Finance & Business World

The debate over gun control is heating up at Starbucks.

Gun owners bearing arms have been gathering at various Starbucks locations in states where it’s legal to do so in public. That’s sparked protests from gun-control advocates and kudos from pro-gun groups.

The coffee chain says that its stores simply abide by state laws, and it is legal to carry weapons in 43 states. But businesses have the right to prohibit customers from carrying guns in their establishments despite state laws, and that’s the crux of this particular dust-up.

"While we deeply respect the views of all of our customers, Starbucks’ long-standing approach to this issue remains unchanged," the company said in a statement. "We comply with local laws and statutes in all the communities we serve."

Starbucks (SBUX, Fortune 500) said the gun-toting gatherings first began at its stores in Northern California after two other chains, San Francisco-based Peet’s Coffee & Tea and California Pizza Kitchen, put policies in place to prevent gun owners from carrying firearms in their stores.

The Brady Campaign to Prevent Gun Violence then wrote a letter to Starbucks CEO Howard Schultz, urging Starbucks to enforce a similar policy. On its Web site, the Brady Campaign is soliciting supporters through an online petition that urges Starbucks to offer "espresso shots, not gunshots" and reverse its corporate policy.

On the other side of the debate, gun rights advocates are pleased with Starbucks’ decision. Forum members of OpenCarry.org, a pro-gun Internet community with nearly 28,000 members, are posting that they are "impressed" with Starbucks’ stance and will regularly buy the company’s coffee to show support.

Starbucks said if it were to adopt a policy prohibiting customers from carrying guns in states where it is legal to bear firearms, that would require its employees to ask law abiding customers to leave stores, putting them in an unfair and potentially unsafe position.

The company also said the gun-control debate belongs in the legislatures and courts, not at its stores.

"Advocacy groups from both sides of this issue have chosen to use Starbucks as a way to draw attention to their positions," the company said. "As the public debate continues, we are asking all interested parties to refrain from putting Starbucks or our partners in the middle of this divisive issue."  

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Aqua America Inc. posted nearly flat income on a revenue increase in the fourth quarter, as earnings per share met analysts’ estimates and revenue did not.

The Bryn Mawr, Pa.-based water and wastewater utility holding company earned $26.7 million, or 20 cents per fully diluted share, in the quarter. The average estimate of eight analysts polled by Thomson Reuters was that it would earn 20 cents per share in the quarter. It earned $25.7 million, or 19 cents per fully diluted share, in the fourth quarter of 2008.

Aqua America’s revenue in the quarter was $167.9 million, up from $159.8 million in the fourth quarter of 2008. The average revenue estimate of six analysts polled by Thomson Reuters was $176 cash advance america.2 million.

In all 2009, the company earned $104.4 million, or 77 cents per fully diluted share, on revenue of $670.5 million. All the figures were increases from 2008, when Aqua America (NYSE:WTR) earned $97.9 million, or 73 cents per share, on revenue of $627 million.

Nicholas DeBenedictis, the company’s chairman and CEO, said in Aqua America’s earnings press release that he expected its earnings to continue to rebound in 2010, supported by an improving economy, a return to normal weather patterns and the successful completion of rate cases it has pending.

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JEFFERSON CITY — Missouri officials say they can’t prevent a tax dodge used by some wealthy investors in the state-sponsored college savings plan.

So instead of trying to police it, officials want to legalize it.

At issue is how long money invested in the Missouri Saving for Tuition program — MOST for short — must stay in an account to earn a state tax deduction.

Missouri set up the program a decade ago to give working families a low-cost way to save for college. Accounts can be opened directly through the state for as little as $25.

Investors pay no federal or state taxes on profits when they withdraw money to pay for college. The program is known as a 529 plan, after the section of federal law that authorized such plans in 1996 and spurred their growth.

MOST has attracted 123,000 accounts holding $1.3 billion in investments.

Like most states, Missouri sweetened the deal by adding a state tax deduction. Families can shield up to $16,000 a year in contributions from Missouri income taxes.

