`Excellent chance’ AIG will repay loans

NEW YORK–American International Group Inc., the insurer bailed out by the U.S., has an “excellent chance” of repaying the government, CEO Edward Liddy said at AIG’s annual meeting yesterday.

AIG got a new slate of government-backed directors at the subdued meeting, effectively revamping its board after the insurer’s $180 billion (U.S.) taxpayer bailout.

AIG also disclosed new risk on derivatives sold to European banks that could have a “material adverse effect” on the company’s results.

The meeting wrapped up in less than an hour, with only a handful of investors airing grievances, even though it was the first public opportunity to address AIG management and directors since the company’s implosion last September.

In sharp contrast to overflow crowds in years past, fewer than 200 investors attended the meeting, held in AIG’s soon-to-be sold 72 Wall Street building, which was circled by security personnel.

Shareholders have seen the value of their stock all but wiped out. The shares, which traded as high as $100 at the beginning of the decade, closed yesterday at $1 payday loan.16.

AIG usually hands out glossy annual reports at the meeting, but this year it distributed bare-bones copies of its 10-K filing with the U.S. Securities and Exchange Committee, printed on cheap newsprint.

In a regulatory filing updating its 2008 annual report, AIG said the risk of losses on the credit-default swaps sold to European banks may last “longer than anticipated.” The firm had $192.6 billion in swaps allowing lenders to reduce the funds they had to hold in reserve as of March 31, AIG said.

“It’s a huge number – if there was any surprise, it’s that this hasn’t been flagged before,” said David Havens, managing director at investment bank Hexagon Securities.

Liddy said AIG had agreed to sell 25 assets so far and there was “an excellent chance” it would repay $83 billion of government loans.

 

From the Star’s wire services

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NorthSide plan highlights age-old planning debate

When it comes to rebuilding American cities, there are two basic approaches: Big, sweeping visions. Or block-by-block rebirth.

And the conflict between those two ideas sits at the heart of the debate over Paul McKee’s plan to rebuild 1,500 acres of St. Louis’ north side.

Is the $8 billion vision — of job centers, and housing, new streets and parks — the kind of plan that St. Louis needs to become a new, more vibrant city? Or is it the top-down imposition of one man’s vision upon its citizens, bound to destroy even as it creates. Is it a shot for the moon? Or too big to succeed?

These are the questions city leaders and residents will be asking over the next few months as they consider McKee’s NorthSide proposal and his unprecedented request for $205 million in city backing and countless other incentives. And as they do, they’ll enter a debate between big and small that has existed in urban planning for generations.

A century ago, the great architect Daniel Burnham urged Chicago to "Make no little plans. They have no magic to stir men’s blood." He then authored a massive plan to rebuild downtown Chicago. It helped transform the city.

Fifty years later, famed urbanist Jane Jacobs urged the organic, block-by-block rebirth of

urban neighborhoods, and warned against ripping out the old to make everything shiny and new. She helped fight off plans to clear Greenwich Village for a highway.

Here in St. Louis, efforts at so-called "urban renewal" cleared the Mill Creek Valley to build Highway 40, then built the doomed Pruitt-Igoe housing complex. More recently, city neighborhoods such as Tower Grove South and Benton Park have revived themselves on a diet of small-scale rehabs, even as downtown silver bullets like Ballpark Village and the Bottle District remain just dreams.

"The areas that have fared best have really been driven by that block-by-block mentality," said Claralyn Bollinger, president of ReVitalize St. Louis, a coalition of neighborhood activists. "It takes a whole community to make projects happen that make a neighborhood strong.

SILVER CANNONBALL

McKee’s plan is much grander than those — perhaps the biggest ever proposed in St. Louis. It’s more like a silver cannonball than a silver bullet. To make it work, he pledges to combine the best of both approaches — the diverse urbanity of Jacobs with the inspiring scale of Burnham.

"You have to engulf that whole huge area with a new sense of belief," he said.

It’s a project on the kind of scope the government used to do, several local planners noted, back in urban renewal days. They didn’t always work out as planned.

