Shaw Capital Management Financial News: Wall St. Banks Expected to Post Weak 2nd-Quarter: Tumblr
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Shaw Capital Management Financial News: Wall St. Banks Expected to Post Weak 2nd-Quarter Results
Article by Shaw Financial
By ERIC DASHPublished: July 10, 2011Only a few short months ago, JPMorgan Chase traders were on such a roll that they did not have a single losing day in the first quarter.But when the bank reports its second-quarter results this week, that hot streak will have come to an end. Analysts expect JPMorgan to count an almost 20 percent drop in its sales and trading revenues, reflecting a slowdown in investor activity and the dismal performance of its fixed-income and commodities groups.Bank of America, Citigroup, Goldman Sachs and Morgan Stanley are expected to report similar news. After helping prop up Wall Street during the financial crisis, core trading revenue is projected to drop, on average, by as much as 25 percent from the first quarter, according to Credit Suisse research.That will put further pressure on the banks’ growth prospects, which are already strained by stagnant loan growth and more stringent regulation. It is also prompting nearly every major Wall Street firm to contemplate another round of layoffs amid growing concerns that at least part of the weak results are permanent.”We are undoubtedly being impacted by lower levels of activity,” said William Tanona, a financial services analyst with UBS. “There is a lot of uncertainty out there.”Together, the five Wall Street banks are still going to take in more than billion from their core trading operations, largely from business done on behalf of clients. For example, the banks routinely help airlines hedge oil prices or bring together buyers and sellers of stock, bonds and other complex securities — often putting their own money on the line to facilitate a trade. But during the second quarter, the business was particularly hard hit.Trading volumes fell sharply as investors became unnerved by the running debt crisis in Europe, the political standoff over the debt ceiling in the United States, and lingering concerns over the anemic growth of the broader economy. Even when investors did place their bets, they were far more hesitant to take big risks — something known on Wall Street as lacking conviction. That meant the banks missed out on the lucrative fees they can generate by selling more high-octane products, like complex options and derivatives.Fixed-income traders, among the biggest moneymakers for Wall Street, faced a bruising market. In the commodities business, for example, oil, gold and other metals prices had been rising quickly during the early part of the year as investors anticipated high demand for materials to keep the global economy humming. But as cracks in the recovery kept surfacing, prices headed south — and traders raced to the sidelines. That left most Wall Street desks, which had stocked up on inventory to facilitate trades, holding losing positions.At JPMorgan, for instance, energy traders were having a gangbuster year, earning several hundred million dollars for its burgeoning commodities unit. Yet when the market turned in early May, they gave back some of those gains, according to market participants. Morgan Stanley, meanwhile, suffered tens of millions in losses on its interest rate desk when a bet on lower inflation turned against the bank’s position.Mortgage trading did not fare much better. After rallying from highly depressed values for much the last two years, mortgage-backed securities prices fell sharply during the second quarter. The reason? The government started dumping into the market its vast portfolio of mortgage bonds acquired from its rescue of the American International Group, and investors believed the outsize supply would cause values to plummet. (Only recently, when the Federal Reserve Bank of New York announced it was halting auctions of the A.I.G. mortgage bonds, did prices start to stabilize.)Although the banks have slowed the spill of red ink from troubled mortgages and other bad loans, they are struggling to increase revenue in their more traditional banking businesses, too.New financial regulations have chipped away at once-lucrative sources of income, like overdraft charges and credit card penalty fees. Starting this fall, banks are expecting to absorb a multibillion-dollar hit when they are forced to sharply lower the fees they charge each time consumers swipe their debit cards. Higher capital requirements, meanwhile, could further depress profits if some banks are forced to lighten their balance sheets or exit certain businesses altogether.

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Shaw Capital Management and Financing provides export trade financing to clients in every major world market and can convert accounts receivable finance transactions in 17 currencies. We have no minimum or maximum monthly volume requirements. Other factoring companies require a financial commitment for the amount of freight bills you factor each month. Our highly skilled team provides full administrative support – including credit management, invoicing, collections, account reporting, expense reporting, fuel card management and much more! With Shaw Capital Management and Financing, you get paid in full minus our fee the day we receive your freight bills. Other factoring companies holdback 10 to 15 percent of your money or more for each invoice in a reserve account. That reserve amount is not immediately provided to your company. In the end, you receive part of that percentage back, depending on how long it takes the factoring company to receive payment on the invoice.

