Ok, maybe its technically not a new bank, they used to be GMAC and changed the whole brand last May, but the whole new persona and semblance of being a younger, nimble, “hip” bank is probably going to do wonders for them.  Older more “wiser” banks have been shown to be full of greed and malice and Ally hopes to stay away from that.

The data sheet on what you can get through them as far as services aren’t necessarily mind blowing but they are definitely competitive.   And since they have few competitors, they aim to stay around.  At this time, their online savings account has a higher interest rate than most money markets.  Worth a look!

[Edit: Below are the brand new rates]

They are putting together a $500 contest for the best infographic based on this financial mess and its a great opportunity to learn something interesting and enjoy excellent design work.  You might have realized that I really dig these things from earlier posts, like this one.  Natch, I picked this winner months ago.  :)

This might be a deal breaker for his re-election, considering other antics his consitutnents have not been happy with.  What is interesting about all of this finger pointing is that Sen. Dodd says he was told by the Treasury Department to strike the language.  The Treasury Department said they weren’t even aware the bonus were out there until just recently and President Obama, incharge or the Treusary Department, had no idea about the bonuses.  If Sen. Dodd was chasing campaing dollars with this provision, he should be held accountable.  Remember his state, Connecuticut, holds the top hedge funds and lots of financial campagin contributions stemm from the state he leads…

Jonathan Jarvis creates a clever, easy to understand video of the credit crisis and how things work.  It goes into complicated investment vehiceles and fiancial structures and is actually very imformative.  It lays a little too much blame on Greenspan, but this is a video you will want to watch and share with your friends and family.  Its important that we understand how these things happen…

I get excited whenever I see one of my ATM’s or banks and automatically think that I should take some cash out, whether I need it or not.  This is what ridiculous ATM fees have done to me.  Nothing pains me more than taking out cash and getting charged a crazy amount just to get what’s already mine.  It doesn’t look like things will get much better, it’s estimated that ATM fees increased an average of 50 cents from last year.

With the average fee around $3.00 not too long ago, a raise of 50 cents puts the current ATM withdrawal fee to around 17% on a $20 withdrawal.  As a concerned consumer, I think this is insane.  I can see a bank charging a fee like this on a loan with a risky borrower or perhaps on a pay-day-loan, but to receive our own money?  Think about, it’s like asking your friend to hold your wallet and charging him to get it back.

When I was in Las Vegas last year for a work event, I encountered an ATM that charged $20/per withdrawal—I threw up a little in my mouth then and again just now as I typed that.  It’s not like the fee is always for convenience either, the past two weekends  I went to my local Wachovia ATM to get a few dollars out, but it was out of service.  Maybe I should charge them 17% of the amount I was going to take out that they couldn’t give me?

Try some of these techniques to avoid ATM Fees:

$ Go to grocery stores and use the free cashback option on a purchase you were going to make anyways.

$ Although rare, some places still allow you to write a check for over the purchase amount.

$ Plan your cash needs and hit up your ATM when it’s convenient both for your wallet and your time.

$ If you can handle the extra wattage of cash, withdrawal higher dollar amounts to reduce your withdrawal percentage.

$ Try to save your cash and use your cards whenever possible.  When you are desperate for cash you’re bound to give in.

$ Choose your bank wisely.  If your using your bank for only a basic checking account, shop for one that allows you to use ATM’s for free.

Until the credit crisis, money market funds were enjoying returns around 5%, but now are seeing their yields sink below 2%.  On top of the declining return, money market funds have scared savers into believing their money is not completely safe.  Because the funds in a money market fund are invested (kinda), they are not FDIC insured, so it is possible you could lose your money, although the chance has historically and should remain very slim.
 

I have recently moved my money out of a money market fund and into an ING Orange Savings Account.  For me, I enjoy the FDIC insurance on my emergency savings, and at the current time, the return is higher than a money market fund at 2.75%.  However, I would stress that savings/emergency funds are NOT investments.  Try not to chase the highest rate of return all the time and especially do not lock up your savings in an investment promising a slightly higher yield.

Because ING and Sharebuilder have recently teamed up, I enjoy the Orange Account because it is linked to my Sharebuilder account, an option that can be used to increase returns on money waiting to be invested.  If you’re in the market for a finding a safer place to park your emergency fund and are interested in starting an Orange account, you can get a $25 bonus if you enter the following reference code at startup: SM424/VNZZ2RR5.  If this code does not work, open up any money magazine in a supermarket and you will likely find an up to date advertisement with a newer code to use.

