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Personal Finance News 03/2010

Republicans want hearing on Fannie/Freddie bailout (Reuters)
Reuters - Two key Republicans are urging the House of Representatives to speed up a public hearing to investigate the administration's bailout of home funding giants Fannie Mae and Freddie Mac.

AIG agrees to $35.5 billion unit sale to Prudential: sources (Reuters)
Reuters - American International Group Inc agreed to sell its Asian life insurance unit to Britain's Prudential Plc for about $35.5 billion, in a deal that would help the U.S. government get back billions of its bailout money, sources familiar with the matter said.

Housing: Time to Pull the Plug on Government Support (BusinessWeek)
BusinessWeek - America's housing market implosion was the epicenter of the Great Recession. It's hardly surprising that the federal government directed enormous resources at the market. Besides bailing out vulnerable banks, the federal government nationalized mortgage behemoths Fannie Mae and Freddie Mac, opened the lending spigot at the Federal Housing Administration (FHA), passed a first-time home buyers' tax credit, and established a mortgage modification program for troubled homeowners. The Federal Reserve embarked on a $1. ...

US consumer spending grows but incomes lag (AFP)
AFP - US consumer spending rose more than expected in January but personal income barely budged amid a fragile economic recovery, the government said Monday.

AP - Manufacturing index grows, but at slower pace in February

Prudential to buy AIG Asia for $35.5 billion (Reuters)
Reuters - Britain's Prudential will buy AIG's Asian arm for $35.5 billion in the insurance sector's biggest deal ever, helping the bailed-out U.S. group repay a big chunk of its taxpayer debt.

Wall St extends gains in broad run-up (Reuters)
Reuters - U.S. stocks extended gains on Monday, with the S&P 500 and the Nasdaq up about 1 percent, after a spurt of takeover news and expectations that debt-ridden Greece may get European Union aid.

TransUnion: Mortgage delinquencies hit new record (AP)
AP - TransUnion said Monday that customers at least 60 days past due on their mortgage payments rose to a new record in the fourth quarter.

Reports show modest but steady economic recovery (AP)
AP - Mixed reports Monday on manufacturing, construction and personal income and spending made clear that the economy is enjoying modest growth even though the recovery remains fragile.

Gov't extends deadline for refinance program (AP)
AP - The government is giving homeowners another year to refinance their loans under a little-used program designed to help borrowers whose homes have plummeted in value.

MBIA narrows 4Q loss to $242 million (AP)
AP - MBIA Inc. said Monday that its loss narrowed in the fourth quarter, although losses from mortgage-related securities continued to hammer the bond insurer.

How the major stock indexes fared on Monday (AP)
AP - Major stock indexes rose to their highest levels in more than a month Monday after corporate buyouts raised hopes about the economy. The biggest boost for the market came from insurer American International Group, which agreed to sell its prized Asian life insurance business to Britain's Prudential for $35.5 billion. It is seen as a sign of confidence in the economy when big businesses go ahead with takeovers.

Summary Box: Corporate dealmaking lifts stocks (AP)
AP - IN LIKE A LION: Stocks began March with hefty gains after several corporate buyouts raised hopes that the economy is strengthening. American International Group, owned mainly by taxpayers, sold its Asian life insurance business to Britain's Prudential for $35.5 billion.

FDIC to grease mortgage market with $1.8 bln deal (Reuters)
Reuters - The U.S. Federal Deposit Insurance Corp is planning to sell $1.8 billion of guaranteed asset-backed debt, according to IFR, in what may be a step toward restoring confidence in securities closely tied to the financial meltdown.

UK's Pru to buy AIG Asia unit for $35.5 billion (Reuters)
Reuters - Britain's Prudential will buy American International Group's Asian life insurance arm for $35.5 billion in the insurance sector's biggest deal ever, helping the bailed-out U.S. group repay a big chunk of its taxpayer debt.

Consumer group sues insurer over policy changes (AP)
AP - Mary Feller's family of three spends nearly $25,000 a year on health insurance premiums, which is more than they pay on their home's mortgage in California's Marin County.

Sirius XM Is Not a $0.25 Stock (The Motley Fool)
The Motley Fool - Despite delivering better than expected results last week, Sirius XM Radio (Nasdaq: SIRI - News) has gone on to close lower in the two trading sessions since its robust report. It opened lower still this morning.

FDIC seen stepping up sales of failed bank assets (Reuters)
Reuters - The U.S. Federal Deposit Insurance Corp is expected to offer $3.8 billion of guaranteed securitizations backed by the residential mortgage assets of failed banks, market sources said on Tuesday.

