eNews March 9, 2010

March 9, 2010

News Briefs

  1. 2010 Credit Congress Offers New "Executive Exchange" Sessions
  2. Transition from Social Media Friendship to Face-to-Face Relationship Not Difficult or Immediate
  3. FTC Appeals ABA Exemption to "Red Flags" Rules
  4. Austin: Always Try to Route Export LCs Through Your Global Bank
  5. Greece Tightens Belt, Concern Continues
  6. 2009 Bankruptcy Numbers Up Nearly 32%
  7. Fed: Economic Recovery Runs Into Snow Bank

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Upcoming Events



2010 Credit Congress Offers New "Executive Exchange" Sessions

This year's Credit Congress & Exposition, in Las Vegas on May 16-19, marks the first time the conference schedule has included an afternoon of "Executive Exchange" sessions, offering attendees a round of participant-driven panel discussions where they can direct the focus and depth of each chosen subject.

These sessions will be moderated by the best and brightest in their field, with some always-reliable NACM instructors and leaders working side-by-side with newer faces. The topics for the six different sessions will be bankruptcy, building and construction, credit and collections, international issues, performance metrics, and agriculture, steel and other commodities. Four of the six sessions will be led by NACM past national chairmen and the other two by officials at Fifth Third Bank and D&B.

Attendees can email questions and suggested topics of discussion in advance to conventions_info@nacm.org with "Executive Exchange - (insert session topic)" in the subject line (i.e., Executive Exchange - Bankruptcy).

Such a format is something new for NACM's Credit Congress. While lively and relevant discussions often occur spontaneously throughout the program, whether during networking events, certificate sessions, or one of the dozens of concurrent educational sessions, this year's "Executive Exchange" segment gives attendees the chance to dictate and drive an agenda.

To learn more about these sessions, as well as the rest of this year's exciting program, visit http://creditcongress.nacm.org.

Jacob Barron, NACM staff writer

Have a Ball With Some Friendly Competition

This year's designee and GSCFM alumni event is being held at the Rio's Lucky Strike Lanes bowling alley. This is a great networking opportunity in a fun atmosphere. Connect with your peers and some pins during this evening, complete with classic alley food fare.

"Lucky Strike Lanes features oversized, retro bowling photographs both inside and outside the red brick venue. The alley is complete with oversized couches and a gigantic neon-lit, script-lettered Las Vegas sign that radiates light over the back-lit lanes. The venue houses state-of-the-art technology including five projection screens descending from a cascading, wave-patterned white ceiling, and score screens complete with picture-in-picture, perfect for viewing sporting events while also keeping track of bowlers." - The Rio Hotel

Click here for more information on this and other networking and optional events at this year's Credit Congress in Las Vegas.

Transition from Social Media Friendship to Face-to-Face Relationship Not Difficult or Immediate

Using social media has become one the quickest and easiest ways to meet people in the business world. However, don't allow the notion that forging a cordial relationship over a keyboard and computer screen means a deep kinship is firmly in place when meeting such contacts in-person for the first time.

Hazel Walker, president of the Referral Institute of Indiana, believes those who can find ways to use social media (LinkedIn, Facebook, Twitter, etc.) in both a business and personal manner with industry contacts tend to be a step ahead of the game at meetings or conferences attended by their online "friends."

"I want to see what my friends and customers are talking about, what they're excited about," said Walker, who will present a March 17th NACM teleconference on the use of social media. "Even if someone on my social media just had a baby and posted something about it, I can send them a card. People are always keenly impressed that I was paying attention to them. And it's really easy to do."

Additionally, Walker notes that those who use their business' social media to listen and have a real dialogue on pressing industry topics are much more likely to transition from a social media relationship to a strong in-person relationship than those who are constantly using such a platform constantly to push an agenda or product for sale.

Nadia Bilchik, of Atlanta-based Greater Impact Communication, said use of social media helps her figure out, in advance, who among her contacts will be attending key industry conferences and subsequently make plans with them. Bilchik adds that LinkedIn's advanced search option is particularly helpful with such an effort.

Still, Bilchik warns that using social media tools are not simply a way to skip key phases of developing a strong business relationship more rapidly.

