NFL lockout loans: Are players being exploited?

For every $100 loaned to consumers via same day loans, a 15 to 25 percent fee is added for the convenience. In most cases, this means the consumer repays $50 or $60 on top of the principal balance of the loan. But the larger dollar amounts involved in NFL “lockout loans,” a phenomenon spawned by the 2011 NFL lockout make such instant payday cash advances a more severe matter, despite the income disparity. Players out of cash due to the labor dispute are being solicited by lending agents. Source for this article – NFL lockout loans: More money, more problems by MoneyBlogNewz.

Lockout loans: When 36 percent APR is dangerous

There have been lockout loans of $60,000 made with a 36 percent Annual Percentage Rate which ads up very fast. The $300 and $400 customer same day loans don’t make nearly that much interest on 36 percent Annual Percentage Rate. Yet players from at least 16 NFL teams have already applied for such large-scale instant cash advances, writes Yahoo! Sports.

The NFL Players Association lockout fund has helped some players, but clearly the response to high-risk lockout loans indicates that some players haven’t curbed their extravagant lifestyles in the absence of their paychecks. Hardly any players listened when the National Football League Players Association advised players to save three game checks. This was given as advice to players in preparation of the 2011 lockout. In addition, the National Football League Players Association has urged players to refinance their homes, fly coach and pursue moneymaking opportunities like autograph signings and speaking engagements in this extended off-season, writes MSNBC.

Wasted funds with NFL players

Sports psychologists suggest that star athletes are surrounded by enablers from a relatively young age. By the time players reach the professional ranks, it is not uncommon for them to lack real world financial knowledge, as they’ve never had to take responsibility for such things. Millions being given to someone who was poor might also be an issue. These individuals might just spend it all up. This is perhaps why as much as 80 percent of retired NFL players have declared bankruptcy, according to a Sports Illustrated estimate. Of the 1,700 players in the NFL, 380 of them are anticipated by MSNBC to be living paycheck to paycheck. This is despite the fact that $1.87 million was the annual salary for NFL players in 2010. Players who spend too much can have lots of problems, after taxes and agents, especially since rookie averages were at $320,000.

A dissenting voice in support of lockout loans

Yahoo! Sports spoke with NFL athlete financial adviser Sherard Rogers who said the lockout loans are a great product. While franchises will endure, players who live to spend can run into trouble.

“Every NFL team was valued at over $1 billion, so they can weather the storm of a lockout. But could players if there weren’t resources to cover this short-term labor dispute?” asked Rogers. “The key is to figure out how to solve the short-term liquidity issue and put the pieces in place to ensure they don’t have this liquidity issue again.”

Information from

MSNBC

msnbc.msn.com/id/41855264/ns/business-personal_finance/41855226

Philly Sports Column

philly.sportscolumn.com/showthread.php?t=11751

The Real Athlete Blog

accessathletes.com/blog/blogDisplay.cfm?/Education-is-Key-for-Pro-Athletes-596

The Post Game

thepostgame.com/features/201104/tpg-exclusive-cash-strapped-nfl-players-seeking-high-risk-lockout-loans

Both sides are feeling the ‘deal heat’

youtu.be/CQD7MvhD3sI

Will Goldman-triggered commodity rout lower U.S. gas costs?

When it comes to commodity prices, what goes up, must come down. As Goldman Sachs revealed that it was selling off commodities holdings to harvest the spoils of the rally, the rest of the industry followed. As commodity costs have soared, something had to give and in this case it is customer demand, which as it falls, is sending commodity prices down in turn. Resource for this article – Will Goldman-triggered commodity rout lower U.S. gas prices? by MoneyBlogNewz.

How the future will look according to Goldman

After rising 25 percent since December and setting fresh peaks Monday, April 11, commodity prices halted their advance by the end of the day. There started to be a commodity rout after warnings on commodity price decreases from Goldman Sachs. There was also a warning from Japan’s economic minister that there would be more damage than believed from the earthquake and tsunami on March 11. Tuesday, there was the largest drop in copper in on day since February while there was a 7 percent decrease in oil. Goldman explained that oil and gas are around the Spring 2008 levels currently. The concern is that there could be long lasting “demand destruction” on oil due to the high costs. There were really peaceful elections in Nigeria while the chances of Libya figuring everything out seem possible right now. This means those betting on fear of these events are no longer going to stopping the oil price increases.

