Probe into Afghan bank scandal plagued by political interference

Report: Probe into Afghan bank scandal plagued by political interference

By Pamela Constable,

Nov 28, 2012 10:10 PM EST

The Washington Post

KABUL—A scathing new report released Wednesday details how high-level political interference and institutional failures thwarted efforts to probe the 2010 collapse of Afghanistan’s largest bank, recover hundreds of millions of dollars from fraudulent loans and prosecute the influential Afghans who profited from a massive scheme to use depositors’ money as a private piggy bank.

Without naming names, an independent anti-corruption committee of Afghan and international experts painted a damning portrait of foot-dragging, incompetence and blatant political manipulation involving virtually every agency that was supposed to either investigate why the Kabul Bank failed or take legal action against those responsible for looting it of more than $900 million.

 

The report is sure to revive widespread public and international concerns about Afghanistan’s viability as a functional democracy, just as it begins to prepare for a transition to self-sufficiency with NATO forces leaving by 2014 and presidential elections scheduled for the same year.

“Kabul Bank was nothing but a fraud perpetrated against depositors, and ultimately all Afghans,” the report says. Both the flagrant crimes and the repeated failures to pursue them, it said, reflect an array of larger, worrisome problems that permeate Afghan society and institutions, including “incapacity, nepotism, entitlement and political interference.”

Two of the bank’s former top executives have been under arrest for many months, and 20 other individuals have been indicted recently in the scandal.Much has already been written about the shady practices of the former bankers, their lavish purchases and lifestyles, and their close relationships with influential Afghans, including aides and relatives of President Hamid Karzai.

Still, some of the details in the 87-page report are eye-opening as well as exotic. It describes how large quantities of bank cash were smuggled out of the country inside airline food-tray containers, how deposits were funneled to inside beneficiaries using fake bank identifier code messages and fake corporate stamps, how two sets of books were kept to keep regulators at bay, and how funds were used to pay for luxury hotel rooms, huge bonuses and other perks for bank officials.

But what is new, and especially alarming, are the highly critical descriptions of how Afghan government agencies and officials behaved long after the bank’s collapse in 2010 created a major public panic and shook international confidence in Afghanistan’s nascent postwar democratic and financial systems.

Over and over, the report says, supposedly independent bodies such as the attorney general’s office deferred to higher political wishes. Earlier this year, about 20 bank associates were indicted on charges including money laundering and using false documents or fictitious account names.

The report quotes sources as saying that a “high-level committee,” meaning a group of powerful officials, decided which former bank associates would be charged with a crime and that prosecutors were told to “construct indictments to conform to the decisions.”

Similarly, the report says, both a major government oversight panel and a special Supreme Court tribunal have taken little action in the case, while other agencies have spun their wheels investigating the whistle-blowers instead of the culprits. Always, there seemed to be an underlying fear of antagonizing or crossing powerful people, the report says.

“We found that many Afghan institutions were simply hesitant to exercise their independent mandate,” said Grant McLeod, a Canadian investigator in Kabul who was one of the lead writers of the report. “This is all about blatant political influence.”

The Karzai government has not responded publicly to the report, which does not name the president directly as having exerted pressure on the bank investigations and prosecutions. But the report is bound to cause further tensions between Karzai and his international partners, who pressed him for months to accept a forensic audit of the bank and allow criminal prosecutions to move ahead.

A spokesman for the attorney general’s office, Basir Azizi, was quoted as saying, “We strongly reject any comments that the attorney general’s office dealt with this case as a political issue.”

Still, the list of individuals who were linked to the bank or financially benefitted from its fraudulent practices is extremely high-level. According to the report, about $861 million in private loans or transfers went to 19 individuals and related companies, including the bank’s former chairman, Sherkhan Farnood; a brother of the president, Mahmoud Karzai; and a brother of the first vice president, former militia leader Mohammed Fahim.

The report was conducted to meet requirements by the International Monetary Fund to gauge progress in Afghanistan’s movement to clean up the bank scandal. Foreign aid, on which the impoverished nation is heavily dependent to run its government as well as help its people, could drop if the progress is found lacking.

Report Claims Kabul Bank Fraud Sent Almost $900 Million Abroad

Report Claims Kabul Bank Fraud Sent Almost $900 Million Abroad

             

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Kabul Bank failed in 2010.

                                 

November 28, 2012

              

An independent report on the Kabul Bank scandal says that institution was involved in a fraud that sent nearly $900 million outside Afghanistan.

A forensic audit financed by international donors offers details about how the money from fraudulent loans ended up in accounts in more than two dozen countries for the benefit of Kabul Bank managers, their friends, and relatives.

The bank's failure in 2010 and subsequent bailout represented more than 5 percent of Afghanistan's gross domestic product.

Drago Kos, the chairman the committee behind the report, spoke about the need for improvements in Afghanistan's financial system.

"What we want to achieve is to make the financial and all other important systems in this country better," he told reporters on November 28. "And last but not least, we would like to do away with nepotism, impunity, and political interference, with a view to help [sic] ensure the future of Afghanistan as a functional, transparent, and accountable democracy."

Three Afghans and three foreigners sat on the Independent Joint Anticorruption Monitoring and Evaluation Committee, which conducted the investigation.

Its report says the vast majority of Kabul Bank’s loans were made to just 19 people and companies.