"It takes time to develop face-to-face relationships - it doesn't start or end with one conversation," said Bilchik, a presenter at this year's Credit Congress. "It usually takes a series of conversations in person to become true allies. Don't expect that just because we're on LinkedIn together that we're automatically the best of friends."

More information on Walker's social media teleconference and Bilchik's Credit Congress session can be found on the NACM website.

Brian Shappell, NACM staff writer

Joint Check Agreements

How one crafts a joint check agreement can be crucial to how such a pact holds up in bankruptcy court. One certainty is that there is no such thing as a "standard" joint check agreement.

As such, James Fullerton Esq. will highlight the wide variety of wordings in such agreements as well as the protection they offer a supplier on a construction project during the NACM teleconference "Joint Check Agreements," on March 15th at 3:00pm EST. The Virginia-based attorney's firm, Fullerton & Knowles, P.C., is widely known for its Construction Law Survival Manual, which outlines everything from contract litigation to mechanic's liens to bankruptcy.

To learn more or register, click here.

FTC Appeals ABA Exemption to "Red Flags" Rules

The Federal Trade Commission (FTC) recently appealed a 2009 court decision to exempt lawyers from the agency's "Red Flags" Rules.

In December of last year, the U.S. District Court for the District of Columbia ruled in favor of the American Bar Association (ABA), which had sued the FTC for making its anti-identity theft rules apply to lawyers. The court stated that the agency exceeded its authority by applying the "Red Flags" Rules to lawyers engaged in the practice of law and ordered the commission to correct its course. Clearly, the FTC disagreed with the court's decision and filed an appeal late last month.

ABA President Carolyn Lamm expressed disappointment at the agency's appeal and predicted victory for her association nonetheless, citing a previous victory against the FTC in a separate case in the same court five years ago. "The D.C. Circuit Court of Appeals resoundingly upheld the American Bar Association's lower-court victory in 2005 against the commission in the Gramm-Leach-Bliley lawsuit, and we are anticipating no less a victory in this case," she said.

The appeal marks the first FTC action on the "Red Flags" Rules in some time. The agency's last move on the regulations came in October 2009, when the FTC announced another in a series of delays of the rules' implementation. Financial institutions and creditors are now expected to comply with the rules starting on June 1, 2010.

NACM has repeatedly covered the "Red Flags" Rules as they apply to business creditors and worked with the Commission to ensure that companies large and small have the materials necessary to comply with the regulations when they go into effect. To learn more, visit NACM's advocacy page, or the FTC's "Red Flags" nerve center.

Jacob Barron, NACM staff writer

New MLBS Half-day Workshop Coming in March!

Join NACM's Mechanic's Lien & Bond Services (MLBS) Director Greg Powelson for his next half-day lien and bond workshop on March 19th at the Norwalk Marriott in Norwalk, CA. In "Liens & Bonds: Building the Optimal Credit Department," Powelson will take attendees through the many idiosyncrasies that accompany construction credit and the many ways in which liens and bonds can be used to secure payment on what are often risky projects. From collecting job information all the way through foreclosure, attendees will get a fast-paced look into how they can create the optimal construction credit department.

To learn more about the program, register or read testimonials about Powelson's previous presentations, click here.

Austin: Always Try to Route Export LCs Through Your Global Bank

There are many ways to save money when using export letters of credit (LCs), and many of them can be tied to ensuring the use of one's primary bank.

Danielle Austin, of Export Trade Associates, an expert speaker on LCs, and a former senior vice president at Bank of America, recently led the NACM teleconference "Export LCs 101 and the Fundamentals" that focused heavily on saving money for exporters. A big part of such savings starts with ensuring agreements contain specific instructions to send LCs through your bank, said Austin. It's one of the reasons why having a bank that does business globally as a company's main financial institution can pay dividends.

"Any time a bank touches something, it costs money," said Austin of trying to cut out "middle man" banks.

She also touched on confirmed letter of credit. Remember, confirmed letters linked to banks that aren't your primary institution don't have to be accepted outright. As Austin puts it, "Why should we pay to get paid?" While it is a more conservative approach, there are many companies that ensure most, or even all, letters of credit are confirmed. But remember, confirmed letters linked to banks that aren't your primary institution don't have to be accepted outright. "If you see that a letter of credit comes in confirmed, it doesn't automatically mean you have to accept it that way," said Austin. "Ask for an amendment to lift the confirmation. It's usually a couple thousand dollars to have an LC confirmed."

Austin also touched on the idea of occasionally asking customers for letters of credit in certain situations because it can be seen as mutually beneficial. She suggests, "We're allowing our customers to play in the global game. They're establishing credit with all these issuing banks instead of just sending cash in advance. In some cases, we're doing these customers a favor, and they're building credit with these banks."

To learn more about NACM's teleconference series, click here.

Brian Shappell, NACM staff writer

Credit Reports

NACM understands that business credit reports are the keystones that help credit professionals make sound credit decisions. NACM Affiliates can provide credit professionals with the most complete, objective and accurate reports available.

• Business Credit Reports
• Business Owner Reports
• Summary Reports
• Scoring Reports
• Small Business Reports
• International Credit Reports
• Country Risk Reports
• Monitoring Service
• Public Record Data

Click here to learn more about NACM's Credit Reports.

Greece Tightens Belt, Concern Continues

Though a massive budget deficit continues in Greece, it appears the reeling nation has finally found ways, popular or not, to slow its economic woes. Still, it remains to be seen whether economic policy makers in Greece, long known for its budget and spending inefficiency, will go far enough.

Days after financial experts expressed deep concerns about Greece's previous inability to tighten its financial belt and the subsequent negative impact on the Euro, including those at the recent FCIB Round Table in New York (see March 2 eNews), the nation finally unveiled an austerity plan worth nearly five billion Euro. The mere announcement of the plan helped slow the financial crisis and earned praise from more financially conservative member-nations in the European Union, notably Germany, because it will help reduce the escalating annual Greek budget deficit. The International Monetary Fund also noted it believes Greece will emerge from its economic crisis without a bailout.

This should be good news for U.S. companies doing business in Greece as the exploding number of late payment histories from companies based in Greece became apparent in late 2009 amid the downturn and lack of confidence in fiscal policy there. Additionally, the value of the dollar will likely rise as a "safe haven asset" as long as the Euro continues to struggle, which is a probability at least for the remainder this year. Still, Enam Ahmed, senior economist at Moody's Economy.com, characterized the Greek spending cuts and new tax measures as "a welcome step, but more will likely be needed in the coming years." However, Greece does not have the strongest record of following through with necessary financial belt tightening. Additionally, the austerity plan has incited a wave of violent protests from thousands of Greek nationals who argue that a reduction in wages and hike in taxes is unfair and designed to make the poor feel the brunt of the economy's weakness. Greece's plan does call for some significant pay cuts for its federal workers along with the dropping of many bonuses, freezing of pensions and a massive tax hike on consumer items such as alcohol and cigarettes.

While EU members are hopeful Greek policy will help stabilize the Euro, similar crisis situations have emerged in nearby Spain and Portugal as do fears of moral hazard linked to previous and potential EU bailouts.

"Euro zone member states are worried about the deterioration in confidence over the single currency project stemming from the debt problems," said Ahmed. "However, any help will undermine current EU rules and institutions in place to ensure fiscal sustainability of member states. A safety net may also prove to be a disincentive for other highly indebted nations to get their books in order quickly. But, without any concrete measures by the Euro zone to support Greece, markets will continue to be troubled by the debt problems in Europe."

Brian Shappell, NACM staff writer

Certification Exams at Credit Congress

Start off your Credit Congress experience knowing you'll soon have a new designation! Credit Congress offers both an exam review the morning of Sunday, May 16 and exams in the afternoon for each the CBA, CBF and CCE designations. Then unwind from it all with light fare and drinks at the Credit Congress Opening Reception in the Expo on Sunday evening.

Get ready now! The paperwork deadline for the May exams is March 29th. Contact the NACM Education Department for more information, and sign up through the Credit Congress registration.

2009 Bankruptcy Numbers Up Nearly 32%

Bankruptcy filings for the 2009 calendar year rose by 31.9%, according to new data released by the Administrative Office of the U.S. Courts. In the 12-month period ending December 31, 2009, a total of 1,473,675 bankruptcies were filed, up from 1,117,641 in the same period a year earlier.

The latest data continue the trend of steady filing increases since 2006, when there were 617,660 bankruptcies in the first full year after the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) took effect. The prior year, in a rush to avoid the more stringent aspects of the BAPCPA, more than two million bankruptcies were filed before the law entered into force.

The overwhelming majority of bankruptcy cases are non-business, which comprised 1,412,838 of the filings in calendar year (CY) 2009, up 32% from the 1,074,108 filings in CY 2008. Business filings totaled 60,837 in CY 2009, marking a 40% increase from the 43,533 filings in the year prior.

Chapter 12 filings rose more than any other type of bankruptcy, by 58% in CY 2009, to a total of 544. Chapter 11 filings rose by 50% to 15,189, while Chapter 7 filings were up by 41%, topping out at 1,050,832. Chapter 13 filings experienced only a 12% bump from 362,705 in 2008 to 406,962 in CY 2009.

Complete copies of the data can be found at the U.S. Courts website.

Jacob Barron, NACM staff writer

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Fed: Economic Recovery Runs Into Snow Bank

Traffic was not the only thing affected by the wave of snow that blanketed much of the nation, especially the East Coast, in late January and February.

The Federal Reserve's periodic Beige Book summary of economic conditions found a rebound continuing to press forward, but growth was muted somewhat in many areas because of widespread, often record, snow storms. Fed contacts found overall improvements in consumer spending and manufacturing activity. However, commercial real estate remained weak in most districts and continued to show signs of deterioration.

District 1 - Boston: Greater New England is one of the few regions able to report modest signs of recovery in commercial real estate activity, notably in Boston and Providence. Still, any upticks in activity in commercial rentals or sales tended to be limited to the highest-quality properties in the market. Most contacts believe conditions in the sector will improve in 12 months.

District 2 - New York: Demand for commercial real estate and industrial loans continues to plummet, as many appear pessimistic that tight credit standards will facilitate approvals. Fed contacts note that lending for commercial products appears tight or worsening throughout the region. As such, commercial real estate remained "exceptionally weak" and is expected to remain that way in greater New York for some time.

District 3 - Philadelphia: Credit quality continues to hold stable in District 3, and commercial bank lending has actually been on the upswing. Still, bankers around Philadelphia predicted tighter credit standards this spring, especially in commercial real estate, as well as softened demand.

District 4 - Cleveland: Commercial real estate activity in the district has slowed to a crawl. Fed contacts reported most activity in the area was on public works and education projects. Reports of business credit delinquencies were mixed, with most negative news coming from real estate portfolios.

District 5 - Richmond: Banking contacts in areas like Richmond and Washington, DC noted lending activity, while soft, remained stable in recent months. Those contacts indicate businesses expressed interest in loan terms, but few were willing to make a move because of continued economic hardship in the Midwest industrial belt.

District 6 - Atlanta: Commercial real estate remains anemic in the region, partly due to the glut of vacant new condominiums throughout the city and its suburbs. Banks reportedly have ample liquidity to lend at present, but have shown great reluctance to do so because it would reduce cash reserves.

District 7 - Chicago: Overall credit conditions around the Chicago area were largely unchanged between the beginning of the year and recent weeks. Business credit lines are operating at low utilization levels and companies appear to be playing a wait-and-see game before committing to any new debt.

District 8 - St. Louis: Business loan demand remained stable, as have credit standards in all segments except for commercial real estate, where conditions tightened on fear of continued losses. Improvements in commercial real estate are expected within six to 12 months, though some signs of hope can already be found in Memphis and St. Louis.

District 9 - Minneapolis: Commercial real estate remained mired in a slump, but did not worsen in recent weeks. Little expansion is expected in the area during the first half of 2010.

District 10 - Kansas City: Banking contacts told the Fed that loan quality conditions are expected to improve significantly throughout 2010. Still, lending for commercial real estate projects remains stunted and is "an impediment to long-run growth."

District 11 - Dallas: A lack of demand for business credit and widening concern over regulatory requirements at smaller banks rendered lending conditions in District 11 "feeble," said the Beige Book. Houston was among the only areas with news of mild improvements in commercial real estate conditions, which are not expected to rebound region-wide before 2011.

District 12 - San Francisco: Business credit demand remained largely unchanged at low levels as conservatism on capital spending and hiring continues amid the slow economic recovery. Demand for new commercial real estate was low and unstable, much like conditions in 2009.

Brian Shappell, NACM staff writer

To view past eNews issues or to visit the NACM Archives, click here.



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