Chicago Defender

Citigroup to Slash 11,000 Jobs

NEW YORK (CNNMoney) -- Citigroup announced it will cut 11,000 jobs as part of plan to cut costs, the first major initiative from the bank's new CEO, Michael Corbat.

The bank will also take a $1 billion pre-tax charge during the fourth quarter, and approximately $100 million in related charges during the first half of 2013 as part of the plan, which is expected to save $900 million in in 2013 and more than $1.1 billion annually beginning in 2014.

"These actions are logical next steps in Citi's transformation," said Corbat, who took the help after former CEO Vikram Pandit stunned investors when he announced his immediate departure in mid-October. "While we are committed to -- and our strategy continues to leverage -- our unparalleled global network and footprint, we have identified areas and products where our scale does not provide for meaningful returns."

The bank's streamlining plans will impact about 1,900 jobs in the institutional clients group and 6,200 positions in the global consumer banking division, which includes scaling back operations in Pakistan, Paraguay, Romania, Turkey and Uruguay. Citi said it will also close some of its bank branches in Brazil, Hong Kong, Hungary, Korea and United States.

The bank will also eliminate 350 positions from Citi Holdings, while the remaining jobs reductions will be in the company's operations and technology division and global positions.

The total reductions impact about 4% of Citigroup's workforce, which stood at 261,000 full-time employees at the end of September.

Shares of Citigroup were up about 4% in early trading. Other bank stocks, including Bank of America, Goldman Sachs, Morgan Stanley were also up sharply.

GOP 'Fiscal Cliff' Plan Echoes Failed Budget Talks

(AP) — Republicans are proposing a "fiscal cliff" plan that revives ideas from failed budget talks with President Barack Obama last year, calling for raising the eligibility age for Medicare, lowering cost-of-living hikes for Social Security benefits and bringing in $800 billion in higher tax revenue.

The counter to a White House plan last week relies more on politically sensitive spending cuts and would raise half the $1.6 trillion in revenue proposed by Obama over the coming decade.

The 10-year, $2.2 trillion proposal from House Speaker John Boehner, R-Ohio, resembles a framework similar to what Boehner supported last year, but Obama is pressing for additional tax increases and appears to be balking at spending cuts discussed in those talks and since.

Administration officials from Obama on down say it'll take money from raising tax rates on the rich — instead of GOP proposals to simply curb their deductions — to win Obama's approval of any plan to avoid the "fiscal cliff."

It has been nearly a week since Obama and Boehner talked directly about the looming cliff, though their staffs have been in contact. Boehner attended a congressional holiday party at the White House Monday night, but avoided the photo line where members get their picture taken with the president and have a few minutes to talk.

Obama and Boehner will push their positions Tuesday in separate meetings with some of the nation's governors, including Gov. Scott Walker of Wisconsin. Walker is a hero among some Republicans for having pushed through deep spending cuts in his state and overcoming a recall vote.

The Republican proposal Monday, while intended to break a stalemate in place since the administration last week angered Republicans with a $1.6 trillion plan that largely exempted Medicare and Social Security from budget cuts, sparked a predictable round of partisanship.

"To protect the middle class while reducing the deficit, simple math dictates that tax rates must rise on the top 2 percent of taxpayers next year," Senate Majority Leader Harry Reid, D-Nev., said in a statement. "The sooner Republicans grasp that reality, the sooner we can avoid the fiscal cliff."

The fiscal cliff is a combination of expiring Bush-era tax cuts and automatic, across-the-board spending cuts due to take effect in January. The cliff is a result of prior failures of Congress and Obama to make a budget deal.

The GOP proposal itself revives a host of ideas from failed talks with Obama in the summer of 2011. Then, Obama was willing to discuss politically risky ideas such as raising the eligibility age for Medicare, implementing a new inflation adjustment for Social Security cost-of-living adjustments and requiring wealthier Medicare recipients to pay more for their benefits.

Boehner called that a "credible plan" and said he hoped the administration would "respond in a timely and responsible way." The offer came after the administration urged Republicans to detail proposals to cut popular benefit programs like Medicare, Social Security and Medicaid.

But Obama and his Democratic allies are less willing to look to these benefit programs for cuts after his re-election last month and believe Obama possesses far more leverage now than he did in secret budget talks with Boehner last year.

Monday's Republican plan contains few specifics and anticipates that myriad details would have to be filled in next year in legislation overhauling the tax code and curbing the growth of benefit programs.

Though the GOP plan proposes to raise $800 billion in higher tax revenue over the same 10 years, it would keep the Bush-era tax cuts — including those for wealthier earners targeted by Obama — in place for now.

GOP aides said their plan was based on one presented by Erskine Bowles, co-chairman of a deficit commission Obama appointed earlier in his term, in testimony to a special deficit "supercommittee" last year.

"The new revenue in the Bowles plan would not be achieved through higher tax rates, which we continue to oppose and will not agree to in order to protect small businesses and our economy," Boehner and fellow Republicans said in a letter to Obama. "Instead, new revenue would be generated through pro-growth tax reform that closes special-interest loopholes and deductions while lowering rates."

By GOP math, the plan would produce more than $2 trillion in budget savings over the coming decade: $800 billion in higher taxes; $600 billion in savings from costly health care programs like Medicare; $300 billion from other proposals such as forcing federal workers to contribute more toward their pensions; and $300 billion in additional savings from the Pentagon budget and domestic programs funded by Congress each year.

