Obama: Bernanke has 'stayed a lot longer' than expected

Tue, 18 Jun 2013 20:30:41 GMT

President Barack Obama hinted Monday that he will not reappoint Ben Bernanke to a third term as Federal Reserve chairman.

"He's already stayed a lot longer than he wanted, or he was supposed to," said Barack Obama in an interview with Charlie Rose, after the PBS host asked the president whether he planned to reappoint Bernanke after his term expires on Jan. 31, 2014.

Obama did not answer directly when asked if he would reappoint Bernanke if the Fed chairman requested another term.

"He has been an outstanding partner along with the White House in helping us recover much stronger than, for example, our European partners from what could have been an economic crisis of epic proportions," Obama said.

Bernanke is scheduled to speak at a news conference Wednesday after the Fed completes a two-day policy meeting of the central bank. He is expected to discuss plans for the bank's bond-buying program.

Bernanke has overseen the central bank's extraordinary response to the global financial collapse that began in earnest in fall 2007, keeping interest rates at historic lows and shepherding a massive Fed intervention in the government bond market.

The fed funds rate, the Fed's key benchmark rate used to set the price of a variety of business and personal loans, stood at 4.5 percent when Bernanke took office, and rose as high as 5.25 percent that year. But the Fed started to cut rates in September of 2007 as the economy weakened. The Fed took rates down to nearly 0 percent in December, 2008. They remain in that range, between 0 percent and 0.25 percent.

First appointed by President George W. Bush, Bernanke started as Fed chairman in February 2006. Obama kept him for a second term that started in 2010.

His predecessor, Alan Greenspan, had the second-longest tenure of any Fed chairman, serving more than 18 years under four presidents. The average time for a chairman to serve is seven years, with half of them serving one term or less.

Chris Isidore of CNNMoney contributed this story.

Stocks rally as Fed looms large

Tue, 18 Jun 2013 20:28:21 GMT

U.S. stocks rose for a third day Tuesday after reports on inflation and new home construction eased fears the Federal Reserve is about to slow the pace of its stimulus program.

The Dow Jones industrial average gained more than 120 points, or 0.8%. That marks the sixth day in a row that the Dow moved up or down more than 100 points.

The S&P 500 edged up 0.7%, while the Nasdaq added 0.8%.

A report on consumer prices showed that inflation remains subdued, while a report on the housing market was mixed.

The data underscored the lackluster outlook for the economy and raised hopes the flow of cheap money from the Fed will continue, said Bruce McCain, chief investment strategist at Key Private Bank.

"Ultimately, prices have to rest on the fundamentals," he said. "But for now the bulls are becoming a bit more emboldened." The absence of inflation, he added, "gives the Fed plenty of room to keep the pedal to the floor."

Gold prices fell more than 1%, extending the metal's recent slide, on tepid inflation data and a stronger dollar.

The Fed is not expected to announce any major change in policy at the end of it's latest two-day meeting, which started Tuesday. But investors are hoping chairman Ben Bernanke will provide some clues about when the central bank could begin tapering the pace of its bond purchases. Bernanke is set to speak at a news conference Wednesday afternoon.

"Some people think they're going to taper tomorrow," said Keith Springer, president of Springer Financial Advisors in Sacramento, Calif. "I think there's zero chance that happens."

Springer said the Fed is more concerned about the threat of deflation, adding that central bankers could decide to boost the $85 billion per month bond-buying program if the economy takes a turn for the worse.

"If they reaffirm that it's not going to happen tomorrow, and that they're going to wait until the fall, I think the market will rally to new highs," said Springer.

Meanwhile, there was speculation about who will succeed Bernanke. In a PBS interview that aired late Monday, President Obama told Charlie Rose that Bernanke has "already stayed a lot longer than he wanted, or he was supposed to."

Sony shares climbed 3% after Dan Loeb's Third Point hedge fund increased its stake and is upping the pressure on the company to agree a partial spin-off of its entertainment business.

Nokia shares rose after a report in the Financial Times raised speculation about a potential merger with China's Huawei. Meanwhile, shares of BlackBerry rose rose on rumors about a deal with Lenovo

Shares of Hormel fell after the processed meat company lowered its earnings outlook for the year.

