Bank of America Putting Pressure on Small Businesses

First appeared in the LA Times

Bank of America Corp., under pressure to raise capital and cut risks, is severing lines of credit to some small-business owners who have used them to stay afloat.

The Charlotte, N.C., bank is demanding that these customers pay off their credit line balances all at once instead of making monthly payments. If they can't pay in full, they are being offered new repayment plans for as long as five years, but with far higher interest rates than their original credit lines had.

Business owners complain that BofA's credit squeeze is abrupt and could strain their small companies and even put them out of business. The credit cutoff is coming at a time when the California economy can't seem to catch a break, and bucks what the financial industry says is a new trend of easing standards on business loans.

One such customer, Babak Zahabizadeh, was told in a letter that the $96,000 debt carried by his Burbank messenger service must be repaid Jan. 25. A loan officer offered multiple alternatives over the phone that Zahabizadeh called unaffordable, including paying off the debt at 12% interest over two years. That's about $4,500 a month, nearly 10 times his current interest-only payment.

Zahabizadeh, known as Bobby Zahabi to his customers, said he has cut the staff of his Messengers & Distribution Inc. to 80 from 200 to nurse his business through tough times.

"I was like, 'Dude, you're calling a guy who's barely surviving!' " he said. "My final word was that I can double my payment — but not triple or quadruple it. I told them if they apply too much pressure they're going to push me into bankruptcy."

The capped credit lines stem from a corporate overhaul launched by Brian Moynihan, who became Bank of America's chief executive in 2010. He promised to address losses caused by loose lending and rapid expansion by reining in risks and shedding investments deemed non-core.

BofA spokesman Jefferson George said a "very small percentage" of small-business customers have been affected by the changes. He would not provide exact numbers except to say it wasn't in the hundreds of thousands. Some of the affected businesses had been customers of other banks that Bank of America acquired, but most were BofA customers from the start, George said.

"These changes were explained in letters to customers, and they were necessary for Bank of America to continue prudent lending to viable businesses across the U.S.," he said.

The bank still has 3.5 million non-mortgage loans to small businesses on its books. The affected business owners were notified a year in advance that their credit lines were being called, George said, although Zahabi and several others said they had not received the early warnings.

The changes also include added annual reviews of borrowers and annual fees, and often reductions in the maximum amount of credit. George said the aim was to reduce Bank of America's risks and to bring the loan terms in line with more stringent standards imposed after the 2007 mortgage meltdown and 2008 credit crisis.

Scott Hauge, president of the advocacy group Small Business California, called the credit cuts "a tragedy" for longtime BofA clients left vulnerable by years of struggle in a sour economy.

"If small businesses are going to lead the way out of the economic doldrums we now face in this country, they must have access to capital, not only to hire more people but to protect the jobs they are currently providing," Hauge said.

Bank of America was a leader in the banking industry's abortive attempt to impose debit card fees. But it appears to be a laggard in tightening business lending standards. Most other banks, having tightened lending standards in the aftermath of the financial crisis, had eased credit last year as competition for small-business customers heats up, bank analysts say.

"Everyone … is targeting commercial and particularly small-business lending as the real focus area for growth," said Joe Morford, an analyst in San Francisco for RBC Capital Markets.

While Bank of America is advertising its own commitment to small businesses, it needs to send another message to its government supervisors because it has less of a capital cushion against losses than major rivals, said FBR Capital Markets bank analyst Paul Miller.

Restricting credit lines "is a way to show the regulators they are serious about addressing risks," Miller said. "Bank of America is under great pressure, especially with another round of [Federal Reserve] bank stress tests coming up, as the regulators say: 'We want you to tighten up.' "

The analysts said all banks monitor business customers and restrict credit on a case-by-case basis. But they said they were unaware of any other large bank systematically capping credit at this time.

Customers interviewed by The Times said they could understand how the turbulent economy might result in some restrictions. But they complained that the credit cutoffs threatened to undo businesses they shepherded through the downturn by slashing costs, hoping to expand when brighter days return.

Several small-business owners indicated that they had nearly used up all the available credit on their Bank of America lines. However, George said maxing out the lines wasn't a major factor in the bank's reevaluation of the credit terms.

Kathleen Caid's Antique Artistry Studio in Glendale sells elaborately beaded, Victorian-style shades that she makes for lamps, chandeliers and sconces. She said she had understood that her $85,000 credit line would remain in place "as long as I wasn't in default," and she hadn't missed any payments.

Caid and her husband, Tim Melchior, a video producer with a Burbank media company, insist they are not in serious financial trouble despite having laid off her eight full-time employees and downsized her business space by two-thirds during the recession.

Yet Bank of America says that her credit-line debt, totaling $80,000, is due in May.

"I wouldn't have run it up if I knew what was in store," she said, adding that she would be speaking to an attorney and other banks about her options.

Teach Banks to Share and Move Your Money

First appeared in Contra Costa Times

Dozens of moms, dads and their kids protested the nation's biggest banks Friday with a stroller march that called on bank customers to switch to credit unions.

About 60 parents and their young children took part in Friday's "Teach Banks to Share" demonstration, which was organized by a group called the Colorful Mamas of the 99 Percent.

The stroller-pushing parents marched through downtown Oakland in support of the national "Move Your Money" campaign, which is urging customers of big banks to close their accounts and join credit unions by Saturday, which is being dubbed "Bank Transfer Day."

The campaign has gained momentum with the expansion of the Occupy Wall Street protests nationwide.

The protesters beat drums and chanted "Time out! You better share!" as they marched to a Wells Fargo branch. The group rallied outside while two mothers went inside and closed their accounts.

"We believe that the money needs to go from the 1 percent to all of us to pay for schools, health care, putting food on the table and our kids' future," protester Mimi Ho, carrying her baby, told the crowd after closing her Wells Fargo account.

The protesters said big banks such as Wells Fargo & Co. don't pay enough taxes or contribute enough to their communities, despite having received tens of billions of dollars in federal bailout funds and posting multibillion-dollar profits.

