In the year-ahead outlook for savings and credit that I wrote for MONEY's December issue, I reported that things weren't exactly going to be rosy next year. But I did point out one potential bright spot.

"Customers who have been on the receiving end of 'gotcha' practices that will earn banks $38.5 billion in overdraft fees this year may also get some relief," I wrote. "Many Capitol Hill watchers believe legislation reforming overdraft policies has a good chance of passage in 2010."

As I reported my story, I talked to several sources who felt that credit card legislation, which passed in May, gives overdraft reform some good momentum. Then, last week, the Fed announced new rules that would also limit overdraft fees charged by banks and credit unions. (See fellow MONEY blogger Beth Braverman's take on five ways you can protect yourself now.)

The Fed rules, which require that banks allow consumers to opt-in to overdraft protection on ATM and debit card transactions, are a step in the right direction. But as consumer advocate Ed Mierzwinski told The New York Times, "Some-of-the-time protection is never as good as round-the-clock protection." More

Many workers unfortunate enough to get the ax in this recession at least had one thing working in their favor: subsidized health insurance. This past February Congress threw out a temporary life preserver for workers laid off between September 1, 2008, and December 31, 2009: For up to nine months, Uncle Sam covers 65% of the monthly premium that these newly unemployed people have to pay to stay on their company health care plan. Previously, if you stuck with your company benefits (under the federal program known as COBRA), you had to pay your share of the monthly premium, plus how much your employer covered. For singles, that totaled an average of $400 a month, according to Kaiser Family Foundation; for families, it came to $1,050.

Thanks to this new subsidy, 38% of unemployed workers are opting to remain on the company health plan, double the number that typically stick with it, according to a study from Hewitt Associates, a human resources consulting firm.

But now that lifeline is running out. More

Last month, Sen. Jon Kyl (R-Ariz.) introduced a health-reform-bill amendment that would have prevented the federal government from requiring insurers to offer any particular medical benefits. "I don’t need maternity care," he said. "And so requiring that to be in my insurance policy is something that I don’t need and will make the policy more expensive."

Michigan Democrat Debbie Stabenow zinged back: "I think your Mom probably did."

The left side of the blogsphere loved this. Democrats used it as fundraising opportunity.

Politicians are probably best advised to stick to a rigorous pro-motherhood line. But Kyl's point was really just an extension of a view about health insurance that a lot of Americans hold. More

There's a lot of speculation about what will happen to the federal estate tax (or the "death tax," if you oppose it) next year. A handful of bills have been introduced in Congress recently, many of which would raise the current exemption from $3.5 million to $5 million and keep the tax rate at 45%. (Under current law, the estate tax disappears in 2010 but is reinstated in 2011 at 55% on estates larger than $1 million.)

Whether the exemption jumps from $3.5 million to $5 million — or disappears altogether — you may assume that you don't have an estate tax issue. Few of us leave behind that much wealth. But here's where many people go wrong: While you may not owe federal taxes you could be on the hook to your state. 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

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.
More

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

It used to be that the mythbusters at Snopes.com were the go-to-guys for refutations of weird rumors. These days, though, those diligent debunkers can barely keep up. It seems like only yesterday that tongues were wagging about Obama's alleged non-citizenship — a false rumor the site addressed earlier this month with a typically withering takedown of the forged birth certificate that purportedly proves Barack Obama was born in Kenya.

Now the air is thick with talk of "death panels" hidden in the health care reform bills — a monumentally absurd notion endorsed by assorted Republican politicians, ex-politicians and talk show hosts, as well as by more than a few angry citizens at town hall hall meetings. (Not only are the claims untrue, but the wholly innocent, even laudable provision at the root of the myths that would have reimbursed doctors for counseling patients who wanted advice on living wills and other end-of-life issues has now been stricken from the Senate bill.) Snopes, which took on similar claims back in July, hasn't yet gotten to the latest round of rumors. So others have had to jump in and do a little mythbusting themselves.

Like, for example, AARP. Now, if there were anything to all this talk of "death panels," you'd think the AARP would be raising holy hell. After all, the nonprofit devoted to people age 50 and over has what you might call a vested interest in keeping America's elderly alive and well. But there isn't any substance to these "death panels," so the group has instead taken aim at the rumors. "Much of the debate is being driven by special interests that are deliberately kicking up clouds of dust to obscure the facts," the group notes on a page set up to combat the "misinformation and fear-mongering" that now clouds the debate. AARP's site is eminently useful for anyone who wants to make sense of what's really at stake in the health care reform battle, offering the group's own detailed refutations of the myths and lies, as well as links to mainstream press coverage of the scare tactics adopted by some opponents of reform.

