In Fed and Out, Many Now Think Inflation Helps

Some economists say more inflation is just what the American economy needs to escape from a half-decade of sluggish growth and high unemployment.

The Fed has worked for decades to suppress inflation, but economists, including Janet Yellen, President Obama’s nominee to lead the Fed starting next year, have long argued that a little inflation is particularly valuable when the economy is weak. Rising prices help companies increase profits; rising wages help borrowers repay debts. Inflation also encourages people and businesses to borrow money and spend it more quickly.

The school board in Anchorage, Alaska, for example, is counting on inflation to keep a lid on teachers’ wages. Retailers including Costco and Walmart are hoping for higher inflation to increase profits. The federal government expects inflation to ease the burden of its debts. Yet by one measure, inflation rose at an annual pace of 1.2 percent in August, just above the lowest pace on record.

“Weighed against the political, social and economic risks of continued slow growth after a once-in-a-century financial crisis, a sustained burst of moderate inflation is not something to worry about,” Kenneth S. Rogoff, a Harvard economist, wrote recently. “It should be embraced.”

The Fed, in a break from its historic focus on suppressing inflation, has tried since the financial crisis to keep prices rising about 2 percent a year. Some Fed officials cite the slower pace of inflation as a reason, alongside reducing unemployment, to continue the central bank’s stimulus campaign.

Critics, including Professor Rogoff, say the Fed is being much too meek. He says that inflation should be pushed as high as 6 percent a year for a few years, a rate not seen since the early 1980s. And he compared the Fed’s caution to not swinging hard enough at a golf ball in a sand trap. “You need to hit it more firmly to get it up onto the grass,” he said. “As long as you’re in the sand trap, tapping it around is not enough.”

All this talk has prompted dismay among economists who see little benefit in inflation, and who warn that the Fed could lose control of prices as the economy recovers. As inflation accelerates, economists agree that any benefits can be quickly outstripped by the disruptive consequences of people rushing to spend money as soon as possible. Rising inflation also punishes people living on fixed incomes, and it discourages lending and long-term investments, imposing an enduring restraint on economic growth even if the inflation subsides.

“The spectacle of American central bankers trying to press the inflation rate higher in the aftermath of the 2008 crisis is virtually without precedent,” Alan Greenspan, the former Fed chairman, wrote in a new book, “The Map and the Territory.” He said the effort could end in double-digit inflation.

The current generation of policy makers came of age in the 1970s, when a higher tolerance for inflation did not deliver the promised benefits. Instead, Western economies fell into “stagflation” — rising prices, little growth. 

Lately, however, the 1970s have seemed a less relevant cautionary tale than the fate of Japan, where prices have been in general decline since the late 1990s. Kariya, a popular instant dinner of curry in a pouch that cost 120 yen in 2000, can now be found for 68 yen, according to the blog Yen for Living.

This enduring deflation, which policy makers are now trying to end, kept the economy in retreat as people hesitated to make purchases, because prices were falling, or to borrow money, because the cost of repayment was rising. 

“Low inflation is not good for the economy because very low inflation increases the risks of deflation, which can cause an economy to stagnate,” the Fed’s chairman, Ben S. Bernanke, a student of Japan’s deflation, said in July. “The evidence is that falling and low inflation can be very bad for an economy.”

There is evidence that low inflation is hurting the American economy.

“I’ve always said that a little inflation is good,” Richard A. Galanti, Costco’s chief financial officer, said in December 2008. He explained that the retailer is generally able to expand its profit margins and its sales when prices are rising. This month, Mr. Galanti told analysts that sluggish inflation was one reason the company had reported its slowest revenue growth since the recession.

Executives at Walmart, Rent-A-Center and Spartan Stores, a Michigan grocery chain, have similarly bemoaned the lack of inflation in recent months.

Stocks & Bonds: Surge in Commodities Prices Helps End Slump on Wall St.

Mining companies and others dealing in commodities helped pull the stock market out of a three-day slump on Thursday.

News that China’s trade rebounded last month signaled the end of a six-month slowdown for the world’s biggest buyer of raw materials. The report drove prices up for copper and other commodities, and that helped lift Newmont Mining, Freeport-McMoRan and other stocks in the materials industry.

“The one thing that stands out today is the better news out of China,” said David Joy, the chief market strategist at Ameriprise Financial. “It comes as a pleasant surprise.”

The Standard & Poor’s 500-stock index edged up 6.57 points, or 0.4 percent, to 1,697.48.

The Dow Jones industrial average rose 27.65 points, or 0.2 percent, to 15,498.32. The Nasdaq composite gained 15.12 points, or 0.4 percent, to 3,669.12.

With little other news to drive trading, the stock market had meandered lower this week. The S.& P. 500 fell three days straight and remains down 0.7 percent for the week. It is still up 19 percent this year.

