Finance topics

New Zealand interest rates needn’t rise as much if the government cuts spending and reforms the tax system to curb property investment, Reserve Bank Governor Alan Bollard said.

“Achieving both low inflation and balanced growth is considerably easier in an environment of fiscal discipline and where the tax system is neutral with respect to investment decisions,” Bollard said in a speech in Christchurch today. Notes of a background paper on which his speech was based were e-mailed to Bloomberg News.

Bollard, who has kept the official cash rate unchanged at a record-low 2.5 percent since April, said yesterday he didn’t expect to start raising borrowing costs until mid-2010 as the economy emerges from a recession. Government spending programs put in place last year to buoy confidence and create jobs will help the economy expand 3.1 percent this year after shrinking 1.4 percent in 2009, he forecast last month.

“A failure to gradually remove the recent fiscal stimulus would put added pressure on monetary policy over the coming period,” Bollard said today. He made no other comment on the outlook for interest rates.

Prime Minister John Key’s government last year brought forward spending on roads and schools to generate jobs, and provided companies with funds so they could keep factories open on reduced hours rather than fire workers.

The government is also considering recommendations from a review of the taxation policy that includes introducing a levy on rental properties.

“We are hopeful that the report of the Tax Working Group will lead to a more efficient and even-handed tax system,” said Bollard. “Our concerns are to minimize tax-fueled property investment and consumption that might detract from more balanced savings and growth.”

Bollard has previously called for taxes to curb property investment, which he says can create a housing bubble.

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RALEIGH, N.C. — U.S. consumers and businesses are filing for bankruptcy at a pace that made 2009 the seventh-worst year on record, with more than 1.4 million petitions submitted, an Associated Press tally showed Monday.
 
The AP gathered data from the nation’s 90 bankruptcy districts and found 1.43 million filings, an increase of 32 percent from 2008. There were 116,000 recorded bankruptcies in December, up 22 percent from the same month a year before.
 
While experts believe some of the increase is due to a natural recovery as consumers and attorneys become accustomed to a recent overhaul of bankruptcy laws, the numbers indicate clear correlations to recession-weary regions. Arizona saw the fastest increase, a jump of 77 percent from the year before, followed by Wyoming (60 percent), Nevada (59 percent) and California (58 percent).
 
Emile Harmon, who owns a law firm in Tempe, Ariz., said the firm has doubled its staff to handle the surge in bankruptcy filings. The lawyers have been steadily shifting away from their other areas of business, civil lawsuits and divorce cases.
 
"Bankruptcy is kind of swallowing the whole practice." Harmon said. "There’s little time to do other stuff."
 
There’s also no sign that things are slowing down. Harmon said bankruptcies have been coming in waves, first with those 18 months ago who had adjustable-rate mortages, then with those who lost their jobs due to the housing downturn. Now he’s finding wealthy individuals and business owners who have finally succumbed to lower incomes and shrinking home values.
 
"A lot of the people we see were in a really good financial position two years ago," Harmon said. "People really look at you and say, ‘I can’t believe I’m here business cards."’
 
For three years, filings have been steadily rising back toward levels reached early in the decade before Congress overhauled the nation’s bankruptcy laws. The 2005 alterations made bankruptcy filings more cumbersome, a move that followed fears from lenders that some consumers were abusing the system to wipe away debts.
 
Bankruptcies surged to slightly more than 2 million in 2005 as consumers rushed to file before the new law took effect but then plummeted to 600,000 in 2006. They’ve been climbing ever since and in 2009 became the seventh-highest year on record, behind only the years 1998 and 2001-2005.
 
The 2005 spike had been preceded by a steady climb from 1.5 million in 2001 to 1.6 million in 2005.
 
John Pottow, a bankruptcy professor at the University of Michigan, said the return to the highs of earlier this decade illustrates the failures of the 2005 overhaul bill. He said the measure largely made filings more costly and time-consuming by forcing consumers to undergo a paperwork-heavy test to determine eligibility for Chapter 7 bankruptcy and adding liability for attorneys who provide help.
 
