.A.
* Pain Net of Arizona, Inc.
* Pain Net, Inc.
* Rovertown Surgery Center, LLC
* PhyAmerica Correctional Healthcare, Inc.
* Texas NPI, Inc.
* Home Medical of America, Inc.
* Nations Healthcare of California, Inc.
* Nations Healthcare of Florida, Inc.
* Nations Healthcare of Greenville, Inc.
* Nations Healthcare of Northern California, Inc.
Other Sellers
-------------
* Advance Home Medical, Inc.
* AllMed Services, Inc.
* Bay Cities Pharmaceutical Services
* Bayer Restorative Center, Inc.
* Care Home and Healthcare Services, Inc.
* Care Medical Group, Inc.
* Care Nursing Associates
* Consolidated Health Corp. of Pittsburgh, Inc.
* Consolidated Health Corporation Management, Inc.
* Continuecare, Inc.
* Florida Health Plan Management, Inc.
* Habitat Healthcare, Inc. dba Procare Home Health
* Health Care Funding Corp.
* Health Management Southeast, Inc.
* Healthplan Southeast, Inc.
* Interstate Environmental Medical Group, P.S.
* Louisiana Helping Hands, Inc.
* Managed Patient Care
* Med Four, LLC
* Medical Management Consulting Group
* Medimanager, Inc.
* Miami Valley Respiratory Care, Inc.
* National Corrections and Rehabilitation Corporation
* National Rehab of Florida, Inc.
* Nations Healthcare of Tampa Bay, Inc.
* Needham/Hamilton House Convalescent Center, Inc.
* Northern Indiana Interim Healthcare Company, LLC
* Orlando Interim Acquisition Company, LLC
* Pain Control Consultants, Inc.
* Pine Grove Hospital Corporation
* Procare of Tennessee, Inc.
* Quality Health Initiatives, Inc.
* Quality Health Systems, Inc.
* Quality Lifestyles, Inc., dba Quality Lifecare, Inc.
* Quest Staffing Solutions, Inc.
* Robertson Interim Acquisition Company LLC
* Schillinger Emergency Physicians Medical Group, P.C.
* Spectrum Medical Care
* Strongin Health Services Corporation
* Sunrise Regional Medical Center, Ltd.
* Superior Home Health Care of Livingston, Inc.
* Tailored Care, Inc.
* Tampa Interim Acquisition Company, LLC
* Tennessee Homecare, Inc.
* The Nurses Station of America, Inc.
* Triad Health Management of Georgia, LLC
and name the five Lockbox Custodians as Defendants in their
lawsuit:
* Huntington National Bank
* Wachovia Bank, NA
* PNC Bank
* Bank of America
* Bank One, NA
Without this injunctive relief, Judge Calhoun sees, the Debtors
face an immediate and substantial threat to the preservation of
their estates' going-concern value and an unwarranted and
irreversible dissipation of their estates. Accordingly, Judge
Calhoun issued a Temporary Restraining Order at a hearing
yesterday in Columbus. The Court directs each Defendant to file
an Answer to the Debtors' Complaint by December 18, 2002, and
will convene a hearing thereafter to consider entry of a
permanent injunction.
*** End of Issue No. 1 ***
NCFE: Death-Dealing Side of the Bubbleby John Hoefle
As a private company not required to make public filings with the Securities and Exchange Commission, much about NCFE remains shrouded in secrecy. But one can tell a lot by looking at its board, which consisted of four of the company's founders and two executives of J.P. Morgan Chase, which controls 16% of the company through its Beacon Group III private equity fund. In addition, Morgan Chase and Bank One are trustees for NCFE's bond trusts. The bonds themselves were underwritten by Crédit Suisse First Boston, the investment-banking arm of Switzerland's Crédit Suisse banking/insurance giant. The top purchasers of the bonds included PIMCO, the world's largest bond fund and a subsidiary of insurer Allianz, the world's third-largest financial institution; Alliance Capital Management, an arm of French insurance giant Axa; and ING, the Dutch insurance/banking conglomerate.
It is this combination of monetary policy, deregulation and financial asset-grabbing which created the dot.com bubble, the related telecom bubble, and the Enron/energy pirates' Wall Street bubble; all of which have subsequently exploded and are now revealed to be what LaRouche had said they were—scams. Now, with the bankruptcy of NCFE, another aspect of this post-1998 looting comes out of the shadows and into the light.
The Asset-Backed Securities Danger
NCFE was basically a financial "factor," advancing cash to hospitals, physicians, and other health-care facilities in exchange for their receivables—the delayed payments made by insurance companies and government agencies for patients' treatment. NCFE would place these receivables into pools, then issue derivative securities—known as asset-backed securities—backed by the expected insurance payments.
All in all, NCFE appears to fit the profile of a looting operation, whose existence served mainly to divert a portion of the health-care income stream into the pockets of some of the biggest financial institutions in the world. Now it has collapsed, leaving a bankruptcy wave which is now spreading among medical providers, with disastrous consequences for the health-care system and its patients.
NCFE serves about 100 healthcare providers nationwide, including hospitals, nursing homes, home healthcare agencies, specialty clinic physician groups, durable medical equipment providers, laboratories and other disciplines within the healthcare
industry. NCFE buys medical providers' bills at a discount (reportedly up to 20% after various fees), securitize those receivables and sell bonds to institutional and other investors.
Collections and insurance reimbursements, in turn, pay down the
bonds. The excess of collections over what it pays to buy the
receivables is NCFE's income. Healthcare providers, when NCFE
pays, receive the benefit of immediate cash to fund their
operations without having to wait for reimbursement.
All of the Debtors' outstanding bonds at this time consist of:
Amount Issuer Indenture Trustee
------ ------ -----------------
$924,995,000 NPF VI, Inc. JP Morgan Chase & Co.
$2,047,500,000 NPF XII, Inc. Bank One, N.A.
In papers filed with the Bankruptcy Court this week, the Company
reports that, as of September 30, 2002, its books and records
reflected approximately $3.8 billion in assets and approximately
$3.6 billion in liabilities.
An Investor Report dated October 23, 2002, and delivered to Bank
One reports that:
(a) NCFE held $851,993 in a Seller Credit Reserve Account as
of October 1, 2002, when there was supposed to be around
$145 million in that account on Oct. 1;
(b) NCFE held $498,321 in an Offset Reserve Account on
Oct. 1, when $44 million should have been on deposit; and
(c) an Equity Reserve Account, supposed to have a $217
million deposit on Oct. 1, only had $10 million on
deposit.
When those facts bubbled to the surface, Bank One ran to the
state and federal courts in Ohio seeking appointment of a
Receiver and prompted agents from the Federal Bureau of
Investigation to descend on NCFE's corporate offices.
Lance Poulsen, the Company's founder, has resigned as chairman
and chief executive. The Company's workforce has fallen from 325
to 103 this week. The Company's main office is located in
Dublin, Ohio, and maintains three regional offices in Scottsdale,
Arizona; Durham, North Carolina; and Port Charlotte, Florida.
NATIONAL CENTURY DEBTORS' CHAPTER 11 DATABASE
-----------------------------------------------------------------
Debtor entites filing separate chapter 11 petitions:
Entity Case No.
------ --------
National Century Financial Enterprises Inc. 02-65235
NPF XII Inc. 02-65236
National Premier Financial Services Inc. 02-65237
NPF VI Inc. 02-65238
Memorial Drive Office Complex LLC 02-65239
National Physicians Funding II Inc. 02-65240
Anesthesia Solutions Inc. 02-65241
NPF-CSL Inc. 02-65242
NPF-LL Inc. 02-65243
NPF-SPL Inc. 02-65244
NPF X Inc. 02-65245
NPF Capital Partners Inc. 02-65246
NPF Capital Inc. 02-65247
NCFE.com Inc. 02-65248
Chapter 11 Petition Date: November 18, 2002
Bankruptcy Court: United States Bankruptcy Court
Southern District of Ohio
Eastern Division
170 North High Street
Columbus, Ohio 43215
(614) 469-6638
Judge: Donald E. Calhoun, Jr.
LIST THE DEBTORS' 40-LARGEST UNSECURED CREDITORS
-----------------------------------------------------------------
Entity Nature Of Claim Claim Amount
------ --------------- ------------
Bank One Trust Company Indenture Trustee $2,047,500,000
N.A. for secured notes
Darlington Cummings issued by NPF
Corporate Trust XII, Inc.
Account Adm.
OH1-0380
255 West Shrock Road
Westerville, OH 43081
Tel: 614-244-9356
Fax: 614-248-1123
J.P. Morgan Chase Bank Indenture Trustee $924,995,000
Structured Finance for secured notes
450 W. 33rd Street issued by NPF
14th Floor VI, Inc.
New York, NY 1001
Tel: 212-946-8600
Fax: 212-946-8302
Pacific Investment NPF XII, Inc. $283,300,000
Management Company Notes (unsecured
Mohan Phansalkar deficiency claim)
840 Newport Center Dr
Suite 300
Newport, CA 92660
Tel: 949-717-7022
Fax: 949-720-4590
Credit Suisse First NPF XII, Inc. $283,000,000
Boston Corp. Notes (unsecured
Michael Criscito deficiency claim)
New York Branch
11 Madison Avenue
New York, NY 10010
Tel: 646-935-0299
Fax: 212-325-8232
Alliance Capital NPF XII, Inc. $188,500,000
Management Corp. Notes (unsecured
Katalin E. Kutasi deficiency claim)
1345 Avenue of
Americas
38th Floor
New York, NY 10105
Tel: 212-969-1000
Fax: 212-969-6820
III Finance, Ltd. NPF XII, Inc. $180,000,000
Julio Maceira Notes (unsecured
c/o AVM, L.P. deficiency claim)
250 S. Australian Ave.
6th Floor
West Palm Beach
FL 33401
Metropolitan Life NPF XII, Inc. $102,600,000
Insurance Notes (unsecured
Charles Scully deficiency claim)
10 Park Avenue
Morristown, NJ 07962
Tel: 866-226-5638
Tax: 973-254-3052
Ambac Insurance Corp NPF XII, Inc. $54,000,000
Joe Ramos Notes (unsecured
One State Street Plaza deficiency claim)
New York, NY 1004
Tel: 212-607-2200
Fax: 212-797-5272
Lincoln Capital NPF XII, Inc. $49,500,000
Management Co. Notes (unsecured
Rick Schneider deficiency claim)
200 S. Wacker Drive
Suite 2100
Chicago, IL 60606
Tel: 3125592880
Howery, Simon, Arnold $2,147,888
& White, LLP
Gary Hall
1299 Pennsylvania Ave.
NW, Washington, DC
20004-2402
Tel: 202-383-7169
Fax: 202-383-6610
Purcell & Scott, LLP $470,801
Cary Purcell
6035 Memorial Drive
Dublin, OH 43017
Tel: 614-761-9990
Fax: 614-761-9474
Gerbig Snell/Weisheimer $413,566
& Associates
Bill O'Dell
500 Olde Worthington Rd.
Westerville, OH 43082
Tel: 614-643-6471
Fax: 614-848-3477
Westcott Strategic $127,273
Management
Novell, Inc. Trade Debt $121,350
Bricker & Eckler Trade Debt $114,290
Peabody & Arnold LLP Trade Debt $98,225
First Merit Bank Trade Debt $90,676
ISHI Systems Inc. Trade Debt $88,049
Crown Partners Trade Debt $87,991
Expert Technical Trade Debt $67,200
Consultants
Object Ovation, Inc. Trade Debt $61,420
Perlman & Assoc Trade Debt $60,646
Freeman & Mills, Inc. Trade Debt $54,354
CNA Insurance Trade Debt $41,450
SARK Trade Debt $39,842
Norman Reitman Company Trade Debt $36,944
Krivcher Magids PLC Trade Debt $34,917
Leitess, Leitess & Trade Debt $32,294
Friedberg
Insight Trade Debt $30,012
Solutions for Manage- Trade Debt $28,998
ment, Inc.
PricewaterhouseCoopers Trade Debt $27,648
LLP
Deloitte & Touche LLP Trade Debt $25,000
Jeanne Cabral Trade Debt $23,566
Architects
Dell Marketing, Inc. Trade Debt $20,209
Biomar Technologies Trade Debt $20,000
IOS Capital Trade Debt $19,627
Abby Lane Temps, Inc. Trade Debt $17,147
Rockey & Wahl, LLP Trade Debt $15,809
Great Lakes REIT Trade Debt $15,679
Results International Trade Debt $14,500
Systems
The Debtors name these known Sellers as Defendants in this
Adversary Proceeding:
Sellers to NPF XII
------------------
* Lincoln Hospital Medical Center, Inc.
* OrthoRehab, Inc.
* RX Medical Services Corp.
* CHC Clintwood Clinics, Inc.
* CareServices of the Heartland, LLC
* CareServices of South Florida, LLC
* CareServices of the Treasure Coast, LLC
* Mobile Medical Industries, Inc.
* Innovative Services, Inc.
* Emergystate, Inc.
* Med Express LLC
* Emergystat of Sulligent
* Extended Emergency Medical Services, Inc.
* ACCI/Allcare of Pennsylvania, Inc.
* BGI of Brandywine, Inc.
* BGI of St. Tammany, Inc.
* BGI of Pensacola, Inc.
* BGI of South Dakota, Inc.
* Comprehensive of Addiction Programs, Inc.
* Glalax Treatment Center, Inc.
* Stonehenge Convalescent Center, Inc.
* Wilmington Treatment Center, Inc.
* Greater Southeast Community Hospital Corporation I
* Pacifica of the Valley Corporation
* Garland Physicians' Hospital, Ltd.
* Thera-Kinetics, Inc.
* International Philanthropic Hospital Foundation
d/b/a/ Granada Hills Community Hospital
* Korman, LLC
* Living Hope Southwest Medical Services LLC
* Locumtenens Acquisition LLC
* Oak Park, Inc.
* Prime Med Pharmacy Services, Inc.
* Quantum Health
* Rock Glen Healthcare, Inc.
* SCCI Hospitals of America, Inc.
* SCCI Hospital Ventures, Inc.
* SIS Acquisition, LLC
* Safecare Ambulance Services, Inc.
* Braintree Manor Nursing, LLC
* Fall River Nursing LLC
* Hollingsworth Nursing LLC
* South Boston Nursing LLC
* Stoughton Nursing LLC
* PriMed Medical Corporation
* Pain Net Northern California Management Corporation
* National Psychiatric Services, Inc.
* Infusion Management Systems, Inc.
* Aurora Home Care, Inc.
Sellers to NPF VI
-----------------
* Chartwell Pennsylvania, LLC
* Chartwell Diversified Services, Inc.
* Chartwell Southern New England, LLC
* Chartwell Midwest Wisconsin
* Chartwell Home Therapies Limited Partnership
* Chartwell Midwest Indiana, LLC
* Chartwell UC Davis, LLC
* Chartwell Michigan, LLC
* Chartwell Mountain Regional Services
* Chartwell Ohio
* Chartwell Care Givers, Inc.
* Chartwell Care Givers of New York, Inc.
* Atlis Health Services, Inc.
* Hunt Country Home Health, Inc.
* Hunt Country Nursing Services, Inc.
* National Nurses Service, Inc.
* Oak Springs Nursing Home, LP
* ACCI/AllCare, Inc.
* ACCI/AllCare of Massachusetts, Inc.
* Brea Community Hospital
* Michael Reese Medical Center Corporation
* Pacin Healthcare-Hadley Memorial Hospital Corporation
* Highland Behavioral Health Services, Inc.
