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Howard Weaver, former vice president for news at The McClatchy Co., has been acting as an adviser for an online news startup by eBay Inc. founder Pierre Omidyar.

Omidyar and Randy Ching, both former eBay executives, established Peer News Inc. in 2008 with the goal of producing original, in-depth reporting and analysis of local issues in Hawaii. The Honolulu-based news service is set to make its debut early next year.

“We’ve been talking to a lot of people in the industry about journalism and how we might be able to have an impact, listening and learning as much as we can,” Omidyar wrote on his Peer News blog. “One of the people who has been a huge help in particular as we began to envision our local news service is longtime industry insider Howard Weaver …”

Peer News has announced it is searching for an editor, and Weaver has said on his blog that he’ll be part of the team looking at candidates. Weaver is not a candidate himself.

Weaver wrote about the startup last week:

“I’m interested for a lot of reasons, but I’d sum it up this way: the new venture intends to demonstrate that a digitally native, technologically fluent Web organization can profitably serve targeted readers who want sophisticated journalism focused on local civic affairs.”

Weaver, who twice led his hometown paper, the Anchorage Daily News, to Pulitzer Prize gold medals, retired from McClatchy (NYSE: MNI) about a year ago. Reached at his home in Sacramento, Weaver said he’s keeping busy in his “next phase” of life. When he’s not advising and blogging, he’s consulting, sitting on a company board of directors, having fun and “trying to write fiction.”

e.Republic takes on ‘Governing’

E.Republic Inc., a Folsom publishing and research company that focuses on government technology news and events for the government and education markets, just made its first acquisition, expanding beyond information technology to government policy.

E.Republic will buy “Governing” magazine from the Times Publishing Co guaranteed approval payday loans. The deal is expected to close Nov. 30. Details were not disclosed.

E.Republic has about 150 employees and continues to grow, unlike many news organizations that have laid off workers during the recession, said Paul Harney, chief operating officer for e.Republic. He said it’s been a tough year for the company’s print publications, except for “Emergency Management.” But e.Republic’s Web sites are “robust” and sponsorships for the company’s 160 events are strong, Harney said.

“People still want to meet face to face and talk business,” he said.

E.Republic also is home to the 10-year-old Center for Digital Government, which provides market research on technology and trends in local and state government.

Harney said e.Republic will be adding staff from “Governing” but it’s unclear yet how many. “Governing” will remain in its Washington, D.C., offices under the leadership of publisher Fred Kuhn.

Harney said the 80,000-circulation publication has been around for 20 years and has a loyal audience.

Extra! Extra! N&R moving

The Sacramento News & Review is finally making its move out of midtown from a rented space at 1015 20th St. to a once-vacant and dilapidated building at 1124/1132 Del Paso Blvd.

The free alternative weekly newspaper’s 60-member staff is set to move Dec. 10.

The newspaper received about $2 million in grants and loans from the Sacramento Housing and Redevelopment Agency to finance the purchase and renovation of the building, and another $2 million from a Small Business Administration loan. The project has been in the works for several years, said Sacramento News & Review president and chief executive officer Jeff vonKaenel.

“We’re very exciting about moving over,” he said.

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The stimulus cash that helped boost small business lending this year just ran out.

The Small Business Administration said Monday that it has run through all of the $375 million Congress allocated to temporarily waive fees and boost guarantees on loans backed by the SBA’s lending programs. Businesses still hoping for a slice of the pie can get in line, cross their fingers and wait.

The SBA backs loans made by banks to qualifying small businesses. If the business defaults, the government pays the bank back for the guaranteed potion of the loan. Typically, the SBA charges banks for this guarantee, but since February the agency has been using a pool of Recovery Act funds to eliminate those fees. The agency also temporarily increased its cap on the portion of a loan it will guarantee, raising it to 90%.

The move was a popular one with banks — though not popular enough to halt the freefall in small business lending. The stimulus incentives were in place for more than half of the SBA’s 2009 fiscal year (which ended Sept. 30), but the number of bank loans backed by the SBA still fell 36% compared to the previous year.

Still, SBA officials say the decline would have been even sharper without the incentives. Last week, the SBA backed more than $1 billion in small business loans. By comparison, the agency fielded $684.5 million in loans in all of January, the month before the stimulus measures kicked in.

