Edward Palonek TV

Consumer Protection

Edward Palonek — Fri, 04 Sep 2009 14:30:00 GMT

Treasury Secretary Timothy F. Geithner
Written Testimony
House Financial Services Committee

Chairman Frank, Ranking Member Bachus, and members of the Financial Services Committee, thank you for the opportunity to testify before you today about the Administration's plan for financial regulatory reform.

On June 17, President Obama unveiled a sweeping set of regulatory reforms to lay the foundation for a safer, more stable financial system; one that properly delivers the benefits of market-driven financial innovation while safeguarding against the dangers of market-driven excess.

The President's plan focuses on the essential reforms. It addresses the core causes of the current economic crisis. It addresses the areas critical to confronting future vulnerabilities. And, in pursuing what amounts to the most extensive overhaul of our financial regulatory regime in decades, it makes clear to the American people that their government, at an early stage in this new Administration, is intent on fixing the basic regulatory flaws that caused extensive damage to families and businesses.

Over the past five weeks, in Congress and in the press, among legislators and business leaders, academics and advocates, the Administration's proposals have spurred an important and sometimes heated debate about how best to reform the financial regulatory system. That debate is to be expected, and is welcome. While crafting our plan, the Administration sought input from all points of view, considered all options and heard many of the opinions being expressed today.

We understand that on any issue this complex and this important there will be areas where parties genuinely disagree, and we look forward to refining our recommendations through the legislative process.

But there should be no disagreement on the need to act.

Over the past two years, we have faced the most severe financial crisis since the Great Depression. The damage has been indiscriminate and unforgiving. Millions of Americans have lost their jobs; families have lost their homes; small businesses have shut down; students have deferred college educations; and seniors have shelved retirement plans. Some of our largest financial institutions failed; others came under extraordinary pressure; and many of the securities markets that are critical to the flow of credit broke down.

As a country, we now know that our financial system failed in its most basic responsibility to be stable and resilient enough to provide credit while protecting consumers and investors.

We now know that our regulatory regime permitted an excessive build-up of leverage, both outside the banking system and within the banking system; that the shock absorbers critical to preserving the stability of the financial system – capital, margin, and liquidity cushions in particular – were inadequate to withstand the force of the global recession; and that they left the system too weak to withstand the failure of major financial institutions.

We now know that millions of Americans were left without adequate protection against financial predation, especially in the mortgage and consumer finance areas; and that many were unable to evaluate the risks associated with borrowing to support the purchase of a home, a car, or an education.

And, we know that the United States entered this crisis without an adequate set of tools to contain the risk of broader damage to the economy and to manage the failure of large, complex financial institutions.

As a result, American families have made essential changes and they expect their government to do the same. There exists today a national mandate, not seen in years, to reform our outdated and ineffective regulatory system.

Still, despite that reality, there are some who suggest we are trying to do too much too soon, and that we should wait until the crisis has definitively receded. Others say we do not need comprehensive change or that it will destroy innovation. And with respect to consumer protection in financial services, there are even those who contend we should leave things as they are.

That is not surprising. Every financial crisis of the last generation has sparked some effort at reform, but past attempts began too late, after the will to act had subsided.

That cannot happen this time.

The reforms proposed by the President are necessary. They would substantially alter the ability of financial institutions to escape regulation, to choose which regulator suits them best, to shape the content of future regulation and to continue the financial practices that were lucrative for parts of the industry for a time, but that ultimately proved so damaging. That is why we have to act, and why we need to deliver real, meaningful change.

The Administration welcomes the commitment of this Committee and your counterparts in the Senate, as well as other key committees and the Congressional leadership, to pass legislation this year. And the Administration is moving aggressively to help advance the overall process.

In the weeks following the President's announcement, we have delivered detailed legislative language to Congress on virtually all of our proposals: on the enhanced regulation of our largest, most interconnected financial firms; on the supervision and regulation of federal depository institutions; on new resolution authority; on payments and settlement systems; on investor protection; on private fund registration; on executive compensation; on securitization and credit rating agencies; and on the proposed new Financial Services Oversight Council and Consumer Financial Protection Agency (CFPA).

We are also working to put in place reforms that do not require legislation. We have used the President's Working Group on Financial Markets to pull together all government agencies that oversee elements of the financial system to formulate more detailed proposals for implementing the comprehensive reforms outlined by the President.

By now the details of our plan are widely known and so I would like to provide some additional context by explaining our key priorities for reform.

Consumer Protection

Let me begin with a pressing concern for this Committee – building strong protections for consumers, and ensuring they can understand the risks and rewards associated with the products sold to them. I know you will soon be marking up legislation on this issue.

There is broad agreement that consumer protection needs to be stronger. Achieving this objective requires mission focus, market-wide coverage, and consolidated authority, none of which exist in today's system.

That is why we are proposing one agency for one market place with one mission – protecting consumers.

The case for the Consumer Financial Protection Agency is clear.

First, non-banks such as mortgage brokers and large independent mortgage companies, consumer credit companies and pay-day loan operations, currently operate under no federal supervision. No federal agency sends consumer protection examiners into these institutions to review their files or interview their salespeople. No federal regulator collects information from them, except for limited mortgage data.

In the years before the crisis, capital flowed heavily to these unsupervised non-banks in large measure because they enjoyed the advantage of weak consumer oversight. Banks were left with the untenable choice of lowering their standards to compete or giving up market share.

The proposed CFPA would fix this problem and ensure a level playing field by extending the reach of federal oversight to all financial firms, no matter whether they are banks or non-banks.

Second, even where federal oversight exists, standards are weakened by the ability of banks and thrifts to choose the regulator that will have the least restrictive oversight of consumer protection, something we also saw in the years leading up to the current crisis.

The President's proposal would correct this by consolidating responsibility for consumer protection into one agency, meaning financial institutions would no longer be able to shop for the weakest regulator and pursue a race to the regulatory bottom.

Third, the banking agencies responsible for implementing and enforcing consumer protection have higher priorities. The agencies' primary focus is the safety and soundness of the institutions they oversee. As a matter of mission and internal organization, they are focused on the effect of a bank's products and practices on the bank itself, rather than the effect on consumers. That is why the CFPA would have as its sole mission examining how a product or practice affects consumers.

Importantly, nothing in the CFPA's mission or authority would conflict with or undermine the safety and soundness of banking institutions. Our proposal ensures cooperation with prudential regulators by placing one of them on the board of directors and requiring examiners to exchange examination reports.

Making banks act fairly and transparently with their customers only enhances their safety and soundness. Market-wide jurisdiction of the CFPA will ensure that banks are not forced to choose between lowering their standards and giving up market share.

Finally, the government agencies that have responsibility for consumer financial protection are limited in their ability to do something about the problems they encounter because they have only one set of authorities available to them, instead of the full range, from rule-writing to supervision to enforcement. This leads to inertia and finger-pointing in place of action. And it makes any action taken less likely to be effective.

For example, when it comes to credit cards, the Federal Reserve has substantial power to write rules but has little authority to enforce them outside of bank holding companies, while the Office of the Comptroller of the Currency has little authority to write rules but wide power to enforce them. As concerns about fairness and transparency emerged, each agency looked to the other to act and, in the end, not enough was done.

Even in cases where agencies have what, in principle, should be the more flexible authority to issue regulatory guidance to institutions, they are hampered by the fact that several agencies have similar authority.

In the case of subprime mortgages, it took the federal banking agencies until June 2007 to reach final consensus on supervisory guidance imposing even general standards on subprime mortgages. By then it was too late.

Our consumer protection proposal would put an end to this problem by giving the CFPA consolidated authority to write rules, supervise compliance and take enforcement action when there are violations.

It is time for a level playing field for financial services competition based on strong rules, not based on exploiting consumer confusion. Our proposal achieves that by ensuring consumer choice, preserving innovation, strengthening depository institutions, reducing regulatory costs, and increasing national regulatory uniformity and accountability.

Financial Stability

Our second priority was creating a more stable financial system by strengthening supervision and regulation of financial firms.

That necessarily begins with higher capital requirements. The most important thing to lowering risk in the financial system is stronger capital cushions.