Tumblr: Shaw Capital Management Factoring Latest News | Livejournal
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DOW JONES NEWSWIRES
Mortgage rates, including the average rate on 30-year fixed mortgages, declined again this week, according to Freddie Mac’s (FMCC) weekly survey of mortgage rates.
“Mortgage rates continued to decline this week following a mixed employment report,” Freddie Chief Economist Frank Nothaft said, noting the economy added the most workers in 11 months in April, though the unemployment rate rose to 9%, its highest reading since January.
Rates had slumped for much of last year, setting record lows in the process, as yields on Treasurys slid amid economic uncertainty. Before recent declines, rates had been rising this year. Mortgage rates generally track the yields, which move inversely to Treasury prices. Yields moved back near their lows of the year Thursday morning as investors sought save-haven investments with weakness in commodities and global equities.
Source: Freddie Mac
The 30-year fixed-rate mortgage averaged 4.63% for the week ended Thursday, down from the prior week’s 4.71% average and 4.93% a year ago. Rates on 15-year fixed-rate mortgages were 3.82%, down from 3.89% the previous week and 4.3% a year earlier.
Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 3.41%, down from 3.47% the prior week and 3.95% a year earlier. One-year Treasury-indexed ARMs were 3.11%, down from 3.14% the prior week and 4.02% a year earlier.
To obtain the rates, the fixed-rate mortgages required payment of an average 0.7 point, while the five-year adjustable required 0.6 point and one-year adjustable required a 0.5 point. A point is 1% of the mortgage amount, charged as prepaid interest.
-By Matt Jarzemsky, Dow Jones Newswires; 212-416-2240;matthew.jarzemsky@dowjones.com

Shaw Capital Management Factoring- The Raw Deal: Personal Loans - Fc2 Blog
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You know, I’ve heard about personal loan offers and promotions but never looked into one. This week I wondered, what’s the difference between a personal loan, a cash loan and a plain ‘ole credit card (apart from the fact that you don’t want a cash advance at 18 percent compounding interest on your Visa thank-you-very-much). And, when should I use a personal loan over a cash loan or credit?

Well, the first thing I found out is personal loans have lower interest rates than cash loans and credit cards (win!). But banks do expect you to have a superb credit rating to lend you the money (dang). Banks are less fussy about a bad credit rating if you’re applying for a credit card, but it doesn’t give you as many spending options.

On small amounts and if you need cash urgently, it shouldn’t be too hard to jig around your cash and expense on your credit card – but watch out. It turns out you spend 12 percent more when you swipe.

Cash loans now are essentially payday loans now. The interest is exorbitant, but you don’t feel it as much over a 24 hour or 48 hour period which is basically what they’re for. If you need the money that badly, I say ask your boss to pay you a day early and offer him the $50 interest. It’ll cost you less and he’ll hardly shoot you down.

The other difference between a loan and credit is that personal loans are split into two categories: secured andunsecured. All it means is your lender will want to prop your borrowing against an asset, like a car or your house. In the case of a secured loan (if you qualify with a slick credithistory!), you’re bound to benefit from low interest rates. Unsecured loans will charge slightly higher interest.

Borrowers beware: Pay your bills on time or face stiff late charges and penalties. Personal loans are more strict when it comes to repayments.

What’s interesting is the fact that more Americans are taking out personal loans according to a report on Digital News as people look for low interest alternatives for borrowing. Tight credit and poor economic conditions has increased the demand for personal loans.

HSBC recently announced unsecured personal loan rates starting at 6.99 percent. Not bad. SunTrust did better with 3.99 percent and Nationwide Bank came out with a 6.45 percent rate. The loans are being used for refinancing vehicles for homeowners mainly.

Personal loans have become increasingly popular since the financial crisis. American banking newsreports:

“Lending Club, a peer-to-peer lending company, has now originated more than $255 million in loans to consumers. The news comes just three months after the company announced that it had surpassed $200 million in loan originations. As of April 16th, Lending Club’s statistics page showed that $255,003,975 had been setup by the company.”

Infographic source : CreditSesame

Okay, so when should I use a loan and when should I use credit?

Essentially: If you need a lump-sum loan with fixed payments over a period of time, go for a personal loan. If all you need is a line of credit you can tap from time to time, a credit card or line of credit is your answer.

You’re going to need a good credit rating and an asset to secure your loan against and get a good rate in the case of a personal loan. It’s better for large sums (such as refinancing your home loan or car loan).

A line of credit is more flexible, and you sure have to be responsible not to get into trouble with it (and you know what I mean), but the interest rates are higher, so look for a good deal before you sign up.