European markets ended mixed, while Asian markets were little changed.

The president of Cyprus has asked the European Union to renegotiate the terms of its $13 billion financial bailout, according to the Financial Times.

Following a summit in Ireland, Obama and other leaders from the world's top 8 economic powers announced new measures to curb tax evasion and money laundering.

It's official: Jack Lew's new signature

Tue, 18 Jun 2013 18:47:23 GMT

It's official: Treasury Secretary Jack Lew has undergone a transformation, at least when it comes to penmanship.

The Treasury Department on Tuesday unveiled Lew's official new signature, which will soon grace the bottom right corner of every bill in your wallet.

Lew's signature needed a major makeover. After President Barack Obama nominated him to the post in January, Lew's John Hancock was downright indiscernible. Even the president pleaded for him to work on his penmanship.

He got the memo, and by April, a revamped version that clearly spelled out his name appeared on an annual report from the Financial Stability Oversight Council. The official signature released by Treasury takes it one step further: The newest version steps up the fancy factor with more swirls and a drawn-out 'w' at the end of "Lew."

Lew's signature will first appear on a $5 bill. It will come off the presses this summer and appear in circulation this fall.

The Treasury secretary's signature garners a lot of attention, since it is required on each currency note in order to make it legal tender.

The process of transferring a secretary's signature onto bills takes 18 weeks, according to a Treasury representative. After receiving signatures from the new secretary and the new treasurer, the bureau creates a series of bills with new serial numbers and suffix letters. A new plate has to be designed before printing the bills.

This isn't the first time that a Treasury secretary had to redo his signature. Former Treasury Secretary Tim Geithner told Marketplace last year that he had to change his signature when he submitted it to the Bureau of Printing and Engraving for currency notes.

G-8 promises to tackle tax cheats

Tue, 18 Jun 2013 17:26:18 GMT

The world's major developed economies committed Tuesday to step up efforts to make individuals and companies pay the taxes they owe.

Tackling illegal tax avoidance has become increasingly important for governments as they struggle to revive their economies while paying down debt levels that exploded in the wake of the global financial crisis.

Stung by mounting evidence that major companies are shifting profits across borders, G-8 leaders said countries should change rules to prevent that from happening and multinationals should report what tax they pay and where.

"If you want a low tax economy ... you have to collect the taxes that are owed -- that is only fair for companies and people that play by the rules," U.K. Prime Minister David Cameron said at the end of a two-day summit.

U.K. and U.S. lawmakers have stepped up their scrutiny of the tax practices of big companies such as Apple and Google, concerned that wealthy businesses are taking advantage of laws that have failed to keep pace with the development of the digital economy.

A U.K. parliamentary committee last week called for a formal inquiry into whether Google was operating within the law by booking the vast majority of sales made in the Britain to a subsidiary in Ireland.

Apple was called before the U.S. Senate last month to explain its tax affairs. Amazon and Starbucks have also come in for criticism.

Company executives have insisted they play by the rules, and it's up to politicians to change them if they don't like the result. Agreement at the G-8 increases the chances of that happening.

"We will work to create a common template for multinationals to report to tax authorities where they make their profits and pay their taxes across the world," the G-8 nations said in a statement issued at the end of a two-day summit.

The Organization of Economic Cooperation and Development and G-8 will work on ensuring that tax rules do not allow or encourage multinationals to reduce overall taxes paid by artificially shifting profits to low-tax jurisdictions, they said. The OECD is due to present a plan of action at a meeting of G-20 finance ministers next month.

The G-8 leaders also said they would share information automatically between tax authorities and push for that to become the new global standard to make it easier to clamp down on tax evaders.

Developing countries, which lose more in tax avoidance than they receive in aid, will be given access to the global information they need to collect the taxes they're owed.

Anti-poverty campaigners described the G-8 deal as an historic achievement.

"The G-8's work to curb corporate tax avoidance is awesome," said Eric LeCompte, executive director of Jubilee USA Network. "I think we would like to see even greater moves for corporate transparency, but the foundation the G-8 built will take us into a more accountable corporate world then we've seen before."

