Economic Perspectives with Hopeton Hay on KAZI 88.7 FM in Austin, TX

Archive for April, 2010

Financial Literacy and Education Commission Launches Enhanced Web Site for Financial Literacy

Posted by Hopeton on April 30, 2010

The U.S. Financial Literacy and Education Commission (FLEC) announced the launch of its redesigned financial literacy education website, www.MyMoney.gov. The new site has enhanced interactive features and utility to provide more resources to Americans seeking information that can inform their personal financial decisions.  President Obama recently proclaimed April to be National Financial Literacy Month, and this enhanced online offering is just one of the many steps the Administration is taking to expand financial education and access for the future.

“As America recovers from the most severe financial crisis since the Great Depression, it’s critical that we strengthen every aspect of our financial system. That means not only strong reforms and consumer protections, but also improved financial literacy and access,” said Treasury Deputy Secretary Neal Wolin. “Financial education and access is a priority for this Administration, and we’re pleased to provide this critical resource to help Americans find free, reliable and unbiased information that can help inform their daily financial decisions and plan for the future.”

The new MyMoney.gov creates an online point of access to financial information from the 21 Federal agencies, departments and bureaus that comprise the FLEC.   Users will be able to find information about how to plan for a host of life events that have financial implications, such as birth or adoption of a child, home ownership, or retirement. They can also find information targeted to their personal or professional situation. For instance, the site includes resources for teachers, service members, women, parents, youth, employers, and more.  The site also provides money management tools including a financial savings calculator, worksheets for establishing a household budget and a college preparation checklist, among others.  The site is also available in Spanish. The effort to make the website as helpful and useful to Americans will be ongoing, with improvements expected to continue.

The web site was made possible by the Financial Literacy and Education Commission, which was established under the Fair and Accurate Credit Transactions Act of 2003. The Commission was tasked to develop a national financial education web site along with a hotline (1-888-My Money) and a national strategy on financial education. It is chaired by the Secretary of the Treasury and made up of the heads of 20 additional federal agencies.  The Commission is coordinated by the Department of the Treasury’s Office of Financial Education.

For details, go to www.MyMoney.gov

Advertisements

Posted in Budgeting, financial literacy | Tagged: , , , | 1 Comment »

NATIONAL FINANCIAL LITERACY SURVEY REVEALS

Posted by Hopeton on April 29, 2010

As the U.S. economy continues to emerge from the global recession, some Americans have responded by making positive behavioral changes in their financial lives, thus providing a silver lining to those dark financial clouds.

The results of the National Foundation for Credit Counseling’s (NFCC) fourth annual Consumer Financial Literacy Survey released today on Capitol Hill sent somewhat of a mixed message, but do suggest a slightly positive trend in a few specific areas.

  • Showing improvement since 2007 (39 percent), more than two in five adults (43 percent) now keep close track of their spending. However, more than half (56 percent) still do not have a budget, and more than 11 million adults (5 percent) do not monitor their overall spending and don’t know how much they spend on food, housing, and entertainment.

 

  • The proportion of adults who have non-retirement savings has increased from 63 percent in 2007 to 67 percent in 2010.  Nonetheless, three in ten (30 percent), or more than 68 million people, report that they have no savings and only 24 percent are now saving more than they did a year ago because of the current economic climate. Nearly two in five (39 percent) Gen Y adults – more than any other age group – report having no savings. Of those with no savings, one in four say that, if faced with an emergency, they would charge that expense to a credit card (25 percent) or take out a loan (29 percent), thus adding to any existing debt.

 

  • A greater proportion than last year gave themselves high grades on their knowledge of personal finance, suggesting an increase in adults’ self-perceived level of personal financial literacy.  In 2009, 41 percent graded themselves as C, D or F, with only 34 percent falling into that category in 2010.  Interestingly enough, even with this increase, nearly four in five adults (78 percent) agree that they would benefit from advice and answers to everyday financial questions from a professional, and nearly one-third (31 percent) strongly agree.

