When the federal government bailed out the banks a year ago it was with the expectation that taxpayer money would be recycled back into the economy in the form of more loans. We all know how that didn’t play out according to Washington’s plans.  But now that the recession has been unofficially deemed over and the economy seems to have stepped back at least a few feet from the financial-crisis cliff, are lenders following the script (finally) and opening the spigot? More

Another week, another credit card policy change. This time around the news is that American Express will dock rewards points for certain co-branded cards when a cardholder doesn’t pay on time. To get the points reinstated, cardholders will first need to pay the obligatory late fee and then an additional $29 to recoup docked points. The AmEx cobranded cards hit with this new policy are Delta Air Lines, JetBlue, Hilton Hotels and Starwood Hotels, putting them all in line with the same policy that’s been in effect for AmEx's regular Green and Platinum cards for years. But the timing of the latest announcements just adds to the pile of credit card cutbacks and fee hikes that has made 2009 the annus horribilis for cardholders. More

Now that the home buyer's tax credits are back up and running through May, the next bit of housing-related economic stimulus is focused on homeowners who are willing to spend money to make their homes more energy efficient. More

A looming shift in Federal Reserve policy could send the 30-year fixed mortgage to 6% or higher, up from Monday’s rock-bottom rate of 5.02%. For all the hullaballoo about the stimulative impact of last week’s decision to extend the $8,000 First-Time Home Buyer Tax Credit and create a $6,500 credit for current homeowners, a sharp rise in the bellwether mortgage rate could muck up a housing recovery. More

Last week’s stream of economic data points to the emergence of a great divide. On the positive side, annualized third-quarter GDP was up 3.5 percent compared to the prior quarter. (Keep in mind that this is an "advance" estimate from the Dept. of Commerce. Stay tuned for revisions.)  But consumer spending for September fell 0.5 percent. That’s the biggest dip since December 2008 when we were in the midst of the financial crisis. More

The lobbyists for the National Association of Realtors sure earned their fee this go-round. Not only did Congress agree to extend through April, 2010 the existing $8,000 tax credit for first-time home buyers scheduled to expire at the end of this month, but now we’re going to all pay for existing homeowners to have a similar tax break.  In the new bill President Obama was slated to sign today — the housing credit legislation was  tacked onto legislation extending unemployment benefits — existing homeowners will be able to claim a $6,500 tax credit if they buy a new home they intend to use as their primary residence.

Congress also decided to swing the door wide open for more Americans to get in on both tax breaks More

With the November  30 expiration of the First-Time Home Buyer Tax Credit fast approaching, the wrangling in Washington over whether to extend the program is getting mighty interesting.

In early September, Senator Johnny Isakson, the patron saint of the National Association of Realtors (and a guy who made his fortune selling real estate) teamed up with Senator Christopher Dodd to back a plan that would increase the current $8,000 credit to $15,000, make it available to all homeowners (not just first timers), and double the income-eligibility rules. More

Reverse mortgages are increasingly the go-to solution for retirees confronting insufficient nest eggs and paltry income payouts in today’s low-rate environment. Last year, the number of new Home Equity Conversion Mortgages insured by the federal government amounted to 112,000 — more than 14 times the HECMs that were originated in 2001. The 2009 tally is expected to be even higher.

Last week’s news that 2010 Social Security benefits will not be given a cost-of-living adjustment — for the first time since inflation protection was added to the program in 1975 — will likely fuel demand for reverse mortgages. And lenders on the prowl for post-meltdown revenue sources are eager to boost the supply. More

When Congress passed the Credit Card reform bill this past Spring it bowed to industry pressure and delayed enactment of the new regs for nine months. Signed into law in May by President Obama the bulk of the reforms mandated by the Credit Card Accountability, Responsibility & Disclosure Act of 2009 won’t take effect until February 22nd, 2010.

Card issuers insisted they needed that time to get their systems set to the new consumer-friendly rules; Congress agreed, with some admonishments that the grace period not devolve into a frenzied fee-grab. But to the surprise of no one seemingly but Congress, the card issuers did just that, using the window to raise interest rates and fees. More

It's not shocking that the National Association of Realtors is working hard to have the $8,000 first-time home buyer tax credit extended past its current December 1st expiration. But what is surprising is how little public discussion there is of the downside of this extension.

It's a full-court press from the NAR: The powerful trade association has its lobbyists pushing the case on the Hill, and it's asking its members to get the message out too. In a video featuring member Realtors talking up the virtues of the credit, the NAR includes a message superimposed on a wave of stars evoking the U.S. flag: Congress: Don’t Let America’s Real Estate Recovery Expire.
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When the Obama Administration announced the Making Home Affordable program in February, it estimated that the refinancing part of the program, known as HARP, could help as many as four million to five million homeowners with little or no equity (and even up to 5% underwater) refinance into less costly loans. So far it hasn’t exactly played out to expectations. Through July just 60,000 or so homeowners have landed a refi through HARP.

That makes it unlikely that HARP will come anywhere close to delivering on the administration’s goal by the time the program’s current authorization runs out in June 2010. (Its sister program, Home Affordable Modification Program, or HAMP, is authorized through 2012.)

While Treasury has the power to extend HARP past next year's deadline — which won't really help unless Treasury can also arm-twist lenders into doing these deals — a handful of other crisis-induced rule changes will need  Congressional action to be extended beyond this year. More

Okay, so that headline packs all the shock value of  "Sun Rises in the East." But given the widespread annoyance so many readers have with their credit card issuers (check out comments to blog posts here and here) I thought it might be, well, satisfying to know card wrath is a bit of a national epidemic.

