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Personal Finance News 05/2010

Buffett stands by defense of Goldman transaction (Reuters)
Reuters - Warren Buffett on Sunday stood by his feisty defense of a controversial mortgage transaction marketed by Goldman Sachs Group Inc, saying the investment bank's behavior did not warrant public opprobrium.

Feisty Buffett supports Goldman, high on economy (Reuters)
Reuters - Warren Buffett on Sunday intensified his feisty defense of a controversial mortgage transaction marketed by Goldman Sachs Group Inc , saying the investment bank's behavior does not warrant public fury.

GMAC posts profit and plans name change (Reuters)
Reuters - GMAC Financial Services, a lender that is majority-owned by the U.S. government after multiple bailouts, posted its first profit since the fourth quarter of 2008 on Monday, as the company started to recover from lingering bad mortgage assets.

3 Easy Ways to Meet Retirement Savings Goals (U.S. News & World Report)
U.S. News & World Report - It's well known that most employees aren't on track to maintain their current standard of living in retirement. The typical U.S. employee will need to accumulate 15 times his or her final pay using a combination of Social Security, pensions, retirement accounts, and other savings in order to retire comfortably, according to Hewitt Associates calculations released today. That number jumps to 15.7 times final pay when inflation and retiree medical costs are factored in.

GMAC posts 1Q profit, plans to rename itself Ally (AP)
AP - GMAC Financial Services on Monday posted its first quarterly profit in more than a year and announced plans to rename itself Ally Financial Inc., as the consumer lender aims to put a failed foray into the mortgage business behind it.

The Top-Performing Commodity (Hint: It's Not Gold) (The Motley Fool)
The Motley Fool - What's the top-performing commodity this year? It's not gold, despite the attention the yellow metal is generating. The base answer is nickel, with a 39% gain through April 28 in the London Metal Exchange price for three-month delivery, according to Bloomberg. As investors debate the prospects for fiat currencies in advanced economies (generally poor, in my opinion) and the merits of hard assets, is nickel a viable investment choice?

Goldman discloses shareholder suits (AP)
AP - Goldman Sachs has disclosed information about a half-dozen lawsuits filed against it by shareholders accusing the big Wall Street firm and top executives of misconduct and abuse in the wake of civil fraud charges brought by the government over mortgage securities deals.

New Hope for Debtors Struggling With Student Loans (U.S. News & World Report)
U.S. News & World Report - Hundreds of thousands of Americans who fall behind in their bills and seek refuge by filing for bankruptcy get a distressing surprise: If they are willing to ruin their credit for years, they can walk away from their houses, turn in their cars, and wipe out their credit card bills, but they typically can't erase a penny of their student debts.

Home loan demand up in tax credit's last days (Reuters)
Reuters - Demand for loans to buy U.S. homes raced to a seven-month high last week in the last hurrah for federal homebuyer tax credits that ended April 30, Mortgage Bankers Association (MBA) data showed on Wednesday.

Sirius XM Plays the Howard Stern Game (The Motley Fool)
The Motley Fool - Howard Stern talks for a living. Sirius XM Radio (Nasdaq: SIRI - News) CEO Mel Karmazin wasn't about to speak for the star in yesterday's quarterly conference call.

Panel criticizes Bear Stearns' risk-taking (Reuters)
Reuters - Bear Stearns' appetite for risk and lack of foresight were criticized at a hearing into the roots of the financial crisis, where former executives argued the firm's collapse was due to events beyond their control.

Storm Clouds Brewing for Payday Lenders (The Motley Fool)
The Motley Fool - Friends, Americans, countrymen, I come here not to debate the relative merits of short-term cash advances and the companies that offer them, but to bury the hopes of their investors.

Down 75%! The FDA Has the Final Say -- Always (The Motley Fool)
The Motley Fool - The Food and Drug Administration doesn't call them final-decision committees; they're called advisory committees. And for good reason: They advise, but the FDA always has the final say.

Freddie Mac posts loss, sees need for state funds (Reuters)
Reuters - Freddie Mac , the second-largest provider of residential mortgage funds, on Wednesday said it lost $8.0 billion in the first quarter and warned that it would continue to need government funds because the housing market remains fragile.

Republicans seek vote on future of Fannie, Freddie (Reuters)
Reuters - A trio of senior Republican senators on Wednesday pushed to add changing the structure of U.S. mortgage finance giants Fannie Mae and Freddie Mac to a broader debate on the financial system.

Freddie Mac asks for fresh 10.6 billion dollar bailout (AFP)
AFP - Troubled US government-backed mortgage firm Freddie Mac on Wednesday asked for an additional 10.6 billion dollars from the Treasury Department to cover losses.

