Those clever phishermen have a new strategy

We've all been warned about the dangers of clicking on links in emails purporting to be from a bank, the IRS or some other government agency. The latest fraudulent email I received capitalizes on those warnings. It says:

ADVISORY: Some members and non-members of Franklin Bank have received fraudulent emails. This email was NOT issued by Franklin Bank, and should be deleted. Do not follow the instructions in the email. Do not click the link. For security reasons we have deactivated your debit card. Please contact us at (800) xxx-xxxx to activate your debit card. (I have x-ed out the phone number)

The email features the logo of a real Franklin Bank to make it look official. The email address is almost like that of the real Franklin Bank. But of course the phone number is the fraudsters' number, not the bank's number. If you call and give out your debit card information, your bank account most likely will be emptied in a matter of minutes.

So if you get an email purporting to be from your bank, don't click and don't call the number in the email. Instead, call the number that's on your statement or that you've looked up yourself.

 

Is the money in my credit union account safe?

Q: I have been reading about FDIC insurance, but what about credit unions? Are they insured too?

A: Yes. Federal credit unions are insured by the National Credit Union Administration, a U.S. government agency similar to the FDIC. It insures $100,000 per person in regular accounts plus $250,000 in most retirement accounts (such IRAs). As with FDIC insurance, there are ways to set up accounts to increase the insurance level. Here's more information.  Check here to make sure your credit union is a federal credit union (most are). You can also check on the health of a particular credit union here.

Making sure you have FDIC insurance

The problems in the financial sector have many people concerned about bank safety. The best alternative: keep your accounts within FDIC insurance limits. That's easy when your accounts are simple. You're insured for $250,000 per person in retirement accounts plus $100,000 per person with all your other types of accounts added together. However it gets complicated when you are trying to increase your coverage through the use of payable on death or trust accounts. This story points out that different types of trust are treated differently under FDIC rules. The FDIC publication, Your Insured Deposit, is the basic document to consult.   If you have questions, you can call 877-275-3342.

Who can I contact to file a complaint about my bank?

Q: Because of its slovenly customer service, I want to file a written complaint against Countrywide Bank, with which I have five CDs. Can you possibly provide me with the name and address of the federal agency responsible for handling complaints against banks?

A: I can tell you where to look. The regulator varies from one bank to the next. To find out the appropriate regulator for your bank, search here. Enter the name of the bank (leave off the state if you aren't sure.) In Countrywide's case, the site tells you that the regulator is the Office of Thrift Supervision. The Web site includes information about filing complaints.

Was there a sweet deal for ousted Wachovia CEO?

Q: As a former Wachovia shareholder who voted against the Golden West acquisition when it was presented to the bank’s investors, I’ve been very interested in seeing Mr. Thompson get what he deserves for engineering such a stupid blunder. What I haven’t seen though is any discussion of what he takes with him when he leaves. Do you have any idea what Mr. Thompson’s total severance package will amount to?

A: According to the Wall Street Journal, Ken Thompson is getting $1.45-million in severance, $50,000 to pay his legal bills and accelerated vesting of $7.25-million in restricted stock. Post retirement benefits include an office and an assistant for three years. The Journal calls the package "modest by recent Wall Street standards."

Of course it is not modest to those of us who aren't Wall Street CEOs and who did not cost our companies billions of dollars. 

Any increase in FDIC coverage on the horizon?

Q: I am reviewing an article written by you and published May 8, 2005. The title is "FDIC limit increase would help retirees". In the article you mentioned that the U.S. House of Representatives passed a bill raising the limit to $130,000 but the U.S. Senate had yet to act. Do you have any knowledge as to whether or not such an increase is in the near future?

A: It's always nice to know that my work was preserved for posterity! The $100,000 base insurance limit was not increased. However, Congress did set a separate limit of $250,000 for retirement accounts (including IRAs and 401(k)s. Thus a single person can have $250,000 in an IRA and $100,000 in other accounts at the same bank and be fully covered. Of course, by adding other people on the accounts, you can increase your limits. Here are more details.

Are you banking online yet?

If not, you'll soon be in the minority. This year for the first time, a majority of U.S. households will be doing at least some online banking, according to projections from Forrester Research. Although younger people are more likely to bank online, many Tampa Bay retirees are quite enthusiastic about online banking, as I report in my column for this Sunday. Convenience is the biggest reason. Another plus is reducing the chance of overdrafts since it's easier to keep track of your balance. It may even be more secure than using paper checks, assuming you use good antivirus software, protect your password and check your account regularly. Paper checks have become very vulnerable to counterfeiting, thanks to improvements in printers and the ready availability of check paper at office supply stores.

Here are some additional reader comments about online banking.

Wachovia agrees to pay restitution to victims of its telemarketing customers

Interesting news today from the Office of the Comptroller of the Currency: Wachovia Bank will pay $144-million to settle charges that it allowed telemarketers to use its accounts to help them take millions of dollars from elderly people across the country. The federal Office of the Comptroller of the Currency said Friday that  Wachovia failed to act against the telemarketers even after the victims and their banks complained they were being defrauded.

