Been Naughty or Nice?

AFTER taxes this year, I found myself in the curious position

of having a decent-sized refund and absolutely no idea what do with it.

See, I’m one of the hundreds of millions of Americans without a degree in finance. I also live in a state where foreclosures are high

and 14 community banks have closed since the economic crisis began. If you look, you can see the seams tearing — empty houses and vacant stores beginning to rot because their owners have lost their shirts, the cost of using public transportation going up,and Atlanta’s property taxes being raised just to keep from having to close more fire stations.

No doubt we all have heard people saying it’s time to get out, especially after that tax increase was announced, but where are they going to go? California? The GoverNATOR just essentially rendered Cali BANKRUPT. Who is going to buy their houses?

They’re stuck.I know I’m one of the lucky ones: I have a spouse, a child, a dog, a car, a mortgage and, thankfully, I still have a job. And all I want is to grow — or at least, not shrink — my nest egg.

Easy? Not easy. Not when you add the rest of the story:

The country’s soaring deficit is making the dollar less valuable. State budgets are collapsing...

...If I were rich, none of this would matter. If I were poor, none of this would matter. But

this recession is an absurd kind of middle-class-only limbo. So in an attempt to salvage my economic status I spent a couple of

days calling and visiting banks around the state, asking them why I should bank with them. It didn’t help.

“Aren’t most of the same folks who started this mess the ones working on fixing it?” I kept wondering. “Aren’t those bad loans

still out there? Why isn’t anybody talking about the 45 banks that have closed in the United States this year? Is your bank safe?”

Most people I met scoffed or shrugged when I asked my questions. Almost all parroted the line that my money was covered by

the Federal Deposit Insurance Corporation. It seemed this was the best they could do, but finally a few bankers sat down with me and assured me that they hadn’t made risky loans, hadn’t needed bailout money, that their institutions were stable and drama-

free.

Which is how I ended up using my nest egg to buy a couple of low-interest certificates of deposit. By low, I mean abysmally low.

But in the most stable, most conservative places I could find — Georgia Federal Credit Union and an Atlanta branch of the Royal

Bank of Canada.

However, I still felt a fool to believe anything anybody in the banking industry told me about making, not losing, money; so my

anxiety-fueled mind kept churning. Where does the F.D.I.C. get all that money to do its insuring? Does it have a vault with enough cash in it to cover everybody?According to its Web site, F.D.I.C. funds come from premiums paid by banks (that have no money) and from interest on its own investments in securities at the Treasury.

Can’t I cut out the middleman and deal with the Man myself? Lo and behold! It turns out, I can. No intermediaries, just me and Uncle Sam. All I have to do is open a free account at the Treasury’s Web site. Hey, it’s as good a deal as any to be had at the banks, and it’s safer. I can invest my dollars directly into the busy goings-on of the government. I can buy and sell securities. I can be my own F.D.I.C.

Marc Fitten, the editor of The Chattahoochee Review, is the author of the novel “Valeria’s Last Stand.”

If you are under water on your mortgage - in negative equity with a loan-to-value (LTV) ratio of more than 100 per cent - it is likely that you will only be able to move once you can clear your mortgage, otherwise the bank is likely to prevent a sale.If you are under water on your mortgage - in negative equity with a loan-to-value (LTV) ratio of more than 100 per cent - it is likely that you will only be able to move once you can clear your mortgage, otherwise the bank is likely to prevent a sale.

In this section »

    * Team Obama's jesters dance to the tune of Wall Street princes

    * Hitching your investment to a green agenda

    * Freezing pensions

Latest estimates suggest that as many as 340,000 home-owners, or one in five homes, are stuck in negative equity, writes FIONA REDDAN.

HINDSIGHT IS a wonderful thing. Looking back at the prices people paid for Irish property during the boom, it?s easy to see how unsustainable they were.

However at the time, despite warnings from everyone from the Central Bank to the Economist magazine that Ireland?s property market was a bubble which had to burst, banks and consumers ignored the advice and ploughed money into property, propping up prices until the inevitable collapse during 2008.

If this is the case, then people who purchased property as far back as 2003 with loan-to-values (LTVs) of more than 80 per cent, will discover that they owe more to the bank than what their house is worth.

Key to a recovery will be easy access to credit, but given how badly banks have had their fingers burnt in the crisis, it is likely that they will continue to use very strict criteria when it comes to lending for some time yet.

Whereas during the boom, banks were regularly lending six and seven times people?s salaries and offering a multiple on discretionary income such as bonuses and commission, they are now taking a much harder look at what people can afford.

