Rudy Kurniawan, once considered one of the world's most formidable wine collectors, was convicted Wednesday of making cheap wine blends in his house and then passing them off as some of the rarest wines in the world, for thousands of dollars each, at auction.
There goes Senator Elizabeth Warren again, working to corral bad business practice with her lasso of truth. The founder of what became the Consumer Financial Protection Bureau continues with her “Justice League” ways by introducing yesterday a bill called the Equal Employment for All Act which would prevent employers from requiring job applicants to inform them of their credit history or to disqualify job hunters based on their credit rating.
Using credit history as a tool for gauging the potential risk of hiring someone was a practice once reserved mostly for fields where security and money-management are day-to-day tasks: Accounting for example, or human resources. But now, nearly 50 percent of all employers use credit history as part of your application process. To use your credit history as a character reference may seem useful, but it's only a useful trust-reference if your credit history is bad because you're irresponsible with debt. Trouble is, that's not usually the case these days. As Senator Warren says:
“People shouldn't be denied the chance to compete for jobs because of credit reports that bear no relationship to job performance and that, according to recent reports, are often riddled with inaccuracies."
Millions of Americans, particularly the long-term unemployed, have found themselves with bad credit history and resulting credit scores due to just what they’re trying to rectify by applying for a job: A lack of income.Others fell behind because of medical debt. As we all know, getting sick in this country can put a major kink in your financial life.
But the other, possibly bigger reason, as Warren mentions, as to why using credit histories in this way is bunk has to do with accuracy and oversight. The credit reporting agencies -- Experian, Transunion and Equifax -- are businesses. Big businesses. It’s in their best interest for our credit to be used to determine nearly everything in life. Credit reporting agencies are very much like the pharmaceutical business, where there’s a lot of “You need this.”
If the agencies were fantastically accurate and quick to correct errors on your credit reports, I’d have a lot more faith as to how reliable our credit histories can be. But there are too many mistakes and omissions in our credit reports, not only within our overall histories but between agencies.
Think it only happens to other people? When’s the last time you looked at your FICO scores? (The credit scores that are in the widest use.) These scores are built off of your credit reports. So if these agencies are each accurate with tracking your credit, using supposedly the same parameters of fact-finding, why do most of us have three, sometimes three very different, scores? My own scores vary between 25-30 points. And I have great credit.
Life happens. People get sick. They lose jobs. They’re not running around Bergdorf’s swiping credit cards for bags or ties. And that job they’re applying for may be just what’s needed to get their credit back in shape. Hardship should not be a reason to be denied a job.
Keep on swingin’, Ms. Warren.
The Victorian proverb touting the health benefits of daily apple consumption has data to support it, British researchers say. And cholesterol-lowering statin drugs do, too. People who eat plenty of fruits and vegetables and take statins when directed would be healthier still.
The Federal Reserve will trim its bond-buying program, reducing its purchases by $10 billion per month.
Chinese state media have said the Dec. 5 incident involved the country's first aircraft carrier, but Defense Ministry officials did not name the warship.
After making its debut in the Western Hemisphere recently, the nasty, mosquito-borne illness has now sickened 10 people on St. Martin. Mosquitoes on the island appear to be spreading the virus, which causes a high fever and severe joint pain.
Ok first a quick refresher: We’re talking about the Federal Reserve’s decision to reduce (taper) it’s bond-buying program. Since September of 2012, the Federal Reserve has been trying to juice the economy by buying bonds. That artificially inflates demand for bonds and mortgage-backed securities. Artificially-high demand means bond interest rates (and yields) are artificially low (think of it this way -- if you sell bonds, and there’s a lot of demand, you don’t have much incentive to offer a high interest rate. You can slide by offering a low interest rate). Those basic interest rates determine other interest rates -- like your mortgage.
So, you might think “well dag nabbit, does this Taper mean my adjustable-rate mortgage is going to go up?”
It would appear not, at least for now.
“Everyone was positioned appropriately,” explains Chris Low, chief economist with FTN Financial, of big investors reaction to the Fed’s announcement.
