remeber folks: both Obama AND McCain backed this bill that falls far short on these issues:
1. THE PLAN MISSES THE KEY ISSUE – WE SIMPLY GIVE MONEY BACK TO WALL STREET AND CROSS OUR FINGERS THAT SUCH FIRMS WILL RETURN LIQUIDITY TO MARKETS. Financial institutions who receive government support are under no obligation whatsoever to use such funds to provide liquidity to the financial markets. Thus this aid package fundamentally misses the real problem and may not provide liquidity of trading we need. Instead, such financial institutions could simply distribute the cash to shareholders and partners, and provide no further help to the economy.
2. TAX LOSS CARRYFORWARDS WILL MEAN THEY DO NOT ACTUALLY PAY TAXES. Importantly, any tax levy in 5 years on troubled financial institutions will be avoided by such bailed out firms. Financial institutions holding troubled assets will incur TAX LOSSES today from the sale of such assets to government and thus will be exempt from paying taxes for very long periods of time as a result of tax loss carryforward rules (the amount of such tax losses will depend upon how they originally accounted for the assets in their financial statements – some firms may record massive tax write downs). In fact in 5 years they may still have sufficient tax shelter from the sale of these troubled assets that they will not be subject to the special tax on financial institutions. Ironically, the financial institutions that avoided these troubled assets and thus did not incur tax losses will be the ones who carry the burden of the new tax since they will not have tax shield available.
3. The total exposure of government is possibly $3.131-TRILLION – well in excess of $700 bn since this is simply an upper ceiling on the maximum outstanding at any one time (per notes on page 40 of the Act). The plan is designed to absorb substantially more troubled assets – as government sells such assets the proceeds from sale can then be used by the Secretary to buy more troubled assets. This establishes a "revolving" loan facility which can be used over and over again to buy troubled assets and then sell such assets. The true exposure of government debt is illustrated by the requested increase in the statutory limits of total debt allowed. This new bill requests to increase the allowed debt by $3.131-trillion (from $8.184-trillion to $11.315-trillion, per pp. 68, line 8). See http://www4.law.cornell.edu/uscode/html/uscode31/usc_sec_31_00003101—-000-.html for current wording and limit on government debt.
4. Credit card loans and car loans that are secured by a home loan (very common in USA) are included in the bail out package. See pp. 14, line 18. Any type of purchase on a credit line secured by a home can be acquired or guaranteed by the government. Since such loans are very common this means virtually any type of debt can be taken over by the Secretary. This package goes well beyond subprime mortgage loans.
5. There is practically no cap on what a financial institution can sell to the government. The cap has been set at $100,000,000 (pp 38, line 24). Thus a small number of big-time offenders can dump their bad debts onto government. If it is only a small number of firms that hold large amounts of such paper then the government should consider allowing them to fail. Government intervention is appropriate to stop systematic broadly-based risk. Not a handful of firms. The private sector could easily buy up a handful of firms with such troubled assets (e.g. JP Morgan easily absorbed WaMu and other institutions like Barclays are seeking opportunistic acquisitions)
6. There is no clarity on the type of deals the Secretary can structure. He has a free hand to deem what is appropriate – even if such deals are not at fair market value. pp 35 line 10 outlines the mechanism for how government takes an equity or debt position in the selling financial institution. Importantly, there is no mention or requirement for the Secretary to use fair market value in determining the value of debt bought by the government. As mentioned earlier the selling financial institutions can flip debt acquired from other struggling financial institutions to the government. There is no consent requirement for the Secretary from any oversight committee. Suggested improvements:
(a) Have Secretary establish fair market value for consideration paid when buying, insuring or guaranteeing troubled assets.
(b) Have Selling/insured financial institution indemnify government against any and all losses resulting from the troubled assets bought, insured or guaranteed. Thus the downside risk of loss will be mitigated.
(c) Have government receive equity participation IN ADDITION to the indemnification.