* Highland Hospital Association
* Lifecare Solutions East, Inc.
* Lifecare Solutions, West, Inc.
* New England Home Therapies, Inc.
* P.N.A.
* Pain Net of Arizona, Inc.
* Pain Net, Inc.
* Rovertown Surgery Center, LLC
* PhyAmerica Correctional Healthcare, Inc.
* Texas NPI, Inc.
* Home Medical of America, Inc.
* Nations Healthcare of California, Inc.
* Nations Healthcare of Florida, Inc.
* Nations Healthcare of Greenville, Inc.
* Nations Healthcare of Northern California, Inc.
Other Sellers
-------------
* Advance Home Medical, Inc.
* AllMed Services, Inc.
* Bay Cities Pharmaceutical Services
* Bayer Restorative Center, Inc.
* Care Home and Healthcare Services, Inc.
* Care Medical Group, Inc.
* Care Nursing Associates
* Consolidated Health Corp. of Pittsburgh, Inc.
* Consolidated Health Corporation Management, Inc.
* Continuecare, Inc.
* Florida Health Plan Management, Inc.
* Habitat Healthcare, Inc. dba Procare Home Health
* Health Care Funding Corp.
* Health Management Southeast, Inc.
* Healthplan Southeast, Inc.
* Interstate Environmental Medical Group, P.S.
* Louisiana Helping Hands, Inc.
* Managed Patient Care
* Med Four, LLC
* Medical Management Consulting Group
* Medimanager, Inc.
* Miami Valley Respiratory Care, Inc.
* National Corrections and Rehabilitation Corporation
* National Rehab of Florida, Inc.
* Nations Healthcare of Tampa Bay, Inc.
* Needham/Hamilton House Convalescent Center, Inc.
* Northern Indiana Interim Healthcare Company, LLC
* Orlando Interim Acquisition Company, LLC
* Pain Control Consultants, Inc.
* Pine Grove Hospital Corporation
* Procare of Tennessee, Inc.
* Quality Health Initiatives, Inc.
* Quality Health Systems, Inc.
* Quality Lifestyles, Inc., dba Quality Lifecare, Inc.
* Quest Staffing Solutions, Inc.
* Robertson Interim Acquisition Company LLC
* Schillinger Emergency Physicians Medical Group, P.C.
* Spectrum Medical Care
* Strongin Health Services Corporation
* Sunrise Regional Medical Center, Ltd.
* Superior Home Health Care of Livingston, Inc.
* Tailored Care, Inc.
* Tampa Interim Acquisition Company, LLC
* Tennessee Homecare, Inc.
* The Nurses Station of America, Inc.
* Triad Health Management of Georgia, LLC
and name the five Lockbox Custodians as Defendants in their
lawsuit:
* Huntington National Bank
* Wachovia Bank, NA
* PNC Bank
* Bank of America
* Bank One, NA
Without this injunctive relief, Judge Calhoun sees, the Debtors
face an immediate and substantial threat to the preservation of
their estates' going-concern value and an unwarranted and
irreversible dissipation of their estates. Accordingly, Judge
Calhoun issued a Temporary Restraining Order at a hearing
yesterday in Columbus. The Court directs each Defendant to file
an Answer to the Debtors' Complaint by December 18, 2002, and
will convene a hearing thereafter to consider entry of a
permanent injunction.
*** End of Issue No. 1 ***
National Century Financial Enterprises, Inc., J.P. Morgan Chase, Morgan Chase and Bank One
"...two executives of J.P. Morgan Chase, which controls 16% of the company through its Beacon Group III private equity fund. In addition, Morgan Chase and Bank One are trustees for NCFE's bond trusts."
NCFE: Death-Dealing Side of the Bubble
by John Hoefle
As a private company not required to make public filings with the Securities and Exchange Commission, much about NCFE remains shrouded in secrecy. But one can tell a lot by looking at its board, which consisted of four of the company's founders and two executives of J.P. Morgan Chase, which controls 16% of the company through its Beacon Group III private equity fund. In addition, Morgan Chase and Bank One are trustees for NCFE's bond trusts. All in all, NCFE appears to fit the profile of a looting operation, whose existence served mainly to divert a portion of the health-care income stream into the pockets of some of the biggest financial
I believe someone needs to address the' PONZI Scheme' that was created with Health care finance.
NCFE, National Century Financial Enterprises, Inc., was a private Healthcare FINANCIAL company, the largest 'private' bankruptcy and dubbed by Federal Prosecutors in Columbus Ohio 'larger than Enron'.
NCFE: Death-Dealing Side of the Bubble
by John Hoefle
As a private company not required to make public filings with the Securities and Exchange Commission, much about NCFE remains shrouded in secrecy. But one can tell a lot by looking at its board, which consisted of four of the company's founders and two executives of J.P. Morgan Chase, which controls 16% of the company through its Beacon Group III private equity fund. In addition, Morgan Chase and Bank One are trustees for NCFE's bond trusts.
NCFE: Death-Dealing Side of the Bubble
by John Hoefle
As a private company not required to make public filings with the Securities and Exchange Commission, much about NCFE remains shrouded in secrecy. But one can tell a lot by looking at its board, which consisted of four of the company's founders and two executives of J.P. Morgan Chase, which controls 16% of the company through its Beacon Group III private equity fund. In addition, Morgan Chase and Bank One are trustees for NCFE's bond trusts. All in all, NCFE appears to fit the profile of a looting operation, whose existence served mainly to divert a portion of the health-care income stream into the pockets of some of the biggest financial
I believe someone needs to address the' PONZI Scheme' that was created with Health care finance.
NCFE, National Century Financial Enterprises, Inc., was a private Healthcare FINANCIAL company, the largest 'private' bankruptcy and dubbed by Federal Prosecutors in Columbus Ohio 'larger than Enron'.
NCFE: Death-Dealing Side of the Bubble
by John Hoefle
As a private company not required to make public filings with the Securities and Exchange Commission, much about NCFE remains shrouded in secrecy. But one can tell a lot by looking at its board, which consisted of four of the company's founders and two executives of J.P. Morgan Chase, which controls 16% of the company through its Beacon Group III private equity fund. In addition, Morgan Chase and Bank One are trustees for NCFE's bond trusts.
Thursday, September 25, 2008
FRAUD ...Connect this to the BAILOUT.
Between January 2006 and May 2008 ....wow this one moved quick.
Five months,and all done. Just investigate the trial that has yet to have the CEO and ex-HEALTHCARE Executive , James K Happgoon trial after eight years?
Another SILENT BAILOUT....The feds statement implies closure. What are they hiding?
Medical Equipment Company Owner Convicted In Motorized Wheelchair Fraud
September 24, 2008 in Health Fraud by Dave Westheimer
Yet another example of the blatant Medicare fraud that’s been going on in public for years: a federal jury in Los Angeles on Monday convicted the owner of durable medical equipment supplier Pacific City Group in connection with a scheme to get Medicare to pay for motorized wheelchairs that weren’t needed. Leonard Nwafor was convicted on 11 counts including health care fraud and conspiracy. Between January 2006 and May 2008 his company billed Medicare over $1.1 million and was paid $526,000 for the wheelchairs, which sell for as much as $7,000 each. Evidence at the trial allegedly showed that prescriptions for the motorized wheelchairs purporting to be from several LA-area doctors were forged. A “beneficiary” testified that a company representative posing as a Medicare official threatened her with loss of benefits if she and her husband didn’t accept two wheelchairs they didn’t need.
Nwafor faces a statutory maximum of 110 years in prison. His sentencing is scheduled for December 1 before US District Judge John Walter. He also faces federal mail fraud charges in a separate case (DOJ).
http://letterofapology.com/2008/09/24/medical-equipment-company-owner-convicted-in-motorized-wheelchair-fraud/
Five months,and all done. Just investigate the trial that has yet to have the CEO and ex-HEALTHCARE Executive , James K Happgoon trial after eight years?
Another SILENT BAILOUT....The feds statement implies closure. What are they hiding?
Medical Equipment Company Owner Convicted In Motorized Wheelchair Fraud
September 24, 2008 in Health Fraud by Dave Westheimer
Yet another example of the blatant Medicare fraud that’s been going on in public for years: a federal jury in Los Angeles on Monday convicted the owner of durable medical equipment supplier Pacific City Group in connection with a scheme to get Medicare to pay for motorized wheelchairs that weren’t needed. Leonard Nwafor was convicted on 11 counts including health care fraud and conspiracy. Between January 2006 and May 2008 his company billed Medicare over $1.1 million and was paid $526,000 for the wheelchairs, which sell for as much as $7,000 each. Evidence at the trial allegedly showed that prescriptions for the motorized wheelchairs purporting to be from several LA-area doctors were forged. A “beneficiary” testified that a company representative posing as a Medicare official threatened her with loss of benefits if she and her husband didn’t accept two wheelchairs they didn’t need.
Nwafor faces a statutory maximum of 110 years in prison. His sentencing is scheduled for December 1 before US District Judge John Walter. He also faces federal mail fraud charges in a separate case (DOJ).
http://letterofapology.com/2008/09/24/medical-equipment-company-owner-convicted-in-motorized-wheelchair-fraud/
Is the HEALTHCARE FRAUD, included in the Bailout?
Billions recouped in medical fraud
WASHINGTON — Whistle- blowers helped authorities recover at least $9.3 billion from health care providers accused of defrauding states and the federal government, according to an analysis of Justice Department records.
The department ramped up efforts in the 1990s to combat health care fraud by using private citizens with inside knowledge of wrongdoing. They now initiate more than 90 percent of the department's lawsuits focusing on health care fraud.
Whistle-blowers start cases by filing a sealed complaint in federal court. The department investigates the allegation and can intervene, assuming the lead role in the lawsuit. Whistle-blowers then get between 15 percent and 25 percent of the amount recovered.
Of the $9.3 billion recovered between 1996 and 2005, whistle-blowers got more than $1 billion, say analysts, writing for the Annals of Internal Medicine.
The analysts' findings are conservative. Information was available for only about three-quarters of the 379 cases reviewed. Also, some of the largest recoveries have taken place after the period reviewed.
For example, the study doesn't include the single largest settlement, worth $920 million, which came against Tenet Healthcare Corp., one of the nation's largest hospital chains, in 2006.
Still, the study highlights some important trends in health care fraud.
While the number of claims pursued has dropped in recent years, recovery amounts have soared because of a late addition to the cast of defendants — pharmaceutical manufacturers. Recoveries jumped from about $10 million a case in 2002 to $50 million by 2005.
Drugmakers are required to sell products to state Medicaid programs at the "best price" offered in the private marketplace, but the companies might artificially inflate the price, according to the report.
Another common scheme is to market drugs for uses not approved by the Food and Drug Administration.
The report's authors, Aaron S. Kesselheim of Brigham and Women's Hospital in Boston and David M. Studdert of the University of Melbourne in Australia, said data on hundreds of whistle-blower lawsuits should be researched to identify what types of allegations turn out to be legitimate and lead to recoveries so that the department can fast-track such cases.
By Kevin Freking
The Associated Press
WASHINGTON — Whistle- blowers helped authorities recover at least $9.3 billion from health care providers accused of defrauding states and the federal government, according to an analysis of Justice Department records.
The department ramped up efforts in the 1990s to combat health care fraud by using private citizens with inside knowledge of wrongdoing. They now initiate more than 90 percent of the department's lawsuits focusing on health care fraud.
Whistle-blowers start cases by filing a sealed complaint in federal court. The department investigates the allegation and can intervene, assuming the lead role in the lawsuit. Whistle-blowers then get between 15 percent and 25 percent of the amount recovered.
Of the $9.3 billion recovered between 1996 and 2005, whistle-blowers got more than $1 billion, say analysts, writing for the Annals of Internal Medicine.
The analysts' findings are conservative. Information was available for only about three-quarters of the 379 cases reviewed. Also, some of the largest recoveries have taken place after the period reviewed.
For example, the study doesn't include the single largest settlement, worth $920 million, which came against Tenet Healthcare Corp., one of the nation's largest hospital chains, in 2006.
Still, the study highlights some important trends in health care fraud.
While the number of claims pursued has dropped in recent years, recovery amounts have soared because of a late addition to the cast of defendants — pharmaceutical manufacturers. Recoveries jumped from about $10 million a case in 2002 to $50 million by 2005.
Drugmakers are required to sell products to state Medicaid programs at the "best price" offered in the private marketplace, but the companies might artificially inflate the price, according to the report.
Another common scheme is to market drugs for uses not approved by the Food and Drug Administration.
The report's authors, Aaron S. Kesselheim of Brigham and Women's Hospital in Boston and David M. Studdert of the University of Melbourne in Australia, said data on hundreds of whistle-blower lawsuits should be researched to identify what types of allegations turn out to be legitimate and lead to recoveries so that the department can fast-track such cases.
By Kevin Freking
The Associated Press
rightchange.com Just how ignorant do you think Americans are?
Before you look at the websites list for'Obamanamics' , let us look at President Bush's 'Proclamation' on June 13,2003.
Yes, 2003!
For Immediate Release
Office of the Press Secretary
June 13, 2003
National Homeownership Month, 2003
By the President of the United States of America
A Proclamation
Homeownership is more than just a symbol of the American Dream; it is an important part of our way of life. Core American values of individuality, thrift, responsibility, and self-reliance are embodied in homeownership. I am committed to helping more families know the security and sense of pride that comes with owning a home.
The Department of Housing and Urban Development is leading an Administration-wide effort to bring new tools and resources to would-be homeowners. We are providing financial assistance to qualified families through the American Dream Downpayment Fund, funding educational programs that stress financial literacy, and offering a compassionate hand to those who dream of moving from subsidized housing into homeownership. And through the Self-Help Homeownership Opportunity Program, my Administration partners with nonprofit organizations that offer homeownership oppor-tunities to families willing to contribute their skills and labor to help build a home of their own. We are also proposing ways to make it easier to shop for a mortgage and to make mortgages available to more families through the Federal Housing Administration.
Today, the United States is fortunate in that our homeownership rate is at an all-time high, and low interest rates continue to encourage millions of Americans to become first-time homeowners. Although a record number of Americans own their own homes, we continue to see a gap between the homeowner-ship rates of minorities and nonminorities. By a significant margin, minority families are less likely to own their own homes. Therefore, I have called upon the entire housing industry to join with my Administration to expand minority homeownership across the Nation. Our goal is to help at least 5.5 million minority families become homeowners by the end of this decade, and our Blueprint for the American Dream Partnership is taking bold steps to make this a reality.
Below is on this so-called non-profit disguise of REPUBLICANS.
10 Things You Need to Know About Senator Obama’s Tax Proposals
Under the tax plans of Barack Obama and his Democratic friends in Congress, American families will only be left with… the change in their pockets.
In 2009, Barack Obama and the Democratic Congress have an idea for a bill. Well, really, it’s a lot of bills that will be paid for by nearly every American in the form of higher taxes and higher costs for food, energy and other products.
So if you have a retirement account, work in or shop at a small business, are close or in retirement, or even flip on a light switch, then there are a few things that you should consider.
