Majority of Voters Expecting Double-Digit Tax Increases in Next 10 Years

/PRNewswire/ -- PJTV's Tea Party TV today unveiled the results of its weekly Tea Party tracking poll, which revealed that 71 percent of likely voters and 76 percent of Independents believe there will be a tax increase of 10 percent or more if current federal spending habits continue.

"Voters overwhelmingly believe the government's spending habits will force lawmakers to increase taxes by double-digit amounts," said Roger L. Simon, CEO of Pajamas Media. "In the last two years, Washington has lifted the debt ceiling twice, extending the limit by $2.2 trillion. Now, Americans - especially Republicans and Independents - are translating that national public debt into a personal financial burden."

When asked about the potential of a tax hike of 20 percent or more, only Democrats were skeptical. Majorities of Republicans (58 percent) and Independents (50 percent) thought this to be a real concern while only 18 percent of Democrats were anxious of this outcome.

The weekly PJTV/Pulse Opinion Research nationwide survey of 1,000 likely voters tracks Tea Party support as well as provides a snapshot of public opinion regarding the week's top issues. In addition to the weekly Tea Party tracking questions, this week's special question asked voters whether they believed taxes would decrease, stay the same, or increase by 10, 20, or 30 percent.

"The poll revealed that support for the Tea Party movement is holding strong at more than 50 percent," said Vik Rubenfeld, PJTV's Polling Director. "Moreover, we are seeing movement in the portion of likely voters who support the movement in the public arena. Today, 39 percent of likely voters report they publicly support the Tea Party, increasing from 33 percent three weeks ago."

Poll Highlights
-- 71 percent of likely voters and 76 percent of self-identified
Independents believe taxes will increase by 10 percent or more in the
next 10 years. Meanwhile, 42 percent of likely voters and 50 percent
of self-Independents believe they will increase by 20 percent or more.
-- 55 percent of likely voters support the Tea Party movement.
-- 39 percent of likely voters support the Tea Party movement publicly,
compared to 35 percent on August 22 and 33 percent on August 15.


Methodology

The Tea Party Tracking Study is a PJTV survey. The telephone survey of 1,000 Likely Voters was conducted by Pulse Opinion Research on August 29, 2010. Pulse Opinion Research, LLC is an independent public opinion research firm using automated polling methodology and procedures licensed from Rasmussen Reports, LLC. Margin of Sampling Error, +/- 3 percentage points with a 95% level of confidence.

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FDIC Urges Stronger Debit Card and Overdraft Oversight; Other Bank Regulators Should Take Action

/PRNewswire/ -- Statement of CRL president Michael D. Calhoun: "American families, especially those most vulnerable financially, could save millions of dollars a year in costly overdraft fees if guidelines the FDIC proposed today are adopted. The guidelines would encourage the banks the FDIC oversees to offer customers lower-cost overdraft alternatives rather than charge unlimited high-cost overdraft fees--as many banks do, even on small debit card transactions.

Under the proposal, a bank would contact a customer who incurs six overdraft fees within 12 months and offer--and explain--less costly options. The bank would be encouraged to provide the customer with a reasonable opportunity to choose one of them. Banks the FDIC oversees also would be discouraged from re-ordering transactions to maximize overdraft fees.

Banks and credit unions frequently promote their most expensive form of overdraft coverage, which typically imposes a $34 fee per overdraft--twice the amount of the typical debit card purchase that triggers an overdraft--rather than reasonably priced options like a low-interest line of credit or an affordable small-dollar loan. Financial institutions earn $24 billion annually from these high-cost programs.

The proposal comes just days before new Federal Reserve's August 15th rules take effect requiring banks and credit unions to obtain a customer's signature before enrolling them in a costly overdraft program for debit cards. But many banks don't give consumers real choices among alternatives; instead, they steer customers into the highest cost overdraft coverage they offer. The FDIC's proposed guidance indicates the Fed's rule is not sufficient to stop unfair and abusive overdraft practices by lenders: The Fed addresses neither the size of the fees nor how many can be charged.

