Tag Archives: Credit

Bank Card Defaults Soar to Five Year High

Credit cards

Credit cardsReleased today, the S&P/Experian Consumer Credit Default Indices showed the largest two-month increase in the rate at which consumers are defaulting on credit card debt since 2010.

The bank card default rate increased 15 basis points to 2.99% following an increase of 23 basis points in February, the largest two month increase since April 2010.

Slowing retail sales in March, lackluster wage growth are contributing factors the increase in the speed at which consumers are failing to pay their credit card bills. Card holders are also likely running into the upper-end of their available credit and are having to choose between necessities like housing and keeping that card in the wallets.

As more Americans reach the end of their ability to buy retail goods on credit, those in the retail trade are likely to see more of a slowdown in sales.

The barely growing economy may have been largely paid for on plastic – and the limit may have just been hit.

Alec Baldwin Hangs Out With OWS Protestors, Shoots New Capital One Ad


If you thought feminine man-boy, Adam Levine, was conflicted (he’s the one that said Fox News is an “effing” evil news channel), then you’ll really get a chuckle out of today’s conflicted celebrity.  It’s our pal, Alec Baldwin.  You know, the Emmy Award winning actor that hangs out with the occupiers of Wall Street.  Here he is giving advice to the OWS kids.

And here he is talking about wanting to go hang out with the OWS kids.  (and then a follow up tweeting announcing he was on his way)


So we know that he supports the kids who are “occupying Wall Street”.  We have that much cleared up.  What we don’t have cleared up is why he has a new Capital One commercial airing even after several weeks of supporting the protestors in Zuccotti Park.  We don’t really have that one cleared up….  Here it is:

For the record…. I actually like the commercial.  ‘Ol Alec’s a charming guy.  I just think it’s odd that he’s so supportive of “occupy” protestors, but he keeps shilling for those “evil” banks.

What do you guys think?  Is Alec Baldwin confused?  Does he support the protestors, or does he support the bankers?  Maybe he’s buttering both sides of his bread.  He needs fans, but he needs employers too.  Who knows?  Let us know what you think in the comments below.  And as usual, you can also tell us on Twitter and Facebook.  We’re not picky.  I mean, you can rent a plane and submit your responses with sky-writing, but I can’t promise I’ll get the message.  If you do sky-write it, be sure to tweet me and let me know.

ACA of Texas Offers Financial Literacy Tips for Parents

ACA INTERNATIONAL EDUCATION FOUNDATION LOGO / ACA INTERNATIONAL EDUCATION FOUNDATION. (PRNewsFoto/ACA INTERNATIONAL)AUSTIN, Texas, Aug. 30, 2011 /PRNewswire-USNewswire/ — With Texas students from kindergarten to college heading back to school, adding financial literacy to your child’s curriculum this fall can teach invaluable skills for today and in the future.

“It’s never too early or too late to talk with your kids about personal finances,” said ACA of TexasPresident Jack Fischer.

As outlined in USA Today’s special supplement on youth financial literacy, teaching children about saving, credit, debt, budgeting and discipline in managing their own finances is essential to growth and development.  “From the very basic to the complex, parental involvement in helping their children better understand how to value and manage money is essential to helping them make successful financial decisions as they grow older,” said Chris Wunder, chair of the ACA International Education Foundation Board of Directors.

Helpful tips for talking to your children about financial management:

  • Be a role model. Parents, siblings and grandparents are important role models for teaching financial management to children. Lead by example.
  • Be honest. Building and maintaining trust with your child is essential. Admit mistakes and share how you learned from them.
  • Be interactive.  Effective teaching is a two-way street. Talking and listening with real life examples is important.
  • Be patient. Some children may not immediately grasp the concepts you are teaching, but don’t give up on your teaching efforts.
  • Start with an allowance.  For children, an allowance provides hands-on lessons in saving, spending, credit and budgeting.

ACA International Education Foundation is a 501(c) (3) nonprofit organization serving as the philanthropic arm of ACA International, the association of credit and collection professionals. The Foundation exists to promote the goal of increasing financial literacy in the United States. Outreach efforts includewww.askdoctordebt.com , which offers free, reliable answers to consumer questions and provides helpful resources.

