The poll, conducted in June, further reveals that consumers who have a personal finance plan are more likely to contribute to the economy. They are more optimistic about the economic outlook and more likely to make home improvements, splurge on a personal item, buy a new car, invest in the stock market, or search for a new job. “While our country continues to grapple with sustained unemployment and other economic headwinds, Americans have a more positive outlook on their own personal finances. And those people who have a financial plan believe that their own financial situation will improve over the next year and are willing to contribute to the economy by spending more,” says Charles A. Moran, chair of CFP’s Board of Directors.

The majority of Americans polled were negatively impacted by the recession, causing 45 percent to dip into their savings and 53 percent to delay making a big purchase. Because of the weak economy, the majority of respondents did not have an official, written financial plan (such as the debt rollover plan) in place even though 58 percent said they would feel better about their financial outlook if they did. Rather, 46 percent said they had a plan in their head and 11 percent said they had some ideas written down. But when presented with the statement, “Everyone should have a financial plan. Even if you have very little money it is good to know in advance how you will spend it and the best means of growing what you have,” 86 percent agreed with it. “Creating and following through with a financial plan can be overwhelming for many people,” explains Eleanor Blayney, the CFP Board’s consumer advocate. “The survey shows the importance of our efforts to educate consumers about the value of financial planning. There are many different sources of advice, and consumers need to be aware of the breadth of options to identify the resource that best suits their individual needs. For many, turning to a certified financial planner professional can help them develop and manage an actionable strategy for meeting their financial goals.”

A significant reason behind the lack of having a formal personal finance plan is the public’s perception of financial advisors. According to the survey, most consumers are less trusting of financial planners, mainly because of revelations during the recent financial crisis. On the other hand, the majority of respondents, if given the opportunity, would take advantage of an hour with a financial planner to review their budget and retirement planning. The survey’s findings, Moran points out, suggest “a gap between how Americans view financial plans and knowing the best way to build and maintain one. They clearly understand the importance of a financial plan, but too many Americans are not taking the necessary steps to formalize it in a concrete, comprehensive way.”

Authorities say that debit card readers in 80 Michaels stores in 20 states were surreptitiously outfitted with skimming devices, designed to read card and personal identification numbers, or PINs.  The fraud occurred between February and early May of this year.  Thieves stole card information and PINs from debit cards, then used the information to make withdrawals from shoppers’ bank accounts, usually in $500 denominations. 

The Irving, Texas-based retail chain says it disabled all of the tampered devices by May 6th, and is now working to replace all 7,200 card readers in its stores nationwide as a precautionary measure.  The total number of shoppers affected has not been disclosed.   

To carry out the fraud, thieves must gain access to a debit or credit card reader.  They install an electronic device to capture the card number from the card’s magnetic strip when it is swiped.  Then, a second device, either a pinhole-sized hidden camera or a clear electronic membrane placed over the debit card reader’s keypad, reads the customer’s personal identification number, or PIN, when it is entered.

Once the thieves have your debit card number and PIN, they can fashion a new card, and start using it to make purchases or withdrawals from anywhere in the world. 

Credit card skimming is not a new scam, but is growing in popularity among thieves.  Gartner, a research and consulting firm, states that skimming fraud has grown fivefold over the past five years.  Similar scams have been known to target ATM machines and gas station card readers – attractive to thieves because of their accessibility – but other retail chains, such as grocer ALDI, have been targeted.  One consultant quoted in the Wall Street Journal called the Michaels scheme “a very audacious, coordinated attack.”  It’s proof that fraudsters are becoming ever better at developing their illicit techniques. 

To prevent this type of fraud from happening to you, you could stop using your debit and credit cards and shop on a cash-only basis.  Since this isn’t a viable option for most people, however, there are a few things you can do to detect this type of crime if it happens and minimize your losses.

1.  Avoid using any ATM or card reader that appears to have been tampered with.
2. Check your bank account activity online daily.  Report any suspicious transactions to your bank immediately with a phone call, and follow up in writing. 
3. Find out your bank’s policy for dealing with fraudulent transactions.  How long do you have to report an illegal transaction?  Will they credit your account for the pilfered funds?  If so, how long will it be before you get your money back? 
4. Consider opening a second bank or credit card account with a nominal balance designed to cover your day-to-day purchases.  Use this second account to make your debit card purchases.  That way, if thieves get hold of your card number, they won’t have access to your main account – and all the money in it.

Conclusion.  Unfortunately, fraud will never go away, and thieves will continue to improve their methods.  Hopefully, it will never happen to you, but if it does, awareness is your best defense – stay on top of your financial activity, and cut your losses.

U.S. President Barrack Obama announced to the world in a statement late in the evening of May 1 that bin Laden was killed in a U.S.-led special forces military operation in Pakistan. The terrorist leader was the mastermind behind the September 11 attacks on the Twin Towers in New York City and the Pentagon in Washington, D.C. Almost immediately following the news, oil prices fell and stocks rose across the world, including the U.S. and Japan, where stocks reached a high not seen since March when the country suffered its devastating earthquake and tsunami. In upcoming months, more investment in Middle East countries and declining transportation costs are expected.

John Silvia, chief economist of Wells Fargo, says bin Laden’s death will lower the risk of doing business worldwide and particularly in the Middle East. “There’s a lot of positives out of this,” he said. “It lowers the risk premium of anything. It generally decreases what we would call event risk – in other words, a sudden outbreak of terrorism.” However, he cautions that an improved global economy environment will be realized only “as long as it’s perceived there’s no bin Laden junior coming along.”

While financial markets are reacting positively to the news of bin Laden, some anticipate the global economic boost to be short term. “One interpretation is that bin Laden’s death means that al Qaeda will be in disarray for some time, leading to relative calm with respect to new terrorist threats, which in turn reduces the potential for disruption in oil supply,” explains Andrew Lo, a finance professor at MIT. “Financial markets will likely react positively to this news in the short run, but the repercussions may be more complex over time as we learn how bin Laden’s death affects his organization and, consequently, the political economy of the Middle East.”

