Actual finance blog

Municipal bond investors are piling into Treasuries as state and local government finances worsen and the yield advantage for tax-exempt securities evaporates.

Local government bonds due in three years with AAA ratings yielded 66 percent of similar maturity Treasuries last month, about the lowest level since Bloomberg began compiling the data in 2001. If the ratio moves closer to 60 percent, investors in the 38.3 percent federal tax bracket would lose all the benefits of sheltering income that comes from municipal debt.

Muni bonds are losing favor as state and local governments raise taxes to fund the record $18.5 billion in budget gaps estimated in a National Governor’s Association survey. Increased buying by tax-exempt investors would sustain a rally in short- term Treasuries, already benefiting from demand for a refuge from sovereign credit concerns and rising purchases by banks.

“Treasuries are safer and more liquid investments, especially given the quality issues with many municipalities of late,” said Jeffrey Schoenfeld, partner and chief investment officer in New York at Brown Brothers Harriman & Co., which manages $33 billion in assets. “In this low-rate environment Treasuries can be huge pickup and very good value on an after- tax basis in the shorter-end.”

The Build America Bond program, an Obama Administration plan that subsidizes 35 percent of interest expense for state and local issuers when they sell taxable debt, is also making municipal securities less attractive relative to Treasuries.

Build America Bonds

Almost $80 billion in Build America Bonds have been sold since the program began in April 2009, and taxable bond sales totaled $97 billion, or about 28 percent of long-term, fixed- rate municipal issuance during the last 11 months, data compiled by Bloomberg show. During the six years through 2008, taxable sales made up an average 5 percent of issuance.

More tax-exempt bonds may be replaced with Build America debt, because the federal budget for the fiscal year starting in October calls for an expansion of the program to allow refunding. It also calls for making the stimulus initiative permanent with a lower interest subsidy of 28 percent for new issues beginning Jan. 1, 2011.

Treasuries due in one to three years have returned 0.78 percent since December, after gaining 0.79 percent in 2009, according to Bank of America Merrill Lynch index data. Similar maturity state and local securities returned 0.57 percent this year, extending 2009’s 4.2 percent gain.

Relative Returns

Government securities fell last week after a Labor Department report showed payrolls dropped by less-than-forecast 36,000 in February. Two-year note yields increased 4 basis points to 0.85 percent.

Municipal debt became more expensive as investors bought longer-maturity debt with money stored in short-term tax free money market accounts that yielded as little as 0.02 percent. Assets in the funds dropped by $148.76 billion from the record $528.36 billion in August 2008, according to iMoneyNet of Westborough, Massachusetts.

“Demand for munis is mostly coming from retail investors who have been sitting on a mountain of cash and wondering what to do with it,” said Christine Todd, a managing director and head of the group that oversees $26 billion in tax-sensitive fixed-income portfolios at Standish Mellon Asset Management Co. in Boston. “AAA munis are rich versus Treasuries.”

Baltimore County, Maryland’s AAA rated general obligation bond due in three years yielded as little as 58 percent of comparable Treasuries last week, according to Bloomberg data. The ratio of AAA rated Arlington County, Virginia, debt due in three years dipped as low as 50.7 percent last week, according to Bloomberg data. That means that buyers would be better off buying Treasuries even if they’re in the highest tax bracket.

‘Great Opportunity’

“Most people with wealthy clients think about taxes first, and that usually means munis, even when munis are overvalued,” said Jonathan Lewis, founding principal of New York-based Samson Capital Advisors LLC, which manages more than $4 billion. “Right now there is a great opportunity to go up in quality and increase liquidity by building allocation in Treasuries.”

Municipal bonds may get even more expensive with a proposal in Congress by Oregon Democrat Ron Wyden and New Hampshire Republican Judd Gregg seeking to replace the tax exemption for state and local bonds with a more limited tax credit.

“Supply concerns will continue to be the major issue, even as quality concerns are not emerging to be real issues,” said George Friedlander, municipal strategist for Morgan Stanley Smith Barney in New York. “Add to that the prospect of the possibility for Congress ending tax exemption and it points to more demand for munis going forward. There is still room for munis to get richer.”