Where do you have your savings?  $

As you have probably heard, the U.S. Senate passed an amended version of the bailout package late on Wednesday, October 2.  Mainly, changes were made to the bill in order to garner enough Republican votes in the House, where a similar package was shot down earlier in the week.  If the Senate’s vote gives us any indication as to how the House of Representatives will vote, then the chances are good because the Senate overwhelmingly passed the measure 74-25.  Both Senator Obama (D-IL) and Senator McCain (R-AZ) voted yes. [UPDATE: Today 10/3/2008, the House of Representatives passed the Senate measure 263-171.]

So what exactly is in the Emergency Economic Stabilization Act of 2008?  The answer is a lot.  When the core draft of the legislation was created by Secretary Paulson, the bill was very short three-page proposal.  After negotiations and a failed House vote, the bill is now 451 pages.  (The text of the bill can be accessed by clicking here.)  Because of the complex nature and length of the bill, below I have outlined the highlights along with what I feel are the positive and negatives of certain provisions.

Outline of the Emergency Economic Stabilization Act of 2008

• Authority to Buy - Gives the U.S. Treasury Department the authority to purchase and eventually sell bad assets (mostly mortgage-backed securities).  If the securities end up going up in value, the Treasury would then deposit the proceeds into the Treasury’s general fund, thus giving the taxpayers a gain.
• Money is Allocated to Treasury in Chunks - Although the $700 billion dollar amount was agreed to, it was in my opinion allocated somewhat responsible way by making the Treasury Department get Congressional approval for more money and makes them report to Congress on the effectiveness of their plan.  Immediately, the Treasury Department will receive $250 billion and would then receive another $100 billion after issuing a report to Congress.  The Remaining $350 billion would need Congressional approval.
• Treasury Can Purchase Non Mortgage Related Securities - The Treasury Department is allowed a little freedom in the types of assets it can purchase.  Most of the assets, of course, will be mortgage related, but this provision allows them to purchase various products.  I understand the motive for this provision, because in theory, if troubled banks need to get additional capital but cannot sell certain illiquid securities, the Treasury will help out.  However, this essentially allows the Treasury to buy assets like student loans and credit card debt off the books of financial institutions, both should not be allowed.  One question I have with this provision is can the Treasury buy securities from a struggling pension fund that was invested highly in mortgage-backed securities?  If this is the case, then if a local government’s pension was heavily invested in bad mortgages, which would result in teachers, firefighters, and city workers losing their retirement money; perhaps this provision would add a little protection to them if not by ultimately leveling out the housing market.
• Keep People in their Homes - The bill directs the Treasury to encourage homeowners facing foreclosure to take advantage of existing programs like the HOPE Homeowners Program under the National Housing Act in order to minimize foreclosures.  In my opinion, this bill does not go far enough to help people stay in their homes.  It’s hard to justify $700 billion for Wall Street when we just direct those losing their homes to existing programs.
• Executive Compensation - Interestingly, this bill would cap tax deductions for executive compensation and bonuses at $500,000 to make sure bad CEO’s do not get to cash out when they run a company in the ground.  In addition, this provision would not allow companies to give “golden parachutes” to their underperforming executives if the Government has completely taken over the company.  I like this provision because it doesn’t allow failing CEO’s to make millions, but it’s limited so that government doesn’t play a role in the executive compensation of other business it has no hand in, this is important.
• Oversight - The bill has a couple of different oversight measures, which is extremely important considering the magnitude of the sum of money.  (Sec. Paulson’s original draft did not include any oversight, essentially giving the Treasury a blank check with no limits or checks).  Included forms of oversight are: GAO studies (non –partisan), an inspector general (most government agencies have an inspector general), a Congressional oversight panel, and a board made up by our Government leaders (SEC, Fed, Treasury, HUD, and FHFA).
• FDIC Insurance - The bill temporarily raises the Federal Deposit Insurance Corp.’s deposit insurance coverage from $100,000 to $250,000. The reworked plan also would give the FDIC an unlimited credit line from Treasury.  This is a good thing, but after the temporary level is lowered again, customers must look for other accounts to ensure their money is insured (The FDIC insures your money in bank accounts up to $100,000, but if you are rich, you can open multiple accounts at $100,000 to insure all of your money).  [Ben edit- And isn't this only going to be in place for 1 year?  What happens afterwards?]

