7-25-09

 
7-25-09
Merced Sun-Star
Groups plan to protest Monday's Atwater City Council meeting...JONAH OWEN LAMB
http://www.mercedsunstar.com/167/v-print/story/969064.html
ATWATER -- Several activist groups calling for the resignation of repentant Atwater City Councilman Gary Frago -- who sent racist e-mails to city and county officials -- plan to picket Monday's City Council meeting in condemnation of his actions.
Change Merced is organizing a protest at the meeting along with the Merced County chapter of the National Association for the Advancement of Colored People, both of which have called for Frago to step down.
Because of the expected crowds, the city has called for a special meeting in Atwater's community center on Monday.
Despite calls for his resignation and the impending protest, Frago, who apologized for the e-mails, has said he will not resign.
"I will read my apology and I will respectfully listen to what the people have to say," said Frago.
Frago's apology did not change the mind of the NAACP. The group officially condemned his actions and called for his resignation in a statement Thursday. The NAACP's statement said Frago's actions were "hurtful, harmful and racist." The statement continued: "We find it appalling that Councilman Frago was so unapologetic and blind to the hurt that such e-mails foster. We also find it appalling that the other individuals that had the opportunity to condemn such behavior chose to lose their memory or to simply say 'I deleted them.' "
Change Merced, a local activist group formed during President Barack Obama's run for office, has strongly condemned Frago as well. The group plans to hold a rally outside of Atwater's City Hall on Monday at 5:30 p.m., calling for his resignation.
Erma Smith, 55, a member of the group as well as an executive board member of Merced County's NAACP, said this kind of behavior cannot go unpunished. "I didn't think I would hear anything like this in 2009, especially in a state like California that is so multicultural," said the Mississippi native.
Smith said her group is asking for Frago to step down and for those who received his e-mails to condemn his actions. In particular, Change Merced has focused on Supervisor Mike Nelson's failure to condemn Frago. "You can see which politicians are silent and which ones speak out about this kind of prejudice. It draws lines unfortunately," said Jeff Freitas, 25, a Change Merced member.
Nelson did not return Sun-Star calls on the matter.
Change Merced plans to canvas Atwater residents over the weekend. They will pass out fliers and tell people of Monday's protest, said Freitas.
While many locals are appalled at Frago's actions, some still stand by him, claiming that the situation has been blown out of proportion.
Tracy Silveira, of Merced, was one of several locals who defended Frago in an e-mail to the Sun-Star. "Who doesn't repeat or forward jokes that they hear or receive in their e-mail? And what president or other public official, black, yellow, brown, red, magenta or white, hasn't been poked fun at?" wrote Silveira.
The City Council will open their meeting at 6 p.m. at City Hall, adjourn soon after for a special meeting on the e-mails at the community center, and then finish the meeting at City Hall, said City Clerk Jeanna Del Real.
City Manager Greg Wellman said that they scheduled the special meeting "to ensure that those individuals wishing to speak are given an adequate opportunity to be heard."
A Sun-Star special report on July 17 revealed that Frago sent at least seven racist e-mails to city and county officials from October 2008 to February 2009. The e-mails denigrated black people in general and in particular President Obama and the first lady.
While Frago has apologized, at first he said he did not regret sending the e-mails. "I don't see where there's a story, I'm not the only one that does it," he said. "I didn't originate them, they came to me and I just passed them on."
Frago episode sends bad message
Racist e-mails call into question councilman's ability to lead, and detract from important city business...Our View
http://www.mercedsunstar.com/181/v-print/story/969083.html
Atwater City Councilman Gary Frago was wrong to send out e-mails containing racist jokes. He says he's learned that lesson.
Frago expressed remorse only after an onslaught of negative attention from across the country. Prior to being the focus of the nation's glare, he thought the jokes were OK. They were harmless, he believed. Not true. He knows that now.
His delay in acknowledging that the jokes were wrong is truly disturbing.
It's incomprehensible to have a city councilman think that this was acceptable behavior. His judgment has proven to be awful. His explanation that he "just passes them on" isn't good enough. People in elected office are rightly held to a higher standard and he has failed to live up to that.
