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Personal Finance News 04/2011



Report critical of pay practices at Fannie Mae, Freddie Mac (Reuters)
Reuters - The heads of bailed-out mortgage finance giants Fannie Mae and Freddie Mac were paid fat salaries without proper written procedures or analysis, according to a report published by the Inspector General of the Federal Housing Finance Agency (FHFA-OIG).

Senate report to reveal mortgage crisis details: WSJ (AFP)
AFP - The Senate will soon issue findings of a probe of the US mortgage meltdown that fueled the global financial crisis, with Goldman Sachs likely to face fresh embarrassment over its role, the Wall Street Journal reported Sunday.

Citi consumer group gets at least 3 bids: report (Reuters)
Reuters - At least three groups of private equity firms have submitted bids for Citigroup Inc's consumer finance business, but another round of bidding is expected, according to The Financial Times.

Beazer gets into used home business (Reuters)
Reuters - Homebuilder Beazer Homes is moving into the used homes business, starting a new division to buy recently built houses that it will rent out in a depressed U.S. housing market where many people are having trouble qualifying for home loans.

Advice for David Sokol, by David Sokol (The Motley Fool)
The Motley Fool - I still don't know what to think about last week's revelation that David Sokol, a former Berkshire Hathaway (NYSE: BRK-A - News; NYSE: BRK-B - News) manager and heir apparent to Warren Buffett, resigned after disclosing he made $3 million by buying shares of Lubrizol (NYSE: LZ - News) weeks before convincing Buffett that Berkshire should buy the company.

Why Saving For Retirement Isn't Enough (U.S. News & World Report)
U.S. News & World Report - The basic rules of personal finance are simple to understand: Spend less than you earn, save for the future, and repeat the process. In principle, it sounds easy. But there is more to retirement planning than just saving whatever you have left over at the end of the month. Here are several other important ways to prepare for retirement.

First Person: Even Updated, Renovated Houses Seeing Few Showings (ContributorNetwork)
ContributorNetwork - COMMENTARY | Many housing experts have recently said the housing market in the United States has bottomed out and is on the rebound. Many homeowners are desperate to sell their homes or refinance to be able to afford their mortgage payments.

SEC sought information from BofA on loan-loss reserves: filing (Reuters)
Reuters - The Securities and Exchange Commission (SEC) sought information from Bank of America Corp last year about the loan-loss reserves used to repurchase faulty home loans, company filings showed.

Buffett: Hypocrite Miser or Philanthropic Master? (The Motley Fool)
The Motley Fool - Hedge fund legend Michael Steinhardt was on CNBC yesterday. As usual, he had much to say and held little back. One of my favorite observations: When he started in 1967, "you had to be a special money manager to run a hedge fund because you were expected to do well. It's a very different world today." So true.

IMF urges U.S. budget include Fannie, Freddie costs (Reuters)
Reuters - The United States should include in its budget the cost of mortgage loan guarantees and other housing supports, the International Monetary Fund said on Wednesday in a rare criticism of its biggest shareholder.

5 Ways to Make Saving for Retirement Easier (U.S. News & World Report)
U.S. News & World Report - Retirement saving is a crucial part of our personal finances. But with so many more immediate needs and wants, it is difficult to allocate resources to a retirement that could be decades away. Here are five ways to make it easier to save for retirement.

Should You Pay Off Your Mortgage or Invest? (U.S. News & World Report)
U.S. News & World Report - Clients often ask if they should pay off their mortgage with their savings or take that nest egg and put it to work in the market. My answer: It depends, but in today's interest rate and market environment, I would likely suggest investing.

When you can do your own taxes, and when you should rely on a professional (ContributorNetwork)
ContributorNetwork - Before becoming a tax accountant, I always prepared my own tax returns. Admittedly, my personal finances were not very complicated, so doing my own taxes was never really a big deal. Now that I know much more about tax law, I still believe that most taxpayers can complete their own tax returns, that is, if they are patient enough and willing to do a little required reading. There are some aspects of federal taxation, however, that are definitely tricky to understand. When dealing with these types of tax issues, I would recommend getting the help of a tax professional, preferably a CPA.

Summary Box: Fixed mortgage rates inch up (AP)
AP - RATES NEARLY UNCHANGED: Freddie Mac said the average rate on a 30-year fixed mortgage rose to 4.87 percent from 4.86 percent the previous week. The average rate on the 15-year fixed mortgage increased to 4.10 percent from 4.09 percent.

