2-7-09

 
2-7-09
Merced Sun-Star
State shuts down Merced-based County Bank
FDIC sells assets, branches to Westamerica Bank; the offices will reopen as normal as Westamerica branches...CORINNE REILLY and JONAH OWEN LAMB. Sun-Star reporters Danielle Gaines and Scott Jason contributed to this story.
http://www.mercedsunstar.com/167/v-print/story/678378.html
It marks the end of an era for both County and the county.
Merced's biggest bank and its only publicly traded company has folded.
State regulators said late Friday they are closing County Bank. All its offices will reopen either today or Monday as branches of San Rafael-based Westamerica Bank.
County Bank, owned until yesterday by the one-bank holding company, Capital Corp of the West, becomes the latest -- and biggest -- local casualty of the credit crunch, foreclosure crisis and septic recession choking the national, state and county economies.
A community hallmark since 1977, County Bank had battled gamely for months to remain "a going concern," in the sterile language of federal regulators. But a $96 million loss last year, caused in part by the collapse of the San Joaquin Valley property market, restricted its ability to recover on its own.
County Bank may have been more prudent than many banks in not issuing many subprime loans, but its own collateral was corroded by plummeting property values in its portfolio.
Last week, that depleted capitalization led the bank to issue an after-markets news release questioning whether it could remain solvent.
Last night, as dozens of Federal Deposit Insurance Corp. (FDIC) officers in suits and pulling roller briefcases poured into the bank's Merced branches, that question was answered.
Their presence, however humbling to dazed bank employees, represented reassurance to depositors.
Regulators are promising a smooth handover: County Bank customers will automatically become customers of Westamerica. Their deposits will remain insured by the FDIC. They can access their money in all the same ways they could before the takeover. Loan customers should make payments as usual. Bank branches with Saturday hours will be open today.
County Bank's stockholders won't get off so easily. The bank's closure means its shares are now worthless.
For County Bank's 500 employees, about 150 of whom live in the Merced area, the takeover's consequences aren't yet clear. From top managers down, some workers will probably lose their jobs, while others may be offered employment with Westamerica.
The news makes County Bank the ninth bank to fail in the U.S. this year and the third in California. It's hard to say exactly how widespread the effects of its collapse will be, but they're certain to hit Merced hard.
Before Friday night, County Bank was by far the biggest financial institution in Merced, with $1.3 billion in deposits across its 39 branches. Westamerica has agreed to buy all the bank's assets.
Basically, what will happen over the weekend at County Bank is this: Roughly 140 FDIC officials will spend at least two days auditing the bank's books, according to an FDIC spokeswoman. Once that's done, Westamerica will take ownership of all County Bank assets, including its loans and deposits.
The FDIC and Westamerica have entered an agreement to share County Bank's future losses. An FDIC spokesman, David Barr, said Westamerica must eat losses up to a certain amount, though he wouldn't say how much.
The FDIC has promised to absorb 80 percent of the remaining losses after that threshold, said Rob Thorson, Westamerica's chief financial officer.
"This isn't merger accounting," Barr said. "This is failed-bank accounting. Westamerica is going to take a finite loss on this, but the bulk of the loss will be with the FDIC."
It's estimated that Westamerica will pump $93 million into what's left of County Bank to make it solvent, Thorson said.
"County Bank was a troubled bank," Barr said. "Its assets were questionable. They were risky. To find someone like Westamerica to come in and take those assets -- they're not going to do that out of the goodness of their heart and then have those problems be their burden."
Before Friday, Westamerica was the seventh-largest commercial bank headquartered in California, with 86 branches in 21 northern and Central California counties.
County Bank CEO Richard Cupp, who took the position six months ago, didn't return calls Friday night. He is under a gag order.
Jerry Callister, chairman of County Bank's board of directors, called Friday a sad day for the Central Valley and California.
"(County Bank) has been such an integral part of the Valley," he said. "It's been such a great company."
A County Bank employee who spoke on the condition of anonymity because she wasn't sure what would happen to her with new ownership said all County Bank employees were required to work until 10 p.m. Friday. She described the mood among the bank's workers as "frantic."
"Everyone is afraid they are going to lose their job," she said. "A lot of people have asked whether or not they are going to lose their jobs, and they just say that they don't know yet."
Capital Corp's stock has been trading for well below a dollar in recent weeks, down from nearly $40 a share in 2006.
County Bank, like hundreds of other financial institutions nationwide, had hoped for help from TARP, the federal bailout program. But that help never came.
The bank's financial condition has been spiraling downward since the collapse of the San Joaquin Valley's real estate market. It reported its first annual loss, $3.7 million, at the end of 2007. Since then it's struggled to find enough investors to offset its troubles.
Capital Corp has blamed its massive losses on several factors, among them sharp declines in the value of real property collateral securing loans in its portfolio, a deteriorating economic environment, downgrades in internal risk ratings, bad consumer confidence and an increase in nonperformance loans.
The bank had relied heavily on customer deposits to keep its cash flowing and saw far more withdrawals than it expected in recent months, according to recent financial reports.
Last week, it said that on a preliminary basis, it would be required to make a provision for loan losses of about $28.5 million in the fourth quarter of 2008, compared with a provision of $11.5 million for the third quarter of 2008.
The company estimated its cumulative provision for loan losses for the year ended Dec. 31 at about $55.4 million. That helped propel its loss for the year to about $96 million, compared with a loss of $2.7 million for 2007.
Founded in Merced in 1977, County Bank had 39 branches in 13 California counties, mostly in the Central Valley. Capital Corp has quietly been laying off workers since September.
Bank depositors are protected by the FDIC's general deposit insurance rules, under which coverage was raised last year to $250,000 per depositor per insured institution, through Dec. 31, 2009.
The FDIC provides full coverage for noninterest-bearing transaction deposit accounts, including personal and business checking deposit accounts as well as attorney-client trust accounts.
County Bank customers with questions about what happened Friday night can call the FDIC's toll-free phone line: (800) 591-2820.
County Bank was a Valley institution in Merced...SCOTT JASON
http://www.mercedsunstar.com/167/v-print/story/678394.html
Merced lost much more than a financial institution Friday when Westamerica Bank agreed to take over County Bank.
Besides the employees who will inevitably lose their jobs and the stockholders who now own worthless paper, County Bank stood as a pillar of support for the area's charities since its 1977 founding.
It donated 5 percent of its yearly profit to various groups and causes, endowing an economics chair at UC Merced before the school even opened.
It also put its headquarters on Main Street, helping to revitalize the city's core.
The demise of County Bank, a casualty of the housing market crash and recession, was met with anguish and sorrow as news spread through town.
CEO Richard Cupp was unavailable for comment. Board of Director Vice Chairman Curtis Riggs offered a statement.
"For over 30 years County Bank has been a significant force for good in our community -- in jobs, community contributions and leadership," Riggs said. "Tonight, as I reflect upon the closure, my thoughts and prayers are with the investors, the team members and the customers and communities that we have served. We gave this our best in the most difficult of times."
A Federal Deposit Insurance Corp. official informed Rep. Dennis Cardoza, D-Merced, that it had merged with Westamerica.
"(County Bank) provided more than just capital to small business in my area," he said. "It was also part of the fiber of our community."
The bank's failure is evidence of the deeper problems in the economy, he said.
"This was an institution that did everything right," he said. "It's just a shame."
He hopes that Westamerica Bank, despite being based in San Rafael, north of San Francisco in Marin County, maintains community support in the Valley.
One stockholder, who heard rumors of a takeover, stood outside the headquarters waiting to learn what would unfold. He left before the change was announced.
Thomas Hawker, who served as County Bank's CEO for 17 years, said its failing was a "tragedy on so many different levels."
He guided the bank through its meteoric rise and left just as it began to fall. Hawker was hired as CEO in 1991 when County Bank had four branches and $20 million in assets.
By the time he left, it had grown throughout the Valley and had assets near $2 billion.
Hawker said its demise can be blamed on being based in Merced, often pegged as the foreclosure capital of the nation. Many of the bank's loans were for commercial and residential projects. The land values have been battered in the last couple years, forcing the company to count them as losses.
While serving as CEO, he recalled seeing Merced County land values set at a third of what they'd be worth in Stanislaus and Fresno counties.
"How do you get around that?" he asked. "There are just some things you can't overcome."
