From the LeMieux report: "...An open Senate Seat is like an open flame drawing politicians like moths. This will be the most contested race in Florida in 2010. If Governor Bush decides to enter the race, it will clear the field of Republicans, and may do the same on the Democrat side. If Bush does not run, look for a potential show down of fellow members of the Florida Cabinet, with Sink versus McCollum."
Gunster Yoakley & Stewart chairman George LeMieux dropped some tantalizing teasers about developments on the state budget and transportation in a speech at the Palm Beach County Bar Association’s annual Bench Bar Conference.
LeMieux is well connected in Tallahassee as a former top aide and political adviser to Gov. Charlie Crist,
In his speech Friday, LeMieux predicted another sizable cut in the state budget. He estimates the next one will total $60 billion, down from $66 billion this year and $72 billion the year before. He said even more cuts in government services will be required.
This is as difficult an environment for Republicans as there’s been since Watergate,” said George LeMieux, the former campaign manager for Gov. Charlie Crist, a Republican.
Mr. Oliver agrees. And like many Republicans trying in the final days to push their party to victory, he says he has found inspiration in Mr. McCain, the perseverant prisoner of war who came from behind to seize the Republican nomination. The current call to arms is simple: “If anyone can pull it off, it’s John McCain.”
About all your vote is ultimately good for is determining which group of electors, be them Democratic, Republican or otherwise, come to Florida's old Capitol, where a little over a month after the election, they will cast their votes and directly decide who wins the White House.
"It's a little ceremonial, because everybody votes the way that they are sworn to vote, which is for the Republican or the Democratic candidate, depending upon which party's elector they are," said George LeMieux, former chief of staff to Gov. Charlie Crist and Republican member of Florida's Electoral College. "You are not obliged to do that by the Constitution, but I know both parties require you to sign an oath that says you will vote for your candidate."
But, according to analysts and voters, the shift toward economic issues amounts to Mr. McCain playing on the Democrats’ turf, putting Florida once again in the crosshairs of both campaigns.
“We need to bring our best game these last couple days before the election,” said George LeMieux, the former campaign manager for Gov. Charlie Crist, a Republican. He expressed hope that the Republican field operation would prevail.
With credit markets frozen and financial institutions in need of assistance, on October 3, 2008, Congress reached an agreement on the Emergency Economic Stabilization Act of 2008 (the “Act”). The Act is the latest attempt to fix the credit and liquidity crisis affecting the U.S. financial system. This advisory discusses the main provisions in the Act that address the financial crisis.
Troubled Asset Relief Program
The Act establishes a Troubled Asset Relief Program (“TARP”) under which the Treasury Secretary, through the newly created Office of Financial Stability, may initially purchase up to $250 billion in “troubled assets” from “financial institutions” in order to restore liquidity and stability to the U.S. financial system. Once purchased, the Secretary is empowered to manage and sell the troubled assets. The President can increase to $350 billion the amount of troubled assets that may be purchased by certifying the increase to Congress. Further increases up to $700 billion may be certified by the President, provided Congress does not reject the certification within 15 days of receipt. To allow for the maximum of $700 billion, the national debt ceiling was raised to $11.3 trillion.
The Act broadly defines “troubled assets” as any residential or commercial mortgages and any securities, obligations, or other instruments based on or related to mortgages originated or issued before March 14, 2008 (including subprime, Alt-A, and collateralized debt obligations) as well as any other assets (such as commercial paper, securities, derivatives, etc) that the Secretary deems necessary, after consultation with the Chairman of the Federal Reserve. Troubled assets may be purchased from any financial institution, foreign or domestic, provided that the financial institution is regulated in the United States and has significant operations in the United States.
As an alternative to purchasing the troubled assets, the Secretary may insure the payment of principal and interest for the troubled assets. This insurance program will be offered to financial institutions in exchange for an insurance premium payment deposited into a Troubled Asset Insurance Financing Fund. These insurance premiums must be sufficient to provide a sufficient reserve to meet expected claims. The difference between the amount of assets guaranteed and the balance of the Troubled Asset Insurance Financing Fund reduces dollar for dollar the authorized amount for the TARP.
