Finance and Economic

Federal subsidies for COBRA insurance coverage for involuntary terminated workers have been extended to 15 months – a move hailed by North Carolina’s insurance commissioner.

The subsidy, part of the federal stimulus plan, pays for 65 percent of the COBRA and mini-COBRA premiums for workers laid off from their jobs between Sept. 1, 2008 and Feb. 28, 2010. Previously, the subsidy ran out after nine months, after which the unemployed would have to pay the full COBRA premium.

“The COBRA subsidy extension is great news for North Carolinians who have been laid off and couldn’t continue their health insurance because of the often impossibly expensive premiums,” said state Insurance Commissioner Wayne Goodwin. “Many citizens in our state were approaching the subsidy’s original cutoff date and just didn’t know how they could pay for the full coverage premiums – or worse, they were forced to cancel their coverage once the subsidy ran out. I’m so pleased that these folks will have the opportunity to maintain their coverage.”

The extension applies to those who are currently receiving the subsidies and to those who have already exhausted their initial nine months of subsidies business card templates. Unemployed workers who are eligible for the subsidies will be notified by their former employers’ insurance provider.

Workers who dropped COBRA after the subsidies ran out because they could not afford the full premiums re-enroll and receive the extended subsidy. Workers who have been paying the full premium since the subsidies ran out should contact their plan administrator or sponsor about receiving future credits or reimbursements for their past payments.

COBRA allows many workers and their families to continue receiving health insurnace coverage that had been provided through their former employer. However, the worker is responsible for paying up to 102 percent of the total cost of the insurance, much of which may have been paid for by the employer.

Mini-COBRA is provided for workers of companies with fewer than 20 employees.

Individuals with questions about COBRA benefits should contact the N.C. Department of Insurance at (800) 546-5664 or go online to www.dol.gov/cobra.

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Accounting firm Watkins Meegan LLC has hired the managing partner of Sturn Wagner Lombardo & Co. LLC, a dissolving Annapolis accounting and consulting firm.

Kurt Sturn, founder of Sturn Wagner Lobardo, will join Bethesda-based Watkins Meegan Jan. 1 and will bring his entire book of business and five to 10 other professional employees with him, said Sean Roddy, chief operating officer of Watkins Meegan, which already has an Annapolis office with about 15 employees.

The deal is part of a new acquisition strategy for Watkins Meegan, the second-largest locally-based accounting firm in the Washington area with about 240 employees and four offices.

“We’re hoping to double over the next five years,” Roddy said.

Over the last five years, the firm has grown its staff 33 percent, according to the Washington Business Journal list of accounting firms — all of it organic.

The firm also is talking to a few potential acquisition targets, Roddy said.

With the current deal, Sturn approached Watkins Meegan, saying he and his partners were going in different directions and were thinking about dissolving, Roddy said.

The firm signed a deal with Sturn last week and is still in negotiations to bring on some of the other accountants that worked under him.

“I am both proud and confident that this merger brings together the best and brightest to serve the Annapolis business community and provide it with the resources of exceptionally trained professionals,” Sturn said in a statement.

Sturn Wagner Lobardo was founded in 1990 and began dissolving several weeks ago. As of a couple of years ago, it had about 33 accountants, though that has been reduced to about 20, Roddy said.

It has offices in Annapolis, Baltimore and Washington, according to its Web site.

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Citigroup will suspend foreclosures and evictions for 30 days, giving 4,000 at-risk borrowers a break during the holiday season, the company said Thursday.

The New York-based bank said distressed homeowners with first mortgage loans owned by CitiMortgage or CityFinancial North America who also meet certain other criteria will not be subject to foreclosure sales or notifications between Dec. 18 and Jan. 17.

"We hope that with this suspension we can make the holidays a little less stressful for our customers who are going through a very difficult time," said Sanjiv Das, chief executive of CitiMortgage, in a statement.

Citi (C, Fortune 500) said the suspension affects 2,000 borrowers scheduled to have foreclosure sales and another 2,000 that were to receive foreclosure notices during the period, which amounts to approximately 20% of the company’s $746 billion mortgage servicing and lending portfolio low interest personal loan.

Fannie Mae (FNM, Fortune 500) also announced Thursday that it was suspending all foreclosure evictions from Dec. 19 through Jan. 3. All owners and tenants living in foreclosed properties that the mortgage financing company holds will not be subject to evictions during the holidays. 

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Thirty-eight percent of seniors who graduated from Florida colleges or universities last year were in debt, with the average amount owed on student loans at $18,621.

By comparison, the average national debt among college grads was $23,200, according to The Institute for College Access & Success’ Project on Student Debt report, which includes debt levels for the 50 states and District of Columbia and nearly 2,000 U.S. colleges and universities.

