Insight: Krawcheck, possible SEC head, raises Washington image

Sallie Krawcheck has been quietly raising her profile in Washington. For six months the former executive at Bank of America and Citigroup has been meeting with lawmakers on both sides of the aisle, offering her insights on a variety of issues including "too big to fail banks" and money market fund reform.

Krawcheck, 48, who was ousted from senior jobs by both banks in recent years, had already sought to distance herself from Wall Street "fat cats" through op-eds, social media posts and TV appearances that have positioned her as an investor advocate.

It all helps to explain why there has been speculation in the media in recent days that Krawcheck has become a contender to be chairman of the U.S. Securities and Exchange Commission, after last week's announcement that current head Mary Schapiro will soon be stepping down. President Barack Obama named SEC Commissioner Elisse Walter to take over the regulator as chairman designate but he will need to either renominate her next year or find someone else as a permanent replacement.

To some, talk of Krawcheck as a candidate came as a surprise given her background as a former executive at banks that needed to be rescued by the government and her lack of Washington experience.

And one person familiar with her thinking said that Krawcheck's efforts over the past few months were not necessarily intended to position her for a shot at the top SEC job. Rather, after getting fired from Bank of America, Krawcheck decided that whatever she does next she wants to get a job that addresses investor advocacy issues.

But others say the SEC job would fit with her views and approach.

"She has always been willing to take controversial views and she gets the industry," said Gary Black, global co-chief investment officer at Calamos Asset Management, who worked with Krawcheck when she was at research house Sanford C.Bernstein, and keeps in touch with her. "She brings a practical view on how to regulate the industry."

New York Senator Charles Schumer, a senior Democrat on the Senate banking and finance committees, has been a prime target for Krawcheck's overtures, sources say. He could be a key ally if Krawcheck is seriously considered for the SEC job or another in Washington.

"ISN'T AN ACT"

People who know or have worked with Krawcheck say the investor's friend persona isn't an act.

"She has been an advocate for clients as long as I've known her," said Lyle LaMothe, a wealth management consultant who retired as head of Bank of America's Merrill Lynch brokerage in 2011 after 24 years with the firm. "When we would be in executive session, once we got through the business of the day the final question (she asked) was, ‘Is this in the best interest of the client?'"

Early on in her career as a commercial banking analyst at Bernstein, Krawcheck was known for being candid about her views, even if they were not popular.

In 2002, Krawcheck, who by then was chairman and CEO of Bernstein, was featured on the cover of Fortune magazine for a story about the search for the "last honest analyst."

"She is not a 'yes' person," said Eric Stoclet, an executive director in London at Forum Partners Investment Management who was an executive for Citi's private bank in London from 2004-2006. "She did quite a good job at Citi with some very tough people."

Her candidness has put her at odds with superiors. In 2008, Krawcheck, as head of Citi's wealth unit, clashed with then CEO Vikram Pandit over how to reimburse clients who bought hedge funds that turned out to be toxic and who owned auction rate securities they were unable to liquidate. Krawcheck argued for paying investors back and suggested making zero percent loans to those clients, a person familiar with the situation said. Within months, she was out.

As head of Bank of America's wealth management unit, Krawcheck praised a controversial plan that would hold commission-based brokers to the same higher ethical standards as fee-based financial advisers - an idea that could drastically affect Merrill's bottom line. She bristled at Wall Street's efforts to derail the idea.

"Regulators are upset with us, the public is irate with us...and some number is bewildered by us...Rather than focus on each other, we should shift our focus to our clients," she told attendees of a Securities Industry and Financial Markets Association's private client conference in April 2010.

She was ousted at Bank of America by CEO Brian Moynihan as part of a reorganization in September 2011.

RADIO SILENCE

The SEC is not seen as the only option. Some have suggested that Krawcheck might want to cut her teeth in Washington in a mid-level position at the U.S. Treasury Department or in a senior role at the new Consumer Financial Protection Bureau, according to the person familiar with Krawcheck's discussions with legislators.

It is unclear whether Krawcheck is a serious contender for the SEC post. Other possible contenders include Richard Ketchum, head of the Financial Industry Regulatory Authority, and Walter, who can remain in the post through December 2013 without needing Senate confirmation.