Have you used a personal loan, and was it better than credit or harder to manage? Share your experience with us below!

Want more info on loans and credit cards? Check out EconomyWatch Loans and Credit Cards for the raw deal and more!


Shaw Capital Management Factoring: Abolishing Loan Exit Fees to Benefit Small Businesses
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The Interface Financial Group (IFG), a growing source of alternative funding for Australian small businesses, announced that the company welcomes the Federal Government’s focus on abolishing exit fees from lending facilities because it places additional value on financiers who differentiate based on offering great client service. IFG provides short-term financial resources including single invoice factoring to companies in Australia, New Zealand, the UK, Ireland, the United States, Canada, and Singapore Earlier this month, the Gillard Government’s legislation to ban exit fees on mortgages was passed into law with the primary focus on benefiting consumers who own residential properties. The ban applies to all new home loans from 01 July 2011 and has already prompted some of the major banks to eliminate their exit fees for their mortgage customers. These exit fees have been a critical area of focus for the Federal Government in an attempt to increase competition in the banking industry. Not surprisingly, the ban has been contained to mortgage products which are the most politically sensitive financial service amongst Australia’s property-conscious consumers. David Hechter, Chief Operating Officer for IFG in Australia welcomed the focus on exit fees across additional credit products in the small business finance market because it forces finance companies to continually provide clients with excellent customer service. ”It is extremely challenging for small businesses to forecast what will happen to their companies over even a short-term period yet entrepreneurs can find themselves locked into business loans with minimum monthly fees and high exit fees should circumstances change. Finance companies who are confident in their ability to retain their small business clients based on consistently providing great customer service will not have to rely on exit fees to achieve customer retention. Especially in the area of debtor finance – where the finance is for invoices that revolve every 30-60 days – financiers will have to fight to keep their clients every month. Small businesses can really benefit from this sort of competition from factoring companies who are not afraid to operate without exit fees in place.” Invoice factoring and invoice discounting are financial services targeted specifically to SME’s who need working capital cash flow, but cannot access conventional bank products such as commercial loans and overdrafts. These products involve selling invoices to a third party, either a specialist provider or a bank. There are specialist funders in this sector that will still consider offering facilities to businesses who may not meet the traditional banks’ lending criteria. This can even include sectors that the banks typically avoid such as construction sub-contracting, however SMEs in this industry can turn to specialist funders who offer facilities through construction factoring arrangements. Factoring belongs to the family of debtor finance products where a company can use one of its most valuable assets – its strong customer base – as a source of cash flow by selling these invoices to a factoring company. With invoice factoring, there are no minimums, no maximums, no long-term commitments and no lengthy application process. About The Interface Financial Group (
www.ifgnetwork.com.au) The Interface Financial Group (IFG) provides short-term financial resources including invoice factoring(invoice discounting). IFG launched the Australia operation in 2006 following the success of its New Zealand businesses which commenced in 2004. IFG’s innovative products also includes spot factoring – the purchase of a single invoice or number of invoices. IFG does not require the whole debtor book. The IFG Network is the funding arm of The Interface Financial Group providing capital and transactional support to IFG’s international office network. IFG has grown to over (150) international offices in Australia, UK, the United States, Canada, Ireland, New Zealand, and Singapore. Each IFG office is managed on a local level, providing immediate service to clients with local knowledge and experience. This makes IFG unique to all otherfactoring companies in Australia. The IFG team has substantial business experience and expertise in numerous diverse areas, including accounting, finance, law, marketing, and banking.


Shaw Capital Management Factoring: Compass Directions – Commodities & Equities Report
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http://shaw-capitalmanagementfactoring.com/2011/07/shaw-capital-management-factoring-compass-directions-%E2%80%93-commodities-equities-report/

GOLD continues to move to the upside as debt woes continue in both the US and Europe. Recent data confirms that bullish bets on Gold are rising in the hedge fund space and as much as this is a positive it could show that a temporary top is in sight. Gold has moved higher form the US close this morning and we briefly touched on $1,598 before easing back slightly. Gold is currently trading higher by 0.40% at $1,597 in early trade.

We would be cautious getting too bullish in the ST as our ST objective has nearly been reached at $1,600. As investors are now getting increasingly bullish on Gold it would not surprise us to see a temporary pullback towards $1,550/60 before the next leg higher. In the MT we remain firmly bullish and target $1,750 by the end of Q3. We look to sell out of ST longs today on the approach to $1,600 and await a pullback.

