Overdraft fees are like a movie monster that just won't die. No amount of public outrage or regulation can slay the beast.
But the banks aren't the only ones casting overdrafts in financial sequels: Truth is, consumers who don't properly manage their accounts, or who have money problems, keep breathing life into the overdraft dragon.
"Overdrafts are part of the small advance and loan market," explains G. Michael Moebs, CEO of Moebs Services. Other parts of that "market" include credit card cash advances, transfers from deposit accounts or small lines of credit, payday loans, pawn loans, even gifts and loans from family and friends -- and at the extreme, loan sharks. "The surprise is, no matter how much government tries to regulate and legislate away this small loan market, it keeps coming back," says Moebs. "People want and need a funding safety net."
According to Moebs Services, a consulting firm for the banking industry, overdraft revenue in the second quarter of 2011 was up b $700 million (from $30.1 billion in the first quarter to $30.8 billion) at both banks and credit unions. The average number of overdrafts per household remained fairly even.
In the majority of cases, overdrafts are accidents, something that happens when people don't keep track of their transactions. However, a surprisingly large fraction -- 26%, according to Moebs -- are intentional. The Moebs study found that 34 million Americans use overdrafts to fill a shortfall of funds, while 19 million of them go to payday lenders. "People have short term needs: medical, auto repairs, relative in trouble, or they are just short cash in some pay periods," says Moebs.
With median overdraft fees at $28, the cost of those accidents and choices adds up. Worse still, Moebs estimates that typically, 90% of overdraft fees are paid by the poorest 10% of customers.
The Pros and Cons of Overdrafts
Linda Sherry, director of National Priorities for Consumer Action, points out that there's more than one type of overdraft, and says the good and bad varieties of overdraft protection shouldn't be lumped together.
"While overdrafts can serve as a short-term loan, we have some important caveats," she says. "We are not talking about 'automatic' overdraft or bounce protection. We are talking about the kind of overdraft protection that you apply for and it covers your overdrafts and charges you only a reasonable transaction fee and any interest on the loan. This one spares you overdraft fees altogether. Most reputable banks offer this."
"Banks also offer the kind of overdraft protection that we don't believe in -- when people overdraft they pay the overdraft but still charge a hefty overdraft fee of $30 or so. We urge caution in allowing a bank to do this," says Sherry.
Moebs argues though, that increased regulation of overdrafts does more harm than good. "Those Americans that rely on overdrafts and advance payday loans, do not have the FICO score to qualify for a line of credit or credit card," said Moebs, in a prepared statement. "By creating unintended consequences, such as predatory lending from loan sharks, adding limits to overdraft volume or price will do more harm than good."
"Regulators should get out of and stay out of the short term money needs of consumers -- they cause more problems than solutions. Instead of trying to tell consumers what they need and how to manage their money, let the market do it," says Moebs, whose clients include banking and savings institutions.
"The huge mistake that many make when looking at overdrafts, payday loans and pawn loans, is trying to measure it by large loan standards -- namely APR. It's like bringing a baseball speed gun used to measure the velocity of a pitch to measure the speed of a college or NFL football player. Overdrafts are measured by fee amounts, not rates."
Consumers Still Need Protection
Regulators clearly disagree with that: Overdraft fees remain high on their agenda. In 2009, the Federal Reserve stepped in with new rules to make overdrafts and fees more transparent. Since then, some banks have gone even further and eliminated the overdraft option on ATM and debit transactions. Other banking regulators have either proposed or issued supervisory guidance governing the banks that they oversee.
The newly formed Consumer Financial Protection Bureau, too, is taking on overdrafts. "The Bureau will carefully assess how we can best ensure that the overall market for short-term credit is fair, transparent, and competitive," said Raj Date, special advisor to the Secretary of the Treasury for the CFPB, in a recent speech at the Lessons Learned from the Financial Crisis: The Need for the CFPB event in Philadelphia. "We will be monitoring the impact of the recent regulatory and supervisory interventions. If we find that these interventions are not working as intended, we will adjust. And if we find that additional action is needed, we will act."
What's the best advice for consumers? Says Moebs, "Have your checking account at a community bank or credit union, because the price is less and you will get the short-[term] funding you need and want."