In the meantime, French Finance Minister Christine Lagarde believes bin Laden’s death is likely to boost consumer confidence and economic growth in the United States. “The U.S. economy is like the American people. It reacts very quickly either positively or negatively,” says Lagarde. “I wouldn’t be surprised if this event prompted a pick-up in confidence.” On the other hand, Yang Chia-yen, a director at the Taiwan Institute of Economic Research, sees bin Laden’s death as more of a political issue rather than an economic one. “Osama bin Laden being killed will not change anything in the global economy. It will only be a ‘one-day’ impact, if any,” he predicts. Yang adds, “The current economic problems the U.S. government is encountering came from inflation and an unstable situation in the Middle East and North Africa. It is not directly related to terrorist activities or bin Laden.” Cheng Cheng-mount, chief economist at Citigroup Taiwan concurs, noting, “The only thing that I can think of at this moment would be the military budget, that the U.S. government will be able to cut a lot and use it for domestic needs instead.”

The economic crisis has a lot to do with Americans’ concerns toward home ownership. A survey that tracks home ownership finds that in December 2010 only 64 percent of people felt a house is a safe investment, compared to 83 percent in 2003, prior to the housing collapse. “If we’ve learned anything from this mess, it’s that housing is not a risk-free investment,” Michelle Meyer, a senior economist at Bank of America Merrill Lynch Global Research points out. “Everyone knows someone underwater in their mortgage or struggling to sell a home.” The U.S. Census Department finds that the home ownership rate fell to 66.5 percent in the fourth quarter of 2010, the lowest in more than a decade.

According to CoreLogic Inc., a real estate information company based in Santa Ana, California, as of December 2010, an estimated 11 million homes in the U.S. were worth less than their mortgages. Furthermore, a March 2011 report finds an additional 2.4 million borrowers had less than 5 percent equity in their homes. But real estate agents are hoping low home prices and borrowing costs will lure buyers back. Mortgage rates recently released by mortgage financier Freddie Mac puts the average mortgage rate for a 30-year fixed home loan at 4.80 percent and the 15-year average rate at 4.02 percent. “If you can jump through the hoops to get a mortgage, and there will be hoops, then this is an amazing time to purchase real estate,” notes Robert Stein, former head of the U.S. Treasury Department’s Office of Economic Policy. “There are going to be a lot of people kicking themselves a few years from now because they didn’t take advantage of the low prices and the low mortgage rates.”

Based on median U.S. income, property prices and mortgage rates, homeownership affordability is at its best yet. The median home price dropped 32 percent from its 2006 peak. “We expect that purchase activity will pick up slowly as the improvement in the job market eventually leads to greater willingness to buy,” the Mortgage Bankers Association anticipates. The group expects home sales to increase 4.1 percent in 2011 and 5.9 percent in 2012. The latest figures from Freddie Mac support the group’s optimism. Sales of existing homes below $100,000 increased 3.7 percent in March and mortgage applications rose 5.3 percent in the week ending April 15. “People will still aspire to own their own homes,” said Lea, the finance professor at San Diego State University. “They’ll just be a lot more practical about it.”

The BBB reported that homeowners have been receiving official-looking letters from out-of-state law firms that invites them to join a “Mass-Joinder” lawsuit that would force their lenders to reduce monthly payments, interest rates, or the balance of the mortgage, and dangled the possibility of receiving hefty punitive damages from their lenders.

To join the purported lawsuit, however, they were asked to hand over a massive upfront fee. In one case, the BBB reported that a Missouri homeowner responded to the letter and was told he could reduce his interest rate by 2 percent or cut down his mortgage balance by 80 percent – if he handed over a “retainer” of $5,000. Fortunately, the homeowner was experienced in the real estate business, realized the scam, and didn’t pay up.

In a statement, the BBB said that complaints from homeowners who have paid for mortgage help have been mounting.  They said, “Few, if any, of these people got help. Many ended up worse off than before the mortgage modification companies entered their lives.”

The Federal Trade Commission recently banned the collection of upfront fees from mortgage relief companies, but exempted law firms under certain circumstances. That’s why the notices are coming from law firms. 

This latest scam is a twist on the advance fee mortgage scam. In that scam, businesses purporting to help troubled homeowners get mortgage modifications charged large up-front fees in order to get their loans updated. While some homeowners did get modifications, the end result was not much better than the original loan. 

This new scam has caused the California Department of Real Estate, the Attorney General for Washington State, and Denver, Colorado’s district attorney, all to issue warnings to consumers to avoid being scammed. 

If you are a homeowner struggling to keep up with your house payments, the Better Business Bureau recommends following these steps:

•  Contact Your Lender Directly.  Try talking to your lender first to obtain a modification on your mortgage before going to a third party.   
• Beware offers of “Help.”  Beware law firms, lawyers, companies, or other groups who promise to allow you to join a “mass joinder” lawsuit against your bank or mortgage company in return for an advance fee.  The BBB reports that your chances of actually getting relief from such a suit are slim. 
• Advance Fees Not Allowed.  As of January 31, 2011, the Federal Trade Commission has banned any company from asking for an advance fee in order to help you modify your mortgage, except under certain circumstances.  If any company is asking you for a huge upfront payment, ask them how they are legally permitted to charge the fee. 
• Watch Out for the “Forensic Loan Audit.”  Yet another twist on the advance fee scam is the company who asks for an upfront payment for a “forensic loan audit.”  Much like the other scams discussed above, you are throwing your money away. 
• Check the BBB Before You Pay.  Check the Better Business Bureau’s Business Reviews at their website before you pay any company promising a mortgage modification.  If there are complaints against the company, or if they’ve gotten a failing grade from the BBB, it’s likely a scam and won’t help you.

 Conclusion.  Unfortunately, scammers think nothing of trying to kick you while you’re down.  If you’re struggling to pay your mortgage, beware any company or law firm who offers you an easy solution.

Mortgage brokers say the regulation will be detrimental to the way they make money and likely force many small brokers out of business. Currently, mortgage brokers earn higher commissions through a yield spread premium. Consumer advocates, calling the practice a “kickback from the lender,” say it’s high time such a rule is being enacted. “They made more money when they were able to stick you with a loan that was worse than what you otherwise would have qualified for,” says Ira Rheingold, executive director of the National Association of Consumer Advocates in Washington, D.C.

