...1. New Century’s strategy was to aggressively pursue the origination, sale, and securitization of subprime mortgages. Since its target market consisted of borrowers with low FICO scores, it could charge interest rates 2-3% higher than prime rates as well as higher origination fees. New Century utilized short term credit known as “warehouse loans” to secure the funds needed to lend to subprime borrowers. The warehouse loans were typically paid off within 30-90 days of origination as New Century sold or securitized new subprime mortgages. The subprime mortgages were pooled and sold either as a whole loan sale to an investment bank or they were sold as securitizations structured as sales to a SPE Trust. New Century also made income by structuring securitizations as financing in which it would keep originated mortgages on the balance sheet as LFHI. The difference between interest earned from these loans and interest paid to bond investors was profit to the company. With the real estate market exploding between 2002 and 2007, New Century’s aggressive strategy led them into increased risky lending such as ARMS, interest-only mortgages, 100% loan-to-value loans, and stated income loans. The New Century business model depended on real estate values continually going up and certainly not down. 2. Primary risks: Large scale default was a legitimate risk that was taken on by New Century Financial. High levels of default would increase New Century’s liabilities, because of their...
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...Strategies for Reviving the Japanese Economy Introduction 1. Assessment of the Current Economy The Japanese economy has begun to show some signs of change as the effects of recent large-scale economic packages have gradually helped to stop the severe economic downturn. But despite this progress, private demand as a whole remains stagnant. Therefore, the economic prospects for self-supported recovery are still uncertain once the economic effects of the last packages have phased out. The fundamental problems pertinent to the weak economy are twofold. First, the true adjustment of the burst of the bubble economy is still insufficient. Second, against the background of the sharp decline in the number of births and the rapid aging of the population, the pace of which has not been experienced in other industrialized nations, the "Japanese system"--the engine of the country's astonishing high growth in the postwar era--has turned problematic with regard to economic growth. First, fears about employment prospects, future pension plans, and the sharp rise in government deficits are obviously restraining an economic turnaround. These fears are attributable to eroding sustainability in the Japanese-style wage and employment systems and the generous social security system. To cope with the situation, provisions of renewed safety nets are urgently needed. Furthermore, the rising fiscal deficits are restraining economic upturn by making people serious about future tax hikes...
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...KPMG Is Sued Over New Century The trustee overseeing the bankruptcy of subprime lender New Century Financial Corp. filed suit against its auditor, KPMG LLP, claiming that "reckless and grossly negligent audits" helped accelerate the firm's collapse two years ago. The lawsuits filed Wednesday said that specialists at KPMG tried to point out errors in New Century's financial statements but were silenced by the KPMG partner in charge of the audits "to protect KPMG's business relationship with, and fees from, New Century." The claims are among the first to attempt to blame auditors for the subprime-mortgage crisis, which spread beyond lenders such as New Century and engulfed the global financial system. If the New Century trustee is successful, "it may embolden others to look more closely at the possibility of bringing [accounting] firms to some level of culpability for the things that happened" that led to the credit crisis, Francine McKenna, president of McKenna Partners LLC, a corporate-governance consultancy, said in an interview. A KPMG spokesman disputed the claims. "While we have not seen the complaint yet, any claim that we acquiesced to client demands is unsupportable," KPMG spokesman Dan Ginsburg said in an emailed statement. Mr. Ginsburg added, "KPMG acted in accordance with professional standards in New Century, and we will vigorously defend our audit work. Any implication that the collapse of New Century was related to accounting issues ignores the reality of the...