Brad McMillan, chief investment officer for Commonwealth Financial Network in Waltham, Mass., said a number of concerns weighed on the market this week. Comments from Federal Reserve officials have convinced many investors that the bank will begin pulling back its support for the economy in the coming months.

In an interview on CNBC after the market closed, Richard W. Fisher, head of the Fed’s Dallas branch, reaffirmed his view that it was time to wind down the bank’s stimulus effort.

At the same time, companies are warning of slower sales and turning in tepid second-quarter results. Mr. McMillan said it was starting to look as though corporate earnings had not kept up with the stock market’s strong pace this year.

“I think people are realizing that stock values are getting disconnected from earnings growth,” Mr. McMillan said. “For the rally to continue, people will have to pay more for earnings that aren’t growing that much.”

Investors are paying more for profits. A year ago, the price-earnings ratio for the S.& P. 500 was 13.4, according to the data provider FactSet. Now it is 15.6, which is still near the long-run average.

In other trading on Thursday, the better economic news out of China sent copper, widely used for electronics and to wire buildings, up 10 cents, or 3 percent, to $3.27 a pound. Gold rose $24.60, or 2 percent, to $1,309.90 an ounce.

In the bond market, the price of the 10-year Treasury note rose 10/32, to 93 1/32, while its yield fell to 2.59 percent, from 2.60 late Wednesday.

F.C.C. Backs Plan to Update a Fund That Helps Connect Schools to the Internet

WASHINGTON — The Federal Communications Commission voted on Friday to overhaul and possibly expand its E-Rate program, a $2.3 billion effort to provide schools and libraries with up-to-date telecommunications service and equipment, including high-speed Internet connections.

A proposal approved by the commission, which will be made available for public comment before a final version is completed, calls for funds to be moved away from outdated uses like paying for paging service and long-distance phone calls and into areas that will accelerate digital literacy, like Wi-Fi connections within a school or library.

The proposal also calls for measures that would drive down the cost of services, like adoption of purchasing consortiums, and the streamlining of administrative requirements — among them, shifting much of the required paperwork for applicants to electronic filings. “One of the biggest obstacles to seizing the opportunities of digital learning in America is inadequate bandwidth at our schools and libraries,” Mignon L. Clyburn, the F.C.C. chairwoman, said before voting. “Simply put, they need faster high-capacity connections and they need them now.”

Just last month in a visit to a North Carolina middle school, President Obama set a goal of connecting 99 percent of school students to the Internet through high-speed broadband and high-speed wireless within five years.

“To get there, we have to build connected classrooms that support modern teaching — investments we know our international competitors are already making,” Mr. Obama said on Friday.

The E-Rate fund has financed Internet connections to more than 95 percent of American public school classrooms, while only 14 percent were connected when E-Rate was established in 1997.

In 2010, however, an F.C.C. study found that more than half of the schools and libraries reported that their Internet connections were too slow to meet their needs. For the coming school year, libraries and schools requested more than $4.9 billion to pay for connections and equipment, more than twice the size of the fund.

“We fail our students if we expect digital-age learning to take place at near dial-up speeds,” said Jessica Rosenworcel, an F.C.C. commissioner. “Contrast this with efforts under way in some of our world neighbors. They are pouring resources into these subjects, into schools and connectivity.”

The E-Rate program has been faulted for inadequately allocating money in the fund, which is provided through a tax on consumers’ phone bills, a monthly charge between 50 cents and $1.

Commissioner Ajit Pai, the lone Republican on the five-member commission (where two seats are vacant), criticized allocations of the fund, saying an average of only $1.8 billion had been spent in each of the last 10 years, leaving more than $5 billion unused in the E-Rate account.

Mr. Pai also complained that the program placed greater emphasis on the wrong services.

“E-Rate today prioritizes long-distance telephone calls and getting phone service to a school’s bus garage over wiring up a classroom,” Mr. Pai said in a speech this week at the American Enterprise Institute. “How can it be that E-Rate in the last few years committed about $600 million, more than one-quarter of its annual budget, to support voice telephone services while at the same time denying eight out of 10 applicants’ funding for connecting classrooms?”

At a Senate Commerce Committee hearing this week, both Republicans and Democrats spoke favorably of the fund, although some quoted Mr. Pai’s observations in a warning of reckless spending.

F.C.C. Backs Plan to Update a Fund That Helps Connect Schools to the Internet

WASHINGTON — The Federal Communications Commission voted on Friday to overhaul and possibly expand its E-Rate program, a $2.3 billion effort to provide schools and libraries with up-to-date telecommunications service and equipment, including high-speed Internet connections.

A proposal approved by the commission, which will be made available for public comment before a final version is completed, calls for funds to be moved away from outdated uses like paying for paging service and long-distance phone calls and into areas that will accelerate digital literacy, like Wi-Fi connections within a school or library.