And what about you, dear reader, what do you think about this bailout?  Does this work for you?  Or does it further cripple our economy? $

How did we ever get to the point of needing $700 billion dollars from the Federal Government?  Were the regulators asleep at the switch or were they simply out smarted by the markets?  Did greed win over principles on Wall Street?  These are great questions that will probably be the topics of countless books over the course of the next ten years.  Of course, I don’t have the answers, but I do have an opinion, that you can take for whatever it’s worth.   Here is my quick and dirty version of the root cause of our current financial crisis, described by the following primary actors:

The Federal Government’s Role- The Federal Government has advocated home ownership for some time now.  The idea has essentially been the cornerstone of the American dream.  The Government practically begs citizens to purchase a home by offering tax incentives, Government backed mortgages, and various other programs designed to aid in purchasing a home.  The reality is that many people simply should not purchase a home, even if on paper it’s somewhat affordable.  (If you have time, read this article where we weigh the pros and cons of Renting vs. Buying).

As a homeowner, I completely understand the desire to own a home, and I think everyone should purchase a home at some point in their life to avoid rent or mortgage payments during retirement, but our desire to own homes has helped banks create exotic mortgage products that put us in the situation we are in today.

Securitization- You have likely heard this term thrown around in the news the past couple of months.  Securitization was a major reason we had a housing bubble and the major reason banks could offer so many nontraditional mortgage products.  Think of securitization like a mutual fund, its the process that bundles multiple mortgages into one security, like a mutual fund that holds various stocks.  As banks sold loans to homeowners, they would then bundle these loans or securitize them into securities that could be purchased by investors.  Investors of all types (this is where investments banks really lost their wallet) would then purchase these securities full of mortgages from the banks.  In turn, the banks would have capital from selling these loans, which allowed them to sell even more mortgages.

As the housing business began to boom and home values started going through the roof, everyone wanted in on the action.  Thus, more consumers took out mortgages, more investors purchased these mortgages through securitization, and the banks were rewarded with even more capital, which allowed them the freedom to become creative (the creation of ARM loans).  Investors were particularly drawn to these investments for a couple reasons.  For one, mortgages were originally thought of as one of the safest investments you could make.  Two, because a lot of these loans reset to higher interest rates, investors would only see their profits increase, which made these seem like no brainers.  Lastly, these securities or bonds were rated by credit rating agencies AAA, the best rating a bond can get (we’ll get to this later).  As you can see, securitization of mortgages was the fuel that fed our housing fire.

Credit Rating Agencies- As I just mentioned, credit rating agencies also played a role.  The main job of credit rating agencies is to examine securities like bonds, and assign a rating to it—the higher the rating, the safer the investment.  Investors took a lot of comfort in securities loaded with bad mortgages because of the high rating assigned to them, which only helped encourage the lending of these mortgages.  Credit rating agencies have come under fire since our housing crisis has unfolded and deservedly so.  They are now under the radar and regulators are paying closer attention to them.

One of the main problems I see in the system of credit rating agencies is the conflicts of interest that exist.  Basically, the system works like this; financial institutions will go to a credit rating agency as a customer and pay the agency to rate their security.  The credit rating agency then finds itself in a tight spot because they are in competition with other rating agencies to rate a particular financial institution’s securities favorably, or they might leave and get a rating they like better from a competing agency.  As you can see, companies seeking ratings are shopping around for the best possible rating and agencies are trying to please the customer in order to get repeat business.  This system is flawed and needs to be addressed.

Regulators- Lastly, I believe it’s worth looking at the role regulators played in the housing meltdown.  Because there are various regulators that have jurisdiction over various issues, some products go unregulated or lightly regulated.  For example, until the crisis, mortgage brokers did not have to register like broker dealers who sell securities.  The value of registering mortgage brokers is great to consumers because bad actors are in a database, easily accessible to consumers shopping for mortgages, not to mention potential employers looking to hire mortgage brokers.  I realize this is just a small piece of the pie, but this has been a positive that has come out of our mess.  Another problem with regulation is the constant turf war that goes on.

Each regulator is out fending for themselves and always trying to justify their existence.  Many times, this is a good thing because it forces regulators to take action.  But in this case, because the jurisdiction among investment banks and other major players involved in selling mortgage products was unclear, no regulator really wanted to step in, rather some backed away.  This is why you’ll hear me say regulators and regulation is needed, but they have to keep pace with the markets and at the same time cannot infringe on market innovation.  This is no small task, but it seems a new administration and Congress is sure to tackle the issue of assessing our current financial services regulatory framework.