For an even more thorough factchecking of what is and isn't true about health care reform, you can turn to Polifact.com, an online project of the St. Petersburg Times. For a quick overview of some of the disinformation that's being spread around, check out the site's health care Truth-O-Meter page. (Or simply look at the the health care "Greatest Hits, Vol. 1.") If you get tired of reading about what isn't true, and want nothing but the truth, Polifact.com's "simple explanation" of the health care bills now under consideration is the clearest I've seen anywhere

Polifact.com isn't partisan. In addition to refuting some of Sarah Palin's wild Facebook assertions about "death panels," they've also factchecked various pronouncements from Obama himself on health care and found some of them highly questionable — such as his claim at a town hall earlier this week that AARP had endorsed his reform plans. (In fact, the group, while supportive of many elements of reform, has not officially endorsed any of the plans now out there, as a spokesman for the group quickly made clear.)

Oh, and in case you're wondering, that video that got forwarded to you earlier this week of the guy shooting off a waterside and landing in a tiny pool — it's fake, too.

Here's my suggestion for solving the nation's healthcare crisis — the one that I would propose at one of those town-meeting shoutfests if I could get in a word edgewise: Make sure that members of Congress are living with the same health benefits that the rest of us are.

As reported recently by the Los Angeles Times, you see, senators and members of the House of Representatives enjoy a health insurance program that insulates them from the costs, problems and worries suffered by millions of uninsured and underinsured Americans. Like other government workers, they have their choice of ten different health plans, while 85% of companies offering a health plan to their employees offer a single option. They pay a modest $300 a month for family coverage, according to the Times. And — in stark contrast to the difficulties faced by cancer survivors or diabetes sufferers who try to get health insurance on the individual market — they don't have to worry that pre-existing medical conditions will prevent them from getting coverage or sorely limit their coverage if they do manage to get a policy.

With such cushy benefits, it's easy for members of Congress to get all passionate about the theoretical issues surrounding health care funding and the social safety net, while ignoring the practical realities what it's like to go broke paying for catastrophic or chronic medical expenses. So let's help them focus their minds and best intentions on the problem at hand.

What we'll do is randomly select senators and representatives to live with a particular quality of health care in the same proportion as the rest of Americans. Forty-six million Americans — 18% of the non-elderly population (in other words, too young to qualify for Medicare) — don't have health insurance at any one time, according to the U.S. Census. So 18% of members of Congress — 18 senators and 78 representatives — will start walking around uninsured. Very quickly, one supposes, they'll be a lot more nervous crossing the street and a lot more worried when a family member starts running a temperature during flu season.

But that wouldn't give Congress a complete taste of the anxiety that Americans feel about their health care — the knowledge that even if you do have affordable health insurance, you could lose it at any moment. All it takes is a job loss or an employer who decides it's just too expensive to provide insurance as a benefit. So, because by one estimate one-third of the non-elderly went without health insurance over 2007 and 2008, we'll make sure that 33 senators and 145 representatives randomly lose their health coverage for a time over each two-year session of Congress. That averages out to roughly a year without health insurance for all those lucky congressmen and congresswomen and their families. Again, let's hope for their sake that they don't choose that year to come down with an expensive medical condition.

Finally, let's make sure that an appropriate number of congressmen feel the financial pain felt by those for whom having health insurance doesn't protect them from financial pain. Seventeen percent of employees with coverage through their employer (see page 7) ended up paying more than 10% of their after-tax income on health expenses such as premiums, co-pays and co-insurance. A whopping 53% of people purchasing non-group private insurance paid more than 10% of their income on health care. So, with the number of people getting health insurance through their employer declining on a regular basis, let's split the difference and dock 10% of the after-tax pay of 35% of congressmen — 35 senators and 152 representatives — and call it a day.

What do we end up with? Two-thirds of elected officials in the legislative branch who either have no health insurance or have reason to be unhappy about it. As the Samuel Johnson quote goes, "(W)hen a man knows he is to be hanged in a fortnight, it concentrates his mind wonderfully." If congressmen knew that their own physical and financial health were at stake, I'm sure they'd solve the health care problem faster than you can say, "Tea party."

When the Obama administration proposed a new government agency solely devoted to protecting consumers who buy financial products, government officials knew they’d be facing opposition from Wall Street, banks and the financial services industry. But who knew that some of their most vocal opponents would come from the government itself?

That opposition became crystal clear when Federal Reserve Chairman Ben Bernanke, Federal Deposit Insurance Corporation Chief Sheila Bair and several other regulators showed up on Capitol Hill last Friday. Testifying before the House Financial Services Committee, they seemed more interested in protecting the powers of their own agencies than in making changes to the financial system.

First up at Friday's hearings, Treasury Secretary Tim Geithner reiterated the need for a Consumer Financial Protection Agency, saying the economic crisis shows that the current financial system “failed in its most basic responsibility” to supply credit and protect consumers. "I think it's very hard to look at that system and say that it did anything close to an adequate job of what it was designed to do," Geithner told the committee. Hard to disagree with that assessment, considering the record number of home foreclosures, bad mortgage loans and rising credit card defaults in the past year.

The proposed CFPA would take over consumer protection powers currently spread throughout several government agencies, including the Fed, the FDIC, the Office of Thrift Supervision and the Office of the Comptroller of the Currency. That doesn't sit too well with the chiefs in charge of those organizations. Following Geithner’s testimony, Bernanke said consumer protection responsibilities should stay with the central bank, arguing that the Fed’s bank supervisory powers go hand in hand with consumer protection. John Bowman, acting director of the OTS, and John Dugan, head of the OCC, both said enforcement of consumer protection should remain within their agencies. While FDIC chair Sheila Bair endorsed the creation of the CFPA and said that the CFPA should be able to write new enforcement rules, Bair said that federal banking regulators such as the FDIC should retain authority to supervise insured institutions.

Geithner's response: "With great respect to the Chairman and other supervisors who are reluctant to do this, they are doing what they should, which is defend the traditional prerogatives of their agencies. I think frankly all arguments should be viewed through that prism."

It’s been a tough going for the CFPA this summer. House Financial Services Committee Chairman Barney Frank (D-Mass.) delayed plans to mark up the bill  to create the new agency until after Congress returns from its summer recess in September. Frank said he believes the CFPA bill has enough support to win approval but agreed to slow down to give the opposition a chance to weigh in. Meanwhile, Republicans have proposed an alternative that would strip the Fed of its regulatory role and abolish the OCC and the OTS. In their place would be a single regulator for depository institutions, which would include an office focused on consumer protections. Unlike the administration's plan, the GOP-envisioned regulator would have no authority over nonbank institutions, such as mortgage brokers.

All this has moved the CFPA off the fast-track that Barney Frank talked about just a few weeks ago and gives industry lobbyists more time to work on defeating the proposal for a consumer financial watchdog.

Ever since President Barack Obama proposed his wide-ranging financial reforms last month,  investors have been wondering how hard he will push for his plans. So far the White House has kept up the pressure, but opposition is mounting. And it's far from clear that Obama is prepared to fight what increasingly looks to be a two-front battle.

First, the progress update. On July 10 the Treasury Department sent legislation to Congress that would turn Obama's investor protection proposals into law. Here are the key changes the White House is seeking:

• Give the SEC power to regulate broker compensation. Right now, brokers are overseen by FINRA, a self-regulatory agency funded by the brokerage industry. This reform would ban brokers from selling high-commission products that make money for the brokerage firm, but not for customers.
• Require brokers to adopt the same fiduciary standards as investment advisers. That means brokers would have to act in the best interests of their clients. Currently brokers are only required to make recommendations that are "suitable" for their customers, even if there are less costly options available. By contrast, investment advisers, who are regulated by the SEC or the states, follow fiduciary standards.
• Restrict or limit mandatory arbitration. Brokerage customers typically must waive their right to sue in the event of a dispute. Instead, any conflicts must be resolved through arbitration — a process that investor advocates say is biased in favor of brokerage firms.
• Improve fee disclosure. Brokers would be required to provide more information about fees before selling a product. Right now most disclosures are not given to investors until after the sale is completed.

One early victory sign: a leading industry group, the Securities Industry and Financial Markets Association has announced it will support a fiduciary standard for brokers.