The writedowns for loan losses squeezed the bank to the point where it couldn't remain above water. Leading the bank as its fortunes dwindled was "sickening," he added, though he didn't think its condition was terminal until the $96 million annual loss was released last week.
"We had a lot of good years," he said, "but one bad year really took it down."
The rise and (almost) fall of America's banks...STEVENSON JACOBS and ERIN McCLAM. Associated Press Writers...AP Business Writer Madlen Read contributed to this story.
http://www.mercedsunstar.com/109/v-print/story/678620.html
These days, you can roll up to an ATM at the grocery, the pharmacy, the gas station, the hardware store, the office, even the ballpark. You can check your Bank of America balance on your iPhone. You can text Chase, and Chase will text you back.
That's banking today: It has grown from an almost quaint relationship between teller and customer into a massive, dizzyingly interconnected network that touches almost every adult in this country.
And right now, the federal government - working without a road map, and without a net - is putting together a plan to keep U.S. banks from collapsing.
Not just to get the banks lending again. To keep them alive.
The government is expected to announce Monday a plan that analysts expect will include lifting soured mortgage assets off selected banks' books, possibly along with guarantees against other losses and maybe more direct injections of cash.
Financial industry experts say it is a matter of choosing the best of several options, none of them very palatable.
And no one knows for sure what will work because nothing like this has happened in living memory.
Getting it wrong could trigger a replay of what happened after Lehman Brothers collapsed last fall - the stock market in free fall, seizure of the credit markets, ripples of layoffs. Perhaps even a run on other banks - so many customers rushing to pull out their cash that it would make the bank run in "It's a Wonderful Life" look like, well, a feel-good holiday movie.
"The banks are at a terrible junction," says Robert Reich, a labor secretary under President Bill Clinton. "The bottom is falling out. Almost every area of the credit markets, we're finding people unable to repay their loans. That means many banks are basically insolvent."
"If one big bank implodes," he says, "the reverberations could be endless."
So how did we get into this mess?
And how do we get out?
---
Washington and Wall Street are still playing the blame game. But most financial experts agree that a cocktail of bad economic policies and lax government oversight led lenders, borrowers and investors to take huge risks.
Greed and recklessness trumped fear and reason, and they led banks to the brink.
To understand how the things went awry this time, go back a couple of decades, to a time when you could walk into your hometown bank branch and speak to a teller who knew your name and kept a pen-and-paper record of your mortgage.
Banking was a simpler affair, and a no-nonsense one: If you didn't make enough money to qualify for a loan, you didn't get one.
But in the 1980s, falling interest rates and loose lending standards opened banking to the masses.
Credit was cheaper, and the government pushed to make more Americans homeowners. The housing boom was on.
Banks and savings and loan associations, or S&Ls, spread across the country offering cheap, 30-year mortgages. By 1980, banks had $1.5 trillion in outstanding mortgage loans, more than double the amount from 1976.
It was, says Eugene White, an economics professor at Rutgers University and an expert on the Great Depression, all about the government's postwar policy of selling a "piece of the American dream."
"But by doing that, we forgot about the risks," he says.
Then came the bust. Unable to pay their mortgages, homeowners and businesses began defaulting in droves. Deliquencies soared, triggering the savings and loan crisis, battering the stock market and prompting a huge, taxpayer-financed bailout.
Sound familiar?
Fast forward to today. Not exactly an example of lessons learned.
Some ingredients of the S&L mess, such as cheap credit, loose lending standards and weak oversight, also are part of the current debacle. But two new trends - the rise of the global banking behemoth and the packaging of debt into securities that investors could buy and sell - made this meltdown unique.
And much worse.
In the span of a decade, Citigroup, Bank of America and JPMorgan Chase, once bread-and-butter providers of free checking accounts, grew into international banking conglomerates that buy and sell stocks and manage assets for fees.
The "universal bank" model, which took hold in the late 1990s, changed the face of global finance. And it linked Main Street with Wall Street in a way never seen before.
Banks themselves became ubiquitous in American life. From 1995 to 2008, the number of bank branches grew from 81,000 to 99,000. Over the past decade, the number of ATMs swelled from 187,000 to 406,000.
These banks lured first-time homeowners, many of whom believed housing prices would go up forever, with attractive lending rates and lax requirements. Bad credit, no credit - it seemed almost anyone could get a mortgage loan.
But instead of holding on to the loans themselves, a modern version of the old pen-and-paper model, the banks bundled them into securities and sold them to investors across the globe.
In a flash, a mortgage for a home in California or Florida could be sold to a hedge fund in London or Singapore - a huge shift.
In the old days, credit had been based on the borrower's ability to pay back the loan.
"But now it was based on the lenders' ability to securitize the loan and sell it," says Barry Ritholz, a financial analyst and author of "Bailout Nation: How Corrupt Money Shook Wall Street." "That is absolutely unique in the history of finance."
Sure, the risks were big. But so were the rewards.
Using vast sums of borrowed money, Goldman Sachs, Morgan Stanley and other investment banks bought and sold mortgage-backed securities and other complex financial products, reaping astronomical profits that helped pay for outsized bonuses for executives.
In 2006, Goldman Sachs turned a $9.4 billion profit, the highest in Wall Street history. The bonanza netted chief executive Lloyd Blankfein a bonus of $53.4 million, more than any other Wall Street CEO for that year.
That was followed by the $41.4 million pay package received by Morgan Stanley CEO John Mack, who led his firm to a profit of more than $7 billion of profit in 2006.
But the good times didn't last long.
When the housing market began to decline in 2006, subprime loans - those made to people with the worst credit - were the first to self-destruct. That caused massive financial losses at the big banks and claimed the first casualties of the financial crisis.
Then, early last year, Bear Stearns, a venerable 85-year-old investment bank, began to teeter.
The bank suffered huge losses tied to subprime securities. Its stock plunged, and investors raced to pull their money. Bear Stearns was bought by JPMorgan for a meager $10 a share in a government-brokered fire sale.
Six months later, the crisis spread to Lehman Brothers, a 158-year-old investment bank that helped finance America's railroads. And, this time, the government decided not to step in.
Lehman collapsed in the biggest bankruptcy in U.S. history. Immediately, banks around the world, seized by fear, stopped trusting almost anyone, and lending, the lifeblood of the economy, dried up.
Seemingly overnight, two of the biggest names in global finance were gone.
To the even greater alarm of most Americans, the stock market went haywire. The Dow Jones industrials, in what amounted to a slow-motion crash, plunged 2,400 points over eight straight trading days in October. By late November, retirement accounts were cut almost in half.
To many observers, the big banks broke one of Wall Street's cardinal rules: Be greedy, but be greedy over the long term.
"They forgot their instinct for self-preservation," says Lisa Endlich, author of "Goldman Sachs: The Culture of Success."
---
This January, the government took over six failed banks, including three on a single day. Last year, it took over a total of 25.
When it happens, the government swoops in and try to minimize disruption. Recently, it has tended to close banks on a Friday and achieve something close to business as usual by Monday morning, arranging for other banks to take on the assets. ATMs have kept working, and people have had access to their cash.
So far, most of the failed banks have been relatively small, many with assets only in the hundreds of millions of dollars. But what would happen if one of the nation's big banks, the kind that manage hundreds of billions in assets, went down?
"That would probably cause a complete meltdown of the American financial system," says Andreas Hauskrecht, an associate professor of money, banking and finance at Indiana University.
After the financial crisis accelerated last fall, the government increased the limit for the amount of bank deposits it will insure for individual depositors, from $100,000 to $250,000, effective through the end of this year.
And while few Americans have to worry about keeping anything bigger than that in the bank, the government could eliminate the limit altogether and insure all deposits regardless of size if a huge bank, such as Citigroup or Bank of America, were to fail, says Jim Wilcox, a professor of financial institutions at the University of California at Berkeley.
No one has ever lost money in an account insured by the Federal Deposit Insurance Corp. But no one has ever seen a bank that size go under, and news of a giant bank's downfall would probably touch off a panic in which even depositors with money in safe banks rush to get it out.
But there's a bigger economic problem: Other lenders, which hardly trust everybody these days anyway, would stop trusting anybody. Businesses, unable to borrow money day to day, would fail, with worldwide consequences.
It doesn't take an economics degree to realize that would be nothing short of catastrophic for the economy.
