Starting Points: Corporations

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Dec 20, 2009

Web users unite: Let's tell sites to pay up

By Kevin Kelleher
Sunday, December 20, 2009; G04

Wake up, Web users. It's time you demanded your fair share for the vast wealth you are helping to build for the Internet's most popular sites. Yahoo, despite its recent troubles, has $4 billion in cash. Google has $22 billion that it won't even share with investors, let alone you. Facebook may one day amass even more cash than either of them. They could never have made a profit without the data they collect about you. So where's your share?

Face it: To these companies, you are not even a human being. You are a "user" -- one of the ugliest, most dehumanizing scraps of jargon to gain currency in the Internet era. It connotes the consumption or manipulation of something valuable, perhaps even in an addictive way. But our "using" the Web is only half of the story -- maybe less than half. You, dear user, may use the Web, but at the end of the day, it is you who is really being used. You have become someone's instrument for profit. And the worst part is, you're not even getting paid.

Of course, everyone knows his or her behavior is tracked online. Some people go to great lengths to protect their privacy, but the rest of us just tolerate the snooping. And most Web sites are upfront about this practice, in a manner of speaking: They disclose it in foggy legal language tucked away in dense "terms of services" or EULAs (that is, end user licensing agreements -- there's that word again!). What they won't tell you is this: Exactly what data have they collected on you? What does it say about you? How much are the data worth?

The short answer: an awful lot.

To get a taste of what is collected, try this. If you haven't cleared your browser history for a while, open it up. Inside its search bar, type in the name of your preferred search engine ("Google search," "Yahoo search," or "Bing" should work.) I did this with Google, and the search terms that had accreted were surprisingly detailed. Keep in mind that it's the richness of this data that drives Google's profits, targeting ads with a precision few companies can match. As chief executive Eric Schmidt said recently, "Advertisers are willing to shell out a lot of money for this targeting."

Or just listen to Web executives when they gather at industry conferences. That's where they open up. Here is a Yahoo vice president gushing to investors last month about "the most exciting" thing that his site's users do:

"They leave a data footprint. They tell me what they are interested in. They tell me what kinds of things they are searching on. They tell me what kinds of articles they are reading. They tell me whether a user is interested in preparing for the tax season for next year. They tell me whether the user is going to be interested in a particular geography from a travel perspective. . . . All this wonderful data footprint, which has such high value."

Again, we all know in theory that our every comment and gestures are tracked online for the benefit of advertisers -- or we should. But think about how far it's gone. Imagine you were having a dinner party and some stranger walked in and wrote down every comment, recording each movement from you and your guests, then sold it. No one would put up with it in the real world. But that's exactly what Facebook is doing online.

It's not so much the intrusion on privacy -- a quaint concept in this age of do-it-yourself publishing, YouTube-spawned fame and reality-TV whoredom. The violation is more of an economic one. Publish a blog or set up a channel on YouTube, and Google will pay you ad revenue, after taking its own cut. They brag privately about how valuable our data are, but they won't share a cent of the riches they bring.

Web companies will argue that collecting personal data helps them afford to offer their services for free. This is true as far as it goes, which isn't very far. The biggest reason Web sites will never charge for search or social networks is that we'll all go somewhere else. What percentage of tweets, say, or YouTube videos would you actually pay to watch?

Usually when personal data are shared among companies, they're in an aggregate form, illuminating group behaviors and trends. In theory, this should return some benefits to the crowd in the same way collective votes in a democracy help shape policy. Instead, we just get a bunch of ads. The profits go to the executives and investors in the company or pile up in corporate coffers.

So: What if we all e-mailed these companies collecting our data with our own version a "terms of service" that read like this? "By collecting, storing, selling, trading, reselling or exploiting for any commercial purposes any information about me, your site agrees to pay me a licensing fee of $100 per month."

The first few times it happens, the companies will laugh. If it happens often enough, they will be annoyed. And then, maybe we will be heard as more than data.

Kevin Kelleher is a writer living in the San Francisco Bay Area.

Dec 17, 2009

Tiger Falls from Grace

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Tiger Woods's self-imposed exile from golf is the most stunning--and stunningly rapid--fall from grace in the history of sports. Not since Shoeless Joe Jackson was banned from baseball after being dubiously blamed for helping throw the 1919 World Series have we seen such a supersonic transition from heroism to heel. And not since Michael Jordan retired from basketball in 1993, following the murder of his father, has a world-class athlete voluntarily taken himself out of his sport in his prime. Woods's exile may last three months or it may last three years. But one thing is certain: unlike the twenty-four-hour wall-to-wall sleaze that's dominated the airwaves since the initial revelations of Woods's infidelity, this is actual news. After fourteen years of being protected by the press, the Tiger has become carrion. And now, the greatest golfer in history is walking away.

The jury is out on whether Tiger's retreat makes him more sympathetic. But years from now when we look back at this saga, I hope we remember that Mr. Woods didn't choose to leave golf until his sponsors left him. Woods announced his departure on December 11. He hadn't been on a prime time commercial since November 29, three days after the accident, according to the Nielson Company.

The "global consulting company" Accenture dropped him from the homepage of their website. AT&T told him not to call. Gillette said that they could find others to shave for the camera. Every part of Tiger Woods Inc. sized up his moment of desperate need and, instead of offering solidarity and support, ran for cover.

Only a couple of companies decided to stand by Woods. "Tiger has been part of Nike for more than a decade," the company said in a statement. "He is the best golfer in the world and one of the greatest athletes of his era. We look forward to his return to golf. He and his family have Nike's full support." This is hardly surprising. Tiger has made Nike untold treasure--while resisting pressure to say word one about the abhorrent labor practices that define the company's profit margins.

And Mohammad Juma Bu Amin, the chief executive officer of Golf in Dubai said in a direct statement to Tiger: "We are with you in this difficult time and respect your request for family privacy. As and when you decide to return to the circuit, you can always count on us.... We will be more than delighted to welcome you to Dubai. Consider Dubai your second home."

So here is Tiger Woods in 2010: no tour, a busted marriage, and alone with nothing but his sweatshops to keep him warm.

This is what we call chickens roosting. The least attractive part of Woods's persona--including all recent peccadilloes--is his complete absence of conscience when it comes to peddling his billion-dollar brand. As we have been writing for years here at The Nation, Tiger's partnership with the habitual toxic waste dumpers Chevron and the financial criminals in Dubai deserves far more scrutiny from the sports press than it's received (none).

