Wednesday, October 29, 2008

Treasury Inflation-Protected Securities, or TIPS

Individual - Treasury Inflation-Protected Securities (TIPS)

Treasury Inflation-Protected Securities, or TIPS, provide protection against inflation. The principal of a TIPS increases with inflation and decreases with deflation, as measured by the Consumer Price Index. When a TIPS matures, you are paid the adjusted principal or original principal, whichever is greater.
TIPS pay interest twice a year, at a fixed rate. The rate is applied to the adjusted principal; so, like the principal, interest payments rise with inflation and fall with deflation.
You can buy TIPS from us in TreasuryDirect and Legacy Treasury Direct through non-competitive bidding. Starting in January 2007, the 20-year TIPS is no longer sold in Legacy Treasury Direct, but it continues to be available in TreasuryDirect.

NOTE: At this time, only individuals can hold accounts in TreasuryDirect.

Wednesday, October 22, 2008

Richard Kavacevich Is another candidate for Banker of the Year

Jamie Dimon and Richard Kavacevich are on the top of the list for Banker of the Year, Big Banks category.

Kovacevich built Citibank into a retail powerhouse only to be passed over in the in house politics of Walter Wriston's world. He went to Norwest bank, built it up, and became CEO of Wells Fargo when it bought Norwest.

Banks talk a lot about cross selling, but actions speak louder than words. Under Kovacevich's leadership, the average Wells Fargo customer uses 5.7 services from the bank. Dan Fitzpatrick discribes Wells Fargo under his leadership as "a selling machine."

Kovacevich now has a chance to evangelize that gospel to Wachovia, which Wells Fargo is planning to take over. Absorbing Wachovia will be a big, big challange. Wachovia announced a $23.7 billion loss today.

Tuesday, October 14, 2008

Laugh So You Don't Cry

Saturday Night Live had a funny video about the current financial mess. It is a spoof of President Bush and Speaker Pelosi that goes on for about 7 minutes. It also includes the Sandlers, real people.

See the video at:

For information on the Sandlers see:

Everyone form all political perspectives can enjoy the video from England in 2007. These two comedians have nailed the current crisis.

You may have to copy and paste the link:

You may note the reference to Bear Stearns. Remember this comes from 2007 before the bailout of Bear Stearns. This was taken off You Tube a few weeks ago and I am happy to see it has resurfaced.

Monday, October 06, 2008

Information Regarding the Gramm-Leach-Bliley Act of 1999

You can find Information Regarding the Gramm-Leach-Bliley Act of 1999 at:


Friday, October 03, 2008

The American Economy Lost 159,000 Jobs in September

Employment dropped by 159,000 Jobs in September. The unemployment rate is still at a recession level 6.1%.

Among the good news, the Bureau of Labor Statistics reported Wichita's unemployment rate was a percent and a half lower than the national average in August. There was evidence in the national report to that that should continue. Employment in aerospace manufacturing was up.

How to Play the Regulators One off Against the Other

Banks have different regulators depending on what type of depository institution they are and who charters them. This allows some operators to play games. It reminds me of the children running to the father when mom says, "No!" or playing the same trick in reverse when he says "No!" Raymond Lamb was a master at this game and America's fund insuring deposits is $862 million smaller thanks to Mr. Lamb's lending policies.

David Enrich and Damian Paletta write in today's Wall Street Journal, "One key focus in the financial crisis is the way the U.S. regulates banks, a patchwork often criticized as outdated and leaky. To those who say it needs an overhaul, Exhibit A could be a twin bank failure in the Southwest in July."

Wednesday, October 01, 2008

Chris Dodd and Angelo

Senator Christopher Dodd chairs the Financial Services Committee. Chris Dodd is a Democrat from Connecticut. I used to live in the Second District which he once represented, as did his father, Tom Dodd, before him.

Christopher Keating reports on the Capitol Watch blog for The Hartford Courant that Dodd, the younger, refinanced two 30-year mortgage loans from Countrywide Financial Corp. in 2003.

Countrywide was America's biggest mortgage lender. Countrywide's business model was to write mortgages through its network of offices around the country and package them into mortgage backed bonds. It got itself into financial trouble when it found it could no longer tap short term credit markets to provide bridge financing while it marketed these bonds. That was further aggrevated when investors became reluctant to buy them.

Fannie Mae's and Freddie Mac's exposure to Countrywide was substantial. Bernard Ducalion tells us, "During the first nine months of 2007, Countrywide accounted for about 29% of Fannie’s single-family business volume (Page 106 of 10-Q)."

Countrywide's chairman and chief executive officer, Angelo Mozilo, personally handled Dodd's refinancing. This was under a special procedure for high profile loans called the "Friends of Angelo" program. "Dodd refinanced his Washington townhouse with a loan of $506,000 and refinanced his East Haddam home for $275,042." Conde Nast Portfolio estimates that the favorable rates accorded the then ranking member of the Finacial Services Committee were valuable: "The Conde Nast article stated that Dodd's 30-year loans were both designed to be at 4.875 percent, but the East Haddam loan was reduced to 4.5 percent and the Washington loan was dropped to 4.25 percent. Over the life of the loans, that saved the Dodds about $58,000 on their Washington home and $17,000 on the East Haddam home, according to the article. Countrywide also waived three-eighths of a point on one loan and one quarter of a point on the other."


The Center for Responsive Politics has tracked the cumulative contributions since 1989 from those associated with Fannie and Freddie. Senator is #1. Interestingly, Sen. Obama, although handicaped with only four years in Congress, has leapfrogged over the other 533 members of the House and Senate to achieve #2. Sen. McCain, however, appears to be in their now nationalized GSEs' doghouse. He has gotten less than one sixth what Obama has gotten and that is over a period five times as long:

All Recipients of Fannie Mae and Freddie Mac Campaign Contributions, 1989-2008
Name Office State Party Grand Total Total from
Total from
Dodd, Christopher J S CT D $165,400 $48,500 $116,900
Obama, Barack S IL D $126,349 $6,000 $120,349
Kerry, John S MA D $111,000 $2,000 $109,000
Bennett, Robert F S UT R $107,999 $71,499 $36,500
Bachus, Spencer H AL R $103,300 $70,500 $32,800
Blunt, Roy H MO R $96,950 $78,500 $18,450
Kanjorski, Paul E H PA D $96,000 $57,500 $38,500
Bond, Christopher S 'Kit' S MO R $95,400 $64,000 $31,400
Shelby, Richard C S AL R $80,000 $23,000 $57,000
Reed, Jack S RI D $78,250 $43,500 $34,750
Reid, Harry S NV D $77,000 $60,500 $16,500
Clinton, Hillary S NY D $76,050 $8,000 $68,050
Davis, Tom H VA R $75,499 $13,999 $61,500
Boehner, John H OH R $67,750 $60,500 $7,250
Conrad, Kent S ND D $64,491 $22,000 $42,491