"We want reinvestment in our communities. We want corporations and large banks to pay their fair share of taxes," said Prishni Murillo, 33, an Oakland mother of two.

Wells Fargo spokesman Ruben Pulido said the San Francisco-based bank been an industry leader in charitable giving, modifying mortgages and lending money to small businesses.

"We're doing a lot to strengthen communities in the Bay Area and around the country," Pulido said.

End of Line for Two Homeowners

First appeared in Contra Costa Times

Business at two Antioch banks was disrupted Friday by protesters demanding help for two homeowners who haven't been able to pay their mortgage.

About three dozen members and supporters of a grass roots social justice organization went to the Bank of America and Wells Fargo Bank branches on Somersville Road asking officials there to intervene on behalf of an elderly Antioch woman who lost her home just days ago as well as a Concord couple that received an eviction notice last month.

Holding signs and chanting, they asked employees to fax a letter to the banks' chief executive officers insisting that the companies work with these people they had victimized with their "predatory lending practices."

Bank of America refused and called the police, who dispersed the crowd by warning that they would be arrested if they didn't leave, said John Adams, local director of the Alliance of Californians for Community Empowerment.

The crowd then walked to Wells Fargo, where the branch manager agreed to fax the plea to rescind its foreclosure on Eva Cader, a 78-year-old Antioch woman who was evicted Jan. 3 while trying to obtain a loan modification, Adams said.

Although the Bank of America branch didn't comply with the group's request, its manager discovered she knew Jessi Koritz, a small-business owner who frequents the Concord branch where she used to work.

The woman promised she would bring his case to the attention of those who mightbe able to forestall his eviction and modify the terms of his loan.

Grappling with financial setbacks from a job loss and workplace injuries, Koritz and his wife, Pamela, have been struggling to keep the first home they have owned for most of the 5½ years they have been in it.

"We're just trying to live the American dream," said Koritz, who hasn't made a mortgage payment since July 2008.

He initially had tried to renegotiate the loan but says the bank told him it couldn't do anything unless he was delinquent.

Although Koritz is reluctant to pin his hopes on Bank of America having a change of heart, Adams says he's optimistic because of what the groundswell of opposition to lending practices already has accomplished.

"We're acting on the knowledge that this is happening across the country," he said. "People are shining a light on their case and -- lo and behold -- the bank will take a look and end up working something out."

That's exactly what Bank of America has been doing, said media relations director Britney Sheehan, noting that the company has made more Home Affordable Modification Program loans than any other lender.

The bank has processed about 200,000 of those loans in California alone since the housing crisis began in 2008, she said.

Moreover, Bank of America works with nonprofits like the housing counseling agency NACA to prevent foreclosures and has opened dozens of customer assistance centers in the hardest hit housing markets around the country -- it's opening one in San Mateo in the next few weeks -- where homeowners can talk to mortgage specialists about their loan, Sheehan said.

It's not in the bank's interest for customers to lose their homes, she said.

"While some would have the public believe that banks make a profit on foreclosures and evictions, the truth is that the process is tremendously costly for all parties," she said.

Barnes & Noble Takes on Technology

First appeared in the Wall Street Journal

Barnes & Noble Inc. is the latest old-school company to discover how costly it can be to try to reinvent itself for a digital future.

The nation's largest bookstore chain warned Thursday it would lose twice as much money this fiscal year as it previously expected, and said it is weighing splitting off its growing Nook digital-book business from its aging bookstores.

Over the past 15 years, rapid technological change has transformed the company from a dominant retailing force that left smaller booksellers quaking in fear to a struggling giant grasping for a plan to ensure its long-term relevance to the publishing industry.

Barnes & Noble realized early on that e-books could appeal to consumers, but allowed Amazon.com Inc. to get an early leg up. Now it is locked in a battle with Amazon and another deep-pocketed rival, Apple Inc., to sell both electronic books and the high-tech devices consumers use to read them.

Digital technology continues to roil all manner of once-dominant companies. Former giants such as Blockbuster Inc., Circuit City and Barnes & Noble's main book-chain rival, Borders Group Inc., have struggled mightily—and in some cases, disappeared altogether—in the face of digital competitors including Netflix Inc. and Amazon. Wednesday's news that Eastman Kodak Co. was contemplating seeking Chapter 11 bankruptcy protection underscored the severity of the technology threat.

Barnes & Noble's stock fell 17% on Thursday. The company now may be at its most critical juncture since its chairman and largest shareholder, opened his first store in New York's Greenwich Village in 1965.

As recently as the 1990s, Barnes & Noble was known as a carnivorous competitor with the power to wipe out independent bookstores with its steeply discounted books and sprawling stores where customers could sip coffee and read in plush chairs. In New York City, the emergence of a Barnes & Noble on the Upper West Side was partly responsible for the mid-1990s closing of the beloved neighborhood bookseller Shakespeare & Company—the kind of narrative arc that cropped up in the movie "You've Got Mail."

Ironically, Barnes & Noble had been one of the first to recognize the potential of digital books. In 1998, it invested in NuvoMedia Inc., maker of the Rocket eBook reader, and the bookseller actively supported digital-book sales. But in 2003, it exited the still-nascent business, saying there wasn't any profit in it.

It wasn't until 2009 that Barnes & Noble re-entered the business, introducing its Nook e-reader. By then, Amazon had been selling its Kindle device for about two years, and was offering best sellers for $9.99, a fraction of what hardcover best sellers are priced at.

Apple introduced its iPad tablet in January 2010. Amazon responded with its competing Kindle Fire tablet this past September, and in November, Barnes & Noble introduced its Nook Tablet.

E-book sales have skyrocketed, jumping to $863 million in 2010, from $62 million in 2008, according to BookStats, a joint-research venture between the Book Industry Study Group and the Association of American Publishers. One publisher predicted Thursday that e-books could account for as much as 40% of total revenue by the end of the year.