Economic Outlook

Even if municipal yields fall, investors can still benefit by switching into U.S. government debt given the relative low level of interest rates and slow economic recovery, said Gary Pollack, who helps oversee $12 billion as head of fixed-income trading at Deutsche Bank AG’s Private Wealth management unit in New York.

Federal Reserve Chairman Ben S. Bernanke, who slashed the central bank’s target rate for overnight loans between banks to a range of zero to 0.25 percent in December 2008, has flooded the economy with more than $1 trillion in the largest monetary expansion in U.S. history.

In his semi-annual testimony to Congress last month, Bernanke reiterated that rates will remain low for “an extended period” because the economy’s “nascent” recovery isn’t strong enough to bear higher borrowing costs.

Market Performance

Shorter-maturity Treasures are outperforming longer-dated debt with the Fed in no hurry to raise rates and investors’ concern increasing that inflation will accelerate because of the record borrowing and stimulus measures. Yields on 10-year notes rose to a record 2.94 percentage points more than two-year notes on Feb. 18, and were 2.79 percentage points higher on March 5.

For all the concern about a record federal budget deficit and the rising supply of Treasury debt, U.S. bonds are the place to be so far in 2010, with returns topping equities and commodities. Bank of America Merrill Lynch’s U.S. Treasury Master Index has increased 1.56 percent, compared with a gain of 0.17 percent for the MSCI World Index of stocks and a 0.33 percent increase in the Standard & Poor’s GSCI Index of 24 raw materials.

“Smart investors are doing the math by buying short-term Treasuries, which are giving more after tax returns and adding quality and liquidity to their portfolio,” said Deutsche Bank’s Pollack. “A combination of extremely low rates, lack of muni supply and the prospect of higher income taxes are making munis look extremely rich. If ratios go lower the after tax return will still be there.”

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The Federal Reserve raised the rate it charges banks that borrow from the central bank when they run short of funds.

The Fed said late Thursday it is raising its discount rate by a quarter percentage point, or 25 basis points, to 0.75%. The central bank said in a statement it made the move in response to improving financial market conditions.

The move is largely symbolic, because banks do little borrowing at the discount window.

The unanimous decision to boost the discount rate also has no effect on the more widely watched federal funds rate, which measures the rate banks charge each other for overnight loans. That rate is expected to remain between 0% and 0.25% for the foreseeable future, given the slack in the labor market and the still fragile state of the economy.

But raising the discount rate allows Federal Reserve chairman Ben Bernanke to take another small step toward normal monetary policy, after the past two-plus years were consumed in a financial firefight.

"The modifications are not expected to lead to tighter financial conditions for households and businesses and do not signal any change in the outlook for the economy or for monetary policy," the Fed said in a statement.

The Fed also shortened the term of some discount window loans and raised the minimum bid in the term auction facilities it uses to supply overnight funds to banks. Those facilities were among the many innovations Bernanke introduced since the onset of the credit crunch in mid-2007 to supply U.S. banks with funding.

As the recession deepened, the Fed moved to support the housing market by buying more than $1 trillion of mortgage-related securities. When buying those securities, the Fed credited the selling banks with reserves at the Fed. This huge sum of so-called excess reserves has led to worries that any upturn in the economy will be met with an inflationary lending spike from banks.

Bernanke has emphasized that the Fed will use multiple new tools to prevent the excess reserves from fueling inflation, including the payment of interest on reserves at the Fed and the sale of Fed assets.

But as eager as policymakers are to show that policy is on a track toward normalization — that is, a nonzero fed funds rate and a smaller Fed balance sheet — the process is clearly going to take time.

The Fed suggested as much Thursday, in explaining why it may be a while before the spread between the federal funds rate and the discount rate may return to its pre-crisis level of 1 percentage point. Following Thursday’s increase, the spread is now half a percentage point.