Krawcheck, often named among the most powerful women in banking, has kept a lower profile since her name was mentioned as a candidate to run the SEC. Her last tweet - on the wisdom of a money market reform proposal from the head of retail brokerage Charles Schwab - came at 10:30 a.m. ET last Monday, just minutes after the SEC officially announced Schapiro's departure.

Krawcheck may be a hard sell for the Obama administration, given that two of her former employers were big contributors to the U.S. financial crisis. She was also chief financial officer at Citigroup at a time when it increased its leverage significantly, and she has been a beneficiary of Wall Street's multi-million dollar signing bonuses and departure packages for top executives.

What's more, a lack of regulatory experience may hurt her chances of getting the SEC post - though former SEC head Arthur Levitt didn't have any when he took the helm.

"ALWAYS HAS A PLAN"

Still, many who have worked with her say Krawcheck was a smart, analytical and competent executive who not only knew the business, but was good at building consensus among different units of companies. She helped restore brokerage Smith Barney's reputation at Citigroup and was popular with many of the financial advisers at Merrill Lynch.

Schumer and other lawmakers contacted by Reuters did not return calls or requests for comment about meetings with Krawcheck or their thoughts about her.

In the end, of course, Krawcheck may not land in Washington at all, two people who know her said.

She has had discussions about a variety of roles with several companies, one source said.

"She has lots of balls in the air," said the source, who asked not to be named because the conversations were private. "Sallie always has a plan."

Tony Blair: Be bold to escape economic crisis

We are living through the deepest economic shock the world has seen in a lifetime. Its effects have been felt in more countries and in more homes than any other since the Great Depression.
Yet people rightly still expect the state to deliver; to create opportunities for employment, provide high-quality health, education and welfare services, and ensure safety and security. Today, these implementation challenges look increasingly similar whether you're in London, Beijing, Monrovia or Brasilia. The question is how can they be met post-financial crash.
As we look to emerge from the global economic crisis we face a choice: restore or renew. Do we restore the system we had before the crisis, or can we be bolder and look to renew our institutions and our thinking? I want to make the case for renewal in two areas: one in domestic, public service reform; and one in international, global governance.
It is clear that if we were designing our public services today they would look very different from those we inherited from the great post-war reforming governments. We would do things very differently, we would build systems that make the best use of technology and which fit for today's economy, lifestyle, and demographics.
As budgets are squeezed we need to look to renew our government for the modern world, not just make do by doing things in the same way with fewer resources.
Luckily, reformers in the West can learn from countries doing just that, whether it's mobile payment technology pioneered in Africa or the Georgian local government offices where you can access 250 government services from a single computer screen.
We also have the big picture evidence to tell us which countries are doing best at achieving more with less. For example, according to the Boston Consulting Group's new "Sustainable Economic Development Assessment" which was released in late November, while it has had an average GDP growth of 5.3% over the last five years, Brazil has generated living standard gains that would be expected of an economy expanding by an average of over 13% annually; many of the eastern European accession countries also do well.
It may seem strange to learn lessons from countries which are still behind the UK in terms of standards of living, but emerging economies are often where the most radical innovation is happening.
Internationally, we also have to take on the challenge of renewing global governance. Global governance sounds detached from the current debates about austerity and public services. But if you think about it, it really means nations coming together to take on problems that they can't solve alone. And if there's one thing the world financial crisis has taught us, it's that many of today's biggest problems are global and need global solutions.
So, what does renewal look like in global governance? First, it means strengthening regional bodies. To compete globally with the likes of China, India and the U.S., smaller nations must work together. That's why I have said that the European Union will become more -- not less -- important for Britain as a way of achieving global influence. The EU is no longer just about peace in Europe, it's about power in the world. The same logic applies to other regional groups like Asean, which will grow in both size and influence in the coming decades.
Second, we need to look again at the major international organisations. The current architecture of international decision-making was stretched to breaking point by the economic crisis, and will be stretched further by the emergence of the new powers. The G8 looks increasingly anachronistic, and the lines of power and responsibility between the emerging G20 and the U.N. are becoming ever-more blurred. We need a reformed international system which is robust and representative.
Finally, I want to mention Africa. As we grapple with policy interventions to spark even single digit growth, governments across Africa have been overseeing growth levels of between 5% and 8% for the last five years. Managing such rapid growth comes with its own challenges, yet Rwanda has lifted a million people out of poverty, Ghana is steadily moving towards total independence from aid, and Nigeria is virtually a BRICS nation in all but name.
Through my charity, the Africa Governance Initiative, I have seen the pace of change in Africa and it's dizzying. How this emerging powerhouse is integrated into the world economy, not as a recipient of aid but as a genuine partner, will be critical for all of us.
For world leaders today the challenges are vast, but I remain an optimist. I believe if we are bold, if we renew rather than rebuild along the old lines, we can emerge from this crisis stronger than we went into it.

