Working on Relationships

There's no substitute for the personal approach, writes a reader. More letters to the editor: where are the ''shining examples'' of cities that work?; nontech financing blues; holding the CEO accountable; more.


CFO welcomes your letters. Send them to: The Editor, CFO, 253 Summer St., Boston, MA 02210.

E-mail us at You can also contact a specific author by clicking on his or her byline at the beginning of any article.

Please include your full name, title, company name, address, and telephone number. Letters are subject to editing for clarity and length.

Thank you for the article titled "Love-Hate Relationship" in the March issue of CFO. I am writing to correct the caption to the photograph on page 31 of that article, which said "...modeling banks' return on capital lessens Worthington Industries's dependence on personal relationships." Our return model's raison d'être is an intellectual gathering point for our discussions and relationship-building. Although it is a critical part of our process, the model will never be used as a proxy for the human element of our credit-procurement efforts. We believe we are on the right track when we receive feedback such as the following from one of our banks: "...the combination of your personal approach and supporting relationship model is the best effort that I have seen in equitably managing a bank group."

Randal I. Rombeiro


Worthington Industries Inc.

Columbus, Ohio

The Other Side of the Coin

Your article "Big City Blues" (February) was well written and insightful. However, although it clearly articulated the problem, it did little to offer any paths forward.

It would be great to see the other side of the coin. Anytime someone is losing money, someone is making money. Are there examples of U.S. cities that are not running in deficit—but instead are running in surplus—even in these trying times? If not, then we are in really big trouble.

If every city in the United States is owned by banks, then the risk to the overall financial security of the country is far greater than you have presented in your article. If there are "shining examples" of cities that work, then at least there is a ray of hope and an opportunity to learn and change. Is there a central location for all cities and municipalities where annual budgets, deficits, and surpluses are reported in summary and detail format?

Kevin Harris

Chief Operating Officer

Silicon Space Inc.
San Diego

The Editor Replies:

The best resource for information about the financial condition of cities comes from the National League of Cities, which publishes an annual study that reviews cities' budget information.

Nontech Financing Blues

Your recent article on capital acquisition ("Finders Keepers," February) was excellent. I have personally searched for start-up/seed capital for a new E-recycling company for close to a year with no luck. In my opinion, the need for these "finders" is greatly understated. For seed-capital companies, if you're not a biotech, software, or other type of technology company, venture capitalists will limit you to a minute of their precious time. For the rest of us in search of fresh capital, it's nearly impossible to find a VC willing to read even the first page of a proposal. Unfortunately, by protecting its own interests, the Securities and Exchange Commission is forcing small businesses (and jobs) out of the country—just what the United States needs in its war on the ever expanding trade deficit.

John Pilafas


Safali Investments LLC

Via E-mail

I enjoyed "Finders Keepers." Your readers should be made aware that even if a finder manages to fall under the SEC "exception" to registration requirements as a securities broker, a finder must still comply with state laws regulating securities brokers and salespersons. These state statutes commonly provide that if any commission is paid to the finder, then he or she must be registered as a securities broker or salesperson. The state statutes often provide that "any remuneration paid which is directly related to the sale of securities shall be considered a commission." Unlike the SEC, most of the states do not have an exception. Unfortunately, fixing the problem on the federal level won't solve the state problem.

Daniel H. Kolber

Gambrell & Stolz LLP


Heavy Metal

In the article "Hard Times" (November 2004), the author tells the sad tale of Mr. Robert Nolan, who was working 80 hours a week as a CFO for Metalor Technologies. Based on Mr. Nolan's input, the precious-metals industry is defined as a "stressful world driven almost entirely by the fluctuating prices of gold, platinum, and other metals."

All precious-metals processing companies hedge their precious-metals inventory in order to insulate themselves from the daily price fluctuations in the market. Therefore, the industry is not driven by fluctuating precious-metals prices. Mr. Nolan's comment indicates that he did not understand the fundamentals of this business, and was working very hard to compensate for this lack of understanding. On the other hand, hedging of the precious-metals inventory introduces complications in day-to-day operations such as a trading room to hedge purchases and sales of precious metals on a futures exchange. Financial reporting of futures transactions is a complex business, but not one requiring 80 hours per week—if you know what you are doing.

I am also perplexed by his comment about the pressure on him from the Swiss parent to perform to their profitability standards. In any manufacturing business, the pressure to perform to any profitability standard is on the production and sales side, not on the CFO. The CFO's prime responsibility is to make sure that financial reporting of this complex business is fair and accurate.

Ravi Nadkarni

Retired CEO/General Manager

Metalor Technologies

Wrentham, Massachusetts

Holding the CEO Accountable

The Letter to the Editor by Joe Moran ("Holding Government Accountable," January) forgets who is the CEO of the executive branch—it's the President. Sarbanes-Oxley correctly assigns the responsibility to the CEO. I assume he advocates that the President "[get] fired, fined, chastised, frowned upon, or lose a raise" for running up the enormous deficits created during his Administration and for not making it a high enough priority (with adequate resources) for agencies within the executive branch to produce audited financial statements. However, just recently, a majority of the voters said they do not care about these matters. Other "values" matter more to them.

W. Bartley Hildreth


W. Frank Barton School of Business

Wichita State University



Our recent story on preference payments ("Bad Debt and Then Some," NewsWatch, March, incorrectly cited David Carere's company and title. Carere is with Rich Products Corp., not Rich Foods Corp. His full title is vice president, finance — credits and accounts settlement.

In our March article "Flashbacks: 20 Years of Finance," we stated that financier Michael Milken was sentenced to 10 years in prison and agreed to pay a $600 million fine. Although Milken was sentenced to 10 years, he was released after just 1 year and 10 months. He paid a $200 million criminal penalty and $400 million separately in a civil settlement.


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