The poverty rate rose last year to 13.2%, the highest level since 1997, said a report released Thursday.
That marks the first statistically significant annual increase since 2004, according to the annual Census Bureau report "Income, Poverty, and Health Insurance Coverage in the United States: 2008."
Last year, 39.8 million people lived below the poverty level, which is $22,025 for a family of four, according to the Office of Management and Budget. That’s up 3.9% from 2007, when 37.3 million people lived in poverty.
Regional changes. The West had 9.6 million people living in poverty in 2008, which represents 13.5% of that region’s population, up from a rate of 12% in 2007.
The Midwest had 8.1 million people living below the poverty line in 2008, which is a rate of 12.4%, up from 11.1% in 2007.
"Unfortunately, the regional numbers make perfect sense," said Heidi Shierholz, labor market economist at the Economic Policy Institute free instant credit report.
"The West was very hard hit by the housing bubble, and the industrial Midwest states are suffering in the manufacturing sector."
The poverty rates for the Northeast (11.6%) and the South (14.3%) were both statistically unchanged from 2007.
State-by-state. New Mexico had the highest poverty rate of any state– 19.3% — followed by Louisiana (18.2%), Mississippi (18.1%), Arizona (18%) and Kentucky (17.1%).
At 7% New Hampshire had the nation’s lowest poverty rate, followed by Utah (7.6%), Connecticut (8.1%), Alaska (8.2%) and Maryland (8.7%).
Forget about resting easy.
Target-date funds, billed as confidence-building vehicles that gradually shift your holdings into more conservative fixed-rate instruments as their date nears, have caused some sleepless nights.
Investors stashed money in these one-stop retirement plans so they didn’t have to worry about making their own allocation decisions. But it has become clear they need to better understand the basic concept of target-date funds and carefully scrutinize any fund under consideration.
The 2010 target-date funds designed for people who turn 65 years old next year lost an average of 25 percent of their value in 2008. Because many target-date funds are also the automatic default investment for enrollees in company 401(k) retirement accounts, the devastation was compounded.
As funds were drawing close to that target date, encouraged by a vibrant stock market, they kept a lot of stock in their portfolios. They were also competing for the best performance in order to attract new assets. But then the bull turned into a bear, and they paid a high price.
The average 2010 target-date fund had a 45 percent stock allocation at year-end 2008, according to Target Date Analytics LLC in Marina del Rey, Calif.
"The fund companies had expanded their investment strategy past the target date, using the rationale that people live 15 or 20 years past retirement, so they should keep a strong equity position," said Joseph Nagengast, principal with Target Date Analytics. "Target-date fund managers weren’t managing to the year 2010, as some investors assumed, but to some point well beyond it."
Investors must determine whether a target fund they’re considering is a "to" fund that manages the money to the target date or a "through" fund that manages it past the target date and into retirement, he said.
"Ask the fund company when the fund will reach its most conservative position," advised Nagengast. "If it’s a 2030 fund and they tell you 2029, you know they’re managing to the target date, but if they say 10 years after that date, you’ll know they’re managing well into retirement."
That means more responsibility than most target-date investors expected.
"You as the investor must define the target date and whether it represents when you plan to retire or some date beyond that," said Jack VanDerhei, research director for the Employee Benefits Research Institute in Washington. "A lot of people believe that by the target date they should be down to zero equities, which indicates their lack of understanding."
Some fund companies that were low on equities last year are now trumpeting their lack of negative performance, VanDerhei noted, while others are saying a certain percentage of equities must be in your portfolio to fight inflation if you have 20 years or more left in your retirement fast cash without a hassle.
"As the investor, you must know which strategy makes you feel most comfortable," he said, noting that reading the prospectus of the fund remains crucial. "Many people say target funds dated 2010 or close to that have too much equity in them, but this ignores the fact that the investor can look for a fund that holds a smaller percentage of equities."
Surveys have shown that some investors incorrectly believed they were getting a guaranteed payout when the target date was reached, another misconception. But despite all the fallout from poor performance and some murky comprehension, there can be a place for target-date funds in an individual’s planning if he or she clearly understands what the investment is all about.
"It still makes sense to have target-date funds and, like any other investment, there are good and bad ones," said Greg Carlson, fund analyst with Morningstar Inc. in Chicago. "They provide one-stop shopping for investors who don’t want to build their own portfolios, plus broad diversification over most asset classes."
