Showing posts from April, 2012

Student Loan Bill

Congress is getting the idea....maybe. The Wall Street Journal’s article “Trying to Shed Student Debt” inspired this blog.The article states that Senator Dick Durban is proposing a bill that would allow forgiveness of "private" student loans in bankruptcy so that private lenders will become more cautious about making student loans. Federal student loans would not be forgiven. I have two problems with this legislation: 1) it is an uneven playing field. Why should private lenders have different standards than government lenders? 2: this is treating the symptoms, not the cause. The causes, as I see them, are many and complicated but the top three are the high cost of education, lack of financial literacy, and lack of personal responsibility. 1. The high cost of education. Reduced government support and increased college cost, along with a recession has left college more expensive and students with less in savings. We also need to ask if a college education is a benefit only to th…

High Cost of STD (STudent Debt)

Can you believe that both agree!?! Yes, it might be really cold and someplace is freezing over, but President Barack Obama and Mitt Romney both agree that student loan interest rates should not be increased.This would keep current interest rates at 3.4%, not raising them to 6.8% on July 1st.By not increasing the rate on student loan interest rates, the government is stating that it will “cost” $5.9 billion.
Woo, wait just a minute-- did anyone question that figure?Being an old banker, we tried to have a 3%-4% spread on money; the cost of deposits verses the cost of loans to make money.The government can borrow money (cost of deposits) at almost zero percent, yet they are charging 3.4%.Even the ten-year treasury is at 2%. Not a bad positive spread.I also just financed a new car for 60 months at 1.9% at my local credit union.Why is the government charging so much on student loan interest and want to raise it even higher? I know, the “cost” of $5.9 billion is really forgone profit if rates…

IRS Blues

Yes, we had two extra days this year before your tax bill was due. Even with two extra days, it is still painful. Make sure it is postmarked by April 17 at midnight. Need a playlist to help numb off the sting? If you are working late on your taxes, here is some music to keep you motivated: -Taxman by the Beatles
-Money by Pink Floyd
-It’s Money that I Love by Randy Newman
-Take the Money and Run by the Steve Miller Band
-Tax Free by Jimi Hendrix
-Who Will Buy My Memories by Willie Nelson
-Taxman, Mr. Thief by Cheap Trick
-I Want to be a Billionaire by the cast of Glee
-Mo Money Mo Problems by the Notorious B.i.G. ft. Mase & Puff Daddy
-Sweetest Girl by Wycliff Jean
-If I had a Million Dollars by Bear Naked Ladies
-Take this Job and Shove It by David Allen Coe

Check Out "Fortune 500" of 1812

Check out my blog (with Dick Sylla) on America's "Fortune 500" list ... for 1812 which just appeared on Bloomberg: Echoes.

And my blog about William Duer and Bagehot's Rule, also on Bloomberg.

And, finally, my Washington Examiner piece on Reprivatizing Healthcare.

Filing Bankruptcy While Averaging $115,881 per Month?

Yes, this is what Warren Sapp, former NFL player and Dancing with the Stars contestant did on March 30, 2012.Mr. Sapp filed for Chapter 7 in South Florida stating that he owes more than $6.7 million to creditors and back-child support and alimony.His reported assets are $6.45 million.What does this mean and how did it happen?
It happens because Mr. Sapp was spending more than he could afford, even more than his income of $115,000 a month.Bankruptcy happened because of poor financial decisions, poor financial planning and thinking of the short-term, immediate gratification--not the long-term gain.It happened because he was living life beyond his means.
Chapter 7 bankruptcy is also known as “straight” bankruptcy or liquidation and allows an individual to keep certain exempt property.Assets are sold by a bankruptcy trustee to repay creditors and many unsecured debts are discharged.Florida does not allow the bankruptcy courts to sell your home because the equity is protected by the Florida …