Those who are reported to have benefited from dealings with the bank include President Hamid Karzai's brother Mahmud, who denies any wrongdoing.

The scandal has also implicated a brother of Vice President Mohammad Qasim Fahim.

Neither of the two men, who were shareholders in the bank, is facing charges.
'High-Level Political Interference'

The report points out that Kabul Bank has "reportedly provided millions of dollars to the campaign of at least one presidential candidate" against the central bank's advice.

The investigation did not name President Karzai, but the bank was said to have been a donor to his 2009 reelection campaign.

Kos blamed part of the problem on inherent flaws in the Afghan banking system.

"Some of the reasons are specifically related to the financial sector of Afghanistan: the weak banking governance, the low capacity of the national bank of Afghanistan, and the lack of coordination among regulatory bodies and law-enforcement agencies," he said.

A trial of some 22 suspects is being handled by a special tribunal set up by President Karzai.

Defendants include Kabul Bank founder and Chairman Sher Khan Farnoud and CEO Khalilullah Ferozi.

But the report alleges that there was high-level political interference in the investigation into the scandal -- an allegation the Attorney-General's Office rejects.

The report says that "information received during the inquiry indicates that the final decision about who to indict was made at the political level in the spring of 2011 by a high-ranking committee."

It adds that “the indictment did not include officials from accounting firms that created false documents for Kabul Bank, airline employees that smuggled money out of Afghanistan, or shareholders who received funds from loans at zero interest, apparently without the intention of repayment."

Speaking to the Reuters news agency at his office in the basement of a fortified house in Kabul, the special tribunal's chief judge, Shamsul Rahman Shams, said, "We are flexing our muscles with the big guys who could easily get rid of us, but we are committed to solve this case."

He acknowledged the investigation was “a dangerous task” but added that “we’re not scared.”

The government's handling of the case is being watched closely by Western countries and international institutions that have pledged billions of dollars in aid to Afghanistan.

With reporting by RFE/RL's Radio Free Afghanistan, AP, AFP, and Reuters

MP calls for cap on credit card debt

MP calls for cap on credit card debt

28/11/2012

Mounting credit card debt could be written off if a Credit Card Debt Limit Bill translates to legislation in parliament. Introduced to the Commons by Labour MP Yvonne Fovargue this week, the Bill was proposed in an attempt to stop credit card debt "spiralling upwards and out of control.” If realised, it will mean that credit card debt could be written off once borrowers have spent more than three times the original amount. Explaining how the new rules would work, Ms Fovargue, MP for Makerfield, told MPs: “My bill would place that cap at three times the original sum borrowed after which there would be no liability to pay. “It would effectively limit the amount by which creditors can increase the size of a debt by the addition of the interest and charges where people are struggling. “It's not about letting people off lightly or allowing them to default on their debts. Credit card companies will still get their profits. It's about giving people the guarantee that their debt will be paid off at some definite future date and it won't spiral upwards.” The Bill was given an unopposed first reading and listed for a second reading on 25 January but is unlikely to become law without further government support. The proposals come in spite of the fact that recent figures from the Consumer Credit Counselling Service (CCCS) revealed a fall in the number of borrowing seeking help over credit cards debts. Data from the charity showed that those seeking advice for debt problems related to credit cards reached just over 76,368 in the first half of 2012. This is down from 80,971 in the first half of 2011 and 85,315 in the first half of 2010. To get the best interest rates and rewards on your borrowing, you can compare credit cards with MoneyExpert.

8 Surprising Behaviors That May Hurt a Young Person’s Credit Score

By Wise Bread

November 19, 2012    

Sabah Karimi

Whether you have stellar credit right out of college or are prepared to put together a credit repair plan after years of credit card use, you need to make sure your post-college decisions won’t negatively impact your credit score. Some simple money moves can unintentionally hurt your credit score and make it that much harder to maintain a score that makes you attractive to future lenders, employers, and financial institutions.
Be wary of these lesser-known actions that can damage your credit score:
1. Opening a New Bank Account. If you’ve decided to switch financial institutions after school, make sure you’re prepared for a slight drop in your credit score. Many banks and even credit unions now check your credit report before granting you a checking account, and this will show up as a hard inquiry on your credit report. Weigh the pros and cons of switching banks or credit unions after college if the financial institution you are thinking of working with will perform a hard credit inquiry.
2. Ignoring Traffic Tickets. So you racked up some traffic tickets while you were in school and are now in a financial position to pay them. Your best course of action is to pay them off within a reasonable amount of time or you may find the incident shows up on your credit report. All traffic violations, including parking tickets and speeding tickets, can be reported to the credit bureaus when they hit a certain unpaid-status date. Take care of these as quickly as possible so the fines don’t even hit the collection agency.
3. Getting a New Cell Phone. A cell phone is a necessity for most, but did you know that signing up with a new cell phone provider could affect your credit score? Most cell phone providers require a credit check when signing on a new customer, so you will see a hard inquiry on your credit report. If you know you have a low score and are planning to apply for credit in the near future, hold off on signing that new cell phone agreement until you get approved for the credit line.
4. Missing Student Loan Payments. Student loans are often referred to as “good debt”—an investment in your future that will help you earn more money in the long run. But despite the positive label, missing a student loan payment is still bad for your credit score. A good way to avoid missing payments is to sign up for an automatic debit payment program with your loan provider. Not only will this save you time and stamps, but some loan providers may even lower your interest rate.
5. Canceling a Gym Membership. If you decide you can actually do without that gym membership but fail to follow the gym’s membership cancellation procedures, you could end up seeing a drop in your credit score. Most gyms list exactly what you need to do to cancel in their membership agreement, so be sure to read the fine print and follow their procedures. If you end up canceling before a certain date or stop payments from your automatic withdrawal setup, the gym could take action and report you to the credit bureau.
6. Closing Zero-Balance Credit Card Accounts. You’ve successfully paid off those larger credit balances you acquired during college and are ready to start the next chapter of your life with a clean slate. Having those open lines of credit can actually work in your favor when it comes to maintaining a good credit history, so don’t be tempted to close out those zero-balance credit card accounts. In fact, keeping those credit cards active by using them for small purchases and paying off the balance before the end of the month can even boost your credit score by a few points.
7. Applying for More Credit. Even if you have a squeaky-clean credit history, every credit card application you submit will show up as a hard inquiry on your credit report. Hard inquiries lower your score, so it’s generally a good idea to avoid applying for several credit cards or credit offers within the same month or span of a few weeks. Applying for multiple cards in a short period of time can also raise some red flags to a future lender, and may lead them to question why you seem desperate to obtain more credit.
8. Renting a Car. Not all rental car companies do this, but you may find that your rental car company runs a credit inquiry even when you use your debit card to secure the vehicle. Read the fine print of the terms and agreement paperwork carefully or just ask the rental specialist what the policy is for new customers. Remember that any type of hard inquiry—even if it’s not for more credit—will drop your credit score by a few points.
Sabah Karimi is a frequent contributor to Wise Bread (@WiseBread), a financial resource dedicated to helping young people save money. Check out Wise Bread for more useful tips like 15 ways to pay back student loans faster.

