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September 29, 2009

Consumer confidence takes a surprising jump

Florida consumer confidence in September reached the highest point since December 2007.

The statewide measure went in the opposite direction of the national consumer confidence index, which decreased slightly from August.

Florida’s consumer confidence index made an unexpected jump three points to 74, following a four-point rise in August.

“I think Florida consumers are buying into the argument that the worst of the recession is over and we have avoided a complete meltdown,” said Chris McCarty, survey director at the University of Florida Bureau of Economic and Business Research.

But the picture isn’t completely upbeat. One of the five components measured was flat. Florida consumers perceptions of their personal finances today compared to a year ago is at a reading of 44, just five points higher than the all-time low which was reached in December of 2008.

“That’s a good indicator of where people really are,” McCarty said. “I think people are saying it’s a great time to buy things if you’ve got the money, which they don’t.”

Consumers are balancing the positives of an improving stock market, housing limping toward recovery and cheaper gas with one big negative: Florida’s high 10.7 percent unemployment rate.

“It’s hard to shrug off unemployment at these levels,” said Economist Sean Snaith, director Institute for Economic Competitiveness at the University of Central Florida. And even worse, he said, is that he expects unemployment to peak statewide at about 11 percent and to stay at 10 percent or higher for all of next year before it starts going down.

That long period of high unemployment “could take the wind out of any consumer sentiment or spending on behalf of consumers,” he said.

Economists watch consumer confidence closely, as an indication of consumer spending plans.
Nationwide, the Conference Board Consumer Confidence index decreased slightly in September. The index is now at 53.1, down from 54.5 in August and below the year-ago reading of 61.4

“While not as pessimistic as earlier this year, consumers remain quite apprehensive about the short-term outlook and their incomes,” said Lynn Franco, director of the Conference Board’s Consumer Research Center. “With the holiday season quickly approaching, this is not very encouraging news.”

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September 28, 2009

Online tools for your finances


My Sunday column, in case you missed it, was about the personal finance web sites that are giving people sophisticated tools for budgeting and managing their money. They're turning out to be a good resource, with some important limits. Here it is:

http://www.sun-sentinel.com/business/sfl-financial-web-sites-092709,0,4226701.column

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September 25, 2009

Monday Laundry: Hope you don't win this one

My weekly list of things I meant to say, follow-ups, requests, all the personal finance news that need to be cleaned up and aired out.54497%2C1216250385%2C1.jpg

Not sure you'd want to win this one, but....

The prizes look good anyway. So if you can stand up and say your portfolio was hurt the most during the recent financial crisis, go ahead and give it a try...
http://www.hedgeable.com/financialcrisiscontest.php

Comment of the week
From AlisonT: I made a contract with certain credit card companies. I kept up my end. I paid on time, never went over the limit, and always paid more than the minimum. They have responded by breaking the contract, lowering my limits, increasing my rates and payments. I tell each of them, the economy will improve, you will get paid off, and when it does I WILL remember who kept
their contract with me and who didn't. Chase and Bank of America, you have
made a lot of money off of me over the years. Kiss it goodbye.

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September 24, 2009

Credit cards: Congress is coming after you again

Maybe they were listening.

I've railed about the credit card industry in the last few months jacking up rates, hiking minimum payments, changing card terms – all in a seeming effort to get things done before Feb. 1, when a new credit card law will restrict some of their most anti-consumer activities.credit-cards_~k0432584.jpg

They’ve just been doing more of the bad stuff now.

A web site, BillShrink.com, says that since August, Wells Fargo has actually increased its rates by 12 percent.

Thursday, Reps. Barney Frank, D-Mass., and Carolyn Maloney, D-NY., introduced a bill to push up the new law, making its reforms effective Dec. 1.

“It’s clear that credit card companies are taking advantage of this period between the signing of my bill and the current effective date,” Maloney said in a statement. “Americans need relief now.”

Faster than you can say annual percentage rate, consumer-advocates across the country were calling for the bill’s passage. “Let’s stop the consumer pain,” wrote Ed Mierzwinski, director of consumer programs for the U.S. Public Interest Research Group.

