As the stock market falters, older individuals are losing large amounts if not all of their 401(k) savings. Many report having lost 35% to 45% of their savings and that percentage is still climbing.
Those planning on retirement in their late 50’s or early 60’s are now making plans to work a decade longer because their savings will not recover in enough time.
Traditionally, 401(k) plans have provided retirement income for the majority of Americans; however, now people are seeing that if the stock market is volatile, they can actually lose more than what they put in.
This is a very troubling situation to read about, and with companies like GM suspending their 401(k) matching and raising costs such as healthcare, it is very hard for individuals to save for retirement these days. What can people that are close to retirement age do to recoup at least some of their retirement savings?
http://www.usatoday.com/money/perfi/retirement/2008-10-30-retirement-401k-funds-stocks-savings_N.htm
Saturday, November 15, 2008
Taxpayers Still on the Hook……
Taxpayers could possibly be responsible for the millions upon millions of dollars in legal fees that the executives of Fannie Mae and Freddie Mac may incur because the mortgage giants had contractual agreements with them to cover their legal expenses. After the government bailout, this legal bill was passed to the government, thus, potentially leading to the taxpayers footing the bill.
Doug Heller, the executive director of Consumer Watchdog put it best when he said, “Who'd have thought we might be on the hook for paying the defense costs when we're also paying the prosecution costs?” The government is trying to avoid this from happening; however, this could lead to more pricey legal battles over who has to pay the bill.
To make matters even worse, the companies also have agreements to cover legal costs from shareholder lawsuits, which taxpayers could potentially have to pay for as well.
This article angered me a lot. Why are we, the taxpayers, who are being laid-off and losing our entire life savings still being forced to support the actions of greedy executives? First we bail them out, then we pay their legal fees, and if they get acquitted, who knows what else we will be paying for? Where is our bailout…
http://www.insurancejournal.com/news/national/2008/11/07/95360.htm
Doug Heller, the executive director of Consumer Watchdog put it best when he said, “Who'd have thought we might be on the hook for paying the defense costs when we're also paying the prosecution costs?” The government is trying to avoid this from happening; however, this could lead to more pricey legal battles over who has to pay the bill.
To make matters even worse, the companies also have agreements to cover legal costs from shareholder lawsuits, which taxpayers could potentially have to pay for as well.
This article angered me a lot. Why are we, the taxpayers, who are being laid-off and losing our entire life savings still being forced to support the actions of greedy executives? First we bail them out, then we pay their legal fees, and if they get acquitted, who knows what else we will be paying for? Where is our bailout…
http://www.insurancejournal.com/news/national/2008/11/07/95360.htm
AIG to Terminate Voluntary Deferred Compensation Plans
AIG is terminating its deferred compensation programs. About $500 million belonging to well over 5,000 employees will be distributed in the first quarter of 2009.
AIG’s deferred compensation plan works by letting an employee voluntarily defer some of their earnings until they leave the company or retire. The company is terminating these types of plans because they do not want any further incentive for their employees to leave the company. The company is concerned about individuals leaving because AIG is working hard preserve the value of its businesses to both sell to pay off the bail-out loan and to rebuild AIG.
I believe that AIG is making a very wise decision. The financial crisis, coupled with the downfall of AIG is leaving employees with little reason to remain at the company. Many of the employees lost their savings in the economic turmoil, and will probably leave in order to obtain funds they are in urgent need of.
http://www.insurancejournal.com/news/national/2008/11/14/95543.htm
AIG’s deferred compensation plan works by letting an employee voluntarily defer some of their earnings until they leave the company or retire. The company is terminating these types of plans because they do not want any further incentive for their employees to leave the company. The company is concerned about individuals leaving because AIG is working hard preserve the value of its businesses to both sell to pay off the bail-out loan and to rebuild AIG.
I believe that AIG is making a very wise decision. The financial crisis, coupled with the downfall of AIG is leaving employees with little reason to remain at the company. Many of the employees lost their savings in the economic turmoil, and will probably leave in order to obtain funds they are in urgent need of.
http://www.insurancejournal.com/news/national/2008/11/14/95543.htm
Sunday, November 2, 2008
Property/Casualty Insurers Want No Part of Government Rescue Funds
This article relates to the previous blog…
Reports have stated that the federal government is thinking about adding life, bond, and mortgage insurance companies to the list of recipients for bailout money, and property/casualty insurers do not want any part of the deal. The insurers are ready to decline any funds if the U.S. Treasury decides to make them available.
A survey by the American Insurance Association (AIA) shows that the majority of insurers represented by them do not agree with property/casualty insurers being on the bailout recipient list and will not participate if they do so.