"It never made sense in the first place that you could change the laws and make all these bankruptcies go away," said Pottow, who would like to see the 2005 law changes repealed. "If people are encountering financial distress, you can only scare them away for so long before they come back again."
 
While every state saw a rise in bankruptcies, Alaska (up 12 percent), Nebraska (12 percent) and North Dakota (14 percent) performed best.

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If you want to buy a house, the state of Missouri wants to give you $1,250.

And if you make the place more energy-efficient, it will give you $500 more.

State officials are poised to pass a measure next week that would give a sizable break on property taxes to most people who buy a house in 2010. It is Jefferson City’s latest bid to boost the state’s weak housing market, and the newest item on a growing menu of sweeteners to make buying a house more appealing, sweeteners that some warn could eventually cause a hangover.

The measure was pitched last month by Gov. Jay Nixon and state Treasurer Clint Zweifel as a way to spur housing sales and spur the state’s economy.

"This is so vital to our state’s economic growth," Nixon said. "We want to do everything feasible to encourage people to buy homes."

So next Friday, they will ask the Missouri Housing Development Commission — which Zweifel chairs and to which Nixon appoints most of the members — to set aside $15 million of its reserve funds for one-time property tax reimbursements for Missourians who buy a home in 2010. To qualify, St. Louis-area households must earn $95,060 or less; if they do, they can get up to $1,250 in property taxes reimbursed by the state.

Home buyers who add energy-saving appliances, new windows or other "green" improvements, can qualify for another $500. With a $15 million cap for the program, the state expects to write between 9,000 and 11,000 such checks — roughly one for every 10 homes sold in Missouri this year.

It comes on top of the $8,000 federal tax credit for first-time home buyers, which many economists say has helped prop up home sales this year. Last month, Congress voted to extend that program through April and expand it to include $6,500 for some repeat buyers. States from California to Delaware have thrown in their own incentives, too, and in January the Missouri housing commission launched a program to give an advance on the $8,000 credit, a program more than 1,200 people have used so far. Illinois launched something similar in July.

Now, Missouri plans to up the ante. If the housing commission approves, the agency will put much of its reserve funds — separate from the state’s cash-strapped general budget — toward the waivers.

"This hopefully is another tool in the toolbox," Zweifel said. "It’s important to put our dollars to work."

Still, given Missouri’s record-high foreclosure rates and a job market that is giving pause to many would-be buyers, some housing advocates wonder if the $15 million might be better spent in other ways no faxing payday loan.

"In terms of the level of need, it strikes me as a little strange," said Chris Krehmeyer, president of Beyond Housing, a St. Louis-based group that provides mortgage counseling and builds affordable housing. "We’re not seeing folks who are buying homes saying ‘I wish someone would pay my taxes next year.’ People are saying, ‘I need help to stay in the home I own.’"

Typically, the state’s housing commission finances affordable housing projects and will issue nearly $100 million in tax credits for those projects in early 2010. But, Zweifel said, the broader housing industry is a big pillar of Missouri’s economy, and supporting it, too, means creating jobs. This provides a fast way to do it.

"The goal was partially to spur home purchases, but also to find a way to quickly put $15 million to work for Missourians," he said. "We wanted to create a program that helps spur economic development and job creation, not something that’s permanent in nature."

The temporary nature of this and the $8,000 federal tax credit has some housing economists warning of trouble when the programs end. Such props must be taken down eventually, and critics point to a plunge in auto sales after the end of the government’s "Cash for Clunkers" program as a warning for what might happen to the housing market.

Then there’s the question of just how much impact it will have. Most people aren’t going to make a decision on whether to move based on $1,250, said Carlos Garriga, an economist who studies housing at the Federal Reserve Bank of St. Louis.

"It’s just kind of a bonus," he said. "Even at the margins, how many people will move because of this? It’s not that big."

Still, said Mark Stallmann, chief executive of the St. Charles County Association of Realtors, it’s the sort of thing that makes it easier to buy a house. And with the real estate market as weak as it is right now, every little bit — even a $1,250 check from the state — helps.

"Anything that reduces the cost of homeownership, that’s an incentive to help families get in a home, that’s a good thing."

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Freer trade can help create jobs and support economic growth, and tariff-cutting accords should not be scaled back on account of the global downturn, senior U.S. and other officials said on Monday.