But mortgage brokers counter that yield spread premiums are part of the retail banking process. Brokers receive wholesale pricing for home loans from banks and add in additional fees to cover their expenses while still remaining competitive with rates offered by other banks. Robert Petrelli, who owns Mount Vernon Mortgage Corp. in Weymouth, Massachusetts, says yield spread premiums are simply one way that mortgage brokers make money. Petrelli likened the process to that used by retailers who buy at wholesale and set a retail price above the wholesale cost to cover overhead and other business expenses. “Yield spread isn’t a kickback,” he emphasized, adding that banks outsource their mortgage business to brokers to save on overhead costs.

Mortgage brokers also point out that the new regulation would make it difficult for them to compete with big banks. Under the rule, brokers would be tied to a certain profit margin, while banks would have flexibility in the mortgage rate they charge customers. “We are hearing from mortgage brokers across the country that say they’re going to let all their loan officers go and become one-man shops,” says Mike Anderson, chairman of the government affairs committee for the National Association of Mortgage Brokers. The organization has filed a federal lawsuit against the Federal Reserve System requesting an injunction that postpones enactment of the new rule.

Regardless of how the new law changes the mortgage brokering landscape, mortgage finance experts say consumers should still do their homework and compare mortgage rates at several financial institutions, including mortgage brokers. “It really helps to get multiple offers or bids and compare them against one another and to try to bid them against one another,” advises Guy Cecala, publisher of Inside Mortgage Finance, which covers the residential mortgage business. Rheingold agrees, adding that the new law would make it easier for consumers to comparison shop by creating “a place where consumers have a better chance of not being cheated in the marketplace when they’re buying a mortgage.”

Hamburg said she got the idea for a traveling museum about money after seeing results from a recent financial literacy study. The research, led by Dr. Annamaria Lusardi, a noted expert on financial literacy at George Washington University, finds that nearly half of the households that participated in the study did not have the know-how to come up with $2,000 in 30 days for a financial emergency. This despite the hundreds of personal finance books, magazines, radio and television shows, and financial literacy programs available to consumers. “The fact that even solidly middle class people, nearly a quarter of the households surveyed with incomes of $100,000 to $150,000, could not come up with that amount is quite profound,” says Hamburg.

Economia: Money Matters traveling museum is designed to educate people on the principles and complexities of economics, money management and personal finances. The intent of the museum experience is to empower visitors to make prudent financial decisions and motivate them to establish a financial security plan for their future. Rainworks Omnimedia is collaborating with financial literacy and personal finance experts to develop the content for the museum. Interactive displays will simplify the intimidating areas of personal finances, among them college planning, retirement, compounding, spending and how the stock market works. In explaining the exhibits in the traveling museum, Hamburg said “visitors will learn about personal finance by journeying through Maslow’s Hierarchy of Needs with financial self-actualization as the goal. We will also weave deep metaphors that drive all human behavior into the design of the exhibition, including balance, control, and transformation.”

The six interactive, multimedia installations and display stations in the traveling museum include a Money On The Brain digital display on real time money fears; Cognition & Spending interactive display on the brain’s behavior when spending; Money Micro & Macro multimedia display on money’s impact on a personal, national and global level; Money In Motion film showing the journey of a dollar bill; Saving Rules for Life exhibit on saving vehicles and the power of compounding; and How the Stock Market Works multimedia exhibit explaining the stock market. There are also stations showing how to read credit reports, FICO scores, credit card statements, college loans, and mortgage and leasing contracts, spending rules to apply on whether you can afford a purchase, and money management habits of financially literate people. The traveling personal finance museum will be touring the North American museum circuit beginning in Fall 2011, with its debut in California.

A new Gallup poll finds the economy the top concern of Americans. Poll numbers show that 70 percent of Americans worry about the economy “a great deal” and 22 percent are “fairly concerned.” Concerns over the economy cross party lines, with Democrats, Republicans and Independents ranking it the number one concern. The federal deficit and unemployment follow as the second and third concerns, respectively.

The survey results mimic those of a CNBC All-American Economic Survey poll that shows Americans growing pessimistic about the future of the U.S. economy. The newly released survey finds that 37 percent of Americans expect the economy to get worse over the next 12 months, a 15-point jump from last December’s poll results. Factors that have Americans most concerned about the economy are rising fuel costs, increasing food costs, and wages not keeping pace with rising prices.

Robert Rubin, who served as President Clinton’s treasury secretary, noted in a recent public forum that President Obama’s economy continues to face “serious headwinds” that are preventing future economic growth. The culprits, he said, are “our long-term fiscal trajectory, state and local government deficits, skyrocketing oil prices and high unemployment.

Mississippi Gov. Haley Barbour, a likely presidential candidate, wasted no time in telling Republicans to focus on the economy in 2012 local and national elections. During the state GOP convention this month in Sacramento, California, Barbour told delegates, “every policy of the Obama administration makes it harder for the economy to grow and harder to create jobs.” Barbour said whomever is chosen as the party’s presidential nominee must stay focused solely on economic issues that concern voters.

Dr. Maryann Feldman, a prominent researcher on economic development based at the University of North Carolina at Chapel Hill, points out that tax cuts alone will not solve the country’s economic troubles. Rather, she recommends partnerships encompassing government, industry and higher education aimed at promoting solid economic solutions. “Simply more tax cuts are not going to be very helpful and they’re not helpful to small businesses because they are struggling to make a profit,” she said. “And so, they need more investment and more capacity-building than things like tax cuts.”

Many other industry leaders have their own thoughts on stimulating the economy. Dan Juneau, president of the Louisiana Association of Business and Industry, says the country should focus on energy since many states have plenty of oil and natural gas in shale formations and offshore coastal areas. “Left to our own devices, I believe our economy could really, really, really take off,” he said. Others see economic growth in high-speed rail, pharmaceutical, technology and manufacturing.

