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Tag Archives: Chapter 13 bankrutpcy

Why is Goldman-Sachs so powerful and (arguably) innovative? Perhaps because even the 375 top partner/employees are constantly under threat of being “de-partnered”

[catagories: Washington Bankrutpcy attorney]

NY Times reporter Susanne Craig offers us a rare glimpse into perhaps America’s most powerful institution, the investment-banking firm of Goldman Sachs. Former U.S. Treasury secretaries Henry M. Paulson, Jr. and Robert E. Rubin both were one-time partners at Goldman-Sachs, as is New Jersey former governor Jon S. Corzine.

Ms. Craig’s Monday, September 13, 2010 article offers interesting reading about the unique structure of America’s most influentially powerful financial firm.

Goldman has approximately 35,000 employees, and 375 of these are "partners". Goldman-Sachs is a publically traded company (e.g. you can buy shares in Goldman-Sachs) and was one of the last large financial firms to "go public".

It is difficult to be named a partner, but an underperforming partner or a partner who is working in an area perhaps no longer as relevant to the future of the firm can be "de-partnered" to make way for fresh partners. Prior to becoming a publically traded company in 1999, once named a partner you were generally a partner for life, even if you grew to become underproductive dead wood for the company. Partners receive special bonusing and compensation in excess of a $200,000 base salary.

"The (partnering/de-partnering) process is at the heart of Goldman’s culture, a way for the firm to reward and retain top tallent. Goldman was one of the last of the big Wall Street partnerships to go public, selling shares in 1999. When it was private the partners were the owners, sharing in the profits, and in some cases having to put in money to shore up losses. To retain that team spirit as a public company, Goldman continued to name partners. In 1999, there were 221 (partners). Yet there are differences from past practices. When Goldmanwas a private partnership, it was rare that a partner would be asked to leave." reports Ms. Craig. "Goldman weeds out partners because it is worried that if the partnership becomes too big, it will lose its cachet and become less of a motivatinal tool for talented up-and-comers people involved in the process say. If too many people stay, it creates a logjam. The average tenure of a partner is about eight years, in part because of natural attrition and retirements. Goldman insiders also note they have what they call an "up-and-out" culture, leading to the active management of the pool. … Goldman typically removes about 30 partners every two years."

IDEAS FOR ACTION: Goldman-Sachs partners get in and stay in (arguably) by being the best at what they do. Even those partners who resign and move on to other firms often find even greater riches and security. I suggest that we can learn something from these elite partners at Goldman-Sachs, and that is to ask ourselves: "What have we done today, this week, this month, this year to make ourselves more ‘in demand’ in the working world?

Have we learned a few words in Spanish , Russian, Ukranian, Vietnamese or Korean to make cross-cultural customers feel more at home? Have we practiced some Yoga to increase our strength/flexibility and concentration? Have we tried to cut down or quite smoking so as to prolong our working life? Have we worked earnestly and cheerily so as to justify the request for a raise/promotion? Have we tried to become more comfortable with a new computer program or learn new features about one we already use? Did we point out a way our company/office can save money and increase productivity?

This type of behavior is perhaps how the elites at Goldman-Sachs seek to prevent becoming "de-partnered". Perhaps there is a lesson for us from the elites. My goal for you is that in any cycle of future layoffs, that you NOT be one of those who receives the layoff notice.

See Ms. Craig’s interesting article at the following link:


325% more students in “for profit” colleges since 1998 – but many may be disappointed because of accreditation issues and confusion

[catagories: Washington Bankrutpcy attorney]

I have posted earlier on this blog about accreditation confusion, misrepresentation and problems regarding "for profit" colleges receiving accreditation by one of 70 "national" accreditation bodies. However, the better and more respectable schools such as the University of Washington, WSU, Eastern Washington University, Western Washington University, Cental Washington University, Community Colleges and private schools such as Whitworth, Whitman, Gonzaga, Seattle Pacific University, Seattle University and Pacific Lutheran University are accredited by more reputable "regional" accreditation bodies.

The primary benefit of "national" accreditation is that the for-profit schools can then be eligible to receive student loan monies that the students borrow.

Anyone considering enrollment at a "for profit" college/school MUST read the USA Today article written by Mary Beth Marklein, on September 12, 2010. USA Today’s website does not offer this particular article on-line so you will need to go to the library to read it, but it is well worth the trip, I assure you.

Enrollment at "for-profit" colleges is up some 325% between 1998 – 2008, from a mere 552,777 to 1,797,563. Most of these "for profit" schools are heavily dependent upon encouraging their students to sign up for student loans. These student loans (since 1977) have been nearly impossible to get rid of, even in bankruptcy.

Before you sign up for a "for profit" school, you need to become aware and fully informed…you can easily destroy your future. Please do yourself a favor and read the story of single-mother Chelsi Miller, of Utah, who is now $30,000 in debt with what she calls a worthless degree that was not appropriate to advance her career and educational goals.