That money is supposed to stay put at least 12 months to be eligible for the tax break. Sen. Delbert Scott, R-Lowry City, sponsored the restriction in 2006.

"I found out that there were people who would deposit the money the last day of December, use it to pay tuition the first day of January, and take the tax deduction," Scott said.

For example, a parent who routed $8,000 through a MOST account at year’s end could save about $480 by avoiding the state’s 6 percent income tax. A married couple taking the maximum deduction could save twice that, or $960.

Scott said that wasn’t the Legislature’s intent.

"This was set up to be a savings account rather than an automatic tax deduction for those who can pay cash as they go," he said.

But the restriction has never been enforced.

"Some people would view it as a loophole," said Joe Hurley, founder of savingforcollege.com, a respected website that rates all 529 plans. "But just about every state that has a deduction has no minimum holding period, so it’s a loophole in pretty much every state."

State Treasurer Clint Zweifel, whose office oversees the MOST program, said it would cost MOST $360,000 to set up a tracking system to make sure accounts didn’t violate the 12-month rule. That oversight could discourage investors, he said.

"It’s creating an administrative burden and red tape that puts government as some sort of Big Brother, telling people how to save for college," Zweifel said.

"Who are we to tell them, when they make a contribution, whether it has to sit for 10 months or 22 months?"

Zweifel said few people used the loophole anyway.

He estimates that about 65 people used it last year to shield $219,000 in contributions. That analysis is based on the number of Missourians who opened new accounts in December 2008 and made a withdrawal in January 2009.

MOST attracted $198 million in investments in 2008, so "we’re talking about a tenth of a percent of contributions," Zweifel said.

Even Scott agrees. He now sponsors the bill repealing the rule he authored in 2006. Scott said a 2008 change in the MOST program made it counterproductive to enforce the restriction.

Missouri extended its deduction to college savings plans sponsored by other states. Most states don’t require money to be held a certain length of time, so Missourians could invest their money elsewhere and claim Missouri’s deduction.

"I think the ultimate message is, we want people to save for their kids’ college," Scott said. "This is just one of the incentives that comes along, if you’ve got the money to do it. It’s kind of an unintended consequence."

If the restriction isn’t repealed, the Missouri Department of Revenue plans to finally try to enforce it next year.

The agency added a note to its 2010 tax form instructions, warning taxpayers not to take the deduction for contributions and earnings withdrawn after less than 12 months.

Scott’s bill is SB772.

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Vietnam raised $1 billion from its second global bond sale, offering higher yields than Philippines and Indonesia, amid the busiest start to a year for global borrowing by developing nations since 2005.

The Southeast Asian government sold 10-year bonds to yield 6.95 percent, or 332.7 basis points more than Treasuries, according to a person close to the transaction who declined to be identified because he’s not allowed to speak publicly. A basis point equals 0.01 percentage point.

The Philippines sold debt due in 2020 at 5.67 percent on Jan. 7, while Indonesia offered similar-maturity notes at 6 percent on Jan. 12. Both countries carry lower debt ratings than Vietnam from Standard & Poor’s.

“I like the country and see continuing inflows into emerging markets,” Francesca di Cesare, a bond manager who helps oversee the equivalent of $10 billion at Aletti Gestielle SGR SpA in Milan, said in an interview before the bond pricing. “Vietnam is not a frequent issuer and thus offers a diversification factor.”

AllianceBernstein L.P. and Western Asset Management Co. last week said Vietnam needed to offer at least 7 percent as the government struggles with a currency trading near a record low, accelerating inflation and a widening trade deficit. Before today’s sale, countries from Turkey to Slovenia and Philippines have sold more than $13 billion of debt, the most in the same period since 2005, data compiled by Bloomberg show guaranteed payday loans.

Market Volatility

The government delayed the pricing on Jan. 22 because of increased market volatility after President Barack Obama unveiled measures to curb risk-taking by U.S. banks. The JPMorgan Chase & Co. Emerging Market Bond Index Global fell 0.5 percent last week, the most since October. Vietnam has a 0.23 percent weight in the index that tracks debt of 37 emerging- market countries.