Don’t make this mistake with your credit card debt

Don’t make this mistake with your credit card debt

If you are someone who is struggling with your credit card debt, and finding if difficult to pay the monthly dues, you have probably heard of taking a settlement on your credit card.
Settlement of credit card debt is when you negotiate with the bank to waive off (write off) part of the outstanding due amount and you get to repay the remaining balance as a few part payments.

Taking a settlement on your credit card, is not the smartest thing you can do.
Agencies

For instance, if your credit card total outstanding amount is Rs 1 lakh and your bank and you agree upon a settlement amount of Rs 75, 000 in three part payments. Then you will simply pay Rs 75,000 and the credit card amount will be settled and no dues will be pending. Sounds like a good idea? Not really. To know more, read on.

Why not to: Taking a settlement on your credit card, is not the smartest thing you can do. Surely, the amount that you have to pay to the bank is decreased substantially, but taking a settlement goes against you. “Your credit report will show “settlement”. This will affect your credit report and score in a negative manner and it will be very very difficult for you to get any further loans,” said VK Kulkarni, Chief Counselor, Abhay Credit Counseling Agency.

Almost, all lenders do their due diligence before offering credit to customers these days. Anyone who has a settlement taken on his credit report approaches a bank for a loan, the banks raise a red flag. After all, banks are here to make a profit, and no one wants to do business with a bad borrower.

When not to take a settlement: If you are below 45 years of age, taking a settlement on your credit card debt is a big mistake. Reason being, there are good number of years ahead of you and you might need to take a loan in the future. Having a settlement mentioned on your credit report, will seriously put you in a position of disadvantage.

When can you take a settlement: “Only when you have no options left, should you consider taking a settlement on your card debt,” Kulkarni said. This means, borrow from family or friends, may be take a low interest rate personal loan or loan against an asset to pay off a credit card debt. Taking a settlement should be your last resort.

But for those who have taken a settlement already, there is a way out. If you have funds, you can pay back the remaining amount plus the interest. This way your account will be “paid in full” and help your remove the “taken settlement” scar from your credit report, in turn improving your credit score.

End Note: You could be struggling to pay your credit card debt due to a number of reasons: job loss, sickness in the family or sheer carelessness. Whatever the reason, if you are in a position which is forcing your to take a settlement, we recommend you get in touch with debt counseling agencies. Their services are free.

How To Make It Through The Holidays Credit Debt-Free

Mandi Woodruff|Nov. 28, 2012, 3:31 PM

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Saen Dreilinger

Now that the dust has settled from the Black Friday frenzy, it's not hard to see why consumer credit took a major leap in the fall.
A record 247 million people shopped in stores and online over the four-day weekend, with the average shopper spending $423 –– up from $398 last year, according to the National Retail Federation.

That news is a little frightening.

Ending the holidays steeped in debt is hardly worth the satisfaction of getting everyone in your family the hottest new holiday gadget.

“A lot of families watch their budget very closely throughout the year and spend far beyond their expectations during the holidays,” says Paul Golden of the National Endowment for Financial Education. “This short period of major spending can lead to long-term problems such as credit card debt, which can cause a burden for years to come. Don’t be afraid to say ‘no’ to gifts you cannot afford. The greatest gift you can give yourself is financial stability.”

Here are five tips NEFE offers to keep debt at bay during the holidays:

Stop at one gift. While shopping, you may come across items that seem like a great fit for someone on your list that you’ve already bought for. Resist the urge. Once you buy for someone, check him or her off your list. If the new gift is even better, be sure to return the previous gift you purchased for him or her.