Moreover, people?s income has been slashed due to pay cuts, higher taxes (more of which are on the way) and less discretionary income, while banks are also looking for much higher deposits to keep LTVs at about 80 per cent.

So if negative equity is here to stay, who is it a problem for and is there anything you can do about it?

YOU ARE HAPPY WHERE YOU ARE

If you are happy where you are living, at least for the foreseeable future, and can afford your monthly repayments, then being in negative equity should have no material impact on your life. If you consider your house as your home ? and not an investment ? then being in negative equity won?t be a problem as you will always need a roof over your head.

The last time negative equity made the headlines was in the UK in the early 1990s.

However, the market eventually turned around and people actually made profits on their properties when they sold them. So sit tight, be patient and things may improve again.

YOU WOULD LIKE TO MOVE HOUSE

If you are in negative equity, with a LTV of more than 100 per cent, it is likely that you will only be able to move once you can clear your mortgage, otherwise the bank is likely to prevent a sale. But there still are some options.

YOU WANT TO GET A LOAN

As long as you keep up with repayments on your mortgage, being in negative equity should have no impact on either your credit rating or your ability to borrow more money to finance a car purchase, for example.

WHAT CAN YOU DO TO GET OUT OF NEGATIVE EQUITY?

Instead of bemoaning your situation, you can take a pro-active approach to getting yourself out of negative equity. While in an ideal world property prices will simply rise again thus lifting people back into the black, this is unlikely to happen for quite some time.

TARP: End of an error

Ten big (and mostly healthy) banks are finally being allowed to pay taxpayers back $68 billion in TARP funds. What do you mean being allowed. Whose permission should they need to pay back MY money I did not want to give to them from JUMP???

By Paul R. La Monica, CNNMoney.com editor at large

Last Updated: June 9, 2009: 1:57 PM ET

What does the payback of TARP funds by 10 major banks mean for the economy?

    *

      A recovery is underway

    *

      It means little; too many banks are still in trouble

    *

      It's too soon to tell

NEW YORK (CNNMoney.com) -- Good riddance, TARP. It was nice knowing you.

Okay, the Treasury Department's controversial Troubled Asset Relief Program isn't exactly dead yet. But by finally letting 10 of the nation's largest financial firms return bailout funds, the Treasury is undoing one of the worst aspects of TARP.

Several of the banks that received money in the panic last fall didn't really need it.

But by all accounts, then Treasury Secretary Hank Paulson and Federal Reserve chairman Ben Bernanke did their best to convince some of the nation's healthier banks, including JPMorgan Chase (JPM, Fortune 500) and Bank of New York Mellon (BK, Fortune 500), to take one for the team.

Some banks didn't want to be viewed by investors as "troubled" enough to qualify for something called the Troubled Asset Relief Program.

But Paulson and others in Washington were apparently concerned that if TARP was only given to banks truly in dire need, the markets would freak out and punish those banks severely. (Coffee's for closers, TARP's for losers.)

That backfired big time. Instead of penalizing only the weak banks, such as Citigroup (C, Fortune 500) and Bank of America (BAC, Fortune 500), investors dumped shares of all banks.

Wall Street quickly came to the wrong conclusion that the entire banking system was on the verge of being insolvent. Short sellers sold bank stocks first and asked questions later.

NOT shocking at all that the people whom run Social Security, Medicaid, Medicare, DMV, etc, etc...are inept at fixing the problem they created. recall the definition of insanity, how about an oxymoron. Who says these companies are "...too big..." to fail. Why are WE paying these "retention" bonuses for the so called brightest minds. You mean the same birght mind that created the issue. Nevertheless I digress I shall leave it to professional journalist to relay some info to you.

Bank bailout may hurt taxpayers, be open to fraud Inspector general cites potential flaws in bank bailout, urges Treasury to adopt safeguards

    * Jim Kuhnhenn, Associated Press Writer
    * Tuesday April 21, 2009, 12:27 am EDT

WASHINGTON (AP) -- Taxpayers are increasingly exposed to losses and the government is more vulnerable to fraud under Obama administration initiatives that have created a federal bank bailout program of "unprecedented scope," a government report finds.

In a 250-page quarterly report to Congress, the rescue program's special inspector general concludes that a private-public partnership designed to rid financial institutions of their "toxic assets" is tilted in favor of private investors and creates "potential unfairness to the taxpayer."

The report, which examines the six-month old, $700 billion Troubled Asset Relief Program, is scheduled for release Tuesday.

Using blunt language, Inspector General Neil Barofksy offers a series of recommendations to protect the public and takes the Treasury to task for not implementing previous advice. The report also commends Treasury and the Federal Reserve for creating some safeguards. (want more of this article)