How to Field an Interview Curveball

Sometimes Mark Chalfant asks applicants to bring a visual representation of themselves to auditions. Or he asks what their worst habit is. Sometimes he fishes with the catchall query, "Is there anything about you that no one would expect?"

As executive director of the Washington Improv Theater, Chalfant uses interview tactics that work in his artistic milieu. But investment banks, biotech firms, media companies and start-ups also are throwing out strange and offbeat job interview questions as they consider which MBA or project manager to hire.

They ask questions such as, "If you had only six months to live, what would you do with the time?" and "What animal would you say you most compare to, and why?" Or, "In the news story on your life, what would the headline be?"

Those queries and others, compiled by Lynne A. Sarikas, director of the MBA Career Center at Northeastern University in Boston, are showing up more frequently in interviews this year, she and others report.

Although inquiries about what kind of food you would be might seem a bit off-base, most have a purpose. As job candidates become more polished, interviewers want to "chip some holes in that prepared facade and see what's underneath," Sarikas said. "Catch them a little off guard and see how they think."

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Answer to No. 1: The Power to Get This Job

You can't anticipate all left-field questions. But here are a few collected by Lynne A. Sarikas of Northeastern University:

If you could be a superhero, which powers would you want?

If you could be any character in fiction, who would you be?

If someone wrote a biography about you, what do you think the title should be?

If you won $20 million, what would you do with it?

How do I rate as an interviewer?

Fed in tug of war over mortgage rules

Federal Reserve on Monday is expected to tighten regulations to protect homebuyers. Consumer groups and lenders each hope arguments win out.

NEW YORK (CNNMoney.com) -- The Federal Reserve is caught in a tug-of-war as it prepares on Monday to unveil final rules overhauling mortgage lending.

Consumer groups are arguing that the regulations, as proposed in December, contain too many loopholes, allowing reckless lending to continue. Industry executives say the proposals place too great a burden on lenders and will prompt them to further restrict credit.

It appears the Fed was swayed by the more than 2,500 comments submitted on the proposals since it has signaled it has revised them, industry insiders say. But it remains to be seen which side the Fed favored.

"The question is which way will the Fed head?" said Kurt Eggert, law professor at the Chapman University School of Law and former Fed Consumer Advisory Council member. "That's what we're all waiting to see."

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Big Buzz for Another Apple Surprise

FROM SEPT 7, 2007


"[The drop in the price of the iPhone] is good news for many consumers who were waiting for the price drop. For many who bought early, it was a purchase based not on price but on being the first to own the coolest and most anticipated consumer electronic device," said Fareena Sultan, digital marketing professor from Northeastern University's College of Business Administration. "While some of those consumers may regret their early purchase, the majority still had the pleasure of being perceived as innovators and "cool," just like their iphone for these few months since the initial launch."

Apple hopes cheaper iPhone 3G will broaden market

As the iPhone 3G hits stores this week, Apple is aiming to gain more users by offering it at reduced prices through carriers.

Apple has slashed the iPhone's price nearly in half, possibly attracting new buyers who balked at paying US$499 for the original 16G-byte iPhone. The new model will work on faster 3G (third-generation) broadband wireless networks for quicker downloads and come with GPS (Global Positioning System) capabilities.

In the U.S., AT&T will start selling the iPhone 3G on Friday, starting at $199 for the 8G-byte model and $299 for the 16G-byte model, each with a two-year contract. In the U.K., O2 will offer iPhone 3G for free with some contracts. The device will also bow Friday in 20 other countries including Germany, Japan and Australia; Apple hopes to sell it in 70 countries by year-end, including India, the Philippines, South Africa and Egypt.

The new phone has some shortcomings, such as the lack of a video camera, but the new features and low price points should attract buyers now that the iPhone is tried and tested, said Fareena Sultan, associate professor at Northeastern University's College of Business Administration.

"The issue is not about the box, it's about the service," Sultan said. The carriers are assisting Apple in subsidizing the phones and ultimately hope to make money through higher-priced contracts and additional services, Sultan said.

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Four signs your job search strategy sucks and what to do about it

There are telltale signs when your job search is failing. The important thing is to fess up, and commit to starting afresh. This feature shows you just how to do that.

Too often, job seekers ignore the warning signs indicating that their search tactics aren't getting them anywhere. Ignorance is bliss, right? Wrong.

The longer you wait to take corrective action, the longer you'll be unemployed or stuck in a job you hate.

So fess up to the fact that your job search is failing and commit yourself to starting fresh.
By establishing a defined job search strategy and spending more time networking, you'll stop spinning your wheels and you'll come much closer to landing your dream job much faster. It'll be a better use of your time and also more fun.

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BEIJING 2008: BERLIN 1936 REDUX?

The Berlin Olympic Games of 1936 stand as testament to the catastrophic failure of the international community to take a stand against an oppressive regime. The U.S. and other Western democracies refused the call of the left to boycott the Games, and thereby missed the opportunity to adopt a position that may have given Hitler pause and galvanized international resistance to fascist tyranny.

