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New rule hamstringing bank lending

Federal Reserve Chairman Ben S. Bernanke warned last week that it wouldn't do the economy much good if credit markets stabilized, but banks were too spooked to lend.

Federal Reserve Chairman Ben S. Bernanke warned last week that it wouldn't do the economy much good if credit markets stabilized, but banks were too spooked to lend.

Joseph Longino, a principal at New York investment bank Sandler O'Neill & Partners L.P. and a federal bank regulator during the last big bank crisis in the late 1980s, says banks are especially scared because tougher accounting rules are taking effect at "the worst possible time."

Financial Accounting Standard 157 requires companies to report the "fair value" of their investments - what they would get if they sold them today, not just what they paid for them or what they wish they were worth.

The problem, Longino said in a letter to Securities and Exchange Commission Chairman Christopher Cox, is that in the current market, many securities and loans can be unloaded only at a discount. Devaluing them "could deliver a coup de grace to domestic and international confidence in the U.S. financial system."

Longino said he did not want the rules repealed, just for the SEC to issue formal guidance showing banks and their auditors that they would not be punished for showing discretion in deciding what to write down.

Merger boss:

Eitan Gertel ran JDS Uniphase Corp.'s power-transmission business in Montgomery County, left in 2001, about the time the bubble burst, and started Optium Corp., of Horsham, which sells optical systems to telecom and cable clients like Ericsson and Alcatel-Lucent.

On Friday, telecom parts-maker Finisar Corp., of Sunnyvale, Calif., agreed to buy Optium, which employs 400, for about $200 million in stock - and put Gertel, not its own CEO, in charge of the combined firms.

The companies haven't said where the new headquarters will be, but Gertel, a Drexel graduate, hasn't announced family moving plans, said spokeswoman Veronica Rosa.

Rival bought:

Financial-software giant SunGard Data Systems Inc., of Wayne, said Friday that it would buy disaster-recovery competitor Strohl Systems Group Inc., of King of Prussia. It caps Myles Strohl's career, 40 years after he opened a headhunter shop and 20 years after he started selling Living Disaster Recovery Planning Solution software in competition with SunGard.

"Strohl's built a strong business" that outsells SunGard's rival Paragon planning tool, said Patrick Doherty, executive vice president at SunGard Availability Services L.P. SunGard will hire Strohl's 170 workers with "minimal staff changes."

Oracle's silence:

AdminServer Inc. was getting ready to double its staff to 400 at its Chester headquarters when Oracle Corp. said last week that it was buying the fast-growing insurance-software-maker.

That left landlord Buccini-Pollin Group wondering if AdminServer will need the extra space it had rented in the center of Chester's redevelopment district. "It sounds like a division that could operate autonomously, and that would positively impact plans for Chester," said Ina Sargen, Buccini's leasing chief. Oracle wouldn't say.

Holy house:

Cardinal Justin Rigali will visit the former St. John Neumann High School, 26th and Moore in South Philadelphia, tomorrow morning to reopen it as a 75-unit "independent living facility" for seniors.

The project cost $17 million. PNC Bank invested $12 million, with an assist from Beneficial Bank. The city provided $1.8 million in loans. The property was donated by the archdiocese, according to Joseph J. Sweeney, chief executive officer of operator Catholic Health Care Services.

Units will rent for about $500 a month, said Suzanne O'Grady Laurito, project developer.


Liberty Resources Inc., which "advocates and promotes independent living for persons with disabilities," has bought the 212,000-square-foot building it rents at 714 Market St. for $25.5 million from New York father-and-son investors Simon and Avika Glick. The sale was financed by Citizens Bank, said Liberty spokeswoman Kristen Insalaco.