A Minor Adjustment

Baseball, is it still our national pastime? If you are a baseball fan, then most of the headlines you have heard over the past few weeks have centered around ARod or how economic turmoil is affecting the new Yankee stadium and their premium seat prices. With the way families across our country are struggling, Major League Baseball has become too expensive for many of them to go to games this year. 

So where can a family go for good entertainment and value for their hard-earned money? Well don’t give up on baseball. Just adjust a little and give Minor League Baseball a shot. That’s what I recently did over the past couple weeks. 

A couple weekends ago, I flew back to North Carolina where my parents live as do both my brother and sister and their families. It was my Dad’s 76^th birthday so I decided to take him out to see the local minor league baseball team play. So on Friday night I took my Dad, brother and 10 year old nephew out to see the Kinston Indians play. The K-Tribe as they are called play in the Class A Advanced Carolina League and are a Cleveland Indians minor league affiliate. 

The Indians play their games in Grainger Stadium. This year Grainger Stadium is celebrating its 60^th anniversary. Yes the stadium is so old that I played Babe Ruth Baseball there for four years during my high school days. In some ways the stadium is still the same, the tobacco warehouse is still out beyond right field (although from what I can gather it is no longer being used) and the dimensions are the still the same including the 380’ sign in left center that I magically hit one over back in 1978. 

But some things have changed. The organization has done an amazing job refurbishing the old park. The new concession stands, ticket office, clubhouse and press box look tremendous. The place was packed. I was surprised at how many people were there over 2,300 on a Friday night in April. Plus it was quite a bargain. Best tickets in the house $6 each and kids get in for $4. The four of us had a great time, enjoyed a great game and indulged in the typical baseball buffet of hot dogs, peanuts, and ice cream for less than $50. We would have spent more than that going to a movie! 

Then this past Sunday, I organized an outing for my church to attend a baseball game together at our local minor league team the Frisco Roughriders who are an affiliate of the Texas Rangers and play in the Double A Texas League. My son Robbie’s best friend, Sean, (who I think of like my 2^nd son) is the Corporate Marketing Manager for the team. He hooked our group up with a fabulous package. Check this out for $15 a person we got great seats behind the first base dugout, all you can eat food and drinks including hot dogs, hamburgers and brats and even a free Roughriders baseball hat. 

Now if that isn’t a family stimulus package then what is? Our group of 30 had an incredible time at the game, enjoying each other’s fellowship and watching the great game of course while stuffing ourselves silly with ballpark fare.  

Just think about it. Aren’t these two instances examples of what going to a baseball game is supposed to be all about? Getting together with family and friends and spending three hours just soaking it all in. How far from a minor league baseball team do you live? Next time you are looking for something to do give it a shot. You won’t be disappointed. 

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Are you LinkedIn?

I am sure you have heard the old adage “It’s not what you know, it’s who you know”. Believe it or not there is a lot of truth to that. A lot of people’s success can be attributed to the power of networking.  

In Chinese the word Guanxi literally means “relationships”. It is the first word any businessperson learns upon arriving in China and has been touted as one of the main strategies used in the booming Chinese economy. So what does Guanxi have to do with me you ask? 

In order to be successful in your industry and continue to grow and develop your business it is of the utmost importance that we focus on our Guanxi talents. The “art of relationships” as some Chinese business leaders refer to it. The personal connections we develop are vital to doing business. All things being equal, people like to deal with people you know and can rely on. 

Guanxi goes back thousands of years and is based on traditional values of loyalty, accountability and obligation. Over the years it has grown into connections, personal relationships and networking. It is relationships that can inform and educate you. So as you move forward stay focused on the core art of Guanxi which is skillfully building mutually beneficial relationships. 

There is a tool now to help you build mutually beneficial relationships known as LinkedIn. Remember your old rolodex? Think of LinkedIn as your superconductor rolodex. From LinkedIn website: “The purpose of the site is to allow registered users to maintain a list of contact details of people they know and trust in business. The people in the list are called Connections. Users can invite anyone (whether a site user or not) to become a connection.”