The government said the telemarketers, including one based in Largo, obtained bank account information from their victims while selling vouchers for discount travel and products or offering free gifts or free trial memberships. The information was then used to draft money out of the victims’ accounts and deposit it in the Wachovia accounts of the telemarketers and payment processors. One of the companies was FTN Promotions of Largo, subject of this FTC lawsuit last year. I think it's interesting that Wachovia was not accused of any fraud but of failing to have the systems in place to adequately respond to the complaints of fraud and then do something about them. Wachovia, incidentally, says it no longer allows pure telemarketing companies to have accounts.

Does our financial regulation need revamping?

U.S. Treasury Secretary Henry Paulson proposes an overhaul of the nation's system for regulating financial services, including banking, securities, commodities trading, insurance and mortgage brokerage. There's no question that the system we have now is outdated, but would consolidation result in more efficient regulation or just less regulation? As I wrote today, there's already a big debate under way. Consumer advocates are fearful that transferring power away from the states would mean even less oversight of brokers and insurance agents. Here's the executive summary of the plan and here's the whole thing for those who have time to read 200+ pages.

Paulson's proposals
• Set federal licensing standards and disclosure requirements for mortgage companies and mortgage brokers. Create a federal commission to evaluate state mortgage regulation.
• Give the Federal Reserve broader powers to stabilize markets, including authority to review private pools of capital such as hedge funds.
• Convert thrifts to national banks regulated by the Office of the Comptroller of the Currency, eliminating the Office of Thrift Supervision. Eventually consolidate all federal bank regulators.
• Let insurance companies choose whether they want to be regulated by a new federal Office of National Insurance or stay under state jurisdiction.
• Merge the Securities and Exchange Commission and the Commodity Futures Trading Commission. Eventually consolidate consumer protection and enforcement across all financial services.

What in the world happened to my stock?

Q: I own shares of Wachovia Corp stock that were worth $57,113 in August and are now worth just $29,811. Can you tell me what would be the cause of this?  I read about Wachovia acquiring all these banks, trying to become the largest bank in the nation. How can this be when its own stock is dropping in value?  Would I not be better off collecting the dividends now instead of reinvesting them?

A: Pretty much everybody invested in the financial sector shares your pain. You may have seen an article or two about problems in the credit markets. The problem is not just people defaulting on their mortgages, but the fact that the future doesn't look especially rosy for financial services right now. Further writeoffs of bad loans are likely and we have to figure a way out of this mess without further damage to our markets. Then, assuming we do, banks simply aren't going to be making the same kind of profits on mortgages and home equity loans that they did in the past. One analyst says Wachovia could become a takeover target. Stock prices have fallen so much that some people think financial stocks may represent a buying opportunity. However, that's only something we'll know in hindsight. You have to be brave to stick your neck out.

This problem points once again to the importance of diversification. Having a lot of eggs in one basket doesn't work out so well when something happens to basket.

Inflation, interest rates and saving pennies

Retirees and other savers are feeling squeezed with inflation heating up and interest rates falling. As the Federal Reserve Board focuses on repairing the credit markets, it runs the risk of making inflation worse. My story today looks at this issue. In addition, my colleagues have written about why food prices are going through the roof and tips on spending less. How are YOU coping as prices rise and CD yields sink? Here's what some readers had to say about lower interest rates.

And speaking of pennies, this week's column is about penny stock fraud. Don't let it happen to you!

[Credit: Stock.xchng]

What's the safest place for our money?

Q: My wife and I are in our seventies and we are not to diversified. Most of our retirement is in CDs, money markets and two homes.  Everything is paid for. We have , I think, enough money to get us through our retirement if someone dosen't take it away from us. What in your opinion is the safest place for our money?  I worry about the banks.

A: In my opinion, banks still are the safest place. Put your money in a well-capitalized bank or credit union (Look up bank safety ratings here.) and stay within deposit insurance limits.

Should my phone number be on my checks?

Q: We’ve had our phone number printed on our personal checks for many years because the stores where we shopped asked for it. Recently I ordered new checks, which arrived today with no phone number printed on them. Also the names were not printed the way I expected. I wanted each of our names printed on a separate line but instead the names are written “William T. or Betty A. Jones.” Should our phone number be shown on the checks? Does the way the names are shown on the checks make any difference?

A: Security experts say printing extra information on checks makes identity theft easier. They advise leaving off phone numbers, driver’s license numbers, middle names and, of course, Social Security numbers. Having an “or” between names makes it clear that either one of you can sign checks. But that’s also how it works when the two names are listed with nothing between them. An “and” between names means both have to sign. Talk to your bank if you want your checks printed differently.

Where can you get excess deposit insurance?

Question: In one of your articles you mentioned banks buying extra insurance for depositors so they would have more than $100,000 from the FDIC .What was the name of that insurance? Is there a list of what banks have this?