UK's Prince William and wife Kate expecting a baby

Britain's Prince William and his wife Catherine are expecting a baby, destined to be the country's future monarch, although the mother-to-be is in hospital with a type of very acute morning sickness that sometimes indicates twins.

"Their Royal Highnesses The Duke and Duchess of Cambridge are very pleased to announce that The Duchess of Cambridge is expecting a baby," the prince's office said in a statement on Monday, adding that Queen Elizabeth and the royal family were delighted.

The couple, officially known as the Duke and Duchess of Cambridge, married in April last year, amid a global media frenzy and there has been much speculation, particularly in U.S. gossip magazines, about a possible pregnancy.

"It's only been a matter of time. Everyone has been waiting for Kate to announce that she was pregnant," Claudia Joseph, who has written a biography of the duchess, told Reuters.

A spokeswoman for the couple said 30-year-old Catherine, widely known as Kate, was in the King Edward VII Hospital in central London suffering from Hyperemesis Gravidarum, an acute morning sickness which causes severe nausea and vomiting and requires supplementary hydration and nutrients.

Professor Tim Draycott, a consultant obstetrician at the University of Bristol, said the condition was common in the early weeks of pregnancy but did not put the baby at any increased risk, although in extreme cases it can lead to the baby being born with a slightly low birth weight.

Draycott told Reuters it may also indicate more than one royal baby may be in the offing.

"Hyperemesis is slightly more common with twins," said Draycott, explaining that the condition affected around one in 100 to 200 pregnant women.

William, a Royal Air Force helicopter pilot, was at her side and she is likely to remain in hospital for several days. There was no detail about when the baby was due, although the prince's spokesman said she was less than 12 weeks pregnant.

"I'm delighted by the news that the Duke and Duchess of Cambridge are expecting a baby," Prime Minister David Cameron said on his Twitter website. "They will make wonderful parents."

BABY WILL BE KING, OR QUEEN

William, Queen Elizabeth's 30-year-old grandson, is second in line to the British throne, and their first child will become the third in succession when he or she is born.

Last year Britain and other Commonwealth countries which have the queen as their monarch agreed to change the rules of royal succession so that males would no longer have precedence as heir, regardless of age.

The agreement also means an end to a ban on a future monarch marrying a Catholic, a stipulation dating back some 300 years.

Britain's royal family are currently riding the crest of popularity on the back of William and Kate's wedding and the queen's diamond jubilee this year which has witnessed nationwide celebrations.

"It's something everyone can look forward to, just like their wedding brought the whole nation together," said Johanna Castle, 25, a sales assistant in an east London homewear and fashion store.

The young royal couple have become global stars after some two billion people tuned in to watch their glittering marriage ceremony and the sumptuous display of pageantry that accompanied it, and barely a day goes by without a picture of Catherine appearing in the pages of Britain's royalty-obsessed newspapers.

The duchess, the first "commoner" to marry a prince in close proximity to the throne in more than 350 years, is now a fashion icon, with her attire scrutinized every time she steps out in public and followed by legions of women around the world.

U.S. President Barack Obama and his wife Michelle were one of the first to send congratulations, an indication of the young royals' popularity across the Atlantic.

"I know they both feel that having a child is one of the most wonderful parts of their lives. So I'm sure that will be the same for the Duke and Duchess of Cambridge," said White House spokesman Jay Carney.

With their fame has come unwanted attention, and there was anger in Britain when topless photos of Kate relaxing on holiday were published in a French magazine in September.