The G-8 agreed to do a better job of tracking "beneficial ownership" -- that is, who ultimately owns and profits from companies and trusts -- and to make that information available to tax collectors and law enforcement agencies.

"These are really strong commitments that have never been written down in this way, and then signed by every G-8 leader," Cameron said.

But in a sign of how difficult it is to make progress on sensitive tax matters, the Swiss government suffered a defeat Tuesday when its draft law to allow banks to share offshore account data with U.S. tax authorities was blocked in parliament.

Home building continues to rise

Tue, 18 Jun 2013 15:11:04 GMT

The pace of home building gained steam in May, another sign of the housing market's recovery.

The number housing starts rose 7 percent to an annual pace of 914,000 homes, according to a government report out Tuesday. The rise was almost all attributed to a jump in buildings with five or more housing units, which were up 25 percent from April. Multi-family building stats are particularly volatile since every unit in a building is counted as a single building start.

The construction of single family home was essentially unchanged from April, but up 16 percent from a year ago, as housing market conditions continue to improve.

Building permits, a sign of builder confidence in the market, slipped 3 percent to an annual rate of 974,000. But that too was due to the volatile reading on multi-family permits, which fell 11 percent. Single-family home permits were up slightly in the month. And the number of homes under construction in the month reached a four-year high.

The housing market has seen a raft of positive news recently, including a drop in foreclosures, a steady rise in home prices and an increase in sales of both new and previously-owned homes. A rise in mortgage rates, up from recent record lows, has done little to slow the the housing market.

A separate government report showed that there are only a 4.1 month supply of new homes available for sale on the market, which is just above the nine-year low that was recorded in January.

Many builders say they are having trouble finding the workers they need to meet the demand for new homes. And a survey of builder confidence by the industry's trade group out Monday showed that the majority of builders feel market conditions are positive for the first time in seven years.

Debt-free, stress-free college

Tue, 18 Jun 2013 11:50:00 GMT

Out of the nearly 20 million Americans who attend college each year, about 60 percent will take out loans to cover all of their costs. Getting accepted to college is one thing, making it through college debt-free is another. Thousands of incoming freshmen will be faced with this challenge in the coming weeks.

Jasmine Roldan just got this acceptance letter from the University of Central Florida.

“You can ask my mom, she was there,” said Jasmine. “We were jumping up and down.”

Her mother, Millie Roldan, said, “I am excited and sad at the same time.”

Now the pressure is really on with food, fun, and finances.

“It’s scary but a nice test to see how I am going to do in the future,” said Jasmine.

University of South Florida freshman Courtney Whitaker has racked up more than 2,000 dollars in credit card debt.

“I feel right now it’s at its worst,” admits Courtney.

Courtney says her bank pushed the plastic.

“I was paying for books. I was paying for my parking permit. I was paying for food or, you know, anything,” said Courtney.

USF Financial Aid Director Billie Jo Hamilton says Courtney is not alone.

“Often times right from the bat when they get here, they may be struggling with having enough money,” explained Hamilton.

Hamilton suggests using free services on campus like movies, concerts, and the rec center. If you have a meal plan, use it. Make a budget, something Hamilton says most college students don’t know how to do. For Courtney, it’s been a spiral of spending.

“You could walk out the door and say oh I’m really hungry, and then you know that you don’t have much money in your debit card so you’re like, oh well, I have basic free money on my credit card so I’ll use just that,” said Courtney.

Jasmine hopes her college days don’t lead to a credit crunch.

“I’ve been waiting for this my whole life,” said Jasmine.

Student debt has become such a problem that the University of South Florida is starting a new program that will counsel students specifically about finances. It will also keep tabs on students’ finances. If a student is going into debt at a rapid pace, counselors will be alerted.

