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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 benef...

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 1 st .    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 k...

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 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 .

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. C hapter 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...

By Robert E. Wright for Augustana College’s chapter of Phi Alpha Theta, 28 March 2012. Strangely enough, I became an historian of the Early Republic in order to better understand current public policy debates. Politicians and pundits have long been pretty good at putting words into the mouth’s of the Founding Fathers. I don’t think that all our policy decisions need to be based on the thought of the Founders but when they are, they should be based on plausible historical interpretations. After having studied the thoughts and deeds of numerous Founders for almost two decades now, I’ve concluded that sometimes the words that policy wonks put into the Founders’ mouths ring true. But too often they are a load of specious bull puckey. One particularly laughable claim is that the Founders believed that roads should be forever free. Some Founders favored local government roads but realized that even those had to be paid for, with labor and materials if not cash. Other Founders -- including Ge...

In Philadelphia, Baltimore, and their respective suburbs, some homeowners still pay "ground rents." The term, which dates from the eighteenth century, is a misnomer as the payments represent interest on renewable 99-year or perpetual mortgages. Although the creation of new ground rents fell out of favor before World War II, ground rents and other types of long-term, interest-only mortgages have much to recommend them and are widely credited with making Philadelphia the "city of homes" and Baltimore the "city of home owners." In the eighteenth and nineteenth centuries, lenders found in ground rents a secure, readily salable (liquid) long-term asset that generally yielded between five and six percent. Defaults were rare because loan to value ratios (LTV) were conservative, typically in the neighborhood of 50 percent, and the interest due any given quarter or year was negligible compared to the value of the real estate, providing borrowers with strong incenti...