Atwater Mayor Joan Faul has shown strong leadership and was right to harshly criticize Frago publicly.
Frago, first elected to office in 2000, has effectively marginalized himself as a voice for Atwater. He's lost the mantle of a leader. The residents of Atwater deserve strong leadership and professionalism from all city workers and council members.
It's also worth noting that the city of Atwater refuses to turn over e-mails sent through its computer systems. This is also unacceptable. What are they hiding? The people have a right to know how their city is managed.
Making himself a distraction, Frago has turned attention away from the issues the City Council needs to address.
As a former firefighter in Atwater, Frago's singular focus on that department is a disappointment. He's shown he has a personal agenda involving the fire department and should broaden the scope of his work on the council.
Frago's behavior is unacceptable. He professes remorse but proof of that will only be evident if he changes his behavior. Time will tell.
Race is a sensitive subject in our nation. Emotions run high. The region's apathetic reaction to this episode is bothersome and shows progress in race relations is needed here.
Whether Frago should be removed from office or not is up to the people of Atwater; his current term ends in 2012. That decision should be made based on what's right for the city.
Important lessons have been learned. Racial insensitivity isn't acceptable.
Modesto Bee
Evidence of endangered frog group found in Calif...JOHN ANTCZAK, Associated Press Writer
http://www.modbee.com/state/v-print/story/793663.html
LOS ANGELES -- Scientists have found evidence of a potentially large population of the nearly extinct mountain yellow-legged frog in a Southern California wilderness where it hadn't been seen in a half-century, raising prospects for restoring the species to its once wide range.
Like amphibians whose numbers are in decline worldwide, the frog species was believed to have fewer than 200 adult members spread across the San Gabriel, San Bernardino and San Jacinto mountain ranges.
In June, U.S. Geological Survey biologists and a team from the San Diego Natural History Museum each separately found a mountain yellow-legged frog at locations 2 1/2 miles apart in the Tahquitz and Willow creeks area of the San Jacintos, about 85 miles southeast of Los Angeles.
At the time, the USGS team was only intent on assessing the suitability of the area for re-establishing the species, ecologist Adam Backlin said Friday.
In 10 years of working with the species, up to 300 locations had been surveyed in the three mountain ranges without any new populations being discovered, so there was no expectation of finding any frogs, Backlin said.
The first frog was found June 10 in Tahquitz Creek.
"We were just blown away," he said.
The museum scientists made their discovery as they followed in the footsteps of a 1908 natural history expedition in order to determine biological changes. That frog was found June 21 in Willow Creek, a tributary of the Tahquitz.
Scientists knew that the frogs had lived there about 50 years ago because museums have examples of the species from the area, Backlin said.
The historic record indicates the frogs were abundant in every area that had permanent water above an elevation of 1,200 feet, he said.
"Between 1968, the 1970s, they just disappeared off the map," he said. "We're trying to figure out now what happened. So anything that is still currently out there has probably persisted since that time."
The frogs don't bask like other frogs and are hard to spot, he said.
The frogs also typically don't move from place to place, so the distance between the two newly discovered frogs is a preliminary indication of a big population.
"And if there's a large population, there may be more frogs in that one creek than we know of across the entire range of the species," Backlin said.
The discoveries follow the San Diego Zoo's first-ever success in breeding a mountain yellow-legged frog in captivity. Tadpoles rescued from a drying stream in the San Bernardino National Forest were taken to the zoo, and eggs were discovered in a tank in December. One frog matured.
Backlin said captive breeding is difficult because of the need to replicate conditions that include the chill of winter, when the frogs are used to hibernating.
"The hope is that we'll get a lot of animals from that captive population this spring and use those to start developing new populations," he said.
Fresno Bee
Troubling water study results
Urban pesticides use may add to Delta region's water problems...Editorial
http://www.fresnobee.com/opinion/v-print/story/1558674.html
A study of Northern California waterways has made some troubling discoveries about a widely used group of pesticides and the role of homeowners and businesses in putting them there.