Although Barnes & Noble was late to the game, its devices have won critical praise, and publishers estimate today that it controls as much as 27% of the digital-books market. "We saw more growth with e-books with Barnes & Noble this Christmas than anybody else," said the publisher.

But those sales have come at an enormous cost. Developing, manufacturing and promoting e-readers and tablets requires heavy upfront spending. Barnes & Noble's spending on advertising has more than tripled since 2009, according to Kantar Media, an ad-tracking unit of WPP PLC. To promote the Nook, the retailer returned to national TV advertising in 2010, after a 14-year hiatus, buying spots on popular programs such as "American Idol."

The heavy Nook investment has squeezed Barnes & Noble's bottom line. Largely as a result, its earnings before interest, taxes, depreciation and amortization—a critical measure of earnings—fell to $163 million in the fiscal year ending April 30, 2011, from $281 million in fiscal 2010.

When Barnes & Noble's stock weakened, the company came under pressure from an activist investor. In response, the chairman, who maintains control with a stake of about 30%, put the company up for sale in August 2010. Last May, Liberty Media Corp. made a bid to buy the business. The chairman appeared to support the bid, but Liberty Media eventually opted to invest $204 million for a 16.6% stake, receiving two board seats.

This holiday season has offered a ray of hope. Barnes & Noble said device sales had risen 70% for the nine-week period ending Dec. 31, compared with the year-ago period. It said the Nook business is likely to notch $1.5 billion in sales in the current fiscal year, compared with $880 million a year earlier. That business includes the Nook devices, digital-book sales, accessories, magazine and newspaper sales, app sales and sales of warranties.

On Thursday, Barnes & Noble increased its projected loss per share for the current fiscal year to between $1.10 and $1.40, from the 30 cents to 70 cents it reaffirmed one month ago.

Barnes & Noble blamed an unexpected shortfall of sales of the Nook Simple Touch e-reader on a Christmas where consumers embraced color digital devices, including the Nook Tablet and Amazon's Kindle Fire. The e-reader sales shortfall is significant because of its ripple effect on projected sales of related products, including e-books and accessories.

"We over-anticipated the demand for the holiday season," said the company's chief executive officer.

He said Barnes & Noble has plenty of capital to continue financing the Nook expansion, including a $1 billion credit line.

But in a comment at an investor conference on Wednesday,the Liberty Media Chief Executive hinted that Barnes & Noble might need help to continue building the business. Competing with Apple and Amazon, he said, was a "big-boy game." He said Barnes & Noble may find "partners to help fund that game, meaning the public or strategic partners."

Barnes & Noble said in a statement on Thursday it was "in discussions with strategic partners including publishers, retailers and technology companies in international markets." It said that could lead to expanding the Nook business overseas.

One possibility is that Barnes & Noble could sell a minority stake in the Nook business in a public offering. The two businesses would likely have different managements and different boards. Under such a scenario, Barnes & Noble would continue to have close ties to its Nook devices. Another possibility is selling the Nook business outright.

A portfolio manager for Aria Partner, a Boston-based investment firm that owns a stake in Barnes & Noble, suggested one logical buyer could be Google Inc., whose e-book store has had only a minimal impact so far. "The Nook business alone could be worth $1.5 billion," said the manager. The Nook runs on Google's Android software. Google declined to comment.

Another potential partner is Microsoft Corp., people familiar with the situation said. Microsoft declined to comment.

The idea for splitting off the Nook business may partly reflect the influence of Liberty Media, whose chairman, John Malone, and chief executive, Mr. Maffei, are experienced at devising complex financial structures to highlight the value of businesses. Mr. Maffei and another Liberty executive are on Barnes & Noble's board.

"This is classic Malone," noted a Maxim Group analyst.

The idea came up during the company's long-running strategic-review process, which began in the summer of 2010, according to people familiar with the situation. Barnes & Noble executives and the board discussed how the company could increase shareholder value and improve its stock price, these people said, and separating the Nook business was one suggestion.

The idea was also embraced by Liberty, said another person familiar with the situation.

Barnes & Noble said the decision to explore the potential sale of the Nook business was a board-level decision that had the full support of the company.

Investors have shown they are in favor of companies overhauling their structures to focus their business divisions, applauding moves by McGraw-Hill Cos., Kraft Foods and other companies that separated businesses last year.

Barnes & Noble investors may not have the patience to fund Nook growth here and abroad, said a Forrester Research analyst. "It's going to require sustained investment."

Less U.S. Children Are Born

First appeared in the Wall Street Journal

The U.S. under-18 population fell between 2010 and 2011, the first time in at least two decades that the country has seen its minor population decline, according to demographers and new Census data.

The U.S. under-18 population was 73,934,272 in July 2011, a decline of 247,000 or 0.3% from July of 2010, according to an analysis of Census data by a demographer at The Brookings Institution. The child population is still up 2.3% from 2000, largely because of gains made in the early-decade boom years.

The child population is falling because fewer immigrant children are coming across U.S. borders, and because fewer children are being born. Meantime, the so-called millennial generation is moving into adulthood. With fertility rates down, The Brookings Institution says “it doesn’t look like a youth boom will reverberate anytime soon.”

The U.S. minor population fell in the 1970s as well, as baby boomers moved into adulthood and women entered the labor force en masse, delaying families in the process. A large drop in fertility was also behind a decline in minors between 1920 and 1930.

States with the biggest drop in children tended to be concentrated in the aging Rust Belt and New England. Every New England state saw its under 18 population fall 1% or greater from April 2010 to July 2011 (state Estimates are over a different time period than the national tally). Michigan and Pennsylvania were also big losers. Also, while the drops were small, states including Arizona and Nevada saw their minor populations fall after huge gains earlier in the decade.

No Solid Sales for Sears

First appeared on Yahoo! News

Sears Holdings Corp will close as many as 120 of its Kmart and Sears discount and department stores after its holiday sales slumped, sending its shares sliding more than 27 percent to their lowest level in three years.