Back to realistic commodity prices

Many are worried that Goldman started the commodities rout so that it could get in on the upward trend that is occurring and prepare. However, in addition to the oracle of Goldman, many recent headlines have pressured commodity costs. High oil costs could threaten the growth of the economy according to a report on Tuesday from the International Energy Agency. The International Monetary Fund talked about it on Monday. It said that commodity costs would trigger a decrease in economic growth to 4.5 percent in 2011 and 2012 from the 5 percent it was last year. In his daily remarks to subscribers Tuesday, Richard Russell, publisher of the Dow Theory Letters, said that the markets could be preparing for the end of the Federal Reserve’s quantitative easing program. The Feds purchase of $600 billion in Treasury securities has flooded the markets with cheap cash used by speculators to drive up commodity prices.

Prices impacted by U.S. customers too

The U.S. customer makes a huge difference to commodity prices, with Goldman Sachs in the background. A MasterCard report released Monday showed that gasoline sales declined for the fifth consecutive week. For a couple of months, there was an increase in demand, before it stopped. This decline was not expected. The average price of gas in July was $4.11. Right now, the price is already 41 cents higher than it was in that same 2008 period. MasterCard reported sales of 2.7 billion gallons of gasoline last week, down 3.6 percent from the same period last year, when it the price was 80 cents lower. A March survey by the Oil Price Information Service showed that sales had fallen at 70 percent of United States gas station chains. Over half reported a big decline. This is defined as a decline of at least 3 percent.

Citations

Barrons

finance.yahoo.com/banking-budgeting/article/112536/commodities-selloff-possible-correction-barrons?mod=bb-budgeting&sec=topStories&pos=7&asset=&ccode=

Reuters

reuters.com/article/2011/04/12/markets-metals-idUSLDE73B0WS20110412

The Street

thestreet.com/story/11080240/2/goldman-calls-commodities-top-is-now-the-time-to-sell.html

Delcotimes.com

delcotimes.com/articles/2011/04/11/news/doc4da2fdeae7538694359346.txt?viewmode=fullstory

Simpler mortgage disclosure forms may be here soon

One of the provisions of the 1975 Home Mortgage Disclosure Act is that loan providers must clearly delineate all pertinent aspects of public loan data. This and other legislation has been around for over 30 years to aid customers, but the subprime mortgage crisis indicates the U.S. nevertheless has a long way to go before being user-friendly. Thus, the Consumer Financial Protection Bureau plans to take steps to simplify mortgage disclosure forms so that any prospective homebuyer can understand them. Source for this article – CFPB to make simpler mortgage disclosure forms a priority by MoneyBlogNewz.

The ‘key priority’ mortgage disclosure form

Part of the Dodd-Frank act was the CFPB that begins on July 21 officially. A “key priority” in it is the new mortgage disclosure form, says the Wall Street Journal.

Mortgage forms currently consist of copious amounts of paper documenting all aspects of the mortgage agreement in Byzantine detail. Borrowing costs and other fees linked to the closing of the loan are buried in a sea of provisions. These book-like forms were created under the auspices of 1968’s Truth in Lending Act and the Real Estate Settlement Procedures Act of 1974. Mortgage disclosure forms will become friendlier than ever if the CFPB gets what it wants.

“We will be looking at our first (mortgage form) prototypes,” White House adviser and possible CFPB chairwoman Elizabeth Warren told Dow Jones Newswires.

Housing industry has opposed simpler forms before

The CFPB idea to simplify the forms was being reviewed by Warren with supports. However, various members of Congress and the housing industry have opposed similar attempts in the past to improve the readability of mortgage papers so that customers can understand the exact costs associated with their mortgage loans. The CFPB post may be filled by someone who might make an effort to help Warren. What the decision is on changes to the charge card industry will be determined in the future.