Then there was the Philippines. As detailed in the documentary The Golf War, the Filipino government, in conjunction with the military and developers, attempted in the late nineties to remove thousands of peasants from their land, known as Hacienda Looc, to build a golf course. They resisted and three movement leaders ended up dead. Where was Woods? He was brought in by the government to play in an exhibition match and sell golf (not explicitly the course, wink, wink), all for an undisclosed fee. The government called it "The Day of the Tiger" and followed his--assumedly G-rated--actions for twenty-four hours. The Golf War filmmakers show clips of Woods saying to kids, "I want all of you to learn and grow from this experience. Invariably you're gonna learn life, gonna learn about life because golf is a microcosm of life." Meanwhile the developers of the course were thrilled at the PR boost his appearance gave their project. Macky Maceda, a vice-president for Fil-Estate Land, Incorporated, the golf course developer in Hacienda Looc, commented, "Oh, I think it's going to be a great picker upper for the entire country in general. Everybody's feeling kind of down with this economic crisis. And Tiger is just, I know it, he's going to give everybody a good feeling."

Romy Capulong, legal counsel for the Hacienda Looc farmers, had a different take: "Tiger Woods should be barred from entering this country, I think. If I can do something about it--I'll certainly do that--to bar him from entering this country and propagating golf."

Tiger, with his global ethnic appeal, has been the sport's willing avatar, traveling the global south seeking new acres to conquer. The sports media has for years closed ranks around Tiger, defending his right "to not be political."

But he has been political. It's the politics of using golf as a weapon to reap untold riches and all the other attendant privileges of fame. It's the politics of selling yourself as a trailblazing icon, while rolling your eyes at the struggles that made your ascendance possible. It's the politics of placing your brand above any and all other concerns. It's the politics of turning a blind eye to your corporate partners' malfeasance, when there is a buck to be made. This is the real teachable moment of this whole circus: if you front for the worst of the worst, don't expect anyone to have your back.

About Dave Zirin

Dave Zirin is The Nation's sports editor. He is the author of Welcome to the Terrordome: the Pain Politics and Promise of Sports (Haymarket) and A People's History of Sports in the United States (The New Press). His writing has appeared in the Los Angeles Times, Sports Illustrated.com and The Progressive. He is the host of Sirius/XM's Edge of Sports Radio.

Dec 13, 2009

U.S. firms lag in bids for Iraqi oil

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Russians, Europeans and Chinese win most contracts for developing major fields

By Ernesto Londoño
Sunday, December 13, 2009

BAGHDAD -- Chinese, Russian and European companies won the right this weekend to develop major oil fields in Iraq, while U.S. firms made a paltry showing at auctions that represent the first major incursion of foreign oil companies into Iraq in four decades.

The companies that secured 10 contracts in auctions held over the weekend and in June stand to profit handsomely, but they are taking a significant gamble.

Iraq has the third-largest proven crude reserves in the world, but the country remains perilous; it suffers from chronic corruption and acrimonious politics that have prevented the passing of new laws to regulate the sector.

Of the seven U.S. companies that registered for the auctions, only one emerged as the leading partner in a consortium that won a contract. Another U.S. company has a minority stake in a contract.

China's state-owned oil company has a major stake in two contracts. Russian firms are parties in two others.

European firms made a strong showing. Royal Dutch Shell, Italy's Eni, British Petroleum and Norway's Statoil got deals.

Companies from Malaysia and Angola were parties to five winning bids.

Oil analysts say the outcome was surprising, considering that U.S. oil companies have long yearned to work in Iraq.

The analysts said it is ironic that U.S. companies do not appear poised to cash in on the aftermath of a war that many in the United States and the Middle East argued was motivated by a desire to tap into Iraq's oil reserves.

After the invasion, the United States paid oil executives to advise Iraq's Oil Ministry and set up large military and civilian task forces to boost the country's ailing energy sector.

"American oil executives provided free training to the ministry," said Ben Lando, bureau chief of Iraq Oil Report, a trade news outlet. "It is quite strange that after wanting access to Iraqi oil for so long, U.S. companies have largely remained on the sidelines."

Security concerns, underscored by coordinated bombings Tuesday, and the threat of political instability as the U.S. military withdraws probably gave American oil executives pause, analysts said.

In some cases, U.S. companies were at a disadvantage because their rivals, particularly the Chinese and Russians, have lower labor costs and do not answer to shareholders, which might allow them to take more risks.

"U.S. companies report back to their shareholders, not to public opinion," said Ruba Husari, editor of Iraq Oil Forum, another trade news site. Nonetheless, she said, "their low profile is intriguing," considering that the auctions are widely seen as the last major opportunity for years for international oil firms wanting to do business in Iraq.

U.S. Ambassador Christopher R. Hill called the opening of Iraq's oil industry to foreign investment an achievement of "historical significance" and said he was encouraged by how transparent the process had been.

Hill said the embassy advised U.S. companies as they weighed the pros and cons of doing business in Iraq, as diplomats do around the world.

"I'm not in a position to express disappointment," he said of the American showing at the auctions. "They had to make a decision based on what they're prepared to pay."

Exxon Mobil was the only U.S. company that led a winning consortium. Los Angeles-based Occidental Petroleum Inc. got roughly a 25 percent share in another.

The state-owned Chinese National Petroleum Corp. bid on more contracts than any other company.

In marked contrast to the Americans, Chinese diplomats in Baghdad have kept a low profile in recent years, working out of a hotel and drawing little public attention. But Iraqi officials say they have been struck by the caliber of Chinese diplomats, many of whom speak flawless Arabic and have developed a nuanced understanding of Iraqi politics.

"We all know that China is on track to become a major economic as well as technological power," said Assam Jihad, a spokesman for the Oil Ministry.

Under the 20-year service contracts, the Iraqi government will pay companies a set fee for each barrel produced above the current output level at each field.

The contracts also position the companies to play major roles in Iraq if the government loosens restrictions on foreign investment. The contracts awarded at the auctions are service contracts, which do not give companies a share of profits.

This weekend's auction was far more successful than the one in June, when the ministry awarded one contract out of the 10 on the auction block. Two other deals from that auction were reached later.

Of the 10 fields up for grab in the second round, the ministry awarded seven contracts.

Iraq's oil revenue, the backbone of its economy, has dipped below target this year as a result of lower prices and export volumes. Officials hope the refurbished fields could pump as much as 11 million barrels per day in eight years. The country currently pumps 2.4 million a day.

A dispute over federalism between politicians in Baghdad and their counterparts in the autonomous Kurdish regional government in northern Iraq is one of the biggest challenges oil companies entering Iraq are likely to face.

