World financial news

AIG shareholders, a.k.a. U.S. taxpayers, ousted the majority of the company’s leadership at AIG’s annual shareholders meeting Tuesday, removing the overseers of one of the biggest corporate unravelings in American history.

Just three of the 11 directors that oversaw the company’s downward spiral in September remained on AIG’s board. Two directors who were placed on the board after the company came undone, including Chief Executive and Chairman Edward Liddy, also stayed in place.

AIG’s three trustees, who represent the government’s near-80% controlling interest in the company, elected the new directors on behalf of the taxpayers.

The six directors who did not stand for re-election were not in attendance at the annual meeting.

The company’s longer-term shareholders stood before Liddy and a small group of about 150 other shareholders, voicing loud objections to the old board. Many tied irresponsible management by AIG’s board to the near-catastrophic losses of shareholders’ stakes in the company.

"I notice none of the [outgoing] directors are here today," said one shareholder, Kenneth Steiner. "They left like rats leaving a sinking ship. Well, goodbye and good riddance."

AIG’s new leadership will oversee AIG’s repayment of more than $80 billion in debt owed to taxpayers as well as the company’s roadmap to recovery, nicknamed "Project Destiny."

The new board includes former executives from American Express (AXP, Fortune 500), Boeing (BA, Fortune 500), KPMG, Delphi, Sears (SHLD, Fortune 500) and Northwest Airlines (DAL, Fortune 500). Liddy called them all "extremely talented," and suggested they they were well suited to help oversee the company’s transition over the next several years.

Liddy, who announced last month that he would relinquish his two positions, said that he expects the new board will find a replacements "soon." The CEO and chairman positions are expected to be split.

Taxpayers to hold onto AIG for a while. The company has previously said that it could take up to five years before the government is fully repaid. Liddy said Tuesday that there is "an excellent chance" the company will be able to repay the taxpayers.

For long-time AIG shareholders, the government’s stake has been an onerous burden, vastly reducing the value of their holdings payday loans no credit check. One shareholder, Jon Levin, suggested that AIG lobby the government to cut taxpayers’ 80% stake in the company as the government begins to pay the insurer back, calling the large stake "a disaster suffered by the shareholders."

But Liddy said he could give no assurances that the government will ever reduce its stake in the company.

Shares of AIG (AIG, Fortune 500) tumbled Tuesday afternoon after shareholders ratified a 20-1 reverse stock split, which will take effect at 5 p.m. ET. The stock was trading at about $1.15 a share in afternoon trading, down 14% from Monday’s close. Though shares have nearly quadrupled in the recent near four-month stock market rally, AIG’s stock is still down more than 90% from the day before the company’s bailout was announced in September.

Angry shareholders. A number of times throughout the 45-minute meeting, Liddy said he felt bad for the many shareholders whose holdings were nearly wiped out by the company’s collapse.

In response to one unidentified shareholder who was looking for guidance after telling Liddy that her AIG shares were worth just 2% of their peak value, Liddy conceded that though AIG’s stock "could recover, the question is, will another stock recover faster?"

"I’m sorry for what’s happened to you," added Liddy. "I wish you luck."

In an effort to prevent future collapses of the company, groups of shareholders proposed three motions for adoption, including curbs on executive compensation, reincorporation in shareholder-friendly North Dakota and the ability to hold special meetings to elect a new board of directors mid-term.

"Perhaps we could have avoided the problems we are facing now by putting a new board in place" through special elections, said Steiner, who proposed the latter two motions. "We lost 99% of our money, and no one is being held accountable," he added.

The trustees voted down Steiner’s motion as well as the other two shareholder proposals. 

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Every state has committed at least half its highway stimulus funds so none will lose any of its allocation, the Obama administration said Thursday.

States had until June 29 to obligate the funds or risk losing half the leftover money. Only a month ago, some 14 states had yet to satisfy that goal. Hawaii was the last to meet the mark, hitting it on June 19.

Maine has secured 100% of its funds and 15 states have more than 80% of their money committed.

"By delivering on these projects ahead of schedule and under-budget, we have been able to do even more than we expected," said Vice President Joe Biden.

The Federal Highway Administration has approved a total of $15.8 billion for more than 4,800 projects, as of June 25. States, however, have spent less than $190 million, as of June 19, according to federal data.

To commit the funds, states had to gain approval for their projects from the Federal Highway Administration, an agency of the Department of Transportation. The money doesn’t actually have to be spent, which can take months as projects go through the contracting and construction process.