Unfortunately, the 2008 Beijing Olympics is shaping up to become another dismal example of the international community’s lack of will to take a timely stand against oppression and human rights violations. Just as was the case seventy-two years ago, the U.S. and Western democracies look set to participate in an Olympic Games that will bolster the domestic and global standing of an authoritarian, paranoid and fundamentally anti-democratic government.

For two weeks in the summer of 1936, the Nazi regime in Germany put on a good face to the world, exploiting the Olympic Games to project an image of prosperity, nationalism and success. This was not the Germany of political suppression, nor the nation of virulent and violent anti-Semitism. This was not the government with ideas of territorial expansion, racist ideology, and military conquest. No, Berlin in the summer of 1936 reflected a Germany renewed, a country freed from poverty, risen from the dark years of world war and crippling economic depression.

The thousands of foreign visitors and correspondents who flocked to Berlin marveled at the Olympic spectacle, the organizational flair, the obvious enthusiasm and national pride. The Olympic Games provided the Nazis not just with a global stage upon which to strut their stuff, but an opportunity to win further support at home. Politics, national image, political purpose and sport were united in a contrived and propagandized display intended to provide credibility and legitimacy to Hitler and his regime.

The international community - and most of the international media - were complicit in not rocking the Nazi boat. There had been a call for a boycott, but the United States and other Western democracies participated regardless. They willingly participated as supporting actors in Hitler’s massively orchestrated Olympian production.

The consequences of the failure of Western democracies to boycott the Games were arguably profound and far-reaching. The Berlin Games were a huge public relations and propaganda triumph for the Nazis, legitimizing their regime domestically and overseas, and encouraging and emboldening them. Within three years the Nazis had dragged Europe into conflagration.

The regime in Beijing in 2008 is far from that of Hitler in 1936. Even the most aggressive critics of the current Chinese government would not suggest, for example, that it is likely to replicate the worst atrocities of the Nazi regime. Indeed few regimes in history can match the ferocity, violence and paranoia of the Nazis.

The communist regime in China has certainly pursued policies of mass slaughter. The radical policies of the Great Leap Forward and other Maoist excesses resulted in the deaths of millions within China, while the spread of Maoist ideology led to the deaths of millions more in the Killing Fields of Cambodia and elsewhere.

But we don’t need to look to such comparatively distant history to find evidence that Beijing regime is anti-democratic, authoritarian, and frequently brutal in suppressing political and ideological dissent. Ironically, preparations for the Olympic Games (theme: “One World, One Dream”) has apparently stimulated human rights violations, including the abuse of migrant construction workers, mass evictions for Olympic infrastructure, and the use of house arrests to silence dissidents.

The Chinese government continues to violate the rights of journalists in spite of assurances to the International Olympic Committee that the Games would foster improvements in human rights and of specific pledges of wider media freedoms. HIV/AIDS activists are harassed, attacked and placed under surveillance. China continues to suppress independent religions deemed a threat to the state, and undermine independent Tibetan religion and culture. China, of course, maintains its control of Tibet through military occupation, violence, and resettlement.

Dissidents in China face imprisonment for subversion, and those who talk to foreign media have been imprisoned for espionage. Independent trade unions are forbidden. Anyone perceived to be an opponent of the regime is likely to be harassed, assaulted or worse. It is estimated that around 7,500 Chinese are executed each year – more than the rest of the world combined – though the exact number has been declared a “state secret.” Chinese courts lack transparency and judicial independence, and their role remains that of loyal state apparatus. With inadequate or non-existent defense counsel, those facing capital punishment find themselves in courts that don’t even pretend to approach international minimum standards.

China actively supports some of the most repressive and tyrannical governments around the globe, from Myanmar to Sudan, offering political and economic support to rogue states in exchange for access to oil and other natural resources. China’s hunger for these resources, combined with an apparent lack of any moral compass in its foreign dealings, has ensured that regimes with truly appalling human rights records have been able to maintain their grip on power thanks to Chinese money and support.

President Bush has already accepted an invitation to attend the opening ceremonies of the Beijing Olympics. His acceptance was premature, and signals to the regime in Beijing that China’s human rights record is – despite what American diplomats may say publicly – not so high on Washington’s agenda that it would cause the President to miss the firework show and photo-op. It is hard to interpret his early acceptance as anything other than a clear vote of support for Beijing.

Indeed it is difficult to detect any coherent strategy from Washington aimed at improving the human rights situation within China or limiting the continuing support of China for the world’s rogue nations. Perhaps the explanation surrounds us: China bankrolls U.S. deficit spending and sells the American electorate the cheap consumer merchandize that keeps them happy. Flat-screen TVs and containers of plastic toys are, perhaps, the new purchase price of the American conscience.

In 1936, the Western democracies provided an oppressive regime with a stamp of approval. Surely we can do better seventy-two years later.


Dr. John Hall is an associate professor and Director of the Center for Global Trade & Development, Chapman University School of Law, in Orange, Calif.

