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Monday, July 26, 2010
Dow turns positive for the year
The Dow Jones industrial average broke into positive territory for the year, rising 100.81 points today to close at 10,525.43.
That's about 97 points or 0.93 percent above where it closed Dec. 31, 2009. But it's still 6 percent below its high for the year, set on April 26.
Stocks got a lift from a report showing that new-home sales rose more than expected in June and from FedEx, which raised its profit forecast and even restored its 401(k) match, which had been suspended in February 2009.
The Standard & Poor's 500 index came close to breaking into the black for the year but missed by a fraction of a point. It closed at 1115.01 today versus 1115.10 on Dec. 31.
The Nasdaq composite index, which turned positive for the year on Friday, added almost 27 points today to close at 2296.43. It is up 1.2 percent for the year but 9.2 percent below its April 23 high.
The Russell 2000, which tracks small-cap stocks, is up 6.4 percent this year.
| Jul 26 at 02:16 PM
Tuesday, July 20, 2010
Unemployment benefits on verge of extension
A bill to extend federal unemployment benefits through Nov. 30 cleared a key hurdle in the Senate today, paving the way for its expected passage.
Carte Goodwin, D-W.Va, who was sworn in today as the replacement for the late Sen. Robert Byrd, gave Democrats the 60 votes needed to overcome a Republican filibuster of the bill. The Senate is expected to approve the bill Wednesday. It then moves to the House, which has promised to approve it, then to President Obama.
The bill would provide federal benefits retroactively to June 2, when they expired.
The California Employment Development estimates that about 400,000 people in the state have had their federal extended benefits cut short since June 2. If they are still eligible for unemployment, these people generally could begin receiving benefits, including retroactive pay, within a few weeks after the bill is signed, says EDD spokeswoman Loree Levy.
EDD has been keeping track of these people and will send most of them claim forms, which need to be returned before benefits can be restored. However, some people will be resintated automatically. These are people who stopped receiving Fed-Ed (the final round of benefits in California) prematurely but took EDD's advice and continued sending in claim forms during the hiatus. They could get their benefits much sooner.
The bill would not extend the $25 increase in weekly unemployment benefits that was part of the federal economic stimulus bill but also expired at the end of May. "If you started a claim May 23 or later you don't get it," Levy says. However, if you were getting the $25 bonus when it expired, you can continue getting it through the end of this year.
The bill does not extend the federal subsidy for Cobra health insurance premiums, which expired at the end of May.
But it would change a rule that penalizes some unemployed people who get temporary or part-time work, then return to unemployment. In some cases, this interim employment can reduce a person's weekly benefit amount. The bill would give states a number of ways to eliminate this disincentive to work, according to a source in the Senate Finance Committee.
The estimated cost of the bill is $34 billion over 10 years. Democrats want to borrow the money, Republicans want it paid for with unused stimulus dollars.
| Jul 20 at 05:41 PM
Thursday, July 15, 2010
Senate set to vote on extended unemployment benefits Tuesday
The Senate is expected to vote on a bill to restore extended unemployment benefits on Tuesday, shortly after a successor to the late Sen. Robert Byrd is sworn in.
Byrd's replacement is expected to give the Senate the 60th vote needed to pass a bill that would continue extended benefits through Nov. 30. The House passed an extension on July 1, but the Senate, without Byrd, fell one vote short.
Until recently, people who exhausted their regular state unemployment benefits (up to 26 weeks) could then receive up to 73 weeks of federally funded benefits, for a total of 99 weeks in high-unemployment states including California. The federal benefits come in four successive tiers ranging from six to 20 weeks, followed by a 20-week extension with special rules known in California as Fed-Ed.
Federal funding for all extended benefits expired at the end of May. Since then, people who were already receiving one of the four tiers could finish it up but could not move on to the next tier. However, people receiving Fed-Ed had their payments cut off almost immediately. The California Employment Development Department estimates that as of June 28, more than 260,000 Californians had their federal benefits cut short. The National Employment Law Project puts the number in California at 429,500.
The bill passed by the House, H.R. 5618, would restore extended benefits retroactively to when they expired and continue them through Nov. 30.
It would not, however, restore two other federal benefits that also expired around the end of May: the $25 increase in weekly unemployment checks and the 65 percent subsidy for Cobra health insurance premiums.
Nor would it provide additional benefits to people who have already received 99 weeks or the maximum allowed in their state. That maximum, which varies depending on the state's unemployment rate, ranges from 60 weeks in two states to 99 weeks in 20 states, according to NELP.
Senators have not seen the bill they will be voting on next week but it is expected to be similar to the House bill and the one narrowly rejected by the Senate, a source in Sen. Dianne Feinstein's office says.