Additional Information:

College is an exciting time for many people, but if they begin looking to loans and credit cards to help ease their financial woes, students could end up graduating with more than a degree. It was recently estimated that close to 12 million individuals borrow money each year to pay for their college-related expenses. For students who graduated in 2011, the average amount of loan debt was a little more than 26,000 dollars per student! Considering many people fresh out of college don’t immediately find gainful employment, paying back this debt can be a difficult and drawn-out process. In fact, about 37 million individuals currently have outstanding student loans. (Source: asa.org)

How to Get Loan Relief: There are a few things people can do to alleviate their debt problems. Here are some options for paying off student loans that you may not know about:

Right to Defer Payment – People attending graduate school or serving in the military can defer their student loan payments until they are finished, giving them more time to get on their feet financially. Loan Forgiveness – Student loans may be forgiven for individuals working in positions such as early childhood education, law enforcement, and government. However, in order to be eligible the person will have to have made 120 payments under the Public Service Loan Forgiveness Program. Pay Based on Earnings – The “Pay as You Earn” plan breaks up monthly payments using the individual’s income and family size. Each month 10% of the person’s discretionary income will be taken to pay off student loans.

(Source: usatoday.com)

College Credit Cards: For some students college is the first time they have had to deal with their own finances, and the temptation of using a credit card to cover costs can lead people into trouble. There once was a time when credit cards marketed on college campuses and offered instant approval credit cards to students, but these practices have decreased in the past few years. With the 2009 Credit Card Responsibility and Disclosure Act along with growing economic problems across the country, fewer college students are turning to credit cards with only 35% currently having one. Instead, more students are using debit cards which restrict spending a little more because it is linked to an actual money account. (Source: washingtontimes.com)

Fla. blocks locals from votes on sick pay law

Tue, 18 Jun 2013 11:03:33 GMT

Florida's governor has signed a law that says cities and counties cannot make businesses offer paid sick leave.

Supporters say the law will mean consistency for employers across the state. Opponents say it burdens the poor and working mothers who cannot afford to lose money to stay at home sick or who are taking care of someone who is ill.

Among the companies that had lobbied for the law are Walt Disney and Darden Restaurants, which operates Olive Garden and Red Lobster, CNN affiliate WESH reported.

Gov. Rick Scott, a Republican, signed the bill into law Friday, saying it "fosters statewide uniformity, consistency and predictability in Florida's employer-employee relationships."

He said the law is business friendly and supports job creation.

The move came as Orange County, which includes Orlando, was considering letting voters decide on a sick pay measure.

The bill's sponsor in the Florida Senate, David Simmons, told WESH that the law signals that cities and counties cannot "create their own patchwork of regulations" in regards to employee benefits.

Orlando-based Organize Now had petitioned Scott to veto the bill.

"The fight for earned sick time will continue," it said on its Facebook page. "Floridians believe in earned sick time for hardworking families and we don't give up when we believe in something. ... and we won't forget."

The law takes effect on July 1.

San Francisco was the first city to mandate sick pay, with the measure passing in 2007. A survey by the Institute for Women's Policy Research suggested that after four years, the law was "functioning well."

The report said most businesses maintained profits and many supported the law.

Most employees didn't max out their sick days, the survey found.

Other municipalities to pass similar laws include Milwaukee; Portland, Oregon; Seattle and Washington. Connecticut became the first state to pass statewide paid sick time laws in 2011.

New York Mayor Michael Bloomberg recently vetoed such legislation, but the City Council could override his decision.

There are no federal legal requirements for paid sick leave, according to the U.S. Department of Labor website.

Some companies are subject to the Family and Medical Leave Act, passed in 1993, which provides up to 12 weeks of unpaid, job-protected leave per year "for certain medical situations for either the employee or a member of the employee's immediate family."

The FMLA was amended in 2008 to permit a "spouse, son, daughter, parent or next of kin" to take up to 26 weeks of leave to care for a member of the armed forces who is undergoing medical treatment, according to the Department of Labor website.

Scam uses Obamacare to trick elderly

Tue, 18 Jun 2013 02:39:56 GMT

A local scam involving people who claim to be government officials are using Obamacare in an effort to steal the identities of senior citizens.

The scam is similar to a recent Medicare con -- the phone rings, the other line says they are someone with the government and that’s about as specific as the caller gets. The caller then requests personal information in return for Obamacare enrollment cards.

All they have to do is give information over the phone,” said the Better Business Bureau's Tom Stevens.

Stephens said the caller will request things such as name, social security number and address in return for an enrollment card. Stephens said people need to be aware that currently, an enrollment process for Obamacare doesn’t even exist. He added even if it did exist, it would never be done by phone.