The Committee is well aware that in the years leading up to this crisis, as rising asset prices, particularly in housing, concealed a sharp deterioration of some of the underwriting standards for loans, risks built up substantially while capital cushions did not. The nation's largest financial firms, already highly leveraged, became increasingly dependent on unstable sources of short-term funding.

These firms did not plan for the potential demands on their liquidity during a crisis. And when asset prices started to fall and market liquidity froze, they were forced to pull back from lending, limiting credit for households and businesses.

Looking back it is clear that regulators did not require firms to hold sufficient capital to cover risks from their trading assets, high-risk loans, and off-balance sheet commitments.

Under our plan, that will change. Financial firms will be required to follow the example of millions of families across the country that are saving more money as a precaution against bad times. They will be required to keep more capital and liquid assets on hand and, importantly, the biggest, most interconnected firms will be required to keep even bigger cushions.

Now, higher capital requirements are an important step towards longer-term stability, but they are only the first step.

While many of the financial firms at the center of this crisis were under some form of federal supervision and regulation, that oversight did not do enough. A patchwork of supervisory responsibility, loopholes that allowed some institutions to shop for the weakest regulator, and the rise of new financial institutions and instruments that were almost entirely outside the government's supervisory framework left regulators largely blind to emerging dangers and without the tools needed to address them.

That is why we propose evolving the Federal Reserve's authority to create a single point of accountability for the consolidated supervision of all large, interconnected firms whose failure could threaten the stability of the system, regardless of whether they own an insured depository institution. This is a role the Fed plays today, given its supervision and regulation of bank holding companies, including all major U.S. commercial and investment banks.

While our plan gives some new authority – along with necessary accountability – to the Fed, it also takes some away. That includes transferring the Fed's consumer protection responsibility to the CFPA and requiring the Fed to receive written approval from the Secretary of the Treasury before exercising its emergency lending authority.

Alongside the new role played by the Fed, there must also be a mechanism to look at the system as a whole for dangers, given that risk can emerge from almost any quarter.

That is why we are proposing a Financial Services Oversight Council to bring together the heads of all of the major federal financial regulatory agencies. This Council will improve coordination of policy and resolution of disputes among the agencies. It will have a significant consultative role to play in helping preserve financial stability. And, most importantly, it will have the power to gather information from any firm or market to help identify emerging risks.

Improving the supervision and regulation of financial firms broadly also requires reducing the ability of depository institutions to choose their regulator and regulatory framework. To address this problem, we have proposed eliminating the thrift and thrift holding company charter and removing other loopholes in the Bank Holding Company Act.

Market Oversight

The third priority that guided our decision making was establishing comprehensive regulation of financial markets.

The current financial crisis emerged after a long and remarkable period of growth and innovation. New instruments, such as over-the-counter (OTC) derivatives, allowed risks to be spread quickly and widely, enabling investors to diversify their portfolios in new ways and enabling banks and other companies to shed exposures that had once resided on their balance sheets.

However, the OTC derivatives markets, which were thought to efficiently promote dispersion of risk to those most able to bear it, instead became a major channel of contagion through the financial sector in the crisis. When fear spread that any institution could fail, the markets for risk transfer and liquidity froze – making it difficult for all financial institutions to maintain daily operations.

Two weeks ago, I testified at a joint hearing of this committee and the House Agriculture Committee on our comprehensive regulatory framework for the OTC derivatives markets. I outlined how our plan would provide strong regulation and transparency for all OTC derivatives regardless of whether the derivative is customized or standardized. In addition, I discussed how our plan will provide for strong supervision and regulation of all OTC derivative dealers and all other major participants in the OTC derivative markets.

We intend very soon to send up draft legislation on derivatives to implement our proposal.

Alongside reforms in the derivatives market, we also propose enhanced regulation of the securitization markets.

In the years preceding the crisis, mortgages and other loans were aggregated with similar loans and sold in tranches to a large and diverse pool of new investors with different risk profiles. Securitization, by breaking down the traditional relationship between borrowers and lenders, created various conflicts of interest that market discipline failed to correct.

Loan originators failed to require sufficient documentation of income and ability to pay. Securitizers failed to set high standards for the loans they were willing to buy, encouraging underwriting standards to sag. Investors were overly reliant on credit rating agencies, whose procedures proved no match for the complexity of the instruments they were rating. In each case, lack of transparency prevented market participants from understanding the full nature of the risks they were taking.

In response, the President's plan requires securitization sponsors to retain five percent of the credit risk of securitized exposures; it requires transparency of loan level data and standardization of data formats to better enable investor due diligence and market discipline; and, with respect to credit rating agencies, it ends the practice of allowing them to provide consulting services to the same companies they rate, requires these agencies differentiate between structure and other products, and requires disclosure of any "ratings shopping" by issuers.

Crisis Resolution

Our fourth priority was addressing the basic vulnerabilities in our capacity to manage future crises.

The United States came into the current crisis without an adequate set of tools to contain the risk of broader damage to the economy and to manage the failure of large, complex financial institutions. That left the government with extremely limited choices when faced with the failure of the largest insurance company in the world and one of the largest U.S. investment banks.

That is why, in addition to addressing the root causes of our current crisis, we must also act preemptively to provide the government better tools to manage future crises. To do that, we have proposed a new resolution authority for financial firms whose disorderly failure would threaten the stability of the financial system.

Our proposal is modeled on the existing FDIC resolution regime for banks. This exception allows the FDIC to depart from the least cost resolution standard only when financial stability is at risk. Similarly, our resolution authority would only be for extraordinary times and would be subject to very strict governance and control procedures.

Any costs to the taxpayer from the use of this authority would be recovered through ex post assessments on large financial firms. As such, it will reduce moral hazard by allowing the government to resolve failing large, interconnected financial institutions in a way that imposes costs on owners, creditors and counterparties, making them more vigilant and prudent.

No one should assume that the government will step in and bail them out if their firm fails.

In addition, we propose that the biggest firms prepare, continuously update, and periodically provide to regulators a credible plan for their rapid resolution in the event of severe financial distress. This would create incentives for firms to better monitor and simplify their organizational structure and would better prepare the government, as well as the firm's investors, creditors, and counterparties, for the possibility of a firm's collapse.

The key test of these reforms will be whether we make this system strong enough to withstand the stress of future recessions and the failure of large institutions.

Level Playing Field Internationally

The final priority of the Administration was working with our global partners to raise international regulatory standards and improve international cooperation.

As we have witnessed during this crisis, financial stress can spread easily and quickly across national boundaries. Yet, regulation is still set largely in a national context. Without consistent supervision and regulation, financial institutions will tend to move their activities to jurisdictions with looser standards, creating a race to the bottom and intensifying systemic risk for the entire global financial system.

The United States is playing a strong leadership role in efforts to coordinate international financial policy through the G-20, the Financial Stability Board, and the Basel Committee on Banking Supervision. Alongside our partners, we are proposing that the international banking regulators responsible for setting capital requirements take forward their work on reforming capital ratios to more effectively constrain leverage in the future. More broadly, we will call on the international banking regulators to develop proposals by the end of this year for countries to have the necessary tools to quickly resolve failures of cross-border financial firms.

Conclusion

Over the past six months, in responding to the current economic crisis, the Obama Administration has taken extraordinary action.

We moved quickly to restore confidence in the banking system. Without first stabilizing and repairing the financial system, broader economic recovery would not be possible. In doing so, we have increased transparency and disclosure, helping to bring billions of dollars of private capital into banks so they could safeguard against a deeper recession, and enabling some banks who took taxpayer funds to start paying back the government.

We worked to ease the housing crisis by helping to bring mortgage rates down to historic lows and establishing new programs to allow responsible homeowners to refinance into affordable mortgages or alter at-risk loans and help homeowners lower their monthly mortgage payments. Estimates indicate that up to 3 to 4 million homeowners will be offered trial loan modifications under the Administration's program.