Under that plan:
Small main street businesses would be forced to pay tax rates as high as 62.3% under Senator Obama’s tax proposals.1
Senator Obama’s tax plan would tax small businesses at a higher rate than large corporations!2
Taxes on retirement income and savings could increase by at least 33%, hitting millions of seniors when they need these resources the most.3
4 million workers over the age of 50 – those eagerly looking forward to retirement – would be hit with increased tax bills. 4
Millions of Americans would only keep 38 cents of every dollar that they earn.5
Senator Obama’s tax plan would reduce the after tax wages of millions of workers by 17.7%.6
It will take 227 days per year, nearly 8 months, just to pay your tax bill!7
97,065 carpenters, 110,908 police officers, 254,992 nurses, 208,562 postsecondary teachers and 237,000 dentists would see tax increases, if the earnings cap was successfully eliminated.8
10.3 million workers would see an average of $5,650 taken from their paycheck and given to government programs.9
Even YOU might be considered “Rich.”
But don’t just take our word for it.
Be a geek. Click Here. Learn More.
Citations
Yes, 2003!
For Immediate Release
Office of the Press Secretary
June 13, 2003
National Homeownership Month, 2003
By the President of the United States of America
A Proclamation
Homeownership is more than just a symbol of the American Dream; it is an important part of our way of life. Core American values of individuality, thrift, responsibility, and self-reliance are embodied in homeownership. I am committed to helping more families know the security and sense of pride that comes with owning a home.
The Department of Housing and Urban Development is leading an Administration-wide effort to bring new tools and resources to would-be homeowners. We are providing financial assistance to qualified families through the American Dream Downpayment Fund, funding educational programs that stress financial literacy, and offering a compassionate hand to those who dream of moving from subsidized housing into homeownership. And through the Self-Help Homeownership Opportunity Program, my Administration partners with nonprofit organizations that offer homeownership oppor-tunities to families willing to contribute their skills and labor to help build a home of their own. We are also proposing ways to make it easier to shop for a mortgage and to make mortgages available to more families through the Federal Housing Administration.
Today, the United States is fortunate in that our homeownership rate is at an all-time high, and low interest rates continue to encourage millions of Americans to become first-time homeowners. Although a record number of Americans own their own homes, we continue to see a gap between the homeowner-ship rates of minorities and nonminorities. By a significant margin, minority families are less likely to own their own homes. Therefore, I have called upon the entire housing industry to join with my Administration to expand minority homeownership across the Nation. Our goal is to help at least 5.5 million minority families become homeowners by the end of this decade, and our Blueprint for the American Dream Partnership is taking bold steps to make this a reality.
Below is on this so-called non-profit disguise of REPUBLICANS.
10 Things You Need to Know About Senator Obama’s Tax Proposals
Under the tax plans of Barack Obama and his Democratic friends in Congress, American families will only be left with… the change in their pockets.
In 2009, Barack Obama and the Democratic Congress have an idea for a bill. Well, really, it’s a lot of bills that will be paid for by nearly every American in the form of higher taxes and higher costs for food, energy and other products.
So if you have a retirement account, work in or shop at a small business, are close or in retirement, or even flip on a light switch, then there are a few things that you should consider.
Under that plan:
Small main street businesses would be forced to pay tax rates as high as 62.3% under Senator Obama’s tax proposals.1
Senator Obama’s tax plan would tax small businesses at a higher rate than large corporations!2
Taxes on retirement income and savings could increase by at least 33%, hitting millions of seniors when they need these resources the most.3
4 million workers over the age of 50 – those eagerly looking forward to retirement – would be hit with increased tax bills. 4
Millions of Americans would only keep 38 cents of every dollar that they earn.5
Senator Obama’s tax plan would reduce the after tax wages of millions of workers by 17.7%.6
It will take 227 days per year, nearly 8 months, just to pay your tax bill!7
97,065 carpenters, 110,908 police officers, 254,992 nurses, 208,562 postsecondary teachers and 237,000 dentists would see tax increases, if the earnings cap was successfully eliminated.8
10.3 million workers would see an average of $5,650 taken from their paycheck and given to government programs.9
Even YOU might be considered “Rich.”
But don’t just take our word for it.
Be a geek. Click Here. Learn More.
Citations
Wednesday, September 24, 2008
Federal Prosecutors in Columbus Ohio 'larger than Enron'
I oppose the proposed bailout plan because we have not even addressed the root of this problem. We hear deregulation but that is not good enough.
I believe someone needs to address the' PONZI Scheme' that was created all the way back to 1999, during the Republican Congress.
The largest 'private' bankruptcy, dubbed by Federal Prosecutors in Columbus Ohio 'larger than Enron' with National Century Financial Enterprises, Inc.(NCFE). The CEO and VP Executive, who by chance was an ex-employee of HCA/TN and Richard Rainwater, GW Bush's ex-partner. This was a healthcare dumping ground for those entities affected by Welfare Reform.
Where is the 700 Billion going? To JP Morgan? It was in 2007, after all, when JPMorgan Chase financed Richard Rainwater’s REIT,Crescent (CEI) sale, just before the Real Estate bust; which all experts thought was a loser.
Then, in 2003, who or what was involved in the " Administration-wide effort to bring new tools and resources to would-be homeowners.” ?
In 2003? NewTools? New Resources?
For Immediate Release
Office of the Press Secretary
June 13, 2003
National Homeownership Month, 2003
By the President of the United States of America
A Proclamation
Homeownership is more than just a symbol of the American Dream; it is an important part of our way of life. Core American values of individuality, thrift, responsibility, and self-reliance are embodied in homeownership. I am committed to helping more families know the security and sense of pride that comes with owning a home.
The Department of Housing and Urban Development is leading an Administration-wide effort to bring new tools and resources to would-be homeowners. We are providing financial assistance to qualified families through the American Dream Downpayment Fund, funding educational programs that stress financial literacy, and offering a compassionate hand to those who dream of moving from subsidized housing into homeownership. And through the Self-Help Homeownership Opportunity Program, my Administration partners with nonprofit organizations that offer homeownership oppor-tunities to families willing to contribute their skills and labor to help build a home of their own. We are also proposing ways to make it easier to shop for a mortgage and to make mortgages available to more families through the Federal Housing Administration.
Today, the United States is fortunate in that our homeownership rate is at an all-time high, and low interest rates continue to encourage millions of Americans to become first-time homeowners. Although a record number of Americans own their own homes, we continue to see a gap between the homeowner-ship rates of minorities and nonminorities. By a significant margin, minority families are less likely to own their own homes. Therefore, I have called upon the entire housing industry to join with my Administration to expand minority homeownership across the Nation. Our goal is to help at least 5.5 million minority families become homeowners by the end of this decade, and our Blueprint for the American Dream Partnership is taking bold steps to make this a reality.
I believe someone needs to address the' PONZI Scheme' that was created all the way back to 1999, during the Republican Congress.
The largest 'private' bankruptcy, dubbed by Federal Prosecutors in Columbus Ohio 'larger than Enron' with National Century Financial Enterprises, Inc.(NCFE). The CEO and VP Executive, who by chance was an ex-employee of HCA/TN and Richard Rainwater, GW Bush's ex-partner. This was a healthcare dumping ground for those entities affected by Welfare Reform.
Where is the 700 Billion going? To JP Morgan? It was in 2007, after all, when JPMorgan Chase financed Richard Rainwater’s REIT,Crescent (CEI) sale, just before the Real Estate bust; which all experts thought was a loser.
Then, in 2003, who or what was involved in the " Administration-wide effort to bring new tools and resources to would-be homeowners.” ?
In 2003? NewTools? New Resources?
For Immediate Release
Office of the Press Secretary
June 13, 2003
National Homeownership Month, 2003
By the President of the United States of America
A Proclamation
Homeownership is more than just a symbol of the American Dream; it is an important part of our way of life. Core American values of individuality, thrift, responsibility, and self-reliance are embodied in homeownership. I am committed to helping more families know the security and sense of pride that comes with owning a home.
The Department of Housing and Urban Development is leading an Administration-wide effort to bring new tools and resources to would-be homeowners. We are providing financial assistance to qualified families through the American Dream Downpayment Fund, funding educational programs that stress financial literacy, and offering a compassionate hand to those who dream of moving from subsidized housing into homeownership. And through the Self-Help Homeownership Opportunity Program, my Administration partners with nonprofit organizations that offer homeownership oppor-tunities to families willing to contribute their skills and labor to help build a home of their own. We are also proposing ways to make it easier to shop for a mortgage and to make mortgages available to more families through the Federal Housing Administration.
Today, the United States is fortunate in that our homeownership rate is at an all-time high, and low interest rates continue to encourage millions of Americans to become first-time homeowners. Although a record number of Americans own their own homes, we continue to see a gap between the homeowner-ship rates of minorities and nonminorities. By a significant margin, minority families are less likely to own their own homes. Therefore, I have called upon the entire housing industry to join with my Administration to expand minority homeownership across the Nation. Our goal is to help at least 5.5 million minority families become homeowners by the end of this decade, and our Blueprint for the American Dream Partnership is taking bold steps to make this a reality.
Tuesday, September 23, 2008
Paulsen, "...protecting the global financial network "
Transcript
A Conversation with Henry Paulson [Rush Transcript; Federal News Service]
Speaker: Henry M. Paulson, U.S. Secretary of The Treasury
Presider: Peter Ackerman, Managing Director, Rockport Capital, Inc.
October 24, 2007
Council on Foreign Relations
Council on Foreign Relations
Washington, DC
Audio
Oct 2007, Henry M. Paulson, U.S. Secretary of The Treasury
"...we need to get some market access in areas where we're already open and market access in services and financial services and non-agriculture and which is where the biggest part of the global economy is. "
"...head of investment banking in 1990.." at Goldman Sachs
"...Both India and the United States recognize that an integrated world economy requires protecting the global financial network against those who want to harm our people and our free economic systems by financing terrorism, weapons proliferation or other dangerous illicit activity. "
--------------------------------------------------------------------------------
PETER ACKERMAN: Good afternoon. My name is Peter Ackerman. I'm a member of the Council's board, and I want to welcome you today to this meeting, which I think is going to be quite exciting to participate in.
Please turn off all your electronic equipment that can go beep. And I'd like to remind everyone here that -- (laughs) -- I'd like to remind everybody here that this meeting will be on the record.
I'm going to introduce the secretary. And then, because his time is a little constrained, I'm going to forgo my rights as presider and he's going to actually select people for Q&A from the group.
Henry M. Paulson Jr., on June 19th, 2006 was nominated by President Bush to be the 74th secretary of the Treasury. A mere nine days later, he was unanimously ratified by the Senate and then sworn into office on July 10th, 2006 by Supreme Court Chief Justice John Roberts.
As Treasury secretary, as you know, Secretary Paulson is the president's leading policy advisor on a broad range of domestic and international economic issues. Secretary Paulson also had an extraordinary career at Goldman Sachs, which he joined in 1974 and became a partner in 1982, then head of investment banking in 1990, then president and chief operating officer four years after that. And then when the public offering occurred, he became the chairman and CEO.
He also had a stint in government, so prior to Goldman Sachs he was on the White House domestic staff serving as the staff assistant to the president from 1972 to '73, and just before that as a staff assistant to the assistant secretary of Defense from 1970 to '72.
The secretary is a graduate from Dartmouth and Harvard Business School. And what impresses me the most, besides being a Phi Beta Kappa, he was all-East, honorable mention all-American football player.
So with no more introduction, I'd like to welcome the secretary. (Applause.)
SECRETARY HENRY PAULSON: Thank you very much, Peter. And it's very good to be with the Council here in Washington today. I appreciate the opportunity to talk with you about the economic power and the promise of India.
Earlier this year, Prime Minister Singh referred to India's history as an open house -- an open society, open to the free flow of ideas and scholarship. I will travel to India next week. I look forward to being a guest in India's house.
My objective is to pay tribute to the strong, growing partnership between India and the United States. I hope to help the Indian government advance their economic reform agenda, which will benefit India's citizens and the world.
India is a vibrant nation whose strength lies in its commitment to equal rights and to speech, religious and economic freedoms that enrich the lives of all citizens. India is not only the world's largest democracy; it is also a secular, pluralistic society committed to inclusive growth.
Through President Bush and Prime Minister Singh's leadership, political, economic and cultural ties between the United States and India have never been stronger. These ties enjoy bipartisan support in both countries. In the last few years we have launched major initiatives in areas including counterterrorism cooperation, space research, clean energy, agriculture, education and economic development.
The historic agreement on civilian nuclear cooperation is an important part of the U.S.-India relationship, and it is beneficial to both countries. India is one of the world's largest and most peaceful states with advanced nuclear technologies and has been isolated from the rest of the world on nuclear issues.
This agreement will bring India into the nuclear nonproliferation mainstream, providing access to the technology which can help it reach its economic and environmental objectives. The United States remains committed to this agreement.
The ties of our governments are, in some sense, catching up to the long history of personal and professional friendship among Indians and Americans. For decades, Indians have immigrated to the United States, joined our communities, and raised their families while maintaining their cultural heritage.
Indian-Americans are physicians, engineers, CEOs, professors, teachers, entrepreneurs. They are a vital part of the United States' economic and social fabric. Because of this long history, the bonds among our people and our cultures will remain strong.
Prime Minister Singh is to be commended for beginning the process of transforming India into a global economic power by initiating economic liberalization in the early 1990s. These economic reforms have continued at varying speed through the past 15 years, regardless of the party in power.
Observers do not question whether India's reforms will continue. They ask only about the pace. The great Indian poet, Tagore, wrote that he had become his own version of an optimist. He said, "If I can't make it through one door, I'll go through another door or I'll make a door." The revolution in Indian economic thinking is making doors and invigorating the Indian economy.
India is a young country with a young population that will be looking for stable, well-paying jobs to support their families. These reforms will help provide the jobs they will need.
Through dramatic increases in mutual trade and foreign direct investment, the United States has been a partner in India's economic emergence. In the last few years, Indian exports to the United States have more than doubled to $21 billion, while the U.S. exports to India have doubled to $10 billion.
Similarly, investment flows have increased dramatically. Last year Indian firms invested $2 billion in the United States and U.S. companies invested about $2 billion in India.
As the Indian government has embraced greater economic openness, the creativity and expertise of the Indian workforce has been unleashed onto the world economic stage. We share Indian policymakers' belief that market-based policies and programs will spread opportunities to all levels of society, reaching ahm adni (ph) -- the common man.
The success of India's software industry is often told, and the story bears repeating here. Through the combination of expertise aimed at the Indian -- excuse me -- gained at the Indian Institute of Technology and through innovative thinking, Indian industry has demonstrated that it can, as the CEO of an Indian software company recently said, take the work from any part of the world and do it in any part of the world.
India's GDP grew nearly 10 percent in 2006 compared to the world average of five and a half percent. India's economic reforms have taken root. And by accelerating them, the government can help ensure that India's growth rate will be, as projected, at least 8 percent for the foreseeable future. I am optimistic about India's economic prospects.
In pursuing economic growth, India and the United States share similar values and similar challenges. We understand that the global economy is here to stay. To keep growing and leading the world in innovation and opportunity, the United States and India must trade freely, openly, and according to the principles of the global marketplace.
Trade also brings a wider variety of lower-priced goods, and this especially benefits lower-income citizens. I look forward to talking with the Indian government about making progress in the Doha Development Round.
Working together to successfully conclude the Doha agreement will be the single most effective thing we can do to help raise living standards in India and around the world. A Doha agreement is within reach, and the potential is so great that we must not let it slip through our grasp.
We also understand how rapidly changing economies can lead to uncertainty, causing many to doubt that trade brings greater benefits than costs. Together, India and the United States must resist this protectionist sentiment.