Boehner signaled in discussions with Obama in 2011 that he was willing to accept up to $800 billion in higher tax revenues, but his aides maintained that much of that money would have come from so-called dynamic scoring — a conservative approach in which economic growth would have accounted for much of the revenue. Now, Boehner is willing to accept the estimates of official scorekeepers like the Congressional Budget Office, whose models reject dynamic scoring.

Using the administration's math, GOP aides said, the plan represents $4.6 trillion in 10-year savings. That estimate accounts for earlier cuts enacted during last year's showdown over lifting the government's borrowing cap and also factors in war savings and lower interest payments on the $16.4 trillion national debt.

Last week, the White House delivered to Capitol Hill its opening proposal: $1.6 trillion in higher taxes over a decade, a possible extension of the temporary Social Security payroll tax cut and heightened presidential power to raise the national debt limit without the approval of Congress.

In exchange, the president would back $600 billion in spending cuts, including $350 billion from Medicare and other health programs. But he also wants $200 billion in new spending for jobless benefits, public works projects and aid for struggling homeowners. His proposal for raising the ceiling on government borrowing would make it virtually impossible for Congress to block him going forward.

The GOP plan is certain to whip up opposition from Democrats who don't want any action now on Social Security, whose defenders say should not be part of any fiscal cliff deal. And Democrats also are deeply skeptical of raising the Medicare age.

In a letter to the president, Boehner and six other House Republicans insisted that the November election that returned Obama to the White House and the GOP to majority control in the House requires both parties to come together "on a fair middle ground."

"With the fiscal cliff nearing, our priority remains finding a reasonable solution that can pass both the House and Senate, and be signed into law in the next couple of weeks," Republicans wrote.

One of the few things the White House and Capitol Hill Republicans can agree on is a framework that would make a "down payment" on the deficit and extend all or most of the expiring Bush-era tax cuts but leave most of the legislative grunt work until next year.

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Associated Press writer Julie Pace contributed to this report.

Oprah Replaced By New World’s Richest Black Woman Folorunsho Alakija

Talk show maven, Oprah Winfrey, who long reigned supreme as the world's richest Black woman, has been kicked down a notch by new kid on the block, Folorunsho Alakija, according to Ventures Africa, an African business magazine and news service.

The newest top-ranking Black female billionaire hails from Nigeria: Alakija is a clothing designer and oil tycoon who is worth somewhere in the $3.3 billion range and beats Oprah's piggy bank savings by $500 million. At last count, Oprah's media dynasty hovered in the neighborhood of about $2.7 billion, according to Forbes Magazine.

As the founder and owner of Famfa Oil, one of Nigeria's most prolific oil blocks, Aliakija, who was born with a silver spoon in her mouth, began her career as a secretary for a now-defunct investment bank in Nigeria. The mid-eighties brought about a career turn-around for Alakija, who began delving in to clothing design, after having studied it in England. Alajika's entrepreneurial spirit led her to start her own clothing line, Supreme Stitches, which catered to a wealthy clientele.

In 1993, Nigerian President Ibrahim Babangida awarded her company, Famfa Oil, an oil prospecting license, which went on to become OML 127, one of Nigeria's most prolific oil blocks. The block is located approximately 220 miles South East of Lagos and 70 miles offshore Nigeria in the central Niger Delta.

At the time, many wealthy Nigerians had been allocated oil blocks and most of them flipped them off to international oil companies for profits — except for Alajika; even though she did not have any expertise in running an oil field, she still opted not to sell her license.

Source: http://newsone.com/2095466/folorunsho-alakija-profile/

Corporate Profits Hit Record as Wages Get Squeezed

(CNNMoney) -- Just four years after the worst shock to the economy since the Great Depression, U.S. corporate profits are stronger than ever.

In the third quarter, corporate earnings were $1.75 trillion, up 18.6% from a year ago, according to last week'si gross domestic product report. That took after-tax profits to their greatest percentage of GDP in history.

But the record profits come at the same time that workers' wages have fallen to their lowest-ever share of GDP.

"That's how it works," said Robert Brusca, economist with FAO Research in New York, who said there is a natural tension between profits and the cost of labor. "If one gets bigger, the other gets smaller."

Profits accounted for 11.1% of the U.S. economy last quarter, compared with an average of 8% during the previous economic expansion. They fell as low as 4.6% of GDP during the recession.

"Corporate profits took a big hit in the recession like everything else, but they've seen a massive bounce back," said Heidi Shierholz, an economist with the Economic Policy Institute, a liberal think tank. "Wages are determined by what's going on in the labor market and we haven't seen a big bounce back there."

A separate government reading shows that total wages have now fallen to a record low of 43.5% of GDP. Until 1975, wages almost always accounted for at least half of GDP, and had been as high as 49% as recently as early 2001.

But overall economic growth has greatly outpaced growth in hourly wages and job creation since the end of Great Recession, so workers' share of the economic pie has dropped steadily. That's despite the fact that modest hiring by employers lifted total wages to a record $6.88 trillion in the third quarter.

"It's not because bad capitalists are keeping all the money," said Brusca. He said that businesses with high labor costs have either gone under or moved offshore.

Shierholz said she doesn't think it's bad that business profits have risen. But the downward pressure on wages is hurting consumers' ability to spend, and thus the need for businesses to hire more people.

"[Businesses] have a capacity to employ more people, but it makes no sense to hire more people until you have demand for your stuff," she said.