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Show i DITOR: D.W AND! RIO I TUB DAILY .U4-:r- ,: By DAVE ANDERTON The Daily Herald ' UTAH COUNTY r' A V WHWFSDAX Nonper-formin- g loans grew an alarming 15 percent in the U.S. during the first nine months of 2000 over 1999, according to a new report released by Weiss Ratings, a bank 1 rating agency. Susan Bondy Keep an eye out for these two investment scams Investment scams come and go. Currently, two popular scams involve "Prime Bank" programs and fraudulent promissory notes. The Securities and Exchange Commission and the National Association of Securities Dealers are increasing their efforts to warn investors, and crack down on promoters and others responsible. Let's examine each of these . offers excellent financial security and has the resources necessary to deal with severe economic conditions. "This rise in bad loans through the third quarter of last year is especially worrisome because the economy didn't start to slow in earnest until the fourth quarter," said Martin Weiss, chairman of Weiss Ratings. "If the economy, continues slowing, recession or no recession, we are bound to see an acceleration of t he industry's trou- difficulties. A "D" or "E" rating, considered weak, represents significant weakness that could impact depositors or creditors. The country's weakest banks included Americana Community Bank, of Minnesota; Bank of Honolulu, of Hawaii; and First Professional Bank, of California, each given an "E" rating for their high rate of nonperforming loans. Notable downgrades included Merrill Lynch Bank,, of Salt Lake City, down from last year's "A-- " to a "B" this year. Bank One, of Columbus, Ohio, also slipped from a "C" to a "D." Nationally, nonperforming loans accounted for 7.22 percent of the industry's capital and reserves. Utah placed below the national average at 5.73 percent. "Utah as a whole is dealing better with nonperforming loans," said Dave Proko, a financial ana That compares to a 2.9 percent increase in all of 1999. In Utah County, the Bank of" American Fork received Weiss' bles." highest rating, an "A," in achievof Ratings of other Utah banks: the lowest ing proportion First Security Bank, B- - (good) and loans to capital reserves. Key Bank, B- - (good) Far West Bank, of Provo, Washington Mutual Bank, C achieved an "A" and Western Com(fair) Zions Bank, B- - (good) munity Bank, of Orem, was given A fair rating, or "C," indicates a D considered to be a weak ratithat a bank is relatively stable, ng.An excellent rating, or "A," but during a period of adverse ecomeans the financial institution nomic conditions could encounter Fighting globalization 31. 2001 Promissory Notes. Many promissory notes are a legitimate way for companies to raise capital. Notes are a form of debt similar to a bond. However, securities regulators are uncovering many promissory notes that are not legitimate. In June 2000, the SEC and state regulators conducted a joint sweep, bringing actions against hundreds of individuals and entities involved in selling fraudulent notes to thousands of investors. These investors had been bilked out of over $300 million in the notes. According to the NASD, promoters and salespersons tell investors that: (1) they will receive high returns (often double digit returns) with low risk; (2) the returns are guaranteed; and (3) collateral exists to back the guar- antee. Most frequently salespersons fail to conduct any research on the promoters or the promissory notes, choosing instead to take the .exorbitant commissions. Prime Bank Programs. A similar investment scheme involves the sale of supposedly "exclusive," international investment programs through banking institutions. These programs are referred to as "Prime Bank" or "Prime" or "High Yield" investments. Promoters target individuals, municipalities, charitable associations and other nonprofit organizations. According to the SEC, investors should be alert for these signs of banking-relateinvestment fraud: 1) Excessive guaranteed returns: Typically, investors are told that they will receive monthly returns of anywhere between 20 percent to 200 percent, absolutely risk free. 2) Fictitious financial instrument: Financial instruments, which go by names such as Standby Letters of Credit, Bank Guarantees, offshore trading programs and debentures, do not exist. Salespersons usually claim these "investments" are issued, traded, guaranteed or endorsed by such entities as the World Bank, the International Monetary Fund and the Federal Reserve. In reality, they are not. 3) Extreme secrecy: All parties must maintain strict confidentiality making client references unavailable. Investors may even be asked to sign agreements. 4) Exclusive opportunity: Salespeople say, "This opportunity has been reserved only for the very wealthy, but it is now available by invitation to a handful of special d bank-issue- d re lyst with Weiss Ratings. Proko also said that Utah s banks maintained a higher reserve to total loans, 2.1 percent compared to the industry's average of 1.51 percent. Weiss Ratings, based in Palm Beach Gardens, Fla., is an independent, private company with no consulting ties to the insurance or banking industries, according to Ellen Yui, a spokeswoman for the company. Ratings are derived from quarterly financial statements filed with federal regulators. A recent study by the U.S. General AmmtingyOffice concluded that WeisV42the most comprehensive of five major rating agencies studied. loan-los- at Dave Anderton can be reached or by at heraldextra.com. 344-256- dan-derto- 2 By ADAM GELLER AP Business Writer NEW YORK Consumer confidence fell sharply in January to its lowest level in four years, driven down by growing fears of a recession, an industry group said Tues- ' ( y f . i ' : ,v meeting in . V YI ' ' Y Participants day. it- -. jLx VV V" A - v s f r- i f' , 5 A " 1 t Tfrl : DOUGLAS ENGI.E The Associated Press the World Social Forum hold hands as they sing during the closing ceremony of the event in s presented itself as legitimizing and formalizing the lobby that has been growing worldwide since protesters disrupted the World Trade Organization j Seattle in December 1999. in Analysts expect second fate cut By JEANNINE AVERSA Associated Press Writer ing Greenspan, and presidents of the Fed's regional banks, opened a meeting on interprivate est rate policy Tuesday. An two-da- y WASHINGTON Worried that the economy may be stalling, Federal Reserve Board Chairman Alan Greenspan is likely to push for another bold half-poiinterest rate cut to try to rev up growth. That's what private analysts are