Compass Direction

Short-Term    Medium-Term

NEUTRAL     BULLISH

3rd Support2nd Support1st SupportSPOT1st Resistance2nd Resistance3rd Resistance
$1,582$1,587/88$1,593/94$1,597$1,600$1,605/06$1,615

S&P/ASX 200 finished US trade flat to marginally weaker in offshore trade on Friday even as commodities gained and US equities posted gains on the back of positive corporate earnings in the tech sector. The ASX 200 finished US trade weaker by 2 points at 4,471. We expect a quick turnaround in the ASX 200 this morning as commodities remain firmly bid with Gold nearly reaching a record $1,600 this morning. Oil moved higher along with Silver and other metals which should add support to the miners.

However, the banking sector may come under some pressure as performances in the US were not all that encouraging. The banking sector will need to outperform for our market to see gains today. We remain bullish in the MT but remain neutral in the ST as consolidation persists. Stops remain below 4,445 and we buy on a break of 4,500

Compass Direction

Short-Term     Medium-Term

NEUTRAL BULLISH



Shaw Capital Management Factoring: CIT Renews $1 Billion Vendor Finance Funding Facility
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NEW YORK–(BUSINESS WIRE)–CIT Group Inc. (NYSE: CIT), a leading provider of financing to small businesses and middle market companies, today announced that it has renewed its $1 billion committed U.S. Vendor Finance conduit facility, significantly reducing costs, increasing the advance rate and lengthening the term. The private facility supports CIT’s lending to small business and middle market companies and will allow CIT Vendor Finance to fund both existing assets and new originations.

“This transaction highlights our progress in securing stable and low cost funding to support the small business and middle market sectors, which remain vital to the ongoing recovery of the U.S. economy”

“This transaction highlights our progress in securing stable and low cost funding to support the small business and middle market sectors, which remain vital to the ongoing recovery of the U.S. economy,” said John A. Thain, Chairman and Chief Executive Officer.

The committed revolving period of the facility now expires in March 2013 and the facility has a final maturity in 2020. Barclays Bank PLC continues to serve as Administrative Agent with three additional banks as committed lenders.

Individuals interested in receiving future updates on CIT via e-mail can register at http://newsalerts.cit.com.

About CIT

Founded in 1908, CIT (NYSE: CIT) is a bank holding company with more than $35 billion in finance and leasing assets. It provides financing and leasing capital to its more than one million small business and middle market clients and their customers across more than 30 industries. CIT maintains leadership positions in small business and middle market lending, factoring, retail finance, aerospace, equipment and rail leasing, and global vendor finance. www.cit.com

Contacts

CIT MEDIA RELATIONS:

C. Curtis Ritter, 973-740-5390

Vice President

Director of External and Internal

Communications & Media Relations

Curt.Ritter@cit.com

or

CIT INVESTOR RELATIONS:

Ken Brause, 212-771-9650

Executive Vice President

Ken.Brause@cit.com



Shaw Capital Management Online : Heads Up
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Originally posted by wallyyamaguchi at Shaw Capital Management Online : Heads Up

Welcome to SCM Online, your sleek and no-frills alternative to the oh-so-cluttered news blogs that currently tops the search results. As a debut post, let me give you a rundown on how this whole thing works.

SCM Online conveniently groups incoming news into three categories that proves to be the most significant ones for the online community in general:

Technology. Keep tabs on the heating competition between search engine giant Google and social networking star Facebook. (Occasionally, we feature certain websites or software products and do some pros-and-cons analysis. Otherwise, anything new and newsworthy concerning consumer gadgets and the collective web.)

Lifestyle. Useful health and diet tips for those conscious with their well-being, with lots of other cool and practical stuff for everyday life thrown in for good measure.

Finance. Daily reports on the state of the market, notable fluctuations on stock prices, commodity updates, scam MOs, and several business and political factors that comes in to play.

We do host a whole lot of other stuff outside of those categories but only if they are totally interesting, amusing or informational (we don’t want to overwhelm you with useless news!).

Above all, we welcome active participation from our visitors (yeah, you!), so if you find something interesting, erroneous, terrible or inspiring, feel free to leave your two cents.

Stay tuned!



Shaw Capital Management Factoring: Fraudulent Google certificate points to Internet attack
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This screenshot shows the warning the user reportedly got when attempting to log in to Gmail.

A Dutch company appears to have issued a digital certificate for Google.com to someone other than Google, who may be using it to try to re-direct traffic of users based in Iran.