In a job interview, expect the unexpected

"Unusual questions are becoming more popular with interviewers", says Lynne Sarikas, director of the MBA Career Center at Northeastern University's business school. "While we've all heard stories of the Microsoft interview questions (why is a manhole cover round? etc.), more employers are using non-standard questions in their interviews."

Here are some thoughts from Sarikas:

- While not everyone answers it well, everyone should be prepared to answer the "tell me about yourself" and "what are your strengths and weaknesses" questions.

- Interviewers will use unusual questions to assess how well you think on your feet. While most of these questions do not have right and wrong answers, they demonstrate quick thinking, poise, creativity and even a sense of humor.

- There is no way to be prepared for "off the wall" questions, so the interviewer observes how well you respond and compose your thoughts.

- You are not likely to the get the right answer to many unusual questions since you don't have all the data necessary, but the interviewer will want to see how you think about it.

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Countrywide Could Bring BofA Misery

Bank of America (BAC - Cramer's Take - Stockpickr) on Tuesday closed its $2.5 billion acquisition of Countrywide Financial(CFC - Cramer's Take - Stockpickr), but the pain caused by the deal may only be beginning.

The all-stock deal, originally worth $4 billion when it was struck in January, makes Bank of America the nation's leading mortgage originator and servicer, while protecting its $2 billion preferred stock investment made in 2007, along with another $3 billion invested in Countrywide's common stock.

"Mortgages are one of the three main cornerstone consumer financial products along with deposits and credit cards," BofA Chairman and CEO Kenneth Lewis said in a company statement. "This purchase significantly increases Bank of America's market share in consumer real estate, and as our companies combine, we believe Bank of America will benefit from excellent systems and a broad distribution network that will offer more ways to meet our customers' credit needs."

Likelihood of Success?

The complaint asks Countrywide and the other defendants each pay a $2,500 penalty per violation. With thousands of loans involved, that could be a pretty penny.

"This puts a cloud over the Bank of America deal, says Kurt Eggert, a professor at Chapman University School of Law in Orange, Calif. "No one knows how likely it is the states will succeed, and if they do, how much it will cost Bank of America."

In this kind of civil suit, the defendant will typically file a motion stating the claim is defective, as the state doesn't have a right to file this type of lawsuit. "They will try to get a judge to throw it out before the other side engages in discovery," according to Eggert.

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What costs are rising in China, and why?

Q: A growing number of media reports suggest that China's advantage as a low-cost destination for Western manufacturing is starting to wear thin. Techtronic Industries, the world's largest power tool maker, recently said it was looking to expand in countries other than China due to rising costs there. What costs are rising in China, and why? Are manufacturers reconsidering the country as a source? Is the balance between higher transportation/logistics costs and lower raw material/labor costs shifting to favor other countries? What are transportation logistics service providers to these manufacturers doing to help, either in moving clients to new locations or finding ways to keep China attractive?

The answer is provided by Ravi Ramamurti, Professor of International Business and Director of the Center for Emerging Markets at Northeastern University’s College of Business Administration.

China's labor costs were kept artificially low by the government, and migration from rural areas to manufacturing centers along the coast (e.g. in Guangdong province, next to Hong Kong) provided a steady supply of workers. Now with growing congestion in cities like Shenzhen and Shanghai the government is allowing wages to rise faster in the coastal cities, encouraging companies to move low-skill, low-wage jobs to smaller interior cities, and looking to replace it with higher value manufacturing jobs in the coastal cities.

This strategy is running into at least four problems. First, logistical costs of operating in interior cities are higher, and partly offset their labor cost advantage. Second, the interior cities do not provide the full ecosystem to support manufacturing activities, e.g. a toy manufacturer may not find a mold maker or machinery suppliers in those cities, compared to a place like Shenzhen. Third, it is much harder to find experienced engineers or manufacturing staff in interior cities. And, finally, senior executives don't want to live in the interior cities and dislike commuting from one of the major coastal cities.

As a result, China's cost advantage is eroding slightly. At the same time, companies are painfully aware that they are over-dependent on China as a supply location. Many toy companies or footwear and apparel companies, for instance, get 80-90% of their supplies from China. This is imprudent by any standard, but so long as every other competitor was following the same strategy, no one firm was willing to reduce its sourcing from China. The recent quality and safety scares about goods made in China may have finally woken up corporate directors to the risks of their China sourcing strategy. Therefore, it is likely that companies will increasingly look to reduce their China supply exposure. But this too is fraught with challenges and risks. Gradually, countries like India and Vietnam will attract a growing share of labor-intensive manufacturing jobs.

Rights, arms and the man

"A well-regulated militia, being necessary to the security of a free state, the right of the people to keep and bear arms, shall not be infringed." Because of the inclusion of the M-word (militia), gun-control advocates have long argued that the Second Amendment applies to militia, but not to individual citizens.

Last week, the Supreme Court put an end to that nonsense when it issued a decision overturning the District of Columbia's 32-year old ban on handguns - even in citizens' own homes. In the 5-4 decision, Justice Antonin Scalia hailed "the right of law-abiding citizens to use arms in defense of hearth and home."

