December 1, 2023

Bucks Blog: Checking Trees as Hurricane Season Starts

Courtesy Chubb Personal Insurance

Hurricane season began on Saturday, and the federal government is predicting an “active or extremely active” year. So if you live in a hurricane-prone area, now is a good time to inspect trees near your home for possible weakness that could lead to damage during a storm with strong winds.

Most standard homeowners’ policies cover damage from branches and trees that fall on your home or garage during a wind or ice storm; they also cover removal of the tree, at a cost of $500 to $1,000, depending on the policy. (If the tree falls on your property but doesn’t damage anything, there’s usually no coverage for its removal.)

But a more worrisome risk is that the tree or branch will injure you or a family member when it falls. In a recent survey by Chubb Personal Insurance about damage from a falling tree or branch, more than 41 percent of those surveyed said they most worried about the tree falling on a loved one. (The telephone survey of 1,004 people was conducted in March by ORC International).

Scott Spencer, worldwide appraisal and loss prevention manager with Chubb, said in a phone interview that homeowners should periodically assess the health of trees near their homes. Often, homeowners assume that because a tree has weathered previous storms, that it must strong. But exposure to storms may weaken trees in some cases, so they need to be reassessed.

Of greatest concern are trees within the “fall zone,” he said — trees that would hit your house if they fell down. Trees with forked trunks — that is, they appear to have two main trunks — are unstable and are at greater risk of falling, he said.

Signs that trees may be in poor health include branches with dead tips; cankers or rot on large portions of the trunk;  or mounds or divots near roots, that may indicate rotting. Trees near areas that recently have been under construction should be carefully checked, since excavation equipment can damage roots.

If you have doubts about a tree’s health, it’s wise to consult a professional arborist. “You need to consult a tree expert, not just a neighbor with a chainsaw,” he said, because improper pruning may cause more problems than it solves by making the tree unstable.

The International Society of Arboriculture certifies arborists and has a search tool in its Web site to help you find a professional near you. The site also lists additional ways to check on a tree’s health.

If the tree is in poor health and is positioned so that it could fall on your home, you may want to consider having it removed. Generally, though, you’ll pay out of pocket for this;  insurance policies cover damage from falling trees, but not prevention.

And as for the fear that a tree or limb might fall on you or a family member, Jeanne Salvatore, a spokeswoman for the Insurance Information Institute, said the resulting medical costs would be covered not by your homeowner’s policy, but by your medical insurance. (If, however, the tree or limb injured someone else, like a guest or a pizza delivery boy, and you were sued, the liability coverage of your policy would cover your losses up to the limits of your policy, she said. Mr. Spencer of Chubb said there would typically need to be a finding that the homeowner was negligent in maintaining the tree.)

How do you maintain trees near your home? Have you ever had one fall on your house?

Article source:

You’re the Boss Blog: Is Obama’s QuickPay Initiative Beginning to Work?

Searching for Capital

A broker assesses the small-business lending market.

If you had to pinpoint the most important financial issue confronting small businesses, what would you say? I suspect many would argue it’s that banks aren’t lending. For many small-business owners, however, I think the primary issue is that their customers are taking longer and longer to pay them, which creates tough cash-flow and working-capital problems.

President Obama took a stab at solving this problem in 2011. He issued an executive order requiring federal agencies to pay small-business suppliers of goods and services within 15 days of receiving a valid invoice, down from 30 days. Because the federal government awards nearly $100 billion in federal contracts to small businesses each year, the potential impact was huge. Initially, however, the program applied only to prime contractors. And critics pointed out that the payment window did not begin until an invoice was actually approved, which could add weeks or even months to the cycle.

Last July, the QuickPay program was revised to include subcontractors. It now holds all federal contractors to the 15-day standard, “with the understanding that those prime contractors will similarly accelerate payments to their small-business subcontractors.” The Office of Management and Budget encourages prime contractors to pay their subcontractors faster, to renegotiate existing contracts to this end and to negotiate all future contracts to this end. Presumably, the federal government will enforce its updated policy by prioritizing prime contractors that pass these quicker payments along to their subcontractors.

