Stock market's sell-off still confounds regulators

WASHINGTON — The head of the Securities and Exchange Commission told a congressional panel Tuesday that regulators need more time to figure out what caused last week's stock market plunge.
SEC Chairman Mary Schapiro said her agency has yet to pinpoint the reason for the sell-off that sent the Dow Jones industrial average falling nearly 1,000 points in less than half an hour.

"We will move as quickly as we can, but I can't give you a final date," Schapiro said at a hearing examining the historic market drop.

Some causes have been ruled out, she said. The agency's review found no evidence of terrorist activity or computer hacking. There also was no evidence "that this was done in any kind of a malicious way," Schapiro said.

Schapiro said establishing a stronger system for slowing trading during periods of high volatility would help.

Six major U.S. securities exchanges on Monday agreed in principle to a uniform system of "circuit breakers," which could slow trading during sharp market swings.

Most of the 50 U.S. exchanges regulate themselves and design their own tools for slowing or halting trading.

Reforms needed

Lawmakers and Schapiro acknowledge that the plunge has undermined confidence in the financial markets.

"We must quickly analyze what happened and embrace reforms in order to restore market integrity and promote investor confidence," said Rep. Paul Kanjorski, D-Pa., chairman of the House Financial Services subcommittee that oversees market regulation.

Last week's market freefall highlighted the growing complexity and diversity of the securities market. Upstart electronic trading platforms now compete with the traditional exchanges, and powerful computers give traders a split-second edge in buying or selling stocks.

The plunge also underscored the growing importance of options trading, which allows investors to trade based on expectations for a particular stock, or group of stocks, to rise or fall, rather than simply trading the underlying stock.

"The interconnections among markets ... have grown immensely more complex over the past few years," Schapiro told the subcommittee. "Orders in one stock directed to one market can now ricochet to other markets, and trigger (mathematical) executions in other stocks and derivatives in milliseconds."

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Acting quickly can salvage beloved heirlooms

When Mary and Dennis Goins got home after working separate overnight shifts, the married police officers took one look at the water lapping at their front doorstep and decided to get out fast.
Mary grabbed a few family photos, but the water was quicker than they were. Within minutes, it had risen to their waists. They swam for it, but lost photos while managing to get to higher ground.

When they returned 48 hours later, their Newsom Station home was a wreck from the floodwaters. The biggest blows: baby pictures of Mary's son, John Patrick Helmontaller, who had died in an accident at the age of 21, were found badly damaged. A 1952 wedding album that belonged to Mary's long-deceased parents was ripped and smeared. A Tennessean engagement announcement carefully preserved for more than 50 years had turned to pulp.

"It was heartbreak upon heartbreak," said Mary's sister, Joan King, who is taking charge of what could be a complicated fight to save or restore some heirlooms.

RelatedNashville Flood 2010Weekend After the FloodComplete coverage of Nashville flooding Flood of 2010 resource guidePDF: Salvaging a flood-damaged home

Many families have returned home in the past week to find valued heirlooms, photographs and artwork swollen with water or covered in mud or silt. They're grappling with whether they can afford to hire restoration experts to save some of the items, or they're taking steps on their own to bring possessions back to life.

Restoration experts in the Nashville area say calls for their assistance have started to trickle in, but they're not overwhelmed with repair requests yet.

With flood victims focused at first on securing homes, tearing out wet carpeting or replacing ruined drywall, dealing with damaged art or soiled furnishings may have taken a backseat to more pressing needs.

Taking immediate action, however, can mean the difference between preserving or losing beloved photos, paper documents and antiques, said DiAnna Tindell, who owns Tindell's Restoration Schools and Studio.

"I know people are tired and at their wit's end and not going to be thinking clearly," Tindell said. "But even if people don't have time or money right now, they can save their valuables."

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Nashville car salesman gets 51 months in prison for $2.7M fraud

A former Nashville car salesman has been sentenced to 51 months in prison in a $2.7 million bank fraud scheme.
According to a news release from the U.S. Attorney's Office for the Middle District of Tennessee, Andrew Crutcher, 53, got millions of dollars in checks from people who thought they were providing capital for car sales that he claimed to be brokering.

In reality, Crutcher used the money for personal expenses and to repay some investors who believed they were reaping the profits of their investment.

The scheme resulted in a loss of more than $980,000 to Bank of Nashville and about $1.8 million to 10 investors between May 2005 and February 2006.

Crutcher pleaded guilty in federal court in October 2009.

In addition to jail time, he will be required to pay $2.7 million in restitution.

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Tyson returns to profitability

Meat producer Tyson Foods Inc. returned to profitability in its second quarter on improvements in its chicken business and higher beef and pork revenue.
The company said it expects the trends to continue as demand picks up for exports and in restaurants at home.

Results beat analyst expectations, and the company said the second half of the year should be strong, too, as pricing continues to improve and demand keeps increasing as people start going to restaurants and eating more meat again.

The industry has been working through a downturn brought on by a combination of high production costs — because of volatile commodities prices — and slumping demand as shoppers pulled back on spending. That crimped profit margins and forced companies to cut production to raise prices and make more money, which is happening now for Tyson.

For pork and beef, which are typically more profitable, the recovery is well under way, particularly in beef.

Tyson — based in Springdale, Ark. — earned $156 million, or 42 cents a share, for the three months ended April 3. That reverses a net loss of $119 million, or 32 cents a share, a year earlier.

Revenue climbed 10 percent to $6.92 billion from $6.31 billion.