See full article from DailyFinance: http://srph.it/nfEnwx
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http://www.dailyfinance.com/2011/09/23/cash-strapped-americans-cant-break-the-overdraft-habit/
Minggu, 25 September 2011
Senin, 19 September 2011
IBM to pay $10 million to settle Asian bribe case
WASHINGTON (AFP) – IBM has agreed to pay $10 million to settle charges it gave cash and gifts to Chinese and South Korean officials to win contracts for mainframe and personal computers and other products.
The agreement with the US Securities and Exchange Commission (SEC) calls for the US computer titan to pay disgorgement of $5.3 million, interest of $2.7 million and a civil penalty of $2 million.
Under the agreement, which is subject to court approval and was released by the SEC on Friday, IBM does not admit or deny the allegations it violated the Foreign Corrupt Practices Act (FCPA).
In the complaint filed with the US District Court for the District of Columbia, the SEC outlined the accusations against IBM, which is based in Armonk, New York.
The complaint detailed instances of IBM Korea employees allegedly handing over envelopes filled with cash to South Korean officials in parking lots, providing them with free notebook computers, fiddling bid sheets and making payments to the bank account of a "hostess in a drink shop."
It said employees of IBM subsidiaries and a majority-owned joint venture provided cash and improper gifts, travel and entertainment to Chinese and South Korean government officials between 1998 and 2009.
From 1998 to 2003, employees of IBM Korea and joint venture LG IBM PC Co. paid $207,000 in cash bribes and gave improper gifts to South Korean government officials to secure the sale of IBM products, the complaint said.
It said that from 2004 to 2009, employees of IBM China provided overseas trips, entertainment and improper gifts to Chinese government officials.
"The misconduct in China involved several key IBM China employees and more than 100 IBM China employees overall," the complaint said.
IBM China employees "created slush funds at local travel agencies in China that were then used to pay for overseas and other travel expenses incurred by Chinese government officials," it said.
"In addition, IBM China employees created slush funds at its business partners to provide a cash payment and improper gifts, such as cameras and laptop computers, to Chinese government officials," it added.
"Deficient internal controls allowed employees of IBM's subsidiaries and joint venture to use local business partners and travel agencies as conduits for bribes or other improper payments to South Korean and Chinese government officials over long periods of time," the complaint said.
It said improper payments were recorded as "legitimate business expenses."
In a statement acknowledging the settlement, IBM said it "insists on the highest ethical standards in the conduct of its business and requires all employees to follow its policies and procedures for conducting business."
IBM shares were up 0.95 percent at $155.65 shortly before the closing bell on Wall Street.
The agreement with the US Securities and Exchange Commission (SEC) calls for the US computer titan to pay disgorgement of $5.3 million, interest of $2.7 million and a civil penalty of $2 million.
Under the agreement, which is subject to court approval and was released by the SEC on Friday, IBM does not admit or deny the allegations it violated the Foreign Corrupt Practices Act (FCPA).
In the complaint filed with the US District Court for the District of Columbia, the SEC outlined the accusations against IBM, which is based in Armonk, New York.
The complaint detailed instances of IBM Korea employees allegedly handing over envelopes filled with cash to South Korean officials in parking lots, providing them with free notebook computers, fiddling bid sheets and making payments to the bank account of a "hostess in a drink shop."
It said employees of IBM subsidiaries and a majority-owned joint venture provided cash and improper gifts, travel and entertainment to Chinese and South Korean government officials between 1998 and 2009.
From 1998 to 2003, employees of IBM Korea and joint venture LG IBM PC Co. paid $207,000 in cash bribes and gave improper gifts to South Korean government officials to secure the sale of IBM products, the complaint said.
It said that from 2004 to 2009, employees of IBM China provided overseas trips, entertainment and improper gifts to Chinese government officials.
"The misconduct in China involved several key IBM China employees and more than 100 IBM China employees overall," the complaint said.
IBM China employees "created slush funds at local travel agencies in China that were then used to pay for overseas and other travel expenses incurred by Chinese government officials," it said.
"In addition, IBM China employees created slush funds at its business partners to provide a cash payment and improper gifts, such as cameras and laptop computers, to Chinese government officials," it added.