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September 23, 2009

Barney Frank aims at the Fed

Financial%20Overhaul.jpg
Cong. Barney Frank, D-Mass., chairman of the House Financial Services Committee, blasted the Federal Reserve for its record on consumer protection. He's rolling toward the creation of a Consumer Financial Product Commission and he's rolling hard.

One point he makes: The Fed only acted to reign in the mortgage industry after the subprime loans and securities filled with them, exploded.

Read Frank's full Fed report card on consumer protection after the jump

Issue: Mortgages and HOEPA
In 1994 the Democratic Congress passed the Home Ownership & Equity Protection Act (HOEPA), which included a host of specific consumer mortgage protections and authorized the Federal Reserve to issue comprehensive rules ending abusive lending practices.

3/27/07: Committee action on mortgage reform begins with a Financial Institutions Subcommittee hearing and continues through 2007.

10/22/2007: H.R. 3915, legislation to regulate subprime mortgages, is introduced in House.

11/9/2007: H.R. 3915 passed by the Financial Services Committee. H. Rept. 110-441.

11/15/2007: H.R. 3915 passed by the House: 291-127 (Roll no. 1118).

5/7/2009: The House approves similar legislation, H.R. 1728, to regulate subprime mortgages.
The Fed’s action on predatory and subprime lending followed House action on the issue.

In June 2007, the Fed held hearings on changes to HOEPA.

The Fed issues its first proposal for new rules in December 2007, after the House passed its bill. The rules were made final in July 2008, and will take effect in October 2009.

Credit Card Rules
Similarly, like lending rules, the Federal Reserve has had the tools to restrict abusive and unfair industry practices under the Unfair and Deceptive Acts or Practices passed in the early 1970s.

Specifically, the Fed had UDAP authority pursuant to Section V of the Federal Trade Commission Act.

2/7/2008: H.R. 5244, the Credit Cardholders’ Bill of Rights Act, introduced in House

9/16/2008: H.R. 5244 is passed by the Financial Services Committee. H. Rept. 110-857.

9/23/2008: H.R. 5244 is passed by the House: 312-112 (Roll no. 623).

Consideration of credit card reform resumed in 2009, and the bill was signed into law on 5/22/09.

The Fed’s action followed House action on H.R. 5244, the Credit Cardholders’ Bill of Rights Act.

The Fed issued its first proposal for new rules in May 2008, after the bill was introduced in the House. The rules were made final in December 2008 and take effect in January and July 2010.

Abusive Overdraft Protections
Like subprime mortgages, the Federal Reserve has had the power for many years, in two different statutes, to regulate overdraft services that banks offer to consumers who overdraw their balance. These overdraft services, which are often considered to be loans, many times come with hefty fees and outrageous interest rates.

2/18/07: Congresswoman Carolyn Maloney initiates H.R. 946 to “extend the protections of the Truth in Lending Act to overdraft protection programs and services provided by depository institutions, to require customer consent before a depository institution may initiate overdraft protection services and fees, to enhance the information made available to consumers relating to overdraft protection services and fees, to prohibit systematic manipulation in the posting of checks and other debits to a depository account for the purpose of generating overdraft protection fees, and for other purposes.”

7/11/2007: The Financial Services Committee holds a hearing on overdraft protection and fair practices for consumers.

The Fed’s action followed House action on H.R. 946, the Consumer Overdraft Protection Fair Practices Act.

12/18/2008: The Fed proposes rules to protect consumers that use overdraft services offered by their bank. The rule solicits public comment on proposed amendments to Regulation E (Electronic Fund Transfers) intended to provide consumers a choice regarding their institution's payment of overdrafts for automated teller machine withdrawals and one-time debit card transactions.

No further action was initiated by the Federal Reserve and the regulations have not been implemented.

Consumer Protection Pursuant to the Unfair and Deceptive Acts or Practices Act
Because the Federal Reserve never issues regulations to protect consumers to comply with UDAP, the other banking regulators were unable to use their existing authorities to better protect consumers.

Chairman Frank in 2007 asks the Federal Reserve to act on UDAP

Chairman Frank introduces legislation in 2007 calling on the Federal Reserve to implement the law. If the Fed did not want to use the UDAP authority, Congress would find federal regulators who would.

9/14/2007: H.R. 3526, to authority to issue UDAP rules to OCC and FDIC as well as FRB, OTS and NCUA, introduced in the House.