Yesterday, someone reported on a Google support site that when attempting to log in to Gmail the browser issued a warning for the digital certificate used as proof that the site is legitimate, according to this thread on a Google support forum site.

“Today, when I tried to login to my Gmail account I saw a certificate warning in Chrome,” someone using the screen name “alibo” wrote. “I think my ISP or my government did this attack (because I live in Iran and you may hear something about the story of Comodo hacker!)” Alibo then posted a screenshot and the text of the certificate. The screenshot page was not accessible.

In this case the browser of the person reporting the problem warned that there was a problem with the digital certificate. However, it’s unclear what triggered the warning and other browsers may not. In that event, a user could end up on a site that purports to be google.com but isn’t.

CNET verified that the digital certificate is fraudulent. This Pastebin post details how to verify that a certificate is real and notes that it was issued in July. More information on how to mitigate the risk from the DigiNotar certificate is provided on this Facebook page from Ryan Hurst, manager of advertising security engineering at Microsoft.

A Google spokesman provided CNET with this statement: “A Chrome security feature warned the user of the invalid certificate and blocked them from visiting the attacker’s site. We’re pleased that the security measures in Chrome protected the user and brought this attack to the public’s attention. While we investigate, we plan to block any sites whose certificates were signed by DigiNotar.”

Mozilla said in a blog post that it was “Because the extent of the mis-issuance is not clear, we are releasing new versions of Firefox… shortly that will revoke trust in the DigiNotar root and protect users from this attack. We encourage all users to keep their software up-to-date by regularly applying security updates. Users can also manually disable the DigiNotar root through the Firefox preferences.”

The certificate was issued by DigiNotar, based in the Netherlands. Representatives from the company did not immediately respond to an e-mail seeking comment today and an automated message said the offices were closed for the night and offered no voice-mail option. A phone call and e-mail to Vasco Data Security, parent company of DigiNotar, were not immediately returned.

The situation is similar to one that happened in March in which spoofed certificates were found involving Google, Yahoo, Microsoft, and other major sites and they used Internet Protocol addresses in Iran. In that case, the fraudulent digital certificates were acquired through reseller partners of certificate authority Comodo and a 21-year-old Iranian patriot took credit for the attack, saying he was protesting U.S. foreign policy.

Moxie Marlinspike, chief technology officer of mobile security firm Whisper Systems and an expert on Internet authentication infrastructure, warned against jumping to conclusions about who is behind the attack.

“Clearly something is amiss. There’s a rogue cert for all of Google services in the wild,” he told CNET. “Of course many people are quick to claim that the state of Iran is responsible for all this but I think it’s probably too soon to draw that conclusion. There doesn’t seem to be any specific evidence.”

These situations happen all the time, and rather than point fingers, the industry should fix the underlying problem, he said. In the meantime, individual Web surfers can protect themselves by using a Firefox plug-in Marlinspike developed called Convergence. “My hope is that this will be integrated into Web browsers themselves” in the future, he said.

These attacks illustrate a fundamental weakness with the current Web site authentication system in which third parties issue certificates that prove that a Web site is legitimate when making an “https://” connection. The list of certificate issuers has ballooned over the years to approximately 650 organizations, which may not always follow the strictest security procedures. And each one has a copy of the Web’s master keys. There is no automated process to revoke fraudulent certificates, nor is there a public list of certificates that companies like Comodo have issued, or even which of its resellers or partners have been given a duplicate set of the master keys. And there are no mechanisms to prevent fraudulent certificates for Yahoo Mail or Gmail from being issued by compromised companies, or repressive regimes bent on surveillance.

Today’s system gives browser makers tremendous responsibility. Any list of so-called certificate authorities they include will be trusted by billions of Web browsers around the world, unless users take the time to change the settings.

“I expect this type of attack to become somewhat commonplace in time,” said Roel Schouwenberg, senior researcher at Kaspersky Lab. “And in this case we may be looking at a double whammy – not only does SSL suffer yet another blow, we may also be looking at a serious compromise within Vasco. The latter could have a very significant impact.”