Mill Creek, for instance, still generates resentment, said veteran St. Louis architect Andy Trivers, over the thousands of people displaced to build a highway.

"It was a different world," Trivers said. "And that was OK then ‘for the greater good.’ But it really wasn’t good."

Inevitably, there was a backlash. Citizen activists fought off big projects, and the government gradually took a more hands-off approach. Neighborhood-run development groups came into vogue, and public-private partnerships replaced big government projects.

That’s especially true in St. Louis, said Sarah Coffin, a professor of urban planning at St. Louis University. The city has taken a light touch to planning, especially at the neighborhood level. Coupled with a weak real estate market, that opened a window for a developer like McKee to create his own vision.

"The city’s not going to lead," she said. "So the private sector will."

REACHING OUT

And while private development may be more efficient, it raises its own set of thorny issues — like public involvement.

The sharpest criticism of McKee comes from those who say his plan is too top-down, that he hasn’t done enough to engage a community that feels alienated by his five years of silent land-buying no fax quick cash.

But McKee, chairman of McEagle Properties in O’Fallon, Mo., is a private developer. Until now, he hasn’t had to engage the public, notes Todd Swanstrom, a professor of public policy at the University of Missouri—St. Louis. But he wants the city’s approval for $410 million in infrastructure financing — and its agreement to pay back half that sum if the project can’t — and that will force it into the public realm.

"He’s going to have to be very public," Swanstrom said. "There can’t be too much consultation."

Still, more consultation from the start would have been better, said Bollinger.

Most of the small local groups that have worked to turn around neighborhoods across the city in recent years have focused on community involvement, she said. They’ve woven rehabs and new businesses into the existing fabric.

"And I’m not convinced that putting down a huge-scale development like this is going to be a panacea," Bollinger said.

A DIFFERENT WAY

Just across Florissant Avenue from the footprint of McKee’s project, sits a contrast to that huge scale development — Old North St. Louis.

That neighborhood has seen a wave of rehabs and new homes built in recent years, and the nonprofit Old North St. Louis Restoration Group will finish a 27-building, $35 million redevelopment of the 14th Street pedestrian mall. The once nearly empty plaza will soon house shops and businesses on the street level, with 80 apartments above.

Local residents have driven nearly all these efforts, said Sean Thomas, the group’s executive director. And they’ve focused on building from existing assets of the neighborhood. It takes a long time, though.

"One of the great challenges is we have to do it piece by piece. We just don’t have the resources to do everything," Thomas said. "But it happens at a pace that people can adjust."

Farther west, where McKee is working, there’s less fabric to build on and fewer residents. McEagle’s request for city financing says 44 percent of the 1,500-acre redevelopment area is either vacant land or vacant buildings. About 8,900 people live there, many in apartment complexes or developments that would stay put. And McKee says he wants to build around and include existing residents.

TOO BIG TO FAIL?

While some observers blame McKee for helping tear down that fabric and drive down the population as he has bought land in recent years, others note that the near north side has long been troubled.

"It’s the scar of 50 years of disinvestment," said Rick Bonasch, a veteran of St. Louis community development who has launched a blog that follows NorthSide. "And it’s big.

So big, McKee argues, that the area needs a really big plan if it will ever turn around. Nothing small will do the trick.

"We’re trying to affect something in a big way," McKee said.

That’s why he bought as much land as he could, where he did, he said. And it’s why he’s asking the city for more: To create jobs and build new neighborhoods in a place that’s seen too little organic growth for too long.

It’ll take a lot of land. McKee’s already got some. And that speaks to another truth of really big plans, Bonasch noted. In a sense, they’re too big to fail.

"We all kind of have a stake in him being a success here," he said. "He controls a lot of land, and I don’t think he’s going away."

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Term life bargains vanishing

The window might be quickly closing on consumers’ opportunity to refinance at great rates — not their home mortgages, but their term life insurance, experts say.

For the first time in a long time, premiums are on the rise.