The retailer, which is controlled by its chairman, the hedge fund manager Edward Lampert, has seen sales decline every year since the $11 billion merger of the two chains in 2005, and likely faces further closings to cut expenses, preserve cash and push back against rivals such as Wal-Mart Stores Inc and Amazon.com Inc, analysts said.

Sears also disclosed on Tuesday that it tapped its credit line to borrow cash and forecast that fourth-quarter earnings would fall by more than half.

Under Lampert, the company, once one of the most successful U.S. retailers with a history going back to 1886, has let stores deteriorate, said analysts, who also faulted poor locations and ho-hum merchandise for its ongoing problems.

"They've neglected this business for so long," independent retail analyst Brian Sozzi said, adding that he expects more closings. "They are letting Kmart and Sears die on the vine."

In a memo to staff obtained by Reuters, Chief Executive Lou D'Ambrosio, who took the job in February, blamed the economy for some of Sears' problems but acknowledged "we also did not execute with the consistency or speed necessary" in areas under Sears' control. "We will do better," he continued.

But Credit Suisse analyst Gary Balter is not so sure. "We do not see how they dig out of these problems," he wrote in a client note.

Same-store sales at Kmart were down 4.4 percent in the eight weeks that ended Christmas Day, and down 6 percent at Sears' U.S. stores. Overall, they were down 5.2 percent compared with the same period a year ago.

The closings follow Sears' announcement last quarter it would shut 10 stores. Kmart and Sears have a combined 2,177 big-box locations.

A list of stores affected will be available at www.searsmedia.com once the retailer decides on the locations.

The declines at Kmart were led by drops in electronics and clothing sales as the low-price chain, founded in 1962, faced stiff competition from a resurgent Wal-Mart which resumed its layaway program this year to make it easier for low income shoppers to make purchases by paying in installments.

Kmart has found itself squeezed between Wal-Mart's low prices and Target's trendier offerings, while Sears has faced more intense competition for electronics and lower prices, and less demand for household appliances.

Sears blamed electronics sales for more than half of the decline in its namesake chain's domestic same-store holiday sales.

Sears' shares finished the day down 27.2 percent at $33.38, their lowest level since December 2008, and have fallen 65 percent since a 52-week high in February.

At the current stock price, Sears Holdings -- home to brands including Craftsman tools and Kenmore appliances -- has a value of $3.57 billion.

The value of Lampert and his hedge fund's stake in the company has plunged nearly 75 percent to $2.25 billion since 2005, when his holdings were worth around $8.5 billion. The stake was worth as much as $12.7 billion in April 2007.

The drop in shares is also a big blow for fund manager Bruce Berkowitz's Fairholme Capital, Sears' second-biggest shareholder with 15.2 percent. Fairholme's stake was worth about $570 million on Tuesday, a potential loss of almost $180 million since the end of the third quarter.

Sears' problems also hit shares of appliance maker Whirlpool Corp, which last year derived 8 percent of sales through the retailer. Whirlpool shares fell 8.9 percent to close at $46.62.

FALLING FURTHER BEHIND

Sears' empire was once so sprawling that it owned everything from a radio station (WLS in Chicago) to Allstate Insurance Co and Coldwell Banker Real Estate Group.

But now the chain, founded in Chicago 125 years ago, acknowledges it has to downsize. Its standard practice in the past would have been to give weak stores time to improve, but the economy is too tough to do that this time, Sears said.

Sozzi, the analyst, went to a Sears in Bayshore, New York, on Monday, one of the busiest days of the retail season, and said it was "deserted." At the northern end of the state, in Plattsburgh, a Sears was similarly quiet.

Wall Street analysts have long faulted Sears for letting its stores become stale, even as rivals ranging from Macy's Inc and J.C. Penney Co Inc to Target Corp and Wal-Mart remodeled and spruced up their stores.

Last fiscal year, Macy's spent $505 million to improve its namesake and Bloomingdale's stores, while Sears spent $441 million despite having more than three times as many stores.

Sears is "effectively asking customers to pay for a poorer shopping environment", Credit Suisse's Balter said.

Balter was also surprised that Sears would borrow money during the holidays, which are typically a peak cash flow period. Sears had $483 million of borrowings outstanding as of December 23, compared with zero a year earlier.

As of October 29, Sears had cash and cash equivalents of $624 million, down from $790 million a year earlier.

Sears Holdings said the lower sales and margin pressure would lead to adjusted fourth-quarter earnings before interest, debt and amortization of less than half of the year-ago quarter's $933 million figure.

The retailer expects to earn $140 million to $170 million by selling off inventory in affected stores and selling or subleasing store space.

Sears also expects to record a noncash charge of $1.6 billion to $1.8 billion in the fourth quarter related to a valuation allowance on certain deferred tax assets.

Troops Leave Iraq

First published by Associated Press

 The last U.S. soldiers rolled out of Iraq across the border into neighboring Kuwait at daybreak in the middle of December, whooping, fist bumping and hugging each other in a burst of joy and relief. Their convoy's exit marked the end of a bitterly divisive war that raged for nearly nine years and left Iraq shattered and struggling to recover.

The war cost nearly 4,500 American and well more than 100,000 Iraqi lives and $800 billion from the U.S. Treasury. The question of whether it was worth it all — or whether the new government the Americans leave behind will remain a steadfast U.S. ally — is yet unanswered.

The 5-hour drive by the last convoy of MRAPS, heavily armored personnel carriers, took place under cover of darkness and under strict secrecy to prevent any final attacks on the withdrawing troops. The 500 soldiers didn't even tell their Iraqi partners they were leaving before they slipped out of the last American base and started down the barren desert highway to the Kuwaiti border before dawn Sunday.

The atmosphere was subdued inside one of the vehicles as it streamed down the highway, with little visible in the blackness outside through the MRAP's small windows. Along the road, a small group of Iraqi soldiers waved to the departing American troops.

But after crossing the berm at the Kuwaiti border, lit with floodlights and ringed with barbed wire, the troops from the 3rd brigade of the Army's 1st Cavalry Division were elated. They cheered, pumped fists in the air and gave each other chest bumps and bear hugs. "We're on top of the world!" shouted one soldier from the turret of his vehicle.  Soldiers were looking forward to seeing their families and not using Satellite Phone Iraq anymore.