"Not to say there's not good aspects of letting someone fail," says Robert G. Hansen, senior associate dean at Dartmouth College's Tuck School of Business. "But the short-term costs of inflicting that punishment to everybody are really high, and I don't think the Obama administration has the stomach for it."
Already, the new administration is treating the Lehman failure as a lesson. Treasury Secretary Timothy Geithner suggested at his confirmation hearing before Congress that the feds would not let another big bank go down.
"Lehman's failure was enormously complicated, an enormously complicated set of events," he said. "It didn't cause this financial crisis, but it absolutely made things worse."
---
So what now?
Financial experts don't expect the United States to go the way of Iceland, where a collapse of the banking system last month threw the tiny country into turmoil and toppled the goverment.
What keeps them up at night is a scenario closer to that of Japan, which bungled its own bank bailout in the 1990s and limped along during a "lost decade" of anemic economic growth and high unemployment.
To prevent that, the Obama administration must choose the best of several difficult options, or a combination. The emergency medicine prescribed by the last administration - flooding the financial system with billions of federal bailout dollars - hasn't worked. If anything, banks are sicker.
One idea under consideration is the creation of a government-run aggregator bank, or a "bad bank," that would buy up hundreds of billions of dollars in banks' toxic assets. The government also may decide to pump more money into banks and offer billions in dollars in guarantees against future losses.
But no single fix is seen as a magic bullet, and financial experts say the government is quickly running out of lifelines.
"The longer they wait, the more damage there is to the economy and the more it will cost taxpayers," says Frederic Mishkin, an economics professor at Columbia Business School and a former member of the Federal Reserve Board.
In theory, the government-run bad bank would buy soured debt that's gumming up the banks' books and clogging the flow of credit. That could shore up banks' base of capital, soothe investors and get banks lending again.
But in practice, it's far from simple.
For starters, no one - including the banks themselves - knows how much these assets are worth. The complex nature of mortgage-backed securities, credit default swaps and other contaminated products has made investors too afraid to touch them.
Pricing them is tricky, to say the least.
If it pays too little, the government risks forcing banks to record huge losses on their books, potentially putting them out of business and wiping out shareholders. If it pays too much, it risks shortchanging taxpayers by hundreds of billions of dollars.
"It's a can of worms," says Sung Won Sohn, an economics professor at California State University, Channel Islands.
The forensic nightmare of appraising these bad assets forced the Bush administration to abandon the idea in the early days of the bailout. With the markets spiraling lower, there simply wasn't enough time.
And even if the government figures out how much to pay for the assets this time, the question is how much to buy.
Goldman Sachs estimates the government would need to shell out $4 trillion or more to absorb all the banks' troubled mortgage and consumer debt.
How big is $4 trillion? It's more than one-third of the economic output of the United States in a year. It's more than twice as big as the first federal bailout and the coming economic stimulus combined. Just look at all those zeroes: $4,000,000,000,000.
Another vexing issue: Who would be in charge of poring over the banks' books and valuing the assets? Experts say the people best qualified to do that are the same ones who created the faulty products - Wall Street bankers and other investment professionals.
That prospect makes some financial observers queasy.
"We're asking the same people who got us into this mess to get us out. These are the guys who buy airplanes and decorate their offices for a million bucks," says Bill Seidman, a former chairman of the FDIC who ran the government bailout during the savings and loan crisis.
Seidman and others are calling for an alternative rescue plan that they say would avoid the pitfalls of past efforts: a short-term nationalization of the banks.
To many people, that very thought is an affront to the free-market system, more Argentina than America. But that's exactly what the U.S. government did in the S&L debacle of the 1980s.
With Seidman at the helm, the government-run Resolution Trust Corp. took over failed S&Ls and sold off their depressed assets - repossessed homes, offices, cars, planes and even artwork. Any institution needing help had its management fired and its shareholders wiped out.
During the next six years, the RTC sold nearly $400 billion in assets on the books of more than 700 failed thrifts. Then it sold the cleaned-up S&Ls back into the private sector.
The cost to taxpayers? About $125 billion to $150 billion by the time the bailout was completed in 1995, which was about 2 percent of one year's gross domestic product at the time.
Seidman believes a similar plan has the best chance of success. And he claims it would cost taxpayers far less because the government wouldn't have to buy bad assets or inject more money into troubled banks.
Instead, the government's expenses would be largely limited to the cost of cleaning up the seized banks and selling them back into the private sector, Seidman says.
"If we don't do it, we risk staying right where we are - pumping more money into insolvent banks and keeping them alive at the expense of healthy ones," he says.
That's what happened to Japan, which injected billions of taxpayer dollars into the banking system and spawned a legion of "zombie banks" - financial institutions that take government money but don't lend it out.
Nationalization isn't a sure thing either.
In the S&L days, the government recouped some taxpayer money by selling the physical assets of the banks, things like real estate and cars - not the hard-to-value paper assets held by banks today.
That wrinkle makes it much harder for the government to follow the RTC strategy, says Jonathan Macey, deputy dean at Yale Law School and the author of a book about a government bailout of Sweden in the 1990s.
"We're not talking about valuing buildings and dirt," Macey says. "This is quite a bit different."
In other words, it's uncharted territory once again.
Law firm sues Merced County over Riverside Motorsports Park bills...CORINNE REILLY
http://www.mercedsunstar.com/167/v-print/story/678421.html
A law firm that used to represent Riverside Motorsports Park filed a lawsuit against Merced County this week to try to collect overdue legal fees RMP has failed to pay the firm.
The lawsuit marks a new twist in the long series of developments that's unfolded since RMP apparently ran out of cash sometime in 2007: RMP's creditors are now beginning to battle one another over any assets the company may have left.
Sacramento-based Somach, Simmons & Dunn, an environmental law firm that represented RMP from 2004 to 2007, sued RMP more than a year ago to collect on a months-overdue $143,000 legal bill. The firm won a judgment against RMP for that amount last August.
But RMP still hasn't paid. The law firm's attempts to seize money from RMP and levy its bank accounts have been unsuccessful because RMP appears to be broke.
Among the accounts the firm tried to levy is a trust account that RMP set up with Merced County.
Concerned about RMP's financial stability, the county told RMP last year that it would have to prepay for certain services. RMP and the county set up a $50,000 trust account to satisfy the county's requirement.
Soon after it won the judgment against RMP, Somach, Simmons & Dunn presented a demand to the county to turn over any money left in the trust account.
The county responded that it wasn't holding any money in RMP's name. However, the law firm says it has proof the trust still held $44,000 when it presented its demand.
Now the firm is suing the county for the $44,000 it says the county should have handed over. It filed the lawsuit, alleging fraud and misrepresentation, in Sacramento Superior Court this week.
Somach, Simmons & Dunn declined to comment Friday. It claims in its suit that the county knowingly lied when it said it didn't have any of RMP's money.
"When (the county) made these representations, they knew them to be false and made these representations with the intention to deceive and defraud (Somach, Simmons & Dunn)," the lawsuit states.
Merced County officials said Friday that the suit "has no merit."
Spokeswoman Katie Albertson said the county stands by its original stance that the county wasn't holding any money in RMP's name when Somach, Simmons & Dunn presented its demand. "The money in the trust was paid to the county for services it provided to RMP, and that's what the money was used for," Albertson said.
What's more, she said the county believes the firm's suit is invalid because it was filed in the wrong jurisdiction; it should have been filed in Merced, she said.
Albertson added that the county will "aggressively defend itself" against this lawsuit, including seeking attorney fees.
RMP first proposed plans in 2003 to build a quarter-billion-dollar motorsports complex, with eight racetracks, a shopping mall, restaurants and a lake, near Atwater. The Board of Supervisors approved RMP's proposal in 2006, but the project never broke ground.
It was stripped of its approvals early last year after RMP lost a lawsuit filed against the project by environmental groups.
RMP also owes $300,000 to Merced County for planning and legal fees. The county won a judgment against RMP for that amount last week. But so far the county also has been unable to collect.
The county is hoping to recoup its money once RMP's land sells. The 1,289-acre property where RMP said it planned to build its massive motorsports park was listed for sale in September for $16.5 million. The asking price has since been lowered.
The county is third in line to collect any money that comes from the property's sale. First and second in line are the bank that hold the land's mortgage and Somach, Simmons & Dunn.
It's unclear whether RMP has any equity in the land, however. If it doesn't, and if no other assets in RMP's name emerge, taxpayers could be left to pay what the company owes; county officials have said they're confident that won't happen.