Tough economic times was the main factor forcing U.S. workers to put less aside for retirement or to tap savings or retirement accounts to meet everyday expenses. The survey finds that 34 percent of workers and 33 percent of retirees used money from an IRA, 401(k), savings, or investment account, or took out a loan against those accounts to pay for basic expenses. Other factors identified in the survey as redefining retirement in the U.S. include rising healthcare costs, federal, state and local government fiscal crises, high unemployment rates, lower investment returns and longer life expectancies. Consequently, the survey finds that more Americans are pessimistic about a comfortable retirement than at any time in the last two decades. “Many people are planning to work longer and retire later because they know they simply can’t afford to leave the workplace – both for the paycheck and for the benefits,” says Mathew Greenwald of Greenwald & Associates and co-author of the survey.

According to the survey, 89 percent of Americans plan to work longer than expected, with 25 percent expecting to work until age 70 or older. Furthermore, 74 percent of Americans expect to work for pay during retirement for financial reasons. The most likely reason for working later in life, the survey shows, is that most workers (70 percent) are behind schedule when it comes to planning and saving for retirement. Compounding the problem is that 49 percent of Americans determine how much they need for retirement by guessing. “There are some important things about financially preparing for retirement that people must know to do a good job, and, unfortunately, that most Americans do not know,” notes Greenwald. “Perhaps one of the most important things they should know is what their savings goal should be in order to have the retirement lifestyle they want. Most workers have not even tried to figure how much they should accumulate. When we ask people how much they need to save by the time they can retire, significant proportions provide us with figures that are far below what financial experts state is prudent.”

The silver lining in the Retirement Confidence Survey is that more workers are beginning to think about retirement and where they stand in terms of personal finances for later years. “These results could be seen as pessimistic, but I view them as realistic and positive. People are increasingly recognizing the level of savings realistically needed for a comfortable retirement,” says Jack VanDerhei, EBRI research director and co-author of the report. “We know from previous surveys that far too many people had false confidence in the past. People’s expectations need to come closer to reality so they will save more and delay retirement until it is financially feasible.”

While it will take several weeks before the extent of economic damage is known, the disaster has already caused the shut down of key ports and suspended production at several automakers and many other manufacturing companies, including Sony and Mitsubishi. In order to maintain financial stability in the country’s banking and financial markets, the Bank of Japan has added $183 billion into money markets and doubled its asset-purchase plan. However, leading economists are carefully analyzing two key questions: How quickly will Japan’s economy recover? What impact will the Japan disaster have on the global economy?

History offers some clues, as researchers look at how advanced countries in the past recovered from similar disasters. According to researchers, historical data indicates that countries with high levels of income, financial development and education tend to rebound quickly from disasters. “As incomes rise in a society, you can devote more resources to safety. So economies that have relatively high exposure to earthquakes or hurricanes start taking the precautions they need. Japan is among the best prepared in the world because they have high exposure and high income,” said Mark Skidmore, economics professor at Michigan State University. The country proved this back in 1995 when a 6.8 magnitude earthquake shook Kobe, Japan, home to the world’s sixth largest container port. The country’s industrial production dipped for one month, yet rose steadily in subsequent months. In that year, Japan’s economy actually grew by 1.9 percent and by 2.6 percent the following year. “Despite the scale of the disaster, it is hard to find much evidence in the macroeconomic data of the effects of the Kobe earthquake,” notes Richard Jerram, chief Asian economist at Macquarie in Singapore who monitors Japan’s economy.

Granted, Japan’s economy and public finances were stronger in the mid-1990s compared to today, but economists remain confident that Japan has the capacity to rebound. “We don’t know yet how devastating this is going to be economically, or even in terms of human casualties, but Kobe was able to rebound very quickly and I think there is the same potential here,” said Skidmore. “They have the resources. They have the social and economic and government infrastructure to effectively utilize the resources that may come in from outside as well as internally. They can focus not just insurance but also government assistance to respond effectively.”

Japan’s ability to utilize resources bodes well for reducing the impact of the disaster on the global economy. To date, J.P. Morgan economists have not changed their global growth forecast of 3.7 percent for the first half of 2011. “The shocks to date would have to magnify considerably to push global growth below this trendline,” they reported. Other economists concur that the harm to the global economy will be negligible and short-lived. “I don’t view this as having a significant impact on global growth,” said Dr. Nariman Behravesh, chief economist at IHS Global Insight. “Clearly it will add to Japan’s fiscal woes, but I think they can get through this one without serious problems.”

Despite his positive outlook, Checki cautioned that America’s economy still has considerable “slack” and fiscal consolidation is necessary for economic recovery to be self-sustaining. U.S. economists tend to agree, but are not as optimistic as Checki when it comes to the economy in 2011. In a recent survey, economists predict only 3% economic growth, taking into consideration the depth of the recession. Economists also noted that in 2011 there will be “ slower and less powerful than is typical improvement in labor market conditions that will cap gains in disposable personal income and personal consumption expenditures.” Not factored into the 2011 forecast is how the U.S. economy will respond to rising oil prices as a result of the uproar in Libya. Economists caution that the unrest in the Middle East could negatively impact consumer spending in the U.S.

During a semi-annual report on the state of the economy, Federal Reserve Chairman Ben Bernanke pointed out that the housing markets and job growth remain weak, hindering greater economic growth this year. But the Obama administration hopes to spur job growth by focusing on technology. During his January State of the Union address, President Obama indicated that the high-tech industry is positioned to turn the U.S. economy into the biggest in the world. Towards that goal, the president recently held a private dinner with top U.S. technology industry executives – including Apple CEO Steve Jobs, Google chairman and CEO Eric Schmidt, and Facebook CEO Mark Zuckerberg – to discuss investing in research and development to promote job growth in the technology sector. Obama also proposed a joint government and private sector partnership designed to support startup companies and small businesses. “All across America, there are innovators and entrepreneurs who are trying to start the next Intel, or just get a small business of their own off the ground,” the president said. “The truth is, we have everything we need to compete: bold entrepreneurs, bright new ideas, and world-class colleges and universities. And, most of all, we have young people just brimming with promise and ready to help us succeed. All we have to do is tap that potential.”

