Former Federal Reserve Economist Tells Lawmakers to Slow Down

/PRNewswire/ -- As lawmakers begin meeting next week to mull over legislation aimed at averting another financial crisis, a former Federal Reserve economist cautions that such sweeping reform could have serious unintended consequences. "This is very ambitious and hugely complicated legislation that is being done very fast," says Robert Bliss, who is now a professor at Wake Forest University Schools of Business. "Some of the changes are positive, but others could create bigger problems than the ones they are trying to solve."

A House-Senate conference committee will try to reach a compromise on the financial regulatory reform bills passed by the House in December 2009 and the Senate a few weeks ago. Headed by Senator Chris Dodd and Rep. Barney Frank, the committee will work to reconcile the two versions with the goal of passing a final bill by July 4th. Among the issues the committee will be seeking to resolve is the regulation of the over-the-counter derivatives market, expanded audits of the Federal Reserve Board, and the creation of a new consumer protection agency.

But rather than trying to pass such sweeping legislation with an eye toward the November election, lawmakers would be better off taking more time to seek expert opinion. Bliss said lawmakers would benefit from bringing in more business and economic experts to advise them rather than approaching the legislation as a political issue. It also is important to take the reform's worldwide implications into account.

"The legislation and these proposals are entirely domestic, and the financial system is entirely international," said Bliss, who formerly served as a senior financial economist at the Federal Reserve Bank of Chicago.

"Although the 2008 financial crisis started in America, it impacted Europe because their banks were buying our subprime mortgages, and now we're looking at a situation where there's a major financial crisis brewing in Europe and that's going to feed back in the U.S. financial markets and our economy," he added. "In today's global markets, we can't have our heads in the sand about the reform's international implications."

Despite the inherent risks involved, Congress is likely to pass the legislation in the weeks ahead. "The financial crisis of 2008 has passed, and now we're talking about a response to it," Bliss said. "But the consequences will continue to play out well into the future."

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New Study Released on the Non-Government Response to the U.S. Economic Crisis

/PRNewswire/ -- A new study shows America's foundations were swift, flexible and targeted in their response to the worst economic crisis since the Great Depression - using on-the-ground knowhow to make a significant impact. The study from The Philanthropic Collaborative (TPC) is the first of its kind to analyze the private-sector response to the crisis and shows that the federal government's response was not the only story.

"The ability of foundations to be swift and flexible in their response allowed them to modify their giving throughout the crisis and ensure the grants went to those most in need," said Doug Holtz-Eakin, author of the study. "During the U.S. economic collapse, we saw grant-making shift, expand and follow the larger unemployment and housing needs that developed and became acute in communities across the country. Even when foundations themselves faced financial stress from the very same crisis, our analysis shows a very clear shift in grant-making patterns to meet emerging economic needs."

The study analyzed a sample of 2,672 grants that totaled $472 million of foundation giving from 2008 to 2009, and early planned giving for 2010. In the area of preventing mortgage delinquencies and foreclosures, private and community foundations saturated their grant-making in states with higher than average delinquency rates. In 2009, for example, 95% of sampled grant-making, or $296 million, went to high-delinquency states. As unemployment became a larger economic problem between 2008 and 2010, the analysis shows foundations devoted more activity to states suffering higher unemployment.

"In the City of Detroit, we have found working with the foundation community has been beneficial for our community and our residents. The foundations allow the city to stretch current budget dollars to plan for the future while continuing to provide services to the residents," said Detroit Mayor Dave Bing. "The study by The Philanthropic Collaborative is representational of the impact foundations have on the City of Detroit," he added.

"Foundation grant-making is fundamental in helping to improve the lives of families during time of economic crisis," said Denver Mayor John Hickenlooper. "Private and community resources, when quickly targeted to local community needs, can play a major role in collective efforts to get local economies back on track. We have seen foundation giving in the Mile High City leverage positive social change with meaningful, measurable results."

"Some in our communities have been devastated by the economic crisis, which has taken a toll on municipal and state resources" said Providence Mayor David Cicilline. "While the responses from the federal and state governments are critically important, we cannot lose sight of the targeted and timely response from community foundations. Without their work, many more individuals and families would fall through the cracks in our system. Foundations are effective because they are part of our community, know the people, can bring aid to where it's needed most and act with speed and precision. They also embody another important attribute - they are able to provide assistance without the red tape and bureaucracy. This entrepreneurial approach is what makes them so effective and welcome in our efforts to ensure people have the means to weather this economic storm."

"I've said many times that government cannot do it all by itself. It must be a citizen movement," Toledo Mayor Michael Bell. "Organizations like to the Toledo Community Foundation and the Stranahan Foundation help provide aid during times of economic distress for people who may otherwise slip through the cracks. We have to be involved as a community and philanthropy plays a vital role in our ability to provide for our citizens."

"This study illustrates the critical role foundations are able to play in assisting Americans and communities in crisis," said John Tyler, Chairman of TPC. "As impressive and encouraging as this is, though, it is only part of the story because previous TPC research has told us that each dollar of grant support from these foundations can generate on average more than eight times that amount of value in direct, economic benefits," he added.

The study analyzed a sample of grants for the years 2008 to 2009, and early planned giving for 2010, obtained from the Foundation Center, which maintains the most comprehensive database of foundations' grant-making activities. The data provides information on the amount, activity and target audience of each grant. Grants averaged $176,608 but ranged from $500 to $5 million.

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New Picture of Personal Finances Shows, in Case of Emergency, Two in Three ''Household CFOs'' Are at Risk

BUSINESS WIRE --A recent national survey of “Household CFOs” - people who are primarily responsible for the financial management of their household - reveals that a majority are not adequately prepared for short-term financial setbacks or long-term financial needs like retirement. In fact, 68 percent of households do not have emergency savings accounts, putting them at financial risk in the event of a crisis.

