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Job fair gives vets hope

September 28, 2012
East Liverpool (OH) Review
STEPHEN HUBA

(Reuters) - Treasury Secretary Timothy Geithner called on Thursday for the new U.S. financial risk council to consider reforms for money market funds, despite stiff opposition from the $2.6 trillion industry and from some securities regulators.

In a letter released by the Treasury Department, Geithner said the Financial Stability Oversight Council should formally ask the Securities and Exchange Commission to move forward with new rules in a bid to get the divided SEC to act.

He also said the council and its member regulators should consider exercising other powers to regulate the money market fund industry more tightly, including naming some firms as "systemic" and imposing capital surcharges on banks that sponsor money funds.

"Without further reform of money market funds, our financial system will remain vulnerable to runs and instability, which are harmful for retail and institutional investors," Geithner wrote.

"With the failure of the SEC to act, the Council should now move forward with the tools provided by Congress."

Geithner's letter came about a month after Mary Schapiro, the head of the SEC, announced that she had failed to win enough support at her agency to advance reforms.

Schapiro had circulated a draft proposal on fund reforms that included requiring the funds to build up capital buffers and impose limits on redemptions to reduce the risk of runs on funds.

It also included a plan to move away from funds' policy of maintaining a stable $1 per share net asset value.

But three of the SEC's commissioners - Democrat Luis Aguilar and Republicans Troy Paredes and Dan Gallagher - said they could not support her proposals.

They have expressed skepticism about the need to adopt additional money market reforms beyond the ones enacted in 2010.

Aguilar declined to comment on Geithner's letter, while Paredes and Gallagher did not immediately respond to a request for comment.

Beyond disagreements at the SEC, the fund industry and corporate treasurers have also come out in full force to oppose Schapiro's proposals.

One fear among fund executives is that the proposals would drive investors out of money funds and into bank accounts.

Fidelity Investments, for instance, has warned regulators that more than half of its money-fund clients would move a portion of their assets if a floating net asset value rule prevailed.

The Chamber of Commerce has also weighed in, saying it could harm businesses that rely on the funds for short-term funding. Earlier this year, the Chamber launched an ad campaign at the metro stop near the SEC's main offices used by many SEC staffers on their commutes.

On Thursday, the Chamber raised concerns about Geithner's intentions to have FSOC get involved.

"The SEC, which is best suited to address this issue, should go back to the drawing board and, only after careful analysis, consider alternatives that will strengthen rather than destroy money market funds that serve the needs of millions of investors and companies," said Alice Joe, the executive director of the Chamber's Center for Capital Markets Competitiveness.

"The broad coalition of businesses, cities, states and others that opposed Chairman Schapiro's harmful reforms will no doubt oppose the same reforms pushed by the Treasury secretary," she added.

The Investment Company Institute President Paul Schott Stevens said the reform proposals Geithner presented to the financial risk council already had drawn strong opposition "for their adverse impacts on investors, issuers and the economy."

"Opponents include hundreds of organizations across the nation as well as members of Congress from both parties," Stevens said in a statement emailed to Reuters. He said the ICI, the national association of U.S. investment companies, hoped regulators would take "an objective fact-based view" of the issues involved.

Confidence in the money fund industry was shaken in 2008 when the Reserve Primary Fund, one of the oldest and biggest money funds, "broke the buck," meaning its per-share value fell below $1. That happened because of the fund's heavy losses on debt holdings in investment bank Lehman Brothers, which had collapsed a few days earlier.

The SEC enacted money market reforms in 2010 that tightened credit quality standards, shortened weighted average maturities and imposed a liquidity requirement on money market funds.

But Schapiro is not convinced those rules go far enough.

Last week, Schapiro penned a column in the Wall Street Journal calling on the FSOC to take action, saying money market funds remain vulnerable to runs.

The FSOC is slated to meet in a closed-door session on Friday, where the topic of money market funds may come up.

Geithner's decision to get FSOC involved in money market funds will ratchet up the pressure on SEC commissioners to come to a consensus.

Created by the Dodd-Frank Wall Street reform law in 2010, the FSOC is a panel comprised of the top U.S. banking and financial market regulators.CHESTER - Former Marine Corps truck driver Mike Smith came to the "Hiring Our Heroes" job fair on Thursday feeling discouraged. He's been out of work for a year.

Army Spc. Jesse Allison came feeling like he's starting over. "Being a single dad, it's hard," he said.

The two men were among about 30 military veterans who attended the "Hiring Our Heroes" job fair at Chester American Legion Post 121 on Thursday. Both said they came away with useful information but no solid job prospects.

