Three more banks fail

Silverton Bank closes, costing the Deposit Insurance Fund an estimated $1.4 billion. Smaller New Jersey and Utah banks also shutter.

NEW YORK (CNNMoney.com) -- Three more banks shut their doors Friday, according to the federal government, bringing the total number of failures up to 32 in 2009.

The first failure was a wholesale banking operator that served 1,400 other lenders across the country and was the fifth biggest bank failure during the current recession in terms of assets.

Georgia "bankers' bank": The Federal Deposit Insurance Corp. said in a statement that it created a bridge bank to take over the operations of Silverton Bank, National Bank, headquartered in Atlanta.

Unlike the other 30 banks that have failed so far in 2009, Silverton Bank did not take deposits directly from the general public or make loans to consumers. Instead, it was a "bankers' bank," offering a wide variety of services, such as foreign wire transfers, as well as clearing and cash management, to other banks.

Silverton was cooperatively owned by community banks throughout the Southeast and was heavily invested in loans to real estate developments in Florida, Georgia, and other parts of the Southeast, according to Christopher Marinac, managing principal of financial firm FIG Partners LLC based out of Atlanta, Ga.

When real estate values sank in the current downturn, the assets backing those properties also lost their value. The Southeast has seen numerous regional banks topple as the housing bubble burst.

At the time of its closing, Silverton Bank had approximately $4.1 billion in assets and $3.3 billion in deposits, all of which are expected to be within the FDIC's insurance limits.

The FDIC estimates that the cost to the Deposit Insurance Fund will be $1.3 billion, making it the fourth costliest bank failure since the start of the recession. "It is a bigger hit to the insurance fund than they have seen in the last couple weeks," Marinac said. "This is a bigger issue than we have seen in awhile."

Silverton served banks in 44 states and operated six regional offices. The FDIC created a bridge bank to take over the assets of the institution and has contracted The Independent Bankers Bank, out of Irving, Texas, to assist. The FDIC does not expect to see any significant impact to the bank's clients, at least in the near term.

However, the bridge bank only plans to be operational for 60 days, with a possible 30-day extension. When the bridge bank services terminate, the banks that were serviced by the cooperatively owned bank will have to go out and find another institution to take care of those services.

"There is no clear cut answer on a situation like this," said Marinac. "This is a little bit more complex and therefore there are more uncertainties about how this will unfold."

Thus far, the FDIC has not been able to find another wholesale bank to agree to take over Silverton's operations. The FDIC will attempt to sell off the assets, but it could pose a challenge to find a buyer for risky commercial loans. However, the FDIC could try to find a buyer by discounting the debt. "Everything has a price," said Marinac.

New Jersey: State regulators shut down Citizens Community Bank Friday night, and named the FDIC as the receiver. The Ridgewood, N.J.- based bank had total assets of approximately $45.1 million and total deposits of $43.7 million as of Dec. 31.

North Jersey Community Bank, of Englewood Cliffs, N.J., has agreed to assume all of the deposits of the failed bank. The failed bank's single office will reopen Monday as the North Jersey Community Bank.

North Jersey Community Bank paid a premium of 0.67% to acquire all of the deposits of the failed bank and has agreed to purchase approximately $11.5 million in assets. The FDIC will hold onto the rest of the assets to dispose of later.

The FDIC will continue to fully insure individual accounts up to $250,000 through the end of 2009.

Utah: On Friday evening the FDIC also became the receiver of America West Bank, after the Utah regulators closed the institution. The Layton, Utah-based bank had total assets of approximately $299.4 million and total deposits of $284.1 million as of Dec. 31.

Cache Valley Bank, based in Logan, Utah, is assuming all deposits, paying discounted price of $352,000. It also agreed to buy nearly $11 million worth of America West's assets and took a 30-day option to purchase loans at book value. The FDIC estimates that the cost to the Deposit Insurance Fund will be $119.4 million.

America West's three branches will reopen Monday as Cache Valley Bank outposts.