“If the market sentiment is less supportive like last week, the spreads could widen after the sale,” said di Cesare, who bid for the securities.

Vietnam is struggling to balance policies that spur growth with efforts to ensure its economy remains stable, Moody’s Investors Service said Jan. 15. The nation is rated Ba3 by Moody’s, three levels below investment grade, with a negative outlook. The ranking is on par with the Philippines and one grade weaker than Indonesia. S&P rates Vietnam BB, one level higher than the BB- ranking for Indonesia and the Philippines.

The government sold $750 million of 10-year bonds to yield 7.125 percent at its inaugural sale in October 2005, a premium of 2.56 percentage points over similar-maturity Treasuries. The January 2016 notes yielded 6.15 percent yesterday, according to Bloomberg data.

Barclays Plc, Citigroup Inc. and Deutsche Bank AG managed the sale.

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President Obama will propose a new tax on financial institutions Thursday to ensure that taxpayers who bailed out banks get paid back, according to a senior administration official.

The White House wants to raise as much as $120 billion through a new tax on banks to cover losses in the federal bailout program.

The law that created the $700 billion Troubled Asset Relief Program empowered the president to ask Congress to recoup money if bailouts were not paid back in full.

TARP dictates that the Office of Management and Budget consider such action five years after TARP went into effect in October 2008 to prevent the federal bailout from adding to the deficit.

When the TARP bill was hastily debated, the provision was key to winning enough support from wary lawmakers to push the bill through Congress.

This new proposal to tax banks has been under discussion since August, a senior administration official said Tuesday.

The federal bailout program has always been a controversial topic, but news of executive bonuses now being awarded for banks’ stellar performance in 2009 is throwing new fuel on populist anger.

Congress would still have to approve any proposed new tax.

Robert Gibbs, the White House press secretary, would not discuss on Monday how a possible bank fee would fit into Obama’s fiscal year 2011. But Gibbs said it is the president’s "goal" to ensure the "money that taxpayers put up will be paid back in full."

While most of the big banks have started paying back their TARP investments, the government still has a lot of money on the line and is likely to for years to come.

Last month, the Treasury estimated that the net cost of TARP to taxpayers would be $41.4 billion.

For example, Treasury Secretary Tim Geithner said last month that the bailouts of the automakers and insurer American International Group (AIG, Fortune 500) would not be paid back in full short term personal loans.

"There is a significant likelihood that we will not be repaid for the full value of our investments in AIG, GM and Chrysler," Geithner told an oversight panel.

Yet, the financial industry tax under discussion could impact the entire financial industry, a prospect the banking industry opposes.

Although few details are available about the proposed fee, the administration official suggested banks would be required to pay, even if the losses were incurred by GM and Chrysler.

"Imposing new taxes on top of the increased regulatory costs will weaken the industry, just when the industry is helping lead the economic recovery," said Scott Talbott, chief lobbyist for the Financial Services Roundtable, a bank lobbying group.

And it’s still unclear what, if anything, can be done to prevent the fee from being passed to bank account holders.

U.S. Chamber of Commerce President Thomas Donohue said Tuesday he expected any new fee imposed would be passed on to consumers.

"If you don’t pass it on to the consumer, than you’re going to have smaller profits, and then if you have smaller profits, your stock goes down," Donohue said.

The total revenue collected from the tax would be no higher than $120 billion, since that is the highest conservative estimate of the cost of TARP, the senior administration official said. However, the Treasury Department expects the total loss number to shrink over the course of future years.

- CNN White House Correspondent Dan Lothian contributed to this report. 

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Don’t close the coffin on Saab just yet.

Spyker, a Dutch maker of exotic cars, said Sunday that it had made a new offer to General Motors for the Swedish car brand.

GM announced on Friday that it would let the brand die after it had failed to reach a deal with potential buyers, including Spyker and Swedish carmaker Koenigsegg.

Early Sunday, Spyker Chief Executive Victor Muller said the company had submitted a proposal that addresses the issues that had hung up a deal.

