'Living Wills' For Five Big Banks Fail U.S. Regulators' Test

By Lisa Lambert

WASHINGTON (Reuters) - Five out of eight of the biggest U.S. banks do not have credible plans for winding down operations during a crisis without the help of public money, federal regulators said on Wednesday, saying the institutions could face stricter oversight if they do not fix their plans.

The "living wills" that the Federal Reserve and Federal Deposit Insurance Corporation jointly agreed were not credible came from Bank of America <BAC.N>, Bank of New York Mellon <BK.N>, J.P. Morgan Chase <JPM.N>, State Street <STT.N>, Wells Fargo <WFC.N>.

The requirement for a living will was part of the Dodd-Frank Wall Street reform legislation passed in the wake of the 2007-2009 financial crisis, when the U.S. government spent billions of dollars on bailouts to keep big banks from failing and wrecking the U.S. economy.

"The FDIC and Federal Reserve are committed to carrying out the statutory mandate that systemically important financial institutions demonstrate a clear path to an orderly failure under bankruptcy at no cost to taxpayers," FDIC Chairman Martin Gruenberg said in a statement. "Today’s action is a significant step toward achieving that goal."

None of the eight systemically important banks, which the U.S. government considers "too big to fail," fared well in the evaluations. However, a bank has to fix deficiencies only if the two regulators jointly determine its plan does not have the potential to work.

The FDIC alone determined that the plan submitted by Goldman Sachs <GS.N> was not credible, while the Federal Reserve Board on its own found Morgan Stanley's plan not credible. Citigroup's <C.N> living will did pass, but the regulators noted it had "shortcomings."

"Each plan has shortcomings or deficiencies," said FDIC Vice Chairman Thomas Hoenig in a statement. "No firm yet shows itself capable of being resolved in an orderly fashion through bankruptcy. Thus, the goal to end too big to fail and protect the American taxpayer by ending bailouts remains just that: only a goal."

Banks whose living wills are deficient can be subject to more stringent regulation such as requirements to have more capital or restrictions on growth. If they do not fix the identified problems within two years, they can be forced to divest assets.

The regulators continue to assess plans for four foreign banks labeled "systemically important," Barclays PLC <BARC.L>, Credit Suisse Group <CSGN.S>, Deutsche Bank AG <DBKGN.DE>, and UBS.

 

(Reporting by Lisa Lambert; Editing by Chizu Nomiyama)

Tesla Proclaims This The Week Electric Cars Went Mainstream

We may have reached a tipping point.

After a frenzied week watching orders for its Model 3 soar, Tesla declared Thursday that electric cars have gone mainstream.

The electric car manufacturer has received more than 325,000 pre-orders for its first affordably priced sedan. At an average cost of $42,000 apiece after various options are priced in, that comes to nearly $14 billion in sales.

Tesla claimed that eye-popping total makes this "the single biggest one-week launch of any product ever."

"Most importantly," the company added, "we are all taking a huge step towards a better future by accelerating the transition to sustainable transportation."

"We want to thank everyone who has shown their faith in Tesla and the mission of electric vehicles. We would write more, but we need to get back to increasing our Model 3 production plans!"

Tesla CEO Elon Musk had offered a similar thought on Twitter last Friday, just after the Model 3 was released, when orders stood at around 200,000.

Definitely going to need to rethink production planning...

— Elon Musk (@elonmusk) April 1, 2016

For perspective on just how much of a production increase that may be, Autoblog notes that Tesla delivered a total of just 50,000 vehicles in 2015.

“The pent-up demand is something that surprised me," DBL Partners Managing Director Nancy Pfund, whose venture capital firm invested in Tesla a decade ago, told The Huffington Post on Monday. "I knew it was big, but I had no idea how much of a market we were tapping into with the Model 3.”

Walmart's Green Goals Perfectly Encapsulate The Company's Ruthless Efficiency

Walmart is famous for its ruthless commitment to efficiency. Often that makes people think of the low wages it pays most of its workers (and the subsequent low prices), but cutting costs is not just about labor. For Walmart, it's also a reason to go green.

Walmart last week joined the Ellen MacArthur Foundation’s CE100 platform, a group of companies committed to reducing waste in their production process. The foundation's aim is to create a "circular economy," where all energy is renewed and products are created in such a way that every part is reusable somehow.