In exercising the authority granted in the Act, the Secretary must, among others, consider the following: (i) the interests of taxpayers; (ii) stability to financial markets; (iii) preserving homeownership; (iv) minimizing impact on the national debt; (v) ensuring all financial institutions are eligible to participate in the program regardless of their size; and (vi) the needs of local communities.
Oversight
One of the major objections to the Secretary’s initial proposal was the lack of oversight. The Act attempts to alleviate those concerns by establishing the Financial Stability Oversight Board, which will be responsible for reviewing and making recommendations regarding the exercise of authority under the Act and reporting any suspected fraud, misrepresentation or malfeasance to the newly created Office of the Special Inspector General. The Office of the Special Inspector General will conduct audits of the purchase, management, and sale of mortgages by the Secretary. Finally, the Act creates a congressional oversight panel to regularly review the use of authority by the Secretary.
Other Protections for Taxpayers
The Act requires that the Secretary take all action to minimize any potential long-term negative impact on the taxpayers. To further reduce taxpayers’ risk, before the Secretary may purchase any troubled asset, the Secretary is required to receive from participating financial institutions that are listed on a national securities exchange, a warrant giving the Secretary the right to receive non-voting common stock or preferred stock in such financial institution. Participating financial institutions not listed on a national securities exchange must provide the Secretary with a senior debt instrument from such institution.
Foreclosure Mitigation Efforts
The Act contains provisions that attempt to halt the snowballing foreclosure crisis. For example, the Act requires that the Secretary implement a plan to mitigate foreclosures and encourage servicers of mortgages to modify loans through the HOPE for Homeowners Program provided under the National Housing Act. The Act also authorizes the Secretary to use loan guarantees and credit enhancement to avoid foreclosures. Finally, the Act requires the Federal Housing Finance Agency, FDIC and Federal Reserve to develop plans to minimize foreclosures and work with servicers to encourage loan modifications.
Executive Compensation Change
To alleviate certain concerns and reduce objections to the Act, the Act requires that all financial institutions that elect to sell troubled assets to the TARP and for which the Secretary takes an equity interest in return, to: (i) limit incentives for executive officers to take certain risks that threaten the value of the financial institution, (ii) be allowed to recover any bonus or incentive paid to a senior executive officer based on statements of earnings or gains which are later proven to be inaccurate, and (iii) prohibit golden parachute payments. In addition, all financial institutions that have sold more than $300 million in troubled assets will be subject to additional taxes, including a 20% excise tax on golden parachute payments triggered by events other than retirement, and tax deduction limits for compensation above $500,000.
Recoupment
After five years, the President must submit a legislative proposal that recoups from the financial industry an amount equal to net amount within the Program to ensure that the Program does not add to the deficit or national debt.
Suspension Authority of Mark to Market Rules
The SEC has been granted the authority to suspend SFAS No. 157 “Fair Value Measurements”, which became effective after November 15, 2007. FASB 157 requires financial institutions to value assets at the market price (the price you could get for them if you sold them right now on the open market) rather than at cost. The problem with FASB 157 has been that when there is no market, such as is the case with collateralized debt obligations containing subprime mortgages, the bank must mark the investment’s value down substantially, possibly to zero.
Deposit Insurance
Until December 31, 2009, the FDIC has increased its insurance coverage for accounts from $100,000 to $250,000. In addition, FDIC insurance was expanded for revocable trust accounts to apply to all beneficiaries, not just “qualifying” beneficiaries.
Relevant Tax Provisions
Although various tax provisions were enacted as part of the legislation, most tax provisions were unrelated to the financial crisis. Two provisions are relevant, however:
Gain or loss realized by financial institutions from the sale of Freddie Mac or Fannie Mae preferred stock will be treated as ordinary income or loss.
