Wednesday, May 20, 2009

Will Debt-Free Retirement Be the Downturn's Biggest Casualty?

/PRNewswire/ -- Consumers are more concerned about short-term security than long-term financial goals. The 2009 Survey of Financial Values and Debt, sponsored by Securian Financial Group, indicated that saving for emergencies is among Americans' top financial priorities. And while they have found many ways to spend less, consumers are not reducing their debt. Eighty-two percent are carrying non-mortgage debt, a figure that is virtually undiminished since Securian's initial survey in 2007.

"Consumers are clutching cash and postponing debt reduction," said Kerry Geurkink, director of Individual Annuity Marketing, Securian Retirement. "They are wisely adjusting their spending and borrowing, but the ultimate goal of debt-free retirement will be more difficult to achieve without a better balance between saving and debt reduction."

Although consumers may be unable to expedite debt repayment right now, they are focused on the long-term consequences of debt. Three quarters of non-retirees are concerned about the amount of debt they may carry into retirement, a plausible worry for Baby Boomers who are accumulating new debt.

One-fifth of Boomers owe at least $50,000 in non-mortgage debt, a 10-point spike from the 2007 survey. Boomers were the only generation in the survey (which included Generations Y, X, and the Silent Generation) to add debt since 2007.

Only one in five of people polled for the Securian survey (22%) applied for credit or non-mortgage loans in the last 12 months, and they were less willing overall to take on debt for cars, vacations, gifts, home improvements or meals out. They also identified several ways to save money on everyday expenses, and eight out of 10 expressed pride in the ways they have cut back.

"It is encouraging that Americans are willing to shun new debt and adopt more cautious attitudes toward spending," Geurkink said. "But consumers need effective debt-reduction strategies to set themselves up for debt-free retirement."

Thursday, May 14, 2009

Sallie Mae Strongly Disagrees with Moody’s Ratings Action

(BUSINESS WIRE)--SLM Corporation (NYSE:SLM), commonly known as Sallie Mae, today issued a statement in response to a Moody’s downgrade of SLM Corporation’s long-term and short-term unsecured debt.

“This action is both unfortunate and surprising in light of the numerous recent positive developments in the financial strength of the company,” stated Albert L. Lord, CEO. Mr. Lord continued, “Moody’s conclusion rests mostly on its predictions of the political process surrounding the Federal Student Loan program. This seems to us inappropriately speculative and very premature since any changes made to America’s student loan programs must be legislated by Congress – a several months process not yet started.”

Mr. Lord cited market developments since Moody’s placed the company “under review for possible downgrade” in February. Sallie Mae’s liquidity position has materially strengthened as the company secured liquidity in a variety of transactions, totaling over $11 billion in new sources this quarter alone. Specifically, in April, the company completed three FFELP asset-backed securitization (ABS) transactions totaling approximately $5.1 billion. In May, the company completed a $2.6 billion private education loan (ABS) transaction. In addition, the organization extended $22 billion of its asset-backed commercial paper (ABCP) facility for one year, paid in full a $2.7 billion private credit (ABCP) facility, and this week announced its initial placement through the U.S. Department of Education-sponsored “Straight A Funding” conduit.

Jack Remondi, CFO of Sallie Mae, stated that Moody’s actions are directionally at odds with the recent market performance in the company’s debt securities. “Investors see what we see, a substantial strengthening of our liquidity position and several new sources of term, lower cost funding. Moody’s action, in light of these recent developments, is perplexing.”

Mr. Remondi continued, “It is difficult to understand how an enterprise with 80 percent of its assets guaranteed by the U.S. Government, over 70 percent of its assets funded to term and the strength of our franchise merits less than an investment-grade rating.”

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Friday, May 8, 2009

New I.R.S. Tax Rulings Provide Alternatives to Victims of Madoff, Ponzi Schemes

(BUSINESS WIRE)--Victims of the Bernie Madoff fraud and other Ponzi schemes have alternatives for obtaining refunds from tax losses and should weigh the numerous recovery avenues before proceeding with a course of action, according to a prominent Florida tax attorney with in-depth knowledge of the new rulings.

The topic, “The Safe Harbor, is it Worth it?” is published on It will be presented by Boca Raton-based attorney Richard S. Lehman on Wednesday, June 10, 3-5 p.m. at the Boca Raton (FL) Marriott. The course offers CPE credit for accountants. To register, call 561-368-1113 or visit

“Thousands of people are facing financial ruin from Ponzi scheme losses,” said Lehman. “Many of these victims aren’t aware of the many courses of action they can take for recovery of taxes paid. Accountants, financial advisors, and attorneys must work together in mapping out an effective strategy for these people.

“The I.R.S. offers victims a ‘safe harbor procedure’ that will be beneficial to many Ponzi scheme victims seeking tax refunds from tax losses. However, the I.R.S. requires the taxpayer to waive certain important tax rights to accept the benefits. For many people the tax rights they are forced to waive are very valuable and do not have to be waived.

“For victims to choose correctly between the safe harbor rules or alternatives, it will be important for them to have accounting and legal experts to guide them through the process of determining whether the safe harbor is the best choice and available to the client or whether the client will benefit more by proving that he is entitled to similar tax benefits to the safe harbor without waiving valuable rights.”

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