A decade ago, most banks declined debit card transactions, and at no charge, when a customer's account lacked sufficient funds. Citibank has never charged overdraft fees on debit cards, and Bank of America is stopping the practice. But another big bank, Wells Fargo, continues to charge over a billion dollars a year in debit card overdraft fees. Wells also continues to market a cash advance product that, like payday lending, carries triple-digit annual interest rates.

To comprehensively address abusive short-term loan products, including unfair overdraft practices, the Federal Reserve and the Office of the Comptroller of the Currency must join the FDIC's efforts and explicitly limit overdraft fees to no more than six per year. In addition, all regulators should require that the size of the overdraft fee reflect a lender's cost and risk, and they should ban the manipulation of transaction postings."

For CRL's research on banks' overdraft marketing efforts, see http://www.responsiblelending.org/overdraft-loans/research-analysis/banks-targ et-mislead-consumers-as-overdraft-deadline-nears.html.

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With Tax Deadline Looming Remember the Newer Nastier IRS

/PRNewswire/ -- As taxpayers finish their 2009 returns, one tax resolution attorney has a warning: Today's IRS is nastier than ever.

"Those of us who fight the IRS every day know this is not true. The US Treasury is desperate for cash and the IRS has been told to get tougher in collecting old debts," says Anthony E. Parent, founder of IRS Medic, Wallingford, CT (www.irsmedic.com).

According to Atty. Parent, the IRS has three new scary tactics:

New Revenue Officers

The IRS has hired many new and forceful Revenue Officers who will come to people's home, businesses or even to a Rotary Club meeting to find delinquent tax payers. "These Revenue Officers tend to be overly aggressive because they think that this will impress their superiors and get them promoted," he cautions.

Seizures of Personal Residences

For the first time, taxpayers' primary residences are up for grabs by the IRS. "The IRS is now willing to seize a taxpayer's primary residence if they feel there is enough equity to satisfy the tax obligation. They can be convinced to back off if you offer a reasonable collection alternative. It's not easy, but it's possible," says Atty. Parent.

Seizures of Retirement Accounts

In the past, the IRS would not seize retirement accounts, but that too has changed. "The IRS is getting bolder," says Atty. Parent. "They can and will wipe out a taxpayer's entire retirement savings if they feel they can collect enough money. There are legitimate ways to prevent this, but you need to know what you're doing."

The moral is anyone owing money to the IRS needs to be proactive and not wait for the IRS to come to them. "We've had clients who came to us after the IRS has pursued them. That makes helping them a lot harder. If someone comes to us early in the game, we have more options. Don't ignore the IRS. They have to send you a certified letter before they levy or seize your property, but people refuse to pick up those letters. And when the IRS takes aggressive action against them -- like wiping out a bank account or levying wages -- they were surprised. You do not want to be surprised by the IRS. It won't be pleasant and the longer you wait, the more shocking it will be."

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Five Gifts to Give Yourself in the New Year

/PRNewswire/ -- The holidays are a wonderful time full of having fun with friends and family and giving gifts to the people we care about. For many consumers, however, the joy of the season will soon be replaced by the stress of paying holiday debt.

"It is easy to get caught up in the excitement of giving during the holidays," said Mechel Glass, Director of Education for Consumer Credit Counseling Service of Greater Atlanta (CCCS). "But many overdo a good thing and then struggle to make even minimum payments on their credit cards."

CCCS of Greater Atlanta advises consumers to top their list of New Year's resolutions with a commitment to improve their financial outlook. To help consumers tackle what can be a stressful time, CCCS suggests following the following tips:

1. Know how much you owe. A common mistake is not keeping track of debt.
The thinking is that as long as you can keep up with the payments,
everything is fine. However, if circumstances change due to a layoff
or other unexpected event, you could find yourself unable to make
payments and in immediate financial stress. The only way to understand
what you are facing is to have a realistic picture of what you owe.
Gather all your credit card statements and other bills and add up the
total.
2. Create a spending plan. The easiest way to take control of your money
is to set out a plan for how you will spend it. This is not glamorous
and can be something of a task, but it gives you the power to decide
where your money goes. The plan should be flexible and include monthly
expenses such as mortgage or rent, utilities, food, transportation,
entertainment, clothing, etc. Make sure your expenses are not more than
your income. If they are, go back to the plan and make adjustments.
3. Pay off credit card debt. The average household has more than to $8,300
in credit card debt (Nilson Report, April 2009) and the interest paid
on those balances can be as high as $1,500 a year. Just think of what
you could do with an extra $125 a month in your budget! Stop charging
additional purchases today and make a commitment to yourself that once
you have paid off your debt, you will not charge any purchases unless
you have a plan in place to pay off the balance in 90 days or less.
Sacrifices now will mean less stress and a better financial future.
4. Build a savings cushion. Once you have paid off your credit card
balances, you should begin to build a savings cushion for emergency or
unexpected expenses or if you lose your job. Your goal is three to six
months of living expenses put aside in a savings account. With this
cushion in place, when the refrigerator stops working, your car's
transmission gives out or your mother-in-law moves in, you will not
have to put those unexpected expenses on a credit card.
5. Develop a strategy for your financial future. Set aside time at least
twice a month to manage your finances including paying bills, balancing
your checking account and analyzing your expenses. Begin thinking
about, and planning for retirement--consider when you would prefer to
retire, how much money you will need to live the lifestyle of your
choice and what you need to do now to get there. Establish a retirement
fund and contribute to it on a regular basis.


Not sure where to start? If you are feeling overwhelmed, there is help. CCCS of Greater Atlanta provides confidential budget counseling, money management education, debt management programs and other services to help consumers. Contact CCCS at 800-251-CCCS or online at www.cccsinc.org.

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Banks’ Actions on Credit Cards Undermine Consumer Protections

Low- and middle-income households with credit card debt owe, on average, $9,827 on their cards. If you make the minimum monthly payment -- under many agreements 2 percent of the balance or $10 -- at 10 percent interest, it will take you more than 26 years to pay off the balance, including $6,812 in interest payments.

But what if the rate was raised even higher, or if your rate was tacked to the prime rate (currently 3.25 percent). It could take more than a lifetime to pay off that kind of debt.

In May, Congress adopted the Credit CARD Act to protect consumers from capricious rate hikes. Under the act, banks must give consumers at least 45 days notice before raising their rates. And beginning in February 2010, banks cannot raise rates on existing balances unless a consumer is in default.

Just last week, however, House Financial Services Committee chair Barney Frank accused banks of abusing the “grace period” they were given before all the law’s provisions take effect. Unfortunately for consumers, he’s right.

For example, Wells Fargo announced last week it was raising rates on existing accounts by up to 3 percentage points. Other card issuers, including such large banks as Bank of America and JPMorgan Chase, also have been accused of raising rates on balances prior to the law’s effective date.

Additionally, in June, Bank of America and Chase switched many cardholders from fixed- to variable-rate cards. Variable-rate cardholders are not protected from unexpected rate changes under the new law, because rate changes are permitted as the prime rate moves up and down.

Those most likely to be harmed by higher borrowing costs are consumers who are relying on their credit cards to carry them through the economic downturn. According to Démos, a non-partisan research and advocacy organization, most low- and middle-income households with high debt-stress levels -- the ratio of a family’s credit card debt to their annual income -- use their credit cards to pay for unavoidable expenses, such as medical expenses or to cover household essentials after a job loss, not for discretionary items.

Higher rates lead to longer payoff periods and thousands of extra dollars in interest payments. Let’s take the case of the average low- and middle-income households with $9,827 in credit card debt. If they continue to make the minimum monthly payment on that amount but at 13 percent interest plus prime, rather than our previous example of 10 percent interest, it must pay $19,897 in interest payments over the more than 45 years it will take to clear the balance. And because the prime rate is at historically low levels, this example likely presents a best-case scenario.

Many cardholders have responded to the downturn and the higher borrowing costs by reducing their debt. In July, revolving credit, which is largely credit-card borrowing, declined. For many, however, reducing debt during these tough times is not an option.

Moreover, changes in the availability of credit are also making it more difficult for cardholders to protect themselves from the banks’ actions. In the past, cardholders could demand better terms by threatening to take their business elsewhere. Today, this option is limited, because many banks have tightened credit-card approval standards.