Don't let guilt rule your spending. Don't be afraid to kick people off your gift list, and don't feel guilty if you have to skip a holiday party or two to stay on track. You'll save by such as wrapping gifts and sending holiday cards can add up too, so avoid expensive wrapping and consider sending a letter rather than store bought cards.

Shop wisely. Consider online shopping to get the best deals, but be sure to figure in shipping costs. Also look for good deals on auction websites. Check sale ads regularly and be selective in your shopping. Don’t wait until the last minute to do your shopping. Set a plan for your time and your spending.

Limit credit card usage. Dig around for extra cash where you can find it (check unused gift cards, cash in rewards points, or even consider doubling up on gifts with a family member or friend). Consider a layaway plan, but be sure you've read all of the fine print and don't agree to a plan riddled with hidden fees. If you are using credit, limit yourself to using one low-interest card and preset a limit that you will not exceed –– and be sure you have enough to pay it off. Keep the rest of your credit cards at home when you go shopping.

Be realistic. Don’t get too carried away with your spending this holiday season just because the economy is showing signs of life. It’s important to stay mindful of your goals and the long-term outlook, and your plan for managing your finances.

Read more: http://www.businessinsider.com/5-ways-to-make-it-through-the-holidays-debt-free-2012-11#ixzz2Di78mX4w

Get-Out-of-Debt Resolutions for 2013

By DR

November 28, 2012

Michal Cheney

Many cringe at the thought of a New Year’s resolution. After all, only about 8 percent of those who make a resolution actually achieve theirs. There are even online tools and apps to help stay on track with your resolution. If our troubled economy has taught us anything, it’s that the less debt you have, the better. Here are eight resolutions to help you climb out of debt in the new year:

1. Reduce Credit Card Debt. One of the best things you can do for your financial stability is to reduce your credit card debt. Your approach should be to pay off all new charges immediately, while working to pay down your existing balances. Paying down credit card debt is also one of the quickest ways to improve your score. Part of your credit score factors in your debt utilization ratio—the amount of debt you have compared to the amount of available credit you have. By reducing your debt, you will boost your credit score.

2. Track Your Spending. Knowing where your money is going is one of the first steps you need to take when examining your finances. You can use a website like Mint.com to track your spending, which will also help you set a realistic budget.

3. Create A Budget. Some people strongly dislike the “B” word, and it’s usually because they can’t stick to a budget. That’s why it’s important to create a realistic one that’s not too strict that you’ll feel the need to go on the occasional spending spree. A budget will help you identify where your money is being spent so that you can make better spending decisions.

4. Make Money On The Side. Whether you need extra money to pay off bills or you just want to add to your emergency fund, finding a side hustle could be your ticket. A side gig can be anything that makes you money outside your full-time job. Sometimes selling your possessions online can bank you money, or you can even pick up a seasonal part-time job. Earning more money helps you put more toward paying off your debt while still keeping up with your regular bills.

5. Set-Up An Emergency Fund. Having an emergency fund will keep you from going into debt. When unforeseen costs arise, you can use money from your emergency fund instead of accumulating more debt. The amount of the emergency fund is something you should determine for yourself. Dave Ramsey suggests everyone should have at least $1,000 set aside for emergencies, while others say you need a full six months of living expenses.

6. Have A Savings Account. A savings account might not give the best return on your money, but any solid financial plan rests on a foundation of liquid assets, such as cash. Your checking account can handle your everyday expenses, but there are good reasons to have extra money in a savings account, such as for unexpected expenses, taxes, and vacations. I use an online savings account to save for my taxes, because it’s money I can’t easily access on a whim. A great way to get started is by setting up a direct deposit from your paycheck or checking account into a savings account. It’s done automatically and you won’t miss the money.

7. Check Your Credit Report. By law, U.S. consumers get one free credit report each year from each of the three credit bureaus. I take full advantage of this by checking one report every four months, that way I’m always up-to-date on where I stand with my credit. This is also an important step you can take to prevent errors on your report or even fraud.

8. Avoid New Debt. Taking on more debt will just be adding more fuel to the fire. If you must borrow, be sure to get the lowest rate possible. You can even try lowering some of your old rates, like with your credit card companies. Give them a call and ask them to lower your rate—it’s worth a shot.

Michal Cheney is a frequent contributor to Go Banking Rates, Credit Card Offers IQ, and Dough Roller, where you can find the best online banks to manage your money.

How I cancelled £21,000 of Credit Card Debt

Wouldn’t you like to eliminate your credit card debt totally. I mean cancel it, terminate it, discharge it, eradicate it, and all legally!
If you’re heavily in DEBT to credit card companies, you need help.

Are you trapped in debt? Are you struggling to make just the monthly minimum repayments, scarcely making a dent in the amount you owe? Do you watch helplessly as your credit card supplier adds fees and penalties to increase a debt that you already fear you’ll never repay?

Read this book and discover the truth of the credit card industry including the deliberate targeting of vulnerable people, and the merciless, mercenary hard nose tactics designed to increase interest rates, penalty fees and late payment fees.

More radically, learn of a way to cancel credit card debt that’s totally lawful.