The chairman of the Iraqi parliament's oil and gas committee, a Kurd, has warned executives that the contracts are illegal. He has called for the resignation of Oil Minister Hussain Shahristani.

"These companies should think twice before signing contracts," said the lawmaker, Ali Hussein Belo.

Meanwhile, deals the Kurds have signed with foreign companies for fields in northern Iraq have come under fire in Baghdad, which banned those companies from participating in the auctions.

The fight could draw oil companies into one of the most protracted battles over power in Iraq. "We have faith in the government," Mounir Bouaziz, a vice president for Shell, said after his company won a coveted field. "The government is behind these contracts."

Special correspondents K.I. Ibrahim and Aziz Alwan contributed to this report.

Mexico's drug cartels siphon liquid gold

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Bold theft of $1 billion in oil, resold in U.S., has dealt a major blow to the treasury

By Steve Fainaru and William Booth
washington post foreign service
Sunday, December 13, 2009

MALTRATA, MEXICO -- Drug traffickers employing high-tech drills, miles of rubber hose and a fleet of stolen tanker trucks have siphoned more than $1 billion worth of oil from Mexico's pipelines over the past two years, in a vast and audacious conspiracy that is bleeding the national treasury, according to U.S. and Mexican law enforcement officials and the state-run oil company.

Using sophisticated smuggling networks, the traffickers have transported a portion of the pilfered petroleum across the border to sell to U.S. companies, some of which knew that it was stolen, according to court documents and interviews with American officials involved in an expanding investigation of oil services firms in Texas.

The widespread theft of Mexico's most vital national resource by criminal organizations represents a costly new front in President Felipe Calderón's war against the drug cartels, and it shows how the traffickers are rapidly evolving from traditional narcotics smuggling to activities as diverse as oil theft, transport and sales.

Oil theft has been a persistent problem for the state-run Petroleos Mexicanos, or Pemex, but the robbery increased sharply after Calderón launched his war against the cartels shortly after taking office in December 2006. The drug war has claimed more than 16,000 lives and has led the cartels, which rely on drug trafficking for most of their revenue, to branch out into other illegal activities.

Authorities said they have traced much of the oil rustling to the Zetas, a criminal organization founded by former military commandos. Although the Zetas initially served as a protection arm of the powerful Gulf cartel, they now call their own shots and dominate criminal enterprise in the oil-rich states of Veracruz and Tamaulipas.

"The Zetas are a parallel government," said Eduardo Mendoza Arellano, a federal lawmaker who heads a national committee on energy. "They practically own vast stretches of the pipelines, from the highway to the very door of the oil companies."

The Zetas earn millions of dollars by "taxing" the oil pipelines -- organizing the theft themselves or taking a cut from anyone who does the stealing, according to Mexican authorities. The U.S. Treasury Department this summer designated two Zeta commanders as narcotics "kingpins," which allows authorities to seize assets.

The Zetas often work with former Pemex employees, according to Ramón Pequeño García, chief of anti-drug operations at Mexico's Public Security Ministry. The former employees "are highly skilled people who have the technical knowledge to extract oil from the pipelines. They are now under the control of the Zetas," Pequeño said.

Across the border

This year, executives of four Texas companies pleaded guilty to felony charges of conspiring to receive and sell millions of dollars worth of stolen petroleum condensate. U.S. law enforcement officials said in interviews that they have no evidence showing that the men were connected to drug traffickers.

During his September arraignment in Houston, Arnoldo Maldonado, president of Y Gas & Oil, pleaded guilty to receiving about $327,000 to coordinate at least three deliveries of tankers filled with stolen condensate to another Texas company, Continental Fuels, according to a court transcript of the hearing.

Asked by U.S. District Judge Ewing Werlein Jr. how the condensate had been stolen from Pemex, Maldonado replied: "I have no idea on that, sir."

Donald Schroeder, a former president of Houston-based Trammo Petroleum, pleaded guilty in May to buying $2 million worth of stolen Mexican condensate, according to a transcript of the hearing. Schroeder re-sold the condensate to another company, BASF, for a $150,000 profit, prosecutors told the court.

A spokesman for BASF, which has not been implicated in the case, said the company was unaware that the material was stolen and is cooperating with the investigation.

In August, U.S. authorities presented the Mexican government with an oversize check for $2.4 million as a repayment.

A sophisticated operation

Pemex reported losing $715 million worth of oil to theft last year. The company said it discovered 396 clandestine taps. This year, Pemex projects it will lose at least $350 million to oil pilfering. Nearly half of the thefts occur in the rugged hills around Veracruz, a largely rural state situated in a region with 2,136 miles of pipeline running from the Gulf of Mexico to refineries in other parts of the country.

To steal the oil, Mexican authorities said, thieves sometimes use safe houses from where they build extensive tunnel networks leading to the pipelines. They fabricate powerful drills that enable them to puncture the highly pressurized steel pipes and extract the oil without causing spills or suspicious drops in pressure. Pemex officials said they have found clandestine taps with as many as five spigots.

In Maltrata, in central Veracruz, Pemex officials showed a reporter a four-foot-deep, six-foot-wide trench ringed by yellow police tape that they said had been dug by thieves to reach an underground pipeline in a clearing near a federal highway last month.

After perforating the exposed two-foot pipeline using a hand-tooled drill and connecting valves to regulate the pressure, the officials said, the traffickers ran a 300-yard hose through the brush to a tanker and filled it with about 200 barrels of crude oil.

"They are very sophisticated -- in some cases, it's three kilometers from the pipeline to the tanker where they deposit the oil," said Mauro Cáceres, who oversees the pipeline network in the region. "It is just constant. They take, and they take, and they take, and they take."

Pemex lost 140,141 barrels of oil to theft last month in the Veracruz region alone, the company reported. At $75 a barrel, the current market price for Mexican oil, the loss comes to $10 million. The company reports that oil rustlers are stealing from the pipelines in all 31 Mexican states.

Defending the pipelines

"When they steal this oil, it's not just a regular crime," said Mendoza, the federal deputy. "It becomes a crime against society, because the people who steal this oil the next day are using it to kidnap us. Tomorrow, with that oil money, they are shipping drugs."

The theft is both a symbolic and financial blow to the Mexican government. Taxes paid by Pemex account for 40 percent of the federal budget. Pemex still owns and operates almost every gas station in Mexico. Juan José Suárez, Pemex's chief executive officer, said in an interview at the company's headquarters in Mexico City that the oil theft is a crime against all Mexican citizens: "This is not taking from Pemex; it's taking from the owners of Pemex. This is the net worth of everybody."