Information from

Home Mortgage Disclosure Act

ffiec.gov/hmda/

Wall Street Journal

blogs.wsj.com/developments/2011/04/18/warren-new-prototype-for-mortgage-forms-coming-in-may/?mod=google_news_blog

You should understand your mortgage

youtube.com/watch?v=MC515DJrhsM

Investing basics and the way NOT to invest

Investing is all about making money. Day traders may savor the adrenaline rush, but profit is the purpose. To do it right, however, you need to know a few things. Among the things you need to know is how not to invest. Article resource – Investing basics and how NOT to invest by MoneyBlogNewz.

Starting your retirement

Starting a 401(k) plan is advised by experts as early as possible. The money deposited isn’t taxable as long as it remains in the account, earning dividends, interest and capital gains. Retirement will only grow if you leave your money sitting.

A 401(k) is not really an investment. It is more of an account that saves money and builds interest at different rates.

The storm will come so saving is highly essential

In addition to a retirement account, it is essential to establish savings. Financial advisors can tell you what to conserve, but there are plenty of free tools online for instance Motley Fool.

Take full advantage of your Roth and Traditional IRA accounts

Taking money out of a Roth IRA is taxed, but putting money in is not taxed. By maxing out your IRA, your retirement could be substantially larger than if not. Traditional IRA accounts still give you flexibility to save even if you don’t qualify for a Roth IRA.

Retirement accounts are just the tip of the iceberg

You could purchase stocks and open brokerage accounts to expand your portfolio. Before investing, however, you need to have a clear vision of your goal. Know what you would like and the way long it will take you to get there based upon the amount of the investment and rate of return.

Pay off your charge cards first

The most detrimental debt to a person is credit card debt because of their interest rates. Take Care of all charge card debt before beginning to invest in stocks.

Sitting around is not an investment

Motley Fool points out that, stock market is unpredictable, but t if you venture nothing, you’ll gain nothing. The miracle of compound interest smiles upon those who purchase in. Make sure that before you invest you are prepared to pay attention to the market or you’ll lose everything. Follow your stocks and move on if and when the time is right. You should be prepared to lose large if you leave your comfort zone.

In and out or down and out

When using a brokerage firm, in and out trading costs a lot with fees, and also can be risky. Day traders make up for this in volume, however for the basic investor, long-term investments (ideally five years or longer) are the safer course. Motley Fool advises those looking for short-term investment to consider CDs or money market funds.

Information from

About.com

beginnersinvest.about.com/od/investing101/a/how-to-start-investing.htm

Motley Fool

fool.com/investing/beginning/why-should-i-invest.aspx?source=iibedihpo0000001

From socks to stocks

youtu.be/50PBUcwfe-w

Customers opting to pay credit cards over mortgages

United States customer patterns in payment of debts have experienced a sea change since the recession, reports the Huffington Post. At one time, a home loan was paramount, considering it dealt with primary shelter. The flood of upside down mortgages has placed customers in the position of only being able to pay the smaller, higher-interest debt of charge cards. Source for this article – Consumers opting to pay credit cards over mortgages by MoneyBlogNewz.

What TransUnion found

Mortgage delinquency is now viewed as almost acceptable in the current housing market, a trend that may have costly repercussions. TransUnion explained that in 2010's fourth quarter, there were 7.24 percent of homeowners in the United States which were late on mortgages. These homeowners also were on time with charge card payments though. In the previous quarter, it was 7.40 percent, but the drop cannot be viewed as good news, said TransUnion consultant Sean Reardon.

"(It is now) 72 percent higher than it was at the beginning of the Great Recession,” he told the Huffington Post.

By comparison, only 3.03 percent of U.S. customers chose to fall behind on their credit cards to be able to keep up with their upside down mortgages. This category has never been so low. It is the lowest in history.

Why every little thing turned around

Not coincidentally, TransUnion found that more United States consumers began to pay more attention to their charge cards than their mortgages just a couple months after the financial collapse began in 2007. Booming unemployment and a poor housing industry submerged scores of subprime borrowers as the country shifted toward an unhealthy dependency upon credit.

The underwater mortgages are staggering right now. By the final quarter of 2010, 23 percent of U.S. homeowners had upside down mortgages, according to business data provider CoreLogic. That amounts to 11.1 million residential properties in negative equity; up from 10.8 million (22.5 percent) in the third quarter of 2010. The total percent of close to negative or negative mortgages are at 27.9 percent considering 2.4 million homeowners that have less than 5 percent equity. There are others that are avoiding paying mortgages. Reardon claims that they instead choose to pay credit cards.