“With debt and unemployment at record levels, young college graduates may feel stuck between a rock and hard place.” said Lauren Asher, president of the Institute for College Access & Success, which produced the report. “Rising student debt is a serious problem, but struggling borrowers do have options to help manage their federal student loan debt, such as unemployment deferments and the new Income-Based Repayment program.”

In South Florida, students graduating from Nova Southeastern University in Davie had the most debt at $35,798, followed by Lynn University, a private institution in Boca Raton, with $30,175 payday loans. The proportion of students with debt from those schools was 76 percent and 37 percent respectively.

Fifty-six percent of those who graduated last year from the University of Miami were in debt. The average amount owed was $24,500. At Palm Beach Atlantic University in West Palm Beach, 69 percent of students owed money with an average debt of $19,420, while 29 percent of students from Florida International University in Miami had student loans with an average debt of $10,899.

Click here to see the state data.

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The St. Louis chapter of the Public Relations Society of America is celebrating its 60th anniversary. It was founded in 1949 by 14 local public relations professionals as the organization’s seventh chapter.

The society now has 110 professional chapters in 10 districts nationwide advance payday loans.

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Japan’s trade minister apologized on Monday for disclosing market sensitive third-quarter GDP figures to oil industry executives ahead of its official release, in an embarrassing slip for a government that took power two months ago.

The much-stronger-than-expected third-quarter growth figures caused Japanese bond prices to dip after the official release by the Cabinet Office at 8:50 a.m. (6:50 p.m. EST), although they later recovered as analysts warned the outlook was less rosy.

Masayuki Naoshima, the minister of economy, trade and industry, said that he told industry officials about GDP data because of concerns about the economy and he did not know the data was due later.

“I’m sorry. I honestly didn’t know it was due to be released at 8:50 a.m. so I thought it would be OK to talk about it,” Naoshima told reporters.

“I apologize for causing trouble and I’ll be careful from now on.”

Japan’s economy grew 1.2 percent in the third quarter, its fastest pace in more than two years as stimulus lifted consumer spending and capital spending bottomed out.

It was the first GDP data released after Prime Minister Yukio Hatoyama’s new government took power in mid-September in the wake of an election that ousted the long-dominant Liberal Democratic Party.

The government under the LDP had become more careful with handling the GDP data after a newspaper reported the figures ahead of the release a decade ago, forcing policymakers to confirm the figures.

(Additional reporting by Sumio Ito and Yoko Nishikawa; Writing by Yoko Kubota; Editing by Rodney Joyce)

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Time Warner Inc. said Wednesday that its business outlook has improved, after the company posted quarterly profit and sales that fell from year-ago results but beat Wall Street’s forecasts.

The recession has cut into the company’s media subscriptions and advertising sales, which are its primary revenue streams. But its television and film units outperformed expectations in the quarter, raising the company’s hopes that it has turned a corner.

"Time Warner is firmly on track to post solid results this year in spite of the tough economic environment," said Jeff Bewkes, Time Warner’s CEO, on a conference call with investors.

The media conglomerate raised its full-year guidance, saying it expects to earn $2.05 per share for 2009. That’s better than the $1.98 per share estimate the company provided in April and is slightly higher than analysts’ consensus expectation of $2.02 per share.

The outlook excludes the effects of a $100 million restructuring at publishing unit Time Inc., which the company expects to incur in the current quarter. Time Warner confirmed that the cost-cutting would come in the form of layoffs at Time Inc. during this quarter, but the company didn’t disclose the number or timing of those job cuts.

A source familiar with the job cuts said the company had offered voluntary buyouts Tuesday night to Time Inc. employees who are members of the Newspaper Guild. Most of those employees work for Fortune, Fortune Small Business, Money, Time, Sports Illustrated and People. The company is expected meet with the remaining staff members on Wednesday, with total job cuts reaching about 500, according to the source.

Time Warner also said it still plans to spin off its AOL unit by the end of the year.

The AOL spin off will follow other recent moves at Time Warner to focus on the company’s core businesses. Earlier this year, the company completed a spinoff of its cable service provider Time Warner Cable (TWC), and the company began to reorganize Time Inc. in late 2008, laying off 600 and stopping publication of a handful of magazines in the process.

"I’m confident that the new content-focused Time Warner will be well positioned to deliver steady and attractive stockholder returns in 2010 and beyond," Bewkes added.

Shares of Time Warner (TWX, Fortune 500) fell 1% in premarket trading.

Income falls on AOL, Time Inc: The New York-based parent company of CNNMoney.com and Fortune said its net income fell to $662 million, or 56 cents per share, down 38% from a year earlier payday loans online. Results included a charge of 5 cents per share.

