Bits Blog: Intel Plans to Cut 5,000 Jobs in 2014

DealBook: Twitter Discloses Its I.P.O. Plans

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DealBook: British Regulator Plans New Rules for Payday Lenders

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NPR Plans Buyouts to Cut Staff 10%

In an effort to balance its budget, NPR said on Friday that it would try to reduce its staff about 10 percent through voluntary buyouts.

The announcement was depicted as one of the most substantial staff cutbacks in the history of the public radio organization. An NPR spokeswoman said that if the desired reductions are not achieved through buyouts alone, “involuntary measures will need to be considered.”

An e-mail on Friday to NPR employees said the buyout offers were part of a strategy to “eliminate the deficit and lower ongoing expenses” and that the strategy “also includes investments in our digital future and revenue generating initiatives such as branded events.”

The announcement came about two weeks before the end of NPR’s fiscal year. The organization had been projected to run a deficit of about $6 million this year, though in recent weeks, according to a spokeswoman, that figure has narrowed to $3 million. The deficit is projected to balloon to $6.1 million again in the fiscal year that will begin on Oct. 1. The buyouts and other measures are intended to help NPR break even in the fiscal year that begins in October 2014.

The plans were prepared by a team led by NPR’s chief executive, Gary E. Knell, who announced last month that he would be leaving to take over the National Geographic Society. At the time of the announcement, he said he hoped to present a balanced-budget plan to the NPR board before his departure. The board approved the plan on Thursday.

The board also selected an interim chief executive from within its ranks, Paul G. Haaga Jr. Mr. Haaga, a lawyer who has served on the NPR board since 2011, will succeed Mr. Knell on Sept. 30 and remain in charge until a permanent chief executive is named.

“I am thrilled to have the opportunity to lead one of the world’s leading providers of news, music and cultural programming on an interim basis, and I look forward to working with my colleagues on the board and senior leadership team to help this great organization build on its success,” Mr. Haaga said in a statement on Friday.

NPR said it would share more information about the buyouts with staff members next week. The organization says it has about 840 full-time and part-time employees. The last significant cutbacks came in late 2008, when about 8 percent of the staff was laid off. NPR has hired a sizable number of journalists and technicians since then, many of whom work for its expanding online ventures like NPR.org and its apps.

Obama Outlines Plans for Fannie Mae and Freddie Mac

He proposed to “wind down” Fannie Mae and Freddie Mac, for the first time outlining his approach to overhauling the two giant mortgage-finance companies that were taken over by the government when they failed nearly five years ago. The companies, which Mr. Obama described in an appearance here as “not really government, but not really private sector,” recently began to repay taxpayers.

“For too long, these companies were allowed to make big profits buying mortgages, knowing that if their bets went bad, taxpayers would be left holding the bag,” the president said. “It was ‘heads we win, tails you lose.’ ”

Since early 2011, the administration has voiced support for overhauling Fannie Mae and Freddie Mac, which long benefited from an implicit government guarantee. Years ago the companies came to symbolize a self-dealing Washington culture beneficial to both parties, and especially Democrats, but Mr. Obama’s remarks on what comes next were his most specific. For several years, the administration held back from revamping the mortgage-finance system for fear of rattling a weakened market.

Mr. Obama on Tuesday endorsed the thrust of bipartisan legislation from a Senate group that would “end Fannie and Freddie as we know them.” The so-called government-sponsored enterprises for decades bought and sold mortgages from financial institutions to provide money for the banks to keep lending to home buyers.

Under Mr. Obama’s principles, which he said were reflected in the Senate bill taking shape, Fannie Mae and Freddie Mac would further shrink their portfolios and lose the implicit guarantee of a federal government bailout. Instead, private investors would be most at risk, with the government a secondary guarantor.

“First, private capital should take a bigger role in the mortgage markets. I know that sounds confusing to folks who call me a socialist,” Mr. Obama said, drawing laughs and applause. “I believe that our housing system should operate where there’s a limited government role,” he added, “and private lending should be the backbone of the housing market.”

The president said that any measure he signed into law “should preserve access to safe and simple mortgage products like the 30-year, fixed-rate mortgage.”

“That’s something families should be able to rely on when they’re making the most important purchase of their lives,” he said.

Senator Mark Warner, Democrat of Virginia who is part of the bipartisan effort on the Senate banking committee, welcomed the president’s endorsement. “It’s good to see additional momentum,” he said in a statement.

Brian Gardner, a senior vice president in Washington at Keefe, Bruyette & Woods, wrote to clients that Mr. Obama’s address on mortgage finance was “important because the administration has not discussed it in some time.” Despite the presidential push, he said, Congress is not likely to approve a bill before 2015.

Separate legislation in the Republican-controlled House would remove the government from the mortgage market, including from the decision whether to keep providing the 30-year mortgage. But Mr. Gardner wrote that even “many free market proponents acknowledge that the government will play some backstop role in a future system” and be compensated for it.

After years in which the formerly formidable Fannie Mae and Freddie Mac and their Congressional allies blocked proposals requiring some kind of fees or risk premiums, Mr. Obama is calling for an assessment to be paid to the government on the value of mortgage-backed securities.

Under his proposals, the revenue from an assessment would help finance aid for borrowers and the construction of houses and rental properties that lower-income Americans could afford.

Mr. Obama’s focus was homeownership. But he emphasized the need for more affordable rental housing more than he had before. Advocates have called for a “rebalance” of government subsidies, which they say have too long been skewed toward homeownership and mostly benefit the affluent.