Shaw Capital Management Headlines: Pope-funded groups and the dismantling of public education
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http://shawcapitalmanagement-headlines.com/2011/03/shaw-capital-management-headlines-pope-funded-groups-and-the-dismantling-of-public-education/


http://www.indyweek.com/indyweek/pope-funded-groups-and-the-dismantling-of-public-education/Content?oid=2140394
by Bob Geary


One day into the 2011 General Assembly session and conservatives were celebrating their new power over education. “It’s a joyous week in Raleigh!” Dallas Woodhouse said exultantly. The state director of Americans for Prosperity was busy welcoming his guests, who included Republican legislators, to a reception co-sponsored by AFP-NC and the John William Pope Civitas Institute.
Woodhouse crowed about how the N.C. Association of Educators was suddenly in retreat and then introduced the new House majority leader, Rep. Paul (Skip) Stam of Wake County. “He’s a friend who’s been with us from the beginning on charter schools,” Woodhouse said.
Stam quickly endorsed the AFP’s three charter school “principles”: an unlimited number of charters; no minimum or maximum enrollments at the schools; and a separate licensing commission outside of the State Department of Public Instruction—even though charter schools are ostensibly public schools.
Then Stam turned to his own bill to create tax credits for parents who pay private school tuitions or homeschool their children. Always call them tax credits, he warned, chortling at this chicanery, because the phrase “tax credits” does better in the polls than “private school vouchers.”
Within hours, video of Woodhouse, Stam and Sen. Neal Hunt, R-Wake, who spoke in favor of merit pay for teachers, was posted to The Locker Room, a blog with a conservative bent. The blog is maintained by the John Locke Foundation, an Art Pope-funded think tank in Raleigh.
But what of Art Pope? He was nowhere to be seen.
Present or not, Pope was the star of this show, the evening’s events and cast of characters a virtual playbill of his growing influence over education policy in North Carolina and the tools he’s used to achieve it: Locke, Civitas, AFP, the Republican Party—all beneficiaries of the Pope Foundation or Pope himself.
Indeed, Pope’s self-image may well be reflected in a description of the humble man for whom the Locke Foundation’s “E.A. Morris Fellowship for Emerging Leaders” is named.
E. A. Morris, who headed the giant Blue Bell Corp. in Greensboro, was “one of the founding fathers of the North Carolina conservative movement,” the Locke website relates, “known for his leadership skills in his community and throughout North Carolina. [His] generosity extended to the support of many charitable and philanthropic causes that aid the advancement of the human condition. While he received several accolades for his achievements, he remained unassuming, humbly accepting such praise.”
The Locke website also contains some details about the projects carried out by Morris fellows from the Class of ’09. Bill Gilbert of Raleigh helped promote tea party events in North Carolina in concert with Americans for Prosperity. Dan Soucek ran a “reverse raffle” to raise money for his campaign in the 45th District, in western North Carolina.
Soucek, a Republican, is now in the Senate and, as a member of the education committee, played a role in the passage of Senate Bill 8, the GOP’s charter-school bill. Sen. Richard Stevens, R-Wake, the bill’s chief sponsor, credited Soucek with adding key language to the provision about the licensing commission.
There were no accolades, though, for the man behind the curtain: Art Pope.
As a younger man, Pope was elected to the House from a Raleigh district and served alongside his friend Skip Stam. Pope even captured the GOP nomination for lieutenant governor in 1992, losing to Democrat Dennis Wicker. Quiet and introverted, however, Pope wasn’t really cut out to be a frontman. He was appointed to fill a House vacancy in 1999 and served through 2002. Since then, he’s chosen to use the financial assets under his control to build a conservative network of acolytes and elevate them to power.
Nowhere is Pope’s imprint more evident than in education policy. His various organizations have long supported more charter schools, vouchers and cutting funding for traditional schools—especially for elaborate facilities, administrators and extracurricular programs. The groups also support merit pay for teachers whose students get the best test results.
More “market competition” from private schools and charter schools, these Pope-backed groups argue, would force the state-run schools to improve or lose students—and in turn, lose even more of their funding.
In the current budget fight, the John Locke Foundation also supports killing former Gov. Jim Hunt’s Smart Start programs for preschool children and former Gov. Mike Easley’s signature More At Four program for at-risk 4-year-olds. Such programs should be replaced by—what else?—refundable tax credits for private preschool or child care expenses, the foundation argues. Although “for a smaller subset of desperately poor preschoolers who lack functioning parents, the foundation says, a “carefully designed state intervention may be justified.”
Pope says the views expressed by Locke, Civitas and AFP are “not necessarily” the same as his. They have their own diverse staffs, he said, and he doesn’t tell them what to say or write. Sometimes he agrees with them; sometimes he doesn’t.
