ICANN Keeps it Money in a Non-Interest Bearing Account!
This thing has got my goat. I'm now prepared to say this decision by ICANN management approximates a gift.....to less than deserving bankers. And all this while some elements cavil and carry-on about an At-Large mission to the IGF 2012! Its as if there is no understanding that money has time value! Now, I spent a little while as a senior banker. And while I'm sanguine that bankers tend to the poorly with use of information, they surely in this case must know this is a gift in spades to them. One of my distinguished correspondents, a guy I know thinks outside the box, had this to say "*A decision to forego fair market value is essentially a decision to gift that fair market value onto another.*". Yessir, that it is! And we could fairly say this decision constitutes a repudiation of the duty of the officers to the public benefit. - Carlton ============================== Carlton A Samuels Mobile: 876-818-1799 *Strategy, Planning, Governance, Assessment & Turnaround* =============================
This thing has got my goat.
Actually, it sounds like ICANN has learned their lesson. A few years back, ICANN made an incredibly irresponsible decision to place $25 million of reserve funds in a broker managed stock market account, which became $20 million when the market burped. Oops. At the time ICANN's CFO refused to take any responsibility or to admit that they'd screwed up, or to explain why they'd needed $25 million of registrants' money for the reserve if, as he now claimed, $20M was enough. I hope we all agree that ICANN's primary reponsibility toward its reserves is to be sure that the money is there when it's needed. That means something with no credit risk, like US government treasury bills, which are currently yielding 0.16% for six month bills and 0.18% for twelve months. When you subtract off even the most modest broker fees, that rounds to zero, so I can't blame them for just putting it in a zero interest account on which they can draw as needed. What were you expecting them to do? Do you think it is possible to find suitable low-risk investments that pay significantly more? Regards, John Levine, johnl@iecc.com, Primary Perpetrator of "The Internet for Dummies", Please consider the environment before reading this e-mail. http://jl.ly
Actually, it sounds like ICANN has learned their lesson. A few years back, ICANN made an incredibly irresponsible decision to place $25 million of reserve funds in a broker managed stock market account, which became $20 million when the market burped. Oops. At the time ICANN's CFO refused to take any responsibility or to admit that they'd screwed up, or to explain why they'd needed $25 million of registrants' money for the reserve if, as he now claimed, $20M was enough.
No, it sounds like they are still stupid!
I hope we all agree that ICANN's primary reponsibility toward its reserves is to be sure that the money is there when it's needed. That means something with no credit risk, like US government treasury bills, which are currently yielding 0.16% for six month bills and 0.18% for twelve months. When you subtract off even the most modest broker fees, that rounds to zero, so I can't blame them for just putting it in a zero interest account on which they can draw as needed.
There are many non-zero interest, no risk accounts.
What were you expecting them to do? Do you think it is possible to find suitable low-risk investments that pay significantly more?
American Express has a savings account which provides close to .98%. .98% of $352.3M is $3,452,540 per year. Or even a CitiGold checking account, you'd get .1% which wold still be $352,300/year.
Regards, John Levine, johnl@iecc.com, Primary Perpetrator of "The Internet for Dummies", Please consider the environment before reading this e-mail. http://jl.ly _______________________________________________ At-Large mailing list At-Large@atlarge-lists.icann.org https://atlarge-lists.icann.org/mailman/listinfo/at-large
At-Large Official Site: http://atlarge.icann.org
Probably, applicants would say it's not ICANN's money; it's their's. or, how do we decide how any revenue used: a PDP? Adam On Sat, Nov 3, 2012 at 10:19 AM, Bill Silverstein <icann-list@sorehands.com>wrote:
Actually, it sounds like ICANN has learned their lesson. A few years back, ICANN made an incredibly irresponsible decision to place $25
million
of reserve funds in a broker managed stock market account, which became $20 million when the market burped. Oops. At the time ICANN's CFO refused to take any responsibility or to admit that they'd screwed up, or to explain why they'd needed $25 million of registrants' money for the reserve if, as he now claimed, $20M was enough.
No, it sounds like they are still stupid!