Read the lawsuit filed against Merced County by Somach, Simmons & Dunn...Law Offices of Donald B. Mooney, Attorney for Plaintiff...FILED, Superior Court Of California, Sacramento...2-4-09
http://media.mercedsunstar.com/smedia/2009/02/06/18/
Complaint.source.prod_affiliate.111.pdf
Somach, Simmons & Dunn, a Professional Corporation, Petitioners
                                        v.
County Of Merced; Merced County Board of Supervisors; and Does 1 to 20, Defendants
State bar suspends former Merced County DA Spencer 30 days...JONAH OWEN LAMB
http://www.mercedsunstar.com/167/v-print/story/678429.html
Merced County's former district attorney, Gordon Spencer, who resigned under pressure in 2007, has been disciplined by the State Bar Court of California for ethical breaches.
He will be barred from practicing law in the state for 30 days, according to filings. The 30 days will begin once the state supreme court issues a disciplinary order.
The disciplinary action arose from events in 2005 when he was still Merced's district attorney.
According to filings, Spencer intervened in a 2005 investigation over a dispute that involved a relative.
Nathan Spencer, Gordon Spencer's son, was in a dispute with a cabinet maker over a contract for cabinets. During an investigation of the matter by Assistant District Attorney Albert Flores, Spencer impersonated Flores and called the cabinet makers, Armstrong Cabinets.
"During the call, respondent misrepresented himself as Albert Flores of the Merced County District Attorney's Office," noted the filing. "The respondent readily acknowledges that using Flores' name was a mistake and has never denied using Flores' name. Respondent contends that he used Flores' name in an effort to avoid intimidating Armstrong Cabinets had the company known that the dispute was with children of the district attorney."
For Spencer, this is a vindication. "I'm gratified professional investigators from both the state bar and attorney general checked out every allegation and this is all the state bar is left with."
He may believe that he has been vindicated, but by no means has he been cleared of past wrong-doing. In a settlement that ended an attorney general's criminal investigations, Spencer paid more than $26,000 to the county for inappropriate use of a county automobile.
Spencer's attorney in the matter, Carol Langford, who teaches ethics at University of San Francisco, among other things, said the bar's discipline was harsh. "I'm not pleased because I think that Gordon Spencer is a very good man. He didn't get any money out of the deal. I think that, frankly, the discipline was a bit harsh for the fact that Gordon did something that, frankly, is quite minor," she said. Spencer has already been tried unfairly in the court of public opinion, she added.
The Bar Association's supervising trial council, Donald Steedman, said the discipline was appropriate. "We thought the misconduct was serious, and we agreed to a discipline that reflected the seriousness of that conduct."
Spencer resigned from his position as district attorney in 2007 after a series of ethical questions surfaced, including serving alcohol to a minor.
Merced County's former district attorney, Gordon Spencer, who resigned under pressure in 2007, has been disciplined by the State Bar Court of California for ethical breaches.
He will be barred from practicing law in the state for 30 days, according to filings. The 30 days will begin once the state supreme court issues a disciplinary order.
The disciplinary action arose from events in 2005 when he was still Merced's district attorney.
According to filings, Spencer intervened in a 2005 investigation over a dispute that involved a relative.
Nathan Spencer, Gordon Spencer's son, was in a dispute with a cabinet maker over a contract for cabinets. During an investigation of the matter by Assistant District Attorney Albert Flores, Spencer impersonated Flores and called the cabinet makers, Armstrong Cabinets.
"During the call, respondent misrepresented himself as Albert Flores of the Merced County District Attorney's Office," noted the filing. "The respondent readily acknowledges that using Flores' name was a mistake and has never denied using Flores' name. Respondent contends that he used Flores' name in an effort to avoid intimidating Armstrong Cabinets had the company known that the dispute was with children of the district attorney."
For Spencer, this is a vindication. "I'm gratified professional investigators from both the state bar and attorney general checked out every allegation and this is all the state bar is left with."
He may believe that he has been vindicated, but by no means has he been cleared of past wrong-doing. In a settlement that ended an attorney general's criminal investigations, Spencer paid more than $26,000 to the county for inappropriate use of a county automobile.
Spencer's attorney in the matter, Carol Langford, who teaches ethics at University of San Francisco, among other things, said the bar's discipline was harsh. "I'm not pleased because I think that Gordon Spencer is a very good man. He didn't get any money out of the deal. I think that, frankly, the discipline was a bit harsh for the fact that Gordon did something that, frankly, is quite minor," she said. Spencer has already been tried unfairly in the court of public opinion, she added.
The Bar Association's supervising trial council, Donald Steedman, said the discipline was appropriate. "We thought the misconduct was serious, and we agreed to a discipline that reflected the seriousness of that conduct."
Spencer resigned from his position as district attorney in 2007 after a series of ethical questions surfaced, including serving alcohol to a minor.
Saving the dairies: Federal government promises to help get farmers through the hard times...CAROL REITER
http://www.mercedsunstar.com/167/v-print/story/678443.html
While local dairy farmers scramble to try to make it through tough times and low milk prices, legislators and others are working hard to try to help them out.
Congressman Dennis Cardoza, D-Merced, said that after asking the dairy industry to come together and provide some potential solutions, he and others met with the new federal Secretary of Agriculture, Tom Vilsack, this week.
"We had a long meeting on Tuesday, and he assured us that he would take every measure within his power to try and assist," Cardoza said.
Cardoza added that he's invited Vilsack to come to the district to see the devastation that the dairy industry has suffered. "He understands the gravity of the situation," Cardoza said.
Dairy farmers have been getting some of the lowest prices ever for liquid milk. Some studies have shown that dairymen are losing $10 for every hundred pounds of milk they produce.
Michael Marsh, chief executive for United Western Dairymen, said his group has worked closely with Cardoza and hopes that steps will soon be taken that will help dairymen in California.
"The secretary indicated that he would immediately utilize the dairy incentive export program," Marsh said.
The program has around for awhile, Marsh said, but during the Bush administration it was dormant. The program will fund up to $200 million a year to subsidize the exports of American dairy products overseas.
"The goal of that program is to release some of the pressure within the United States dairy market and also expand the dairy market overseas," Marsh said.
Marsh said that Vilsack indicated he was willing to exert his authority inside the Department of Agriculture to move into domestic and foreign feeding programs. That would help get dairy products into the hands of the poor and unemployed, he added.
Another way legislators are looking at helping dairy farmers is to bring supply into line with demand, Marsh said. This could be done with the help of the Cooperatives Working Together program. The program was designed by dairy farmers for the benefit of dairy farmers. It works to strengthen and stabilize milk prices by balancing supply with demand.
The program, if approved, would accelerate the culling of dairy cattle. Because the dairy industry doesn't want to affect the beef cattle industry, the timing and quickness of the culling will affect beef producers minimally.
"We would be bringing cattle to market in the spring, normally not a time that beef producers sell their cattle," Marsh said. Because most beef cattle calve in the spring, it's a slow time for selling. Marsh said dairy farmers would also work quickly to get the culled cows through the market process, making the impact on beef prices a short-term affair.
Cardoza hopes to hear news about those programs and possibly others next week.
"These issues facing Valley farmers are devastating, and we are doing everything we can to help (Vilsack) get up to speed on the issues," Cardoza said.
Dairy farmers hope it's fast enough.
Modesto Bee
Regulators close failed banks in Ga., Calif....MARCY GORDON , AP Business Writer
http://www.modbee.com/state_wire/v-print/story/591373.html
Regulators on Friday closed FirstBank Financial Services in Georgia and two California banks, Alliance Bank and County Bank, marking nine failures this year of federally insured institutions.
The Federal Deposit Insurance Corp. was appointed receiver of the three banks. FirstBank Financial, based in McDonough, Ga., had $337 million in assets and $279 million in deposits as of Dec. 31. Alliance Bank, based in Culver City, Calif., had about $1.14 billion in assets and $951 million in deposits as of year's end. Merced, Calif.-based County Bank had around $1.7 billion in assets and $1.3 billion in deposits as of Feb. 2.
Twenty-five U.S. banks failed last year, far more than in the previous five years combined. The six failures announced in the last two weeks are double the total for all of 2007.
It's expected that many more banks won't survive this year amid the pressures of tumbling home prices, rising mortgage foreclosures and tighter credit. Some may have to merge with other institutions.