Mexico has launched an all-out campaign to defend the pipelines, drawing in the army, the attorney general's office, the Interior Ministry and the customs service. During the past two years, the government has conducted helicopter overflights, installed electronic detection devices inside the pipelines and beefed up Pemex's private security force.

Suárez estimates that Pemex will spend hundreds of millions of dollars over the next three years defending its pipelines. With the company's maintenance staff overwhelmed, Pemex assembled 20-man teams this year to repair breaches caused by theft.

"The teams are working day and night," Cáceres said.

Pemex sent out a call for help to the federal government in 2007. In June that year, Mexican customs officials informed U.S. Immigration and Customs Enforcement (ICE) that they had discovered dozens of Mexican companies that appeared to be conspiring with U.S. firms to export stolen petroleum products across the border.

Working closely with the Mexican customs service, ICE investigators said, they soon uncovered a network of Mexican and American companies that shipped stolen oil to the United States in tankers, stored it in aboveground containers in Texas and then shipped it in barges to end users in the United States.

With oil prices then at record highs, the scheme allowed U.S. companies to buy petroleum products at below-market value. The scam involved hundreds of people, according to Jerry Robinette, special agent in charge of the ICE office of investigations in San Antonio, which is overseeing the probe.

"The folks that made the most amount of money are the people who are going to harm us the most, and that was the organized crime in Mexico," Robinette said.

Staff researcher Julie Tate in Washington contributed to this report.

Dec 7, 2009

Chrysler calls for release of Aung San Suu Kyi

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Posted on December 7, 2009
Filed Under Burma news | Leave a Comment

In what may seem like a cynical attempt to garner some goodwill by a troubled company, carmaker Chrysler has launched a new commercial in which it calls for the release of Burmese opposition leader Aung San Suu Kyi.
The company says the commercial for the Chrysler 300 is meant to demonstrate its commitment to supporting social issues and defending human rights around the world.
Until now, advocacy campaigns for Burma have mostly been by celebrities and pressure groups like the US Campaign for Burma.
The involvement of a large corporation can only be good. Even if their goals, like the commercial are largely self-serving.
The auto industry is struggling to regain the public trust after large bailouts from several governments earlier this year, which appears to be pushing them towards more populist subjects.
Oliver Francois, President and CEO – Chrysler Brand, Chrysler Group LLC, who is also the Managing Director of Lancia Automobiles said, “We produced the TV film in honour of all those who put their lives at stake in the hopes of making the world a better place.”
“In particular, those men and women who are still prisoners like Aung San Suu Kyi. For Chrysler, this is a chance to use our brand image to join with others in the fight for peace and to knock down the walls that divide us. We at Chrysler believe in doing the right thing and making a difference.”

Nov 2, 2009

It's a Bird, It's a Plane, It's Pork! - BusinessWeek

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Boeing's C-17 cargo aircraft cost $250 million apiece. The Pentagon says it has plenty. But it's nearly impossible for Obama to kill a project that provides jobs in 43 states

By Ben Elgin and Keith Epstein

President Barack Obama and Defense Secretary Robert M. Gates want to leave the Cold War in the past—finally—and reshape the U.S. military into more of a counterinsurgency force. They have made reforming weapons acquisition a major priority, saying that some hardware designed for battling Soviet armies or other massive foes in vast open-field clashes ought to be replaced by lighter, less expensive gear. The Administration has pared billions from the budget for the Lockheed Martin (LMT) F-22 fighter, a super-sophisticated plane conceived in the 1980s for dogfights against Moscow's best. The Pentagon has also reined in a sprawling high-tech infantry project called Future Combat Systems that Boeing (BA) oversees. All told, a half-dozen major weapons systems have been eliminated for an estimated savings of more than $100 billion over coming decades.

But it's not like military spending is actually going down. At a projected $107 billion for 2010 alone—a 5% rise over this year—the Pentagon's base budget for planes, ships, missiles, and guns has grown more than 50% since 2000. Reforming and redirecting military procurement always riles members of Congress trying to protect jobs in their home districts. Lawmakers are teaming up with Lockheed, Boeing, and other defense contractors to push back fiercely on certain targeted programs, even when the Pentagon says it doesn't need the weaponry in question. In some areas, organized labor has joined the fight.

The C-17 Globemaster offers one illustration of successful opposition to the Obama-Gates push for control of weapons spending. C-17s are large cargo planes produced by Boeing that cost $250 million apiece. They have been used heavily since 1993 to transport troops, tanks, and supplies. Every year since 2006, the Pentagon has said that it has enough C-17s. And every year, Congress overrules the military and authorizes funds for additional planes. In October the Senate approved $2.5 billion in the 2010 budget for 10 more C-17s, which would bring the fleet to 215.

"It's about political engineering," says Mandy Smithberger, a national security staff member of the Project on Government Oversight, a Washington nonprofit. "Companies design weapons systems to make them difficult to kill."

The C-17 by most accounts has served the Pentagon reliably and well. The cavernous Globemaster is flying in both Iraq and Afghanistan. But the real reason Congress wants more of them has little to do with military need. Boeing has built the C-17's industrial base for political survivability.

The company has spread manufacturing across no fewer than 43 states. C-17 production lines employ more than 30,000 workers, many of them relatively well paid by factory-wage standards. Many of those jobs would be at risk if C-17 work ground to a halt.

The White House understands the challenge. "The impulse in Washington is to protect jobs back home, building things we don't need at a cost we can't afford," President Obama said in August in a speech at the Veterans of Foreign Wars Convention in Phoenix. "The special interests, contractors, and entrenched lobbyists—they're invested in the status quo, and they're putting up a fight."

Enthusiasm for the Globemaster crosses political lines. "We're fighting two wars and meeting humanitarian needs; we need these planes," says Senator Kit Bond (R-Mo.). "It is a defense industrial-base issue, too. It produces jobs in 43 states. But that is secondary. We wouldn't push that unless there is a real need." Boeing's defense business has its headquarters in St. Louis.

Bond, Senator Barbara Boxer (D-Calif.), and 16 colleagues began circulating a letter in April urging members of the Senate Appropriations Committee to keep funding the plane despite clearly stated objections from the White House and Pentagon. In California, C-17 production employs 5,000 workers at a final assembly plant in Long Beach.

Bond's fellow Missourian, Senator Claire McCaskill, a Democrat, however, evinced ambivalence in comments to the media earlier this year about earmarking money for more Globemasters. Boeing noted that she didn't sign the letter to the Appropriations Committee. So the company mobilized to change her mind.

