Patti's Blog - Advocate for Elders, People with Disabilities and Their Families

Put Your Accounts in Your Daughter’s Name — What Could Go Wrong?

Excerpt from: Fleming & Curti, PLC (click for full article)

 

Seniors are subjected to a constant drumbeat of advice: make sure you have no assets in your own name, or you will lose them to the nursing home. Transfer everything to your children to “protect” your assets. Is it good advice?

We usually counsel against such transfers. They are a bad idea for several reasons, but chiefly for these two reasons:

1. Such transfers are not likely to work, given the five-year look-back period for Medicaid eligibility. In other words, if you make such a transfer shortly before you go to the nursing home, you won’t be eligible for government assistance with your long-term care costs for up to five years — or even longer, in some cases.
2. Even if you successfully “protect” your assets from your own nursing home costs, you have just subjected them to the recipient’s creditors and claims.

Law and Order: AIG

Patti's Comments:  And where is the outrage over this??

Excerpt from The Huffington Post: (click for entire article)

President Obama's Department of Justice announced last week that there would be no indictments in the collapse of AIG, an event which led to a worldwide economic collapse and cost the American taxpayer trillions. As someone who once worked for AIG I was shocked, but apparently that's how this mystery ends: Hundreds of millions of victims, smoking guns in every room, and not a perp to be found anywhere.

Yves Smith is disappointed that PriceWaterhouseCoopers, the auditors who signed off on AIG's financial claims despite mounds of disturbing evidence, escaped serious legal scrutiny. She observes that our "Potemkin" financial reform (her word) won't remove the barriers that prosecutors face in pursuing secondary parties like auditors (although I believe the Supreme Court ruling she cited only addressed civil suits.) Not only is the auditor protected, but that allows the fraudster himself to use the defense that he kept his auditor informed - kind of like Bush and Cheney using John Yoo's legal opinion to inoculate themselves from criminal prosecution.

AIG: Still Losing Money!

Excerpt from NPR: (click for entire article)

AIG lost $8.9 billion in the fourth quarter of last year. Sure, it sounds bad -- until you compare it to the $61.7 billion the company lost in the fourth quarter of 2008. AIG's main business lines actually turned a small profit in the last three months of 2009. But the company took some big hits to its balance sheet as it paid back part of its bailout, set more money aside to cover its insurance policies, and sold a subsidiary on the cheap. Here's more from Bloomberg.

Still feeling angry about the bailouts? Arne Duncan would like a word with you. In this morning's Washington Post, the education secretary leans on old-school, anti-bank populism to push the Obama administration's plan to change how student loans work. Under the current system, "the banks earn profits on the interest; if students default, taxpayers take the loss, not the banks," he writes. "In other words, working Americans pay while bankers get rich." (Here's a counterpoint from Sallie Mae, which could lose big under the administration's plan.) A student-loan bill passed the House last year, but has been held up in the Senate.

The 13 Biggest Paychecks in Finance 2009

Patti's Comments:  Too much - there is no logic in this….

Excerpt from The Huffington Post: (click for entire article)

Who got the biggest pay package in finance this year? Chances are you've never heard of many of the top earners.

In a year marked by high unemployment, record foreclosures and the fallout of historic bailouts of the financial sector, bank pay became a constant concern for politicians, voters and Wall Street's army of PR reps and lobbyists.

Though much of the outrage was directed at Goldman Sachs and the riskiest of Wall Street banks, the biggest paydays went to relative unknowns. A Wall Street compensation consultant told the New York Times earlier this week that "there are probably thousands of people that are in the Millionaire Club -- or even the Ten Millionaire Club -- that have gotten no heat."

We've compiled a list of the biggest earners in finance this year, which factors in base salary and bonus pay. We've also included some high earners who aren't CEOs.

Former Merrill chief Thain to lead CIT Group

Excerpt from Washington Post: (click for entire article)

Former Merrill Lynch chief executive John Thain, who brokered the investment bank's controversial sale to Bank of America, has been named chairman and chief executive of commercial lender CIT Group, which continues to restructure its business following a brief stay in bankruptcy protection last year.

CIT Group, which lends to more than 3,000 businesses, including supermarkets and department stores, was hit hard by the credit crisis and forced into bankruptcy after failing to raise cash to pay off outstanding debt. The more than 100-year-old company also was hurt by mounting loan losses as more customers fell behind on repaying loans during the recession.

Thain, 54, took over Monday, replacing interim chief executive Peter Tobin, who will remain on CIT's board of directors. Tobin had been serving as chief executive since Jeffrey Peek retired on Jan. 15. Thain has also served as chief executive of the New York Stock Exchange and as president and chief operating officer at Goldman Sachs Group.