The good news is that we are starting to see results. For several months, I have been working with a client who is a defense contractor and is trying to get an asset-based loan secured by his receivables and inventory. As we were moving through the loan process and completing his audit, everything changed. The government began paying him faster than he had ever been paid before, and as a result, his receivables balance fell dramatically.

This actually created an unexpected problem in that he had planned to borrow against those receivables. But this is what I call a high-quality problem. We will solve it by taking out a loan against his equipment, and because his cash is turning over faster, his cost of financing will go down.

I hope that the QuickPay program will become a model for the private sector as well. Last year I spoke at a TedXNewWallStreet program about an idea for a 10-Day Pay Initiative where Fortune 1000 companies would treat their small-business suppliers the same way. Since we wouldn’t be able to require this by law, I suggested we turn to social media and good old-fashioned shame to get the job done. We would do this by creating a Web site where small-business owners could post their invoices as proof of slow payment. Then, as consumers, we could see how suppliers treat small businesses and pick the ones we want to support.

The reality is that if the government and Fortune 1000 companies pay their small-business suppliers faster, it won’t hurt the big companies, and it will open up opportunities for small businesses and entrepreneurs to grow and add jobs.

Ami Kassar founded MultiFunding, which is based near Philadelphia and helps small businesses find the right sources of financing for their companies.

Article source:

Fed’s Transferred $88.9 Billion to Treasury in 2012

WASHINGTON — The Federal Reserve said on Thursday that it sent $88.9 billion in profits to the Treasury Department in 2012, a record that reflected the vast expansion of the central bank’s investment portfolio.

The Fed is required by law to hand over a large majority of its profits, a long-standing provision that has become a lot more lucrative in recent years. Because the money is transferred at regular intervals throughout the year, Thursday’s report does not affect the imminent arrival of the debt ceiling.

As part of its campaign to stimulate the economy, the Fed over the last five years has amassed $2.7 trillion in Treasury securities and mortgage-backed securities. And the central bank is still expanding its holdings by $85 billion a month.

The interest payments on those securities are the primary source of the Fed’s profits. The Fed has transferred a total of $335 billion to the Treasury since 2009, compared with $147 billion in the previous five years, adjusted for inflation. The Fed has transferred at least some profit to the Treasury every year since 1934.

Because the Fed mostly holds debt issued by the federal government, its profits — which totaled $91 billion in 2012 — are largely payments from the government. By returning that money to the government, the central bank in effect is letting the government borrow at no cost.

Some conservative politicians say this back-and-forth — and the Fed’s broader efforts to reduce interest rates — are worsening the government’s fiscal problems by making debt seem less onerous and spending cuts seem less necessary.

The Fed’s chairman, Ben S. Bernanke, has acknowledged the benefit, jokingly describing the savings as “interest that the Treasury doesn’t have to pay to the Chinese.” But Mr. Bernanke and other Fed officials note that the purchases have their own purpose, to stimulate the economy, and will not continue indefinitely. They also note that Congress is responsible for its own behavior.

The Fed buys Treasuries and mortgage bonds to make them less profitable, which makes borrowing cheaper and encourages investors to take larger risks on potentially more lucrative, alternative investments. Returns on Treasuries are so low that many investors are losing money after adjusting for inflation. The Fed’s ability to profit nonetheless is a result of its unique business model: it pays for securities by creating money.

But there are risks. Higher interest rates would reduce the value of the Fed’s securities. And the central bank has incurred a new cost in recent years, paying interest on the reserves that private banks keep with the central bank. That has allowed the Fed to buy assets without increasing the amount of money in circulation, but keeping the money in its vaults could require it to pay higher rates as the economy improves.

The Fed spent about $4.9 billion on its own operations last year. It provided another $387 million to finance the Consumer Financial Protection Bureau, the agency created by the Dodd-Frank Act in 2010 to take over the work of protecting consumers after lawmakers decided that the Fed and other federal banking regulators had failed to do so.

Article source:

Bucks Blog: Worrying About Electronic Benefits Deadline? Don’t

March 1 is the deadline set by the federal government for converting all benefits payments — including Social Security — to electronic deposits.

That’s the date by which recipients are supposed to choose direct deposit of their monthly payment into a bank account or to a prepaid debit card, like the government’s Direct Express card.

But those who don’t switch by the deadline apparently won’t face any serious consequences, aside from continued pestering from the government.