I'm committed to working to maintain an open trade and investment climate in the United States. Both India and the United States recognize that an integrated world economy requires protecting the global financial network against those who want to harm our people and our free economic systems by financing terrorism, weapons proliferation or other dangerous illicit activity. We will continue implementing financial systems safeguards to help ensure our countries and our citizen's security.
The U.S. and India also share the challenge of ensuring secure and clean energy supplies. We understand that economic growth and environmental responsibility are necessary, compatible goals. Moving forward with the civilian nuclear agreement is one part of that solution. Working together in a post-2012 framework, the U.N. climate change process is another.
It is in the best interests of India, the United States and the world for India to continue and even accelerate the pace of economic reform and openness. As with any democratic transformative effort, India faces political challenges -- something the United States also knows well. The government is to be applauded for what it has already accomplished, and encouraged to move forward. We stand with them as a partner as they do so. Other countries are also developing financial sophistication and global integration. If India slows its pace now, it risks losing the ground it's already worked so hard to gain.
Now, let me talk about two areas where the United States, and particularly the Department of Treasury, want to be partners with India in advancing reform and inclusive economic growth. First, by assisting the government's plan to finance physical infrastructure improvements, which will benefit Indian families' daily lives and fuel the economy. Second, by supporting steps to strengthen and expand India's financial system by building an international financial center -- a so-called IFC in Mumbai. Achieving these two goals will require a firm commitment to adopt international standards and to move forward aggressively with reforms, despite political risks.
The Indian government estimates that to further transform its economy it needs to spend close to $500 billion over the next five years to build physical infrastructure that will deliver power to cities and villages and transport people and goods to market. Given India's fiscal constraints, it is looking to the private sector to fund up to one-third of this needed investment. The United States wants to support this effort to attract private financing. During my trip, I will participate in the India Infrastructure Financial Conference in Mumbai. At that conference and afterwards, we will highlight the opportunity of India's infrastructure initiatives to U.S. businesses.
This infrastructure investment is important to helping India achieve its second green revolution, which is what Prime Minister Singh has called for. Our private sectors must take an active role in developing sophisticated agricultural markets in India where farmers can tap modern supply chains and processing technologies to improve their productivity and to improve the lives of their families. The government can do more to encourage this private investment by establishing more hospital investment, regulatory and financial regimes. Capital limitations, combined with ongoing uncertainty about contract enforcement and regulatory consistency will make infrastructure investment more difficult to obtain.
Let me now turn to the expansion of India's financial sector, especially establishing a financial center in Mumbai. In 2006, Prime Minister Singh said that it is possible for Mumbai to emerge as a new financial capital of Asia and be the bridge between Asia and the West in the world of finance. Properly regulated, a well-functioning financial markets are critical for a balanced development and strong, inclusive growth. This is an area of enormous opportunity for India. Officiate markets link capital with ideas and ambition. They are the economic lifeblood through which people find the means to rise out of poverty. This is true in India, in the United States and around the world.
Today Indian firms in Bangalore play a key role in the back office operations of multinational firms. In this, India has revolutionized forever the way the world does business. The next step is for India to develop front offices in Mumbai and provide financial services to companies and investors in and across the region. By establishing an IFC in Mumbai, India will build a financial system that will help large and small businesses. Shopkeepers, farmers and craftsmen need access to credit, financial and insurance products, as much as the large industrial manufacturers need this access. The Indian government has recognized this need and commissioned a report from a high-powered expert committee. The committee's report outlined a requirement and a timetable for developing an IFC in Mumbai. The report is bold, thorough and ambitious. I believe it is the right path.
A financial footprint in Mumbai makes a door through which the world can invest in India and India can invest in the world. Equally importantly, it gives India an important stake in the rapidly growing global financial services industry. The report identifies the needed changes to fiscal and monetary policy and to financial regulation. It also outlines that Mumbai's own urban infrastructure must be improved. This demonstrates the wisdom of the Indian government's emphasis on physical and financial infrastructure improvements. Both goals must be met in order to achieve the transition that will provide inclusive growth.
India has already made significant accomplishments in developing its financial sector and the economy has responded positively. India's stock and commodities exchanges are thriving. Since deregulation, the asset management industry has grown and now manages over $100 billion in assets. By reducing constraints on financial firms, India's government can foster a more efficient allocation of financial resources. This will help free capital to finance infrastructure investment, develop new innovations in other industries and extend financial services to a larger portion of the population. India's large and growing middle class stands to benefit from new financial products that will help them to achieve home ownership and to invest in the best possible education for their children.
Many of the world's leading financial firms have already opened offices in Mumbai. They're eager to do their part in building an international financial center. I urge my Indian colleagues to move forward quickly on the recommendations of their expert committee report. The United States will continue as a partner with India in its economic transformation.
Treasury and the Finance Ministry have led an ongoing dialogue for several years among U.S. and Indian regulators to share experiences and best practices. We will kick off another session to help advance the Indian government's economic reform agenda. When I am in New Delhi next week, Mumbai's development into an IFC is an important element of that agenda. U.S. experience can help the Indian government and industry as they work to develop an IFC in Mumbai. And the private sector stands ready to share their experiences in dealing with the development of domestic bond markets and other elements that create the backbone of a financial center.
We understand that the Indian officials are concerned that the greater capital flows associated with a financial center can add to inflationary pressures, destabilize the domestic financial sector or add to exchange rate volatility. For the most part, India's on the right path to reduce these risks. India has allowed greater flexibility in the exchange rate in recent months and the appreciation of the rupee has helped to reduce inflationary pressures. India has also taken administrative steps to adjust the pace of capital outflows and inflows.
As recent experience in the region has shown, administrative restrictions of capital flows are blunt instruments and can have unintended consequences. They tend to inhibit efficiency and lose their effectiveness over time. I encourage India to continue liberalizing such restrictions. Steps abroad to deepen the domestic financial sector will also help to mitigate the risk posed by greater capital flows.
India's development plans will require additional capital, innovative financial instruments, and a commitment to financial openness. Recent growth in India's savings base and in the number of global firms setting up shop in India suggest that all of this is possible, that India can be a significant exporter of financial flows and investment in the years ahead. The development of Mumbai as a financial center will take some years to come to fruition. Nonetheless, it is a path worth taking, a path that will yield benefits all along the way for India and for the global economy.
The remarkable growth brought about by India's economic reforms has proven the wisdom of those reforms and their promise for the future. As Prime Minister Singh said, "India is an open house. It can become more open, more integrated into the global economy." This will bring the inclusive growth, which is India's aim: an economy in which small -- the small farmer, the craftsman and the next Indian entrepreneur with a dream makes the door and fulfills that dream. India and the United States have made a very good start on delivering on our new partnership, and we can do more to reach our full strategic and economic potential. I look forward to learning from my Indian colleagues during my visit and to working with them on these and future initiatives.
Thank you, and I welcome your questions. Thanks. (Applause.)
ACKERMAN: Do you want to stay up there and answer from the podium, or --
PAULSON: Yeah. Yeah, sounds good to me.
ACKERMAN: Okay.
PAULSON: So you'll pick --
ACKERMAN: Okay, we'll take time, so -- yes.
QUESTIONER: Mr. Secretary, I'm Teresita Schaffer. I'm retired Foreign Service India and I now run the South Asia Program at CSIS.
I was very interested in -- (off mike) -- you said that you wanted to concentrate on. And I wonder if you could say a bit more about what you see as the vehicle for infrastructure improvements. I know there's been some sense that there was a need to find ways of insulating those who would invest in infrastructure from the vagaries of politics and -- (off mike). Have you found -- (off mike) -- our Indian friends found ways of doing this?
PAULSON: Okay. Well, let me say you obviously know your topic well, and the -- I think the biggest concern on the part of foreign investors are sanctity of contracts, the way the regulatory system works, and so on. I think this government is doing a good job of working through a number of the outstanding commercial disputes and issues out there, and we don't have -- I don't have anything that overnight will solve this problem. But what we're going to be doing -- and this trip is built around a very big conference on infrastructure finance where you're going to -- it's going to be heavily attended by the private sector and by the government.
And given the size of India's needs and how key this infrastructure development is for the kind of inclusive economic growth this country is going to need, I look at it -- I think -- and a fund that has been -- I think there's been some good work that's already been done. And one of the things that I've -- you know, that I've been a small part of in attending the meetings has been this CEO forum with the CEOs of both countries. And I think it's pretty unique the way this works because you get -- you know, you get the key government leaders in there also and, again, working on tangible steps -- sometimes very small steps. And so we've have a number of banks come together with an infrastructure fund, again focusing on taking small and important steps.
So I think what we -- what you're going to see is you're going to see some positives come out of this and you'll see more private-sector investment, and we just have to keep building on success. But ultimately, the question you've raised is the big question hanging over the capital markets and the investment there.
Okay, let me -- we've got plenty of time. Let me go right to the woman right in front of me and then we'll go to this side and --
QUESTIONER: Thank you very much. I'm Paula Stern, former chairwoman of U.S. International Trade Commission.
And I would like to ask you to go back and discuss the flexibility of the exchange rates in India, the value of the rupee and what they have done, and invite you to contrast what the U.S. diplomacy has been there with regard to India and compare it with that of China. And see if you can help us understand what the magic formula was that's been successful in India.
PAULSON: Well, let me say this is about India, not about China. I'll talk about China later.
But I would say we have -- we have, in India, a -- we've seen real exchange-rate flexibility. And you know, when an exchange rate is in a competitive marketplace, it makes the difference. And India has a system that allows for that and, you know, there's a fair mount of pushback and concern in India among some that are concerned with the policy there. But you do see that the rupee has -- based upon the underlying strength and underlying economic fundamentals, it's appreciated. That has not slowed India's growth. And we -- and inflation seems to be -- seems to be under control, and so that's a very good thing.
And now there's been some movement to say, "Well, we need to be concerned about capital flows and so on." And again, I'm a big believer in market-driven means.
Now, again, as I said, China is in a different stage of development and no one has argued -- I have not argued that China is ready to have a totally market-determined exchange right now. But they need to get the part -- point where they can have one, and -- because it's of a -- of -- as I said, an unnatural act to be as integrated as they are into the global economic system and to goods and services and not when you look at financial markets. So what we're encouraging them to do is to move more quickly to appreciate in the short term so that you can have a currency that's more reflective of the market and send the proper market signals through their economy and around the world, and then make the kinds of changes in their capital markets they're going to need to make to get to the point where they could have a market-determined currency.
But I tend to -- I think what's happened in India here has been -- it's been good news in terms of what they've done with the exchange rate, and I'll just be encouraging them to stay the course and not backslide.
Thank you.
Yes, we'll go -- I don't want you to think I'm only -- I am right-handed, but I'll -- but I will --
QUESTIONER: Thank you. Mr. Secretary. Paul Marino (ph), EIR News.
I wanted to ask you about M-LEC, Congress and protectionism. It seems in light of the discussion around the Master-Liquidity Enhancement Conduit that Congress is considering many bills which are of more of a protectionist nature, maybe to freeze the mortgage sector or reconstitute our chartered banks. So Mr. Secretary, wouldn't prudence demand that we further this dialogue and offer our policies to India of a more protectionist nature for industrial development?
PAULSON: Well, let me just say that we have protectionist sentiment everywhere in the world today, and it is -- I would say if you had to say what's sort of the number one issue that I deal with and I'm concerned about in this country and in virtually every other part in the world, it is that the lessons for the last 30 years have been those countries that have liberalized, gone to market-based reforms, opened up investment and finance have benefited. Other have been left behind. But we -- there is great concern today in many places that somehow or other, in country after country, they can't compete or that foreign investment will be bad or harmful somehow or that the trade will be a negative. And of course, I believe we need to do absolutely the opposite.
And so it's just -- it's clear, and I think we need to do a better job. And I think policymakers need to do a better job explaining the benefits because the dislocations and the problems are very visible to everyone, and many of them have got nothing to do with trade. They have to do with automation and technology. And people are never saying, "Well, we think we should turn off the Internet or turn technology back." So a lot of it trade gets blamed and a lot of this is about skills and really getting, you know, the skills that people need to compete and do well in today's world. Yes?
QUESTIONER: Mr. Secretary -- I don't know if this is on -- my name is Clay Swisher. I'm a new term member. I'm with the Middle East Institute. Thanks for your remarks today. It helps put into perspective an article that was in "Foreign Affairs", this latest edition by Nick Burns over at State regarding I guess the warming of U.S.-India relations, and I'm wondering if you can explain given in India's neighborhood with Pakistan the internal crisis that's happening there as well as the unresolved issue of Kashmir, what's Pakistan going to have to say about all this? How are they going to interpret these moves?
PAULSON: Well, again, I think what I'm -- all I can say is, you know, there's been some positive developments in a number of areas and I tend to be a glass half full rather than half empty person and so I think the fact that India and Pakistan have a constructive dialogue and that they're working together and sharing information in the counterterrorism area -- that they're talking about difficult sensitive issues like Kashmir is all to the positive, and our only position on this is that it be resolved in a constructive way and taking into account the interests of the people in Kashmir. Okay, let me -- there.
QUESTIONER: Secretary -- (off mike) -- you mentioned that the -- India's growth rate for the foreseeable future was growing at about 8 percent annually -- (inaudible). What's the quid pro quo on this for the United States in terms of our growth rate here? Do you see something there you could translate -- (inaudible)?
PAULSON: To the -- I can't equate the -- their growth rate directly to ours but what I can say is something I see quite strongly, and I'm glad you asked the question because many people, you know, and it's part of the -- it's -- of a protectionist sentiment -- they're not understanding global economics and so there is a tendency for some people to think because India is doing well this will be bad for the U.S. and that somehow or other, you know, we're competing with them in a way in which the faster they grow the worse it will be for us, and it's exactly the opposite -- exactly the opposite.
Right now, one of the biggest things we've got going for us we have a very -- we have a healthy economy in the U.S. but we have exceptionally strong growth outside of the U.S. and a big part of that growth is in developing countries around the world. Developing countries are growing twice the fast -- twice as fast the major developing countries as to developed countries are and three times as fast as they did in the 1990s. And this is helping all of us and the thing that we should be -- if people want to be concerned about something it wouldn't be that India would continue to do well -- it would be if India wouldn't do as well or some of the other major developing countries didn't do as well that would not help us.
So again, this is a situation where for a number of years we were the engine of growth around the world. We are very important to global growth given the size and importance of our economy but it's nice right now. We're going through a period where our exports are growing much faster than our imports and growth we're seeing around the world is very much helping the U.S. economy today. Yes?
QUESTIONER: Mr. Secretary, my name is Sidney Weintraub. I'm with the Center for Strategic and International Studies.
You emphasize the importance of trade and the Doha Round. My understanding is that India together with Brazil recently has been reluctant to open its market, particularly to manufactured goods. How are you going to deal with that issue when you get there?
PAULSON: I tell you, this is an informed audience. I will say that, and you're asking the right questions and we -- obviously Sue Schwab, you know, our trade representative, is leading that effort. I talk with her regularly. I had an opportunity to talk with her again this morning about it. You are right that -- well, first of all let me say that Doha has never been more important given the protectionist sentiment around the world and given some of the issues that are going on in the capital markets, and Doha is still very much within reach. It's not easy but it is very much in reach, and the key to Doha is going to be market access in some of the major developing countries. You mentioned two of them -- Brazil and India -- some of the major developing countries that have been pushing the developed countries to further open their markets, which are already quite open, and have been resisting opening theirs.
