Supreme Court Will Determine Constitutionality of PCAOB

Earlier this year, the Supreme Court agreed to hear oral arguments on the constitutionality of the Public Company Accounting Oversight Board, known as the “PCAOB”, or as many others have amicably dubbed it, “peek-a-boo” (a reference to the acronym, as well as its function to “surprise” inspect audits of accounting firms).  The PCAOB arose out of the Sarbanes Oxley Act (“SOX”), a rather infamous piece of legislation among accountants and CFOs alike.

Florida Wins…or loses?

Fox New’s Marketwatch reported that Florida has suffered the most in home foreclosures of any state  Over ten percent of all mortgages in the state are in foreclosure and double that amount have defaulted in one way or another.  Those percentages amount to over 2.3 million Florida mortgages being underwater.

It’s interesting because you always hear people musing that it was the Las Vegas housing market that was hit the hardest or that it was Michigan that took the toughest  blow.  How can all these places be hit the hardest, be suffering the most? Clearly, it’s comparing the lesser of evils.  Doing a quick Google search of “Michigan Housing Market” a majority of the hits have the theme of despair. For example, some hits were entitled: “When will Michigan Housing Recover, are we near bottom yet”?” “Why Michigan House Values keep falling (and falling).” The same type of theme comes up when the same search is done for Las Vegas.

So it is a scary thing to hear that a winner has been declared as having the worst mortgage problems, because if there is a state that has a higher foreclosure rate than those states that immediately come to mind in terms of high foreclosure rates, the bottom may be lower than we thought.

 

Bye Bye Block 37

It’s no suprise that Block 37 is being foreclosed on. The project seemed doomed from the beginning.  Doomed since it was first introduced under the original Daley, Richard J.,  in 1970.   Today Bank of America and another group of investors moved to foreclose on the development claiming the developer Freed owes $128.5 million on a $205 originally loaned.  So, what gives?  How could the developer not make the building work?  The location could not be more ideal, surrounded by the court house, theater district and shopping central.

However, maybe we shouldn’t be so quick to blame the developer.  This could be just another loan gone wrong.  Another time the banks and other lenders overextended themselves to debtors, a mirror of the imploded housing market.  We will have to wait and see if banks begin to foreclose on other development projects to know if this is a fluke or if it’s the begining of a trend towards a burst in the commerical real estate bubble.

Eastern Europe’s Economic Struggle

As most Americans continue to grimace at the mere mention of the words ‘economic crisis’ and ‘current job market’, looking abroad may provide solace for some.  Eighteen years ago the Soviet Union fell, transforming Eastern Europe into a playground for the world’s most daring capitalists.  The recent global economic crisis, however, has intensified an already tumultuous situation by highlighting glaring weaknesses in the policies of many of Eastern Europe’s most powerful governments.

BofA, Merrill Lynch, and the Lawyers Who Advised

While Bank of America CEO Ken Lewis is taking the fall for the sketchy acquisition of Merrill Lynch, maybe we should also be looking at the lawyers who advised him. The bank has agreed to release more documents on the controversial deal, including legal advice. And the bank says it followed its lawyers’ counsel. According to Breakingviews, things could get uncomfortable for the lawyers.

Exhibit A is the decision by Jed Rakoff, a federal judge in New York, to reject the $33 million settlement Bank of America had reached with the Securities and Exchange Commission over disclosures, or lack thereof, surrounding the Merrill deal, including potential bonus payments to the firm’s bankers. Simply put, he wanted names to be named. He also wanted to know more about the legal advice the bank had received.

Exhibit B is Andrew M. Cuomo, the New York attorney general. His opportunistic strikes, including threats to charge bank bosses including Mr. Lewis, have helped persuade the bank to make an about-face, the publication argues. For months, the bank insisted it wouldn’t release the legal advice it had relied on. This week, it decided it would.

Law firm Wachtell, Lipton, Rosen & Katz was the main advisor for the Merrill Lynch deal.

While there it is not clear whether Wachtell’s advice “departed from the norms of previous financial sector mergers” or that the bank’s in-house counsel acted outside of the scope of Wachtell’s advice, it would be a disaster if either of these scenarios turned out to be true.

Eight Wasn’t Enough

Victims of Bernie Madoff’s ponzi scheme which may have resulted in losses up to $13 billion  have good reason for looking for scape goats. Madoff himself is in jail and will no doubt die while incarcerated before his 2139 release date.  Although there must be some justice in that, is is not financial justice which the victims right deserve.  Some victims have used the legal system to go after Madoff’s wife, Ruth, while others have gone after his family members .  The latest justice seeking group of victims are choosing another scapegoat, namely the SEC.