Mortgage rates for the past 52 weeks at a glance (AP)
AP - Mortgage rates for the past 52 weeks at a glance

Tax tools, websites you need to know about (ContributorNetwork)
ContributorNetwork - While you may turn your pile of W-2 and 1099 over to your CPA every spring, when it comes to managing your personal finances the rest of the year, thinking about your income taxes is part of it. Whether you are calculating the tax impact of capital gains tax on an investment or investigating whether a request for a charitable contribution can truly be tax deductible -- which may mean you can afford to give more -- these are the references you need to make those decisions:

Reducing your taxes -- even without children or mortgage deductions (ContributorNetwork)
ContributorNetwork - Tax season is a particularly ugly time of the year for me. I typically suffer a tiny little seizure every time I realize how much money I'm doling out to Uncle Sam. Don't mistake me for a rich man, as we're decidedly middle class. Our tax problems are entirely born out of our lifestyle.

Consumers borrowed more in February to buy cars (AP)
AP - U.S. consumers borrowed more money in February to buy new cars but cut back on pulling out their credit cards to make purchases.

Analysis: Obama claim shutdown to hit housing may be off mark (Reuters)
Reuters - President Barack Obama's warning that a government shutdown might prevent many Americans from obtaining a mortgage may be more of a negotiating tactic than reality.

Portugal Reminds Us That You Can't Triple-Stamp a Double Stamp (The Motley Fool)
The Motley Fool - Last night was like watching a scene right out of Dumb & Dumber:

Consumers borrow more for student loans, new cars (AP)
AP - U.S. consumers borrowed more money in February to buy new cars and attend school, but they cut back on using their credit cards to make purchases.

Wells Fargo cuts 1,900 jobs as refinancings slow (Reuters)
Reuters - Wells Fargo & Co said on Thursday it is shedding about 1,900 jobs, or less than 1 percent of its total workforce, as mortgage refinancings slow.

No federal funding for Ohio projects if shutdown moves forward (ContributorNetwork)
ContributorNetwork - GENEVA, Ohio -- Yes, the mail will still get delivered and Social Security checks will still go out should the U.S. government "shut down" Friday at midnight, but there will be plenty of things to affect Ohioans. From closed parks to delayed income tax refund checks to reduced pay for military families, the government shutdown is likely to touch most residents of the Buckeye State in one way or another.

Goldman bets on China insurance with $900 mln Taikang stake buy (Reuters)
Reuters - Goldman Sachs has bought a 12 percent stake worth more than $900 million in China's Taikang Life Insurance Co Ltd, giving the Wall Street giant a foothold into the world's biggest insurance market.

IRA Monte Carlo (BusinessWeek)
BusinessWeek - High-income taxpayers can now convert traditional IRAs, which allow contributions to be deducted from taxes but incur taxes on distributions, into Roth IRAs, where the contributions are taxed but the distributions are tax-free. The conversion triggers a one-time tax bill based on the value of the newly converted Roth IRA. As one might expect, tax experts are recommending that high-net-worth individuals convert their traditional IRAs to Roth IRAs before 2013, when ordinary income rates are likely to go up.

Q&A: Aid Guru Mark Kantrowitz (BusinessWeek)
BusinessWeek - When it comes time to finance a college education, students and families often bypass scholarships in favor of student loans. That can be a mistake because unlike loans, scholarships are essentially "free money for your college education," says Mark Kantrowitz, a financial aid expert and author of the new book Secrets to Winning a Scholarship, published in February. The typical student is eligible for anywhere between 50 and 100 scholarships, and every year more than 1.5 million scholarships worth more than $3. ...

Will a Government Shutdown Actually Save Money? (The Motley Fool)
The Motley Fool - With a government shutdown looking likely this weekend, one question many sane people are asking is, "Why are we doing this?"

Don't fight an IRS audit by yourself, and other times to rely on a CPA (ContributorNetwork)
ContributorNetwork - As a tax professional with several years' worth of experience, it can be more than a little annoying to be compared to TurboTax. After all, what I do every day is not the same as a do-it-yourself tax preparation computer program.

South Korea watchdog probes Hyundai Capital data breach (Reuters)
Reuters - South Korea's financial watchdog launched an investigation on Monday into the leak of personal information from South Korea's Hyundai Capital, the consumer finance unit of Hyundai Motor Group, a Financial Supervisory Service official said.

How to Save for Retirement on a Low Income (U.S. News & World Report)
U.S. News & World Report - Saving for retirement is especially difficult for workers with small salaries. Many low-income workers don't have access to a retirement account at work and simply have less money to build a nest egg after paying their monthly bills. Here are some strategies to save for the future on a small wage:

Broker admits role in insider trading scheme (Reuters)
Reuters - A mortgage broker who secretly recorded two friends who prosecutors say tried to cover up one of the biggest U.S. insider trading cases on record pleaded guilty to involvement in the 17-year scheme.

Why Aren't Banks Justified in Boosting Dividend Payouts? (The Motley Fool)
The Motley Fool - With the Federal Reserve finally giving its consent for big banks to increase dividend payments, everyone is heaving a sigh of relief well, almost everyone.