The FDIC said FirstBank Financial's deposits will be assumed by Regions Bank in Birmingham, Ala. Its four branches will reopen Monday as offices of Regions Bank. Regions Bank also agreed to buy around $17 million of FirstBank's assets; the FDIC will retain the rest for eventual sale.
The parent company, Regions Financial Corp., is a large regional bank company that received $3.5 billion from the Treasury Department under the government's financial rescue program. In August, Regions Bank took over deposits and some assets of another failed institution, Integrity Bank of Alpharetta, Ga.
Alliance Bank's deposits will be assumed by San Diego-based California Bank & Trust, which also agreed to buy about $1.12 billion in assets. The FDIC will keep the rest for eventual sale. In addition, California Bank & Trust agreed to share losses on the assets with the FDIC. Alliance Bank's five branches will reopen Monday as offices of California Bank & Trust.
Westamerica Bank, based in San Rafael, Calif., agreed to purchase all the deposits and assets of County Bank. Westamerica also is sharing losses with the FDIC. County Bank's 39 branches will reopen as branches of Westamerica, some on Saturday and others on Monday.
A number of banks have failed and been shuttered in recent months in California, an area that's been especially battered by the mortgage and housing crises.
The FDIC estimated that the resolution of FirstBank Financial will cost the federal deposit insurance fund $111 million while that of Alliance Bank will cost $206 million and County Bank, $135 million.
Regular deposit accounts are insured up to $250,000.
Since October, the Treasury Department has been using most of the first half of the $700 billion federal bailout fund to buy stock in banks and other financial institutions, with the idea that cash injections will spur banks to get lending again.
But with banks clamoring for the second $350 billion installment to be doled out, Treasury Secretary Timothy Geithner and other top officials are readying a plan to overhaul the rescue program. Those efforts are expected to be announced Monday.
Seattle-based thrift Washington Mutual Inc. failed in late September, the biggest bank collapse in U.S. history. It had $307 billion in assets. Wall Street powerhouse JPMorgan Chase & Co. bought Washington Mutual's deposits, branches and loan portfolio from the FDIC for $1.9 billion.
The FDIC estimates that through 2013, there will be more than $40 billion in losses to the deposit insurance fund, including an $8.9 billion loss from the failure of IndyMac Bank last July. The agency has raised insurance premiums paid by banks and thrifts to replenish its fund, which now stands at around $34.6 billion, below the minimum target level set by Congress and the lowest level since 2003.
An FDIC official asked Congress this week to more than triple the agency's line of credit with the Treasury Department to $100 billion from the current $30 billion, as a way to reassure the public that the government stands firmly behind insured bank deposits.
The FDIC has in place a program to guarantee as much as $1.4 trillion in U.S. banks' debt for more than three years as part of the government's financial rescue plan. Under the program, which is meant to thaw the freeze in bank-to-bank lending, the FDIC is providing temporary insurance for loans between banks, guaranteeing the new debt in the event of payment default by the borrowing bank.
Of the roughly 8,500 federally insured banks and thrifts, the FDIC had 171 on its confidential list of troubled institutions as of Sept. 30 - a nearly 50 percent jump from the second quarter and the highest tally since late 1995.
Patterson Irrigator
Farmers’ lifeblood continues to dry up...James Leonard...2-4-09 
“I would say that, based on our current situation, we will not be receiving a 2009 water supply.”
— Bill Harrison, General manager, Del Puerto Water District
http://pattersonirrigator.com/content/view/2855/42/
Rainfall totals are low, the Sierra snowpack is light and 2009 is already looking to be an especially lean year for farmers.
The California Department of Water Resources released results last week from the second snow survey of the winter season, which showed the snowpack that helps provide the entire state with water at just 61 percent of normal. That’s a decrease from the prior survey, which in late December showed the snowpack at 76 percent of normal.
“We may be at the start of the worst California drought in modern history,” said Lester Snow, the DWR’s director. “It’s imperative for Californians to conserve water immediately at home and in their businesses.”
The numbers are even worse for local farmers. The snowpack in the Northern Sierra, which trickles down to the West Side by way of the San Joaquin Delta, was at just 49 percent of normal.
Farmers who rely on surface water from the Delta — which also faces environmental restrictions on pumping because of an endangered fish — are preparing for the worst.
The Del Puerto Water District, which serves about 45,000 acres of farmland between Vernalis and Santa Nella and gets all its water from the Delta, received about 40 percent of its contracted water supply last year.
This year, it will get less — much, much less.
“I would say that, based on our current situation, we will not be receiving a 2009 water supply,” said Bill Harrison, the district’s general manager.
Harrison said with no available surface water, many farmers will have to abandon row crops in lieu of preserving permanent tree orchards. And they’ll have to get the water for that on their own.
“Anybody with groundwater will be utilizing that to protect permanent crops,” Harrison said. “For the most part, that will be the supply of water available to my users.”
Dave Santos, a local farmer of apricots, cherries and other fruits, gets water from the Delta but also from the West Stanislaus Irrigation District — which takes some of its water from the San Joaquin River — and his own wells.
Santos knows he probably won’t get anything from the Delta this year. And the West Stanislaus district might get shorted on its allocation from the river, according to a letter to customers from Kenneth Bays, president of its board of directors.
That will likely leave Santos to rely on groundwater this year, which could pose problems of its own.
“I think we’ll probably have a pretty fair backup water supply,” Santos said. “I just don’t know what’s going to happen when everybody’s pumping. I just don’t know how that’s going to take its toll.”
Grounded fears
There might be enough groundwater to go around this year, but for those without reliable groundwater, the situation is even more dire.
“Most of them are in survival mode,” Harrison said, “meaning they’re trying to keep their permanent crops alive as long as they can and maybe make some hard decisions on which to keep alive and which to abandon.
“That’s a very sad proposition to have to face.”
Local farmer Ed Maring has crops in various locations and draws water from a number of sources, none of which appear to be particularly reliable this year. He said he’ll likely have to leave some ground fallow, and he’s in the process of fixing up some old wells he hasn’t use dfor years.
Maring said this drought could be the worst he’s seen, largely because it’s being exacerbated by the environmental restrictions on the Delta.
The population of the Delta smelt is dwindling, and environmentalists believe it’s because the fish are being caught in massive pumps that send water south along the California Aqueduct and Delta-Mendota Canal. The courts have thus far agreed, and increasingly stringent orders have been sent down to limit how much water can be pumped out of the Delta.
“We’ve never had the political issues that we have now,” Maring said. “Years ago, whatever water they had was pretty available to agriculture. Now, environmental issues seem to have taken precedence over growing our food.”
The shortage of water could have a significant effect on an already struggling economy, Harrison said. In addition to higher prices on produce for consumers, there could be major job losses for agricultural workers.
“Ag dollars tend to flow through the economy,” Harrison said. “They’re the basis of a vibrant economy when there’s water around.
“When there’s no water around, the dollars stop flowing.”
Wal-Mart opponents get organized...James Leonad
http://pattersonirrigator.com/content/view/2876/42/
Rainfall totals are low, the Sierra snowpack is light and 2009 is already looking to be an especially lean year for farmers.
The California Department of Water Resources released results last week from the second snow survey of the winter season, which showed the snowpack that helps provide the entire state with water at just 61 percent of normal. That’s a decrease from the prior survey, which in late December showed the snowpack at 76 percent of normal.
“We may be at the start of the worst California drought in modern history,” said Lester Snow, the DWR’s director. “It’s imperative for Californians to conserve water immediately at home and in their businesses.”
The numbers are even worse for local farmers. The snowpack in the Northern Sierra, which trickles down to the West Side by way of the San Joaquin Delta, was at just 49 percent of normal.
Farmers who rely on surface water from the Delta — which also faces environmental restrictions on pumping because of an endangered fish — are preparing for the worst.
The Del Puerto Water District, which serves about 45,000 acres of farmland between Vernalis and Santa Nella and gets all its water from the Delta, received about 40 percent of its contracted water supply last year.
This year, it will get less — much, much less.
“I would say that, based on our current situation, we will not be receiving a 2009 water supply,” said Bill Harrison, the district’s general manager.
Harrison said with no available surface water, many farmers will have to abandon row crops in lieu of preserving permanent tree orchards. And they’ll have to get the water for that on their own.
“Anybody with groundwater will be utilizing that to protect permanent crops,” Harrison said. “For the most part, that will be the supply of water available to my users.”