BMC Software 4Q net income jumps 43 pct on gain (AP)
AP - Business software maker BMC Software Inc. said Wednesday that its fiscal fourth-quarter net income rose 43 percent, helped by an income tax benefit.

Why the U.S. Is Worse Off Than Greece (The Motley Fool)
The Motley Fool - Little old Greece made news again this week following the announcement of a $145 billion rescue package for the country (courtesy of the EU and IMF). Although this money will see the country through its May 19 debt maturities, the bond market remains skeptical of Greece's long-term solvency. And rather than solve for the market's worries, it seems to have actually exacerbated them. ...

U.S. was ill-prepared for financial crisis: Paulson (Reuters)
Reuters - Former Treasury Secretary Henry Paulson admitted on Thursday the United States was ill-prepared for the financial crisis that struck in 2008 and said he had not foreseen the depth of mortgage-related problems.

Freddie Mac: mortgage rates sink to 6-week low (AP)
AP - Rates for 30-year fixed mortgages have fallen to their lowest level in six weeks, Freddie Mac said Thursday.

Lawmakers still trying for school retirement deal (AP)
AP - Michigan lawmakers said Thursday that a potential money-saving plan aimed at coaxing thousands of public school employees into retirement this summer hasn't yet failed.

Ahead of the Bell: Consumer Credit (AP)
AP - Consumer borrowing likely fell again in March, marking the 13th decrease in the past 14 months, and underscoring that the overall economy is still facing headwinds as it tries to emerge from a deep recession.

Fed to sell some of mortgage-backed portfolio: report (Reuters)
Reuters - Federal Reserve officials have agreed to sell some of the central bank's $1.1 trillion portfolio of mortgage-backed securities, but many are undecided on how soon or how aggressively to do so, the Wall Street Journal said, citing several people familiar with the matter.

BofA's Countrywide OKs $624 million lawsuit settlement (Reuters)
Reuters - Countrywide Financial Corp, the mortgage lender acquired by Bank of America Corp , has agreed to a $624 million settlement of a lawsuit accusing it of misleading investors about its lending practices.

Consumer borrowing posts unexpected rise in March (AP)
AP - Consumer borrowing posted an unexpected increase in March, only the second gain in the last 14 months. It could be a sign that households are feeling more confident about boosting spending, a key development needed to support a sustained economic recovery.

NY pension fund: $600M settlement with Countrywide (AP)
AP - New York pension fund officials said Friday they've reached a proposed $600 million settlement of securities fraud allegations against mortgage lender Countrywide Financial Corp.

Ringleader of Va. mortgage fraud gets 5 years (AP)
AP - If you want to understand what went wrong in the housing market, the case of Ruben Rojas is an important piece of the puzzle.

Reform bill should include Fannie, Freddie: Shelby (Reuters)
Reuters - Financial reform legislation being debated by the Senate needs to overhaul government involvement in U.S. mortgage finance giants Fannie Mae and Freddie Mac, Senator Richard Shelby, the lead Republican on the Senate Banking Committee, said on Saturday.

Shelby: Bank bill should include mortgage firms (AP)
AP - A Democratic plan to rein in the financial industry is flawed because it fails to tighten control over two large government-sponsored mortgage companies blamed for creating a demand for risky loans and inflating the housing bubble, a leading GOP senator on banking issues says.

Qatar buys top London store Harrods (AFP)
AFP - The Qatari royal family's investment arm bought luxury British department store Harrods on Saturday, with the Qatari prime minister vowing to make the London landmark "even greater and better".

Late payments on mortgages show surprising 1Q drop (AP)
AP - The rate of late mortgage payments dropped in the first quarter for the first time since 2006, according to credit reporting agency TransUnion.

Fannie Mae seeks $8.4 billion from govt after loss (Reuters)
Reuters - Fannie Mae, the largest U.S. residential mortgage funds provider, on Monday asked the government for an additional $8.4 billion after the company lost $13.1 billion in the first quarter.

Fannie Mae seeks $8.4B in aid after 1Q loss (AP)
AP - Fannie Mae has again asked taxpayers for more money — this time $8.4 billion — after reporting another steep loss for the first quarter. The taxpayer bill for rescuing Fannie and its sibling Freddie Mac has grown to $145 billion — and the final tally could be much higher.

April delinquencies fall for 'Alt-A' mortgages (AP)
AP - Fitch Ratings on Monday said late payments on high-risk residential mortgages known as 'Alt-A' loans fell last month for the first time in four years as more borrowers caught up on their payments and modified their loans.

