I often tell people that we need muscular government regulation to do three things: ensure that companies (a) tell the truth, (b) perform on their obligations, and (c) don’t engage in anti-competitive behavior that harms the marketplace.

Facts are different from appearances at times, but this is a story about two companies who appear to have violated the requirement to tell the truth, and a government regulator intent on letting them off the hook because of their own questionable actions during the waning bailout days of 2008.

A week after the Securities and Exchange Commission announced that it had settled the matter, Judge Jed S. Rakoff questioned whether the $33 million agreement with Bank of America was adequate. He refused to approve the deal, saying too many questions remained unanswered, including who knew what and when about the controversial payouts.

His ruling prolongs what has become a major embarrassment for Bank of America and its chief executive, Kenneth D. Lewis, and also deals a stinging blow to the S.E.C., which needs Judge Rakoff’s approval of its deal with the bank.

Judge Rakoff ordered the bank and the commission to submit more information to him within two weeks.

During a hearing in New York that was heated at times, the judge was scathing about the settlement, in which the S.E.C. accused Bank of America of misleading its shareholders. Bank of America neither admitted nor denied wrongdoing.

Bank of America and Merrill Lynch, Judge Rakoff said, “effectively lied to their shareholders.” The $3.6 billion in bonuses paid by Merrill as the ailing brokerage giant was taken over by the bank was effectively “from Uncle Sam.”

» Read the Entire Article

Photo Credit: NYT

I promised a review of the Amazon Kindle. I’ve had it for a month or so now, and I’m absolutely loving it.

The idea of the Kindle is absolutely revolutionary once you experience it. The screen is crisp, easy on the eyes, and effortlessly reads like paper. You’re carrying around a 10 ounce device that can hold a complete library of 1,500 books.

If you ever get to the point that your Kindle is full, or you just want fewer books on the directory, just delete them. They’re saved in the cloud in your Amazon.com account, and you can download them back into your Kindle in less than 60 seconds.

Even better, if you need something new to read, you can buy it and download it directly to your Kindle. No need for a wi-fi hot spot or computer; the Kindle has a built-in connection on the Sprint 3G wireless network with no monthly fees.

The Kindle’s battery will normally last two weeks with very little usage, or a couple of days with quite heavy usage. However, turn off the wireless connection and battery usage will be incredibly minimal when you’re not reading. That’s the approach I take, because then I don’t really have to worry about charging it unless I see the battery depleting while reading.

One of the best parts of the whole concept is the ability to sample books at will. Today, when I read about a book or am browsing Amazon.com, I can send the first chapter or two to my Kindle with a single click.

Here’s a major con: you’ll really wish there was some way to convert your existing “dead tree” library or books you’re in the middle of reading right now into Kindle books. Of course, there’s no way to do that.

Also, there are certain books that I don’t think I’d buy for the Kindle. Obviously, a book heavy on illustrations or art. Or a reference book heavy on diagrams. (This is a pretty small minority, but I thought I’d bring it up.)

I took the Kindle on vacation to Yosemite and greatly enjoyed it. I used it on the beach without any glare taking away from the readability of the amazing screen.

Right now, I’m focusing on finishing my “dead tree” books and stocking up my Kindle with the titles I’ll want for our upcoming trip to Ethiopia in late October or early November. My intention at this point is for the Kindle to be the only book I take!

And I won’t miss lugging around pounds of reading material, that’s for sure.

Fred Wilson has a great blog post up about how long it takes technology to die.

I’m sitting here at terminal four at JFK waiting to pick up my son who is returning from a long weekend in LA. And right next to me is a bank of pay phones (five of them) that are doing a bang up business.

I’ve been sitting here for 20 minutes and there’s been at least one in use all the time. Right now, three of the five are in use.

I can think of a few reasons why someone with a cell phone might opt instead for a pay phone (dead battery, needing to use some kind of prepaid card, etc) but honestly I can’t think of the last time I used a pay phone.

The other day I was commenting to my kids that pay phones are largely gone from the streets of NYC. When I moved here 25+ years ago, there was a pay phone on many corners.

So pay phones are clearly a legacy techonology in a long period of decline. But the past 20 minutes sitting here reminds me that old technologies take a long time to die unless they are rendered completely useless like analog TVs.