We worked to offset the dramatic contraction in demand by working with Congress to put in place the most sweeping economic recovery package in our nation's history – a comprehensive program of immediate tax incentives for businesses and households, support for state and local governments, and investments in critical economic priorities, from infrastructure and energy to health care and education. The Recovery Act was designed to provide a sustained boost to economic demand, concentrated over a two year period and, as designed, the largest effects on the spending side will come in the next six months.

Through the G-20 and G-8, we are working with the major economies of the world on a coordinated program of macroeconomic stimulus and financial stabilization, alongside regulatory reform. This has amounted to the most aggressive international response to any financial crisis in the last fifty years, implemented with unprecedented speed and breadth.

Because of these steps, in just six months, the Administration has substantially reduced the risk of a much deeper and more prolonged recession. We have begun stabilizing an economy that in January was in a free-fall. And we have seen improvements that have been more substantial and have come more quickly than expected when we were designing our response in December and January. Business and consumer confidence has started to improve, housing markets have begun to stabilize, the cost of credit has fallen significantly and credit markets are starting to open up.

But there is still a long way to go. We have a lot more work to do to lay the foundation for a more sustainable recovery, with the gains more broadly shared among all Americans, and central to that effort is passing comprehensive regulatory reform legislation by the end of the year.

We simply cannot afford inaction on this issue. We cannot afford a situation where we leave in place vulnerabilities that will sow the seeds for future crises, and prevent our financial system from functioning properly.

The United States is the world's most vibrant and flexible economy, in large measure because our financial markets and our institutions create a continuous flow of new products, services and capital. That makes it easier to turn a new idea into the next big company.

America's tradition of innovation has been vital to our prosperity. The reforms proposed in the Administration's plan are designed to strengthen our markets by restoring confidence and accountability, while preserving that tradition of innovation.

In the weeks and months ahead I look forward to working this Committee to help pass regulatory reform legislation and, in turn, build a stronger American economy.

Thank you.

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Vice President Biden Asks For Your Help

Edward Palonek — Thu, 03 Sep 2009 21:17:00 GMT

Vice President Biden Asks For Your Help: Why We Need Reform Now

Download .mp4 (23 M

To help us bust the myth that our health insurance system is fine the way it is and that reform isn't important to the American people, upload a video response to Vice President Biden's video explaining why you want reform. It's easy, and we will feature some of the best throughout the week here at WhiteHouse.gov. If you want to know more about what's in it for you, take the quiz.

Upload Your Video Response. Click here to upload your video response on why we need health insurance reform now and bust the myth that it is not important to the American people.
Take the "What's In It For You" Quiz: Click here to answer a few questions and find out what's in reform for somebody like you -- you'll be surprised how much there is.

American Recovery and Reinvestment Act of 2009

Edward Palonek — Wed, 02 Sep 2009 16:10:00 GMT

FRIDAY, FEBRUARY 13TH, 2009 AT 2:05 PM

ARRA for comment

Posted by Jesse Lee

Yesterday, the American Recovery and Reinvestment Act of 2009 passed through conference and is now on its way back to the House and Senate for full votes.

One Hundred Eleventh Congress
of the
United States of America
AT THE FIRST SESSION
Begun and held at the City of Washington on Tuesday,
the sixth day of January, two thousand and nine
An Act
Making supplemental appropriations for job preservation and creation, infrastructure
investment, energy efficiency and science, assistance to the unemployed, and
State and local fiscal stabilization, for the fiscal year ending September 30,
2009, and for other purposes.
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ‘‘American Recovery and Reinvestment
Act of 2009’’.
SEC. 2. TABLE OF CONTENTS.
The table of contents for this Act is as follows:
DIVISION A—APPROPRIATIONS PROVISIONS
TITLE I—AGRICULTURE, RURAL DEVELOPMENT, FOOD AND DRUG ADMINISTRATION,
AND RELATED AGENCIES
TITLE II—COMMERCE, JUSTICE, SCIENCE, AND RELATED AGENCIES
TITLE III—DEPARTMENT OF DEFENSE
TITLE IV—ENERGY AND WATER DEVELOPMENT
TITLE V—FINANCIAL SERVICES AND GENERAL GOVERNMENT
TITLE VI—DEPARTMENT OF HOMELAND SECURITY
TITLE VII—INTERIOR, ENVIRONMENT, AND RELATED AGENCIES
TITLE VIII—DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES,
AND EDUCATION, AND RELATED AGENCIES
TITLE IX—LEGISLATIVE BRANCH
TITLE X—MILITARY CONSTRUCTION AND VETERANS AFFAIRS AND RELATED
AGENCIES
TITLE XI—STATE, FOREIGN OPERATIONS, AND RELATED PROGRAMS
TITLE XII—TRANSPORTATION, HOUSING AND URBAN DEVELOPMENT, AND
RELATED AGENCIES
TITLE XIII—HEALTH INFORMATION TECHNOLOGY
TITLE XIV—STATE FISCAL STABILIZATION FUND
TITLE XV—ACCOUNTABILITY AND TRANSPARENCY
TITLE XVI—GENERAL PROVISIONS—THIS ACT
DIVISION B—TAX, UNEMPLOYMENT, HEALTH, STATE FISCAL RELIEF, AND
OTHER PROVISIONS
TITLE I—TAX PROVISIONS
TITLE II—ASSISTANCE FOR UNEMPLOYED WORKERS AND STRUGGLING
FAMILIES
TITLE III—PREMIUM ASSISTANCE FOR COBRA BENEFITS
TITLE IV—MEDICARE AND MEDICAID HEALTH INFORMATION TECHNOLOGY;
MISCELLANEOUS MEDICARE PROVISIONS
TITLE V—STATE FISCAL RELIEF
TITLE VI—BROADBAND TECHNOLOGY OPPORTUNITIES PROGRAM
TITLE VII—LIMITS ON EXECUTIVE COMPENSATION

American Recovery Investment Act

Helpful Link

Edward Palonek — Wed, 13 May 2009 15:35:00 GMT

Useful Grant Links

Catalog of Federal Domestic Assistance - Information on obtaining Federal grants
CFO Council Grants Policy Committee - Emerging grant policy
Grants.gov - The single access point for over 1,000 grant programs offered by all Federal grant making agencies
GrantsNet - General grant resources and information
Federal Demonstration Partnership - Research grant information
Federal Assistance Awards Data System - Statistical information
Federal Audit Clearinghouse - Results of Grantee Audits
Federal Funding Accountability and Transparency Task Force - Information on Federal spending
National Grants Partnership - Non-research grant information

The Constitution

Edward Palonek — Fri, 17 Apr 2009 14:36:00 GMT

THE CONSTITUTION

"We the People of the United States, in Order to form a more perfect Union, establish Justice, ensure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America." — Preamble to the Constitution

The Constitution of the United States of America is the supreme law of the United States. Empowered with the sovereign authority of the people by the framers and the consent of the legislatures of the states, it is the source of all government powers, and also provides important limitations on the government that protect the fundamental rights of United States citizens.

Why a Constitution? | The Constitutional Convention
Ratification | The Bill of Rights

Read the full text of the Constitution

Why a Constitution?

The need for the Constitution grew out of problems with the Articles of Confederation, which established a "firm league of friendship" between the states, and vested most power in a Congress of the Confederation. This power was, however, extremely limited — the central government conducted diplomacy and made war, set weights and measures, and was the final arbiter of disputes between the states. Crucially, it could not raise any funds itself, and was entirely dependent on the states themselves for the money necessary to operate. Each state sent a delegation of between two and seven members to the Congress, and they voted as a bloc with each state getting one vote. But any decision of consequence required a unanimous vote, which led to a government that was paralyzed and ineffectual.

A movement to reform the Articles began, and invitations to attend a convention in Philadelphia to discuss changes to the Articles were sent to the state legislatures in 1787. In May of that year, delegates from 12 of the 13 states (Rhode Island sent no representatives) convened in Philadelphia to begin the work of redesigning government. The delegates to the Constitutional Convention quickly began work on drafting a new Constitution for the United States.