ACA of Texas is a State Unit of ACA International, the Association of Credit and Collection Professionals.  ACA is the comprehensive, knowledge-based resource for success in the credit and collection industry.  Founded in 1939, ACA brings together more than 5,000 members in the United States and abroad, and their more than 150,000 employees, including third-party collection agencies, asset buyers, attorneys, creditors and vendor affiliates.  ACA establishes a wide variety of products, services and publications.  For more information on ACA International, visit www.acainternational.org .

CONTACT: Mark Schiffman
Tel. (952) 259-2124 or [email protected]

SOURCE ACA International Education Foundation

 

August 11th 10pm EST on CDNews Radio: Mitchell & Ray – Downgraded, But Not Out

CDNews-Radio-LogoShow Time: Thursday August 4th, 7pm pacific, 8pm Mountain, 9pm Central, 10pm Eastern

Tune In: CDNews Radio: Mitchell & Ray

Call in: Be part of the program – call in to the show: (424) 220-1807

Guests: Nicole Pearce from Truth About Bills.

Show Topics: Join Michelle and Rich as they take your calls on the debate, Iowa GOP debate, the credit downgrade, the spin, market and the aftermath.

Show Archive:

Listen to internet radio with CDNews Radio on Blog Talk Radio

Links from the Show:

Spinning the Downgrade

Downgrade Without a Plan

Hear recordings of past shows: CDN On-Air Archives


U.S. Takes it on the Chin; Administration Delivers No Plan .. Again

Obama DownThe news that America’s sovereign debt has taken a hit has been the top news story since Friday. But, the nation’s true crisis is that her leaders have decided to fight the downgrade rather than create a strategy to fix the underlying issue: we’re spending more than we make.

Pundits and politicians are arguing about whether S&P made the right decision while the bond markets are largely ignoring the rating change – yields are actually dropping. What the electorate wants to hear from the President is how we fix our fiscal mess, not whether or not S&P got it right.

Treasury Secretary Timothy Geihtner had said that there was absolutely no risk of a downgrade. His basis seems to be the same as former Federal Reserve chief Alan Greenspan when he said, “The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default”. Perhaps Mr. Geihtner should have thought about that when he was raising the default specter before the debt ceiling deal.

Almost in direct response to Geihtner and Greenspan’s terrible idea of printing our way out of the debt mess, today while downgrading Fannie Mae, Freddie Mac and indicating  that it would be downgrading the country’s six largest insurers, S&P said, “printing money doesn’t deliver a triple-A rating.”

Despite Tim Geihtner’s missed guess on the downgrade and absolute failure on monetary policy, he is staying in place. Not because he’s the right guy for the job, but because the White House is not about to go through the nomination process for someone new. It would be nearly impossible to get another Keynesian spend-monger through the Senate confirmation process considering the failures of the current administration’s supply-side approach. That’s politics, one of the key factors to S&P’s downgrade. Leadership from Obama would have been to replace the flailing Treasury head and get a new plan implemented.

The White House won’t seek a fresh perspective in Treasury. The administration isn’t serious about lowering the country’s debt-to-GDP ratio. After the downgrade, the only action from the White House seems to have been to ..  go after the rating agency and the Conservatives in Congress. On Sunday, Geihtner appeared on NBC and said that, “”S&P decision to cut U.S. credit rating shows stunning lack of knowledge about basic U.S. fiscal budget math.”. No mention of his miscalculation or the necessity of the federal government to curtail spending.

The only call-to-action has so far come from the very segment of Congress that Senate Majority Leader Harry Reid and other democrats are blaming – Republicans. Senator Mark Kirk (R), called for the president to bring Congress back from its August recess to address the issues raised in the S&P report. Congress could then implement the debt-ceiling law and start to craft a real plan – no word from the White House yet.

Where is the leader of the greatest nation on Earth? Where is America’s captain after the nation was shaken by a credit downgrade? Where is the strong-chinned leader of the free world, offering a way forward – a positive plan – to get our nation back on its feet?

During remarks this afternoon the President did point out the good news. Obama said, “Our problems are solvable.” His speech offered no plans, no solutions, only blame and calls for more stimulus spending and to continue the too-small-to-be-effective payroll tax break that he has championed for years.

Obama’s only genuine attempt at fiscal leadership, his budget, went down in flames when it was unanimously defeated in the heavily Democrat Senate 97-0 earlier this year.

S&P was concerned that America may not be able to get its deficits under control and that our leaders would be focused on politics rather than policy. Will the President lead us out of the spending troubles that he helped lead us into or is it too close to his re-election for him to be concerned about policy instead of politics?

