Sep 30, 2007

How safe is your bank?

The specialists of pound the table trying to get folks to put their financial house in order. But it's not just consumers who need to wisely manage their finances, banks do too.

The Safe & Sound ratings feature is a quick and easy way for you to check the financial health of a bank, thrift or credit union before you open an account. It's an independent resource to assist you in making banking decisions.

Ratings are based on tests of the institutions' Capitalization, Asset quality, Earnings and Liquidity (CAEL).

Capitalization -- Measures how much of a company's assets are owned by the company or its shareholders, as opposed to being owned by creditors.

Asset quality -- Assesses the loans in a bank's portfolio. It especially focuses on how many of them are delinquent or risky.

Earnings -- This is the difference between revenues and expenses. It's the primary measure of a bank's profitability.

Liquidity -- Measures how well the bank can meet the expenses required for day-to-day operations, including a surge in cash withdrawals by customers.

We use publicly available quarterly data from regulatory agencies in the banking industry -- the Federal Deposit Insurance Corporation, Office of Thrift Supervision and the National Credit Union Administration. The testing assigns a value to each of the Safe & Sound CAEL categories and calculates a composite rating for each institution.

More than 10,000 FDIC-insured banks and thrifts and about 12,000 credit unions are analyzed. The Safe & Sound CAEL rating should not be confused with ratings used by the FDIC or any third party.

The strongest Safe & Sound CAEL rating is one; the weakest is five, in accordance with industry standards. has reversed this order in its graphic rankings for easy visual recognition. No report is available for institutions that don't have four quarters of historical financial data on file with the federal regulatory agencies. This may simply mean that the institution is too new to rate; it's not necessarily an indication of financial strength or weakness.

Financial institutions that show higher than normal asset growth are assigned a "G" qualifier in addition to their Safe & Sound CAEL rating. The "G" identifies institutions that have shown annual asset growth rates of 25 percent or greater. This rapid growth can be a sign of speculative, and perhaps imprudent, activity on the part of management. Regulatory agencies pay close attention to high asset growth that isn't a result of a merger.

The Safe & Sound rating feature provides comprehensive information for depositors, borrowers, creditors, industry professionals and regulators who need information regarding financial conditions of banks, thrifts and credit unions.

This information is believed to be reliable but the information is not guaranteed. In addition, events since the information was collected may have altered an institution's financial condition.

Dan Rafter


Sep 19, 2007

The Dirty Secret of Campus Credit Cards

by Jessica Silver-Greenberg

It was three years ago and Irene Leech still remembers the shock clearly. An associate professor at Virginia Tech who specializes in consumer affairs, she read the terms of the credit card that her school, together with JPMorgan Chase (JPM), was marketing to students, alumni, and staff. Behind the card's shiny surface, featuring the football stadium at sunset, the so-called "affinity" card offered some of the most unfavorable terms around for card users. Among other things, the card had what's known as "double-cycle" billing, where interest is calculated over two months instead of the typical one, resulting in higher finance charges. "I was shocked," she says.

The experience convinced Leech that it was time for her to take a stand. First in a limited way and now more broadly, she has been speaking out against the conflicts of interest that universities face when they strike business agreements with credit card companies. Chase ultimately dropped double-cycle billing on the Virginia Tech card, as it did for all cards earlier this year. But Leech warns that schools that get money from credit card companies through affinity contracts or other marketing agreements face intractable problems, in which the school's financial interests are in direct conflict with those of students and alumni.

"Students assume that if the university has an affinity contract with a bank to offer a credit card, the university will surely look after them," she says. "But these contracts are really money-makers for the school, and not about services to the students."

Million Dollar Relationships
Leech isn't just taking on Virginia Tech, which takes in seven figures from the Chase deal. Nearly every major university in the country has a multi-million-dollar affinity relationship with a credit card company. The deals can be worth nearly $20 million to a single university. Schools, especially public universities supported by state revenues, are coming under increasing financial pressure to generate new revenue these days, and deals with credit card companies can provide a steady stream of income. And in most cases the worse the card terms are for students and alumni, the more profitable they are for the schools.