“Initially it was,” he said, “but it spread across all risk segments. It’s now an issue at the national level.”

Information from

Corelogic

corelogic.com/About-Us/News/New-CoreLogic-Data-Shows-23-Percent-of-Borrowers-Underwater-with-$750-Billion-Dollars-of-Negative-Equity.aspx

Huffington Post

huffingtonpost.com/2011/04/06/americans-credit-cards-mortgages_n_842756.html

Refinance your mortgage and whittle down credit card debt

youtu.be/_8dg3Vkm1I8

Nationwide house sales are down but rent is increasing

Countrywide rent rates are going up, as fewer people are deciding to purchase. Declining vacancies have been observed for months, as home sales get slower and slower. Landlords nationwide are only too happy to raise the rates, as the scarcity of the resource demands it be done. Resource for this article – Rent beginning to rise nationwide as fewer buy homes by MoneyBlogNewz.

Get the apartment rented with no difficulties

The number of rental property openings has been steadily falling for more than a year, according to Bloomberg. The occupancy rate is very high. The vacancy rate throughout the nation is only at 6.2 percent total. There is a business called Reis Inc., which tracks real estate data throughout the nation. This business observed that there was an 8 percent vacancy rate in April 2010 which dropped to 6.6 percent by the time the year was over. The increased demand is thought to be mostly due to individuals in the 20 to 34 age group, according to Reuters. The amount of individuals needing a place to live is not going down. Still, individuals do not want to purchase yet. It might be very hard to find a new apartment now with all the openings continuing on.

Renting costs more

As fewer apartments and other rental properties are available, the cost of those properties goes up. The same Reis Inc., survey explained that the average for rent is also increasing. The national average effective rent, which is what individuals pay each month, is $991 per month, an increase over $967 a year ago. There was a rise from $1,027 to $1,047 in the asking rent. Rent advertised went up $20. The actual rent paid went up $24 though. Landlords might end up with even higher rent considering the slowing construction on apartment complexes and duplexes.

No reason to buy

American has less incentive to purchase real estate these days. Rates of interest and values are very low. Nevertheless, getting financing is harder than ever. CNN reports that the Federal Reserve said 25 percent of applicants aren’t given loans while borrowers with a credit rating below 760 cannot be backed by Freddie and Fannie. Banks are asking for larger down payments as well, and a 20 percent upfront payment on a $200,000 house isn’t simple for many people.

Articles cited

Bloomberg

bloomberg.com/news/2011-04-06/apartment-vacancies-in-u-s-fall-to-three-year-low-as-rental-demand-climbs.html

Reuters

reuters.com/article/2011/04/06/us-usa-apartments-idUSTRE7353CD20110406

CNN

money.cnn.com/2011/04/06/real_estate/why_you_cant_get_a_mortgage/index.htm

Amazon to release ad-supported Kindle for $114

E-readers, tablets and other mobile devices are upending the traditional print industry, which suits Amazon just fine, as a result of the Kindle. Once the $114 Kindle with Special Offers ships May 3, Amazon should improve its 60 percent share in the e-reader market. What is the catch? The new Amazon Kindle, while no different from the Kindle 3 in most respects, will be ad-supported. Article source – Amazon to release ad-supported Kindle for $114 by MoneyBlogNewz.

It is worth a price reduction for an ad based kindle?

About $399 was spent in 2007 on the first Amazon kindle. The price has gone down a lot since then. To be able to try and compete with the iPad in the e-reader market, the advertisements were put on it this time in the price deduction. The Kindle with Special Offers is slated to ship May 3. Target and Best Purchase will sell the advertisement-supported version of the Kindle 3 in stores at that time.

Founder and CEO of Amazon Jeff Bezos claim it is a “chicken in every pot” move. Every person will want the Special Offers $114 kindle:

“We’re working hard to make sure that anyone who wants a Kindle can afford one,” he said via a statement.

Reader response to a Christian Science Monitor article about the price cut seems to echo the fears most consumers have about an advertisement-based Kindle. With 99 cent books, one reader would be okay as long as the ad based e-kindle was free. The price of books becomes a different issue then. Another reader concurs that a $25 discount isn’t enough to make up for the presence of ads, but one thing experts believe Amazon has done right is to isolate the ads to the Kindle’s screensaver and the bottom of the home screen.