12/5/2007: H.R. 3526 is reported by the Committee on Financial Services. H. Rept. 110-472, Part I.

12/5/2007: H.R. 3526 is reported by the Committee on Energy and Commerce. H. Rept. 110-472, Part II.

12/5/2007: H.R. 3526 is passed by the House on motion to suspend the rules and pass the bill, as amended agreed to by voice vote.

The Federal Reserve’s inattention and inaction on consumer protection is a key reason why Democrats are working to create the Consumer Financial Product Agency in the coming weeks and months. As the above report card shows, consumer protection has long been overlooked by federal regulators, and their motivation to protect consumers has been driven more by congressional pressure rather than a sense of duty to the protect the American public.

###


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Chase, Bank of America change overdraft policies

2832828.thl.jpgFaced with the prospect of legislation and possibly a Federal Reserve-imposed regulation, two of the nation's largest banks have decided to change the way they handle overdrafts and what they charge customers.

This has become a source of billions in revenues for all banks. And major irritation for consumers.

Not an easy knot to untie. Chase and Bank of America have made a start. Good news.

http://www.sun-sentinel.com/business/yourmoney/sfl-overdraft-092309,0,783281.story

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September 22, 2009

Huge, hidden fees

It’s all about the pay, some days. Amazing pay for the seller, but what sort of payoff for the investors.

The Securities and Exchange Commission yesterday announced a settlement with Regions Bank, over huge hidden fees and the activities of U.S. Pension Trust.

Regions acquired Union Planters in 2004. Union Planters began the bank's relationship with USPT in 2001.

Here’s what was happening, according to the SEC complaint:.

USPT managed to convince 14,000 investors, most of them living in Latin America, to invest $255 million into a collection of mutual funds. Trouble was, the organization didn’t disclose that it was taking as much as 85 percent of investors’ annual contributions in sales commissions and profits for itself. If instead you invested one lump sum, the charge was as much as 18 percent.

Regions agreed to a cease and desist order and will pay a $1 million penalty.

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September 21, 2009

Feeling squeezed? It's because your incomes has gone nowhere

Household incomes in South Florida have remained flat or even declined over the last five years, according to newly released Census figures.

For Broward County households, between 2003 and 2008, median annual income went up $1,671. For Palm Beach households, income actually declined, by $1,182.

“If people feel like they’re not any farther ahead than they were five years ago, it’s not all in their minds,” said Cora Barnhart, associate professor of economics at the Rinker School of Business at Palm Beach Atlantic University.

South Florida’s flat-to-declining household incomes in recent years were far outpaced by the strong upward trend in prices for consumer goods.

In South Florida, local inflation was high, pushing prices up at a 5 percent to 6 percent rate in 2006 and 2008.

The Census report makes it clear that Florida has been through a major change in fortunes.

Between 2003 and 2007, state and South Florida incomes rose in several years, although some changes were small and there were declines in some years. In good years, incomes generally were growing along with the housing industry’s boom until the bubble burst in 2007.

“We were seeing a nice up trend until we hit the worst recession since the Depression,” said economist Sean Snaith of the University of Central Florida. “Anytime economic output falls, so does income.”

The kick of the recession that began in 2007 was especially hard on South Florida.

Income normally goes down during a recession, but the drop in incomes last year was much sharper than in other economic downturns. In 2008 compared to 2007, after inflation is subtracted, the median household income for the nation fell 1 percent. Half of all household incomes where higher and half, lower.

Median household incomes fell 4 percent statewide in Florida, 3 percent in Miami-Dade, 5 percent in Palm Beach and 6 percent in Broward.

In the recession of March to November 2001, household incomes after inflation fell 3.5 percent nationwide. In the recession before that, from July 1990 to March 1991, incomes fell 3.9 percent.

Where does declining income leave Floridians? With far less purchasing power, said Economist Antonio Villamil, dean of the St. Thomas University School of Business. He said such figures give him doubts about the strength of the economy’s recovery.

“Consumer spending will be relatively weak for the next year or so. The consumer needs to recover,” he said. “Since 2003 they’ve been living on credit cards and flipping condos. The bottom line is, that’s over now. And the banks have tightened consumer lending and second mortgages.”

What’s more, Snaith said, people are saving more, as they try to recover from losses in the stock market.