Checking accounts, debit cards still work: Through the weekend, depositors of both Citizens Community Bank and America West Bank can access their money by writing checks or using ATM or debit cards. Checks drawn on either of the failed banks will continue to be processed, and the FDIC said loan customers should continue to make their payments as usual.

Stress tests awaited

Local banks have been shutting down in droves as the recession has made it harder for customers and businesses to pay their loans. Nearly every Friday so far this year, at least one bank has failed. Last week, four regional banks were shuttered.

Even as the government has committed unprecedented amounts of money to increase liquidity and jumpstart the economy, the pace of bank failures has accelerated. In all of 2008, 25 banks failed, compared with 2009's 31 banks.

It is not only smaller, regional banks that have felt the pressure of the recession. The nation's largest banks have also been hit by rising default rates and a decline in business spending.

Among the big banks that have received government aid, Citigroup (C, Fortune 500) and Bank of America (BAC, Fortune 500) have each received $45 billion in funds from the government's Troubled Asset Relief Program, or TARP.

In order to assess the health of the nation's financial industry, the Obama administration has unveiled details of its plan to conduct "stress tests" on 19 of the nation's largest banks.

The assessment of the bank's health was expected to be made public May 4, but an announcement from the Treasury Department Friday indicated that results would be delayed untilMay 7.

Market watchers are anxiously awaiting the results of the stress tests, which have been designed to assess the banks' preparedness to weather further downturns in the economy, including further increases in unemployment and decreases in home prices.

--CNNMoney's David Ellis contributed to this report. 

Source: http://money.cnn.com/2009/05/01/news/companies/bank_failure/?postversion=2009050120

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Pressure Mounting On Australia's Ambitious Carbon Trading Plan

By Phil Mercer  Sydney 03 May 2009

Australia's bold plans for a carbon emissions trading scheme are under threat after the conservative opposition in Canberra hardened its stance against it. Critics of Prime Minister Kevin Rudd's proposal say it would cost jobs and provoke economic uncertainty for the next 20 years.

Australian Prime Minister Kevin Rudd (file photo)

The prime minister wants the legislation - a proposal that would become the world's most sweeping emissions trading system - passed by the end of next month.

Under the bill, companies would have to buy permits for every ton of carbon they emit, a system designed to provide financial incentives for those that reduce their pollution. It would cover about 75 percent of emissions from Australia's 1,000 largest polluters.

Critics say that new, independent research proves the system will damage the Australian economy and cost jobs if it is introduced at a time of global recession.

Conservative lawmaker Andrew Robb says the government should delay its controversial plans.

"This report establishes very clearly that the government has got serious work to do to fix this deeply flawed scheme that they have put in place. Do not put in jeopardy tens of thousands of Australian jobs," said Robb.

The left-of-center Mr. Rudd wants the scheme to be working by July of next year.

The measures need the approval of the country's upper house of parliament, the Senate, which the government does not control.

Vehicles and a barn burn in bushfires 125 kilometers west of Melbourne, Australia, 07 Feb 2009

It needs the support of Greens Senators, who argue the scheme does not go far enough to protect the environment.

Climate Change minister Penny Wong is adamant she can convince skeptics to change their mind and that the plans will get parliamentary approval.

"All I can say is that we are determined to act in the national interest and the national interest means that we are determined to get this legislation through," said Wong.

Australia, one of the world's worst per capita emitters of greenhouse gases, warns that without tough environmental measures the country would lose jobs and key industries, including agriculture and tourism.

A long-standing drought, along with recent devastating bushfires and widespread floods have given some scientists more reason to think that the vast continent is likely to be one of the countries hardest hit by a shifting climate.

Skeptics argue, however, that rising temperatures and warmer oceans are part of a natural cycle and are not convinced the changes are a result of man's pollution.  