The findings should prompt residents to reflect on their household practices. It also should lead to further scientific investigation of the role these pesticides are playing in the multifaceted crisis of the Sacramento-San Joaquin Delta.
The study, led by a UC Berkeley toxicologist, focused on pyrethroids. These are man-made pesticides commonly used in household insecticides, lawn care products and pet sprays.
Before this study, what happened to these substances after they killed unwanted pests was something of a mystery. Now it's a worry.
That's because the study discovered three things that hadn't previously been known about pyrethroids' penetration of local water systems.
It found that these pesticides in the American River were present in sufficient quantities to poison the tiny shrimp that are among the early links of the aquatic food chain. That may come as a surprise to many people who view the American River as more pristine than it apparently is.
The study also found the pesticides were present in all the urban runoff flowing out of regional storm drains. And pyrethroids were routinely detected in local wastewater.
Experts say this doesn't necessarily mean the pesticides play a key role in the devastation of the Delta ecosystem, including the decline of nine fish species ranging from the tiny Delta smelt to the giant green sturgeon. But that question must be answered by further study.
A group called Pesticide Watch says urban areas use more pesticides per acre than agricultural ones. Valley farmers have long been saying that to their critics, but it's mostly fallen on the deaf ears of those who like to bash agriculture.
What's obvious is residents across California should be using household pesticides with much more care. They are dangerous.
The pesticide study is a reminder that everything done in the watershed has consequences for the Delta. While Northern California environmentalists like to blame farming for endangering threatened species, you don't hear much out of them about cities such as Sacramento dumping treated sewage in the Delta.
We must protect the Delta, and that means regulating all sources contibuting to the problem, including cities and the pesticides that homeowners carelessly use.
Los Angeles Times
Guaranty Bank warns that it's on the verge of failure
The firm, which has more than 50 branches in California, reports that its capital has been wiped out and that it is unable to raise new funds...Times Staff And Wire Reports
http://www.latimes.com/business/la-fi-guaranty25-2009jul25,0,4333640,print.story
Guaranty Bank, which has more than 50 branches in California, warned that it could become the biggest financial institution to fail this year.
Asset write-downs have wiped out the company's capital, and the firm has been unable to raise fresh funds, parent Guaranty Financial Group Inc. said in a securities filing Thursday.
"The company believes that it is probable that it will not be able to continue as a going concern," the Austin, Texas, firm said Thursday. It said its deposits remained insured by the Federal Deposit Insurance Corp.
The federal Office of Thrift Supervision has directed the bank to turn itself over to the FDIC, the company said.
A failure would be likely to wipe out Guaranty Financial's shareholders, including funds run by billionaire Carl Icahn, who couldn't be reached for comment. Icahn in 2007 pressed Guaranty's former owner, forest products company Temple-Inland Inc., to spin off the thrift when values for financial firms were high.
At the end of 2007, Guaranty Financial reported having $16.8 billion in assets, $9.4 billion in deposits and more than 150 branches, mostly in Texas.
Its stock fell 7 cents Friday to 15 cents, down from $18.50 in December 2007.
CNN Money
7 regional banks fail
6 subsidiaries of a Georgia bank go down, bringing the tally to 16 for the state in 2009. A N.Y. bank is the first FDIC-insured bank in the state to fail since 2004...Catherine Clifford
http://money.cnn.com/2009/07/24/news/companies/bank_failure/
index.htm?postversion=2009072418
NEW YORK (CNNMoney.com) -- State regulators shut down seven regional banks Friday, the Federal Deposit Insurance Corporation said, bringing the total number of banks to fail in the United States to 64 this year.
Six of the banks that closed were subsidiaries of one larger bank, the Security Bank Corporation, based out of Macon, Ga. So far in 2009, 16 banks have failed in Georgia, more than in any other single state.
The State Bank and Trust Company, headquartered in Pinehurst, Ga., will take over all of the deposits of the six bank subsidiaries that failed. As of March 31, the six subsidiaries had total assets of $2.8 billion and total deposits of approximately $2.4 billion.
The six failed Georgia banks had a total of 20 branches, and the branches will reopen Saturday as branches of State Bank and Trust Company.