The proposal also calls for measures that would drive down the cost of services, like adoption of purchasing consortiums, and the streamlining of administrative requirements — among them, shifting much of the required paperwork for applicants to electronic filings. “One of the biggest obstacles to seizing the opportunities of digital learning in America is inadequate bandwidth at our schools and libraries,” Mignon L. Clyburn, the F.C.C. chairwoman, said before voting. “Simply put, they need faster high-capacity connections and they need them now.”

Just last month in a visit to a North Carolina middle school, President Obama set a goal of connecting 99 percent of school students to the Internet through high-speed broadband and high-speed wireless within five years.

“To get there, we have to build connected classrooms that support modern teaching — investments we know our international competitors are already making,” Mr. Obama said on Friday.

The E-Rate fund has financed Internet connections to more than 95 percent of American public school classrooms, while only 14 percent were connected when E-Rate was established in 1997.

In 2010, however, an F.C.C. study found that more than half of the schools and libraries reported that their Internet connections were too slow to meet their needs. For the coming school year, libraries and schools requested more than $4.9 billion to pay for connections and equipment, more than twice the size of the fund.

“We fail our students if we expect digital-age learning to take place at near dial-up speeds,” said Jessica Rosenworcel, an F.C.C. commissioner. “Contrast this with efforts under way in some of our world neighbors. They are pouring resources into these subjects, into schools and connectivity.”

The E-Rate program has been faulted for inadequately allocating money in the fund, which is provided through a tax on consumers’ phone bills, a monthly charge between 50 cents and $1.

Commissioner Ajit Pai, the lone Republican on the five-member commission (where two seats are vacant), criticized allocations of the fund, saying an average of only $1.8 billion had been spent in each of the last 10 years, leaving more than $5 billion unused in the E-Rate account.

Mr. Pai also complained that the program placed greater emphasis on the wrong services.

“E-Rate today prioritizes long-distance telephone calls and getting phone service to a school’s bus garage over wiring up a classroom,” Mr. Pai said in a speech this week at the American Enterprise Institute. “How can it be that E-Rate in the last few years committed about $600 million, more than one-quarter of its annual budget, to support voice telephone services while at the same time denying eight out of 10 applicants’ funding for connecting classrooms?”

At a Senate Commerce Committee hearing this week, both Republicans and Democrats spoke favorably of the fund, although some quoted Mr. Pai’s observations in a warning of reckless spending.

Housing Data Helps Propel Markets

Wall Street closed higher on Tuesday, fueled by new data showing a strengthening housing market in the United States and supportive comments from central banks around the world.

By the end of trading, the Standard & Poor's 500-stock index was 0.6 percent higher, and the Dow Jones industrial average gained 0.7 percent. The Nasdaq composite was 0.9 percent higher.

Markets were bolstered by a report that American home prices rose 1.1 percent in March, according to the Standard & Poor’s Case Schiller index. Analysts were looking for a rise of 1 percent. It was the biggest annual gain in nearly seven years, and a further sign that the strengthening housing recovery is providing a source of support for the economy.

Prices in the 20 cities jumped 10.9 percent year over year, beating expectations for 10.2 percent. It was the biggest increase since April 2006, just before prices peaked in the summer of that year.

Further encouraging the market, data showed consumer confidence was the strongest in over five years in May.

Both the Bank of Japan and the European Central Bank reaffirmed that their policies would remain in place. On Monday, when United States markets were closed for the Memorial Day holiday, an executive board member of the European Central Bank, Joerg Asmussen, said the policy would stay as long as necessary. On Tuesday, a Bank of Japan board member, Ryuzo Miyao, said it was vital to keep long- and short-term interest rates stable.

Monetary stimulus from central banks has been a major contributor to Wall Street’s gains this year, lifting the S.&P. 500 more than 15 percent. Analysts have also cited earnings growth and relatively cheap valuations as reasons investors have used any market decline as a buying opportunity, helping lift both the S.&P. and Dow to a series of new highs. Last week, major American indexes posted their first negative week since mid-April on lingering concerns that the Federal Reserve may scale back its stimulus measures sooner than expected.

“Whenever the Fed starts slowing its stimulus, that will have an impact on markets, but there’s enough strength out of retail and housing that we can sustain our gains, especially with Japan making it very clear what its policy will be,” said Tad Hill, chief executive of Freedom Financial Group in Birmingham, Ala.

Cyclical sectors, which are closely tied to the pace of economic growth, are likely to advance on any sign of continued supportive policies. Bank of America rose 0.8 percent while Citigroup was 2.5 percent higher.

Luxury retailer Tiffany & Company on Tuesday reported adjusted earnings and sales that beat expectations, sending shares up 4 percent.