The aircraft manufacturer convened a strategy meeting with local labor leaders in mid-spring at its St. Louis offices. George C. Roman, a Boeing vice-president for government operations, helped lead the discussion. A key challenge described by the Boeing side was the need to shore up wavering support from legislators, including McCaskill, according to Robert A. Soutier, president of the Greater St. Louis Labor Council, who attended the gathering.

Shortly after the meeting, Soutier criticized McCaskill in the St. Louis media, questioning her support for thousands of local jobs. McCaskill responded quickly. She defended her C-17 bona fides and in May announced she was sending a letter to Obama and Gates emphasizing her backing for the Boeing cargo aircraft.

Since then, she has showed up at machinist rallies, met Boeing officials, and spoken out forcefully on the plane's behalf. Adrianne Marsh, a spokeswoman for McCaskill, called the earlier discord "a misunderstanding" and says the senator has advocated the program all along. McCaskill "believes the C-17 can stand on its own and compete for these dollars based on its merits," says Marsh.

Soutier says that communication has improved between Boeing and McCaskill and that he's pleased with the senator's support for the C-17. A Boeing spokesman declined to discuss the company's lobbying but said in a prepared statement: "We routinely meet with our employees, their representatives, elected officials, and other key stakeholders to provide updates on our business operations." The spokesman added: "We greatly appreciate the support the C-17 continues to receive. We look forward to continuing to work with both our customer and the Congress to ensure this valuable airlifter is available to support our war fighters and our nation's future airlift requirements."

In late September, as Congress restored money for 10 additional C-17s, the Administration stated that "it strongly objects to" the funding. White House spokesman Thomas Victor told BusinessWeek: "The President never thought this was going to be easy, but he and Secretary Gates are committed to pushing for these reforms."

Senator John McCain (R-Ariz.), a prominent critic of Pentagon spending, went to the Senate floor on Oct. 5 to make a last-minute effort to strip funds from the defense budget for the new C-17s. "One would have expected the President and Secretary Gates to be outraged," he said. "However, we have heard barely a word of opposition from them." The next day, McCain's motion was defeated, 68 to 30.

John Murtha (D-Pa.), the powerful chairman of the House Defense Appropriations Subcommittee, said on Oct. 21 that he expects the fiscal 2010 budget to provide for the 10 additional Globemasters. He urged Boeing to trim the price of the plane to about $200 million each, but it remains to be seen whether the manufacturer will lower its bill.

Business Exchange: Read, save, and add content on BW's new Web 2.0 topic network

Machinists Throw a Wrench

While it fights to preserve the Pentagon budget for more C-17 cargo planes, Boeing is struggling with International Assn. of Machinists leaders over a proposed no-strike agreement in connection with the 787 passenger liner. According to the Seattle Times, talks are "deadlocked and hindered by distrust on each side." The Machinists have said they would agree to a no-strike deal through 2020 if Boeing guarantees a second 787 assembly line in Everett, Wash., among other conditions, the Times reported.

For more on Boeing's labor situation, go to http://bx.businessweek.com/Boeing/reference/

Elgin is a correspondent in BusinessWeek's Silicon Valley bureau. Epstein is a correspondent in BusinessWeek's Washington bureau.

Oct 20, 2009

Wall St. Giants Reluctant to Donate to Democrats - NYTimes.com

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By DAVID D. KIRKPATRICK

WASHINGTON — The Wall Street giants that received a financial lifeline from Washington may have no compunction about paying big bonuses to their dealmakers and traders. But their willingness to deliver “thank you” gifts to President Obama and the Democrats is another question altogether.

Mr. Obama will fly to New York on Tuesday for a lavish Democratic Party fund-raising dinner at the Mandarin Oriental Hotel for about 200 big donors. Each donor is paying the legal maximum of $30,400 and is allowed to take a date. Four of the seven “co-chairs” listed on the invitation work in finance, and Democratic Party organizers say they expect that about a third of the attendees will come from the industry.

But from the financial giants like Goldman Sachs, JPMorgan Chase and Citigroup that received federal bailout money — and whose bankers raised millions of dollars for Mr. Obama’s election — only a half-dozen or fewer are expected to attend (estimated total contribution: $91,200).

Part of the reason, several Democratic fund-raisers and executives said, is a fear of getting caught in the public rage over the perception that Wall Street titans profiting from their government bailout may use their winnings to give back to Washington in return. And the timing of the event, as the industry lobbies against proposals for tighter regulations to address the underlying causes of last year’s meltdown on Wall Street, has only added to the worry over public appearances.

“There are sensitivities there,” said Scott Talbot, a lobbyist for the industry’s Financial Services Roundtable. Political contributions “can make a donor a target,” Mr. Talbot said. Many involved, though, say the low attendance from those Wall Street giants also reflected a broader disenchantment with Mr. Obama over the angry language emanating from the White House over the million-dollar bonuses and anti-regulatory lobbying.

“There is some failure in the finance industry to appreciate the level of public antagonism toward whatever Wall Street symbolizes,” said Orin Kramer, a partner in an investment firm who is a Democratic fund-raiser and one of the event’s chairmen. “But in order to save the capitalist system, the administration has to be responsive to the public mood, and that is a nuance which can get lost on Wall Street.”

Dr. Daniel E. Fass, another chairman of the event who lives surrounded by financiers in Greenwich, Conn., said: “The investment community feels very put-upon. They feel there is no reason why they shouldn’t earn $1 million to $200 million a year, and they don’t want to be held responsible for the global financial meltdown.” Dr. Fass added, “How much that will be reflected in their support for the president remains to be seen.”

Mr. Obama remains a potent fund-raising draw. Plunging into the 2010 midterm campaigns last week, he raised more than $3 million in one night in San Francisco, speaking at a similar $30,400-a-couple dinner and a larger rally with tickets at $1,000 and under.

In addition to the big-ticket dinner on Tuesday, Mr. Obama will also address a more small-d democratic event at New York’s Hammerstein Ballroom, where roughly 2,500 donors paying $1,000 or less will also make cellphone calls to promote his health care overhaul. Over the next five days he will appear at fund-raisers for Bill Owens, a candidate for a House seat in New York; Gov. Jon Corzine of New Jersey (himself a former Goldman Sachs banker); Gov. Deval Patrick of Massachusetts; and Senator Christopher J. Dodd of Connecticut.

Democratic fund-raisers say the economic slump has dampened fund-raising across every industry. Wall Street has lost Bear Stearns, Merrill Lynch and Lehman Brothers to consolidation in last year’s credit crunch. Some former Obama fund-raisers on Wall Street have ascended to jobs in the administration, like Michael Froman, a former top Citigroup executive who is now an adviser on economics and national security.