Obama’s Debt Compromise Costs U.S. AAA Credit Rating for First Time in History

The Administration and members of Congress had held the specter of a credit rating downgrade over the heads of Americans. If a debt deal is not reached, the nation’s good credit would be damaged said several government leaders. On Friday, Standard and Poor’s (S&P) downgraded the United States’ rating from AAA to AA-plus on concerns about growing budget deficits.

The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.

Despite attacks by Republicans and Democrats, Congressional Conservatives held out for a deal that would actually trim the nation’s debt. President Obama pushed for the compromise deal that instead, actually increases the amount of publicly held debt every year for the next decade. S&P said that the deal did not do near enough to prove fiscal responsibility and took the downgrade action.

U.S. Treasury securities have long been sought as the safest investments in the world. Now, the government bonds of the U.K., Germany, Canada and even France are rated higher than those from the U.S.

S&P also set the outlook of the new credit rating to negative, a signal that another downgrade could be coming within the next 18 months if the government does not get serious about trimming the national debt.

The outlook on the long-term rating is negative. We could lower the long-term rating to ‘AA’ within the next two years if we see that less reduction in spending than agreed to, higher interest rates, or new fiscal pressures during the period result in a higher general government debt trajectory than we currently assume in our base case.

The S&P press release also noted a key difference between the U.S. and the remaining AAA-rated nations – while America’s debt will increase in the next 3-5 years,their debt-to-GDP ratios are going down [emphasis added].

By 2015, we project that their net public debt to GDP ratios will range between 30% (lowest, Canada) and 83% (highest, France), with the U.S. debt burden at 79%. However, in contrast with the U.S., we project that the net public debt burdens of these other sovereigns will begin to decline, either before or by 2015.

In response to the credit rating agency’s downgrade, Democrats are using intimidation to get S&P to change the rating. Congressional Democrats are threatening investigations into S&P’s inner-workings. Some are even asking for more spending to remedy the current over-spending situation.

Congressional Conservatives are taking a different approach by pushing again for more cuts in spending, removing the regulations that are forcing American businesses overseas and getting the economy going again. Sen. Jim Demint has also requested the resignation of Treasury Secretary Timothy Geihtner stating that the secretary has failed the country.

“For months he opposed all efforts to reduce the debt in return for a debt ceiling increase. His opposition to serious spending and debt reforms has been reckless and now the American people will pay the price.”

Commentary from the Obama administration focuses blame on the process by which the compromise solution was passed. But, had the Obama administration’s first plan – a debt ceiling increase with no spending reductions at all – gone through, the S&P downgrade would have been joined by negative ratings by Fitch and Moody’s.

Indiana’s State Treasurer also said that the Administration handled the debt ceiling poorly by failing to act with any fiscal responsibility whatsoever.

This downgrade is the direct result of raising the debt limit on Tuesday, August 2, without providing for substantive cuts in spending. The White House and many in Congress failed in their jobs by settling for a political compromise rather than seeking a fiscal resolution.

Much like Obamacare, the legislation pushed by the Administgration to supposedly deal with an impending crisis is instead exacerbating the underlying problem.

Debt and our failing economy

Is the country being led astray once again by those on the Hill that appear to be doing business as usual? The words deficit and downgrade and debt-ceiling almost seem to be synonymous with one another when nothing could be further then the truth. Yet both sides think they are right; they have resorted to high school politics where one side blames the other, name-calling, and denial. And if that is not enough to send you into complete bewilderment, the current Bill, which was just passed, is full of idealism that will surely break the American economy, while setting in motion grave consequences for future generations. Raising the dept limit with out any structural reforms in place will be the primary force in setting the economy in a downward spiral. It is no wonder the average American is confused. So who is right?

Despite all the chaos, misrepresentation, and blame being thrown around on the Hill, and by the media, American’s seem to see the clear picture of what is going on based on current polls. For example, a July 12th Gallup poll showed 42% of Americans oppose raising the debt ceiling. The July 19th Wall Street Journal poll found that 55% of those polled felt raising the debt ceiling would be a major problem. One Gallup Poll found that Americans, by a 42% to 22% margin, want their representatives on the Hill to vote against an increase in the debt ceiling. The President of the United States, as well as some members of the Senate and House, have been reckless with spending from one generation to another, all of which have escaped accountability. Mr. Obama has spent more money during to date then that of Mr. Bush’s entire time in office. According to Karl Rove, “In 20 months, Mr. Obama will add as much debt as Mr. Bush ran up in eight years.”1 Raising the debt limit allows the president to spend more money and further the deficit. To be clear, the deficit is the amount of money we, as a country, are in debt; it is the money we owe to creditors, etc.