“In the run-up to the crisis, banks and the government too often made everyone feel like they had to own a home, even if they weren’t ready and didn’t have the payment,” Mr. Obama said. “That’s a mistake we shouldn’t repeat,” he said. “Instead, let’s invest in affordable rental housing.”

Mr. Obama purposely spoke in Phoenix, where weeks after taking office he first announced his ideas for providing relief to homeowners and stemming foreclosures. Here, as in much of the nation, home values and sales are up, and foreclosures are down. Before arriving at a high school gym packed with an enthusiastic crowd, he visited a housing construction company that has quintupled its work force since the bust.

But as he often does, Mr. Obama tempered his celebration of better times, and his administration’s role in helping to reach them, with acknowledgment that the recovery was not complete.

“The truth is, it’s been a long, slow process,” he conceded. “But during that time we’ve helped millions of Americans save an average of $3,000 each year by refinancing at lower rates. We’ve helped millions of responsible homeowners stay in their homes, which was good for their neighbors because you don’t want a bunch of foreclosure signs in your neighborhood.”

Federal Judge Halts Plans to Start Horse Slaughters

Judge Christina Armijo of Federal District Court issued a restraining order in a lawsuit brought by the Humane Society of the United States and other groups in a case that has set off an emotional national debate about how best to deal with the tens of thousands of unwanted and abandoned horses across the country.

Judge Armijo scheduled another hearing for Monday in the lawsuit. The move stops what would have been the resumption of horse slaughters for the first time in seven years in the United States.

The groups contend the Department of Agriculture failed to do the proper environmental studies before issuing permits that allowed the companies to open horse slaughterhouses, which they had said they planned to open as soon as Monday.

The horse meat would be exported for human consumption and for use as zoo and other animal food.

The Valley Meat Company of Roswell, N.M., has been at the fore of the fight, pushing for more than a year for permission to convert its cattle plant into a horse slaughterhouse.

The Agriculture Department in June gave the company the go-ahead to begin slaughtering horses. Federal officials said they were legally obligated to issue the permits, even though the Obama administration opposes horse slaughter and is seeking to reinstate a Congressional ban that was lifted in 2011.

Another permit was later approved for Responsible Transportation in Sigourney, Iowa.

The move has divided horse rescue and animal welfare groups, ranchers, politicians and American Indian tribes about what is the most humane way to deal with the country’s horse overpopulation.

Some American Indian tribes, including the Navajo and Yakama nations, are among those who are pushing to let the companies open. They say the exploding horse populations on their reservations are trampling and overgrazing rangelands, decimating forage resources for cattle and causing environmental damage.

On the other side, the actor Robert Redford, former Gov. Bill Richardson of New Mexico, current Gov. Susana Martinez and the attorney general, Gary King, are among those who strongly oppose a return to domestic horse slaughter, citing the animals’ longtime role as companion animals in the West.

Cries of Betrayal as Detroit Plans to Cut Pensions

Stephen McGee for The New York TimesGloria Killebrew, 73, a retiree who cares for her husband, J. D., in Dearborn, Mich. More Photos »

DETROIT — Gloria Killebrew, 73, worked for the City of Detroit for 22 years and now spends her days caring for her husband, J. D., who has had three heart attacks and multiple kidney operations, the last of which left him needing dialysis three times a week at the Henry Ford Medical Center in Dearborn, Mich.

Isaiah McKinnon, a retired police chief, expressed concern about officers whose pensions were based on lower salaries. More Photos »

Now there is a new worry: Detroit wants to cut the pensions it pays retirees like Ms. Killebrew, who now receives about $1,900 a month.

“It’s been life on a roller coaster,” Ms. Killebrew said, explaining that even if she could find a new job at her age, there would be no one to take care of her husband. “You don’t sleep well. You think about whether you’re going to be able to make it. Right now, you don’t really know.”

Detroit’s pension shortfall accounts for about $3.5 billion of the $18 billion in debts that led the city to file for bankruptcy last week. How it handles this problem — of not enough money set aside to pay the pensions it has promised its workers — is being closely watched by other cities with fiscal troubles.

Kevyn D. Orr, the city’s emergency manager, has called for “significant cuts” to the pensions of current retirees. His plan is being fought vigorously by unions that point out that pensions are protected by Michigan’s Constitution, which calls them a contractual obligation that “shall not be diminished or impaired.”

Gov. Rick Snyder of Michigan, a Republican who appointed Mr. Orr, signed off on the bankruptcy strategy for the once-mighty city, which has seen its tax base and services erode sharply in recent years. But the governor said he worried about Detroit’s 21,000 municipal retirees.

“You’ve got to have great empathy for them,” Mr. Snyder said in an interview. “These are hard-working people that are in retirement now — they’re on fixed incomes, most of them — and you look at this and say, ‘This is a very difficult situation.’ ”

On Sunday, Mr. Snyder fended off the notion that the city needed a federal bailout. “It’s not about just putting more money in a situation,” the governor said on “Face the Nation” on CBS. “It’s about better services to citizens again. It’s about accountable government.”

Many retirees see the plan to cut their pensions as a betrayal, saying that they kept their end of a deal but that the city is now reneging. Retired city workers, police officers and 911 operators said in interviews that the promise of reliable retirement income had helped draw them to work for the City of Detroit in the first place, even if they sometimes had to accept smaller salaries or work nights or weekends.

“Does Detroit have a problem?” asked William Shine, 76, a retired police sergeant. “Absolutely. Did I create it? I don’t think so. They made me some promises, and I made them some promises. I kept my promises. They’re not going to keep theirs.”