Career Panel Tomorrow: “From the Courtroom to the Boardroom: Using Your Law Degree in the Business World”

Please join the Corporate Law Society, Real Estate Law Society and the Career Services Office on Tuesday, October 13, 2009, when three accomplished executives will address the topic: “From the Courtroom to the Boardroom: Using Your Law Degree in the Business World.”

Howard Tullman is the immediate past President of Kendall College, which he recently sold to Laureate Education. Now, Mr. Tullman serves as CEO of Flashpoint, digital media arts college. After practicing law for ten years,  Mr. Tullman changed routes and has founded or served as CEO or Board Chairman of nine companies and as a director and/or adviser to many other early-stage companies. In addition to teaching at Northwestern’s Kellogg Graduate School of Management, Mr. Tullman is the General Managing Partner of Chicago’s High Tech Investors, LLC, Director of the Cobalt Group and Passage Events, both located in Seattle. Mr. Tullman graduated, with honors, from both Northwestern University and Northwestern University School of Law.

Victoria Noonan is the Managing Director of Leasing for Tishman Speyer Properties, responsible for supervising and coordinating the company’s leasing efforts for the Chicago portfolio. Tishman Speyer is one of the leading owners, developers and managers of first-class real estate in the world. In Chicago, Ms. Noonan manages leasing efforts for eleven high-rise buildings in the area, including the Civic Opera Building. Ms. Noonan graduated from DePaul University in 1980 and received her J.D. from Chicago-Kent in 1984.

After practicing as a commercial real estate attorney at Katten Muchin Rosenman LLP and, thereafter, at Greenberg Taurig LLP, Dustin Cahan left his practice to become the Chief Operating Officer of Evaporcool Solutions, LLC, a “green” technology venture. Mr. Cahan, who is 29, oversees the development and manufacturing of a sophisticated cooling solution, which reduces energy and maintenance costs of air conditioning equipment. Mr. Cahan obtained his B.A. in economics from Northwestern University, and thereafter his J.D. from Northwestern University School of Law.

The event will convene at 12:00 p.m. in Room 270. Pizza and refreshments will be served.

If you’re happy at your bank, raise your hand

If you’re unhappy with overdraft charges or upset with the fact that you had to buy all new checks when your bank went under, you’re suprisingly in the minority.  An online survey by Digital Insight reported by Pacific Business News revealed that people are happy or very happy with their current bank.  The results were reached by polling both individuals and small businesses.  On a whole, people and businesses felt secure in their current bank’s stability.  Maybe people feel secure and content is because they have no choice in where they can bank. 

Shop till you drop

Good morning Chicago, it’s Monday October 5^th and in the retail business world this means that holiday shopping is upon us. The Wall Street Journal reported today that retailers and analysts are anxiously awaiting the September sales reports due this Thursday from “key store chains” to see if they need to adjust their already gloomy holiday sales forecasts. Large chains, such as Wal-Mart are already advertising big savings for the early birds – including 100 toys priced at $10. And, we can all bet that Best Buy will be promoting similar deals on all sorts of electronics. So, get ready all you bargain shoppers and recessionistas, this is another great year for you! Be sure to put your wish lists together early because it’ll be another mad dash to the registers this year for everything is “while supplies last.”

Chicago 2016 Olympics: American Dream or Nightmare?

We are only a day away from the long awaited International Olympic Committee’s selection of a host city for the 2016 Summer Games. As the city wide excitement continues to grow, reality also seems to be setting in. Up to date there have been a lot of mixed emotions about bringing the games to Chicago.  Chicago residents have been torn between the feelings of pride and honor associated with hosting the Games, yet tension is running high as to how exactly the city will afford such a feat. Mayor Daley has confidently stated, “Tax money isn’t paying for it. There’s no tax money whatsoever…We are very strong in that position … in the regard to having that be sponsored by the private sector and others.” And, the 2016 Olympic bid committee has repeatedly assured that the $4.8 billion estimated cost would be paid for with contributions from wealthy donors, corporate sponsorships, television rights and ticket sales to ceremonies and sporting events. But, can the local government be trusted not to use the public taxpayer’s money to put on the Games?  I, for one, would be proud to have the Olympics in Chicago, but at what cost?  These questions will be answered in the coming weeks and months, but for now we hold our breaths praying for a good tomorrow…