The exclusion of income from discharge of indebtedness for the short sale of a principal residence was extended from January 1, 2010 to January 1, 2013.
Termination
The authority provided under the Act terminates on December 31, 2009.
Conclusions
Overall, the Act contains substantially increased powers for the Secretary to deal with the spiraling financial crisis. The Act is focused on helping financial institutions with bad assets that are weighing down their balance sheets. Whether this aid will arrive in time, and whether the new powers and the high price tag of this legislation will be enough to turn the crisis around, remains to be seen.
* * *
Should you wish to receive further information concerning matters discussed in this Banking Advisory, please contact Gregory K. Bader, Esq. at (954) 713-6407, David C. Scileppi, Esq. at (954) 713-6433 or Marina Olman, Esq. at (305) 376-6069 or at gbader@gunster.com, dscileppi@gunster.com or molman@gunster.com.
This Banking Advisory is for general information only. It is not legal advice, and legal counsel should be contacted before any action is taken which might be influenced by this Banking Advisory.
Unlike homeowner insurance in Florida, commercial policyholders can't always depend on state regulators to stop premium hikes. For example, much of the commercial insurance sold in Florida comes from unregulated companies.
That's got George LeMieux, chairman of the Gunster Yoakley law firm, advising his clients of risks such as possible delays in paying claims as AIG (NYSE: AIG, $4.72) restructures and more downgrades by rating services. A.M. Best, for instance, has downgraded AIG from an A+ rating to an A, and placed it under review.
"People need to be vigilant and monitor the situation." LeMieux said. "It's a perception-based market and things could quickly turn bad, as we saw with Lehman Brothers."
Every great business deal begins with a good relationship. As potential business partners discover each other’s strong suits and assets, they begin to consider new possibilities for mutually beneficial ventures. In the same way, during the past 10 days I have been building relationships with some of Florida’s most important international trade partners.
As I led the Team Florida Trade and Business Development Mission to the United Kingdom, France, Russia and Spain, I focused on developing and strengthening international trade in aerospace and aviation, renewable and alternative energy and economic opportunities from addressing the effects of climate change. These four nations are among Florida's top foreign investors. Together, they have more than 700 companies in our state, providing jobs for more than 60,000 Floridians and pumping more than $7 billion into our state’s economy. These nations are strategic trading partners, with bilateral trade of $7.8 billion and more than $1.7 billion in exports.
International trade is growing in our state. In fact, Florida exports increased more than 12 percent in 2007 to $58.9 billion, and by almost 22 percent in the first quarter of this year. The goal and purpose of this trade mission was to make immediate and long-term sales, create investment leads, promote Florida goods and services in foreign markets and to learn from international leaders how we can increase opportunities to benefit our economy here at home.
I anticipate tangible returns on the time and dollars spent on this trade mission, similar to what we achieved last November during our trade mission to Brazil. The largest single-state delegation in United States history to Brazil yielded more than $340 million in actual and anticipated sales generated by our presence there. We have seen a $182 million funding agreement between Renewable Fuels of Tallahassee and Controlsud International Group, as well as an announcement by Brazilian aircraft manufacturer Embraer of plans to invest approximately $41 million to establish new manufacturing facilities in Melbourne. While in Brazil, I had the opportunity to meet with Frederico Curado, president and chief executive officer of Embraer.
Other aviation companies are also recognizing Florida’s attraction. In January, AirTran Airways announced plans to keep its corporate headquarters in Orlando, the base of its operations since 1998. Future plans include an expansion of its workforce, with the salaries for new positions averaging $45,000 annually. In May, Piper announced plans to keep its headquarters in Florida and to expand manufacturing operations in Vero Beach.
The Farnborough International Air Show, the world’s premier aerospace show, provided a perfect opportunity to forge similar kinds of partnerships. Florida has the third largest commercial aviation industry in America and is home to 1,400 aviation companies, with 53,000 employees and a payroll of $2.4 billion. Our purpose at the air show was to ensure our continued success as an aviation and aerospace leader, and our attendance is expected to result in nearly $75 million in confirmed sales with more expected to come.