Vera Proctor, 63, who retired in 2010 after 39 years as a 911 operator and supervisor, said she worried that at her age and with her poor health, it would be difficult to find a new job to make up for any reductions to her pension payments.

“Where’s the nearest street corner where I can sell bottles of water?” Ms. Proctor asked wryly. “That’s what it’s going to come down to. We’re not going to have anything.”

Officials overseeing Detroit’s finances have called for reducing — not eliminating — pension payments to retirees, but have not said how big those reductions might be. They emphasized that they were trying to spread the pain of bankruptcy evenly.

When the small city of Central Falls, R.I., declared bankruptcy in 2011, a state law gave bondholders preferential treatment — effectively protecting investors even as the city’s retirees saw their pension benefits slashed by up to 55 percent in some cases.

Detroit, by contrast, wants to spread the losses to investors as well as pensioners, and hopes to find cheaper ways to cover retirees through the subsidized health exchanges being created by President Obama’s health care law.

Bill Nowling, a spokesman for Mr. Orr, said the emergency manager’s restructuring plan would treat bondholders the same as retirees in bankruptcy.

Steven Yaccino reported from Detroit, and Michael Cooper from New York. Erica Goode and Monica Davey contributed reporting from Detroit, and Mary Williams Walsh from New York.

This article has been revised to reflect the following correction:

Correction: July 22, 2013

An earlier version of this article misstated the name of the institution where Isaiah McKinnon, who was Detroit’s police chief in the 1990s, works as an associate professor. It is the University of Detroit Mercy, not Detroit Mercy University.

Bucks: Investment Plans and Forecasts Don’t Mix

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Rio Tinto Overhaul Plans Dented as Diamond Sale Abandoned

The world no.3 miner has at least half a dozen assets on the block, aiming to pare $19 billion in net debt, cut costs and boost returns to shareholders, but buyers are unwilling to pay up in face of volatile commodity prices and rising debt costs.

"In resource land it's just a little bit tough at the moment," said Paul Xiradis, chief executive of Ausbil Dexia, which owns Rio Tinto shares.

"The market would have preferred for Rio to sell (diamonds)....But if you're not going to achieve the right price, there's no point in cutting off your nose to spite your face just to achieve an end."

Rio is not alone in struggling to sell assets. Barrick Gold was unable to pin down a sale of a stake in African Barrick Gold to state-owned China National Gold in January, and Peabody Energy and Brazil's Vale have given up trying to sell some mines in Australia.

Rio Tinto's new chief executive, Sam Walsh, this month hosed down expectations for a sale of the diamonds unit, amid speculation the company was going to float the business after failing to find a buyer.

"This is not market day at the bazaar. I'd be quite happy to keep it," Walsh was quoted saying in an interview with The Telegraph in London.

Rio's Diamonds and Minerals chief executive Alan Davies said there was a positive market outlook for diamonds.

"After considering a number of alternative strategic ownership options it is clear the best path to generate maximum value for our shareholders is to retain these businesses," he said in a statement on Monday.

Rio's shares fell 2.2 percent to A$51.50, close to a nine-month low, as mining stocks were pelted on worries about slowing growth in China.

LAGS ARCH-RIVAL

Rio Tinto put the diamonds arm up for sale in March 2012, soon after rival BHP Billiton put its diamonds unit on the block. BHP won the race to find a buyer last November, selling to Harry Winston, now called Dominion Diamond Corp.

The Canadian company is co-owner of the Diavik mine with Rio Tinto and had expressed interest in buying Rio's 60 percent stake in the mine, but was not interested in the rest of its diamond business.

The diamond unit, with operations in Australia, Canada and Zimbabwe, reported a $43 million loss in 2012, down from a profit of $10 million a year earlier.

While BHP has racked up more than $4.6 billion in asset sales over the past year, over the same period Rio has only managed to sell its Eagle nickel mine for $325 million.

"Debt costs have blown out by 200 basis points in the last couple of weeks. That makes it pretty tough if you're trying to finance an acquisition," said a resources banker, who is not involved in Rio Tinto's sales.

The assets BHP has sold have mostly gone to Japanese and Chinese bidders, who are cashed up. Asian buyers are seen as most likely to be able to complete deals, which could help Rio Tinto at least on the sale of its Australian coal assets.

It has attracted interest from Indian conglomerate Aditya Birla, Coal India, China's state-owned Shenhua Group Corp and Japanese trading house Marubeni Corp for its Clermont coal mine and a 29 percent stake in Coal & Allied.

Rio is also looking to sell its Pacific Aluminium arm, on the block since 2011, a majority stake in Iron Ore Company of Canada (IOC) and its Northparkes copper mine in Australia.

The stake in IOC attracted a wide range of interest, allowing Rio to come up with a shortlist of half a dozen suitors, but there are only three bidders left in the running, according to people familiar with the situation.

Rio is seeking between $3.5 billion and $4 billion for that stake, according to one source.

The sale of its Northparkes mine, which could fetch $800 million, is seen as the easiest to seal. However people familiar with the situation have said there is only one bidder left, OZ Minerals Ltd, and it is under pressure not to overpay.

(Additional reporting by Jackie Range in SYDNEY; Editing by Edwina Gibbs and Richard Pullin)

Unable to Reach Deal, Europe Plans New Talks on Bank Rescues

“We ran out of time,” Michael Noonan, the Irish finance minister, told reporters as he left the meeting here. “There are still core issues outstanding, so we’ll need a full meeting next week, and there’s no guarantee it will reach conclusion.”