Abercrombie & Fitch late Friday reported a drop in first-quarter same-store sales that was steeper than expected and cut its full-year profit view. Its shares fell 1.8 percent.

DealBook: Strong Lobbying Helps Dimon Thwart a Shareholder Challenge

Haraz N. Ghanbari/Associated PressA proposal to separate the jobs of chairman and chief executive of Chase became a referendum on Jamie Dimon.

8:18 p.m. | Updated

Jamie Dimon and the 10 other directors of JPMorgan Chase had reason to be confident before they took private jets to Tampa on Monday, the eve of the bank’s annual meeting. Early indications were that a shareholder vote to split Mr. Dimon’s jobs as chairman and chief executive was heading to a resounding defeat.

There was just one problem: One director was not going to Florida.

Ellen V. Futter, a longtime member of the board’s risk policy committee who had come under fire over her lack of a background in finance, had decided at the last minute not to attend the meeting.

Ms. Futter, the president of the American Museum of Natural History, was sick of the swirl of negative attention surrounding her, worried that it needlessly detracted from JPMorgan’s strengths and that it might hurt the reputation of the museum, people briefed on the matter said. She wanted off the board.

A resignation by a bank director would have distracted from what was shaping up to be a victory parade for Mr. Dimon. The charismatic chief executive called her on Monday to try to convince her to stay, although he acknowledged that it was a personal decision, the people briefed on the matter said. That discussion was followed by calls from at least two other directors, the people said. They urged Ms. Futter to remain on the board, adding that her resignation would drag her back into the spotlight.

In the end, Ms. Futter, who narrowly eked out re-election, changed her mind.

Mr. Dimon’s art of persuasion was also in evidence on Tuesday as nearly 70 percent of the shares were voted to reject decisively a proposal for an independent chairman.

The shareholder vote had shaped up to be a rare challenge to Mr. Dimon, who was widely praised for piloting the bank through the turmoil of the financial crisis. Since the crisis, three years of consecutive quarterly profits at JPMorgan have added to his laurels.

Yet a surprising multibillion-dollar trading loss last year — one that has helped drive top lieutenants from the bank and produced a range of investigations — has raised questions about the chief executive’s leadership.

The shareholder resolution, while intended to improve corporate governance by having an independent chairman as a counterweight to a chief executive, became a referendum on Mr. Dimon himself. It was a test he easily passed.

“To some extent this was a referendum on Jamie Dimon, and he is quite unique and special and no one can deny that,” said Marvin Schwartz, a portfolio manager at Neuberger Berman, which controls roughly 12 million shares and voted against the resolution. “To hold against him one unfortunate loss in the trading area, I think, is quite unfair.”

Even though some 40 percent of the shares last year had supported a similar proposal to split the top two jobs at the bank, this year’s resolution was supported by only 32.2 percent of the shares. The divide in the vote was apparent, with institutional investors like Neuberger Berman voting overwhelmingly against the proposal and pension funds voting for it, according to people briefed on the matter.

In an e-mail to employees after the annual meeting, Mr. Dimon wrote: “I love coming to work here every day — and hope to be doing it for years to come.”

Chris O’Meara/Associated PressStockholders arrived for the JPMorgan Chase annual meeting on Tuesday in Tampa, Fla.

Shares of JPMorgan rose as much as 2.6 percent on Tuesday, before closing up 1.4 percent, at $53.02.

The hearty endorsement of the chief executive — which was announced on his 30th wedding anniversary — came after months of behind-the-scenes lobbying by the bank.

At its Park Avenue headquarters, JPMorgan assembled a war room where executives kept close tallies as shareholder votes began streaming in, according to two people briefed on the matter. To sway investors, these people said, influential board members were paired with large shareholders.

Part of the message was to remind shareholders that the directors were already a powerful check on Mr. Dimon, noting that board had earlier moved to root out problems in the aftermath of the losses and to claw back $100 million from the traders at the center of the outsized wagers.

The bank held conference calls with several big investors, including Neuberger Berman. Mr. Schwartz said that during that call, which lasted roughly 40 minutes, Neuberger portfolio managers had a “frank give and take” with JPMorgan executives.

Still, roughly two weeks before the shareholder meeting, the proposal sponsors were winning, according to people briefed on the tallies. The vote was going against Mr. Dimon.

On May 6, Lee R. Raymond, the lead director of the bank’s board, and William C. Weldon, the chairman of the board’s corporate governance and nominating committee, met with officials from the American Federation of State, County and Municipal Employees, one of the main backers of the proposal to divide the roles.

A close ally of Mr. Dimon even tried to enlist former President Bill Clinton to help broker a compromise with Afscme, according to two people with knowledge of the discussion. Mr. Clinton declined.