The chairman of ACE Group and AIA, Evan Greenberg, stated that AIA members "believe that, as property/casualty insurance writers, they are well-capitalized and well-positioned to weather the current financial market crisis without the assistance of the CPP announced by Treasury.”
http://www.insurancejournal.com/news/national/2008/10/27/95021.htm
Reports have stated that the federal government is thinking about adding life, bond, and mortgage insurance companies to the list of recipients for bailout money, and property/casualty insurers do not want any part of the deal. The insurers are ready to decline any funds if the U.S. Treasury decides to make them available.
A survey by the American Insurance Association (AIA) shows that the majority of insurers represented by them do not agree with property/casualty insurers being on the bailout recipient list and will not participate if they do so.
The chairman of ACE Group and AIA, Evan Greenberg, stated that AIA members "believe that, as property/casualty insurance writers, they are well-capitalized and well-positioned to weather the current financial market crisis without the assistance of the CPP announced by Treasury.”
http://www.insurancejournal.com/news/national/2008/10/27/95021.htm
CPP Offers Insurers Competitive Advantage
Chubb, an insurer, says that P&C insurers should not receive funds from the US Treasury because it would give them an unfair competitive advantage. CPP was created to infuse the financial system with liquidity in times of distress.
Chubbs COO, John Degnan, stated, “We do not believe that allowing property and casualty insurance companies to participate in the CPP is consistent with the stated purpose of the Act,” in a letter to the Treasury. He also stated that the P&C industry does not pose any systematic risk to the economy and therefore does not require a bailout.
Degnan went on to state that if P&C insurers participated in CPP, there would be an adverse affect on competition because the insurers would be allowed to get capital at a lower costs than their competitors. He claims that it would be unfair for companies such as his who have been cautious and conservative with their business practices and investing, but would not be able to take advantage of the bailout.
http://www.strategicrisk.co.uk/story.asp?sectioncode=23&storycode=375112&c=2
Chubbs COO, John Degnan, stated, “We do not believe that allowing property and casualty insurance companies to participate in the CPP is consistent with the stated purpose of the Act,” in a letter to the Treasury. He also stated that the P&C industry does not pose any systematic risk to the economy and therefore does not require a bailout.
Degnan went on to state that if P&C insurers participated in CPP, there would be an adverse affect on competition because the insurers would be allowed to get capital at a lower costs than their competitors. He claims that it would be unfair for companies such as his who have been cautious and conservative with their business practices and investing, but would not be able to take advantage of the bailout.
http://www.strategicrisk.co.uk/story.asp?sectioncode=23&storycode=375112&c=2
US Financials Outperform Europe as Counterparty Risk Falls Sharply
A report by Credit Derivatives Research showed earlier this month that counterparty risks among major financial institutions have declined significantly. The CDR’s counterparty risk index was the lowest it had been in more than a month.
The US financial credits were better that Europe’s with almost a 20% difference in the amount of drop in risks. US banks experienced a drop in risk of 53%. US brokers had an average reduction of risk of over 50%.
http://www.creditflux.com/digest/2008/10/16/us+financials+outperform+europe+as+counterparty+risk+falls+sharply+says+cdr.htm
The US financial credits were better that Europe’s with almost a 20% difference in the amount of drop in risks. US banks experienced a drop in risk of 53%. US brokers had an average reduction of risk of over 50%.
http://www.creditflux.com/digest/2008/10/16/us+financials+outperform+europe+as+counterparty+risk+falls+sharply+says+cdr.htm
Friday, October 31, 2008
AIG on the Edge of Collapse Says Former CEO
The former CEO of AIG, Maurice "Hank" Greenberg, stated that with every passing day, the restrictions on the bailout loan are pushing AIG closer to failure. In a letter to CEO Edward Liddy, he said, "Time is clearly running out." He told him that is was imperative that AIG began talks about renegotiating the loan. Additionally, Greenberg said that to government was effectively nationalizing the company. The government could receive up to an 80 percent stake in the company.
Greenberg also said that taxpayers, employees, and investors in the company could be hurt with losses that could be incurred under the current loan arrangement. He is concerned that with the current loan structure AIG is being forced to sell assets and that is very hard under the current economic conditions. He said that this indicates that there is “little hope” that the loan will be able to be repaid.
http://www.reuters.com/article/businessNews/idUSTRE49T9SR20081030?feedType=RSS&feedName=businessNews
Greenberg also said that taxpayers, employees, and investors in the company could be hurt with losses that could be incurred under the current loan arrangement. He is concerned that with the current loan structure AIG is being forced to sell assets and that is very hard under the current economic conditions. He said that this indicates that there is “little hope” that the loan will be able to be repaid.
http://www.reuters.com/article/businessNews/idUSTRE49T9SR20081030?feedType=RSS&feedName=businessNews
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