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...INSURANCE; Farmers Insurance Acquisition of 21st Century Insurance Finalized SECTION: EXPANDED REPORTING; Pg. 15 LENGTH: 725 words The Farmers Insurance Group of Companies(R) announced that it has completed the acquisition of 100 percent of AIG's U.S. Personal Auto Group, which includes 21st Century Insurance. In addition to 21st Century Insurance, the acquisition includes the former AIG Direct business and Agency Auto business. The purchase price amounts to approximately $1.9 billion. Under the agreement, AIG's U.S. personal auto insurance business is being sold to Farmers Group, Inc., a Los Angeles-based subsidiary of Zurich Financial Services Group. Farmers Group, Inc. will sell the underlying insurance entities to the Farmers Exchanges, which Farmers Group, Inc. manages but does not own, for approximately $1.4 billion. This acquisition by the Farmers Exchanges strengthens Farmers' place as the 3rd largest personal lines insurer in the US. And, the acquisition positions the Farmers Exchanges as the largest auto insurer in several states, including California. The acquisition is the largest in the 81-year history of Farmers. The acquired companies operate in 49 states and Washington, D.C.; have more that 2.4 million customers; and insure more than 4 million vehicles in the US. Further, 21st Century Insurance is the nation's 3rd largest traditional "direct" writer of insurance. Without including 21st Century customers, Farmers already provides auto, home, business...
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...THE OF THE ST CENTURY 21 THE OF THE 21 CENTURY ST Other Best-Selling Books in the Rich Dad Series Rich Dad Poor Dad What the Rich Teach Their Kids About Money That the Poor and Middle Classes Do Not Rich Dad’s CASHFLOW Quadrant Rich Dad’s Guide to Financial Freedom Rich Dad’s Guide to Investing What the Rich Invest in That the Poor and Middle Classes Do Not Rich Dad’s Rich Kid Smart Kid Give Your Child a Financial Head-Start Rich Dad’s Retire Young Retire Rich How to Get Rich Quickly and Stay Rich Forever Rich Dad’s Prophecy Why the Biggest Stock Market Crash in History Is Still Coming… and How You Can Prepare Yourself and Profit from It! Rich Dad’s Success Stories Real-Life Success Stories from Real-Life People Who Followed the Rich Dad Lesson The Business School for People Who Like Helping People The Eight Hidden Values of a Network Marketing Business Rich Dad’s Guide to Becoming Rich Without Cutting Up Your Credit Cards Turn “Bad Credit” into “Good Credit” Rich Dad Poor Dad for Teens The Secrets About Money—That You Don’t Learn in School! Rich Dad’s Before You Quit Your Job 10 Real-Life Lessons Every Entrepreneur Should Know About Building a Multimillion-Dollar Business Why We Want You to Be Rich by Robert Kiyosaki and Donald Trump Provide Insight on How to Improve Your Financial Future Rich Dad’s Increase Your Financial IQ How to Get Smarter with Your Money Rich Woman: A Book on Investing for Women ...
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...the dawn of the eighteenth Century the Ottomans, while perceived by the Western powers to be in decline, were still a moving force in world politics. The heart of the Ottoman Empire homelands was strategically located at the crossroads of the great trade routes of the medieval world. Situated near the convergence of the Silk Roads, the Indian Ocean Routes, the Volga, the Danube, and the Mediterranean the Ottomans enjoyed political, economic and social influence over a large portion of Eastern Europe, Africa, and the Middle East The many provincial governments and diplomatic outposts in the countries controlled by the Ottomans functioned as effective and essential arms of the central bureaucracy. Encompassing vast swaths of territory, the...
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...science Applying knowledge. The domain of technology. There are two basic issues about knowledge: Source: Betz (2011) Prepared by Chi-Yo Huang, Ph.D. 1 Prepared by Chi-Yo Huang, Ph.D. 3 Contents Introduction (2) Introduction Timeline of Science, Technology, and Industrialization Innovation Process Technology and Wealth Technical Savvy and Financial Savvy Technical Personnel and Business Personnel 2 There is a difference between technology and scientific technology Technologies are the "how" to do something E.g. 天工開物 Science is the "why" of something. So scientific technologies are both the how and why something can be done in nature. Science understands nature. Scientific technology manipulates nature. (Scientific technology: the technology invented upon a science base of knowledge that explains why the technology work) Prepared by Chi-Yo Huang, Ph.D. Prepared by Chi-Yo Huang, Ph.D. 4 Introduction (3) Introduction (5) The basis for our modern age, characterized by So many new technologies and Rapid technological progress, The study of these (science to technology to economy) connections is is the science base of modern technologies (or scientific technology). The focus of the topic of technological innovation. The field of management of technology (MOT) studies the principles of innovation, Describing the general patterns and principles in...