More states join Libor scandal investigations

Posted: 11/30/2012 12:01:00 AM MST
November 30, 2012 10:54 AM GMTUpdated: 11/30/2012 03:54:34 AM MST

By Jake Grovum
Stateline.orgdenverpost.com

Several U.S. states have joined the investigations swirling around the illegal manipulation of the bank-to-bank interest rate known as "Libor" — an international scandal that may have cost governments and consumers billions of dollars.
"Libor" is a shorthand term for the London Interbank Offered Rate, a key measure that sets the basis for interest rates on financial instruments around the world. The attorneys general in Connecticut and New York have led the charge thus far, working together since early this year.
Regulators in the U.S. and the United Kingdom have charged that some banks manipulated Libor as they reported borrowing costs, either overstating or understating the figures to depress or inflate the rate. Some contend the false reporting was an attempt to puff up a bank's standing — lower costs, for example, would signal lower risk.
Massachusetts, Florida and North Carolina have confirmed that they are formally investigating the matter. Maryland is contemplating a formal investigation, and several other states are quietly participating in the effort as well.

Read more: More states join Libor scandal investigations - The Denver Post http://www.denverpost.com/business/ci_22094393/more-states-join-libor-scandal-investigations#ixzz2Di4bn55L
Read The Denver Post's Terms of Use of its content: http://www.denverpost.com/termsofuse

How I Got in (and Out) of $5,000 Credit Card Debt

How I Got in (and Out) of $5,000 Credit Card Debt

Posted: 11/28/2012 9:47 am

When I saw the Citibank credit card offer, designed specifically for students, I hesitated to throw it away. In the past, whenever I had received credit card offers in the mail, I didn't hesitate to tear them up and not think twice. Now the opportunity crept in my mind and made a nest. Considering I was preparing for a move I couldn't afford, the offer was perfect timing.

Because my financial aid refund wasn't coming for another month and no one could loan me the money, I figured the credit card could pay for what I couldn't, plus any other expenses along the way until I received the refund.

I told myself I would only use it for moving-related expenses. The fact that I would have a limit -- maybe $1,000 -- was comforting. I couldn't get into too much trouble if they put a cap on how much I could spend, right?

While filling out the online application, I hit a roadblock when it asked for my monthly income. My less than part time job would never convince the credit card company that I could handle a credit card. Panicking and still determined to find a way to be approved, I looked to Google. I typed, "Is financial aid considered income on a credit card application?" into the search bar. The question had been asked before, as there were numerous discussion forums with varying answers, one recommending applicants check the credit card company's terms and conditions. When I did that and saw nothing about listing financial aid as income, I went ahead with it and was approved in less than an hour for a $4,000 limit.

A University of Houston Law Center survey found that a lot of students "who sign up for cards used student loan proceeds as part of the income they reported." Some might say I should've known better and that Citi doesn't have to include financial aid in the fine print, others would say it's irresponsible and unfair for Citi to accept financial aid as income. So who is to be held accountable: the credit card companies or the students filling out the application?

It's not listed in Citi's credit card application, but financial aid does not technically count as a source of income. According to numerous studies, my situation is not uncommon among college students. Some credit card applications don't require a cosigner and the terms and conditions are very vague. If the student doesn't make a point to call up the company, a lot of questions are left open to interpretation. Perhaps if students weren't approved so easily, the level of student debt would decrease.

That's exactly what happened to me. Every time I missed a payment, a late fee of $50 was applied to my account. Because I could only afford a minimum monthly payment of $50, I was basically only paying back the interest incurred. It racked up dangerously fast and I lost sleep wondering how I could get out of debt.

After about a year, when my balance was nearing $5,000, I was receiving offers to settle for about half the balance and my account was turned over to a collections agency. The multiple daily phone calls asking me to make a payment were not only stressful, but frustrating and headache-inducing. The payments I could make were only the minimum balance and usually late, which only resulted in more calls which, eventually, I ended up blocking. When I got my financial aid refund last term, it was enough so that I could finally accept the settlement. I negotiated with the company to pay less than half of what I owed and my account was taken care of.

The settlement will be reported to the credit bureaus, but notes like that only last a short amount of time compared to debt consolidation. When I look at the alternative of being in debt for the next five years, I'm happier with the settlement, whatever the repercussions may be.

The problem with student credit cards is that a lot of credit companies assume students are able to pay it back. They are counting on us not having any financial planning knowledge, and we don't. I remember taking one personal finance class in high school, but it didn't cover anything about credit cards, which poses another question: what are students learning in school about how to build credit in a healthy and manageable way? And where do parents come in?

It's disappointing that there doesn't seem to be a trusted, safe way to earn a little good credit. If we're failing to be financially responsible now, while we're still in college, what does that say about our futures, when only more "big" decisions are to come?

Barclays Sacked Five Staff Over Libor Manipulation Scandal

by The Guardian

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Barclays has admitted it "terminated" the employment of five people involved in the Libor scandal and conceded it is reviewing as many as 80 other financial instruments where it helps to set the price.

 

Rich Ricci, the head of Barclays investment bank, revealed 13 staff had been disciplined in total – and said others who might have been subjected to the disciplinary process had already left by the time the Libor manipulation scandal broke, leading to the departure of chief executive Bob Diamond.

Ricci told a sub-panel of the banking standards commission that some of those who had been dismissed were appealing.Barclays declined to elaborate on the remarks by Ricci, who gave a strong indication that the investment bank – formerly known as Barclays Capital – was likely to withdraw from its controversial tax advisory business and some areas of commodities trading because of the damage being caused to its already battered reputation.

The government has begun a month-long consultation on changes to the law to make manipulating Libor a criminal offence.