Banks may be putting themselves at risk by their actions as well. If consumers are subjected to usurious rates as the prime rate rises, more will inevitably default on their debt. Banks will find it difficult to make up for these losses by further raising rates on consumers who are already stretched to their limits.

Bank of America vowed last week to stop raising interest rates before the February limits take effect, making the announcement as Rep. Franks’ committee met to consider moving up the effectiveness date of the new legislation. But such a promise offers too little, too late for many consumers who have already been harmed.

It is time for banks to rethink their recent moves and for Congress to do more to protect consumers.

By Jamie Lau

Jamie Lau is a research fellow with the Community Enterprise Clinic at Duke Law School.

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Consumer Savings Higher as Debt Declines; Mortgage Delinquencies, Bankruptcies Continue to Grow in September

/PRNewswire/ -- Consumers continue to fight the recession by saving more and paying off debt; banks are responding with more careful lending; and stressed homeowners increasingly are falling behind on mortgages on their primary residence, according to the latest Equifax Inc. (NYSE:EFX) Credit Trends Report, a summary of key economic trends the company distributes to its customers every month.

Some of the key findings in the September report include:

Total consumer debt has been reduced by more than $440 billion, down 3.8 percent from its peak in the third quarter of 2008.

The estimated consumer savings rate continued to be relatively high at 3.71 percent in the third quarter - down from 4.74 percent in the second quarter - but much higher than savings rates that were as low as 1.30 percent as recently as the third quarter of 2008 and .20 percent in the first quarter of 2008.

Bankcard issuers continue to close accounts and reduce credit lines. Since September 2008, there are 88 million fewer accounts and credit lines have been reduced by $751 billion. Delinquency rates also are the highest in five years with 4.36 percent of bankcard accounts more than 60 days late in September 2009 compared with 3.39 percent in September 2008 and 2.80 percent in September 2007.

New accounts opened, based on end of July data, were 54 percent lower than July 2008. The percent of cards issued to those with Equifax Risk Scores greater than 740 grew from about 28 percent in July 2007 to more than 50 percent at the end of July this year. Conversely, the percent of cards issued to those with Equifax Risk Scores 660 and below dropped from 42 percent in July 2007 to slightly over 22 percent in July 2009.

Home mortgages at least 30 days late reached a record 7.65 percent (in dollars) in September, up from 7.58 percent in August and 7.32 percent the previous month. This record rate is a significant increase over the 5.17 percent rate of September 2008 and the 3.55 percent rate of September 2007.

Home equity lines of credit are an estimated $65 billion lower in September 2009 than they were in September 2008 and the number of accounts is an estimated 754,000 lower. Delinquency rates are at an all-time high of 3.39 percent versus 2.66 percent in September 2008 and 1.59 percent in September 2007.

Personal bankruptcies also continued to rise. For the first nine months of 2009, filings are 40 percent higher than last year. Filings have already exceeded one million compared with the 2008 year-long total of 1.1 million.

"American consumers are making the most fundamental change in the way they handle their finances we have seen in a decade," said Dann Adams, president of Equifax's U.S. Consumer Information System. "They are conserving cash and reducing debt across the board. We haven't seen savings rates this high since shortly after the third quarter of 2001 - just after 9-11 - when they were at 3.25 percent.

"At the same time, high unemployment is being reflected in more homeowners falling behind in their primary mortgages," Adams added. "As a result, banks and other financial institutions are being much more careful in managing their risks.

"The data reflect an economy in transition with consumers doing better with their financial management, but with many still struggling in the face of high unemployment and restricted credit."

Data for the Credit Trends Monitor Report is sourced from Equifax's more than 200 million files of US consumers using credit. The personal savings rate information comes from CreditForecast.com, which uses U.S. Bureau of Economic Analysis data.

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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."

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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Consumer Reports' Annual Public-Education Campaign Warns of the Pitfalls of Credit Card Debt

/PRNewswire-USNewswire/ -- Consumer Reports today unveiled the third installment of its annual public education campaign, warning holiday shoppers of the pitfalls of credit card debt. Consumer Reports' public education campaign kicks off on Monday, November 24th with a full-page ad in USA Today advising shoppers: "There is no 'bailout clause' in your credit card contract." Americans owe nearly $1 trillion in credit card debt according to the Federal Reserve Board.