 

 “Sometimes it takes hitting bottom to facilitate change, and this is apparently what has happened with many American consumers. Tracking spending and creating non-retirement savings are two of the building blocks to financial stability, and the recession has served as a harsh reminder of this to millions who have been affected by the economic downturn,” said Susan C. Keating, president and CEO of the NFCC.  “We are encouraged by the positive developments, but nonetheless remain concerned about the many areas where the survey exposed continued financial deficiencies.  We still have a long way to go before Americans consider themselves financially literate, and the NFCC is proud to take the lead in the march toward this goal.”

Some interesting findings related to debt and credit are as follows:

  • 28 percent, or nearly 64 million adults, admit to not paying all of their bills on time. Among minorities, this number is at 47 percent for African-Americans and 42 percent for Hispanics;
  • Though a majority of adults (67 percent) say they pay for most purchases with cash or a debit card, about two in five (41 percent) report that their household carries credit card debt and more than 11 million people (5 percent of adults) say they carry $10,000 or more in credit card debt from month to month.; and
  • In spite of it being free, nearly two-thirds of adults (65 percent), or nearly 148 million people, have not ordered a copy of their credit report in the past year. And nearly one-third (31 percent) do not know their credit score.

 

As it relates to housing, the survey revealed the following:

  • 44 percent of adults, or about 100 million people, currently have a home mortgage and, of those, one in three (33 percent) say that the terms of their mortgage somehow turned out to be different than they expected; and
  • 80 percent of adults feel there are situations where it is acceptable to default on a mortgage, and two of the top three most justifiable circumstances place the blame on the lender.

 

“The data is compelling and speaks to the need to take action. Many U.S. adults continue to engage in risky financial behaviors and certain subgroups of the population – young adults and minorities in particular – are at greater risk than others. Now is the time to invest in America’s future with a national commitment to financial education,” continued Keating.

The 2010 Financial Literacy survey was conducted by telephone within the United States by Harris Interactive on behalf of the NFCC between March 4 and March 8, 2010 among 2,028 adults ages 18+. Results were weighted for age, sex, geographic region and race where necessary to align them with their actual proportions in the population. The full survey will be available Tuesday afternoon, April 13, at www.NFCC.org.

Posted in Uncategorized | Leave a Comment »

Banking Regulator Calls for Redesign of Community Reinvestment Act

Posted by Hopeton on April 22, 2010

Comptroller of the Currency John Dugan discussed the role of the Community Reinvestment Act during a speech on April 20 before the Federal Economic Development Forum.  A portion of his speech where he calls for redesigning CRA is excerpted below.  To read the entire speech click here.

…In light of all these changes, I think it is it time to think about redesigning CRA.  That, of course, raises a number of key questions and issues, which is exactly what I would like to put before you in the remainder of my remarks.

John Dugan

An obvious threshold question is whether CRA should be expanded to cover a broader range of entities that provide financial services affecting communities.  Is it time, as some have suggested, to consider expanding CRA to certain non-bank affiliates and subsidiaries of bank and thrift holding companies?  Or should we take a more holistic approach to activities conducted within regulated bank and thrift holding companies, recognizing that these companies have the ability to allocate many activities to different legal entities, only some of which may be covered by CRA?

Should redesign be based on recognition of the changed roles of nonbank financial services providers, extending coverage to nonbank firms that provide credit and other financial services that can meaningfully impact community well being, such as credit unions and mortgage companies?  And if we expand coverage in these ways, what would be the rationale for the expansion?

If CRA was originally premised – at least in part – on the benefit of a form of government support, deposit insurance, should an expansion of CRA be based on new types of government support that are available to financial firms other than insured banks and thrifts?  I have heard the rationale advanced that a broader range of financial services firms benefit from access to other federal programs or charter privileges that should obligate them to do more for communities.  Is access to Federal liquidity funding or access to Federal guarantees appropriate justification for enhanced CRA responsibilities?