Those who fail to switch will still receive paper checks, said Walt Henderson, director of the Treasury Department’s Go Direct campaign. Those recipients will, however, get mailings from the government after the deadline, in an effort to encourage them to adopt electronic payments, he said.

“We don’t have the authority to change their payment method without their permission,” he said in a telephone interview. But they may be mailed a Direct Express card, and urged to activate it.

But, he said, “We won’t automatically switch them.”

Those who continue to hold out for paper will continue to hear from the government, he said. But they won’t get telephone calls, because of the widespread use of telephone schemes aimed at those who receive benefits.

“The whole premise is to educate people about electronic payments,” he said.

The move is part of an effort by the Treasury Department to shift transactions away from paper to save money and reduce potential errors. All new applicants for federal benefits, as of May 1, 2011, have had to select an electronic delivery method.

Currently, about 93 percent of payments to recipients of Social Security and Supplemental Security Income are made electronically — either through direct deposit into a bank account, or onto a prepaid debit card. (Some privately issued prepaid cards can also be used to receive payments, as long as they are insured by the Federal Deposit Insurance Corporation and meet other requirements.)

But about 5 million recipients still get paper checks, so the Treasury Department is aiming at those people in the next two months to encourage them to choose an electronic option. In research conducted last fall, Mr. Henderson said, 75 percent of those still receiving paper checks said they intended to switch by the deadline.

Those age 92 or older are exempt from the requirement. Others who don’t want to switch are supposed to apply for a waiver. They must either have a “mental impairment” that prevents them from using the card or live in a geographically remote area where it may be difficult to use them.

Some consumer advocates raised concerns that the waiver process was too complex for people to navigate. About 600 waivers had been issued as of the end of December, Mr. Henderson said.

Given that there is no real punishment for not complying with the switch, does it make sense to have people fill out forms — which must be notarized — to apply for waivers? In a follow-up e-mail, Mr. Henderson said, “Our expectation is that individuals receiving federal benefit payments such as Social Security will comply with the requirement to receive those funds electronically by direct deposit or the Direct Express card.” He added that the waivers exist to be “sensitive to certain populations who may have trouble complying, but who want to be in compliance with regulations related to their payments.”

Meanwhile, Treasury has continued issuing statements urging recipients to switch. “Switching to an electronic payment is not optional — it’s the law,” David Lebryk, commissioner of the Treasury Department’s Financial Management Service, said in one announcement, which was titled, in part, “Time is running out.”

Representatives of Fisca, a trade group representing check-cashing providers, have complained that the government is “needlessly scaring” benefits recipients into thinking they may have to go without their payments after March 1, if they don’t switch to electronic deposit.

Do you plan to switch to electronic payments for your federal benefits by March 1?

Article source:

Bucks Blog: Resolution: Convert Paper Bonds to Electronic Versions

An inflation savings bond featuring Albert EinsteinAssociated PressAn inflation savings bond featuring Albert Einstein

As a New Year’s financial resolution, I’ve decided to take care of a financial skeleton in my closet. Well, it’s actually a shoebox, not a skeleton — but it is literally sitting in a closet.

It is a small red box stuffed with paper I-bonds — savings bonds that pay interest based on the rate of inflation (hence the “I”). I know the bonds are in the box because I helpfully labeled it “I-Bonds” with a Sharpie before I tossed the box onto the shelf when we moved into our home a few years back. We automated most of our finances years ago, but the box remains.

My husband bought the bonds via a payroll deduction over a period of time starting about 10 years ago, when we were expecting our first child. (I don’t remember if there was an electronic option at the time, but ours came monthly in the mail. Now, paper bonds are available only in certain circumstances, for instance when you request them for your income tax refund.) The bonds are still paying interest. I-bonds pay interest for 30 years, although you can redeem them without penalty after five. The problem is that we don’t know what the bonds are currently worth. Here’s a typical conversation we periodically have, usually after a surge in the Consumer Price Index:

My husband: “Where are those I bonds? I wonder what they’re worth.”
Me (continuing to read the paper): “They’re in the closet. Yeah, we should find out.”

Pretty lame. Hence, my resolution: Get out the box and begin the process of converting them to electronic bonds, using the federal government’s Treasury Direct Web site.