Dark chicken hits highs

Tyson's chicken division, which has been hit by oversupply and consumer spending cuts, reported $2.49 billion in revenue, compared with $2.36 billion a year ago, on increased average prices. Grain costs rose by $19 million in the quarter.

The company noted that dark meat chicken is selling at highs never seen before in the U.S. Spokesman Gary Mickelson said the company is producing a wider variety of dark meat products, such as boneless thigh meat.

Beef revenue climbed to $2.76 billion from $2.42 billion, helped by higher export sales volume and better operating margins. For pork, revenue increased to $929 million from $844 million partly on improved operating margins.

Smith said the company is seeing more demand from restaurants, particularly for expensive items such as beef tenderloin. Casual dining restaurants are a major outlet for that cut, and so seeing it rebound shows people are becoming more confident in spending money in restaurants, he said.

The prepared foods unit also posted better revenue, as sales climbed to $734 million from $684 million on improved sales volume and increased average prices.

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Entrepreneurs seek funding at showcase

Shortly after a 10-minute pitch describing a medical tourism company that she plans to launch, Dorothy A. Owens was taking questions from a potential investor who wanted to learn more about the concept.
Owens' presentation was among 18 sales pitches that took place at the Tennessee Innovation Conference and Venture Showcase, which wraps up today at the Loews Vanderbilt Hotel.

Hosted by the Tennessee Technology Development Corp., the event is designed to connect venture capitalists and angel investors with entrepreneurs who need capital to make their ideas reality or to expand.

"I think the timing in the market is better, the market's starting to grow and come around, people are more familiar with medical tourism, and insurers are actively seeking a solution and looking abroad," said Owens, who will earn an MBA from Vanderbilt University later this week.

She hopes to find $400,000 in financing for her business idea, Constellation Medical Travel.

Other local companies presenting on Monday included Bandbox, which wants to raise $1 million to help musicians and other artists sell independently and directly to fans via their websites. MyWerx, which is expecting a $1.5 million round of financing in August, has a copyright management system.

After their presentations, each speaker got feedback from a panel that included venture capitalists and others with investment backgrounds. More than 300 people attended.

The event continues today with an innovation showcase featuring scientific research with business potential from around the state.

"This is another essential piece of the puzzle to help create 21st-century jobs in Tennessee," said James Stover, director of capital formation with the Tennessee Technology Development Corp., a state-funded economic development agency created as a nonprofit.

Getahn Ward can be reached at 615-726-5968 or gward@tennessean.com.

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BankTennessee gets new CEO

Collierville-based BankTennessee, which has a branch in Lebanon, announced today that former Shelby County Mayor Jim Rout will serve as the new president and chief executive officer of the bank.
Rout is a board member and was one of the bank’s founders in 1992.
BankTennessee, which previously was based in Franklin under the name Civitas BankGroup before it was split off, was hit with a federal enforcement action this spring that requires the bank to make changes to its lending practices after falling on hard times.
At the time, the bank reported that it was well capitalized.

BankTennessee also announced today that former chief executive officer R. Todd Vanderpool has been named chief executive officer and president of the holding company BankTennessee Bancshares. He will also assume the role as the bank’s chief credit officer.
Wright Cox, a veteran community banker for primarily the Collierville and Germantown areas, will continue his role as community president and chief lending officer.

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AmSurg's CEO urges transparency in health costs

WASHINGTON — Let's say you want to buy a television. You find the model you like at one store for nearly $500, but at another store the same model is less than $200.
Basic economic theory says you choose the cheaper TV. If enough people do that, the store charging more lowers its prices.

That basic idea — transparency in pricing and quality benefits consumers and drives down prices — should be applied to the health-care industry, the CEO of a Nashville company testified last week.

Christopher Holden, president and CEO of AmSurg, which has 203 ambulatory surgery centers in 33 states, testified at a House hearing last week about legislation to require health-care providers to disclose what they charge for products and procedures.

Holden told members of the House Energy and Commerce Subcommittee on Health that if half the Medicare patients who sought surgical services at a hospital last year had instead gone to an outpatient surgery center, Medi care would have saved $2 billion.

The average cost of cataract surgery is $495.96 at a hospital and $192.49 at a surgical center, he said. Other average price differences he cited include $76.05 for a colonoscopy at a surgery center versus $186.06 at a hospital, and $209.92 for a knee arthroscopy in a center versus $403.36 at a hospital.

"There is very little information available to patients about the relative price of services offered by different types of providers in their community," Holden said.

It's a little more complicated

Rep. Frank Pallone, D-N.J., subcommittee chairman, said he supports the legislation but cautioned that the complexities of the health-care system make the benefits of transparency less clear. "Purchasing health care is not like going out and buying a car," he said.

People with health emergencies aren't likely to have the time or inclination to price-shop, Pallone said, and patients are often unwilling to go against the recommendation of their family physician.

Forty-one states already have some sort of disclosure requirements, said Steven Summer, CEO of the Colorado Hospital Association, who testified on behalf of the American Hospital Association.

The Tennessee Hospital Association provides information about the costs of procedures at hospitals through its Tennessee Hospitals Inform website at http://tnhospitalsinform.com.

The only witness to oppose the legislation was attorney Michael Cowie, formerly with the Federal Trade Commission. He said requiring large providers, such as drugmakers, to disclose negotiations with wholesalers or other intermediaries could lead to collusion and price-fixing.

But all subcommittee members of both parties expressed support for increasing available information on pricing and quality of care.

"You can find better reviews about a blender than a bypass," said Rep. Michael Burgess, R-Texas.

Contact Bill Theobald at wtheobal@gannett.com.

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