Dave Santos, a local farmer of apricots, cherries and other fruits, gets water from the Delta but also from the West Stanislaus Irrigation District — which takes some of its water from the San Joaquin River — and his own wells.
Santos knows he probably won’t get anything from the Delta this year. And the West Stanislaus district might get shorted on its allocation from the river, according to a letter to customers from Kenneth Bays, president of its board of directors.
That will likely leave Santos to rely on groundwater this year, which could pose problems of its own.
“I think we’ll probably have a pretty fair backup water supply,” Santos said. “I just don’t know what’s going to happen when everybody’s pumping. I just don’t know how that’s going to take its toll.”
Grounded fears
There might be enough groundwater to go around this year, but for those without reliable groundwater, the situation is even more dire.
“Most of them are in survival mode,” Harrison said, “meaning they’re trying to keep their permanent crops alive as long as they can and maybe make some hard decisions on which to keep alive and which to abandon.
“That’s a very sad proposition to have to face.”
Local farmer Ed Maring has crops in various locations and draws water from a number of sources, none of which appear to be particularly reliable this year. He said he’ll likely have to leave some ground fallow, and he’s in the process of fixing up some old wells he hasn’t use dfor years.
Maring said this drought could be the worst he’s seen, largely because it’s being exacerbated by the environmental restrictions on the Delta.
The population of the Delta smelt is dwindling, and environmentalists believe it’s because the fish are being caught in massive pumps that send water south along the California Aqueduct and Delta-Mendota Canal. The courts have thus far agreed, and increasingly stringent orders have been sent down to limit how much water can be pumped out of the Delta.
“We’ve never had the political issues that we have now,” Maring said. “Years ago, whatever water they had was pretty available to agriculture. Now, environmental issues seem to have taken precedence over growing our food.”
The shortage of water could have a significant effect on an already struggling economy, Harrison said. In addition to higher prices on produce for consumers, there could be major job losses for agricultural workers.
“Ag dollars tend to flow through the economy,” Harrison said. “They’re the basis of a vibrant economy when there’s water around.
“When there’s no water around, the dollars stop flowing.”
Tracy Press
Tracy’s water outlook better than most — for now
Tracy’s water situation is likely secure for summer despite the drought, but it probably won’t always be that way...Jon Mendelson
http://tracypress.com/content/view/17218/2244/
Don’t be fooled by our week-ending drizzle. The rain gods are not in a giving mood.
La Niña is setting up her beach umbrella over the Pacific Ocean, leading plenty of weather experts to predict that after two already dry years, California is sliding into its worst drought in modern history.
Some communities are already bracing.
Water districts in Southern California, long known for turning fertile land into desert (see: Owens Valley), are preparing for rationing. The giant Metropolitan Water District of Southern California has said there’s a 50/50 chance that its water deliveries will be capped.
For some areas, the odds aren’t even that good.
Bolinas, a coastal enclave in Marin County, has limited each customer’s water use to 150 gallons per day, a 25 percent decrease. And it’s three strikes, you’re out, for water wasters. The city plans to shut off the spigot to three-time violators.
In Tracy, the situation is not nearly so dire. Customers won’t be required to reduce use this summer, according to city water managers. At least for now.
"We expect there to be less water then last year, but we do expect to meet customer supply without mandatory rationing," said Steve Bayley, the deputy director of public works.
There’s no established threshold for when conservation would be required, Bayley said. But there are triggers for when the City Council could decide to ratchet up the rationing.
According to the city’s municipal code, city leaders could step in if Central Valley Project surface water is cut back, if the governor declares a drought, or if Tracy’s groundwater level dips to 30 feet below sea level. Bayley said that the city’s aquifer is full and "highly reliable." And it should be — it’s the city’s backup plan when things get bone dry. As for the drought, which almost everyone agrees is no imaginary enemy, Gov. Arnold Schwarzenegger declared a drought in June without actually declaring it. His was a call for voluntary conservation, not a mandate to cities and counties, explained Stephanie Reyna, Tracy’s water resources analyst. So right now, commonsense saving — watering lawns at night and only when it isn’t raining, for instance — is the city’s focus. But just because shorter showers aren’t mandatory doesn’t mean they’re a bad idea. "The biggest part is getting people to make voluntary changes," Reyna said. "And they have." Water use among Tracy residents dropped about 10 percent from 2007 to 2008, Bayley said, all because of voluntary cutbacks. The hope is that 2009 will be close to or below last year’s numbers. It’s an encouraging trend, one that needs to continue.
With the city’s growth dial still set on "expand" — via the Ellis development and as-yet-to-be-determined projects — demand on Tracy’s water supply will only increase. And all signs point to less water in the future, not more.
These three years are supposedly an aberration, but climate change models predict dwindling Sierra snowpacks. Which means less water in the Stanislaus River, the San Joaquin Delta and the Tracy aquifer — the city’s three water sources.
Aside from supply issues, there’ll be more straws sucking from the same trough: California’s population continues to expand, and farmers must continue to grow food.
Rationing for everybody will likely become a painful reality eventually. You can bet on it if we don’t change our water priorities, including how we build our suburbs.
That pain might come sooner than advertised for some. On Feb. 20, the U.S. Bureau of Reclamation will announce its annual water deliveries.
In the meantime, the smart move is to get used to a tight water budget. Because we don’t know when Bolinas’ problem — and solution — will become ours.
San Francisco Chronicle
Energy chief recuses self from lab oversight...H. Josef Hebert, Associated Press
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/02/07/MN9915P6G4.DTL&type=printable
Energy Secretary Steven Chu is limiting his direct involvement in overseeing three of the Energy Department's premier research laboratories to avoid potential conflicts of interest.
A department spokesman acknowledged Friday that Chu has informed the department's ethics office that he will recuse himself from contract, financial and certain work-performance-related decisions at the Los Alamos and Lawrence Livermore national laboratories. They are managed by the University of California, the secretary's former employer.
Chu has also said in the past that he would recuse himself from certain issues involving the Lawrence Berkeley National Laboratory, where he was director until chosen by President Obama to be energy secretary.
Los Alamos, in New Mexico, and Livermore are two of the government's premier nuclear weapons research facilities, but they also conduct other research. The Berkeley lab has been in the forefront of research into renewable energy.
Despite the recusals, department spokesman Dan Leistikow said Chu remains "actively engaged in oversight of the labs, is in frequent contact with the lab directors and is regularly briefed about the security situation" at the facilities.
Leistikow characterized the kinds of decisions that Chu will not get involved in as "mostly lower level" that normally would be taken care of by subordinates. "He put these recusals in writing so there would be no question about how seriously he takes matters of public trust," said Leistikow in an e-mail.
But the recusals, which largely involve contract and financial issues, raise questions as to what extent Chu could get involved in lab performance and possible future disciplinary action. The department's power to discipline a laboratory is largely limited to withholding fees paid for poor performance or mismanagement.
Los Alamos over the years has had a string of security lapses that have reverberated to the highest levels of the Energy Department and prompted fines and several management changes at the lab.
Lawrence Livermore also has had past problems involving security and environmental issues.
Chu's recusal letter, dated Jan. 6, was first reported Friday by Energy Daily, the trade publication.
Economists urge support for NV nuclear waste dump...MARTIN GRIFFITH, Associated Press Writer
http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2009/02/06/financial/f133221S84.DTL&type=printable
Nevada should drop its opposition to a proposed nuclear waste repository in the state and welcome the federal money as a way to help solve its budget crisis, business leaders were told at a conference here Friday.
Robert Barone, managing partner at Ancora West Advisers, and Thomas Cargill, an economics professor at the University of Nevada, Reno, urged Sen. Harry Reid and other top Nevada elected officials to reopen debate on the dump at Yucca Mountain.
They were among panelists who offered a gloomy economic forecast at Directions 2009, an annual economic forum focusing on northern Nevada.
Barone said he thinks up to 75 percent of Nevadans would support the dump if they knew that the state could receive substantial federal money for accepting it.
He noted former Treasury Secretary Henry Paulson dropped his opposition of government intervention into the banking industry after determining its benefits.
"Harry Reid can say the same thing: `Hey, the facts changed, Nevada needs the money, I'm going to change my position,'" said Barone, who also is chairman of the California State Automobile Association.
"It's ridiculous to think it (stored nuclear waste) is dangerous," he added.