A recent survey from the Consumer Reports National Research Center found that 12 million Americans are still in debt from last year's holiday season. Additionally 38 percent of Americans said they plan to use credit cards this holiday season as much as they did last year (35%) or more than last year (3%).

In addition to the full-page ad in USA Today, Consumer Reports will run a series of online ads across highly trafficked or influential personal finance and consumer blogs including Consumerist.com, Yahoo Shopping, and Bargainist.com. The online ads will highlight the Consumer Reports "Tightwad Tod" blog on www.ConsumerReports.org/TightwadTod.

Launched at the start of the holiday shopping season, the "Tightwad Tod" blog covers a wide variety of topics that affect consumers during these tight economic times including advice on getting the best deals during the holiday season -- everything from layaway plans to getting a holiday job to navigating outlet malls. The blog is written by Consumer Reports Senior Project Editor Tod Marks, who has been finding deals and exposing scams in every area of consumer spending for nearly 20 years.

"This campaign reminds consumers that Wall Street's bailout won't cover them this holiday season. If consumers over-extend their credit cards, there won't be a rescue package waiting in the wings, so they need to remain vigilant about spending within their budgets," said Jim Guest, president and CEO of Consumers Union, nonprofit publisher of Consumer Reports. "As an organization that doesn't take advertising, we're using this venue as a way to educate consumers and foster marketplace change."

A Tradition of Public Education and Marketplace Change

This latest effort by Consumer Reports follows a tradition of public education campaigns against gift cards and extended warranties. Last year, the organization took on the retail sector and the ubiquitous gift card with a full-page ad in the New York Times, which advised consumers that $8 billion in gift cards go unused and wind up back in the pockets of retailers. The campaign called on retailers and the National Retail Federation to eliminate expiration dates and service fees. In 2006, Consumer Reports took out a full-page ad in USA Today advising consumers to skip the extended warranty. That ad was rebutted by a full-page ad one week later from the Service Contract Industry Council. Following this campaign, the Consumer Electronics Association reported consumer interest in purchasing extended warranties fell 20 percent.

Which way to pay: Credit, debit, check, or cash

A recent poll conducted by the Consumer Reports National Research Center found that 59% of consumers plan to make a budget before they begin to shop this holiday season. And while making a budget is a good first step, being able to stick with it is quite another. Of the 39% of consumers who said they made a budget last year, 45% were able to stay on budget while, nearly as many (44%) went over budget. Only 3% discarded their budget all together going way over budget.

Consumer Reports advises consumers that whether they make a budget or not this year the method of payment makes a difference. Credit cards offer the most protections for consumers, but consumers who routinely carry a balance will pay more for their purchases once fees and interest charges are factored in.

Consumer Reports recommends the following tips to avoid debt and maximize the method of payment:

-- Cash. Consumers should use cash as much as they can. There's no fear
of identity theft, and it's accepted almost everywhere. Remember to
save the receipt for evidence of payment.
-- Checks. Write a check if you need to make a large purchase somewhere
that won't accept credit or debit and you don't want to carry cash.
Canceled checks can also be useful as receipts or for tax purposes. If
a check disappears, you can stop payment on it, if you act quickly
enough (checks are increasingly being processed in a single day).
-- Debit cards. Use a debit card when you don't mind having the money
withdrawn immediately from your checking account. Debit cards are a
surefire way to avoid onerous credit-card interest charges, but you
could be slapped with burdensome overdraft fees if you don't have
enough money in your account to cover your purchases. With a debit
card, your liability for unauthorized transactions is limited to $50
if you report the problem within two business days of discovering it.
After that the limit leaps to $500. Beyond 60 days of your account
statement you could lose all the money in your bank account.
-- Credit cards. Use a credit card for most large purchases, if you're
not carrying a balance and can pay off the bill each month. Credit
cards offer greater protection than other forms of payment. If you
don't pay off your purchases each month, you'll pay interest rates of
about 12 to 13 percent on your balance, depending on whether your card
has a variable or fixed rate. If your account number falls into the
wrong hands, you're liable for only the first $50 in charges, and most
large issuers waive liability altogether. If you have a legitimate
beef with a seller, it's relatively easy to have the charges removed
until the dispute is settled, if you report the matter to the issuer
within 60 days after the charge appears on your statement.