The central bank said Thursday’s increase should "encourage depository institutions to rely on private funding markets for short-term credit and to use the Federal Reserve’s primary credit facility only as a backup source of funds" and added that it will "assess over time whether further increases in the spread are appropriate." 

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Senior living community The Place at Gallatin has a new name and a new owner.

Seattle-based Emeritus Senior Living announced today that it has purchased The Place at Gallatin, which will now operate under the name Emeritus at Gallatin.

Publicly traded Emeritus currently operates 316 residential and assisted living communities in 36 states serving about 32,700 residents.

In a news release, Emeritus President Granger Cobb said the company plans to bring “additional improvements” to its newest facility.

Mary Ellen Mayfield, executive director for Emeritus at Gallatin, said the purchase allows the community to maintain its independence while benefiting from the support of a national senior living company.

“It will be great for this community to be a part of the Emeritus family, such a forward-thinking company that is committed to the highest standards of quality care for seniors,” Mayfield said.

Emeritus is on of the country’s largest operators of freestanding assisted living communities providing Alzheimer’s and related dementia care services to seniors.

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The owner of Quality Candy Shoppes and Buddy Squirrel has filed for Chapter 11 bankruptcy, but the future of the 13-store St. Francis-based chain could not immediately be determined.

Quality Candy Shoppes/Buddy Squirrel of Wisconsin Inc. filed for bankruptcy Jan. 15 in U.S. Bankruptcy Court in Milwaukee. The company listed assets of between $1 million and $10 million and liabilities in the same range.

Two of the company’s largest unsecured creditors are suppliers: Cargill Inc., for $89,938, and Wright Brothers Paper Box at $10,959. The other top unsecured creditors include radio station owner Lakefront Communications, $10,332; George Pinter, accounting services, $8,910, and J.M. Swank Co., $8,032.

Harris Bank is the company’s secured lender and is owed an unspecified amount.

In a Jan. 19 hearing, Quality Candy/Buddy Squirrel sought emergency funding to make its payroll. Bankruptcy Judge Margaret McGarity approved the motion and required the company to provide an accounting of its cash use by this Wednesday and make interest-only payments to the bank until then payday loans guaranteed no fax.

Another hearing is scheduled for Feb. 8.

Jonathan Goodman, an attorney for the company, declined to comment Monday. The president, CEO and sole shareholder is Margaret Gile, who represents the third generation of family ownership.

Quality Candy was founded in Milwaukee in 1916, according to the firm’s Web site. In the 1960s, Quality Candy bought Buddy Squirrel of Wisconsin, and in 1999, the two businesses were merged and the company was renamed Quality Candy Shoppes/Buddy Squirrel of Wisconsin Inc. The company built a 15,000-square-foot distribution center in 2001.

Margaret Gile, represents the 3rd generation as owner and president.

Quality Candy/Buddy Squirrel owns and operates stores in the Milwaukee area, Racine and Madison.

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The Greater Cincinnati Microenterprise Initiative (GCMI) and Adams/Brown Counties Economic Opportunities Inc., were among 11 organizations and municipalities to share more than $591,000 in microenterprise grants from the Ohio Department of Development.

The grants, funded through the Ohio Housing Trust Fund and Community Block Development Grant Program, help develop local microenterprise businesses.

GCMI will receive $58,300 to give training and technical support to 85 low- and moderate-income micro-entrepreneurs, according to a news release.

The Adams/Brown organization also will be awarded $58,300 for 40 low- and moderate-income entrepreneurs, and for loans to four microenterprise businesses.

“Microenterprise businesses throughout the nation and our state are a major source of employment,” said Lisa Patt-McDaniel, director of the Ohio Department of Development, in the release.

Other areas receiving grants include: Athens, Pike, Franklin, Perry, Columbiana, Morgan, Van Wert and Vinton counties, and the city of Zanesville.

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Angry employees at an idle air conditioning manufacturer in Mississauga occupied the company’s plant for more than three hours Monday after they charged management "blindsided" them with an abrupt shutdown and no paycheques for extra work.