The pictures rekindled memories of the media pursuit of William's mother, Princess Diana, who was killed in a car crash in Paris in 1997 while being chased by paparazzi.

"I will be very surprised if this isn't handled with the utmost tact and sensitivity," said media commentator Steve Hewlett. "Newspapers realize there's a huge amount of goodwill towards Will and Kate, and they take their cue from their readers."

"DADDY'S LITTLE CO-PILOT"

Kate made her last public appearance on Friday when she returned to her old school - a minor event that nonetheless generated live television coverage on news channels - when she looked healthy and joined in a game of hockey with pupils.

Earlier in the week William had hinted at a pregnancy during a visit to Cambridge in central England when they were given a home-made baby suit emblazoned with the words "Daddy's little co-pilot", a reference to William's job.

"When I gave it to him he said 'I'll keep that', and handed it to his aide," said Samantha Hill.

Joseph, author of "Kate: The Making of a Princess", said she believed the couple, who currently live in north Wales where the prince is based as a search and rescue pilot, had been waiting for the right moment to have a baby.

"My feeling has always been that they were not going to take the spotlight away from the queen in her Jubilee. But now 2013 is going to be William and Kate's year," she said, adding the couple would make wonderful parents.

"We have seen her with children and she is lovely with them, she's got the natural touch, and her parents run a party business and she has spent a lot of time with children," Joseph said. "(William) he has always talked about wanting children, so I am sure he is delighted."

Best place to buy property in Asia

Forget the red-hot property market of mainland China -- a new forecast says investors should be looking south.
Jakarta -- Indonesia's burgeoning capital of nearly 10 million people -- is predicted to be Asia's top real estate market in 2013, ahead of cities such as Hong Kong, Singapore and Sydney in "Emerging Trends in Real Estate -- Asia Pacific 2013," a real estate forecast released this week by PriceWaterhouseCoopers and the Washington D.C.-based Urban Land Institute.
The recommendation to buy into Jakarta-based property may raise eyebrows, but PriceWatershouseCoopers says Indonesia's economic turnaround over the past few years has impressed international investors.
"Interest rates and inflation are under control, and while GDP is growing at around 6.5% annually, foreign direct investment is increasing at a much higher rate—39% in the first half of this year," the survey said. "Driven by increased demand from foreigners and locals alike, office rents shot up 29% year-on-year in the third quarter, according to (property services firm) DTZ."
That growth in demand helped Jakarta jump 10 places from its 2011 ranking but PwC warns the city's real estate scene is not entirely rosy. Difficulties in finding inexpensive bank loans, trustworthy local partners and land with disputed ownership all mean "caveat emptor" -- buyer beware.
China's financial hub of Shanghai keeps its number two spot from last year. The PwC survey says the city's retail property sector is heating up as investors shift away from the commercial sector, traditionally "the bread-and-butter investment for foreign funds in China for many years."
But PwC adds that foreigners are generally not as tempted to buy into Shanghai property as they were in the past. The major reasons: a real estate market that is already saturated, the rarity of commercial-grade investment buildings and Chinese regulators that are not as welcoming to foreign money as in years past.
The tiny city-state of Singapore, traditionally a safe bet for real estate plays, comes in a close third, falling from last year's first place. PwC credits the Lion City's strong position as an Asian financial hub, an uninterrupted supply of real estate projects and continued demand for high-grade office space as the country attracts more employees from multinational firms. Put simply, both supply and demand for Singapore property is expected to stay strong in 2013, PwC reports.
Asia-Pacific's Top 15 Asian Investment Prospects for 2013
1. Jakarta, Indonesia
2. Shanghai, China
3. Singapore, Singapore
4. Sydney, Australia
5. Kuala Lumpur, Malaysia
6. Bangkok, Thailand
7. Beijing, China
8. China--secondary cities (Chongqing, Tianjin, Shenyang)
9. Taipei, Taiwan
10. Melbourne, Australia
11. Hong Kong, China
12. Manila, Philippines
13. Tokyo, Japan
14. Seoul, South Korea
15. Guangzhou, China
At number 13, the real estate outlook for Tokyo signifies a ratings downgrade from "generally good" prospects to "fair" prospects. PwC says the ranking for Japan's capital is surprisingly "lackluster."
"Though investment potential appears good, investors have found deal flows restricted by the ongoing reluctance of local banks to clear bad debt from their balance sheets. A wide bid/ask spread has also limited transaction volumes."
The forecast's lowest-ranked city for real estate investment in 2013 is Osaka and ranks at the bottom in most survey categories, from investment and development prospects to office buy/sell recommendations.
One major reason is a glut of new office space that is still being completed. At the same time, PwC says "in small regional cities such as Osaka, investors simply do not know where the bottom is because of uncertain demand."
The silver lining is that Osaka's four-year oversupply of office space is coming to an end, PwC says.

