Tuesday, July 14, 2009
6 day detox programme
I have started a 6 day detox programme, which is working well. My experience so far (after completing 3 days) is shown here.
True cost of life assurance
Many people know that life assurance is useful to provide for the financial security of their family. But they are not aware that the protection can be obtained at a low cost using term insurance or accident insurance.
They are recommended to buy a whole life, endowment, critical illness or a specially designed plan (marketing under branded names) that have high hidden cost and gives a poor return on their savings.
This FAQ explains the true cost of life assurance. It will help you to make a better choice in buying your life assurance in the future. It does not help the policyholders who already bought the life assurance and the past and has already paid the high upfront cost.
Read this FAQ and pass it to the younger people to be educated, before they buy the wrong life assurance policy.
Financial consumers need new watchdog: Obama admin
By Kevin Drawbaugh and David Lawder
WASHINGTON (Reuters) - The U.S. government's fragmented system for protecting financial consumers is "designed to fail" and must be replaced by a single, powerful new agency, a senior U.S. Treasury official said on Tuesday.
As the Obama administration seeks support for a sweeping package of financial regulation reform proposals, Treasury Assistant Secretary Michael Barr urged lawmakers at a hearing to create a new Consumer Financial Protection Agency.
"The present system of consumer protection regulation is not designed to be independent or accountable, effective, or balanced. It is designed to fail," Barr told the Senate Banking Committee. "It is simply incapable of earning and keeping the trust of responsible consumers and providers ..."
"We have to have a fresh start with a new agency whose sole mission is standing up for the American people."
His call for change met general support from Democrats.
"While we can tailor this a little bit better, the reality is we need this," said Democratic Senator Robert Menendez.
Some Republicans resisted the proposal, following lines of attack already set by lobbyists for the financial industry, which sees the agency as a threat to its profitability.
"This is a tremendous overreach ... This is way out of bounds," said Republican Senator Bob Corker at the hearing.
Senator Richard Shelby, the committee's top Republican, called the proposed new agency "a radical departure."
President Barack Obama last month unveiled a wide-ranging package of proposals to rewrite the rules for banks and capital markets in response to a severe financial crisis that has dragged down economies worldwide for more than a year.
He wants to enact new laws by the end of the year. His proposals are expected to move rapidly through the House of Representatives, where Democrats are in firm control, with the closely divided Senate likely to move more slowly.
The Consumer Financial Protection Agency (CFPA) would take over consumer protection duties on mortgages, credit cards, payday loans and other products. At present, more than 10 agencies, including the Federal Reserve, handle these issues.
"We expect the agency to have strong and stable funding through a mix of appropriations and fees. The agency would have transferred to it the staff, the resources, and the fees collected by the bank agencies," Barr said in an interview with Reuters Television.
The Financial Services Roundtable, which represents most of the nation's largest financial groups, in remarks to be delivered at a House committee hearing on Wednesday, said:
"We strongly oppose the creation of a separate, free-standing Consumer Financial Protection Agency."
Rather, the group -- whose members include Citigroup, JPMorgan Chase & Co and UBS AG -- said it supports beefing up consumer protection in existing agencies.
But Senate Banking Committee Chairman Christopher Dodd said at the hearing on Tuesday that the present oversight system broke down in the recent crisis in a "spectacular failure."
He said, "Stronger consumer protection could have stopped this crisis before it started.
"We are in a radical situation ... The classical model (of regulation) has fallen apart."
(Reporting by Kevin Drawbaugh and David Lawder; Editing by Diane Craft)
WASHINGTON (Reuters) - The U.S. government's fragmented system for protecting financial consumers is "designed to fail" and must be replaced by a single, powerful new agency, a senior U.S. Treasury official said on Tuesday.
As the Obama administration seeks support for a sweeping package of financial regulation reform proposals, Treasury Assistant Secretary Michael Barr urged lawmakers at a hearing to create a new Consumer Financial Protection Agency.
"The present system of consumer protection regulation is not designed to be independent or accountable, effective, or balanced. It is designed to fail," Barr told the Senate Banking Committee. "It is simply incapable of earning and keeping the trust of responsible consumers and providers ..."
