UC Merced's early years to be recounted by students in upcoming book...MICHELLE HATFIELD, The Modesto Bee...2-21-09
A history book for a college graduation present?
The gift might not inspire much excitement -- unless it's a short primer about your own college days.
This year's 400 or so University of California at Merced graduates will get a free copy of "The Fairy Shrimp Chronicles," a book about the school's early years as told by students.
The book makes its debut in May as UC Merced finishes its fourth year.
"We wanted to capture the temper of the times. Nobody's going to remember what happened here, what it was like in the early days," said Gregg Herken, history professor and project adviser.
Researched, organized and written by 11 writing and honors history students, the book describes the 10th UC campus's founding and college life for the first students. It went to print this month.
The informal history is less than a dozen chapters and focuses on anecdotal storytelling. Chapters start with "Where Is Merced?" and end with "Merced 2.0."
One tale describes the trials of finding a location for the university. The site selection committee looked at 86 spots across the Central Valley, Herken said, and "one team carried around binoculars and a field guide to birds in case they were asked what they were doing."
Sidebars tell about student pranks, living in the dorms, taking classes in the library, navigating the tule fog and debating over the school mascot.
The title of the book refers to the endangered crustaceans found in nearby vernal pools, forcing the university to delay construction and shift the campus a mile away from its original site. The fairy shrimp has become something of an underground mascot at the campus, represented officially by the native bobcat.
Honors history majors are required to write a senior thesis, so Herken asked students if they'd be interested in this project. He got the idea from a book about the first years of his alma mater, UC Santa Cruz, which opened in 1965.
History senior Katie Hatfield, a Hughson native, co-wrote the chapter on campus life. "It's important that our stories and our experiences be presented for future students of this institution," she said.
The project taught students how to research and digest data in such documents as the UC Merced Master Plan; interview; and write oral histories.
A university grant of $12,000 will cover the cost of printing the books so the Class of 2009 can have it for free. When they walk across the commencement stage in May, the graduates will receive their diploma and a copy of the book.
Herken said he's looking into the possibility of selling "The Fairy Shrimp Chronicles" in the campus bookstore and on Amazon.com.
Letter: Cardoza should've read bill...KATHERINE ROYER, Merced
Editor: Rep. Dennis Cardoza, D-Merced, voted for the $787 billion stimulus package without having read the bill.
Since the final 1,000-page bill came out around midnight, there is no way our congressman could have personally read that bill before he voted for it. Perhaps he would argue that this was an emergency -- we had to do something now. Yet, surely waiting another week to actually read the bill would not have endangered the nation.
When he voted for the largest transfer of wealth in our nation's history from private individuals to the government he burdened this nation with debt for decades, taxing our children and grandchildren and starving our businesses, yet he couldn't take the time to strip this bill of wasteful spending.
In a rush to keep feeding the insatiable beast that has become our government, reward his contributors and benefit the special interests that support the Democratic party, Cardoza didn't do the right thing -- instead he sold us out for campaign cash and party unity.
Details of canal emerge...Alex Breitler
Piece by piece, details are emerging about a peripheral canal that could skirt water around, rather than through, the Delta.
While officials planning for the estuary's future say no definite decisions have been made, documents under review as part of the Bay Delta Conservation Plan call for a relatively large canal that would divert anywhere from zero to two-thirds of Sacramento River flows depending on the time of year, under one scenario.
Officials are also leaning toward wrapping the canal around the east side of the Delta, rather than the west side, meaning it will likely cut through farmland in west San Joaquin County.
A new public comment period has opened and a series of meetings will be held around the state, including in Stockton on March 24.
"The good news is it's becoming clearer. The bad news is it's becoming clearer," retired County Counsel Terry Dermody told San Joaquin County water commissioners last week. Dermody is watching Delta issues for the county.
The conservation plan is a complex mesh of habitat restoration, water supply and environmental goals that would ultimately give water contractors from the Bay Area, the San Joaquin Valley and Southern California legal authority to continue diverting water.
It's widely agreed that the status quo - sucking Sacramento River water through the Delta to the state and federal pumps near Tracy - isn't working. Smelt populations are crashing, and water exports have been cut.
In theory, a canal would reduce the number of fish killed at the pumps and secure much of the state's water supply should vulnerable levees fail. Opponents say that siphoning off the Sacramento River will turn the Delta into a swamp and would add no actual water to the system.
