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Even as the Obama administration is unveiling plans to impose unprecedented pay caps on top officials at the seven U.S. companies receiving the largest federal bailouts, the U.S. Supreme Court is preparing to hear a case that turns on whether to apply analogous pay caps on certain financial advisers.
Representative Ron Paul, Republican from Texas and long-time favorite of the Internets, introduced a bill earlier this year called the Federal Reserve Transparency Act of 2009 (H.R. 1207). HR 1207, which now has 303 co-sponsors and last saw action in committee hearings on September 25th, would call for a full audit of the Federal Reserve by the Government Accountability Office before the end of 2010. The audit would be reviewed
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by Congress.
I think accountability is fundamental and I agree with many that the secrecy of the Fed, protected by the U.S. Code under 31 USC 714 – Sec. 714, is not in keeping with the transparency and openness we should require of our public officials (I understand the Fed technically only quasi-public, but for all intents and purposes it’s public in my mind). I understand it when we need to keep things hidden for purposes of national security but I don’t think this extends to national financial security.

Under normal circumstances, I don’t see it necessary for the Fed to disclose the contents of their FOMC meetings. This creates a problem for the attendees because if they are 100% forthcoming in their meetings, it could come back to haunt them. This might make the “official” meeting a joke and push true discussion behind closed doors.
However, during this economic crisis, the Fed has given trillions of dollars in loan guarantees and hasn’t disclosed what they got in return. This is a problem because it’s those trillions belong to you, me, and our children (and our children’s children!). As the dollar hits historic lows versus other currencies and faces the real threat of losing reserve status, the money we’ve earned is worth less and less because of these actions.
I don’t want to increase the bureaucracy in Washington but I think transparency, in this particular case, is crucial.
The Senate version of this bill is S. 604, cheerily named the Federal Reserve Sunshine Act of 2009, has 30 sponsors and was last referred to the Committee on Banking, Housing, and Urban Affairs back in March (this means it’s most likely dead in that form).
What do you think about this bill? Should the Fed be more transparent (at least to Congress)? Or are we wasting time and scrutinizing too much?
(Photo: epicharmus)
Federal Reserve Transparency Act of 2009 (HR 1207) from personal finance blog

Question: I'm 30 years old and have savings of about $50,000. I've never invested in stocks or mutual funds, but I would like to start. Can you recommend some resources that can help educate me about investments and give me a better understanding of how they work? --Suresh T., Jacksonville, Florida
If you’ve been watching any TV, visiting any financially focused website, or have opened a financial magazine or newspaper, you’ve probably seen a Chase ad and information about their “Blueprint” program. They’ve done a huge media push over a program that, while a little innovative, only helps people who are carrying a balance. With the average credit card debt, it’s refreshing to see a credit card company offer up tools to help people pay down debt.
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I think there are two reasons they’ve pushed these features out. First, it’s great PR to have a credit card company offer features that help people pay down debt. Second, it’s great business to have a credit card company offer features that help people pay down debt because it means they are less likely to default on it! I read the August 2009 Nilson Report, a credit card industry trade magazine, and it listed Chase has having the most outstanding debt at nearly $166 billion. A good customer is a paying customer, not a bankrupt one.
The Blueprint program has four components: Full Pay, Split It, Finish It, and Track It.

Full Pay
When you don’t carry a balance, you get a grace period until the statement payment due date before interest begins accruing. When you carry a balance, you lose the benefit of the grace period. Once you make a purchase, interest begins accruing immediately. The Full Pay system lets you choose from fourteen “every purchases” categories that will be interest free as long as you pay them off in full each month.
For example, let’s say you have a $1,000 credit card balance that you’ve been paying down each month. Normally, if you bring your clothes to the dry cleaners and charge it to your card, interest accrues on that purchase. With Full Pay, you can select “Laundry/dry cleaning” as one of your Full Pay categories and that purchase amount will be added to your “BLUEPRINT payment.” As long as you make that BLUEPRINT payment, you don’t accrue interest on that purchase.
If you don’t make that BLUEPRINT payment but are still current, making your minimum payments, you’re OK as long as you don’t miss the Full Pay payment three out of any six month period.
The Full Pay Categories are:

  1. Department Stores and Catalog

  2. Dining

  3. Drugstore

  4. Entertainment

  5. Gas and Convenience Stores

  6. Grocery Stores

  7. Health clubs and Membership

  8. Laundry and Dry Cleaning

  9. Office and School Supplies

  10. Salon and Beauty Supplies

  11. Transit

  12. Utilities

  13. Wholesale Clubs and Discount Stores

  14. All blink Purchases

Split It
Split It let’s you take one large purchase and “split it” across several months of payments. They have calculators that help set your monthly payment amount based on how many months you want to take to pay it off. You don’t get any interest benefit from using Split It, they just do the math for you, calculating how much interest accrues and ensuring you pay it off within the specified time period.
While a nice feature, I don’t think you should be making large purchases on your credit card if you can avoid it. If you’re talking furniture, electronics, home improvement, or some other large purchase, you can usually find favorable financing options or go the old fashioned route – save until you can afford it.
That being said, having this feature is better than the options other credit card companies give you – which is nothing.
Finish It
Finish It is a lot like Split It except instead of looking at one large purchase, it looks at your entire balance. You tell the tool how much you want to pay or how quickly you want to pay down your balance and it does the calculations for you. Again, no interest benefit for setting up this program.
Track It
Track It will automatically categorize your purchases and let’s you set a budget for each category. It’s a bit like a light version of personal finance tools like Mint and Quicken (which I suppose are now going to be the same thing), but only for your Chase card. A nice little feature but I feel like this is like the toothpick on a Swiss army knife. Yeah it’s nice that it’s there, but how often do you pull out the knife to use the toothpick?
Overall, I think it’s great that Chase is offering up these tools to help people better manage their debt. I think that one of the best things you can do for yourself when you’re trying to achieve a goal, in this case paying down debt, is to establish a plan. Chase is offering just that.
What Cards Offer Blueprint?
Right now, the Chase Platinum, Chase Freedom, Chase Sapphire, and Slate from Chase all offer the Blueprint system. Right now, my vote would probably be to the Chase Slate card or the Chase Freedom.
Chase Slate currently offers 0% introductory APR and no annual fee. Chase Freedom sports a $50 cash back promotional offer after your 1st purchase plus 3% cash back on rotating categories, 1% on everything else with no limits. Also, no annual fee and the potential for an 0% introductory APR.
Chase Blueprint Payment Program Review from personal finance blog

A key House committee on Thursday approved the most high-profile part of the White House plan to prevent future financial collapse: The creation of a new agency to regulate consumer financial products.
The credit card reform bill tries to help cash-strapped customers, but companies are just coming up with new ways to boost profits.
We put our emergency fund into a CD ladder and every month one of those certificates of deposit matures and is automatically renewed. As an added bonus, ING Direct, where our CDs live, gives us a CD rollover bonus whenever we renew (currently the bonus is 0.15% on CDs of at least 12-months long). For us, the decision is simple. It’s a CD ladder and you simply renew the CD each month for the 12 month term.
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What if you’re money isn’t in a CD because it’s part of a CD ladder, what should you do?

My goal is always to maximize the interest rate while minimizing my headache. Our CD ladder isn’t at ING Direct because they offered the best 12 month CD rates (though they currently do, especially after you factor in the rollover bonus or the new money bonus), it’s because it was the simplest online savings account available when we set up the ladder.
1. Decide whether you want to save this money in a CD. If you intend to buy a house or a car and need the cash for a downpayment, don’t put it back into a CD. If you really want to put it back into a CD, consider a no-penalty CD where you can withdraw your money at anytime.
If you still want to save it, you have two options:

  • Renew the CD at your current bank

  • Open a new CD at another bank

2. Review interest rates to see if your current bank is offering competitive rates. If your bank still offers the best rates, then then simplest way is the best way – renew it at your current bank. If your bank doesn’t offer the best rate, you have to decide whether opening a new account and transferring the money, which will take several days, is worth the different in interest.
You can use this CD interest calculator to help you decide. 0.5% APY difference on a 12 month CD is only $5 on $1,000 in savings. That’s $5 before you take away part of it for taxes.
Those are the steps I take whenever I’m deciding what to do with one of my non-laddered emergency fund CDs mature.
What To Do When Your CD Matures from personal finance blog

Jason and Patty Simkins, both 40, have saved next to nothing for retirement in the past year. They were rattled by the rocky market, which caused the value of their portfolio to tumble 40% at its low point.
There are two mistakes that most people routinely make. They let emotions play too big a role in their decision making and they fail to adequately plan for the worst case scenario before the worst case scenario actually happens. These two mistakes aren’t a big deal when you’re planning dinner, but they can be disastrous when it comes to investing in the stock market. Reacting emotionally to the market can lead to bad decisions, which is compounded by the fact that we react to worst case scenarios rather than plan for them!
Fortunately in investing, we can use some of the tools
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to protect ourselves against it. I’ve recently been reading more about it and one of the best ideas I’ve seen is the use of stop loss orders and trailing stop loss orders to your advantage.

Stop Order
A stop order is an order to buy or sell once the price of the underlying stock reaches a specified price, called the “stop price.” Once it reaches the stop price, the order is put out on the open market. A buy stop order is an order to buy a stock after it reaches the stop price, which is always set to be higher than the current market price. A sell stop order is an order to sell a stock after it reaches the stop price, which is always set to be lower than the current market price.
You can also make it a stop-limit order by setting a limit price in addition to a stop price. The stop price activates the order and it becomes an ordinary limit buy or sell order.
Stop Loss Order
A stop loss order is just a name given to a sell order with a stop price. They use “stop loss” as a way to indicate the purpose of the order, since you are usually trying to stop a loss. The idea is that you set a stop price under the current market price for a sell order. If the stock falls to or below the stop price, you sell the stock in the market as a market order.
In general, a stop loss order is setup as a percentage of the current market price and is used to remove emotion from the decision making. You buy a share of Bargaineering (BRG) at $10 and decide you want to, at most, lose 10% of your investment. You would make the purchase and then set a stop loss order at 10% less than the share price, or $9. If BRG ever falls to $9, then you would sell the stock at market price. If it goes up, as it probably would , then you keep holding on.
Why a stop loss order? It’s recommended that you set up these types of orders when you are not going to be able to review your stocks on a regular basis. If you go away on vacation and can’t check your stocks for a while, a stop loss order can be used to protect you against a sudden drop you can’t respond to. It’s also said that these orders remove some of the emotion out of the process.
Trailing Stop Loss Order
A trailing stop loss order is a stop loss order that adjusts as the stock increases in price but doesn’t adjust when the stock decreases in price. In our case of BRG, let’s say the price goes up to $100. Your existing stop loss order with a stop price of $9 is probably not going to do you any good. With a trailing stop loss order, as the stock rocketed up to $100, the 10% trailing stop would adjust upward in lock step. At $100 a share, the stop loss order would have a stop price of $90 (10% under the share price). If the shares fall to $95 a share, the stop price remains $90.
This has two benefits. The first is that you don’t have to monitor the stock on a daily basis. Second, you have essentially locked in the gains. If the stock falls under $90, then your broker would execute a sale and you still collect the proceeds from your then unrealized gains.
This was a very simple discussion of stop loss and trailing stop loss orders, so if you want to learn more I recommend you do a little more digging online about the various strategies and techniques you can employ using these orders. I think it’s important to understand the vocabulary so you can speak the language, hopefully I’ve achieved that here.
If you have insights or thoughts to add, please do so in the comments!
(Photo: brianglanz)
What is a Trailing Stop Loss Order? from personal finance blog

If you are among the 6.5 million homeowners who took out a low-rate adjustable-rate mortgage during the housing boom, you've probably spent the past couple of years waiting for your day of reckoning to come.
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