Investors made a bet, says Low, that interest rates would rise when the Fed stopped propping up demand. So they started setting aside tons of cash to buy those bonds with new, higher interest rates. But guess what? When everyone rushes in to buy, demand goes right back up, and interest rates -- including on things like mortgages -- will go right back down.
“The Fed is buying $10 billion fewer in bonds every month but its more than likely investors will make up the slack,” says Low.
There’s another big reason why tapering won’t disrupt the economy as many had feared. That’s because on the one hand, yes, the Fed eased up the gas pedal by saying it would buy fewer bonds. But on the other, it basically said, “Don’t worry! We’re going to do extra to keep other interest rates (on things like car loans or business loans) down.”
“What they’ve promised to do,” says Dan Greenhaus, Chief Global Strategist at BTIG, “is keep interest rates lower for longer, longer than we thought.”
He’s talking about the rate that banks charge to one another. If that stays low, our interest rates – like on cars or business loans – stay low too.
“What that means for the average person in theory is that then you should be able to gain access to loans, your credit card balances won’t accumulate interest at as rapid a pace,” Greenhaus says.
There’s some good news for the stock market too. A lot of people were worried that when the Fed stopped propping up the bond market, the stock market might fall as people retreat from stocks to fill the vacuum in bonds. Scott Wren, Senior Equity Strategist at Wells Fargo Advisors, says it doesn’t look like that’s happening.
He says there’s going to be a lot of volatility in the coming months, and that’s actually a good thing for investors. “That creates buying opportunities and that’s what we like to see.”
While the Fed has tried to be really clear about where it’s going, saying its decisions will be based on economic data and that investors should be able to follow along so there are no surprises, there’s still a lot of uncertainty.
For one thing, Wren says the Fed’s predictions of economic growth are far higher than what Wells Fargo Advisors predicts. So not everyone’s on the same page.
“Every meeting here on out is going to be all about whether the Fed is going to do more, do less, even boost bond purchases again,” adds Wren.
That, he says will lead to volatility in the market, and volatility will lead to buying opportunities.
So all in all this taper has proven pretty gentle. But the Fed’s meeting again in a month, and it’ll be the same questions all over again.
British Petroleum was dealt another legal blow today, or at least one of its employees was. A federal jury convicted a former BP drilling engineer, Kurt Mix, of one charge of obstruction for deleting text messages related to the Deepwater Horizon oil spill. The conviction comes on the heels of BP's latest public relations move, full-page ads in the New York Times that single out what BP says are frivolous claims by businesses affected by the spill.
The bold print headline of the Times ad reads, "Would you pay this claim?" It goes on to describe an anonymous celebrity chef, widely believed to be Emeril Lagasse, who was awarded more than $8 million dollars for what BP calls fictional losses. The ad claims they were fictional because the chef's management company made more money the year of the spill than the two years prior.
But legally it's all moot. The claim is being paid under the terms that BP agreed to.
"They are now objecting to awards that have been upheld, even within the internal review process," says Georgetown law professor Heidi Li Feldman, "so now they are going to the court of public opinion."
Feldman says that technically speaking, the public's opinion on claims like this one has no legal bearing on their outcome. So why spend thousands of dollars on an ad that isn't going to change things?
"Insofar as BP influences, even subconsciously, the people who are operating the claims procedure," says Feldman, "a public relations campaign could benefit them greatly."
BP likely chose the New York Times because of its wide reach, and because of who reads it, says Roger Williams University law professor David Logan.
"They know the New York Times is the paper of record for lawyers, judges and law professors, and it must be viewed as a sound, strategic investment," he says.
Neither BP nor Lagasse agreed to an interview, though BP issued a statement stating it will continue to fight in court all interpretations of the settlement agreement that it disagrees with.
On Wednesday, the Federal Reserve announced it will cut its bond-buying program by $10 billion starting January.
In its statement, the Fed cited stronger labor market conditions as a primary factor in the decision. The announcement may have surprised many investors who were keenly watching the relationship between quantitative easing and inflation.
The Fed began its series of large-scale bond purchases -- known as quantitative easing -- 15 months ago to boost hiring and economic growth. The annoucement today is a major pivot point for one of the Fed's largest monetary policy experiments.