Emily Clark Munoz, of the U.S. Chamber of Commerce, greets two local job-seekers Thursday at the “Hiring Our Heroes” job fair at Chester American Legion Post 121. The fair, one of many being held around the country, gave military veterans seeking employment a chance to meet with local companies. (Photo by Stephen Huba)

"It just seems like sometimes (employers) back away" from hiring veterans, Allison said. That's especially true of veterans who have been deployed overseas, in Iraq or Afghanistan, he said.

Allison, 43, of East Liverpool, finished his tour of duty in Baghdad in 2010. He currently works part time as a Black Hawk helicopter mechanic for the Army National Guard in Wheeling. For 16 years, he drove a tractor-trailer for a living.

"If I get back into driving, it would have to be something local because of my kids," Allison said.

Smith, 38, of Newell, lost his job at the Horsehead Corp. plant in Monaca, Pa., in September 2011. He figures he's filled out more than 100 employment applications since then, landing only one interview.

Smith served with the Marine Corps from 1993 to 1998, but, when it comes to looking for work, he doesn't see much of an advantage in his veteran status. "As far as skills sets are concerned, the person with more experience is going to get the job," he said.

Smith has been a truck driver, a construction worker and a heavy equipment operator. Although he's collecting unemployment from Pennsylvania, he learned about the Chester job fair through WorkForce West Virginia.

"Hiring Our Heroes" is an initiative of the U.S. Chamber of Commerce launched in 2011 to help veterans find work. Since then, "Hiring Our Heroes" has hosted more than 200 job fairs resulting in about 10,000 veterans and spouses getting jobs, according to the U.S. Chamber Web site.

Most job fair participants are veterans under the age of 25 - men and women - who served in the enlisted ranks and have had a hard time finding work since leaving the military. Emily Clark Munoz, of the U.S. Chamber's Eastern Region, said the unemployment rate among veterans is 11 percent.

"It's even higher among Iraq and Afghanistan veterans," Munoz said. "We feel that people who took time off to serve their country - that we owe it to them to give them a meaningful career when they leave the service."

The national unemployment rate for August was 8.1 percent, according to the Bureau of Labor Statistics. In the tri-state area, the August unemployment was 7.2 percent for Ohio, 7.5 percent for West Virginia and 8.1 percent for Pennsylvania.

Munoz said the "Hiring Our Heroes" job fairs are not just for veterans - they're for companies that want to take advantage of a "flexible and dynamic" workforce.

 

Veterans, she said, have the qualities that employers are looking for. "Almost all of them can think under pressure. They're problem-solvers, and they can work as part of a team. They're punctual, they're reliable and they're dependable."

Munoz said she was pleased with the turnout at Thursday's fair. "I feel like we had a lot of quality matches. Employees got a lot of face time with potential employers," she said.

Among those at the Chester fair were Chesapeake Energy, CONSOL Energy Inc., U.S. Bank, Mountaineer Casino, Racetrack & Resort, and Lowe's. The Chester fair was billed as having an energy sector focus.

Dressed in his fatigues, Allison said he was encouraged by the "friendly environment" of the job fair and hopes that one of the companies will give him a second look. Smith said he also found it helpful.

"I think it's a really good thing. It helps the veterans get out there to see what's out there for them," Smith said. "I got ideas of what (employers) are looking for and things I need to adjust on their Web sites."

The council has the authority to dub non-bank financial firms such as money market funds "systemically important," a designation that subjects them to greater regulatory oversight.

The panel can also use its powers to pressure regulators to act, in a Dodd-Frank measure colloquially known as the "name and shame" provision.

That provision allows the FSOC to make formal recommendations to regulators. The SEC would then need either to adopt the FSOC's proposed rules or formally reject them in writing within 90 days.

In his letter, Geithner urged the council to consider both of these options.

He said he has already asked his staff to begin drafting a list of formal recommendations for the SEC to consider. He said he wants the council to consider the recommendations at its November meeting.

Some of those reforms, he said, could include Schapiro's proposals to require funds to set aside more capital and restrict customer withdrawals at times of stress.

He also, however, said the council is willing to entertain an alternative approach of imposing capital standards coupled with liquidity fees or temporary "gates" on redemptions.

Both Republican SEC commissioners last month said they were open to exploring rules that would allow fund boards to impose "gates" on redemptions.

In a statement, SEC spokesman John Nester said that Schapiro is "pleased that this important reform initiative is moving forward."

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