Source: http://www.voanews.com/english/2009-05-03-voa7.cfm

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Alternative Energy's Fortunes Shift With the Winds

One Man's Effort to Build a Turbine Company Reflects the Ups and Downs of Oil, the Economy and Commitment

Cedar Rapids, Iowa -- James Dehlsen has spent decades trying to build a bigger and better machine to convert a breeze into electricity.

As much as anyone, he helped create the modern wind-power business, riding waves of interest in alternative energy and weathering downturns when that enthusiasm died down. At this point in the cycle, he doesn't exactly have the wind at his back.

"The industry has been impacted pretty heavily," says Mr. Dehlsen, chairman of Clipper Windpower, one of a few U.S. wind-turbine makers. Asked about the demand for turbines, he says: "It's not up."

Jeffrey Ball/The Wall Street Journal

Just a few months ago, Clipper Windpower's turbines were in high demand. The company recently laid off workers.

President Barack Obama and politicians of both parties vow a renewable-energy revolution. The ups and downs of Mr. Dehlsen's company show both the promise and the difficulty of that vision. Creating reliable energy from a fuel as fickle as the wind is difficult. Doing so without predictable and prolonged help from Capitol Hill and Wall Street is all but impossible.

Few industries are as hard to change as energy. Fossil fuel, entrenched and convenient, follows a boom-and-bust cycle that keeps interrupting the development and adoption of alternatives. The interest in renewable energy rises with the price of oil and falls with it, too. Phasing in new energy sources on a scale big enough to matter would take consistent effort over decades -- something that, so far, hasn't happened in the biggest oil-consuming country in the world.

Europe has been more consistent. Longstanding subsidies there have incubated renewable-energy companies that now have gone global -- much like higher gasoline taxes have pushed most Europeans away from gas-guzzling cars. In good economic times, the U.S. chose not to match Europe's renewable-energy subsidies. So Europe, which generally isn't as windy as the U.S., emerged early on as a global wind-power leader.

Before the recession hit last fall, renewable energy, such as wind farms, were seeing a boom in jobs, growth and funding. But now financing has dried up and layoffs are occurring. Jeffrey Ball reports from Iowa

Today's recession is whipsawing renewable-energy companies regardless of their nationality. According to New Energy Finance, an industry analyst, new investment in "clean energy" -- sources such as wind, solar and biofuels -- sank 53% globally in the first quarter from the same period last year. Layoffs and production cutbacks are spreading throughout the industry, which just months ago was soaring. In response, the U.S. is moving to boost its subsidies, largely to generate what Mr. Obama calls "green jobs."

That's a big opportunity for Clipper -- if it can get past the recession. In the past few months, Clipper has laid off one-quarter of the workers at its factory in this Rust Belt city, and it has slashed its production of wind turbines by more than half. Like many of its competitors, it's spending huge sums fixing mechanical problems that couldn't have come at a worse time. The industry might have ironed out those glitches had it developed without the fits and starts.

Today's wind turbines weigh more than 300 tons and stand some 300 feet tall. Climbing their internal ladders to the top requires wearing a mountaineer-style safety harness and takes 10 or 15 sweaty minutes. Their three fiberglass blades slice through a circle of airspace covering nearly two acres. The blades turn gears, which run generators, which produce electricity.

When Mr. Dehlsen started his first wind company in 1980, turbines were "made in people's garages," he recalls. At the time, oil prices were surging, and tax breaks for new sources of energy were waiting to be exploited. Mr. Dehlsen's company, Zond Systems, began importing turbines from Vestas, a Danish equipment maker then entering the wind business.

By 1985, the good times had ended. Oil prices sank, Washington withdrew the tax credits, and private financing for wind power dried up.

Mr. Dehlsen spent the next two decades trying to develop turbines that would produce more power at lower cost. In 2000, he sold Zond to Enron, then a highflying energy company. The following year, he founded Clipper and began developing an even bigger turbine. In 2005, he tested it in a howling Wyoming snowstorm.

His timing was good. Once again, oil prices were rising, another U.S. tax break was in place, and investors were pouring money into wind.