The Consumer Reports National Research Center conducted a telephone survey of a nationally-representative probability sample of telephone households. 1,001 interviews were completed among adults aged 18+. Interviewing took place over October 16-19, 2008. The margin of error is +/-3% points at a 95% confidence level.

DECEMBER 2008

(C) Consumers Union 2008. The material above is intended for legitimate news entities only; it may not be used for commercial or promotional purposes. Consumer Reports(R) is published by Consumers Union, an expert, independent nonprofit organization whose mission is to work for a fair, just, and safe marketplace for all consumers and to empower consumers to protect themselves. To achieve this mission, we test, inform, and protect. To maintain our independence and impartiality, Consumers Union accepts no outside advertising, no free test samples, and has no agenda other than the interests of consumers. Consumers Union supports itself through the sale of our information products and services, individual contributions, and a few noncommercial grants.

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Wall Street Bail Out and the Credit Card Industry

24-7-- It almost sounds like a waste of time to spend my days writing about the Wall Street bailout. With every media outlet in the world zeroed in on our economy and the socio political ramifications that would ensue, should a bailout not occur. Let's be clear, it's a bailout, not a loan or some other disarming term. The credit card industry is already and will be profoundly affected for years to come because of this meltdown; the question to merchants and cardholders is how to keep that facet of the credit industry moving ahead without too much heartache for both parties.

As I'm stroking keys in my office, acquiring banks are contemplating risk as it pertains to their customer's available credit. This type of hard look at your available card balance and if they want to decrease it or take it away from you all together is the front line of the credit crunch that consumers will likely see in the months to come. My intent isn't to alarm anyone, because this may not come to fruition, but if our economy were to enter a credit freeze, the first fat to be trimmed will likely be available card balances. Why? Because it's the easiest way to decrease potential future loss. As banking institutions consolidate, go under and fear becoming under government control; they need to eliminate risk as much as possible. This is really an easy mathematical calculation; multiply the number of cardholders by their available balance and you'll have the sum of their exposure in an economic crisis.

If the government bails out these and other banks on toxic loans and bad debt, it's unlikely that delinquent credit card debt will be a part of the equation. As it appears today, defaulted mortgages, auto loans and business loans will get much of the attention, making the credit card divisions of these lending institutions in the step children of the bailout. As this is a scary concept to credit card holding Americans that often use their cards to float their monthly expenses; this halt to credit affects merchants and the global economy even more. Just as the inability to use a credit card on a daily basis and the need for cash is an inconvenience at best; for businesses, it can cripple them in both the short and long term. Ecommerce merchants that depend on credit cards for roughly 99% of their transactions would be nearly out of business immediately. Again, we're not saying that this will happen; however this is a very real card on the table of banks that can be played at any time.

Shortly after the ecommerce bubble had burst and businesses had found it harder to process customer credit cards at a fair rate, many found it easier and cheaper to process their daily transactions overseas. Non-domestic or offshore credit card processing isn't for illegal and illicit online businesses, like we all used to think. Today, with so many ecommerce merchants selling globally, international merchant accounts are very normal and often offer low rates, better security and services that many US domestic banks may only offer for a fee. While our economy is looking bleak, the global banking industry has proven in the past and may have to prove once again that working together can be better than domination.

Sager G. Loganathan is a freelance Search Engine Optimization writer specializing in the banking and finance industry. Sager Loganathan, a United States Marine Corp Veteran, has a Bachelor of Arts degree in Communications from the State University of New York at Buffalo.

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Although $700 Billion Bail-Out is Only 'First Step' on Long Road to Repair Financial Markets, CornerCap Sees Opportunities for Smart Investors

PRNewswire/ -- Although the $700 billion bail-out legislation signed into law earlier this afternoon by President Bush should help set an orderly process for disposing mortgage assets, it is at best a first step to allow for stability and recovery of the nation's financial markets says Atlanta-based CornerCap Investment Counsel's chief investment officer, J. Cannon Carr, Jr.