It was "an inevitable ruling," explained George Washington University Law Professor Jonathan Turley. "Even though I'm an advocate of gun control, it's very hard to read the Second Amendment and not see an individual right."

Yet, somehow, four justices did not see that the fundamental right - actually, it's more than a right, it's a basic human instinct - of self-defense. As Justice Stephen Breyer wrote in one of two dissenting opinions, "The Second Amendment protects militia-related, not self-defense related, interests."

John Eastman, law school dean at Chapman University in Orange County, found it ironic that the four justices relied on an interpretation, albeit erroneous, of the framers' original intent - when they don't seem to care about original intent in so many other cases.
The dissenting four justices otherwise have agreed with Justice Anthony Kennedy when he wrote in another case that the court is supposed to determine whether death penalty cases are constitutional, based on "the evolving standards of decency that mark the progress of a maturing society."

But with this case, quipped Eastman, "Everyone seems to be an originalist now."

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New Interview Trend Shakes Things Up

COLLEGE OFF THE RECORD

Time to toss out your old study guide for interviews. Today's employers are more concerned with what type of salad dressing you'd be over your specific qualifications.

• If you could be any character in fiction, who would you be?
• If Hollywood made a movie about your life, whom would you like to see play the lead role?
• If someone wrote a biography about you, what do you think the title should be?
• If you could compare yourself to any animal, which would it be and why?
• If you were a salad, what dressing would you be?

These sound like survey questions, don’t they? They are actually interview questions. According to Lynne Sarikas, the director of the MBA Center at Northeastern University, these questions are meant to see how interviewees react when they are caught off guard and how well they handle the pressure. These questions are also meant to break the habit of rehearsed answers to the same old questions about strengths and weaknesses, and goals and expectations. Interviewers have noticed that potential hires are too prepared and want to shake things up.

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Federal Reserve to release mortgage regs; expert comments

THOUGHTS FROM DECEMBER 18, 2007


As you may know, tomorrow, the Federal Reserve is expect to unveil new regulations on mortgage lending. Kurt Eggert, a law professor from Chapman University School of Law who has testified to Congress on these issues and is a past member of the Federal Reserve Board's Consumer Advisory Council, provides some preliminary thoughts below:

“By tightening up underwriting standards, the Fed would help borrowers, investors and even lenders. The subprime meltdown occurred in large part because subprime lenders were making bad loans that were too likely to default. Borrowers were burned by loans they couldn't repay, and investors were burned by excessive defaults. Even lenders were harmed when the secondary market for subprime loans collapsed. By tightening underwriting standards, the Fed can reestablish faith in the subprime market,” Prof. Eggert says.

“This is no time for half measures. Under Greenspan, the Fed deferred to market participants to set the rules for the subprime market, which led to a Wild West atmosphere and led to the subprime meltdown. Some have argued that regulating the subprime market will reduce access to credit, but we have seen that the opposite is true. By establish clear and effective rules that require effective underwriting, escrowing of tax and insurance, and requiring effective documentation of the ability to repay the loans, the Fed could increase the access of beneficial credit to borrowers and increase investor confidence in subprime loans,” Prof. Eggert concludes.

Career to Count On: Accounting More Popular Than Ever

If the enrollment numbers are any indication of its widespread appeal, crunching numbers is cool. According to the American Institute of CPA’s, more than 64,000 students graduated with bachelor’s and master’s degrees in accounting in the 2006-2007 school year, the largest number of accounting graduates in at least 36 years.

Rock-Solid Jobs

“Accounting is a very stable and well-anchored career path,” says Denny Reigle, director of academic and career development of the AICPA, a national professional association of CPAs with more than 350,000 CPA members.

Jody Queen-Hubert, executive director of co-op and career services at Pace University, adds, “Businesses always need accountants; the demand is there. Understanding how an organization manages its finances is critical to understanding how the business operates, and students need to cut their teeth in the trenches of an organization.”

Recession-Proofing

Although strict regulatory requirements in effect for several years created an increased need for more accountants, the sizzle appeal right now may be attributed to the capricious financial industry.

Marjorie Platt, professor and head of the accounting department at the Northeastern University College of Business Administration, explains, “As Wall Street faces serious layoffs, quantitatively oriented students may decide to focus on accounting rather than finance. We've seen our number of majors continue to grow over that past year while the number of finance majors is flat or trending down a bit. Since the two subjects are highly related, it may not take a lot of extra effort or coursework to refocus one's major.”

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Teaching IFRS to Tomorrow's Accountants

Lora Bentley spoke with Charles Bame-Aldred, an accounting professor at Northeastern University.

Bentley: I've read that colleges and universities aren't doing much to add International Financial Reporting Standards to their accounting curricula yet because it's not required and it's not on the CPA exam. Would you agree, or is there something else?

Bame-Aldred: Yes... and [in a recent CFO.com article] one of the SEC folks said they weren't going to go through the process of training people until they know this is going to happen for certain because then you end up losing some of that educational benefit because people forget. So there is some hesitancy to do it right away.