More than 100 workers mingled peacefully and retrieved belongings including tools at the M&I Air Systems plant in a pressure tactic to get some answers about their missing pay and the plant’s future.

Bob Chernecki, a senior official for the Canadian Auto Workers, said management had not responded to union queries since last week, when the company halted operations and told employees to go home.

Chernecki said in an interview that the occupation led to a meeting where management indicated it would inform the union about its financial status, payment to workers and any possible chance of a reopening on Wednesday.

"These workers were blindsided by this corporation just before Christmas," he said.

"It’s ridiculous. They received no warning and now face so much uncertainty."

M&I did not return calls for comment about the company’s situation.

Chernecki said he expects the U.S.-based company to slip into receivership or fall under bankruptcy court protection during the next few days.

"It doesn’t look good," he said.

M&I formed in 1981 and provides air-moving technology and systems for industrial and institutional buildings.

Chernecki said M&I did not provide regular biweekly paycheques on Dec.10, but managers promised they would submit them on the following Monday if employees worked during the same weekend to complete a major air-system project for a customer.

"They didn’t get paid on the Monday and on the Tuesday the company called them in at 9 a.m. and told them there was no work and to go home," he added.

The union, which represents about 155 workers at the plant, is seeking wages including overtime for the employees during the past three weeks plus severance and holiday pay.

Furthermore, it wants the company to file employment insurance information with the federal government immediately.

The workers, including some staff with more than 20 years service, negotiated a new three-year contract during the fall that contained small wage increases for lower-paid staff and a $400 lump sum amount for higher-paid employees. The average wage is about $18 an hour.

The CAW and other unions have pushed for stronger legislation to protect workers who are victims of plant closures, including giving them higher standing than other creditors.

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On the back of a recent issue of Bon Appétit magazine, a group of attractive, smiling young people is gathered around a white-cloth covered table, sipping wine and laughing.

The tag line is "Guess who’s paying for dinner? Your points."

It’s an ad for a credit card and the implication is clear: Use your card often enough and you’ll get something in return.

Canadians are crazy for rewards programs. Collectively, there are 114 million active members of rewards programs in Canada, according to Colloquy, the market research arm of LoyaltyOne, the group that owns the Air Miles program.

That’s more than four rewards programs for every man, woman and child in the country.

"When you can take a whole family on a trip and not pay anything, I think that’s fantastic. That’s worth thousands of dollars. Why wouldn’t you do it?" says Lynda Fishman, a 52-year-old children’s camp director in North York.

Fishman has at least three credit cards with rewards programs on them, and an Air Miles card she can use on its own to collect points. None comes with annual fees and they’ve produced enough points to send her family of five to Florida for a week.

She also earns a $150 bottle of Chanel perfume every few months with her Shoppers Drug Mart loyalty card. "I shop there whenever they have the 20 times bonus points on everything in the store."

In the minds of most consumers, these rewards are "free." But, of course, they’re not.

They come out of the pockets of retailers like Jim Stonley and Zafar Khokhar, co-owners of the Esso station at Front St. E. and Sherbourne St. in Toronto.

The pair say they pay nearly $11,000 a month on average in credit card fees and see little benefit, even from Esso-brand loyalty cards.

Indeed, they say they pay twice when a customer swipes their Esso points card – once to process the transaction and again when the customer redeems them because the points do not cover the full cost of the product or service.

Stonley and Khokhar say they feel they have to accept any credit card the consumer presents or risk losing their business to competitors. But the costs are starting to add up.

Profit margins on gas average 5 cents a litre. Credit card processing fees are on average 2 per cent. So, when the price of gas goes up, the credit card processing fee also increases and eats into the margins.

"It’s quite a lot of money for a small business person," Stonley said.

Many loyalty programs are part of a retailer’s marketing program. Retailers pay to join Air Miles because it helps drive cardholders to their stores. Shoppers Drug Mart uses its Optimum card to attract customers and push selected merchandise by doubling or tripling the points on those items.

These kinds of loyalty programs make up about 80 per cent of the rewards program market in Canada.