The three biggest competitors in target-date funds are Fidelity Investments, Vanguard Group and T. Rowe Price, though such funds are offered by a host of investment companies.
Carlson especially likes the Vanguard Target Retirement Funds because they’re mostly index funds with broad diversification and low fees. He also likes T. Rowe Price Retirement because it has some excellent funds in its portfolio and "is one of the few companies that does a lot of things really well." Two examples of 2010 target-date funds Carlson finds noteworthy are Vanguard Target Retirement 2010 and T. Rowe Price Retirement 2010.
Other experts have caveats about even those fund groups.
"I think Vanguard and T. Rowe Price do a good job in long-dated funds that have more than 20 years until the target date," said Nagengast. "But in my view, they do a poor job of managing risk in short-dated funds of 15 years or less because they’re making investment decisions based on a date well past the actual target date."
Whatever fund company and fund is chosen, individual investors still bear the ultimate responsibility for the selection made. The buck stops with them.
"All the big fund companies are pretty competitive on fees, so I don’t think that will be the greatest factor making an investor choose one company over another," concluded VanDerhei. "It really comes down to asset allocation and which fund company you feel most comfortable with."
Bernard Madoff, convicted of swindling $65 billion through the biggest-ever Ponzi scheme, has told fellow prison inmates that he is dying of cancer, the New York Post reported on Monday, citing unnamed prison sources.
Madoff, 71, who since June has been serving a 150-year sentence at a North Carolina federal prison, has been telling fellow inmates he does not have much longer to live, the Post said, citing the unofficial and unusual sources.
The Post said there had been speculation that Madoff was suffering from pancreatic cancer earlier this year. Inmates said Madoff was taking “about 20 pills a day” and “not doing very well.”
The Post said Madoff’s lawyer did not return messages Sunday and had previously declined to answer questions about whether Madoff had cancer. Reuters could not reach Madoff lawyer Ira Sorkin immediately for comment.
The tabloid also reported Madoff has engaged in a number of surprising new activities with some unexpected social circles.
A shirtless Madoff has joined weekly “Native American religious purification ceremonies” that involve prayers, heated rocks to induce sweat and smoking from a ceremonial pipe, the paper said.
The paper also reported that various “gangs” at the prison are trying to recruit Madoff while some inmates regularly cook “sandwich wraps” for him at their cells.
(Reporting by Joseph A. Giannone, editing by Maureen Bavdek)
Ford Motor Co. said Thursday it is increasing production over the rest of the year to meet increased demand spurred by the U.S. government’s "Cash for Clunkers" sales incentive program.
Ford said it now plans to build 495,000 vehicles in the third quarter, up 10,000 from its previous forecast. That would mark an increase over year-earlier levels of 18%.
The No. 2 U.S. automaker also set a fourth-quarter production target of 570,000 vehicles, up 33% from year-earlier levels.
The output gains will translate into immediately higher revenues for Ford (F, Fortune 500), the only U pay day loans.S. automaker to have avoided a federally sponsored bankruptcy. Major automakers book revenue when vehicles are manufactured and shipped to dealers.
Are you part of a Detroit-area family with a tradition of working in the automotive industry? If so, Money magazine would like to speak with you for an upcoming personal finance story. Please email your contact information to gmannes@moneymail.com.
Freddie Mac, the second largest provider of U.S. home mortgage funding, Friday posted its first quarterly profit in two years as gains from hedges and a one-time accounting change offset still-lofty credit losses.
For the first quarter in four, Freddie Mac said it would not need a capital injection from the Treasury to maintain its business of providing credit for U.S. housing. But it said it continues to rely on government money to keep it afloat.
Freddie Mac (FRE, Fortune 500) and larger rival Fannie Mae (FNM, Fortune 500) are seen as key barometers of the U.S. housing market, having expanded their scope as competitors fell during the financial crisis. Under government control since September, they are also being asked to do more for U.S. efforts to stabilize the shaky housing market, even though that is turning out to be a costly effort.
Together, the companies own or guarantee more than $5 trillion in U.S. mortgages.
"Our outlook remains cautious due to rising foreclosures, growing unemployment, tight lending standards, and buyers’ reluctance to reenter the market," John Koskinen, Freddie Mac’s interim chief executive officer, said in a statement.
Freddie Mac reported second-quarter net income of $768 million, compared with a $9 payday loan online.9 billion loss in the first quarter and a $821 million deficit in the period a year ago.
After payments of $1.1 billion in preferred stock dividends to the U.S. Treasury, Freddie Mac had a net loss of 11 cents per diluted common share.