(d) Place limitations on distributions/dividends to shareholders until the loans are repaid. There is no limitation on dividends and other distributions to partners/shareholders from the financial institutions. Repayment of government obl
Why do people think that because clueless George said we need a bailout (Actually it was more like "Gimme gimme right now. Shut up, no strings. Gimme gimme gimme).
Now that common sense has survived the first spate of Bush and Paulsen crying "wolf". it is time to think. Just because Bush loudly and hysterically proclaimed that the only way to prevent the depression he has been leading us into for 8 years is to throw hundreds of billions of our tax dollars at it does not mean that is the only or best or even a good "fix".
Other nations are responding with more calm and wisdom. There are other things that can and should be done.
Trading on the stock markets should be suspended until strict regulations can be put in place to limit the damage that can be done by reckless speculation and panic.
Those financial institutions that are in trouble should be nationalized, set in order and sold to new owners. Bush has had no problem violating the Bill of Rights when it comes to the People, he shouldn’t be cowardly about a little thing like nationalization of companies that are a threat to national welfare, hence security.
The Federal Reserve needs to either be attenuated or dissolved.
I got an unsecured salary based loan from the bank,now am not working at the moment and i dont have any other source of income. I had some bad luck and lost everything including my car and i have no assets. I told them that i can only start paying when i get another job but they keep on calling asking me to pay something and threatening court.whats the worst that can happen.
hi
If you looking for a legitimate online loans in 1 Hour.once approved your loan will be transferred directly to your checking account promptly, and securely. Now you’ll be able to use the cash for all your necessities.
http://bestonlineloancompanies.com
• 100% secure and processing
• No faxing -No credit check
• Immediate online approval
• Excellent customer service
• Get Cash in Minutes!
Good luck!……..
Yes, BOTH senators voted YES to pass the bills that is lacking (abbreviated):
1. THE PLAN MISSES THE KEY ISSUE – WE SIMPLY GIVE MONEY BACK TO WALL STREET AND CROSS OUR FINGERS THAT SUCH FIRMS WILL RETURN LIQUIDITY TO MARKETS. Financial institutions who receive government support are under no obligation whatsoever to use such funds to provide liquidity to the financial markets. Thus this aid package fundamentally misses the real problem and may not provide liquidity of trading we need. Instead, such financial institutions could simply distribute the cash to shareholders and partners, and provide no further help to the economy.
2. TAX LOSS CARRYFORWARDS WILL MEAN THEY DO NOT ACTUALLY PAY TAXES. Importantly, any tax levy in 5 years on troubled financial institutions will be avoided by such bailed out firms. Financial institutions holding troubled assets will incur TAX LOSSES today from the sale of such assets to government and thus will be exempt from paying taxes for very long periods of time as a result of tax loss carryforward rules (the amount of such tax losses will depend upon how they originally accounted for the assets in their financial statements – some firms may record massive tax write downs). In fact in 5 years they may still have sufficient tax shelter from the sale of these troubled assets that they will not be subject to the special tax on financial institutions. Ironically, the financial institutions that avoided these troubled assets and thus did not incur tax losses will be the ones who carry the burden of the new tax since they will not have tax shield available.
3. The total exposure of government is possibly $3.131-TRILLION – well in excess of $700 bn since this is simply an upper ceiling on the maximum outstanding at any one time (per notes on page 40 of the Act). The plan is designed to absorb substantially more troubled assets – as government sells such assets the proceeds from sale can then be used by the Secretary to buy more troubled assets. This establishes a "revolving" loan facility which can be used over and over again to buy troubled assets and then sell such assets. The true exposure of government debt is illustrated by the requested increase in the statutory limits of total debt allowed. This new bill requests to increase the allowed debt by $3.131-trillion (from $8.184-trillion to $11.315-trillion, per pp. 68, line 8). See http://www4.law.cornell.edu/uscode/html/… for current wording and limit on government debt.
4. Credit card loans and car loans that are secured by a home loan (very common in USA) are included in the bail out package. See pp. 14, line 18. Any type of purchase on a credit line secured by a home can be acquired or guaranteed by the government. Since such loans are very common this means virtually any type of debt can be taken over by the Secretary. This package goes well beyond subprime mortgage loans.