Current Democratic fund-raisers say their 2008 take from Wall Street may also have benefited from the personal connections of the party’s chief fund-raiser that year, Philip D. Murphy, a former top executive at Goldman Sachs. (He is now ambassador to Germany). And as in recent years, Democrats are raising far more from Wall Street executives than Republicans, according to campaign finance data sorted by the Center for Responsive Politics.

The Democrats, including House and Senate party committees and the party itself, have raised about $5.4 million through the first eight months of the year, while the Republicans took in just $2.7 million.

So far in the current election cycle, though, Wall Street accounts for less than half as much of the Democratic Party’s fund-raising as it did in 2008: 3 percent, or about $1.5 million out of a total $53.6 million in the eight-month period, compared with about 6 percent, or $15.3 million out of $260.1 million during the last election. (Republicans relied more heavily on their party to support their presidential candidate in 2008, and the party’s Wall Street fund-raising has fallen even further.)

Fund-raisers say that smaller but lucrative businesses like hedge funds and private equity firms now account for more of Wall Street’s political contributions than the big banks that received bailout money, with the possible exception of the famously generous executives of Goldman Sachs.

Employees associated with the financial firms that received bailout money from the federal government contributed almost $70,000 to the Democratic Party in the first half . Most of that, $60,800, came from one couple who each contributed the legal limit. At the time of the donation, the husband, John M. Noel, had recently retired as head of a unit of the insurance giant AIG called AIG Travel Guard.

Mr. Obama, though, still has the loyalty of other powerful friends on Wall Street. Among the other chairmen of the Tuesday dinner in New York is Robert Wolf, head of the American investment banking division of the Swiss giant UBS Group. Mr. Wolf raised more than $500,000 for Mr. Obama’s campaign and sits on a White House panel of outside economic advisers.

Mr. Wolf does not have to worry about the same appearance problems as Wall Street rivals, however. His firm was bailed out by the government of Switzerland, not the United States.

Griff Palmer contributed research from New York.

Rift between Obama and Chamber of Commerce widening - washingtonpost.com

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Health-care reform and economy are points of contention

By Michael D. Shear
Washington Post Staff Writer
Tuesday, October 20, 2009

The White House is moving aggressively to remove the U.S. Chamber of Commerce from its traditional Washington role as the chief representative for big business, the latest sign of a public feud ignited by disagreement over the administration's effort to overhaul the health-care system.

Instead of working through the Chamber, President Obama has reached out to business executives, meeting repeatedly with small groups of CEOs in his private White House dining room. He also has dispatched top aides Valerie Jarrett and Chief of Staff Rahm Emanuel to corporate boardrooms. Since the summer, the three have met with some of the biggest names in the business community, including the heads of IBM, Wal-Mart Stores, Time Warner, Eastman Kodak, Starbucks, Amazon.com and Coca-Cola.

In the process, Obama is attempting to rewrite the rules of the game in Washington, where the Chamber and other business lobbying groups have long held a highly visible, and powerful, place at the intersection of policy and politics.

"The question we have is: Does the Chamber really represent the business community the way they used to?" said Jarrett, the president's chief business liaison. "It seems as though their members are disengaging."

Meanwhile, the Chamber is fighting back with its own public relations agenda, launching multimillion-dollar ad campaigns to resist several of Obama's top priorities. Passage of the president's plan could depend in part on how this battle plays out.

R. Bruce Josten, the Chamber's longtime lobbyist, said he has less real access to Obama's chief aides than he had during any previous administration. He said the business events Obama holds at the White House are just for show.

"Going to the Reagan center with 150 people, where the president gives prepared remarks -- I'm sorry, I don't consider that a consultative outreach," Josten said. "That's an event, designed by the White House, for the White House."

Quitting in protest

The quarrel obscures that the White House and the Chamber had a relatively warm relationship when Obama took office. Disagreements about a broad swath of the president's economic agenda soured relations, though.

The Chamber of Commerce was already embroiled in controversy over its opposition to climate change legislation. In recent weeks, high-profile businesses have quit the Chamber in protest of that position, most notably Apple Inc.

Chamber officials hint that they think the White House has been encouraging the defections. Jarrett denied that vehemently, saying, "They have to be responsible for their own membership, not us."

On Monday, climate change activists orchestrated a hoax in which Chamber officials appeared to reverse their opposition to energy legislation in Congress.

The event, complete with fake handouts on Chamber letterhead, at least a couple of phony reporters and a podium adorned with the Chamber logo, broke up when a spokesman from the real Chamber burst in.

The pretend Chamber of Commerce official was a member of the activist-prankster group called the Yes Men, which has staged several hoaxes to draw attention to what it believes is slow progress in fighting climate change.

"These irresponsible tactics are a foolish distraction" from the real work to reduce greenhouse gas emissions, said Thomas J. Collamore, the Chamber's senior vice president for communications and strategy. He added that his group will ask authorities to investigate.

Obama and CEOs

Since taking office, Obama has held three private lunches with chief executives. On Oct. 8, he met with Amazon.com's Jeff Bezos. Lewis Hay III of Florida Power & Light, Antonio M. Perez of Eastman Kodak and Irene B. Rosenfeld of Kraft. The next day, before reporters in the East Room, Obama upbraided the Chamber of Commerce for its effort to defeat or water down new consumer protections.

"They're very good at this, because that's how business has been done in Washington for a very long time," he said. "In fact, over the last 10 years, the Chamber alone spent nearly half a billion dollars on lobbying -- half a billion dollars."

Josten said previous presidents sought to work with groups such as the Chamber, even when they disagreed on policy matters, in an attempt to improve legislation or neutralize potential concerns. But he said Obama's dislike of lobbyists has robbed the White House of the chance to craft legislative compromises that businesses can live with.

"Does he get some probably good input from CEOs? I'm sure he does," Josten said. "Are they going to actively go up to the Hill and lobby? I'm sure they're not."

Josten and other Chamber officials participated in more than two dozen "issue meetings" during Obama's transition, and the group backed the president's early efforts to fix the economy. They supported his economic stimulus plan and some of his first nominees for economic positions in the administration.

That goodwill ended abruptly this past summer, when the Chamber announced its opposition to a public insurance option as part of a broad health-care reform effort. The group ran ads in 20 states warning of higher taxes, inflated deficits and "government control over your health."

The Chamber followed up with public statements against the president's climate control legislation and his push for new regulation of the financial sector in the wake of the economic collapse. (Politico first reported Monday on the dispute.)