"The decision (to build a canal) was made before this whole thing started, in my opinion," said Stockton attorney Dante Nomellini, steadfast canal foe.
Here's what we know, and don't, about the proposed canal:
» The size. A Feb. 10 report by a Bay Delta Conservaion Plan committee says a canal that can carry 15,000 cubic feet per second is the best choice. For perspective, that's enough water to fill an Olympic-size swimming pool in about six seconds; it's also roughly the maximum amount of water that can be exported from the pumps near Tracy.
A large canal allows for what officials call the "big gulp/small sip" strategy. That is, when the Sacramento River is bulging with water, they can take a big gulp; when it's a relative trickle, they can take a small sip.
The original peripheral canal, defeated by voters, would have carried up to 21,000 cubic feet per second with the intention that about 6,000 cubic feet per second be released back into the Delta, Nomellini said. Either way, he said, the canal will be little more than a dry ditch if the government respects Delta and upstream water rights.
» The straw. Where will the canal tap into the Sacramento River? Water may be diverted from five locations, from Freeport in the north to an area near the Delta Cross Channel south of Hood, a January report says. Altogether, those five diversions would account for the 15,000 cubic feet per second maximum.
» The route. A canal has been studied for either the west or east side of the Delta, but draft reports say the east alignment is most likely, and likely cheaper.
Exactly what path the canal will take is unclear. The state Department of Water Resources is surveying land in the Delta for that purpose.
Karla Nemeth, a spokeswoman for the conservation plan process, said public comments will help officials determine a number of alternatives outlining what works best for people, fish and water quality.
"We're looking at a lot of information, and a canal is part of that," she said.
If you're going
Public comments on the Bay Delta Conservation Plan will be accepted during a March 24 public hearing in Stockton.
The meeting will be held from 6 to 10 p.m. at Stockton Memorial Civic Auditorium.
To learn more about the plan, or to read documents describing a possible canal, visit www.resources.ca.gov/bdcp.
San Francisco Chronicle
Court turns down utilities over mercury emissions...(02-23) 07:23 PST WASHINGTON (AP)
The Supreme Court is refusing a request by electric utility companies to step into a case concerning the regulation of mercury emissions from power plants.
The court said Monday that it will not hear the companies' appeal of a lower court decision that struck down an industry-favored Bush administration rule governing emissions. That rule would have allowed 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.
The Obama administration had earlier abandoned its predecessor's appeal of the ruling by a federal appeals court in Washington. The Environmental Protection Agency said it would begin crafting a new rule limiting mercury emissions from power plants, which are the biggest source of mercury. It is commonly found in high concentrations in fish. Mercury can damage developing brains of fetuses and very young children.
The case is Utility Air Regulatory Group v. New Jersey, 08-352.
A dirty air budget deal...Editorial
California legislators may be proud they survived a marathon budget ordeal. But none should be saluted for a backroom deal that may sicken or kill thousands in the name of a special-interest loophole.
If that sounds extreme, consider what happened. The budget bargaining, which wrapped up at dawn last Thursday, contains a proviso to delay the start of pollution controls on off-road diesel engines. It's a category covering some 180,000 road graders, forklift trucks, airport baggage trucks and even ski resort snow-packing vehicles, which spew out lung-damaging soot and a key chemical that causes smog.
The delay will push back rules adopted in 2007 by the state Air Resources Board, which enacted the tailpipe limits after years of study and public hearings. Beginning next year, the off-road engines were due to be replaced or retrofitted as part of wide-ranging process to clean emissions pouring into some of the nation's dirtiest air.
These diesel power plants may be reliable, durable and thrifty. But these qualities come with a human price. The off-road engines kick out particulates, the speck-sized particles in the dark clouds of exhaust. The state rules intended to remove 85 percent of the amounts in a series of steps running from 2010 to 2025 and up to 70 percent of the oxides of nitrogen, a smog-causing chemical. During this multiyear period, the board projected the changes would save 4,000 lives.
Thus, it's no stretch to say that delaying a diesel cleanup will prolong this public health hazard. There will be more hospital admissions for lung and heart disease and asthma rates will sail on. The ill-founded decision also jeopardizes California's chances of federal highway money because of unabated dirty air levels in the San Joaquin Valley and parts of Southern California.
It's not hard to see what's going on. Construction firms had fought the rules for financial reasons, estimating that engine replacements and retrofits would cost $13 billion. (It's a number that state smog officials pegged at considerably less.) Early in the budget debate, Republican leaders brought up the notion of delaying an even larger goal - overall limits on greenhouse gas emissions - as a bargaining chip.