The benefit of doing so is that you can keep track of the bonds (I-bonds and other series of savings bonds), how much interest they’re paying and what their redemption value is, using your computer. Plus, you can redeem them online when you’re ready, and have the funds deposited electronically in your checking or savings account. No mailing or paper checks necessary.

The Web site provides instructions about how to do this. But there are some steps that you have to take first.

I had to establish a Treasury Direct account. This worked mostly as advertised and took about 10 minutes. You have to provide financial information like your bank account number and its routing number, and choose a password, as well as a security icon image (like a wrench or a flower pot, which helps you make sure you’re on the right Web site, and not on a phishing imposter). You also have to set up security questions.

The system then e-mails you an account number and a one-time pass code, which you use to log onto the system. (The Treasury Department has recently simplified its log-on process by eliminating the use of a printed “pass card” that was mailed to customers). I hit a bit of a snafu here. I kept getting a “connecting” message from the Web site after I typed in my account number, but it never connected. It’s not clear if the fault was with my computer or with the Treasury site. Finally, I shut the site and tried again about 20 minutes later, this time logging on successfully. (A bureau spokeswoman said she was unaware of any access problems with the site).

Next, I had to click on a menu to create a linked “conversion” account to convert the bonds from paper to electronic. That went smoothly. I then chose a bond randomly from the box and entered its vital statistics: date of issue (November 2003), denomination ($100) and serial number, and hit “submit.”

Next came the part that gave me pause. The system kicks back a “manifest,” which you must print out (and copy for your records), sign and mail back to the Treasury Department, with the original, unsigned savings bond. In about three weeks, according to the Web site, I would be notified that the bond had been converted, and the electronic bond information would appear in my online account.

The thought of manually entering all of those bonds, then mailing them to the Treasury Department, is a bit daunting. I hoped I would be able to just shred them, although in retrospect that wasn’t realistic. A department spokeswoman said in an e-mail that about 3.8 million bonds had been converted since fiscal 2005, but that it hadn’t heavily promoted the conversion option because it remained “largely a manual process” for both customers and the Treasury Department.

Happily, it turns out that there are somewhat simpler alternatives, if you want to know the value of your bonds but don’t want to go entirely electronic. You can create an electronic inventory of the bonds, for instance, which will let you update their value periodically. That still involves a lot of data entry in my case, but it does eliminate the printing and mailing of manifests. If you don’t need to create an inventory — if, say, you just have a bond or two — you can quickly check the value of a single bond. (I learned that my $100 I-bond from 2003 was now worth $136.40.)

For now, while my husband and I mull whether we want to spend a few hours entering data into the computer, the bonds will nestle in their red box. Do you think it’s worth the effort?

Article source:

Bucks Blog: Consumer Agency Seeks Comments on Private Student Loans

10:30 p.m. Updated to revise email address for submitting comments.

Do you have student loans that aren’t backed by the federal government? The new Consumer Financial Protection Bureau wants to hear from you.

The agency is required by the Dodd-Frank financial reform law to look into how students are using private loans to finance their college educations. Private loans, made by schools or banks, can be more expensive and carry fewer consumer protections than loans made through the federal student loan program, including Stafford or Perkins loans.

The agency seeks to understand, for instance, why families sometimes take out private loans before exhausting their federal loan options and whether marketing by schools may play a role.

The agency has prepared a report on questions it seeks to answer and will take comments for the next 60 days.

You can submit comments online, or by sending an e-mail to the consumer bureau at

(You can also mail comments to the following address: Monica Jackson, Office of the Executive Secretary, Consumer Financial Protection Bureau, 1500 Pennsylvania Avenue NW, Attn: 1801 L Street, Washington, DC 20220.


Article source:

In Letter to Congressman, Buffett Claims 17.4% Tax Rate

The figure represent 17.4 percent of his $39.8 million in taxable income, a percentage he has repeatedly said is too low compared to what his own staff members pay.

Mr. Buffett caused an uproar in August when he said the wealthy should be subject to a higher rate of tax. The White House has taken on his challenge and proposed a “Buffett Rule” that would raise levies on the richest people.

After Mr. Buffett’s suggestion, a Republican congressman, Tim Huelskamp of Kansas, sent Mr. Buffett a letter in late September calling on him to release his tax returns.