Earlier in the evening, Waterford Village Bank, of Clarence, N.Y., was shut down, and the FDIC was named the receiver. Evans Bank, N.A., headquartered in Angola, N.Y., took over all of the deposits of the failed bank.
The last time an FDIC-insured institution was closed in New York state was more than five years ago.
As of March 31, Waterford Village Bank had total assets of $61.4 million and total deposits of $58 million. The single branch of the failed bank will reopen Monday as a branch of Evans Bank, N.A. and customers will automatically be transferred over.
Friday's seven closures will cost the FDIC fund $812.6 million, bringing the total cost for failed banks to $14.21 billion this year. That compares with $17.6 billion in all of 2008. The number of bank failures so far in 2009 has more than doubled last year's total of 25.
Smaller regional banks have been especially hard hit during the recession. Many collapsed as local residents and commercial real estate developers that took out loans have been unable to pay them back. Get ready for banking's next headache
No. 2 Texas bank expects to fail
In filing, Guaranty Financial says it's 'critically' short of capital, and is talking to investors about recapitalization.
http://money.cnn.com/2009/07/24/news/companies/guaranty_
financial.reut/index.htm?postversion=2009072421
NEW YORK (Reuters) -- Guaranty Financial Group Inc , the second-largest publicly traded bank in Texas, said it will probably fail after loan losses and writedowns left it "critically" short of capital.
The bank, whose investors include Carl Icahn and Robert Rowling, is in talks with at least one investor group for a possible recapitalization, said a source familiar with the situation. The source requested anonymity because the talks are not public.
"The company believes that it is probable that it will not be able to continue as a going concern," Guaranty (GFG) said in a regulatory filing.
The Austin-based lender has about $16 billion of assets and more than 150 branches in Texas and California, according to its Web site.
On that basis, if it were to fail, Guaranty would be the largest U.S. bank to collapse in 2009. Guaranty is about half the size of IndyMac Bancorp Inc, which failed last July.
So far 64 banks have failed this year, including seven on Friday, according to the Federal Deposit Insurance Corp. Friday's failures include six bank subsidiaries of Security Bank Corp of Macon, Ga.
In a regulatory filing late Thursday, Guaranty said it has been unable to obtain new capital from shareholders, and believes it will be ineligible for help from U.S. regulators.
Its largest investors include companies run by billionaire Carl Icahn and by Rowling, whose investment firm owns the Omni Hotels chain.
Won't comply: Guaranty said it does not expect to raise enough capital to comply with an April cease-and-desist order from the federal Office of Thrift Supervision (OTS).
It said losses and writedowns have left it "critically undercapitalized," with negative capital ratios.
Guaranty also said it has agreed to an OTS demand for the appointment of the Federal Deposit Insurance Corp as a receiver or conservator. That appointment has not yet happened, but the OTS is exercising "a significant degree of control" over what had been functions of the board of directors, Guaranty said.
The company has not filed official results since the third quarter of 2008. It has estimated it lost $444 million in all of 2008 and another $256 million in the first quarter of 2009.
Chief Marketing Officer John Wessman said in a statement that Guaranty is still working with regulators, and believes it can avoid disruptions to customers.
Guaranty's largest investors include Rowling's investment firm TRT Holdings Inc, which has a 19.9% stake according to a regulatory filing. A company run by Icahn has a 17% stake, Reuters data shows.
Icahn and Rowling did not immediately return calls for comment.
Guaranty began operations in 1988, according to its Web site. It was spun off in December 2007 by Temple-Inland Inc. (TIN) , a corrugated packaging and building products company.
The largest publicly traded bank based in Texas is Dallas-based Comerica Inc. (CMA)
Guaranty shares closed down 7 cents, or 32%, at 15 cents on the New York Stock Exchange on Friday. Their 52-week high is $6.75, set last Sept. 18.
Get ready for banking's next headache
A weak economy and frozen financing markets could spell trouble for regional banks with big commercial loan portfolios...Colin Barr
http://money.cnn.com/2009/07/24/news/economy/banks.commercial.
fortune/index.htm?postversion=2009072416
NEW YORK (Fortune) -- Regional banks can no longer ignore the elephant in the room -- their exposure to the commercial real estate bust.