One of his commenters said, “it’s amazing that we think that everyone has a cell phone.” So true, and Cacey and I learned this personally.

A few months ago, we killed our landline. Saved $60/month, and we weren’t using it much anyway. Then we hired a baby sitter and went out to dinner.

About halfway to dinner, we remembered something to tell the sitter. As we started to reach for our phones, we realized we didn’t know the sitter’s cell number. So we called her family, and lo and behold, she didn’t have a cell number. Oops.

Turns out, she was trying to reach us too. Walking around the house searching for a telephone, and trying to convince our two year old to tell her where he’d hid the phone.

Fortunately, her kind parents were nice enough to run over a cell phone to our off-the-grid house so we could chat yet again.

It was a good reminder that not everyone thinks it’s a good idea to pay money to a telecom conglomerate for the privilege of being connected anywhere, all the time.

Photo Credit: Fred Wilson

An astonishing story in the New York Times about a cynical deal between the White House and lobbyists for big pharmaceutical companies.

Pressed by industry lobbyists, White House officials on Wednesday assured drug makers that the administration stood by a behind-the-scenes deal to block any Congressional effort to extract cost savings from them beyond an agreed-upon $80 billion.

Drug industry lobbyists reacted with alarm this week to a House health care overhaul measure that would allow the government to negotiate drug prices and demand additional rebates from drug manufacturers.

In response, the industry successfully demanded that the White House explicitly acknowledge for the first time that it had committed to protect drug makers from bearing further costs in the overhaul. The Obama administration had never spelled out the details of the agreement.

“We were assured: ‘We need somebody to come in first. If you come in first, you will have a rock-solid deal,’ ” Billy Tauzin, the former Republican House member from Louisiana who now leads the pharmaceutical trade group, said Wednesday. “Who is ever going to go into a deal with the White House again if they don’t keep their word? You are just going to duke it out instead.”

A deputy White House chief of staff, Jim Messina, confirmed Mr. Tauzin’s account of the deal in an e-mail message on Wednesday night.

“The president encouraged this approach,” Mr. Messina wrote. “He wanted to bring all the parties to the table to discuss health insurance reform.”

The new attention to the agreement could prove embarrassing to the White House, which has sought to keep lobbyists at a distance, including by refusing to hire them to work in the administration.

So in essence, the White House colluded with these drug companies in making a secret deal, agreeing to hold “fake negotiations” on reducing drug prices, with the amount of the reduction already known in advance.

But it gets better. Here’s what the Obama administration got in return.

The White House commitment to the deal with the drug industry may also irk some of the administration’s Congressional allies who have an eye on drug companies’ profits as they search for ways to pay for the $1 trillion cost of the health legislation.

But failing to publicly confirm Mr. Tauzin’s descriptions of the deal risked alienating a powerful industry ally currently helping to bankroll millions in television commercials in favor of Mr. Obama’s reforms.

So the real story is…in exchange for bankrolling millions of dollars in TV ads to push through nationalized government health care, the pharmaceutical companies get to be exempt from its effects.

And you thought “change” was coming to Washington.

» Read the Entire Article

The economy has now declined 3.9% from its peak. According to the Calculated Risk blog (now a must-read for me), this is now the worst recession since quarterly records started in 1947.

Still a ways off from the technical definition of a depression (10% decline), but that doesn’t make it any more enjoyable.

Pre-meeting documents:

• Meeting Agenda
• Contracts (General / Capital Projects)
• Warrants

The primary focus of this meeting is the evaluation of our CEO. I’ve probably written enough on this blog for you to know that I think the world of Leo Chavez and what he’s accomplishing at Sierra College. These evaluations are the board’s opportunity to check in with him on how he’s executing on the strategic plan and the goals we’ve set as an institution.

In open session, we’ll get updates on the upcoming accreditation review, facilities planning issues, and the budget. I expect few decisions on the budget as staff is still defining how we’re going to cut between $6 and $8 million out of our $100 million budget this year. (They’ll propose a budget for adoption in September.)

Cutting 6% to 8% out of your budget is not easy to do when you’re running as lean as we are, and have huge demand for student growth from the newly unemployed seeking upgraded job skills. Thank heavens that we have the reserves that we’ve built up for the last four years for just this kind of problem.