Its also worth looking at other timelines to try and piece together this whole mess, here is a doc that does a really good job of breaking it all down, albeit somewhat exhaustively.

Who’s to blame?
There has been a fair share of finger pointing going on since the foreclosures first sprouted.  Regulators have been pointing their finger at other regulators.  Industry leaders have been pointing their fingers at regulations, credit rating agencies, and even Congress.  Congress has been pointing their fingers at virtually everyone but themselves.  As much as everyone wants to blame one party for the crisis we find ourselves in today, the reality seems to be that everyone deserves a little bit of the blame, including the consumers.

All of the roles I talked about above, in my opinion, helped us get to the point we are currently at.  There’s no one person or entity to blame, rather a system that was flawed and leaders including consumers that were greedy.  It’s easy for us as consumers and investors to look the other way when things are going really good, like they were during the housing boom.  It’s easy to not ask questions and jump on board like many homeowners, investors, and financial institutions did.  It’s embarrassing that we didn’t see what was coming sooner, because in the end, it seems like common sense.  Going forward, I hope we learn a lesson and get back to old school financials, where if it’s too good to be true than it is and if you can’t afford something, you can’t have it.  $

My day job, working in Government Affairs in Washington, DC, has given me an insider’s perspective on the makeup of the bailout package and the politics that have gone into the drafting of the legislation.  If you find yourself confused, don’t feel bad, I have found that many Congressman and Senators are equally as lost and are relying on party leadership and staff to help aide them in their votes.  Frankly, some questions asked by Congress during hearings that took place last week with our top financial leaders (U.S. Secretary Paulson, Federal Reserve Chairman Bernanke, and Chairman of the Securities and Exchange Committee Cox) were asked without any true understanding of the makeup of our financial markets in addition to an inexcusable knowledge of the subprime debacle (an issue we will cover on Friday).

As legislation continues to fight its way through Congress, we thought it would be helpful for us to put a real word spin on the issue as well as offer our opinions, formed mostly by observing firsthand the Congressional hearings of last week.  We will write a short series this week, covering a different topic each day that will hopefully help you better understand the crisis and feel more confident and secure about your financial holdings.  The order of writings for the week is:

•    Why Does Congress Need to Pass Bailout Legislation?
•    Understanding the Crisis: Timeline of Failure/Who’s at Fault?
•    What is Actually Included in the Bailout Legislation?
•    Insiders Perspective: Embarrassing Congressional Reaction to an Originally Dangerous Bailout Plan

MYM Series: Why Does Congress Need to Pass Bailout Legislation? 1 of 4

While it’s debatable, depending on your political views, if Congress should intervene in the markets at all—it’s not debatable to conclude that our markets are facing something so severe and so unprecedented that any valid comparison is only to the market crash during the Great Depression.

Lending
According to Secretary Paulson, one of the main threats our housing crisis has on the U.S. economy is the availability of credit.  When banks started realizing their bets on the housing markets were drastic mistakes and subsequently cost them money hand over fist, they found they no longer had any money or capital to continue with their everyday business—lending.  Although the concept of lending to get out of debt seems ridiculous, it’s important to remember that lending is a lifeblood to our economy.  If banks can no longer afford to lend money, consumers can no longer borrow for a house, car, or lines of credit.  Small businesses can no longer get the money they need to prosper or even begin.  Students could not take out loans to attend college.  As you can see, our economy truly relies on lending, which is one enormous reason Congress is desperately trying to pass legislation ASAP.

The reason lending is such a fruitful endeavor is because only about 10% of the money lent out needs to be backed up.  They can claim interest to be paid to them on the full amount while only having to give out a much smaller amount.  Its essentially the interest the banks are after.

Scared Investors = Panic Selling
Another very important and often overlooked reason Congress needs to pass bailout legislation is the affect these failures by our major financial institutions (“Super-Banks”) would have on the overall market.  Not only would credit begin to dry up, but investors would start thinking with their feet, and running out the door.  Major selloffs in our markets, like we experienced yesterday, could continue.  The reality of such a scenario would most likely put the U.S. markets in a deep recession, possibly taking years to overcome.  Most damaged by this would be senior investors currently living in retirement.  Although they thought they saved enough, the loss they would experience from selloffs would force them to start living off their principal savings rather than pull from interest earned.  We could have a wave of retirees simply running out of money.