“I think that given the resources that the management and the board threw at this, it’s not a surprise that the vote was lower than last year,” said Lisa Lindsley, the director of capital strategies at Afscme.

The bank pulled other levers as well, some shareholders said.

“First we hear Jamie might leave if things go against him and then people start talking about the damage to the stock price,” said one major shareholder, who asked not to be named because of a company policy against speaking to the media. “It was effective.”

People close to the bank say a turning point in the campaign came from an unexpected source, an influential shareholder advisory firm, Institutional Shareholder Services, which urged shareholders earlier this month to withhold their votes from three directors on the board’s policy committee.

In a scathing 33-page report, the firm faulted three directors, saying they lacked risk expertise. By zeroing in on the board members, several people close to the bank said, the advisory firm effectively gave shareholders an alternative. They could register their dissatisfaction with JPMorgan without going after Mr. Dimon, the people said.

Indeed, the preliminary vote totals for the three directors were effectively rebukes. Ms. Futter received just 53 percent of the voting shares, while the two other directors on the committee did only a little better: James S. Crown received about 57 percent of the vote; and David M. Cote received 59 percent. (In comparison, Mr. Dimon received 98 percent of the vote for his board seat, while Mr. Raymond, the lead director, received 95 percent.)

As a result of this sign of disapproval from shareholders, it is almost certain the board will make some changes. On Tuesday, Mr. Raymond told shareholders to “stay tuned” when he was asked if the board is planning to make changes to the risk committee. It is likely Ms. Futter will come off the risk committee, and the board may replace her or others with directors that have more knowledge of financial risk.

“The vote proved to be a referendum on the board’s oversight of risk rather than over whether to split the chairman/C.E.O. job,” said Michael Garland, an assistant comptroller who heads corporate governance for the New York City comptroller, John Liu, which co-sponsored the bill. “I don’t think this is a setback because it put a spotlight on the issue and the clock is now ticking on director reform.”

DealBook: Cost-Cutting Helps Lloyds Bank Earn $2.3 Billion

Andy Rain/European Pressphoto AgencyA branch of Lloyd’s TSB bank in London.

LONDON – The Lloyds Banking Group said on Tuesday that first-quarter net profit rose to £1.5 billion ($2.3 billion) from the period a year earlier, as it continued to reduce costs and shed assets.

The result, which beat analysts’ estimates, was a sharp turnaround from the £5 million loss Lloyds posted in the first quarter of 2012.

The bank’s performance was driven by higher revenue in its main retail banking business, falling costs as it sold assets and a reduction in money set aside to cover delinquent mortgages, Lloyds said in a statement.

“We made substantial progress again in the first quarter,” the chief executive, António Horta-Osório, said in the statement.

Shares in Lloyds, which is 39 percent owned by the British government after it received a bailout during the financial crisis, rose almost 5 percent in morning trading in London on Tuesday.

In recent years, Lloyds and other local lenders have had to pay billions of pounds for inappropriately selling insurance products to British customers who did not require them. The bank said it had not set aside additional money to cover the costs for that inappropriate activity.

As British regulators push banks to shore up their capital positions, Lloyds has been increasing its reserves through a series of disposals.

On Monday, Lloyds sold its Spanish operations to Banco Sabadell of Spain. Lloyds is also planning an initial public offering of part of its branch network to meet conditions of its government bailout in 2008. The bank made £394 million last month from selling a 20 percent stake in the wealth management firm St. James’s Place.

In March, regulators said British financial institutions would have to raise an additional £25 billion of capital. Many analysts expect that Lloyds will have to raise additional funds, though it said on Tuesday that it was still waiting to receive guidance from the local authorities.

The bank’s core Tier 1 ratio, a measure of a firm’s ability to weather financial shocks, remained at 8.1 percent under the accountancy rules known as Basel III.

During the first quarter, Lloyds said it had continued to reduce costs and cut the amount of money set aside to cover delinquent loans. Impairment charges fell 40 percent, to £1 billion, from the period a year earlier, while noncore assets fell 6 percent, to £92.1 billion.

Lloyds also said on Tuesday that Matthew Elderfield, deputy governor at the Central Bank of Ireland in charge of financial regulation, would become its new group director of conduct and compliance beginning in October.

New Service Helps Put a Dollar Value on Lawyers' Social Media Efforts

Do tweets and Facebook posts add up to billable hours?

Now that the Internet has displaced the Yellow Pages, many lawyers use social media to try to build their businesses, but few know whether the outreach is effective, legal consultants say.

"The reality is that the vast majority of lawyers just aren't keeping track," said Adrian Dayton, a consultant who helps law firms devise strategies for social media.

Avvo Ignite, a new service offered by the legal directory and forum Avvo, aims to change that by letting lawyers see how many inquiries originate from their presences on and offline -- and how many yield new clients.