Some states — Florida, Georgia, Hawaii, Arizona, Virginia and New Mexico — have yet to claim any funds. Illinois has spent the most, claiming more than $47.6 million of the $664 million allocated so far.

Republicans in Congress said they were concerned by the slow pace of spending unsecured personal loans.

"This is pitiful that we can’t get people working, we can’t get the stimulus money out," said Rep. John Mica, (R-Fla.), the top Republican on the House Committee on Transportation and Infrastructure. "People want jobs and they want them now."

The administration did not report how many jobs have been created or saved thanks to the infrastructure funding. The issue has become a source of controversy, with Republicans on Capitol Hill questioning the the recovery act’s effectiveness in stemming the unemployment tidal wave.

States are sharing $26.6 billion for highway infrastructure projects, though only $18.6 billion is subject to the June deadline. The road allocations are among the earliest of the $280 billion in funds going to states and municipalities as part of the $787 billion recovery act.

Including transit and airport construction, the federal Department of Transportation is making $48.1 billion available, of which $19 billion has already been committed to more than 5,300 projects, according to the administration. Currently, more than 1,900 projects are underway.

A total of $369 million has been spent, Mica said. Only $11 million has flowed to the 10 states with the highest unemployment rates, he said. 

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1. Purolator Courier

Canada’s largest courier company has taken a lead in trying to reduce its carbon footprint, having purchased 105 hybrid-electric delivery trucks and experimented with other technologies. Purolator has ordered another 50 hybrid vehicles.

2. Mountain Equipment Co-Op

This retailer of outdoor gear embraces green-building practices for its 12 stores and head office, and was the first national retailer to introduce compostable bags and donate the 5 cents it collects from them to environmental causes.

3. Enbridge Gas Distribution

The natural gas distributor is placing more emphasis lately on energy conservation and alternatives, such as solar, thermal, wind and fuel-cell technologies. It has begun capturing pipeline waste energy to generate low-emission electricity.

4. Loblaws

Canada’s largest grocery chain was the first to experiment with bag-free stores, is promoting local foods and has committed to sourcing only sustainable seafood products by 2013.

5. TD Bank Financial Group

The bank says it will be carbon-neutral by 2010 young persons carinsurance. Efforts to achieve this include the purchase of "green" electricity from Bullfrog Power for its national bank-machine network.

6. Toronto Hydro

It wants to build a wind farm in Lake Ontario, plans to turn the waste water processed at Ashbridge’s Bay into heat and electricity, and runs its entire fleet on biodiesel or electricity.

7. Cascades

This Quebec-based maker of packaging and tissue products is the largest user of recycled fibres in Canada. In fact, 77 per cent of the raw material it uses comes from recycled content.

8. Magna International

Can a maker of automotive parts be green? Yes, if you consider the effort this Aurora-based company has made to reduce the weight of its parts using advanced materials. Lower-weight cars mean less fuel consumption, meaning lower emissions.

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<credit-solo/>Guarantee Electrical

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Monsanto Co. and Dole Food Co. said they’ll work together to develop new varieties of vegetables with the goal of giving consumers more choices when they shop for groceries.

The companies entered a five-year agreement to focus on developing more nutritious, better tasting vegetables through plant breeding, they said in a joint statement. Initially, their efforts will focus on four key vegetables — broccoli, cauliflower, lettuce and spinach.

Any new products would be commercialized by Dole, based in Westlake Village, Calif., the companies said.

Additional terms of the agreement weren’t disclosed.
The venture pairs Monsanto’s expertise in plant research and breeding and Dole’s position as the world’s largest producer and marketer of fresh fruit and vegetables affordable health insurance for children.

Monsanto, better known as a seller of genetically modified row crops such as corn, soybeans, cotton and canola, jumped into the vegetable business four years ago with its acquisition of vegetable seed giant Seminis Inc. for $1.4 billion.

Last year, the company spent $860 million to acquire Netherlands-based De Ruiter Seeds Group BV, one of the world’s largest sellers of seeds for vegetables grown in protected environments, such as greenhouses.

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some rays of hope for the unemployed. Can the recovery last? Most important: Where are the jobs?

Get the answers when Anderson Cooper and Ali Velshi host our panel of experts and check in on virtual town halls across the country.

Thursday, June 18 at 8p.m. ET

–>

Which of these recent economic initiatives should be the Obama administration’s main focus?