We Need Financial Institutions to Succeed
Lastly, the overall health to our financial institutions is something we all benefit from.  Congress has taken numerous calls from constituents begging them to vote against any sort of Wall Street bailout because they feel taxpayers should not be on the hook for Wall Street’s failures.  While there is a lot of truth in these concerns, it’s important to realize the severe threats of doing nothing poses.  In addition, it’s likely many of these constituents calling their Congressional Representatives live in a house afforded only by the lending techniques that eventually buried our economy.  While I believe those that acted fraudulently in the housing crisis deserve to get punished, our Government must act quickly to first stabilize the markets or we will all be punished by their behavior.

Current Bailout Legislation Concerns
Just like you, I have many reservations about the latest bailout proposal.  I’m not thrilled with the Treasury Department receiving an unbelievable amount of power and money, especially at the same time.  I’m not happy that ultimately a new Administration and subsequently a new Treasury Secretary would be tasked with taking over Paulson’s expensive plan.  I hope that any passed legislation addresses the issue of CEO’s getting paid millions to walk away from jobs of which they sucked at.  While it may be necessary, I’m not thrilled that the proposal includes monies to bailout foreign banks that have business in the United States.

Hopefully, a decision is reached in the short-term that will give our markets a little stability and more importantly, some confidence.  In the long-term, the U.S. needs to take a step back and look at the regulatory structure that allowed our crisis to happen and legislate changes that will help our regulators keep pace with the innovation in our markets without infringing or discouraging the innovation that makes our markets so great. $

While the details of the plan will be determined by Congress in the coming week, the proposed bailout mostly is developed around the Government purchasing mortgage backed securities from troubled financial institutions in an attempt to keep them afloat.  But there is one proposed provision that I find extremely beneficial to the everyday consumer and that is insurance on money-market funds.

Money-market funds basically serve as savings accounts (which are federal insured) but are actually comprised of investments, hence the word “funds.”  In wake of the complete dry up of the auction rate securities market, many investors are left wondering if money-market funds will be the next failed investment product.  These worries may be overblown, but are well warranted.  Our markets have seen a substantial amount of money being pulled out of money-market funds during the past week because investors were acting on their fears.  If money-market funds were to dry up, the effect on our economy and to individuals, is hard to fathom.  I’m very pleased to see the proposed bailout to include Federal insurance for money-market funds; this action will protect individual consumers in addition to restoring confidence in the markets.

We will continue to eye the bailout as it works its way through Congress next week and will report any specifics that will directly affect everyday consumers.  $

While a bit of an exclusive club, it is with good reason.  The customer service is top notch and the rates are extremely competitive.  They currently allow only military, but have expanded to include the following:

• Military retirees who served honorably, regardless of when they retired
• Military personnel honorably discharged on or after January 1, 1996
• Widows and widowers of military members killed in action while eligible

I currently have my renters insurance ($6 a month), a credit card prime + 2.9%, and my vehicle insurance ($700/year, with full coverage) through them and have always been extremely pleased.

If you know of someone who might be able to take advantage of this, share this with them.

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New movie tries to raise awareness of what we owe
by Colin Lovett – PIC Current Producer

There are no chase scenes.  There is no romance.  And the hero is balding. With glasses.  But a new movie opening this month may be the scariest of the summer.  And it’s all about the national debt.

Courtesy I.O.U.S.A the movie

I.O.U.S.A is basically a call for Americans to understand how bad our budget problems have gotten and how much worse things could be if we don’t fix the problem. Watch the trailer here.

The movie is being promoted by Pete Peterson Foundation, who is using $1 billion of his own money to raise awareness of the budget deficit.

The current debt is about $9.5 trillion.  But Mr. Peterson’s group says it could  shoot up to $53 trillion if you count future debts such as paying out social security and medicare to 78 million baby boomers. At this price, every American man, woman and child would be on the hook for $175,000.  I don’t know about you, but that check would bounce if I wrote it.

They argue that all is not lost, but we must begin making tough choices now on spending, saving and taxes.

The federal debt is pretty simple to understand but can be very difficult to solve in practice.  We as a country take on debt when Congress and the President spend more than they take in in taxes.

Much of this debt is currently paid for from social security payroll taxes.  We now take in more social security payments than we send out.  But in a few years, that will change and we will need to find ways to make payments to millions of baby boomers as they leave the workforce.

If that’s still confusing, take a look at the way School House Rock explains it:

A lot our debt also comes from borrowing from foreign countries.  One day, we will need to pay them back.

There is little that any individual can do about the national debt.  But we should all be concerned about it because the hard decisions that will have to be made will affect all of us.  Higher taxes, lower spending and higher interest rates are just some of the possibilities. If we make this a concern, maybe they’ll make a movie sequel: Debt Crushers.  I hope the next one has some explosions.