The banking standards commission will take evidence from former bosses of HBOS – Sir James Crosby and Andy Hornby – next week, along with former chairman Lord Stevenson as it concludes its sub-panel review into the near collapse of the bank.

Andrew Tyrie, the Conservative MP who chairs the committee, said: "Two of these men [Hornby and Stevenson] were on the bridge when HBOS failed, when public money was needed to rescue it and when trust in our banking system – both within the industry and amongst the public – collapsed almost completely."

Ricci said the number of financial instruments where Barclays was involved in setting prices was "in the 80s". The bank is looking at areas across the firm where it was technically possible to have an opportunity to change prices and that these operations were under "heightened supervision".

He helped build up the investment bank over the past decade with Diamond and Jerry del Missier, who also left in the wake of the Libor scandal. He has almost completed a review, dubbed Project Mango, of the businesses he runs to assess the potential reputational hit they cause the bank even if they are profitable. The test, he said, was "if you read about the activity in a newspaper, would you be proud?" He indicated that bonuses were likely to take account of reputation, saying the bank was working "on a balanced score card around appraisals … to get all those interests properly aligned".

New chief executive Antony Jenkins, who used to run the retail bank, last week summoned the top 125 executives to a two-day meeting to discuss the culture of the bank. Ricci revealed that incidents at Barings, which collapsed under trading by Nick Leeson, had been discussed as well as events at Kodak, which was left behind in the move to digital cameras. Zoos were also part of the discussion, specifically "how they have been able to change by looking at ecosystems rather than just zoology animal things".

A heated exchange with Mike Walters, head of the bank's compliance department, sparked MP Mark Garnier to argue that banks should be broken up.

"I was in charge of compliance. I wasn't in charge of culture, that is the responsibility of everyone at Barclays," said Walters.

This article was written by Jill Treanor, for The Guardian on Wednesday 28th November 2012 18.48 Europe/London

Don't Get Stuck With Debt that Isn't Yours

by Roman Shteyn

Published November 29, 2012

FOXBusiness

Relatives, friends and even business partners might think that they inherited credit card debt after someone close to them has died. Even worse, they could be misled by bill collectors into believing that they need to pay off that debt, even though they may not be legally responsible for it.
When a credit cardholder passes away with an outstanding balance, relatives and others can be drawn into the collection proceedings—but not always.
Understanding some basic financial and legal realties associated with credit card debt can prevent you from being saddled with the deceased’s debt load when collectors start calling. It’s important for you to understand what-if any-debt you might be held responsible for especially because some unscrupulous lenders may try to get their money back no matter the cost.
Joint Account Holders can be Held Liable
If you have co-signed for the credit card in collection, then you can be held responsible for unpaid balances. Non-working spouses often have co-signed accounts along with parents on behalf of their children. Increasingly, adult children are setting up joint accounts for their aging parents as a convenient way to oversee their activities. And business partners might use this arrangement as an accounting procedure. Here’s the bottom line: If you have a joint account with someone, then you are responsible for that debt if they pass away.
An authorized user of a credit card does not constitute joint ownership. A student may be authorized to use a parent’s card, for example, but the primary cardholder is not liable for the debt accrued by an authorized user if that person dies.
How Divorce Plays a Role
Divorce can shake up these credit card rules. For example, as part of the settlement one party might agree to pay the credit card debt for the other party. This agreement holds up even if the debtor dies before the debt is paid.
States that have community property laws, a spouse could be responsible for his or her partner’s debt even if the account was not a joint one. And if one party receives community property as part of a divorce settlement, credit card companies could go after those assets to square away the debt left by the former spouse.
Don’t Become a Victim
Unfortunately, a death can make someone easy prey for the bill collection industry. The front lines of the industry might contend that there is a moral obligation to pay the debt, but there are legal guidelines that consumers need to arm themselves with.
Some financial institutions are outsourcing collection to companies with special expertise in debt collection of deceased debtors. Although the Federal Trade Commission issued new guidelines in July 2011 to protect survivors, it is not against the law to contact them by phone and letter immediately after a death.
Given the law regarding joint credit card accounts, spouses, parents and adult children might rethink co-signing. Also, those who are married or who plan to marry in community property states should consult with an attorney about assets and liabilities. When there is a death involving debt of any kind, the first stop should be the law library or the reference desk at the public library to review the law in that state. But the good news is if there is no joint account, it is likely the financial institution issuing the card that will have to absorb the loss.
Roman Shteyn is co-founder of Credit-Land.com. He writes frequently on credit-related issues.

Read more: http://www.foxbusiness.com/personal-finance/2012/11/29/dont-get-stuck-with-debt-that-isnt-yours/#ixzz2Di2qajzk

Nashville reflects Great Recession birth dip

Nashville reflects Great Recession birth dip

By Harriet Wallace

Updated 2:38PM

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Child Financial Planning Tips

• Reshuffle your budget: Account for baby items in your budget and adjust regular expenditures.
• Create a special savings account: This will help with emergency expenses or even diapers, clothes, etc.


• Plan ahead for college expenses


• Manage your debt: Begin to cut back on credit card debt and other debts.


• Take advantage of the Child Care Tax Credit. Ask your payroll manager for instructions on how to add an extra allowance for your child on your W-4 form.

The national birth rate apparently took a dip during the Great Recession, right alongside the nation’s financial stability.