I hope we all agree that ICANN's primary reponsibility toward its
reserves
is to be sure that the money is there when it's needed. That means something with no credit risk, like US government treasury bills, which are currently yielding 0.16% for six month bills and 0.18% for twelve months. When you subtract off even the most modest broker fees, that rounds to zero, so I can't blame them for just putting it in a zero interest account on which they can draw as needed.
There are many non-zero interest, no risk accounts.
What were you expecting them to do? Do you think it is possible to find suitable low-risk investments that pay significantly more?
American Express has a savings account which provides close to .98%. .98% of $352.3M is $3,452,540 per year. Or even a CitiGold checking account, you'd get .1% which wold still be $352,300/year.
Regards, John Levine, johnl@iecc.com, Primary Perpetrator of "The Internet for Dummies", Please consider the environment before reading this e-mail. http://jl.ly _______________________________________________ At-Large mailing list At-Large@atlarge-lists.icann.org https://atlarge-lists.icann.org/mailman/listinfo/at-large
At-Large Official Site: http://atlarge.icann.org
_______________________________________________ At-Large mailing list At-Large@atlarge-lists.icann.org https://atlarge-lists.icann.org/mailman/listinfo/at-large
At-Large Official Site: http://atlarge.icann.org
One of our politicians said at one time 'it takes cash to care'. That observation cannot be successfully contradicted. Here's the thing. I prefer to work the 'public benefit' side of the street. This is where I would wish for ICANN to care. And as Christopher [Wilkinson] so unerringly identified in the thread, there is no shortage of worthy care points to consider for public benefit. Better to have a problem deciding the points we care about than not having the wherewithal to care. - Carlton ============================== Carlton A Samuels Mobile: 876-818-1799 *Strategy, Planning, Governance, Assessment & Turnaround* ============================= On Sat, Nov 3, 2012 at 4:47 AM, Adam Peake <ajp@glocom.ac.jp> wrote:
Probably, applicants would say it's not ICANN's money; it's their's.
or, how do we decide how any revenue used: a PDP?
Adam
On Sat, Nov 3, 2012 at 10:19 AM, Bill Silverstein <icann-list@sorehands.com>wrote:
Actually, it sounds like ICANN has learned their lesson. A few years back, ICANN made an incredibly irresponsible decision to place $25
million
of reserve funds in a broker managed stock market account, which became $20 million when the market burped. Oops. At the time ICANN's CFO refused to take any responsibility or to admit that they'd screwed up, or to explain why they'd needed $25 million of registrants' money for the reserve if, as he now claimed, $20M was enough.
No, it sounds like they are still stupid!
I hope we all agree that ICANN's primary reponsibility toward its
reserves
is to be sure that the money is there when it's needed. That means something with no credit risk, like US government treasury bills, which are currently yielding 0.16% for six month bills and 0.18% for twelve months. When you subtract off even the most modest broker fees, that rounds to zero, so I can't blame them for just putting it in a zero interest account on which they can draw as needed.
There are many non-zero interest, no risk accounts.
What were you expecting them to do? Do you think it is possible to
find
suitable low-risk investments that pay significantly more?
American Express has a savings account which provides close to .98%. .98% of $352.3M is $3,452,540 per year. Or even a CitiGold checking account, you'd get .1% which wold still be $352,300/year.
Regards, John Levine, johnl@iecc.com, Primary Perpetrator of "The Internet for Dummies", Please consider the environment before reading this e-mail.
_______________________________________________ At-Large mailing list At-Large@atlarge-lists.icann.org https://atlarge-lists.icann.org/mailman/listinfo/at-large
At-Large Official Site: http://atlarge.icann.org
_______________________________________________ At-Large mailing list At-Large@atlarge-lists.icann.org https://atlarge-lists.icann.org/mailman/listinfo/at-large
At-Large Official Site: http://atlarge.icann.org
_______________________________________________ At-Large mailing list At-Large@atlarge-lists.icann.org https://atlarge-lists.icann.org/mailman/listinfo/at-large
At-Large Official Site: http://atlarge.icann.org
Even with my admitted rudimentary knowledge of high finance, seems you're making the case for new investment counselors to ICANN. No, I won't give it for free, not this time! - Carlton ============================== Carlton A Samuels Mobile: 876-818-1799 *Strategy, Planning, Governance, Assessment & Turnaround* ============================= On Fri, Nov 2, 2012 at 7:36 PM, John R. Levine <johnl@iecc.com> wrote:
This thing has got my goat.