5. There is practically no cap on what a financial institution can sell to the government. The cap has been set at $100,000,000 (pp 38, line 24). Thus a small number of big-time offenders can dump their bad debts onto government. If it is only a small number of firms that hold large amounts of such paper then the government should consider allowing them to fail. Government intervention is appropriate to stop systematic broadly-based risk. Not a handful of firms. The private sector could easily buy up a handful of firms with such troubled assets (e.g. JP Morgan easily absorbed WaMu and other institutions like Barclays are seeking opportunistic acquisitions)
6. There is no clarity on the type of deals the Secretary can structure. He has a free hand to deem what is appropriate – even if such deals are not at fair market value. pp 35 line 10 outlines the mechanism for how government takes an equity or debt position in the selling financial institution. Importantly, there is no mention or requirement for the Secretary to use fair market value in determining the value of debt bought by the government. As mentioned earlier the selling financial institutions can flip debt acquired from other struggling financial institutions to the government. There is no consent requirement for the Secretary from any oversight committee. Suggested improvements:
(a) Have Secretary establish fair market value for consideration paid when buying, insuring or guaranteeing troubled assets.
(b) Have Selling/insured financial institution indemnify government against any and all losses resulting from the troubled assets bought, insured or guaranteed. Thus the downside risk of loss will be mitigated.
(c) Have government receive equity participation IN ADDITION to the indemnification.
(d) Place limitations on distributions/dividends to shareholders until the loans are repaid. There is no limitation on dividends and other distributions to partners/shareholders from the financial institutions. Repayment of government obl
Sugar: how so?
Give it 5-10 years and this whole situation will happen again. The government just set the banking industry up for failure yet again. This bill was a stupid move. The guys running for president have just showed us they buckle under peer pressure. Not a good sign. It fixes nothing and will possibly cause further problems, and who knows how severe those will be. This just shows how narrow minded our congress and the guys running for president are.
Question 1
(a) Ten years ago, to supplement their planned retirement, a couple purchased a 25 year flexible savings plan for a target sum of £75,000, which was projected to grow at an annual equivalent rate (AER) of 8%. The insurance company, having reviewed their plan (as they do normally every 10 years), now inform the couple that they will have to increase their monthly premium as the rate of return has turned out to be lower than expected, or face the prospect of receiving a lump sum well below the target.
(i) Calculate the revised monthly premium for the next 15 years in order to meet the target sum of £75,000, based on a projected AER of 6%. (25%)
(ii) What would be the shortfall in the target sum if the couple continued paying their monthly premium as before, but the plan grows at 6% AER for the first 10 years, and then at 5% AER for the next 15 years? (25%)
(b) A householder takes out a mortgage of £75,000 to be repaid over 25 years at an assumed Annual Percentage Rate (APR) of 6.8 %. What would be the reduction in his monthly repayment if £10,000 of the capital were repaid at the end of 10 years, with a part repayment penalty charge of £199 added to the outstanding balance? (30%)
(c) A student loan company will lend you £5,000 now, repayable in 10 years with interest but the repayments will only start after 3 years when you graduate. What will be the end of year annual repayment for the remaining 7 years if the APR on the loan is 3.6%? (20%)
NB: It is better to perform your initial calculations to 6dp to avoid rounding off errors.
Question 2
(a) Using the present value of a fixed term bond, explain the relationship between the price, the par value and the rate of return on this bond. How do you distinguish between a bond that sells at a premium and a bond that sells at a discount? (20%)
(b) A £100 par value bond has a coupon rate of 8.25 per cent, payable semi-annually on 30 June and 31 December. The bond matures on 31 December 2010. Find the quoted price and the market price of this bond on 16 November 2006, given that the yield to maturity was 8 per cent. (20%)
(c) An investor has a portfolio of three assets. The expected returns, expected standard deviations and the correlation matrix of returns are:
Asset Expected Expected Correlation matrix
Return Stand dev A B C
A 2% 10% A 1.0 0.3 0.4
B 3% 12% B 1.0 0.2
C 4% 14% C 1.0
(i) Calculate the portfolio expected return and standard deviation if each asset constitutes one third of the portfolio. (15%)
(ii) Suggest weightings for the assets that would produce a portfolio with lower risk. Explain what risk is and why it is reduced. (15%)
(iii) Trace out the efficient segment for the above data, explaining how this is obtained. What is the expected return on the least risk portfolio? (30%)
Pls solve the question with steps and formuleas, even you know one part plz do solve it.