Cargill decried what he called the "emotionalism-driven debate" on Yucca Mountain and nuclear energy, and called for an "open and balanced" discussion on the proposed repository.
"I think the governor would be well advised to set up a broad-based commission to study Yucca Mountain and to bring out all the facts and all the pros and cons," Cargill said.
Daniel Burns, spokesman for Republican Gov. Jim Gibbons, said no budget crisis could become so bad that it would force the governor to change his position on the waste dump.
"Our opposition to Yucca Mountain has not and will not change," he said Friday. "We are adamantly opposed to Yucca Mountain."
Jon Summers, spokesman for Reid, D-Nev., said other states aren't trying to steal the waste dump from Nevada because there are no real benefits from it.
"It's unfortunate the Nevada GOP and other pro-Yucca Mountain forces are trying to mislead people into thinking they could get something good out of it. It doesn't exist," he said.
In December, Nevada Republican Party Chairwoman Sue Lowden touted the dump's financial potential after leading 60 members of the party's central committee on a tour of Yucca Mountain, 90 miles northwest of Las Vegas.
Lowden said the repository could help solve Nevada's financial crisis, and the state should consider negotiating for federal benefits for accepting it.
Polls conducted by Nevada newspapers have consistently shown most Nevadans oppose the project.
"Nevadans know a bad bet when they see one and that is why we continue to overwhelmingly oppose allowing our state to become a nuclear waste dump," said Rep. Shelley Berkley, D-Nev.
President Obama has said he doesn't believe the desert site is suitable for keeping highly radioactive used reactor fuel up to a million years and believes other options should be explored.
Reid, the Senate majority leader, has vowed to starve the project of funds.
The Energy Department last June submitted its license request for the dump to the Nuclear Regulatory Agency, which has three years to consider the request. Supporters hope the site can be opened by 2020.
The long-delayed dump is planned as the first national repository for radioactive waste, and is designed to hold 77,700 tons of used reactor fuel from commercial nuclear power plants in 31 states.
Administration aims for stricter mercury limits...Associated Press
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/02/07/MNRL15P0CA.DTL&type=printable
The Obama administration signaled Friday that it will seek more stringent controls on mercury pollution from the nation's power plants, abandoning a Bush administration approach that the industry supported.
The Justice Department on Friday submitted papers to the Supreme Court to dismiss the Bush administration's appeal of the rule, which a lower court struck down last year. Meanwhile, the Environmental Protection Agency said it would begin crafting a new rule limiting mercury emissions from power plants.
The court was expected to decide later this month whether it would take the case. Last year, an appeals court ruled that the Bush plan violated the law by allowing utilities to purchase emission credits instead of actually reducing emissions.
Such a plan would have allowed some power plants to release more mercury pollution than others, creating localized "hot spots" where concentrations are higher, states and environmental groups argued. The law requires all facilities to install the best technology available to curb emissions.
Power plants are the biggest source of mercury, which finds its way into the food supply. It is commonly found in high concentrations in fish. Mercury can damage developing brains of fetuses and very young children.
"It is yet another Bush administration policy they are not going to go forward with," said David Bookbinder, the Sierra Club's chief climate counsel.
While the administration has signaled it is breaking with its predecessor on several issues, Friday's filing on mercury is the first outright reversal of a legal position taken by the Bush administration at the Supreme Court.
Emissions review
The Environmental Protection Agency announced Friday that it was starting a review of the Bush administration's decision to deny California and other states the right to control emissions of the gases blamed for global warming from cars.
In a statement, the agency said there were significant issues with the previous administration's denial of the California request that represent major departures from the law.
Contra Costa Times
UC Berkeley rehires retired police chief again...Matt Krupnic, Contra Costa Times
http://www.insidebayarea.com/oaklandtribune/localnews/ci_11647387
UC Berkeley has rehired its retired police chief for six more months, less than a year after state lawmakers criticized the school for bypassing guidelines to retain her.
Chief Victoria Harrison, whose previous contract expired last week, will likely retire for good once her new contract runs out July 31, said UC Berkeley Vice Chancellor Nathan Brostrom. The school will begin searching for her replacement soon, he said.
Harrison was rehired to her post in 2007, shortly before she retired and took a $2.1 million payout of her pension. State senators called Brostrom to testify shortly after the Times revealed the rehiring last April, and University of California leaders subsequently instituted new rules to limit such deals.
Although the new contract again bypasses UC rules, including by allowing Harrison to work full time, Chancellor Robert Birgeneau and the campus human resources director signed off on the agreement, Brostrom said. The new contract increases Harrison's six-month pay to $102,603, or $5,000 more than she was paid in the past six months.
Budget concerns have kept the university from seeking a replacement sooner, Brostrom said.
"I just couldn't get around to it in the fall," he said. "We could have gone with an interim chief from within the department, but I felt this would be less disruptive."
Santa Cruz Sentinel
Ron Duncan, Go Green: Water softeners -- Tough on the environment...Ron Duncan, manager for the Soquel Creek Water District, which promotes water conservation and helps protect local water resources
http://www.santacruzsentinel.com/localnews/ci_11652488
Many people in Santa Cruz County use water softeners and no wonder, much of the water is considered moderately hard. More than half of the water in the U.S. is considered hard. Using data from the Salt Institute of America, the Wisconsin Bureau of Wastewater Management stated the amount of salt purchased for water softeners in the U.S. in 1994 was 2.6 millions tons. This equates to a whopping 20 pounds for each person in the U.S. in 1994. If you have a water softener or are thinking about getting one, you can select and manage your softener in a "green" manner and save money, too. Soft water is generally considered better for washing and reducing scale, but using a water softener has environmental consequences that are rarely discussed.Hardness is defined as high mineral concentrations, primarily calcium and magnesium. While hard water is not a health issue, it can be annoying due to spotting of dish ware, forming scum rings and causing scaling inside tea kettles and plumbing pipes.
How Softeners Work
A water softener works by replacing the hard minerals in the water with soft minerals. On a technical level, this process is called ion exchange and usually involves replacing calcium and magnesium with sodium or potassium.
The typical softener is a "rock salt" type and has a tank with resin beads. The resin is charged with sodium aka rock salt. As the water flows by the resin, the hard minerals are removed by exchanging places with the sodium. After the resin has lost all its sodium, it is recharged with more sodium in a process know as regeneration. Regeneration involves a backwash cycle, sodium replacement cycle, and a rinse cycle, which combined use a significant amount of water.
The devices on the market that claim to soften water without the use of salts need further evaluation. Program manager of the water softener rebate program for Santa Clara Valley Water District, Ray Wong, tested two water samples from a no-saltwater softener device and the results showed they did not remove the hardness from the water.
He suggested that the tested system is capable of temporally softening the water, but that by the time the consumer uses the water the ions reform to make the water hard again. The California Department of Health Services provides certifications for water treatment devices that make health claims, but not for water softeners or treatment devices that make only aesthetic claims.
Environmental Issues
Most softeners waste water and cause recycling and sewage treatment issues. The most environmentally damaging softeners are the type that use salt and regenerate on a preset timer schedule. The amount of water used for regeneration varies, but is roughly 75 gallons. Many systems are set to regenerate too frequently.
The water softeners that regenerate on a preset schedule were banned in the city of Scotts Valley in the early 1990s, mainly to prevent overloading the wastewater recycling system with sodium. Note that contracted services that regularly exchange the filter tanks are allowed.
The Monterey Regional Water Pollution Control Agency found that its recycled water contained sodium near the permitted levels and that 37 percent of the salt was from softeners. High levels of sodium make it much more costly to recycle the water and to discharge the effluent that is not recycled.
As recycling of wastewater plays a bigger role as a water source, lessening the impact of water softeners will be become even more critical. Although the discharge of sodium-rich soft water to septic systems is not believed to affect the microbial action necessary to breakdown the sewage, long-term discharge can negatively affect groundwater aquifers.
Tips to Reduce Environmental Impact
1. First off, evaluate if you really need a water softener and refrain from purchasing one if the answer is no.
2. Use potassium chloride not sodium chloride in the softener tank. This helps prevent wastewater recycling and treatment issues.