"Deficient internal controls allowed employees of IBM's subsidiaries and joint venture to use local business partners and travel agencies as conduits for bribes or other improper payments to South Korean and Chinese government officials over long periods of time," the complaint said.
It said improper payments were recorded as "legitimate business expenses."
In a statement acknowledging the settlement, IBM said it "insists on the highest ethical standards in the conduct of its business and requires all employees to follow its policies and procedures for conducting business."
IBM shares were up 0.95 percent at $155.65 shortly before the closing bell on Wall Street.
Foolish FAQ: The Fukushima Nuclear Crisis
Japan continues to deal with an incredible tragedy right now. The earthquake on March 11 triggered a tsunami that hit the country's east coast, killing thousands and decimating the landscape. We mourn the losses and pray for the survivors and relief workers.
In the U.S., our attention has now shifted toward the nuclear power generation plants at Fukushima Daiichi, heavily damaged by the quake and tsunami, as operators work tirelessly to fend off nuclear disaster.
The struggles at Fukushima have brought many companies into the spotlight, including reactor designer General Electric (NYSE: GE - News) and Exelon (NYSE: EXC - News), the largest nuclear power plant operator in the United States. We've also seen a renewed focus on alternative energy sources from solar power companies such as First Solar, Trina Solar, and Suntech Power and wind energy companies like Broadwind Energy. While we need healthy debate about energy policies in the future, we have the opportunity to learn more about nuclear power today.
To get the scoop, I interviewed my father, Butch Meier, who's had decades of experience working with nuclear energy. The views he will express are his own, but based on his experience, he's got plenty of interesting things to say. We'll learn more about the situation at Fukushima, what the workers are trying to prevent, and how you can help. So let's get right to it.
David Meier: I may know about your background, but readers don't. What's your experience with nuclear energy?
Butch Meier: I studied reactor theory and design at the United States Naval Academy and in graduate school on an Atomic Energy Commission Fellowship at the University of Arizona. I served in U.S. Navy nuclear submarines for 29 years. Since 1998, I have done consulting work in related fields.
David: Why is cooling water so important for the situation at Fukushima right now?
Butch: Keeping things cool is vital.
Here's the problem the Japanese are trying to overcome: The earthquake, followed by the tsunami, absolutely wiped out their infrastructure, causing the cooling pumps to lose power. They have also experienced fires in the pumps providing cooling water to the spent fuel pools. Without a flow of cooling water, the water in the core or spent fuel pool eventually boils. With no water to remove the decay heat, the temperature of the fuel rises, causing the pressure to increase. In the limit, it can increase to the point that the fuel cell ruptures, which would release radioactive fission products. Chernobyl is the only example where this has happened.
(Editor's note: Tokyo Electric Power is working hard to restore dedicated power to the reactors in order to get the cooling systems working.)
David: Are the reactors running right now?
Butch: No. The reactors are shut down, and there is no worry about them restarting. The issue centers on the fission products in the shutdown reactors -- atoms that are produced when uranium atoms split in the fission process.
David: Speaking of uranium, the fuel used in a nuclear reactor, what goes on inside to create heat and radioactive byproducts?
Butch: When a uranium atom fissions, or splits, it releases energy as it splits into two other midweight atoms. ... These unstable radioactive atoms decay as they seek a stable state, emitting radiation in the process. Fissions still occur when the reactors are shut down -- just not at the rate when the reactor is "critical" or producing power. The shutdown fission rate is 8-10 or more orders of magnitude lower than during reactor operation.
Two types of radiation -- gamma rays (think of X-rays) and neutrons -- emitted from these decay products generate heat by mechanical interaction. Some of the neutrons are absorbed in the uranium fuel, causing more fission and more heat. So while the shutdown reactor doesn't require anywhere near the cooling needed when it is operating, it still requires cooling. Even the spent fuel removed from the reactors still generates heat. Water is the most prevalent coolant.
You may have heard that boric acid or borated water is being pumped into the cores. (Editor's note: South Korea has agreed to send some of its boron reserve to Japan.) Boron has a tremendous affinity for neutrons. It prefers to absorb them rather than the fuel, reducing the heat generated.
David: There have been reports of explosions at the plant. How do you think those happened?