While there may be any number of explanations why fewer babies are being born in the United States, job loss, reduced income and other economic factors are bound to play a role when deciding when, or if, to have a baby, experts say.

The Centers for Disease Control reports the U.S. birth rate has hit an all-time low at 63.2 births per 1,000 women ages 15-44. The birth rate in 2010 was 64.1, down from 69.3 in 2007.

In the Nashville area, the Women’s and Children’s Hospital at Centennial has seen a drop-off, with 3,286 babies born in 2007 and 2,488 through the end of October 2012.

Baptist Hospital’s births have remained basically flat during the recession years, with 6,601 in 2008, 6,723 in 2011 and 5,004 through the end of October.

Another Child in Day Care?

Nashville marriage and family therapist Jo-An M. Fox says she believes insecurity over jobs and income go hand-in-hand with waiting or delaying having a child, although she says she has yet to see any recent study that connects the two issues.

“My couples say a lot, ‘I’d like to get another job, but I’m afraid I won’t find anything because the jobs are bad. We have one child now, but she just started kindergarten, and I don’t know if we could afford another child in daycare right now with what we’re earning,’” Fox says.

Fox, who began her Nashville practice in 2004, says most of her clients have been struggling financially during the past four or five years. Many cite child care expense, piled on top of day-to-day bills, as a reason to hold off adding to or starting a family.

The U.S. Department of Agriculture reports it costs an estimated $235,000 to raise a child from birth to age 17, including the cost of day care.

“I definitely see the strain of the economy,” Fox says. “It hampers (a couple’s choices). Mom now has to stay at home after having more kids because of the cost of day care.”

The Family Solution

The cost of day care is not a problem for Kizzy and Van Reid, who rely on their families to watch the kids, including a 2-year old daughter and twin 8-month-old boys. By depending on both large families, the Reids are saving at least $1,200 a month for day care.

“I know them, I know they’re not going to be hurt. I know they will give them their medicine when due,” Kizzy Reid says.

“Some things you have to cut out. I can’t get my hair done like I used to. You just have to balance things and do what you’ve got to do. I’ve got a car coming, and we have the kids. We have to do things,” she adds, referring to couponing, cost-cutting and coping with a shrinking budget.

Skip the Expensive Wedding, Maybe?

Watching costs and sticking to a budget is the way to go when planning a family, says Marcus T. Henderson, Sr., a financial planner and president and CEO of Henderson Financial Group, Inc.

Despite financial strains, he says, all couples need to take a look at finances and plan from the beginning on how to pay for the expansion of the family.

“My father used to say, ‘Be careful. You can have enough children to put you in the poor house.’ We’re starting to see the effect of that. We’re starting to see families that are looking at that. They are feeling the economic impact,” Henderson says.

Henderson says he has counseled several couples needing help to financially plan for children, and says planning for your child begins before you’re married.

“Start to think about everything from the beginning, including your wedding. Do you still want to have a wedding that costs $20,000, or should we do a $10,000 wedding and use the other $10,000 to buy a home?” Henderson says.

Kizzy Reid, who recently took a financial planning class and oversees her family’s finances, also has advice for couples preparing for children.

“Keep God first. That’s No. 1. No. 2 is, you really have to go with the flow of things.

“If you smoke or drink alcohol or do a bunch of shopping and you have more going out than coming in, it doesn’t take a rocket science to say we need to redirect this. If your lights are getting cut off and you have to keep paying a reconnect fee, you just have to use common sense and redirect the money. Nothing is getting cheaper,” she says.

Success starts with socking cash away when you're young

Financial Literacy Month ends with a review of the ABCs of personal finance

By Ray Turchansky, Postmedia NewsNovember 30, 2012 2:05 AM

 

Wealthy Barber Returns author David Chilton says his most important financial advice is to pay yourself first and start saving at a young age.

Photograph by: Glenn Baglo, PNG Files , Postmedia News

 

As Financial Literacy Month ends, individuals are reminded to review their basic personal finance issues.
People are advised to start paying themselves first, namely putting aside 10 per cent of money they receive, and earmarking various amounts toward other goals: perhaps something fun like a smart-phone, something longer term like a special trip, and a charitable cause.
"Beyond pay yourself first, I still say 'start young' is the most important personal finance advice, by far," said David Chilton, who wrote The Wealthy Barber Returns last year.
"It's getting young kids to save, whether they're in their 20s or 30s, and to live within their means. Living within their means is what financial planning is all about; it's still what we struggle most with."
The magic of compounding, or Rule of 72, shows that dividing 72 by your annual rate of investment return determines how many years it takes to double your money. The younger you start, the more time you have for your money to double, quadruple and so on.
For example, Mary invests $2,000 a year from age 25 to 30, a total investment of $12,000. Walt invests $2,000 a year from age 30 to 65, total investment of $72,000. If they both get annual stock market returns of 12 per cent, each winds up with about $1 million at age 65.
Money put into an in-trust account for a youngster is controlled by the contributor, usually a parent or grandparent, until the child turns 18. Capital gains are attributed to the child.
Registered Education Savings Plans attract a Canada Education Savings Grant of 20 per cent, to a maximum of $500 on $2,500 contributed for each child annually. Money taken out by a youngster attending post-secondary school, or a sibling in the case of a family plan, is partly taxable in the hands of the student.
A Tax-Free Savings Account can be opened as early as age 19, and while contributions are not tax deductible, withdrawals are tax free. The annual contribution limit has just been increased to $5,500 for 2013. But a TFSA shouldn't be used like a bank account, because if money is withdrawn one year, the contribution room isn't recovered until the following year.
As fewer companies offer employees a defined-benefit pension, and with 93 per cent of pensions in Canada being underfunded at the end of 2011, Registered Retirement Savings Plans have become crucial for retirement. RRSPs allow people to get a tax deduction on contributions while in a higher tax bracket, then make withdrawals while in a lower tax bracket, usually in retirement.
You often want to withdraw TFSA money while in a high tax bracket and RRSP money while in a low tax bracket.
Most people are best off holding bonds, T-bills and money market funds that pay interest in TFSAs or RRSPs, while keeping stocks and funds that pay capital gains or dividends in non-registered investment accounts.
Note that fees can quickly erode your profits and even the principal invested. Commission-based financial advisers profit from sales of products like mutual funds, which charge annual management fees of about 2.5 per cent on Canadian equity funds and 1.0 on bond funds. Fee-based advisers charge about 1.0 per cent of your portfolio value, depending on size. Fee-only advisers charge by the hour or by the service provided.