“It’s very important that we didn’t interfere with the reading experience,” Kindle director Jay Marine told the Associated Press.

Price matters

The guess TechCrunch has is that the $114 Amazon Kindle is just leading up to the Christmas 2011 $99 Kindle. According to traditional marketing, 99 is magical number.

However, new research from New York’s Columbia Business School indicates that the advantage is more imagined than it is real anymore. A dollar plus approach, adding a penny, was more effective than the dollar minus approach, taking a penny away. The Columbia study showed this clearly. Sales of goods that used the dollar-plus method increased by 3 percent, and customers felt greater trust for dollar-plus brands since the prices were perceived as being less manipulative.

Citations

Christian Science Monitor

csmonitor.com/Books/chapter-and-verse/2011/0413/Will-readers-accept-ads-in-exchange-for-a-cheaper-Kindle

Columbia Business School

gsb.columbia.edu/ideasatwork/researchbriefs/7314376?&top.region=main

Knowing and Making

knowingandmaking.com/2011/04/new-research-99-no-longer-optimal-for.html

TechCrunch

techcrunch.com/2011/04/11/amazon-kindle-99/

Kindle sales tripled after last price drop

youtu.be/PaAFm_fZQ2A

Child identities stolen by those who they trust the most

Identity thieves have zeroed in on the most vulnerable. New research shows that identity thieves are focusing increasingly on children because parents do not pay attention and the theft can go undetected for years.

All about child identity theft

Thousands of kids and their families are being victimized by identity theft and thousands more are at risk, according to a report by Carnegie Mellon University’s CyLab cybersecurity research center. There were 42,232 children in the report looked at from the 2009-10 Debix AllClear ID Protection Network scan where parents were told about compromised child IDs. The Debix AllClear ID data showed 4,311 of the children, a little more than 10 percent, had their Social Security numbers in use by identity thieves. That’s a child identity theft rate 51 times higher than the 0.2 percent of United States adults targeted by identity thieves, based on 663 attacks against 347,362 adults listed in Debix AllClear ID. The youngest it ever got was a five month old. The identity was stolen still. There were 42 open accounts in Arizona that a 17 year old girl found out she had. In all of these charge cards, car loans and mortgages, she owed $725,000 in debt. There were eight pe! ople that had her Social Security number. In Kentucky, a 14 year old boy found out there was a foreclosure on his credit. It was from 10 years earlier too.

Friendly fraud victimizes

Child identity theft appears to be coming to a head after the seeds were planted in early 1980s. All kids were given Social Security numbers back then by the Social Security Administration by the Internal Revenue Service. Everyone with access to the Social Security numbers would typically abuse them. Children quickly became victims of this. Javelin Strategy and Research reported that there were several “friendly fraud” cases in 2010. That was 30 percent of identity theft cases. In credit checks, age isn’t verified. This makes it easier for a thief to get a credit card, create accounts and even take out loans. The Identity Theft Resource Center helped a young male trying to work on his credit. Apparently his father had, years ago, stolen his identity and damaged his credit beyond repair.

Figuring out child identity theft

The dangers in sharing information on the internet and not being private should be taught to every child according to the Identity Theft Resource Center. All personal information, including Social Security numbers and birth certificates, should be kept in a secure place. If mail arrives in the child’s name, that’s a warning sign that a credit file has been opened. If you are a parent, gets a-hold of the major credit bureaus. Get a credit rating for the child. Sometimes there is no credit report. That is probably good for child. There needs to be a security alert filed with Equifax, TransUnion and Experian if there is a credit report. File a police report using the credit reports as evidence. The credit agencies are required to remove the credit rating issues within 30 days after a police report listing the fraudulent accounts.

Information from

Forbes

blogs.forbes.com/moneybuilder/2011/03/31/protecting-your-child-from-identity-theft/

Atlanta Journal Constitution

ajc.com/news/child-identity-theft-increases-572552.html

Wallet Pop

walletpop.com/2011/04/05/report-as-child-id-theft-grows-rapidly-consider-these-precauti/

new payday advance report out by Center for Responsible Lending

The Center for Responsible Lending has released a report on payday advance. The organization bashed them, true to form. The CRL is one of the chief lobbying organizations openly hostile to the payday lending industry. However, the organization does advocate against other credit practices. In a few months, the Consumer Financial Protection Bureau will being operations, and pay day loans will partially fall under the jurisdiction of that agency. Article source – Center for Responsible Lending has new report on payday loans by MoneyBlogNewz.