World Trade Organization Director-General Pascal Lamy told a WTO ministerial conference that completing the long-running Doha round would strengthen the global trading system that had helped countries come through the crisis.

But trade liberalization had to be backed by other domestic policies to absorb the shocks of increased competition, he told the opening session of the conference.

Launched eight years ago to open markets and help developing countries prosper through more trade, the Doha talks have been extremely tortuous. Political leaders have called for an accord in 2010, but a deal is not yet ready.

“The moment of truth is fast approaching when you will have to decide whether the 2010 target can be met,” Lamy told trade ministers from the WTO’s 153 members.

“Political leaders are practically unanimous that they want to meet it, but reaffirmation is not enough. Now we need action, concrete and practical action, to close the remaining gaps.”

U.S. Trade Representative Ron Kirk told Reuters that the ministers and senior officials gathered in Geneva needed to make sure trade can power continued growth and job creation.

“It’s an important opportunity for us to reaffirm the valuable role that liberalizing trade around the globe has in sustaining and promoting growth,” he said.

Many countries hold the United States responsible for the lack of progress in the Doha talks, as issues from healthcare to Afghanistan have higher priority in Washington.

But Kirk told the conference the United States was ready to move into the final stages of negotiations — provided agreement led to real new market opportunities in manufacturing and services as well as farming, the main focus of poor countries.

He repeated America’s call for big emerging countries like China and India to open their markets further to secure a deal.

Outgoing EU trade chief Catherine Ashton expressed concern that negotiations were not moving fast enough to reach agreement in 2010 and said the European Union was committed to a comprehensive deal in the months ahead.

LACK OF REGULATION

Criticism of the WTO and its free trade agenda has increased over the past year following global economic turmoil which many have attributed to a lack of oversight and regulation of financial services.

This week’s gathering falls on the 10th anniversary of a Seattle WTO ministerial meeting made famous by violent protests that contributed to the collapse of the conference. 

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Chrysler Group LLC still plans to shutter eight North American plants according to its initial schedule, Chief Executive Sergio Marchionne said on Thursday, as he dismissed recent reports that a Detroit-area plant would get a reprieve.

Marchionne, who is also the head of the Italian carmaker Fiat SpA, said the No. 3 U.S. automaker will stay with business decisions it made at the time of its April 30 bankruptcy filing, and would advise the U.S. autos task force of its updated turnaround plan.

Under its previously announced restructuring plan, Chrysler said it would close eight auto plants in North America, aimed at steering the faltering automaker toward recovery.

In the past week, reports have said that Chrysler’s Sterling Heights, Michigan plant slated for closure at the end of 2010 would remain open until at least 2012 as the company revamped the two sedans made there — the Chrysler Sebring and the Dodge Avenger.

“There are no plans on my desk that the decision is going to be reversed,” Marchionne told reporters at an appearance at Chrysler’s global headquarters.

Chrysler is offering an update to the White House’s autos task force this week, a U.S. Treasury official said on Tuesday.

“I think we are going to advise them of the fact, that, based on the current assessment of conditions, there is absolutely no need today to go up there and revisit that decision,” said Marchionne.

“And, if and when that need were to arise, then we will look at this as part of a wider set of choices that may or may not include Sterling Heights.”

Marchionne said Chrysler is working on the final details of a five-year turnaround plan to be unveiled in November. The company emerged from bankruptcy on June 10 by selling most of its assets to a group led by Fiat, which took a 20-percent ownership stake in Chrysler and full management control.

Marchionne said Chrysler is in a “cleansing process” similar to one that he led in 2004 when he started a successful turnaround of Fiat, and Chrysler’s weak September sales results do not reflect the true viability of the company.

Chrysler on Thursday reported a 64-percent plunge in September U.S. sales, compared to a year earlier.

He said a combination of factors including the end of the U.S. “cash for clunkers” buyer-incentive program and reduced incentive spending led to depressed sales figures for September.

“We are not bleeding like people think we are,” Marchionne said.

“The future (for Chrysler) is going to be a lot better” than what last month’s sales figures would indicate, he said.