Our reserves are there to protect our students and our employees. Without those two sets of people on campus, we can’t fulfill our mission. The key question facing the board is: how much protection do we want to have for our students and employees?

If we use all of our spendable reserves to make this year “easy” (relative term), we’ll have zero means to protect students and employees when the cuts come next year — and come they will. Revenues are still declining and the state “solved” several billion dollars of the problem by simply throwing the expenditures into next year. I can’t find a single economist who thinks state revenue will climb next year.

I’m not firmly attached to any particular dollar number of how much in reserves we should use this year (other than the simple fact that we clearly should be mitigating some cuts with the reserves…this is precisely what they’re for).

To make that decision, I’ll literally do some simulations in a spreadsheet to see how good or bad things might be in 2, 3 and 4 years, try to develop a sense of the most likely outcome, and see how it looks to spread the reserves out over those years.

That’s the tough decision facing this board. Each of us will have our own approach to deciding what we can live with. We’re charged with safeguarding — holding in trust — this institution, and I think all seven of us take that very seriously. I hope you’ll take the time to share your input with us — via e-mail, Twitter, a letter or postcard, a fax, or even showing up at this meeting.

Enrollment in California’s “Healthy Families” program has exploded in recent years. The legislature decided twelve years ago that we should give free health insurance to the kids of middle class families who had prioritized buying a new BMW over health care coverage.

(Sidebar: Now I’m sure there were some truly needy people who availed themselves of this program. There are truly needy people in every government program. But remember, Medicaid and Medi-Cal already exist. This is for people who aren’t poor enough to qualify for those programs.)

To further compound the issue, these programs use your tax dollars to run advertisements seeking to create more demand for themselves, thereby creating more demand for…your tax dollars. It’s a brazenly self-serving practice if you ask me.

The state’s ad campaign went something like this. “Do you want to keep paying for your kids health insurance, or would you like us to pay for that for you? Act now and we’ll throw in free dental and vision too!”

Read the rest of this entry »

The Union has a great story on the new appointment of a congressional page to work for Congressman Tom McClintock. Claire Mars is a junior at Ghidotti Early College High School, a partnership between Sierra College and the Nevada Union Joint High School District to give kids the chance to graduate from high school with their diploma and a two-year college degree.

(Sidebar: I knew one of the other applicants for this program, who was also incredibly well qualified. This is a tough competition!)

Congratulations to Claire, and to the staff at Sierra College and NUHSD. In addition to the great scores that Ghidotti is turning in on standardized testing, this is yet another indicator of what a great advantage the early college high school model can deliver to our kids.

» Read the Entire Article

Photo Credit: The Union

In addition to Twitter, Sierra College is now broadcasting emergency alerts on Nixle. The company is providing its technology, which it sells for corporate use, free to public agencies and over 1,200 are using it now to keep citizens (or in our case, students and staff) in the know when it comes to emergencies.

If you’re near Sierra College, you can sign up to get those alerts via e-mail or text message now.

Andy Stanley is a favorite author of mine. He’s the pastor of a church down in Atlanta, but he writes from a very personal level that is very real, drawn from personal expertise, and much more helpful than your typical self-help book.

(Sidebar: One of my favorite books that Andy has written a book for busy business leaders struggling with work-life balance, and it’s provocatively called “Choosing to Cheat.” Perhaps I’ll blog about that book at some point, but it’s a great read, too.)

In Principle of the Path, Andy makes the case that our intentions have no measurable affect on the outcome of our lives, but rather the choices we make and the paths we put ourselves on do instead.

And how true is that? We’ve seen so many people who were smart, had admirable goals in life, and ended up a long ways away from where they intended to be. Not to single people out, but Governors Rod Blagojevich (corruption) and Mark Sanford (cheating on his wife) come to mind.

I doubt either of those governors intended to be where they are today, but a long time ago, they made tiny decisions that set them on a path to their current outcome.

And that’s Andy’s point: intentions matter little. The path you’re on determines where you end up. So make wise decisions about the paths you take, and you have a much greater chance of ending up where you want to go.

» Find “The Principle of the Path” on Amazon