Without monitoring what works and what doesn't, lawyers struggle to make the most of the new outlets available to them online, said Avvo executive Sachin Bhatia, who researched lawyers' social media habits before launching the service in November. Rather than sealing the deal, some lawyers spend too much time qualifying clients, he said. Many do not have a sound system for logging their prospects. And some do not get many leads from social media, he noted.

"We saw lawyers spending money to market in places when clients weren't even there," said Bhatia, who is vice president of products at Avvo Inc.

The Avvo Ignite Suite is supposed to help attorneys avoid that fate by documenting how each prospect found the firm and then facilitating communication and payment to bring clients on board. Another edition, Avvo Ignite Starter, creates basic websites and monthly activity reports and can be accessed on mobile devices. The Starter edition costs $199 per month with a $499 setup fee that can be waived with a yearlong contract.

Most who have signed up so far are lawyers at small to midsize firms and solo practitioners, Bhatia said. Social media can neutralize the reputational advantage enjoyed by Big Law, consultants note.

"It costs a fortune to launch an ad campaign in The New York Times or The Wall Street Journal, but not on social media," law firm consultant Peter Zeughauser said. "Social media levels the playing field for smaller firms."

And yet some lawyers -- particularly those who did not grow up with the Internet -- remain skeptical about social media, Zeughauser said. Lewis Rosenblum, an Orange County, Calif.-based criminal defense attorney, once questioned how much he stood to gain through the channels. When he launched his own office four years ago, he relied on the contacts that he made in 29 years as a prosecutor to generate business. Answering questions on Avvo showed him that there were clients to be found online. He now has accounts on Google Plus and Yahoo as well.

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Intervention Business Helps Attorney's Own Recovery

The road to recovery for a veteran trial lawyer who confronted his own drinking problem has created an unexpected business opportunity -- leading interventions for families dealing with substance abuse problems.

Steven Varney has been sober since 2006. A little over two years ago, he got interested in the idea of helping families organize surprise showdowns that result in getting drug- or alcohol-addicted loved ones into treatment. Varney's motivation came from facing addiction problems of his own. "I found that in working through my own recovery program, I got enormous satisfaction or fulfillment out of helping other people who are struggling," Varney said.

The season of holiday parties is upon us, when a social drink here or there can materialize into something destructive in the nicest of families. Varney knows all too well how the good times can turn sour. He also knows that alcoholism does not discriminate. "It doesn't matter how many friends you or how much money you have," he said. "Anyone can become addicted."

For the first 25 years of his career, Varney was a profile of success, at least on paper. After majoring in political science as an undergraduate, he graduated from the University of Connecticut School of Law in 1985. His first job was as a litigator with Brown, Paindiris & Scott in Hartford, Conn., where he stayed for 24 years.

During that time, he made partner and handled many high-profile cases, including a lawsuit known as the "Tarmac Hold" case in which a Fairfield, Conn., family sued America West Airlines for being held "captive" on a jet for over eight hours during an airport weather delay. The case eventually settled favorably for his client.

In 2005, Varney left to start his own criminal defense and civil litigation practice, which he expanded to include defense of abuse and neglect charges brought by the Department of Children and Families. After work, Varney coached Little League baseball, soccer and basketball in his community of Rocky Hill, Conn.

While he did a pretty good job of keeping it secret, his alcohol addiction grew worse. "I was on top of the world," he said. "But my world was crumbling around me. I continued to go on functioning, day after day, denying to myself and my loved ones that I had a problem."

DISCIPLINE ISSUES

His own road to recovery was pain-filled to be sure, although Varney hesitates to publicly discuss that path or the impact it had on his own family. He said only that his family held an intervention, which led him to inpatient and outpatient treatment. "I'm living proof that interventions work," he said.

Although he found sobriety, he also found himself in trouble with state disciplinary officials. In 2010, two clients filed grievances against Varney. One alleged violation stemmed from collecting an unreasonable retainer of $5,000 for a routine case. The other was for not adequately communicating with a client. As a result, his law license was suspended for two years.

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Former Rodeo Queen Finds Time in the Saddle Helps Her Work as Assistant DA

There are a lot of similarities between lawyering and rodeoing, says Katie Woods, an assistant district attorney in Tarrant County, Texas.

"You're always sizing up your competition. … You want to know what you're up against to be successful in what you're doing," says Woods, who says her rodeo background also helps her in voir dire because she knows how to make a jury like her -- "[m]uch like you want a horse to trust you and follow you wherever you want to go," she says.

At the height of her rodeo career, Woods traveled frequently to amateur and professional-level rodeos and won big purses in barrel races -- riding a horse in a clover pattern around three barrels in an arena.

She became a local rodeo queen. She later was the third runner-up in a statewide rodeo queen competition hosted by the Professional Rodeo Cowboys Association in California, where she grew up.