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...A SHORT HISTORY OF ACCOUNTING AND BUSINESS By Gary Giroux September 1999 Preface Overview: Accounting toward the 21st century: Where are we now? How did we get here? 1. From the Ancient World to Pacioli The First Cities Trade Tokens: The First Accounting The Sumerians Complex Tokens and Clay Tablets Cuneiform Writing and Beyond Money, Banking and Credit The Dark Ages and the Rise of the Italian Merchants Luca Pacioli: The Father of Accounting 2. Britain and the Industrial Revolution Prior to 1750 Ironbridge Textiles The Steam Engine Wedgwood and the Importance of Cost Accounting Early Cost Accounting Transportation Development of the Accounting Profession 3. American Big Business and Cost Accounting Early Developments in Manufacturing and Accounting Rockefeller Morgan and Carnegie Cost Accounting in the Era of Big Business Alternative Systems in Asia and Europe Relevance Lost: The Critique of Johnson and Kaplan The American Response 4. Financial Accounting and the Structure of Accounting Regulation The Great Crash and Government Response The New Role of the Accounting Profession The Financial Accounting Standards Board Earnings Management and Economic Consequences Accounting Principles and the Conceptual Framework 5. Auditing Auditing in the U. S. The Big...
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...In nineteenth-century Russia, the woman question emerged as a prevalent topic for debate. It questioned women’s gender roles within society. The increase in women’s agency within the public sphere during the eighteenth century, brought on by Peter the Great’s reforms, changes in property laws, salon culture, and charity, engendered the woman question in the nineteenth century and influenced responses to it. Four responses to the woman question emerged: the feminist response, the nihilist response, the radical response, and the reactionary right response. Each of these responses reacted to or built upon preceding responses, each broadening the scope of the next. The feminists drew on eighteenth-century charity to shape its response that women’s...
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...Practices and Ethics In 2012 GlaxoSmithKline (GSK) paid $300 million in fines for incorrect pricing (The United States Department of Justice, 2012). Five executives of National Century Financial Enterprises were convicted of conspiracy to commit securities and wire fraud (New York Times, 2008). These companies are just two examples of financial fraud and lack of financial ethics in health care organizations. These two stories reinforce the importance of employing ethical and trustworthy financial managers and staff. Financial management is a complicated and detailed job. Generally accepted account principles (GAAP) have three sets of rules, and include 10 basic guidelines and principles (Averkamp, 2014). Planning, controlling, organizing and directing, and decision making are the primary elements of financial management (Baker & Baker, 2011). The first of the four elements in financial management is planning. In this phase, the manager identifies the steps that need to be taken to complete the organizations objectives (Baker & Baker, 2011). How much money will be needed to maintain operations in the next year? Things like medical supplies, equipment, additional employees, and more need to be considered in the planning process. The planning stage will encompass the next business year as well as the years to follow. Many organizations will want a five to 10 year plan or longer. The next element is controlling, and this is usually carried out by the controller or comptroller...
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...Cullen Jones Econ 30423 Dr. Lovett December 3, 2013 Railroads first came around in the early 19th century. It is common knowledge that the railroad helped the economy and the people living in that time; but to what extent? This paper will examine the railroad in greater detail to determine how revolutionary the invention actually was. An intricate railway system helped make shipping more economical as well as changed population habits. Sources indicate that these changes could have affected the economy of a country. The railroad became prominent in different countries at different rates and at different times. This paper will also discuss this and try to find any repercussions of a delayed start to the widespread use of the rail road. There is some evidence to support that the railroad affected a countries current economic standing. A primary country that will be observed is Portugal. The statistics and information on Portugal is relevant to what is being discussed. Portugal will be compared to countries like the United Kingdom and Spain to see how each was affected by the railroad. There are a significant amount of difference between the railroad, including how they took on the process of building a system and how that affected the country as a whole. Economic Impact of the Railroad: Portugal vs. Europe Cullen Jones Railroads first came around in the early 19th century. It is common knowledge that the railroad helped the economy and the people living in that time; but...