Walmart has already started to make its internal procedures more circular. For example, it has a system for the big refrigerators it uses in its stores. If one breaks and can't be used, the whole machine doesn't get thrown away. Walmart has a team that inspects the equipment for any parts that are salvageable. Those parts get sent to a central warehouse and catalogued. Then, when another refrigerator part breaks in a different store somewhere else in the country, recycled parts from the warehouse can be used to fix it. The company ends up replacing far fewer refrigerators than it would if it didn't salvage parts.

“Waste represents inefficiency,” according to Fred Bedore, a senior director on Walmart’s sustainability team. “We want to root out the inefficiencies. We want to be operating [Walmart] at the lowest possible cost.”

For Walmart, that means committing to eliminate waste in the company’s energy use, operations and the products it sources. While Walmart might not be the first company that comes to mind when you think of sustainability, it’s actually a strategy that fits rather naturally with its business model.

That means both finding ways to make its own business more circular -- things like the refrigerator repair system, and incorporating more renewable energy into its business -- and working with suppliers and vendors to make their businesses more circular as well.  

"We want to make sure that we are using resources effectively, and not creating more waste than is necessary," Bedore told the Huffington Post. 

And, of course, less waste means even lower prices. 

Even Tesla Fanatics Are Shocked By Model 3 Preorders

Elon Musk reveled this weekend in the tidal wave of preorders Tesla Motors received for the company's first affordable car, the Model 3, which debuted March 31.

By Saturday night, the electric automaker pulled in an eye-popping 276,000 orders for the $35,000 vehicle, each with a $1,000 deposit, the billionaire chief executive said on Twitter. That's more than double what the company expected. 

276k Model 3 orders by end of Sat

— Elon Musk (@elonmusk) April 3, 2016

Even two of electric carmaker's keenest observers -- one an early investor, the other a high-ranking analyst fixated on the future of transportation -- were wowed by the numbers.

"We were all surprised to sell a quarter of a million cars in two days," DBL Partners Managing Director Nancy Pfund, whose venture firm invested in Tesla a decade ago, told The Huffington Post at the Bloomberg New Energy Finance Summit in New York on Monday. "The pent-up demand is something that surprised me. I knew it was big, but I had no idea how much of a market we were tapping into with the Model 3."

When she first invested in the electric automaker 10 years ago, the company's only offering was the super-fast, super-expensive Roadster, and electric cars in general seemed dead-on-arrival.

"People were telling us Tesla is for rich people," Pfund said. "I mean, we didn't sit around a conference table 10 years ago and say, 'Let's make a car for the wealthy.' It's like the early cellphone or iPhone, these things are expensive at first."

The reaction to the Model 3 could ripple throughout the auto industry.

"That legitimately surprised us," Colin McKerracher, the lead advanced transportation analyst at Bloomberg New Energy Finance, told HuffPost in an interview. "I don't think you want to ignore that. I don't think you want to say that's just a flash in the pan."

Handout . / Reuters

The Tesla Model 3.

Rather, McKerracher said traditional automakers are now scrambling to develop competitors to Tesla's roster of sleek, well-designed electric vehicles. 

"I wouldn't underestimate Tesla's ability to pull other automakers along," he said.

One big difference is that the Nissan LEAF and Chevrolet's Bolt and Volt -- the Model 3's chief rivals -- simply haven't had the same hype as a Tesla.

"If you build a badass product, people will buy it on its own merits," Salim Morsy, senior analyst at Bloomberg New Energy Finance, told HuffPost.

But people need to know about it, he added. 

"For the Bolt, Volt and Leaf, the marketing was abysmal," Morsy said. 

Musk is nothing if not a good hype man. 

The 2 Near-Death Experiences That Changed Mark Bertolini Forever

Before Mark Bertolini became the chief executive of the country's biggest health insurer, before he was celebrated by business publications for being an "unconventional boss" who is "mindful of morality," before he overhauled his company to prioritize the wellness of his workers, he was a father watching his teenage son die.