Frustrated over the recent scam, Pat Ferguson believes the crooks underestimate seniors' ability to spot a con before it's too late and hang up the phone.

“They think we’re stupid, not up-to-date, that we’re senile. That’s what they think,” said Ferguson. “But they’re wrong.”

For more information on this scam and similar scams, head to the Better Business Bureau website.

Exxon sued over Arkansas pipeline spill

Tue, 18 Jun 2013 01:51:04 GMT

The Arkansas Attorney General and the federal government are suing ExxonMobil, alleging improper waste storage and water contamination stemming from a March pipeline spill that sent thousands of barrels of heavy tar sands crude flooding into the small town of Mayflower.

In a lawsuit filed Thursday, the Arkansas AG alleges that Exxon stored oil and oil-contaminated clean-up material alongside a state highway without a permit, despite being told to remove the material on May 1. Civil penalties related to that case could total $25,000 per violation.

The AG and the federal Environmental Protection Agency are also seeking civil penalties against Exxon for violations of state and federal clean water and air laws. Violating the state environmental laws carries a penalty of up to $10,000 per violation per day.

"This spill disrupted lives and damaged our environment," Arkansas Attorney General Dustin McDaniel said in a written statement. "As the party responsible for this incident, Exxon is also responsible for the penalties imposed by the state for the damage to our environment and the company should foot the bill for the state's clean-up costs."

An Exxon spokesman said the company is aware of the filing, but has yet to review the allegations and has not been formally served with the complaint.

The spill occurred on March 29, when a underground pipeline carrying heavy crude from Canada's tar sends region ruptured in a residential neighborhood in Mayflower, a small town about 30 miles northwest of Little Rock. The spill sent oil rushing through streets and properties in the area. Although most of the homes were built around the pipeline after it was constructed, many residents said they had no idea the pipeline was buried in their neighborhood.

It's estimated that between 3,500 and 19,000 barrels of crude were spilled. On the high end, that's a bit more than the water in an Olympic-sized swimming pool. By comparison, the BP Deepwater Horizon spill sent an estimated 5 million barrels into the Gulf of Mexico. Criminal charges and billions of dollars in lawsuits resulted from that spill.

Exxon garnered press for its fast response and lavish spending immediately following the Mayflower accident, but it hasn't been enough to placate either residents or the state. Earlier this month a group of residents filed a suit seeking class-action status against Exxon asking for $5 million in damages.

That the pipeline was carrying heavy Canadian crude -- which some say is more toxic and harder to clean than traditional oil -- became fodder for opponents of the Keystone pipeline.

The Keystone expansion is a massive project running from Canada's oil sands region in Alberta to refineries along the Gulf Coast that has sparked much debate in the United States. The project is still awaiting final approval from the Obama administration.

Just thinking about money can corrupt you

Mon, 17 Jun 2013 20:29:06 GMT

Simply thinking about money can trigger people to lie, steal and make unethical decisions, new research shows.

People who have just seen images of money or phrases about money are more likely to do something unethical like steal paper from their office because they ran out of paper at home. They're more apt to hire a candidate who says he will share confidential insider information about his former company. And if it means winning money, they're more likely to lie to get it.

These results come from four studies conducted by researchers at Harvard University and University of Utah. There were 324 participants overall, and to get a group of the participants to subconsciously think about money, researchers showed them images of currency or asked them to unscramble words to form money-related phrases.

"Across all of these studies we found that participants who were merely exposed to the concept of money were more likely to demonstrate unethical intentions, decisions, and behavior than participants in a control condition," said Kristin Smith-Crowe, one of the study's authors and an associate professor at the University of Utah's David Eccles School of Business.

Why? Because the exposure to money puts participants in a business mind frame -- leading them to make business decisions based on monetary benefits and big payoffs instead of morals, the study found.

When it comes to real world implications, the findings indicate that everyday exposure to money may be influencing peoples' actions and decisions more than we think.

"These findings suggest that money is a more insidious corrupting factor than previously appreciated, as mere, subtle exposure to money can be a corrupting influence," the study concludes.

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