Mr. Huelskamp sent a second letter reiterating the request this month, and promising to release his own returns if Mr. Buffett did.

Mr. Buffett, the chief executive of the conglomerate Berkshire Hathaway, responded in kind on Tuesday, according to a copy of the letter. Mr. Buffett did not release his full return, though, as many have called for him to do.

In the letter, Mr. Buffett reiterated what he saw as the inequality of his paying a rate in the teens when most people who work for him pay a rate in the 30 percent range.

Mr. Buffett also called on other very wealthy Americans to release their own returns.

“If you could get other ultra-rich Americans to publish their returns along with mine, that would be very useful to the tax dialogue and intelligent reform,” Mr. Buffett said. “I stand ready and willing — indeed eager — to participate in this exercise.”

Mr. Huelskamp, in a statement Wednesday, slammed Mr. Buffett’s letter as inadequate and again called on him to either release his full returns or voluntarily give more tax money to the federal government.

Article source:

Economix Blog: Losing Faith in Government

Washington’s dysfunctional political climate not only makes it harder for Congress to pass sound economic policy. It also means that whatever policies Congress manages to pass may be ineffective anyway, since Americans have lost so much confidence in their government’s ability to help.



Dollars to doughnuts.

Americans’ confidence in their government is at historic lows, according to Gallup’s annual governance survey.

The poll of 1,017 adults, conducted in early September, found that 81 percent of Americans are dissatisfied with the way the country is being governed, the highest share since the question was first asked in 1972.


Additionally, 69 percent of Americans say they have little or no confidence in the legislative branch of government, also a record high, and nearly three times the share of people who said this in 1972.


Americans estimate that the federal government wastes 51 cents of every dollar it spends, the highest number on record since that question was first asked in 1979. (Because the margin of sampling error was plus or minus four percentage points, however, that is not a statistically significant difference from last year’s poll, when Americans said 50 cents of every dollar the government spent was wasted.)

Almost half of Americans (49 percent) believe the federal government “poses an immediate threat to the rights and freedoms of ordinary citizens.” In 2003, less than a third of Americans said they believed this.

Perhaps most worrisome, Americans’ trust and confidence in the government’s ability to handle policy problems has plummeted.


The light green line above shows that just 43 percent of Americans say they have “a great deal or fair amount” of trust in the federal government to handle domestic problems. That is lower than it was at any time in the past four decades.

If we have another federal government shutdown in the next few days, which is entirely possible, these sentiments will only get worse.

My concern about these survey responses isn’t that they might hurt politician’s feelings. It’s that, in order for government policy to be effective, people must believe it will be effective. This is as true for economic policy as it is for anything else.

In particular, part of the reason that economic stimulus works is that it gives consumers and businesses confidence that the economy will improve. That belief becomes self-fulfilling as they feel more comfortable increasing their purchases and investments.

Likewise, if Americans believe that Congress cannot be counted upon to do anything that will help the economy, nothing that Congress does — no matter how well designed and well executed — will succeed in helping the economy. Perception matters.

Article source:

Bucks: The Class Act and Your Long-Term Care Plans

In this weekend’s Your Money column, I examined the Class Act, the public option that made it through Congress as part of last year’s health insurance overhaul. It would offer a type of long-term care insurance, but only if the federal government can find a way to create a program that will break even financially.

Now that you know a little bit about what’s going on behind the scenes, do you think the Class Act will ever see the light of day? And if it doesn’t, how do you plan to balance the need for long-term care planning with retirement savings and all of your other financial priorities?

Article source:

Michigan Cuts Jobless Benefit by Six Weeks

Democrats and advocates for the unemployed expressed outrage that a such a hard-hit state will become the most miserly when it comes to how long it pays benefits to those who have lost their jobs. All states currently pay 26 weeks of unemployment benefits, before extended benefits paid by the federal government kick in. Michigan’s new law means that starting next year, when the federal benefits are now set to end, the state will stop paying benefits to the jobless after just 20 weeks. The shape of future extensions is unclear.

The measure, passed by a Republican-led Legislature, took advocates for the unemployed by surprise: the language cutting benefits next year was slipped quietly into a bill that was originally sold as way to preserve unemployment benefits this year.