It was 2001, and Bertolini's son Eric, who was then 16, was diagnosed with a rare type of cancer. Bertolini, now the chief executive of Aetna, quit his job at insurance rival Cigna and moved into his son's hospital room in Boston to help manage his care.

Eric made a full recovery two years later, but was struck by complications and needed a kidney transplant.

Once again, Bertolini stepped in, donating one of his kidneys to his son.

Those experiences, coupled with a severe skiing accident he suffered in 2004, completely changed the way that Bertolini saw health and, by extension, health care. 

"What I found very quickly in both his circumstance and mine was getting our lives back, becoming engaged and productive members of society, was something that the health care system cared very little about," Bertolini says in the sixth episode of "Pioneers," a new video series by The Huffington Post that profiles leaders in various industries who have redefined success by making it their mission to live more meaningful and less stressful lives.

Facing long-term disability and chronic pain after colliding with a tree, Bertolini turned to yoga and meditation. A recent study by Wake Forest Baptist Medical Center found that participants who practiced mindfulness meditation experienced greater pain relief than those who received a placebo. Regular meditation and healthy amounts of sleep essentially work to drain out toxins -- such as molecules associated with the degeneration of brain cells -- that build up during waking hours. 

"I still have my pain, but as we say in the meditative arena, in the mindfulness arena: 'I have pain, I'm aware of my pain, I am not my pain,'" Bertolini says. "I had to learn how to be more 'Zen' in the way I approached my daily life, and meditation was a way to learn how to do that."

That approach bled over into his work life, too. Under Bertolini's leadership, Aetna helped spearhead the movement in corporate culture to focus more on employee health -- as both a means of improving people's lives and a way of reducing health care costs. And perhaps most importantly, he addressed one of the biggest sources of stress for his workers: money. 

Last year, Bertolini raised the minimum hourly base pay for all U.S. workers at Aetna to $16 after reading Capital in the Twenty-First Century, a best-selling 700-page book on income inequality by the French economist Thomas Piketty.

"If people are too busy looking for food, if they're too busy stressing about whether or not they have enough money to pay for their health care, how can they possibly sleep?" Bertolini says. 

Still, for wealthy executives, money shouldn't be everything in business, he says. 

"We view stock price and compensation as ways of measuring the success of an organization, and I think, because of that, we have a very short-term view of how capitalism works," he says. "At Aetna, we actually say: 'You know what, we're here for the long run. Here are the fundamentals we're investing in, like we did with our employees.'" 

To watch previous episodes of Pioneers, head here.

FDA Sued Over Approval Of Genetically Engineered Salmon

• Plaintiffs argue the federal agency overstepped its authority in approving the genetically modified fish.
• Produced by AquaBounty Technologies, the salmon are engineered to grow twice as fast as wild species.
• Critics worry engineered salmon could prove disastrous for wild salmon populations.

Nearly a dozen fishing and environmental groups have filed suit against the Food and Drug Administration in an effort to block its recent approval of genetically modified salmon.

The plaintiffs, represented by the Center for Food Safety and Earthjustice, argue that by green-lighting the first-ever genetically altered animal slated for human consumption, the FDA violated the law and ignored potential risks to wild salmon populations, the environment and fishing communities.

"That's one of the major risks here, is the escape of these fish into the wild," George Kimbrell, senior attorney for Center for Food Safety, told The Huffington Post. "It could be a final blow to our already imperiled salmon stocks."

Produced by Massachusetts-based company AquaBounty Technologies, the AquAdvantage Salmon is an Atlantic salmon engineered with genes from a Pacific Chinook salmon and a deep water ocean eelpout to grow twice as fast as its conventional counterpart.

Handout / Reuters

An AquAdvantage Salmon is pictured in this undated photo provided by AquaBounty Technologies.

The 64-page lawsuit, filed in U.S. District Court for the Northern District of California, challenges whether the FDA has authority to regulate genetically modified animals as "animal drugs" under the 1938 Federal Food, Drug and Cosmetic Act. It also argues the agency failed to protect the environment and consult wildlife agencies in its review process, as required by federal law, CFS said in a release. 

"I think it's important to note that FDA has gone ahead with this approval over the objections of over 2 million Americans in the comment period," Kimbrell told HuffPost.