Chamber officials describe their change in attitude as a result of the president's ambitious agenda, which they said contrasts sharply with their long-standing belief in smaller government, lower taxes and less regulation. Jarrett and others in the White House say the Chamber became an all-out adversary less interested in working to find solutions.

White House officials say they remain open to meeting with the Chamber and its officials, but Jarrett said that discussions so far have been contentious.

Oct 15, 2009

Cracking Down on How Airlines Treat Travelers - WSJ.com

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DOT Presses Carriers To Comply With Rules On Delayed Luggage

By SCOTT MCCARTNEY

Many airlines may be violating federal rules on reimbursing travelers for expenses when baggage is lost, delayed or damaged on domestic flights, and the federal government is finally cracking down to help consumers.

Taking a tougher stand on how airlines treat travelers, the Department of Transportation fined Spirit Airlines $375,000 last month for multiple violations of federal rules, including violations of domestic baggage-reimbursement requirements. Late last week, the DOT warned other carriers that their baggage-reimbursement policies appear to violate federal rules, too. "We have learned that a number of airlines have adopted policies that purport to limit reimbursement for such expenses in a variety of ways," the DOT said in its notice to airlines Friday.

A Wall Street Journal examination of practices at 14 airlines shows that many carriers have some of the same restrictions that resulted in the official censure of Spirit Airlines. One violation cited by the DOT was that Spirit made customers wait 24 hours after luggage was lost or delayed before covering any incidental costs travelers had to pay, such as toiletries or replacement clothes. DOT rules prohibit such waiting periods. The agency also said Spirit reimbursed customers for incidental expenses only if bags went missing on the outbound portion of a round-trip journey, yet the DOT's rule applies to "any flight segment."

"Travelers should not have to pay for toiletries or other necessities while they wait for baggage misplaced by airlines," Transportation Secretary Ray LaHood said in a statement. "We expect airlines to comply with all of our regulations and will take enforcement action if they do not."

The DOT gave airlines 90 days to modify their rules and practices before the agency would launch any enforcement actions.

Lost or delayed bags are relatively rare—about one traveler out of every 190 on domestic flights ended up at the baggage office empty-handed last year. And airlines say most people get their bags back within a day or two. Still, a large number of people are impacted by the uncertainty, inconvenience and expense of lost luggage. In 2008, more than three million mishandled-baggage reports were filed by airlines, and that just covers domestic flights.

Part of Spirit's response to the DOT was that its baggage policies were consistent with those of several other airlines. Indeed, Continental Airlines Inc., Hawaiian Airlines and Allegiant Air, for example, all say they pay for expenses only after the first 24 hours from a flight's arrival. UAL Corp.'s United Airlines says it reimburses expenses only on the outbound portion of a trip.

And many airlines put a limit on what they'll offer to pay passengers per day for expenses related to the lost luggage, which the DOT says is a violation of its domestic baggage-liability rule. The only limit allowed, the agency says, is that total liability for lost domestic baggage is $3,300 per passenger, including replacement costs and incidental expenses.

Long-Standing Gripes

Travelers have been complaining about such restrictions for years. In January 2007, this newspaper charted baggage-reimbursement policies at different airlines and reported on customer unhappiness with airline reimbursement. But the DOT didn't explore the issue until a few months ago.

In our latest survey over the past week, Continental said its reimbursement to travelers for delayed or lost luggage tops out at $200—$50 a day for four days after a 24-hour waiting period. United says it will pay $50 to $100 a day. US Airways Group Inc. has a less-generous limit of $25 a day for up to three days.

Alaska Airlines says it doesn't provide interim expenses to passengers for baggage delayed or lost because of bad weather or air-traffic-control problems. When it does pay, Alaska limits its liability to $25 for the first day a bag is missing, then ups that to $50 a day for the next four days.

Allegiant, a unit of Allegiant Travel Co., says it pays $25 a day for four days, but that only begins 24 hours after a bag has gone missing.

Hawaiian, a unit of Hawaiian Holdings Inc., limits payments to $30 a day for three days. JetBlue Airways Corp. says its "standard" payment is $25 per day, but like other airlines it considers higher amounts on a case-by-case basis.

Continental said it was evaluating what changes it may need to make to its policy to ensure it is in compliance with the DOT regulation. Virgin America, which said it reimburses $25 a day for five days, then amended that statement to say it may pay more if customers provide receipts; the airline said it asked the DOT on Monday for "further clarity" to determine if it is in compliance. Allegiant says it has asked the DOT "for clarification on a few items.'' Others said they believe they are in compliance.

AMR Corp.'s American Airlines says it has no daily limit and will negotiate with customers, but it does require customers to get prior approval from the airline for any expense. Southwest Airlines says it offers customers $50 on the spot when luggage goes missing, and will pay more if passengers file formal claims.

Case-By-Case Basis

After the DOT warning was issued, many airlines stressed that they consider their reimbursement limits, sometimes included in published materials given to passengers, to be only "guidelines" and that higher amounts can be paid on a case-by-case basis. That may be news to some customers who get told there's a tight limit to what the airline will pay.

In 2007, when The Wall Street Journal charted baggage-reimbursement policies, Delta Air Lines Inc. said it limited customers to $25 a day for five days. This week Delta spokeswoman Susan Elliott said that amount is offered "in many cases, but because we handle these types of issues on a case-by-case basis the compensation could be more depending on the situation."

Likewise in 2007, AirTran Airways said it had a limit of $25 a day for three days. After the DOT warning was issued Friday, a spokesman for AirTran said it had no arbitrary limit. Asked when the policy changed, AirTran, a unit of AirTran Holdings Inc., didn't respond.

Arbitrary Expense Limits

The DOT said it considers "any arbitrary limits on expense reimbursement incurred in cases involving lost, damaged or delayed baggage to violate" its baggage rule, 14 CFR Part 254. The rule says an airline can't "limit its liability for provable direct or consequential damages...to an amount less than $3,300 for each passenger." It applies to any flight with more than 60 seats, or any passenger whose itinerary includes a flight using an aircraft with more than 60 seats.

Airlines say they delay any help with incidental expenses for 24 hours because bags often show up during that first 24-hour period. However, excluding the first 24 hours can greatly reduce airline payments to customers for incidentals.

And that policy leaves travelers in the lurch—typically they don't know when or even if the bag will turn up. If you need a tie for your presentation in the morning, you may have to buy one even though your bag may be delivered to your hotel at 10 p.m.

Travelers complain they often have to battle with airlines to cover the cost of lost items.