J.D. Power reports that overall customer satisfaction with credit card issuers hit a three-year low, clocking in at 703 (on a scale of 1000) in 2009. That was slightly lower than the already anemic 710 score from 2008, and is the lowest showing since the firm started looking at credit cards in 2007. More

There doesn’t seem to be much Washington can agree on these days. But I don't think I'm going to go out on a limb by saying that one issue with widespread bipartisan support is the need for Americans to save more for retirement. So you have to imagine there is going to be some quick hustling to avert an oncoming p.r. train wreck: the IRS soon may be forced to impose a lower maximum contribution limit for 401(k)s in 2010. Yes, Washington may tell us it is forcing us to save LESS next year. Not exactly what you want to center your mid-term election campaign on.

The culprit here is low inflation. The annual 401(k) contribution limit is set by comparing the Consumer Price Index (CPI)  for the third quarter of the preceding year to a base level. If the August and September CPI numbers come in as low as July, the Q3 inflation number plugged into the calculation could trigger a decline in the 2010 contribution limit. According to an analysis by Mercer’s Washington Resource Group the 2010 limit might drop from $16,500 to $16,000 for individuals younger than 50, and the catch up contribution for the 50+ cohort might decline from $5,500 to $5,000.

The IRS is scheduled to announce the 2010 limits on October 15. Even if the IRS regulation mandates a reduction in the contribution limit it would be a shocker if Congress doesn’t jump in with a fix.

But the unfortunate reality is that even if the limits were reduced it wouldn’t have much impact on Americans retirement savings. According to a Financial Engines survey of more than 550,000 401(k) accounts, only 7% of participants came within $500 of contributing the maximum allowed by the IRS or their plan limit. So for 93% of Americans this is a bit of a non-issue. (The fact that 93% of Americans should be saving more is an entirely different topic.)

IRAs don’t face the same low-inflation pickle. The formula for computing IRA limits uses the trailing 12-month CPI (through August) to set IRA limits and that stat is expected to show an increase. It won’t likely be enough to budge the IRA limits up for 2010, but will ensure the limits can remain at their 2009 level: $5,000 for individuals under 50; $6,000 if you are 50 or older.

Social Security payouts are where low-inflation is going to do real damage. For the first time since annual cost-of-living adjustments were mandated in 1975, it looks like there will be no COLA increase for 2010 Social Security benefits. In fact, the Obama Administration’s budget forecast assumes there will be no COLA increase in 2011 either. Yet Medicare Part B premiums are expected to rise. That means the net payments to Social Security beneficiaries will be declining in 2010 (and probably 2011.) Let’s see what Congress has to say about that.

In this year of the great belt tightening pet owners continue to give themselves a long leash to keep shelling out for Fido and Fluffy. The American Pet Products Association estimates we’ll spend $45.5 billion on pets this year, a 5% increase since 2008 and a near 60% jump from our 2001 pet outlays.  This comes at a time when June retail sales were about 10% lower than a year earlier and a Gallup survey of weekly consumer expenditures in mid-August was nearly 30% lower from a year ago.

Pet expenditures aren’t merely a kibble and kitty litter story. The APPA reports that 19% of pet owners admit to buying a “designer” item.  Exhibit A: The $935 price tag for the large version of  this cat condo would cover a few months of mortgage payments for plenty of human condos on the market.

But it’s not just about the pet bling. Basic food and care is driving some very big bottom lines. Nestle recently reported a 9% year-over-year pickup in its pet care division; PetSmart recently doubled its dividend payout, and drug maker Sanofi-Aventis SA is paying Merck $4 billion to buy its 50% share of animal health-care manufacturer Merial. Sanofi’s CEO told The Wall Street Journal that Merial sales are up 50% the past five years and the firm’s operating margin is near 30%.

I know all about that trend; the epileptic dog sleeping at my feet as I write this requires twice-daily medication, and will see her vet more this year than I have seen my primary care physician in the past decade.

But I just had to sigh in disbelief at a House Resolution introduced last month that would allow an annual tax deduction of up to $3,500 a year for “qualified pet expenses." No, I am not making this up.  As Howard Gleckman so pithily wrote at the Tax Vox blog, this non-essential tax break seems a bit out of touch for the times given the massive federal deficit. What’s your take on this pet project?

Opening the August credit card statement is going to send the blood pressure of some Chase customers skyward.  For the second time this year the bank has changed up the rules for how it calculates the minimum payment due for certain customers, increasing the rate from  2% of the outstanding balance to 5%.  If you’re carrying a $5,000 balance that means your required minimum payment went from $100 in July to $250 this month.

That move, in turn, has raised some serious hackles. Over at about.com the call to action is to file a complaint with the Federal Trade Commission over this “unfair practice.”

Hmmm. Unfair? I’m not so sure. Unfriendly, absolutely. There is no question that tightening the payment screws at a time when unemployment is at a 25-year high and furloughs are the hot new employment trend isn’t exactly consumer-friendly. Yet there is indeed a residual benefit for cardholders. Increasing the minimum payment rate by 150%  means Chase customers will pay off their debt a whole lot faster. That’s a boon for their personal balance sheet as well as saving a bundle in interest costs. While I don’t believe for one second that Chase’s motivation is to help its customers — this is all about Chase reducing its risk — I think Curtis Arnold over at CardRatings.com got it right by tagging the change a case of “tough love.” What's your take? The poll is open.