Actually, it sounds like ICANN has learned their lesson. A few years back, ICANN made an incredibly irresponsible decision to place $25 million of reserve funds in a broker managed stock market account, which became $20 million when the market burped. Oops. At the time ICANN's CFO refused to take any responsibility or to admit that they'd screwed up, or to explain why they'd needed $25 million of registrants' money for the reserve if, as he now claimed, $20M was enough.
I hope we all agree that ICANN's primary reponsibility toward its reserves is to be sure that the money is there when it's needed. That means something with no credit risk, like US government treasury bills, which are currently yielding 0.16% for six month bills and 0.18% for twelve months. When you subtract off even the most modest broker fees, that rounds to zero, so I can't blame them for just putting it in a zero interest account on which they can draw as needed.
What were you expecting them to do? Do you think it is possible to find suitable low-risk investments that pay significantly more?
Regards, John Levine, johnl@iecc.com, Primary Perpetrator of "The Internet for Dummies", Please consider the environment before reading this e-mail. http://jl.ly _______________________________________________ At-Large mailing list At-Large@atlarge-lists.icann.org https://atlarge-lists.icann.org/mailman/listinfo/at-large
At-Large Official Site: http://atlarge.icann.org
One of the things that the United States federal government did in the wake of the "great recession" to shore up confidence in the banking system was to remove the cap on FDIC insurance for certain non-interest bearing bank accounts. (See, http://www.fdic.gov/deposit/deposits/changes.html). So ICANN apparently made a decision (the right one, in my view) that this extraordinary sum of money was better off in a fully insured non-interest bearing account than in any other place. The FDIC rule expires on December 31, 2012, so unless it is extended, ICANN will have to reexamine this before the end of the year. -- Bret
On 11/03/2012 12:14 PM, Bret Fausett wrote:
One of the things that the United States federal government did in the wake of the "great recession" to shore up confidence in the banking system was to remove the cap on FDIC insurance for certain non-interest bearing bank accounts. (See, http://www.fdic.gov/deposit/deposits/changes.html). So ICANN apparently made a decision (the right one, in my view) that this extraordinary sum of money was better off in a fully insured non-interest bearing account than in any other place.
I've been thinking about this since the initial note was posted yesterday. I began my thought with this: ICANN's fee for the new TLD program is based on an estimate of anticipated costs to process applications. In other words it is a cost recovery system, not intended to make a profit. But it is also not a slush fund to be wasted. OK. First I thought of AVC's comment that given that it appears that perhaps many applications share similar content that the cost of evaluation would be rather less than anticipated because, simply, one evaluation would cover the the main part of several applications. AVC estimated that the savings could run as high as 92%. If cost recovery is really the underlying theme then one might expect some, potentially significant, adjustments - refunds? - based on actual expenses. But that does not reach the question of where to hold the application money in the meantime. Assuring against downside risk is hard. The FDIC rule essentially puts the "full faith and credit" of the United States behind the zero-interest holding account, at least for another 8 weeks. But then again, that same "full faith and credit" stands behind US Treasury notes. But at least those Treasuries pay interest, perhaps a small amount, but when measured on a base of $350,000,000 it is nothing to sneeze at - even at the low rates mentioned by John L., one could buy several houses in many parts of the US on the yearly return. The catch is that such notes have specific maturity dates and can be less flexible than an on-demand account. Personally when I need a low-risk investment vehicle I also buy a hedge - i.e. put options or that now evil-sounding thing called a credit default swap. Of course, as we have well learned, even hedges can fail. And those things don't come for free, not even close. All of this suggested to me that perhaps ICANN could have followed a different course - which would have been to allow those submitting applications to submit letters of credit against which ICANN could draw as actual, real, concrete evaluation expenses arose. The applicant could then pick-and-chose to fund that letter of credit with whatever it took to get someone to issue a LoC meeting whatever standard of quality that ICANN required. I wonder, at the end of this process will ICANN perhaps be performing and publishing an audit of program costs? --karl--
participants (6)
-
Adam Peake -
Bill Silverstein -
Bret Fausett -
Carlton Samuels -
John R. Levine -
Karl Auerbach