Over the last several years, prices on simple term life insurance have been plummeting. Premiums in recent years could be less than half of what they were in the early 1990s. For example, the same policy that had an annual premium of $1,400 back then might have cost $350 last year.

The price drop represented easy savings for consumers, who could simply buy a new, lower-priced policy — even with the same insurer — and then cancel their old one.

That’s changing. Here’s what you need to know about term life insurance:

— The pressure is on low cost car insurance. Since the start of the year, insurance companies have started raising premiums for new policies — most often by 5 percent to 15 percent.

— Lock in now. Rising rates do not affect most term policies already in place because premiums are level, meaning they stay the same for the duration of the policy.

— Opt for longer terms. Consider buying a policy with a longer term, such as 20 or 30 years, to lock in today’s relatively low prices.

— Shop around. Premiums can vary widely for the exact same coverage.

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More canceled 787 orders

Boeing’s largest airline customer for the 787 said it is canceling orders for 15 Dreamliners and deferring another 15 by four years. Qantas Group, the parent of Qantas and Jetstar, said Friday in Australia that the changes were driven by the economic climate, not this week’s announcement of a design problem that will add weeks or months to the much-delayed plane’s first flight payday loan online. Qantas has 50 remaining Dreamliners on order, comprising 35 B787-9s and 15 B787-8s. Qantas placed its original B787 order in December 2005. The financial impact of the contract changes was not disclosed. (MCT)

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Globe union sees `final offer’

A union representing workers of The Globe and Mail says the newspaper’s management planned to email staff today with a "final offer" to replace a contract that expires next week.

The editorial, advertising and circulation workers voted 97 per cent Saturday in favour of strike action.

While negotiations resumed Monday, a strike/lockout date has been set for midnight June 30 for the almost 500 employees faxless payday loans.

Management had proposed a six-year deal, which includes a total compounded salary increase of 7.2 per cent over six years.

The Canadian Press

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Quebecor World shakes up boardroom

Bankrupt commercial printer Quebecor World Inc. said yesterday its creditors have approved plans of reorganization in Canada and the United States.

Quebecor also said Mark Angelson, the former chief executive of U.S. printing company and spurned suitor R.R. Donnelley & Sons, would become chairman of its new nine-member board, replacing former prime minister Brian Mulroney.

On June 10, R.R. Donnelley abandoned its $1.5 billion offer to buy Quebecor World, which had rejected the bid.

Quebecor World CEO Jacques Mallette is the only holdover from the current board, the company said.

Other members slated to join the board include Tom Ryder, former chairman and CEO of Reader’s Digest Association Inc., Jack Kliger, former CEO of magazine publisher Hachette Filipacchi, and Raymond Bromark, a retired senior partner of PricewaterhouseCoopers.

The new board members will be seated upon Quebecor World’s emergence from its insolvency proceedings, which is expected to occur in July affordable health insurance quote.

The Montreal-based company said about 86.4 per cent of all voting creditors across classes had voted to accept the company’s third amended U.S. reorganization plan.

Creditors approving the U.S. plan represented 88.9 per cent, or $1.82 billion (U.S.), of the total dollar value of claims voted.

The company’s second amended and restated Canadian plan of reorganization was approved by about 96 per cent of the affected creditors, representing about 89 per cent of the total value of claims voted.

A joint confirmation hearing on the two plans is set for June 30 in the courts, Quebecor World said.

Quebecor World prints books, magazines, directories and advertising materials. It filed for court protection in January 2008 and currently has about 20,000 employees.

Reuters News Agency

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‘Green shoots’ trampled as investors flee

A gloomy global economic outlook from the World Bank spooked investors yesterday and pushed Canada’s resource-laden S&P/TSX composite index below the 10,000 mark for the first time since May 11.

The index fell 453.77 points to 9,834.18 – its worst one-day point loss since early December.

The TSX was punished in particular by falling oil and mining stocks, two of the big drivers of this spring’s market surge no fax cash advances.

