Category: Financial Smarts

Millennials: Your First Steps Towards Financial Freedom

There are countless headlines circulating in the financial media about millennials poor financial outlook. After reading about the soaring student loan debt, stagnant wage growth, and other issues, it may seem like financial freedom is just a dream that is no longer reachable, but nothing could be further from the truth. As long as you make the right financial moves while youre young, its still 100% possible to turn that dream into a reality.

Dont turn down free money
When youre in your 20s, its understandable that retirement could be the last thing on your mind. However, the early years of your career are by far the most important to your long-term financial health, so its important to get a few major decisions right.

One that is particularly important is making sure you take full advantage of your employers 401(k) match, even if it feels like a stretch to have that money withheld from your paycheck. According to a TIAA-CREF survey, 23% of employees who have the opportunity dont contribute enough to receive the full match.

If you dont get the full amount your employer is willing to match, its like giving away free money. You wouldnt be happy if your salary was cut by say, 4%, but thats exactly what youre doing by turning down the free money thats offered to you. And, keep in mind that the true value of those 401(k) contributions are more than they seem. If youre 25 years old and earn $50,000 per year, a 4% employer match is worth $2,000 per year. Over a 40-year career, those employer contributions alone can balloon into a six-figure nest egg.

The Next Financial Crisis – How Good Rules Go Bad

Karen Shaw Petrou’s Federalist Society speech titled, The Next Financial Crisis How Good Rules Go Bad

It is an honor to speak here today with Senator Gramm, a man whose name graces many of the most important banking and budgetary bills enacted during the decades he represented Texas voters – I know they miss him still. He has just spoken about the macroeconomic risks he believes result from Federal Reserve accommodative-monetary policy. But, there’s an even greater danger than misfiring monetary policy: none at all. The new, radically-different structure of the US financial-services market means that the Fed can’t tell the economy what to do anymore because banks don’t matter anywhere near as much as they used to. You may well say good riddance given the cost of the financial crisis, but a country without a functioning monetary-policy delivery channel where systemic risks increasingly arise outside the reach of prudential regulation is one putting itself at great and unnecessary risk.

Is this alarmist? I sure hope so. I’m not the only one, though, worrying a lot about the FRB’s growing inability to use interest rates and bank reserves to set the economy on its preferred course – a conference held yesterday and today at the Federal Reserve Board itself on precisely this issue shows that the FRB knows it has a problem even though it has yet, sadly, to broach any solutions. The global Financial Stability Board yesterday counted up all the US financial assets housed in most non-banks, logging them in at $14.2 trillion at year-end 2014.1 That’s not small and neither is the risk they pose.

Although describing the conference as a research session, Chair Yellen yesterday said that she would like to better understand how changes in the way US financial intermediation affects monetary-policy transmission. Let me today offer my own thoughts on this critical question and, given how urgent it is, also a few things the FRB can and should do ASAP to save not only its ability to conduct monetary policy, but also the rest of us from preventable systemic crises.

Maybe we could manage without monetary policy if there was another way to short-circuit boom-bust crises – what we’ve come to call macroprudential regulation. But macropru doesn’t work any better than monetary policy. In the real world in which financial institutions live or die, rules have costs and costs have consequences. Regulators believe that costs are manageable and consequences are nothing but beneficial. However, the costs now are so great that combined with other market transformations, they pose significant second-order risks. We’ve probably corrected for all the causes of the last crisis, but I fear we’re sowing the seeds of the next one.

Where Needed Change Still Sows Systemic Seeds

Before I talk about specific regulatory actions and how they have changed the market, let me first point to one example of the best intentions that nonetheless pose grave risk. It epitomizes how even an unimpeachable policy action poses second-order dangers.

