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Bankers Reacting Angrily to Pay Cut

Ordinary Americans are angry but it seems that some people are angrier. Wall Street bankers are simply furious with the way the Obama administration has tried to rein in executive pay. Large bankers including the Bank of America have covered their ire with comments that these efforts may hurt the very organizations that the government wants to save.

According to the spokesperson of BoA, Scott Silvestri, “People want to work here but they want to be paid fairly.” He added that the competition is identifying the top performers within the bank and luring them with fair-market compensation. Previously, BoA has received $45 billion worth of bailout funds from the US government.

Measures Taken by the Administration

The Treasury Department has slashed the pay rate for executives in ailing organizations such as the American International Group, Citigroup Inc., and the Bank of American by as much as 50 percent. Meanwhile, the Federal Reserve is also taking a tougher stance. It has recently announced stricter guidelines with regards to executive compensation.

Basically, it will be more reliant on risk management. These measures are aimed at controlling what the Obama administration refers to as “unchecked risk taking fueled by excessive pay.” The cause of the financial crisis is, to a large extent, attributed to the $1.6 trillion in losses in the financial sector as well as the 7.2 million job cuts in the United States.

Even with new guidelines in place, the top positions in the bailed-out companies are still lucrative. Robert Benmosche, the chief executive of AIG, has received $10.5 million in compensation. He also assured employees that they won’t be forced to return the money they’ve already collected. On the other hand, the Goldman Sachs Group set aside $11.4 billion for salary and bonuses for the first half of the year.

Credit Card Debt – The Worst Things You Can Do

When it comes to money, no one can make all the right decisions all the time. Most people have done things they later regretted, especially when it comes to credit card debt. It may be a simple thing like getting charged $3 for withdrawing cash from an out-of-network ATM machine or a big mistake like maxing out your cash advance option without any apparent means to pay for it.

Some mistakes are easily resolved while others take years to sort out. Whatever the case, blunders happen when it comes to money management. The important thing is to understand the severity of the transgression. So in this article, we will score common mistakes on a scale of 1 to 10 based on its impact on your finances:

Paying Past Due Date: 5.5

Credit card issuers are never happy with late payers. Because of this, they have severe penalty charges and charge high interest payments for individuals who pay past the due date. In addition, some issuers even report your transgression to the credit bureaus so your credit score will suffer as well. If you’ve been an on-time payer in the past, some companies may let it slide. Just make sure to call them and ask them to waive the interest fee as well.

Paying the Minimum: 5

Generally, credit card companies earn the most from slow payers. Paying only the minimum might not affect your credit score but you might end up paying more on the interest than the principal. This is not a good practice because it keeps you in debt for a lengthier timeframe.

Missing a Payment: 9

This is one of the worst mistakes you can commit if you have a credit card. You will be slammed with high interest rates, penalty fees, and other charges. As if that’s not bad enough, your credit score will also take a huge hit. Because of this, you will need to pay more when you take out a loan next time. In essence, missing a payment is a no-no. Pay the minimum at the very least.

Should You Stay in a Job You Hate For Money?

As you probably know, this blog is mostly focused on credit, debts, and personal finance. Rarely do we tackle the subject about your job and self-worth. This week, we decided to tackle the subject about your work and careers in general. Your personal finances and even your lifestyle are inevitably tied to your work. More importantly, it is tied to the amount you’re earning each month. For this reason, countless people stay on a job they hate just so they can pay the bills.

The phenomenon is nothing new. However, the problem may be more prevalent than before due to the pressure of today’s lifestyle. Basically, you don’t make the same amount you did when the mortgage or auto loan was taken out, you can lose everything. So here, we will look at the reasons why you should or shouldn’t keep your job and the factors that should be taken into consideration.

Career Diva posted a funny and insightful blog post titled “Maybe We Need a Workplace Moses”. She talked about people working for free just to gain experience. Most young professionals go this route in the hope that it will pay off over the long term. Basically, she called this slavery and cited several reasons why people accept it. With the unemployment rate as high as it is, some have no choice.

The blog Money Smart Life recently had an article titled “Job Hunting Tips” to help out struggling job-seekers? Finding a job, let alone the right job, is not an easy task. Among the tactics you can consider include research, networking, the pay rate, retirement benefits, the take-home pay after taxes, and the health insurance provided. Even timing should be given importance because your worth in the marketplace can depend on demand.

Another helpful blog post on the topic can be found at Brazen Careerist. The blog post titled “Misery Loves Company Especially When You Are Dumbemployed” sums the topic up.

Tighter Credit for American Business Owner

Majority of small business owner in America can tell you how difficult it is to secure sufficient loan for their business. This difficulty is never more apparent than today as banks tighten credit in an effort to stop massive losses. The effect of this constraint is not only being felt by individual businessmen, but by the real economy. When expansion plans and prospective growth are hindered, overall economic growth comes to a standstill.

And the problem is, there are very little indications that banks will relax their lending standards in the near future. A survey conducted by the Federal Reserve Board revealed that senior bank officials expect that credit will still be tight until at least the middle of 2010. This credit squeeze points to an aversion to risk among today’s lenders. It has more to do with their concerns about the economy than the viability of individual businesses.

Banks are also worried about the high unemployment rate and their losses as credit card charge offs increase. As they expect more troubles in real estate, they will continue to hold on to their capital. Sam Thacker, a partner at Business Finance Solutions said that “the banks are just deathly afraid…I don’t see commercial banks coming back to the market anytime soon.” Although the above view might not sound good today, it might be healthier over the long term.

Right now though, businesses aren’t very happy with the banks’ reaction. Economists agree. They believe that bankers are overreacting because even stable companies are finding it difficult to borrow. But all is not bad news. Banks depend on borrowers to make money. Raymond Davis, the chief executive of Umpqua Bank said that “banks want to lend money” but the effects of the recession are still being felt. Be that as it may, without the banks’ help, the economy might take longer to recover because money is needed to stimulate demand and growth.

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