Business and the New Economy News

Resort Development

Work has halted at the Moonlight Basin resort near Big Sky, Montana, after its construction funding vanished -- a casualty of the bankruptcy of the Wall Street investment firm Lehman Brothers.

"Lehman Brothers has been Moonlight Basin's banking partner for the last 13 months," wrote Moonlight CEO Lee Poole in an emailed statement in response to questions about the development. "We are… working through the matter and expect to continue normal operations." [more]

As the fallout from the housing crash continues to reverberate on Wall Street, Montana banks have been re-appraising balance sheets, taking another hard look at collateral and reassuring Main Street businesses, which have begun to feel the economic slump.

"All the stuff that's happened… doesn’t affect but a handful of banks in the state, if any," said Michael Richards, president of Bank of Bozeman, who was referring to the collapse of the investment firm Lehman Brothers and the $85 billion bailout of the international insurance group and financial services company AIG.

The real estate collapse, basically, is what dragged down those two companies, as well as investment firm Merrill Lynch. [more]

High Finance

It's a long way from Wall Street to Whitefish, but for better or worse the connections these days are closer than you might think. This week's case in point: Richard Fuld, chairman and CEO of Lehman Brothers, the huge financial firm that went bankrupt this week, is a partner in two major Whitefish-area real estate projects.

While Fuld's Montana ventures, which are part of a partnership with super-star venture capitalist Mark Kvamme, are in better shape than his investment bank, they are not exactly thriving amid the real estate slump.

Take the Homestead at Whitefish, one of the region's seemingly countless "unique" developments, "nestled" into the mountains and offering buyers an "authentic Western lifestyle." With lots priced from $500,000 to $1.5 million and spec homes in the $4 million range, the Homestead is, uh, not selling very well. [more]

You might think, as the stock of Lee Enterprises (NYSE: LEE) fell to a record low of $2.35 and the nation's largest newspaper conglomerate Gannet (NYSE: GCI) declined to $16.32 per share, that Montana's daily newspaper publishers would feel a bit downtrodden. Maybe pessimistic.

After all, newsprint has gone up about 30 percent this year, and it was already high. Ink, too, has gotten outrageous. Both are driven up largely by fuel prices. Every publisher in the state has significantly cut staff this year. In all cases, the cuts have extended to the newsroom, although some of the positions have been trimmed with buyouts and by attrition. In the last three weeks, Montana's Lee newspapers (which include the Missoulian, the Billings Gazette, the Helena Independent Record, the Montana Standard in Butte, and the five-day-a-week Ravalli Republic in Hamilton) have slashed staff to cut costs. I've written about each of those layoffs recently, except the Montana Standard, which laid off seven employees last week, none in the newsroom. [more]

$800,000 Allegedly Stolen

Officials at First National Bank of Montana allege that a longtime bank retail manager embezzled some $800,000 over a number of years in Missoula. Sources say federal investigators and bank examiners have been probing the case, and that criminal charges will soon be filed.

"I'm not at liberty to go a lot into the specifics," said First National's Missoula market president Adam McQuiston. "Here's the limited detail I can go into: Internal theft was uncovered early this year by bank officials, who took immediate action, and authorities were contacted. The bank has been reimbursed via insurance for the losses, net a deductible of $50,000. The theft didn't affect client accounts or customers." [more]

Luella Brien, a reporter at the Billings Gazette with nearly two years experience at the paper, was the latest journalist laid off in the state, thanks to cutbacks at Lee Enterprises, which owns four daily newspapers in Montana. The Gazette laid off another newsroom employee last week.

Managers asked Brien not to tell her coworkers because "it would be awkward... for them," she said. The paper has also ceased publishing its Heights edition, geared toward the sprawling neighborhoods along Billings' north and east borders. [more]

Got an Extra Million? Have I Got a Seminar for You!

One of the leaders of a Flathead-area capital investor group has renewed a push to build an angel investment network in Missoula with an all-day seminar at the Doubletree Hotel on Sept. 25 geared toward possible investors and led by long-time capital investor Bill Payne.

A seminar may seem like a funny way to get rich people to come forward as potential backers of potential businesses, but that's the trick with building an angel network, said Liz Marchi. Other partners in Marchi's effort include the Governor's Office of Economic Development and umpteen local economic development groups, including Montana Community Development Corp. Most of the groups, excluding MCDC, have little or no actual experience in fostering real startup companies and spurring them to grow. [more]

Cutbacks at Lee Enterprises newspapers in Montana continue today with six newsroom layoffs at the Ravalli Republic in Hamilton.

The layoffs amounted to three full-time and three part-time positions, although the paper also added a position, hiring John Cramer, a seasoned reporter laid off by the Missoulian last week. In a story on the newspaper's Web site, publisher Kristen Bounds said she intends to make another hire for the newsroom in the coming weeks. [more]

Media Industry

A husband-wife pair received the first newsroom layoff notices from the Missoulian in more than five years, as Missoula's daily newspaper and other Lee Enterprises newspapers around the state slashed costs in the face of high paper prices, slow advertising sales and increased competition (especially from free Internet-based classified ad vehicles, like craigslist, as well as news and aggregation sites).

John Cramer, the environmental reporter, and Pamela J. Podger, who covered business, came to the Missoulian about a year ago. The two have young boys, twins, and recently bought a house in town. [more]

Words on the National Economy

The Federal Reserve Bank should allow banks to fail -- to teach managers the right tough lessons -- said Minneapolis Federal Reserve Bank president Gary Stern in Three Forks this afternoon. He also suggested the U.S. economy today was similar in many ways to that of 1990 and 1991, although he noted a few significant differences.

[more]