After the “cleansing process” that includes an emphasis on cutting costs, Marchionne said “We need to go back and make products that people want.” 

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It helped Elizabeth Poelker buy her house.

It probably helped Paul Medler sell his.

But is the $8,000 tax credit for first-time homebuyers really helping the economy all that much? Enough to warrant extending it for another year, at an estimated cost of $15 billion? Enough to maybe even expand it to $15,000 apiece, for everyone?

That’s a question Congress is wrestling with these days, as the program starts to near its Nov. 30 closing date, and the real estate industry ramps up a full-throated campaign to keep the credits flowing. It’s unclear at this point what will be decided.

Nearly everyone agrees that the credits have helped keep the housing market afloat during a tough time. After they were enacted as part of the $787 billion federal stimulus Congress passed in February, existing home sales rose for four straight months, before dipping in August. The rate of sales is up 12 percent since March, according to the National Association of Realtors.

About 1.4 million people have already claimed the credit on their taxes, according to the IRS, with probably more awaiting paperwork or delaying until they file in the spring.

And, along with low prices and historically low interest rates, real estate agents say the credits are sparking interest in home-buying.

"There’s no question it’s had a positive impact on our business," said Jim Dohr, president of Coldwell Banker Gundaker, which has 25 offices in the St. Louis region. That’s especially true at lower price points. Coldwell’s business is up 23 percent from last year on homes sold for less than $100,000 and 16 percent for homes sold for $150,000 or less.

"Much of the action in our business is at the lower end, and it’s really being fueled by the first-time tax credit," Dohr said.

What is less clear is how many of those sales would have happened anyway.

Prices and interest rates are low, after all. And people still need a place to live.

Out of a projected 1.8 million sales that will use the tax credit this year, economists estimate that between 350,000 and 400,000 would not have happened without it. And a recent survey commissioned by real estate tracking firm Zillow found that, if the credit is extended another year, it would be a major deciding factor for 18 percent of first-time homebuyers — spurring an additional 334,000 sales in all.

That’s nothing to sneeze at, said Zillow chief economist Stan Humphries. But at $15 billion, it works out to almost $45,000 for every sale generated.

"It’s an expensive program," he said. "For every five homes, four were going to get purchased anyway."

But there’s still that other one — people such as Poelker.

She’s 25 and works at an accounting firm. Her lease in Maryland Heights was coming up this summer, and she had grown tired of renting but didn’t think she could afford a down payment. When the tax credit passed, she started looking.

Soon, she found a nice townhouse in Manchester, put in an offer, and closed in June.

"It really helped me make it work," said Poelker, who noted that her brother and a friend had also used the tax credit to buy houses. "I probably would have purchased in the next couple of years, but it helped me do it sooner."

Still, that raises another question about the tax credit. Is it just borrowing sales from the future?

Skeptics point to Cash for Clunkers, the government-funded program to help spur auto sales. After a surge of car-buying in July and August, September is expected to be car dealers’ worst month of the year, according to a recent report from JD Power. The same thing, critics say, could easily happen whenever the homebuyer credit expires.

But supporters say that’s all the more reason to prolong it, at least for a few months. The economy is still shaky. Any housing recovery is fragile at best. Winter is typically a slow season in real estate. The timing, said Scott Dettmer, general manager of Dettmer Homes in Cottleville, is bad all around.

"You’re taking the single biggest impetus for home sales in at least three years, and you’re going to expire it at what is normally a bad time anyway?" he said. "I’d like to see it extended at least through the spring, to give a bridge over what are normally a tough few months."

At least 20 bills have been proposed in Congress to extend the plan, including one co-sponsored by Sen. Majority Leader Harry Reid that would push it into June. Another bill — to extend the credit and make it $15,000 for all homebuyers — reportedly has 15 co-sponsors.

But that measure was stripped from the stimulus bill in February, and there seems to be a limited appetite for it now, as Congress wrestles with health care reform and other pricey legislation. Many observers don’t expect a resolution until the Nov. 30 deadline draws nearer.

And that will probably keep Paul Medler waiting.