Clipper leased an abandoned printing-press factory in Cedar Rapids and retooled it to make turbines. The location was sensible if not sexy. The windiest solid swath of the U.S. is a corridor stretching from Texas to the Dakotas. Iowa sits along it.

The arrival of Clipper and other wind-energy companies was a blessing for Iowa, which had been losing manufacturing jobs. Among those hired was Jeff Pottebaum, who was a maintenance worker at a local hospital before Clipper hired him in 2006 for $15 an hour. "I thought I had the world by the tail," the 41-year-old says.

In 2007, Clipper's first full year of production, cracks developed on the blades of some turbines the company had installed, and the teeth on some turbines' gears began to wear prematurely. In response, Clipper reinforced the blades of all its turbines. It also brought the gearboxes of all its turbines back to the factory to check and, if necessary, repair. Then, last year, more problems emerged with blades and with a few gearboxes. Those prompted additional fixes. Clipper says the problems originated with suppliers.

But the industry can't control the economy. Last fall, the debt markets collapsed, the recession set in, and orders for new turbines screeched to a halt. Clipper halved production, to about four turbines per week. In January, it laid off about 80 workers, including Mr. Pottebaum.

"I was with a company where I thought the sky was the limit," says Mr. Pottebaum, who now has a temporary job in landscaping. He would return to Clipper, he says, "in a heartbeat."

Other wind-turbine makers also have had layoffs -- enough to worry Iowa Gov. Chet Culver. "We've got to help them hold on," he says between meetings at the state capitol. Gov. Culver is glad that several wind-turbine companies -- including those based abroad -- have set up factories in his state. "Long-term, I think this is probably the strongest sector of our economy," he says. "I can't predict today what the future is going to be -- how long these companies are going to have to struggle."

Clipper is seeking a loan guarantee under the Obama administration's economic-stimulus plan. At the Cedar Rapids plant, Clipper's chief executive, Douglas Pertz, invokes national interest as a reason the government should help his firm. As the country assists its automotive icons, he argues, it also should help loosen up funding for its renewable-energy companies. It would be problematic for the country "for Clipper to not survive," he says. Yet the renewable-energy industry is one of many sectors competing for stimulus aid.

Vestas has grown into a global wind-power juggernaut largely because of the reliability of European renewable-energy policy, says Roby Roberts, a Vestas senior vice president. "It takes continuity, predictability and consistency, and that's not what the U.S. has ever had," he says. Vestas now is expanding in the U.S., he says, largely because the U.S. is implementing more supportive policy.

Out behind Clipper's plant, shrink-wrapped in plastic, the finished pieces of wind turbines are piling up as they wait to be picked up by buyers facing financial difficulty themselves.

Write to Jeffrey Ball at jeffrey.ball@wsj.com

  Source: http://online.wsj.com/article/SB124113394573975093.html

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Gandhi's Generational Gamble

By PETER WONACOTT in Talwandi Sabo and NIRAJ SHETH in Vadodara, India

Under a scalding April sun, Rahul Gandhi tried on an orange turban and held aloft a ceremonial curved sword. But such props are routine in Indian elections. What was really unusual about this campaign stop was the age of Mr. Gandhi and the other politicians on stage.

They were young. "Ask people to vote for change. Vote for the youth!" the 38-year-old Mr. Gandhi exhorted followers in the northern Indian state of Punjab.

India is run by graying politicians, although about 70% of its 1.1 billion population is under 40. Now Mr. Gandhi, scion of the country's most powerful political dynasty, is campaigning on the theme of generational revolution -- a strategy that also could pave his own path to power.

View Slideshow

Reuters

Rahul Gandhi, son of Sonia Gandhi, waved to supporters during a campaign rally at Khammam, India, in early April.