As an "emergency" measure, the extended benefits would not have to be paid for with tax increases or spending cuts. The bill bogged down in the Senate because Republicans wanted to pay for the roughly $34 billion cost with unused stimulus money. Democrats argued that would take money from other projects.
Ben Nelson of Nebraska, which has relatively low unemployment, was the only Democratic Senator who voted against the bill. Sens. Susan Collins and Olympia Snowe, both of Maine, were the only Republicans who voted for it.
West Virginia Gov. Joe Manchin, a Democrat like Byrd was, said he will name Byrd's successor Friday. Senate Majority Leader Harry Reid, D-Nev., said today that the new Senator will be sworn in Tuesday afternoon and that a procedural vote on the unemployment bill will follow. The new senator is expected to give the bill the filibuster-proof 60 votes needed to begin moving it to President Obama.
How hard is it to find a job these days? Check out my column from today's Chronicle.
| Jul 15 at 05:43 PM
Tuesday, July 13, 2010
California planning big expansion of Cash for Appliances
The California Energy Commission is laying plans to energize its slow-moving cash for appliances program by adding new types of appliances eligible for federally funded rebates.
Today, California consumers can get $200 in cash back on a refrigerator, $100 on a clothes washer and $50 on a room air conditioner. All appliances must meet certain energy-efficiency standards.
At its July 28 meeting, the commission will vote on a proposal to also provide rebates on energy-efficient dishwashers ($100), freezers ($50), water heaters ($100 to $750, depending on type) and heating, ventilating and air conditioning units ($200 to $1,000 depending on type and efficiency).
The federal stimulus act passed in February 2009 provided states with a total of $300 million to set up rebate programs. Compared with some states, which exhausted their funds in a few days, California's program has been downright sluggish. It started April 22 and still has about $20 million of its $31.7 million in rebate money available.
Retailers say the money is going slowly because California offered rebates on a more limited number of appliances than other states and required higher energy-efficiency standards, especially on fridges and washers.
If the expansion is approved, consumers would be eligible for rebates on the newly added appliances purchased July 29th or later.
The money will be doled out on a first-come, first-served basis based on the postmark date of a complete rebate application received by the rebate processor. For appliance categories added July 29, the commission might add a Web-based option to initiate processing electronically.
To qualify, the buyer must replace the new appliance with an existing appliance of the same type, purchase within the specified time period from a California retailer (or dealer or contractor under the proposed rules) and recycle the replaced appliance consistent with California law.
To read more about the proposed expansion, see here.| Jul 13 at 07:25 PM
Friday, July 09, 2010
Passport fees going up Tuesday
If you're traveling outside the country and need to apply for or renew your passport, act fast to avoid a fee hike.
U.S. Department of State
Starting Tuesday, those applying for a first-time adult passport will pay $135, compared to $100 today. Adults renewing a passport will pay $100, up from $75 today. New or renewal passports for minors under age 16 jump to $105 from $85.
The cost of a passport card will rise to $55 from $45 for adults and to $40 from $35 for minors. Americans can use these cards to re-enter the United States at land border crossings and sea ports (but not airports) from Canada, Mexico, the Caribbean and Bermuda.
The State Department is also imposing new fees for some services such as $82 to add pages to your passport and $450 to renounce your citizenship.
For more on the fee changes, see here. To learn how to apply for or renew a passport, see here.
| Jul 09 at 08:45 AM
Thursday, July 01, 2010
First Republic Bank regains its independence
First Republic Bank completed its management-led buyout from Bank of America today, returning to its roots as an independent bank based in San Francisco.
The bank's managers announced in October that they were planning to buy the company from BofA with financing from private equity firms Colony Capital and General Atlantic. BofA inherited First Republic when it took over Merrill Lynch in January 2009. Merrill had purchased First Republic from its public shareholders for $1.8 billion in September 2007, near the peak of the market.
The completed buyback coincided, coincidentally, with First Republic's 25th birthday.
The management-led group raised $1.862 billion from investors including the two private equity firms and other institutions, family partnerships, clients and about 120 employees. "Some of that went to Bank of America, some is for First Republic to have a very strong capital base on which to grow," said Katherine August-deWilde, First Republic's president and chief operating officer.
She would not disclose the purchase price nor the new ownership structure, except to say that General Atlantic and Colony each own less than 25 percent. Other institutions investing in the deal include Wellington Management, which was one of the bank's largest shareholders when it was public, and Sequoia Capital. BofA is retaining about $2 billion in First Republic assets. No debt was used in the deal.
August-deWilde said the bank will consider going public again when market conditions seem right.
During the nearly three years it was owned by BofA and Merrill, First Republic continued to operate as a separate company, with its own pricing, lending policies and brand identity. It still gives out fresh-baked cookies and free umbrellas in its branches.