"Despite our collective 11th-hour set-back, we are returning to the table with a renewed offer, that addresses every known issue brought to light during the initial negotiations and that has the full backing of the Saab management," Muller said in a statement.

"Our efforts are based on our passion for saving an iconic brand that we would be honored to shepherd, and the jobs and livelihoods of thousands of loyal Saab employees, suppliers and dealers around the world," he added.

Some 3,400 employees globally would be directly affected by Saab’s closure, according to GM spokesman Chris Pruess.

In a statement on Sunday, GM said it had "received inquires from several parties" following Friday’s announcement. The company added that it would "evaluate each inquiry."

Spyker’s offer is set to expire Monday at 5 p.m. ET.

Saab has never been a big-selling car brand, but the recent global recession and news of the brand’s possible demise have driven sales down to crisis levels. Saab’s U.S. sales have fallen by more than half so far this year.

Sweden’s other major automaker, Volvo, is currently owned by Ford (F, Fortune 500), which is in the process of selling it to the Chinese automaker Geely.

What went wrong

GM previously said that the potential deals with both Spyker and Koenigsegg fell through because of unspecified issues that arose during negotiations.

As of Friday, GM was still planning to sell some Saab 9-3 and 9-5 technologies to the Chinese automaker Beijing Automotive Industry Holdings Co. Ltd. That deal was announced last week.

GM has owned a major stake in the Swedish automaker since 1989 and took full ownership in 2000; Saab has been making cars since 1949. GM will now begin winding down Saab production, but warranties will continue to be honored, and spare parts will still be available, the company said.

In the past two decades, GM has made every effort to turn Saab into a profitable car brand, Smith said. But recent global economic problems were simply too much for the still-weak automaker to survive.

As part of its government-sponsored bankruptcy restructuring, GM planned to sell of or wind down four of the eight brands it recently operated.

Pontiac is being wound down; a deal to sell the Saturn brand to Penske Automotive fell through in September; and a deal to sell the Hummer SUV brand to Chinese heavy equipment maker Sichuan Tengzhong is awaiting government approvals.

GM’s remaining brands are Chevrolet, Buick, GMC and Cadillac. 

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Sales tax revenue continues to fall in Dallas and other cities across North Texas.

Dallas' sales tax revenue fell 5.3 percent for November, compared to collections for the same period in 2008. Still, it's better than the Texas average, which dropped 14.4 percent, according to state Comptroller Susan Combs.

Dallas' net payment was $14.5 million, compared to $15.4 million for the same period last year. So far this year, payments are down 9.2 percent, dropping to $205.4 million from $227 million in 2008.

Fort Worth saw its monthly payment drop a whopping 17.3 percent, to $7 million from $8.5 million a year ago. For the year, payments in Fort Worth are down 7.9 percent, to $97.8 million from $106 no fax payday loan.2 million.

Frisco saw its November collections drop 11.6 percent, Plano saw a drop of 19.1 percent, Grapevine tax revenue for the month was down 8.3 percent and Irving showed a decrease of 18 percent. Lewisville fared better than most North Texas cities, with November 2009 collections dipping less than 1 percent when compared with November 2008.

Texas collected $1.7 billion in sales taxes last month, making November the ninth consecutive month of a year-over-year decline.Combs says collections are down in all categories, including retailing, oil and gas production and construction.

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Ben S. Bernanke has the backing of a majority of U.S. senators on the Banking Committee for a second term as Federal Reserve chairman.

Eight Democrats and four Republicans, among the 23 lawmakers on the panel overseeing the central bank, made their views known in interviews, comments to reporters or written statements. Some said they will support Bernanke, while others said they’re leaning in his favor.

Committee Chairman Christopher Dodd, a Connecticut Democrat, said yesterday that Bernanke has “done a pretty good job,” and that anger in Congress over the Fed’s role in the financial crisis is “misplaced.” Judd Gregg, a New Hampshire Republican, said Nov. 20 he will “absolutely” vote for Bernanke.