7. In some countries, financial institutions operate under Shariah, which also gives guidance about accounting practice in these companies. What is “Shariah?”a) Shariah is the financial accounting standards board in Saudi Arabia.B) Shariah is the law governing human conduct that is derived from the Koran.C) Shariah is the codification of banking regulations in the European Union.D) Shariah is a political system used in South American countries.
8. Assets are commonly shown in order of their liquidity, or in reverse order of their liquidity. What does “liquidity” mean?
Liquidity refers to how easily the assets are converted to cash.
Liquidity means that assets are inflation-adjusted.
Liquidity refers to whether the asset is depreciable or not.
Liquidity means that the assets are closely matched to specific liabilities.
9. Individualism, power distance, uncertainty avoidance, and masculinity are examples of: a) accounting values B) ecological factors C) cultural dimensions D) external forces
13. According to Sir Bryan Carsberg, former IASC Secretary-General, what is the most significant cost of accounting diversity?
The time expended by accountants to create multiple sets of financial statements conforming to different national standards.
The cost of the IASB to regulate compliance with many national accounting standards.
The reduction in effectiveness of the international markets for capital.
The resources used by countries in legislating different sets of accounting standards.
15. Of the 14 members of the International Accounting Standards Board (IASB), how many work for the board on a full-time basis?
14
12
10
0
16. The IASB’s Framework for Preparation and Presentation of Financial Statements (1989) implies that the most important group of users is:
government.
general public.
creditors.
investors.
22. Camerata Construction borrowed 19,000,000 for 10 years at 6% specifically to modernize its operations with new equipment. The average rate of interest on Camerata’s debt after considering the most recent loan was 5.5%. What rate of interest should be used for capitalizing the borrowing costs on the new equipment under IAS 23?
5.5%
6%
5.75%
Some other amount
23. The IASB standard on stock options (IFRS 2) is substantially the same as U.S. GAAP. How should stock options be accounted for?
Since their value is not determinable until a future date, they are not recorded, but only disclosed in the notes to the financial statements.
A compensation expense is recorded based on the value of the options expected to vest as of the date the options are granted.
An expense is recorded only if a market value for the options exists on the date the options are granted.
The options are recorded as a liability for the value of the stock at the exercise date.
24. What functional area dominates the accounting profession in Germany?
Taxation
Auditing
Financial reporting
Managerial Accounting
26. What is the main source of corporate financing in the United Kingdom?
banks
capital markets
government grants
royal family
27. What is the greatest difference between Mexican accounting practice and American accounting practice?
The method of calculating earnings per share
The lack of conservatism in Mexican accounting standards
The treatment of inflation effects on financial statements
The accounting for exchange rate gains and losses
28. In what year was the Shanghai Stock Exchange reactivated?
1949
1956
1990
1995
29. According to the World Trade Organization, what was the size of international trade in 2003?
$7,000,000,000 (7 billion dollars)
$70,000,000,000 (70 billion dollars)
$37,000,000,000 (37 billion dollars)
$7,000,000,000,000 (7 trillion dollars)
31. What is a foreign currency transaction?
It is another name for an international transaction.
It is a transaction that involves payment at a date sometime in the future.
It is an economic event measured in a currency other than U.S. dollars.
It is a business deal denominated in a currency other than a company’s domestic currency.