The money running out wasn’t a surprise. The SBA knew its funding was getting low, and SBA chief Karen Mills put out a statement two weeks ago cautioning banks that the well would soon run dry. At the time, she forecast that the money would last into December. But last week, the SBA notified banks that Nov. 23 would be the "transition date" on which it would revert to its old fee and guarantee structure low rates payday advance.

The SBA would like to see Congress allocate money to extend the measures at least through February. "We are going to continue to work with Congress to appropriate funds to maintain the reduce fees and increased guarantee," said agency spokeswoman Hayley Matz.

Loan applications surged last week as lenders tried to push through as many as possible before the deadline. To allocate the last dollars left, the SBA on Monday launched a Recovery Loan Queue. Those left hanging — both business owners and the banks processing their loans — can check online to see where their application stands. Any applications that don’t make it through before the cash is exhausted will need to be resubmitted for a non-Recovery Act loan.

The SBA currently has 148 loans in queue, totaling $80.3 million.

Small business lending has plunged since the recession set in. At a Washington forum SBA Administrator Mills and Treasury Secretary Tim Geithner convened last week to discuss the problem, bankers emphasized the important of continuing the SBA’s enhanced loan guarantees.

David Rader, the head of SBA lending at Wells Fargo (WFC, Fortune 500), pushed for an extension into 2011. Wells Fargo was the top SBA lender last year.

"We absolutely have increased our lending opportunities with the stimulus programs. The fee waivers for customers, the increased guarantee, is absolutely saving cash for our borrowers — and cash is king," said Rader at the forum. "I think it is imperative for this body to continue the fee waiver and the 90% guarantee stimulus." 

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Credit rating agencies would be more tightly regulated and more exposed to lawsuits under legislation approved on Wednesday by the U.S. House of Representatives Financial Services Committee.

In another procedural step forward for the Obama administration’s and congressional Democrats’ push for financial reform, the committee voted 49-14 to send the bill to the full House for a vote, likely next month.

Credit rating agencies are widely blamed for failing to spot credit market problems, with securitized debt and other instruments, in the run-up to last year’s financial crisis.

President Barack Obama and Democrats have been working for months on a package of proposals to tighten bank and capital market regulation after the crisis, the worst in decades.

“The rating agencies really screwed up and now people are asking for us to put their heads in the guillotine … But what really needs to happen is to see what can be done to make sure this doesn’t happen again,” said Representative Paul Kanjorski, author of the committee’s bill.

The agencies are viewed by critics as compromised by their prevailing business model, in which issuers of debt pay the agencies for debt ratings. Kanjorski said lawmakers explored ways to change that model, but found it was impractical no fax payday advances.

Instead, the bill imposes regulations on the industry intended to “close many of the weaknesses and the loopholes,” said Kanjorski, a Democrat.

Firms affected by the bill include Moody’s Corp, Standard & Poor’s and Fitch Ratings.

The bill would for the first time set up an office in the U.S. Securities and Exchange Commission to oversee the agencies and their ratings and how they are determined.

It would also open the door to more lawsuits by investors against agencies over flawed ratings, a provision opposed by the agencies and likely to attract controversy as the bill works its way to the House floor and the Senate.

The bill also calls for removing some references in federal law that mandate certified agencies’ credit ratings as a way to reduce the pervasiveness of their use.

The committee, chaired by Democratic Representative Barney Frank, was expected to vote later on a bill to beef up the SEC’s budget and legal protection standards for investors.

(Editing by Dan Grebler)

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As the top dogs of private equity gather in Dubai next week for one of the industry’s biggest events, the priority will be raising and retaining money from investors in the Middle East rather than spending it in the region.

Just three investments have been made in the Middle East by private equity firms from outside the region so far this year, according to data from Thomson Reuters, and the aggregate value of those is negligible.

That’s a stark contrast from the previous four years when there was a total $4.8 billion invested.

Still, the amount invested by Middle East sovereign wealth funds in private equity funds remains high, with 69 percent of SWFs in Middle East and North Africa invested in the asset class in October, according to a report from London-based research firm Preqin, up from a 63 percent estimate in April.