For a while these arguments went nowhere. Gov. Arnold Schwarzenegger, who appointed the leadership of rule-setting state agency, stood firm behind the plans. Democrats in the Legislature disregarded the GOP criticisms. But these leaders have caved.
Was any of this debated or publicly discussed? Of course not. That's what the shame factor will do.
The decision was done quietly, and few noticed until the decision was made to delay the diesel rules. The environment and public health took a back seat to political deal-making.
When Sacramento recovers from the budget ordeal, it should reconsider this mistake. Muster a majority vote to return California to a timetable that will produce cleaner air and a healthier population.
Los Angeles Times
Cleanup at the ports of Los Angeles and Long Beach begins to pay off
Older polluting trucks are being barred and electric ones rolled out in the harbors' effort to cut emissions...Ronald D. White
An ambitious plan to clean up once-filthy air around the ports of Los Angeles and Long Beach has shifted into high gear.
Hundreds of 1988-and-older trucks have been banned since October. Others that don't meet 2007 air pollution standards began paying a $70 fee last week each time they haul cargo to and from the ports. This week, the first of a fleet of electric trucks will debut. And within three years, most ships will be able to plug into the ports' electrical grid and turn off their exhaust-belching diesel engines.
For more than a decade, South Bay and Long Beach residents have complained about pollution from the ports, and 1,200 annual premature deaths have been linked to the ports' air pollution problems. But in October, the ports launched the cleanup, and it's beginning to pay off.
"This is the No. 1 health issue in our city," said Long Beach Mayor Bob Foster, who was pleased with the new truck fees introduced last week. "By paying these fees, the people who benefit from the goods-movement industry have become part of the solution to cleaning the air."
Los Angeles Mayor Antonio Villaraigosa agreed. The new fee collection "marks a milestone in our efforts to clean up the ports as we roll ahead with taking 16,800 dirty-diesel trucks off the road for good."
The National Resources Defense Council, long one of the ports' toughest critics, was impressed. It praised the step in October to remove about 2,000 trucks that were at least 20 years old. As a result, the group estimated that diesel particulates emissions may have been reduced 50%.
"These are the dirtiest ports in the nation, with the worst air pollution, but if this program survives its legal challenges, the changes these ports are making now could be adopted throughout the country," said David Pettit, senior attorney for the resources council.
Experts say no other part of the nation has taken such broad steps to reduce the effect their ports have on health.
"This is putting the Southern California ports at the forefront. Port trucks are going to be cleaner than any other trucks in the region that are hauling cargo, and that is huge," said Kristen Monaco, a logistics and port trucking expert at Cal State Long Beach. "This will be used as a template for ports around the nation."
About 3,000 new clean diesel trucks have already joined the fleet, which is well above the 2,000 new trucks both ports said that they had hoped to have in place by now.
"Everybody said that this would never work, but it is not just working, it's thriving," Villaraigosa said. Other cleanup efforts underway include:
* Ports have earmarked more than $20 million in incentives that are encouraging more than a dozen of the world's biggest shipping lines to switch to clean-burning fuels as they approach Southern California.
* Nearby harbor areas have also become testing grounds for the latest technology, such as compressed natural gas trucks that will be moving cargo containers between the San Pedro Bay ports and nearby freight-consolidation yards.
* Los Angeles and Long Beach have become new technology incubators, with seed money for projects such as the world's first electric-diesel hybrid tugboat, which was delivered this month. That includes Balqon Corp., the electric truck manufacturer.
On Wednesday, amid confusion and traffic jams, officials launched a much-delayed effort to assess a $70 fee on all trucks that do not meet 2007 air pollution standards each time they haul cargo containers to and from the ports.
The fees will be used to help subsidize truckers so that they can lease from the port new low-emissions diesel or natural gas trucks. Under the plan that is expected to start in the coming weeks, truckers would pay 50% to 60% of the truck leases and the fees would cover the rest, plus maintenance.
The timing is crucial because Dec. 31 is the next deadline for eliminating or retrofitting 2003 and older trucks.
It hasn't been a smooth road. An electronic system is finally in place at the ports to determine which trucks meet the new requirements. But it took weeks longer than anticipated to put in place. Until Wednesday, all trucks carried stickers and had to be monitored visually at the gates by attendants.