Are BRIC Countries a Threat to the Dollar Standard? (The Motley Fool)
The Motley Fool - During the first BRIC summit last year, leaders from Brazil, Russia, India, and China discussed ways to conduct trade among themselves without using the U.S. dollar as a reserve currency. Russian President Dmitry Medvedev went so far as to unveil a new "world currency" coin at the G-8 meeting the following month to replace the dollar.

The Future of Housing-Related Jobs (U.S. News & World Report)
U.S. News & World Report - When you buy a new home, you're not just moving into a different neighborhood. You're injecting a dose of adrenaline into the heart of the American labor market. Think about it: Building a home requires architects to design plans, workers to hammer nails, and manufacturers to provide everything from lumber to bulldozing equipment. Purchasing a previously owned home also provides an employment jolt. By the time you sign the closing documents, you'll have created demand for real estate agents, lawyers, appraisers, inspectors, and mortgage lenders. ...

11 Steps to Relief From Federal Student Loans (U.S. News & World Report)
U.S. News & World Report - Falling behind on federal student or parent loan payments can be terrifying. Your credit scores drop, which can cut off opportunities to buy homes, go back to school, or get credit cards. Bankruptcy judges generally won't clear the debt, and the government can take part of your paychecks and even Social Security checks. But those having trouble making payments on federal education loans do have a growing number of attractive options to temporarily reduce or pause their monthly bills, or even get some of their debt forgiven.

Mortgages: Strategic Defaults Are On the Rise (BusinessWeek)
BusinessWeek - The first wave of U.S. mortgage defaults was spurred by lenders who made bad loans and borrowers who wound up with larger monthly payments than they could ever hope to manage. Lately, something altogether different has been making an increasing contribution to soured debt: Americans choosing to stop making mortgage payments they actually can afford.

AIG chief confident AIA sale will proceed: source (Reuters)
Reuters - American International Group Inc Chief Executive Robert Benmosche told employees he is confident a $35.5 billion deal to sell its Asian life insurance unit would move forward, a source familiar with the matter said.

Fannie, Freddie aid cost unclear: regulator (Reuters)
Reuters - It is unclear how much U.S. taxpayers will eventually have to shell out to help mortgage finance giants Fannie Mae and Freddie Mac, the regulator of the two companies said on Tuesday.

AIG, Pru in talks to restructure AIA deal: sources (Reuters)
Reuters - AIG is in talks with Prudential Plc to restructure a $35.5 billion deal to sell its Asian life insurance unit to the British insurer, sources familiar with the matter said on Tuesday.

There's No Need to Run From Oil Companies (The Motley Fool)
The Motley Fool - There's a lot we don't yet know about the disastrous oil rig explosion and ensuing oil leak in the Gulf of Mexico. Crews from BP (NYSE: BP - News), Transocean (NYSE: RIG - News), and other companies are toiling to stop the flow, while company executives and politicians mix it up in a game of who's to blame and who's going to pay.

Senate rejects GOP's Fannie, Freddie plan (Reuters)
Reuters - The Senate on Tuesday voted to reject a Republican measure that would have moved housing finance giants Fannie Mae and Freddie Mac out of government conservatorship within two years.

Senate GOP moves to kill securitizers rule (Reuters)
Reuters - Senate Republicans moved on Tuesday to kill part of a far-reaching Democratic Wall Street reform bill that seeks to crack down on mortgage securitization, a financial practice blamed widely for helping to inflate the subprime mortgage bubble.

Samsung Life shares jump after record IPO (AP)
AP - Samsung Life Insurance shares jumped 10 percent in their first day of trading in South Korea after a $4.3 billion initial public offering that set a record as the country's largest.

Home refinancing demand jumps as rates drop (Reuters)
Reuters - U.S. mortgage applications rose last week, reflecting a jump in demand for home refinancing loans as interest rates reached their lowest level since mid-March, data from an industry group showed on Wednesday.

Morgan Stanley probed by Federal authorities: report (Reuters)
Reuters - U.S. federal investigators are probing whether Morgan Stanley misled investors about mortgage derivative products it helped create and sometimes bet against, The Wall Street Journal said, citing people familiar with the matter.

Morgan Stanley shares drop on reported probe (AP)
AP - Morgan Stanley shares dropped Wednesday following a report that the investment bank is facing an investigation into mortgage derivative deals.

Senate votes to bar mortgage kickbacks, liar loans (Reuters)
Reuters - The Senate on Wednesday voted to end mortgage kickbacks and so-called "liar loans," two lending practices that played a role in the meltdown of the subprime mortgage market.

Senate keeps 5 percent "skin in the game" requirement (Reuters)
Reuters - The Senate on Wednesday rejected a Republican measure to kill a provision in a sweeping Wall Street reform bill requiring mortgage securitizers to shoulder more risk posed by the complex debt instruments they create.

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