Borrowing Clothes

David Pykon, a New York hedge-fund trader, says he was given conflicting information by different American Airlines supervisors on daily expenses after his bag was lost on a Thanksgiving trip to Dallas last year. Although he had no clothes or toiletries, he was first told he had to limit his spending to $25 a day. Then he was told $50 a day. Later another official said $75 a day. Mr. Pykon borrowed clothes from friends but still spent nearly $200 over his four-day trip, and the airline gave him a check before his flight home for $170.

"They said tough luck—it is what it is," he said.

American spokesman Tim Smith said some of Mr. Pykon's expenses may not have been pre-authorized.

The bag was never found and Mr. Pykon filed a claim for more than $2,600. He included credit-card statements showing purchases. American sent a check for $740, saying it accepted only actual store receipts, and didn't cover electronics (he had lost an iPod), medication and sunglasses, he said. The airline discounted the value of other items for depreciation.

Mr. Pykon said he wrote to American three times, called repeatedly and was never allowed to speak to the person who handled his claim. (His credit-card company covered much of the loss the airline refused to pay.)

"It's easier for them to frustrate me," Mr. Pykon said of the airline. "A person is only going to take it so far."

American says it hopes its processes aren't frustrating and inconsistent. "We try to be fair and listen to what the customer needs," Mr. Smith said.

New York Stock Exchange Shrinks as Rivals Take Over Trades - NYTimes.com

Image by Sebastian Bergmann via Flickr

By GRAHAM BOWLEY

For most of the 217 years since its founding under a buttonwood tree on Wall Street, the New York Stock Exchange was the high temple of American capitalism.

Behind its Greco-Roman facade, traders raised a Dante-esque din in their pursuit of the almighty dollar. Good times or bad, the daily melee on the cavernous trading floor made the Big Board the greatest marketplace for stocks in the world.

But now, even as the Dow Jones industrial average topped 10,000 for the first time since the financial crisis sent it tumbling, the exchange and its hometown face an unsettling truth: the Big Board, the symbolic heart of New York’s financial industry, is getting smaller.

Young, fast-moving rivals are splintering its public marketplace and creating private markets that, their critics say, give big banks and investment funds an edge over ordinary investors.

Some of the new trading venues — “dark pools,” the industry calls them — are all but invisible, even to regulators. These stealth markets enable sophisticated traders to buy and sell large blocks of stock in secrecy at lightning speed, a practice that has drawn scrutiny from the Securities and Exchange Commission.

These upstarts are utterly unlike the old-school Big Board, which is struggling to make its way as a for-profit corporation after centuries of ownership by its seat-holding members. Last year, its parent company, NYSE Euronext, lost $740 million.

Wall Street’s judgment has been swift and brutal. Since January 2007, the share price of NYSE Euronext has lost nearly three-quarters of its value, even though stock trading over all has soared.

While the exchange has been under assault since the beginning of the decade, its decline has accelerated in recent years as aggressive competitors have emerged. Today, 36 percent of daily trades in stocks that are listed on the New York Stock Exchange are actually executed on the exchange, down from about 75 percent nearly four years ago. The rest of are conducted elsewhere, on new electronic exchanges or through dark pools.

The old Big Board was far from perfect. Its floor brokers — who occupy a privileged, and potentially lucrative, niche between buyers and sellers — have sometimes enriched themselves at their customers’ expense.

But changes inside the exchange’s grand Main Hall are startling. For decades, the New York Exchange was the kind of place where sons followed their fathers onto the trading floor. But half of the jobs there have disappeared over the last five years. Many of the 1,200 or so remaining workers retreat quietly to their computers shortly after the opening bell clangs at 9:30 a.m.

The Big Board has been forced to close one of its five trading halls, and it has repopulated two others with business from the American Stock Exchange, which NYSE Euronext bought last year. The Main Hall — the soaring, gilded room opened in 1903 — can seem little more than a colorful backdrop for CNBC.

“It has not been pretty,” said Benn Steil of the Council on Foreign Relations in New York. “All the big established exchanges around the world have experienced the same phenomenon, but the New York Stock Exchange has taken the biggest beating.”

It is a remarkable comedown for the New York Exchange, and for New York. Once the undisputed capital of capital, the city is struggling to retain its dominance in finance as the industry globalizes. “Wall Street” seems to be no longer a place, but a vast, worldwide network of money and information.

The Big Board says that it is fighting back — and that its hybrid of computers and human traders can beat the new rivals. It slashed commissions and developed its own purely electronic exchange, Arca, in Chicago. Arca has captured about 11 percent of the market for Big Board-listed stocks. It is also winning business in areas like derivatives.

“What’s going on here is a reinvention,” said Lawrence Leibowitz, head of United States markets and global technology at NYSE Euronext. “How can you bring this institution forward into the 21st century?”

Proponents of the new exchanges and private trading systems contend that ordinary people benefit from the technologies whether they know it or not.

“Competition has benefited the average investor,” said William O’Brien, chief executive of Direct Edge, one of the new exchanges. “Their broker has so many choices available, on or off exchanges, anywhere in the world, and they can get their order executed in less than a second.”

Critics maintain that only the most sophisticated players are benefiting, able to execute their trades seconds before smaller investors and in private.

“There are tools now that certain investors have that give them an advantage over other investors,” said Joseph Saluzzi, who trades equities for institutional investors and hedge funds at his boutique brokerage, Themis Trading.

The Securities and Exchange Commission is beginning to take notice of such complaints, opening investigations into the new type of trading venues and promising action. It is worried, for example, that dark pools, with their scale unknown, could destabilize the market.

Unlike the Big Board, the new electronic exchanges are virtually unknown outside financial circles. Direct Edge, the largest, is in Jersey City. Another, the BATS Exchange, is based in Lenexa, Kan. Both are only about five years old. But each now accounts for about a 10th of daily United States stock trading.

In its fight to survive, the Big Board is building a new data center in New Jersey and another outside London. The Main Hall is being overhauled, in an attempt to lure business back to the floor. There is even a new coffee shop, Outtakes.

Even so, the world still watches — literally — what happens on the New York Stock Exchange. Twenty television networks broadcast live from the exchange, in nine languages.

But whichever way the market goes from here, many see a difficult road for the Big Board. The competition is unlikely to let up.

“There has been a sea change,” said Sang Lee of the Aite Group, a financial services consulting company. “I don’t envy what any of the exchanges have to do.”

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Oct 15, 2009

DOT Presses Carriers To Comply With Rules On Delayed Luggage

By SCOTT MCCARTNEY

Long-Standing Gripes

Case-By-Case Basis

Arbitrary Expense Limits

Borrowing Clothes