Butch: Steam pressure from boiling water in the uncooled core has to be vented, or it could rupture the core vessel and the containment around the core vessel. (Editor's note: For a reactor diagram, see "Inside the Reactors" here.) Hydrogen is also produced in the core. The gas is vented into the containment building around the two inner containments. The vented gas also contains some radioactivity. The explosions that have occurred involve this hydrogen-steam mixture buildup, coupled with the loss of power and the ability to ventilate the containment building.
David: News headlines flash that radiation levels are high or rising. That doesn't tell the whole story. Break down the types of radiation -- how it can interact with humans or the environment, and how can people protect themselves against radiation?
Butch: Radiation is a challenging subject to discuss meaningfully. You can't see it, feel it, or taste it. We are not familiar with units, which are millisieverts, unlike a gallon of milk or the yards on a football field. But the effects of the various types of radiation and doses/dose rates -- the intensity and accumulation of radiation -- are well understood and documented. (Editor's note: This CNN blog entry does a nice job of putting things in perspective.)
There are four types of radiation. Gamma and neutron radiation, discussed above, can penetrate the body and cause long-term health problems under chronic exposure. Exposure to extremely concentrated doses could be immediately fatal. From what I have read, Fukushima is nowhere near exposures that are harmful.
Two others -- alpha and beta -- don't penetrate, and are only a problem if you ingest them or absorb them. You mitigate the gamma and neutron radiation by time, distance, and shielding. You mitigate alpha and beta radiation by staying inside or using filters or masks. The contaminations you see and hear about on TV are predominantly alpha and beta. (Editor's note: Japanese officials have been ordering people to stay inside and pictures show relief working with masks covering their noses and mouths.)
The release of the fission products in the cores and spent fuel pose the radiation hazard due to large amounts of long-lived penetrating radioactivity. Two fission product isotopes, cesium and strontium, are readily taken up by the body (bones, marrow), plants, food supply, etc. While they are not the most abundant fission products, they are long-lived and are a significant hazard.
Another fission product of concern is iodine, which concentrates in the thyroid. The potassium iodide tablets the government passed out are designed to flood the thyroid so it can't take up any more, thus blocking any released radioactive iodine. Note that the government has just made the tablets available they haven't told the people to take them, because they do not presently anticipate fission products released. If they do direct the people to take them, the problem is getting worse.
David: Let's go back to the beginning. On March 11, there was an earthquake measuring 8.9 on the Richter scale off the northeast coast of Japan. This caused a tsunami to hit the east coast, causing massive damage to homes, land, and infrastructure, including loss of power, reduced communication, and damage to the Fukushima nuclear plant. How well are Japanese officials and workers handling the situation?
Butch: Some perspective will help. The 1906 San Francisco earthquake is estimated as an 8 on the Richter scale -- it flattened the city. The 8.9 quake is one of the three or four most powerful ever. For perspective, the energy released in the Japan earthquake is about 30 times that released in San Francisco. Japanese officials have an almost impossible task, but they are doing well in my opinion.
David: The troubles at Fukushima conjure images of Three Mile Island for many, Chernobyl for others, and perhaps even Hiroshima and Nagasaki for some. Should operators lose control of the recovery effort in the plant, what would you be most worried about?
Butch: The release of the fission products in the cores and spent fuel -- no question.
David: We shouldn't take the possibility of a nuclear disaster lightly -- and no one is. What do you think is missing from the disaster in Japan?
Butch: Essentially the same thing that was missing in the Three Mile Island accident -- useful practical public education of the basics of nuclear power, including the risks, and media reporting that uses the context of technical facts. Our news media is quite driven by hysteria and sensationalism rather than facts and information -- that is not useful.
How you can helpThe tragedy in Japan gives us a great opportunity to learn. I hope that you leave this interview with more knowledge about the challenges at Fukushima.
There's also a chance to improve the lives of the survivors over in Japan by donating to the relief efforts. Please consider making a contribution. The story of the struggle at Fukushima has pushed the needs of the tsunami victims off of the front page, but you can read "Donating to Japan" to learn more about how to make a contribution.
In the U.S., our attention has now shifted toward the nuclear power generation plants at Fukushima Daiichi, heavily damaged by the quake and tsunami, as operators work tirelessly to fend off nuclear disaster.
