U.S. ambassador warns against "gutting" Iraq mission

WASHINGTON (Reuters) – The U.S. ambassador to Iraq urged Congress on Tuesday not to “gut” the post-war diplomatic presence in Iraq after a Senate committee report urged Washington to consider reducing its massive civilian presence there for security reasons.

Tim Chen: Fraud Protection and Prepaid Debit Cards

A lot of folks are using prepaid cards these days as a payment method. The Federal Reserve estimates that a full 17% of Americans are using them. This number is likely growing much bigger with all the people that are dropping their credit cards and getting rid of debt. Just be aware that security and consumer protection for prepaid cards are nothing like those offered by traditional credit and debit cards.

You can reload your prepaid cards and use them like traditional debit cards or charge cards for transactions. Most prepaid cards also look like a standard debit or credit card, with markings like the logos of Visa or MasterCard, and account numbers. Consumers who are not qualified to get a credit line, and those who are underbanked or unbanked tend to be the biggest users of prepaid cards. Those who don’t trust banks also turn to prepaid cards. However it’s important to keep in mind that prepaid cards can leave you more vulnerable to fraud. Regulators are now trying to change this.

Areas that lack protection

Consumer protections offered by prepaid debit cards are voluntary and can be revoked or revised by the issuer at any given time and for any given reason. The FDIC also doesn’t typically regulate or insure the money that is loaded on these prepaid cards (as they do with traditional banking accounts), but some issuers are in fact backed by the FDIC. Consumers whose prepaid cards are not backed by the FDIC are not guaranteed to recover their money in full, in the event that the issuer goes belly up.

Also, when you report your prepaid card lost or stolen, and it is used in a fraudulent way, you will not get the same statutory and regulatory safeguards for the recovery of your money. Cards issued by banks and credit card companies have a Zero Liability Clause that frees the cardholder from financial responsibility from unauthorized purchases (certain terms and conditions apply, but in general you can recover all the money that is stolen).

When you report your debit card lost or stolen within 2 business days of it occurring, your personal liability is limited up to $50. If reported after 2 business days, your liability rises to $500. If it takes you more than 2 months to report the theft, you will likely be held liable for the full amount. Credit cards give a $50 limit no matter how soon you report it lost or stolen.

When you have a prepaid card, things are different. It isn’t clear whether or not the Electronic Fund Transfer Act applies to these cards, as is mentioned in Green Dot Financial’s SEC filings. In this case, the card issuers have the option of whether or not they want to protect you from fraud. You should also be aware that there are loopholes within the MasterCard and Visa Zero Liability programs. So, for instance, ATM transactions and PIN debit transactions that aren’t routed over the Visa PIN network aren’t covered by Visa’s fraud protection.

Filing billing disputes with prepaid card companies is difficult since consumers don’t have the same leverage as with regular credit card companies. Federal law protects you with a traditional card by allowing you to avoid making any payments until your dispute has been settled. With prepaid cards, your money has already been taken and you’re not guaranteed to get it back unless the card issuer wants to replace it. These issuers also aren’t required to by law to give consumers the option of dispute resolution, so this is also voluntary on their part.

Keep yourself protected

The federal government is facing a lot of pressure to make the same legal protection available for prepaid cards that they now offer for credit cards. Since prepaid cards aren’t connected with any bank accounts, they are not regulated by the EFTA and Regulation E, so regulators have to work to fix this.

Credit cards, gift cards and debit cards have all had to adopt the Credit Card Accountability Responsibility and Disclosure Act regulations. But prepaid cards were left out. Consumer advocates argue that prepaid card disclosures are feeble or non-existent.

If you are a prepaid debit cardholder, be aware. You should read the fine print thoroughly to ensure that you know what the issuer’s policies are on theft and fraud. Then afterward, take what you find with a grain of salt.

This post comes to you from the NerdWallet.com team of personal finance bloggers and experts in helping consumers find the best rewards credit cards.

Read more: Mastercard, Electronic Fund Transfer Act, Fdic, Regulation E, Visa, Federal Reserve, Prepaid Cards, Visa Zero Liability, Efta, Business News

Dan Dorfman: Wall Street Blind to Egyptian Crisis?

