A Different Approach to $700,000,000,000.00 "Bailout"

Category: Elder Law, Estate Planning, Estate and Inheritance Tax, Business Law and Planning, Tax Law and Planning, Probate and Estate Administration, Financial Planning, Miscellaneous Musings

I can't seem to stop reading about this "bailout" or No Banker Left Behind Act. It is like watching a car wreck in slow motion - you would do something if you could, but you don't have the power to stop it.

Then, I came across the below that I think offers a better way to look at a bailout. Apparently, Sweden found itself in a strikingly similar bank credit crisis back in 1992: "The country was so far in the hole in 1992 — after years of imprudent regulation, short-sighted economic policy and the end of its property boom — that its banking system was, for all practical purposes, insolvent." Sound familiar?

How Sweden Solved Its Bank Crisis - NYTimes.com: "But Sweden took a different course than the one now being proposed by the United States Treasury. And Swedish officials say there are lessons from their own nightmare that Washington may be missing.

Sweden did not just bail out its financial institutions by having the government take over the bad debts. It extracted pounds of flesh from bank shareholders before writing checks. Banks had to write down losses and issue warrants to the government."

The article goes on to say that Sweden spent about the same percent of its GDP (4-5%) on is 1996 bailout of the banks, but took equity back so the out of pocket to the government (ie the taxpayers) was really only 2%.

I am thinking I am liking the Swedish plan much better than take all my money, do what you like, have no oversight, and no real change plan I see now - oh, and I really love that we have to do it NOW or life as we know it will end, when as we know it is already long past.

The No Banker Left Behind Act

Category: Miscellaneous Musings

To all Taxpayers - the proposed $700,000,000,000.00 (yeah, that is a real big number - looks much more menacing with all the zeros spelled out) bailout represents a cost of $2,310.23 per each man, woman and child in US.  For a family of 4, that amounts to $9240.92 of money our government currently does not have going to a group of institutions that not only have made horrendous investment decisions, but already profited from them. 

Per the International Herald Tribune December15, 2006:

NEW YORK: Lehman Brothers Holdings and Bear Stearns, the Wall Street firms most dependent on the fixed-income market, crowned their best year with record fourth-quarter earnings, bolstered by corporate bonds and derivatives.




Profit at Bear Stearns rose 38 percent to a record $562.8 million, and Lehman's earnings rose 22 percent to $1 billion in the quarter ended Nov. 30. While both beat analysts' estimates, they lagged behind Goldman Sachs Group, which reported a better- than-expected 93 percent jump in quarterly profit this week.

If I were going to be investing $9240.92 this week, it would certainly not be in financial institutions. While some sort of government action may be necessary, an un-critiqued $700,000,000,000.00 blank check cannot be the answer. Call, write to, or email your Congressperson. Regardless of your beliefs, demand that they take the time to analyze the No Banker Left Behind Act. Congress should give as much attention to this bill as you would to you investing $2,310.23 in the current market for every member of your family.

To reach your Represenatives in the House of Representatives:

https://forms.house.gov/wyr/welcome.shtml

To reach your Senator:

http://www.senate.gov/general/contact_information/senators_cfm.cfm


 

Fein Such Awarded for Excellence in Workplace Flexibility

Category: Miscellaneous Musings

As a pat on the back to our firm and its wonderful employees, Fein Such is a proud recipient of the Alfred P. Sloan Awards for Business Excellence in Workplace Flexibility. The Sloan Awards recognize organizations that are dedicated to making work “work” for both the employer and the employees by creating effective and flexible workplaces that meet the needs of the 21st century.

New Moves for Permanent Estate Tax Reform

Category: Estate and Inheritance Tax

Courtesy of Donald Vanarelli, Esq. Bipartisan Senate Bill Would Fix Estate Tax at 2009 Level

"Senate legislation, S.3284, was introduced July 17, 2008, by Sens. Tom Carper (D-DE), Patrick Leahy (D-VT) and George Voinovich (R-OH). The bill would create a lifetime estate tax exemption of $3.5 million, indexed for inflation, and impose a top tax rate of 45 percent." Note that this is the Estate Tax reform proposed by Sen. Obama (see What's the Tax Plan Mr. President in Waiting)


"That amounts to 11,000 estates by 2012. By comparison, 50,000 estates were taxed in 2001 when the tax started being phased out. "

On July 15, 2008 "Rep. Jim McDermott (D-WA) introduced an estate tax reform bill in the House. H.R. 6499 would freeze the current $2 million estate tax exemption and impose other reforms, including providing for estate and gift tax reunification by permitting lifetime gifts up to a maximum of $2 million rather than the $1 million gift tax limit under current law. "

A link to the Senate bill can be found here - Senate Bill
A link to the House bill can be found here - House Bill