Ms. Marklein’s article is excellent and will start you well on your journey to understanding the nearly incomprehensible universe of college accreditation. Ms. Marklein will also show you how the "for-profit" schools misrepresent and hoodwink students into believing the for-profit school "national" accreditation is as valid as a more highly regarded "regional" accreditation.

She will also teach you that even a "for-profit" school with some degree of "regional" accreditation is still suspect. Herein lies a trap!…. so please read the other things I have written about Ms. Marklein’s September 29, 2010 article.

IDEAS FOR ACTION: Considering more education? You MUST secure a copy of the Wednesday, September 12, 2010 USA Today paper containing Ms. Mary Beth Marklein’s detailed investigative article before you sign up for any schooling or student loans.

For-profit colleges: WATCH OUT! says Wyoming Senator Michael Enzi, the Federal Government Accountability Office and many former students suing the schools … the article contains information about Kaplan, Everest, Corinthian, U of Phoenix and others

[catagories: Washington Bankrutpcy attorney]

Locally here in Western Washington, BCTI or "Business Consumer Training Institute" was our worst "bad-boy" local for-profit school. The school (now closed) was criticized for signing up underqualified students for classes that they had little hope of completing. The school would then encourage the enrollee to incur thousands of dollars in student loans to pay for the schooling. (Note that the student loans were not dischargeable in bankruptcy) The student would be unable to complete the courses (many courses of which were of dubious benefit and would not transfer to a regular state or private college or university like Tacoma Community College, U of W Tacoma or even University of Puget Sound) but were then forever saddled with piles of student loan debt. BCTI would leave its students worse off than before, or so it was alleged.

Mary Beth Marklein of USA Today reported on September 29, 2010 that "As for-profit colleges rise, students question value". USA Today did not offer a link to this article on its website, so you will need to go to the library to obtain a re-print. However, anyone considering a for-profit school MUST read this article! I insist!

The article leads off with the story of Chelsi Miller, a Utah resident and former student at Everest College.

Ms. Miller achieved an "Associates Degree" from Everest College, incurring $30,000 in student loan debt.

Fortunately, Ms. Miller (a single mother from a farm town) was thereafter admitted to the University of Utah to pursue a pre-med program, but delight turned to horror. She was devastated, shocked and dismayed to learn that she had to start all over again with her courses because the Everest College degree credits was worthless at the University of Utah! The University of Utah would not accept the Everest College credits, and she claims that after spending $30,000 in student loan money at Everest, she was left with an Everest associates degree that did nothing to advance her education and career goals. She relates that Everest (owned by Corinthian Colleges corporation) mislead her into believing her Everest College credits would transfer well to the University of Utah. Ms. Miller is suing, along with others.

Ms. Marklein reports that the for-profit colleges seem to mis-represent the nature of their "accreditation". They are accredited by a seemingly "wishy washy" organization called the Accredition Council for Independent Colleges and Schools. But the University of Utah and other REAL two and four year schools like the University of Washington, Western Washington University and WSU are accredited by much more stringent organizations unrelated to the "wishy washy" for-profit college accreditation entities.

Here is a quote directly from Ms. Marklein’s article and it is very worth reading:

"…Everest College is accredited by the Accrediting Council for Independent Colleges and Schools, one of the more than 70 organizationsrecognized by the Education Department. The problem:The organization is a national body. Historically, for-profit colleges have been accredited mostly by national groups, which traditionallyhave focused on short-termcollege programs in fields such as culinary arts, medical billing or business administration. In contrast, most non-profit, degree-granting public and private institutions are accredited by one of six regional bodies. (To complicate matters more, some professional associations accredit academic programs in fields such as pharmacy or nursing at both regionally and nationally accrdited institutions). ,…. most specialists in higher education agree that regional accreditation, which takes at least two years for a college to earn and must be renewed every 10 years, is considered the most rigorous and most prestigious."

This is tricky: just because a for-profit school DID obtain some measure of regional accreditation does not mean that other schools/universities are required to accept the transfer of credits from the for-profit college, and often the for-profit colleges seem to stretch the truth in promotional materials and presentations. Writes Ms. Marklein, "It’s up to institutions to decide whether to accept or deny transfer credits, but many use accreditation status as a (mere) guideline. The University of Utah, for example, requires students who want to transfer from nationally accredited schools such as Everest College to seek permissionfrom its faculty to get credit for courses already taken at a different institution."

"’Often those courses (from schools like Everest College) are found lacking in some way or another,’ says Suzane Wayment, associate director at the University of Utah. For example, she says, an algebra textbook used by a nationally accredited school may be for an introductory course, while the university (of Utah) requires that students complete a higher-level course." writes Ms. Marklein.