Though housing markets remain weak, analysts expect credit problems over the next year to center on commercial real estate -- mortgages on office and apartment buildings and shopping malls, as well as construction, development and industrial loans.
U.S. banks hold some $1.8 trillion worth of commercial loans, according to Federal Reserve data. Big regional banks, including PNC (PNC, Fortune 500) of Pittsburgh, KeyCorp (KEY, Fortune 500) of Cleveland and BB&T (BBT, Fortune 500) of Richmond, Va., have more than half their loan books in commercial loans.
With financing markets locked up and the economy still mired in recession -- unemployment is at a 26-year high while capacity utilization, a key measure of industrial production, recently hit a record low -- observers fear a wave of loans will go bad in coming quarters.
"The problems facing commercial real estate are severe and will likely take many years to resolve," Deutsche Bank analyst Richard Parkus told the Joint Economic Committee of Congress this month. He said the biggest losses are likely to come from banks' $550 billion of construction loans, such as loans to homebuilders.
Banks are already bracing for impact. Higher credit costs led to second-quarter losses at banks ranging from Atlanta's SunTrust (STI, Fortune 500) to Delaware's Wilmington Trust (WT). Zions Bancorp (ZION), which operates primarily in Utah, California, Texas and Nevada, was among those forecasting deeper losses on problem commercial real estate loans.
"It is still a pretty crummy economy out there and we are seeing deterioration in all of it," Zions Bancorp chief financial officer Doyle Arnold said in a conference call with analysts and investors.
Accordingly, banks have been adding to their reserves for future credit losses. But with more borrowers falling behind on their loans, it's not clear that these so-called reserve builds will be enough.
SunTrust, for instance, added $161 million in the latest quarter to its loan loss reserve, citing continuing housing market deterioration and "increasing economic stress in the commercial market."
But nonperforming assets rose even more, jumping to 4.48% of total loans from 2.09% a year earlier. As a result, the bank's loan loss reserve tumbled to 53% of nonperforming assets from 70% a year earlier. Investors like to see a number nearer 100%. BB&T, for instance, has 101% coverage.
Thin reserves mean SunTrust "may face material provisions ahead," according to a report from analysts at research firm CreditSights. That could take a toll on profits over the next year.
Similar trends are playing out at Comerica (CMA), whose loan loss reserve has fallen to 78% of nonperforming loans from 91% a year ago, and Zions, which fell to 65% from 79%.
The increase in nonperforming assets comes as some real estate players complain that banks are sitting on bad loans rather than liquidating them -- a trend they claim is suppressing new lending and compounding the problems in a falling market.
"The rate at which these troubled loans are being resolved has been sluggish," James Helsel, treasurer of the National Association of Realtors, told the Joint Economic Committee July 10. "Over $60 billion in assets have become distressed this year but only $4 billion worth of commercial loans have been resolved so far."
Though the banking industry succeeded in raising tens of billions of dollars in new equity in the second quarter, some expect the financing picture to remain cloudy, adding to price declines.
Office rental rates have fallen 23% in New York and 11% in Washington from their 2008 highs, commercial property manager Jones Lang LaSalle said in its monthly market perspective newsletter this month. Meanwhile, office vacancy rates jumped to 14% in Manhattan and 11% in Washington in the first quarter, reflecting the economic slump.
"Debt will remain constricted as banks continue to adopt the 'delay and pray' approach to their real estate holdings, extending loan terms in the hope that better economic conditions will obviate the need to foreclose," Jones Lang LaSalle said in its report.
For their part, bankers blame the problems on weak loan demand and deny they're kicking the can down the line on troubled credits.
"We are managing these problem loans effectively," Comerica chief executive officer Ralph Babb said in the bank's second quarter earnings statement.
Still, the banks have underestimated their problems before. Comerica forecast in January that this year's credit-related charge-offs, or writedowns of uncollectible loans, would be in line with last year's level of $472 million.
But the bank said last week that charge-offs were $405 million in the first half alone, with even "modest" improvement not expected until the fourth quarter.