The network you have developed throughout your career is one of your most valuable assets. On LinkedIn you can “Manage the information that’s publicly available about you as a professional; find and be introduced to potential clients, service providers, and subject experts who come recommended; be found for business opportunities and find potential partners and gain new insights from discussions with likeminded professionals in private group settings.” 

The Groups feature is another valuable tool that LinkedIn offers. This allows users to establish new relationships by joining alumni, industry, or other professionals groups and network for business opportunities, news and feedback on ideas. 

You can view my profile on LinkedIn HERE . It is free and very easy to get set up on LinkedIn. Take your power of guanxi to the next level and get “linked in” today.

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A Call to Service

President Obama crusaded for volunteerism in his Inaugural address, urging Americans to pitch in around their communities during these difficult times. Many Americans who have unfortunately been laid-off, are finding volunteering and serving in various capacities throughout their neighborhoods rewarding both personally as well as professionally as it provides them with opportunities to not only help others but to hone their work skills and network with various members of the community. 

According to survey data from the Corporation for National Community Service in Washington, D.C., in 2007, the most recent year for which statistics are available, 60.8 million Americans donated 8.1 billion hours of volunteer service. However the amalgamation of the economic downslide and the decrease in charitable donations means volunteer work has become even more important. What can I do to help?

One does not have to look far to find volunteer opportunities. The best places to start are your local church, schools and community organizations. Another exciting element about serving is you do not have to do it alone. Some of the best ways to help those in need are doing things with a group of people. It can be a group of co-workers, classmates, friends or church members. Recently I participated in two separate events where those of us who served together definitely made an impact on our community. 

It started in response to an article I read in The Colleyville Courier about the Grapevine Relief and Community Exchange food pantry facing a 20% increase in needy families since the beginning of this year. GRACE is a faith-based non-profit relief agency that provides food, clothing, and other emergency assistance to people who are in need in Grapevine, Colleyville, or Southlake, Texas. 

Our company, Bayview Financial, has worked with GRACE over the past 5 years in various capacities like the Feed Our Kids summer lunch program, the Walk for Hunger, providing 100 turkeys each Thanksgiving as well as providing toys and gifts for the Christmas Cottage. We have 38 employees here in our Southlake operation. We too have felt the effects of the financial crisis as we have reduced our staff almost in half since the beginning of 2008 when we had over 75 employees. But we still want to give back to our community and help those in need, so we decided to conduct our own canned food drive. 

During the month of February, any employee could wear jeans to work (normally we are business casual except on Fridays) any day during the month as long as they brought in 4 canned good items that day. We had an outstanding response and the first week of March we delivered 1,224 canned food items to the food pantry. Rusty Thigpen, GRACE Food Pantry Manager, said that our donation should cover the pantry’s needs for about two weeks. In addition to assisting the food pantry we hope to inspire other area businesses to look for creative ways to help GRACE and other area organizations. 

The second event I was a part of was for the Union Gospel Mission of Tarrant County, whose mission is to be a Christian organization providing love, hope, respect and new beginnings for the homeless. Union Gospel Mission of Tarrant County is independent of government funding and the United Way. They serve over 190,000 meals and provide shelter to more than 900 individuals each year; operating on an annual budget of less than $3,000,000. As a result, volunteers are vital to their success. 

My wife, Angie, and I host and lead a weekly bible study for the young adult group at our church, Life Connection Church. Towards the end of last year one of our studies was on identifying each of our spiritual gifts and then developing plans on how to use our gifts. Come to find out that many of the people in our group have the spiritual gifts of giving and/or serving. With this in mind we decided that throughout the coming year our group would undertake several service projects in our community. 

So last Saturday night our group of 12 volunteers went to Union Gospel Mission and worked the “dinner shift”. The dinner shift consists of feeding, serving and cleaning up for three groups of people. The mission does tremendous work not only for the “residents” but also for the people who live out on the streets nearby that come in each night for a hot meal. First the women and children who live at the mission come in for their meals. Our team prepared the plates, delivered them to the people as they sat at their tables and then bused the tables when they were finished.

The same procedure was done on the second group which consisted of the men that live at the mission as well as the third group which is when the mission opens their doors to the people who do not live in the mission. In total we served over 250 meals in the three hours we were there. It was a very rewarding and humbling experience for all of us. 