Bentley: When it does happen, how will the process look?

Bame-Aldred: There's a couple things that may occur. And again, this is just my speculation. I have no idea. This is just reading the tea leaves, but it's quite possible that you'll have both IFRS and U.S. GAAP existing simultaneously. You'll have GAAP maybe used in private companies and IFRS in public companies. Unless they make a requirement, people are going to do whatever is going to be what they're used to and also what's less costly. If I have to go through and change systems, retrain people, I'm not going to do that if there's no incremental benefit. Especially since public companies just went through all of the hoops to comply with Sarbanes-Oxley section 404. They may be looking and saying, "Did we really get any benefit out of that requirement?" We just don't know, but unless they make it a requirement, we may see these things coexisting.

Bentley: So what will the change require from an academic perspective?

Bame-Aldred: One of the great things about accounting academics is they're very adaptable, in my opinion. Every time there's a new pronouncement coming out, they're ready to take care of it. They're ready to make sure that information gets in the hands of our students. With IFRS, we're not changing the way we do basic accounting; we're changing the way we're reporting things. Accounting academics know how to report things in a variety of different ways. Nothing in IFRS is that groundbreaking that you would say, "Wow — that's a completely new way to do things!" It's either fair value, or it's not fair value. You get to recapture things, or you don't get to recapture things. You don't get to do LIFO; you do get to do LIFO. It's just a matter of what are the changes, and then put those changes into our curriculum.

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THE UNEXPECTED FALLOUT FROM THE SUBPRIME CRISIS

"Its not just lower income people who will face problems from the recent closing of the low interest rate, no need for income model of home lending," says Harlan Platt, Ph.D., corporate turnaround expert and finance professor at Northeastern University's College of Business Administration. "The capital markets are backing up all across the globe as a consequence of the failure of lending institutions to adequately factor in risk."

"The biggest users of the cheap money were hedge funds. For each dollar invested in them many have levered themselves up by borrowing an additional $5 or $10," adds Dr. Platt. "Before the crisis the world was wonderful for them as they earned their enormous fees not just on the invested dollar but also on the borrowed dollars. Using these fees hedge managers lived like Roman emperors; buying cars, homes and other luxury goods."

"When hedge funds begin to fail (and many are poised to do so which is why the Fed cut the discount rate) luxury goods will go looking for buyers," concludes Prof. Platt. "Watch prices in Aspen, Palm Beach and East Hampton fall dramatically. Seems that too many "wise" investors forgot about the risk/return tradeoff."

Supreme Court gun ruling leaves questions

How far does the constitutional right to gun ownership extend? Is the right fundamental -- generally not subject to government rules? Or can it be strictly regulated?

WASHINGTON -- The Supreme Court’s historic ruling this week that clarified Americans' right to own a gun for self-defense left a crucial question unanswered, one that will be resolved only after many years and a torrent of litigation, legal experts said Friday.

Is gun ownership a "fundamental right" under the Constitution, or something less? Put simply, is a gun akin to an automobile, a legal but dangerous product that can be strictly regulated by the government? Or is a gun more like a book, both legal and largely off-limits to government regulation?

"There's a lot that needs to be sorted out. The big question is: Is this like the 1st Amendment and the freedom of speech?" said John Eastman, dean of the Chapman University School of Law in Orange. He once was a clerk on the high court.

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Supreme Court Upholds Individual Gun Rights

In a split 5-4 decision, the United States Supreme Court struck down Washington, D.C.'s three decade old ban on handguns, declared Americans have the right to own firearms for protection and hunting, and issued its first major pronouncement on the scope and meaning of the Second Amendment since the amendment was ratified in 1791.

Writing for the majority, Justice Antonin Scalia reasoned the District's ban on handgun and its requirement that other guns stored in the home be "unloaded and dissembled or bound by a trigger lock or similar device" was an unconstitutional encroachment on the Second Amendment.

The Second Amendment reads, "A well regulated militia, being necessary to the security of a free state, the right of the people to keep and bear arms, shall not be infringed" and the case raised the question of whether an individual citizen has a constitutional right to own a gun or whether that right is somehow tied to a state militia.

"There will be a lot of challenges to gun restrictions," said John Eastman, a constitutional lawyer and dean of Chapman University's School of Law. Mr. Eastman recognized Mr. Scalia attempted to limit the scope of the decision, but argued the majority opinion "leaves open a whole range of other restrictions" that could be challenged.

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CA law dean commentS on state greenhouse gases

I thought you might want to speak to John Eastman, Dean of the Chapman University School of Law.

“In short, I think both of the claims have merit, and an appeal to the Court of Appeals and perhaps ultimately the Supreme Court should be expected,” Dean Eastman says.

“The points I would make are that federal regulations in this area have preempted local state laws to the contrary. Moreover, even without that preemption, the effect on interstate commerce is so great that California's actions may well violate the dormant commerce clause,” Dean Eastman adds.

And Yet the Sale of Countrywide is Going to Happen

The sale of Countrywide Mortgage to Bank of America absorbed another blow this week as three states took legal action against the lender.