The White House also plans to invest in education to create a workforce highly skilled to compete in the high-tech industry. “If we want to win the global competition for new jobs and industries, we’ve got to win the global competition to educate our people,” Obama pointed out. “We’ve got to have the best-trained, best-skilled workforce in the world. That’s how we’ll ensure that the next Intel, the next Google, or the next Microsoft is created in America, and hires American workers.”

While Republicans say the programs are ineffective, Democrats and White House officials argue that they are an important piece to economic recovery. During House Financial Services subcommittee hearings on the programs, David Stevens, assistant secretary at the Department of Housing and Urban Development, acknowledged that the programs aren’t working as effectively as originally planned. However, he stressed that, “Independent economists have indicated that these combined government efforts, while not sufficient on their own to enable the market to fully recover, were appropriate policy actions to help stem the vicious cycle of steadily declining house prices leading to escalating loan defaults.”

With $75 billion available in funding, the Home Affordable Modification Program is designed to lower mortgage payments of homeowners at risk of foreclosure so they can stay in their homes. Those who qualify typically realize a 40 percent reduction in their monthly mortgage payment. Despite the relief the program provides, critics, including Republicans, say it’s not reaching enough people and lenders have been more successful in providing mortgage modifications that don’t involve federal subsidies. At the end of 2010, an estimated 522,000 HAMP mortgage modifications were given. Expectations were that 4 million homeowners would be served by the HAMP program by 2012. “There are 3.3 million families who might have been reached by this program if only it had been better designed, better managed and better executed by the Treasury department,” said Neil Barofsky, special Treasury Department Inspector General charged with overseeing the Troubled Assets Relief Program (TARP) who is resigning his post at the end of this month.

Also targeted by the bill introduced by Rep. Patrick McHenry (R-N.C.), is the Neighborhood Stabilization Program. The initiative provides about $7 billion in grants to states, municipalities and nonprofit groups to buy, rehabilitate, rent or resell foreclosed and abandoned homes in an effort to create affordable housing and revitalize troubled neighborhoods hit hardest by the recession. But Rep. Gary Miller (R-Calif.) says the funds should be in the form of loans, not grants. “We’re giving $7 billion of taxpayer dollars to groups and organizations and cities and none of it comes back to the federal government. There is no requirement for repayment,” said Miller. “I think it’s a huge waste of taxpayer dollars. I don’t think there is adequate oversight of the funds, and if they sell the properties they keep the funds.”

In defending the mortgage modification programs, Rep. Luis Gutierrez (D-Ill.) pointed out that Republicans should focus on improving the programs instead of eliminating them. “Republicans are willing to give large breaks to the wealthiest in our nation yet they’re unwilling to provide the necessary aid to devastated families and distressed communities,” Gutierrez said. “Simply doing away with these critical programs that serve the American people without offering any real solutions that reform or replace these programs does nothing to alleviate our nation’s foreclosure emergency.”

Treasury Secretary Timothy Geithner warns that ending the mortgage modification programs would harm an already fragile housing market and “leave hundreds and hundreds of thousands, if not millions, of Americans without the chance to take advantage of a mortgage modification that would allow them to stay in a home they can afford.” The fate of the Republican bill remains questionable. The measure moves to the House floor, where the Republican-controlled House is expected to pass it. However, it is doubtful the bill would make it out of the Democrat-controlled Senate.

According to the survey, 49 percent of people said they were “very concerned” about the impact the recession has had on their personal finances, up from 43 percent in 2010. “The recession clearly has not ended for millions of Americans,” said Stephen Brobeck, executive director of the Consumer Federation of America.

Over the past few years, saving money has taken a backseat to mortgage debt, consumer debt, and for some, unemployment. Although Americans saw fewer if any pay raises at work, they had to pay out more for their workplace health insurance plan. In addition, their company retirement plans performed less than expected because employers reduced their contributions to them. The end result, the survey shows, is that the majority of Americans had to tap their savings account rather than add to it.

“The positive economic indicators often reported by the government and media measure how the climate is improving for businesses and affluent people,” Brobeck points out. A poll by The Washington Post, the Kaiser Family Foundation and Harvard University supports his theory. The poll shows numerous disparities in savings and investing among ethnic groups. According to the poll, African Americans and Hispanics are not saving at the same rate as Caucasians. Specifically, 46 percent of blacks and 32 percent of Hispanics said they had a retirement account, compared with over 50 percent of whites who said they had stocks, bonds and mutual funds. Furthermore, two in three whites said they also had 401(k)s, IRAs or similar investment plans.

Middle class blacks reported in the 2010 Ariel Black Investor Survey that hardships caused by the Great Recession caused them to tap their savings more, withdraw money from their 401(k)s and reduce their monthly contributions to their retirement savings. In the past two years, the survey found that 48 percent of blacks polled withdrew money from their savings to make ends meet, compared with 31 percent of whites.

“The fact that black and Hispanic workers are less likely to have meaningful retirement account balances is a worrisome development,” said Alicia H. Munnell, director of the Center for Retirement Research. “If the retirement age goes from 67 to 69, the practical effect will be bigger reductions for people who claim it at 62. Low-skill workers, who are already paid less, would just get less from the program.”

Although personal savings have taken a hit during the recession, the American Savings Education Council survey finds that people are still trying to save. The poll found that 57 percent had a savings plan, up from 55 percent the previous year, and 54 percent participated in their workplace retirement plan, up from 49 percent. Of those with a savings plan, 88 percent spent less than their income and saved the remainder. Those without a savings plan, the survey found, tended to spend more.

America Saves said the survey shows the importance of saving, even during tough economic times. “Saving is for everyone, not just the financially fortunate,” said Washington State Treasurer James L. McIntire. Survey results indicate that people who save do better paying off debt, building an emergency account and saving for retirement.