32. Under U.S. GAAP, foreign exchange losses should be recorded by:
debiting “Foreign Exchange Loss”
crediting “Foreign Exchange Loss”
debiting “Retained Earnings”
debiting “Sales Revenue”
33. Under U.S. GAAP, to qualify for hedge accounting which of the following conditions must be met?
There must be for
Please do your own work. You learn better that way./
JPMorgan Chase said it was not acquiring any senior unsecured debt, subordinated debt, and preferred stock of WaMu’s banks, or any assets or liabilities of the holding company, Washington Mutual Inc. JPMorgan also said it will not take on the lawsuits facing the holding company.
Now, if there is no signed credit card agreement between me and I also loss stock in WM, can I dispute my credit card debt? The problem is WAMU screwed up my account and gave me a card over the phone based on an equity loan that had been closed for over a year. When they found out the mistake, they demanded payment in full. I disputed and asked them to simply transfer to a new account and send me a credit card agreement at the same interest rate. They refused and rather then work to resolve the issue, they threatened me with fraud.
I had to retain a criminal attorney which cost almost 10K to prove the error on their part, which they eventually admitted to. However, the stress was so much that I had a heart attack and was hospitalized. So we where in the process of filing a lawsuite against WAMU for what happened and what I have suffered as they refuse to remove the dispute from my credit report.
Since then I had to retain a credit attorney (who is off today – but I did leave his office a voice mail ) and I want to know if whoever holds the new debt, if they can’t prove the debt was agreed upon or there was no valid contract, can they uphold the debt and if so, can I then take the legal action against them for what I suffered?
You question is unclear, but any loss you suffer investing in WAMU stock is a completely separate issue from a credit card dispute.
Mortgage loan is the money that the lender gives to the borrower; sometimes these loans need a guarantee. A mortgage is what one gets as a certification once the asset is used as a pledge for security. There were times when availing mortgage loan was very difficult but with the growing competition it has become very simple to get mortgage loan. The loan amount can be used for various purposes such as purchasing a property, wedding, vacation, medical purposes etc.
As a security is attached with the loan therefore the loan amount is very high. Every individual has his own requirement as a result one should choose the right kind of loan that would solve his purpose. In mortgage loan the time of repayment is very long it may extend unto 25 years or more. Since the repayment tenure is so long therefore the monthly installment that the borrower has to pay is not much and does not disturb his monthly finances.
Mortgage loan can be generally divided into two types:
In case of fixed rate mortgage loan the interest rate remains the same throughout the tenure of the loan. In this kind of loan the borrower is more relaxed because he knows the amount that he has to pay every month and accordingly plans his budget. Therefore the borrower will not be affected by the change in the interest rates as his mortgage amount will not change.
In adjustable rate mortgage loan or variable rate mortgage loan the interest rate is adjusted from time to time based on an index. By taking this kind of mortgage loan the borrower can lower his payments as he is ready to take the risk of change in the interest rates.
Apart from these two there are various kinds of mortgage loan such as interest only mortgage loan, graduated payment mortgage loan, negative amortization mortgage loan, conventional loan, extendible balloons and many more. It is for the borrower to decide on the kind of loan that would fulfill his requisite.
Mortgage loan is a kind of loan that would continue for years, therefore the borrower would want the best and the most reasonable rate as he has to pay the interest for many years. There are certain things that affect the mortgage loan interest rate such as loan amount, loan tenure, down payment, income of the borrower, whether or not the loan is adjustable etc.
There are certain points that the borrower must keep in mind before availing mortgage loan.
Firstly, the borrower should decide on the loan amount after assessing his income and the pay back capacity so that the loan does not hamper his budget.
Secondly, one should do complete market study before availing mortgage loan, and then choose the best deal as per his need.
Thirdly, mortgage loans are of various kinds, so the borrower should decide on the type of mortgage loan according to his constraint.
Fourthly, the borrower must have a clear idea about the rate of interest, the monthly installment that he has to pay, the terms and conditions and the tenure of the loan. One should calculate the interest rate and the monthly installments beforehand so that he does not end up paying more to the lender.
Fifthly, the borrower must check the means and standing of the mortgage loan lender.