• Fixing health care

• Reforming financial sector

• Stabilizing banks

• Helping homeowners

View results

FIXING HEALTH CARE

• Health debate: A little clarity, please
• Can’t afford health care? Barter for it
• How health reform may help … or hurt
• House GOP outlines health care bill
• The fear factor in health care costs
• The death of the corner pharmacy

NEW YORK (CNNMoney.com) — Americans are being told daily that health reform isn’t just the right thing to do — it will also help save the economy.

"Health care reform is not part of the problem when it comes to our fiscal future, it is a fundamental part of the solution," President Obama said in a recent address.

The crux of the problem: The United States spends far more on health care than do other developed countries, but it often gets far less bang for its buck. Meanwhile, a large number of Americans either can’t afford insurance or have insurance that doesn’t adequately cover their medical costs.

The kicker, of course, is that rising costs are making the country’s long-term fiscal picture very, very ugly.

For many, the Washington debate over the mind-bending details of different options obscures the issue of what’s at stake. What is the threat to the economy if no action is taken? What happens if a health system overhaul succeeds … and what are the economic perils if it fails?

The economy without health reform

For 40 years, health care costs have grown faster than inflation and wages.

Today, the United States — including the government, employers and individuals — spends more than 16% of its gross domestic product on health care, or $7,421 per person, according to the Kaiser Foundation.

If health care costs grow unabated, the country is on track to spend more than 20% of its GDP on health by 2018.

In other words, 20% of the value of goods and services Americans produce will be spent on health care alone.

The more we spend on health, the less we’ll have to spend on other things. That can hamper economic growth and means there will be less and less money available to support education, defense and other priorities.

Meanwhile, the country’s already record high debt is set to swell to unsustainable heights due largely to rising health care costs, which expand federal spending on Medicare and Medicaid.

By 2035, the Government Accountability Office estimates that all federal revenue — taxes and fees paid by individuals and businesses — will be consumed by Medicare, Medicaid and interest on the public debt.

"Virtually all of our long-term fiscal challenge is attributable to the rapid growth in health care costs. And unless we get them under control, our budget is doomed," said Robert Reischauer, former director of the Congressional Budget Office (CBO) who is now president of the Urban Institute.

Lawmakers note that higher health care costs put U no fax cash advances.S. businesses at a competitive disadvantage because they have to pay so much more to insure their employees than do their foreign competitors.

Indeed, among developed countries, the United States is the biggest spender. It spends 52% more on heath per person than the country ranked second, which is Switzerland. Despite that, the United States does not necessarily do better in terms of health care access, quality or outcomes.

Meanwhile, the Commonwealth Fund estimates that currently 46 million people have no insurance, while another 25 million working-age adults are underinsured.

In a letter to lawmakers, the CBO made plain the consequences of letting health costs grow unrestrained.

"The country faces difficult and fundamental tradeoffs between limiting the growth of Medicare and Medicaid … accepting a continuing increase in taxes … and reducing other spending … possibly to levels not experienced in this country in more than 40 years."

If health reform works

Arguably, there are three measures by which to judge whether health reform is successful from an economic standpoint. It would have to pay for itself over time; reduce health spending without compromising quality; and provide affordable, accessible care for everyone.

The CBO told lawmakers that a 1% reduction in the growth of federal health care spending each year for the next 20 years would pay for the cost of expanding coverage in the first decade and then provide savings that "exceed that cost in the next decade."

The desired end result of reform is less money spent for the same or better care and with better outcomes.

"If we do it right, it allows us to have a more efficient health care system … and we can use the additional savings to invest in something, educate someone or pursue some other national goal," said Douglas Holtz-Eakin, a former CBO director.

Obama economic adviser Christina Romer estimates that if the annual growth rate in health care costs slows by 1.5 percentage points a year — which she concedes is a high bar — real GDP could increase by more than 2% in 2020 and by nearly 8% in 2030.

But GDP isn’t the only measure of well-being.

"If people get better access to health care those people are better off," said Robert Book, a senior research fellow in health economics at the Heritage Foundation.

But the physical dividends pay off economically as well. That’s because it’s easier to generate income when you’re healthy. And it’s easier to stimulate the economy with your income when you’re not bankrupted by a medical crisis.

If health reform fails

One reason health reform hasn’t happened yet: It is painfully hard to figure out how to do it right.

And economically, there are serious risks if health reform is done wrong.

For Book, reform will have failed if everyone gets covered but has to wait for essential care. "People will be sick, less productive and not get what they paid for," he said.

He believes taxing a portion of workers’ health care benefits could lead to a more efficient use of health services. But, he said, using other tax increases to fund reform could place a drag on GDP.