Latest James Bond movie breaks UK box office record

"Skyfall", the 23rd official James Bond movie, has become the most successful film in British box office history, earning 94.3 million pounds ($152 million), its producers said on Wednesday.

The tally, earned over 40 days, surpasses the previous record of 94.0 million pounds set by 2009 3D adventure film "Avatar" over its 11 month run in UK cinemas, although the figures do not take inflation into account.

Skyfall, which has been well received by critics, stars Daniel Craig in his third outing as 007, and is directed by Sam Mendes.

In it Bond and British spymaster M, played by Judi Dench, are pitted against technological wizard Silva (Javier Bardem) who is bent on revenge.

"We are very proud of this film and thank everybody, especially Daniel Craig and Sam Mendes, who have contributed to its success," said co-producers Michael G. Wilson and Barbara Broccoli in a statement.

Globally, Skyfall has some way to go to match Avatar. It has earned $870 million in ticket sales around the world, according to movie tracking site Boxofficemojo.com, compared with Avatar's record $2.8 billion.

According to the same website, Avatar's adjusted box office total comes in at 14th in cinema history, with the 1939 classic "Gone With the Wind" in pole position.

Lady Gaga buys Michael Jackson's costumes at auction

Pop star Lady Gaga purchased 55 items belonging to late singer Michael Jackson in a weekend auction that raised more than $5 million, a portion of which will be donated to charity, Julien's Auctions said.

The auction, held in Beverly Hills, showcased 465 lots of items spanning Jackson's career through the years, including costumes and props used on tour and in music videos.

Highlights from the sale included the late singer's "BAD" tour jacket raising $240,000, a white glove selling for $192,000 and one of the singer's Pepsi and Awards jacket garnering more than $68,000, the auction house said in a statement.

Following Sunday's auction, Gaga told her 31 million Twitter followers that "the 55 pieces I collected today will be archived & expertly cared for in the spirit & love of Michael Jackson, his bravery, & fans worldwide."

Jackson died aged 50 in June 2009 in Los Angeles from an overdose of the anesthetic propofol and sedatives.

The collection of outfits, designed by Los Angeles-based collaborators Dennis Tompkins and Michael Bush and gifted back to them by the late singer, were taken on a world tour earlier this year, traveling across South America, Europe and Asia.

In September, British hat designer Philip Treacy designed his first London fashion week show in a decade around Jackson's auction costumes, which were worn by the models down the runway and accessorized with hats inspired by the late singer's life.

Gaga not only attended Treacy's show but was on hand to introduce the milliner's collection.

The auction exceeded pre-sale estimates of $1 million to $2 million, and a portion of the final amount raised will benefit the Guide Dogs of America and Nathan Adelson Hospice in Las Vegas.

House committee purge may continue as Boehner tightens grip

U.S. House of Representatives Speaker John Boehner's purge of some dissident Republican congressmen from key committees may continue as he seeks to tighten control over his unruly caucus ahead of difficult votes on "fiscal cliff" issues.

House Republican lawmakers said on Wednesday that in addition to the four conservatives who were stripped of their committee assignments earlier this week, other unnamed lawmakers were warned that their votes need to be more in line with party leadership and committee chairmen.

In effect, these congressmen are not "team players" working constructively with committee colleagues and leadership, Representative Pat Tiberi, a close Republican ally of Boehner from his home state of Ohio, told Reuters. Gone are the days when a lawmaker could expect "to stay on a committee forever," Tiberi said.