The Constitutional Convention

A chief aim of the Constitution as drafted by the Convention was to create a government with enough power to act on a national level, but without so much power that fundamental rights would be at risk. One way that this was accomplished was to separate the power of government into three branches, and then to include checks and balances on those powers to assure that no one branch of government gained supremacy. This concern arose largely out of the experience that the delegates had with the King of England and his powerful Parliament. The powers of each branch are enumerated in the Constitution, with powers not assigned to them reserved to the states.

Much of the debate, which was conducted in secret to ensure that delegates spoke their minds, focused on the form that the new legislature would take. Two plans competed to become the new government: the Virginia Plan, which apportioned representation based on the population of each state, and the New Jersey plan, which gave each state an equal vote in Congress. The Virginia Plan was supported by the larger states, and the New Jersey plan preferred by the smaller. In the end, they settled on the Great Compromise (sometimes called the Connecticut Compromise), in which the House of Representatives would represent the people as apportioned by population; the Senate would represent the states apportioned equally; and the President would be elected by the Electoral College. The plan also called for an independent judiciary.

The founders also took pains to establish the relationship between the states. States are required to give "full faith and credit" to the laws, records, contracts, and judicial proceedings of the other states, although Congress may regulate the manner in which the states share records, and define the scope of this clause. States are barred from discriminating against citizens of other states in any way, and cannot enact tariffs against one another. States must also extradite those accused of crimes to other states for trial.

The founders also specified a process by which the Constitution may be amended, and since its ratification, the Constitution has been amended 27 times. In order to prevent arbitrary changes, the process for making amendments is quite onerous. An amendment may be proposed by a two-thirds vote of both Houses of Congress, or, if two-thirds of the states request one, by a convention called for that purpose. The amendment must then be ratified by three-fourths of the state legislatures, or three-fourths of conventions called in each state for ratification. In modern times, amendments have traditionally specified a timeframe in which this must be accomplished, usually a period of several years. Additionally, the Constitution specifies that no amendment can deny a state equal representation in the Senate without that state's consent.

With the details and language of the Constitution decided, the Convention got down to the work of actually setting the Constitution to paper. It is written in the hand of a delegate from Pennsylvania, Gouverneur Morris, whose job allowed him some reign over the actual punctuation of a few clauses in the Constitution. He is also credited with the famous preamble, quoted at the top of this page. On September 17, 1787, 39 of the 55 delegates signed the new document, with many of those who refused to sign objecting to the lack of a bill of rights. At least one delegate refused to sign because the Constitution codified and protected slavery and the slave trade.

Ratification

The process set out in the Constitution for its ratification provided for much popular debate in the states. The Constitution would take effect once it had been ratified by nine of the thirteen state legislatures -- unanimity was not be required. During the debate over the Constitution, two factions emerged: the Federalists, who supported adoption, and the Anti-Federalists, who opposed it.

James Madison, Alexander Hamilton, and John Jay set out an eloquent defense of the new Constitution in what came to be called the Federalist Papers. Published anonymously in the newspapers The Independent Journal and The New York Packet under the name Publius between October 1787 and August 1788, the 85 articles that comprise the Federalist Papers remain to this day an invaluable resource for understanding some of the framers' intentions for the Constitution. The most famous of the articles are No. 10, which warns of the dangers of factions and advocates a large republic, and No. 51, which explains the structure of the Constitution, its checks and balances, and how it protects the rights of the people.

The states proceeded to begin ratification, with some debating more intensely than others. Delaware was the first state to ratify, on December 7, 1787. After New Hampshire became the ninth state to ratify, on June 22, 1788, the Confederation Congress established March 9, 1789, as the date to begin operating under the Constitution. By this time, all the states except North Carolina and Rhode Island had ratified — the Ocean State was the last to ratify on May 29, 1790.

The Bill of Rights

One of the principal points of contention between the Federalists and Anti-Federalists was the lack of an enumeration of basic civil rights in the Constitution. Many Federalists argued, as in Federalist No. 84, that the people surrendered no rights in adopting the Constitution. In several states, however, the ratification debate in some states hinged on the adoption of a bill of rights. The solution was known as the Massachusetts Compromise, in which four states ratified the Constitution but at the same time sent recommendations for amendments to the Congress.

James Madison introduced 12 amendments to the First Congress in 1789. Ten of these would go on to become what we now consider to be the Bill of Rights. One was never passed, while another dealing with Congressional salaries was not ratified until 1992, when it became the 27th Amendment. Based on the Virginia Declaration of Rights, the English Bill of Rights, the writings of the Enlightenment, and the rights defined in the Magna Carta, the Bill of Rights contains rights that many today consider to be fundamental to America.

The First Amendment provides that Congress make no law respecting an establishment of religion or prohibiting its free exercise. It protects freedom of speech, the press, assembly, and the right to petition the Government for a redress of grievances.

The Second Amendment gives citizens the right to bear arms.

The Third Amendment prohibits the government from quartering troops in private homes, a major grievance during the American Revolution.

The Fourth Amendment protects citizens from unreasonable search and seizure. The government may not conduct any searches without a warrant, and such warrants must be issued by a judge and based on probable cause.

The Fifth Amendment provides that citizens not be subject to criminal prosecution and punishment without due process. Citizens may not be tried on the same set of facts twice, and are protected from self-incrimination (the right to remain silent). The amendment also establishes the power of eminent domain, ensuring that private property is not seized for public use without just compensation.

The Sixth Amendment assures the right to a speedy trial by a jury of one's peers, to be informed of the crimes with which they are charged, and to confront the witnesses brought by the government. The amendment also provides the accused the right to compel testimony from witnesses, and to legal representation.

The Seventh Amendment provides that civil cases also be tried by jury.

The Eighth Amendment prohibits excessive bail, excessive fines, and cruel and unusual punishments.

The Ninth Amendment states that the list of rights enumerated in the Constitution is not exhaustive, and that the people retain all rights not enumerated.

The Tenth Amendment assigns all powers not delegated to the United States, or prohibited to the states, to either the states or to the people.