“And I have been a constant example of how you can help those in need by working hard. You should remember the words of the Lord Jesus: ‘It is more blessed to give than to receive.’” Acts 20:35 NLT. What greater call to service is there? 

Who have you served lately? 

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The School of Hard Knocks

I am sure that no matter what field you are in there are times when you feel like the only way you learn things is the hard way. In the seller finance industry, there is a monthly newsletter publication known as Noteworthy. It has been around for over nineteen years. In January of this year, a good friend of mine purchased the newsletter from the family of the man who started it years ago. My friend had been the editor of Noteworthy since the middle of 2008 and when he took over he started a column called “Hard Knocks U”. 

This is a forum for him and others in the industry with years of experience (known as “old-timers”) to share war stories with the readers using real life examples of  things we learned the hard way, with the intention of keeping others from having to experience these themselves. I was asked to write a column for the March issue of Noteworthy. Following is my story titled “Why There’s a Thing Called Up – Front Due Diligence”:

Believe it or not, note-holders do not always tell the truth. Now, “most” of them do not lie straight to you but they do tend to “omit” information. It is sort of like how the pastor of my church explains the different kinds of sin. There is the sin of “commission” (no not huge broker fees) which refers to knowing something is wrong but doing it anyway, whereas the sin of “omission” is failing to do something you can and ought to do. Investors rely on note-holders or brokers to provide accurate, detailed information on each transaction. 

It is imperative that brokers ask ALL of the necessary questions to get the details needed. There is a reason why all investors want the original note and a “certified” pay history. Let me tell you a story of a situation I was faced with due to the note-holder “omitting” a key piece of information. 

I was presented with what appeared, at least on the surface, as a quality note to purchase. The note was secured by an owner-occupied single family residence in Houston, Texas. The borrower put down a strong down payment of over 20% and had a credit score of over 700. The bpo came back supporting the sales price as the current market value. So far, so good – right?

When the broker, with whom I had done many deals throughout the years, submitted the loan file, there was a pay history included. I am sure most of you have seen the standard pay history form the broker used. It is a template where the payment amount, date received and new balance are filled in by hand and then signed by the note-holder “certifying” the unpaid balance is correct. Now our first clue should have been the cookie-cutter format in which the form was completed. Basically it looked like all the broker (or note-holder) did was copy the information right off an amortization schedule. All payments were for the exact amount, all paid on the first of each month (even if the 1st was a holiday or a Sunday) and the unpaid balance amortized down to the penny. 

Of course this was the typical pay history brokers provided to investors, so nothing appeared to be out of the ordinary. The deal funded, we wired the money, the broker got their fee and we booked the loan and set-up servicing. Little did we know at that time the fun was just beginning. Shortly after the borrower received his welcome letter from us, he immediately called to let us know the information on the letter was incorrect. 

“There’s no way I owe $118,000 on my loan” he said. We tried to explain to him that when we bought the loan we received a pay history showing his balance and when his next payment was due. “Well what about the $25,000 I paid on my mortgage when I got my bonus last December (now 7 months ago)?” “Excuse me” was the only thing our representative could muster at first. 

The borrower went on to explain that when he received his annual bonus he sent the note-holder a lump sum payment of $25,000 to reduce his balance. Upon further investigation, and numerous phone calls to the broker and seller we were able to determine that the borrower did indeed make the lump sum payment as stated. 

So instead of buying a loan with an $118,000 balance, we really bought a loan with an unpaid balance of $93,000. The problem we had is we paid $108,000 for the loan. The broker made a $10,800 commission and the seller netted $97,200. Talk about being upside down. 

The situation escalated to where legal proceedings were threatened on both the broker and the seller in order for us to re-coup the difference in the loan balance we purchased. The good news is after several months we did indeed get the money due to us from the seller and the borrower paid on his loan as agreed eventually paying us off. The bad news is we spent a lot of time, money and energy resolving an issue that should have been avoidable. Not to mention the relationship between the broker and our company was strained for many months and never really got back to normal. 

