Banks get cash infusion

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Monday, December 01, 2008

PORTLAND As of mid-November, three Oregon banks are in line to get a federal infusion of cash.

Portland-based Umpqua Bank will get a $214 million cash infusion after selling that amount in preferred stock to the U.S. Treasury. Pending shareholder approval this month, Capital Pacific Bancorp in Portland will get $4 million. The Commerce Bank of Oregon will receive an undetermined amount from its parent company’s $1.4 billion Treasury investment. Zions Bancorporation owns Commerce.

The $250 billion Capital Purchase Program is meant to bolster healthy banks so they can lend more  and stimulate the economy. The feds are only investing in banks capable of paying it back, which has analysts scrambling to find out which banks didn’t make the cut, experts say.

“Behind the scenes almost every bank in the Northwest is applying for it,” says Ron Farnsworth, chief financial officer at Umpqua. “But they may apply and not get it, and that’s the investor’s concern.”  Umpqua’s stock value went up more than 20% since the announcement.

Concern has been raised about banks hoarding the cash. Participants must pay a 5% dividend on the shares issued to the government for the first five years of the investment, then 9% after that.

“There’s a lot of concern that banks have turned off the spigot,” says Capital Pacific CEO Mark Stevenson. “Even to their existing clients.”

Both Umpqua and Capital Pacific say they intend to lend the money to Oregon businesses immediately. 

JASON SHUFFLER


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Editor's Letter: Power Play

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There’s a fascinating article in the December issue of the Harvard Business Review about a profound power shift taking place in business and society. It’s a long read, but the gist revolves around the tension between “old power” and “new power” as a driver of transformation. Here’s an excerpt:

Old power works like a currency. It is held by few. Once gained, it is jealously guarded, and the powerful have a substantial store of it to spend. It is closed, inaccessible, and leader-driven. It downloads, and it captures.

New power operates differently, like a current. It is made by many. It is open, participatory, and peer-driven. It uploads, and it distributes. Like water or electricity, it’s most forceful when it surges. The goal with new power is not to hoard it but to channel it.

The authors, Henry Timms and Jeremy Heimans, don’t necessarily favor one form of power over another but merely outline how power is transitioning, and how companies can take advantage of these changes to strengthen their positions in the marketplace. 

Our Powerbook issue might be viewed as a case study in the new-power transition. This annual book of lists provides information on leading businesses, nonprofits and universities in the state. Most of the featured companies are entrenched power players now pursuing more flexible and less hierarchical approaches to doing business. Law firms, for example, are adopting new technologies and fee structures to make legal services more accessible and affordable.

This month we also take a look at a controversial new U.S. Securities and Exchange Commission rule requiring public companies to disclose the median pay of workers, as well as the ratio between CEO and median-worker pay. 

Part of the 2010 Dodd-Frank financial reform law, the rule will compel public companies to be more open about employee compensation, with the assumption that greater transparency will improve corporate performance and, perhaps, help address one of the major challenges of our time: income inequality.

New power is not only about strategy and tactics, the Harvard Business Review authors say. “The ultimate questions are ethical. The big question is whether new power can genuinely serve the common good and confront society’s most intractable problems.”

That sounds like a call to arms. Or a New Year’s resolution. Old power or new, the goals are the same: to be a force for positive change in the world. Happy 2015!

— Linda


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