There are many people in UK who go through the harrowing experience of facing harassing calls from their creditors pestering (and sometimes threatening) them to clear off the outstanding due. This unpleasant situation comes in life when one tries to ride on too many ‘debt boats’.
And what is the result?
The person falls and starts drowning in the sea of debts!
But then every problem has a solution.
There are a number of companies in UK that offer debt consolidation services to people in financial distress. These companies hire debt counsellors who work upon to streamline the debt situation of such people. They try to identify which aspect of the debt is causing the problem to the borrower. For example, if a creditor is charging excessive fees, the counsellor tries to negotiate with the creditor to cut down on the fees.
If the interest rate is too high, the debt counsellors try to convince the creditors to settle with a new agreement based on a reduced interest rate that in turn lowers the monthly instalments.
Another effective means available for managing debts is a debt consolidation loan that can be used to replace the pending debts with a single loan. However, it is not easy to receive financial aid from lenders when you need to pay off the heavy debts that you owe to different creditors. Most of the lenders demand suitable collateral security to cover such a substantial loan amount.
A secured debt consolidation loan quite suitable for consolidating heavy debts, such as pending credit card balances, unsecured loans, etc. As like any other secured loan, secured debt consolidation loans are offered against collateral security, which may be any valuable asset, such as your home, land, farm, car and so on. Select the asset depending upon the amount of money you need to borrow to pay off your debts.
A secured debt consolidation loan proves to be effective in reducing the debt burden, especially when a person is entangled in a number of high-interest debts. Presence of collateral in the secured form of a consolidation loan allows the lender to offer the loan at a reasonably low APR. This helps the borrower to save a significant amount of money every month that in turn eases out the debt burden considerably.
Case: Borrow more than your House is worth: don’t make a payment for 90 days ,and a Loan servicing Agency paid by the Feds will lower your payments so you can stay in the House.If you bought a Mercedes on a Home equity loan ,and that is what caused you to go under(upside down)on the loan .You can keep the car,and any assets you have .The loan will be re-worked with new lower payments adjusted as low as 33% of your Gross income. So if you have two jobs you can quit one ,or your wife can quit hers ,and The Feds will base the New payment qualifying you on the one household income ..Keep your expensive car and (Toys) assets.After wards the borrower can get a higher income, and still have the New Low payment. How Sweet! Only in America. That’s the New Federal Program that is rewarding all the borrowers that have no equity in their homes due to irresponsible behavior. Well as for the poor working Slob that has 10% or more equity in their Home.If they lose their job due to this Quote financial Crisis,fall behind,well out in the street They Go!ONLY IN AMERICA! Don’t get me wrong I don’t think anyone should get Special Treatment. Why does the Government make out Like they are helping a Responsible Home Owner,When this is all to keep the House Listed as an asset for the Banks that are Guilty of Irresponsible Lending Practices?
WHAT ARE THE ODDS EITHER ONE WILL CHANGE THEIR BEHAVIOR?
Because they are more powerful then our government and are using you, the tax payer to line their pockets even more.
Trust me, that is how it all works out.
=====
Look at the back of a dollar bill
It says Federal Reserve System
How many of you know that system is privately owned?
How many of you know that the Federal Reserve System is controlled by a few banks and a handful of very rich people?
How many of you know that the chairman of the Federal Reserve System is probably the most powerful man on the planet?
The Federal Reserve System controls our money supply
Prints our money
Interest rates
encourages you to be in debt
lends money to our government while you the tax payer are paying interest on that debt.
That our money is not backed by anything tangible, such as gold or silver, but only backed with a promise.
In short, they control just about every aspect of your life, your money, your credit cards, your mortgage, your car loan, student loans, your retirment, etc.
Including having their hands in getting us involved in money making wars.
The smartest thing I ever did was chose to live debt free about 20 years ago. It is amazing how much of our money is eaten up by the Federal Reserve System, and how much more disposable income I had because I made the right choice.
And more information about the federal reserve system:
Asset Based Lending