Some advocates point to the Federal government’s support during the financial crisis to justify CRA’s expansion to a much broader array of financial services providers.  Mutual funds received temporary deposit insurance coverage.  And the TALF and TARP programs provided important market support that benefitted a range of financial firms, including investment banks and insurance companies…

To read the entire speech click here.

Posted in Banking, Community Development | Tagged: , , , , | Leave a Comment »

Congressional Oversight Panel Evaluates Progress of TARP Foreclosure Mitigation Programs

Posted by Hopeton on April 20, 2010

The Congressional Oversight Panel released its  oversight report, “Evaluating Progress of TARP Foreclosure Mitigation Programs,” on April 14.  The Panel commended recent changes to the mortgage modification program designed to reach more homeowners, but found that Treasury is still struggling to get its foreclosure programs off the ground even as the crisis continues unabated.

Elizabeth Warren, Chair, Congressional Oversight Panel

Since the Panel’s last examination of foreclosure mitigation efforts in October 2009, Treasury has taken steps to address concerns that the Home Affordable Modification Program (HAMP) did not adequately address foreclosures caused by unemployment or negative equity, including by establishing a voluntary principal reduction program. Despite these and other efforts, foreclosures continue at a rapid pace. In 2009, 2.8 million homeowners received a foreclosure notice, and nearly one in four homeowners with a mortgage currently has negative equity. While housing prices have begun to stabilize in many regions, home values in several metropolitan areas continue to fall sharply.

The Panel found that “Treasury’s response continues to lag well behind the pace of the crisis” and that, even when HAMP is fully operational, they “will not reach the overwhelming majority of homeowners in trouble.” The report raises three specific concerns with Treasury’s foreclosure programs:

Timeliness. Since early 2009, Treasury has initiated half a dozen foreclosure mitigation programs, gradually ramping up the incentives for participation by borrowers, lenders, and servicers. Although Treasury should be commended for trying new approaches, its pattern of providing ever more generous incentives might backfire, as lenders and servicers might opt to delay modifications in hopes of eventually receiving a better deal.

Sustainability. Although HAMP modifications reduce a homeowner’s mortgage payments, many borrowers continue to experience severe financial strain. HAMP typically does not reduce the total principal balance of a mortgage, meaning that a borrower who was underwater before receiving a HAMP modification will likely remain underwater afterward. Many borrowers will eventually redefault and face foreclosure. Redefaults signal the worst form of failure of the HAMP program: billions of taxpayer dollars will have been spent to delay rather than prevent foreclosures.

Accountability. The Panel is concerned that the sum total of announced funding for Treasury’s individual foreclosure programs exceeds the total amount set aside for foreclosure prevention. Treasury must be clearer about how much taxpayer money it intends to spend. Additionally, it must thoroughly monitor the activities of participating lenders and servicers, audit them, and enforce program rules with strong penalties for failure to follow the requirements.

The full report is available at cop.senate.gov.

The Congressional Oversight Panel was created to oversee the expenditure of the Troubled Asset Relief Program (TARP) funds authorized by Congress in the Emergency Economic Stabilization Act of 2008 (EESA) and to provide recommendations on regulatory reform. The Panel members are: former Securities and Exchange Commissioner Paul S. Atkins; J. Mark McWatters; Richard H. Neiman, Superintendent of Banks for the State of New York; Damon Silvers, Policy Director and Special Counsel for the AFL-CIO; and Elizabeth Warren, Leo Gottlieb Professor of Law at Harvard Law School.

Posted in Housing | Tagged: , , , , | Leave a Comment »

Interview with Frank Ross, Co-Founder of National Association of Black Accountants Available

Posted by Hopeton on April 19, 2010

The Economic Perspectives interview with Frank Ross, one of the 9 founders of the National Association of Black Accountants (NABA), is now available. Ross was also the first president of NABA when it was founded in 1969.  To download or listen to the interview click: Frank Ross Interview.  To obtain a copy of Frank Ross’ book, Quiet Guys Can Do Great Things Too, click here.