At a time when state support for higher education has languished, these contracts have become major sources of cash for universities. The University of Tennessee, which raised eyebrows with a $16 million deal in 1998, recently signed a pact with Chase worth $10 million -- roughly $384 per student at a school with a total enrollment of 26,038. If Ohio State, with the nation's largest enrollment at 59,091, signed a similar deal, it could be worth more than $22 million.

Card issuers and schools say that these relationships are mutually beneficial. With affinity cards, the schools get income that they otherwise wouldn't, while alumni and students get the option of signing up for a credit card. The alumni association at Virginia Tech, which oversees the relationship with Chase, says its affinity card helps students and alumni build credit histories with unusually good service. "Hopefully card-users feel that they get more special care" says Thomas C. Tillar, vice-president for alumni relations at Virginia Tech. Some 20,000 people currently hold the card, including students, alumni, professors, and other staff.

A spokesman for Virginia Tech emphasizes that the business relationship with Chase is with the alumni association, which is a separate entity from the university. The alumni association does have the ability to negotiate contracts with Chase that include giving Chase direct mail access to students, alumni, and professors, and the opportunity to market at university athletic events.

As a growing number of college kids pile up mountains of credit-card debt, the entire issue of credit-card companies on campus is coming under increasing scrutiny. Earlier this year, the state legislatures in Texas, Oklahoma, and New York voted to clamp down on credit-card marketing to college students.

"Clear Conflict of Interest"
Congress plans to hold hearings on the companies' practices later this year. With such efforts underway, activists say that it is inevitable that the relationships between credit card companies and universities will ultimately face greater examination.

"Universities are pursuing these sweetheart deals with credit card companies, and offering up premiere marketing locations and student names and addresses for a big profit," says Robert Manning, director of the Center for Consumer Financial Services at the Rochester Institute of Technology. "It's a clear conflict of interest."

Affinity relationships typically mean that schools enter into partnership with a credit card company to issue a co-branded card. Bank of America (BAC) is the leading player in the field, with 900 agreements with schools nationwide. Chase has 40 affinity relationships with schools nationwide. In most cases the school is paid royalties for the partnership. Royalties can top $2 million dollars a year in exchange for offering the credit-card company access to student lists and exclusive marketing privileges at football games and other school events. In addition schools earn a set fee for each student, alumnus, or professor who signs up for a credit card, as well as a percentage of overall charges made on the cards, according to Manning.

Surrounded by Secrecy
Professor Leech, with her specialty in consumer affairs, was particularly sensitive to how customers would be treated in such situations. She also has been involved in the Consumer Federation of America (CFA), the consumer advocacy group based in Washington, D.C., and currently serves as its vice-president. When she found out about the terms of the Virginia Tech card she began quietly to campaign to persuade students to avoid the card. "I told whoever would listen not to use that card," Leech remembers.

One thing that Leech has objected to in particular is the secrecy surrounding the contract between Virginia Tech and Chase. When she began asking the alumni association questions about how Chase was selected, the criteria for the bidding process, and the specific terms of the university's deal, she was met with a brick wall. "These deals are kept very close to the chest," she says.

Virginia Tech isn't alone in this regard. Universities closely guard the financial terms of their agreements with card companies. This is true even in public schools, where open contract laws typically mandate transparency. "Schools don't want the public to see money made on these deals and so they broker the contracts through incorporated entities," explains Robert Manning. "There is so much of this money unaccounted for."

Benefits Scholarship Funds?
Only a handful of the contracts have been made public. It was in a hearing held by the U.S. Senate Committee on Banking, Housing and Urban Affairs where Manning testified that a contract between the University of Tennessee and FirstUSA was worth $16.5 million over seven years. He also testified that the University of Oklahoma received a $1 million signing bonus from MBNA.

A spokeswoman for the University of Tennessee said that its affinity card is marketed primarily to graduate students and alumni, not undergraduates. In addition, the school -- which last year signed a new affinity contract with Chase for $10 million over seven years -- sends the bulk of the money from such contracts to private scholarships.