For this year, labor expert Bruce Nissen, who is on leave from Florida International University, said he expects the income-drop to continue.

When 2009 figures are collected, Nissen suspects the median household income for 2009 will be less than it was in 2003.

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Monday Laundry

My weekly list of things I meant to say, follow-ups, requests, all the personal finance news that need to be cleaned up and aired out.54497%2C1216250385%2C1.jpg

First, off, First-time home buyer...

When I was writing recently about the looming deadline for first-time homebuyers to get their act together and to buy the house by Nov. 30, I assumed the real estate lobby would want to get that deadline extended. But it's not. At least openly. Openly, the real estate folks want us to get those deals done now. Quietly, I wouldn't be surprised at all that they're working furiously to get more help from a tax break?

Second, Got a question?
We're going to do a Financial Planning Helpline, as we did last year, using members of the Financial Planning Association to answer your calls. If you'll submit a question in the box at right, I'll be handing them out and trying to get answers.

Third, Did you notice?

We really do have deflation in Florida, which is an overall decline in prices. I reported last week that local prices for consumer goods have fallen by the largest amount in 31 years, according to a federal Bureau of Labor Statistics report.

The local measure of consumer prices fell 1.8 percent on an annual basis through August.
August was the sixth consecutive month in which inflation has been absent from the local economy, replaced by falling prices or deflation.

Fourth, Probably doesn't feel any better.
Because, on average, your income hasn't been going up. Writing that story for tomorrow.

More later.

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September 17, 2009

Are you smarter than a fifth grader?

Fort Lauderdale Securities attorney David Weintraub has been out and about, testing and entertaining financial planners and trust officers bankers and estate attorneys with his Jeopardy-style game of financial questions. This week, he did his game-show special for the Financial Planning Association in Broward.

jeopardy.JPG

And the category is: Lawyers in Love (with themselves) for $200
The answer: Plead no contest in 1973 to failing to pay $29,500 of federal income tax.
The question: Who was Vice President Spiro T. Agnew?
You get it.

Now let's see if you're smarter (financially) than a fifth-grader. Weintraub says his most recent audience did very well.

The category: Equities for $400
The answer: A complex investment that pays
investors part of the capital
appreciation in a stock index
and guarantees a minimum
return if held to maturity
The question: You guess.

The category: Elder Investors for $200
The answer: Reporting elder abuse to the state's central abuse hotline.
The question:

The category: Equities for $800
The answer: The tax advantage of purchasing a variable annuity inside an Individual Retirement Account or other qualified retirement account.

The questions are below:
Equities for $400: What is an equity indexed annuity?
Elder investor for $200: What is a bank's obligation when it has reasonable cause to suspect exploitation of an elderly person?
Equities for $800: What is none?

Weintraub, whose web site is www.stockbroker litigation.com, has actually made this stuff fun.

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September 16, 2009

It's real, prices are falling

Consumer prices are going down in South Florida, driven by dropping gasoline, housing and clothing costs.

Overall, local prices for consumer goods have fallen by the largest amount in 31 years, according to a federal Bureau of Labor Statistics report Wednesday.

The local measure of consumer prices fell 1.8 percent on an annual basis through August.
August was the sixth consecutive month in which inflation has been absent from the local economy, replaced by falling prices or deflation.

The rest of the nation is experiencing deflation, too. Atlanta’s prices are going down at the fastest rate, 3.8 percent, followed by Detroit, at 2.3 percent.

Nationwide, prices are falling, but not as rapidly as in those cities or in South Florida.

The national consumer price index has declined 1.5 percent on an annual basis, even though for the month of August, the CPI actually rose 0.4 percent.

When volatile energy and food costs are stripped out, the core CPI is going up at a 1.4 percent annual rate – the smallest rate of increase in more than five years.

The South Florida core CPI is also rising, but at a slight 0.3 annual rate.
In South Florida, “We are seeing acceleration in the decline that has been going on in Miami,” said BLS Economist Matthew Dotson.

Driving prices down was a 9.2 percent annual decline in transportation costs – including gasoline.

“Think about what you paid for gas last summer, “ Dotson said.

Housing costs, which haven’t fallen in South Florida since September 1986, came down 0.6 percent on an annual basis, the BLS said.