The policy actions I mean here aren’t so much a single rule, but rather the cumulative impact of all of the new rules and the current, way-tough enforcement environment. Many of these rules – stress-testing, for example – are essential and punishment for crisis-causing behavior was, if anything, too weak. But in practice the new rules and enforcement regime combine with newly-enhanced risk management and better boards to force banks to devote billions not to innovation and enhanced customer service, but rather to model-building, internal investigations, and new information systems.

Gliniewicz Family Had Financial Issues, Traveled Extensively

The family of Lt. Joe Gliniewicz, the now-disgraced Fox Lake police officer whose “carefully staged suicide” appears to be an attempt to cover up years of criminal activity, was experiencing serious financial problems around the time police allege the officer started an elaborate embezzlement scheme. NBC 5s Tammy Leitner reports. (Published Friday, Nov. 6, 2015)

GE Reveals Synchrony Financial Exchange Ratio, Shares Up

Diversified conglomerate General Electric Company (GE – Analyst Report) recently revealed the exchange ratio for the share swap deal with Synchrony Financial (SYF – Snapshot Report) as part of its corporate strategy to further dissociate itself from the financial business. With the transaction, General Electric will shed an 85% ownership stake from the spun-off entity.

According to the terms of the deal, General Electric will offer 1.0505 shares of Synchrony Financial for each of its share. This equates to a buyback of about 671 million General Electric shares for approximately 705 million of Synchrony Financial shares upon full consummation of the exchange offer for over $20 billion. This in turn is likely to reduce the outstanding number of shares of General Electric by about 6.6%, thereby improving its bottom line on a per share basis. Investors reacted positively on the news as share prices witnessed an uptrend.

The strategic move was orchestrated in accordance with Chairman and CEO Jeff Immelts vision to transform the diversified conglomerate to an industrial-focused firm. Accordingly, General Electric is divesting most of the financial units under GE Capital, while retaining those units that directly relate to the core industrial operations of the company. These include financing verticals like GE Capital Aviation Services, Energy Financial Services and Healthcare Equipment Finance.

As of mid-October 2015, General Electric has signed agreements to dispose GE Capital assets worth $126 billion well ahead of the target and remains firm to achieve its divestiture target of $100 billion for the year. The company has also closed asset sale transactions worth $60 billion. The transactions will realign the company to a manufacturing-based entity with emphasis on big-ticket items such as aviation engines, drilling machines, generators, medical equipment and scanners.

With these restructuring initiatives, General Electric expects operating earnings from the industrial business to aggregate over 90% of its total operating earnings by 2018, up from 58% in 2014. The company continues to expect double-digit industrial operating EPS growth in 2015 and expects the industrial operating EPS to be within $1.13-$1.20 per share. At the same time, General Electric remains committed to achieve 2%5% industrial segment organic revenue growth; margin expansion; a smaller GE Capital; $16 billion in cash flow from industrial activities; and $30 billion cash return to shareowners.

We remain encouraged with the restructuring endeavors of this Zacks Rank #3 (Hold) stock. A couple of notable companies in the industry include Federal Signal Corp. (FSS – Snapshot Report) and Kopin Corporation (KOPN – Snapshot Report) , both carrying a Zacks Rank #2 (Buy).

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Veterans: Inefficiencies Complicate Financial Aid Process

For military veterans at Cornell, filing for financial aid and receiving support through the Post-9/11 GI Bill can be a “nightmare.” Many veterans who spoke with The Sun described a slow and disorganized system, even as administrators insist that veteran admissions remains a priority for Cornell.

There are currently 130 students who receive benefits under Chapter 33 of the Post-9/11 GI Bill, 69 of whom are veterans, according to Melissa Osgood, deputy director of media relations. However, many of these veterans described the filing system to receive aid as disorganized and criticized the time it takes the University to transfer necessary documents to the US Department of Veteran Affairs.