He did acknowledge, however, that he supports lifting the cap on charter schools and merit pay for teachers, especially math and science teachers. He supports tax credits for private school tuition in general, though he said he hasn’t read Stam’s bill and has no position on it.
Public aid to private schools isn’t always a conservative position, Pope added. Even the late U.S. Sen. Ted Kennedy, the Massachusetts liberal, was in favor of tuition grants for low-income kids trapped in inner-city schools.
Pope vociferously denied, in fact, being anti-public schools, saying that as a legislator he supported numerous funding increases, including votes for the Excellent Schools Act, the ABCs of Education Law and additional aid to low-wealth counties.
The Pope Foundation doesn’t limit itself to K–12 public education. The foundation also pays the bills, to the tune of some $540,000 a year, for the John William Pope Center for Higher Education Policy to pump out criticism of North Carolina’s public universities.
The center has been arguing for a decade that the UNC system is too big, too costly to taxpayers and that it enrolls too many students unprepared for academic work—who should attend a cheaper community college.
A perennial complaint from the Pope Center is that the UNC faculty, with support from university administrators, indoctrinates students with radical ideas, including “diversity” courses in which the views of women, minority and gay scholars are considered instead those of the great white male thinkers like, say, philosopher John Locke.
In 2004, Pope got into a tussle with UNC-Chapel Hill faculty members over the use of money he was prepared to donate toward a new “Studies in Western Civilization” curriculum. Faculty said he was trying to promote his conservative agenda in their history courses; he denied it—and continues to deny it.
Since then, Pope’s donated money to several universities—always in response to their request, he said—for programs such as one at N.C. Central University that brings speakers to the law school and another at N.C. State that brings speakers to its program in law and economics. As Pope described them, the programs have a conservative flavor: U.S. Supreme Court Chief Justice John Roberts was among the speakers at N.C. Central, he said, and Vernon Smith, a Nobel Prize-winning economist and a fellow at the libertarian Cato Institute, spoke at N.C. State.
Pope’s organizations have long maintained that students should pay more of their own way to a UNC education, with taxpayers paying less. In a May 2000 paper, “A New Model for the Financing of Higher Education in North Carolina,” the center’s George Leef contended that UNC tuitions “[have] been held far too low, and notwithstanding the vague injunction in the state constitution to keep the cost of higher education as low as ‘practicable,’ a substantial increase would be good policy.”
(In fact, the state constitution calls for UNC and other public institutions of higher education to be “free of expense” as far as practicable. )
It would be good policy, Leef contended, because many taxpayers “derive no direct benefit” from educating other people’s children. Thus, students or their parents should pay, with exceptions made for the poor.
Moreover, Leef said, the state should give the private schools more money—in the Legislative Tuition Grant program—as a way of tilting the playing field against the public schools.
Eleven years later, Leef’s title at the center is director of research, and he continues to hold the same views, summarized in his biography as “free markets, minimal government, private property, and individual rights.”
And 11 years later, tuitions and fees at UNC campuses are about triple what they were when Leef wrote his paper. In-state undergraduates at UNC-CH, for example, paid $2,365 in 1999–2000, exclusive of room and board. The current rate is $6,840.
Nonetheless, the Pope Center issued a new paper last month again arguing that, “Considerable savings can be achieved by replacing state appropriations with revenue from tuition.”
On the center’s website, however, Jane Shaw, the center’s president and a regular columnist on its Clarion Call blog, took a dim view of giving the UNC system state funds or student tuition increases. “It’s time to ‘starve the beast’—limit the amount of money that the university system has to spend so that it will make the right changes,” Shaw wrote.
There’s some irony in the fact that Pope-funded groups complain about too many students in too many UNC institutions while they themselves proliferate: Locke, Civitas, Civitas Action, Pope Center, AFP-NC, Real Jobs NC and the list goes on.
But if their messages are redundant (and they are), the methods of the different Pope-backed groups vary greatly, combining for a kind of tag-team or good cop-bad cop politics that is working in education policy.
The John Locke Foundation is the flagship of the bunch. It’s fashioned as a think tank, with a host of staffers churning out enormous volumes of written and spoken words and TV sound bites for any audience that will listen to them. Its president, smooth-talking John Hood, is especially prolific, attacking big government at every opportunity while assuring us that the right-wing ideas he’s promoting are in no way radical, but simply the next reasonable thing.
For example, Hood wrote recently that liberals are wrong when they fear that “parental choice” (vouchers and charter schools) will destroy the public schools—so are any conservatives who happily forecast that outcome. The likely result, Hood said, is that a quarter of students will attend charter or private schools—far fewer than in other countries which, Hood was pleased to note, spend less tax money (emphasis added) per pupil than the U.S.