Apparel has plummeted by 14.9 percent since last year.

“With the loss of wealth form of home equity, the tremendous loss in investment portfolios and high unemployment, those take the wind out of consumer demand,” said Economist Sean Snaith of the University of Central Florida. “That’s why sales are showing up for apparel,”

The BLS measures inflation nationally every month and local inflation in ten cities every other month. It records prices in Miami and Fort Lauderdale, but not in Palm Beach County. Local economists say the price trends there are similar, however.

In Miami and Fort Lauderdale, consumer prices fell 0.3 percent in April, 1.6 percent in June and now 1.8 percent in August.

Those are the only decreases – other than a one-time dip of 0.1 percent in July 1986 – that the BLS has recorded since it began publishing local inflation figures in 1978.

That’s in sharp contrast to last year, when prices were growing at annual rates of 4.9 percent to 5.8 percent.

In recent years, the peak South Florida annual inflation rate was 6.1 percent at the start of 2006.

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September 15, 2009

A year after the meltdown...

Federal Reserve Board Chairman Benjamin Bernanke may think the recession is over, but the average Floridian has a hard time seeing signs of the end.
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With high unemployment, low consumer confidence and weak consumer spending, Floridians stand on uncertain ground, one year after the collapse of Lehman Bros.

Bernanke said Tuesday the worst recession since the 1930s is probably over. But he conceded that the economic pain won’t go away quickly.

“It’s still going to feel like a very weak economy for some time because many people will still find that their job security and their employment status is not what they wish it was,” he said.

The recession nationwide began in December 2007, although Florida analysts say it began here earlier that year, probably in March.

Although nationwide unemployment stands at a 26-year high of 9.7 percent, Florida's rate is higher, at 10.7 percent statewide in July. It's even more in Palm Beach County at 11.3 percent. Broward's rate is 9.5 percent.

One year ago, when Lehman Bros. collapsed Sept. 15, 2008 in the largest corporate bankruptcy in U.S. history, Wall Street was teetering. It had already survived the demise of Bear Stearns in March, 2008, as the firm folded after the collapse of two hedge funds tied to subprime mortgages.

Lehman Bros. had more than $1 billion directly invested in commercial real estate loans in South Florida.

But the ramifications of its failure went far beyond its own interests and helped to freeze up the credit markets. That set off a scramble for borrowers, big and small, that hasn’t ended.

Today, one year after the nation’s financial system almost collapsed, 7 out of 10 Americans lack confidence the federal government has taken safeguards to prevent another financial industry meltdown, according to an Associated Press-GfK poll.

President Barack Obama Monday called on financial industry leaders to accept new regulatory reforms. Among his proposals is for the creation of a Consumer Financial Products Commission, which would have authority over mortgage and loan disclosures and possibly other services and products.

When it comes to complex financial services products, Floridians don’t have enough understanding, said Gary L. Horowitz, who is both a certified public accountant and certified financial planner in Deerfield Beach.

“Most people wing things,” he said. “They go through life and if works, good, and if it doesn’t, in the past, they made up for that (loss) here in Florida just by owning real estate.” He said property owners bailed themselves out with home equity loans as property values rose, “But you don’t have that anymore,” he said.

Florida Bankers Association President Alex Sanchez vehemently opposes more regulation for banks, which he points out, are already regulated by four federal agencies and state banking regulators. “The problem we banks have is we are the only ones regulated for consumer issues, not the non-banking shadow-banking (firms) on Wall Street.”

Information from The Associated Press was used in this report.

Spotlight on Lehman and South Florida:

Lehman Bros. had investments worth $900 million in 13 commercial real estate projects in Broward County.

Its loans financed the Trump condominium tower in Hollywood and the Hollywood Bread Building.

In Palm Beach County, Lehman had $489 million invested in 15 commercial projects.

The state of Florida had $140 million invested in Lehman Bros.securities.

Lehman also reportedly financed millions of square feet of office space in Miami, Tampa Bay and Orlando.

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Twice as many need people head to credit counseling

While I don't pretend that widespread financial literacy would have prevented our economic difficulties, I am certain that fewer consumers would be in such deep trouble if more Americans had the knowledge they need to properly evaluate offers and make solid financial decisions. If more Americans were financially literate, fewer Americans would be struggling today with debts that they are unable to repay.