And so we need real access and, you know, with India we're not -- there's all the conversation about agriculture and subsistence farmers and everybody understands that issue but it is -- we need more movement in the non-agriculture -- in the manufacturing tariffs and in services. And I think a very interesting lesson for India is in areas where they've either been liberalized or they never were very regulated to begin with India does great. Look at the whole IT software area. Look at airlines -- certain areas of the manufacturing.
So I think part of it is for them and it's -- we have these issues at every country for them to have the confidence that they will benefit and grow as they open up markets and as they liberalize. But you're right -- that is, seeing movement from India and Brazil and giving some market access and again, some of the countries that have had the most to gain from the global trading system and have benefited the most from it need now to be willing to buy into the system and be prepared to provide more access into their markets. Okay. Yes, in the front, and then I've got time after this for one more question so this'll be the last -- this one and then one more.
QUESTIONER: Jeff Pryce, Steptoe & Johnson. Thank you, Mr. Secretary.
I wonder if you could talk about the benefits that a bilateral investment agreement such as India has with other capital exporting countries would have for encouraging American investment in India and particularly addressing the regulatory environment issues that were mentioned and what the prospects are for negotiation of such an agreement.
PAULSON: Well, I think -- again, a very good question. It's one I've thought about a lot and I've had some preliminary conversations with the Indians on this and, again, to complete a deal and I think these deals have got great value because it provides -- it -- they provide protections and comfort for investors and normally countries -- but both sides have got to want to pursue an agreement like this, and normally our counterparties who are willing to sign these agreements usually do so because they either have a strong need to attract foreign investment or they are using them to help them bring about reforms -- one or the other.
And we have -- I think the Indian government and the finance minister and others when I've talked about it they're quite willing to talk about investment and the importance of investment. I think it is a tougher issue, some of the things that we normally ask for -- protections, intellectual property, other things that go along with these investments.
So the way I tend to think about investment is there's no country I go to -- well, maybe there's -- I can't think of any where we don't talk about investment and what we need to do. We're open for investment in the U.S., encouraging investment, talk about some of the issues and concerns some countries have around the CFIUS process or what have you and then we talk about -- I'm all the time talking about opening up for U.S. investment and for competition and investment because it's been a key to our development and to our growth, and it's one of the big keys to our success. And so we talk about it and we talk about it in tangible steps, but to conclude a formal bet is a major undertaking and many of our trading partners aren't ready to do such a thing. Okay. One more -- I'm going to go way to the back.
QUESTIONER: Secretary Paulson, Jim Moody, Merrill Lynch.
You talked about the Doha Round -- the importance of that and, of course, we all agree. One of the strong inhibitions to raising countries out of poverty people -- countries like India and Pakistan and those areas -- is American subsidies to our agriculture that makes their agriculture less competitive. I know that's not your direct portfolio -- agricultural subsidies -- but are you -- do you weighed (sic) or your people weighed in on those -- that topic? Europe, of course, is much worse than we but we have a major problem vis-a-vis countries that export agriculture.
PAULSON: Well, I would just simply say this. People point to that all the time because there are few other areas that -- in the U.S. that -- where they can point to issues like the subsidy, and what I say and I'm -- you know, I've learned a lot about that since coming to Washington and I deal with that very directly with my counterparts because I say the U.S. has moved in showing a willingness to move. We are quite comfortable negotiating with the tax, okay? If we don't complete an agreement this will not have to do with the U.S. and ag subsidies and supports. It will not.
It will be we -- we're negotiating with them to -- in the tax and we can do what we need to do. The key thing is going to be what I pointed to and this is not -- I'm not one for pointing fingers -- I'm never going to point a finger at one particular country but it really is -- we need to get some market access in areas where we're already open and market access in services and financial services and non-agriculture and which is where the biggest part of the global economy is. That's where the economic growth is going to come from and that's going to benefit the countries that provide that much more than it does all the rest of us because that will help them develop strong economies that are competitive, first-rate financial services, and so on. So anyway that's why it's not hard to get me going on that topic. (Laughter.) Thank you all.
ACKERMAN: Thank you, Secretary. (Applause.) Thanks so much. Good job.
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THIS IS A RUSH TRANSCRIPT.
A Conversation with Henry Paulson [Rush Transcript; Federal News Service]
Speaker: Henry M. Paulson, U.S. Secretary of The Treasury
Presider: Peter Ackerman, Managing Director, Rockport Capital, Inc.
October 24, 2007
Council on Foreign Relations
Council on Foreign Relations
Washington, DC
Audio
Oct 2007, Henry M. Paulson, U.S. Secretary of The Treasury
"...we need to get some market access in areas where we're already open and market access in services and financial services and non-agriculture and which is where the biggest part of the global economy is. "
"...head of investment banking in 1990.." at Goldman Sachs
"...Both India and the United States recognize that an integrated world economy requires protecting the global financial network against those who want to harm our people and our free economic systems by financing terrorism, weapons proliferation or other dangerous illicit activity. "
--------------------------------------------------------------------------------
PETER ACKERMAN: Good afternoon. My name is Peter Ackerman. I'm a member of the Council's board, and I want to welcome you today to this meeting, which I think is going to be quite exciting to participate in.
Please turn off all your electronic equipment that can go beep. And I'd like to remind everyone here that -- (laughs) -- I'd like to remind everybody here that this meeting will be on the record.
I'm going to introduce the secretary. And then, because his time is a little constrained, I'm going to forgo my rights as presider and he's going to actually select people for Q&A from the group.
Henry M. Paulson Jr., on June 19th, 2006 was nominated by President Bush to be the 74th secretary of the Treasury. A mere nine days later, he was unanimously ratified by the Senate and then sworn into office on July 10th, 2006 by Supreme Court Chief Justice John Roberts.
As Treasury secretary, as you know, Secretary Paulson is the president's leading policy advisor on a broad range of domestic and international economic issues. Secretary Paulson also had an extraordinary career at Goldman Sachs, which he joined in 1974 and became a partner in 1982, then head of investment banking in 1990, then president and chief operating officer four years after that. And then when the public offering occurred, he became the chairman and CEO.
He also had a stint in government, so prior to Goldman Sachs he was on the White House domestic staff serving as the staff assistant to the president from 1972 to '73, and just before that as a staff assistant to the assistant secretary of Defense from 1970 to '72.
The secretary is a graduate from Dartmouth and Harvard Business School. And what impresses me the most, besides being a Phi Beta Kappa, he was all-East, honorable mention all-American football player.
So with no more introduction, I'd like to welcome the secretary. (Applause.)
SECRETARY HENRY PAULSON: Thank you very much, Peter. And it's very good to be with the Council here in Washington today. I appreciate the opportunity to talk with you about the economic power and the promise of India.
Earlier this year, Prime Minister Singh referred to India's history as an open house -- an open society, open to the free flow of ideas and scholarship. I will travel to India next week. I look forward to being a guest in India's house.
My objective is to pay tribute to the strong, growing partnership between India and the United States. I hope to help the Indian government advance their economic reform agenda, which will benefit India's citizens and the world.
India is a vibrant nation whose strength lies in its commitment to equal rights and to speech, religious and economic freedoms that enrich the lives of all citizens. India is not only the world's largest democracy; it is also a secular, pluralistic society committed to inclusive growth.
Through President Bush and Prime Minister Singh's leadership, political, economic and cultural ties between the United States and India have never been stronger. These ties enjoy bipartisan support in both countries. In the last few years we have launched major initiatives in areas including counterterrorism cooperation, space research, clean energy, agriculture, education and economic development.
The historic agreement on civilian nuclear cooperation is an important part of the U.S.-India relationship, and it is beneficial to both countries. India is one of the world's largest and most peaceful states with advanced nuclear technologies and has been isolated from the rest of the world on nuclear issues.
This agreement will bring India into the nuclear nonproliferation mainstream, providing access to the technology which can help it reach its economic and environmental objectives. The United States remains committed to this agreement.
The ties of our governments are, in some sense, catching up to the long history of personal and professional friendship among Indians and Americans. For decades, Indians have immigrated to the United States, joined our communities, and raised their families while maintaining their cultural heritage.
Indian-Americans are physicians, engineers, CEOs, professors, teachers, entrepreneurs. They are a vital part of the United States' economic and social fabric. Because of this long history, the bonds among our people and our cultures will remain strong.
Prime Minister Singh is to be commended for beginning the process of transforming India into a global economic power by initiating economic liberalization in the early 1990s. These economic reforms have continued at varying speed through the past 15 years, regardless of the party in power.
Observers do not question whether India's reforms will continue. They ask only about the pace. The great Indian poet, Tagore, wrote that he had become his own version of an optimist. He said, "If I can't make it through one door, I'll go through another door or I'll make a door." The revolution in Indian economic thinking is making doors and invigorating the Indian economy.
India is a young country with a young population that will be looking for stable, well-paying jobs to support their families. These reforms will help provide the jobs they will need.
Through dramatic increases in mutual trade and foreign direct investment, the United States has been a partner in India's economic emergence. In the last few years, Indian exports to the United States have more than doubled to $21 billion, while the U.S. exports to India have doubled to $10 billion.
Similarly, investment flows have increased dramatically. Last year Indian firms invested $2 billion in the United States and U.S. companies invested about $2 billion in India.
As the Indian government has embraced greater economic openness, the creativity and expertise of the Indian workforce has been unleashed onto the world economic stage. We share Indian policymakers' belief that market-based policies and programs will spread opportunities to all levels of society, reaching ahm adni (ph) -- the common man.
The success of India's software industry is often told, and the story bears repeating here. Through the combination of expertise aimed at the Indian -- excuse me -- gained at the Indian Institute of Technology and through innovative thinking, Indian industry has demonstrated that it can, as the CEO of an Indian software company recently said, take the work from any part of the world and do it in any part of the world.
India's GDP grew nearly 10 percent in 2006 compared to the world average of five and a half percent. India's economic reforms have taken root. And by accelerating them, the government can help ensure that India's growth rate will be, as projected, at least 8 percent for the foreseeable future. I am optimistic about India's economic prospects.
In pursuing economic growth, India and the United States share similar values and similar challenges. We understand that the global economy is here to stay. To keep growing and leading the world in innovation and opportunity, the United States and India must trade freely, openly, and according to the principles of the global marketplace.
Trade also brings a wider variety of lower-priced goods, and this especially benefits lower-income citizens. I look forward to talking with the Indian government about making progress in the Doha Development Round.
Working together to successfully conclude the Doha agreement will be the single most effective thing we can do to help raise living standards in India and around the world. A Doha agreement is within reach, and the potential is so great that we must not let it slip through our grasp.
We also understand how rapidly changing economies can lead to uncertainty, causing many to doubt that trade brings greater benefits than costs. Together, India and the United States must resist this protectionist sentiment.
I'm committed to working to maintain an open trade and investment climate in the United States. Both India and the United States recognize that an integrated world economy requires protecting the global financial network against those who want to harm our people and our free economic systems by financing terrorism, weapons proliferation or other dangerous illicit activity. We will continue implementing financial systems safeguards to help ensure our countries and our citizen's security.
The U.S. and India also share the challenge of ensuring secure and clean energy supplies. We understand that economic growth and environmental responsibility are necessary, compatible goals. Moving forward with the civilian nuclear agreement is one part of that solution. Working together in a post-2012 framework, the U.N. climate change process is another.
It is in the best interests of India, the United States and the world for India to continue and even accelerate the pace of economic reform and openness. As with any democratic transformative effort, India faces political challenges -- something the United States also knows well. The government is to be applauded for what it has already accomplished, and encouraged to move forward. We stand with them as a partner as they do so. Other countries are also developing financial sophistication and global integration. If India slows its pace now, it risks losing the ground it's already worked so hard to gain.
Now, let me talk about two areas where the United States, and particularly the Department of Treasury, want to be partners with India in advancing reform and inclusive economic growth. First, by assisting the government's plan to finance physical infrastructure improvements, which will benefit Indian families' daily lives and fuel the economy. Second, by supporting steps to strengthen and expand India's financial system by building an international financial center -- a so-called IFC in Mumbai. Achieving these two goals will require a firm commitment to adopt international standards and to move forward aggressively with reforms, despite political risks.
The Indian government estimates that to further transform its economy it needs to spend close to $500 billion over the next five years to build physical infrastructure that will deliver power to cities and villages and transport people and goods to market. Given India's fiscal constraints, it is looking to the private sector to fund up to one-third of this needed investment. The United States wants to support this effort to attract private financing. During my trip, I will participate in the India Infrastructure Financial Conference in Mumbai. At that conference and afterwards, we will highlight the opportunity of India's infrastructure initiatives to U.S. businesses.
This infrastructure investment is important to helping India achieve its second green revolution, which is what Prime Minister Singh has called for. Our private sectors must take an active role in developing sophisticated agricultural markets in India where farmers can tap modern supply chains and processing technologies to improve their productivity and to improve the lives of their families. The government can do more to encourage this private investment by establishing more hospital investment, regulatory and financial regimes. Capital limitations, combined with ongoing uncertainty about contract enforcement and regulatory consistency will make infrastructure investment more difficult to obtain.
Let me now turn to the expansion of India's financial sector, especially establishing a financial center in Mumbai. In 2006, Prime Minister Singh said that it is possible for Mumbai to emerge as a new financial capital of Asia and be the bridge between Asia and the West in the world of finance. Properly regulated, a well-functioning financial markets are critical for a balanced development and strong, inclusive growth. This is an area of enormous opportunity for India. Officiate markets link capital with ideas and ambition. They are the economic lifeblood through which people find the means to rise out of poverty. This is true in India, in the United States and around the world.
Today Indian firms in Bangalore play a key role in the back office operations of multinational firms. In this, India has revolutionized forever the way the world does business. The next step is for India to develop front offices in Mumbai and provide financial services to companies and investors in and across the region. By establishing an IFC in Mumbai, India will build a financial system that will help large and small businesses. Shopkeepers, farmers and craftsmen need access to credit, financial and insurance products, as much as the large industrial manufacturers need this access. The Indian government has recognized this need and commissioned a report from a high-powered expert committee. The committee's report outlined a requirement and a timetable for developing an IFC in Mumbai. The report is bold, thorough and ambitious. I believe it is the right path.
A financial footprint in Mumbai makes a door through which the world can invest in India and India can invest in the world. Equally importantly, it gives India an important stake in the rapidly growing global financial services industry. The report identifies the needed changes to fiscal and monetary policy and to financial regulation. It also outlines that Mumbai's own urban infrastructure must be improved. This demonstrates the wisdom of the Indian government's emphasis on physical and financial infrastructure improvements. Both goals must be met in order to achieve the transition that will provide inclusive growth.
India has already made significant accomplishments in developing its financial sector and the economy has responded positively. India's stock and commodities exchanges are thriving. Since deregulation, the asset management industry has grown and now manages over $100 billion in assets. By reducing constraints on financial firms, India's government can foster a more efficient allocation of financial resources. This will help free capital to finance infrastructure investment, develop new innovations in other industries and extend financial services to a larger portion of the population. India's large and growing middle class stands to benefit from new financial products that will help them to achieve home ownership and to invest in the best possible education for their children.
Many of the world's leading financial firms have already opened offices in Mumbai. They're eager to do their part in building an international financial center. I urge my Indian colleagues to move forward quickly on the recommendations of their expert committee report. The United States will continue as a partner with India in its economic transformation.
Treasury and the Finance Ministry have led an ongoing dialogue for several years among U.S. and Indian regulators to share experiences and best practices. We will kick off another session to help advance the Indian government's economic reform agenda. When I am in New Delhi next week, Mumbai's development into an IFC is an important element of that agenda. U.S. experience can help the Indian government and industry as they work to develop an IFC in Mumbai. And the private sector stands ready to share their experiences in dealing with the development of domestic bond markets and other elements that create the backbone of a financial center.