Criticism of the central bank has mounted in Congress since President Barack Obama nominated Bernanke in August, with many lawmakers blaming the Fed for lax supervision of banks and for taking part in taxpayer-funded bailouts of companies including Citigroup Inc. Some senators said those concerns won’t stop them from backing the former Princeton University economist.

“He’s been far from perfect,” Senator Sherrod Brown, an Ohio Democrat, said in an interview yesterday. “He was not quick enough responding last year to many of these issues that we care about, particularly in housing. I want him to focus on jobs. But I think he’s generally done a decent job.”

Hearing Tomorrow

The banking panel holds a hearing on Bernanke’s nomination tomorrow in Washington. A vote hasn’t been scheduled, and the full Senate would then need to confirm the Fed chief. Bernanke’s four-year term ends Jan. 31.

Traders on Intrade, an online futures exchange, give Bernanke a 90 percent chance of Senate confirmation, up from 89 percent yesterday.

The Fed under Bernanke has slashed interest rates almost to zero and pumped more than $1 trillion into the financial system to battle the deepest recession since the 1930s. The Standard & Poor’s 500 Index has jumped 64 percent from its 2009 low on March 9 as the economy showed signs of revival.

Policy makers last month repeated their pledge to keep rates low for an “extended period” to bring down an unemployment rate at a 26-year high. A government report Dec. 4 is likely to show that companies reduced payrolls for a 23rd straight month, according to a Bloomberg survey of economists.

Dodd said in August that while he’s had “serious differences” with the Fed, reappointing Bernanke is “probably the right choice.”

‘Pins and Needles’

Asked yesterday about his vote, Dodd told reporters, “I want you to be on pins and needles and wait until Thursday to hear this exciting news.”

Jim Bunning, the Kentucky Republican who was the only senator to oppose Bernanke’s first nomination in 2005, hasn’t changed his views.

“His job rating would be zero minus F,” Bunning said in an interview yesterday. “He has catered to the big banks, to the Wall Street elitists, to every major money concern in the country and in the world.”

Senator Bernard Sanders, a Vermont independent who isn’t on the banking committee, said today that he placed a procedural hold on Bernanke’s nomination, which requires 60 votes to break. “Mr. Bernanke has failed,” Sanders said in an e-mailed statement. “It’s time for him to go.”

The other Democrats on the banking panel expressing support for Bernanke include South Dakota’s Tim Johnson, Jack Reed of Rhode Island, New York’s Charles Schumer, Evan Bayh of Indiana, Hawaii’s Daniel Akaka and Virginia’s Mark Warner.

Three said they’re undecided, including Wisconsin’s Herb Kohl, Jon Tester of Montana and Jeff Merkley of Oregon.

‘Earth Shattering’

Among Republicans, Nebraska’s Mike Johanns said Bernanke “will have my support.” Utah’s Robert Bennett said he’ll probably vote in favor, while Bob Corker of Tennessee said he is likely to back Bernanke “if nothing earth-shattering comes out of the hearings and the follow-ups.”

Alabama Senator Richard Shelby, the panel’s top Republican, declined to comment except to say, “You’ll be there Thursday.”

Bernanke, 55, has presided over the most expansive use of Fed powers since the 1930s, taking control of insurer American International Group Inc. and launching unprecedented programs to contain fallout from a run on money-market funds and to buy short-term debt from companies such as General Electric Co.

Some lawmakers have accused the Fed of overstepping its authority and failing to properly supervise the financial firms that packaged and sold the mortgage-backed securities at the heart of the crisis.

‘Abysmal Failure’

Dodd, calling the Fed’s record on banking supervision an “abysmal failure,” introduced legislation in November that would strip the central bank of that role. Also last month, the House Financial Services Committee approved a proposal to remove a three-decade ban on congressional audits of Fed interest-rate decisions.

The Fed chief said in a Nov. 29 commentary in the Washington Post that curbing the central bank’s authority to supervise the banking system and tampering with its independence would “seriously impair” economic stability in the U.S.