The survey was conducted by Consumer Credit Counseling Service (CCCS) of Greater Atlanta, a national credit counseling agency that has been educating consumers on money and debt management, housing, and bankruptcy and foreclosure prevention since 1964.

In response to survey findings(a) and current economic conditions, CCCS is launching a national awareness campaign, “Household CFO,” and enhancing its CredAbilityU online education program to offer free, easy-to-use interactive webinars and financial management tools.

“The time and energy it takes to manage the day-to-day leaves little time for thinking about what lies ahead. People often become overwhelmed and forget to include savings and long-term planning in their budget. But, it’s essential,” said Mechel Glass, director of education for CCCS. “We launched the Household CFO campaign to share what we’ve learned in our 44-year history, encourage proactive financial education and help individuals better prepare for financial stability.”

Survey results showed that Household CFOs recognize the importance of financial planning and are comfortable with daily financial management tasks. However, respondents were more likely to rate their knowledge of more complicated and long-term financial preparations as “Average” or “Below Average.” In fact, one in six respondents do not have any financial goals or long-term plans in place, such as a budget, retirement plan, investment portfolio or any kind of savings, and nearly one in three households has not prepared a will, purchased insurance of any kind or made other preparations for a significant life-changing event.

“A long-range financial plan is particularly critical during times of economic uncertainty like the present,” said Ilyce Glink, nationally-syndicated personal finance and real estate journalist and member of the National Advisory Council for CCCS. “A general guideline is to save 10 percent of net income and have 6 months income available in an emergency fund or savings account. But if saving 10 percent of your net income seems impossible in a time where gas prices are rising, try to set aside five percent and build in an extra one percent each month until you've reached that 10 percent threshold.”

Though many aren’t prepared, nearly half of survey respondents experienced extenuating circumstances within their household in the past 12 months that negatively affected their finances. Almost one in three experienced a medical emergency or a change in health status. One in six reported a job loss, and one in ten went through a divorce.

“With free resources available to Household CFOs, it’s easier than ever to become more knowledgeable about managing finances in their own time and at their own pace,” said Glass. “Through courses like 'How do I save my home?,' 'Why am I a 678 credit score?,' and 'Living on 70 cents a day,' Household CFOs can easily build their confidence while building financial stability for the future.”

Glass recommends the following Web sites as resources for effectively managing household finances:

www.HouseholdCFO.org - Free webinars and financial management tools via CredAbilityU, including mortgage calculators and budget trackers
www.ThinkGlink.com - Useful news, tips, advice and information from Ilyce Glink, financial expert, regarding personal finance, real estate and consumer issues
www.MyFico.com – Credit score reporting and education
www.AnnualCreditReport.com - Free annual credit reports
www.MFEA.com - (Mutual Fund Investor’s Center) Basics on investing in mutual funds

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2008 Housing Counseling Demand Soars 184 Percent at Consumer Credit Counseling Service of Greater Atlanta

PRNewswire/ -- More than 30,000 Americans turned to Consumer Credit Counseling Service (CCCS) of Greater Atlanta for housing counseling in the first half of 2008, nearly equaling the agency's total number of housing clients for all of 2007.

The increase in families seeking the nonprofit agency's help tracks the deepening of a national mortgage crisis that initially affected mostly low-income borrowers, but is now spreading to people with higher household incomes. For the first time in the 44-year history of CCCS of Greater Atlanta, the average household income of clients seeking housing counseling exceeded $40,000.

In addition to a 184 percent jump in new housing counseling sessions in the first six months of 2008 compared to last year, the agency helped many more people overall in each area of service:

-- Total counseling sessions conducted in person, by phone and over the Internet, increased from 120,000 in the first half of 2007 to 170,641 in the same period this year, an increase of more than 41 percent.

-- Bankruptcy counseling sessions increased from 79,417 in the first half of 2007 to 100,789 in the same period this year, an increase of 26.9 percent.

-- Budget and debt counseling sessions increased from 29,544 in the first half of 2007 to 38,837 in the same period this year, an increase of 31.5 percent.

"Demand for our counseling services is rising significantly as people try to avoid foreclosure and bankruptcy, as well as cope with rising gasoline and food costs," said Suzanne Boas, president of CCCS of Greater Atlanta. "Our agency will add at least 80 new housing counselors in the second half of this year to continue to help people avoid foreclosure and meet other financial needs."

The hiring of 80 new housing counselors and plans to open a new metro Atlanta counseling center are the result of a $2 million grant made in June by the Ford Foundation. The grant will support the agency's expansion of a pilot test of a new software platform that lets credit counselors eliminate lengthy delays faced by homeowners in urgent need of modified mortgages.

Approximately three-fourths of housing counseling sessions during the first half of 2008 involved individuals seeking help to avoid foreclosure of their home. The Atlanta-based agency is one of the nation's leading nonprofit counseling agencies helping people seek solutions to foreclosure. It provides counseling to homeowners in all 50 states 24 hours a day, seven days a week, through a 24-hour hotline, 1-888-995-HOPE.

The rise in people seeking CCCS of Greater Atlanta bankruptcy counseling follows an increase in the country's bankruptcy rate. Federal bankruptcy law requires individuals to complete credit counseling before they can file for bankruptcy. Approximately 20 percent of all of Americans who file for bankruptcy seek counseling help from CCCS of Greater Atlanta.

Budget and debt counseling primarily serves individuals struggling with credit card, medical and other unsecured debt. These people often seek help to pay their creditors. The agency tries to work out debt management plans for people who cannot make their minimum payments.