Freddie Mac said profit was cushioned by a $5.1 billion increase in equity due to the adoption of accounting rules that govern how it must recognize losses. It also had a $4.2 billion gain from derivatives that rose in value as interest rates rose, and greater interest income as its borrowing costs fell.
Provisions for credit losses declined to $5.2 billion in the second quarter from $8.8 billion in the previous period, driven by recent home price improvements, it said. But that benefit is likely seasonal, and provisions will probably rise again, it said.
Fannie Mae on Thursday reported a $14.8 billion quarterly net loss, and noted a "significant uncertainty" to its long-term health given the lingering housing crisis and costs taken to slow foreclosures.
A government investigator overseeing the $700 billion bailout reported on Thursday that outsiders, including some lawmakers, lobbied regulators on behalf of banks seeking money.
"I am writing on behalf of one of my constituents to express my support of their application for assistance and support under the Troubled Asset Relief Program," one lawmaker wrote, according to audit report by Neil Barofsky, the special inspector general for the Troubled Asset Relief Program.
Barofsky found 56 instances in which outside parties contacted regulators. Of those 56 firms, 16 got bailouts. And three of those 16 companies did not meet standard bailout criteria, but received money after regulators found "mitigating factors" justifying help, according to Barofsky.
The inspector general’s report did not disclose the names of the banks examined or the people, including lawmakers, who lobbied on their behalf.
Barofsky said he found no evidence that bailouts were granted because of outside lobbying.
"SIGTARP did not identify any instances of external pressure having undue influence during the application review process," Barofsky wrote free 3-in-1 credit report.
Still, the report calls on regulators to do more to shine a light on the issue.
Treasury Department staffers told the IG’s office that they had received calls from those lobbying for bailout applicants but they didn’t document the calls.
The report recommends that Treasury provide a more detailed and cleaner accounting of how each bailout decision maker votes. It also said Treasury and other regulators must maintain better records of talks they have with outside parties trying to lobby about bailouts.
Earlier this year, several news reports said that Reps. Barney Frank, D-Mass., and Maxine Waters, D-Calif., reached out to regulators about bailouts for banks.
Extended unemployment benefits may be available for Americans who exhaust their standard jobless insurance — but the programs, as well as who’s included in government data, can be confusing.
Because programs and eligibility standards change frequently, the best thing to do is contact your state’s labor division. But here are answers to some common questions.
1. Who is included in the unemployment rate?
Only people who have actively looked for work in the past four weeks are included — regardless of whether they file for unemployment benefits. The Labor Department conducts a monthly population survey, asking simply if you’ve sought work in the past four weeks.
2. What is the difference between initial and continuing claims?
The government’s initial claims number identifies those people filing for their first week of unemployment benefits. Continuing claims reflect those people filing each week after their initial claim, up to their 26th week. After that, they are no longer counted in that total.
3. How many weeks of unemployment do I get?
A maximum of 26 weeks to start. (Well, except in Montana, which offers up to 28 weeks, and Massachusetts, which has a max of 30 weeks) 100% approval payday loans.
Eligibility depends on how long you worked and how much you made prior to becoming unemployed. Not every filer receives the maximum number of weeks available.
4. What if I run out?
You can get at least another 20 weeks in most instances.
In June 2008, Congress passed the Emergency Unemployment Compensation program, which extended the number of weeks available in those states that opted to be a part of the program. All did.
On top of that, those states with an insured unemployment of 4% or higher, or a total unemployment rate higher than 6% can offer another 13 weeks for a total of 33 weeks under EUC.
5. Is there anything after that?
Possibly another 20 weeks.
For those states whose insured unemployment is at 5% or higher, or total unemployment rate is above 6.5%, the federal government will pay for another 13 weeks of benefits. When the total unemployment tops 8%, states may enact a voluntary program to receive federal money for another 7 weeks of benefits.
StormHarbour Partners LP, a firm founded by former Citigroup Inc bond trading executives Antonio Cacorino and Fredrick Chapey, has hired 50 traders and bankers from larger financial firms, the Wall Street Journal said.
The hires include about 20 from Citigroup, as well as others from JPMorgan Chase & Co, Goldman Sachs Group Inc, Bank of America Corp and Carlyle Capital Corp, the paper cited StormHarbour as saying.
StormHarbour has also hired Robert Cummings and Sohail Khan from Citigroup, John Stomber from Carlyle and Chris O’Connor, who used to work at Bear Stearns Cos, according to the paper free business card.