The quiet withdrawal was a stark contrast to the high-octane start of the war, which began before dawn on March 20, 2003, with an airstrike in southern Baghdad where Saddam Hussein was believed to be hiding, the opening shot in the famed "shock and awe" bombardment. U.S. and allied ground forces then stormed from Kuwait across the featureless deserts of southern Iraq toward the capital.

Saddam and his regime fell within weeks, and the dictator was captured by the end of the year — to be executed by Iraq's new Shiite rulers in 2006. But Saddam's end only opened the door to years more of conflict as Iraq was plunged into a vicious sectarian war between its Shiite and Sunni communities. The near civil war devastated the country, and its legacy includes thousands of widows and orphans, a people deeply divided along sectarian lines and infrastructure that remains largely in ruins.

In the past two years, violence has dropped dramatically, and Iraqi security forces that U.S. troops struggled for years to train have improved. But the sectarian wounds remain unhealed. Even as U.S. troops were leaving, the main Sunni-backed political bloc announced Sunday it was suspending its participation in parliament to protest the monopoly on government posts by Shiite allies of the Prime Minister.

In the final days, U.S. officials acknowledged the cost in blood and dollars was high, but tried to paint a picture of victory — for both the troops and the Iraqi people now freed of a dictator and on a path to democracy. But gnawing questions remain: Will Iraqis be able to forge their new government amid the still stubborn sectarian clashes? And will Iraq be able to defend itself and remain independent in a region fraught with turmoil and still steeped in insurgent threats?

Some Iraqis celebrated the exit of what they called American occupiers, neither invited nor welcome in a proud country. Others said that while grateful for U.S. help ousting Saddam, the war went on too long. A majority of Americans would agree, according to opinion polls broadcast on Internet Iraq websites.

Iraq's military chiefs believe that troops were up to the task of uprooting militant groups. Sunni militants continue to carry out bombing and shooting against police, soldiers and civilians, and Shiite militias continue to operate.

The U.S. convoys were the last of a massive operation pulling out American forces that has lasted for months to meet the end-of-the-year deadline agreed with the Iraqis during the previous presidential administration.

In the middle of the week, there were two U.S. bases and less than 4,000 U.S. troops in Iraq — a dramatic drop from the roughly 500 military installations and as many as 170,000 troops during the surge in 2007, when violence was at its worst. As of the last night, that was down to one base — Camp Adder — and the final 500 soldiers.

On the last evening at Camp Adder, near Nasiriyah, about 200 miles southeast of Baghdad, the vehicles lined up in an open field to prepare and soldiers went through last-minute equipment checks to make sure radios, weapons and other gear were working.

Early the last morning, the brigade's remaining interpreters made their routine calls to the local tribal sheiks and government leaders that the troops deal with, so that they would assume that it was just a normal day.

The Iraqi soldiers were to wake up in the morning without any knowledge of move.

In a guard tower overlooking a now empty checkpoint at the base soldiers talked about what they looked forward to most in getting home. They planned to go for Mexican food at a restaurant in Killeen, Texas. Another joy of home, she said: you don't have to bring your weapon when you go to the bathroom or go on the Internet in Iraq.

At its height, Camp Adder boasted a Taco Bell, a KFC, an Italian restaurant and two Green Beans coffee shops. On the last night, it felt empty, with abandoned volleyball and basketball courts and a gym called "House of Pain." Hundreds of vehicles — trucks, buses — waited in a lot to be handed over to the Iraqi military, which is taking over the site. With the Americans gone, the base reverts to its former name, Imam Ali Air Base.

Despite the President’s earlier contention that all American troops would be home for Christmas, at least 4,000 forces will remain in Kuwait for some months. The troops could also be used as a quick reaction force if needed.

The U.S. plans to keep a robust diplomatic presence in Iraq, hoping to foster a lasting relationship with the nation and maintain a strong military force in the region. The President met in Washington with the Iraqi Prime Minister last week, vowing to remain committed to Iraq as the two countries struggle to define their new relationship.

U.S. officials were unable to reach an agreement with the Iraqis on legal issues and troop immunity that would have allowed a small training and counterterrorism force to remain. U.S. defense officials said they expect there will be no movement on that issue until sometime next year.

Bankruptcy for Kodak

First appeared in Wall Street Journal

Eastman Kodak Co. is preparing to seek bankruptcy protection in the coming weeks, people familiar with the matter said, and a move that would cap a stunning comedown for a company that once ranked among America's corporate titans.

The 131-year-old company is still making last-ditch efforts to sell off some of its patent portfolio and could avoid Chapter 11 if it succeeds, one of the people said. But the company has started making preparations for a filing in case those efforts fail, including talking to banks about some $1 billion in financing to keep it afloat during bankruptcy proceedings, the people said.

A Kodak spokesman said the company "does not comment on market rumor or speculation."

A filing could come as soon as this month or early February, one of the people familiar with the matter said. Kodak would continue to pay its bills and operate normally while under bankruptcy protection, the people said. But the company's focus would then be the sale of some 1,100 patents through a court-supervised auction, the people said.

That Kodak is even contemplating a bankruptcy filing represents a final reversal of fortune for a company that once dominated its industry, drawing engineering talent from around the country to its Rochester, N.Y., headquarters and plowing money into research that produced thousands of breakthroughs in imaging and other technologies.

The company, for instance, invented the digital camera—in 1975—but never managed to capitalize on the new technology.

Casting about for alternatives to its lucrative but shrinking film business, Kodak toyed with chemicals, bathroom cleaners and medical-testing devices in the 1980s and 1990s, before deciding to focus on consumer and commercial printers in the past half-decade under Chief Executive Antonio Perez.

None of the new pursuits generated the cash needed to fund the change in course and cover the company's big obligations to its retirees. A Chapter 11 filing could help Kodak shed some of those obligations, but the viability of the company's printer strategy has yet to be demonstrated, raising questions about the fate of the company's 19,000 employees.