"We have to have a fresh start with a new agency whose sole mission is standing up for the American people."
His call for change met general support from Democrats.
"While we can tailor this a little bit better, the reality is we need this," said Democratic Senator Robert Menendez.
Some Republicans resisted the proposal, following lines of attack already set by lobbyists for the financial industry, which sees the agency as a threat to its profitability.
"This is a tremendous overreach ... This is way out of bounds," said Republican Senator Bob Corker at the hearing.
Senator Richard Shelby, the committee's top Republican, called the proposed new agency "a radical departure."
President Barack Obama last month unveiled a wide-ranging package of proposals to rewrite the rules for banks and capital markets in response to a severe financial crisis that has dragged down economies worldwide for more than a year.
He wants to enact new laws by the end of the year. His proposals are expected to move rapidly through the House of Representatives, where Democrats are in firm control, with the closely divided Senate likely to move more slowly.
The Consumer Financial Protection Agency (CFPA) would take over consumer protection duties on mortgages, credit cards, payday loans and other products. At present, more than 10 agencies, including the Federal Reserve, handle these issues.
"We expect the agency to have strong and stable funding through a mix of appropriations and fees. The agency would have transferred to it the staff, the resources, and the fees collected by the bank agencies," Barr said in an interview with Reuters Television.
The Financial Services Roundtable, which represents most of the nation's largest financial groups, in remarks to be delivered at a House committee hearing on Wednesday, said:
"We strongly oppose the creation of a separate, free-standing Consumer Financial Protection Agency."
Rather, the group -- whose members include Citigroup, JPMorgan Chase & Co and UBS AG -- said it supports beefing up consumer protection in existing agencies.
But Senate Banking Committee Chairman Christopher Dodd said at the hearing on Tuesday that the present oversight system broke down in the recent crisis in a "spectacular failure."
He said, "Stronger consumer protection could have stopped this crisis before it started.
"We are in a radical situation ... The classical model (of regulation) has fallen apart."
(Reporting by Kevin Drawbaugh and David Lawder; Editing by Diane Craft)
The New Paper:The real problem? Underwriters hiding product's risk
14 July 2009
For the first time, the Monetary Authority of Singapore has banned 10 banks and brokers from selling structured notes for six to 24 months.
The ban doesn't affect other structured products. POSB still advertises 2.78 per cent interest in the first year for its five-year structured deposit linked to four Singapore blue chip companies.
That one is safe but, as usual, it is impossible to calculate the yield you can expect after five years.
Banks won't tell what we really need to know: A history of actual versus advertised yields for structured deposits.
Banks and brokers sold us billions of dollars of structured notes. Defaults stand at $686 million. Some have become worthless, like DBS High Notes 5. Others still have value, like Minibonds.
MAS report
In the just-released 119-page MAS report, 10 banks and brokers describe how they measure customer risk attitudes. It's useful but doesn't address the real problem: Underwriters hiding the product's risk.
Structured notes promise a safe-looking yield of around 5 per cent per year. But underwriters invest your money in risky bonds that yield much more, like 15 per cent. They keep the difference of 10 per cent, which is called 'expenses'.
The problem is, they don't disclose expenses or total yield in the prospectus or anywhere else. Investors see only their 5 per cent yield, which is low enough not to trigger any alarm bells.
That is half the story. The other half is a built-in conflict: Underwriters have fixed expenses and can earn more by investing your money in high-yielding, risky bonds.
Those bonds are more likely to default but underwriters have that covered too. A typical contract is written so that investors lose everything if only 10 to 15 per cent of the bonds default.
Investors must then forfeit the remaining 85 to 90 per cent of 'good' bonds to the underwriter. An example of this is Pinnacle Notes 9 and 10.
Underwriters get an even better deal when a 'reference entity' - like Lehman Brothers - defaults. It triggers transfer of 100 per cent of investors' money to the underwriter. An example is DBS High Notes 5.
In that case, DBS said it sold its rights to the $103m of investor losses. I asked, but the bank declined to say when it sold, how much it received and whether the buyer was an affiliated company.
Next, DBS set aside $70m to refund losses here and in Hong Kong.
