All items from Finance & Law for Not-So-Dummies

The much discussed fiscal cliff about which will fall over (or not based on Congress) is probably misunderstood more than any other jargonistic word in politics today. What is it? Please read further.

About a year ago, or so it seems, Congress and the President couldn't agree on the issue of the national debt - should it be allowed to increase again. Actually, not even the House of Representatives and the Senate could agree (Thank you Tea Party!). A deal was made that allowed the Debt Ceiling to increase by $1-2Trillion. Had it not increased, so goes the theory, we would have defaulted on international and domestic debt. (I guess Bain Capital would have bought the Country for 5 cents on the dollar).

Student Loans: Legal Loan Sharking

Student Loan Sharking. Harsh? NO! Outstanding student loans in this country have exceeded $1,000,000,000.00 (One Trillion Dollars). At least 15% of those loans are "private" loans, meaning not made by a government agency or sponsored lender. So what is the difference.

Remember all of the discussion (still heard throughout the country) about "Sub-Prime" and "Predatory" Lending? It's live and well on campuses all over. And why not? The Bankruptcy law change in 2005 created a form of indentured servitude. Have a PRIVATE student loan that is at a level 5 times the entire annual salary that can be earned, accumulating interest at 6%-20% (based on payment history - a default of a payment and the rate jumps to the maximum in most cases - how can anyone pay it?

"Too many student loan borrowers are struggling to pay off private student loans that they did not understand and cannot afford,...We must do our best to leave the next generation in a better place than we are today, rather than buried under a mountain of debt." - Richard Cordray, Director of the COnsumer Finance Protection Bureau ("CFPB"). Both the CFPB and the Federal Reserve are gravely concerned about the problem. 25% of the outstanding loans are in some state of default.

  BLACK EYE FOR JP MORGANThe "Too Big To Fail" banks are at the center of the current U.S economic problem. Below is a copy of a comment to an Op/Ed piece that appeared in the American Banker on June 18th. While it deals with issues that do not affect most of us directly, it does affect the entire structure of our Banking system. Unless you have avoided (perhaps wisely) the news, JPMorganChase ("JPM") lost $2,000,000,000 ($2 billion) in trading. Well, that was the initial reported loss. As of this morning (6/28/12) it is up to $9 BILLION. One might say that a comapny lost money - So what? - it only affects the shareholders. NOT IN THIS CASE.

As the details of the Mortgage Settlement Agreement, the deal between 49 of 50 states and the U.S. on one side, and BanK of America, Wells Fargo, CitiBank, Ally Financial, and JP Morgan/Chase on the other, become analyzed, it a HUGE win for the Banks. The not only received a "Get Out Of Jail Free" card but are now assured that there will no jail and the cost will not hurt profits.

Quoting from the March 13, 2012 American Banker's article about the agreement

"The settlement includes releases from certain federal claims, including errors related to servicing conduct; origination; and errors specifically related to servicing loans for borrowers in bankruptcy

The claim "fully and finally" releases the company and any affiliated entities, from any civil or administrative claims and any civil or administrative penalties -- including punitive or exemplary damages--for: