Bair Is Open to Banks Profiting on Problem Loans

Federal Deposit Insurance Corp. Chairman Sheila Bair said Thursday she would be open to letting banks see some of the profits if they dump problem loans that ultimately recover some value.

The comments, made in a conference call with bankers Thursday, address a key industry concern with the government's plan for ridding banks of toxic assets.

While bankers understand unloading troubled loans will help clean up their books, taking bargain-basement prices could cause immediate pain and transfer the prospect of any future recovery to the buyers.

The Treasury Department's Public-Private Investment Program involves setting up investment funds to buy loans from banks. Ms. Bair said banks might be able to take an equity stake in those funds as partial payment for their loans, which would give them a payoff if the loans ultimately rise in value and would provide bankers with more incentive to sell troubled assets.

"We'd be open to comments on that," Ms. Bair said.

Domestic U.S. banks held loans valued at $6.5 trillion on their balance sheet last month, almost 60% of which are tied to consumer and commercial real estate. Those real-estate loans are causing the biggest headache and are likely the ones banks will hope to sell.

The problem is few investors will be willing to pay anything close to face value for such assets. If the price for impaired loans is below the face value of the loans minus the provision banks took to reserve for potential losses on the loans, banks' capital could suffer.

The FDIC's disposal of assets seized from failed banks gives some indication of the wide range of values the market is placing on bad loans. Last year, the FDIC auctioned off $38.6 million of real-estate loans that were originally valued at $58.4 million.

Loans made by banks in hard-hit states like California, Arizona, Michigan and Florida are valued the least, said Kingsley Greenland, chief executive of DebtX, an auctioning firm under contract with the government agency.

Top-tier, income-generating properties sell for as much as 90 cents on the dollar in regular FDIC auctions, Mr. Greenland said.

At the other end of the spectrum, COF Capital Partners LLC of Rocklin, Calif., paid $1.78 million, or only four cents on the dollar, for a portfolio of eight loans with a face value of $44.6 million, according to the FDIC's sale database.

The Treasury program aims to get investors to bid on the high side by letting them buy assets with lots of government-backed borrowed money and little cash down.

But observers said bankers may still hesitate to sell.

Some of the troubled loans still generate cash flow, and bankers might fear losing out on big gains in the loans when the economy improves.
Source http://online.wsj.com/article/SB123811926739754025.html

Not Just a Guy in a White Coat

Few would argue with the premise that some understanding of science is essential to making sense of the world today. Distinguishing between anecdotes and tested ideas means being able to draw on science and the scientific process to understand issues as varied as climate change, evolution and alternative energy.

Yet, many Americans' acquaintance with the scientific process is limited to a list they memorized from a textbook: Ask a question, form a hypothesis, conduct an experiment, collect data and draw a conclusion.

Just in time for the Year of Science 2009, a new Web site funded by the National Science Foundation offers a window to a better understanding about how dynamic and creative the scientific process really is.

With the contributions of "an astonishing set of advisers," Scotchmoor and her colleagues have developed a Web site that draws students into real-life examples--from the structure of DNA to advances in fueling technology to the discovery of insulin--to illustrate what science is and how it works. The site even offers a chance to evaluate pursuits such as astrology and apply a set of criteria to determine whether or not they constitute science.

The audience for the Web site is the general public as well as the educators (from kindergarten to undergraduate level) who are an essential part of young people's introduction to the scientific process and body of knowledge. Links to teacher resources include resources targeted to primary, middle school, high school and undergraduate-level educators. Instead of the five-part list representing a single scientific method in a textbook, there is an interactive chart showing how science works: the many motivations leading to exploration and discovery; the ways that ideas are tested out; the role of community analysis and feedback; and possible benefits and outcomes that result from scientific work.

Feedback from science teachers who have used the site have been very positive.

"Many of the teachers have a greater comfort level with science," said Scotchmoor. "They also noticed that their students were much more creative in how they approached problems, rather than saying, 'just tell me the steps and I'll do it.'"

Satellite data provide new view of smoke from wildfires

Scientists have a new tool for understanding how events in one region, such as wildfires, can affect air quality in areas far away.

Observations from NASA's Multi-angle Imaging SpectroRadiometer (MISR) show that the plumes of dust, smoke and particles from wildfires or volcanoes often rise past the atmospheric boundary layer, the turbulent lowest portion of the atmosphere, and are injected into the less-turbulent and higher free troposphere. The aerosols can remain concentrated there for long periods and also be transported great distances.

The MISR Plume Height Climatology Project, a repository for wildfire plume height data acquired with MISR, became publically available in early 2008 and supports studies of wildfires, climate change and air quality. The MISR INteractive eXplorer (MINX) application tool used to generate the database is also free and was the recipient of a 2008 NASA Space Act Board Award.

One of the project's goals is to generate data based on actual observations of biomass burning emissions from wildfires that can be used in global atmospheric models. The frequency of wildfires has increased over the past few decades, and such fires may be even more common in a future, warmer climate. Predicting the effects of climate change on air quality requires the ability to accurately model smoke injection and long-range transport.

The MISR instrument flies on NASA's Terra satellite.

Blind Area Elimination: Video Cameras on Surface Haulage Equipment

As surface haulage trucks continue to get larger, the corresponding blind areas are also getting larger. Since 1987, there have been 58 fatalities in the mining industry involving haul trucks where restricted visibility was determined to be a contributing factor. In these accidents, the equipment operator did not expect a person or vehicle to be in the immediate area. This is a serious safety concern throughout the mining community. The increased production levels afforded by the ever increasing size of haulage equipment must not be at the expense of miners’ safety. The Mine Safety and Health Administration strongly supports the use of video cameras in large haulage vehicles to help solve this problem.