He sold his home in Kirkwood in June to a first-time buyer who used the tax credit. It probably helped make the deal happen, Medler said. Now he’s renting, and waiting to find a good deal to buy, but prices in the neighborhoods where he’s looking still seem too high for this market.

Medler’s hoping the credit either gets extended to everybody — so he can use it — or ends in November as planned.

"After this stops I feel like we might have another dive in housing prices," he said.

And, at least in his case, that would be a good thing.

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Intel Corp Chief Executive Paul Otellini expects personal computer sales volume this year to “likely” at least match 2008’s, underscoring growing expectations that consumer spending is driving a mild recovery for the depressed market.

But with analysts expecting much of the fastest growth for Intel in future to come from non-PC arenas, Otellini stressed on Tuesday that software and embedded chip development would be crucial.

Intel plans to host a software applications development platform for its lower-end Atom microprocessor, which will allow developers to write programs that work across different devices and operating systems.

Otellini said Taiwan’s Acer and Asus, and PC maker Dell, would support the platform. Intel itself has no plans to get into the apps store business.

The company instead will provide the framework for developers to write software that can then be sold through others’ stores.

Otellini also talked about embedded electronics: microchips in car audio and communications systems, for instance, that can synchronize with computers and smartphones.

Intel has said that market represents a $15 billion opportunity. Otellini on Tuesday said BMW and Daimler would use a version of the Atom chip for in-vehicle information and entertainment devices beginning 2012.

On Intel’s core business, Otellini seemed to echo industry expectations of a flat to potentially better 2009 compared with last year, when PC sales fell off a cliff.

Otellini said the PC industry remains “alive and well” in the middle of the worst U.S. recession in 70 years, with unit sales seen at flat to slightly higher this year versus last.

Goldman Sachs this month raised its forecast for PC unit sales to “roughly flat,” compared with previous expectations for a 4 percent decline, citing resurgent consumer and government-education spending.

(Reporting by Clare Baldwin)

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The federal government signalled today that it would be the final judge of whether Canada's conventional broadcasters would be allowed to charge cable and satellite companies a fee to carry their signals.

Heritage Minister James Moore took the unusual step of inserting himself into the contentious fee-for-carriage debate by ordering the federal broadcast regulator to hold a separate set of hearings to consider consumer interests on the matter.

The Canadian Radio-television and Telecommunications Commission later confirmed that it would do so in December. Shortly thereafter, it must provide Ottawa with a wide-ranging report on what fee for carriage could mean to consumers' already-strained pocketbooks.

"Our government has a record of putting consumers first," said Moore in a press release. "When it comes to the broadcasting system, our stance is no different. That is why we've directed the CRTC to consider what fee-for-carriage would mean for Canadians, because this is an issue that affects them directly."

It is rare for the federal government to encroach on the CRTC's independence. And Moore's interjection was bound to fuel the simmering debate about the veracity of the agency's arms-length relationship with Ottawa.

Political posturing aside, Moore's decision to take the reins follows three ugly years of squabbling between broadcasters and television service providers.

Fee for carriage, already twice rejected by the CRTC, will be considered for a third time at a separate set of hearings in November. The December hearings, meanwhile, will mark its fourth go-around.

Broadcasters argue carriage fees are a “matter of fairness,” arguing the business model for over-the-air television is “broken.”

Cable and satellite companies, however, liken the proposal to a bailout for broadcasters that overspent on acquisitions and U.S. programming in recent years.

Those television service providers currently pay carriage fees to distribute specialty TV channels but not for conventional stations as those signals can be pulled in for free with an antenna.

Canadian consumers, meanwhile, have found themselves at the centre of the television industry's tug of war.

Both sides, each purporting to champion consumer interests, have ratcheted up public relations offensives in recent weeks bad credit personal loan lenders.

Broadcasters CTV, Global and CBC teamed up to launch a national advertising blitz called “Local TV Matters.”

Cable giant Rogers Communications Inc., meanwhile, sent a strongly-worded email to customers earlier this month warning them that fee-for-carriage could inflate their cable bills by up to $10 a month. Shaw Communications Inc. has also taken similar action. Bell, which owns Bell TV satellite service, is busy engaging journalists on the issue.

