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March 10th, 2010
05:07 PM ET

Financial Dispatch: Big bank scrapping some fees

 

 Andrew Torgan
CNN Financial News Producer 

Facing a withering crossfire of complaints about excessive fees, Bank of America says that it plans to ditch overdraft fees on debit card purchases this summer. 

The Federal Reserve recently announced new requirements that are slated to go into effect in July, but BofA’s move goes one step further

The Fed's new rules will prevent banks from automatically enrolling customers in overdraft protection programs, which charge fees when consumers spend more than they have in their accounts. More than 75% of banks automatically sign customers up for overdraft programs, according to a study by the FDIC. 

But under BofA's new policy, the bank will deny transactions for customers using their debit cards if they didn't have sufficient funds in their checking accounts to cover the charges.

For customers who attempt to withdraw insufficient funds at one of BofA’s 18,000 ATM machines, the bank will alert them that a $35 overdraft fee will kick in if they continue and ask them to confirm or decline the transaction. 

The new policy kicks in for new Bank of America customers beginning in June, and for existing customers starting in early August. 

Rival bank JPMorgan Chase reduced the maximum number of daily overdraft fees from six to three in January, and says it will implement additional reforms at the end of the month and this summer. 

The Center for Responsible Lending says overdraft fees on debit card and ATM transaction account for about half of all overdraft fees, which total nearly $24 billion annually.

State unemployment picture brightens

A total of 30 states and Washington, D.C., reported rising unemployment rates in January, down from 43 in December.

Jobless rates decreased in nine states, according to the Labor Department's monthly report on state unemployment. Eleven states reported no change.

Twenty-five states posted jobless rates lower than the national unemployment rate of 9.7% in January. Eleven states and Washington, D.C., reported rates higher than the national average, down from 17 states and Washington, D.C. posting rates higher than the national average of 10% in December.

Michigan again had the highest rate of unemployment at 14.3%. Second was Nevada at 13%, followed by Rhode Island at 12.7%. For South Carolina, fourth at 12.6%, and California, fifth at 12.5%, the January jobless rates were record highs.

North Dakota was again the state with the lowest jobless rate, at 4.2%.

Remember Pets.com? Webvan?

It was 10 years ago today that the Nasdaq closed at its all-time high above the 5,000 mark, fueled by dot-com hysteria and a series of moon shot IPOs. Little did we know back then that it was actually “dotterdammerung” - or the “twilight of the dot-coms.”

Today, the Nasdaq closed at less than half that level - 2,358 and change.

So take a trip with CNNMoney.com back to a time when some entrepreneurs believed that shipping a 40lb. bag of dog food or a single pint of ice cream to your front door or would make them millionaires.

It’s a tale of sock puppets, Super Bowl commercials and a seemingly inexhaustible supply of hubris.

Follow the money… on Twitter: @AndrewTorganCNN


Filed under: Andrew Torgan • Finance
March 5th, 2010
12:03 PM ET

Financial Dispatch: Unemployment rate holds steady at 9.7%

Andrew Torgan
CNN Financial News Producer

It’s the report that Wall Street and Main Street have been waiting for all week: the government says the economy shed 36,000 jobs last month, while the unemployment rate held steady at 9.7%. Both readings came in better than expectations.

But the results were still worse than the previous month, as just 26,000 jobs were lost in January, according to the revised estimate.

Also, the government said the winter storms that blanketed the East Coast with several feet of snow last month possibly skewed the results. The Labor Dept.'s jobs survey was conducted in the middle of February, which coincided with blizzards that temporarily shuttered some businesses and kept many workers home without pay. Those employees would not have been counted on the government's payroll survey.

Construction continued to be one of the worst-hit sectors, cutting 64,000 jobs in February. Retailers trimmed 400 jobs after adding 41,000 positions in January. Manufacturing businesses added just 1,000 jobs, down from 20,000 new jobs the month before.

But several industries showed solid gains in employment, including health care and the service industries. Also encouraging was the addition of 47,500 temporary workers, whose hiring often signals that employers are starting to gear up again.

All told, nearly 15 million people unemployed – or roughly the populations of Pennsylvania and Nevada combined.

Still, the number of workers who were seeking full-time employment but were working only part-time hours rose, pushing the so-called “underemployment rate” up to 16.8% from 16.5% in January.

The silver lining

So is there any good news? Well if you are lucky enough to have a job, your paycheck may be starting to get bigger – and that’s a sign of improvement in the job market.

Even a small gain in income is significant. If consumers have more money in their pockets, that can help to boost consumer spending and create the demand that will prompt a resumption of hiring.

According to the government's report, average hourly earnings have risen by nearly 2% over the past 12 months. And that's not the only evidence of a turnaround in pay.

An analysis of income and employment taxes withheld from more than 130 million U.S. workers by TrimTabs Investment Research found that total salaries and wages increased by 0.7% in February compared to a year ago. This is the first increase since 2008, and it represents $42 billion extra dollars in consumers' pockets compared to a year ago.