Retailers have threatened to take their business elsewhere, but it is not clear how much business might have been lost. Lawsuits filed by the American Trucking Assn. and the Federal Maritime Commission to block various parts of the clean truck program are pending.
Port traffic was snarled Wednesday when hundreds of trucks were turned away from the terminal gates because they did not have the proper credentials for the fee collection. There were fewer problems and delays Thursday and Friday.
It was "a realization for a lot of people that we are serious about doing this. It's like tax day. People will wait for the last minute to do what they have to, but you cannot wish it away; it is here," said Dick Steinke, executive director of the Port of Long Beach.
S. David Freeman, chairman of the Port of Los Angeles' board of harbor commissioners, said, "The miracle is we are ahead of schedule despite all the thrashing and whooping and hollering that has gone on."
Bruce Wargo, president and chief executive of PortCheck, the organization set up to handle the fee collections, said that the first few days went off better than expected.
"Only about 10% of the trucks today were turned away at the gates," Wargo said. "I was expecting it to be about 20%."
Not everyone was pleased. Dwight Robinson is vice president of the Los Angeles Harbor Grain Terminal, a longtime local business that helps exporters move their grains and other agricultural goods overseas by transferring them to cargo containers.
One of Robinson's drivers showed up in a 2009 natural gas truck, only to be turned away from both ports because his truck tags were faulty. But officials at the Terminal Island Clean Truck Center later told him the tags were fine, after he had waited in line for three hours.
But others, including San Pedro resident Kathleen Woodfield, were ecstatic.
"It gives me a feeling of great hope that these air pollution issues will be resolved and that we will be breathing cleaner air in the very near future," she said.
Geraldine Knatz, executive director of the Port of Los Angeles, said she had already heard from officials at some of the nation's other ports who were anxious to know how it was going.
"I think we're off to a great start," she said.
Supreme Court to tackle judicial conflict of interest
At issue in a West Virginia case is whether big spending on a judge's election can create an unconstitutional 'appearance of bias....David G. Savage
Reporting from Washington — Hugh Caperton, owner of a small coal mine from Slab Fork, W.Va., was driven into bankruptcy after he ran up against the huge A.T. Massey Coal Co., but got a measure of revenge when a jury awarded him $50 million in damages.
But when Massey appealed to the West Virginia Supreme Court, Caperton thought it might mean trouble. Massey Chief Executive Don Blankenship had spent $3 million of his own money to help elect a new justice.
"The deck was stacked against us," Caperton said.
In November 2007, Chief Justice Brent Benjamin cast the deciding vote in a 3-2 ruling that overturned the verdict against Massey.
This saga of money, power and judicial politics in West Virginia has prompted the U.S. Supreme Court to consider for the first time whether big spending on a judge's election can create an unconstitutional "appearance of bias" that violates the guarantee of due process of law in the Constitution.
The case has attracted intense interest from judges, lawyers groups and legal ethicists, most of whom decry the trend toward campaign-style races for judgeships.
In 38 states including California, some judges are elected. Twenty states besides West Virginia elect the justices of their supreme courts. Most are in the Great Lakes region or the Deep South.
The amount of money flowing into these races has more than doubled in the last decade, and most of it comes from businesses or trial lawyers. It has created the perception that justice can be bought or at least rented when needed, critics say.
The question raised by the West Virginia case comes close to home for the nine justices of the U.S. Supreme Court, some of whom have had their own recusal controversies. When must a judge step aside because there is a good reason to doubt he or she is impartial?
Massey's lawyers say the case is not as simple as it has been portrayed: Blankenship gave only a small contribution directly to Benjamin's campaign. And Benjamin has voted against Massey in other, more recent cases, they said.
If the standard that judges should step aside based on an appearance of bias or because they owe a "debt of gratitude" to someone were to be adopted, Massey's lawyers said, U.S. Supreme Court justices could be asked to bow out of cases involving presidents who nominated them.
But Stephen Gillers, a legal ethics expert at New York University, said the justices should focus on the facts of the case.
"Ask yourself a simple question: If your opponent contributed a lopsided amount to the judge -- say $3 million -- and you contributed nothing, would you think there is a risk of bias?" he said. "With these numbers, the answer has to be yes."
Twelve years ago, Caperton owned a mine that sold a high-quality coal for the steel industry. Massey wanted the same business and bought the processing firm that handled Caperton's coal. It also bought the land around his mine.
For a time, Blankenship expressed interest in buying Caperton's company but backed away from a deal.