Then in 2004, Woods became Miss Rodeo USA for the International Professional Rodeo Association by winning a weeklong competition in the areas of etiquette, public speaking and horsemanship, among other things.

When her third year of law school at Texas Wesleyan University School of Law rolled around, Woods stopped traveling to rodeos and focused on school. She earned her law degree in 2010 and later that year she joined the Tarrant County DA's office, where she prosecutes misdemeanors in Tarrant County Court-at-Law No. 6.

But Woods will never give up rodeoing. She's on a team that competes in ranch rodeos, which focus on techniques like roping, tying and sorting cattle. In the near future, she hopes to resume barrel racing at smaller rodeos in Texas.

"It's my one getaway from the rest of life. When I'm horseback, I don't think about anything else going on in my life," Woods says.

This article first appeared on Texas Lawyer's Tex Parte blog.

Shortcuts: Recycling Helps, but It’s Not All You Can Do for the Environment

LIKE most households, we recycle pretty religiously. It’s easy, though, because our town in suburban New York allows us to throw pretty much everything into one bin, and it gets picked up at the curb.

Recycling has become so automatic that if we’re out and there’s no place to recycle that soda can or bottle, it feels slightly illicit to just drop it in the trash. It’s like littering. You just don’t do it.

Lately, however, I started wondering — are we really doing anything with all this recycling besides feeling better about the stuff we buy?

Much of the discussion has focused on the economic impact. That issue has been batted back and forth with mixed results, although most experts now agree that cities have become more experienced and more effective — and therefore made it more cost-efficient — to recycle most products rather than dump them in landfills.

I’m more curious about what impact it has on other environmental behavior. And when I started looking at that more closely, I discovered that there’s an intense debate going on about this issue.

Recycling “is good civic behavior,” said Samantha MacBride, an assistant professor of public affairs at Baruch College, City University of New York, but it’s oversold as a panacea to a whole host of environmental ills, from overflowing landfills to global warming. “I wouldn’t say that people who do recycling feel they’ve done everything they can by participating, but they think there’s a lot more being achieved than there actually is,” she said. Nationally, said Professor MacBride, who is the author of “Recycling Reconsidered” (MIT Press, 2011), recycling prevents only about one-third of all trash from ending up in landfills.

Partly, she said, that is because people are not recycling everything they can. Partly it’s because the recycling model in most municipalities of picking up a bin with all the recyclables mixed together, especially the plastics, doesn’t work well.

“There’s a huge range of plastic materials and hundreds of different resins,” Professor MacBride said. “We need markets and processes to route them back into production and for the most part, those processes don’t exist.”

So some plastics are sent in bales to China and developing countries, and some are disposed of in landfills.

The emphasis, she said, has to be much more on regulating and recycling waste from manufacturers rather than consumer waste.

The other problem is that while “recycling is a wonderful thing to do if we’re comparing it to throwing stuff away, it has become a reward for consumption,” said Michael Maniates, a professor of environmental science at Allegheny College in Pennsylvania.

Gernot Wagner, an economist with the Environmental Defense Fund and author of “But Will the Planet Notice: How Smart Economics Can Save the World,” (Hill and Wang, 2011), agrees. “There’s a well-documented phenomenon known as single-action bias, where people do one thing and move on,” he said. “People don’t explicitly think, ‘I’ve recycled a cup and solved global warming,’ but rather once they’ve done an action like recycling, they feel consciously or subconsciously like they’ve done their part.”

Or as the Center for Research on Environmental Decisions, which is affiliated with the Earth Institute at Columbia University, says on its Web site: “Although recycling is important, it should be but one activity in a series of behavior changes aimed at reducing climate change. Switching to wind or other renewable energies, consuming less meat, conserving daily energy use and eating locally grown food are other effective ways to mitigate climate change, to name but a few. However, if individuals and institutions participate in recycling programs, they may be prone to the single-action bias and feel like they are already doing enough to protect the environment.”

Hold on there, said Allen Hershkowitz, senior scientist and director of the solid waste project at the environmental organization the Natural Resources Defense Council. “I’ve never dealt with a person or company who said, ‘We recycle so we don’t have to do anything else.’ It’s, ‘We recycle, what else can we do?’ ”

DealBook: Mortgage Lending Helps JPMorgan Profit Rise 34%

Finally moving beyond a trading debacle that has stained his once-stellar reputation, Jamie Dimon, JPMorgan Chase’s chief executive, on Friday trumpeted a strong quarter of earnings stemming from a surge in mortgage lending.

Mr. Dimon has been fighting to shift attention from a multibillion-dollar trading loss in May that rattled investors, prompted the bank to claw back millions in compensation and attracted the scrutiny of federal law enforcement agents. The latest quarter’s profit, up 34 percent, to $5.71 billion, helped do that.