Posted in African American, Business, Interview, Radio | Tagged: , | Leave a Comment »

Listen to Interview with President of Black Bank that Survived and Prospered After Devastation of Hurricane Katrina

Posted by Hopeton on April 18, 2010

Alden McDonald, President and CEO of Liberty Bank and Trust, the nation’s 3rd largest Black-owned bank, was interviewed on Economic Perspectives on April 12.  Headquartered in New Orleans,  Liberty Bank not only survived Hurricane Katrina, but had record profits the following year thanks to the leadership and hard work of McDonald and his team. Listen to McDonald discuss the keys to his success and commitment to providing loans and deposit products to the underserved and poor communities of New Orleans and the other markets served by Liberty by double clicking: Alden McDonald Interview.

Posted in African American, Banking, Interview, Radio | Tagged: , | Leave a Comment »

SEC Proposes New Rules to Protect Investors in Securitization Market

Posted by Hopeton on April 17, 2010

On April 7 the Securities and Exchange Commission proposed rules that would revise the disclosure, reporting and offering process for asset-backed securities (ABS) to better protect investors in the securitization market.

The proposed rules are intended to provide investors with more detailed and current information about ABS and more time to make their investment decisions. The proposed rules also seek to better align the interests of issuers and investors by creating a retention or “skin in the game” requirement for certain public offerings of ABS.

“The rules we are proposing stem from lessons learned during the financial crisis,” said SEC Chairman Mary L. Schapiro. “These rules if adopted would revise the regulatory regime for asset-backed securities in order to better protect investors.”

Mary Shapiro

Asset-backed securities are created by buying and bundling loans — such as residential mortgage loans, commercial loans or student loans — and creating securities backed by those assets, which are then sold to investors. Often, a bundle of loans is divided into separate securities with different levels of risk and returns. Payments on the loans are distributed to the holders of the lower-risk, lower-interest securities first, and then to the holders of the higher-risk securities.

Most public offerings of ABS are conducted through expedited SEC procedures known as “shelf offerings.” ABS offerings also are sold as private placements which are exempt from SEC registration. ABS private placements are typically sold to large institutional investors known as qualified purchasers (QIBs).

Public comments on the proposed rules should be received by the Commission within 90 days after its publication in the Federal Register.  To read the proposal click here.  To submit comments on the proposal click here.

Posted in Finance, investing | Tagged: , , , | Leave a Comment »

SBA Recovery Lending Extended Through May

Posted by Hopeton on April 16, 2010

President Barack Obama signed legislation yesterday providing $80 million in additional funding to continue important enhancements in the U.S. Small Business Administration’s two key small business loan programs.  The enhancements, first made available under the American Recovery and Reinvestment Act, include a higher guarantee on some SBA-backed loans and small business fee relief.

The SBA estimates the $80 million will support about $2.8 billion in small business lending under the 7(a) and 504 programs.

“Small businesses across the country have been able to secure critical financing as a result of the Recovery Act loan provisions and the continued interim funding we’ve received for the program,” said SBA Administrator Karen Mills.  “The increased guarantees and reduced fees on SBA loans have generated more than $25 billion in new loans to small business owners and brought more than 1,200 lenders back to SBA loan programs.  In fact, the first two quarters of the current fiscal year have been our best two opening quarters ever for the 7(a) program, with more than $7 billion in guaranteed loans.  These programs have been successful in helping jump-start our economy, which is why we will continue to work with Congress on a longer term extension of the increased guarantee and reduced fees.

Karen Mills

“We also know that small businesses could greatly benefit from the additional tools the President has proposed, including higher SBA loan limits and refinancing for commercial property mortgages, which could help thousands of small businesses avoid potential foreclosure.  Small businesses need these improvements to ensure their access to the capital they need to drive economic growth and create jobs in communities all across the country.”