When so much money is at stake, Leech and other advocates worry that the schools are seeking out the best contract for their own financial interest, not the students'. "The university is not demanding consumer-friendly terms, instead they are just seeing what credit-card companies offer them," says Leech.

Funding Financial Literacy
Tillar, from Virginia Tech's alumni association, says that when the school renewed its affinity card contract roughly a year-and-a-half ago, it did have a choice of two banks -- Bank of America and Chase. Still, the bidding didn't allow Virginia Tech to negotiate better features on the affinity card, ensuring only that it could get a more competitive royalty package. "The bargaining is really with the royalty fee that is offered by the banks," says Tillar. The money, Tillar says, goes toward operating costs for the alumni association.

Some advocates argue that any money made from such credit card contracts should be used for financial literacy programs, to make sure students use credit responsibly. Manning has been campaigning for such programs, as well as for a reserve fund to bail out students who end up over their heads in debt. At Virginia Tech Tillar hopes to use some money from the Chase contract to provide financial literacy education, although the program hasn't been set up yet.

All of these steps are too modest for Leech. She says that the relationship between universities and credit card companies is simply too complicated to keep. "These affinity contracts are compromising and people need to wake up and examine them."

Copyrighted, Business Week. All rights reserved.

Sep 14, 2007

Vladimir Putin: Unknown Pictures

By the end of August there was a presentation of a new project “Putin” – unknown pictures. This album includes more than 630 pictures of Russian President made by journalist Anatoly Gdanov.

The most of these pictures are widely unknown. The President of Russia is pictured during official meetings, in Kremlin’s office, visiting military facilities and with his family.

See more pictures here.

Sep 11, 2007

Improving Your Credit Score

Credit scores aren't static numbers. Because they are calculated based on your current credit report, they change every time your credit report changes. While this change may be very slight, it can also be much more dramatic. Here are some things some financial advisers say to do to try to improve your score:

  • Review your credit report and correct any errors you find. Getting rid of inaccurate (and bad) information can sometimes improve your score dramatically.
  • Advice used to be given to close old and unused credit cards accounts in order to reduce your “potential” available credit (which could change your debt ratio after you’ve been approved for a loan). Now, however, the ratio of your debt to your credit limit is more critical, so closing old accounts only raises that ratio – which you don’t want to do.
  • Some people have moved debt from several credit cards to one card and then closed the old accounts. Since creditors look at the debt-to-credit limit ratio this can have a bad affect on your credit score because you have the same amount of debt but less available credit. So don’t close old credit card accounts just because you’re not using them.
  • Creditors also now look at the average age of your accounts so, again, keep those old accounts.
  • Reduce your balances on credit cards to 75% or less of your available credit (25% is preferable).
  • Pay your bills on time. (This is probably the most important of all!)
  • Don't let anyone make an inquiry on your credit report unless you absolutely have to. The more inquiries, the lower your score.
  • Don’t open new credit card accounts just to increase your available credit in the hopes of raising your score.

Also, remember that some improvements - such as better efforts at making payments on time -- may take time to impact your score. So, time is also a factor.

If you go to the bank for a loan and are turned down because your score is too low, your would-be lender will get a list of reasons for that low score. You can use that list to try to turn your score around. While nothing is guaranteed, since lenders can also use their own scoring methods, you certainly can't hurt your score by taking any of these steps.

The key is to get credit only when you need it (unless you're trying to establish your first credit), and then use it carefully, make your payments on time, and keep your balances low.


Sep 8, 2007

Best Time to Harvest Deals in Autumn

Leaves aren't the only things that fall in autumn.

As retailers clean out old inventory and make room for the upcoming holiday season and new year, there are plenty of bargains to be found. Shop for the right items, and you'll see prices drop just as fast as -- if not quicker than -- the foliage outside. Here's our guide to what's best to buy in September, October and November.