Alternet, an alternative news site, has this take on I.O.U.S.A..

“Facing Up” is a great non-partisan site devoted to the federal budget.  If you have debt problems in your personal life, our sister site The Beehive, has great resources to help you manage your budget.

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We can learn a great deal about this issue and apply it to our own fiscal policies, one element you can take away is to not spend more than you make.  The other is to think about the future.  What else can a movie like this tell us?

This movie is going to be an eye opener as it is approachable and will explain how such a massive spending deficit has occured.  My only hope is that its not too late and that this doesn’t set an example for our future.  Or else we aren’t going to be able to go to the Olympics next time.

So MilkYourMoney.com has decided to feed this monster and highlight our data, in the form of tools that we have put together as well as gleaned from the web.  All of the following can be found down there on the right side of the page…Use them, and share them!

Become a Millionaire in 30 Years With Your Current Salary
This is a popular one, as it has a veritable list of things that you might be able to cut from your budget in order to have money to set aside for a savings account. We have run some numbers and gotten some estimates and have found that this is easy to do. It leverages compound interest and you might be affected by inflation but to be honest, its a great plan.

Broker Check
In the event that you are at the point where you want to buy securities, you might want to use a broker.  This is an individual buys securities on your behalf, like firm like an Ameritrade, E-Trade, or Sharebuilder.  (We like Sharebuilder by the way, as its the most affordable and integrates nicely with ING as the merged earlier this year.)  To be sure that your new broker (or soon to be new broker) is on the up and up, take a look at FINRA’s Broker Check page.  (FINRA stands for Financial Industry Regulatory Authority and are tasked with quite a bit but…well that’s a whole other article.)

Guide to House Hunting
Freddie Mac put together a nice over all check list that any new home buyer should consider taking with them to cover all your bases.  Be sure not to miss something important and get this list!

Light Bulb Comparisons
Ever wonder if the bulbs you have in your house are really saving you money?  When will Compact Florescents pay for themselves?  Is it worth the switch?  Take a look and see if its worth your time and money.  If you would like this in pdf, feel free to ask and we will send one right over.

Loan Repayment Calculator
This will allow you to figure out what you might be paying each month given a certain loan amount as well as factor in your interest for the life of the loan.  An invaluable tool that any borrower should take advantage of.

Monthly Budget
Ahh, one of our favorites!  This spreadsheet should take you from debt to profit and show you the best way to manage your money.  Give it a shot and see if its something that could help you.  If you have suggestions on this, feel free to let us know as we are always working on budget spreadsheets.  If emailed, we can even start one for you.

Mutual Fund Expense Analyzer
Most of us are given options to choose at our jobs when it comes to mutual funds.  We select what we would like and the percentage and then wait for a really long time to see what we made.  What if we could find the cheaper ones that accrued just as much in gains?  That would mean more money in your pocket and less in some bankers, right?  Check your funds!

Savings Calculator
This will allow you to start with a given amount of money and apply a reoccurring payment to it, in order to see how much you might eventually make after a set amount of time.  Use this to set goals for yourself and see what you need to do in order to meet those goals. $

For a copy of our letter sent to the Federal banking regulators, click here.  Or click on the image to the left.

Overall, we feel that the proposed rules are long overdue and in general are legitimate in their intentions. While we generally feel the proposals do not go far enough, we applaud the Agencies for taking the first and necessary steps to curb these abusive practices related specifically to credit cards.  MYM proposed amendments to the proposals in the following areas: Allocation of Payments, Applying Rate Increases to Existing Balances, and Firm Offers of Credit.

In addition to the suggested amendments, MYM also suggested that reform be addressed in the following areas that are not currently incorporated into the Fed’s proposal:

• The number of overlimit fees that may be applied in a single billing cycle should be fairly determined to properly put responsibility on the account holder to stay within their limit, but not overly punish them into unaffordable debt.

• Finance charges are often applied at the transaction date and not at the posting date when the money is actually financed. Finance charges should not be charged before the money is actually lent to the consumer.

• Fees charged to a consumers account for non-use of a card should be banned. Credit is something consumers earn and being charged for not using available credit is cruel and irresponsible.

• Penalty interest rates should be capped at a reasonable rate to both interested parties.

• A disclosure should be added to each monthly bill that clearly states the amount of time it will take and the cost to the consumer to completely pay off an account when only making the required minimum monthly payments. $