We understand that the Indian officials are concerned that the greater capital flows associated with a financial center can add to inflationary pressures, destabilize the domestic financial sector or add to exchange rate volatility. For the most part, India's on the right path to reduce these risks. India has allowed greater flexibility in the exchange rate in recent months and the appreciation of the rupee has helped to reduce inflationary pressures. India has also taken administrative steps to adjust the pace of capital outflows and inflows.
As recent experience in the region has shown, administrative restrictions of capital flows are blunt instruments and can have unintended consequences. They tend to inhibit efficiency and lose their effectiveness over time. I encourage India to continue liberalizing such restrictions. Steps abroad to deepen the domestic financial sector will also help to mitigate the risk posed by greater capital flows.
India's development plans will require additional capital, innovative financial instruments, and a commitment to financial openness. Recent growth in India's savings base and in the number of global firms setting up shop in India suggest that all of this is possible, that India can be a significant exporter of financial flows and investment in the years ahead. The development of Mumbai as a financial center will take some years to come to fruition. Nonetheless, it is a path worth taking, a path that will yield benefits all along the way for India and for the global economy.
The remarkable growth brought about by India's economic reforms has proven the wisdom of those reforms and their promise for the future. As Prime Minister Singh said, "India is an open house. It can become more open, more integrated into the global economy." This will bring the inclusive growth, which is India's aim: an economy in which small -- the small farmer, the craftsman and the next Indian entrepreneur with a dream makes the door and fulfills that dream. India and the United States have made a very good start on delivering on our new partnership, and we can do more to reach our full strategic and economic potential. I look forward to learning from my Indian colleagues during my visit and to working with them on these and future initiatives.
Thank you, and I welcome your questions. Thanks. (Applause.)
ACKERMAN: Do you want to stay up there and answer from the podium, or --
PAULSON: Yeah. Yeah, sounds good to me.
ACKERMAN: Okay.
PAULSON: So you'll pick --
ACKERMAN: Okay, we'll take time, so -- yes.
QUESTIONER: Mr. Secretary, I'm Teresita Schaffer. I'm retired Foreign Service India and I now run the South Asia Program at CSIS.
I was very interested in -- (off mike) -- you said that you wanted to concentrate on. And I wonder if you could say a bit more about what you see as the vehicle for infrastructure improvements. I know there's been some sense that there was a need to find ways of insulating those who would invest in infrastructure from the vagaries of politics and -- (off mike). Have you found -- (off mike) -- our Indian friends found ways of doing this?
PAULSON: Okay. Well, let me say you obviously know your topic well, and the -- I think the biggest concern on the part of foreign investors are sanctity of contracts, the way the regulatory system works, and so on. I think this government is doing a good job of working through a number of the outstanding commercial disputes and issues out there, and we don't have -- I don't have anything that overnight will solve this problem. But what we're going to be doing -- and this trip is built around a very big conference on infrastructure finance where you're going to -- it's going to be heavily attended by the private sector and by the government.
And given the size of India's needs and how key this infrastructure development is for the kind of inclusive economic growth this country is going to need, I look at it -- I think -- and a fund that has been -- I think there's been some good work that's already been done. And one of the things that I've -- you know, that I've been a small part of in attending the meetings has been this CEO forum with the CEOs of both countries. And I think it's pretty unique the way this works because you get -- you know, you get the key government leaders in there also and, again, working on tangible steps -- sometimes very small steps. And so we've have a number of banks come together with an infrastructure fund, again focusing on taking small and important steps.
So I think what we -- what you're going to see is you're going to see some positives come out of this and you'll see more private-sector investment, and we just have to keep building on success. But ultimately, the question you've raised is the big question hanging over the capital markets and the investment there.
Okay, let me -- we've got plenty of time. Let me go right to the woman right in front of me and then we'll go to this side and --
QUESTIONER: Thank you very much. I'm Paula Stern, former chairwoman of U.S. International Trade Commission.
And I would like to ask you to go back and discuss the flexibility of the exchange rates in India, the value of the rupee and what they have done, and invite you to contrast what the U.S. diplomacy has been there with regard to India and compare it with that of China. And see if you can help us understand what the magic formula was that's been successful in India.
PAULSON: Well, let me say this is about India, not about China. I'll talk about China later.
But I would say we have -- we have, in India, a -- we've seen real exchange-rate flexibility. And you know, when an exchange rate is in a competitive marketplace, it makes the difference. And India has a system that allows for that and, you know, there's a fair mount of pushback and concern in India among some that are concerned with the policy there. But you do see that the rupee has -- based upon the underlying strength and underlying economic fundamentals, it's appreciated. That has not slowed India's growth. And we -- and inflation seems to be -- seems to be under control, and so that's a very good thing.
And now there's been some movement to say, "Well, we need to be concerned about capital flows and so on." And again, I'm a big believer in market-driven means.
Now, again, as I said, China is in a different stage of development and no one has argued -- I have not argued that China is ready to have a totally market-determined exchange right now. But they need to get the part -- point where they can have one, and -- because it's of a -- of -- as I said, an unnatural act to be as integrated as they are into the global economic system and to goods and services and not when you look at financial markets. So what we're encouraging them to do is to move more quickly to appreciate in the short term so that you can have a currency that's more reflective of the market and send the proper market signals through their economy and around the world, and then make the kinds of changes in their capital markets they're going to need to make to get to the point where they could have a market-determined currency.
But I tend to -- I think what's happened in India here has been -- it's been good news in terms of what they've done with the exchange rate, and I'll just be encouraging them to stay the course and not backslide.
Thank you.
Yes, we'll go -- I don't want you to think I'm only -- I am right-handed, but I'll -- but I will --
QUESTIONER: Thank you. Mr. Secretary. Paul Marino (ph), EIR News.
I wanted to ask you about M-LEC, Congress and protectionism. It seems in light of the discussion around the Master-Liquidity Enhancement Conduit that Congress is considering many bills which are of more of a protectionist nature, maybe to freeze the mortgage sector or reconstitute our chartered banks. So Mr. Secretary, wouldn't prudence demand that we further this dialogue and offer our policies to India of a more protectionist nature for industrial development?
PAULSON: Well, let me just say that we have protectionist sentiment everywhere in the world today, and it is -- I would say if you had to say what's sort of the number one issue that I deal with and I'm concerned about in this country and in virtually every other part in the world, it is that the lessons for the last 30 years have been those countries that have liberalized, gone to market-based reforms, opened up investment and finance have benefited. Other have been left behind. But we -- there is great concern today in many places that somehow or other, in country after country, they can't compete or that foreign investment will be bad or harmful somehow or that the trade will be a negative. And of course, I believe we need to do absolutely the opposite.
And so it's just -- it's clear, and I think we need to do a better job. And I think policymakers need to do a better job explaining the benefits because the dislocations and the problems are very visible to everyone, and many of them have got nothing to do with trade. They have to do with automation and technology. And people are never saying, "Well, we think we should turn off the Internet or turn technology back." So a lot of it trade gets blamed and a lot of this is about skills and really getting, you know, the skills that people need to compete and do well in today's world. Yes?
QUESTIONER: Mr. Secretary -- I don't know if this is on -- my name is Clay Swisher. I'm a new term member. I'm with the Middle East Institute. Thanks for your remarks today. It helps put into perspective an article that was in "Foreign Affairs", this latest edition by Nick Burns over at State regarding I guess the warming of U.S.-India relations, and I'm wondering if you can explain given in India's neighborhood with Pakistan the internal crisis that's happening there as well as the unresolved issue of Kashmir, what's Pakistan going to have to say about all this? How are they going to interpret these moves?
PAULSON: Well, again, I think what I'm -- all I can say is, you know, there's been some positive developments in a number of areas and I tend to be a glass half full rather than half empty person and so I think the fact that India and Pakistan have a constructive dialogue and that they're working together and sharing information in the counterterrorism area -- that they're talking about difficult sensitive issues like Kashmir is all to the positive, and our only position on this is that it be resolved in a constructive way and taking into account the interests of the people in Kashmir. Okay, let me -- there.
QUESTIONER: Secretary -- (off mike) -- you mentioned that the -- India's growth rate for the foreseeable future was growing at about 8 percent annually -- (inaudible). What's the quid pro quo on this for the United States in terms of our growth rate here? Do you see something there you could translate -- (inaudible)?
PAULSON: To the -- I can't equate the -- their growth rate directly to ours but what I can say is something I see quite strongly, and I'm glad you asked the question because many people, you know, and it's part of the -- it's -- of a protectionist sentiment -- they're not understanding global economics and so there is a tendency for some people to think because India is doing well this will be bad for the U.S. and that somehow or other, you know, we're competing with them in a way in which the faster they grow the worse it will be for us, and it's exactly the opposite -- exactly the opposite.
Right now, one of the biggest things we've got going for us we have a very -- we have a healthy economy in the U.S. but we have exceptionally strong growth outside of the U.S. and a big part of that growth is in developing countries around the world. Developing countries are growing twice the fast -- twice as fast the major developing countries as to developed countries are and three times as fast as they did in the 1990s. And this is helping all of us and the thing that we should be -- if people want to be concerned about something it wouldn't be that India would continue to do well -- it would be if India wouldn't do as well or some of the other major developing countries didn't do as well that would not help us.
So again, this is a situation where for a number of years we were the engine of growth around the world. We are very important to global growth given the size and importance of our economy but it's nice right now. We're going through a period where our exports are growing much faster than our imports and growth we're seeing around the world is very much helping the U.S. economy today. Yes?
QUESTIONER: Mr. Secretary, my name is Sidney Weintraub. I'm with the Center for Strategic and International Studies.
You emphasize the importance of trade and the Doha Round. My understanding is that India together with Brazil recently has been reluctant to open its market, particularly to manufactured goods. How are you going to deal with that issue when you get there?
PAULSON: I tell you, this is an informed audience. I will say that, and you're asking the right questions and we -- obviously Sue Schwab, you know, our trade representative, is leading that effort. I talk with her regularly. I had an opportunity to talk with her again this morning about it. You are right that -- well, first of all let me say that Doha has never been more important given the protectionist sentiment around the world and given some of the issues that are going on in the capital markets, and Doha is still very much within reach. It's not easy but it is very much in reach, and the key to Doha is going to be market access in some of the major developing countries. You mentioned two of them -- Brazil and India -- some of the major developing countries that have been pushing the developed countries to further open their markets, which are already quite open, and have been resisting opening theirs.
And so we need real access and, you know, with India we're not -- there's all the conversation about agriculture and subsistence farmers and everybody understands that issue but it is -- we need more movement in the non-agriculture -- in the manufacturing tariffs and in services. And I think a very interesting lesson for India is in areas where they've either been liberalized or they never were very regulated to begin with India does great. Look at the whole IT software area. Look at airlines -- certain areas of the manufacturing.
So I think part of it is for them and it's -- we have these issues at every country for them to have the confidence that they will benefit and grow as they open up markets and as they liberalize. But you're right -- that is, seeing movement from India and Brazil and giving some market access and again, some of the countries that have had the most to gain from the global trading system and have benefited the most from it need now to be willing to buy into the system and be prepared to provide more access into their markets. Okay. Yes, in the front, and then I've got time after this for one more question so this'll be the last -- this one and then one more.
QUESTIONER: Jeff Pryce, Steptoe & Johnson. Thank you, Mr. Secretary.
I wonder if you could talk about the benefits that a bilateral investment agreement such as India has with other capital exporting countries would have for encouraging American investment in India and particularly addressing the regulatory environment issues that were mentioned and what the prospects are for negotiation of such an agreement.
PAULSON: Well, I think -- again, a very good question. It's one I've thought about a lot and I've had some preliminary conversations with the Indians on this and, again, to complete a deal and I think these deals have got great value because it provides -- it -- they provide protections and comfort for investors and normally countries -- but both sides have got to want to pursue an agreement like this, and normally our counterparties who are willing to sign these agreements usually do so because they either have a strong need to attract foreign investment or they are using them to help them bring about reforms -- one or the other.
And we have -- I think the Indian government and the finance minister and others when I've talked about it they're quite willing to talk about investment and the importance of investment. I think it is a tougher issue, some of the things that we normally ask for -- protections, intellectual property, other things that go along with these investments.
So the way I tend to think about investment is there's no country I go to -- well, maybe there's -- I can't think of any where we don't talk about investment and what we need to do. We're open for investment in the U.S., encouraging investment, talk about some of the issues and concerns some countries have around the CFIUS process or what have you and then we talk about -- I'm all the time talking about opening up for U.S. investment and for competition and investment because it's been a key to our development and to our growth, and it's one of the big keys to our success. And so we talk about it and we talk about it in tangible steps, but to conclude a formal bet is a major undertaking and many of our trading partners aren't ready to do such a thing. Okay. One more -- I'm going to go way to the back.
QUESTIONER: Secretary Paulson, Jim Moody, Merrill Lynch.
You talked about the Doha Round -- the importance of that and, of course, we all agree. One of the strong inhibitions to raising countries out of poverty people -- countries like India and Pakistan and those areas -- is American subsidies to our agriculture that makes their agriculture less competitive. I know that's not your direct portfolio -- agricultural subsidies -- but are you -- do you weighed (sic) or your people weighed in on those -- that topic? Europe, of course, is much worse than we but we have a major problem vis-a-vis countries that export agriculture.
PAULSON: Well, I would just simply say this. People point to that all the time because there are few other areas that -- in the U.S. that -- where they can point to issues like the subsidy, and what I say and I'm -- you know, I've learned a lot about that since coming to Washington and I deal with that very directly with my counterparts because I say the U.S. has moved in showing a willingness to move. We are quite comfortable negotiating with the tax, okay? If we don't complete an agreement this will not have to do with the U.S. and ag subsidies and supports. It will not.
It will be we -- we're negotiating with them to -- in the tax and we can do what we need to do. The key thing is going to be what I pointed to and this is not -- I'm not one for pointing fingers -- I'm never going to point a finger at one particular country but it really is -- we need to get some market access in areas where we're already open and market access in services and financial services and non-agriculture and which is where the biggest part of the global economy is. That's where the economic growth is going to come from and that's going to benefit the countries that provide that much more than it does all the rest of us because that will help them develop strong economies that are competitive, first-rate financial services, and so on. So anyway that's why it's not hard to get me going on that topic. (Laughter.) Thank you all.
ACKERMAN: Thank you, Secretary. (Applause.) Thanks so much. Good job.
####
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THIS IS A RUSH TRANSCRIPT.
‘The Rise and Fall of America" JPMorgan Chase CEO and chair James Dimon
Economic Panel: Greenspan, Buffett, Paulson, Rubin, Volker, Levitt, Bloomberg
April 19, 2007
Christopher Bjorke, AFP
April 19,2007
"...addressing the health of U.S. capital markets.."
“If they write a book called, ‘The Rise and Fall of America,’ the fall would be from the legal system,” said JPMorgan Chase CEO and chair James Dimon, who called class-action suits “one-sided crap shoots” that mostly benefit outside lawyers.
“Where is the balance between hobbling the U.S. economy in a more competitive global marketplace and protecting investors from another Enron?”
Immelt said. “But is it in the best interest of the investors?”
Buffett was talking about the intensity of focus investors and regulators should bring to their scrutiny of companies
“In my judgment, we must rise above a rules-based mindset that asks, ‘Is this legal?’ and adopt a more principles-based approach that asks, ‘Is this right?’ ” Paulson said, according to a transcript from Treasury.