I can not stress enough the importance of doing a good job on the front-end by getting all the correct information and asking direct questions when verifying information. 

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Change Happens

I am part of a men’s discipleship group at Life Connection Church. Our group is called “Iron Men” based on the fundamental verse on discipleship, “As iron sharpens iron, a friend sharpens a friend.” Proverbs 27:17. One of the main purposes of the group is Christian leadership development to grow spiritually and relationally as well as strengthen the foundation of our Church, our Community and God’s Kingdom.

Leaders are readers, so to reinforce that we read a book every month and come together for a meal, fellowship, a teaching time, and then we teach each other as we give our point of view and what we learned from the book. Our goal is for us to learn together and help build one another up as friends and as brothers in Christ.

This month’s book is Spencer Johnson’s Who Moved My Cheese?, which is a simple parable on how to deal with change. Although this book was first published in 1998, you must agree that a book on change is apropos in today’s world.

The two key components of the parable are the “maze” and the “cheese”. The “maze” represents our situation. It can refer to the company we work for, the community we live in, our family life or the church we attend. The “cheese” is what we want out of life, such as success, wealth, love or spiritual faith. The four characters in the book, two mice – Sniff and Scurry along with two “little people” – Hem and Haw, are confronted with unforeseen change.

The book tells the story of how each of the four “characters” handles this change. As one of the characters “masters” his change he shares what he has learned by recording his experiences on the walls of the maze. The “Handwriting on the Wall” serves as a blueprint for others on how to adapt to the inevitable change you will encounter. The seven steps in the blueprint are:

• Change Happens 
• Anticipate Change
• Monitor Change
• Adapt to Change Quickly
• Change
• Enjoy Change!
• Be Ready to Quickly Change Again and Again

OK so I know what you’re thinking, this isn’t rocket science, change will happen, if you don’t change you will be left behind, watch for signs of change so you can be prepared and change is good. Easy enough, so what value does this book add you ask? As with most books on leadership, management or self-help it’s all in how you apply the findings from the book.

Obviously in today’s difficult economic times, a lot of people can apply this in their job “maze”. Every day more people get laid off or reassigned to a different position or face a salary cut. Realizing this is a possibility and having a plan to handle this change before you are faced with it is a huge advantage. Personally being in a management position not only do I face the same daily concerns but I must also be sure to effectively communicate with my employees what direction our company is taking, how we are measuring up versus our performance metrics and provide the required leadership to ensure my team is motivated and fully focused on the task on hand to ensure the continued success and stability of our company. 

However, since I have just read this book for the second time, this time in the context of Christian leadership development, there are a different set of applications I will try to use to produce a better church so that together as a body our church can accomplish our missions. It is imperative that we lead by example when handling change. We must show faith and confidence that God has a plan no matter how it might appear to change and provide the vision and wisdom to others so they develop and grow spiritually and personally eager to join us on our journey to multiply the ministry. Because as it says in Ecclesiastes 4:12, a person standing alone can be attacked and defeated, but two can stand back-to-back and conquer. Three are even better, for a triple-braided cord is not easily broken. 

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What Did We Do Before TiVo?

Flashback: How many of you can remember back to when the video cassette recorder (VCR) was introduced? Do you recall the debate between whether or not to go with the VHS or the Beta format? Hitting the mass market in the late 1970’s VCR’s became a household staple for television viewers for almost 20 years. The beginning of the end for VCR was the move from videotapes of your favorite movies and television shows to the DVD. That is when viewers faced a real dilemma. 

On one hand, viewers wanted to see their favorite movies in the much clearer and easier to use (easier to fast forward, rewind, scene selection, etc) format provided by the DVD. But on the other hand, they had a routine of recording programs on their VCR to watch at a time other than when the show was broadcast. Viewers just didn’t want to give up the ability to record their favorite programs. 

Say hello to digital-video recorders! After a couple years of frustration, DVR’s were introduced and all the problems were solved. The world of “time-shifted” television (that is, programming viewed with a digital-video recorder) had arrived. And now people can not imagine how they lived without it. What are you to do when there are two shows on at the same thing? Just DVR one of them. How about when there are shows on and you will not be home for a week? Set your DVR to record them. Afraid you will forget to record a show next week? Don’t worry! With your DVR you can program it to record every show in the series. 