Job creation bill heads back to Senate

It’s all still a work in progress though… and lawmakers' efforts to spur job creation were delayed once again Thursday after the House amended a $15 billion Senate bill before passing it.

The amendments mean the Senate must again approve the four-prong measure, this time with no changes, if President Obama is to sign it into law. The Senate may not take up the legislation until next week.

The bill would exempt employers from Social Security payroll taxes on new hires who were unemployed; fund highway and transit programs through 2010; extend a tax break for business that spend money on capital investments, such as equipment purchases; and expand the use of the Build America Bonds program, which helps states and municipalities fund capital construction projects.

However, the House added two provisions to pay for the infrastructure spending and corporate tax breaks. The amendments require foreign financial institutions to give the IRS more information to help it catch tax cheats, and delays a tax break for foreign interest payments. The measure passed by a 217-201 vote.

Tax breaks for job seekers

We all know that job hunting can be expensive. The costs of hiring career coaches, printing hundreds of résumés at Kinko's and flying out for job interviews can really add up, especially for someone who doesn't have an income.

But finally, there's a benefit to being unemployed: job seekers can deduct search-related expenses, including employment and outplacement agency fees, travel costs and résumé costs. Your job search doesn't even have to result in employment for you to qualify!

Check out the details on CNNMoney.com.

Follow the money… on Twitter: @AndrewTorganCNN


Filed under: Andrew Torgan • Economy • Finance • Job Market • Unemployment
March 4th, 2010
03:52 PM ET

Financial Dispatch: Jobs numbers take center stage

Andrew Torgan
CNN Financial News Producer

New claims for jobless benefits fell last week - another sign that layoffs may be easing as the economy slowly recovers. This comes on the heels if two reports out Wednesday that showed the pace of job cuts continued to slow last month, and ahead of Friday’s all-important February employment report.

The Labor Dept. says that initial claims for unemployment insurance fell by 29,000 to a seasonally-adjusted 469,000 in the week ended Feb. 27.

In addition, the number of people continuing to claim jobless benefits fell by 134,000 to 4.5 million in the week ended Feb. 20, the most recent data available.

But continuing claims only reflect people filing each week after their initial claim until the end of their standard benefits, which usually last 26 weeks. The figures do not include those people who have moved to state or federal extensions, or people whose benefits have expired.

FULL POST


Filed under: Andrew Torgan • Economy • Finance • Job Market • Unemployment
February 11th, 2010
01:06 PM ET

Financial Dispatch: Jobless claims and foreclosures drop

Andrew Torgan
CNN Financial News Producer

The number of Americans filing first-time claims unemployment insurance fell sharply last week to the lowest level in more than a year

Initial claims for jobless benefits fell by 43,000 to a seasonally adjusted 440,000 in the week ended Feb. 6, the Labor Dept. said. And the number of people who continue to collect benefits for a week or more - known as continuing claims – dropped by 79,000 to just over 4.5 million in the week ended Jan. 30, the most recent data available.

A Labor Dept. spokesman said the snow storm that crippled much of the East Coast last week did not impact the number of jobless claims filed, but at least one analyst expects that next week's numbers – reflecting claims from this week - will definitely be impacted by Wednesday’s blizzard.

The largest increase in initial claims for the week ending Jan. 30 was in Pennsylvania (+10,495) with layoffs in the construction, trade, and service industries.

The largest decrease was in New Jersey (-1,819) due to fewer layoffs in trade and service industries.

FULL POST

January 27th, 2010
12:58 PM ET

Wall Street bonuses are outrageous

Nell Minow says Wall Street banks are earning big profits due to government bailouts.

Nell Minow says Wall Street banks are earning big profits due to government bailouts.

Nell Minow
Special to CNN

If insanity is doing the same thing and expecting a different result, the post-crisis pay plans in the finance industry qualify for commitment. The Wall Street financial firms claim to have made some changes, but all the ones we have seen so far are cosmetic, required by statute, weakened by loopholes, or circumvented.

First, the boards of Wall Street financial institutions implemented pay plans that were a major and direct cause of the financial meltdown. These purported bastions of capitalism protected themselves from risk by limiting their downside exposure while taking their pay off the top. Second, rinse and repeat - they took bailout money and kept paying themselves as though they earned it.

I believe in the market. But executives and their boards of directors have hijacked the market to externalize costs and it is doing critical damage to capitalism. The key is always persuading providers of capital that managers will use the funds to create shareholder value and not to enrich themselves. This compensation mess calls that into question.

Keep reading...


Filed under: Bailout Turmoil • Economy • Finance
January 25th, 2010
06:45 PM ET

Financial Dispatch: Stocks inch higher

Andrew Torgan
CNN Financial News Producer

Stocks on Wall Street managed some slight gains today as investors weighed worries about the bank sector, the likelihood of Fed Chairman Ben Bernanke being confirmed for a second term and a troubling report on the housing market.