Buffett, Greenspan and Paulson were just a few of the big names at a U.S. Treasury conference addressing the health of U.S. capital markets. With SOX, IFRS and lawsuits, they had plenty to talk about.
A gathering of economic and financial superstardom in Washington, D.C., in March revealed a number of opinions from notables past and present.
Former Treasury Secretary Robert Rubin thinks Sarbanes-Oxley places too much liability on CEOs.
New York Mayor Michael Bloomberg believes future competitiveness requires increased immigration and better schools.
Legendary investor Warren Buffett really likes reading financial statements.
“I have an enthusiasm for reading reports. It’s like a teenager reading Playboy,” Buffett said, drawing the biggest laugh of the federal Treasury’s Conference on U.S. Capital Markets Competitiveness. “At 76, you have to get excited about something.”
Buffett was talking about the intensity of focus investors and regulators should bring to their scrutiny of companies. He and his fellow panelists met to bring their collective wisdom and experience to the question of American competitiveness in capital markets.
Current Secretary of Treasury Henry Paulson, recently returned from the latest travels in his campaign to influence Chinese economic policies, hosted the public panel discussions by the most famous and influential players in economics. Other names worthy of E.F. Hutton-type attentiveness were Alan Greenspan, Paul Volker, Arthur Levitt and Jeffrey Immelt, to name only a few.
And the question their discussions frequently came down to was, “Where is the balance between hobbling the U.S. economy in a more competitive global marketplace and protecting investors from another Enron?”
SOX and suits
U.S. companies are “digesting” regulations like Sarbanes-Oxley, Buffett said, though they have “no choice but to digest what’s being served up. ... Most of my friends are not pleased, but they, in a way, brought it on themselves.”
Since “Enron” became a byword for corporate chicanery rather than an energy company, executives in public companies have paid for the misdeeds of others, and questioned the burden of regulations like Sarbanes-Oxley and their effects on the strength of U.S. companies internationally.
“Having high standards is not a bad thing for business,” said Immelt, General Electric’s chief executive and board chair. Like other panelists, he showed an unwillingness to discount the ability of American business to adapt to a changing environment.
“Whatever the regulation is today, I can win. I can win in China, I can win in India,” Immelt said. “But is it in the best interest of the investors?”
The panelists, however, did not hesitate to discuss their frustration with audit committees, SOX 404 requirements and the threat of litigation.
“I think I’d be scared to death to sign one of these things now,” in light of the lawsuits an incorrect SOX 404 statement could bring, said former Treasury Secretary Robert Rubin.
Lawsuits and the jackpot mentality behind some litigation came in for a good share of the panelists’ ire, perhaps more so than the more politically sensitive Sarbanes-Oxley.
“If they write a book called, ‘The Rise and Fall of America,’ the fall would be from the legal system,” said JPMorgan Chase CEO and chair James Dimon, who called class-action suits “one-sided crap shoots” that mostly benefit outside lawyers.
International rules, competition
Beyond the internal regulations and legal system of the United States is the fact that it is not alone in the world as much as it was in the past. Other countries’ economies have grown up and so have international capital markets and the day when all international companies had to play by American rules—and Generally Accepted Accounting Principles—has passed.
Paulson in his opening statement broached the differences between the rules-based U.S. standards and the principles-based international standards.
“In my judgment, we must rise above a rules-based mindset that asks, ‘Is this legal?’ and adopt a more principles-based approach that asks, ‘Is this right?’ ” Paulson said, according to a transcript from Treasury.
Securities and Exchange Commission Chairman Christopher Cox, Paulson’s co-chair on the conference’s panels, put the rules/principles dichotomy another way.
“It’s ‘like tastes great, less filling.’ Everybody wants both,” Cox said. “Enron taught us that following rules punctiliously is not necessarily the way to truth.”
Former Federal Reserve Chairman Paul Volker said American adherence to its standards was out of step with companies.
“An overwhelming number of companies big and small are adopting IFRS,” he said. “The U.S. is going to be left behind.”
A frequent statistic meant to instill in business people and policy-makers a healthy fear of over-regulation is the issue of companies choosing to list on overseas equity markets and the shift of public companies to private ownership. Not all the panelists were convinced that complex U.S. rules were driving a trend.
According to former SEC chair Arthur Levitt, now an advisor to the Carlyle Group, companies listing overseas were merely a result of other countries mimicking American financial services, “the greatest export the U.S. has had.”
“It doesn’t make any difference in terms of jobs and basic business,” Levitt said.
Immelt and others said companies going private may be just a passing fad.
“We’re at a moment in time where that’s being played up as the nirvana of business.”
Bloomberg and Greenspan both took a long view on the economy, citing big-picture concerns such as immigration restrictions, poor education and wide income disparity as threats to the economy.
As for the more immediate regulatory concerns of the panel, opinions stayed on a theme: Laws are fine as long there is balance and clarity.
As Bloomberg expressed it, “Just tell us what the law is and we can compete.”
Copyright © 2007 Association for Financial Professionals. All Rights Reserved.
April 19, 2007
Christopher Bjorke, AFP
April 19,2007
"...addressing the health of U.S. capital markets.."
“If they write a book called, ‘The Rise and Fall of America,’ the fall would be from the legal system,” said JPMorgan Chase CEO and chair James Dimon, who called class-action suits “one-sided crap shoots” that mostly benefit outside lawyers.
“Where is the balance between hobbling the U.S. economy in a more competitive global marketplace and protecting investors from another Enron?”
Immelt said. “But is it in the best interest of the investors?”
Buffett was talking about the intensity of focus investors and regulators should bring to their scrutiny of companies
“In my judgment, we must rise above a rules-based mindset that asks, ‘Is this legal?’ and adopt a more principles-based approach that asks, ‘Is this right?’ ” Paulson said, according to a transcript from Treasury.
Buffett, Greenspan and Paulson were just a few of the big names at a U.S. Treasury conference addressing the health of U.S. capital markets. With SOX, IFRS and lawsuits, they had plenty to talk about.
A gathering of economic and financial superstardom in Washington, D.C., in March revealed a number of opinions from notables past and present.
Former Treasury Secretary Robert Rubin thinks Sarbanes-Oxley places too much liability on CEOs.
New York Mayor Michael Bloomberg believes future competitiveness requires increased immigration and better schools.
Legendary investor Warren Buffett really likes reading financial statements.
“I have an enthusiasm for reading reports. It’s like a teenager reading Playboy,” Buffett said, drawing the biggest laugh of the federal Treasury’s Conference on U.S. Capital Markets Competitiveness. “At 76, you have to get excited about something.”
Buffett was talking about the intensity of focus investors and regulators should bring to their scrutiny of companies. He and his fellow panelists met to bring their collective wisdom and experience to the question of American competitiveness in capital markets.
Current Secretary of Treasury Henry Paulson, recently returned from the latest travels in his campaign to influence Chinese economic policies, hosted the public panel discussions by the most famous and influential players in economics. Other names worthy of E.F. Hutton-type attentiveness were Alan Greenspan, Paul Volker, Arthur Levitt and Jeffrey Immelt, to name only a few.
And the question their discussions frequently came down to was, “Where is the balance between hobbling the U.S. economy in a more competitive global marketplace and protecting investors from another Enron?”
SOX and suits
U.S. companies are “digesting” regulations like Sarbanes-Oxley, Buffett said, though they have “no choice but to digest what’s being served up. ... Most of my friends are not pleased, but they, in a way, brought it on themselves.”
Since “Enron” became a byword for corporate chicanery rather than an energy company, executives in public companies have paid for the misdeeds of others, and questioned the burden of regulations like Sarbanes-Oxley and their effects on the strength of U.S. companies internationally.
“Having high standards is not a bad thing for business,” said Immelt, General Electric’s chief executive and board chair. Like other panelists, he showed an unwillingness to discount the ability of American business to adapt to a changing environment.
“Whatever the regulation is today, I can win. I can win in China, I can win in India,” Immelt said. “But is it in the best interest of the investors?”
The panelists, however, did not hesitate to discuss their frustration with audit committees, SOX 404 requirements and the threat of litigation.
“I think I’d be scared to death to sign one of these things now,” in light of the lawsuits an incorrect SOX 404 statement could bring, said former Treasury Secretary Robert Rubin.
Lawsuits and the jackpot mentality behind some litigation came in for a good share of the panelists’ ire, perhaps more so than the more politically sensitive Sarbanes-Oxley.
“If they write a book called, ‘The Rise and Fall of America,’ the fall would be from the legal system,” said JPMorgan Chase CEO and chair James Dimon, who called class-action suits “one-sided crap shoots” that mostly benefit outside lawyers.
International rules, competition
Beyond the internal regulations and legal system of the United States is the fact that it is not alone in the world as much as it was in the past. Other countries’ economies have grown up and so have international capital markets and the day when all international companies had to play by American rules—and Generally Accepted Accounting Principles—has passed.
Paulson in his opening statement broached the differences between the rules-based U.S. standards and the principles-based international standards.
“In my judgment, we must rise above a rules-based mindset that asks, ‘Is this legal?’ and adopt a more principles-based approach that asks, ‘Is this right?’ ” Paulson said, according to a transcript from Treasury.
Securities and Exchange Commission Chairman Christopher Cox, Paulson’s co-chair on the conference’s panels, put the rules/principles dichotomy another way.
“It’s ‘like tastes great, less filling.’ Everybody wants both,” Cox said. “Enron taught us that following rules punctiliously is not necessarily the way to truth.”
Former Federal Reserve Chairman Paul Volker said American adherence to its standards was out of step with companies.
“An overwhelming number of companies big and small are adopting IFRS,” he said. “The U.S. is going to be left behind.”
A frequent statistic meant to instill in business people and policy-makers a healthy fear of over-regulation is the issue of companies choosing to list on overseas equity markets and the shift of public companies to private ownership. Not all the panelists were convinced that complex U.S. rules were driving a trend.
According to former SEC chair Arthur Levitt, now an advisor to the Carlyle Group, companies listing overseas were merely a result of other countries mimicking American financial services, “the greatest export the U.S. has had.”
“It doesn’t make any difference in terms of jobs and basic business,” Levitt said.
Immelt and others said companies going private may be just a passing fad.
“We’re at a moment in time where that’s being played up as the nirvana of business.”
Bloomberg and Greenspan both took a long view on the economy, citing big-picture concerns such as immigration restrictions, poor education and wide income disparity as threats to the economy.
As for the more immediate regulatory concerns of the panel, opinions stayed on a theme: Laws are fine as long there is balance and clarity.
As Bloomberg expressed it, “Just tell us what the law is and we can compete.”
Copyright © 2007 Association for Financial Professionals. All Rights Reserved.
May 2006...we both committed to make consistent strides towards financial sector liberalization.
Last May, when senior Chinese officials came to Washington for our second meeting of the Strategic Economic Dialogue, we both committed to make consistent strides towards financial sector liberalization. As a result, a major U.S. bank recently announced plans to establish at least ten rural banks and loan companies in China's countryside. It will join the Chinese government's pilot program to allow foreign investors to operate in the rural areas of western and central China. Such transactions, over time, will bring transformational benefits to China's economy and to U.S.-China economic ties.
November 8, 2007
hp-671
Remarks by Secretary Henry M. Paulson, Jr.
before the 2007 China Institute Executive Summit
on Shared Responsibilities and Shared Benefits in U.S.-China Economic Relations
New York, NY-- Good evening. Thank you, Ginny, and the China Institute for inviting me to address your Executive Summit. The China Institute's more than seven decades of work, promoting educational and commercial exchanges with China, underscore the value of a long-term, constructive approach to U.S.-China relations.
This conference, China Goes Global: New Perspectives and New Strategies, could not be more timely. The U.S.-China economic relationship is among my highest priorities. It is also among the most challenging.
A Strategy for Economic Engagement with China
China and the United States are two of the largest and most influential economies in the world. That prominence brings responsibilities. Addressing these responsibilities together will create greater benefit for both our peoples. That proved true when we worked together to bring China into the WTO. The requirements of WTO accession led to an acceleration of reform in China. China now has the responsibilities and must fulfill the obligations of a major WTO member, just as China has reaped the rewards of the rapid growth that followed WTO accession.
The United States and China have a unique role to play in the coming decades in assuring a strong global economy and shaping the global economic agenda. Greater coordination and enhanced cooperation is required – indeed, demanded – of us in order to meet those responsibilities.
These dynamics informed the creation of the Strategic Economic Dialogue (SED) by President Bush and President Hu Jintao in 2006. They have established a forum that allows both governments to communicate at the highest levels on issues of long-term and strategic importance to ensure bilateral economic stability and prosperity. Through the SED, we also work to produce tangible short-term results which are necessary to demonstrate progress towards achieving our long term objectives.
Our economic dialogue now focuses on going beyond China's WTO commitments. Admission to the WTO represents a minimum level. It is important that China fully meet those commitments but an equally important challenge is to accelerate reform beyond those commitments. China's leaders understand the role of markets in attaining stable, non-inflationary growth to meet the needs and aspirations of their people. Our discussions have not been about the direction of reform, but rather about the pace. As China's economy rapidly evolves, the challenges that it faces and the policies required to continue China's development have also changed. While some in China and elsewhere may see danger in moving too quickly with reforms, I believe moving too slowly is the bigger risk to Chinese and world prosperity.
Understanding Shared Responsibilities and Realizing Shared Benefits
As major global economic players, we both have responsibilities to maintain open trade and investment regimes, implement domestic policies that promote the health of our own economies and of the global economy, enhance the safety and integrity of trade, and promote energy conservation and environmental protection.
Shared Responsibility for Open Economies
The first of the responsibilities that the United States and China share in the global economy is to maintain open trade and investment regimes. Open economies spur competition, improve productivity, and create good jobs – in our countries and around the globe.
The U.S. economy is one of the most open in the world, and I am committed to working to maintain this openness, even in the face of rising protectionist sentiments in the U.S. Almost thirty years ago, Chinese leaders clearly recognized the value of an open economy; but China still has much more work to do. This challenge is becoming more difficult as it confronts strong protectionist sentiment from its domestic companies which, like all market-driven firms, welcome competition in other industries much more than in their own.
The efforts of each of us to maintain open trade and investment regimes at home strengthen the efforts of the other. The United States is working to reinforce our open economy policy and keep our markets open to investment and trade. Frankly, it is easier to keep the U.S. economy open if the American public sees China continuing to open up their markets. By joining efforts, we will be more effective in working against this protectionist tide and in promoting the competition and openness to investment that drive greater innovation and productivity.
Just as openness to competition has kept the U.S. economy on the cutting edge, further openness to trade and competition is clearly in China's interest. For China, further opening of key sectors to competition is critical to achieving the growing prosperity that the Chinese people expect and deserve. For example, opening the financial services sector to foreign participation will enable China to leap-frog years of costly and problematic practices. Chinese households across the nation would more quickly gain access to a wider range of higher-yielding savings instruments they need to build assets more rapidly for higher living standards today and in retirement.
Opening markets to trade and competition would further signal to the international community China's willingness to assume a role as a responsible global economic power. Also, given growing protectionist sentiments around the world, if Chinese reforms slow, China may confront a backlash from other nations.
Shared Responsibility for a Healthy Global Economy
The U.S. and China also share a responsibility to support the health of the global economy. By working together on this, we can create greater benefits for the people of both our nations.