Maybe it’s because of today’s tough economic times, but television viewing in total is growing at an amazing clip. Roughly 285 million of our country’s 306 million people watched TV in their home in the fourth quarter of 2008, up almost four million people compared to the fourth quarter of 2007 according to The Nielsen Company. People spent more time watching TV: an average of 151 hours a month or five hours a day – a record high according to Nielsen. This increase carried over to “time-shifted” viewing as well. Nearly 74 million people watched DVR programming in the 4^thquarter of 2008 up 20 million people from the 4^th quarter of 2007, a 37% increase.  

Another key component to the DVR rage is the convenience factor. The ability to skip the commercials can be addicting. Our family rarely watches a television program in “real-time” anymore. At the very least we start recording it and then start watching about 20 minutes into the show so we can skip the commercials. The only television we watch in real-time is sporting events. But even during sporting events the DVR comes in handy with the rewind feature. No longer are you reliant solely on the broadcast to show replays, you can easily rewind and watch great plays over and over again and then resume live action. 

There is one issue, however, that DVR recording and viewing has created for the networks and that has to do with the Nielsen ratings. How do they account for the viewers who record and watch the shows later and how do they translate that to their advertising customers? I jotted down a quick list of my top ten shows I watch on a regular basis and let me tell you NBC should be concerned. As a matter of fact, only CBS should feel secure. My top ten shows break down as follows: two are sit-coms, one is a reality show and the other seven are dramas (i.e. action, crime, cop-type shows). Out of my top ten seven are on CBS, one on Fox, one on ABC and one on the USA Network, which NBC owns a part of so I guess they don’t get “goose-egged” after all!

Fox wins the honors of broadcasting my favorite show “24”. Season 7 of Jack Bauer taking on the world of terrorists (not to mention his own government!) has been one of the highlights of this year’s television. Three shows in their first season make my top 10 led by ABC’s “Life on Mars” which overcame about a six week hiatus to remain a strong candidate for the network’s best new program. CBS’s “The Mentalist” is a favorite of mine as well as many other people as it is consistently ranked in the top 10 of the Nielsen ratings. The new CBS comedy “Gary Unmarried” also makes my list.

My favorite comedy program on TV is “The Big Bang Theory” on CBS. Actor Jim Parsons will win many an Emmy award for his portrayal of Sheldon in this up and coming series. The only reality show making my top 10 is “Survivor.” The main reason is my whole family enjoys this show and we all watch it together as a family event. 

The remaining four shows in my top 10 are “CSI”, “CSI Miami” and “Criminal Minds” all on CBS as well as “Burn Notice” on the USA Network. These shows are well done, well cast and provide me an “escape” from my normal day-to-day activities. Finding the time to watch each of these shows would be nearly impossible without our DVR. What would we do without it? 

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Pricing in Today’s Environment

Much has changed over the past 18-plus months in not only the seller finance industry but the mortgage acquisition market as a whole. Back in the “good old days” an investor’s pricing philosophy was pretty straightforward. It was really very basic. Three key factors drove pricing: credit, equity (LTV), and seasoning.  

Investors would evaluate these three key factors both independently and together on each deal. Strength in one or more of the three factors could outweigh significant weakness in another factor. For example, a deal with weak credit (590 FICO score) loan has 36 months seasoning and a 75% LTV, the strength of the seasoning and equity helped offset the credit risk involved. Therefore pricing would not get hit as hard as the credit would indicate. Or on a loan where the credit is extremely strong (725 FICO score) which was a relatively new loan (only 2 payments made) and only 10% cash down would still bring a strong price offer. Why? Pricing models predicted that borrowers with credit in this range default at a very low percentage. 

Today’s market can be summarized by one word: “Disconnect”. Disconnect is defined as an unbridgeable disparity, as from a failure of understanding. Currently we are faced with such a disconnect between the “bid” price and the “ask” price that very little product is in fact trading at all. 