Some practices not good for payday lenders

Several use the word predatory to describe payday lending. This is because loan companies are said to get borrowers into debt cycles. The customer advocacy group for consumers, the Center for Responsible Lending, is one of the biggest supporters of getting rid of the practice. Getting pay day loans means that, people might end up trapped for several pay periods, instead of just one pay day. This was according to a report on payday lending the organization released, states Daily Finance. ”Payday Loans Inc: Short on Credit, Long on Debt” is the name of the report on the CRL website for any person to see.

Lawsuits

Regulation and criticism tends to be what personal loan companies get. Some loan companies deserve it; the number of violations committed by personal loan companies also as the number of lawsuits including class actions show that not all quick installment loans lenders are on the level. The Consumer Financial Protection Bureau will start to operate later this year which several hope will mean more regulation on payday advance. The CFPB can’t regulate interest rates, although most are hoping for a cap. According to the CRL, this would be a poor choice. The Consumer Financial Protection Bureau should not do this.

Customer risk to borrowing

The scholarly literature that exists on payday loans and similar credit goods indicates there is a risk of customers falling into a fair amount of debt once they start borrowing from payday lenders. The CRL explained that typically an individual could be indebted for a couple of years to payday lenders. At least it isn't 30 years of debt. A typical mortgage is 30 years long. Student loans get 10 years, which that is also better than. Payday loans are given a bad reputation while those are just fine. Another credit individuals don't consider bad is charge card debt. Nevertheless, it is something that could ruin a person for decades if they are not careful.

Citations

Daily Finance

dailyfinance.com/story/credit/payday-loans-exposed-short-term-lenders-borrowers/19898661/

Responsible Lending

responsiblelending.org/payday-lending/research-analysis/payday-loan-inc.pdf

Customers recommended being wary after Epsilon database hack

The email communications firm Epsilon suffered a database hack on March 30. Personal information in the form of names and emails for millions of consumers was exposed to hackers in the Epsilon data security breach. Phishing attacks are anticipated to be the inevitable result of the Epsilon data base hack, and the company’s clients began warning their customers Monday. Source of article – Epsilon database hack exposes millions to phishing attacks by MoneyBlogNewz.

Database takes Epsilon names

The Epsilon database hack could be the biggest in history of a hack while millions of names and email addresses were stolen. Annually, about 40 billion marketing emails are sent out for 2,500 corporations by Epsilon. The company announced that it was hacked on Friday, meaning emails and other information given to web sites may have been stolen.

Many companies were affected by this. There were at least a dozen involved. Customers at banks for instance Capital One, Barclays Bank, U.S. Bancorp, Citigroup, J.P. Morgan Chase need to be on the lookout for phishing attacks. Watch out when you have been at other businesses also. These will contain Kroger, Walgreens, TiVo, Best Buy and HSN. Student email addresses from SAT organization, College Board, may have been stolen as well for about 5,900 universities and colleges.

Scams galore

It’s likely the stolen names and email addresses in the Epsilon database hack could be used to target spam. This data security breach could make “phishing” attacks more effective because cyber-criminals can target actual account holders with a financial institution or retailer. Fake accounts are put together for the phishing emails. Then, the customer is certain to log in so the information could be stolen. Once hackers have a person’s name and email address, they may also find personal details on Facebook that could be used to make the email more convincing. Several times, a phishing con will say that an account can be closed if information is not updated or ask an individual to update charge card information. Sometimes the phishing scam will say the account is compromised. They’ll say information needs to be updated due to this.

Making history with this breach

The number of students and consumers exposed to the database hacks has yet to be made clear by Epsilon, although it was clear that it was limited. In addition to the Epsilon clients mentioned above, others contain Verizon Communications, Hilton Hotels, Kraft Foods and AstraZeneca. Internet security analysts believe the Epsilon database hack may surpass the Heartland Payment Systems hack, currently recognized as the biggest identity-theft incident in U.S. history. After stealing over 40 million payment card numbers in the Heartland Payment Systems hack, Albert Gonzalez got 20 years in prison as a sentence.