Without the charge, Time Warner said it earned 61 cents per share. Analysts polled by Thomson Reuters, who typically exclude one-time items from their estimates, forecasted earnings of 53 cents per share.

The company said adjusted operating income before depreciation and amortization (adjusted OIBDA), a commonly used profit metric for media companies, fell 9% to $1.8 billion, topping analysts’ expectations of $1.7 billion. Adjusted OIBDA declines at AOL and Time Inc. negated moderate growth at the company’s television networks and film units.

Profit rose modestly in the company’s TV networks and film units, but earnings were halved at AOL and Time Inc.

Advertising, magazine sales tumble: Sales for the company fell 6% to $7.13 billion, just topping analysts’ forecasts of $7.07 billion.

Revenue fell in every segment except for the company’s TV networks unit. Network sales rose 5% in the quarter, despite a 1% dip in advertising sales from the same period a year ago.

The biggest decline in sales came from the Time Inc. unit, in which revenue dove 18%. Ad sales fell 22% at the company’s publishing arm, and subscriptions were down 24% in the quarter.

The company’s filmed entertainment segment, which includes film studio Warner Bros., posted sales that fell 4% in the quarter. That decline was mostly due to a difficult comparison to the same period last year, which brought in hefty revenue from the blockbuster "The Dark Knight." The company said the new Harry Potter movie and "Final Destination" performed very well, and it was still taking in carryover ticket sales from the summer blockbuster "The Hangover."

Sales at AOL, which the company has been planning to spin off since May, fell 23% on an 18% decline in online ad revenue.

Time Warner’s results come a day after rival Viacom (VIA) reported profit jumped 15%, even as advertising sales slumped.

Also on Wednesday morning, cable provider Comcast (CMCSA, Fortune 500) reported 22.5% earnings growth. Comcast is reportedly in negotiations to buy General Electric’s (GE, Fortune 500) NBC Universal unit, but some analysts believe Time Warner is also in the running for the Peacock Network. 

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The Obama administration’s new proposal for tackling financial risk in the U.S. economy, unveiled just two days ago, came under attack on Thursday from Congress and regulators, with questions raised about its funding and scope.

U.S. Treasury Secretary Timothy Geithner scrambled in a congressional hearing to defend the plan against critics who said it would give too much power to regulators and enshrine government bailouts for troubled financial firms in law.

Released by the Treasury Department and Democratic Representative Barney Frank on Tuesday, the plan is an bold attempt to make sure the Bush administration’s confused handling of last year’s financial crisis doesn’t happen again.

That episode saw some firms, such as AIG and Citigroup, get multibillion-dollar bailouts. Others, such as Lehman Brothers, were allowed to go into bankruptcy, while still others were forced into government-engineered mergers.

The 253-page Obama plan tries to strike a balance between bailouts and bankruptcy, while insisting that large financial firms, not taxpayers, foot the bill for future interventions.

“Without the ability for the government to step in and manage the failure of a large firm and contain the risk of the fire spreading, we will be consigned to repeat the experience of last fall. It’s a really stark, simple thing,” Geithner said at a hearing of the House of Representatives Financial Services Committee, chaired by Frank and packed with bank lobbyists.

Amid concerns that a few elite financial giants have become “too big to fail,” the administration’s plan would empower regulators to police, restructure, and even shut down large firms that threaten stability payday advance. It resembles the Federal Deposit Insurance Corp’s power to seize and dismantle troubled banks.

Bankruptcy would be remain the dominant tool for handling non-bank financial firm failures, Geithner said.

“But as the collapse of Lehman Brothers showed, the bankruptcy code is not an effective tool for resolving the failure of a global financial services firm in times of severe economic stress,” he said.

The plan is meant to mesh with many other financial regulatory reform proposals being pursued by the administration and congressional Democrats.

HALTING PROGRESS

Ranging from regulation of over-the-counter derivatives and setting up a financial consumer watchdog agency, to curbing bankers’ pay and cracking down on credit rating agencies and hedge funds, the reform push has been making halting progress.

Final action is still months away. Frank’s committee has approved some proposals, but votes by the full House await and the Senate has barely begun handling the matter.

“Congress will be split” over the new systemic risk plan, said financial services policy analyst Brian Gardner at investment firm Keefe Bruyette & Woods.

“Opposition cuts across party lines. We also expect significant opposition to increasing the Fed’s role as a banking regulator in the Senate and we think this bill’s prospects are far from certain,” Gardner said. 

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Some of the nation’s largest companies pushed back against U.S. Democrats’ plans to deliver a government-run insurance option in a healthcare overhaul, decrying it as a step backward that would drive up costs for employers and their workers.