Writing for the firm's quarterly newsletter, Carr says that even with the government's plan, credit markets are likely to remain tight until home prices and debt levels fall to rational levels.

"That will take time," Carr says. "Only the market can stabilize home prices." Moreover, with extreme risk aversion among lenders, Carr still anticipates a difficult year ahead for the economy.

"Despite the uncertain market, this is not a time for broad selling," Carr notes. "In fact, there are real opportunities available for the patient and disciplined investor."

The full text of Carr's commentary is available online and may be downloaded at no cost from www.cornercap.com/library/Newsletters/n2008fall.pdf .

Carr points out that the nation has experienced 10 recessions since 1945. In all but the most recent recession (2001) stocks slid as the economy slowed, but began their assent before the recession ended.

"Recognizing that it is impossible to call a market bottom, we believe the probabilities are in our favor and now is the time to take advantage of some increasingly attractive opportunities to make selective buys," Carr said.

His firm began increasing its exposure to consumer stocks earlier in the year, and now sees opportunities in Industrials and Basic Materials stocks, which are among the hardest hit on recession fears.

"While there are still potential land mines out there, a healthy balance sheet and flexible cost structure are keys to helping determine which stocks can weather the storm," Carr said.

According to Carr the nation's financial system cracked due to two issues: too much debt and falling housing prices. "Once the housing process stabilizes, the financial system can more accurately price transactions, and more importantly, evaluate asset risk and debt obligations," Carr said.

What started as "apparently" isolated problems in subprime mortgages over a year ago has mounted to a crescendo of scary news about the health of the U.S. financial system and the global economy Carr writes.

Even if the government successfully plugs the holes in the nation's financial dam, the pressure causing the fissures must still drop before the dam can truly hold, Carr says.

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People Seeking Credit Counseling in August Earned $49,308 Annually, Nonprofit Agency Finds

PRNewswire/ -- People seeking budget and debt counseling in August had an average annual household income of $49,308, an amount far above historic levels for people seeking this service, reports Consumer Credit Counseling Service (CCCS) of Greater Atlanta.

The income data is based on counseling sessions with 5,549 individuals in August who reported an average monthly income of $4,109, which is nearly 18% higher than the monthly income of people who sought credit counseling in August 2007. One year ago, people receiving the same kind of counseling had monthly incomes of $3,492.

"Rising unemployment, the continuing mortgage and credit crisis and rising food and fuel costs are causing people with good incomes to seek help paying their debt," said Suzanne Boas, president of Consumer Credit Counseling Service (CCCS) of Greater Atlanta. "People with middle-class incomes are finding it more and more difficult to meet their financial obligations."

CCCS of Greater Atlanta is a national nonprofit credit counseling agency that helps people in all 50 states in financial distress. People seeking budget and debt counseling are first-time callers who receive a free, confidential one-hour counseling session to help them find solutions for excessive debt.

Through the first eight months of 2008, the agency has conducted more than 37,000 budget and debt counseling sessions, a 39% increase compared to the same period in 2007.

People seeking credit counseling in August 2008 also reported this information:

-- The average person spent $638 for food and fuel in August, which is 20% higher than the amount people were spending in January, only eight months earlier. While people seeking help paid less for fuel in August than July, the amount spent on food continues to climb.

-- People seeking credit counseling who own their home reported monthly housing costs of $1,423, a 25% increase compared to people seeking credit counseling in August 2007.

CCCS professional counselors offer individual, confidential advice for developing budgets, managing money, using credit wisely and building a savings plan. Counselors will review a person's financial situation and help determine the best possible financial strategies. The counselor will offer solutions to a person's current financial problems, as well as personalized plans for preventing financial pitfalls in the years to come.

This service is available in English or Spanish. People can call for a free budget counseling session today at 1-800-251-CCCS (2227), or can begin an online counseling session at www.cccsinc.org .