During the trade mission, we also focused on green technologies that can address climate change and boost Florida’s economy. Last year in Miami at the Serve to Preserve Summit, I signed a Memorandum of Understanding with the United Kingdom. That partnership led to a group of climate change delegates spending three days exchanging expertise and information related to the economic opportunities of addressing climate change.
Also, the presence of Florida in Spain at a Renovalia photovoltaic solar energy facility led to an announcement by Renovalia USA and Seminole Electric to begin negotiations for a new solar plant in Florida. According to Jaime Galabart, CEO of Renovalia, our presence in Spain solidified their decision to explore opportunities in Florida.
In Russia, I was honored to be among the first in a growing number of U.S. public sector leaders who are recognizing the size and strengths of the Russian markets. While there, we discussed real estate investments in Florida. John Sebree, vice president of public policy for the Florida Realtors Association, explained that Florida’s commercial and residential real estate market is clearly being seen as one of value to Russian investors. One purpose of our trade mission was to bring much needed visibility for Florida’s market throughout Europe.
Additionally, we promoted tourism to Florida, our number-one industry. The United Kingdom has a long history of being one of Florida’s largest overseas tourism markets, with UK 1.34 million arrivals in 2006. Each British visitor to Florida spends over $3,000 per trip, so it is important that they keep coming. To help us continue to attract this important market, we announced a new marketing campaign that will focus on encouraging residents of the United Kingdom to vacation in Florida. Also, one the top five U.S. exports to France is tourism, and several Spanish trade organizations have created a private fund to promote tourism and cultural events that benefit both Florida and Spain.
While many people know Florida for its mild climate and premier tourism destination, Florida is also proud to be a leader in agricultural produce within the United States and throughout the world. While in Russia, I encouraged and promoted the expanded importation of Florida citrus and other agricultural products. Florida was the top U.S. producer of citrus in 2006, and Florida exported $112,938 in citrus produce to Russia in 2007. I met with importers who are interested in expanding their markets so that Florida growers benefit.
International trade is integral to Florida’s economy. About one million jobs in our state depend on international business, and about 39,000 Florida companies export products, giving the Sunshine State the second largest concentration of exporters in the United States. Jobs in international trade offer high wages and bring increased value to our economy.
It is short sighted to think we can sit idly by in Tallahassee during these challenging economic times. Floridians are counting on leadership and, now more than ever, we must aggressively seek the opportunities and build the relationships that will strengthen our economy and better the lives of our people.
This trade and economic development mission is just the beginning. In the coming weeks, my administration will lay out an aggressive strategy for strengthening Florida’s economy through a thorough examination of and comprehensive planning in the areas of transportation, aerospace technology, higher education, small business innovation and workforce development.
When I took the oath of office as Governor of the greatest state in the nation 18 months ago, I declared that this would be Florida’s greatest century. I still believe that because I believe in the nearly 20 million people who call the Sunshine State home. Together we will continue moving Florida forward.
Over the objection of many Cubans who came to Tallahassee in protest, Gov. Charlie Crist signed a bill making it even more difficult to fly to Cuba. The law, championed by Rep. David Rivera, is being challenged in federal court.
Former Crist campaign manager and chief of staff George LeMieux appeared on MSNBC's Hardball with Chris Matthews to answer how John McCain can appeal to the non-country-club Republicans. His answer:
"What I've learned working for Charlie Crist is that it's simple. People want someone who's going to fight for them on issues that are important,'' LeMieux said. That means, they want good schools, good jobs, affordable health care, "and if you're a problem solver, not an ideologue, not an Washingtonian who fights back and forth with parisan rancor."
The plain black book may look innocuous, but it's the ultimate to-do list, an insider's guide to Gov. Charlie Crist at work.
Former chief of staff George LeMieux carried the book with him everywhere during Crist's first year as governor. The governor's top aide and long-time political strategist filled it with notes of daily encounters with legislators, lobbyists, bureaucrats and others. He wrote reminders to himself and to Crist, made lengthy lists of tasks for his deputies and jotted down political advice from others.