Ms. Marklein recounts the devil-may-care policy of many for profit colleges: "Many Rivera, spokesman for the Apollo Group, which owns the University of Phoenix, says ‘it is the student’s responsibility to confirm whether credits earned at the University of Phoenix will be accepted by another institution.’"

The Federal Government is concerned about Phoenix, Kaplan, Everest and others. The Federal Government Accountability Office suggests that "some nationally accredited colleges may be exploiting confusion about accreditation by omitting or glossing over details. The GAO report, for example, said a representative for the nationally accredited Kaplan College in Florida told an undercover government investigator who was pursuing an associate’s degree in criminal justice that the college was accredited by ‘the top accrediting agency – Harvard, the University of Florida they all use that accrediting agency.’ But that was not true."

Ms. Marklein relates that this past summer "..lawmakers grilled officials of regional and national accreditors during hearings about whether colleges found to engage in questionable practices – such as encouraging students to lie on their financial aid forms or pressuring students to sign legally binding contracts – should be allowed to keep their accreditation." Senator Michael Enzi, R-Wyoming, ranking member of the Senate’s education committee, as an active participant in the hearings.

Ms. Marklein relates the comments of the now devestated Chelsi Miller, the 26 year old single monther in Utah from the small farm town: "’I feel as if I had been sold a college experience from a used-car salesman….I received misleading guidance and answers that led me to sign my life away (with student loans) … I can’t speak to other colleges, but as far as Everest goes, they really have taken advantage of people that canot afford to be taken advantage of.’"

IDEAS FOR ACTION: Considering a return to school? If you hope to transfer credits from a for-profit school to some other school you must go to the school you hope to transfer to and obtain the specific written committment as to which precise "for-profit" school credits will be accorded full faith and credit as substituting for specific classes at your subsequent transferee school. Better yet, just avoid the "for profit" schools and try to get into a regionally accredited school and do all of your education at one school. Finally, my best advice is in this economy, you should do what you can to avoid large student loans at "for profit" schools, because since 1977, it has been exceedingly difficult to discharge student loans in any form of bankrutpcy filing.

Lowest mortgage rates in history fail to help housing market. 11 million houses are worth less than what is owed on them and 15 million are unemployed. HARP refinance program a failure.

USA Today on September 29, 2010 set forth the grim numbers in a report by Paul Wiseman and Stephanie Armour. "Anemic demand continues to hamper real (economic) growth, " says housing analyst Robert Andrews of IBISWorld. "The housing market needs to find its true bottom before things can finally turn around."

Home sales were thought likely to strengthen after a terrible summer. But the housing market was barely registering a pulse even after 30-year, fixed-rate mortgages hit a record low 4.32% earlier in September. This does not bode well for anyone who is hoping that their home equity appreciation may offer a financial rescue.

Nearly one in four homes with mortgages are underwater – more is owed on the houses than they’re worth reports Wiseman and Armour.

They report that the 2009 Obama HARP program (Home Affordable Refinance Program) has not been effective. Under HARP, homeowners can refinance even if their mortgages are 25% higher than the value of their houses. However, two requirements hold back the success of that program. First, their mortgages must be guaranteed by Fannie Mae or Freddie Mac, and the homeowners must be up to date on their monthly payments. Federal Housing Finance Agency director James Lockhart III predicted in 2009 that HARP could help up to 4 to 5 million homeowners lower their monthly house payemnts. The program has not been effective, as only 380,000 ho
homeowners had refinanced through HARP by the end of June 2010. Note: HARP is different from a loan modification under HAMP. The programs are different.

Wiseman and Armour report that Amhearst Securities analyzed several reasons for the failure of HARP, including (1) homeowners with negative equity are struggling to come up with the funds to pay the closing costs of the new mortgage (2) the mortgage industry laid off many people and cut positions and thus cannot cope with the small surge in HARP refinance requests and (3) mortgage servicing companies are reluctant to handle home loans originally underwrittenby lenders that are now out of business.

As reported in USA Today September 29, 2010. (USA Today publishes selected articles online so I apologize that it seems no link was available to the September 29, 2010 Wiseman/Armour article "Mortgage rates fail to motivate".

IDEAS FOR ACTION: Mortgage rates have already popped up since the 4.32% low earlier this month. DO refinance now and specifically insist on the HARP program, but avoid the temptation to pull home equity out to pay credit cards and other bills if you do have any home equity. If your home equity is less than $125,000 you may be able to refinance to a lower mortgage payment and soon thereafter reduce your credit card burden with a Chapter 13 0% interest repayment plan or a Chapter 7 wipe-out of credit card debt. Do not be afraid to ask relatives and friends to help you pay closing costs associated with an HARP refinance. As cynical as it may seem, consult with a bankruptcy attorney about surrendering your "underwater" home and then buying another one in a year or two that is "right priced" to the market so that you are not paying forever on negative equity.