Balanced growth – growth that does not generate large trade imbalances -- is vital to each of our country's prosperity and to sustained global economic growth. In the United States, we remain committed to advancing policies that maintain strong growth and enhance international confidence in our economy, financial markets and securities. We are reducing our budget deficit, and we need to address rising entitlement costs. This is in our interest, and is also key to addressing global imbalances in the medium term. We must also maintain the robust productivity growth that has allowed the United States to be a key driver of global prosperity in recent years.
For China, balanced growth requires continuing economic reform. The resource-intensive, export-intensive economic model that has driven China's extraordinary growth has led to growing imbalances that threaten internal harmony and spur trade conflict. Sustaining China's development in the future will require growth that is based more on increases in productivity, rising domestic household demand, and a greater role for services. All of this depends on a greater role for the market in allocating capital and a reduced reliance on administrative decisions.
China's leaders have pledged to carry out the economic reforms necessary to rebalance their economy. Of course, implementation is the name of the game. The expanding size and complexity of the Chinese economy, in particular the influence of provincial governments in policy implementation, make meeting these responsibilities more challenging. The question is not whether China can grow quickly over the short term; the question is whether it can grow differently and consistently over the long term.
To enable market forces to efficiently rebalance the economy and spread prosperity to all the Chinese, China needs more flexible prices, including a much more flexible, market-driven exchange rate. Exchange rate flexibility is also key to allowing monetary policy – the most potent instrument for guiding an economy – to focus on assuring stable and non-inflationary growth.
Also, the RMB's exchange rate is increasingly being viewed by many countries as a source of unfair competition. China is increasingly seen as out of step with international norms and expectations, as evidenced by the growing number of national leaders and multilateral institutions calling for currency appreciation. The G-7 Finance Minister's meeting held in Washington two weeks ago concluded with a communiqué that specifically called for RMB appreciation.
The United States has a stake in China's structural economic reforms because we have a stake in a prosperous, stable China. We do not fear an economically stronger and more competitive China, which benefits the Chinese people, the American people, and the prosperity of the global economy.
Working together is already bringing benefits to both our nations, but we have the potential to do much more. We will only realize that potential through direct and intense engagement such as the Strategic Economic Dialogue.
Last May, when senior Chinese officials came to Washington for our second meeting of the Strategic Economic Dialogue, we both committed to make consistent strides towards financial sector liberalization. As a result, a major U.S. bank recently announced plans to establish at least ten rural banks and loan companies in China's countryside. It will join the Chinese government's pilot program to allow foreign investors to operate in the rural areas of western and central China. Such transactions, over time, will bring transformational benefits to China's economy and to U.S.-China economic ties.
Shared Responsibility for the Integrity of Trade
WTO accession and integration into the world economy has allowed China to dramatically grow and thrive. As large beneficiaries of global integration, the U.S. and China share a responsibility to maintain the integrity of trade. The benefits of trade can only continue to flow when consumers around the world have confidence in the quality and integrity of the goods they buy. While the safety of food and product imports is a global problem, it has touched our bilateral trade relationship in an acute way in recent months.
We need to work together through respectful, science-based processes to ensure that products coming to America from China are safe. Effective management of these safety issues will have a long term, positive impact on U.S.-China trade relations. As China overcomes these issues, it will be further integrated into the global trading system and this will benefit China's people and help sustain China's economic growth.
Through the SED framework, we have expanded bilateral consultations to improve the U.S. government's ability to certify the safety of food and product imports coming from China. The United States will continue to seek opportunities to work with China – by sharing our extensive experience – as China builds the regulatory infrastructures necessary for safe and secure trade in a globally integrated world. On Tuesday, the Bush Administration announced a significant expansion of Food and Drug Administration and Consumer Product Safety Commission authority to inspect and certify imports, and an effort to work with Congress to implement measures to ensure effective inspection of imports. We can use this as a model as we work with China in this crucial area.
Shared Energy and Environmental Responsibilities
The United States and China also share the responsibility of ensuring secure and clean energy supplies, and protecting the environment. China's acute environmental problems are degrading the health of its population and ecosystems as well as undermining China's long-term economic potential. My perspective is not that of an official of a rich, developed nation, but one borne out by economic truths and past American experiences balancing these priorities. A healthy environment and a strong economy are not mutually exclusive; they are mutually necessary. As I learned during my July trip to Qinghai Province, no one understands this better, or is more concerned about it, than the Chinese people. I applaud the Chinese leadership's recent effort to expend extensive financial resource to save Lake Tai.
Addressing the issue of climate change by working together on a post-2012 framework will help the United States and China meet our global environmental responsibilities more effectively, and bring greater benefit to our citizens. And, if we are to be successful in this, it must be against the backdrop of strong economies. I was especially pleased that China participated in the recent Major Economies Meeting hosted by President Bush.
As the world's largest consumers of oil and as net-importers, we clearly share an interest in energy security and energy conservation. We should expand cooperation in the development of new sources of supply and in minimizing supply shocks. Through cooperation in the development of new alternative energy technologies, we can help ensure that the benefits of a clean, healthy environment endure for coming generations.
Advancing U.S.-China Economic Relations at SED III
In December, cabinet-level officials from both China and the United States will meet in Beijing for the third round of the Strategic Economic Dialogue. We have a robust and comprehensive agenda which will require focused and consistent leadership in both Washington and Beijing. We will focus on long-term strategic issues, as well as manage short term issues to show progress and concrete results along the way. By addressing the most pressing, short-term issues we can build the confidence to maintain the long-term, strategic relationship that will define the trajectory of U.S.-China economic ties.
As our two proud and powerful nations work together to meet our responsibilities, our citizens and the global economy will benefit. This relationship may ultimately determine many of the patterns of global prosperity, international security, and economic stability in the 21st century.
Thank you.
November 8, 2007
hp-671
Remarks by Secretary Henry M. Paulson, Jr.
before the 2007 China Institute Executive Summit
on Shared Responsibilities and Shared Benefits in U.S.-China Economic Relations
New York, NY-- Good evening. Thank you, Ginny, and the China Institute for inviting me to address your Executive Summit. The China Institute's more than seven decades of work, promoting educational and commercial exchanges with China, underscore the value of a long-term, constructive approach to U.S.-China relations.
This conference, China Goes Global: New Perspectives and New Strategies, could not be more timely. The U.S.-China economic relationship is among my highest priorities. It is also among the most challenging.
A Strategy for Economic Engagement with China
China and the United States are two of the largest and most influential economies in the world. That prominence brings responsibilities. Addressing these responsibilities together will create greater benefit for both our peoples. That proved true when we worked together to bring China into the WTO. The requirements of WTO accession led to an acceleration of reform in China. China now has the responsibilities and must fulfill the obligations of a major WTO member, just as China has reaped the rewards of the rapid growth that followed WTO accession.
The United States and China have a unique role to play in the coming decades in assuring a strong global economy and shaping the global economic agenda. Greater coordination and enhanced cooperation is required – indeed, demanded – of us in order to meet those responsibilities.
These dynamics informed the creation of the Strategic Economic Dialogue (SED) by President Bush and President Hu Jintao in 2006. They have established a forum that allows both governments to communicate at the highest levels on issues of long-term and strategic importance to ensure bilateral economic stability and prosperity. Through the SED, we also work to produce tangible short-term results which are necessary to demonstrate progress towards achieving our long term objectives.
Our economic dialogue now focuses on going beyond China's WTO commitments. Admission to the WTO represents a minimum level. It is important that China fully meet those commitments but an equally important challenge is to accelerate reform beyond those commitments. China's leaders understand the role of markets in attaining stable, non-inflationary growth to meet the needs and aspirations of their people. Our discussions have not been about the direction of reform, but rather about the pace. As China's economy rapidly evolves, the challenges that it faces and the policies required to continue China's development have also changed. While some in China and elsewhere may see danger in moving too quickly with reforms, I believe moving too slowly is the bigger risk to Chinese and world prosperity.
Understanding Shared Responsibilities and Realizing Shared Benefits
As major global economic players, we both have responsibilities to maintain open trade and investment regimes, implement domestic policies that promote the health of our own economies and of the global economy, enhance the safety and integrity of trade, and promote energy conservation and environmental protection.
Shared Responsibility for Open Economies
The first of the responsibilities that the United States and China share in the global economy is to maintain open trade and investment regimes. Open economies spur competition, improve productivity, and create good jobs – in our countries and around the globe.
The U.S. economy is one of the most open in the world, and I am committed to working to maintain this openness, even in the face of rising protectionist sentiments in the U.S. Almost thirty years ago, Chinese leaders clearly recognized the value of an open economy; but China still has much more work to do. This challenge is becoming more difficult as it confronts strong protectionist sentiment from its domestic companies which, like all market-driven firms, welcome competition in other industries much more than in their own.
The efforts of each of us to maintain open trade and investment regimes at home strengthen the efforts of the other. The United States is working to reinforce our open economy policy and keep our markets open to investment and trade. Frankly, it is easier to keep the U.S. economy open if the American public sees China continuing to open up their markets. By joining efforts, we will be more effective in working against this protectionist tide and in promoting the competition and openness to investment that drive greater innovation and productivity.
Just as openness to competition has kept the U.S. economy on the cutting edge, further openness to trade and competition is clearly in China's interest. For China, further opening of key sectors to competition is critical to achieving the growing prosperity that the Chinese people expect and deserve. For example, opening the financial services sector to foreign participation will enable China to leap-frog years of costly and problematic practices. Chinese households across the nation would more quickly gain access to a wider range of higher-yielding savings instruments they need to build assets more rapidly for higher living standards today and in retirement.
Opening markets to trade and competition would further signal to the international community China's willingness to assume a role as a responsible global economic power. Also, given growing protectionist sentiments around the world, if Chinese reforms slow, China may confront a backlash from other nations.
Shared Responsibility for a Healthy Global Economy
The U.S. and China also share a responsibility to support the health of the global economy. By working together on this, we can create greater benefits for the people of both our nations.
Balanced growth – growth that does not generate large trade imbalances -- is vital to each of our country's prosperity and to sustained global economic growth. In the United States, we remain committed to advancing policies that maintain strong growth and enhance international confidence in our economy, financial markets and securities. We are reducing our budget deficit, and we need to address rising entitlement costs. This is in our interest, and is also key to addressing global imbalances in the medium term. We must also maintain the robust productivity growth that has allowed the United States to be a key driver of global prosperity in recent years.
For China, balanced growth requires continuing economic reform. The resource-intensive, export-intensive economic model that has driven China's extraordinary growth has led to growing imbalances that threaten internal harmony and spur trade conflict. Sustaining China's development in the future will require growth that is based more on increases in productivity, rising domestic household demand, and a greater role for services. All of this depends on a greater role for the market in allocating capital and a reduced reliance on administrative decisions.
China's leaders have pledged to carry out the economic reforms necessary to rebalance their economy. Of course, implementation is the name of the game. The expanding size and complexity of the Chinese economy, in particular the influence of provincial governments in policy implementation, make meeting these responsibilities more challenging. The question is not whether China can grow quickly over the short term; the question is whether it can grow differently and consistently over the long term.
To enable market forces to efficiently rebalance the economy and spread prosperity to all the Chinese, China needs more flexible prices, including a much more flexible, market-driven exchange rate. Exchange rate flexibility is also key to allowing monetary policy – the most potent instrument for guiding an economy – to focus on assuring stable and non-inflationary growth.
Also, the RMB's exchange rate is increasingly being viewed by many countries as a source of unfair competition. China is increasingly seen as out of step with international norms and expectations, as evidenced by the growing number of national leaders and multilateral institutions calling for currency appreciation. The G-7 Finance Minister's meeting held in Washington two weeks ago concluded with a communiqué that specifically called for RMB appreciation.
The United States has a stake in China's structural economic reforms because we have a stake in a prosperous, stable China. We do not fear an economically stronger and more competitive China, which benefits the Chinese people, the American people, and the prosperity of the global economy.
Working together is already bringing benefits to both our nations, but we have the potential to do much more. We will only realize that potential through direct and intense engagement such as the Strategic Economic Dialogue.
Last May, when senior Chinese officials came to Washington for our second meeting of the Strategic Economic Dialogue, we both committed to make consistent strides towards financial sector liberalization. As a result, a major U.S. bank recently announced plans to establish at least ten rural banks and loan companies in China's countryside. It will join the Chinese government's pilot program to allow foreign investors to operate in the rural areas of western and central China. Such transactions, over time, will bring transformational benefits to China's economy and to U.S.-China economic ties.
Shared Responsibility for the Integrity of Trade
WTO accession and integration into the world economy has allowed China to dramatically grow and thrive. As large beneficiaries of global integration, the U.S. and China share a responsibility to maintain the integrity of trade. The benefits of trade can only continue to flow when consumers around the world have confidence in the quality and integrity of the goods they buy. While the safety of food and product imports is a global problem, it has touched our bilateral trade relationship in an acute way in recent months.
We need to work together through respectful, science-based processes to ensure that products coming to America from China are safe. Effective management of these safety issues will have a long term, positive impact on U.S.-China trade relations. As China overcomes these issues, it will be further integrated into the global trading system and this will benefit China's people and help sustain China's economic growth.
Through the SED framework, we have expanded bilateral consultations to improve the U.S. government's ability to certify the safety of food and product imports coming from China. The United States will continue to seek opportunities to work with China – by sharing our extensive experience – as China builds the regulatory infrastructures necessary for safe and secure trade in a globally integrated world. On Tuesday, the Bush Administration announced a significant expansion of Food and Drug Administration and Consumer Product Safety Commission authority to inspect and certify imports, and an effort to work with Congress to implement measures to ensure effective inspection of imports. We can use this as a model as we work with China in this crucial area.
Shared Energy and Environmental Responsibilities
The United States and China also share the responsibility of ensuring secure and clean energy supplies, and protecting the environment. China's acute environmental problems are degrading the health of its population and ecosystems as well as undermining China's long-term economic potential. My perspective is not that of an official of a rich, developed nation, but one borne out by economic truths and past American experiences balancing these priorities. A healthy environment and a strong economy are not mutually exclusive; they are mutually necessary. As I learned during my July trip to Qinghai Province, no one understands this better, or is more concerned about it, than the Chinese people. I applaud the Chinese leadership's recent effort to expend extensive financial resource to save Lake Tai.
Addressing the issue of climate change by working together on a post-2012 framework will help the United States and China meet our global environmental responsibilities more effectively, and bring greater benefit to our citizens. And, if we are to be successful in this, it must be against the backdrop of strong economies. I was especially pleased that China participated in the recent Major Economies Meeting hosted by President Bush.
As the world's largest consumers of oil and as net-importers, we clearly share an interest in energy security and energy conservation. We should expand cooperation in the development of new sources of supply and in minimizing supply shocks. Through cooperation in the development of new alternative energy technologies, we can help ensure that the benefits of a clean, healthy environment endure for coming generations.
Advancing U.S.-China Economic Relations at SED III
In December, cabinet-level officials from both China and the United States will meet in Beijing for the third round of the Strategic Economic Dialogue. We have a robust and comprehensive agenda which will require focused and consistent leadership in both Washington and Beijing. We will focus on long-term strategic issues, as well as manage short term issues to show progress and concrete results along the way. By addressing the most pressing, short-term issues we can build the confidence to maintain the long-term, strategic relationship that will define the trajectory of U.S.-China economic ties.
As our two proud and powerful nations work together to meet our responsibilities, our citizens and the global economy will benefit. This relationship may ultimately determine many of the patterns of global prosperity, international security, and economic stability in the 21st century.
Thank you.
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