Frederic Mishkin, a former Fed governor who now teaches at Columbia University in New York, called the measure that would allow audits of Fed policy “incredibly dangerous.”

“If you make the central bank beholden to politicians on a short-run basis, you get very bad outcomes: high inflation and less of the ability to deal with shocks like the ones we had recently,” Mishkin said yesterday in an interview.

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The U.S. Defense Department is moving the Boeing EA-18G Growler to full production, Boeing said Monday.

Boeing’s EA-18G program, which is based in St. Louis, will now begin building 22 aircraft per year for U.S. Navy, the Pentagon said.

The news represents a $386 million modification to a previously awarded contract, according to the Pentagon.

The EA-18G is derived from the F/A-18F aircraft and includes electronic attack capabilities.

Work will be performed in Baltimore (46.5 percent); Bethpage, N.Y. (22.7 percent); St. Louis (13.5 percent); Melbourne, Fla. (5.5 percent); Fort Wayne, Ind. (3.7 percent); Thousand Oaks, Calif. (3.7 percent); Wallingford, Conn. (2.6 percent); Nashua, N.H. (1.1 percent); and Westminster, Colo. (0.7 percent), and is expected to be completed in December 2012.

Chicago-based Boeing Co. (NYSE: BA) is prime contractor on the Growler. The team also includes Northrop Grumman, Raytheon and General Electric Aircraft Engines.

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The U.S. dollar may come under renewed pressure from emerging market currencies and the euro after a meeting of the world’s top finance officials failed to take concrete action on rebalancing global money flows.

Finance ministers and central bank governors of the Group of 20 major countries, meeting in Scotland at the weekend, launched a “framework” in which they will discuss how to reduce trade and savings imbalances between nations.

But their communique talked only in general terms about rebalancing economies, and implied they might not agree on specific policies for individual countries to adopt before the end of next year at the earliest.

The result may be a continuation of heavy fund flows into emerging markets, boosting currencies there. And central banks intervening to slow currency appreciation may keep investing much of the money they obtain in the euro, pushing up that currency too.

“We’re probably looking at fresh dollar weakness in the short term” in the wake of the G20 meeting, said Kenneth Broux, senior markets economist at Lloyds TSB.

CHINA, BRAZIL

At the center of the currency issue is China’s reluctance to permit appreciation of its tightly controlled yuan, which it has kept flat against the dollar since mid-2008.

That has prompted additional fund flows into emerging market currencies that do trade freely, such as the Brazilian real, which has soared over 30 percent this year. Last month, Brazil slapped a 2 percent tax on foreign investments in fixed income and stocks in an effort to slow the real’s rise.

Last week, Brazilian officials said they would discuss this problem at the G20 meeting. But the G20 communique made no reference to the issue, and Brazil appeared to get little sympathy from a senior official of the International Monetary Fund, which is a key player in the global rebalancing campaign.

Youssef Boutros-Ghali, who chairs the International Monetary and Financial Committee, the IMF’s policy steering committee, told Reuters that Brazil’s tax was unlikely to work and that “we should not be fixated on currencies.

Officials from several countries, including Brazil, Japan and Indonesia, urged China on the sidelines of the meeting to let the yuan move more flexibly.

But as a group, the G20 did not press China on the sensitive issue, G20 sources said. British finance minister Alistair Darling told reporters: “We didn’t discuss the renminbi. I think that’s a question for China rather than us.”

In fact, China appeared in a combative mood. Finance Minister Xie Xuren and central bank governor Zhou Xiaochuan, speaking to the official Xinhua news agency after the meeting, made no mention of the yuan and instead warned developed countries to focus on the quality of their own policies.

Xie said countries with global reserve currencies should work to maintain the currencies’ value, to avoid destabilizing the global economy — implying it was up to Washington, not Beijing, to resolve the issue of the weak dollar.

The silence on the yuan in Scotland suggested countries accepted the G20 was not a forum in which to press China. The other main global economic forum, the Group of Seven nations, last met in October; it did mention the yuan, but only in the softest terms, “welcoming China’s continued commitment” to free up the yuan without referring to a timetable. 

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