New York-based CIT will pay Thain an annual cash salary of $500,000. He will also receive $5.5 million in stock annually, of which $2.5 million will be subject to a one-year holding period. The remaining $3 million cannot be sold for three years. Thain could also receive as much as $1.5 million in bonuses based on the performance of the company. The board will determine whether to award the performance-based bonuses.

Civil fraud charges filed against Bank of America

Excerpt from Washington Post: (click for entire article)

Federal and state regulators filed civil fraud charges Thursday against Bank of America and its former chief executive and former chief financial officer in the broadest action brought to date against a major player in the financial crisis. The bank agreed to pay $150 million to settle some of the charges.

Regulators accused Bank of America and its former top executives -- chief executive officer Ken Lewis and chief financial officer Joseph Price -- of lying to investors in fall 2008 about mounting losses at Merrill Lynch, the troubled investment bank it was acquiring, and billions of dollars in bonuses paid to employees. Regulators also charged that the bank misled federal officials by falsely claiming it would back out of a deal to buy Merrill Lynch without billions of dollars more in bailout funds.

The actions represent the culmination of long-running investigations by the Securities and Exchange Commission, New York Attorney General Andrew Cuomo and Neil Barofsky, the Treasury Department's special inspector general for the financial bailout.

AIG plans to pay about $100 million in bonuses Wednesday

Patti's Comments:  Just say NO -- give the money to the states for Medicaid.

Excerpt from Wall Street Journal: (click for entire article)

American International Group plans Wednesday to pay another round of employee bonuses worth about $100 million, said several people familiar with the matter, a year after similar payments at the bailed-out insurance giant infuriated many Americans and inflamed Washington.

This week's retention payments will go only to employees at the company's Financial Products division who agreed recently to accept 10 to 20 percent less money than AIG had initially promised them years ago. In return, they are receiving their payments more than a month ahead of schedule.

The company is still scheduled to pay out tens of millions of dollars more in March, mostly to former employees who did not agree to the concessions.

AIG executives have been scrambling to hammer out a compromise before March 15, when the firm faces a deadline to pay nearly $200 million in bonuses to employees at Financial Products, the unit whose risky derivatives deals brought the insurer to the brink of collapse in 2008. Government and AIG officials have been eager to avoid a repeat of the public furor that erupted last March when an earlier round of payments -- worth $168 million -- went to the same set of employees.

GAO Asked To Review Fed's Role In AIG Rescue

Patti's Comments:  Yeah — and any of the illegal wiretaps used on these folks???
 
Excerpt from NPR: (click for entire article)

Federal Reserve Chairman Ben Bernanke has taken the unusual step of asking the investigative arm of Congress to conduct a "full review" of the Fed's role bailing out AIG. The Fed chief's move is aimed at defusing criticism of the government's $182 billion rescue of the insurance giant. The bailout sparked public outrage and demands in Congress for more information.

$9 Billion For Taxpayers, Maybe

Patti's Comments:  Good - then use it to bail out cuts to long term supports via Medicaid...

Excerpt from NPR: (click for entire article)

American International Group Inc. is reportedly in talks with MetLife Inc. to sell one of its largest and most valuable insurance units for between $14 billion and $15 billion.

The deal, if it goes through, would help pay off $9 billion of A.I.G.'s rescue debt to the government, and possibly more, depending on the price. Attempts to sell the unit have faltered for more than a year because of what A.I.G. considered low bids during the financial crisis.

Under the terms now being discussed, MetLife would pay about $14 billion to $15 billion for the A.I.G. subsidiary, which has an attractive foothold in fast-growing Asian markets, according to people briefed on the negotiations. That price suggests a large premium above the unit's current price although the economics of the industry have gyrated in the last two years.

Alico is an international life and health insurance business that operates in more than 50 countries around the world.

How Retirees Saved the Banks

Excerpt from New York Times: (click for entire article)

If you’re a retiree who relies on interest income, you know that the tap is running dry. In fact, many investors in certificates of deposits, savings accounts and money market accounts are losing money once taxes and inflation are subtracted from today’s extremely low yields.

Less well known is that measly savings yields are central to the government effort to buy time for the banks to earn their way back to health. It is important to rebuild the banks. But more attention must be paid to the collateral damage from that effort.

Here’s what’s happening: By lowering the short-term interest rate it controls to virtually zero and creating lending programs, the Federal Reserve has enabled banks to borrow cheaply. The banks re-lend that cheap money, but not necessarily to consumers and businesses. They can, for example, lend it to back to the federal government by buying Treasury securities, and earn a nice spread between their cost of funds and Treasury yields.

At the same time, banks are awash in deposits, much of it from investors who have pulled their money out of riskier investments. With money rolling in, big banks don’t need to compete with one another for savers, which further depresses the interest on offer.

The result is presumably healthier banks and certainly poorer savers. Or, as William Gross, the legendary bond investor told The Times’s Stephanie Strom: “It’s capitalism, I guess, but it’s not to be applauded.”