Both sides, however, managed to unanimously agree today that the federal government's decision to take charge of the file was a good idea.

CTV, Global and CBC issue a joint statement welcoming Ottawa's commitment to consumers.

“We are in agreement that consumer interests should be front and center when it comes to implementing a new negotiation for value model for local television across the country,” said Charlotte Bell, Global's senior vice-president of regulatory and government affairs.

Paul Sparkes, CTV's executive vice-president of corporate affairs, called the government's engagement a positive step forward. Consumers, he added, should not have to pay another cent for local television.

Steven Guiton, CBC's chief regulatory officer, said tens of thousands of Canadians have already voiced their support for local television.

Despite being diametrically opposed to broadcasters on fee for carriage, cable and satellite companies appeared to share their enthusiasm for the government's decision to put consumers first.

“The government says the CRTC must take into account the impact on consumers of a fee-for-carriage regime which is something we have consistently advocated,” said Phil Lind, vice-chairman of Rogers Communications.

Mirko Bibic, Bell's senior vice-president of regulatory and government affairs, echoed those sentiments.

"Minister Moore and the government have clearly recognized that an issue of such broad impact on consumers as potential new TV taxes should be considered a matter of government policy and therefore decided by government," he said.

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NEW YORK — A federal judge said Monday he needs more information before he can decide whether to approve a $33 million settlement between Bank of America Corp. and the Securities and Exchange Commission over executive bonuses.

“I am concerned that we have not yet ferreted out all that the court needs to know,” U.S. District Judge Jed Rakoff said at a hearing in New York Monday afternoon. Adding that he is looking for “the truth, not the spin,” Rakoff ordered both sides to provide additional details to the court within the next two weeks.

Bank of America, without admitting or denying the allegations, agreed last week to pay the fine to settle charges that it misled investors about Merrill Lynch’s plans to pay bonuses to executives even as it prepared to report billions in losses. Those losses affected Bank of America’s bottom line after its takeover of the troubled investment bank was completed.

The SEC alleges that Bank of America promised its shareholders that Merrill would not pay year-end bonuses without getting the Charlotte, N.C.-based bank’s prior consent, but in fact had already given Merrill authorization to pay up to $5.8 billion in extra compensation.

In back-and-forth questioning, Rakoff probed the allegations, describing the SEC’s filing as “a fairly uninformative, bare bones complaint.” He asked SEC officials who exactly approved the year-end bonuses.

“Was this some sort of ghost that performed these actions?” Rakoff asked David Rosenfeld, the associate regional director in the SEC’s New York office. “Or were there human beings who wrote these documents?”

Rosenfeld demurred, but Rakoff pressed on, asking if former Merrill CEO John Thain and Bank of America CEO Kenneth Lewis were responsible for the bonuses. Rosenfeld said that both men had been advised by their lawyers, but that Thain and Lewis had not been a focus of the SEC’s investigation.

Another key issue centered on just how the SEC came up with the $33 million price tag for the settlement, and if that money would be paid out of the billions in federal aid that Bank of America has received.

Rosenfeld, speaking so softly at times that both Rakoff and a court reporter had to ask him to speak up, said the amount was “fair and reasonable,” based on a limited number of prior cases. But Rakoff called it a “tiny, tiny fraction of what was disclosed,” if in fact, Bank of America was not truthful with its shareholders.

Bank of America, along with Citigroup Inc. and insurance giant American International Group Inc., is among the largest recipients of government aid online instant cash advance. It has received $45 billion from the federal government’s $700 billion bank rescue program.

In a statement, Bank of America spokesman Scott Silvestri said that taxpayer money would not be used to pay the settlement. He also said that the SEC complaint does not allege that anyone intentionally did anything wrong.

Rosenfeld, in a statement, said the agency will continue to present the facts of the case as well as the additional information the judge has requested.

Both the SEC and Bank of America will submit additional paperwork by an Aug. 24 deadline. Each side will then have time to review the new materials, and the judge could then rule or order additional hearings.

Bank of America agreed to purchase Merrill in a deal that was hastily arranged Sept. 13-14, 2008, the same weekend that Lehman Brothers collapsed. Bank of America CEO Ken Lewis and Merrill Lynch CEO John Thain announced the deal Sept. 15.

The acquisition came as Lehman’s collapse caused panic in the financial markets and investment banks such as Merrill faced billions of losses on soured mortgage investments.
Merrill ended up paying $3.6 billion in bonuses in 2008, the SEC said, even though it lost $27.6 billion that year, a record for the firm. The bonuses amount to nearly 12 percent of the $50 billion that Bank of America paid for Merrill.

During the hearings Monday, Bank of America attorney Lewis Liman defended the bonuses. He said the average award amounted to $91,000, which he described as “not a lot of money,” a point Rakoff quickly contested. Liman also said the bonuses were a “retention tool” needed to prevent employees from deflecting to competitors.

But Rakoff questioned the reality of such a threat, given the state of the financial industry.

“How many banks were hiring new people at this time?” he asked. “Or how many brokerage firms, assuming any were left, were hiring at this time?”

The acquisition and bonus payments have caused Bank of America internal issues and angered some shareholders. Lewis’ management ability has been questioned and shareholders stripped him of his chairman’s title in April.

For the SEC, the outcome of today’s hearing may slow down the agency’s efforts to quickly make settlements, said Robert Heim, a former SEC attorney and a partner of Meyers and Heim in New York.

The agency, under Chairman Mary Schapiro, has been investigating cases at a rapid clip in the past few months.

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OTTAWA–Industry Minister Tony Clement says he’s taking U.S. Steel to court over its acquisition of Stelco Inc. in order to show foreign takeover bidders that Ottawa is serious about protecting Canadian interests.

Clement, who oversees foreign buyouts, announced yesterday that he is going to the Federal Court of Canada to make U.S. Steel live up to promises it gave Ottawa in 2007.

It is the first time the federal government has taken legal action to force a company to meet its promises under the 1985 Investment Canada Act.

Ottawa wants the court to order U.S. Steel to comply with commitments it made on production, research and development and investment, in exchange for being allowed to acquire Stelco in Hamilton.

The government is seeking a fine of up to $10,000 a day for every day the court rules the company is not in compliance, Clement said.

Despite the promises U.S. Steel made to Ottawa, in March the company temporarily shut down most of its production at two large former Stelco operations in Ontario, leaving the future of hundreds of employees up in the air.

Clement said Ottawa can’t just "roll over" and ignore the commitments made by takeover bidders.

"If I let these things go, quite frankly, it will be open season for other potential foreign investors to think that they can make promises and then break those promises," he told the Toronto Star.

"Every company that invests in Canada, if they make a promise to Canadians and to the government of Canada, they have to keep that promise."

Clement said U.S. Steel is not meeting the commitments it made to Ottawa.

"I remain of the view that U.S. Steel is not complying with its undertakings, and I am not satisfied by its explanations for non-compliance," he said guaranteed payday loans.

Clement’s action is a change of direction for the Conservative government on the issue of foreign takeovers. In 2006 and 2007, the Harper government was criticized for presiding over a wave of buyouts that saw many of the country’s corporate mainstays – including the bulk of the steel industry – fall under foreign ownership.

"The Conservative record was one of rubber-stamping all of those takeovers," United Steelworkers economist Erin Weir said.

"So, I think perhaps now the government does feel a bit uncomfortable, it does feel some obligation to enforce the commitments made as part of those takeover." .

U.S. Steel took sharp issue with Clement’s decision.

"We are disappointed that the minister has apparently decided to pursue the matter in the courts while ignoring our numerous requests to meet with him on these issues and while disregarding the ministry’s own guidelines with respect to foreign investment," said James Garraux, a senior vice-president and general counsel at U.S. Steel.

"We will vigorously defend our record at U.S. Steel Canada in the appropriate forum," Garraux added.

A U.S. Steel spokesperson was unable to explain what Garraux meant when he said Clement was ignoring Canadian government guidelines.

Clement said he had met with U.S. Steel and exchanged correspondence with the company.

But Clement said the company tried in its correspondence to present legal positions "basically changing the deal" it had struck with the federal government two years ago.

Clement said the company’s statements yesterday were "all a distraction" from the issue of compliance.

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