“What we’re looking to do is to build a global markets firm,” Chapey told the paper.
The firm started advising clients on bond trades in June and aims to help investors and bond issuers buy and sell bonds that are hard-to-value, according to the paper.
StormHarbour could not be immediately reached for comment by Reuters.
(Reporting by Ajay Kamalakaran in Bangalore, Editing by Ian Geoghegan)
The highest home loan rates in more than two months drained demand for refinancing last week, dragging total U.S. mortgage applications to the lowest level since early March, the Mortgage Bankers Association said on Wednesday.
Refinancing has been the lifeblood of a renewed push for mortgage funding much of this year, and even that has lost steam despite borrowing costs staying relatively low, according to the industry group’s data.
The average 30-year mortgage rate rose 0.12% point to 4.81%, above a low of 4.61% two months ago though down more than a percentage point from a year ago.
Many homeowners are waiting for kinks to be worked out of refinance programs from the government as well as government-controlled Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500).
The hope is that once the hurdles in the refinance process are surmounted, consumers can return to slicing monthly housing costs and stimulating the recessionary economy by spending some of those savings.
Total U.S. mortgage applications fell 14.2% in the week ended May 22 to 786.0 on a seasonally adjusted basis, 37% below its recent peak of 1,250.6 in early April.
Many consumers are holding out for even lower rates and prices. Caution about making such a big purchase if jobs are at risk has also kept many buyers sidelined.
"People are calling but not necessarily willing to act," said Brad Sherman, vice president of residential lending at Nationwide Mortgage Services in Rockville, Maryland. "We keep hearing stories that housing prices are continuing to fall and people are nervous to commit new money" to buy when it could soon cost less.
The Mortgage Bankers Association’s measure of demand for loans to buy homes rose by 1% to 256.6 last week, but has shown scant momentum during the keenly watched spring sales season.
In the meantime, those waiting for lower rates likely also saw home values slide versus the size of their loan, possibly to levels that kept lenders from approving a refinancing payday loans for bad credit.
"As far as refinancing goes, people are counting on some of these Fannie Mae and Freddie Mac programs to fully kick in, and there are some problems with them that they haven’t yet ironed out," Sherman said.
Requests for loans to refinance slumped 18.9% last week to 3,890.4, about 43% below the 6,813.5 peak in early April. Refinancings accounted for just over 69% of all applications, after hovering closer to 75% in recent weeks.
Affordability remains at record highs, but some key obstacles remain before the housing crisis becomes history.
Fixed mortgage rates still remain near record lows. The average home price nationwide has been slashed by more than 32% from the 2006 highs, according to the Standard & Poor’s/Case-Shiller indexes.
The market may be on the doorstep of stabilization, according to some housing analysts, but a recovery won’t be forthcoming with unemployment rising and foreclosures still setting records.
"We’ve seen traffic on our site grow every single month since the beginning of the year so there’s a huge amount of pent-up demand, particularly from first-time home buyers," said Pete Flint, San Francisco-based chief executive of Trulia, a real estate Web site.
But there will be bargains for the next few years, curbing the urgency to purchase immediately, he said.
"The housing market is not going to recover until foreclosures stabilize and reduce," which is unlikely in the short run, Flint said. "I would feel a lot more hopeful for the housing market when I see some positive signs in the employment statistics."
The U.S. unemployment rate of 8.9% in April was the highest in more than a quarter century and is widely expected to climb.
Lehman Brothers Holdings Inc’s U.S. estate administrators will ask a federal judge on Tuesday to approve a framework for coordinating bankruptcy proceedings for the bank’s subsidiaries worldwide, putting them at odds with its administrators in the UK, the Wall Street Journal said.
Lehman’s UK estate administrator PricewaterhouseCoopers (PwC), who represents the bank’s main European arm, maintains the estate is governed by local rules and the interests of its own creditors, according to the paper.
A global protocol is “unnecessary, insufficiently tailored and unacceptably burdensome,” the paper quoted Tony Lomas, a PwC partner, as saying payday loan.
Lehman’s London-based estate held about a third of the firm’s estimated $630 billion in assets before it filed for bankruptcy in September 2008, the paper said, adding that the estate holds data essential to insolvency proceedings among other smaller European subsidiaries.
Lehman’s U.S. administrators and PwC could not be reached for comment.
(Reporting by Ajay Kamalakaran in Bangalore; editing by John Stonestreet)
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