Benjamin was a little-known Republican lawyer in Charleston, the state capital, when he sought to unseat Justice Warren McGraw in 2004. Blankenship gave $1,000 directly to Benjamin's campaign, but spent nearly $3 million on ads that attacked McGraw as "radical" and "soft on crime."
Benjamin won a narrow victory, becoming the first Republican since World War II to be elected to West Virginia's high court.
When Massey's appeal came before the court, Benjamin refused to step aside, saying later that no one could show he had "any actual bias or prejudice."
The West Virginia justices operate under the same code as the U.S. Supreme Court justices. They step aside automatically if they own stock in a company whose case is before the court. The code also says they must disqualify themselves if their "impartiality might reasonably be questioned." If questioned, though, they decide for themselves whether their impartiality might reasonably be in doubt.
In 2004, for example, U.S. Supreme Court Justice Antonin Scalia refused to step aside from a case in which environmentalists were suing Vice President Dick Cheney. They wanted to know whether energy industry lobbyists had met behind closed doors with Cheney's energy policy task force.
A lower court ruled for the environmentalists. Three weeks after the Supreme Court voted to hear the vice president's appeal, Scalia flew to Louisiana on Cheney's government jet to go duck hunting. When the Sierra Club asked the justice to step aside from deciding the Cheney case, the Supreme Court made clear the decision was Scalia's alone.
"I do not believe my impartiality can reasonably be questioned," he wrote in refusing to withdraw. He noted Cheney was sued in his "official capacity" as vice president. He was not personally liable. Moreover, he said, they did not spend much time together on the trip. "I never hunted with him in the same blind," he wrote.
In the Massey case, Benjamin said he had no personal relationship with Blankenship. The majority ruled that Caperton's lawsuit should have been decided in western Virginia, where the coal processing firm was located, rather than in West Virginia.
Caperton and his lawyers petitioned the Supreme Court to review the case. They won the support of the Brennan Center for Justice at New York University and other reform groups that have tracked the rising tide of spending in judicial races.
"It is dialing for dollars from people who have cases before the court," said Bert Brandenburg, executive director of Justice At Stake Campaign, a public interest group which sees judicial elections as a threat to impartial justice. "Why else would you give a lot of money to a judicial candidate?"
On March 3, the U.S. Supreme Court will hear arguments in Caperton vs. Massey and is expected to hand down a decision by late June.
The Wall Street Journal
U.S. Eyes Large Stake in Citi
Taxpayers Could Own Up to 40% of Bank's Common Stock, Diluting Value of Shares...DAVID ENRICH and MONICA LANGLEY. Dan Fitzpatrick, Deborah Solomon and Damian Paletta contributed to this article.
Citigroup Inc. is in talks with federal officials that could result in the U.S. government substantially expanding its ownership of the struggling bank, according to people familiar with the situation.
While the discussions could fall apart, the government could wind up holding as much as 40% of Citigroup's common stock. Bank executives hope the stake will be closer to 25%, these people said.
Any such move would give federal officials far greater influence over one of the world's largest financial institutions. Citigroup has proposed the plan to its regulators. The Obama administration hasn't indicated if it supports the plan, according to people with knowledge of the talks.
When federal officials began pumping capital into U.S. banks last October, few experts would have predicted that the government would soon be wrestling with the possibility of taking voting control of large financial institutions. The potential move at Citigroup would give the government its biggest ownership of a financial-services company since the September bailout of insurer American International Group Inc., which left taxpayers with an 80% stake.
The talks reflect a growing fear that Citigroup and other big U.S. banks could be overwhelmed by losses amid the recession and housing crisis. Last week, Citigroup's share price fell below $2 to an 18-year low. Bank executives increasingly believe that the government needs to take a larger ownership stake in the institution to stop the slide.
Under the scenario being considered, a substantial chunk of the $45 billion in preferred shares held by the government would convert into common stock, people familiar with the matter said. The government obtained those shares, equivalent to a 7.8% stake, in return for pumping capital into Citigroup.
The move wouldn't cost taxpayers additional money, but other Citigroup shareholders would see their stock diluted. A larger ownership stake by the government could fuel speculation that other troubled banks will line up for similar agreements.
Bank of America Corp. said Sunday that it isn't discussing a larger ownership stake for the government. "There are no talks right now over that issue," said Bank of America spokesman Robert Stickler. "We see no reason to do that. We believe the goal of public policy should be to attract private capital into the bank, not to discourage it."