Consumers don’t seem to mind that the costs may be hidden in the prices of things they buy. Indeed, the Consumers Association of Canada opposes anything that would reduce the value of rewards programs, such as caps on credit card interest rates and fees.

Nearly half of Canadians use a credit card simply because it offers rewards, citing first points, then flights and finally cash as their preferred rewards, according to Chicago-based research firm Mintel International Inc.

Retailers say there is a fundamental problem in the way credit card programs are funded. They foot the entire bill but they do not derive all the benefits and say they have no ability to negotiate the rates.

That’s because merchant "swipe" fees are based largely on something called the "interchange rate."

"I can tell you, without a doubt, that all of the credit cards that come with rewards programs are fully paid for by the merchants," says Diane Brisebois, president of the Retail Council of Canada. The council estimates such fees now cost merchants $4.5 billion a year, or roughly 2 per cent of the value of every purchase Faxless payday loans. That amounts to nearly $400 per household, assuming these costs are passed on to consumers in the form of higher prices.

The Bank of Canada concluded credit cards have become the most expensive form of payment for merchants. The average debit card transaction costs 12 cents, but a credit card transaction costs 2 to 4 per cent of the value of the sale, according to the central bank.

Credit card companies say interchange keeps the system running smoothly. In a two-way network, where both sides have to agree to participate, it ensures banks have an incentive to issue cards to consumers, and merchants have an incentive to accept them, they say.

The fee is collected by the merchant’s bank and paid to the cardholder’s bank to compensate the card issuer for the cost of bringing cardholders into the system, the credit card companies say.

"Interchange is determined by MasterCard and makes up part of the fee paid by the merchant," Kevin Stanton, president of MasterCard Canada, told a Senate committee hearing earlier this year.

Merchants and small business owners say the system encourages a weird form of reverse competition in which credit card companies compete for the banks’ business by raising the interchange rate at the merchants’ expense.

This wasn’t a problem as long as merchants felt the rates were reasonable and negotiable, Brisebois says. That’s no longer the case.

Ever since most of Canada’s banks outsourced their merchant-acquiring business to third parties, it’s been a lot tougher for merchants to strike deals on credit card processing fees.

"The merchant used to deal directly with the branch manager of their bank. The merchant could negotiate with the manager, who wanted to keep the merchant’s banking business," Brisebois explains.

The situation took a turn for the worse after the credit card companies fiddled with their interchange rate structure and introduced a new class of "premium" cards. After years of relatively steady, predictable fees, both Visa and MasterCard expanded the number and kind of rates retailers pay from two or three rates to between 19 and 21.

The new premium cards, such as Visa’s Infinite card, come with more perks for consumers but cost merchants more to accept.

Retailers say these cards now represent 25 per cent of the value of all transactions and have a huge and unpredictable impact on the fees they face at the end of the month.

The bankers’ association says premium cards represent just 9 per cent of their credit card accounts and benefit the merchant by bringing in higher net worth customers.

Industry experts, such as Andrew Davidson of Mintel International Inc., say premium cards were created to offset banks’ rising loan losses during the economic downturn.

Add in other interchange changes and these new premium cards helped boost processing fees more than 10 per cent for Visa and nearly 20 per cent for MasterCard in the 12-month period ending last February, retailers say.

The credit card companies dispute the retailers’ figures, saying they have raised rates for some types of transactions and lowered them for others so the overall impact is neutral. The retail council says the new rates are designed to boost credit card use in grocery stores, gas stations and coffee shops where consumers prefer to use cash or debit.

Initially, credit cards were cheaper than cash or cheques and had the added benefit of reducing the risk of theft, says Andrew Ching, a marketing professor at the University of Toronto’s Rotman School of Management. Now, with the market saturated, banks began to use their reward programs to compete for market share, and to penetrate under-represented markets, such as grocery and gas.

Fishman, the points-collecting camp director, shrugs off retailer complaints. She accepts credit card payments from clients. "It’s just another cost of doing business."