In its approval announcement in November, the FDA said it determined "food from AquAdvantage Salmon is as safe to eat and as nutritious as food from other non-GE Atlantic salmon and that there are no biologically relevant differences in the nutritional profile of AquAdvantage Salmon compared to that of other farm-raised Atlantic salmon."

FDA spokeswoman Juli Putnamn told HuffPost in an email that as a matter of policy, the federal agency does not comment on pending litigation.

SAUL LOEB via Getty Images

Fresh Atlantic salmon steaks and fillets at Eastern Market in Washington, D.C. in 2013.

The lawsuit is the latest development in an ongoing and heated debate over genetically modified organisms, their safety and whether genetically engineered foods should be labeled. While proponents say the technology allows agricultural farmers to be more efficient, opponents argue they result in heavy pesticide use and transgenic contamination.

In the case of its GE salmon, AquaBounty says the fish grows to market size using 25 percent less feed than any Atlantic salmon on the market today.

But if the engineered fish were to be released into the wild -- a risk AquaBounty says is eliminated by raising them on land and away from the ocean -- critics worry they might outcompete endangered wild salmon for food and introduce new diseases.

“Once they escape, you can’t put these transgenic fish back in the bag," Dune Lankard, a salmon fisherman and the Center for Biological Diversity’s Alaska representative, said in a release. "They’re manufactured to outgrow wild salmon, and if they cross-breed, it could have irreversible impacts on the natural world. This kind of dangerous tinkering could easily morph into a disaster for wild salmon that will be impossible to undo."

Plaintiffs in the case include Pacific Coast Federation of Fishermen’s Associations, Institute for Fisheries Resources, Golden Gate Salmon Association, Friends of Merrymeeting Bay and others.

Tesla Unveils Model 3, Its Most Important Electric Car Yet

HAWTHORNE, Calif. -- Electric car manufacturer Tesla unveiled its latest electric car Thursday night -- the hotly anticipated, lower-cost Model 3 sedan.

The much-hyped public presentation of the mid-sized sedan at Tesla's design studio was a historic moment for both the electric car industry and for Elon Musk’s Tesla.

The Model 3, Tesla's fourth production car, is the first one that's aimed at the masses, with a starting price of $35,000. For Tesla, considered the Apple of the automotive industry, the Model 3 has the potential to be its iPhone -- a sexy, mass-market, consumer-priced machine that changes the game.

ASSOCIATED PRESS

This undated photo provided by Tesla Motors shows a silver Model 3 car. The promise of an affordable electric car from Tesla Motors had hundreds of people lining up to reserve one. At a starting price of $35,000 — before federal and state government incentives — the Model 3 is less than half the cost of Tesla's previous models.

If the car becomes as popular and successful as Musk hopes, Tesla stands to become a major consumer brand that helps shepherd the all-electric car era into the mainstream. Musk said at Thursday night's event that 115,000 Model 3s had been ordered in the previous 24 hours.

#TeslaModel3 ! pic.twitter.com/kXnLwO2Rnc

— Matt Ferner (@matthewferner) April 1, 2016

But it may be a bumpy road. The Koch brothers are planning a multimillion-dollar assault on electric vehicles, Tesla’s direct-to-consumer sales model is prohibited in several states, automotive technology and trends are evolving rapidly and there is a possibility that tax incentives -- a key to electric car sales -- will drop by the time the first Model 3s ship in late 2017. The Model 3 isn't the first affordable all-electric vehicle on the market, and the competition is likely to intensify.

Musk said the Model 3 can go from 0 to 60 mph in less than six seconds and will have a range of at least 215 miles on a charge. The car will seat five adults comfortably and will have front and rear trunks, he said.

"Can you fit a seven-foot surfboard in a Model 3? Yes," said Musk.

A quick spin in a Model 3 with a Tesla driver showed the car to be blazingly fast with sporty handling. When the driver pressed the accelerator, the three passengers -- all journalists -- gasped and giggled. 

The back seat was indeed comfortable for two, and had ample room for a third person.

Less than two hours after Musk took the wraps off the car, the number of orders topped 133,000.

133K reservations and counting #TeslaModel3 pic.twitter.com/bmfFedDsIi

— Matt Ferner (@matthewferner) April 1, 2016