Wednesday, July 30, 2008
Wachovia and Overdraft Protection
Consumers will want to take a look at our parent company's site today. One of their most recent complaints involves a consumer who reports that
Wachovia closed a savings account without notice.
According to the consumer, the savings account provided overdraft protection for a checking account. With the savings account closed, the checking account's balance went haywire.
This was a savvy consumer who happens to own a business, not someone opening their first bank account. In today's uncertain financial times, interest rates on long-term notes are shifting, lines of credit are being slashed and pre-approved offers are being yanked for using other accounts at "certain types" of businesses.
The markets are scared, and the financial players who hold so much power, are even more scared. You need to be completing a monthly audit of all of your accounts, verifying interest rates, credit limits and other account details.
Labels: banking, checking account, overdraft protection, savings account, Wachovia
Monday, July 28, 2008
Buying A Foreclosed Home? The FDIC Wants You To Read First
Home foreclosures can offer great bargains—and real risks. The steepest discounts are found at auction, but you have to buy the home sight unseen, in cash.
Pre-foreclosure sales—prior to auction—are less risky, and provide savings of 10 to 20 percent. But you deal directly with the owners and may even have to close the purchase within 30 days, depending on the state.
To help you get that loan, for a foreclosed home or any other home on the market, take a look at “
The New Climate For Mortgage Borrowers, a free microsite from the FDIC
Labels: FDIC, foreclosure, mortgage programs
Thursday, July 17, 2008
eBay Stock Gets Eaten By Bears
One would hope growing profit 20 percent plus at a mature company would be enough in these troubled financial times to hold off the bear market, but Internet shopping site eBay learned otherwise today.
On a day when the S&P again climbed, eBay (
NASDAQ: EBY) was hammered by investors despite beating estimates. Less than two hours before the market's close, EBY stock was trading down almost 15 percent, pushing the P/E ratio to over 75.
eBay announced yesterday that executive Lorrie Norrington would run the company's eBay Marketplaces division, a post once held by CEO John Donahoe. Norrington replaces long time eBay executive and former CFO Rajiv Dutta, who is leaving the company. Dutta had also previously run eBay's Skype and PayPal divisions.
We continue to suggest consumers seek advice from a licensed professional for investing and other financial matters.
Labels: bear market, eBay, Lorrie Norrington, Rajiv Dutta, Stocks
Tuesday, June 24, 2008
IRS Mileage Rate Increases For 2008 Reimbursement
Fuel surcharges, explicit and hidden, continue impacting consumer prices. Virtually every travel method from taxis to airplanes to trucking has included hefty fuel surcharges. Even local merchants who deliver are doing the same.
The Internal Revenue Service (IRS) is generally good about increasing the reimbursement rate for mileage used while using your car for business or as a personal tax deduction (perhaps if you itemize and your out of pocket medical qualifies). What the IRS has traditionally not been good at is changing the rate in response to a market condition in the middle of a tax year.
Not anymore.
The agency everyone loves to pound on is cranking the mileage deductible rate to 58.5 cents next week on July 1. The increase is more than 15%, and if your vehicle is averaging 20 miles per gallon, the 8 cent increase in the mileage deduction rate effectively decreases your cost per gallon by $1.60.
The deductible rate for medical purposes will rise to 27 cents.
Labels: energy, IRS, mileage deduction, mileage rate
Monday, June 16, 2008
Here Come Hydrogen Cars As Oil Rebounds and Americans Hypermile
If you haven't been watching the news much lately, they're Honda's marketing coup. A mix of science fiction and global environmentalism, fuel cell cars are real and here to stay.
Saudi Arabia announced this weekend that they they would boost oil output to its highest level in 27 years. Asian and European exchanges had initially reacted favorably to the news, but now are seeing prices bounce back over $135.
Meanwhile, neither you nor your friends will be getting a Honda Clarity any time soon unless you're a Hollywood star or finance mogul, but the zero emissions vehicle's debut may be a landmark moment like the launch of Sputnik. While doing little by itself in terms of space exploration, Sputnik ushered in a generation of possibilities. The launch of the tiny Soviet spacecraft enabled John F. Kennedy several short years later to declare that the United States would put a man on the moon. What a pity none have returned.
Meanwhile, Honda announced today that three Southern California dealerships would form the first distribution network for fuel -- long seen by economists as one of the vehicle's major impediments. The world's industry still remains oil-dependent, but you will be able to tell your descendants that one day, long ago, you remember when the first zero emissions vehicles rolled off the assembly line.
Labels: auto, energy, Honda
Sunday, May 25, 2008
How Derivatives Trading Toppled A Giant, But Don't Credit A Single Person
Rogue traders like Nick Leeson have been a part of of the financial landscape for years. Leeson was the young trader who destroyed Barings Bank in the early 1990s. That was the UK equivalent of Bear Stearns disappearing over a weekend. Shortly after that, Orange County, California faced a similar billion dollar loss through derviatives trading.
Derivatives Trading DefinedMost personal investors never have to worry or learn about derivatives, but you should be paying attention if your financial advisor or fund is using them as a hedge. At their core, derivatives are a financial instrument investors use to hedge their investment or even to bet against a market's general direction.
Derivatives usually involve a commitment to buy or sell a certain investment at a future date at a currently agreed upon price. Those investments can be anything from stocks to currency against another currency to a commodity.
If you saw the Eddie Murphy and Dan Akroyd movie
Trading Places, released a generation ago, the orange juice futures being traded were essentially a derivative. And while you may not find a public exchange trading orange juice futures, you can certainly find public exchanges trading oil, gold and even soybean futures.
Because these trades are often made on margin (remember the margin call at the end of the movie), derivatives are a fast way to lose a lot of money while putting up only a fraction of the amount.
Why Derivatives Are Important NowA billion dollars is the new million say many big investors so a headline of a trader causing a billion dollar drop doesn't necessarily destroy an institution any more.
During the beginning of 2008, however, France's Societe General (also called SocGen) announced that a young trader without authorization had dummied records and plunged the bank into the derivatives market while losing more than $7 billion.
The crisis reverberated through the financial and political communities. French officials were outraged that a 145 year old legendary institution was teetering on the brink of failure. No one understood how a 31 year old non-executive trader could enter derivative trades greater than the value of SocGen's market capitalization.
New reports out this weekend suggest that the trader, Jerome Kerviel, may have had at least one accomplice at a more senior level.
Given the relatively easy going Kerviel has experienced, we always wondered how far up SocGen's ladder the trading was known. The coming weeks will undoubtedly prove challenging for the bank and indeed for European institutions. If Countrywide and CDOs are the poster children of the financial crisis in the US, SocGen's $7 billion derivatives loss may be Europe's.
Why do derivatives matter to you as an individual investor? Because you need to know how much risk you are willing to assume and then you need to see what your funds and other investments are doing in the derivatives market.
One celebrity investor who isn't going anywhere near the derivatives pool is Warren Buffett. The
renowned investor told Reuters (as published in today's
New York Times) that "It's not right that hundreds of thousands of jobs are being eliminated, that entire industrial sectors in the real economy are being wiped out by financial bets even though the sectors are actually in good health."
We agree with Warren. We usually do. And on this long weekend, you should see how much of your own investments are tied up in this high risk-high reward area.
Labels: Buffett, derivatives, Societe General
Saturday, March 15, 2008
[mortgage] Adjustable Rate Mortgage Book Available
Although adjustable-rate mortgages (ARMs) have recently been affecting many homeowners negatively, they’re still available.
If you’re in the market for a house, you should know what they are and how they might affect you.
Unlike fixed-rate loans where the interest rate stays the same for the life of the loan, the interest rate on an ARM changes periodically, usually in relation to an index. As a result, your monthly mortgage payments may go up substantially, especially if you received a low introductory rate.
Find out more, including how ARMs work, issues borrowers may face, and ways to reduce risks with the Consumer Handbook On Adjustable Rate Mortgages. This informative publication from the Federal Reserve Board costs $1.00.
For your copy, send your name, address, and a check or money order for $1.00 to:
Federal Citizen Information Center
Dept. 349R
Pueblo, CO 81009
You can also call toll-free 1 (888) 8 PUEBLO, and ask for Item 349R.
Labels: FCIC, information, interest rates, mortgage programs