Locke’s publications are replete with articles extolling the virtues of this charter school, that homeschooling parent or the next tea party movement (headline from the January issue of its Carolina Journal: “North Carolina Tea Party’s Next Objective? Education Reform”).
Civitas, meanwhile, functions mainly as a training ground for conservative activists, including instruction about political uses of the information supplied by other Pope-backed groups. One of Civitas’ new offerings is to supply state-required training to local school board members. Not surprisingly, Civitas got its first such gig with the Wake County school board after a five-member conservative majority took power following the 2009 elections. Money from the Wake County Republican Party helped elect the conservatives; Pope gave $15,000 to the party, according to campaign finance reports, and advised on its election strategy. Pope, in fact, was called the “architect” of the plan to elect Republicans to the school board by then-party financial chair Marc Scruggs.
Then there’s Americans for Prosperity, a national organization that has an especially active North Carolina chapter, thanks to the Pope Foundation. AFP-NC’s job is grassroots organizing and agitation. AFP-NC State Director Dallas Woodhouse, whose pugnacious personality is 180 degrees removed from John Hood’s, is prone to calling the state teachers association “sworn enemies” of school reform. According to media reports, Woodhouse threatened to punch out a Georgetown University professor (a “moronic professor from some distant school,” Woodhouse complained) who debated him on the radio about the Wake school board’s turn to the right.
On any given day, Woodhouse, Hood, Leef, Shaw, Bob Luebke—the education analyst at Civitas—or a multitude of other Pope-paid pundits may appear on your TV screen or in The News & Observer, commenting on education issues. Each supposedly represents a distinct group, a “different” point of view. In fact, they are voices in the Pope chorus.
You may encounter Lindalyn Kakadelis, head of a group called the North Carolina Education Alliance. Kakadelis is a former teacher and Charlotte-Mecklenburg school board member and one of the founders of a charter school in Charlotte.
Kakadelis counts as a “key achievement” voting as a school board member to end Charlotte-Mecklenburg’s school diversity policy, leading to a neighborhood-schools plan that critics say has wrecked Charlotte’s inner-city schools—shades of Wake County.
Her education alliance isn’t an independent organization, though. Rather, it’s a “project of” the Locke Foundation.
Even groups that are independent, like Parents for Educational Freedom in North Carolina, benefit from the Pope empire’s warm embrace. PEFNC President Darrell Allison says his organization receives no funding from Pope (and the Pope foundation records show none). But when Allison’s group hosted a forum on school choice featuring Milwaukee charter schools guru Howard Fuller recently, John Locke and the other Pope groups lavished it with publicity, helping turn out an audience of 700—which made for a positive story in the Carolina Journal: “At Meeting, Charter Struggle Compared to Civil Rights.”
Recently, Art Pope has been attacked by pro-diversity groups in Wake County (“a villain to those who value the public sector and public education, the youth group NC HEAT said) and by the N.C. Association of Educators, which posted a video called “Money & Privatization: A Love Story.” That video accused Pope of supporting the resegregation of Wake’s schools and “anti-public education legislation” in the General Assembly.
And in the House, Rep. Rick Glazier, D-Cumberland, ripped Senate Bill 8, the charter-school bill, as a radical assault on public education itself. “There have always been critics of public education, as there should be, but their goal has always been to improve public education,” Glazier said. “It seems, however, that the sponsors and the folks behind Senate Bill 8′s answer to public education is to get rid of it and replace it with something that is wholly different and not subject to any democratic participation or control.”
Such attacks infuriate Pope, who insists that parental choice and other elements of the conservative reform agenda will strengthen public education, not cripple it. The political left, he said, want to “attack the messenger” by demonizing him rather than confronting head-on the points he and his fellow conservatives are making.
“Speaking for myself,” Pope said, “I am strongly committed to improving the public schools.”
It also hacks him off, he said, that the media is obsessed with the money he pours into conservative causes, but never looks at progressive organizations and their funding: Z. Smith Reynolds Foundation in Winston-Salem and moderate business leaders like Jim Goodmon of Capital Broadcasting. Amass all these groups, plus the N.C. Justice Center and the others “on the far left” he said, outspend Pope-funded groups. (According to Philanthropy Journal, the value of two trusts operated by the Z. Smith Reynolds Foundation totaled $470 million in 2007, but dropped during the recession.)
“A lot of what I have tried to start and initiate,” Pope said in exasperation, “is simply an effort to keep up.”

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