Now investors fear they are looking at a "bear market rally" that has fizzled out. They had been encouraged by so-called "green shoots" signalling economic recovery, such as slowing job losses. But few economists now expect a sudden snap-back. More in Business.

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EBay enthusiast shaken by online fraud, tardy response from bank

Karen MacIntyre likes to buy and sell merchandise at eBay.

She uses a PayPal account, which is linked to a chequing account at President’s Choice Financial.

But a recent experience with fraud has made her question her loyalty to online shopping and banking. Someone got access to her PayPal account and put through 22 transactions – worth $5,325 (U.S.) – in a single day.

"I felt sick. I felt violated. And I felt quite helpless. This has really scared me," she says.

Only two fraudulent payments came out of her chequing account. She has little money there and no overdraft protection.

But PC Financial levied $800 (Canadian) in fees for non-sufficient funds – or $40 for each of the 20 transactions that were blocked.

And it didn’t reverse the charges until the Star became involved, leaving her account frozen for almost two weeks.

On Monday, June 8, she contacted her bank and faxed documents, as requested. The initial response was that the $800 in fees could not be waived because of lack of evidence of fraud.

PayPal wrote an email, confirming the unauthorized use of her account. It also offered to host a three-way call with the customer and her bank – an offer that was not taken up.

Last Monday, MacIntyre contacted the bank’s ombudsman, but was referred to the customer care department. By Thursday, she was frustrated and sent me an email.

"I am concerned because time is valuable," she said. "As of today, I do not have a functioning chequing account. I cannot open a new one because of the outstanding charges on the PC Financial account. And if the overdraft is not paid in 30 days, my account will proceed to a collection agency."

I got in touch with CIBC, which handles banking for the Loblaw Co. subsidiary.

"This client situation was not handled appropriately at the first point of contact with PCF," said CIBC spokesman Rob McLeod free business cards.com.

"From there, it should have been escalated to CIBC and wasn’t, which is unusual.

"As soon as it was escalated to CIBC, it was resolved promptly."

Karren King, a PCF spokeswoman, apologized for the delay.

"In instances where a client is the victim of fraud, we would not hold them liable for any resulting financial impact," she said.

"PCF has taken the necessary steps to reverse the fees incurred as a result of the hacking…"

The money was restored to her chequing account by yesterday.

So, what can consumers do to stay safe from online fraud?

Michael Barrett, chief information security officer at PayPal, stresses the importance of protecting your passwords. "We all have so many online accounts these days. Almost everyone I talk to says they use the same password everywhere," he said in an interview.

You need four different passwords, he said: One for all your financial accounts, which have strong safeguards against hacking; a second for your email account; a third for online retailing accounts, such as eBay or Amazon; and a fourth for websites where you go once and never come back.

You also need strong passwords that are not easy to guess. He suggests putting two unlike words together – such as "skywall" – and adding a number.

MacIntyre plans to change her PayPal password. She’s also thinking of moving to a bank with more human contact. "I just didn’t feel the level of service was there with PC Financial, that it was willing to go the extra mile."

eroseman@thestar.ca

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Dealers hope ‘cash for clunkers’ will goose new-car sales

Through a program automakers and dealers hope will stimulate new-vehicle sales, car shoppers soon could get government incentives to swap their old vehicle for a new fuel-efficient one.

President Barack Obama is expected to sign the "cash for clunkers" program, approved by the Senate on Thursday, into law soon. That means owners of older models like a 1994 Toyota Camry, 1999 Chevrolet Tahoe or 2002 Chrysler Town and Country could receive up to $4,500 to scrap their vehicles and buy new ones.

"I’ve been sitting on the fence for about a year," said Jim Seegraves, 44, of East Lansing, Mich., who has been looking to replace his 2000 GMC Sierra pickup. "This legislation will help me get over the hump and get the car that I want."

Dealers, including those in the St. Louis area, say it will be a valuable tool to lure more shoppers to their showrooms. Every bit helps, said James Heutel, co-owner of Sunset Ford in south St. Louis.