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...Investment Banking: Past, Present, and Future by Alan D. Morrison, Saïd Business School, University of Oxford and William J. Wilhelm, Jr., McIntire School of Commerce, University of Virginia investment banks are changing fast. Forty years ago the industry was dominated by a few small partnerships that made the bulk of their income from the commissions they earned floating securities on behalf of their clients. Today’s investment banks are huge full-service firms that make a substantial proportion of their revenues in technical trading businesses that started to attain their current prominence only in the 1980s. The CPI-adjusted capitalization of the top ten investment banks soared from $1 billion in 1960 to $194 billion in 2000. Between 1979 and 2000, the number of professionals1 employed by the top five investment banks (ranked by capitalization) rose from 56,000 to 205,000.2 The enormous upheavals documented in the previous paragraph raise a number of difficult questions. What have the investment banks of today got in common with their predecessors? Is it possible to draw any meaningful parallels between businesses that today call themselves investment banks and the investment banks of 20, 40, or even 100 years ago? What is the source of the recent changes to the investment banking landscape, and can we say anything about the likely future direction of the industry? These questions point to a more fundamental one: namely, if investment banks did not exist, would we need to invent...
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............................................................................. 2 1.2 19th Century – The Beginnings of Modern Accounting in Europe and America ............................... 3 1.3 20th Century – The Development of Modern Accounting Standards................................................. 4 1.4 21st Century – Accounting Regulation in Modern Commerce ........................................................... 4 2. DEVELOPMENT OF ACCOUNTING .................................................................................. 4 3. EVOLUTION OF ACCOUNTING ......................................................................................... 5 4. THE CONSEQUENCE OF DOUBLE ENTRY ..................................................................... 6 5. RECENT GROWTHS AND DEVELOPMENTS IN ACCOUNTING ............................... 7 6. LOOKING TO THE FUTURE ............................................................................................... 8 REFERENCES .............................................................................................................................. 9 1. INTRODUCTION The main objective of this study is to critically review the Origin, Growth and Development of accounting theories and their impacts on financial reporting. Other objectives are to explore accounting theory in resolving areas of diversities among users of financial statements. It further examines the extent to which accounting theory has influenced practices...
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...client holds with a particular financial institution, the longer they will stay with that bank. The idea is, the more accounts they open for each client, the more dependent these clients will become to their services, and closing several accounts to join another institution requires time and effort. Avoiding these tedious tasks will manipulate a client to stay with the given financial institution longer as well as prompting them to maintain majority of their funds under the same roof. There are many studies conducted to prove this scenario that is the reason why the “cross-selling” technique has been adopted by the banking industries. The ultimate goal is clear, and all financial institutions believe that “those who die with the most money win”. Whether or not these techniques create a false sense of loyalty, the question is: Does account balance exhibit any correlation to the number of services a client holds with the bank? Numbers don’t lie, we will explore and evaluate this hypothesis using statistics and data sets from Century National Bank to prove whether or not this idea holds true. Hypothesis Statement “Does account balance exhibit any correlation to the number of services a client holds with the bank?" The banking industry as a whole has changed over the past decade in which customer are able to use technology to update account information, view bank account balances via the internet, and mobile banking. These are a few of many new ways customers can receive updated...
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...book. I thought this book ‘This Time is Different’ will be interesting to read. I thought it will be about different times and different countries financial history (about bank crisis, currency crashes and so on) and how these countries survived in different times. Furthermore, before I bought this book, I read the brief of the book it sounded interesting, than I wanted to read and to know more about it. Author’s credentials Carmen M. Reinhart is the Dennis Weatherstone Senior Fellow at the Peterson Institute for International Economics. Previously she was professor of economics at the University of Maryland. She has held a positions in IMF. Kenneth S. Rogoff is the Thomas D. Cabot Professor of Public Policy and professor of economics at Harvard University. He received his PhD in Economics from MIT. He is a commentator for NPR, the Wall Street Journal. And the Financial Times. Carmen M. Reinhart and Kenneth S. Rogoff made a big contribution to financial history, collected data which covered sixty-six countries and different time periods and wrote about financial crisis, inflation,international debt currency crashes and debasements. They are first researches in the history about the financial crisis over many years. The author’s were trying to explain in the book, that ‘This Time is Different’ syndrome is wrong that financial crisis is happening to other countries not to us, because we are doing better as we learn from the past. Summary At the beginning of the book authors...
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