3. Use less salt. The literature suggests most softeners use twice as much salt than is really needed.
4. Reduce the frequency of the regeneration cycle in timer clock systems; consider a five-day cycle.
5. Retrofit time clock systems with a demand-initiated kit.
6. Replace time clock systems with a demand-initiated regeneration DIR system. Demand-initiated systems regenerate based on need, not just on a preset schedule like the timer types. This will save about 75 percent of the regeneration water and 30 percent of the salt used. Look for systems that have the Water Sense and Energy Star labels.
7. Consider subscribing to a service e.g., Rainwater, Culligan, etc. that maintains and regularly exchanges the filter tanks. These services generally regenerate the removed tank in a more environmentally sensitive manner. This will cost more than purchasing your own system, but it is less hassle and better for the environment.
8. If you do purchase a system, then purchase a demand-initiated regeneration DIR type. They cost more initially than a timer-type system, but costs are recouped over a few years due to using less water and salt.
Following the steps above will lessen the environmental impacts from water softeners and lower your operational costs.
Los Angeles Times
Chu: 'economic disaster' from warming...Jim Tankersley, Greenspace
http://latimesblogs.latimes.com/greenspace/2009/02/chu-economic-di.html
Earlier this week, Energy Secretary Steven Chu caused a stir in the Golden State - and many circles across the country - with his warnings that global warming could destroy California agriculture by century's end.
Chu isn't a climate scientist - he's a Nobel-winning physicist - but he's served on several climate-change commissions, and in his position, will be one of President Obama's point men on the climate issue. His comments came in a 40-minute interview, his first since being confirmed as secretary.
"This is a real economic disaster in the making for our children, for your children," he said, near the end of an extended riff on the topic.
Here, for the first time, is that riff, only slightly edited for length. For all sides of the climate debate, it makes for fascinating reading.
CHU: Carbon dioxide "is a global problem. The cost of the carbon emissions are things that, number one, won't show up immediately in one year, or even in 10 years. They have begun to appear. The real costs are hard to estimate because we don't know to what extent, how bad it's going to get, in all honesty. There are projections... You can make a best guess on what might happen.
I prefer - there are people who say, since we're not sure, we really shouldn't do about it - I think, in my opinion, a more measured way of dealing with this is, it's all about the risk, the potential risk, the downside risk of not doing something, or maybe doing it in a very moderate way.
The analogy I like to use is, suppose you buy a house, and then in the inspection, the structural engineer says, well, this House is a fine house, but understand, you have to rewire the house, because it's an old wiring and there's a chance of an electrical fire. It's going to cost a lot of money, but you should rewire... So you get an estimate of whether you really need to rewire the house, or whether you can go another, safely for another 20 years or 10 years.
Suppose, just pretend, that the next person comes and says, essentially, I think the wiring is shot. I can't guarantee if it's going to be this year or five years from now, but you run the risk of an electrical fire. So now you have many options. You can continue to shop for the answer you want: your house is safe. Or you can say, I know the solution.... let's pretend it's $20,000, a lot of money, that's going to come out of your budget, an you can't - you're going to have to forgo a lot of other things.
You could say, well, I could just get better fire insurance. You're probably not going to do that. Because there's a chance the house could burn down when you're asleep and your kids are asleep in the house. So eventually, you might be led to say, if there's a 50 percent chance my house might burn down in five years, I better do the rewiring. Then you have to bite the bullet. No one is telling you there's a 100 percent chance this is going to happen.
So ... we certainly are seeing some of the consequences of a changing climate. More and more, it's coming down very hard on the fact that, it's caused by humans. And will there be a cost in trying to control carbon emissions? Well yes, like there's a cost in trying to clean up our sewage. But overall, the benefit to the world will be better.
You know, if there's only five people on the earth, you don't have to worry about this. But the fact, with the population we have today, the fact is we don't want to go backward in terms of the prosperity of developed countries, and we see developing countries wanting to do [the same]. We've got to figure out a way to use the energy we have more efficiently, and the get newer, cleaner sources. And to get better technical solutions, better technical options...
Hopefully the American public will wake up and support their policymakers who see this is an essential issue. I don't think the American public has grasped in its gut what could happen. So let me give you one example. It's local to California.
California's major part of its water storage system is in the Sierra Mountains. It snows there, and then we have dams, but it's the snow and the slow melting of the snow and the forests in the watershed area that helps store the water in California. And much of the Central Valley is desert. Los Angeles, San Diego - it's all desert. Without water - right now, California spends about 20 percent of its electricity moving water.
What is being predicted in climate change, there are two bracketed scenarios. The more optimistic one - that we will really control carbon emissions, that we will get a handle on this, and we're talking the end of this century - even by mid-century, in the optimistic scenario, we will have decreased our snow pack by 20 percent on an average basis.
And our forests are going to begin to die, because of parasites and such. At the end of this century, optimistic scenario, you will have decreased [snow pack] by 47 percent. In the pessimistic scenario, the snow pack will decrease by 70 to 90 percent. Well, let me tell you what California does when there's a two-year in a row 20 percent decrease in snow pack: They water-ration.
Q: So you're looking at a scenario of permanent water rationing?
CHU: No, you're looking at a scenario where there's no more agriculture in California. When you lose 70 percent of your water in the mountains, I don't see how agriculture can continue. California produces 20 percent of the agriculture in the United States. I don't actually see how they can keep their cities going.
This is not only true of California, this is true for all the Western states. Forests are dying because of parasites. The pine bark beetle is killing pine. British Columbia has already lost 40 percent of its pine ... so, when there are no trees, when it rains, the soil doesn't hold the water...
The American public needs to be made aware that this is happening. This is a real economic disaster in the making for our children, for your children. If you live in California, any of the Western states, this is going to be very serious. In the Upper Midwest, water shortages, huge water shortages are being predicted. ... It goes back to this fire insurance. How do we find the political will? It hopefully has to come from the people of America.
CNN Money
State regulators close three banks
FirstBank Financial Services of Georgia and Alliance Bank and County Bank of California become latest victims of banking crisis; nine banks have failed in 2009...Kenneth Musante
http://money.cnn.com/2009/02/06/news/economy/bank_failure/
index.htm?postversion=2009020621
NEW YORK (CNNMoney.com) -- State regulators shuttered three banks Friday evening, bringing the total number of bank failures this year to nine.
Deposits at FirstBank Financial Services based in McDonough, Ga. will be taken over by Regions Bank (RF, Fortune 500), based in Birmingham, Ala., according to the Federal Deposit Insurance Corporation.
FirstBank's four branches will reopen on Monday as Regions Bank branches, the agency said.
FirstBank held assets worth about $337 million, and held deposits worth about $279 million at the end of December, the Federal Deposit Insurance Corporation said. Regions Bank has agreed to purchase about $17 million of FirstBank's assets.
Meanwhile, deposits at Alliance Bank out of Culver City, Calif. will be assumed by California Bank & Trust from San Diego.
Alliance Bank held assets totaling $1.14 billion, and deposits of $951 million, the FDIC said. California Bank & Trust agreed to purchase $1.12 billion of Alliance's assets at a discount of $9.9 million.
California Bank & Trust also agreed to share some of the asset losses with the FDIC, the agency said.
Alliance Bank's five offices will reopen Monday as branches of California Bank & Trust.
Finally, County Bank of Merced, Calif. was closed late Friday. The FDIC said that Westamerica Bank of San Rafael, Calif. will assume all of the deposits of County Bank.
County Bank had total assets of approximately $1.7 billion and total deposits of $1.3 billion. Westamerica Bank (WABC), in addition to assuming the deposits, agreed to purchase all of County Bank's assets.
The FDIC said County Bank's 39 offices would reopen as branches of Westamerica. Branches with Saturday hours will reopen Saturday while the remaining branches will reopen Monday.
Customers who banked with FirstBank, Alliance Bank or County Bank will automatically become customers of the new deposit holders, and will retain their account protection under the FDIC, which insures single accounts up to $250,000, and joint accounts up to $500,000, the government agency said.
Over the weekend, those customers will be able to use checks, ATMs and debit cards as normal. Customers who have taken out loans from a failed bank should continue to make regular payments, the FDIC said.
Altogether, the three bank failures will cost the FDIC about $452 million.
The unfolding financial crisis continues to take a toll on banks. If banks continue to fail at a rate of at least one per week, on average, then 2009 could see twice as many failures as in 2008. Last year, 25 banks were closed nationwide, which was the highest annual total since 1993, when 42 banks went under.
Economists expect the number of failed banks to continue rising this year as the financial crisis plays out and the economic outlook remains dark.