Fuel economy on several Ford vehicles, such as the Focus and Fusion, would qualify for the rebates and attract new-car shoppers, Heutel said. Although "cash for clunkers" details still are being finalized, he believes St. Louis dealers will see a boost once the program starts.

"I think it’ll trickle down," he added. "I’m hoping to get sales out of it."

But while the program shows promise, one industry observer said it is a "drop in the bucket" for the struggling auto market.

The "cash for clunkers" bill provides $1 billion to run the program from July through November, funding that could generate as many as 250,000 new-vehicle sales.

That’s a minor sales amount, said Jeremy Anwyl, chief executive of auto information website Edmunds paydayloans.com. By comparison, the industry expects to sell less than 10 million vehicles in the U.S. in 2009, down from more than 16 million in 2007.

"This is not going to help the car industry in any material way," Anwyl said.

The program is aimed at replacing older vehicles — those built in model year 1984 or later — that get 18 mpg or less. An owner will trade in a vehicle and, instead of receiving the trade-in value from the dealer, he or she can apply a $3,500 or $4,500 rebate toward a more fuel-efficient vehicle.

Trade-ins have to be owned for at least a year, and the new vehicle must have a manufacturer’s sales price of less than $45,000. The rebate amount depends on the mileage improvement from the old vehicle.

The offer would make sense for vehicles with trade-in values less than $4,500.

A 1998 Jeep Cherokee 4-wheel-drive with about 150,000 miles, for example, might only get $1,000 to $1,500 as a trade-in vehicle, according to estimates by Kelley Blue Book. Since the 1998 Cherokee gets about 17 mpg, an owner could parlay it into a new Ford Escape Hybrid — 2009 versions get 28-to-32 mpg — and maximize the trade-in to $4,500.

Anwyl said most vehicles are worth more, and many owners of those qualifying vehicles either do not want an increased car payment or cannot afford one.

The government is expected to implement the "cash for clunkers" incentives by early August.

Angela Tablac of the Post-Dispatch contributed to this report

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KKR rethinks deal, may impact listing: source

Kohlberg Kravis Roberts & Co KKR.UL is considering separating a plan that links buying its Amsterdam-listed fund with its own moves to list on the NYSE, a source familiar with the matter said, throwing further doubt on whether the private equity giant will list in New York.

KKR’s plans to follow in Blackstone Group’s footsteps and become a publicly-traded New York Stock Exchange-listed company hinge on a complex deal to buy its fund, known as KPE.

Separating the two plans would give KKR, co-founded by “buyout king” Henry Kravis, the option to buy its Amsterdam-listed fund without the pressure of having to list at a difficult time to go public. The company could later decide to list under a different method if it desired.

KKR said in July 2008 it would buy Euronext-listed KKR Private Equity Investors (KPE), delist it from Euronext and launch the combined new company on the NYSE under the stock symbol “KKR” KKR.N. KKR had previously considered a more conventional initial public offering.

But KKR and KPE said in March they were reevaluating the deal in the face of the global financial crisis and later extended by four months the deadline to buy the fund — to August 31.

“As a matter of policy, we do not comment on rumors or speculation,” KKR said in an emailed statement late on Thursday cash advance. “We and the KPE Board continue to evaluate the advisability of the transaction. Any official announcement related to the transaction will be made via press release.”

The details were earlier reported by the Financial Times, which cited people familiar with the matter saying KKR is holding talks with a shareholder of KPE about a merger without a New York listing - at least for the time being.

The new arrangement could involve altered terms for the deal under which KPE shareholders would receive stakes in the combined entity, the FT report said.

It cited people close to the talks saying they were preliminary and cautioned that the outcome was uncertain.

The source who spoke to Reuters said that no decisions have been made.

The private equity industry has been struggling with the absence of leverage for new deals, as well as troubled portfolio companies and investors hurt by a fall in equities.

Rival Blackstone, the only other major U.S. private equity firm to go public, is trading at around $11.15, significantly less than its June 2007 IPO value of $31 a share.

(Reporting by Megan Davies and Ritsuko Ando; Editing by Dhara Ranasinghe)

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