FEDERAL RESERVE STATISTICAL RELEASE for November 24 2008

Edward Palonek — Wed, 26 Nov 2008 17:22:00 GMT

FEDERAL RESERVE STATISTICAL RELEASE

   H.15 (519) SELECTED INTEREST RATES
   For use at 2:30 p.m. Eastern Time

Yields in percent per annum                  November 24, 2008

                                              2008   2008   2008   2008   2008   Week Ending   2008
                  Instruments                 Nov    Nov    Nov    Nov    Nov    Nov    Nov    Oct
                                               17     18     19     20     21     21     14
   Federal funds (effective) 1 2 3            0.37   0.38   0.38   0.49   0.57   0.36   0.28   0.97
   Commercial Paper 3 4 5 6
      Nonfinancial
         1-month                              0.50   0.45   0.43   0.46   0.62   0.49   0.64   1.55
         2-month                              1.14   1.21   1.15   1.10   1.10   1.14   1.34   1.82
         3-month                              1.32   1.31   1.27   1.22   1.28   1.28   1.41   2.07
      Financial
         1-month                              1.34   1.36   1.35   1.34   1.46   1.37   1.19   2.77
         2-month                              n.a.   1.26   n.a.   1.23   1.93   1.47   1.54   2.96
         3-month                              n.a.   1.34   n.a.   n.a.   1.59   1.47   1.43   3.19
   CDs (secondary market) 3 7
      1-month                                 1.35   1.43   1.45   1.38   1.55   1.43   1.47   4.04
      3-month                                 2.30   2.25   2.28   2.20   2.25   2.26   2.27   4.32
      6-month                                 2.83   2.78   2.73   2.80   2.83   2.79   2.83   4.37
   Eurodollar deposits (London) 3 8
      1-month                                 1.80   1.80   1.80   1.80   1.90   1.82   2.00   4.93
      3-month                                 3.00   3.00   3.00   3.00   3.00   3.00   2.88   5.31
      6-month                                 3.60   3.75   3.75   3.75   3.75   3.72   3.75   5.25
   Bank prime loan 2 3 9                      4.00   4.00   4.00   4.00   4.00   4.00   4.00   4.56
   Discount window primary credit 2 10        1.25   1.25   1.25   1.25   1.25   1.25   1.25   1.81
   U.S. government securities
      Treasury bills (secondary market) 3 4
         4-week                               0.06   0.10   0.09   0.05   0.03   0.07   0.09   0.26
         3-month                              0.12   0.12   0.07   0.03   0.02   0.07   0.21   0.67
         6-month                              0.81   0.76   0.65   0.51   0.44   0.63   0.86   1.20
         1-year                               1.05   1.03   0.95   0.85   0.81   0.94   1.09   1.38
      Treasury constant maturities
         Nominal 11
            1-month                           0.06   0.10   0.09   0.05   0.03   0.07   0.09   0.29
            3-month                           0.12   0.12   0.07   0.03   0.02   0.07   0.21   0.69
            6-month                           0.81   0.76   0.66   0.52   0.45   0.64   0.87   1.23
            1-year                            1.08   1.05   0.97   0.87   0.83   0.96   1.12   1.42
            2-year                            1.22   1.15   1.09   1.00   1.09   1.11   1.23   1.61
            3-year                            1.53   1.44   1.36   1.20   1.35   1.38   1.63   1.86
            5-year                            2.32   2.22   2.08   1.94   2.02   2.12   2.41   2.73
            7-year                            2.92   2.79   2.64   2.43   2.53   2.66   3.02   3.19
            10-year                           3.68   3.53   3.38   3.10   3.20   3.38   3.78   3.81
            20-year                           4.42   4.32   4.17   3.87   3.93   4.14   4.49   4.45
            30-year                           4.20   4.14   3.96   3.64   3.70   3.93   4.24   4.17
         Inflation indexed 12
            5-year                            3.44   3.51   3.61   3.73   3.96   3.65   3.48   2.75
            7-year                            3.71   3.80   3.91   4.01   4.17   3.92   3.77   2.96
            10-year                           2.85   2.92   2.98   3.06   3.15   2.99   2.86   2.75
            20-year                           2.79   2.78   2.96   2.93   3.10   2.91   2.89   2.87
      Inflation-indexed long-term average 13 2.88   2.86   3.01   3.01   3.20   2.99   2.97   2.92
   Interest rate swaps 14
      1-year                                  2.12   2.09   2.04   1.93   2.00   2.04   2.08   2.86
      2-year                                  2.28   2.27   2.22   2.04   2.12   2.18   2.31   2.89
      3-year                                  2.68   2.64   2.57   2.29   2.44   2.53   2.75   3.28
      4-year                                  3.05   3.01   2.91   2.59   2.72   2.86   3.15   3.58
      5-year                                  3.33   3.29   3.17   2.83   2.95   3.11   3.44   3.80
      7-year                                  3.71   3.67   3.51   3.11   3.20   3.44   3.82   4.09
      10-year                                 3.99   3.92   3.74   3.31   3.34   3.66   4.10   4.31
      30-year                                 3.97   3.94   3.72   3.23   3.16   3.61   4.14   4.30
   Corporate bonds
      Moody's seasoned
         Aaa 15                               6.33   6.15   5.97   5.69   5.82   5.99   6.37   6.28
         Baa                                  9.26   9.24   9.11   9.02   9.08   9.14   9.26   8.88
   State & local bonds 16                                          5.13          5.13   5.14   5.50
   Conventional mortgages 17                                       6.04          6.04   6.14   6.20

     n.a. Not available.

   ----------------------------------------------------------------------------------------------------

Footnotes

   1. The daily effective federal funds rate is a weighted average of rates on brokered trades.

   2. Weekly figures are averages of 7 calendar days ending on Wednesday of the current week; monthly
   figures include each calendar day in the month.

   3. Annualized using a 360-day year or bank interest.

   4. On a discount basis.

   5. Interest rates interpolated from data on certain commercial paper trades settled by The
   Depository Trust Company. The trades represent sales of commercial paper by dealers or direct
   issuers to investors (that is, the offer side). The 1-, 2-, and 3-month rates are equivalent to the
   30-, 60-, and 90-day dates reported on the Board's Commercial Paper Web page
   (www.federalreserve.gov/releases/cp/).

   6. Financial paper that is insured by the FDIC's Temporary Liquidity Guarantee Program is not
   excluded from relevant indexes, nor is any financial or nonfinancial commercial paper that may be
   directly or indirectly affected by one or more of the Federal Reserve's liquidity facilities. Thus
   the rates published after September 19, 2008, likely reflect the direct or indirect effects of the
   new temporary programs and, accordingly, likely are not comparable for some purposes to rates
   published prior to that period.

   7. An average of dealer bid rates on nationally traded certificates of deposit.

   8. Bid rates for Eurodollar deposits collected around 9:30 a.m. Eastern time.

   9. Rate posted by a majority of top 25 (by assets in domestic offices) insured U.S.-chartered
   commercial banks. Prime is one of several base rates used by banks to price short-term business
   loans.

   10. The rate charged for discounts made and advances extended under the Federal Reserve's primary
   credit discount window program, which became effective January 9, 2003. This rate replaces that for
   adjustment credit, which was discontinued after January 8, 2003. For further information, see
   www.federalreserve.gov/boarddocs/press/bcreg/2002/200210312/default.htm. The rate reported is that
   for the Federal Reserve Bank of New York. Historical series for the rate on adjustment credit as
   well as the rate on primary credit are available at www.federalreserve.gov/releases/h15/data.htm.

   11. Yields on actively traded non-inflation-indexed issues adjusted to constant maturities. The
   30-year Treasury constant maturity series was discontinued on February 18, 2002, and reintroduced
   on February 9, 2006. From February 18, 2002, to February 9, 2006, the U.S. Treasury published a
   factor for adjusting the daily nominal 20-year constant maturity in order to estimate a 30-year
   nominal rate. The historical adjustment factor can be found at
   www.treas.gov/offices/domestic-finance/debt-management/interest-rate/ltcompositeindex_historical.shtml.
   Source: U.S. Treasury.

   12. Yields on Treasury inflation protected securities (TIPS) adjusted to constant maturities.
   Source: U.S. Treasury. Additional information on both nominal and inflation-indexed yields may be
   found at www.treas.gov/offices/domestic-finance/debt-management/interest-rate/index.html.

   13. Based on the unweighted average bid yields for all TIPS with remaining terms to maturity of
   more than 10 years.

   14. International Swaps and Derivatives Association (ISDA(R)) mid-market par swap rates. Rates are
   for a Fixed Rate Payer in return for receiving three month LIBOR, and are based on rates collected
   at 11:00 a.m. Eastern time by Garban Intercapital plc and published on Reuters Page ISDAFIX(R)1.
   ISDAFIX is a registered service mark of ISDA. Source: Reuters Limited.

   15. Moody's Aaa rates through December 6, 2001, are averages of Aaa utility and Aaa industrial bond
   rates. As of December 7, 2001, these rates are averages of Aaa industrial bonds only.

   16. Bond Buyer Index, general obligation, 20 years to maturity, mixed quality; Thursday quotations.

   17. Contract interest rates on commitments for fixed-rate first mortgages. Source: Primary Mortgage
   Market Survey(R) data provided by Freddie Mac.

   ----------------------------------------------------------------------------------------------------

   Note: Weekly and monthly figures on this release, as well as annual figures available on the
   Board's historical H.15 web site (see below), are averages of business days unless otherwise noted.

   ----------------------------------------------------------------------------------------------------

   Current and historical H.15 data are available on the Federal Reserve Board's web site
   (www.federalreserve.gov/). For information about individual copies or subscriptions, contact
   Publications Services at the Federal Reserve Board (phone 202-452-3244, fax 202-728-5886). For paid
   electronic access to current and historical data, call STAT-USA at 1-800-782-8872 or 202-482-1986.