On Monday, private equity chiefs from the world’s biggest firms, such as Blackstone Group’s Stephen Schwarzman, Carlyle Group’s CYL.UL David Rubenstein and Providence Equity Partners’ Jonathan Nelson, convene in Dubai for one of the major industry conferences of the year, Super Return Middle East.

They’ll join leaders of funds and banks such as Cairo-based private equity firm Citadel Capital; Saudi-based private equity firm Swicorp and Dubai-based Abraaj Capital.

Looking for new investments in a region hard hit by the global economic downturn after a boom fueled by higher oil prices isn’t a priority. Much more time will likely be spent appealing for new funds and trying to keep existing investors happy.

“The primary focus of most of the U.S. groups in the Middle East has been on the region as a source of capital,” said Josh Lerner, a Harvard Business School professor specializing in private equity easy pay day loans. “It may change, but I don’t think it will change overnight.”

Still, promising high returns on new buyout funds has become a tougher sell for U.S. and European private equity shops, which have taken writedowns on their portfolios and seen some failures of companies they own. Attracting money for new funds may not be as easy as it once was.

“The last year has not been a pretty one for many of the sovereign funds,” said Lerner, who is speaking at the conference. “My guess is that we’ll probably see more focus on more emerging economies as opposed to necessarily investing in the U.S. or Western Europe — driven partially by anticipation of where the most attractive opportunities are likely to be.”

As well as having sovereign wealth funds as investors in their funds, some private equity firms have them as stakeholders. Abu Dhabi bought a $1.35 billion stake in Carlyle Group in September 2007, and Blackstone has China Investment Corp as an investor.

STILL CASH RICH

But despite continued strong interest caution reigns, and the types of investments are changing.

One U.S. investor, who declined to be named, said very few SWFs in the Gulf emirates are making commitments to private equity funds currently.

That investor, however, said the attitude is more positive for making direct private equity investments and co-investing alongside PE funds, which gives them the ability to conduct due diligence on assets. 

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Global oil demand through next year will be weaker than previously forecast while petroleum supplies will be higher, the U.S. government said in a revised outlook on Wednesday.

The latest forecast from the U.S. Energy Information Administration could put downward pressure on oil prices, which have more than doubled since February on hopes for an economic recovery.

The EIA cut its forecast for world oil demand growth in 2010 by 30,000 barrels per day to daily demand of 84.58 million bpd. But it boosted its forecast of global oil production growth by 150,000 bpd to average output of 84.65 million bpd.

The EIA’s new monthly short-term energy forecast would mean a daily world oil supply surplus of 70,000 barrels.

“This is the definition of an oil glut and should mean we will enter a bear market,” said Phil Flynn, an energy analyst at PFGBest Research in Chicago.

The EIA said while the current outlook assumes the world economy “begins to recover at the end of this year,” projected strong oil demand growth in developing countries will be partially offset by weaker oil use in industrialized nations, contributing to the supply surplus.

Flynn said despite the fact that the market is “swimming in crude,” prices for oil may continue to be supported by outside forces, such as the weak dollar and a global economic stimulus.

For the fourth quarter of 2009, the agency lowered its forecast for OPEC crude oil production to 29.26 million bpd from its prior estimate of 29.31 million bpd free credit score.

“The combination of higher prices and OPEC’s historical tendency for weaker compliance with production targets over time … suggests that OPEC crude oil production could (still) rise over the remainder of the year, unless prices fall sharply from current levels,” the EIA said.

The EIA raised its forecast of OPEC oil output during 2010 to an average 28.89 million bpd from 28.82 million bpd.

EIA’s forecast came as OPEC ministers were meeting in Vienna, where they were expected to not change their oil output targets. “As long as oil prices remain in their current range, EIA expects the Organization of the Petroleum Exporting Countries to maintain its existing production targets,” the agency said.

Separately, the EIA lowered its projection for oil output from non-OPEC countries next year to 50.19 million bpd from its previous projection of 50.22 million bpd.

“Over the forecast period, higher output from Brazil, the United States, Azerbaijan, Kazakhstan and Canada offsets falling production in Mexico and the North Sea,” EIA said.