Such uncertainty was once unthinkable at Kodak, whose near-monopoly on film produced high margins that the company shared with its workers. On "wage dividend days," a tradition started by Kodak founder George Eastman, the company would pay out bonuses to all workers based on its results, and employees would use the checks to buy cars and celebrate at fancy restaurants.

Former employees say the company was the Apple Inc. or Google Inc. of its time. Robert Shanebrook, 64 years old, who started at the company in 1967 and was most recently world-wide product manager for professional photographic film, recalls young talent traipsing through Kodak's sprawling corporate campus. At lunch, they would crowd the auditorium to watch a daily movie at an on-site theater. Other employees would play basketball on the company courts.

"We had this self-imposed opinion of ourselves that we could do anything, that we were undefeatable," Mr. Shanebrook said.

Kodak's troubles date back to the 1980s, when the company struggled with foreign competitors that stole its market share in film. The company later had to cope with the rise of digital photography and smartphones.

It wasn't until 10 years ago that the mood began to sour, said Mr. Shanebrook. By 2003, Kodak announced it would stop making investments in film. "I didn't want to stick around for the demise," he said.

Kodak shares closed Wednesday at 47 cents, down 28% after The Wall Street Journal reported the company was preparing a Chapter 11 filing.

Kodak has lost money each year but one since Mr. Perez, who previously headed the printer business at Hewlett-Packard Co., took over in 2005. The company's problems came to a head in 2011, as Mr. Perez's strategy of using patent lawsuits and licensing deals to raise cash ran dry.

Hoping to plug the hole, Kodak put some of its digital patents up for sale in August. Efforts to sell the portfolio have been slowed by bidders' concerns that Kodak might seek bankruptcy protection. The company has talked to hedge funds about borrowing hundreds of millions of dollars to bridge its finances until the patents sell, but the talks have faltered, people familiar with the matter said.

The first sign of acute cash pressure came in late September, when Kodak drew $160 million from its credit line at a time when it had told investors it would be building cash. The move sent Kodak's stock tumbling and raised fresh concerns about the company's viability.

Soon after, Kodak hired restructuring lawyers and advisers to help shore up its finances.

The company and its board have weighed a potential bankruptcy filing for months. Advisers told Kodak a filing would make its patent sale easier and likely allow the company to command a higher price, people familiar with the matter have said. The obligation to cover pension and health-care costs for retirees could also be purged through bankruptcy proceedings, the people said.

Those obligations—which run to hundreds of millions of dollars a year—as well as the unprofitable state of Kodak's new businesses, have made the company undesirable as a takeover target, people familiar with the matter said.

During a two-day meeting of the company's board, management and advisers in mid-December, executives were briefed on how Kodak would fund itself during bankruptcy proceedings should efforts to sell its patents fall short, a person familiar with the matter said.

Kodak is in discussions with large banks including J.P. Morgan Chase & Co., Citigroup Inc. and Wells Fargo & Co. for so-called debtor-in-possession financing to keep the company operating in bankruptcy court, people familiar with the matter said.

Kodak has also held discussions with bondholders and a group led by investment firm Cerberus Capital Management LP about a bankruptcy financing package, the people said.

Should it seek bankruptcy protection, Kodak would follow other well-known companies that have failed to adapt to rapidly changing business models. They included Polaroid Corp., which filed for bankruptcy protection a second time in December 2008; Borders Group Inc., which liquidated itself last year; and Blockbuster Inc., which filed for bankruptcy protection in 2010 and was later bought by Dish Network Corp. A bankruptcy filing would kick off what is expected to be a busier year in restructuring circles, as economic growth continues to drag and fears about European sovereign debt woes threaten to make credit markets less inviting for companies that need to refinance their debts.

Mr. Perez decided to base the company's future on consumer and commercial inkjet printing. But the saturated market has proved tough to penetrate, and Kodak is paying heavily to subsidize sales as it builds a base of users for its ink.

The company remains a bit player in a printer market dominated by giants like H-P. Kodak ranks fifth world-wide, according to technology data firm IDC, with a market share of 2.6% in the first nine months of 2011.

As the company works on a restructuring plan, a key issue for creditors is whether the printer operations are worth supporting, or whether the bulk of the company's value is in its patents.

Nortel Networks Corp., a company that also had fallen behind the technology curve, opted to liquidate itself in bankruptcy court rather than reorganize, raising a greater than expected $4.5 billion for its patent trove.

Kodak's founder, Mr. Eastman, took his life at the age of 77 in what is now a museum celebrating the founder and Kodak's impact on photography. His suicide note read: "To my friends, my work is done. Why wait?"

Are Asian's Discriminated Against When Appling To College?

Story first appeared in The Detroit News.


Lanya Olmstead was born in Florida to a mother who emigrated from Taiwan and an American father of Norwegian ancestry. Ethnically, she considers herself half Taiwanese and half Norwegian. But when applying to Harvard, Olmstead checked only one box for her race: white.


For years, many Asian-Americans have been convinced that it's harder for them to gain admission to the nation's top colleges.

Studies show that Asian-Americans meet these colleges' admissions standards far out of proportion to their 6 percent representation in the U.S. population and that they often need test scores hundreds of points higher than applicants from other ethnic groups to have an equal chance of admission. Critics say these numbers, along with the fact that some top colleges with race-blind admissions have double the Asian percentage of Ivy League schools, prove the existence of discrimination.

The way it works, the critics believe, is that Asian-Americans are evaluated not as individuals, but against the thousands of other ultra-achieving Asians who are stereotyped as boring academic robots.

Now, an unknown number of students are responding to this concern by declining to identify themselves as Asian on their applications.

For those with only one Asian parent, whose names don't give away their heritage, that decision can be relatively easy. Harder are the questions that it raises: What's behind the admissions difficulties? What, exactly, is an Asian-American — and is being one a choice?