When to Buy: September

Why: Next year's models are on the lot, meaning all vehicles in the current model year must get cleared out pronto, says Phil Reed, consumer advice editor for During this time, cash incentives from auto makers abound, plus dealers are more willing to negotiate.

If you're picky about the car you want, go to the lot early in the month, says Reed. While deeper discounts proliferate late in the month (as dealers grow more eager to move older cars), the selection is much more limited. "You get weirdly optioned cars and off colors," says Reed.

Holiday Airfare
When to Buy: September

Why: Booking your trip to Aunt Louise's house for Christmas a few months in advance offers you the best combination of fare selection and price, says Anne Banas, executive editor for travel advice site . Wait, and it's likely that you'll have to consider alternate airports and days, include a layover or two, or stomach a price you're not happy with. "By the end of October, things are pretty much booked up," she says. "Then, it's just about availability."

When to Buy: October

Why: Get this year's styles at clearance prices. Retailers start discounting their jeans after the back-to-school promotional push ends in September, says fashion expert Kathryn Finney, a.k.a. The Budget Fashionista . Expect even better deals this year, predicts Finney. "Dresses are very 'in' this year, which may cut into jean sales," she says. More stock on the shelves means bigger discounts at a faster rate.

Plants (Trees/Shrubs/Perennial Flowers)
When to Buy: September

Why: Nurseries and gardening stores would rather deeply discount their inventories of trees, shrubs and perennial flowers than try to hold them over until spring -- and risk losing everything, says Charlie Nardozzi, a senior horticulturist with the National Gardening Association. Even better news: "Now is actually also the best time to plant," says Nardozzi. "The soil is still warm so they'll put in a lot of root growth before winter."

When to Buy: November

Why: Get trendy shoes for less before the winter hits. In September, retailers push sneakers for back to school. But by mid-October, they've moved on to anticipating snowier pastures, says Finney. "Stores start to push more toward boots," she says. That means more sneakers on sale.

When to Buy: October

Why: Most new toys debut in September, says Jim Silver, editor of Toy Wishes magazine. "It's the start of the holiday season, so to speak," he says. Retailers begin making price adjustments based on what the others are selling a given toy for. By October, you'll see hot price competition -- and those must-have holiday toys that everyone will be fighting over in November will still be on the shelves.

Wedding Dresses
When to Buy: November (specifically, after Thanksgiving)

Why: "The dynamic of the wedding industry is that most people get engaged at Christmas, and most people who are planning [a wedding] get distracted by the holidays," says Alan Fields, co-author of "Bridal Bargains." The result: very lonely bridal-shop owners anxious for business. "You have much more negotiating power," says Fields. You could easily save 15% to 25% on your dress or get free alterations (typically a $300 value).

When to Buy: September

Why: "Fall is always when the new bottles from last year's harvest show up on shelves," says Natalie MacLean, editor of Nat Decants , a wine education site. The crush of vineyards clamoring for your attention keeps prices low. The exception: high-demand, low-supply "cult wines" like Burgundies and California Cabernets. You won't find low prices on these, says MacLean -- but September is your best shot to snag these hard-to-find bottles.


Sep 7, 2007

Man Tries to Break Into Buffett's Home

ABC News informs:

OMAHA, Neb. -- A man with camouflage paint on his face and a fake gun tried to break into to billionaire Warren Buffett's house but fled after a scuffle with a security guard, police said Thursday.

Buffett's wife, Astrid, summoned the guard after the doorbell rang shortly after 10 p.m. Wednesday, police said.

The security guard found the man, dressed all in black, on the home's front porch and confronted him, police said. The man struck the guard on the head, then fled and remained at large Thursday.

Neither Buffett, who was home at the time, nor his wife was injured, police said.

Buffett spokeswoman Jackie Wilson did not immediately return a phone message seeking comment.

Forbes lists Buffett is the world's third-richest man, with an estimated net worth of around $52 billion. The chairman and chief executive officer of Omaha-based Berkshire Hathaway Inc. still lives in the same ungated, 5,830-square-foot home he bought in 1958 for $31,500.

Police described the case as an attempted robbery but said the suspect never entered the home.