U.S. oil output is forecast to average 5.24 million bpd this year and then rise to 5.30 million bpd in 2010.

“Crude oil production from the new Thunder Horse, Tahiti, Shenzi and Atlantis federal offshore fields accounts for about 14 percent of Lower-48 crude oil production in the fourth quarter of 2010,” the agency said. 

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Barnes-Jewish Hospital is getting a new leader next month at a time when health care facilities are feeling the pinch of the troubled economy and facing the uncertainties of health care reform.

But Richard Liekweg, who will become president of Barnes-Jewish and Barnes-Jewish West County Hospital on Sept. 14, believes BJC HealthCare is on solid footing and doesn’t anticipate major cutbacks.

However, Liekweg, who is leaving his position as chief executive and associate vice chancellor of the University of California, San Diego Medical Center, is concerned that health care reform may result in lower reimbursements, including those for research and medical education.

Barnes-Jewish Hospital is St. Louis’ largest employer with more than 9,300 employees and a 1,832-member medical staff. It is also the largest hospital in Missouri.

Liekweg will report to Steven Lipstein, president and chief executive of BJC HealthCare, the parent company of Barnes-Jewish Hospital. Liekweg spoke to the Post-Dispatch from San Diego.

The economy has forced many U.S. hospitals to reduce capital expenditures and their work force. Do you foresee any major cutbacks at Barnes?

I’ve been very impressed that BJC is on very sound financial footing. There is significant discipline in the way it’s allocated limited resources. I don’t anticipate a cutback. I think it will be steady as we go as we look toward the future.

What’s occurred in other markets and in other hospitals around the country, in good times they expanded more than they have taken in. That’s not what BJC has done, and that is serving them very well.

Are you expecting growth in certain areas?

The success Barnes-Jewish has had in cancer care will continue to be an opportunity for future growth and development.

Likewise there will probably be opportunities to grow our cardiovascular program as well.

What concerns do you have about health care reform?

We want to make sure that whatever reform looks like in the end that there is access to affordable coverage for all citizens of the country. At the same time, coverage needs to reimburse hospitals fairly for the investments we make in providing access and delivery of first-class care.

I’m confident in the end … that we will find a way to a system that does ensure that access at a reasonable cost and fair reimbursement.

Are there other provisions you would like in a reform package?

Within health care reform, there needs to be funding to support our academic mission. As an academic medical center, we incur extra costs to train the health care providers of tomorrow.

In addition, from a research point of view, we also have responsibility to make sure we provide our faculty with an environment that is innovative and supports clinical trials. … It would be unfortunate if those two pools of dollars were reduced to fund whatever health care reform model takes hold.

Why would you want to leave San Diego for the humidity of St. Louis?

We’re not moving because of the weather, I’ll put that right out on the table. We really are moving because of the opportunity to join a world-class organization, that’s Barnes, BJC and the partnership with Washington University and its School of Medicine.

I really do believe Barnes-Jewish Hospital has the ability to become the top academic medical center in the country.

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The Bank of Israel raised the benchmark interest rate by a quarter of a percentage point, the first central bank to lift rates since signs of an easing in the global recession started in the second quarter.

Governor Stanley Fischer increased the lending rate to 0.75 percent, the Jerusalem-based central bank said Monday, after keeping it at a record low since March. Two of 12 economists surveyed by Bloomberg forecast the increase, while the rest expected Fischer to hold the rate steady.

The decision "strikes a balance between the need to moderate inflation and the need to continue to support the recent recovery in economic activity," the bank said. "Setting the interest rate at the low level of 0.75 percent continues to represent an expansionary monetary policy."

Fischer has been backing away from economic stimulus measures since July 27, after the inflation rate slid into the target range for only one month before rebounding back out. The Israeli, French, German and Japanese economies all returned to growth in the second quarter, prompting Fischer to say on Friday at a meeting of bank governors at Jackson Hole, Wyo., that "the first signs of global growth have appeared."

"You can read this as the first hike in the recovery cycle," said Shahin Vallee, an emerging-markets currency strategist at BNP Paribas SA in London. "Poland could be next."

Israel posted inflation rates of 3.5 percent in July and 3.6 percent in June, above the 1 percent to 3 percent target range.