Who really benefits from Shelby’s financial deregulation

Earlier this year, Senate Banking Chair Richard Shelby (R-Ala.) introduced the “Financial Regulatory Improvement Act of 2015” — a massive bill that gives a preview of the kind of regulatory rollbacks the financial industry will try to attach to end-of-year funding bills. In fact, Senator Shelby has already placed the entire bill into appropriations legislation that passed the relevant committee earlier this year.

Shelby and others have attempted to portray this multi-hundred page bill as a relatively moderate set of changes to the financial reforms put in place by the Dodd-Frank Act. That’s far from the truth. The legislation would weaken protections against the kind of mortgage lending abuses that were at the heart of the financial crisis, undermine consumer protections, and reverse improvements in the regulation of some of the largest financial institutions in the country.

Financial Imperatives for the Future

Healthcare leaders focused on three big-picture topics while meeting with their peers at the HealthLeaders Media CFO Exchange.

More than 40 financial leaders from provider organizations across the country gathered in August at The Broadmoor Resort in Colorado Springs, Colorado, for the fifth annual HealthLeaders Media CFO Exchange.

These executives represented large health systems with national scope, including Chicago-based Advocate Health Care and Catholic Health Initiatives, headquartered in Englewood, Colorado; regional heavyweights such as Banner Health, based in Phoenix, and Baylor Scott amp; White Health, headquartered in Dallas; community hospitals such as Firelands Regional Medical Center in Sandusky, Ohio, and South Nassau Community Hospital in Oceanside, New York; health systems that are community pillars, including Froedtert Health in Milwaukee and Rex Healthcare in Raleigh, North Carolina; safety-net hospitals including Truman Medical Centers in Kansas City, Missouri, and The MetroHealth System in Cleveland; academic medical centers such as Boston Medical Center and UC Health in Cincinnati; and for-profit organizations, including Capella Healthcare in Franklin, Tennessee, and Birmingham, Alabama-based Trinity Medical Center, affiliated with Community Health Systems.

As in previous years, attendees help shape the agenda for the two-day event. Three big-picture discussion topics emerged from advance discussions and surveys.

Preparing for the future of healthcare. What do healthcare leaders need to know–about their operations, markets, and regulatory jurisdictions? Healthcare reform is a work in progress. Across the country, fee-for-service revenue remains dominant and the timing of the shift to value-based payment is unknown. CFO Exchange attendees increasingly expect to contend with both reimbursement models indefinitely, which will require a tricky balancing act. Meanwhile, new types of disruptive competitors are encroaching in many markets. Using analytics to understand operations is the foundation for any system improvement. But sufficient data on clinical and financial aspects is elusive, even as the cost of healthcare analytics rises.

The clinical transformation toward value-based healthcare. What should leaders be doing today to prepare their organizations for future delivery models? Each health system must understand its own capabilities to reduce the cost of care while improving quality. CFO Exchange attendees bemoaned the lack of financial success from most accountable care organizations. But efforts continue everywhere to reduce variations in care, improve efficiency and outcomes at the same time, and engage and align employed and affiliated physicians alike.

Business, payer, and clinical partnerships. Who should leaders join with? The consolidation wave in healthcare continues, but with a twist: The number of traditional mergers or acquisitions is nearly matched by looser affiliations, according to HealthLeaders Media research. For hospitals and health systems, establishing partnerships is a key strategy to manage the financial impact of momentous changes in the healthcare industry. CFO Exchange attendees discussed the pressure to partner: to develop clinical affiliations across the care continuum, and to build alliances with payers (both external and internal) to develop risk-based payment models.

The CFO Exchange discussions will be explored in depth in Insights Reports available on our website ( Look to these guides, as well as similar reports from our other Exchange events for CEOs, CNOs, population health executives, and revenue cycle leaders to steer your own organization.

Reprint HLR115-11

3 men sought in Prattville ID theft investigation


Prattville investigators are asking the public for help identifying three men who may possibly be connected to a case of identity theft. The victim reported that their credit/debit card information was stolen and then used at a store in the Montgomery area back on Feb. 3.