The Indian National Congress has run the country with his father, grandmother and great-grandfather at the helm. To rejuvenate the left-leaning party, Mr. Gandhi is trying to signal a break with the past. He has plucked candidates for Parliament from the party's youth wing, which he heads. Five hopefuls from Punjab, in their 30s or early 40s, represent Mr. Gandhi's strategy to flush out his party's elderly cadre, rebuild the ranks of its foot soldiers and catch up with a demographic shift that's reshaping Indian politics.

The push reflects both idealism and cold calculation as the world's largest democracy chooses its next government. Mr. Gandhi's ruling party and the main opposition, the Bharatiya Janata Party, or BJP, are vying for the same bulging youth vote. They see the young as the swing factor in India's dizzyingly divided electorate of religious, ethnic and caste groups. So do a host of scrappy regional parties. Results for the month-long elections are expected May 16.

The rejuvenation pitch is partially undermined by the fact that India's prime minister, and the Congress candidate for the post in the elections, is 76-year-old Manmohan Singh. His rival in the right-of-center BJP is 81-year-old L.K. Advani.

The push by younger players into politics could prove to be a turning point for India. Put off by rampant corruption, many of the country's young and talented have steered clear of political careers. The state has fallen short of its promises to deliver better health, education and living standards. The theory put forth by the champions of generational change is that bringing educated and business-savvy young people into politics will revolutionize governance.

The elections come as India navigates big obstacles. The global financial crisis has significantly slowed its economy. The Mumbai terror attacks of last year that left more than 170 dead sparked tensions with Pakistan that haven't cooled much.

Mr. Gandhi bats away speculation about his own future. For the next two years, he says, his mission is to introduce direct elections for the Youth Congress, the party wing for members 35 and under, so local chapters choose their leaders.

"The Rahul Gandhi of today has a very clear focus: the democratization of the Youth Congress," he said in a recent interview with a group of reporters. "It's very important that the Congress party is strengthened."

That mission is accompanied, opponents say, by a rich irony: The reformer is the heir to the party helm by virtue of his family's lasting hold over Congress, a spell even more powerful than that cast in America by the Kennedy and Bush clans. Mr. Gandhi is widely seen as being groomed as a future prime minister by his Italian-born mother, Sonia, who heads the Congress Party.

Mr. Gandhi emerged from a cloistered childhood, after the assassinations of his grandmother Indira in 1984 and father Rajiv in 1991. He earned a graduate degree from Cambridge University and worked as a consultant. In 2004, he won his father's old constituency in Uttar Pradesh state, and later became one of the Congress party's top officials.

Today, Mr. Gandhi is considered one of India's most eligible bachelors. But off the campaign trail, he shies from the spotlight and is rarely photographed at parties. A fellow politician and friend says Mr. Gandhi enjoys early morning motorcycle rides, but with a helmet to ensure his protection and privacy.

Rivals liken Mr. Gandhi's youth strategy to a tummy tuck for a party that remains flabby and old. And his drive has been marred by party infighting -- and at least one fistfight.

"They are talking as if they discovered the young. It's ridiculous," says D. Raja, a senior leader in the Communist Party of India, which has long drawn young followers.

Mr. Gandhi is betting the electoral math will work in favor of the party that introduces a critical mass of younger politicos. The average age of India's lower parliament, called the Lok Sabha, is 56. Of India's elected parliamentarians, 11% are under 40.

Whether young people will vote for younger politicians just because of their age remains to be seen. Like their parents, India's younger generation may favor politicians who share similar backgrounds, regardless of age, says Ramachandra Guha, a historian of modern India. "Ultimately the DNA of India is caste, kinship and religion," he says.

In the past four elections, voters between 18 and 25 lagged the national average; in 2004, the youth turnout was 55%, compared to 58% overall, according to the Center for the Study of Developing Societies, a New Delhi think tank.

Mr. Gandhi has set a goal that 30% of his party's parliamentary candidates should be young. Such talk helped fuel the Congress party's youth recruitment, but provoked an outcry among those who touted their experience and years waiting their turn for a shot to run.