The original bill was aimed at reducing unemployment fraud and making a technical change so the state’s current long-term unemployed could continue receiving extended unemployment benefits from the federal government for up to 99 weeks — benefits that would have been phased out next week without a change in the state law to make the unemployed in the state eligible to continue receiving benefits. Republican lawmakers amended it to cut the length of benefits starting in January.

“It turns the clock back 50 years at a time when unemployment is at historic highs since the Depression,” Representative Sander M. Levin, Democrat of Michigan, said in an interview, adding that he worried that the state would set a precedent that would be followed by other states, including Florida, that are thinking of curtailing their unemployment programs. “I think that Michigan should not be to unemployment insurance what Wisconsin has become to collective bargaining.”

But Republicans and business groups said that cutting benefits was necessary, because the unemployment trust fund, which was ill-prepared to cope with the recession, is insolvent. The state owes the federal government $4 billion that it borrowed to keep its program afloat, and unemployment taxes on businesses have already been raised, and will need to be raised more, to repay the money. The Michigan Chamber of Commerce called the new law “a huge win for job providers,” and said it could save up to $300 million a year.

Mr. Snyder issued a statement after signing the bill trumpeting the fact that it would preserve the extended benefits this year — and making no mention of the fact that it would cut state benefits beginning next year. “Snyder Signs Bill to Protect Unemployed,” was the headline of the news release that his office sent out. “Now that we have continued this safety net, we must renew our focus on improving Michigan’s economic climate,” he said in the statement.

Sara Wurfel, a spokeswoman for Mr. Snyder, said in an e-mail that he signed the bill because 35,000 Michiganders would have lost their extended benefits this week, and an additional 150,000 would have lost them by year’s end, if the state’s law had not been altered. She said that about 250,000 people collected more than 20 weeks of benefits in 2010.

Advocates for the unemployed called it a bad trade. “We have a temporary change to help some jobless workers that is imposing an indefinite or permanent cost on future jobless workers,” said Rick McHugh, a staff lawyer for the National Employment Law Project, which opposed the law. “And that does seem doubly unfair when the temporary help for current jobless workers is almost totally paid for by the federal government.”

But business groups saw the state’s need to change its unemployment law as an opportunity to make the cuts to benefits that they have long sought.

“The business community, the chamber included, were opposed to a one-sided benefits increase,” said Wendy Block, the Michigan Chamber of Commerce’s lobbyist responsible for health policy and human resources initiatives, and unemployment insurance. She said that while the extended benefits were currently paid for by the federal government, the money comes from a fund that is financed by federal unemployment taxes on employers. “Employers will ultimately see higher federal unemployment taxes to pay for this,” Ms. Block said.

More than half the states together owe the federal government more than $46 billion that they borrowed to pay for their unemployment programs during the downturn. Many states had salted away too little money in their unemployment trust funds during good times — often because they cut taxes on employers — and saw their funds depleted by the length and depth of the recession, and the slow pace at which businesses have begun hiring again. Now some other states are thinking about reducing unemployment benefits.

In Florida, where the unemployment rate hovers at 11.5 percent, even higher than Michigan’s current rate of 10.4 percent, lawmakers are zeroing in on a similar bill. The Florida House also approved a bill this month to reduce the number of weeks unemployed workers could receive benefits to 20 weeks, from 26, and make it easier for businesses to deny benefits to applicants. A Senate bill takes a less stringent approach and does not cut the number of weeks workers can receive benefits. (It is unclear how the differences will be resolved.) Doing so would undo a consensus that emerged in the years after World War II that states should pay up to 26 weeks of unemployment benefits. And it would come as the average length of unemployment has risen.

Richard A. Hobbie, the executive director of the National Association of State Workforce Agencies, said “at a time when long-term unemployment is worse than ever, it doesn’t match up well with the trends in the labor market.”

One of the unemployed Michiganders who was warned that her extended benefits could run out next week without action was Melissa Barone, 42, who lost her job with a software company in August 2009, and has been collecting unemployment since then. She has gone back to school to train to be a nurse.

“Maybe what they need to do is look at giving businesses more incentives,” Ms. Barone said, “rather than taking from the guy that is unemployed and needs those funds.”

Lizette Alvarez contributed reporting from Miami.

Article source: