A bill designed to provide health coverage to more than 100,000 Coloradans without insurance was being introduced Thursday. Called the Colorado Heathcare Affordability Act, the measure has been several months in the making. It charges a fee to hospitals to generate about $600 million a year to provide coverage to the uninsured. In return, federal health care programs will provide roughly $600 million in matching funds that will go back to the state’s health care system. In total, the proposal generates an additional $1.2 billion — enough to cover more than 100,000 Coloradans through Medicaid and the Colorado Indigent Care Program, according to a fact sheet about the proposed bill.

The plan also expands the Children’s Health Plan Plus program for kids and pregnant women up to 250 percent of the federal poverty level.

The proposal also raises reimbursements for inpatient and outpatient services up to the maximum allowable rate under Medicaid. Colorado hospitals have long complained that Medicaid reimbursements are insufficient and fail to cover the real cost of health care services.

The measure has been in the works by Colorado Gov. Bill Ritter and his health policy analyst since mid 2008. But despite the endorsement of the Colorado Hospital Association, which worked with the governor and the Colorado Department of Health Care and Financing on crafting the legislation, not all local hospital systems are crazy about the idea, health policy experts say. Ritter has long maintained that there will be winners (hospitals that get more from the fee than what they put forward) and losers (hospitals that don’t) in the proposal. But Ritter’s spokesman, Evan Dreyer, said that as the bill is written, 87 percent of Colorado hospitals will “break even or come out ahead” with the fee.

Among the potential losers are the HealthOne-HCA, the Denver-area’s largest hospital system, and the nonprofit health system Kaiser Permanente in Colorado. Kaiser, which provides both health insurance and medical services, doesn’t treat uninsured patients and could have limited access to government subsidies under Ritter’s plan. But hospitals that provide services for a high number of uninsured or Medicaid patients stand to gain from the proposal, including Denver Health and hospitals in the Centura Health and Exempla Healthcare system. While the legislation was being drafted, private insurers wanted assurances that Ritter’s plan won’t create yet another cost for the health care system that ultimately would be paid by their members, whose insurance premiums have risen by double-digit margins in recent years.
However, several insurance providers, including Anthem, Cigna and UnitedHealthcare, wrote letters supporting elements of the concept. Dreyer said there are provisions in the bill to ensure that the fee is not shifted back to patients and insurers. The bill prohibits line-item billing of the fee. It also creates an oversight committee which to evaluate hospital finances. Supporters also say that the practice of cost-shifting will grow higher without the plan. The Metro Denver Chamber of Commerce issued a statement Thursday in support of the proposal as now drafted. “The Colorado Healthcare Affordability Act seeks to increase Medicaid dollars in Colorado by drawing down additional federal matching funds, enabling better reimbursement rates to Colorado hospitals, expanding coverage to the uninsured and reducing the cost shift to business from uncompensated health care,” the chamber said. “We support the draft, because we believe it includes many of the recommendations that are crucial to working toward a better Medicaid system for our state. … We look forward to reviewing the bill as introduced and the dialogue and discussion that will follow,” the chamber added. The bill is sponsored by members of the Joint Budget Committee, including Sen. Moe Keller, D-Wheat Ridge, Rep. Don Marostica, R-Loveland and Rep. Jim Riesberg, D-Greeley. If approved by the Colorado Legislature, the plan will be submitted to the federal Centers for Medicare and Medicaid Services for final approval.

© 2009 American City Business Journals, Inc.

Two proposals opposed by Colorado health insurance companies but approved by consumer advocates are poised to get out of the Colorado Senate. A bill that requires health insurers in the state to extend dependent coverage to unmarried adult children under 30 was approved by the Colorado Senate in a preliminary voice vote Tuesday. Senate Bill 159, sponsored by Sen. Paula Sandoval, D-Denver, is intended to make health insurance available to young adults whose employers might not offer insurance and who might not be able to afford it without help. Under current law, group insurers must offer dependent coverage for unmarried adult children under 25.

But Sen. Shawn Mitchell, R-Broomfield, opposed the proposal, which he called the “slackers-at-home bill.” Mitchell echoed concerns from health insurers and fellow Republicans that the bill encourages “adverse selection” in the health insurance market and will ultimately drive up already-rising insurance premiums. He said if the bill is signed into law, healthy young people would either waive coverage or get their own policies, while the sickest young adults (who can’t obtain or afford insurance policies because of pre-existing conditions) will opt to get guaranteed coverage from their parents. Mitchell added that the sickest of the sick can get insurance options through government health plans such as Cover Colorado or Medicaid. “Who’s going to take advantage of this? People with the sickest children who will drive up the cost for everyone,” Mitchell said. “How many small employers will find this to be the straw that breaks the camel’s back and say we can’t afford to provide coverage anymore?”

Sandoval said she sponsored the bill in part because the “transition of adulthood is taking longer.” “Sometimes, the first job after college doesn’t provide health insurance,” she said. “But hopefully it does by the time you’re 30.” Sandoval cited estimates that show 53 million young adults in the country are without insurance coverage. She did not have a local estimate available. If given final approval by the Senate, SB 159 moves to the Colorado House of Representatives for consideration.

Another insurance-related bill, Senate Bill 61, also got preliminary approval from the Senate Tuesday. The measure, sponsored by Sen. Morgan Carroll, D-Aurora, requires health insurance companies serving people in the state to use only Colorado-licensed health care providers to evaluate health care claims. It’s currently standard practice for insurers to have claims reviewed from medical professionals, but often the assessments come from other states. Insurance representatives said the measure creates an unnecessary and additional expense for insurers. The bill is particularly problematic in medical disciplines where only two or three such highly specialized physicians exist in Colorado, they argued. Supporters maintained that the bill ensures that doctors who review medical claims are familiar with the state’s medical guidelines and malpractice laws. If given final approval by the Senate, Carroll’s bill moves to the Colorado House of Representatives for consideration.

© 2009 American City Business Journals, Inc.

Charlotte Business Journal
Legal battle between Wachovia and a hedge fund shows the interconnected world of a Wall Street fiasco
Charlotte Business Journal – February 23, 2009

It was a tiny deal in Wall Street terms. In May 2007, Wachovia Bank agreed to make what was essentially a $10 million bet with a small offshore hedge fund. No big deal; certainly no big impact on Wachovia at the time. But now, credit markets have nearly frozen. Taxpayers are shelling out $700 billion — with much more expected — to shore up a tottering financial system. Many banks, including Wachovia, have all but failed and disappeared. Venerable Wall Street firms have cratered. And that tiny $10 million bet has turned into a piece of an estimated $54 trillion unregulated market, much of it based on toxic debt, with no one able to make any kind of estimate of how big losses may turn out to be.

Using information from a federal lawsuit and additional reporting, the Charlotte Business Journal has taken a detailed look at that one bet — called a credit-default swap, which is similar to an insurance policy. The broad sweep of entanglements in that $10 million deal opens a window into the complex world of exotic Wall Street finance, illustrating what has happened in the national and world economies on a much larger scale. The companies involved directly or indirectly include some of the biggest names in an all-star cast with roles in the larger crisis — Wachovia, Merrill Lynch & Co. Inc. and Bank of America Corp. Key players who helped create the $1.5 billion portfolio of debt, called a collateralized debt obligation, that was at the heart of the swap include a wealthy Scientologist, a chief executive who was incorrectly identified in a prospectus as having a Harvard MBA and a hedge fund manager who twice flunked a multiple-choice exam required for a license to supervise a brokerage branch office. “It’s amazingly interconnected,” says Tony Plath, an associate professor of finance at UNC Charlotte who closely follows the banking and the financial markets.

The story starts in Tampa, Fla., where Bryan Zwan helped finance the startup of a company called Forge ABS in 2006 that entered the asset-backed securities market. As former CEO of Digital Lightwave, a manufacturer of fiber-optics testing equipment, he had been sued by the Securities and Exchange Commission in 2000 for alleged financial fraud. That case was settled on a books and records violation, with Zwan paying a $10,000 fine but admitting no wrongdoing. The fraud allegations were dismissed.

Leslie Finnemore, chief operating officer for Forge ABS, calls Zwan a minority investor with no active role in managing the company. The Forge ABS team, led by Chief Executive Michael Bissonnette, went to work in the same Tampa office building housing Zwan’s foundation that has given millions of dollars to Scientology. Zwan’s religion has never played any role in Forge ABS, a company spokesman says. “Dr. Zwan contributes his time to many causes and charities, and the singling out of his religion is beyond mystifying,” says Adam Goldberg, a lawyer for Zwan. “We are very well-capitalized and have a sound plan for growth and success,” Eugene Cunningham, a Forge ABS trader wrote in an August 2006 blog describing the firm. It would take a year for Forge ABS to get its first big deal to market. But when it did, the results would repeatedly — and sometimes remarkably — touch the balance sheets of Charlotte’s big banks.

A toxic mix
The $1.5 billion CDO was called Forge ABS High Grade CDO 1 Ltd. It was underwritten by Merrill Lynch, which managed the sale of bonds backed by CDOs and asset-backed securities such as mortgages. The prospectus for the $1.5 billion investment covered, in 251 mind-numbing pages, the risks of the offering made up of slices of some 245 securities. Investors who read the prospectus might have taken comfort in CEO Bissonnette’s lofty academic achievement: an MBA from Harvard University. Only as it turns out, his MBA is actually from the University of Hartford. Finnemore describes the incorrect reference to a Harvard MBA as a typo. “We do not know how this occurred,” Finnemore says. “Somehow when this document was produced, Harvard University was substituted for University of Hartford. Michael has an MBA from the University of Hartford.”

The mix of debt in the Forge ABS CDO included about $79 million in securities backed at least in part by mortgages from Bank of America. Mortgages from Wells Fargo & Co. were also in the Forge ABS CDO mix. About a fourth of the CDO was made up of 49 slices of other CDOs, most of them also underwritten by Merrill Lynch.

In the days of soaring housing prices, CDOs consisting of slices of mortgages produced huge fees for investment firms such as Merrill. Rating agencies such as Moody’s used complicated computer models and algorithms to measure the default risk involved in CDOs. Both Merrill and Moody’s saw no trouble ahead when the Forge ABS CDO was issued in April 2007. Neither did Donald Uderitz, a hedge fund manager at VCG Special Opportunities Master Fund Ltd., who works out of an orange stucco building on First Street in Delray Beach, Fla. Uderitz had worked at Wachovia Capital Markets as a portfolio director from 2003 to 2005, when his position was eliminated. In spring 2007, his Channel Islands-based hedge fund approached Wachovia with a proposal for a credit default swap tied to a slice of the Forge ABS notes.

The booming collateralized debt market had become the source for a flood of swap deals that ostensibly were designed to help minimize risk. The hedge fund hit Wachovia at a good time to get the bank’s attention. Wachovia Corp., once the fourth-largest bank holding company in the United States, entered the credit derivatives business in 2000.

By the second quarter of 2008, Wachovia Bank bought and sold a total of about $367 billion in credit default swaps. That ranked Wachovia fifth among commercial banks, according to federal regulators. Neither VCG nor Wachovia actually owned any of the notes that were being insured, or hedged, in the Forge ABS deal. Both were simply trading in the default risk of a $10 million slice of the CDO. “It’s just a side bet,” says Frank Partnoy, a lawyer and former investment banker who has written extensively on financial market regulation. “They’re making a bet on something happening without having to own anything.” Such deals, known as “naked credit default swaps,” had become commonplace when VCG and Wachovia came together. For his side of the bet, Uderitz was counting on earning a fixed fee from Wachovia as long as the debt being insured didn’t go into default.
Uderitz was the chairman of Vanquish Capital Group, which launched the VCG Special Opportunities Master Fund in January 2007. His bio there credits him with generating significant arbitrage profits while at Wachovia. “He’s one of the brightest individuals I’ve ever met in my life,” says Vince Ciaglia, Vanquish Capital Group’s managing director of marketing and sales. “He’s a brilliant mathematician. He’s got an imagination most people would die to have, which is why he’s been successful.” An MBA graduate of The College of William & Mary, Uderitz also had twice flunked a Financial Industry Regulatory Authority multiple-choice exam before passing it with a score of 76 out of 100 in December 2007.

His firm put up $750,000 in collateral to be held by Wachovia. The bank agreed to pay $275,000 in annual fees for the default insurance. That meant the hedge fund hoped for a 36% annual return, with the deal running to the expiration of the notes in 2053. VCG could have initially considered the swap a home run. Moody’s had assigned the slice of the CDO involved in the swap a rating of Aa2, the agency’s third-highest level. But even before the notes were issued there were signs of trouble. Bissonnette, the Forge ABS CEO, told employees of VCG in April 2007 — the same month the swap with Wachovia was being pitched — that Forge couldn’t meet its payroll, according to a lawsuit the hedge fund filed in New York against Forge ABS. VCG advanced $130,000 to Forge ABS, expecting another firm would be appointed to manage the $1.5 billion collateralized debt obligation, the lawsuit contended. The hedge fund also invested $5.6 million in the CDO in addition to the deal it had with Wachovia.

According to the hedge fund’s lawsuit, VCG’s investment in Forge ABS provided the primary funding to launch the CDO. The hedge fund also accused Forge ABS and four of its officers of fraud in the suit, but the case was discontinued.

Finnemore, the Forge ABS executive, says the company disputed all allegations in the lawsuit. But she declines to comment further, citing a confidentiality agreement. Uderitz declines to discuss the swap and would not answer questions submitted to the firm by the Charlotte Business Journal . The unraveling Just as Uderitz was signing the credit default swap contract with Wachovia, the collateralized debt market was rapidly faltering, although Merrill Lynch would continue to pump out a couple more massive CDOs over that summer. The math experts who analyzed CDOs based their predictions on data collected when defaults were rare. That fundamental flaw quickly revealed itself as plummeting housing prices triggered a wave of foreclosures and defaults. The result: Revenue tied to the mortgages in the bundles that made up CDOs such as Forge ABS dried up. It didn’t take long for Uderitz to see his bet on the Forge ABS CDO was going to be costly. He just didn’t know how far and how quickly it would fall. VCG wired Wachovia the $750,000 in collateral to secure the swap on May 30, 2007.

According to another lawsuit the hedge fund filed that year, this time against Wachovia, VCG hadn’t expected to make any other payments unless there were significant write-downs in the Forge ABS CDO or a default. But within weeks of signing the documents with Wachovia, VCG was hit with repeated demands from the bank for millions more in collateral. Wachovia first demanded $320,000 more on June 18. By November, Wachovia had made 14 requests, some just days apart, for $8.17 million more in collateral. The demands came as the mortgage crisis was heating up, with securities backed by subprime mortgages losing value. In July 2007, two Bear Stearns hedge funds loaded with CDOs collapsed. That sent CDO prices tumbling and created instability that fed on itself in securities markets as well as for guarantors of credit default swaps. In all, VCG put up $8.92 million in collateral to keep its bet on Forge ABS alive. That amounted to about a fifth of its $50 million in assets. During this entire time, the Forge ABS notes still carried investment-grade ratings, meaning the rating agencies thought it had little risk of defaulting. The hedge fund got a 15th request for more collateral the day before Thanksgiving 2007. Wachovia told VCG the Forge ABS notes were worth about a nickel for every dollar.

This time VCG balked. On Nov. 28, 2007, the hedge fund sued Wachovia in New York, claiming fraud, breach of contract and unjust enrichment. In December 2007, Wachovia foreclosed on the collateral it had collected from VCG, essentially pocketing $8.92 million. The bank also told the hedge fund it owed the bank an additional $1 million-plus.

Wachovia’s response to VCG’s suit denies any wrongdoing in the case. The bank acknowledges the repeated calls for collateral but contends the demands fell within the terms of the contract. Tom Wickwire, the former head of structured products at Wachovia’s corporate and investment banking division, says VCG suffered from buyer’s remorse. “They bought something they didn’t like,” he says. “Every asset has gone down in value. Are you going to sue because your 401(k) has gone down in value?”

The hedge fund’s lawsuit also accuses the bank, which was facing its own balance-sheet problems at the time, of pushing to get collateral wherever it could. Its lawsuit against Wachovia, which was acquired Dec. 31 by Wells Fargo, is ongoing. A status report on the case is due Feb. 27.

Epilogue
•VCG has said in its complaint against Wachovia that it could lose current and prospective investors because of the swap agreement’s impact on the hedge fund. A federal judge in a similar case, VCG’s suit against Citibank, found the rules governing swaps let Citibank request additional collateral based on the current value of the swap contract. “VCG, a sophisticated hedge fund, simply failed to review carefully the terms of the parties’ agreement,” Judge Barbara Jones wrote in her November opinion. VCG was ordered to pay Citibank more than $674,000 in that case.

•The Forge ABS CDO has met the fate of most of the other Merrill Lynch bundled debt packages from 2007. Of the 30 CDOs Merrill sold in 2007, all but one has either had its best-rated portion cut to junk, is in technical default, is being liquidated or is in danger of being liquidated, according a report last year by Janet Tavakoli, founder and president of Tavakoli Structured Finance Inc. in Chicago. Tavakoli, a noted author on structured finance, has questioned Merrill’s tactics in bringing the deals to market with their underlying value obviously in question.

•Bank of America agreed in September to buy Merrill Lynch as it tottered toward collapse. Now BofA stock has slid precipitously, posting a closing price of $4.57 a share at Wednesday’s close. Merrill lost $15 billion in the fourth quarter, with much of the losses attributed to a range of high-risk assets, including collateralized debt obligations. In its securities filings, Merrill doesn’t provide a breakdown of how much of its losses were due to CDOs. The former CEO of Merrill Lynch, John Thain, resigned recently from BofA.

•Moody’s now has given a grade of “c” to the slice of Forge ABS notes the swap was about. That’s the firm’s lowest rating.

© 2009 American City Business Journals, Inc

Watch the video and share it with your friends and family:

http://my.barackobama.com/recoveryplan

President Obama discussed why we need an immediate effort to create millions of jobs while investing in long-term challenges like energy and health care.

He called for swift investment in job creation while continuing to assist those who are out of work, without health insurance, or in danger of losing their homes.

The Economic Recovery plan passed the House of Representatives, and the Senate is preparing to vote on it very soon. The final version can and will be improved. But the President’s core plan will positively affect families and communities all across the country.

You can help make sure the American people have all the facts so they can support this crucial effort to boost our struggling economy.

The President is leading. Help is on the way.

Lend your voice by sharing this video with everyone you know. Then sign up to join thousands of people across the country who are organizing Economic Recovery House Meetings this weekend:

http://my.barackobama.com/recoveryplan

Thank you for staying involved,

David

David Plouffe
Campaign Manager
Obama for America

——————————-

Dear Republican Senator ___________ and Congressperson _________,

The stimulus package needs to be approved, period. How much longer will we be allowed to suffer through the political noise? People are losing their homes, have little or no food, food banks cannot meet the food demand, jobs and good paying jobs are few, and the Republicans want us to believe that large tax credits are the answer.