The attorneys general of California and Illinois and the Washington State department that regulates financial institutions all filed lawsuits against Countrywide on Tuesday alleging variations on the theme of mortgage fraud.

According to an article in the Wall Street Journal, California's attorney general Edmund G. Brown, Jr. charged that Countrywide used "misleading marketing practices" to steer home buyers into inappropriate loans and that Countrywide was driven by a desire to boost market share and fill demand from investment bankers for loans that could be packaged into securities. California's filing also names controversial Countrywide Chairman Angelo Mozilo and Countrywide president David Sambol.

All three states are seeking restitution for borrowers. The Journal quotes Kurt Eggert, a law professor at Chapman University as saying that, if the courts do grant restitution it "could be a staggering blow against Countrywide." The company "could be required to give back its profit on all those loans and conceivably give back houses on which it has foreclosed."

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California joins legal fight against Countrywide

California Attorney General Jerry Brown says he's seeking something quite simple for thousands of homeowners who lost money or their houses to foreclosure after borrowing from Countrywide Financial Corp.

Payback.

But the state's top lawyer warned that the journey to compensate troubled homeowners who took out Countrywide loans will be marked by a lot of roadblocks. And just where that journey will lead remains unclear.

As fresh lawsuits hang over BofA's July 1 acquisition, some say the giant bank may get more than it bargained for.

"Bank of America is taking on a big risk," said Kurt Eggert, a law professor at Chapman College in Orange in Southern California.

Eggert said Countrywide could be liable for "huge sums of money and might have to return houses that have been foreclosed. Until this litigation is resolved, it strikes me that Countrywide is under a very dark financial cloud."

Yet, it's by no means clear that California's lawsuit will get traction in the courts, let alone prevail, said Wesley M. Marple, professor of finance at Boston's Northeastern University. Marple's hunch is that Brown is grandstanding and that other states will follow.

"It's a great way of getting political support on the part of the naive electorate," he said. Though attorneys general have "enormous prosecutorial power that dwarfs that of most individuals, Countrywide, with Bank of America, can probably withstand the onslaught," he said.

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Tech MBA moves techies to business jobs

When people first hear about Northeastern’s high-tech MBA program, they frequently assume that its focus is on IT-related skills and tasks, with a goal of training CTOs and CIOs. “Our High Tech MBA students (HTMBA) are here to transition their careers – to move from technology or engineering jobs to become P&L managers and product managers and to develop entrepreneurial and innovation skills to help them become more directly involved in their company’s growth,” says Marc Meyer, faculty director of the HTMBA.

This was the case for Jim Garneau. A regional sales manager of Eastern North America for Physik Instrumente, (the US subsidiary of a German manufacturer of optical instrumentation systems), with an undergraduate engineering degree, Jim decided that he needed to augment his business skills to advance both within his company and in his career. He decided the best way to do this was to continue in his job AND pursue an advanced business degree through the High Tech MBA program at Northeastern.

“I needed an accelerated part-time program that would give me the skills to analyze and break down the problems of a tech business that I was seeing every day on the job, and the High Tech MBA program did just that,” Mr. Garneau added. “Northeastern has always had a strong reputation in both technology and hands-on business education, and that’s exactly what I needed.”

“Most importantly, the High Tech MBA gave me an arena to segment a potential new market for my company, and the tools to identify the needs of what a new market – and not merely a few new customers – would need from PI,” Mr. Garneau also points out. “I also developed important analysis and presentation skills that helped me sell this new market opportunity within my company and develop a new sales strategy model for this market that we still use today. I guess the ultimate proof is in the putting: not long after I completed my MBA studies, I was promoted to Director of Sales for the company.”

Northeastern’s HTMBA is a 21-month, accelerated program for technology-savvy professionals who want to drive business innovation. The High Tech MBA program emphasizes management and leadership skills, designed to help technologists fuel enterprise growth and rapidly advance in technology-intensive environments. Students can continue working full-time during the program and are part of a cohort, attending class every other week on Tuesday evenings and Saturdays.

“The High Tech MBA attracts individuals dedicated to learning, business growth, and personal achievement,” Prof. Meyer said. “Good technology does not automatically translate into market leadership. It takes powerful marketing, sound business models, robust control systems, and a strong management team. These are the skills that we teach students to apply and integrate for business growth. We serve many industries, including telecommunications, health care, biotechnology, financial services, systems and software, materials, and defense.”

“When I first started the program, Professor Meyer told me that it was set-up to help people like myself solve business problems I would see the next day when I went to work,” Mr. Gareau concluded. “He was absolutely right: the High Tech MBA program helped me break down problems and develop potential solutions, working side-by-side with other technology business people in the same boat.”

The barbecue at Countrywide turns into a forest fire

FROM BLOGGING STOCKS

More states have filed charges against Countrywide (NYSE: CFC) for aggressive marketing and giving loans which were highly risky. Washington and California have joined Illinois in the actions.