Diplomats said the next attempt to reach a deal was scheduled for Wednesday — a day before the leaders of the European Union’s 27 member states gather for a summit Brussels, their last scheduled meeting before the summer. The leaders had been expected to endorse the finance ministers’ decision.

The failure to reach a deal could further unsettle investors who were already jittery about the lingering recession in the euro zone, turbulence on global markets, renewed political instability in Greece, and hints that Cypriot leaders were balking at their bailout agreement. 

The marathon effort, involving 18 hours of talks beginning Friday morning, was aimed at breaking the so-called doom loop, in which struggling governments take their states deeper into debt to save their banking systems, only to face sky-high sovereign borrowing costs.

The rules would specify the order in which investors and creditors have to absorb losses so taxpayers do not have to bear the burden.

A deal could also help prevent a recurrence of the chaos that ensued during a bailout for Cyprus in March, when governments and international lenders argued over how to impose losses on investors in the country’s troubled banks.

The tools would become important building blocks in the future for a possible banking union, which includes a single supervisor under the European Central Bank overseeing about 150 of the bloc’s largest lenders. It is supposed to go into force in the middle of next year.

A day earlier, as part of the effort to address the banking issue, the 17 ministers from the euro area agreed to allow a rescue fund, the European Stability Mechanism, or E.S.M., to pump money directly into failing banks during the second half of next year.

But on the second day of talks, as ministers from the 10 remaining non-euro countries in the European Union joined the meeting, there was a deadlock over how to stop disorderly bank bailouts from turning into national fiascos.

One of the most sensitive issues was a divide between countries using the euro, and those remaining outside the single currency, was where losses should fall when banks fail, said Mr. Noonan. “Those countries which aren’t in the euro need greater flexibility because they haven’t access” to the shared rescue fund.

France and Germany, which are both members of the euro group of countries, were also divided on that issue. France sought more leeway to access the shared European mechanism while Germany resisted, said diplomats who spoke on condition of anonymity.

The German stance, which was shared by the Dutch, underlined how some northern European countries want to ensure that bank bailouts remain a national responsibility as much as possible, and how they remain determined to resist creating a lender of last resort that could expose them to losses incurred by other parts of the bloc.

For much of the day, ministers were divided over how, and whether, to allow countries discretion to protect certain classes of creditors.

The worry among some countries like Britain was that automatic losses for some creditors could set off fears of losses at other institutions, which could start bank runs. But countries like Spain wanted to ensure that bank investors do not flee to more prosperous countries like Germany, where mechanisms for resolving bank problems might be better capitalized and could be used to shield creditors from losses.

A proposal put forward by the Irish delegation during the negotiations would have given countries the flexibility to choose where losses would fall, as long as 8 percent of a failing bank’s total liabilities were wiped out first.

But that proposal failed to gain sufficient traction. Sweden protested that the figure was too high. The Dutch and the Germans said the Irish figure was too low, and they complained it still could induce risky behavior if bankers were overly confident of relying on mechanisms like national bailout funds to come to their rescue.

DealBook: ING Plans I.P.O. of European Insurance Unit

7:17 a.m. | Updated

The Dutch financial services firm ING Group said on Wednesday that it was planning an initial public offering of its European insurance business in 2014.

The offering is the latest effort by ING to repay a 10 billion euro ($13.1 billion) bailout from local taxpayers at the height of the financial crisis.

Last week, ING also raised about $1.3 billion by selling a stake in its American division, and it has also sold several of its global businesses in recent months to repay the Dutch government.
The disposals helped to increase its first-quarter net income, which more than doubled, to $2.4 billion, compared with the period a year earlier.

“ING has demonstrated steady progress so far this year on the group’s restructuring, culminating with the successful I.P.O. of our U.S. insurance business,” ING’s departing chief executive, Jan Hommen, said in a statement. “We are now accelerating preparations for the base case of an I.P.O. of our European insurance company.”

Times-Picayune Plans a New Print Tabloid

Nearly one year after The Times-Picayune of New Orleans announced that it would print only three days a week, the paper said it planned to roll out a three-day-a-week tabloid edition.

Starting this summer, a tabloid called TPStreet will be published on Mondays, Tuesdays and Thursdays, according to a statement released online by Jim Amoss, editor and vice president for content at The Times-Picayune.

TPStreet will be available on newsstands for 75 cents and not be delivered to subscribers’ homes. At the same time, The Times-Picayune will continue to publish and offer home delivery of its traditional newspaper on Wednesdays, Fridays and Sundays.

“We promised to invest in our community, and we’re fulfilling that promise,” said Ricky R. Mathews, president and publisher of The Times-Picayune in a statement posted on the Web site Nola.com

Last May, the paper’s owners, Advance Publications, announced it would cut back printing of The Times-Picayune and would make major cuts to the newsroom. Advance Publications then introduced similar changes at other papers.

Mr. Mathews said in an e-mail that he was still figuring out how many people to hire for the new edition.

But there are no guarantees that any other cities with papers operated by Advance’s Newhouse unit, which lost daily newspaper coverage, also will get tabloids. Randy Siegel, president of local digital strategy for Advance Publications, said in an e-mail about the change in New Orleans “this was purely a local market decision.”

Many New Orleans residents posted comments tinged with sarcasm on Nola.com. One reader of Nola.com named BeignetBob posted on the site, “C’mon guys, just admit it: The grand digital experiment is a big bust. We tried to tell you, but would you listen? Nooooooooo. Next time, listen to the readers.”

Amazon Plans an Internet Video Device

The company is developing a television set-top box and has begun discussions with outside providers of content to distribute their video services to the device, according to three people briefed on the plan, who spoke on condition of anonymity because the Amazon product had not yet been announced and remained confidential.

