Barack Obama Needs a CTO - Chief Transparency Officer

President-elect Barack Obama has mentioned his desire to hire a CTO (Chief Technology Officer) for the country. I agree - however, the CTO we need is a "Chief Transparency Officer."

The job description is simple: to ensure that there is full visibility for taxpayers regarding anything which could put their money at risk. Consider the case of some investment banks, who conveniently kept certain transactions off their balance sheets, preventing visibility into the excessive risks they were taking while simultaneously receiving top-notch ratings from the rating agencies. Perfectly legal. However, should it ever have been allowed?

The buyers of the trillions of dollars worth of Credit Default Swaps these banks were underwriting were also unaware of the huge default risks these banks carried. In fact, nobody had a clear view of the full risk exposure, not even the Feds. This is in sharp contrast to a small business owner who would have been in very real trouble with the law for keeping two sets of books.

It seems there are two sets of rules, one for those involved with "Wealth Creation" – the factories, the start-ups, the small businesses and then another set of rules (much more opaque) for those involved in "Wealth Management." It's no wonder "wealth management" is the most lucrative profession in this country by a wide margin.

The Chief Transparency Officer needs to make absolutely sure that everyone from Wall Street to Main Street follows the same set of rules. What's good for Main Street ought to be good enough for Wall Street.

Any thoughts?

Suze Orman and the FDIC Public Service Announcement

Financial guru Suze Orman has teamed up with the FDIC for some public service announcements detailing some of the new services offered.

You can find out more about FDIC limits at MoneyAisle's FDIC page, as well.

Remember, every bank in the MoneyAisle network is Member FDIC.

A Bailout for Homeowners

Amidst all the talk of bailouts in the wake of the current economic crisis, I had a thought: why not bail out homeowners to jumpstart the economy?

Think about it: There are currently 45 million homeowners in the United States. What if every homeowner received a break on their mortgage payment (up to $15,000) on their primary residence for one year, paid for by the federal government. This may sound silly, but it's not.

Look at the advantages:

1. This will free up roughly $600 Billion for consumers to spend on goods, services, automobiles, etc. Jumpstarting the economy at the consumer level.

2. No foreclosures.

3. Banks, not having to worry about toxic assets, will not need a bailout.

4. Banks will also get paid, refilling their coffers. Without the worry of foreclosed homes, they can also increase lending.

5. A huge adrenalin shot will be provided to every sector of the economy.

I know what you're thinking: who pays for this? I have a solution to that as well.

Those who want to receive this benefit will have a year added to their mortgage on the back-end - the last year's payment will go to the government instead of the bank, so the federal government WILL get paid. If the home is sold prior to the mortgage getting paid, that homeowner will be allowed a few years to pay the sum off.

This plan could also be limited to those making $250,000 a year or less. Couple my idea with some standard lending practices and it could be very effective.

The bottom line: many more refinements can be made. However, it's much better to go about fixing the economy this way then using $150 Billion in taxpayer money to bail out AIG (NYSE: AIG) and others (banks, the auto industry, real estate.) It puts money in the pockets of the taxpayers instead of those responsible for bringing so much economic misery. Best of all, the government won't take much of a hit at the same time, and the economy will be given a much-needed boost.

If you like this idea, pass it around.

I welcome your thoughts and comments.

The Benefits of Online Banking

The excellent Alpha Consumer blog over at US News & World Report had a great guest post on a subject that is near to MoneyAisle's heart: Online Banks: The Solution for Savers

An excerpt:

A high interest rate on your savings account isn't the only benefit of working with an online bank. Because the website is your primary interface with the bank, it is often very sophisticated and very user friendly. They allow you to bank 24 hours a day, seven days a week, a convenience I've personally taken advantage of. Just recently, I locked in great rates on certificates of deposit from the comfort of my office. If I had to go to a branch, it's likely that I would have never done so.

MoneyAisle offers great rates on High-Yield Savings accounts to consumers in all 50 states. Check out our homepage to run an free test-drive of our system. MoneyAisle also offers amazing CD rates.

It's free, and there's no commitment to buy. Check it out: http://www.moneyaisle.com

New AIG Bailout

The big financial news today is that the Fed is restructuring its bailout of AIG (NYSE:AIG), the Treasury plans to use $40 billion to buy new preferred shares in AIG. The money will come from the $700 billion in funds the government has authorized to bail out struggling banking and insurance firms.

From Forbes:

But markets are still in a tailspin, and AIG--which has been deemed too big to fail--is still on the ropes. The equity stake announced by the Treasury Monday allows the Fed more wiggle room in extending funds to AIG, as it cuts the original amount of funds loaned to the company from $85 billion to $60 billion.

Bloomberg goes into greater detail on the specifics of what the Fed plans to do:

To make the bailout affordable, the U.S. will reduce the $85 billion loan that saved AIG in September to $60 billion, buy $40 billion of preferred shares, and purchase $52.5 billion of mortgage securities owned or backed by the company, the Federal Reserve said today in a separate statement.