“It was like avoiding an atom bomb, or in this case, a financial bomb,” quipped one Morgan Stanley trader.

That was his reaction to Monday’s surprisingly strong stock market performance following Friday’s wicked 166-point decline in the Dow in the wake of the Egyptian riots.

The consensus of some market watchers over the weekend was that all hell might break loose on Monday, but it never happened. The market opened higher, never looked backed and wound up the day higher, with the Dow rising more than 68 points.

Even the Wall Street Journal guessed wrong, telling its readers over the weekend that U.S. stocks were likely to extend their Friday tumble when the market opened Monday. Actually, when you think about it, the Journal should have been right, given the obvious risks related to the riots, notably:

— They might encourage terrorists to spread the riots to destabilize other Mideast regimes, such as Jordan and Saudi Arabia.

— Lead to a possible disruption in the transportation of 2 percent of the world’s oil through the Egyptian-controlled Suez Canal, which would cause the price of crude to skyrocket.

— More than likely heighten tensions between Israel and its neighbors should Egyptian president Hosni Mubarak (who announced he will not seek re-election) leave and radical elements take control of the country, the leading Arab peacemaker in the region.

Apparently, investors pooh-poohed the significance of these risks. Though investors escaped the ravages of the riots on Monday, the question is raised as to whether Wall Street is making a mistake by downplaying the crisis. Some market watchers suggest yes.

One is well-regarded Wall Street veteran, Fred Dickson, chief investment strategist of D.A. Davidson & Co. in Great Falls, Montana, who argues the worst may not be over yet as far as the Egyptian conflict goes. It will prey on investors’ minds until stability is restored, he says. “It’s like a flash fire; either it goes out right away or it smolders. This one will smolder.”

Dickson figures the Egyptian situation will lead to above average market volatility for the next month or so. One obvious danger, he notes, is the possibility that extremist elements may gain control of the country. If that happens, he observes, “look for a nasty market decline.”

In any event, Davidson sees stock prices vulnerable to a 3 percent to 5 percent pullback some time soon. “This market has come awfully far awfully fast and looks overextended,” he says.

Another market watcher also questions the wisdom of downplaying the crisis. He’s Costa Rican money manager Felix Heligmann, who manages about $93 million of family and friends’ assets.

About a week ago with the Dow hovering around 12,000, up about 20 percent since late August, he told me “The U.S. market is acting so strong that you really have to be a player and I’m going to increase my position.”

But that was a week ago. Now, in light of the riots in Egypt, he’s had a change of heart. “I’ve changed my mind about doing more buying,” Heligmann says. “The market is acting like the events in Egypt were a non-event. That’s reckless, scary and it’s also not right because too many things there could go wrong. Does anyone,” he asks, “really think the U.S. haters in the Mideast are not plotting ways to worsen this crisis?”

Whether he’s right or wrong is anybody’s guess. But for sure, he’s dead on about the market, which, based on its ongoing strength, looks like a combination of Samson, Hercules and Conan the Barbarian all wrapped up into one.

Citigroup views the political unrest in Egypt as little more than “a short-term challenge.” In addition, a Rasmussen poll shows that 75 percent of the participants don’t think the Egyptian problems will spread.

I only wish I could be so cocksure. Reminds me of this boat captain who assured an alarmed passenger: “Don’t worry; the Titanic could never sink.”

What do you think? E-mail me at CDandordan@aol.com.

Read more: Egypt Protests, Stock Market, Egypt Stocks, Egypt Wall Street, Wall Street, Egypt, Business News

Paul Boden: Something for Nothing: The Selling Off of Public Housing

HUD has administered the planned obsolescence of public housing for well over 15 years. According to HUD, 150,000 units have been lost to demolition and disposition, although the number of lost units is probably closer to 280,000 if taken from the Millennial Housing Report and Ways and Means Committee’s Green Book. There are also an estimated $20-30 billion in maintenance backlogs. 2011-01-27-PublicHousingCapitalFund.jpg
HUD Secretary Shaun Donovan argues that things have gotten so bad that we must open up public housing to private capital or “lose these irreplaceable resources forever.”