Amazon is planning to introduce the set-top box in the fall, one of these people said.

Bloomberg Businessweek first reported news of Amazon plans on Wednesday.

Kinley Pearsall, an Amazon spokeswoman, declined to comment.

It was not immediately clear why Amazon would bother designing its own set-top box. The device will most likely showcase Amazon’s own online video offerings, which include Prime Instant Video, a Netflix-like subscription video service with more than 40,000 movies and television episodes that is included as part of Amazon’s broader Prime membership.

Among other benefits, Prime members, who pay $79 a year, get free two-day shipping on orders bought through Amazon’s site.

Amazon also offers a much broader library of video content, totaling 150,000 titles, that anyone, including people who aren’t Prime members, can buy and rent.

But Amazon’s video services are already available on hundreds of devices, many of which connect to television sets, like game consoles, digital video recorders and Blu-ray players. An app for using Amazon’s video service is even embedded in some television sets, including models from Sony, Panasonic and Samsung.

Although Amazon was an early entrant in the e-reader market with the Kindle, the company is late to the market for set-top boxes, where the incumbents include Apple’s Apple TV device and a family of products from Roku.

Amazon, though, has considerable strengths and has shown an aptitude for reinventing itself in new categories, like cloud computing and tablet computers. One media executive who has participated in discussions with Amazon about its set-top box said he thought the company’s standing as a top shopping destination would allow it to promote its new device and give it a strong chance of attracting an audience.

The company could use other creative techniques for getting its set-top box into more living rooms.

Michael Pachter, an analyst at Wedbush Securities, said one approach that could make sense was for Amazon to sell the device for $100 or less, about what Internet set-top boxes cost today, and to include a free year of its subscription video service.

At the end of the term, customers would have an incentive to sign up for Amazon Prime to continue receiving all of its membership benefits, including the video service. “I think this is a Trojan horse to get people to join Prime,” Mr. Pachter said.

Amy Chozick contributed reporting from New York.

Court Staffers Rally in Los Angeles Over Closure Plans

Several hundred court workers and community activists rallied in front of the Stanley Mosk Courthouse on Thursday, protesting the Los Angeles trial court's plans to close all or parts of 10 courthouses and consolidate services throughout the county.

"Our interest is not just with court workers," said Ian Thompson, a spokesman for Service Employees International Union Local 721, which represents about 3,400 Southern California court employees. "Our members, some of whom will lose their jobs if this goes through, are worried about public service."

Court leaders have announced that they will shutter eight courthouses completely and "remove most court work" from two other sites to deal with a budget deficit that could reach $85 million. Officials are also consolidating specific case types in limited locations. All unlawful detainer cases, for instance, must soon be filed in one of only five "hubs," forcing some litigants and lawyers to make lengthy commutes or public-transit trips to far-flung locations. Currently, tenants may appear in one of 26 neighborhood courtrooms throughout the county.

Court officials have also warned that approximately 500 jobs will be eliminated, although not all of the positions are currently filled.

Los Angeles County Superior Court Presiding Judge David Wesley said in a statement that his court no longer has the funding to keep neighborhood courts open.

"We are now being forced by budget cuts to make changes that will disadvantage litigants, attorneys, justice system partners and all court users across the spectrum and across our court," Wesley said.

In past years, court workers have directed their budget ire at the state Administrative Office of the Courts, accusing the centralized bureaucracy of profligate spending on pet projects at the trial courts' expense. This time, rally-goers expressed anger at L.A. judges for not consulting with labor or community groups before announcing the upcoming closures.

"The judges made the decision," Thompson said. "They launched this consolidation plan. They have the power to scale it back."

A statement released by the court Wednesday said court leaders met with "hundreds" of attorneys, law enforcement officials and county representatives before deciding on the closure plan.

Thursday's rally followed on the heels of a lawsuit filed by four community groups that claim reducing the number of courthouses where eviction cases are heard is unfair to poor tenants and those with disabilities. The complaint, filed in U.S. District Court in L.A., names Los Angeles Presiding Judge Wesley, Governor Jerry Brown and court executive officer Jack Clarke as defendants.

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DealBook: Japan Plans to Sell $10 Billion Stake in Cigarette Firm

Toru Hanai/ReutersA vending machine in Tokyo. Japan Tobacco is the world’s third-largest tobacco company.

TOKYO – The Japanese government is set to loosen its grip on Japan Tobacco, the world’s third-largest tobacco company, by selling a third of its stake in a sale that will net the country about $10 billion.

The Finance Ministry, which owns just over 50 percent of the former state monopoly, will sell 333 million of its shares in the cigarette manufacturer, according to a company statement issued on Monday.

The deal will be priced next month, from March 11 to 13, the statement said. In the run-up to the sale, Japan Tobacco will buy back up to 250 billion yen ($2.7 billion) of its shares.

Under laws passed in 2011 after a devastating earthquake and tsunami hit Japan, proceeds of the sale of Japan Tobacco shares will go toward rebuilding the country’s battered northeast coast. The reconstruction costs have threatened to weigh on Japan’s public finances at a time when public debt is twice the size of its economy.

It is an opportune time for the Japanese government to sell. Japan’s stock market has rallied since mid-November, and Japan Tobacco’s shares have tracked the market’s ascent, climbing 20 percent in the last three months.

Shares in Japan Tobacco closed 1.43 percent higher on Monday, at 2,901 yen, before the planned sale was announced. At that price, the government’s share sale would be valued at roughly 967 billion yen.

Japan has already been reducing its stake and involvement in the cigarette maker, which traces its origins to a Finance Ministry bureau set up in 1898 to create a national tobacco monopoly that lasted until 1985.

Even after the company went public, the Finance Ministry held two-thirds of its shares until 2004, when it reduced its stake to 50.1 percent, or roughly one billion shares. Other investors in Japan Tobacco include Mizuho Trust & Banking, Goldman Sachs and the Children’s Investment Fund Management.

The position in Japan Tobacco has put the government in a controversial position.

The government has squeezed more funds from its smokers, raising the price of a pack of cigarettes about 40 percent in 2010, its single largest increase in tobacco taxes. Still, cigarettes remain relatively cheap in Japan, at about $4.30 a pack.

But antismoking advocates have blamed the Japanese government’s continued ownership of Japan Tobacco – whose brands include Camel, Winston and Mild Seven – for the country’s delay in passing laws to protect nonsmokers from cigarette smoke, for example, and more stringently regulating of tobacco-related marketing.

In a 2012 report, the Washington-based Global Business Group on Health said Japan’s ownership of Japan Tobacco shares “leads to a national conflict of interest, in which the government treats smoking as a behavioral issue rather than a health concern.”

Though smoking rates have started to decline in recent years, the Japanese remain heavy smokers, consuming about 1,841 cigarettes a person, according to data compiled last year by the World Lung Foundation and American Cancer Society. That compared with about 1,000 cigarettes a person in the United States.

To make up for declining cigarette consumption at home, Japan Tobacco has aggressively expanded overseas, acquiring Britain’s Gallaher Group in 2007 for $15 billion, and adding the Silk Cut and Benson & Hedges brands to its portfolio. The company has also made a push into packaged foods and soft drinks, as well as pharmaceuticals.

The government’s sale of Japan Tobacco shares is part of a wider effort to raise money to finance reconstruction from the country’s natural and nuclear disasters in 2011. The government also plans to sell shares of Japan Post Holdings, which runs the country’s postal system and also acts as its biggest bank.

DealBook: Financial Industry Regulatory Authority Plans to Expand Its Focus

Wall Street’s self-regulator is planning to exercise some new muscle.

Richard G. Ketchum, the head of the Financial Industry Regulatory Authority, said in an interview on Tuesday that he would ramp up scrutiny of high-speed trading and a batch of complex products. Finra, Mr. Ketchum said, would take aim at so-called leveraged loans and collateralized loan obligations, along with the potential conflicts that brokerage firms face in pitching their own investments over rivals’ products.

“We’re going to be very focused on conflicts of interest,” said Mr. Ketchum, the chairman and chief executive of Finra. In a statement, Firna added that it would “pursue potential cross-market abuses and refine its surveillance patterns based on new threat scenarios and regulatory intelligence.”

The expanded focus comes as Finra announced on Tuesday that it filed more than 1,500 enforcement actions against financial firms and brokers in 2012, an all-time record for the regulator. Finra, which barred nearly 300 people from the industry, levied more than $100 million in penalties.

“It’s nice to see an upward trajectory,” Mr. Ketchum said.

A private, nonprofit organization, Finra monitors 600,000-plus stockbrokers. The group’s enforcement arm has struggled to shake the perception that brokers and their firms, which pay for Finra’s operations through fees and dispatch representatives to sit on the board, have muzzled the watchdog.

But Finra, Mr. Ketchum noted, is now tracking bigger game. He highlighted the range of cases filed last year, a collection of actions against some of the biggest names on Wall Street. Firna last year sanctioned Citigroup, Morgan Stanley and UBS, among others, for improper sales tactics. Goldman Sachs paid an $11 million fine for failing to keep an eye on its research analysts.

The agency’s enforcement unit, run by J. Bradley Bennett, also waded into the minutiae of Wall Street products, filing cases involving structured investments and leveraged exchange-traded funds. Finra said on Tuesday that the unit could strike a more aggressive tone in 2013, investigating other products and the high-speed trading industry.

“What I like about the cases we brought is the focus on complex products,” Mr. Ketchum said.

Former Dreier Partner Has Big Plans for New Firm

When he was the managing partner at the Stamford, Conn., office of Dreier LLP, Joseph M. Pastore III handpicked a group of lawyers to work at the financial litigation firm. Much of the group's work involved defending brokerage firms against charges brought by the U.S. Securities and Exchange Commission.

Among the lawyers Pastore brought in were Leanne M. Shofi and William M. Dailey. They worked closely together, but time and circumstances pulled the trio apart. "We always joked about getting the band back together," Pastore said.

Last month, they did. The three former colleagues opened a new Stamford firm -- Pastore, Shofi & Dailey -- that may eventually have more than 10 lawyers and could include a Florida office. "We are starting out small but we are looking to grow," said Pastore, whose new firm continues to represent financial service companies and investment groups. "I think we're already practicing at a big-firm level. That's the nature of our work style. We're focusing on the financial practice, but our goal is to have a full-service law firm."

In 2009, law firm founder Marc Dreier was arrested for securities fraud and his 200-lawyer, New York City-based firm collapsed. That prompted Pastore to help form a new 15-lawyer firm called Pastore & Osterberg, with intellectual property attorney Eric Osterberg. The office was later acquired by the 500-lawyer firm Fox Rothschild.

Pastore left Fox Rothschild in 2011 because one of the clients he had brought from Dreier was engaged in a legal dispute with a client of Fox Rothschild. Rather than give up the client, Pastore moved on. But Dailey kept working at Fox Rothschild and Shofi went off to raise a family. Pastore kept himself busy as partner in the security and litigation practices with Smith, Gambrell & Russell, a New York-based firm of 175 lawyers that has a Stamford office.