Sure, tax credits sound good, but once the money is spent, then what? How do we sustain our economy each day, each month, or each year? The proposed $500.00 per individual and $1,000.00 per couple is not enough money to offset a regular paying job. How will this one time purchase or one month of payments, sustain our jobs and economy, and move us forward?

If I have a choice between a tax credit and a job, I choose a job.

History has been documented, researched and proven that providing jjobs is the obvious answer to stimulate the economy and our country. Building and repairing roads and bridges create jobs and build the economy. Franklin D. Roosevelt rebuilt America’s infrastructure and pulled America out of the Depression.

The 2007 Bush stimulus didn’t win any brownie points or elections for the Republicans. Paid to taxpayers in May 2008, this tax credit did not create jobs or stop or slow down the recent economic crash. We are experiencing the living proof that Bush’s last tax credit/stimulus failed.

So let’s try rebuilding and repairing the infrastructure. Let us ensure that we can use our bridges and highways safely to go to work, home, and live our lives. Yes, it is risky. Anything we try will be risky because the cost will be high; but we cannot afford to do things that have already failed in the past and we must spend enough to begin to correct our failing finances.

So let’s not have politics as usual. Let’s realize that government needs to help Main Street by creating jobs. Also remember that the majority of America has already voted for Barack Hussein Obama and HIS economic plan and no amount of insulting “Barack, the Magic Negro” songs will change that. The Republican financial plan of tax credits and paying for mortgages was soundly defeated in November 2008. We are not interested in it now. $500.00-$1,000.00 and a pat on our heads won’t work to restore voter favor.

Please do the right thing and vote for Obama’s stimulus plan as-is.

http://www.progressnowaction.org/RootsCamp09
Interesting event on January 31st.

Since the blog is not being used too much I thought I would send this out via
email.

And, if you are a Keith Olbermann fan, 8 years in 8 minutes
http://www.msnbc.msn.com/id/3036677/#28699663

susang

“Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism. A review of capitalist system over past 40 years” by Kevin Phillips

“The Predator State: How Conservatives Abandoned the Free Market ” by James Galbraith

“Chain of Blame: How Wall Street Caused the Mortgage and Credit Crisis” by Paul Muolo

“Whose Freedom?: The Battle over America’s Most Important Idea” by George Lakoff

“The Political Mind?: Why You Can’t Understand 21st Century American Politics with an 18th Century Mind” by George Lakoff

“Moral Politics?” by George Lakoff

“The Only Investment Guide You’ll Ever Need” by Andrew Tobias pb 1995

“The Plan: How to Rescue Society When the Oil Stops – Or the day before” by Edwin Black

“Real Money: Sane Investing in An Insane World” by Jim Cramers

George Lakoff
“Metaphors We Live By, Moral Politics: How Liberals and Conservatives Think, Don’t Think of an Elephant”
“The Political Mind: Why You Can’t Understand 21st Century Politics with an 18th Century Mind”

James Galbraith “The Predator State”
 
Kevin Philips “Bad Money”

Dean Baker, “The Conservative Nanny-State” 

“Change We Can Believe In” produced by the Obama team is an extensive outline of the Obama program which is useful to keep track of where a given issue fits into the overall scheme.

http://www.progressnowaction.org/RootsCamp09
Interesting event on January 31st.

Since the blog is not being used too much I thought I would send this out via
email.

And, if you are a Keith Olbermann fan, 8 years in 8 minutes
http://www.msnbc.msn.com/id/3036677/#28699663

susang

At 9AM, Cinema Grill, 13682 E Alameda Ave Aurora

80012, 303-344-3455, serving from lunch menu www.cinemagrill.com

At 9AM, Shadow Theatre, 1468 Dayton St Aurora 80010 720-857-8000,
www.shadowtheatre.com

At 6PM, El Lucerito Restaurant 3088 Peoria St Aurora CO 80014, sign up
at http://civic.moveon.org/event/inauguralbash/89545