The Business Roundtable, comprised of chief executives at Verizon Communications, JPMorgan, General Electric, Wal-Mart and other companies that together employ more than 12 million people, said the federal government is inefficient and would underpay providers. That would result in providers boosting prices for private insurers and employers, the group said on Wednesday.

“A public plan would neither manage cost nor encourage innovation,” said Antonio Perez, chief executive of Eastman Kodak Co and head of the Business Roundtable’s health initiative. “We believe it is the wrong direction for fixing our health care system.”

On Monday, Senate Majority leader Harry Reid said his bill would include a so-called “public option” as an alternative to those sold by private insurers. Individual states could “opt out” against offering the plan.

President Barack Obama, who has made health reform his top priority this year, has said a government alternative will force private insurers to be more competitive.

The U.S. House of Representatives’ proposals also contain a public insurance option.

Although an earlier congressional analysis found that about 9 million to 10 million people, most uninsured, would opt for the public plan, the Business Roundtable fears that number will jump as people see their private plan premiums climb.

“The costs for all of us in the system will continue to go up and again put pressure on employers to get out of the healthcare system,” John Castellani, president of Business Roundtable, told reporters at a news conference payday advances.

Other business groups also oppose a public insurance option and are pushing for alternative cooperative exchanges. The U.S. Chamber of Commerce launched television ads on national cable stations and in seven states on Wednesday to fight the government option.

‘ORBITZ’ FOR HEALTH PLANS?

The United States is the only developed nation that pays for the bulk of its health care through private employers rather than the government, and studies have shown premiums for workers and their companies continue to rise each year.

Health insurers earlier said they would back some reforms as long as a bill included a strong requirement for people to buy health insurance policies, a move they said would spread risk among a wider pool of people and disperse costs. Insurers also vowed to pass through additional taxes and costs onto purchasers.

While details from the final Senate and House bills have yet to emerge, so far the proposals differ somewhat on what penalties either individuals or companies would face for not buying or providing health insurance.

Companies want to offer employees health care to recruit and retain talented workers, said Bruce Josten, a vice president at the Chamber of Commerce.

The chamber backs an national exchange “with an Orbitz-like website,” Josten told Reuters, referring to a popular travel site that compares deals among various providers. 

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A retired sales manager for airplane maker Boeing Co on Monday pleaded guilty to hiding nearly $2 million in Swiss UBS AG accounts, as the United States pursues Americans illegally stashing funds abroad to avoid taxes.

Roberto Cittadini was accused of filing a false tax return omitting that he had an interest in or control over accounts at UBS, as well as failing to report income from the accounts, according to the U.S. Justice Department.

Cittadini faces up to three years in jail, a fine of up to $250,000 and a civil penalty equal to 50 percent of the highest account balance between 2001 and 2007, the department said. He will be sentenced in January.

His plea is the seventh so far involving the government’s case against UBS, stemming from a February settlement in which the giant Swiss bank paid the U.S. government $780 million.

“The IRS (Internal Revenue Service) is continuing to do what it has said it would do and it would be foolhardy for people to think that they will go undiscovered or will not be pursued for prosecution once the IRS is on to them,” said Barbara Kaplan, an attorney at Greenberg Traurig in New York who counsels such clients.

According to court documents, Cittadini in 2000 set up a Hong Kong corporation at the suggestion of a Swiss banker, Hansruedi Schumaker, a man U.S. prosecutors in August charged with helping Americans hide their assets from U.S. tax authorities.

The plea deal said Cittadini was counseled by Matthias Rickenbach, a Swiss attorney also indicted for conspiring to defraud the government in August.

It said a Swiss attorney referred to as “A.M.R.” and a UBS banker it called “P.B.” were also involved in the scheme. A Justice Department spokesman declined to discuss those two individuals.

UBS, as part of the February deal with the government, admitted it actively took part in a scheme to defraud the United States by actively helping U.S. citizens conceal their accounts.

UBS also handed over the names of about 250 accounts of American clients. About 150 of those have been farmed out to prosecutors across the country to potentially bring to trial. In a separate settlement, UBS in August agreed to turn over details of another 4,450 accounts of Americans.

“Individuals all over the country who are hiding income and assets in offshore accounts would be well-advised to promptly come in and come clean before the government learns about their accounts through other channels,” John DiCicco, the acting assistant attorney general of the Justice Department’s Tax Division, said in a statement.

A tax amnesty program offered by the U.S. Internal Revenue Service runs through October 15 for Americans to confess to secret accounts hidden overseas.

The case is United States of America v Roberto Cittadini, No. CR 09-0344.

(Additional reporting by Jeremy Pelofsky; Editing by Matthew Lewis, Gerald E. McCormick, Gary Hill)

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