Ark. gov. candidate: Cut capital, income taxes (AP)
AP - Republican gubernatorial candidate Jim Keet on Tuesday called for phasing out the state's tax on capital gains and a reduction in Arkansas' income tax.

A Guide to Online Investing (U.S. News & World Report)
U.S. News & World Report - When start-up company kaChing began accepting clients last year, its capital base was as small as its aspirations were grandiose. With just over $2 million in investments under management, the company was looking to challenge the $11 trillion U.S. mutual fund industry.

New, Easy Ways to Save for Retirement (U.S. News & World Report)
U.S. News & World Report - Half of Americans don't have a retirement plan through their employer, and of those who do, few are saving enough to finance a retirement that will last several decades. To encourage more workers to plan for the future, President Obama announced in September several new federal initiatives to promote saving for retirement. Although employers had the option before, these changes make it easier for them to automatically enroll workers in retirement plans. Some employees will be able to convert unused vacation and sick days to funds for their 401(k)'s, and there's a new way to save tax refunds. ...

Business owners can avoid common tax time pitfalls (AP)
AP - Small business owners who compile their own income tax returns can find themselves falling into some common quicksand pits. The mistakes can be costly if they raise a company's tax bill unnecessarily or subject it to penalties and interest in the future.

Freddie Mac prices $5.5 billion in 3-year notes (AP)
AP - Government-owned mortgage finance company Freddie Mac on Wednesday priced $5.5 billion in three-year reference notes.

AIG units settle discrimination charges (Reuters)
Reuters - Two AIG units settled federal charges that they discriminated against blacks in providing home loans and will pay at least $7.1 million for restitution and education efforts, according to court documents filed on Thursday.

Trustee sues ex-Thornburg Mortgage execs for theft (Reuters)
Reuters - Four top executives of Thornburg Mortgage improperly paid themselves handsome bonuses just before the mortgage lender filed for bankruptcy last year, and stole money and ideas from Thornburg to secretly launch a new firm, the bankruptcy trustee in charge of liquidating the lender alleged in a lawsuit.

America: The Next Growth Economy (The Motley Fool)
The Motley Fool - Warren Buffett described Berkshire Hathaway's (NYSE: BRK-A - News; NYSE:BRK-B - News) acquisition of Burlington National Railroad as a long-term bet on the American economy. In his book The Next Hundred Million: America in 2050, author Joel Kotkin presents data that supports Buffett's thesis, arguing that despite its current economic woes, the U.S. will remain an economic powerhouse over the next four decades.

Mortgage rates fall below 5 percent (AP)
AP - Mortgages rates have dipped below 5 percent again, four weeks before a government program that is helping keep rates low is scheduled to run out.

MetLife near $15 billion deal for AIG unit (Reuters)
Reuters - A tax question holding up American International Group Inc's sale of its foreign life insurance unit to MetLife Inc is expected to be resolved favorably, clearing the way for a roughly $15 billion deal, sources familiar with the matter said on Thursday.

Equity One reports jump in profit during 4Q (AP)
AP - Shopping center owner Equity One Inc. said Thursday it posted a 71 percent increase in fourth-quarter funds from operations, reporting higher revenue and an income tax benefit.

Behind the Buzz About Mint (BusinessWeek)
BusinessWeek - In's creation story, as recounted on its Web site, founder Aaron Patzer started the free online personal finance service after a tedious session with Intuit's (NasdaqGS:INTU - News) Quicken budgeting software in 2005. It's a measure of Mint's success that any new complaints about Quicken should now be directed to Patzer himself. Tired of getting its clock cleaned by Mint, Intuit bought the site in 2009 and put Patzer in charge of its entire consumer finance operation. He must figure out how all the pieces will fit together -- while rejuvenating Intuit's aged Quicken franchise.

Upper-income households report less distress (Reuters)
Reuters - Sentiment of U.S. households in the top fifth of the income distribution improved in early 2010 compared with 2009, but worries over personal finances persist, a survey showed on Friday.

Lawmaker is working to improve loan modifications (AP)
AP - A key lawmaker says he is working with banks, regulators and the Obama administration on ways to boost the government's struggling foreclosure prevention effort.

Summary Box: Consumer borrowing up in January (AP)
AP - BORROWING UP: Consumer credit rose by $4.96 billion in January, breaking a record string of 11 consecutive declines.