   ----------------------------------------------------------------------------------------------------

           Description of the Treasury Nominal and Inflation-Indexed Constant Maturity Series

   Yields on Treasury nominal securities at "constant maturity" are interpolated by the U.S. Treasury
   from the daily yield curve for non-inflation-indexed Treasury securities. This curve, which relates
   the yield on a security to its time to maturity, is based on the closing market bid yields on
   actively traded Treasury securities in the over-the-counter market. These market yields are
   calculated from composites of quotations obtained by the Federal Reserve Bank of New York. The
   constant maturity yield values are read from the yield curve at fixed maturities, currently 1, 3,
   and 6 months and 1, 2, 3, 5, 7, 10, 20, and 30 years. This method provides a yield for a 10-year
   maturity, for example, even if no outstanding security has exactly 10 years remaining to maturity.
   Similarly, yields on inflation-indexed securities at "constant maturity" are interpolated from the
   daily yield curve for Treasury inflation protected securities in the over-the-counter market. The
   inflation-indexed constant maturity yields are read from this yield curve at fixed maturities,
   currently 5, 7, 10, and 20 years.

http://www.federalreserve.gov/releases/h15/Current/

Knee Deep in Debt

Edward Palonek — Thu, 13 Nov 2008 19:12:00 GMT

Having trouble paying your bills? Getting dunning notices from creditors? Are your accounts being turned over to debt collectors? Are you worried about losing your home or your car?

You’re not alone. Many people face a financial crisis some time in their lives. Whether the crisis is caused by personal or family illness, the loss of a job, or overspending, it can seem overwhelming. But often, it can be overcome. Your financial situation doesn’t have to go from bad to worse.

If you or someone you know is in financial hot water, consider these options: realistic budgeting, credit counseling from a reputable organization, debt consolidation, or bankruptcy. Debt negotiation is yet another option. How do you know which will work best for you? It depends on your level of debt, your level of discipline, and your prospects for the future.

Self-Help

Developing a Budget: The first step toward taking control of your financial situation is to do a realistic assessment of how much money you take in and how much money you spend. Start by listing your income from all sources. Then, list your “fixed” expenses — those that are the same each month — like mortgage payments or rent, car payments, and insurance premiums. Next, list the expenses that vary — like entertainment, recreation, and clothing. Writing down all your expenses, even those that seem insignificant, is a helpful way to track your spending patterns, identify necessary expenses, and prioritize the rest. The goal is to make sure you can make ends meet on the basics: housing, food, health care, insurance, and education.

Your public library and bookstores have information about budgeting and money management techniques. In addition, computer software programs can be useful tools for developing and maintaining a budget, balancing your checkbook, and creating plans to save money and pay down your debt.

Contacting Your Creditors: Contact your creditors immediately if you’re having trouble making ends meet. Tell them why it’s difficult for you, and try to work out a modified payment plan that reduces your payments to a more manageable level. Don’t wait until your accounts have been turned over to a debt collector. At that point, your creditors have given up on you.

Dealing with Debt Collectors: The Fair Debt Collection Practices Act is the federal law that dictates how and when a debt collector may contact you. A debt collector may not call you before 8 a.m., after 9 p.m., or while you’re at work if the collector knows that your employer doesn’t approve of the calls. Collectors may not harass you, lie, or use unfair practices when they try to collect a debt. And they must honor a written request from you to stop further contact.

Managing Your Auto and Home Loans: Your debts can be unsecured or secured. Secured debts usually are tied to an asset, like your car for a car loan, or your house for a mortgage. If you stop making payments, lenders can repossess your car or foreclose on your house. Unsecured debts are not tied to any asset, and include most credit card debt, bills for medical care, signature loans, and debts for other types of services.

Most automobile financing agreements allow a creditor to repossess your car any time you’re in default. No notice is required. If your car is repossessed, you may have to pay the balance due on the loan, as well as towing and storage costs, to get it back. If you can’t do this, the creditor may sell the car. If you see default approaching, you may be better off selling the car yourself and paying off the debt: You’ll avoid the added costs of repossession and a negative entry on your credit report.

If you fall behind on your mortgage, contact your lender immediately to avoid foreclosure. Most lenders are willing to work with you if they believe you’re acting in good faith and the situation is temporary. Some lenders may reduce or suspend your payments for a short time. When you resume regular payments, though, you may have to pay an additional amount toward the past due total. Other lenders may agree to change the terms of the mortgage by extending the repayment period to reduce the monthly debt. Ask whether additional fees would be assessed for these changes, and calculate how much they total in the long term.

If you and your lender cannot work out a plan, contact a housing counseling agency. Some agencies limit their counseling services to homeowners with FHA mortgages, but many offer free help to any homeowner who’s having trouble making mortgage payments. Call the local office of the Department of Housing and Urban Development or the housing authority in your state, city, or county for help in finding a legitimate housing counseling agency near you

Credit Counseling and Debt Management Plans

Credit Counseling: If you’re not disciplined enough to create a workable budget and stick to it, can’t work out a repayment plan with your creditors, or can’t keep track of mounting bills, consider contacting a credit counseling organization. Many credit counseling organizations are nonprofit and work with you to solve your financial problems. But be aware that, just because an organization says it’s “nonprofit,” there’s no guarantee that its services are free, affordable, or even legitimate. In fact, some credit counseling organizations charge high fees, which may be hidden, or urge consumers to make “voluntary” contributions that can cause more debt.

Most credit counselors offer services through local offices, the Internet, or on the telephone. If possible, find an organization that offers in-person counseling. Many universities, military bases, credit unions, housing authorities, and branches of the U.S. Cooperative Extension Service operate nonprofit credit counseling programs. Your financial institution, local consumer protection agency, and friends and family also may be good sources of information and referrals.

Reputable credit counseling organizations can advise you on managing your money and debts, help you develop a budget, and offer free educational materials and workshops. Their counselors are certified and trained in the areas of consumer credit, money and debt management, and budgeting. Counselors discuss your entire financial situation with you, and help you develop a personalized plan to solve your money problems. An initial counseling session typically lasts an hour, with an offer of follow-up sessions.

Debt Management Plans: If your financial problems stem from too much debt or your inability to repay your debts, a credit counseling agency may recommend that you enroll in a debt management plan (DMP). A DMP alone is not credit counseling, and DMPs are not for everyone. You should sign up for one of these plans only after a certified credit counselor has spent time thoroughly reviewing your financial situation, and has offered you customized advice on managing your money. Even if a DMP is appropriate for you, a reputable credit counseling organization still can help you create a budget and teach you money management skills.

In a DMP, you deposit money each month with the credit counseling organization, which uses your deposits to pay your unsecured debts, like your credit card bills, student loans, and medical bills, according to a payment schedule the counselor develops with you and your creditors. Your creditors may agree to lower your interest rates or waive certain fees, but check with all your creditors to be sure they offer the concessions that a credit counseling organization describes to you. A successful DMP requires you to make regular, timely payments, and could take 48 months or more to complete. Ask the credit counselor to estimate how long it will take for you to complete the plan. You may have to agree not to apply for — or use — any additional credit while you’re participating in the plan.

Protect Yourself

Be wary of credit counseling organizations that:

charge high up-front or monthly fees for enrolling in credit counseling or a DMP.
pressure you to make “voluntary contributions,” another name for fees.
won’t send you free information about the services they provide without requiring you to provide personal financial information, such as credit card account numbers, and balances.
try to enroll you in a DMP without spending time reviewing your financial situation.
offer to enroll you in a DMP without teaching you budgeting and money management skills.
demand that you make payments into a DMP before your creditors have accepted you into the program.

Debt Consolidation

You may be able to lower your cost of credit by consolidating your debt through a second mortgage or a home equity line of credit. Remember that these loans require you to put up your home as collateral. If you can’t make the payments — or if your payments are late — you could lose your home.

What’s more, the costs of consolidation loans can add up. In addition to interest on the loans, you may have to pay “points,” with one point equal to one percent of the amount you borrow. Still, these loans may provide certain tax advantages that are not available with other kinds of credit.

Bankruptcy

Personal bankruptcy generally is considered the debt management option of last resort because the results are long-lasting and far reaching. People who follow the bankruptcy rules receive a discharge — a court order that says they don’t have to repay certain debts. However, bankruptcy information (both the date of your filing and the later date of discharge) stay on your credit report for 10 years, and can make it difficult to obtain credit, buy a home, get life insurance, or sometimes get a job. Still, bankruptcy is a legal procedure that offers a fresh start for people who have gotten into financial difficulty and can’t satisfy their debts.