During this period, its assets and deposits roughly doubled, to $20 billion and $18 billion, respectively. Its expanded its employee base by almost 25 percent to 1,400 and its number of offices by 30 percent to 62. It has 31 branches in the Bay Area.
As a standalone company, First Republic will rank as roughly the nation's 46th largest bank by deposits or 58th by assets, based on March 31 data from the Federal Deposit Insurance Corp. Among banks headquartered in San Francisco, it will rank fourth after Wells Fargo, Union Bank (owned by Japan's Mitsubishi UFJ Financial Group) and Bank of the West (owned by France's BNP Paribas).
Although BofA and Merrill were good parents, the bank's managers are happy to regain their independence, August-deWilde said. "The nice thing is, decisions are now local again. Management can decide what products we will offer, what we want to do in the community." The collapse of Merrill and its takeover by BofA caused "a lot of uncertainty," she added. "Employees are happy all the uncertainty is gone."
She and Jim Herbert, the bank's chairman and chief executive officer, will remain in their positions. They have been running the bank since its inception.
The duo are not planning any drastic changes. "You will see more of the same. We are very well capitalized. We have one of the cleanest balance sheets" in the industry, she said. Only 0.2 percent of its assets are non-performing. At the end of the first quarter, the average bank had 3.4 percent of assets classified as non-performing, according to the FDIC.
First Republic avoided big problems by focusing on credit quality. "We made loans to people and businesses who had the cash flow to pay us back. We were never a subprime lender," she said. About 65 percent of its loans are home loans, primarily jumbo mortgages. It also makes conforming loans that it sells to Fannie Mae and Freddie Mac.
Its business clients include private equity, venture capital and other financial service companies; professional firms such as accountants, lawyers and doctors; and private schools and other nonprofits.
In addition to its traditional banking business, First Republic manages money for wealthy individuals, generally those with $1 million and up. It has about $15 billion in client assets under management and is looking to hire more relationship managers to expand that business.
| Jul 01 at 02:09 PM
Congress extends closing deadline for home buyer tax credit
Congress has given some home buyers an extra three months to close escrow and qualify for the federal tax credit.
To get the credit, buyers must have entered into a binding contract no later than April 30 and close by Sept. 30. The previous closing deadline was June 30, but some buyers, especially those involved in short sales, complained they didn't have enough time to get all parties on board and sign the papers within that time frame. Congress had tried to extend the deadline by putting the measure into a big bill that would have extended expiring tax provisions and unemployment benefits, but that bill kept failing test votes in the Senate.
At the 11th hour, Congress put the measure into a separate bill, the Homebuyer Assistance and Improvement Act, H.R. 5623. The House passed the bill Tuesday and the Senate approved it late Wednesday. President Obama is expected to sign it.
The extension only applies to people who had ratified contracts in place as of April 30 that have not yet closed. It does not create a new tax credit.
The federal tax credit credit is up to $8,000 for first-time buyers and $6,500 for repeat buyers. The newly purchased home must be used as a primary residence. Other restrictions apply.
| Jul 01 at 09:39 AM
Tuesday, June 29, 2010
Q&A: Where's my appliance rebate check?
Q: Newton D. of San Francisco asks, "After reading your May 15 article on the appliance rebate program, I was looking forward to my rebate ($100) in a few weeks. I submitted the documentation eight weeks ago but haven't received a rebate. Are they issuing checks?"
A: The state controller's office started issuing checks June 14, says Amy Morgan, a spokeswoman for the California Energy Commission, which is running the state's Cash for Appliances program. More than 20,000 rebates have gone out.
People who didn't send in all the required paperwork were issued a postcard instructing them to return the postcard with the missing documentation. People who applied in late April or early May and haven't received a check or postcard can call 888-390-4034 toll free to see what's up.
Under the federally funded program, California consumers who buy certain high-efficiency appliances can get a rebate of $200 for a fridge, $100 for a clothes washer and $50 on a room air conditioner. The commission voted in late May to extend the program, which was supposed to end May 23, to whenever funds run out. It also voted to give consumers 120 days from the purchase date to submit their rebate application by mail. Originally they had just 30 days to get their paperwork in.
Responding to complaints that not enough eligible appliances were available, the commission also added 38 washers and 30 refrigerators to the list, bringing the total to 259 washers, 126 refrigerators, and 300 room air conditioners.
The program still has most of its $31 million in rebate money remaining. As of last week, the state had received only 43,556 rebate applications. If every one was for the maximum $200 fridge rebate, the state could still give out $23 million in rebates. In reality, it can award more because some of the applications were for the smaller rebates.