"We have a picture of economic recovery right now, which you see elsewhere in the world," said Jonathan Katz, an economist at HSBC Securities who predicted the increase. At the same time, "Israel is one of the few countries in the world where inflation is running above target at three and half percent, and Fischer’s mandate is to try and bring it down between 1 and 3 percent."

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The Internal Revenue Service wants radio personality McGraw Milhaven to pay a $500,000 fine. His offense: avoiding less than $1,000 in taxes.

Milhaven, the morning show host on KTRS, has been caught up in the government’s war against abusive tax shelters. He, and others in the same position, say the IRS is levying giant fines meant to punish millionaires and big corporations on people who aren’t rich and didn’t intend to break the law.

"I don’t have it. I could sell everything I own, and I doubt that I’m worth $500,000. It depends on how much I could get for my Sandy Koufax signed baseball," said Milhaven, 42.

Milhaven has been a fixture on St. Louis radio for a decade and formerly worked at KMOX. He revealed his tax problems on his KTRS show this week. "I’m being persecuted," he adds.

The IRS publishes a list of suspected tax shelters. A taxpayer with such a shelter, or something "substantially similar," must report it at tax time. If not, the tax law makes big fines almost automatic: $200,000 per year for a corporation and $100,000 per year for an individual.

It doesn’t matter how much money was sheltered or whether the taxpayer knew about the IRS list.

Milhaven says he had no idea the IRS frowned on his tax maneuver. "My accountant tells me it’s legal," he said. "I wasn’t taking a midnight flight to the Cayman Islands."

An IRS spokesman declined to comment, saying the agency can’t comment on an individual taxpayer’s situation.

Milhaven says his trouble began when his accountant, Douglas Mueller of MPP&W PC, recommended a way to lessen his taxes. The plan went like this:

Milhaven would create a corporation. Into that corporation would go the money he makes from speeches, appearances and endorsements outside of his KTRS pay.

He would also open a Roth Individual Retirement Account. Money in a Roth IRA can grow tax free, and its owner can spend it without penalty once he turns 59 1/2. That makes it a popular — and legal — way to avoid taxes. However, a taxpayer Milhaven’s age can only contribute $5,000 a year to a Roth.

Milhaven’s IRA would invest in Milhaven’s corporation. The corporation could then pay out its profits into the IRA, avoiding the $5,000 contribution limit.

The IRS has been going after Roth IRA tax shelters since at least 2003, when the Grant Thornton accounting firm in Kansas City drew the tax agency’s ire over shelters marketed to its clients get a free credit report. That year, the agency added to its prohibited list the practice of using a Roth to invest in a taxpayer-owned company unless the Roth pays a fair price.

In papers given to Milhaven, the IRS argues that his shelter violated that warning. The tax agency proposed $400,000 in fines for Milhaven’s corporation, and $100,000 against Milhaven himself. The case is now in the IRS appeals process.

Cases like this have been popping up around the country, said Alex Brucker, an employee benefits lawyer and director of the Small Business Council of America, which is campaigning to change the law.

There are roughly one thousand cases involving the Roth IRA scheme and other tax shelters that fall under the severe penalties, he estimates.

"Of course it’s not fair," Brucker said. "The penalty is disproportionate to the crime."

Last month, the Los Angeles Times reported that the owners of a local commercial printer faced $1.3 million in penalties for a tax-shelter scheme that helped them avoid only $8,385 in taxes.

The large fines were designed to punish big corporations and major tax cheats, not small fries like Milhaven, Brucker said.

Sen. Ben Nelson, D-Nebraska, has proposed a bill that would let the IRS lower the fines if a taxpayer had an acceptable excuse and make fines proportionate to the amount of taxes evaded.

Others are less sympathetic. "The IRS is especially looking at Roths because they are a breeding ground for hanky panky," says Ed Slott, a certified public accountant and publisher of Irahelp.com. "Once money is in a Roth it’s tax-free forever, so people find all kinds of schemes and scams to put money in Roths."

Milhaven says his tax shelter, which was created in 2004, never really worked. After a couple of years, his accountant discovered that one of Milhaven’s largest employers was making out checks to Milhaven, not his new corporation. So, Milhaven dismantled the corporation and filed in 2007 amended tax returns — in effect reversing the whole effort — before the IRS learned of it.