The pricing models have evolved ten-fold over the past year and a half. Sure in the past there were other factors that affected pricing, such as the property type, the occupancy status and the interest rate. But now the factors are extensive. 

It is now imperative that pricing models do a much better job of “predicting” the level of risk prior to acquiring an asset. In todays market environment it is more important than ever to identify and evaluate risks and then select and manage methods to adapt to such risks. Risk management is the process of analyzing exposure to risk and determining how to best handle such exposure.  

So what factors impact the risk of potential loan trades? The obvious factor is credit. While the credit score of the borrower is a definite indicator of the risk associated with the loan, current models go much further than just analyzing risk based on the credit score. The credit of the borrower is weighed along with the loan-to-value as well as the combined loan-to-value and the seasoning on the loan to help forecast the “frequency of foreclosure.” In other words: statistical analysis is done to determine how often a loan with a 605 FICO score and an 80% LTV, a 95% CLTV with only 5 payments made tends to default and go into foreclosure. This frequency of foreclosure ratio directly impacts the price of a loan. 

The property location as well as the housing trends in that market also impacts the risk in several ways. House Price Index (HPI) data is used to examine the relationship between the stated loan-to-value and the current market supported loan-to-value drilled down to the zip code. The term “declining market” has become a household word for almost two-thirds of our country. These declining market trends add to the risks, and subsequent reduction in pricing, involved in acquiring loans in these locations.  

What is it going to take to “correct” the market? Well first of all if I had that answer I would be a very popular and well compensated man. Popular opinion believes the first step must be the stabilization of the housing prices. The government is currently trying to finalize the financial-system bailout plan to address falling home prices which is key in ending the financial crisis. The concept of a public/private bank structure (similar to the old RTC) is also an option being discussed to help set floor values on certain assets in order to get deals trading again. Perhaps this will help resolve the disconnect facing the market today.

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It’s Still the Greatest City in the World

This past weekend, my wife Angie and I went to the greatest city in the world to celebrate Valentine’s Day. Yes we went to New York City! The last time we were there was the summer of 2000, when we took our son Robbie, who was preparing to start high school, and our daughter Kristin, who was only seven years old at the time, on our family’s summer vacation to explore New York City. 

Needless to say, little did we know that just over a year later the city, our country and the entire world would never be the same due to the terrorist attacks on September 11, 2001. To be honest I really did not know what to expect to see after the eight and a half years since we had been there last. 

To give you a little background, I am somewhat partial to New York City. I was born just across the Hudson River in New Jersey and spent the first eight years of my life there. That is why I am a life-long New York Yankees fan as well as a New York Knicks and New York Rangers fan. On a side note, the Giants and Jets never really excited me and I latched on to “America’s Team” and followed the Dallas Cowboys. My grandparents lived on Long Island so I spent many days visiting the city. I remember going to “Bat Day” at Yankee Stadium, going to the top of the Empire State Building and visiting Central Park. 

When Angie and I took our kids on vacation to the City in 2000, we hit all the tourist spots. We stayed right across the street from the World Trade Center at the Millennium Hilton Hotel. We went to the top of the Twin Towers, took the boat to see the Statue of Liberty, walked across the Brooklyn Bridge, ate in Chinatown and Little Italy, toured Central Park, rode the subways and even caught a Yankee game. Although my daughter does not remember all of it, we shared a total New York City experience that week. 

So last Friday as we were flying into La Guardia International Airport, we could see Manhattan out the window of the plane. Yes the first thing I noticed is what was missing. The towers are gone. There were other changes as well. I could see not one but two Yankee Stadiums! How cool is that? The new stadium has been built right next door to “The House That Ruth Built”. I’m not sure how long it will remain but I got to see them both. I also got to see the New York Mets new stadium, Citi Field, as we were landing. 