The Dow added 23 points or 0.2%. The S&P 500 added 5 points or 0.5% and the Nasdaq also gained 5 points or 0.3%.

Stocks plunged last week after President Obama proposed new limits on banks and talk swirled that Bernanke's term may not be renewed. In three sessions, the Dow, S&P 500 and Nasdaq all slumped 5%.

But those worries were tempered today at the start of a busy week for economic and earnings news. This week brings a Fed meeting, the first reading on fourth-quarter GDP growth, the president's State of the Union address and profit reports from a slew of major companies – including DuPont, Johnson & Johnson, and Travelers.

First out of the gate with earnings this week is Apple, which reported another strong quarter after the closing bell on the back of its current product lineup, which includes iPhones, iPods and Macintosh computers.

FULL POST


Filed under: Andrew Torgan • Economy • Finance • Housing Market • Technology
January 12th, 2010
02:20 PM ET

Financial Dispatch: Federal Reserve posts record profit

Andrew Torgan
CNN Financial News Producer

The Federal Reserve’s efforts to stabilize the financial system paid off handsomely last year as the central bank raked in a record-setting profit of more than $52 billion.

That reflects the highest earnings in the Fed’s nearly 100-year history.

Let’s put that into perspective: In 2008, oil giant ExxonMobil reported the largest annual profit in U.S. history, making $45.22 billion on the back of record-high oil prices.

And unlike most government agencies, the Fed funds itself from its own operations, and its member banks are required to return all profits to the U.S. Treasury after certain deductions. That means Ben Bernanke and Co. returned about $46 billion to taxpayers. Not too shabby an accomplishment for Time’s “Person of the Year 2009.”

The Fed's 2009 profit marks a 47% increase over 2008. It comes as the central bank took in interest payments on an expanding portfolio of securities issued by the Treasury and by the government-sponsored mortgage agencies Fannie Mae and Freddie Mac.

FULL POST


Filed under: Andrew Torgan • Economy • Finance • U.S. Federal Reserve • Unemployment • Wall St.
January 12th, 2010
11:43 AM ET

America's new financial capital is ... Washington

David Frum
CNN Contributor

The Wall Street Journal reported Friday that office rents in Washington are poised to overtake rents in New York City. Washington now boasts the lowest office vacancy rate in the nation.

New York City is bleeding jobs, unemployment is over 10 percent. Washington is booming as government agencies like TARP and the General Services Administration expand.

New York's crisis and Washington's growth is more than a business page story.

Over two centuries, American culture has been shaped by the physical separation of politics and finance. The British might centralize everything in London, the French in Paris, the other countries of Europe in their great capitals, but the United States divided these functions.

Keep Reading...


Filed under: Finance • Raw Politics
January 8th, 2010
05:14 PM ET

Financial Dispatch: Jobs are back! Oh, wait a minute…

Andrew Torgan
CNN Financial News Producer

Is the glass half empty? Or half full?

We lost far more jobs than we expected last month. But at the same time, the government now says we actually added jobs in November - snapping a streak of losses that goes back nearly two years to the start of the recession.

Employers cut 85,000 jobs in December, but the Labor Dept. revised its numbers for November to a net gain of 4,000 jobs from a loss of 11,000.

The unemployment rate stayed at 10% in the December, which was in-line with forecasts.

Construction and manufacturing, two sectors of the economy particularly hard hit during the recession, again suffered large job losses in December. Temporary help services and health care continued to add jobs.

The economy has lost 7.2 million jobs since the start of 2008. Losses for 2009 alone came to 4.2 million jobs, the most in one year since the government started tracking payrolls in 1939.

FULL POST


Filed under: Andrew Torgan • Economy • Finance • Job Market
January 6th, 2010
01:54 PM ET

Financial Dispatch: New year… same old issues

Andrew Torgan
CNN Financial News Producer

The jobs picture is at least a little brighter today as two reports say the pace of job losses eased in December.

Payroll-processor ADP said private-sector employers cut 84,000 jobs last month, the fewest since March 2008. It was the ninth straight month that job losses narrowed from the previous month.

In a separate report, outplacement firm Challenger, Gray & Christmas said that 45,094 job cuts were announced in December, 10% less than November's 50,349 cuts. It was the lowest total since December 2007, when 44,416 cuts were announced.

All this comes ahead of Friday’s official employment report for December from the Labor Dept. Estimates there are all over the map, and experts are forecasting everything from a loss of 25,000 jobs, to our first job gains since December of 2007.

From job losses to billion-dollar government bailouts…

GMAC, the troubled finance company that just last week received its third government bailout, said Tuesday it expects to post a record fourth-quarter loss of $5 billion.

FULL POST


Filed under: Andrew Torgan • auto bailout • Economy • Finance • Wall St.
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