Beginning late last year, the Youth Congress held elections for local leaders in some regions for the first time; previously, leaders were appointed by the party. From this group, Mr. Gandhi selected a handful of candidates for this year's parliamentary elections.

One of the early battle grounds for Mr. Gandhi's strategy is in Gujarat, a BJP stronghold in western India. Gujarat held elections Thursday, though results aren't yet known.

Mr. Gandhi's strategy there has been to rely heavily on the Youth Congress to supply campaign workers for the parliamentary elections. In a three-week recruitment drive in February, the Youth Congress expanded to 700,000 members from 150,000, according to party officials. The goal is to cut into the 14 of 26 parliamentary seats that the BJP controls from Gujarat.

Not all has gone according to plan.

When the Youth Congress held elections to pick leaders in March, fistfights broke out between poll workers and voters who claimed their names didn't appear on electoral rolls. In another district, ballot papers were burned. The selection of a Youth Congress veteran as a parliamentary candidate enraged rivals in the party who had been waiting their turn for the seat, prompting at least one defection to the BJP.

Perhaps the biggest stumbling block to Mr. Gandhi's drive in Gujarat has been the state's popular chief minister, a man who many mention as Mr. Gandhi's future opponent for prime minister: Narendra Modi of the BJP, who leads the state of 51 million people.

During Mr. Modi's seven-year tenure, the state's economy has averaged 10.2% growth a year. In 2008, he drew in investment of $15 billion, tops among Indian states. He's overseen building of roads and ports and, last year, wooed the high-profile Tata Nano auto factory to Gujarat from West Bengal.

But Mr. Modi's hard-line championing of Hinduism also makes him a controversial figure in this religiously diverse country. Under his tenure in 2002, riots ripped apart the state -- leaving dead 2,000 people, mostly Muslims.

Mr. Modi, 58, has frequently outwitted his Congress party critics. When Mr. Modi called Congress a "budhiya" party (meaning "old woman" in Hindi), his aides sent a text message relaying the jab to nearly one million Gujarati voters.

The next day, 37-year-old Priyanka Gandhi, Mr. Gandhi's sister, asked publicly if she or her brother looked old. Mr. Modi said he changed his mind: He said Congress was actually a "gudiya" party (meaning "baby" in Hindi). Another million-person text message went out.

The barbs came from a BJP digital-technology group targeting young, urban voters. The team not only sends out the chief minister's quips, but has created pages for Mr. Modi on YouTube and Google's social-networking site Orkut. It even makes ring tones from his speeches.

"Narendra Modi is the brand in Gujarat," says Shashi Ranjan Yadava, who heads the BJP digital technology wing. "Our job is to market him."

Indeed, with Mr. Modi in power, the odds for the Congress party in Gujarat appear long -- even among the sort of voters the Congress party is wooing.

"Rahul Gandhi has young blood, but he doesn't have the experience," says Jack Prajapati, a 20-year-old Gujarati business student and first-time voter. "Narendra Modi is a powerful person who has shown he can take decisions."

Many running on a BJP ticket against Congress opponents in Gujarat are successfully riding the chief minister's coattails. In the university town of Vadodara, BJP candidate Balkrishna Shukla has been mayor for nine months. But young voters still credit him with improving the city's economic prospects.

Mr. Shukla's opponent, former Youth Congress President Satyajitsinh Gaekwad, has had a bumpier ride, hinting at troubles that may lie ahead for Mr. Gandhi's plans.

In 1996, when he was 34, Mr. Gaekwad was nominated for Parliament from his home district in Vadodara, and eked out Congress's first win there in seven years. In office, Vadodara voters say, he had trouble bringing back money for development because of his young age. He lost the following election.

Mr. Gaekwad, now 47, says he is getting more smiles and fewer stiff stares than he did in previous years. "People are getting tired of the BJP," he said, as he waved from the back of a pick-up truck to slum-dwellers. "They want a change."