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Carolina Diaz-Silva says she believes that learning a foreign language at an early age can give children a cognitive advantage in the future. Diaz-Silva is founder and director of International Schoolhouse, a Spanish-immersion preschool in Olivette. She started the school in August with 10 children and will be adding eight more in January.

Diaz-Silva, who speaks in English, Spanish, Italian and German, hails from Peru and moved to St. Louis 16 years ago. She spent her time teaching Spanish at MICDS in Ladue and also at Washington University.

In 2006, she received a master’s degree in Spanish Literature from Washington University and received an MBA from the university in May. She serves as an adjunct lecturer in the romance languages department of Washington University, teaching Spanish.

Diaz-Silva says she is trying to weather the economic challenges that come with her new venture and the competition from other preschools in the area.

Are the children enrolled in the program from different backgrounds?

We have a lot of diversity in our student body as well as our teachers. Out of 18 students, we have four Hispanic children, one Indian and one African-American.

What kind of economic challenges are you facing with the school?

I would say that I had a lot of interest in the school, because it is not a day care, it is only a preschool that has part-time hours.

But in today’s economy, preschool has become an option for a mother who stays home with her child. A lot of families are choosing not to make that expense. And that has an impact on the enrollment.

But I am happy that we are small and are able to gradually grow.

Has the performance of the school, so far, met your expectations?

I was naive no fax payday loan. I thought the school would fill up from the first day, because it is such a great idea.

It is also important to realize that I have to build trust with the parents. And that is exactly what we are doing right now.

We had an open house for children coming in January and we had the current parents be at the open house and talk to the prospective families. That made all the difference in the world. Because it wasn’t the director or the teacher selling what a great program we have, but the parents telling them how delighted they were with the program and how fantastic the teachers are.

Who are your competitors?

Preschool is very local. We did a lot of market research before starting the school and found out that families drive less than three miles for a preschool and a lot of families just walk.

There aren’t any Spanish-immersion preschools in our area, but there are a couple in St. Charles and Ballwin. My direct competition are other preschools in the area.

How do you publicize the school?

Most of our publicity comes from word-of-mouth. But we also do some advertising, like in St. Louis Kids Magazine, Ladue News, direct mailing, postcards.

We need to do more effective marketing. But I don’t believe marketing is going to get me more students. It is going to be my current families talking to their friends. Basically, I have 10 advocates, and I will have 18 in January.

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Retailers are praying that holiday sales will finally turn around after two hard years. Last year was terrible, with the downfall of well-known retail chains such as Circuit City and Linens ‘n Things. This year hasn’t been much better.

But the near-term outlook doesn’t appear positive to Robert Buchanan, assistant professor of finance at St. Louis University. He sees glum sales through the first half of next year. And Buchanan doesn’t expect consumers to return to their free-spending ways in the long run.

Unlike many academics, Buchanan hasn’t been confined to an ivory tower. He spent 23 years in equity research, scrutinizing the financial statements and strategies of retailers. Before turning to teaching, he was vice president and Retailing Industry Research Group leader at A.G Edwards.

Yet, he didn’t start in equity research. He had been a journalist, working for wire service United Press International.

"There is a lot of commonality between a good reporter and a good analyst," Buchanan says.

How do you project this year’s holiday season to be, compared to 2008?

I think it is going to be a slow Christmas. If you look at the industry, it is certainly not depressed, but I think the industry is in slow spirits. What we’ve been seeing is same-store sales growth in the -1, -2 percent area throughout the year. I think that trend will continue through the holiday, and certainly into the first half of next year.

There are two reasons, number one is the debt — personal, corporate and government debt. Debt has become an acute problem for individuals.

Second thing has to do with the stock market. The total returns for the stock market during the 26 years ending with 2007, they ran right around 13 percent per year (which made consumers richer). … My suspicion is that kind of super market will not apply during the next 26 years.

What would be your advice for retailers this season?

A lot of them are acting very intelligently, starting with Walmart and individual retailers like Nordstrom, Kohl’s, Target, Costco cheap payday loan. What they are doing is smart, they have cut way back on their inventory levels and their expense levels. Those retailers in particular are positioned to make decent a return even if the sales stay slow.