There are two primary types of personal bankruptcy: Chapter 13 and Chapter 7. Each must be filed in federal bankruptcy court. As of April 2006, the filing fees run about $274 for Chapter 13 and $299 for Chapter 7. Attorney fees are additional and can vary.

Effective October 2005, Congress made sweeping changes to the bankruptcy laws. The net effect of these changes is to give consumers more incentive to seek bankruptcy relief under Chapter 13 rather than Chapter 7. Chapter 13 allows people with a steady income to keep property, like a mortgaged house or a car, that they might otherwise lose through the bankruptcy process. In Chapter 13, the court approves a repayment plan that allows you to use your future income to pay off your debts during a three-to-five-year period, rather than surrender any property. After you have made all the payments under the plan, you receive a discharge of your debts.

Chapter 7 is known as straight bankruptcy, and involves liquidation of all assets that are not exempt. Exempt property may include automobiles, work-related tools, and basic household furnishings. Some of your property may be sold by a court-appointed official — a trustee — or turned over to your creditors. The new bankruptcy laws have changed the time period during which you can receive a discharge through Chapter 7. You now must wait 8 years after receiving a discharge in Chapter 7 before you can file again under that chapter. The Chapter 13 waiting period is much shorter and can be as little as two years between filings.

Both types of bankruptcy may get rid of unsecured debts and stop foreclosures, repossessions, garnishments and utility shut-offs, and debt collection activities. Both also provide exemptions that allow people to keep certain assets, although exemption amounts vary by state. Note that personal bankruptcy usually does not erase child support, alimony, fines, taxes, and some student loan obligations. And, unless you have an acceptable plan to catch up on your debt under Chapter 13, bankruptcy usually does not allow you to keep property when your creditor has an unpaid mortgage or security lien on it.
Another major change to the bankruptcy laws involves certain hurdles that a consumer must clear before even filing for bankruptcy, no matter what the chapter. You must get credit counseling from a government-approved organization within six months before you file for any bankruptcy relief. You can find a state-by-state list of government-approved organizations at www.usdoj.gov/ust. That is the website of the U.S. Trustee Program, the organization within the U.S. Department of Justice that supervises bankruptcy cases and trustees. Also, before you file a Chapter 7 bankruptcy case, you must satisfy a “means test.” This test requires you to confirm that your income does not exceed a certain amount. The amount varies by state and is publicized by the U.S. Trustee Program at www.usdoj.gov/ust.

Debt Negotiation Programs

Debt negotiation differs greatly from credit counseling and DMPs. It can be very risky, and have a long term negative impact on your credit report and, in turn, your ability to get credit. That’s why many states have laws regulating debt negotiation companies and the services they offer. Contact your state Attorney General for more information.

The Claims

Debt negotiation firms may claim they’re nonprofit. They also may claim that they can arrange for your unsecured debt — typically credit card debt — to be paid off for anywhere from 10 to 50 percent of the balance owed. For example, if you owe $10,000 on a credit card, a debt negotiation firm may claim it can arrange for you to pay it off with a lesser amount, say $4,000.
The firms often pitch their services as an alternative to bankruptcy. They may claim that using their services will have little or no negative impact on your ability to get credit in the future, or that any negative information can be removed from your credit report when you complete their debt negotiation program. The firms usually tell you to stop making payments to your creditors, and instead, send payments to the debt negotiation company. The firm may promise to hold your funds in a special account and pay your creditors on your behalf.

The Truth

Just because a debt negotiation company describes itself as a “nonprofit” organization, there’s no guarantee that the services they offer are legitimate. There also is no guarantee that a creditor will accept partial payment of a legitimate debt. In fact, if you stop making payments on a credit card, late fees and interest usually are added to the debt each month. If you exceed your credit limit, additional fees and charges also can be added. This can cause your original debt to double or triple. What’s more, most debt negotiation companies charge consumers substantial fees for their services, including a fee to establish the account with the debt negotiator, a monthly service fee, and a final fee of a percentage of the money you’ve supposedly saved.
While creditors have no obligation to agree to negotiate the amount a consumer owes, they have a legal obligation to provide accurate information to the credit reporting agencies, including your failure to make monthly payments. That can result in a negative entry on your credit report. And in certain situations, creditors may have the right to sue you to recover the money you owe. In some instances, when creditors win a lawsuit, they have the right to garnish your wages or put a lien on your home. Finally, the Internal Revenue Service may consider any amount of forgiven debt to be taxable income.

Damage Control

Turning to a business that offers help in solving debt problems may seem like a reasonable solution when your bills become unmanageable. But before you do business with any company, check it out with your state Attorney General, local consumer protection agency, and the Better Business Bureau. They can tell you if any consumer complaints are on file about the firm you’re considering doing business with. Ask your state Attorney General if the company is required to be licensed to work in your state and, if so, whether it is.

Some businesses that offer to help you with your debt problems may charge high fees and fail to follow through on the services they sell. Others may misrepresent the terms of a debt consolidation loan, failing to explain certain costs or mention that you’re signing over your home as collateral. Businesses advertising voluntary debt reorganization plans may not explain that the plan is a bankruptcy filing, tell you everything that’s involved, or help you through what can be a long and complex process.

In addition, some companies guarantee you a loan if you pay a fee in advance. The fee may range from $100 to several hundred dollars. Resist the temptation to follow up on these advance-fee loan guarantees. They may be illegal. It is true that many legitimate creditors offer extensions of credit through telemarketing and require an application or appraisal fee in advance. But legitimate creditors never guarantee that the consumer will get the loan — or even represent that a loan is likely. Under the federal Telemarketing Sales Rule, a seller or tele-marketer who guarantees or represents a high likelihood of your getting a loan or some other extension of credit may not ask for or accept payment until you’ve received the loan.

You should be cautious of claims from so-called credit repair clinics. Many companies appeal to consumers with poor credit histories, promising to clean up credit reports for a fee. But you already have the right to have any inaccurate information in your file corrected. And a credit repair clinic cannot have accurate information removed from your credit report, despite their promises. You also should know that federal and some state laws prohibit these companies from charging you for their services until the services are fully performed. Only time and a conscientious effort to repay your debts will improve your credit report.

If you’re thinking about getting help to stabilize your financial situation, do some homework first. Find out what services a business provides and what it costs, and don’t rely on verbal promises. Get everything in writing, and read your contracts carefully.

For More Information

For more information, see Fiscal Fitness: Choosing a Credit Counselor, at www.ftc.gov/bcp/conline/pubs/credit/fiscal.shtm

The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad. If you need to find some unclaimed Financial Information or an Unclaimed IRS refund you can visit a site called foundmoney.com

Statement by President Bush on Job Report Numbers

Edward Palonek — Mon, 10 Nov 2008 15:17:00 GMT

Today, we received monthly job report numbers that reflect the difficult challenges confronting our economy. We are in the midst of a global financial crisis, and tight credit markets have made it harder for businesses to borrow the money they need to meet their payrolls, grow, and create new jobs.

The Federal government has taken aggressive and decisive measures to address this situation. It will take time for these measures to have their full impact on an economy in which many Americans are struggling. But in recent days, we have seen some encouraging signs. The market for lending between banks has loosened considerably, and the Federal Reserve's efforts to stabilize the commercial paper market have provided businesses with an urgently needed source of financing for day-to-day operations.

In the weeks ahead, my Administration will continue working to return our economy to the path of prosperity and growth. I will continue urging Members of Congress to approve free trade agreements with Colombia, Panama, and South Korea, and I look forward to hosting an international financial summit with leaders of both developed and developing nations on November 15.

I understand that Americans remain deeply concerned about the challenges facing our economy, but our economy has overcome great challenges before, and we can be confident that it will do so again.

Ways to save money for College Students

Edward Palonek — Mon, 08 Sep 2008 20:36:00 GMT

Now that students are starting college they are doing their homework to find new ways to save on textbooks and other supplies.

College students spend an average of $940 a year on textbooks and supplies, according to the College Board.