According to the report, an improved labor market led to a drop in mortgage payment delinquencies across all home loan types during the last quarter of 2010. Mortgage delinquencies declined to 8.2 percent, the lowest since 2008, from 9.1 percent in third quarter 2010. Loan payments that were one payment overdue dropped to the lowest level since the recession began in 2007, and mortgage loans that were three or more payments overdue dropped to 3.6 percent, compared to 5 percent in the first quarter of 2010. “First-time delinquency is very much a measure of distress in the employment system,” said Jay Brinkmann, chief economist for the Mortgage Banking Association. “I see all of this as pretty good news. It looks like we’ve clearly hit the turning point.”

But that turning point might stall in 2011. The Mortgage Bankers Association report also finds that the number of mortgage loans in foreclosure increased to 4.63 percent, compared to 4.4 percent in the previous quarter. The report attributed the increase to lenders putting a temporary hold on seizing homes from delinquent borrowers because of fraudulent or incomplete documents. Another issue delaying the housing market recovery is the large volume of low-priced, foreclosed homes on the market that are undermining home values. Last month, almost half of all home purchases were distressed properties. “We have to clear out those distressed properties before we can talk about any kind of housing market recovery,” said Guy Cecala, publisher of Inside Mortgage Finance Publications. “There are signs of improvement, but I think it’s a little early to break out the champagne.” Cecala estimates that it would take more than two years to clear foreclosed homes off the market, adding “and that’s assuming that no more foreclosures are added to that inventory.”

Despite the decline in mortgage loan delinquencies for the last three months of 2010, credit reporting agency TransUnion expects the mortgage delinquency rate to flat line during 2011 because of declines in housing prices. According to the Standard & Poor’s/Case-Shiller 20-city home price index, home prices in most large U.S. cities fell to their lowest point since the housing market collapse. “The data would say that these things (delinquency rates and falling housing prices) are clearly related,” said Tim Martin, who follows the housing market for TransUnion financial services. “There’s pressure on prices, and if prices drop, it tends to lead to delinquencies,” he said.

The Mortgage Bankers Association report also finds fewer people applying for home loans, even though mortgage rates for 30-year loans dropped for the first time in five weeks to 5 percent. Rates for 15-year mortgage loans also declined to 4.27. “The housing market is struggling to regain traction despite still historically low rates,” said Frank Nothaft, vice president and chief economist for Freddie Mac. According to the Mortgage Bankers Association report, loan applications for the week ending Feb. 11 decreased 9.5 percent, the lowest point since November 2008. In addition, applications for mortgage refinancing loans dropped to 64 percent, the lowest level since May 2010. Matt Howlett, an analyst at New York’s Macquarie Group Ltd., says refinancing would only improve if “there were some other government stimulus that hasn’t already been constructed. And that just seems unlikely.”

The Obama administration’s current housing rescue program is already running far behind expectations. The initial goal was to reach at least 3 million to 4 million people by the end of 2012. But according to U.S. Treasury Secretary Timothy Geithner, “we won’t come close to initial estimates.” He said the taxpayer-funded incentives offered to mortgage servicers to reduce monthly payments for homeowners struggling to make mortgage loan payments “have not been powerful enough, in all cases, to overwhelm all of the muck that these servicers have created.”

To replace Fannie Mae and Freddie Mac, the “Reforming America’s Housing Finance Market” report to the U.S. Congress recommends opening the playing field so private capital – which backed away during the financial crisis – returns to the housing finance market. Under the Obama plan, the private sector would be the main source of mortgage credit and assume the burden for losses. To attract private capital, the government would end Fannie Mae’s and Freddie Mac’s capital advantages over the next few years, increase Fannie’s and Freddie’s conforming loan limits to the levels established in the Housing and Economic Recovery Act (HERA), and gradually increase the down payment requirements of Fannie Mae and Freddie Mac.

The Obama administration’s plan would also reduce the investment portfolio for Fannie Mae and Freddie Mac at an annual rate of no less than 10% per year and begin returning the Federal Housing Administration (FHA) to its traditional role. “This report provides a strong plan to fix the fundamental flaws in the mortgage market and better target the government’s support for affordable homeownership and rental housing,” said U.S. Housing and Urban Development Secretary Shaun Donovan. “We must continue to take the necessary steps to ensure that Americans have access to quality housing they can afford. This involves rebalancing our housing priorities to support a range of affordable options, from promoting much-needed financing for quality, affordable rental homes to ensuring the availability of safe, and sustainable mortgage products for current and future homeowners.”

For home buyers, the Obama plan is not very promising, since it is likely to result in higher borrowing costs and larger down payments. And industry officials say the changes will mean that home loans will be harder to secure. “Even today we’re seeing for consumers a tighter credit box; it’s more difficult for consumers to get mortgage loans and to qualify,” John Courson, president of the Mortgage Bankers Association, points out.

Officials caution that they will move slowly in phasing out Fannie Mae and Freddie Mac to prevent any adverse ramifications to an already fragile home sales market. Currently, the federal government backs nine out of 10 new mortgages, so baby steps in removing that support are necessary to minimize the impact to economic recovery. “We are going to start the process of reform now, but we are going to do it responsibly and carefully so that we support the recovery and the process of repair of the housing market,” says Geithner. Officials estimate a timeframe of five to seven years before Fannie Mae and Freddie Mac are completely phased out.

While the report offers a viable framework for mortgage reform, the Obama administration’s recommendations still have to survive debate among members of the U.S. Congress and the powerful financial services industry, which is not too keen on shouldering the burden of loss. It should be quite a debate.

Obama encouraged businesses to take the nearly $2 trillion in cash on their balance sheets and invest it in America. “Ask yourselves what you can do for America,” he said. “Ask yourselves what you can do to hire American workers, to support the American economy, and to invest in this nation.” He told business owners in attendance that his administration will “help lay the foundation for you to grow and innovate” by investing in infrastructure and education and removing tax codes, regulations and other “barriers that make it harder for you to compete.”

Although the president was somewhat vague on how the government would help businesses recover and begin hiring in this weak economic climate, he did criticize the “burdensome corporate tax code” and promised to lower corporate taxes by eliminating tax loopholes. And although he promised to further trade deals with Colombia and Panama to help U.S. businesses expand, he failed to provide any timetable on getting the pacts approved. “I am eager to work with both parties and with the Chamber to take additional steps across the budget to put our nation on sounder fiscal footing,” the president said.