-Susan C. Keating, president and chief executive officer, National Foundation for Credit Counseling, speech during NFCC annual conference in Washington, D.C., Sept. 14.

NFCC members counseled 3.2 million people last year, more than double the figure in 2006.
.

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September 14, 2009

Financial illiteracy is all too common

Here's Sunday's column....

"I have a college degree, but you know, I just don't know anything about mortgages and what's the right thing to do."

When I heard a South Florida home buyer say this the other day, it sounded so familiar. I hear that sentiment so often, not just about mortgages, but about life insurance, investments, annuities, 401(k)s and mutual funds.

Plenty of smart, conscientious people don't have a great understanding of personal finance, of financial products and how they work.

In fact, most people don't, judging by a handful of surveys, including the first National Financial Literacy Challenge, conducted last year among 46,000 high school students. Average score: 56 out of 100. That's an F.

I suspect the findings also apply to lots of post-high school grads.

Financial illiteracy is the norm, even though we have foundations, government initiatives, regulatory programs and private industry-funded educational institutes -- all designed to raise your level of financial knowledge.

I've looked at this issue for years and I think that Wall Street really doesn't want to increase the nation's financial literacy. Nor do most school systems.

The impacts of financial ignorance are significant: Far too many people live beyond their means, don't save, pay high fees for investment and insurance products, get out of the stock market at the wrong time and make life-changing financial decisions without an ounce of clear information.

Why bother to worry about this now? Congress is considering setting up a Consumer Financial Products Commission to evaluate the stuff the financial services industry sells ¡V because consumers certainly can't do it all.

Even more crucial is this: Because most of us have to plan and fund our own retirement, such widespread ignorance is dangerous.

"I've made this point many times. If we are thinking we are going to address the lack of financial literacy by informing people at one seminar, let's not even start that discussion. You don't cure pneumonia with an aspirin," said Annamaria Lusardi„©, professor of economics at Dartmouth College. Lusardi is editor of Overcoming the Saving Slump: How to Increase the Effectiveness of Financial Education and Saving Programs.

Financial illiteracy is a serious condition, she says, and it requires a serious response.

Her prescription: Start with financial education programs that aren't a one-size-fits-all. First, she says, educators ¡V at schools and any other institution -- should listen to what consumers want to know, which problems they'd like to solve. Let the consumer needs guide the educational program. Then provide solutions to their specific issues. And do all this in a clear and simple format.

I asked the same questions of Jane Bryant Quinn, the columnist and best-selling personal finance author. Quinn is wrapping up a re-write of her classic Making the Most of Your Money . "I think a lot of people have indeed learned from us [in the press]. That they should invest in index funds, things like that," Quinn said. "The personal finance press has done a great job of combating all the stuff you hear from Wall Street where they sell you all the terrible products with the high fees and the same from the insurance industry."

The next frontier, she thinks, may be financial products that are designed to get consumers to do the right thing ¡V such as college that require students to show that they tried to get financial aid before applying for a loan.

I think there's another important aspect to increasing financial literacy. That's timing.

I have a gut-level conviction that you can present all the information you want about finances to people and they won't hear it until they are ready. Tell 'em to save for retirement when they're trying to figure out how to budget for the new baby and your message won't get across.

"We are in a big teachable moment," Lusardi said. "The financial crisis has shown us how dire and how important financial mistakes are."

Harriet Johnson Brackey can be reached at hjbrackey@sunsentinel.com.

I've looked at this issue for years and I think that Wall Street really doesn't want to increase the nation's financial literacy. Nor do most school systems.

The impacts of financial ignorance are significant: Far too many people live beyond their means, don't save, pay high fees for investment and insurance products, get out of the stock market at the wrong time and make life-changing financial decisions without an ounce of clear information.

Why bother to worry about this now? Congress is considering setting up a Consumer Financial Products Commission to evaluate the stuff the financial services industry sells ¡V because consumers certainly can't do it all.

Even more crucial is this: Because most of us have to plan and fund our own retirement, such widespread ignorance is dangerous.

"I've made this point many times. If we are thinking we are going to address the lack of financial literacy by informing people at one seminar, let's not even start that discussion. You don't cure pneumonia with an aspirin," said Annamaria Lusardi„©, professor of economics at Dartmouth College. Lusardi is editor of Overcoming the Saving Slump: How to Increase the Effectiveness of Financial Education and Saving Programs.