Some first-year law graduates who get jobs at major law firms can pull six-figure salaries, said Kise and George LeMieux, the governor's former chief of staff. A salary study by the Florida Bar in 2006 showed that the median salary for a law partner in Florida was $145,000; for a recent law school graduate, $55,000.
"To try to get a lawyer to take a pay cut to be a judge is very challenging," said LeMieux, whose law partner Robert Hackleman is on the Judicial Nominating Commission.
Crist, his former chief of staff George LeMieux and Mississippi Gov. Haley Barbour will hold private briefings for key Republicans "about the political climate here in Florida and around the country," as Crist's invitation letter says.
"It's an historic opportunity," said George LeMieux, Crist's close friend and former chief of staff. "This is one of the biggest decisions of any governor and the fact that he will appoint four and basically appoint a majority of the court in his first term is unprecedented."
Bell's resignation also marks the abrupt end of Gov. Jeb Bush's influence on the state's top court. During his eight years in office, Bush appointed only two justices - Bell and Cantero.
With national Republicans fretting the possibility of a disastrous election year, Gov. Charlie Crist is inviting political insiders to two sessions next month to discuss the political climate in Florida and the nation.
Crist's stated goal, as outlined in an invitation, is to help the Republican Governors Association capture more statehouses in 2008 and 2010. But he also is seeking a bigger role in the group heading into 2010.
Florida Governor Charlie Crist will host two invitation-only events in Tampa and Fort Lauderdale in early June, inviting national Republicans to discuss ways to vault the wounded GOP back to the top of the pile, the Associated Press reports. Crist's top adviser and former chief of staff, George LeMieux, will be heavily involved, and to add party weight Mississippi Governor Haley Barbour is co-hosting.
5 QUESTIONS WITH GEORGE LEMIEUX
George LeMieux, Gov. Charlie Crist's former chief of staff, back in private practice at Gunster, Yoakley & Stewart, shares some insights on Florida's political scene.
When Charlie Crist became Florida’s attorney general five years ago, he named George LeMieux deputy attorney general. When Crist ran for governor, LeMieux was his campaign manager. After Crist was elected in 2006, LeMieux became the governor’s chief of staff. Early this year, citing a need to spend more time with his family, the 38-year-old LeMieux left the governor’s office and returned to Gunster, Yoakley & Stewart.
George Lemieux, Gov. Charlie Crist’s former chief of staff, has launched a weekly online newsletter providing a wrap-up of the latest business, legal and political news with an emphasis on business.
Lemieux, whom Crist affectionately referred to as “the maestro,” said the newsletters will be briefings similar to the “one pagers” he provided to the governor and will also include some commentary.
The former chief of staff and chief strategist for Gov. Charlie Crist thinks he has discovered a gap in the information marketplace and plans to fill it with a weekly one-page summary of commentary and analysis on legal, business and political issues. The problem, as LeMieux sees it, is a glut of news that takes busy executives too much time to sift through.
George LeMieux's law firm lands a big state contract.
TALLAHASSEE -- Shortly before Gov. Charlie Crist's former chief of staff left government to return to his old law firm, the firm landed a $500,000 contract with the state Transportation Department.
George LeMieux, whom Crist nicknamed "the maestro" for his role in the governor's 2006 victory, said he played no role in the state's decision to hire his firm.
Dave talks to George LeMieux, the former head of the Broward GOP and the man who guided Charlie Crist to the Governor's mansion, about Mitt Romney dropping out of the presidential race.
Florida is the next stop on the campaign trail. Dan Rather Reports will offer analysis from inside the campaigns with political pros who have been there. Special two-hour coverage live from St. Petersburg, Florida, with results from the GOP primary.
At one time George LeMieux called Charlie Crist "general." Now, he calls him "governor." But when referring to LeMieux, the governor of our great state just calls him "friend."