Citations

Associated Press

finance.yahoo.com/news/Banks-creditcard-issuers-warn-apf-754015157.html?x=0&sec=topStories&pos=main&asset=&ccode=

MSN Money

money.msn.com/identity-theft/news.aspx?feed=OBR&date=20110403&id=13261200

Computer world

computerworld.com/s/article/print/9215443/Update_Bank_customers_warned_after_breach_at_Epsilon_marketing_firm?taxonomyName=Security&taxonomyId=17

Microsoft

microsoft.com/security/online-privacy/phishing-symptoms.aspx

Discharge of discount window details unveils large European financial institution bailout

The discount window provided by the Federal Reserve attracted a hoard of financial institutions heretofore unidentified as the financial system melted down. A Freedom of Information Act request for the data had kicked around the courts until last week. The Supreme Court ruled the public has a right to know which financial institutions obtained loans from the discount window and how much they borrowed. The true danger of Wall Street’s financial meltdown to the world was made evident by the discount window details. Source for this article – Release of discount window data reveals big European bank bailout by MoneyBlogNewz.

Financial institution bailout by Fed

The Fed started the discount window a long time ago. It was meant to be a program with short term loans to help out healthy banks when in some trouble. The identities of the banks borrowing have been kept a secret in the past because of the stigma that comes in financial circles when a bank needs help from the Fed. After Bloomberg and Fox Business filed a request under the Freedom of Information Act, the Fed was required to release the details though due to a Supreme Court ruling. When the Fed finally released the data Thurs, any concern about a negative stigma may have been alleviated by the belief that just about every financial institution in the world had to stand in line at the discount window as the global financial system teetered on the brink of collapse. The discount window was used to lend as much as $110 billion in just one day of a peak day in the financial crisis in accordance with over 25,000 documents.

Most borrowing happened in European financial institutions

Wall Street banks have taken much of the flak for government bailouts throughout the financial turmoil. All of the data showed that European financial institutions borrowed the most. The Fed report was clear about this. There were two banks that borrowed money on Oct. 29, 2008. They included the $24.6 billion borrowed by German mortgage lender hypo Real Estate owned financial institution Dexia which is a Belgian-French financial institution and $26.5 billion was borrowed by Depfa in Dublin. Other European banks such as Bank of Scotland, France's Societe Generale and Austria's Erste Group all borrowed billions in the discount window also. On this side of the pond, before it became the biggest bank failure in history, Washington Mutual borrowed $2 billion on Thursday, Sept. 18, 2008, to get through the weekend. Until Wamu was taken over by J.P. Morgan Chase on Thursday, September 25, 2008, it kept applying for the $2 billion loan overnight as it could not be paid back! .

Whole world faces financial crisis

Financial institutions started to beg the Fed to help them out as the financial system froze and economy started to dive downward after the Lehman Brothers collapsed in September 2008. The real damage was found when the discount window data sheets were released. During testimony to a congressional panel investigating the financial turmoil in November 2009, Fed chairman Ben Bernanke said of all the financial institutions lined up at the discount window, only one was not at risk of total collapse. The Dodd-Frank financial reform bill passed last year removes secrecy from discount window lending, but not until two years have passed from the time the loans are made — about the same period it took the courts to force the Fed to do it this time.

Articles cited

Fox Business

foxbusiness.com/industries/2011/03/31/demystifying-feds-secretive-discount-window/

Wall Street Journal

online.wsj.com/article/SB10001424052748703712504576234700412932330.html

Reuters

reuters.com/article/2011/03/31/usa-fed-lending-idUSN3126104220110331?pageNumber=2

Bailout loans paying out dividends as financial institutions come back from recession

banks and investment houses that received bailout loans from taxpayers are paying out returns to the government. The Troubled Asset Relief Program created relief programs for numerous industries, but banks and other financial institutions have been recovering faster from the recession than other industries, and those loans have managed to turn a profit. The housing relief programs that were part of TARP did not work out also.

