US Treasury to Stop Selling Bonds at Banks/Credit Unions

The U.S. Department of the Treasury said it will no longer sell paper savings bonds through financial institutions such as banks and credit unions as of Jan. 1, 2012. The move is part of the Treasury’s goal to increase electronic transactions with citizens and businesses and will save taxpayers about $70 million over the first five years.

Series EE and I savings bonds will still be available for purchase TreasuryDirect, which has offered savings bonds since 2002. “Savings bonds are very much a part of this country’s history and culture, and will remain a part of America’s future - but in electronic form,” said Public Debt Commissioner Van Zeck. “It’s time for us to take a 1935 model and make it a 21st century investment tool.”

It is free to open an account at TreasuryDirect. Services offered through the site include:

  • Buy, manage and redeem savings bonds
  • Convert paper Series EE and I savings bonds to electronic form
  • Purchase savings bonds as gifts
  • Enroll in a payroll savings plan for purchasing bonds
  • Invest in other Treasury securities, such as notes, bills and TIPs

If you still have paper savings bonds you can continue to redeem them at financial institutions.

April 2011 Shows Strong Job Gains

U.S. employers added jobs in April, according to the U.S. Department of Labor. Gains in employment were spread across various industries, with nonfarm payroll employment adding 244,000 jobs and the private sector adding 268,000.

Secretary of Labor Hilda L. Solis said in a statement:

April’s broad-based job gains were the largest we have seen in 11 months. Our economy has now seen private sector job gains for 14 months running. During this period, we have added 2.1 million private sector jobs, including 760,000 in the last three months alone. We have crossed an important threshold by creating more than enough jobs in each of the last three months to outpace growth in the labor force and put unemployed Americans back to work.

Despite the gains, the overall unemployment rate rose slightly to 9 percent from 8.8 percent.

 

Savings Rate at 5.3%

Saving money is one of the smartest financial moves you can make whatever the state of the economy. Many Americans have changed their spending ways and are adding to savings accounts. The personal savings rate was 5.3 percent of disposable income in November, compared with 5.4 percent in October, according to a recent report from the Bureau of Economic Analysis.

Although savings rates are not very high–savings accounts are paying an average of 0.39 percent interest and money market accounts are averaging 0.32 percent–it still makes sense to build a nest egg. Getting started on a savings program now can help you become disciplined about building up an emergency fund. If you stick with a savings plan, the money will add up sooner than you think, especially if you put it away and don’t touch it until it’s really needed.

Shop around to find the right savings account for your money. If you know that you won’t need the funds for a year or two, consider opening up a certificate of deposit to earn a higher interest rate. CD rates for a 1-year term are averaging 0.77 percent, but if you shop around to compare bank deals you should be able to find an account with higher promotional rate.

CD Rates Rise to 9% in India

"Short-term rates seem to be shooting through the roof. Acute shortage of liquidity made banks raise three-month funds via certificates of deposits (CDs) at nine per cent.

According to dealers, Bank of India raised three-month CDs at nine per cent today. Another government-owned lender, Syndicate Bank, raised Rs 300 crore at 8.99 per cent, while Corporation Bank raised Rs 500 crore via three-month CDs at 8.97 per cent. Rates for the three-month paper have increased 60-70 bps in the past one week owning to tightness in liquidity.

According to a treasury official, a south-based private sector bank has raised around Rs 200 crore through one-year CD at 9.55 per cent. Syndicate Bank today placed one-year CDs worth Rs 215 core at 9.25 per cent.

Liquidity continued to be tight today with banks raising more than Rs 1.25 lakh crore from the liquidity adjustment facility of the Reserve Bank of India.

Dealer said advance tax outflow, which is expected to suck out Rs 50,000-60,000 crore from the system, will put further pressure on rates.”

FDIC May Sue Officers/Directors of Failed Banks

The Federal Deposit Insurance Corp. (FDIC) is set to sue more than 50 officers and directors of banks that failed for more than $1 billion in losses related to the credit crisis, according to Bloomberg. The FDIC authorized the lawsuits during closed board sessions.

According to the Bloomberg article the FDIC has filed only one lawsuit against bank officers and directors of a failed bank, a $300 million suit involving IndyMac Bank executives. Since 2008, the FDIC has closed 294 banks. If suits are filed against the banks, an FDIC spokesman said the best scenario would be to try and get as many banks to settle as possible before an suits filed ended up in court.

In other financial news, some banks have suspended foreclosures, and proceedures for processing documents are being investgated. The banks are being investigated becuase mortgage officers are accused of signing foreclosure documents without actually reviewing them. Among the banks that have halted foreclosure processing are Bank of America, JPMorgan Chase, GMAC Financial, and PNC Financial Services. As government officials and consumer advocates call for more investigations, more banks are also likely to halt foreclosures as their procedures are scrutinized.

US Treasury Proposes New Rules on Bank Transfers

The U.S. Treasury has proposed that banks be required to report all electronic funds transfers into, and out of, the U.S. Banks have only been required to report cash transfers over $10,000 and others they believe are suspicious. Credit card and ATM transactions would not be affected by the new rule.

The change in rules is part of the government’s efforts to crack down on money laundering and financing for terrorists. The goal is to better track financial transactions so that unusual activity can be detected.

“By establishing a centralized database, this regulatory plan will greatly assist law enforcement in detecting and ferreting out transnational organized crime, multinational drug cartels, terrorist financing and international tax evasion,” James H. Freis Jr., director of the Treasury’s Financial Crimes Enforcement Network (FinCEN), said in a statement.

Some opponents of the proposal cited concerns about the government collecting so much personal data. “These new banking surveillance programs are testing the boundaries of privacy,” Marc Rotenberg, executive director of the Electronic Privacy Information Center, told the Washington Post. “Many consumers both in the United States and outside are likely to object.”

FDIC Permanently Increases Deposit Insurance to $250k

The FDIC released this press release on 7/21/2010 which announced that the standard maximum deposit insurance amount has been permanently increased to $250,000. Here's an excerpt from the press release:

On July 21, 2010, President Barack Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act, which, in part, permanently raises the current standard maximum deposit insurance amount to $250,000. The standard maximum insurance amount of $100,000 had been temporarily raised to $250,000 until December 31, 2013. The FDIC insurance coverage limit applies per depositor, per insured depository institution for each account ownership category.

The temporary increase from $100,000 to $250,000 was effective from October 3, 2008, through December 31, 2010. On May 20, 2009, the temporary increase was extended through December 31, 2013.
One thing that was not mentioned in the press release was the retroactive increase to Jan. 1, 2008. IndyMac depositors and depositors from a few other banks that failed in 2008 before October will now be able to recover some or all of their money that had been uninsured. Checks will be mailed starting on 7/22/2010.

The deposit insurance change affects credit unions as well - here is the press release by the NCUA.