As part of the Recovery Act enacted on Feb. 17, 2009, SBA received $730 million to help small businesses, including $375 million to increase the SBA guarantee on 7(a) loans to 90 percent and to reduce borrower fees on most 7(a) and 504 loans.  The funds for these programs were exhausted on Nov. 23, 2009, and an additional $125 million was provided in December.  Those funds were exhausted in late February, 2010, and an additional $60 million was provided subsequently.  SBA was authorized for an additional $40 million in late March.

Under the new extension SBA may continue to reduce loan fees in its 7(a) and 504 programs and to provide higher guarantee levels on 7(a) loans through May 2010, or until the funds provided under the bill are exhausted.

This extension has no effect on the continued availability of financing under other SBA Recovery Act programs, including SBA’s America’s Recovery Capital (ARC) loan program and the agency’s Microloan program. Recovery Act funding still remains available for both of those programs.

Posted in Small Business Loans | Tagged: , | 2 Comments »

Business Success Lessons from Rock Stars

Posted by Hopeton on April 16, 2010

Former Houston rock and roll radio personality, Dayna Steele, author of Rock to the Top: What I Learned about Success from the World’s Greatest Rock Stars, will be the April 18 guest on KAZI Book Review, 12:30 p.m. – 1 p.m. on KAZI 88.7 FM.  Listen live online at kazifm.org.

Steele takes her readers on an entertaining backstage tour into her adventures with some of the most successful rock stars in the world, sharing her savvy business advice and lessons learned along the way. An added bonus to the stories and business tips, readers will also find her great personal collection of photos featuring The Rolling Stones, ZZ Top, Van Halen, Stevie Ray Vaughan and more.

For years, Steele was one of the top female rock radio personalities in the USA. With a legion of fans that referred to themselves as Steeleworkers, Dayna was known for her sultry voice, music knowledge and entertaining celebrity interviews. During her career and reign as Houston’s “First Lady of Radio,” she was named one of the 100 Most Important Radio Talk Show Hosts by Talkers Magazine and nominated as Local Radio Personality of the Year by Billboard Magazine.

Posted in Interview, Radio, small business | Tagged: , , | Leave a Comment »

PODCAST AVAILABLE: How Leader Helps Increase Corporate Business Opportunities for Minority Businesses

Posted by Hopeton on April 16, 2010

The interview with Harriet Michel, president of the National Minority Supplier Development Council (NMSDC), from the April 19 edition of Economic Perspectives on KAZI 88.7 FM is now available for download.   To download her interview click: Harriet Michel Interview.  The interview is 19 minutes long and available as an MP3 file.  Michel was honored for Black History Month this year as an African American Economic Trailblazer by Economic Perspectives.

Providing a direct link between corporate America and minority-owned businesses is the primary objective of the National Minority Supplier Development Council, one of the country’s leading business membership organizations. It was chartered in 1972 to provide increased procurement and business opportunities for minority businesses of all sizes.

The NMSDC Network includes a National Office in New York and 37 regional councils across the country. There are 3,500 corporate members throughout the network, including most of America’s largest publicly-owned, privately-owned and foreign-owned companies, as well as universities, hospitals and other buying institutions. The regional councils certify and match more than 15,000 minority owned businesses (Asian, Black, Hispanic and Native American) with member corporations which want to purchase goods and services.

When it comes to helping African American and other minority businesses sell to Corporate America, no one does it better than Michel .  Under Harriet Michel’s leadership since 1988, the National Minority Supplier Development Council corporate members spent over $100 billion with minority firms in 2008.  With 3,500 corporate and 17,000 minority business members in its network, Michel has helped establish supplier diversity as a core business value in Corporate America.

Posted in Diversity, Interview, minority business, Radio | Tagged: , , | 1 Comment »