Mr. Dimon, who months ago took a swaggering tone in dismissing the troubled bets and was later forced to be more contrite, struck his usual confident tone on Friday. He emphasized that JPMorgan had contained the fallout from the bungled trade, after closing out the position and limiting the losses to the investment bank of on the remainder of the credit derivative trade. The losses on the bet were $449 million in the third quarter, bringing the total loss to $6.25 billion for the year.

“Synthetic credit is a sideshow,” Mr. Dimon said.

Instead, he pointed to the bank’s robust growth across its business units, especially in its mortgage banking unit, which reported a profit increase of 57 percent from a year earlier.

“We believe the housing market has turned the corner,” Mr. Dimon said.

Over all, the company’s earnings, at $1.40 a share, surpassed Wall Street’s estimates. Revenue in the third quarter was $25.9 billion, up 6 percent from the year-ago quarter.

As the nation’s largest bank in assets, JPMorgan’s performance, especially when rosy, is seized upon as a positive sign for the overall economy. The growth at JPMorgan, particularly in loans to consumers and businesses, could signal broader optimism among Americans and bode well for the housing markets, which have been lurching toward recovery.

“It’s a distinctly positive sign,” said Glenn Schorr, an analyst with Nomura Securities.

The bank also reported that fewer consumers were behind on their credit card bills. Write-offs of soured card loans fell to 3.6 percent, from 4.7 percent the previous year. Those trends echo a pattern across the United States.

In August, delinquencies on credit cards stood at 2.32 percent, according to Moody’s Investors Service. That’s down from 3.04 a year earlier.

Still, investors in bank stocks remained wary after the earnings announcements of JPMorgan and Wells Fargo on Friday. Shares of JPMorgan declined 48 cents, or 1.14 percent, to $41.62. Investors were spooked, in part, by shrinking net interest margins, which is the profit margin achieved from lending and investing. JPMorgan’s net interest margin, for example, dipped to 2.43 percent from 2.66 a year earlier.

At JPMorgan, a glut of deposits is challenging because of persistently low interest rates, which make yields on the bank’s investments anemic.

JPMorgan’s earnings were buoyed, though, by an increase in mortgage lending, spurred, in part, by exceedingly low interest rates, driven even lower in recent weeks by the Federal Reserve’s mortgage bond buying program. New home loans and refinancings at the bank hit $47 billion, up 29 percent from the period a year earlier.

Mr. Dimon tempered his expectations for the market and noted that a large swath of the new originations came from a burst of refinancing activity that would eventually slow down. Refinancings accounted for roughly 75 percent of the quarter’s mortgage volume.

He warned, too, that defaults could continue, along with foreclosures, which would most likely leave the bank to shoulder higher costs.

Hitting a familiar tone, Mr. Dimon also remarked that the housing market could rebound more quickly if lawmakers in Washington did less meddling. “I would hope for America’s sake we start to fix the things that make the mortgage underwriting too tight,” he said on a conference call with reporters.

Throughout its core lending businesses, JPMorgan showed signs of strength. The commercial banking group reported record revenue. The volume of credit card sales jumped 11 percent over the previous year, bolstering the broader unit. The card services and auto business posted profits of $954 million, up 12 percent.

With the improving credit environment, JPMorgan set aside less money to cover potential losses, increasing its profits. In the mortgage banking business, the bank cut the amount of reserves by $900 million. Across the bank, JPMorgan set aside $1.79 billion of such funds, compared with $2.41 billion a year earlier.

Revenue from fixed-income and equity markets remained largely stagnant.

Still, the bank is dogged by investigations that could increase its headaches going forward. In the latest challenge for the bank, federal authorities are building criminal cases related to the trading loss, examining calls in which JPMorgan employees talked about how to value the bets. The Securities and Exchange Commission is also investigating the trading losses.

In addition, JPMorgan is facing a lawsuit against Bear Stearns, the troubled unit it now owns. Earlier this month in its first move against a big bank, the federal mortgage task force, co-headed by the New York attorney general, Eric T. Schneiderman, sued Bear Stearns and its lending unit, claiming it defrauded investors who bought mortgage securities during the housing boom.

In a bid to clean up the bungled trade ahead of its third-quarter earnings, JPMorgan has broadly reshuffled its top executive ranks. For example, Douglas L. Braunstein, the bank’s chief financial officer since 2010, is expected to give up his position, but remain at the company. Earlier, Barry Zubrow, who currently heads the bank’s regulatory affairs, announced he would resign by the end of the year.

In the second quarter, the bank transferred the remaining credit bets in the chief investment office to its investment banking unit. On Friday, JPMorgan said it “effectively closed” out its derivative position, which was made by Bruno Iksil, the so-called London Whale.