Up until now, Bank of America (NYSE: BAC), which is buying Countrywide, has been sticking to its story that it will close on its purchase of the mortgages company. The media has written a million times that the big money center bank might pull out of the deal. That actually became a bit more likely with the new states' actions.

According to The Wall Street Journal, Kurt Eggert, a law professor at the School of Law at Chapman University said, "Countrywide could be required to give back its profit on all those loans and conceivably give back houses on which it has foreclosed." Since that number could be well into the billions of dollars, the potential damages are rising fast.

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Countrywide's Pressures Mount

The legal and financial pressures on Countrywide Financial Corp. mounted Wednesday as officials in three states filed separate legal actions against the mortgage lender.

The actions, by the attorneys general of California and Illinois, and the Washington State Department of Financial Institutions, came on the same day that Countrywide shareholders voted to approve the sale of the company to Bank of America Corp. The all-stock transaction was valued at $4 billion when Bank of America agreed to buy Countrywide in January. But Bank of America shares have since slipped, and the value has fallen to about $2.8 billion. The transaction is scheduled to close on July 1.

The California action, filed in state court by Attorney General Edmund G. Brown Jr., alleges that Countrywide used "misleading marketing practices" to steer home buyers into "risky and costly loans" without regard to borrowers' ability to pay. Mr. Brown alleges that Countrywide, based in Calabasas, Calif., was driven by an effort to boost the company's market share and fill demand from Wall Street for loans that could be packaged into securities. The 46-page complaint also names Countrywide Chairman Angelo Mozilo and the company's president, David Sambol.

All states are seeking restitution for borrowers. If the states can persuade the courts to grant restitution, it "could be a staggering blow against Countrywide," said Kurt Eggert, a law professor at the School of Law at Chapman University, in Orange, Calif. "Countrywide could be required to give back its profit on all those loans and conceivably give back houses on which it has foreclosed."

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The Tease of the "Teaser Freeze"

By Kurt Eggert

Professor of Law, Chapman University School of Law

On December 6, the Bush Administration announced a "market-based" solution to the mounting tide of foreclosures that threatens to swamp the economy. But its plan may do more harm than good if it squeezes out real solutions to the foreclosure problem. In a nutshell, the Bush plan is to let the Wall Street insiders who caused the problem do whatever helps themselves the most.

The plan is to provide a "rate freeze" to a select group of subprime borrowers: those who received adjustable subprime loans from 2005 to mid-2007, whose rates will reset between January 1, 2008 and mid-2010, who are able to stay generally current on their loans until the reset but likely will not be able to make the higher reset payments, and who seem unlikely to be able to refinance. Because it helps so few borrowers, the "teaser freeze" may just be a tease. Although two million residential foreclosures have been predicted for the next two years, the Center for Responsible Lending estimates that the Bush plan will help only about 145,000 families, or about 7% of subprime borrowers, which would make the plan the proverbial drop in the bucket.

Worse, by focusing loan modification efforts on this select group, the Bush plan could hurt other borrowers. Getting servicers to modify loans for distressed borrowers has been harder than pulling teeth. Borrowers who fall outside the Bush plan may find loan servicers even less willing or able to spend the time to modify their loans and help them save their houses.

Even for those who fall within the plan, there is not much there there. The plan is completely voluntary and is, by its own terms, "non-exclusive," meaning that servicers do not have to follow the plan. Even the vaunted five-year rate freeze is discretionary, as the rate freeze will only be "generally for five years" but could be much shorter. There are no mandates to do anything and no monitoring to see if anything has been done and, perish the thought, no additional governmental regulation to clean up the mess.

The primary effect of the plan will be to reduce some loan servicer costs associated with loan modifications by allowing servicers to presume that they should modify the loans of the select group of borrowers, without plowing through all of the debtor's income and expense information. While reducing these servicer costs should help some borrowers get loan modifications, the primary benefit will be to the investors and servicers who can therefore keep more of the borrowers' payments.

The plan does not solve many of the most pressing problems. It does nothing to help the multitude of homeowners facing foreclosures right now because their loans have already reset or they already are unable to pay those loans. According to the Mortgage Bankers Association, the rate of new foreclosures and the percentage of loans in the process of foreclosure right now are both at their highest rate ever recorded, in a survey dating back to 1972.

The irony is that Bush's plan was crafted by Wall Street, by the very parties who by and large caused the problem. The subprime meltdown and the wave of foreclosures is the result of a system that paid most of the players in the game not based on the quality of the loans they handled, but on the quantity. The lenders, investment houses, and rating agencies who created, packaged, and sold these loans on Wall Street were paid more if they made more loans. To pump up the number of loans, underwriting standards were thrown out the window and increasingly risky loans, with teaser rates and option payments, were made, often without determining whether borrowers could afford them when the higher rates kicked in. As a result, foreclosures are skyrocketing.

The subprime industry could keep making these hazardous loans because it was virtually unregulated by any governmental agency. Lenders got their orders from Wall Street, from the very parties that now claim to have a plan to solve the problem that they in large part caused.

The great danger is that this plan will squeeze out better and more complete attempts to solve these problems. A broader loan modification system could be crafted, including one that mandates reasonable efforts by servicers. Bankruptcy reform could allow distressedborrowers to modify their loans in bankruptcy and so save their homes, whether they are part of the select group or not. And real reform of the lending process is crucial to keep new risky loans from being made.

The problem of rising foreclosures requires real, substantive solutions, not just handing off the ball to the players who caused the problem in the first place.

Kurt Eggert is a Professor of Law with Chapman University School of Law and has testified to Congress on subprime and securitization issues. He just completed a three year term as a member of the Federal Reserve Board's Consumer Advisory Council.

Service, style distinguish Nordstrom

Nordstrom holds just three sales a year. But each one runs for about two weeks.

The Seattle-based retailer's first Pittsburgh-area store will differ in plenty of other ways from the region's established department stores when it opens at 10 a.m. Oct. 24 at Ross Park Mall, two company representatives said Tuesday.

Its Via C department will feature styles by emerging designers, which national retailers often ignore, spokesman Michael Boyd said.

Tony Gao, a retail expert and professor at Northeastern University in Boston, agreed. "They probably are doing better, in terms of withstanding the impact of the worsening economy, than a lot of the middle-of-the-road retailers," he said.

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Julie's Gal Tops John's Guy; Here Comes Tom Campbell

Noted politician-intellectual Tom Campbell is becoming an OC guy. The former Republican congressman from the San Jose area is stepping down as biz dean at Berkeley and joining Chapman U's law school for a two-year gig starting in January. It's another coup for Chapman and law dean John Eastman ...

United Airlines: Hidden gem in sagging airline market

When JetBlue announced a new $7 charge for pillows and blankets, I thought you might be interested in some comments from Harlan Platt, Ph.D., a finance professor focusing on the airline industry at Northeastern University’s business school. Note that he references United Airlines recent earnings report showcasing their hidden strength:

“There are two ways to raise prices: directly and indirectly. The direct way simply increases the price and the consumer notices it. The indirect way increases prices in ways that the consumer does not notice when they make their purchase decision,” Dr. Platt states. “Direct price increases piss off the consumer immediately and may cause a sale to be lost; an indirect price increase pisses off the consumer later. Given that higher fuel prices are requiring airlines to raise prices they are advised to use the indirect method to avoid losing market share to airlines using the indirect method.”

“No one likes the higher fares (either direct or indirect) but air travel still is the preferred way to get from here to there. Unless oil prices continue to fall air travel will become a luxury good available to the middle class only on special occasions. The death of an airline (we've lost 5 so far this year) accelerates the move to a luxury good status as legacy carriers take advantage of the reduced competition to raise prices.

“Notice the hidden strength in United Airlines' earnings report. They have plenty of cash to weather the storm as higher ticket prices have increased revenue and cut backs have reduced costs,” Prof. Platt concludes.

Interview Questions from Left Field

Potential employers enjoy asking MBA applicants some off-the-wall questions. Here's how to not get rattled

In May, Jon Borden, a second-year MBA student from Northeastern University, interviewed at Blue Cross Blue Shield for a position as an IT recruiter. When he arrived for the interview, he was as well-prepared as he believed he could be. Because the position he was interviewing for required an almost immediate start date, he figured the interview would be quick and to the point.

It wasn't long into the meeting, however, before Borden was faced with a question unlike any other he had ever encountered in an interview: "If you could have any superpower, what would it be?"

"I was shocked," he admits. Even though Borden himself used to ask unexpected questions during interviews as an IT recruiter at Addeco ( ADO), he admits being caught off guard: "I didn't see that coming at all."

Manhole Cover Puzzle

While not a new trend, asking seemingly unrelated or impossible-to-answer questions aimed at throwing candidates for a loop seems to have turned from an uncommon interview tactic into something much more mainstream, says Lynne Sarikas, director of Northeastern's MBA Career Center. "This is something Microsoft ( MSFT) popularized a few years ago," Sarikas says. "They were notorious for asking strange questions like, Why is a manhole cover round?'"

Sarikas explains that much of the reason certain interviewers ask unpredictable questions is to catch candidates in an unguarded moment. "To some degree, it's a response to candidates being too prepared," she says. "These days, you're dead in the water if you're not prepared because companies expect you to be."

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Need to talk? Take a look at Bluetooth

North Park store owner Saad Ewdish knows the law on using his cell phone while driving is about to change, but he's a little fuzzy on details, such as when the change takes effect, and unfamiliar with the technologies that would let him continue talking.“I don't know if my phone does Bluetooth,” Ewdish said. “What's Bluetooth?”

As of July 1, Ewdish and other California drivers who talk behind the wheel risk a ticket unless they use hands-free technology.

Increased use could lead to social acceptance of Bluetooth, but some say it's more likely to produce discrete use of the technology in the privacy of owners' cars.

“Just because you have to be hands-free in the car doesn't mean you have to be hands-free everywhere,” said Gloria Barczak, a Northeastern University marketing professor who researches new-product development.

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