Answer: The insurance is called CDARS, which stands for Certificate of Deposit Account Registry Service. It is offered by Promontory Interfinancial Network. You can find a list of banks offering it here.  Here was the original story.

Has your credit card company jacked up your rate for no apparent reason?

Some card issuers are raising rates for some customers even though the customers have never had any late payments. This Business Week story says Bank of America appears to be doing its own internal review of customer credit, raising rates on factors such as higher balances even though the customer's credit rating and payment history are unchanged. If you write the bank a letter and don't put any new charges on the card, you have the option of paying off the balance at the old rate. If you fail to do that, both your old and new balances will accumulate interest at the new rate, which may be as high as 28%

Based on the problems we've seen in the credit markets, banks should have tougher lending standards. However, it seems very unfair to entice customers into building big balances with easy terms, then suddenly change the rules. They certainly will push up their default rates as a result, but I guess they think the extra interest they're going to get will be worth it.

Fed cuts rates, wild day on Wall Street

Talk about a crazy day. The Fed delivers the biggest interest rate cut in more than 25 years and the traders who dominate Wall Street can't decide whether to buy or sell. The Dow is down 400-plus points in one moment and then only down 40 something at another.

Stock investors generally like rate cuts, but their happiness that the Fed is taking action is tempered by the news that the Fed economists apparently think that recession warning lights are going off like crazy. The good news is that as rate cuts work their way through the economy, they make it less expensive for businesses to borrow money to expand or just stay afloat and for consumers to handle their credit card debt and home equity loans. Of course not everybody has good enough credit to qualify for a loan and take advantage of the good rates. However, if you've got an adjustable rate mortgage that's getting ready to reset, this is really good news for you.

The bad news is that every rate cut increases concern about inflation, reduces income for retirees who depend on CDs and money market accounts and hurts the dollar.

Should I put my CDs in my grandchildrens' names?

Question: What are the pros and cons of CDs bought with minors’ names as owners and my name as custodian? Friends tell me that buying CDs in my grandchildrens’ names would save me on taxes because the IRS does not tax minors.

Answer: Children do not pay taxes on the first $850 of investment income. If you title your CDs as you propose, you will save on your taxes but the money legally will belong to your grandchildren. You cannot take it back if you need it and they will be entitled to full control at age 21.
Money titled in the name of a child also may reduce eligibility for college financial aid. Another alternative is to use the money to set up 529 college savings plans, such as the Florida Prepaid College Plan and the Florida College Investment Plan (www.florida529plans.com).

Have you lost track of an investment? Here's help

Have you got an old stock certificate and no idea whether it's worth anything? Wondering about that old bank statement or passbook that shows money you can't remember withdrawing? Can't find those savings bonds you thought you tucked in a drawer?

Today's column offers some advice for tracking down investments. Of course merely having posession of a security or bank book doesn't mean you're entitled to the money. You'll also have to prove that you own it or that you are the legitimate heir or representative of the estate.

What does the Bank of America-Countrywide merger mean for customers?

I wrote about that topic in today's paper, but I've received a couple of emailed questions from worried depositors. One reader asked: "We  have  2  CD's  with Countrywide Bank. One matures in April and the other in May  2008. Are  we safe in leaving there until maturity or should we withdraw them early and pay the penalty?"

The answer is that you should leave your CDs alone. Countrywide Bank's status is far more secure with this announcement than it was before. However, even if this deal had not happened, you would have no reason to be concerned if your accounts were within FDIC insurance limits. With so many banks out there, individual depositors have no need to take the risk of exceeding insurance limits. The Bank of America announcement is very positive for uninsured depositors, who did have reason to be concerned.

Bank of America-Countrywide Financial deal is reason to celebrate in Tallahassee

Reports on Wall Street that Bank of America is close to a deal to buy Countrywide Financial is good news for stocks. But I'm guessing that nobody was happier than the folks at the State Board of Administration who made a big bet last year that Countrywide would survive. The Local Government Investment Pool's troubled "B" fund holds a whopping $650-million in Countrywide CDs, obviously well over the $100,000 FDIC insurance limit. Those CDs begin to mature Feb. 5, with the last of them coming due in June. Other SBA-managed portfolios have about $110-million in Countrywide securities. The recent talk of a possible Countrywide bankruptcy has to have had a lot of folks at the SBA office feeling prett queasy.

Friday update: The deal was announced today.

If you've been considering a CD, you might want to act Monday

The Federal Reserve is widely expected to drop short-term interest rates when it meets Tuesday, which means banks are likely to follow the downward trend. Unfortunately for consumers, savings rates drop faster than borrowing rates. That means this probably is a good time to lock in a slightly longer-term rate. You might consider a CD ladder, buying CDs with varying maturities (one year, two year, three year).

You can check rates on sites such as bankrate.com  and Quicken.com. Certainly you shouldn't settle for a rate of less than 5%. You can go to FDIC.gov to check whether a bank has FDIC insurance.