James Moore: Why the Fonz's thumbs-up for'reverse mortgages' is not so cool

It was the gratuitous insults that made corporate America shun Rush Limbaugh

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The Independent Online

Outlook It's impossible to resist. Writers aged 35 and above just can't mention Henry Winkler without adding Aaaaeeeyyy (spelling courtesy of the New York Times). For the uninitiated, that was the catchphrase of "The Fonz" in the comedy Happy Days, which was popular in its 1970s heyday because it represented a small town fantasy-land USA that Americans like to hark back to.

It seems Mr Winkler has found a second career: endorsing so-called "reverse mortgages" taken out by pensioners against the equity built up in their homes.

Oh dear. Mr Winkler might – like so many others – have been unable to escape the role that defined him. But it hasn't stopped him from being able to make a good living from the acting business, and his retirement income will likely be such that his main worry will probably be whether it is enough for him to be able to afford a new top-of-the-range golf cart or not. The sort of financial issues facing those considering reverse mortgages – the need to clear credit card bills, to pay health costs, or simply to boost pitiful retirement savings – are concerns a world away from Mr Winkler and friends.

But companies selling them know that using a trusted celebrity in his sort of financial position can be key to driving in business. As Robert Thompson, a professor at Syracuse University, told the NY Times: "When viewers see celebrities they've known for years endorsing a product that might seem a bit marginal they think, whether it's true or not, 'they don't need the money, so this must be something they really believe in.'"

Can you see the problem?

There is nothing to suggest that the company Mr Winkler represents is anything other than legitimate and above board.

But reverse mortgages generally are already causing concern stateside just as they continue to cause concern over here, where in their old guise as home income plans they created an almighty scandal in the late 1980s. That was when a number of pensioners faced losing their homes after the plans were sold linked to risky investment bonds that went pop.

Even though the new generation of reverse mortgages and various lookalikes on both sides of the Atlantic are supposed to be safe, they are complicated products that should only really be taken out after detailed independent advice. If then.

That being the case, using a "trusted celebrity" to entice people into such a product seems to be just a teensy bit irresponsible.

It might be worth noting at this point that a group of US lenders have just agreed a $26bn settlement aimed at drawing a line under the foreclosure scandal that grew out of the credit crunch and saw a number of Americans wrongly booted out of their homes.

If reverse mortgages are handled badly, there is a distinct possibility that this is where the next scandal is coming from. And if that happens the Fonz and his celebrity pals might not look so cool any more.

How long before the US flag flies over the City?

Remember how unhappy everyone was when the US food giant Kraft took over Cadbury? That deal was the cue for a rash of hand-wringing about how easy it was for a foreign predator to gobble up a British company.

Except that if you looked closely, Cadbury, run by an American, with sprawling operations all over the place and an international shareholder base, wasn't really very British at all.

In fact, most companies listed on the stock market today aren't really very British any more. Recent data from the Office for National Statistics suggests that, in fact, they are the least British that they have ever been.

By the end of 2010, individual British investors owned 11 per cent of all UK-listed shares, compared to 54 per cent in 1963. Insurance companies accounted for another 8.6 per cent, while pension funds held a further 5.1 per cent, the lowest level since the survey began. By contrast, foreign ownership had boomed, hitting 41 per cent.

Dominance of the UK stock market by overseas investors could have a profound effect on the way "British" companies are governed and run. For a start, it is hard enough to get British institutions to use the votes they control at annual meetings, let alone overseas investors.

And even when overseas shareholders vote, they don't always vote in line with what we might think is best corporate practice.

Take those Americans, who account for half of the foreign investment in the UK stock market. Their influence is already beginning to be felt. One of the most controversial issues facing boards right now is their right to call company meetings at short notice.

Granting this is uncontroversial among UK investors, who are happy to allow companies some flexibility. Not so in the US, where shareholders feel it could lead to their being disenfranchised. According to Pirc, the average vote against this type of resolution is now 4 per cent. That might not sound like much, but it is more than double the average vote against directors seeking re-election, and quadruple the average vote against an auditor being reappointed.

Such a technical issue might not seem like too much of a big deal, but here's one that is. If it comes to another contested takeover like the one involving Cadbury and Kraft, why would the Americans vote against?

And there's worse. British chief executives look like charity cases when compared to some of their North American counterparts. If they're worried about the £6m or so it yesterday emerged that Barclays American chief executive Bob Diamond received for 2011, it might be that they feel he isn't getting enough.

There is, admittedly, a certain amount of paranoia about Britain becoming the 51st state. But in corporate terms it is actually happening. And we might not like the consequences of the Stars and Stripes flying over the London Stock Exchange.

Few tears will be shed for ultra-conservative pundit

There won't be many tears shed as a result of the difficulties that Rush Limbaugh is currently facing. Advertisers have been deserting the right-wing blowhard who makes Richard Littlejohn look like Ed Milliband in their droves.

As a rule, advertiser-led boycotts make me feel a mite uncomfortable: if advertisers were allowed to dictate the viewpoints expressed in the media they patronise, those views would likely become uniformly bland, mildly right-wing from an economic standpoint, and possibly mildly liberal from a social perspective.

However, it isn't so much Limbaugh's ultra-conservative views that have prompted corporate America to abandon him. It was the gratuitous personal insults (slut and whore for example) he threw at a female law student who felt that contraceptives should be included with women's health insurance policies. Which makes the advertisers' response much more understandable. David Friend, chief executive of the web security firm Carbonite, summed it up when he pointed out that he had daughters the same age as the student, Sandra Fulke, in explaining his company's withdrawal.

There is one company that has, funnily enough, stood by Mr Limbaugh: Clear Channel, the media firm that airs his shows and which argued that his mealy mouthed half-apology to Ms Fulke was sufficient. Clear Channel can be reached at 33 Golden Square, London, W1F 9JT. And at nationalsales@clearchannel.co.uk, in case you were interested.

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