While the national debt continues to grow by the seconds, spending cuts continue to be nonexistent. The amount of cuts which would be required to balance the budget well exceed those suggested by congress. A downgrade would impact our AAA rating by Moody’s and S &P. Investors would view our failing economy as too much of a risk to invest in and take their business somewhere else. Whether it happens today, or five years from now, our AAA credit rating will go down if we continue to spend as though the checkbook is virtual black hole with no end in sight. In addition, to make matters worse as the United States becomes a mockery and concern for the rest of the world, institutional and foreign investors, those people or firms who invest large sums of money into securities, real property, and other types of investments, will reconsider investing in the US.

House Minority leader Nancy Pelosi regularly discussed the need for job creation and yet under this administration unemployment is at it highest level. David Axelrod, a political strategist for the president claimed the pork-laden stimulus package has been a success. But Mr. Obama told Americans that if it were passed, unemployment wouldn’t rise above 8%. It is now 10%. The president also said it would create 3.7 million jobs, 90% of which would be in the private sector. By Mr. Obama’s standards, the stimulus failed miserably.2 To create jobs we need to lower corporate taxes to be more competitive with the rest of the world. If we truly want to bring business back to this country and away from places like China and India we would need to look at the Tax code in its entirety.

There were a lot of bills on the table, the Ryan Bill, Cut, Cap, and Balance just to name a few. They were killed in the Senate by Senator Harry Reid. Cut, Cap, and Balance would have addressed the spending issues while putting measures into place to effectively balance our budget. The Connie Mack Penny plan which was discussed, but not something many people heard about, it also dealt with the excessive squandering that goes on in our government. More explicitly it would cut federal spending by one percent for six years, set a cap of 18 percent of gross domestic product in 2018, and reduce the amount of spending over a 10 year period by 7.5 trillion dollars. This plan provides the framework necessary for balancing the budget while maintaining spending regulations for future members of government. This plan has not gotten the attention it needs.

The bottom line is this: We are traveling down a path which is deeply rooted with opposition to our founding fathers and the Constitution of the United States. Both sides need to stop playing politics and address the very serious issues at hand. In addition, those people on the Hill who live with the delusion that they know more then the American people therefore they need to do all the thinking for them, need to wake up! It is about time they realize they were put there by the people, for the people, and they are accountable to the people.

Sources:
[1]Karl Rove.Obama vs. Bush on Spending.Wall Street Journal. January 21, 2010
[2] Ibid

Mortgage Banking Giant Agrees to Pay Homeowner $30,000 as Part of Settlement Agreement

With pending counterclaims of fraud and predatory lending, Deutsche Bank agrees to pay defendant $30,000 and issue a letter to correct credit to settle a New Jersey foreclosure action

PHILADELPHIA, June 14, 2011 — Shaffer & Gaier, LLC announced today that its client has agreed to a $30,000 cash settlement with Deutsche Bank in an action filed by the banking giant to foreclosure on a New Jersey investment property worth approximately $65,000.00. As part of the terms of the settlement, the homeowner is entitled to retain the property and collect rental income for an expected period of 15-18 months, free of mortgage payment obligations, after which time he will walk away from the underwater property. The bank has also agreed to issue a letter to correct credit to the defendant, which will be distributed to the three credit bureaus to repair any credit blemishes caused by the suit.

Deutsche Bank, the plaintiff in this case, was acting as the trustee on behalf of Morgan Stanley ABS Capital Inc., Trust 2006-NC5, Mortgage-Pass Through Certificates, Series 2006-NC5, the mortgage pool that claimed to own the defendants loan. While the bank was able to produce an assignment dated and recorded prior to the filing of the foreclosure complaint, one of the most commonly raised foreclosure defenses, defense counsel was able to challenge the bank on several other issues of standing, but ultimately it was the counterclaims of fraud and predatory lending that drove the settlement.