Good Luck Getting That Mortgage Now! (The Motley Fool)
The Motley Fool - With mortgage rates low and houses sadly overabundant, now seems like the perfect time to buy a home. Unfortunately, many would-be buyers now find they can't get a mortgage in the first place -- and their odds of success could soon grow even longer.

What You Really Need to Know About Money (U.S. News & World Report)
U.S. News & World Report - It's financial literacy month, which means everyone's offering ideas on how to end the dearth of financial knowledge in this country. Mandate personal finance courses in high school. Convince parents to talk about their own budgets with their kids every night. Elect Suze Orman president of the United States. (Okay, no one actually suggested that last one.)

High Earners Face State Tax Hikes (U.S. News & World Report)
U.S. News & World Report - If you're a millionaire living in California or New Jersey, you might want to consider moving. That's because high earners in those states charge taxpayers some of the highest rates in the country, while others, such as Alaska, charge no income tax at all. When you're bringing home a lot of dough, those differences add up.

JPMorgan's net jumps 67 pct on investment banking (AP)
AP - JPMorgan Chase & Co. reported a 67 percent jump in first-quarter earnings Wednesday on solid growth in investment banking fees and a drop in losses from credit cards. The bank's mortgage business continued to be weak.

GE target of hoax saying it will return tax refund (Reuters)
Reuters - General Electric Co, embroiled in controversy over its low 2010 U.S. tax bill, was the target of a bogus press release claiming that it would donate billions of dollars to the federal government.

Fed calls on banks to tighten mortgage rules (AFP)
AFP - The Federal Reserve on Wednesday asked some of the largest US banks to tighten up their mortgage procedures and warned of coming fines, following a scandal over homes being unfairly repossessed.

AP mistakenly reports on fake GE press release (AP)
AP - The Associated Press mistakenly published a story Wednesday about General Electric Co. that was based on a fake press release.

Gov't orders 14 lenders to reimburse homeowners (AP)
AP - The federal government on Wednesday ordered 16 of the nation's largest mortgage lenders and servicers to reimburse homeowners who were improperly foreclosed upon.

Bank regulators in pact with mortgage lenders (Reuters)
Reuters - U.S. bank regulators announced pacts with the largest home lenders over allegations of shoddy foreclosure practices, jumping ahead of a states-led probe and leaving the amount of fines until later.

Is Chipotle Overvalued? (The Motley Fool)
The Motley Fool - Chipotle's (NYSE: CMG - News) stock continues to sizzle, but every momentum stock eventually loses steam. How do you know when to jump off the momentum train? You can rely on intuition -- probably a bad idea -- or crunch the numbers and see whether they add up. Let's break out the calculator and determine whether Chipotle's share price might be headed south of the border.

Summary Box: Lenders to reimburse homeowners (AP)
AP - FORECLOSURE REIMBURSEMENTS ORDERED: The federal government ordered 16 of the nation's largest mortgage lenders and servicers to reimburse homeowners who were improperly foreclosed upon.

Credit raters triggered financial crisis: panel (Reuters)
Reuters - Moody's Corp and Standard and Poor's triggered the worst financial crisis in decades when they were forced to downgrade the inflated ratings they slapped on complex mortgage-backed securities, a U.S. congressional report concluded on Wednesday.

Activist group behind GE hoax (AFP)
AFP - An activist group took credit for putting out a fake press release claiming General Electric had decided to donate a purported $3.2 billion tax refund to the US Treasury.

Senator questions Goldman execs' testimony (AP)
AP - The head of a Senate panel investigating the financial crisis is questioning the accuracy of testimony Goldman Sachs executives gave to Congress last year about whether the firm steered investors toward mortgage securities it knew would likely fail.

Credit raters triggered financial crisis: panel (Reuters)
Reuters - Moody's Corp and Standard and Poor's triggered the worst financial crisis in decades when they were forced to downgrade the inflated ratings they slapped on complex mortgage-backed securities, a U.S. congressional report concluded on Wednesday.

Report says Goldman duped clients on CDO prices (Reuters)
Reuters - In a frenzy to protect its interests at the start of the credit crisis, Goldman Sachs Group Inc sold mortgage-linked derivatives to clients at inflated prices and misrepresented the nature of the deals, according to documents released by a Senate subcommittee.

Mortgage rates for the past 52 weeks at a glance (AP)
AP - Mortgage rates for the past 52 weeks at a glance

Could China's Trade Deficit Hurt U.S. Equities? (The Motley Fool)
The Motley Fool - The earlier part of this week was dominated by talk of monster mergers and news that the radiation leakage from Japan was worse than initially thought. Somehow, in the sea of news stories we've shuffled through this week, the market has almost completely ignored news out of China that it reported its first quarterly trade deficit in more than seven years. How a story like this goes undetected is beyond me because it has every implication to stall this dream-like 10-month-long rally.



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