The 7 Jul MAS report shows DBS made refunds of $7.6m to High Notes 5 investors. That is 11 per cent of the $70m DBS allocated to reimburse Singapore and Hong Kong investors.
The low payouts here may be explained by higher payouts in Hong Kong.
Compensation by HK v S'pore banks
WE HAVE heard that 63 per cent of decided structured note cases received full or partial refunds.
That is impressive, but the number falls considerably when you look at dollars paid to all investors.
The data comes from the 7 Jul MAS report, a 26 Jun speech by Senior Minister Goh Chok Tong and losses reported for Pinnacle Notes 9 and 10.
It shows $107m out of $686m of defaulted notes - 16 per cent - was returned to investors.
Contrast that with Hong Kong banks. On 7 Jul, The Standard newspaper there reported that 16 distributors for Minibonds met with the Securities and Futures Commission on 29 Jun to indicate they would pay 60 per cent of the amount invested. A few investors - aged 65 and above - would receive 70 per cent.
To recap, our banks paid investors 16 per cent. Hong Kong banks propose paying at least 60 per cent.
For the first time, the Monetary Authority of Singapore has banned 10 banks and brokers from selling structured notes for six to 24 months.
The ban doesn't affect other structured products. POSB still advertises 2.78 per cent interest in the first year for its five-year structured deposit linked to four Singapore blue chip companies.
That one is safe but, as usual, it is impossible to calculate the yield you can expect after five years.
Banks won't tell what we really need to know: A history of actual versus advertised yields for structured deposits.
Banks and brokers sold us billions of dollars of structured notes. Defaults stand at $686 million. Some have become worthless, like DBS High Notes 5. Others still have value, like Minibonds.
MAS report
In the just-released 119-page MAS report, 10 banks and brokers describe how they measure customer risk attitudes. It's useful but doesn't address the real problem: Underwriters hiding the product's risk.
Structured notes promise a safe-looking yield of around 5 per cent per year. But underwriters invest your money in risky bonds that yield much more, like 15 per cent. They keep the difference of 10 per cent, which is called 'expenses'.
The problem is, they don't disclose expenses or total yield in the prospectus or anywhere else. Investors see only their 5 per cent yield, which is low enough not to trigger any alarm bells.
That is half the story. The other half is a built-in conflict: Underwriters have fixed expenses and can earn more by investing your money in high-yielding, risky bonds.
Those bonds are more likely to default but underwriters have that covered too. A typical contract is written so that investors lose everything if only 10 to 15 per cent of the bonds default.
Investors must then forfeit the remaining 85 to 90 per cent of 'good' bonds to the underwriter. An example of this is Pinnacle Notes 9 and 10.
Underwriters get an even better deal when a 'reference entity' - like Lehman Brothers - defaults. It triggers transfer of 100 per cent of investors' money to the underwriter. An example is DBS High Notes 5.
In that case, DBS said it sold its rights to the $103m of investor losses. I asked, but the bank declined to say when it sold, how much it received and whether the buyer was an affiliated company.
Next, DBS set aside $70m to refund losses here and in Hong Kong.
The 7 Jul MAS report shows DBS made refunds of $7.6m to High Notes 5 investors. That is 11 per cent of the $70m DBS allocated to reimburse Singapore and Hong Kong investors.
The low payouts here may be explained by higher payouts in Hong Kong.
Compensation by HK v S'pore banks
WE HAVE heard that 63 per cent of decided structured note cases received full or partial refunds.
That is impressive, but the number falls considerably when you look at dollars paid to all investors.
The data comes from the 7 Jul MAS report, a 26 Jun speech by Senior Minister Goh Chok Tong and losses reported for Pinnacle Notes 9 and 10.
It shows $107m out of $686m of defaulted notes - 16 per cent - was returned to investors.
Contrast that with Hong Kong banks. On 7 Jul, The Standard newspaper there reported that 16 distributors for Minibonds met with the Securities and Futures Commission on 29 Jun to indicate they would pay 60 per cent of the amount invested. A few investors - aged 65 and above - would receive 70 per cent.
To recap, our banks paid investors 16 per cent. Hong Kong banks propose paying at least 60 per cent.
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