A number of retail companies filed for bankruptcy in the past year. How will this affect retailers in the long run?

I think the days of heady growth for American retailers are over. Moving forward, the game is going to be about the market share. … A given retailer has to punch another retailer in the nose to take their market share away in order to survive. It has become and will remain a ruthless Darwinian struggle.

Do you think the recession has marked the death of customers?

My hunch is that (for) the high end of American retailing, like Neiman Marcus, Saks Fifth Avenue and parts of Nordstrom, the customer mindset … has permanently changed.

I think the days of freewheeling spending are over, particularly at the high end. It never made a whole lot of sense for someone to spend $2,000 on a business bag, for example, and yet, people did anyway … I think now it absolutely makes no sense. Frugality is the word.

If I am wrong about the (stock) market, and the stock market goes on a sustained (strong growth) for the next 26 years, then people might go back on spending $4,500 on a handbag.

What do you think will be the state of retail business over the next 20 years?

I think strong and superior value propositions will carry the day. To me, the best retailing concept in the world … is Costco’s.

Most typical retailers are working anywhere between a 30 percent to 60 percent mark up (on) the cost of their merchandise; Costco is working anywhere between a 10 to 15 percent markup. They don’t carry everything, they only have about 4,000 items at one point in time versus 150,000 items at a Walmart super center. But what they have … is very sharply priced.

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The biggest U.S. business organization has fallen out with influential parts of Corporate America because of its trenchant opposition to climate-change legislation making its way through Congress.

The U.S. Chamber of Commerce’s opposition to the climate bill has already cost it prominent members including Apple Inc and California utility PG&E Corp.

And this week two of the lobbying group’s most powerful members, the conglomerate General Electric Co and the telecommunications equipment provider Cisco Systems Inc told Reuters they do not see eye-to-eye with the group on climate regulations.

“The Chamber does not represent our views on the urgent need for climate legislation,” said Peter O’Toole, a spokesman for GE, the largest U.S. conglomerate. “We need climate legislation and a price for carbon in the U.S. now.”

The Chamber, which represents some 3 million U.S. businesses ranging from massive multinationals to mom-and-pop operations, says its positions take into account the needs of many sorts of businesses across a range of industries.

“Our goal is to have the positions that we actually take stances on be reflective of the democratic majority of the broad majority of the business community,” said Eric Wohlschlegel, a Chamber spokesman. “There are cases, not just with energy, where companies are going to peel off and take different positions than the Chamber.”

The bill making its way through Congress aims to reduce emissions of carbon dioxide — a greenhouse gas that contributes to global climate change — through a cap-and-trade system that would allow companies a limited amount of emissions. Those that emit more would need to buy additional credits; those that emit less would be able to sell credits no teletrek payday advance.

The Chamber has raised concerns that the bill is not comprehensive enough and is not international in scope while seeking to tackle a global problem.

Its opposition to the climate bill, as well as to proposed health care reforms, has become enough of a concern to the White House that U.S. President Barack Obama met with Chamber officials on Thursday.

NEED TO “MODERNIZE”

Apple, which makes Macintosh personal computers and iPod music players, as well as utilities PG&E, Exelon Corp and PNM Resources Inc, quit the Chamber outright over this issue, while giant sportswear maker Nike Inc stepped down from the board but remains a member of the group.

Even companies that are keeping up their memberships said they would like to see change.

Cisco, the world’s largest maker of equipment for networking computers, aims to work with the Chamber “to modernize their position,” said spokeswoman Jennifer Greeson.

Duke Energy Corp Chief Executive Jim Rogers has long advocated regulation of carbon dioxide emissions and threw his weight behind the House version of the bill. He has no plans to give up his seat on the Chamber’s board, a spokesman said.

“We work with the Chamber on lots of different issues, but we don’t always see eye-to-eye with them,” said Tom Williams, a spokesman for the Charlotte, North Carolina-based company. 

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