Olmstead is a freshman at Harvard and a member of HAPA, the Half-Asian People's Association. In high school she had a perfect 4.0 grade-point average and scored 2150 out of a possible 2400 on the SAT, which she calls pretty low.

College applications ask for parent information, so Olmstead knows that admissions officers could figure out a student's background that way. She did write in the word multiracial on her own application.

Still, she would advise students with one Asian parent to check whatever race is not Asian.

Not to really generalize, but a lot of Asians, they have perfect SATs, perfect GPAs ... so it's hard to let them all in.

Amalia Halikias is a Yale freshman whose mother was born in America to Chinese immigrants; her father is a Greek immigrant. She also checked only the "white" box on her application.

As someone who was applying with relatively strong scores, she didn't want to be grouped into that stereotype. She didn't want to be written off as one of the 1.4 billion Asians that were applying.

Her mother was extremely encouraging of that decision even though she places a high value on preserving their Chinese heritage.


But leaving the Asian box blank felt wrong to Jodi Balfe, a Harvard freshman who was born in South Korea and came here at age 3 with her Korean mother and white American father. She checked the box against the advice of her high school guidance counselor, teachers and friends.


Other students, however, feel no conflict between a strong Asian identity and their response to what they believe is injustice.


Immigration from Asian countries was heavily restricted until laws were changed in 1965. When the gates finally opened, many Asian arrivals were well-educated, endured hardships to secure more opportunities for their families, and were determined to seize the American dream through effort and education.

These immigrants, and their descendants, often demanded that children work as hard as humanly possible to achieve. Parental respect is paramount in Asian culture, so many children have obeyed — and excelled.


Of course, not all Asian-Americans fit this stereotype. They are not always obedient hard workers who get top marks. Some embrace American rather than Asian culture. Their economic status, ancestral countries and customs vary, and their forebears may have been rich or poor.

But compared with American society in general, Asian-Americans have developed a much stronger emphasis on intense academic preparation as a path to a handful of the very best schools.


Does Holmes think children of American parents are generally spoiled and lazy by comparison?

Asian students have higher average SAT scores than any other group, including whites. A study by Princeton sociologist Thomas Espenshade examined applicants to top colleges from 1997, when the maximum SAT score was 1600 (today it's 2400). Espenshade found that Asian-Americans needed a 1550 SAT to have an equal chance of getting into an elite college as white students with a 1410 or black students with an 1100.

Top schools that don't ask about race in admissions process have very high percentages of Asian students. The California Institute of Technology, a private school that chooses not to consider race, is about one-third Asian. (Thirteen percent of California residents have Asian heritage.) The University of California-Berkeley, which is forbidden by state law to consider race in admissions, is more than 40 percent Asian — up from about 20 percent before the law was passed.

Steven Hsu, a physics professor at the University of Oregon and a vocal critic of current admissions policies, says there is a clear statistical case that discrimination exists.


Yale, Harvard, Princeton and the University of Pennsylvania declined to make admissions officers available for interviews for this story.

Kara Miller helped read applications for the Yale admissions office when she was an undergraduate there, and participated in meetings where admissions decisions were made. She says it often felt like Asians were held to a higher standard.


Highly selective colleges do use much more than SAT scores and grades to evaluate applicants. Other important factors include extracurricular activities, community service, leadership, maturity, engagement in learning, and overcoming adversity.

Admissions preferences are sometimes given to the children of alumni, the wealthy and celebrities, which is an overwhelmingly white group. Recruited athletes get breaks. Since the top colleges say diversity is crucial to a world-class education, African-Americans, Latinos, Native Americans, and Hawaiian/Pacific Islanders also may get in despite lower scores than other applicants.

A college like Yale could fill their entire freshman class twice over with qualified Asian students or white students or valedictorians,says Rosita Fernandez-Rojo, a former college admissions officer who is now director of college counseling at Rye Country Day School outside of New York City.

But applicants are not ranked by results of a qualifications test, she says — "it's a selection process."


In the end, elite colleges often don't have room for Asian students with outstanding scores and grades.

That's one reason why Harvard freshman Heather Pickerell, born in Hong Kong to a Taiwanese mother and American father, refused to check any race box on her application.


She considers drawing lines between different ethnic groups a form of racism — and says her ethnic identity depends on where she is.


Holmes, the Yale sophomore with the Chinese-born mother, also has problems fitting herself into the Asian box.

"I feel like an American," she says, "... an Asian person who grew up in America."

Susanna Koetter, a Yale junior with an American father and Korean mother, was adamant about identifying her Asian side on her application. Yet she calls herself "not fully Asian-American. I'm mixed Asian-American. When I go to Korea, I'm like, blatantly white."

And yet, asked whether she would have considered leaving the Asian box blank, she says: That would be messed up. I'm not white.


She didn't check the box, even though her last name is a giveaway and her essay was about Asian-American identity.

Looking back I don't agree with what I did, Zhuang says. It was more like a symbolic action for her to rebel against the higher standard placed on Asian-American applicants.


Hsu, the physics professor, says that if the current admissions policies continue, it will become more common for Asian students to avoid identifying themselves as such, and schools will have to react.


The lines are already blurred at Yale, where almost 26,000 students applied for the current freshman class, according to the school's web site.

About 1,300 students were admitted. Twenty percent of them marked the Asian-American box on their applications; 15 percent of freshmen marked two or more ethnicities.

Ten percent of Yale's freshmen class did not check a single box.

Google Receives AdMeld Acquisition Approval

Story first appeared in USA TODAY.

The Justice Department approved Google's acquisition of online advertising service Admeld after concluding the deal wouldn't diminish competition in one of the Internet's most lucrative marketing niches.

The decision announced Friday clears the way for Google (GOOG) to take control of Admeld six months after the companies agreed to the deal. Google said it plans to take control of Admeld within the next few days, although the two companies' products will remain separate for a while longer.

It's the fourth time since 2007 that that the U.S. government has taken a close look at a Google acquisition to determine if it would stifle competition or drive up prices. Google has gained regulatory approval in each instance. In 2008, though, Google backed out of a proposed partnership with Yahoo (YHOO) to avoid a legal battle with the Justice Department.