Financial illiteracy is a serious condition, she says, and it requires a serious response.

Her prescription: Start with financial education programs that aren't a one-size-fits-all. First, she says, educators ¡V at schools and any other institution -- should listen to what consumers want to know, which problems they'd like to solve. Let the consumer needs guide the educational program. Then provide solutions to their specific issues. And do all this in a clear and simple format.

I asked the same questions of Jane Bryant Quinn, the columnist and best-selling personal finance author. Quinn is wrapping up a re-write of her classic Making the Most of Your Money . "I think a lot of people have indeed learned from us [in the press]. That they should invest in index funds, things like that," Quinn said. "The personal finance press has done a great job of combating all the stuff you hear from Wall Street where they sell you all the terrible products with the high fees and the same from the insurance industry."

The next frontier, she thinks, may be financial products that are designed to get consumers to do the right thing ¡V such as college that require students to show that they tried to get financial aid before applying for a loan.

I think there's another important aspect to increasing financial literacy. That's timing.

I have a gut-level conviction that you can present all the information you want about finances to people and they won't hear it until they are ready. Tell 'em to save for retirement when they're trying to figure out how to budget for the new baby and your message won't get across.

"We are in a big teachable moment," Lusardi said. "The financial crisis has shown us how dire and how important financial mistakes are."

Harriet Johnson Brackey can be reached at hjbrackey@sunsentinel.com.

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September 11, 2009

Monday Laundry: Rate advisors, Chase getting heat, Cobra foul-up

My weekly list of things I meant to say, follow-ups, requests, all the personal finance news that need to be cleaned up and aired out.54497%2C1216250385%2C1.jpg

Has anybody used the new crop of websites that claim to rate and review financial advisors?

The ones I know of are www.evaluatemyadvisor.com and fabeetle.com (in development). Are there others?

I've already looked at -- and don't plan to look at again -- a self-promotional site called FinanicalPlanningCertificationCenter.com. Supposedly it was designed to clear up confusion over the credentials that financial advisors typically use. But it really just promotes one designation, Chartered Financial Consultant, over another one, the Certified Financial Planner designation.

I'm hearing from readers that....
There's a foul-up in the system for allowing the unemployed to pay only part of their health insurance premiums through the Cobra provisions. One reader says he's been paying, but the company the state of Florida contracted with to funnel federal subsidies to the health insurers is running four months behind. Result: He was told his health insurance with Blue Cross Blue Shield of Florida wasn't in force

Consumer groups chastise Chase

(Heard about this one from readers, too)
Consumers Union, the National Consumer Law Center and U.S. Public Interest Research Group have called on Chase to stop hiking the minimum payments for their credit card customers who have fixed-interest rate cards. The hike was to 5 percent of the balance, up from 2 percent. The only way Chase was allowing customers to keep paying a 2 percent minimum was if they signed up for much higher interest rate after a low-rate promotional period.

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New video, investment fraud

So I do have a few thoughts on investment fraud left, after so many stories about it recently. There seem to be Ponzi schemes cropping up all over the place. After talking to dozens of victims, I think victims have to take some of the responsiblity. But there's more. From Nightly Business Report...

http://tr.im/yqOP

POSTED IN: Your Money (256)

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September 10, 2009

Good luck Home Buyers. You'll need it

The Florida Legislature said it would put $30 million toward giving first-time home buyers a cash advance and the buyers could pay the money back when they get that new $8,000 federal income tax credit.

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That was the idea, anyway.

Less than half of the money allocated has arrived. The process for people to apply isn't even open in some cities. And good luck getting through this in time to buy a house before the tax deadline.

My story in today's newspaper:

http://tr.im/yluL

POSTED IN: Your Money (256)

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September 9, 2009

Donation dropped, along with Bienes name

At Holy Cross Hospital, the Michael and Dianne Bienes Diagnostic Imaging Center no longer carries the Bienes name.

Because the money from Bienes, who says he lost millions in the Bernard Madoff scheme, has stopped.