"This is not golf. This is baseball. You're part of a team," he added.

The move after a November election in which Republicans ceded seats but maintained a majority, signals a stronger hand from Boehner, who took the speaker's gavel two years ago and has repeatedly struggled to get his caucus behind him.

It's too soon to tell if the discharges are a temporary, tactical move by Republican leadership to get a deficit reduction deal passed or a more fundamental shift that reflects the waning influence of the more extreme Tea Party movement, which lost several vocal members in November's elections.

Regardless, the threat of further committee reassignments could make House Republicans think twice about breaking party ranks to vote against any deal that Boehner forges with President Barack Obama to avoid the year-end $600 billion fiscal cliff of automatic tax hikes and spending cuts.

Boehner has already offered revenue increases as part of a replacement plan, which conservatives have denounced as a tax hike that they have pledged to avoid. Obama is holding firm on raising tax rates on the wealthiest Americans, and persuading a majority of Republicans to back such a deal would be difficult at best.

"The message was that there may be more punishment coming. We are watching your votes," said Representative Tim Huelskamp, a Republican from Kansas who lost his assignments on the House Budget and Agriculture committees.

While Boehner has struggled over the past two years with Tea Party-backed freshmen opposing his most important fiscal initiatives, he now needs to also closely watch the party's more moderate wing.

A number of lawmakers in recent days have voiced agreement with Representative Tom Cole's recommendation that Republicans give in to Obama's demands to let the top two tax rates rise in order to gain more leverage over other areas of the fiscal cliff, including cuts to government health care programs.

CONSERVATIVES INCENSED

Boehner and other House Republican leaders have not spoken publicly about the decisions, which lawmakers say were made by the House Republican Steering Committee in a closed-door hearing.

In fact, Representative Justin Amash, who according to Republican aides lost his Budget committee seat, said on his Facebook page that he has not received "a single call, email or text from Republican leadership" regarding the decision.

"I look forward to hearing from my party's leadership why my principled, conservative voting record offends them. That's sure to be a lively and entertaining conversation," wrote Amash, a congressman from Michigan who is among those who has voted against Boehner most often.

Conservative lawmakers, bloggers and pundits denounced the purge as an attack on their values and independence. Even conservative Tea Party icon Sarah Palin jumped into the criticism on her Facebook page, telling Republican leaders, "don't go wobbly on us."

"We send good conservatives to D.C. to fulfill the promises they made to the electorate, and yet when they stay true to their word the permanent political class in their own party punishes them," Palin wrote. "This won't be forgotten come 2014."

The reassignments were hardly aimed at conservatives, however, as many of the House's most hardline anti-tax members kept their posts, including Budget Committee Chairman and former vice presidential candidate Paul Ryan.

But Huelskamp and Amash, both starting second terms in January, were the only Republicans to vote in the Budget Committee against Ryan's budget plan earlier this year, saying it did not cut spending deeply enough. On the House floor, they both voted against the debt limit deal, extending a payroll tax break and a stopgap measure to keep the government funded into March 2013.

Also removed from the House Financial Services Committee were Walter Jones from North Carolina, a longtime dissident who has voted against Boehner more than any Republican, as well as David Schweikert of Arizona.

A Boehner spokesman, Michael Steel, declined to provide any further detail on the decision, saying only, "The Steering Committee makes decisions on a variety of factors."

MORE DEFIANCE?

The effort to boost committee effectiveness, however, could backfire on Boehner by making some members more defiant as they try to safeguard the interests of their constituents.

Voting with leadership, particularly on a fiscal cliff deal that raises taxes, would go against the wishes of voters in many conservatives' districts, said Representative Trent Franks of Arizona.

"When we punish people for voting their conscience, when the votes are in line with the Republican platform, we weaken our caucus," Franks said.

Jones, who said he expects to keep his senior post on the House Armed Services Committee, said that "intimidation" would not work on him, because he will not defy his constituents.

"They say, we put you there, we helped you get a voting card and we want you to remember we the people, not we the leadership," he said.

Amash was equally defiant, again via Facebook: "If they think kicking me off of a committee will lead me to abandon my principles or stifle my bipartisan work toward a balanced budget, I have a message for them: You're dead wrong."