On the expense side of your personal balance sheet, there is good debt borrowed for appreciating assets, often investments or a house, and bad debt borrowed for depreciating items, like a vehicle.
Canadian household debt is at 163 per cent of family net income. Lines of credit and auto loans are on the rise, while mortgage and credit-card debt are falling slightly. The average British Columbian has $38,837 in non-mortgage debt.
Lines of credit, mortgages and car loans can cost three to seven per cent a year. Credit cards can charge 10 to 14 per cent interest for a standard card, 18 to 20 per cent for a gold card, and as much as 29.9 per cent for a department store card.
Paying your entire monthly balance by the due date gives you a three-to seven-week revolving interest-free loan each month. But Canadians have average outstanding credit card debt of $3,539, which at 14 per cent interest would take 14.3 years to pay off by making minimum monthly payments.
Consider a mortgage of $240,000 charging 5.75 per cent annual interest. If you paid it off in 25 years, at $1,509.86 per month, it would cost you $212,956.61 in interest alone. However, if you paid it off in just 10 years, at $2,634.46 a month, it would cost you $76,235.35 in interest.

© Copyright (c) The Vancouver Sun

Read more: http://www.vancouversun.com/business/Success+starts+with+socking+cash+away+when+young/7632365/story.html#ixzz2Di1mB2tN

Festive season debt warning

Festive season debt warning

• Published: 30/11/2012 at 12:00 AM
• Newspaper section: News

 

A Malaysian government minister has expressed alarm over the high number of university graduates being declared bankrupt after losing control of their "excessive" credit card spending in the early stages of their working lives. He is not alone. Similar concerns were echoed this week by Thailand's foremost think-tank which warned the spending behaviour of many low-and middle-income earners has become a source of worry because of increasing credit card debt and the growing number of defaults and non-performing loans.

In its latest Social Outlook report, the National Economic and Social Development Board (NESDB) says non-performing personal loans exceeded 56.5 billion baht in the third quarter of this year, making up 21.4% of the outstanding non-performing loans of all financial institutions. It is little surprise that much of this additional drain on household finances came from eagerness to take advantage of the government's popular "first car" and "first home" schemes as well as the desire to splurge on everything from new motorcycles and flashy TVs to smartphones.

NESDB deputy secretary-general Suwannee Khamman said the number of personal loans taken out to buy vehicles jumped by 33.6% from July to September over the same period last year. Loans for new homes increased 10.3% and for other products and services by 30.3%. She quoted Bank of Thailand figures showing outstanding personal consumption loans stood at 2.74 trillion baht, up 20.4% year-on-year and also consecutively higher than those in the first and second quarters of this year.

With the temptations of the festive season fast approaching, these figures are a timely reminder for consumers to spend within their means and have fun doing so. We all know that debt is a fact of life and therefore inescapable. The danger is when it gets out of control and greed takes over. If the debtor has influence, then corruption or fraud are rarely far behind. Some people even tend to gloss over the fact that loans do have to be repaid, usually with hefty interest and penalty clauses.

Sadly it has become apparent that a small but growing number of citizens are resorting to spendthrift lifestyles financed by credit card abuse and personal loan excess. Often this is to keep up with their peers and they are influenced by the celebrity lifestyles they see portrayed on TV or on the internet.

Inevitably this craving for instant gratification and unwillingness to adopt unfashionable, frugal lifestyles and save money for emergencies has brought unwelcome consequences. These include an increase in suicide and self-harm among stressed-out teens and adults who have found out the hard way that nothing in life is free. Dealers say repossession of motorcycles and cars is becoming more frequent. Mental health issues, especially depression, are on the rise as people worry about the rising cost of living, natural disasters, political conflicts, job security and unpaid bills.

There are few scarier plights in today's money-obsessed world than to be blacklisted as a credit risk or be in debt to a vicious loan shark. The desire to keep up with the latest shiny tech toys, dress fashionably, have a beautiful house and car and take overseas holidays is human nature. There is nothing wrong with it unless someone is impatient enough to manipulate credit sources to try and get everything all at once, as has happened in the West. That is the quickest way to turn an innocent dream into a waking nightmare and spend years dodging creditors and lawsuits.