It was good to use TARP loans

The installment loans from the taxpayers to huge banks and investment firms under the Troubled Asset Relief Program were certainly a reason for controversy. CNN reports the Department of Treasury has made a $6 billion profit already. This may grow to be a $20 billion profit at the end of the program. About $432 billion was spent of the $700 billion TARP was allowed.

Mortgage modification program cut

There was not much success in the federal mortgage modification program. This disappointed the government. MSNBC reports that due to this, there might not be a Home Affordable Modification Program anymore. Even though a bill getting rid of HAMP passed in the House, it might not pass in the Senate while the President himself might not want to sign it off. The program has been deemed a failure, as it has a success rate of less than 50 percent in modifying mortgages. Other mortgage relief programs are being targeted for elimination, but eliminating such programs would likely also be symbolic. There are many homeowners that need these programs to continue staying in their home. Even though the programs have been deemed failures, the President and Senate may not want to get rid of it so easily.

All about Wall Street

There are many CEOs willing to hire once again due to the feel of a better economy, reports Reuters. This was according to respondents of a survey. More than half of the 142 CEOs that responded to the survey said they would hire for next year soon. The survey was done by the Chief Executive Officers at major corporations’ trade organization, Business Roundtable. If hiring at large firms picks up, that provides a boost to the middle class.

Articles cited

CNN

money.cnn.com/2011/03/30/news/economy/tarp_program/index.htm

MSNBC

msnbc.msn.com/id/42339454/ns/business-real_estate/

Reuters

reuters.com/article/2011/03/30/us-usa-economy-roundtable-idUSTRE72T3JE20110330

Ponzi scheme by Utah payday loans lender shutdown by Feds

Two online pay day loans businesses owned by the very same person have been hit with a fraud suit. The suit was brought in federal court by the Securities and Exchange Commission. The alleged perpetrator is John Scott Clark, of Utah. He has been alleged to have run a multimillion dollar Ponzi scheme using the two online financial services businesses he owns. Clark is alleged to have stolen $47 million from more than 120 investors.

Fraud suit given to lending companies by Securities and Exchange Commission

The SEC sued the owner of two lending online payday cash advance companies for a Ponzi scheme costing millions of dollars. The Securities and Exchange Commission sued John Scott Clark, of Cache County, Utah, for defrauding more than 120 investors over a period of five years in return for investing capital into two companies that he owned, Impact Cash LLC and Impact Payment Systems LLC, according to the Salt Lake Tribune. Clark allegedly recruited investors by promising an average return of 80 percent in exchange for capital, which he allegedly said would be used to fund payday cash loans to reliable consumers. Investors paid over $47 million for the operation between March 2006 and Sept 2010, states the Credit Union Times. Supposedly, the investors were convinced of this scheme.

Clark accused of funding Mercedes habit with investor funds

Clark would gain the confidence of investors and allegedly use new investment funds to pay dividends to initial investors and fund his lifestyle, according to Deseret News. A 1963 Chevrolet Corvette and three Mercedes-Benz cars were purchased by Clark during this period. He also purchased many home furnishings including a $25,000 theater system. Some of his investors were growing suspicious by 2009 and asked Clark to sell their stake in his businesses and turn the proceeds over, which he refused to do. Eventually, the Securities and Exchange Commission became involved, slapping Clark with a lawsuit alleging five different violations of the Securities Act. The Wall Street Journal reports that the Impact companies were put into receivership and were frozen by a Federal judge.

One ruins it for all

Most people have a bad connotation of online personal loan companies. They’re considered evil. That is far from the case, however transactions that are completed fairly and honestly do not go widely reported. The people you give money to need to be trusted. Be careful about it. This is where the Better Business Bureau comes in. It’s there to help customers. An informed consumer will always be in a position to make a better decision, and something that sounds too good to be true usually is.

Information from

Salt Lake Tribune

sltrib.com/sltrib/money/51503972-79/investors-clark-complaint-payday.html.csp

Wall Street Journal

online.wsj.com/article/BT-CO-20110328-710072.html

Deseret News

deseretnews.com/article/705369480/Cache-County-man-allegedly-bilked-investors-of-millions-to-feed-lavish-lifestyle.html

Credit Union Times

cutimes.com/2011/03/28/sec-halts-47-million-payday-loan-ponzi