He stressed to the group, “I understand the challenges you face. I understand you are under incredible pressure to cut costs and keep your margins up. I understand the significance of your obligations to your shareholders and the pressures that are created by quarterly reports. I get it.” However, companies are seeking more assurances, particularly on regulations, infrastructure and trade. “The reason the companies are sitting on $2 trillion worth of cash is because of uncertainty,” said U.S. Chamber of Commerce President Thomas Donohue.

The relationship between Obama and the Chamber has not been an amicable one in past years. The U.S. Chamber of Commerce, the nation’s major business lobbying group, has been critical of Obama’s agenda that focuses too much on “big government.” And the White House criticized the Chamber for failing to disclose donors for its political ad campaigns against Democrats in 2010’s congressional elections.

U.S. Chamber of Commerce members listened politely to the president’s speech, but remained noncommittal in their response. White House spokesman Robert Gibbs played down the lack of enthusiasm by Chamber members, saying the president wasn’t seeking applause. Donohue responded to the president’s speech by saying, “We thought it was a good change in tone. He came, he visited, and we look forward to doing things together.” Other members, however, remained skeptical of Obama’s commitment to business. “Are they going to follow through or is this just the politics of saying the right thing and it stops there?” questioned Juliana Zoto Efessiou, a Chamber member who saw her bridal boutique fail during the recession but rebounded by starting a social media enterprise. Harold Jackson, chief executive of Buffalo Supply Inc., a medical supply business in Colorado, questioned Obama’s implication that businesses have a moral responsibility to put people back to work. “I think it’s a little outside the bounds to suggest that if we hire people we don’t need, there will be more demand,” said Jackson. Matthew Shay of the National Retail Federation also has doubts that business investments are the answer to economic recovery. “The recovery is going to be driven by the 70% of the economy that is consumption, not the 15% that’s investment,” he said.

Clearly Obama is cognizant of the fact that he needs the support of business to secure another four years in the White House. But if his reelection bid is to be successful, he needs to bring down the 9 percent unemployment rate and get Americans back working again. As such, he needs to rely on business to help him meet that goal. But it could take some convincing for the president to get business on his side. Bitter feelings remain after Obama’s sharp words on executive pay during the financial crisis and the business community is against the president’s healthcare reform and major overhaul of Wall Street. Time will tell whether Obama will put his words into action and whether the business community will take the olive branch that the President has extended.

According to the 2010 National Financial Wellness Survey conducted by PricewaterhouseCoopers, 43% of employees said it is difficult to meet their household expenses each month. “Employees tell me they make good salaries, but still have trouble making ends meet,” says Michael DiMaio, independent financial counselor and principal of New Focus New Jersey, a budget counseling company. For businesses, those troubles translate into employee tardiness, lost productivity, or increased workplace absenteeism. Mark McAvoy, a member of the Organizational Development Expertise Panel of the Society for Human Resource Management, estimates that employees spend an estimated 20 hours a month dealing with their financial troubles. “This equals about 30% of a 40-hour work week and includes time to go to the bank or call the debt collector from the office,” he points out.

The Mercer Annual Workplace Survey shows that businesses are well aware that employees are struggling to make ends meet, especially those faced with the job loss of a spouse, foreclosure, or mounting debt. Companies are being proactive in addressing their employees’ financial woes with targeted and incentive-based initiatives that take the same approach as their health and wellness programs. Prudential Financial, for instance, is providing individual financial counseling to employees through its employee assistance program that promotes a holistic approach to health and wellness. The company also introduced a personal budget coaching program that helps employees complete a personal financial analysis and create a budget.

McDonalds USA is taking a similar approach, providing company-owned restaurants and franchises with confidential consultants through its McResource Line. The professional advisers put employees in touch with debt management and credit counseling programs, as well as community programs that offer financial education and assistance. McDonalds also offers financial tools, educational videos, a smart phone budgeting calculator and other resources on its employee website. “Putting targeted and proactive communications, education and coaching in front of employees when it is most timely and relevant allows for a more surgical approach to addressing an employee’s financial needs,” says Kent Allison, partner-in-charge of the financial education practice at PricewaterhouseCoopers. “The tactic also increases the probability that employees will indeed take action – and employers will be able to drive desired behavioral change.”

Other companies are offering educational workshops on personal finance, financial fitness assessments that identify specific areas of concern, personal financial coaching, and weekly personal finance educational series. Dimension Data Americas, a technology company headquartered in New York and North Carolina, holds monthly financial wellness seminars and provides employees with financial materials as part of its Think Wellness company-wide wellness campaign. “The point of wellness programs is to get employees to feel good. And when we looked at the different things that might cause employees to not be productive, stress over personal financial situations was a cause,” says Maia Lucier, director of compensation and benefits at Dimension Data Americas.

Given the tough economic times, experts agree that incorporating financial health into a company’s existing wellness initiative is necessary for the overall health of employees. “We see this as part of lifestyle management,” says Joni Troester, assistant director of Human Resources at the University of Iowa, which recently added a financial component to its employee wellness program and health fairs. “Financial stress can impede people from having an overall healthy lifestyle.”

While the return on investment for addressing financial stress in the workplace has yet to be defined, it makes sense for companies to provide personal financial resources to its employees. There are plenty of studies that support the notion that stress, including financial stress, leads to poor health. And for employers, that means higher healthcare costs. “Taking this more holistic approach to wellness is catching on at many companies, but hasn’t quite hit the mainstream yet,” says Sander Domaszewicz, a principal at Mercer. “The most forward-thinking companies are doing it.”

Bank of America Chief Executive Brian Moynihan announced the creation of the Legacy Asset Servicing group and appointed senior executive Terry Laughlin to run it. The unit is responsible for servicing the bank’s 1.3 million delinquent home loans, overseeing foreclosures and servicing discontinued residential mortgage products. “We believe this will best serve customers – both those seeking homeownership and those who face mortgage challenges – as well as our shareholders and the communities we serve,” said Moynihan.