predicting in the wake of Greenspan's assertion to Congress last week that economic growth at present is probably "very close to zero." "That was a strong message .;. that he will continue to be aggressive in easing monetary policy," said Mark Zandi, chief economist for Economy.com, a consulting firm. The Federal Open Market Committee, comprising Fed board members in Washington, includ announcement of the decision on rates is expected Wednesday afternoon. As Fed members were meeting behind closed doors, President Bush ducked a question at the White House about whether the central bank should cut interest rates, saying that he had made a mistake when he expressed approval for the Fed's first rate cut on Jan. 3. That's the last time I'm going to comment about the actions Mr. Greenspan takes. He's an independent voice and needs to be an independent voice," Bush told reporters. Zandi, other economists and Wall Street expect the Fed after Wednesday's meeting to announce a reduction of half a percentage By ALISON LINN Dec. 31, Amazon lost $545 million, compared with $323.3 million in nt policy-maker- s' . point in the federal funds rate, the interest banks charge each other, from 6 percent to 5.50 percent. Economists don't believe that the last rate cut. In coming months, economists predict, the funds rate will drop to 5 percent in a series of moves by May or June. Fed s could decide to push the funds rate even lower, depending on how the economy unfolds between now and then, economists said. Some analysts didn't rule out a less dramatic, quarter-poin- t rate reduction at this meeting, the Fed's first regularly scheduled session of the new year. Whatever size reduction the Fed makes, it's likely to be followed by a similar cut in commercial banks' prime lending rate, the benchmark for millions of personal and business loans, standing now at 9 percent. will be rate-cuttin- g policy-maker- The Consumer Confidence Index dropped more than 14 points to 114.4, the lowest level since December 1996 when it was 114.2, the Conference Board reported. The decline in confidence raises new worry about the fragility of the economy, with consumers decidedly more pessimistic about business and employment conditions, said Lynn Franco, director of the Conference Board's Consumer Research Center. "Since apprehension leads to caution and cautious consumers spend less than the confident ones, confidence levels in February will be carefully watched," Franco said. "Further erosions in consumer confidence will create more serious concerns about the overall health of the economy." But economists noted that consumers continue to view the current situation in relatively favorable terms, with their doubts focused on the future. The question is whether consumers act on those fears, observers said. "Historically, when we see confidence decline, we have to watch and see if it shows up also affecting spending," said Gary Thayer, chief economist with A.G. Edwards & Sons in St. Louis. The Conference Board index, based on a monthly survey of some 5,000 U.S. households, is considered a key indicator because consumer spending accounts for about of the nation's economic activity. The index compares results with its base year, 1985, when it stood at 100. The new report will be watched particularly closely, since it follows remarks by Federal Reserve Alan Chairman Greenspan emphasizing the importance of consumer confidence. two-thir- customers". 5) Claims of inordinate complexity: Questions such as, "Who is involved?" and, "Where is the money going?" are too difficult to answer. Those not expert in complex financial instruments will find them to be too complex or technical. Frequently promoters AP Busirjgs Writer Amazon.com said Tuesday it plans to cut 1,300 jobs, or 15 percent of its work force. SEATTLE are just plain bunk. ' If you are solicited to purchase these promissory notes and prime bank instruments, alert your securities regulator immediately. Note that the Internet is fertile ground for perpetrating these frauds. Investors unfortunate to have invested should seek legal counsel The news came as the Seattle-base- d online seller of books and CDs posted losses that were slightly lower than what analysts were expecting. In a statement, Amazon said it is closing a distribution center in McDonough, Ga., and a customer service center in Seattle to contain 'costs. It also said its distribution center in Seattle will be operated immediately. seasonally. give documents that appear complex, sophisticated and official, but Write to Susan in care of this her at newspaper, or sbondygtii.com. n Consumer confidence tumbles "investments": . JANUARY Otali County bank receives highest rating BONDY ON MONEY - (www.HarkTheHerald.com) HrRA-L- fourth-quart- er V The resulting job cuts will cause Amazon to take a charge in excess of $ 150 million this year. For the three months ended the year-agperiod. e items, AmaExcluding zon lost $90.4 million, compared with $184.9 million last year. "While the strength of consumer spending remains uncertain, and there are no guarantees, we expect Amazon.com as a whole to reach operating profitability in the fourth quarter of this year," said Warren Jenson, chief financial offio Online holiday shopping getting smoother one-tim- cer. Amazon.com stock closed at $18.94 Tuesday, down $1.18 or about 6 percent on the Nasdaq Stock Market. For all of 2000, Amazon reported a net loss of $417.1 million. Amazon.com, which began selling products online in July 1995, employs about 8,500 workers. WASHINGTON (AP) Holi- day shoppers who went online last year reported fewer problems with Web purchases, particularly the shipping delays that plagued the 1999 season. The Federal Trade Commission said Tuesday it had received fewer consumer complaints and credited online companies with making more realistic shipping claims. The number of complaints was not available. "No investigations tied solely to the 2000 holiday season appear warranted," Jodie Bernstein, director of the commission's consumer protection bureau, said in a statement. "At this time last year the FTC had already begun investigating more than a dozen online companies." Bernstein said a review of Better Business Bureaus and consumer complaint Web sites also suggests that online retailers did a better job meeting their shipment commitments. During the 1999 holiday season, many Internet stores failed to deliver on time and didn't notify customers of late shipments, FTC spokesman Eric London said. Facing civil charges, seven companies including Macy's and Toys R Us paid more than $1.5 million in penalties. T |