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Pickups, SUVs and passenger cars that have been orphaned under the federal government’s cash for clunkers program have started to trickle in to St. Louis-area auto salvage yards.

And operators are preparing for a bigger wave of castoffs.

"We are actually getting an influx of cars," said Joe Heiman, president of Al’s Foreign Auto Salvage and Sales in Pagedale,

While the cash for clunkers program will send thousands of used cars to salvage and recycling operators, visions of huge profits for such companies are being kept in check.

Some vehicles will yield usable parts, but others will fetch only what someone will pay for scrap metal.

For salvage companies, clunkers have limited value compared to vehicles from other sources. The engines in clunkers must be disabled almost immediately — a process that involves replacing the engine oil with a sodium silicate solution and running the engine until it seizes.

The car itself must be crushed within six months, then shredded.

Those vehicles going directly to scrap generate little cash, however, likely $100 to $125 per unit, Heiman said.

Steel mills are paying about $245 to $250 a ton for recycled car metals, said Bruce Savage, vice president of communications for the Institute of Scrap Recycling Industries. Last summer, the metals were going for about $550 a ton.

"The question is: Is there domestic demand for these materials?" Savage said.

Under cash for clunkers, tens of thousands of American motorists have traded in their cars for vehicles promising better gas mileage. Qualifying car owners can receive a credit worth up to $4,500 toward the purchase or lease of a new car.

The program proved so popular that Congress stepped in to authorize another $2 billion after the original $1 billion fund began to run dry two weeks ago. By Thursday morning, dealers had submitted 338,659 transactions with a combined value of $1.4 billion, according to the National Highway Traffic Safety Administration.

There is currently a backlog of vehicles that dealers are holding on to until they are sure they are getting paid for them, said Jan Daniels, contract vehicle purchasing manager for Pick-N-Pull Auto Dismantlers, which is based in Rancho Cordova, Calif payday loan lenders., and has a facility in St. Louis.

"The mass volume of the cars coming to our facilities hasn’t happened yet, but we are anticipating that the numbers should pick up," said Michael Wilson, executive vice president of the Automotive Recyclers Association.

Under the program rules, dealers have to turn the cars over to a salvage yard or to a scrap processor. Vehicles can be sent to salvage pool auctions, but ultimately must end up with a recycler.

"These are all cash for clunkers here," Heiman said recently, as he approached a batch of cars on his 4 1/2-acre lot. "We’re scrapping them as fast as we can, pulling the converter, the gas tanks (and draining) the transmission fluid."

Al’s has received about 35 clunkers from local auto dealers with an additional 70 to 80 promised. Heiman said the clunker program helped him branch into the sale of domestic car parts. Without clunkers, he would have had to pay more for the domestic vehicles he is now getting from dealers.

Salvage operators say they have been struck by the quality of some so-called clunkers.

Under the federal program, the cars must get less than 18 miles per gallon combined city and highway, must be drivable and must have been owned and insured by the same person for the previous year.

"We somewhat expected more beat-up vehicles. Rusty vehicles. Older vehicles. The term ‘clunker’ brings an image to mind," said Brad Schwartz, president of Liberty Auto Parts & Salvage in St. Louis whose clunker inventory included a Pontiac Trans Am with a T-top and even a 1990s Jaguar.

"Clunker is the wrong word to use to describe a number of these vehicles."

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The total value of distressed-debt deals, where creditors use their debt positions to take ownership of troubled companies, has touched $84.4 billion this year, the Wall Street Journal said, at a pace close to double that of 2008.

The newspaper, citing data compiled by data provider Dealogic, said 140 distressed-debt deals have been struck during 2009, compared with 102 for all of 2008.

It said the deals involved every sector of the U.S. economy from auto parts maker Delphi Corp to retailer Eddie Bauer and included corporate takeovers, covering several kinds of transactions related to bankruptcies, restructurings, recapitalizations or liquidations payday loan online.

The total value of distressed-debt deals in 2008 was about $20 billion, according to the paper.

(Reporting by Ajay Kamalakaran in Bangalore; Editing by Valerie Lee)

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