In spearheading mortgage reform efforts, Dimon has decided to move ahead without the Obama administration’s plans for overhauling Freddie Mac and Fannie Mae. The White House, which is working with the Department of Housing and Urban Development and the U.S. Treasury regarding the future of the mortgage giants, recently announced a delay in releasing its report and recommendations. “We know that the situation that we have now is untenable. We are looking at how to transition from a government having too big a footprint in the marketplace to one that has the private sector playing the dominant role in the mortgage market,” said Treasury spokesperson Steve Adamske.

But Dimon has a clear vision of what mortgage reform should look like. Mortgage reform, says Dimon, needs to include standard national laws, standard foreclosure laws and standard servicing clauses, necessary consistencies to have a sound mortgage market. JPMorgan Chase is not without an unblemished record when it comes to questionable mortgages and faulty paperwork that contributed to the home mortgage crises. However, Dimon managed to keep JPMorgan Chase out of the subprime mortgage arena that brought down several major banks and nearly sent Bank of America and Citigroup into bankruptcy.

One can assume that Dimon, a Democrat, is among the financial leaders that are taking part in the quiet meetings on mortgage reform between the White House and banking officials. In December, Dimon was among the business leaders invited to take part in private Oval Office one-on-one meetings with President Obama to talk about the economy. For Dimon, his challenge is walking that fine line between being a leader on mortgage reform and looking out for what’s best for his shareholders. Dimon was quoted as saying, “I’m not as worried about JPMorgan as I am about our industry and our country.” However, that comment somewhat contradicts his actions. One only has to go back to last year when JPMorgan Chase aggressively spent more than any other Wall Street firm to aggressively lobby against the financial regulatory reform law.

Perhaps former President Bill Clinton has a more realistic view in responding to Dimon’s call for mortgage reform. “Dimon’s big test now will be whether he can figure out a way to influence public policy and direct his own bank,” says Clinton. “Can he continue to make money for his shareholders and lead in a way to finance the resurgence of America?”

According to the CFPB’s website, its one goal is to “watch out for American consumers in the market for consumer financial products and services.” The agency is structured to “make consumer financial products and services work for Americans.” The formation of the CFPB is a direct result of deceptive lending practices that led to the financial crises. President Obama proposed an agency that would protect consumers going forward and address gaps in the consumer protection system. The CFPB consolidates supervision and enforcement responsibilities that were scattered throughout government departments and agencies. Created in the U.S. Congress by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the CFPB focuses strictly on the consumer and has complete supervision and enforcement of laws that govern providers of consumer financial products and services.

At the CFPB site, consumers can submit their ideas by email, Twitter or YouTube. Still to come on the CFPB website are a consumer response center where consumers can submit questions and complaints about financial products and services, and an office of financial education with financial literacy and consumer education programs. And starting July 21, the agency will have the authority to write and enforce federal consumer financial laws.

Since the website’s launch on February 3, the CFPB has received numerous comments from consumers regarding improving the fine print in credit card agreements, ending aggressive mortgage lending, addressing arbitrary rate increases on credit cards, and preventing banks from adding overdraft protection to checking accounts without notifying the customer. However, some consumers question spending more tax dollars on creating another government agency, and others wonder whether adding more oversight to an already highly regulated banking industry is necessary.

Those who work in the financial services industry are also weighing in on the role of the CFPB. For instance, a mortgage banker looks forward to the “honest, level playing field the law represents” and hopes the CFPB can help lenders better understand the 400-plus mortgage lending law that goes into effect in April. However, not everyone in the industry are in favor of the CFPB. “There were much more effective ways of addressing real problems it was designed to address. It has enormously aggressive powers and it doesn’t really replace anything. It’s just adding another regulator,” says Andrew Sandler, co-chairman of BuckleySandler LLP, a legal firm that represents the nation’s leading banks, mortgage lenders, credit card companies, insurance companies and other financial services companies.

Until the CFPB is in full operation, it’s difficult to judge its effectiveness in protecting consumers. On the surface, federal policing of financial products is a good thing for both consumers and financial institutions because it will result in better communication between them. And in the long run, financial institutions will benefit as well with better informed customers.

Recent statistics from the Bureau of Labor Statistics that show unemployment decreasing and increased hiring at small and mid-sized businesses reflect the influence of private equity. “Private equity is one of the key sources moving the economy forward and creating job market growth right now,” says John Challenger, CEO of Challenger, Grey and Christmas, a global outplacement consulting firm. “They’re future oriented and they’re putting capital behind companies to develop new products and moving into new markets, which leads to job creation.”

One example of a small business that received an infusion of private equity cash to expand its workforce is the Health and Safety Institute in Eugene, Oregon. The emergency care and response training organization had the customer base for its training services, but lacked the funds to expand staff to handle customer demand. That’s when the Ohio office of the Riverside Company, a global private equity firm, gave them the financial support they needed. The money enabled the company to hire 50 additional employees to serve the needs of its growing customer base. “Four years ago we had just 20 employees and now we have nearly 70, so that’s a 215% growth and we’re still growing. In this economy, that’s quite a feat,” says Bill Clendenen, CEO of the Health and Safety Institute. “For the average Joe searching for a job, when entrepreneurs, like myself, grow their business, that means more jobs and that means more opportunities.”

According to the Association for Corporate Growth, more than 4 million Americans are in jobs backed by private equity and experts predict more than a million more new jobs will be created by private equity investments over the next few years. But perhaps more eye-opening is the more than $400 billion that is currently available to be invested in companies. It just goes to show that other enterprises besides banks can provide the financing necessary to help this economy grow. “The impact private equity has had on the economy still has yet to be tapped,” Van Mieghem points out. “It’s an exciting time right now because the private equity firms are becoming a lot more active, especially with some of the improvements in the economy. They’ve gotten this money that they need to invest and it’s creating a good situation and a lot of activity in the market compared to the last couple of years.”

One has to wonder if the White House is taking notice and considering the same type of formula to help existing businesses transform into the smart energy and technology-driven companies that will get this country back on track.