Wall St rallies on jobs data, consumer credit (Reuters)
Reuters - Stocks jumped and the Nasdaq hit an 18-month closing high on Friday as U.S. employers cut fewer jobs than expected last month and consumers showed signs of shedding their penny-pinching ways.

Treasury restates support for Fannie, Freddie (AP)
AP - The Treasury Department was forced Friday to reiterate its financial support for Fannie Mae and Freddie Mac after a key lawmaker rattled investors by pointing out that their debt does not enjoy the explicit guarantee of the federal government.

US consumer credit rises first time in a year (AFP)
AFP - Borrowings by Americans rose for the first time in a year in January, the Federal Reserve said Friday in a sign that the US economic recovery is on track.

Consumer credit posts first rise in a year (Reuters)
Reuters - Total U.S. consumer credit rose $4.96 billion in January, its first rise in a year and the largest for any month since mid-2008, Federal Reserve data showed on Friday.

Consumer borrowing up in January after 11 declines (AP)
AP - Consumer borrowing broke a record stretch of declines with a small increase in January as a boost in auto loans offset continued weakness in credit card borrowing.

AIG to get $231M if sale of Asian unit crumbles (AP)
AP - American International Group Inc. will receive a termination fee of $230.6 million if the sale of its Asian life insurance business to Britain's Prudential PLC falls through.

AIG set for $15.5 bln deal with MetLife: report (AFP)
AFP - US insurance giants American International Group and MetLife will on Monday announce a $15.5 billion deal for AIG's second-largest foreign life-insurance business, The Wall Street Journal reported.

US insurer MetLife to buy AIG unit for $15.5 bln (AFP)
AFP - US life insurance giant MetLife will acquire a unit of American International Group in a 15.5-billion-dollar deal that will help AIG pay back part of its government bailout, the firms said Monday.

MetLife buying AIG's Alico unit for $15.5 billion (Reuters)
Reuters - AIG is selling its foreign life insurance unit to MetLife Inc for about $15.5 billion, its second major asset sale in a week as it raises funds to repay a $182.3 billion U.S. government bailout.

Is Bank of America a Buy? (The Motley Fool)
The Motley Fool - With the recent auction of Treasury's Bank of America (NYSE: BAC - News) warrants, the big bank joins Goldman Sachs (NYSE: GS - News), Morgan Stanley (NYSE: MS - News), and several other banks in completing its exit from TARP. But, is it a buy?

Summary Box: AIG's $15.5B Alico sale to MetLife (AP)
AP - THE SALE: American International Group Inc. sold its American Life Insurance Co. division, or Alico, to MetLife Inc. for $15.5 billion. The deal is AIG's second big asset sale in two weeks. On March 1, it said it would sell its AIA Group unit to Prudential PLC for $35.5 billion.

Management Education on the Fly (BusinessWeek)
BusinessWeek - Who got us into this mess? It's not just greedy mortgage lenders and irresponsible economists who are responsible for the current financial crisis. Leaders, so called, have played a role too, by not managing their companies and so being detached from what was going on in them. And behind much of this has been an educational process that encouraged such detachment. As I've argued at length in my book, Managers not MBAs, the MBA is fine education -- but in the functions of business, not the exercise of managing. ...

Commercial delinquency lower than other mortgages (AP)
AP - Commercial mortgages were among the best-performing loans and leases held by banks and thrifts in the fourth quarter of last year, the Mortgage Bankers Association said Tuesday.

One Congressman's Solution for Boosting Small Business Loans (The Motley Fool)
The Motley Fool - The first Friday of every month brings the all-important employment report. February's numbers were better than anticipated. The United States lost only 36,000 jobs, versus the 68,000 that experts expected. This compares with 651,000 jobs lost in February 2009. Still, the unemployment rate held steady at 9.7%, with the unofficial rate stuck around a whopping 16%.

Nationalized UK bank Northern Rock back in profit (AP)
AP - Nationalized mortgage lender Northern Rock said Wednesday that it returned to profit in the second half of 2009 as interest income rose and losses on loans fell.

Home loan demand nudges higher in latest week (Reuters)
Reuters - U.S. mortgage applications nudged higher last week, reflecting increased demand for home purchase loans even as interest rates trekked higher, data from an industry group showed on Wednesday.

Quinn seeks income tax hike for schools (AP)
AP - Calling himself a realist, Gov. Pat Quinn on Wednesday scaled back his proposal to raise income taxes, shifting to a call for an increase of just one percentage point to be used solely for preventing deep cuts to education.

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