For more information and a list of eligible appliances, see www.cash4appliances.org.
| Jun 29 at 04:21 PM
Monday, June 28, 2010
Home buyers must scramble to claim federal tax credit
Home buyers hoping to cash in on the federal tax credit have until Wednesday to close escrow.
To qualify, buyers had to buy or enter a binding contract to buy a primary residence on or before April 30 and close on or before June 30. The credit is up to $8,000 for first-time buyers and $6,500 for repeat buyers. Other restrictions apply.
The National Association of Realtors predicts that as many as 180,000 buyers who entered contracts by April 30 could miss the closing deadline. Most are involved in short sales, in which a home is sold for less than the outstanding debt. These transactions involve more parties and paperwork than regular sales and take longer to process.
A federal bill would have extended the closing deadline until Sept. 30, but only for people who had a contract pending on April 30. That bill, which included a host of other tax and spending measures including extended unemployment benefits, failed several test votes in the Senate and is now in limbo.
Despite efforts to crack down on fraud in this program, the Treasury Inspector General for Tax Administration issued a report this month showing that 1,295 prisoners got the credit on their 2008 tax returns, including 241 prisoners serving life sentences. The report also estimated that 2,555 taxpayers received inappropriate home buyer credits totaling $17.6 million for home purchases made before the allowed dates.
Meanwhile, time is also running out to claim California's tax credit for first-time home buyers. In March, the Legislature approved $100 million in state-income-tax credits for first-time home buyers who purchase a new or existing home in California. To qualify, the buyer must close escrow after May 1 and before the $100 million runs out. As of last Tuesday, the state Franchise Tax Board had received applications for $91.4 million in credits, after adjusting for credits that will go unused because some home buyers won't owe enough tax to take full advantage of the credit.
The board, which has been posting weekly updates on its Web site, will announce the cutoff date at least 24 hours in advance so people can fax their documentation. The credit will be allocated on a first-come, first-served basis, according to the time and date stamp on the fax.
California is also offering a state-tax credit worth up to $10,000 spread over three years to repeat buyers who purchase a brand new (but not an existing) home. This program also has $100 million in credits available, but as of last week, only $41.7 million in these credits had been claimed or reserved.
| Jun 28 at 10:50 AM
Thursday, June 17, 2010
California first-time home buyer tax credit running out
Time is running out to qualify for California's first-time home buyer tax credit.
The state Franchise Tax Board announced today it has received applications claiming about 80 percent of the credit. Although it's hard to predict, tax board spokeswoman Denise Azimi says the credit could be gone within a few weeks.
In March, the state Legislature approved $100 million in state-tax credits for first-time home buyers who purchase a new or existing home in California. To qualify, the buyer must close escrow after May 1 and before the $100 million runs out.
The credit is 5 percent of the purchase price or $10,000, whichever is less, spread over three years. To make full use of the credit, the buyer would have to owe at least $3,333 in California income taxes in each of those three years.
Because many first-time buyers won't owe that much tax and lose part of their credit, lawmakers allowed the tax board to reduce the $100 million pot by only 57 percent of the credit claimed by each buyer. If a buyer requested a $10,000 credit, the pot would shrink by only $5,700.
As of Tuesday, the FTB had received more than 15,000 applications claiming more than $78 million in (post-reduction) credits. Because many applications are duplicates or invalid, FTB said it plans to accept at least 28,000 applications to make sure the full $100 million is awarded.
The FTB, which has been posting weekly updates on its Web site showing how much of the credit remains, will announce the cut-off date at least 24 hours in advance so people can fax their documentation. The credit will be allocated first-come, first-served based on the time and date stamp on the fax. The FTB warns that submission before the cutoff does not guarantee a credit; it will stop allocating credits once the $100 million is gone.
A first-time buyer is someone who did not own a principal residence for the preceding three years. The buyer must reside in the home for at least two years immediately following the purchase date.
At the same time it approved the first-time home buyer credit, the Legislature approved a separate tax credit for people who already own a principal residence who purchase a brand new (but not an existing) home. This credit is also worth up to $10,000, spread over three years.
This program also has $100 million in credits available, but the money is not close to running out. Buyers can reserve a credit by entering into a binding contract between May 1 and Dec. 31 and closing before Aug. 1, 2011. Because more repeat buyers will be able to take full advantage of the credit, this $100 million pot will be reduced by 70 percent of the tax credit allocated to each buyer. As of Tuesday, the tax board had received only 5,630 applications and reservation requests for this tax credit, totaling about $36 million after the reduction for unused credits. That leaves about $64 million remaining for repeat buyers purchasing a new home.
For more information, see here.
| Jun 17 at 03:20 PM
Kathleen Pender will answer questions, share comments and provide updates on the economy, investing and personal finance in her blog.
By Kathleen Pender, Read Bio
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