Mr. Gandhi's search for young parliamentary candidates yielded five for Punjab. It also fueled a recruitment drive that more than doubled the Punjab Youth Congress ranks to 340,000, according to Vijay Inder Singla, the 37-year-old former president of the Youth Congress and now also a candidate for parliament.

But Mr. Gandhi's backers admit the parliamentary selection process hasn't been unblemished democracy. Even to some of the candidates, it wasn't clear how and why they were chosen to run for parliament.

"I assume Rahul decided," said Mr. Singla.

Dalbir Singh, a senior Congress party official in New Delhi, said the youth wing chief did make the final decisions. In Punjab, he adds, family was a factor.

As the group of aspiring parliamentarians huddled around him after his speech in Punjab, Mr. Gandhi offered a longer view of his youth experiment. "If you are going to be democratic," he says, "you have to leave the outcome to the people who vote."

Before jumping on to a helicopter in another campaign stop for this election, he added: "Democracy is an attitude and an idea. We are pushing the attitude, the idea and the process. It takes time."

Source: http://online.wsj.com/article/SB124121671565578589.html

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How One College Is Snagging So Many Students?

By LAURA FITZPATRICK – Sat May 2, 2:00 am ET

For high school seniors, May 1 was D-Day. Decision Day. After weeks of weighing the pros and cons, they had until the last mail pickup on Friday to postmark a deposit to reserve a spot in next year's freshman class. In this spring of economic certainty, many nationally known schools are sweating over whether they'll enroll, or "yield," enough students to fill the class - an outcome officials won't know for sure until all the deposits are tallied over the coming weeks. But in a tiny corner of Kentucky, one little college is doing just fine. Berea College is on track to yield 78% of the students it accepted this year - and thereby beat Harvard's 2008 haul. The school's secret? Free tuition. (See TIME's photos inside a public boarding school)

At Berea, which was founded in 1855 as the first integrated college in the South, all 1,530 students work at least 10 hours a week in a campus or service job, earning $3.80 an hour and four years of free tuition. Eighty percent of the school's operating costs are funded by its endowment and the rest comes from donations, a tough combination these days: the school announced on Friday that it would lay off 30 employees, or 5% of the staff. Berea did not, however, back off from its commitment to offering a free education, and this year, not surprisingly, as applications cratered at some expensive schools, Berea notched a 15% increase. And more of the students applying were of a higher academic caliber. The number who received the school's top "four-star" academic rating jumped 10%, raising the average GPA of admitted students to 3.48. All of which might be expected after an October survey from MeritAid.com found that 57% of high school seniors were considering a less prestigious school for financial reasons. Berea is used to getting high-quality students who say affordability is a major factor, says Joe Bagnoli, associate provost for enrollment. "This year, there were just more of them." (See how schools are willing to give more financial aid.)

What the school didn't expect, however, was to hang on to so many of those top students. Typically, while admissions officials say Berea has a 54% chance of snagging a student who scores between 540 and 650 on the verbal section of the SAT, the chance of enrolling an applicant who gets between 660 and 800 is only 40%. Case in point: Bagnoli says he received a call on May 1 from a parent who reported that his daughter had gotten into Stanford, where her financial aid would cover four years of tuition, room, board and fees as well as a travel stipend. "They didn't know how they could pass up the opportunity," Bagnoli notes. (See how tolearn from Ivy League professors for free.)

But few schools can afford that kind of largesse. And this year, more students who may have been admitted to (pricily) prestigious schools are passing them up and opting to go to Berea instead. While a 78% yield would not be an increase from last year, it would not be a decrease, either - as Bagnoli says it almost certainly would have been in flusher times.

With some deposits arriving Friday and others still en route, Bagnoli says he expects the school's yield to hold steady at 78% - or even possibly rise. "It would be a little presumptuous of me to say that's going to happen," he says. "But I wouldn't be surprised."

Source: http://news.yahoo.com/s/time/20090502/us_time/08599189548200

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