Bienes was one of the best-known philanthropists in Broward County, with his name and his wife's name plastered across buildings and rooms at Broward's main library, schools and at Holy Cross. There's a Bienes Cancer Center there, too. That will retain his name, presumably because it's paid for.

Bienes and partner Frank Avellino ran one of the major feeder funds that sent money from investors to Madoff. The SEC shut their operation down in 1992, but Bienes says he continued to invest his own money with Madoff, adding more to his account as recently as 2007.

When Madoff was arrested, Bienes said he lost millions.

Here's part of the statement from Holy Cross spokeswoman Christine Walker Moncrieff:

Due to circumstances beyond their control, the Bieneses are unable to meet their pledge to the Diagnostic Imaging Center at Holy Cross Hospital. Therefore, we will no longer be able to use their name for the Diagnostic Imaging Center. We remain extremely grateful to the Bieneses for the favor they have shown Holy Cross Hospital and many other community organizations over the years.

Bienes pledged $4 million in 2005 to the Michael and Dianne Bienes Diagnostic Imaging Center at Holy Cross. The center opened two years later, but Bienes said he paid only part of the pledge.

Holy Cross's Moncrieff said the loss of the Bienes money will not affect patient care or services at the center.

POSTED IN: Madoff (14)

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September 4, 2009

Monday Laundry on Tuesday

My weekly list of things I meant to say, follow-ups, requests, all the personal finance news that need to be cleaned up and aired out.

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I hear....

That Michael and Diane Bienes' names have been taken down at the (formerly) Bienes Diagnostic Center at Holy Cross Hospital. Bienes, you will remember, ran one of those Madoff feeder funds until the SEC shut him down. Many of the investors in his fund then invested with Madoff directly. Bienes told me he had to stop his many charitable contributions last year, because he, too, had his money with Madoff. Anyone else know if this is true? I've put in a call to a Holy Cross spokeswoman to check this out. ..

And I learned....

Some of the new rules for mortgage disclosures from FDIC Consumer News, http://www.fdic.gov/consumers/consumer/news/cnsum09/index.html

-Starting Oct. 1, the loan documents will have to disclose any fees the lender pays to a mortgage broker for bringing in your business.
-In effect since July 30 is a Federal Reserve rule that says lenders have to give borrowers disclosures about the loan at least seven business days before the loan closes. This is for mortgages as well as refinancing a loan.
-Starting Jan. 1, HUD will limit how much the actual costs can go up from the good faith estimates.

Watch Me...

On Wednesday, on Nightly Business Report. My commentary will be about why I think there's been such an increase in investment fraud. The show airs on Public Broadcasting System stations nationwide.

POSTED IN: Your Money (256)

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You can complain, but they won't tell

Why is it that….

The state of Florida adopts a spiffy new set of investor protections, yet says complaints against bad stockbrokers or investment advisors cannot be made public?

That’s what I learned in examining the case of Gary J. Gross, which you’ll see in the newspaper today. And here:
http://tr.im/xT6Y

I don’t get why you can’t know if a lot of other investors have a problem with the person you’re going to for advice. You could know this if it was a doctor. Are financial relationships any less important?

POSTED IN: Wall Street (26)

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About the author
You've got the job of managing your money. No one in school taught you how. But you and I, we can teach each other, how to handle it, how to save for retirement, how to make money last, how to educate the kids, how to make a budget work. The conversations I have with my readers are fun. Money's important, but discussing it does not have to be boring.

Harriet Johnson Brackey Harriet Johnson Brackey, the personal finance columnist for the Sun Sentinel, is an award-winning business reporter. Her columns for 2008 were named "The Best in the Business," a national award chosen by her colleagues at the Society of American Business Editors and Writers.

Brackey has worked at Business Week magazine and at USA TODAY, where she was a founder and part of the original staff of the Money section at the country's first national newspaper. After nearly 11 years there - spent covering the 1980s bull market, the insider trading scandals, the 1987 crash - Brackey left Washington, D.C., and came to The Miami Herald. She spent the next decade writing a column about personal finance that chronicled the stock market's Internet boom and bust, as well as the popular Money Makeover features.

Brackey also has done commentaries for Marketplace Money, which airs on National Public Radio and The Nightly Business Report which is broadcast on more than 250 PBS television stations nationwide. She also has been a radio guest on WLRN’s Miami Herald News.
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