Some newer ways to find money hidden away are textbook rentals, eBooks, purchasing and downloading individual chapters.

A site called StudentMarket.com offers price comparisons on over 1.6 million new and used books, textbook rentals, eBooks, as well as textbook buybacks. Another site that may help fund some unclaimed money or forgotten cash that can be used to pay for high priced books is foundmoney.com

SEP IRA - For Last Minute Tax Deductions

Edward Palonek — Thu, 26 Jun 2008 13:53:00 GMT

SEP IRA - For Last Minute Tax Deductions

The SEP IRA is one of the few remaining methods for small business owners to cut their taxes for the 2002 tax year.

Virginia - February 24, 2003 - The SEP IRA is one of the few remaining methods for small business owners to cut their taxes for last year. Employer contributions made to a Simplified Employee Pension-Individual Retirement Account, known as a SEP plan, before a companys tax filing deadline are deductible for 2002. This holds true even if the SEP plan is set up and the contributions are made in 2003.

A SEP-IRA allows small business owners and sole proprietors in a very simple manner to cut their tax liability by making retirement contributions for their eligible employees," says Daniel Lamaute, retirement plan specialist at InvestSafe.com and CEO of Lamaute Capital, Inc.

The SEP-IRA has several main advantages for employers, says Lamaute. Employers get a tax deduction while the SEP-IRA contribution is not taxed as income to the employees. The earnings within the SEP IRA are taxed deferred until the participant pulls money out, usually at retirement."

Employers can contribute annually up to 25% or $40,000 of an employees wages, whichever is less. An employer is not required to make contributions in any year or maintain a certain level of contributions to a SEP plan. But, the employer must contribute the same percentage amount for all eligible employees.

Eligible employees include all employees who are at least age 21 and have been with a company for 3 years out of the immediately preceding 5 years. Employers have the option to establish less restrictive participation requirements, if desired.

A SEP-IRA is an excellent choice for the entrepreneurs, as well," says Lamaute It affords them a vehicle with favorable tax treatment to put away money for their retirement. Its hassle free, cheap and very easy to set up. Nothing has to be filed with the IRS to establish the SEP-IRA or subsequently unlike other retirement plans that may require IRS annual returns"

Anyone can visit http://www.investsafe.com/smallbusiness.html to get more information on the SEP IRA or other retirement plans for the self-employed and small business owner.

Baby Boomers Beg Advisors for Truth on Self-Directed IRAs; PENSCO Trust Offers Mini-Symposium Series for Professional Advisors

Edward Palonek — Wed, 25 Jun 2008 21:11:00 GMT

Baby Boomers Beg Advisors for Truth on Self-Directed IRAs; PENSCO Trust Offers Mini-Symposium Series for Professional Advisors

The exploding IRA market is expected to hit the $5.6 trillion mark by 2011. Roughly 75% of Boomer retirees roll their 401(k) retirement funds into IRA accounts, and are begging for help truly diversifying beyond the default choice of stocks and bonds. PENSCO Trust is offering a symposium on self-directed IRAs for real estate and financial professional advisors.

San Francisco, CA (PRWE August 17, 2006 -- PENSCOTrust.com, the forerunner in advanced self directed IRA education, has launched a new series of free mini-symposiums for tax attorneys, real estate pros, CPAs and financial planners who want to tap the emerging self-directed IRA market. The seminars, to be held in the fall in various cities, explain how advisors can deliver what IRA and 401(k) holders are asking for – safe and savvy, but little-known investment opportunities in private equities and real estate.

The exploding IRA market is expected to hit the $5.6 trillion mark by 2011. Roughly 75% of Baby Boomer retirees roll their 401(k) retirement funds into IRA accounts, and are begging their advisors for help truly diversify beyond the default choice of stocks and bonds.

Read the rest of this release, click here.

Business: Investing - Podcast Date: Fri, 18 Aug 2006 13:05:14 -0700

Boomers Discover Powerful Way to Leverage Their Self-Directed IRAs – Borrow and Buy Real Estate

Edward Palonek — Tue, 24 Jun 2008 16:52:00 GMT

Boomers Discover Powerful Way to Leverage Their Self-Directed IRAs – Borrow and Buy Real Estate

Retired Pilot Fuels His IRA With a Mortgage From North American Savings Bank (http://www.iralending.com)

Like the millions of baby boomers retiring every year, when airline pilot Tom Ebenhack hung up his uniform he took control of his personal finances with a self-directed IRA. The difference? He rolled over his lump-sum retirement payment into an IRA investment he understands—real estate.

The catch is finding professionals who can help you make the real estate investment happen. At NASB, we're filling the gap by offering mortgages specifically for IRAs and by educating financial advisors to meet the demand.

“Leverage is the whole benefit of real estate,” says Ebenhack, who was surprised to discover he could borrow and buy property through his IRA with a special non-recourse loan from North American Savings Bank (NAS (http://www.iralending.com). In response to client requests, NASB created the nation’s first non-recourse loans, for real estate held in IRAs. The loans are structured to meet the stringent IRS requirements for real estate purchases through self-directed retirement accounts, and NASB is the only lender to offer investors nationwide access to the product.

Leverage your retirement with IRA non-recourse loans

When proactive investors find out about the growth and tax advantages of investing their IRAs in real estate, they often ask:

What organization is suppressing this information?
Why didn’t my CPA tell me I could invest my IRA in real estate?
What’s the catch? It seems too good to be true.

Matt Allen, Director of IRA Lending at NASB, says, “The catch is finding professionals who can help you make the real estate investment happen. At NASB, we’re filling the gap by offering mortgages specifically for IRAs and by educating financial advisors to meet the demand.” As America’s leading IRA lender, NASB teams up with national self-directed IRA experts to teach investors and CPAs, attorneys and brokers the how-tos. Allen’s next presentation for financial professionals is January 17^th, 2007 in San Francisco. Limited seating is available at the free event, so register on IRA custodian and host PENSCO Trust Company’s site.

To learn more about IRA borrowing requirements, contact Matt Allen at (816) 347-4222 or visit www.iralending.com.

About North American Savings Bank (http://www.iralending.com)

Founded in 1927, Grandview, Missouri-based NASB is the only nationwide lender that specializes in IRA lending, including 30-year fixed and 5-year adjustable IRA mortgages. Their dedicated IRA lending team typically processes and funds loans within 30 days. NASB maintains a network of IRA professionals, including attorneys, real estate brokers and custodians, to help clients invest their self-directed IRA accounts in real estate.

Rothschild Investment Corporation’s “University Series” Addresses

Edward Palonek — Mon, 23 Jun 2008 16:29:00 GMT

Rothschild Investment Corporation’s “University Series” Addresses
Investment Selection Philosophy

CHICAGO (Business Wire EON) June 3, 2008 -- To help employees successfully save for retirement, it is critical that employers have a well-defined 401k and retirement plan investment philosophy. To help bring clarity to this complex issue, Rothschild Investment Corporation (www.rothschildinv.com) today announced the second of four sessions in its “401k and Retirement Plan University Series.”

Understanding Investment Philosophy for Defined Contribution Plans

Event: “Understanding Investment Philosophy for Defined Contribution Plans”

Date: June 17, 2008

Time: 12 pm CT (lunch will be served)

Place: 311 South Wacker Drive, 65^th Floor

RSVP: Luke J. Novak, 312-983-8975, lnovak@rothschildinv.com

Hosted by Rothschild’s 401k and Retirement Plan Services team, this University Series session will help attendees understand:

Issues to consider when developing an investment philosophy.
Pitfalls and insights regarding investment selection.
The Five Pillars of corporate retirement plan excellence:
- Cost
- Process
- Plan Design/Administration
- Participant Focus
- Investments

About Rothschild Investment Corporation

Since 1908, Rothschild Investment Corporation has provided investment services to generations of entrepreneurs, professionals, families, retirement plans, endowments and foundations. Independent for each of its 100 years, Rothschild tailors investment solutions to the unique needs of each client, avoiding conflicts of interest associated with proprietary products, securities inventorying, market-making and investment banking relationships. Rothschild has approximately $2 billion under management and supervision.