CUSTOMER SERVICE

But all this time, Pastore said, he's been looking to re-create the skill set and the esprit de corps he had at Dreier. That wasn't possible right after the implosion. "Our impulse when that happened was, let's just get everyone back in the boat" and re-employed, Pastore said. "But ever since, I've had a hard time finding a firm that really understands our market, which is Connecticut and New York."

Elaborating, Pastore said hedge fund managers and other clients in Fairfield County expect sophisticated legal services to be provided with a speed and efficiency that "not everyone gets.

"The way I see it, we're in a customer service business," said Pastore, a Ridgefield, Conn., resident. "We're good at what we do, we're smart people but we've also got to provide value to our clients. And that in my mind means you don't bill them disproportionately to the task."

What he means by that, is if a client has a dispute that's worth $5,000, "and you bill them $5,000, then you haven't added any value for your client. Instead, you've hurt the client in that situation."

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Bucks Blog: Morningstar's Latest Ratings of College Saving Plans

Morningstar Inc. has updated its rankings of the country’s largest 529 college savings plans, giving its top rating to plans offered by four states: Alaska, Maryland, Nevada and Utah.

Morningstar, a provider of investment research, is best known for its rating of mutual funds. But it also tracks 529 plans, which are state-sponsored plans named for the tax code that created them. Money in the plans grows tax free, and  stays that way as long as it’s used for educational expenses when you withdraw it. Many states also give tax breaks for money saved in the plans. (Families aren’t restricted to investing in the plan in the state where they live.)

Morningstar rated 64 plans representing 95 percent of assets held in the plans. Factors that it said it used in the rankings included the plan’s strategy and investment process; the plan’s risk-adjusted performance; the skill of the plan’s manager; the practices of the plans administrator and parent firm; and the fees involved in managing the plans.

Over the last year, many plans have showed a trend toward better-quality investments and lower fees, said Laura Pavlenko Lutton, who oversees Morningstar’s 529 Ratings.

Twenty-seven of the plans were given medal rankings (gold, silver and bronze) and are “likely to outperform their peers, based on Morningstar’s analysis. But just four plans were given a “gold” rating, meaning they were “highly regarded” by Morningstar analysts. “Over all, these plans stand out as best of breed for their ability to help college savers meet their goals,” the company explained in a statement.

The gold star plans went to these plans:
• Alaska’s T. Rowe Price College Savings Plan, managed by T. Rowe Price;
• Maryland College Investment Plan, managed by T. Rowe Price;
• Nevada’s The Vanguard 529 Savings Plan, managed by Upromise Investments; and
• Utah Educational Savings Plan, managed by the agency of the same name.

Four more plans were rated silver, and 19 were rated bronze.

A “neutral” rating means the analysts don’t think the plans are likely to deliver “standout” returns, but also that they’re unlikely to significantly under-perform. Most plans — 33 of them — fell into this category.

And these four plans were rated negative because of poor-quality investments or high fees:

• Kansas’ Schwab 529 College Savings Plan, managed by American Century Investment Management;
• Minnesota’s College Savings Plan, managed by TIAA Tuition Financing;
• Rhode Island’s CollegeBoundfund (Advisor-sold), managed by AllianceBernstein; and
• Rhode Island’s CollegeBoundfund (Direct-sold), managed by AllianceBernstein.

More details on the plans and their rankings are available on Morningstar.com’s 529 plan Web site, but a subscription is required.

Are you surprised by your 529 plan’s Morningstar rating? What has been your experience with your 529 plan?

New Sbarro Pizza Recipe to Drive Chain’s Turnaround Plans

Executives at Sbarro, the chain ubiquitous at shopping malls and airports, are hoping to elevate their restaurants in consumers’ minds with a better quality of pizza.

Aided by some technological changes, the company will return to making tomato sauce fresh and shredding cheese in each restaurant, instead of using prepackaged ingredients. The reformulated pizza is intended to help transform Sbarro into a “fast casual” restaurant chain like Panera Bread and Qdoba, said James J. Greco, who became chief executive at the beginning of the year.

Such restaurants offer customers better food quality and specialization without full table service, thus falling somewhere between fast food, or what the industry calls quick service, and casual dining restaurants. Customers often can select the ingredients for, say, a basic item like a pizza or a sandwich, which is made in a few minutes and handed over a counter for a meal costing $8 to $15.

Several pizza chains that have emphasized quick service are making the transition to the fast-casual category, said Darren Tristano, executive vice president of Technomic, an industry consulting firm. Pizza Inn, which has 300 restaurants, recently started Pie Five Pizza, a fast-casual chain that bakes nine-inch pizzas “designed” by customers in five minutes. Naked Pizza of New Orleans and 800 Degree Pizza out of Los Angeles are other examples.

“Sbarro fits into the quick service category because of its price point and service format, where nothing is made to order,” Mr. Tristano said. “In malls and food courts, they’ve struggled during the recession, and in their stores in urban and suburban locations, they’re really up against much larger chains in the delivery space.”

A 56-year-old pizza chain founded in Bensonhurst, Brooklyn, Sbarro staggered into bankruptcy in April 2011 with more than $400 million of debt. Its sales, like those of many other restaurants, had slid during the recession as customers ate out less and prices rose for commodities like flour. It exited bankruptcy eight months later, after shedding 28 stores and securing a $35 million line of credit.