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Federal Home Loan Bank of Atlanta Approves Agreement with the U.S. Treasury as Backup Liquidity Source

PRNewswire/ -- The Federal Home Loan Bank of Atlanta ("Bank") announced today it has approved a lending agreement with the U.S. Department of the Treasury ("Treasury") that is designed to serve as a source of contingent liquidity for the Bank's debt issuance activities.

The agreement stems from provisions of the Housing and Economic Recovery Act of 2008, which provided the Treasury with the authority to establish such a facility. The terms of the agreement are described in the Bank's Current Report on Form 8-K filed today. The agreement expires on Dec. 31, 2009, or sooner if the Bank determines it will not need the Treasury support. Any loan under the agreement would be secured by certain Bank assets, such as advances to members or by mortgage-backed securities issued by Fannie Mae or Freddie Mac.

"The Bank appreciates the U.S. Treasury's interest in establishing a clearly-defined operational agreement should the Federal Home Loan Banks require added liquidity support for our debt," said Richard A. Dorfman, FHLBank Atlanta President and Chief Executive Officer. "It is essential that the Bank continue to execute its mission of providing affordable liquidity to lenders, and this agreement makes it clear the federal government supports that role."

Each of the 12 Federal Home Loan Banks has entered into such an agreement. Extensions of credit by the Treasury to the FHLBanks, or to any FHLBank, will be considered a consolidated obligation and will be the joint and several obligation of all of the FHLBanks. However, Dorfman noted that at this time, the Bank does not anticipate that it will need to tap the lending facility.

About the Federal Home Loan Bank of Atlanta

The Bank is a cooperative financial services organization that provides funding, community development grants, and other banking services to more than 1,200 member financial institutions in Alabama, Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia, and the District of Columbia. The Bank is one of 12 district banks in the Federal Home Loan Bank System (the FHLBank System), which since 1990 has contributed more than $2 billion to affordable housing development in the United States.

Some of the statements made in this announcement, including, without limitation, the Bank's plans to not access funding under the lending agreement, are "forward-looking statements," which include statements with respect to the Bank's beliefs, plans, objectives, goals, expectations, anticipations, assumptions, estimates, intentions, and future performance, and involve known and unknown risks, uncertainties and other factors, many of which may be beyond the Bank's control, and which may cause the Bank's actual results, performance or achievements to be materially different from the future results, performance or achievements expressed or implied by the forward-looking statements.

The forward-looking statements may not be realized due to a variety of factors, including, without limitation: legislative and regulatory actions or changes; future economic and market conditions; changes in demand for advances or consolidated obligations of the Bank and/or the FHLBank System; changes in interest rates; political, national and world events; and adverse developments or events affecting or involving other Federal Home Loan Banks, GSEs or the FHLBank System in general. Additional factors that might cause the Bank's results to differ from these forward-looking statements are provided in detail in our filings with the Securities and Exchange Commission, which are available at http://www.sec.gov/ .

You should not place undue reliance on forward-looking statements, since the statements speak only as of the date that they are made. The Bank has no obligation and does not undertake to publicly update, revise or correct any of the forward-looking statements after the date of this announcement, whether as a result of new information, future events or otherwise, except as may be required by law.


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How To Downsize Your Debt

(SPM Wire) Most Americans spend more than they earn or carry extra debt on their credit cards.

Getting out of debt can seem insurmountable, but can be accomplished with some simple frugal measures.

For starters, set out a budget, encourages debt management expert, Clarky Davis of TheDebtDiva.com.

"A budget is empowering," Davis says. "It's right there on paper… You know how much of your income goes to bills, how much goes to outstanding debt and how much is available for spending."

Here are some more tips from Davis:

Create a debt "snowball." Focus on your highest-interest credit card and pay as much as you can on that card first, while making at least the minimum payment on your other debts. When that card is paid off, add that amount to the next highest credit card and so on and so on. You'll pay off debts faster because you're applying larger and larger payments. You'll save on interest, too.

Pay your bills on time or early when you can.

Keep focused on getting out of debt, but set aside some money to create a savings cushion. Use this for unexpected expenses like car repairs, instead of credit cards.

Keep up your spirits. A recent study found that those who watched a sad movie clip were willing to spend four times more money on an item than those who watched a nature video.

For more tips visit Davis' Web site, TheDebtDiva.com.