The pivotal decisions by Congress to cut annual appropriations for the Public Housing Capital Fund and to lift one-for-one replacement for any public housing unit lost to demolition or disposition were neither necessary nor inevitable. They were politically, not economically, determined. Other choices could have been made. For instance, George Romney, HUD Secretary under President Nixon, suggested that, if necessary, money for public housing should come from reforms to Mortgage Interest Deductions, a reasonable alternative considering 75 percent of this expenditure benefits homeowners earning more than $100,000 a year.2011-01-27-HomeownerTaxBreaks.jpg

Shaun Donovan’s plan is to open up public housing to private investment. The plan relies on debt financing that would put up 280,000 public housing units as collateral. The initiative is called Transforming Rental Assistance. The initiative has been introduced to Congress as the Preservation, Enhancement, and Transformation of Rental Assistance Act. After rejection by both House and Senate appropriations for FY2011, the legislation has been slightly altered and reintroduced as the Rental Housing Revitalization Act by Congressman Keith Ellison.

Amongst many other concerns, most notably the undermining of public housing as a public good, the effect on tenants’ rights, and the exposure of units to foreclosure, the plan will certainly raise the ceiling on affordability as lenders look for a return on their investment. (Click here to read a letter to Secretary Donovan outlining the concerns of local and national organizations working to protect the human right to housing about this plan.)

Quite frankly, for how much they’ve been touted as efficient and innovative in leveraging private capital, mechanisms like Low Income Housing Tax Credits (most likely the program to be used for private investment in public housing) have done little to provide affordable housing to those earning less than 30 percent of Area Median Income, i.e. public housing tenants.

A good example is the private-public partnerships Donovan developed as head of New York City’s Department of Housing Preservation and Development. According to the New Housing Marketplace Plan, he helped create 88,000 new affordable housing units, but only “68 percent of these units will be affordable to those earning less than 80 percent of Area Median Income and the remaining 32 percent of units will serve moderate and middle-income New York Families.” We are concerned that the returns that would satisfy investors would mean gentrification, displacement, and homelessness for public housing tenants.

Shaun Donovan’s framing of the problem and the solutions he puts forward strike us as misleading and risky. The medicine he prescribes is more of the same “creative financing” that got us into this mess in the first place. To expect a different result is the definition of insanity. It’s time we move beyond symptoms to the root cause of the malady.

The Housing Act of 1937 was created to remedy the “acute shortage of decent, safe, and sanitary dwellings for families of lower income.” The legislation was a direct response to the housing market’s failure to provide adequate housing for millions of people. The act acknowledged that the federal government had a responsibility to provide a home for all Americans. For over 70 years, public housing has provided the opportunity for people to build better lives. Public housing’s problems do not stem from anything inherent to its mission. Public housing has not failed; public policy has. The problems it faces today come from policy decisions to allocate public resources for housing that benefit people with higher income levels rather than fairly distributing funding to all Americans.

In testimony given on April 14, 2010 to the House Financial Services Committee, Donovan stated that the nation’s housing financing system should “ensure that private sector gains and profits do not come at the expense of public losses.” We would like to see this standard applied to public housing. Because whether through demolition, disposition, or the proposed Rental Housing Revitalization Act, we are allowing private sector gains and profits at the expense of public losses for those least able to afford them.

Since HUD first introduced what is now the Rental Housing Revitalization Act to Congress last May, HUD approved the “loss” of another 9,150 public housing units through demolition or disposition. Over the same time period, 10,170 actual units were “lost” by previously approved demolitions or dispositions. Each and every unit that has been “lost” has been applied for by a Housing Authority and approved by HUD. HUD and Congress claim no responsibility for what in fact they have authorized. Moreover, they are using these “losses” as rationale to pass legislation that will further compromise public housing’s longevity.

As a country, we must stop gambling with people’s homes. We must change our priorities and work for a fair housing policy that ensures everyone has a safe, decent place to live. There are better alternatives than selling off public housing, but we will have to organize en masse to win them.

A special thanks to Nicholas Dahmann of Los Angeles Community Action Network for working on this article.

Read more: Housing Market, Homelessness, Public Housing, Economy, Economic Crisis, Western Regional Advocacy Project, Homeless, Financial Crisis, Housing Crisis, Housing and Urban Development, Department of Housing and Urban Development, Politics News

The 13 Major Cities Where Foreclosures Soared Last Year

The foreclosure crisis isn’t exclusive to real estate-addled cities like Las Vegas and Phoenix

In fact, as the crisis deepened, foreclosures mounted in unexpected cities last year. Of the 13 major cities that saw the biggest increases in foreclosures in 2010, according to data from RealtyTrac, none were in the notorious housing bust states of Florida, Arizona or Nevada.

Foreclosure activity increased in 149 of the country’s 206 largest metropolitan areas last year, RealtyTrac found. Even cities that were initially shielded from the the worst of the foreclosure crisis have now seen big jumps in foreclosure activity, AP notes. Job loss has become the leading cause of the increase.

Falling home prices erode homeowners’ wealth, making them more vulnerable to default and foreclosure. As foreclosures tend to bring property values down even further, the cycle can perpetuate itself. Rising unemployment makes the situation worse still.

Check out the areas that saw the biggest increases in foreclosures last year, per RealtyTrac’s data:

Read more: Foreclosure Crisis, Home Prices, Economic Crisis, Slidepollajax, Business News, Foreclosure, Housing Crisis, Realtytrac, Business News

American Manufacturing Expands At Fastest Rate In 7 Years — But Recovery Still Uneven

American manufacturing continued its rapid growth last month, according to a new report released Tuesday, suggesting a broader economic recovery could take hold this year.

January marked the eighteenth straight month of growth in the manufacturing sector the fastest rate of growth seen since May 2004, according to the Institute of Supply Management’s Report On Business. The report gives a crucial overview of the U.S. manufacturing sector, which likewise serves as a sign of the overall health of the economy.

Manufacturing is in “full economic recovery mode,” said John Silvia Chief Economist at Wells Fargo, “And this is good for the economy. It does suggest we have sustained economic growth.”

As for when manufacturing’s recent brisk expansion will translate into new jobs, Silvia is less optimistic.

“My view is that a lot of this unemployment is structural. We have some improvement in the unemployment rate already. I think we’re going to continue to see improvement in the next year, it’ll continue to decline.” But, Silvia added, “there’s just a lot of people in the wrong spot with the wrong skills. A lot of construction workers — they’re not going to be IT engineers tomorrow.”

Last year, the U.S. manufacturing sector created more jobs than it eliminated for the first time in more than a decade. That number will likely continue to increase in 2011, according to the Wall Street Journal, which quoted one economist who described manufacturing as “the shining star of this recovery.”

Despite the recent spate of strong signs of improvement — a rising GDP, strong manufacturing, consumer spending up this recovery, as a recent Time cover story put it, may be cruelly uneven:

“None of this means that we’re going back to an old-fashioned economy. One of the less attractive features of this job recovery is that it will be cruelly uneven. It will favor, more than ever, the college educated over blue collar workers. It will favor cities that have developed industry clusters in which skills match demand. It will favor the Dakotas over states such as Florida, Nevada and California. It will favor those who work in the private sector over those who work in the public sector.”

Read more: Unemployment, Gdp, Economic Crisis, Jobs, Manufacturing, ISM Report, Economic Recovery, Ism Report Manufacturing, Economic Growth, Consumer Spending, Recession, American Manufacturing, Business News

Sanofi puts Genzyme at low $70s plus payout: source

PHILADELPHIA/BOSTON (Reuters) – France’s Sanofi-Aventis has agreed to raise its bid for Genzyme Corp to the low $70s-per-share range, plus a milestone payment based on the performance of an…

Monster storm slams Midwest, heads northeast

CHICAGO (Reuters) – A colossal winter storm stretching from New Mexico to Maine hit the heartland of the United States with snow, high winds and freezing rain on Tuesday, and experts said the worst was still to come as the monster event moved northeast and temperatures plunged.