If that happens, that will "mak[e] it far more difficult to escape the debt trap," wrote Harvard economist Kenneth Rogoff in a Financial Times op-ed.

To Holtz-Eakin, who advised John McCain in last year’s presidential race, failed health reform would mean that "everyone gets coverage but we don’t change the underlying cost dynamics. Health care spending goes up and we haven’t solved our deficit problem."

In that scenario, health reform would make the deficit worse — which "could prove the straw that breaks the camel’s back," Rogoff wrote.

And the deficit could get worse even if lawmakers pass measures that can pay for health reform in full.

Here’s why: some of the biggest savings from reform might not be realized for at least a decade because they will require key changes in how medicine works. In the interim, however, there is a risk that lawmakers will undermine those savings by tweaking reform policies — such as succumbing to political pressure to defer scheduled payment cuts for providers.

If lawmakers are really serious about putting the federal budget on a sustainable path, the CBO said, that just won’t do. 

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MINNEAPOLIS — Fed up with airline fees? Well, brace for more.

As if charging $15 to check a bag weren’t enough, US Airways and United beginning this summer are asking passengers for $5 more if they pay their baggage fees at the check-in counter. (You can avoid the $5 fee if you pay your baggage fee from home. The airlines call it the "online discount.")

Rather than raise ticket fares in the middle of a recession, airlines are piling on fees to make money — fees for bags, fees to get through the line faster, even fees for certain seats.

United Airlines alone expects to rake in more than $1 billion this year in fees ranging from baggage to accelerated frequent-flier awards. That’s more than 5 percent of its revenue.

That revenue stream is causing airlines to become more creative, each watching the other to determine whether passengers accept the fees or revolt business cards printing.

As recently as last year, most fliers came across a fee only if they checked three bags or sent a minor child across the country. Most people, most of the time, traveled fee-free.

But that began to change last spring. Spiking jet fuel prices and passenger resistances to higher fares started airlines looking around the cabin for things they could charge extra for.

Passengers are finding it’s a lot easier for the airlines to add the fees than to take them away.

"They’re going to keep nudging them up until they run into market resistance," said Ed Perkins, a contributing editor at the website Smarter Travel.

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European Union leaders warned of continued weakness in the banking system and pledged to “stay alert” to the possible need for further government support, according to the draft of a statement to be approved later today at a Brussels summit.

“The operating environment of the financial institutions remains challenging and credit flows continue to be constrained,” the heads of state and government said in the draft obtained by Bloomberg News. “Governments must therefore stay alert to possible further measures which may be needed to recapitalize or to clean up balance sheets.” profitability.”

European governments have approved $5.3 trillion of aid to banks, including debt guarantees and equity injections, since the onset of the financial crisis, according to a separate EU document obtained by Bloomberg. Regulators in the 27 EU nations will assess risks in the banking industry and report the results to finance ministers, the Committee of European Banking Supervisors in London said last month payday loans for bad credit.

“The ongoing EU-wide stress-testing exercise will help to better assess the financial system’s resilience, contribute to enhancing confidence of financial markets and facilitate coordinated policy measures at EU level,” the EU leaders said in today’s draft statement.

The worldwide financial crisis, which started with the collapse of the U.S. property market in 2007, has led to more than $1.46 trillion of writedowns and credit losses at other financial institutions, according to data compiled by Bloomberg, and sent the global economy into its first recession in more than six decades.

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European Union leaders warned of continued weakness in the banking system and pledged to “stay alert” to the possible need for further government support, according to the draft of a statement to be approved later today at a Brussels summit.

“The operating environment of the financial institutions remains challenging and credit flows continue to be constrained,” the heads of state and government said in the draft obtained by Bloomberg News. “Governments must therefore stay alert to possible further measures which may be needed to recapitalize or to clean up balance sheets.” profitability.”

European governments have approved $5.3 trillion of aid to banks, including debt guarantees and equity injections, since the onset of the financial crisis, according to a separate EU document obtained by Bloomberg. Regulators in the 27 EU nations will assess risks in the banking industry and report the results to finance ministers, the Committee of European Banking Supervisors in London said last month no fax cash advance.

“The ongoing EU-wide stress-testing exercise will help to better assess the financial system’s resilience, contribute to enhancing confidence of financial markets and facilitate coordinated policy measures at EU level,” the EU leaders said in today’s draft statement.

The worldwide financial crisis, which started with the collapse of the U.S. property market in 2007, has led to more than $1.46 trillion of writedowns and credit losses at other financial institutions, according to data compiled by Bloomberg, and sent the global economy into its first recession in more than six decades.

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