The struggles at Fukushima have brought many companies into the spotlight, including reactor designer General Electric (NYSE: GE - News) and Exelon (NYSE: EXC - News), the largest nuclear power plant operator in the United States. We've also seen a renewed focus on alternative energy sources from solar power companies such as First Solar, Trina Solar, and Suntech Power and wind energy companies like Broadwind Energy. While we need healthy debate about energy policies in the future, we have the opportunity to learn more about nuclear power today.
To get the scoop, I interviewed my father, Butch Meier, who's had decades of experience working with nuclear energy. The views he will express are his own, but based on his experience, he's got plenty of interesting things to say. We'll learn more about the situation at Fukushima, what the workers are trying to prevent, and how you can help. So let's get right to it.
David Meier: I may know about your background, but readers don't. What's your experience with nuclear energy?
Butch Meier: I studied reactor theory and design at the United States Naval Academy and in graduate school on an Atomic Energy Commission Fellowship at the University of Arizona. I served in U.S. Navy nuclear submarines for 29 years. Since 1998, I have done consulting work in related fields.
David: Why is cooling water so important for the situation at Fukushima right now?
Butch: Keeping things cool is vital.
Here's the problem the Japanese are trying to overcome: The earthquake, followed by the tsunami, absolutely wiped out their infrastructure, causing the cooling pumps to lose power. They have also experienced fires in the pumps providing cooling water to the spent fuel pools. Without a flow of cooling water, the water in the core or spent fuel pool eventually boils. With no water to remove the decay heat, the temperature of the fuel rises, causing the pressure to increase. In the limit, it can increase to the point that the fuel cell ruptures, which would release radioactive fission products. Chernobyl is the only example where this has happened.
(Editor's note: Tokyo Electric Power is working hard to restore dedicated power to the reactors in order to get the cooling systems working.)
David: Are the reactors running right now?
Butch: No. The reactors are shut down, and there is no worry about them restarting. The issue centers on the fission products in the shutdown reactors -- atoms that are produced when uranium atoms split in the fission process.
David: Speaking of uranium, the fuel used in a nuclear reactor, what goes on inside to create heat and radioactive byproducts?
Butch: When a uranium atom fissions, or splits, it releases energy as it splits into two other midweight atoms. ... These unstable radioactive atoms decay as they seek a stable state, emitting radiation in the process. Fissions still occur when the reactors are shut down -- just not at the rate when the reactor is "critical" or producing power. The shutdown fission rate is 8-10 or more orders of magnitude lower than during reactor operation.
Two types of radiation -- gamma rays (think of X-rays) and neutrons -- emitted from these decay products generate heat by mechanical interaction. Some of the neutrons are absorbed in the uranium fuel, causing more fission and more heat. So while the shutdown reactor doesn't require anywhere near the cooling needed when it is operating, it still requires cooling. Even the spent fuel removed from the reactors still generates heat. Water is the most prevalent coolant.
You may have heard that boric acid or borated water is being pumped into the cores. (Editor's note: South Korea has agreed to send some of its boron reserve to Japan.) Boron has a tremendous affinity for neutrons. It prefers to absorb them rather than the fuel, reducing the heat generated.
David: There have been reports of explosions at the plant. How do you think those happened?
Butch: Steam pressure from boiling water in the uncooled core has to be vented, or it could rupture the core vessel and the containment around the core vessel. (Editor's note: For a reactor diagram, see "Inside the Reactors" here.) Hydrogen is also produced in the core. The gas is vented into the containment building around the two inner containments. The vented gas also contains some radioactivity. The explosions that have occurred involve this hydrogen-steam mixture buildup, coupled with the loss of power and the ability to ventilate the containment building.
David: News headlines flash that radiation levels are high or rising. That doesn't tell the whole story. Break down the types of radiation -- how it can interact with humans or the environment, and how can people protect themselves against radiation?
Butch: Radiation is a challenging subject to discuss meaningfully. You can't see it, feel it, or taste it. We are not familiar with units, which are millisieverts, unlike a gallon of milk or the yards on a football field. But the effects of the various types of radiation and doses/dose rates -- the intensity and accumulation of radiation -- are well understood and documented. (Editor's note: This CNN blog entry does a nice job of putting things in perspective.)