Although predatory lending and fraud claims are common allegations in the foreclosure defense arena, foreclosing banks are usually successful at overcoming the charges with a “holder in due course” defense, hiding behind a securitization process that serves as smoke and mirrors for the true parties to a mortgage transaction. Michael Gaier, partner at the Philadelphia-based law firm of Shaffer & Gaier, LLC, with the help of his partner Michael Shaffer, and a team of mortgage experts, paralegals and associates, has dedicated the last two years of his life to crafting a legal argument that has survived summary judgment motions, overcome protective orders to depose high-level banking executives and gained nine dismissals or settlements in the last 10 weeks alone. “I’m especially pleased with the outcome of this case,” said Mr. Gaier. “This was not the most compelling story of our cases. It was an investment property that was purchased with a limited down payment and has been earning income for the last two years. The issue is that my client never should have been approved for this loan in the first place. The lenders grossly inflated his income on the application, and then hid that from him, and disclosed a rate and payment vastly different from what he ended up with at the closing table and pressured him to close with the threat of forfeiting a deposit. Bottom line is fraud is fraud. I anticipate there will be many more settlements going forward.”

 

The U.S. Economic News You May Not Have Seen

Much of the last few weeks has concentrated on the difficulties that the over-entitled European economies are now facing.  News reports, like this one at TheHill.com have been careful to also point to Tim Geithner’s comments that, “The U.S. will not be harmed economically by the debt crisis in Europe”.  Mr. Geithner also repeated the Administration mantra that our economy, “is getting stronger. We’re seeing a lot of strength, improvement and confidence.”  But how true is that?

Bloomberg.com and Yahoo.com reported that consumers are returning to Galt-like spending habits.  The Bloomberg article demonstrates the change in American fiscal discipline by examining the change in the ratio of income to spending:

Incomes rose 0.4 percent in April for a second month, matching the survey median. Wages and salaries rose 0.4 percent last month after climbing 0.3 percent in March.

The savings rate climbed to 3.6 percent last month, the highest level since January, from 3.1 percent in March as incomes increased and purchases cooled.

That means while incomes increased by .4%, none of it went back into the economy – in fact, an extra .1% came out and went into savings.  The Yahoo post just puts it plainly by saying, “Consumers don’t appear confident enough in the economy to open their wallets more freely.”  This is particularly troubling in a fractional reserve system such as that in the U.S.  If no one is borrowing or buying, no additional liquidity can be created.  Proof that these are tied lies in the fact that the M3 money supply, the broadest metric of the amount of money in the economy, is at it’s lowest since the great depression.

It’s not just consumer confidence that’s heading south.  The head of one of Scotland’s biggest fund companies puts the risk of a global bear market at 40%, up from 30% last month.  Markets also demonstrated their lack of confidence as American stocks, Oil, the Euro and the Dow had the worst may since 1940.

There has been trillions in stimulus spending in many forms.  Bail-outs have been given to anyone the government thought needed it.  Every manner of federal intervention in the economy has occurred – so why is this bad news showing up?  “It’s the economy stupid.”

Corporations sold the smallest amount of bonds in ten years in May due to increasing yields (the interest rate on the bonds).  Investors are seeking safety in government bonds which is making credit harder for companies to secure.  This is the credit crunch that Mr. Geithner has been throwing printed money at for more than a year.  It’s still here, is stifling investment and risk-taking – both of which are necessary for job growth (really, it’s not the government that does it).

Politico.com’s Michael Steele sums the problem up for us in this article:

Americans deserve leaders who understand what makes the economy tick. America has always been the place of big dreams and bold moves, where the risk-taking at the root of entrepreneurial growth stands the best possible chance.

That requires an environment where the stock and commodities markets are stable; where the financial sector is strong, allowing for the free flow of affordable credit; where taxes are low and structured to encourage profit and investment, and where regulation is predictable, minimally intrusive and easy to understand.

In other words, the conditions required to grow jobs are exactly the opposite of what entrepreneurs face today under Obama’s radical, anti-growth agenda.

The government cannot impose its will on a free-market economy.  Doing so simply pushes a large bubble into another part of the economy where it is fed by printed money, built even higher so that it can assert it’s now even more negative burst on a larger segment of the economy.  Let the bubble burst, let the crashes happen, let the bad banks and companies fail.  It will hurt, but it will establish equilibrium in the economy for another cycle.  Without letting it happen, we are simply building the mess up to a point that will not just be painful, but may be highly destructive.