Citigroup's low share price already reflects, at least in part, a fear among shareholders that their stakes might be further diluted. A government move to take a big stake could backfire, potentially spurring investors to flee other banks, even healthier ones.
There's no universal agreement on what constitutes nationalization of a bank. In the U.K., the government already owns 43% of Lloyds Banking Group PLC, and last week moved to increase its ownership of Royal Bank of Scotland Group PLC to 70% from 58%. Those two banks have been classified as "public-sector entities," and as much as £1.5 trillion ($2.136 trillion) of their liabilities have been moved over to the country's balance sheet.
The White House has knocked down recent speculation that the government is preparing to nationalize several large U.S. banks.
The U.S.'s intentions with Citigroup remain unclear. For instance, it's not yet known whether the government would seek a stronger hand in the New York company's management or day-to-day operations.
As part of the plan, Citigroup officials hope to persuade private investors that have bought preferred shares -- such as the Government of Singapore Investment Corp., Abu Dhabi Investment Authority and Kuwait Investment Authority -- to follow the government's lead in converting some of those stakes into common stock, according to people familiar with the matter. That would further bolster an obscure but increasingly pivotal measure of banks' capital known as "tangible common equity," or TCE.
The TCE measurement, one of several gauges of a bank's financial strength, gives weight to common shares -- thus the interest in converting preferred shares to common stock.
Details of the rescue remain in flux. Key questions, such as the price at which the government will convert its preferred stock into common shares, haven't been resolved.
And it's possible that other options will emerge to stabilize the company. For example, the Obama administration could decide to sit tight until the results of several new "stress tests" on major banks -- broad examinations of financial health now being mandated -- are known in a couple months, one official said.
If the deal gets nailed down, it will be Washington's third effort to aid Citigroup since last fall. In October, the Treasury Department put a total of $125 billion into eight giant financial institutions, including $25 billion to Citigroup, in exchange for preferred shares and warrants to buy stock.
Then, shortly before Thanksgiving, the government agreed to infuse another $20 billion into Citigroup as its stock tumbled. It also agreed to protect the banking company against most losses on a $301 billion pool of assets.
Among the question marks looming over the current discussions is the future of Citigroup Chief Executive Vikram Pandit and the company's board.
In November, as part of the sweeping rescue, federal officials privately discussed the possibility of replacing Mr. Pandit, who became CEO in December 2007. But the government decided not to remove him, in large part due to a dearth of qualified replacements. Still, top government officials warned Mr. Pandit that a third trip to the taxpayer trough would probably cost him his job.
However, since the latest talks don't involve the possibility of Citigroup receiving additional government capital, it isn't clear whether Mr. Pandit's job is on the line. A Citigroup spokeswoman declined to comment.
Federal officials have been pushing Citigroup executives and the board's lead independent director, Richard Parsons, to shake up the 15-member board. Already, three directors, including former Treasury Secretary Robert Rubin, have announced plans to step down this spring.
There are at least two catalysts for the recent talks with the government.
First, Citigroup's shares have fallen to historic lows. That doesn't pose a direct threat to the company's stability. But if it spooks customers into pulling their business, that could push the bank toward a dangerous downward spiral.
Second, bank regulators this week will start performing their battery of stress tests at the nation's largest banks as part of the Obama administration's industry-bailout plan. As part of those tests, the Federal Reserve is expected to dwell on the TCE measurement as a gauge of bank health, according to people familiar with the matter.
The crisis is triggering a deep re-examination of the way bank health is measured in the U.S. financial system. This complex exercise boils down to calculating various ratios of capital to a bank's total assets.
Until recently, TCE -- essentially a gauge of what common shareholders would get if an institution were dissolved -- has been one of the less prominent ways to measure a bank's vigor. TCE is also among the most conservative measures of financial health.
Bankers and regulators generally prefer to use what is known as "Tier 1" ratio of a bank's capital adequacy. It takes into account equity other than common stock. By Tier 1 measurements, most big banks, including Citigroup, appear healthy. Citigroup's Tier 1 ratio is 11.8%, well above the level needed to be classified as well-capitalized.
By contrast, most banks' TCE ratios indicate severe weakness. Citigroup's TCE ratio stood at about 1.5% of assets at Dec. 31, well below the 3% level that investors regard as safe.
The regulators' new focus on TCE represents an important shift. The government's recent injections into hundreds of institutions were predicated on the idea that Tier 1 was key. Because the investments weren't in the form of common stock, they didn't affect the companies' TCE ratios.