This time we stayed in a hotel right across the street from Battery Park in lower Manhattan and could see the Statue of Liberty from our room. The first thing we did after unpacking was set out to see ground zero. It was about a four block walk on a cold, 38 degree, windy afternoon. After not knowing what to expect to see, I have to say, you really only see the “memories”. The site where the World Trade Center towers once stood basically looks like a giant construction site. It is surrounded by chain link fencing, which makes viewing difficult. There are engraved plaques listing the victims of that day on the fence but that is the only “memorial” we found. Amazingly the hotel we stayed at on our family vacation has reopened after a couple years of renovating and rebuilding and the “Stage Door Deli” right around the corner is still open and packed with customers. On the corner is a small chapel that former Mayor Rudy Giuliani described as “St. Paul’s Chapel stands – without so much as a broken window. Little miracle.” Hard to believe it’s a block away from total devastation and not a mark on it. We capped our first night in the city off with a nice, romantic dinner in a quaint, Italian restaurant, Il Cortile, on Mulberry Street that we dined at back in 2000. Once again, the food was wonderful. 

The next day Angie and I spent the day touring the city and just hanging out in the streets with thousands of other people. I tell you, based on the number of people we saw all over the city, there are still plenty of folks spending money and stimulating the economy. That night, we had an outstanding Valentine’s dinner at Blue Fin restaurant in Times Square where the seafood is “swimmingly fresh” and then went to see the Broadway musical “Jersey Boys”. Wow! What a show! That was our first Broadway show and believe me it will not be the last. The theater was sold out and the show was amazing. 

Then on Sunday morning we checked out of the hotel and headed back to the airport to come home to Dallas. All I can say is if you have never been to New York City, you definitely are missing out on one of the most unbelievable places in the world. There is so much to do that Angie and I already have a “to do” list for our next visit and I guarantee you we won’t wait another eight years before we head back. I think Michael Bloomberg the Mayor of New York said it best “This is the city of dreamers and time and again it’s the place where the greatest dream of all, the American dream, has been tested and has triumphed.” I love New York…

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You Call This Due Diligence?

Timothy Geithner – strike one, Tom Daschle – strike two, Nancy Killefar – strike three. President Obama’s first month in the White House is not off to a good start. What do Geithner, Daschle and Killefar all have in common? Well, first of all they are (or were) three nominees for high-level positions in the Obama administration. Secondly, they all three did not “know” they should have paid their taxes in full. 

First, it was Timothy Geithner, who is now our Treasury Secretary. Mr. Geithner failed to pay $34,000 in self-employment taxes from 2001 to 2004 while he worked for the International Monetary Fund. Although he signed a disclosure provided by IMF that the taxes were his responsibility to pay, he failed to pay them. But he had a good excuse: “These were careless mistakes,” he said “but they were unintentional.” OK no problem Mr. Geithner that explains it all. 

By all accounts Timothy Geithner is the best choice to head up the Department of Treasury in these difficult times and he went on to receive senate confirmation. But shouldn’t we be at the very least somewhat skeptical that as Treasury Secretary he is in charge of the Internal Revenue Service?! 

Next up is Tom Daschle, former Senator from South Dakota. Daschle, who is also former Majority Leader in the Senate and served 18 years in the Senate as well as 8 years in the U.S. House, is President Obama’s nominee for Health and Human Services Secretary. During his confirmation hearings it has been uncovered that he failed to pay $134,000 in federal taxes centered around his chauffeur service since he left office. 

His explanation, “I would hope that my mistake could be viewed in the context of 30 years of public service,” left room for question.  So 26 years in Congress allows for a “mistake” like this that would have the average American likely facing criminal charges for tax evasion? But the good news is today, despite President Obama “absolutely” supporting his nominee, this morning Mr. Daschle has decided to withdraw from his nomination for HHS Secretary. 

And finally we have Nancy Killefar who was President Obama’s choice to be the first Chief Performance Officer for the federal government. When her nomination was announced earlier this month reports came out that in 2005 the District of Columbia government had filed a $946.69 tax lien on her home for failure to pay unemployment compensation tax on household help. Today Ms. Killefar as well withdrew from her nomination. 

The real question is what kind of due diligence was done by President Obama and his staff? These three nominees all with tax issues slipped through the cracks during the vetting process? Or was the President fully aware of the problems and decided they were not serious enough? Due diligence by definition is the care that a reasonable person exercises under the circumstances to avoid harm to other persons or their property. The process of investigation through research and analysis. Can you call this due diligence?

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