The Justice Department is still reviewing Google's proposed takeover of cell phone maker Motorola Mobility Holdings (MMI). That $12.5 billion deal is the biggest in Google's 13-year history.

The Federal Trade Commission is in the midst of a broader inquiry into whether Google has been abusing its dominance of Internet search to make it harder for people to find rival services and apply pressure on advertisers to pay higher prices. Google has consistently predicted that investigation will be resolved in its favor.

Google hasn't disclosed how much it is paying for Admeld, a New York company that works with websites to help them figure out how to make the most money from the amount of space they have available for display ads. It's a steadily growing field of advertising that emphasizes photos, video and illustrations instead of Google's specialty of distributing text-based commercial links alongside search results.

The Justice Department said that privately held Admeld, formed in 2007, raised about $30 million in 2010 to help fund its operations.

Google generated revenue of about $29 billion last year and analysts expect it to surpass $38 billion in revenue this year. Most of Google's revenue still comes from search advertising.

In an attempt to diversify beyond search advertising, Google bought DoubleClick for $3.2 billion in 2008. That deal is turning display advertising into a major moneymaker for Google, but the company's market share in the segment still lags behind Facebook and Yahoo, according to the research firm eMarketer Inc.

That apparently helped sway the Justice Department to approve the Admeld deal.

UAW Continues Negotiations

Story first appeared in the Detroit Free Press.

The UAW is continuing to negotiate with a General Motors supplier owned by the Ambassador Bridge's Moroun family, but union leaders are considering whether to protest or even strike the supplier's operations inside GM's Orion Township plant.

The union had planned to protest LINC Logistics on Wednesday morning, but called off those plans ahead of a renewed effort to make progress in contract negotiations. Talks continued into the evening Wednesday, said Pat Sweeney, president of Orion's UAW Local 5960. This would be the LINC employees' first union contract, Sweeney said.

The outcome will determine whether the UAW takes any action. A strike could disrupt production of the Chevrolet Sonic subcompact or the Buick Verano compact, which are built at the GM plant. LINC's employees, who work inside the GM factory, voted unanimously in June to strike if UAW leaders call for a walkout.


Negotiations have dragged on for months between the UAW and LINC, which organizes and distributes parts at automakers' plants. LINC workers currently make less than $10 an hour.

The Orion Township factory restarted production this year after getting a reprieve from GM's plan to close it as part of its 2009 bankruptcy. GM now employs about 1,600 hourly workers in Orion -- about 60% at the $28-an-hour first-tier wage and the rest at about $16 an hour. A couple of suppliers also have employees working inside the GM factory, in part thanks to space freed up by the plant's redesigned body shop.


Separately, the Orion Township factory had a small fire around 8 a.m. Wednesday in its body shop. GM called the fire department as a precautionary measure and evacuated the body shop, but restarted production by 9 a.m. The fire did not impact production and no one was injured.

Deception Charges for FB

Story first appeared in USA TODAY.

Facebook on Tuesday agreed to a Federal Trade Commission order that bars Facebook from deceiving consumers about its privacy practices and requires it to submit to monitoring for 20 years.

The sanction stems from privacy setting changes that Facebook made in December 2009, without asking users' permission. The company told users they could keep their information on Facebook private, when, in fact, it repeatedly allowed information to be shared and made public.

Facebook CEO Mark Zuckerberg insisted in a blog posting that the company has a good history of providing transparency and control over who can see your information, but acknowledged that they've made a bunch of mistakes.

The FTC's sanction comes as Facebook readies itself for a high-profile initial public offering of stock, expected next spring. Meanwhile, the company has come under rising criticism in the U.S. and Europe for using Like buttons embedded on millions of websites to monitor Web surfing.

Facebook compiles tracking logs of the webpages viewed by each of its 800 million members, and millions more non-members, the company disclosed in exclusive USA TODAY interviews.

New federal laws are needed to help consumers protect their personal information from companies surreptitiously collecting and using that personal information for profit, says Sen. Jay Rockefeller, D-W.V., sponsor of a Do Not Track law that would restrict online tracking.

Rockefeller commended the FTC's action. Consumer privacy is a right, not a luxury, he says. This action against Facebook is just the first step toward protecting consumer privacy.

Facebook improperly disclosed information to advertisers and continued to display photos and videos even after the accounts were deactivated, according to the FTC.

The consent order, which must be approved by a judge, requires Facebook to:

•Obtain express consent before overriding users' privacy preferences.

•Cut off access to a user's material within 30 days after deletion of an account.

•Establish a comprehensive privacy program covering new and existing products and services.

•Submit to privacy program audits within 180 days and every two years after that for the next 20 years. Monitoring would be handled by an independent professional yet to be named.

Even after the consent order takes effect, Facebook users may not notice anything different.

It's not clear how the FTC's order could affect Facebook's plans for new services, including Timeline, which digitally maps everything a user has ever done on the popular social network, and "Open Graph" applications designed to broadcast user's surfing patterns and interests widely across the social network.

Chris Conley, a tech and civil liberties attorney at the ACLU'S Northern California chapter, notes that Facebook's privacy settings make no reference to Like button tracking.

There's no setting for (the) user to control that, says Conley. It's questionable if something that doesn't have a privacy setting today is covered by the FTC's order.

The FTC stopped short of ordering Facebook to restore the more rigorous privacy settings it had prior to December 2009, noted Marc Rotenberg of Electronic Privacy Information Center.

EPIC and nine other non-profit groups filed the complaint that triggered the FTC probe. If it was unfair to change the privacy settings, then the right response would be to change the settings back.

The order is expected to give technologists and privacy advocates a new, more effective tool to monitor Facebook's privacy practices, says Jeff Chester, executive director of the non-profit Center for Digital Democracy.

Federal lawmakers focusing on privacy issues will also be closely monitoring the aftermath of the FTC's order, says Rep. Mary Bono Mack, R-Calif.