Now Apollo Global Management and more than two dozen other investors are banking on Mr. Greco to achieve the same kind of turnaround at Sbarro that he did in his last post, at Bruegger’s, the bagel chain. A private company, Sbarro said it had $650 million in worldwide sales in 2011, $420 million of which was in the United States.

“We have to change people’s perception of us,” Mr. Greco said over one of the company’s new cheese pizzas at its store north of Times Square. “We feel there’s no better way to do that than to get this pizza into as many mouths as possible as fast as we can.”

Thus, two vintage trucks are beginning a national tour, starting in New York and Los Angeles and working their way around the country, handing out free slices.

Mr. Greco faced a similar challenge at Bruegger’s, one of the many bagel chains that thrived during the bagel enthusiasm of the 1980s but suffered when consumer preferences changed. He added soups, wraps, salads and sandwiches to that menu and, while the stores still sell bagels, it is a place to have a light lunch today.

Bruegger’s was sold in 2011 to Groupe Le Duff, a French restaurant company that also owns Brioche Dorée, earning a hefty return for Sun Capital, the private equity firm that had hired Mr. Greco to fix it.

“He grew the brand and shifted it into a fast-casual place,” Mr. Tristano said. “He did a nice job of moving it more to a cafe.”

Since June, Sbarro has been testing a fast-casual format at 10 locations across the country. The updated restaurants offer pastas made to order in front of customers in 45 seconds in sauté pans on induction stovetops or in fast boilers sunk into countertops.

But the test has shown that pizza still drives Sbarro’s sales. Pizza accounted for almost half of sales in the test sites, according to Nation’s Restaurant News, while pasta generated just 6 percent.

For advice, Mr. Greco turned to a local pizza restaurant in New Haven, where he lives — though he would not divulge the name of the shop or its owner. The goal was to come up with a basic, Neapolitan-style pizza that could stand up to the local pizza wherever there is a Sbarro store. “Why can’t we do that?” Mr. Greco asked.

Along with changing ingredients, the chain is adding open-flame ovens to increase the “theater” of the experience as well as cut the time it takes to cook a pizza and reheat a slice.

To ensure consistency, the company long ago began making its tomato sauce and shredding its cheese in central locations and shipping it to restaurants.

Every pizza was the same — but every pizza did not taste as good as it could, said Anthony J. Missano, president of business development at Sbarro.

The company is now shipping whole peeled San Marzano tomatoes, which are put through a food mill as needed and made into a sauce with minimal ingredients at the restaurants.

Cheese is shipped in blocks and shredded on site as well. “People are much smarter about what they’re eating,” Mr. Missano said. “They have higher expectations of what they’re going to get when they go to a restaurant, and we’re going to give it to them with this new pizza.”

The next step in Sbarro’s turnaround will be to adjust its real estate mix. The company has about 1,000 stores, about 420 of which it owns; the rest are franchised. Four-fifths of them are in mall and airport food courts, where rents are high and it is easy for customers to move to a different counter.

Mr. Greco’s plan is to open new stores on street fronts, where the company has about 70 restaurants.

“It’s as if we are doing a jigsaw puzzle,” he said. “You dump out all the pieces on the table, sort through them and look at the picture on the box — except that instead of putting the pieces back together to form the picture, you have to make a new picture out of them.”

UC Irvine Plans Summer Training for In-House Counsel

The exterior of UC Irvine School of Law
Image: courtesy photo

Call it a summer boot camp for in-house counsel.

The University of California, Irvine School of Law plans to launch a Center for Corporate Law next summer, offering extensive training for attorneys in legal departments and those who hope to move in-house.

A handful of law schools already offer executive education for lawyers, most notably Harvard, Georgetown and Northwestern, but their corporate counsel programs tend to last just a few days.

By contrast, Irvine administrators plan an annual six-week slate of summer courses, broken into five-day modules. The six modules will cover management and business skills plus areas of law pertinent to in-house counsel, such as intellectual property. Lawyers can take as many modules as they like, but those who complete at least three of the modules within three years will earn a "corporate counsel" certificate, while experienced attorneys can obtain a "general counsel" certificate upon completing four modules within four years, according to administrators. The program is intended both for experienced corporate counsel and for those entering legal departments or hoping to move in-house.

"I think this will become one of the signature programs of the law school," dean Erwin Chemerinsky said.

The idea for the center emerged from the law school's business advisory council, which noted a lack of robust training opportunities for in-house counsel, Chemerinsky said. That role requires skills most lawyers don't learn at firms or in law school, he said, such as how to advise business clients regarding risk. "We also heard that there are different ethical issues that in-house counsel face."

The law school is in the final stages of raising the approximately $150,000 it needs to hire an executive director and get the center off the ground. Irvine intends to hire a director with in-house counsel experience and offer participants help in finding legal department jobs. The plans include establishing an alumni network. The center will produce research and practical guidance on matters relevant to corporate counsel.

Chemerinsky said the summer program likely would start off small and grow over time. The school plans to recruit students not only in Southern California, but also in China and Korea, where Irvine already has relationships with universities and business leaders. Thus far, local firms and general counsel have been enthusiastic about the idea, he said.

While executive education programs can be solid revenue generators for law schools, Chemerinsky said the new center likely would just break even at first. The curriculum and program costs are still being finalized.

The initial module would cover the basics of the in-house counsel role, including business structures, dealing with outside counsel and ethical issues. Subsequent modules will focus on finance, accounting and corporate governance; corporate strategy and innovation; managing risk; the global business environment; and legal department management. The modules would run from Wednesday through Sunday.