And, if you've want to go really deep, Reuters has a good 7-page article:

The company's net loss for the third quarter was $24.47 billion, or $9.05 per share, compared to net income of $3.09 billion, or $1.19 per share, in the same period last year. The loss was the company's fourth straight quarterly loss.

MoneyAisle on TV: North Carolina

The NBC affiliate in Greensboro, North Carolina ran a great piece on MoneyAisle last week - we've embedded it above so those of you outside of the Greensboro viewing area can watch as well.

They did a great job of highlighting what's special about MoneyAisle's unique reverse auction process - which connects consumers with amazing High-Yield Savings and CD rates.

After watching the clip, if you want to experience a MoneyAisle auction for yourself, why not run a test-drive at the MoneyAisle site? It's free, and there's no commitment to buy.

Where Obama Stands on Economy

Well, with all but a few close Senate races still too-close-to-call, election 2008 has come to an end.

The most important issue facing our new president-elect, Barack Obama, is obviously the economic crisis.

While Obama and John. McCain talked about their economic plans during the debates (when they weren't discussing Joe the Plumber), we thought it might be a good idea to check in one more time on the current economic policies of our president-to-be. Keep in mind that the president doesn't have the magical power to implement these policies at will (he has to work with the legislative branch), but one can get a sense in what financial direction he wants to lead the country.

A good place to start is this CNN article, What Obama Stands for on the Economy, which covers five key areas: Financial crisis, Housing and mortgages, Taxes, Health care, and Energy.

Here's an excerpt from the Financial crisis section:

Among the temporary measures he proposed: exempting seniors from having to make withdrawals from retirement savings; exempting jobless workers from having to pay income taxes on unemployment benefits and calling for an extension of those benefits; and offering a tax credit to businesses for every new hire they make in the United States.

One of the most important appointments our next president is going to make is Secretary of the Treasury. While no one has been named yet (and remember, pundits like to speculate), an article on the ABC News website goes over some likely candidates: Obama's Priority: Chief of Staff, Treasury Secretary.

According to the article, Timothy Geithner, president of New York's Federal Reserve Bank, and Larry Summers, the former treasury secretary in the Clinton administration, are believed to be the leading contenders.

Election

I hope you all had a fantastic Halloween (and thanks to everyone on my Twitter feed who answered my question about favorite Halloween songs), and now that we've all put our costumes away and brought our leftover candy to our respective workplaces in the hope of pawning it off on unsuspecting co-workers we can turn our thoughts to two things:

1. They're running Christmas commercials ALREADY?

2. We're electing a new President tomorrow!

It seems like this election has lasted roughly nine lifetimes - with the primaries and the primary debates and the presidential debates and the endless advertisements - and I'm looking forward to it ending tomorrow.

Naturally, once we've all voted we can turn our attention to getting great High-Yield Savings and CD rates and figuring out new ways to save. The holidays are traditionally an expensive time, and I'll have some tips on how to get through them without completely emptying your piggy banks over the course of the week.

Go Read This

Salon.com has an excellent article up about the financial crisis as part of their new "Talk to Me Like I'm 5" series. If you're feeling a bit lost as to what, exactly, you should be doing as your stomach drops every time you check on your 401k, it's required reading.

What to do with your money now.

Here's an excerpt I particularly liked:

I'm hearing more about people keeping their money under their mattress. What do you think about that?

It's a terrible idea! If your house goes up in flames, that money is gone. Also, money isn't that easy to sleep on -- it pokes out from the mattress, and it's uncomfortable. Honestly, if you are so terrified that your $250,000 won't be protected by FDIC, which it will be, and if you don't have enough trust that we will get through this crisis, which we will, then put your money in a safe deposit box in a bank. But I'm telling you, if the bank goes up in flames, your money is gone, which it will not be if you keep it in FDIC-insured savings.

It's incredibly important for people to be in control of their money. The idea that you're sleeping on it is a tangible way to feel that you have control, but it makes absolutely zero sense.

We've lost all of our trust in the financial markets, and we have to find it again. It takes some time. But it will happen.

Americans Working Longer as Jobs Contract

Check out this article from the New York Times:

Working Longer as Jobs Contract

A recent AARP survey found that the economic slump has been badly squeezing the nation’s 78 million baby boomers, those born between 1946 and 1964. In the survey, 20 percent of boomers said they had stopped contributing to retirement plans, 34 percent said they were thinking of delaying retirement and 27 percent acknowledged problems paying rent and mortgages.

It's hardly news that the recent economic troubles have been affecting those close to retirement most severely. Some have been forced to delay their long-planned for dates, some are getting laid off early and need to start over in a new job. Others are looking at their investment portfolio and realizing that current market conditions won't support their retirement.

Amid all this, there's been a renewed interest in savings rather than investing. There's a trade-off here: with savings, you know what you're going to get out of it - the fun and mystery and possibilities of investing in stocks is no longer there. Without the fun and mystery what you get in return is stability. Those who had a strong savings component in their portfolio didn't wake up to a nasty surprise when the market took a tumble.

If you can afford it, and you have some money to put away, consult with an expert on the best way to diversify your portfolio.

What's worked for you as you've tried to get the most out of your savings?