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The House on Tuesday passed a bill making it easier for more companies to become publicly traded by bypassing audits and disclosures now required for investors.

The House voted 380-to-41 to pass the bill, which the Senate passed last week. The passage sends the bill to President Obama, who has indicated support.

The measure rolls back some rules the Securities and Exchange Commission enforces on small and medium companies attempting to make an initial public offering or IPOs.

"It is a victory for small companies and entrepreneurs who want Washington to reduce the red tape that stifles innovation, economic growth and job creation," said Rep. Spencer Bachus, an Alabama Republican who heads the House Financial Services Committee.

The bill has sparked concern from the retirement group AARP, investor groups, unions, consumer groups and even the head of the SEC. All of them said the bill could open the door for more failed IPOs and investor fraud.

The bill would relax SEC rules for small and medium-sized companies with less than $1 billion in gross revenue seeking to go public. The measure gives them up to five years, or until revenue tops $1 billion, to supply an independent audit and certain investor disclosures.

U.S. corporate tax rate: No. 1 in the world

Critics said $1 billion is too high a threshold — some 80% of firms going public would be able to bypass disclosures.

It would also make it easier for companies with as many as 2,000 shareholders to avoid registering with regulators.

The bill would also exempt firms from nonbinding shareholder votes on executive pay and benefits packages, which just came as part of the Wall Street reform law. In the aftermath of the financial crisis, the law made it tougher for CEOs to reap bonuses tied to soaring stock prices — particularly when the company is over-leveraged and making risky bets paydayloans.

Critics, including the Council of Institutional Investors, said that easing the rules applied to far too many companies and could make investors wary of investing in them.

"A company (with $1 billion in revenues) has the resources to comply with disclosures," said Jeff Mahoney, general counsel to the Council of Institutional Investors.

The bill would also allow companies to solicit investors — including the use of advertisements — when going public, which is currently prohibited. And it would allow them to raise money from larger numbers of small, less sophisticated investors.

Barbara Roper of the Consumer Federation of America warned the provision would make it easier for companies to take advantage of seniors, luring them to sink their retirement savings into an IPO.

"A retiree who has that nest egg isn’t necessarily a sophisticated investor and shouldn’t be speculating on private offerings," Roper said.

The bill would also allow what’s called "crowd funding," allowing firms to bypass regulations to raise money from large pools of small investors by directly soliciting them over the Internet. Critics are concerned about the potential for fraud.

The only change that the Senate made last week was to require that those working as an intermediary to such crowd funding register with regulators.

"The bill is far from perfect, but it’s a good bill," said Senate Majority Leader Harry Reid last week. "It’ll help capital formation." 

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Service producers are taking over from manufacturing as the driver of the almost three-year-old U.S. expansion.

The end of the recession in June 2009 triggered the biggest surge in production in a decade, propelled by rising demand from overseas and the need to replenish inventories and upgrade equipment. That is now giving way to increasing sales at places like restaurants, transportation companies and temporary-help agencies, leading to gains in employment that have bolstered the world

Singapore

It wasn’t the stock market debut that BATS Global Markets was hoping for.

The stock exchange operator on Thursday night announced it would sell 6.3 million shares at $16 apiece when it went public the following morning. Then, the next day, the shares plunged to 4 cents before trading was halted.

The reasons weren’t immediately clear. The exchange issued a statement on its website saying it would cancel all orders for stocks in the symbol range of A to BFZZZ for 10 minutes in the early afternoon.

The Wall Street Journal reported Friday that the Securities and Exchange Commission is investigating the rapid-fire, computerized stocks trading platforms and whether they give traders an unfair advantage. The Journal, which cited people familiar with the matter, said the investigation includes BATS.

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More than 1,000 indigenous protesters reached Ecuador’s capital Thursday after a two-week march from the Amazon to oppose plans for large-scale mining on their lands.

The protesters were joined by thousands of anti-government protesters in Quito, and some of the demonstrators clashed with police outside the National Assembly. Police repelled rock-throwing young men using tear gas and charging at the demonstrators on horseback.

Police said at least four officers suffered minor injuries in the violence.

The indigenous protesters were joined by students, activists and government opponents who criticized President Rafael Correa for signing off on plans for mining projects including open pit mines that are to extract copper and other minerals from the traditional lands of the Shuar Indians in southern Ecuador.

Thousands of Correa’s supporters gathered in parks and plazas for a counter-demonstration to show their support for the government’s policies, some of them in front of the president’s palace.

Correa’s supporters chanted: “The coup-plotters won’t pass! They’ll bump into the people!”

The leftist president addressed a crowd of supporters at a park, saying the government is willing to talk with indigenous leaders despite the disagreements.

“We’ve told them: They want to talk, perfect, but with the good-intentioned, good people. For that, they don’t need marches. We’re always open to dialogue,” Correa said. He called the protesters “counterrevolutionaries.”

“If they want to beat us, they should do it in elections,” Correa said in a radio interview.

The president said the government took measures to ensure security and the right of his opponents to protest peacefully. Hundreds of police officers stood watch at both demonstrations.

“But if there is an act of violence… clearly it will be from infiltrated opposition groups,” Correa said, adding that he thought the indigenous protesters had failed to rally much of a crowd.

Correa, whose spending on social programs has helped boost his approval ratings above 70 percent, has supported large-scale mining projects saying they represent a financial boon for the country guaranteed cash advance.

The march was organized by the Confederation of Indigenous Nationalities, the country’s indigenous umbrella group.

Delfin Tenesaca, one of the group’s leaders, said that if the president is truly willing to have a dialogue, he should receive the protesters. “He should also eliminate all mining contracts in order to respect the constitution, which prohibits all types of mining in parks, ecological reserves and water sources,” Tenesaca said.

The indigenous group’s president, Humberto Cholango, told reporters: “We want peace and no more insults by the president.”

“We want Ecuador to know that there are people here who are willing to question and tell the president his mistakes,” Cholango told the Ecuadorean television channel Ecuavisa.

The protest march began on March 8 in the Amazon town of El Pangui, about 350 kilometers (215 miles) south of Quito. The marchers took a winding route, hiking about 700 kilometers (435 miles) to reach the capital.

Near the starting point of the march, the government has authorized open pit mines. Under a contract signed by the president this month, Chinese-owned Ecuacorriente will begin stripping copper as early as next year from a hillside in Shuar country whose reserves are estimated at 2.1 billion kilograms (4.7 billion pounds).

The Indians hold title to their traditional lands, but the government maintains mining rights and isn’t legally bound to obtain the communities’ consent to begin mining projects.

While contracts specify that 10 percent of the royalties should benefit local communities, activists say that can’t compensate for harm to Amazon forests and watersheds.

The protesters, from various indigenous groups, also express concern about plans for more oil drilling in the country and a proposed gold mining project in the Amazon that aims to tap an estimated 6.4 million ounces of recoverable gold reserves, currently worth $10.6 billion.

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In a year when political stalemate is expected to block any real progress on fiscal reforms, House Republicans will take a swing at tax reform in their fiscal year 2013 budget proposal due out on Tuesday morning.

House Budget Chairman Paul Ryan and his caucus will call for a reduction in individual tax rates and brackets. Instead of today’s six brackets, with rates from 10% to 35%, they are calling for just two — 10% and 25%. It’s not clear how much income would fall under each bracket. (Washington’s $5 trillion interest bill)

The Republican proposal, worked out with House Ways & Means head Dave Camp, would also eliminate the Alternative Minimum Tax altogether.

Although originally intended to ensure that the very wealthy pay taxes, the AMT was never structured to keep pace with inflation.

So on paper the AMT is scheduled to bring in trillions of dollars in revenue over the coming years because it would capture more and more taxpayers who are not wealthy. But every year Congress passes costly "patches" to protect the middle class from having to pay the AMT, and adds the cost of those patches to the deficit.

Quiz: What the rich really pay in taxes

It was not immediately clear whether the House GOP plans to replace that forecasted revenue, but it seems unlikely since it is proposing to keep revenues as a share of the economy on par with the 40-year average of 18.1% of the economy’s GDP.

Since the financial crisis in 2008, revenues as a share of GDP have hit 60-year lows, coming in at around 15%. And going forward, independent budget experts have said the country may need to bring in more revenue than the historical average to meet entitlement benefit promises and adequately fund programs without slashing too deeply in any one area of the budget.

On the corporate tax side, the House GOP would lower the top tax rate to 25% from 35% and switch the United States to territorial system of taxation, meaning that U.S. multinational companies would only owe tax on foreign-made profits to the government of the country in which the profits were made.

Ryan’s new manifesto on health care

Currently, a U.S. company owes U.S. taxes on foreign profits once the money is brought home, and they can subtract from their Washington tax bill taxes they have already paid to the country where the profits were made. Some estimate that U.S. companies may be parking as much as $1 trillion abroad.

The House GOP proposal on corporate taxes differs from President Obama’s. He would lower the corporate tax rate to 28% and impose a minimum tax on foreign-made profits the year they were made to discourage companies from parking money abroad.

And as they have at every turn, House Republicans will reject outright most of Obama’s tax proposals for individuals, particularly those on the wealthy, including his proposed Buffett Rule to ensure millionaires pay at least 30% of their income in federal tax.

The emphasis on tax reform in advance of the formal release of the House Republican budget may indicate the GOP’s desire to turn the conversation away from their anticipated and polarizing proposals to reform Medicare and to cap discretionary spending at levels lower than the top cap agreed to by both parties last summer.

Democrats have expressed opposition to both prospects.

House Republicans are expected to propose a spending level that is about $20 billion less than that specified by the Budget Control Act, the deal that ended the bitter fight over the debt ceiling in August. If that’s the case, that could set off a battle with the Democratic-controlled Senate on federal spending just weeks before the November election.

Meanwhile, the most conservative factions in the House have been pushing for the GOP to propose spending levels lower than those likely to be proposed on Tuesday. 

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ST. LOUIS • City water workers have long worried that their bosses were looking to sell one of the city’s richest assets – its water – and their jobs along with it.

To that end, the city has hired water engineers Black & Veatch, for $245,100, according to the contract. The company will not, however, do the work itself, or at least not under this contract. Instead, it has been hired to help the city find another company to do the work.

But the contract outlines what Black & Veatch have to provide the city, and the first descriptions of the work to come are due – about now.

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At the start of each workday, Sanjiv Das reads the comments from CitiMortgage customers to employees who are trying to answer a question or fix a problem through one of the company’s websites.

A website CitiMortgage launched in December allows customers facing foreclosure or having difficulty making mortgage payments to post questions or comments to the company’s support team.

“There’s instantaneous feedback on what’s working and not working,” Das, CitiMortgage’s president and CEO, said in an interview. “Sometimes it’s painful.”

Painful certainly describes the condition of U.S. residential housing market and mortgage industry since Das was named to lead CitiMortgage in July 2008.

Based in O’Fallon, Mo., CitiMortgage is the mortgage lending subsidiary of Citigroup Inc., parent of the nation’s third-largest bank.

The subsidiary also has been buffeted by accusations of wrongdoing and increased regulatory oversight.

Despite the troubles, Das says CitiMortgage remains an important piece of Citigroup.

“Now it’s all about execution,” he said about moving CitiMortgage forward. “The team is in place. The structures are in place, and the strategy is in place.”

And righting the ship has meant more local jobs.

Das came from Morgan Stanley, where he was a managing director of its Institutional Securities Group. Das previously worked for Citi for eight years in the 1990s, overseeing product development and marketing, among other duties.

He returned to Citi to lead its mortgage business on the eve of the financial collapse of 2008.

“We knew we were in the eye of the storm,” Das said. “We didn’t know how big the storm would be.”

As the economy soured, Citigroup, its parent company, lost a combined $40 billion in 2008 and 2009. The credit crisis prompted Citigroup to accept $45 billion through the federal government’s Troubled Asset Relief Program, which it has since repaid.

The housing market has yet to recover, and Citigroup executives expect mortgage delinquencies to rise slightly this year.

While CitiMortgage’s parent reported a $11.3 billion profit last year, challenges remain.

On Tuesday, Citigroup received disappointing news in the Federal Reserve’s annual stress test results for 19 major U.S. banks.

The Fed wouldn’t allow Citigroup to increase payouts to investors. It said this would cause the bank to fail the test, which evaluated whether the financial institution has enough capital to withstand another crisis.

Other clouds facing the company include allegations of misdeeds related to its mortgage business and foreclosure practices dating back several years.

Last month, Citigroup agreed to pay $158 million to settle a civil fraud lawsuit against CitiMortgage for what the U.S. attorney’s office in New York called “reckless” mortgage practices over several years.

The U.S. attorney’s office alleged CitiMortgage pressured its quality control staff to reduce or downgrade findings of defects in government-backed loans, which led to losses. As part of the settlement, CitiMortgage admitted that it failed to comply fully with government requirements on FHA loans.

Also last month, CitiMortgage was one of five of the country’s largest mortgage servicers that agreed to a $25 billion settlement related to allegations of deceptive foreclosure practices lodged by the federal government and the attorneys general of 49 states.

The other banks included in the settlement are Bank of America, Wells Fargo, JP Morgan Chase and Ally Financial Inc.

The mortgage servicers, including CitiMortgage, “were engaged in widespread questionable foreclosure practices involving the use of foreclosure ‘mills’ and a practice known as ‘robosigning’ of sworn documents in thousands of foreclosures throughout the United States,” according to the U.S. Department of Housing and Urban Development.

NEW OPPORTUNITIES

While declining to comment on specific allegations, Das said CitiMortgage is working hard to comply with the new regulations it must follow stemming from the consent orders it signed with the government.

“Regulatory pressures have been top-of-mind,” he said. “It’s caused us to build out (our operations) to make sure foreclosure and loss mitigation is now very, very robust in terms of dealing with operational controls.”

What that means for O’Fallon’s headquarters and a CitiMortgage office in Dallas is new employees added over the last year to handle the extra oversight, Das said.

As mortgages and refinancings dropped in early 2011, CitiMortgage laid off 400 employees in four states, including dozens locally, to pare costs. Now, with the added staff to meet the new regulatory requirements, CitiMortgage’s workforce is 3,800 employees locally, which includes some contract employees, and 2,800 employees in Dallas.

The O’Fallon facility focuses on the front end of the mortgage business, including processing mortgage refinancings. Refinancings make up the majority of its current business.

Das’ office is in New York, but he said CitiMortgage’s headquarters remains firmly planted in the St. Louis region.

“It’s anchored in O’Fallon,” Das said. “We have a great tradition of being in Missouri. We have employees with long tenures here.”

A CitiMortgage initiative launched last summer included creating a support team of several hundred CitiMortgage employees — split between here and Dallas — that provides a single point of contact for customers.

If a homeowner has a question about a mortgage refinancing, each time they call Citi, the same representative who took their call in the past answers the phone, said Mark Danahy, CitiMortgage’s managing director based in O’Fallon.

Danahy was hired last July from PHH Mortgage, one of the largest U.S. originators of residential mortgages, as part of Das’ reorganization of top senior management at CitiMortgage.

“We have significantly transformed our connectivity with customers,” Das said. “Customers can literally speak to us online. On blogs, we’re answering customers’ questions.”

Das is now looking ahead at what’s next for CitiMortgage. He said he sees growth opportunities internationally where Citi’s credit card and other bank customers are already located. CitiMortgage’s international business has grown to equal its business in North America.

“With the rapid economic growth in Asia and Latin America … we can offer a full package of consumer services from credit cards to home loans,” he said. “The team is in place, the structures are in place, and the strategy is in place.”

Tom Lewandowski, a financial services equity analyst at Edward Jones, which has a “buy” stock rating on Citigroup, said Citi’s global reach should provide opportunities for CitiMortgage to grow outside of the U.S.

“If you look at Citi and its peers, you won’t find a more global business,” Lewandowski said. “I think growing in emerging markets is a good strategy in the long term.”

But some analysts aren’t convinced CitiMortgage has yet turned the corner.

“The settlement does not protect the banks from other enforcement actions, including securitization-related litigation or claims by borrowers,” Morningstar analyst Jim Sinegal wrote in a research note last month about the $25 billion settlement. “We do not expect these risks to subside anytime soon, creating headline risk for all of the major banks, and potentially significant financial risk for the most vulnerable institutions.”

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