There are four types of radiation. Gamma and neutron radiation, discussed above, can penetrate the body and cause long-term health problems under chronic exposure. Exposure to extremely concentrated doses could be immediately fatal. From what I have read, Fukushima is nowhere near exposures that are harmful.
Two others -- alpha and beta -- don't penetrate, and are only a problem if you ingest them or absorb them. You mitigate the gamma and neutron radiation by time, distance, and shielding. You mitigate alpha and beta radiation by staying inside or using filters or masks. The contaminations you see and hear about on TV are predominantly alpha and beta. (Editor's note: Japanese officials have been ordering people to stay inside and pictures show relief working with masks covering their noses and mouths.)
The release of the fission products in the cores and spent fuel pose the radiation hazard due to large amounts of long-lived penetrating radioactivity. Two fission product isotopes, cesium and strontium, are readily taken up by the body (bones, marrow), plants, food supply, etc. While they are not the most abundant fission products, they are long-lived and are a significant hazard.
Another fission product of concern is iodine, which concentrates in the thyroid. The potassium iodide tablets the government passed out are designed to flood the thyroid so it can't take up any more, thus blocking any released radioactive iodine. Note that the government has just made the tablets available they haven't told the people to take them, because they do not presently anticipate fission products released. If they do direct the people to take them, the problem is getting worse.
David: Let's go back to the beginning. On March 11, there was an earthquake measuring 8.9 on the Richter scale off the northeast coast of Japan. This caused a tsunami to hit the east coast, causing massive damage to homes, land, and infrastructure, including loss of power, reduced communication, and damage to the Fukushima nuclear plant. How well are Japanese officials and workers handling the situation?
Butch: Some perspective will help. The 1906 San Francisco earthquake is estimated as an 8 on the Richter scale -- it flattened the city. The 8.9 quake is one of the three or four most powerful ever. For perspective, the energy released in the Japan earthquake is about 30 times that released in San Francisco. Japanese officials have an almost impossible task, but they are doing well in my opinion.
David: The troubles at Fukushima conjure images of Three Mile Island for many, Chernobyl for others, and perhaps even Hiroshima and Nagasaki for some. Should operators lose control of the recovery effort in the plant, what would you be most worried about?
Butch: The release of the fission products in the cores and spent fuel -- no question.
David: We shouldn't take the possibility of a nuclear disaster lightly -- and no one is. What do you think is missing from the disaster in Japan?
Butch: Essentially the same thing that was missing in the Three Mile Island accident -- useful practical public education of the basics of nuclear power, including the risks, and media reporting that uses the context of technical facts. Our news media is quite driven by hysteria and sensationalism rather than facts and information -- that is not useful.
How you can helpThe tragedy in Japan gives us a great opportunity to learn. I hope that you leave this interview with more knowledge about the challenges at Fukushima.
There's also a chance to improve the lives of the survivors over in Japan by donating to the relief efforts. Please consider making a contribution. The story of the struggle at Fukushima has pushed the needs of the tsunami victims off of the front page, but you can read "Donating to Japan" to learn more about how to make a contribution.
French minister Besson against "destabilizing Renault"
Renault admitted this month it had wrongly dismissed three senior executives after it had been tricked into believing they had sold vital know-how on the electric car project to third parties, possibly involving China.
The three men were fired in January on suspicion of industrial espionage. All denied wrongdoing from the start and began legal action against the carmaker. A Renault security manager has been placed under investigation for suspected fraud.
Ghosn and right-hand man Patrick Pelata held onto their jobs after the climbdown, but despite giving up bonuses they have come under continued public pressure over the fiasco, whose impact rippled well beyond the world of automobile research.
The affair embarrassed France's government, which owns 15 percent of Renault, and caused a rift with China, weeks ahead of a key visit to the country by President Nicolas Sarkozy.
Beijing implicitly rebuked France over its handling of the matter on Thursday, saying it hoped that people checked facts before unjustly implicating the country.
Relations were strained when a French government source, speaking before the case collapsed, said investigators were following up a possible link with China.
Besson and Finance Minister Christine Lagarde issued a joint statement last week saying the government would ensure anyone responsible for the discredited espionage claims was dealt with.
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