The White House is also putting its weight behind a new Consumer Financial Protection Agency, which would regulate mortgages, credit cards and other loan products. On  Tuesday assistant Treasury Secretary Michael Barr testified before the Senate Banking Committee in support of the agency. "There are too many agencies with consumer protection responsibilities, their authorities are too divided, and their primary missions are too distant from consumer protection," Barr said. "There is only one solution to these deep structural flaws: one regulator with one market with one mission — to protect consumers."

Other financial services industry lobbyists seeking to defend the status quo, as well as conservatives who oppose more government regulation, are pushing back hard. Edward Yingling, head of the American Bankers Association, testified before the Senate Banking Committee that  a consumer protection agency "will chill efforts to innovate and respond to consumer demand." And Peter Wallison of the American Enterprise Institute argued that the agency  "reflects a paternalistic desire on the part of elites to control and limit others’ choices while leaving themselves unaffected."  

On the other side of the philosophical divide, some critics say that the White House isn't working hard enough to overcome opposition resistance to a new consumer protection agency, while investor advocates are calling for even stronger fiduciary protection.  

And on Wednesday, an investor coalition that includes two former SEC chairmen, former chair of the Commodity Futures Trading Commission Brooksley Born, and money managers Bill Miller and Jeremy Grantham, issued a report that attacked Obama's plan to reorganize federal agencies on several counts, including awarding risk oversight to the Federal Reserve. As the report put it, the Fed's credibility has been "tarnished" by its "easy credit policies" and "lax regulatory oversight." Instead, the group recommends establishing a  Systematic Risk Oversight Regulator, which would have a staff appointed by the president and confirmed by the Senate.

It looks to be a long, hot summer in Washington.

What do you think of Obama's financial reform proposals — will they make life better for consumers and investors?

Exactly what will Obama’s financial-industry consumer guardian police? The answer became clearer last week when the administration sent Congress a proposed law detailing its vision for the Consumer Financial Protection Agency.

Obama's plan for establishing the CFPA contains a few surprises regarding its authority. While the Securities and Exchange Commission will continue regulating investment products, the administration says the CFPA will oversee “financial products and services." That’s a pretty broad term, and when the agency proposal was first unveiled in mid-June, most observers took that to mean mortgages and credit cards, the two financial products that have caused the most trouble for consumers and the banking system in the past few years.

But the new 152-page blueprint lays out exactly what the Treasury considers a financial product or service, and it goes well beyond home loans and credit cards.  According to the proposal, the CFPA will oversee any financial activity that comes in connection with extending credit or servicing loans, which includes everything from overdraft protection on bank deposit accounts to stored-value cards.

But most noteworthy, say consumer advocates, is the inclusion of some notoriously overpriced insurance products associated with loans: credit insurance, mortgage payment insurance and title insurance. (Property and casualty insurance are explicitly excluded from the CFPA’s jurisdiction). “There are some serious signs of abuse in the sale of these insurance products, which have low loss ratios, high profit margins and big markups,” says Travis Plunkett, legislative director for the Consumer Federation of America, who testified before the House Financial Services Committee two weeks ago and urged Congress to include loan insurance products under the CFPA.

Credit insurance is sold with a variety of loan products, promising to cover your loan payments if you get laid off or become disabled. Similarly, mortgage payment insurance is designed to cover your home loan payments if you become disabled or die. But premiums for these products are expensive, and you’re typically already covered if you’ve got life or disability insurance.

Unlike credit or mortgage payment insurance, title insurance isn’t optional, and it protects the lender (not you) from any losses associated with ownership issues connected to title on your property. (Note that mortgage payment insurance isn't the same thing as private mortgage insurance, which lenders typically require when a down payment is less than 20%, and which protects lenders in the event of a mortgage default.) Title insurance prices vary widely, and while consumers are free to shop around, most rely on recommendations from real estate agents and lawyers, whose firms frequently get a cut of the premiums. Read this piece from my colleague Stephen Gandel about overpriced title insurance.

The bottom line: Insurance is complicated, and while there are many good reasons to buy insurance — for your health, your life, if you’ve got dependents, or your car — the addition of these insurance products to the CFPA will make it easier to determine which policies you can live without.

Convert some of your retirement savings into a lifetime annuity and you could snag a big tax break, if a new bill recently introduced in the House sees the light of day.

The rationale behind the Retirement Security Needs Lifetime Pay Act (H.R. 2748) is that we are going to screw up withdrawals from our retirement accounts and run out of money way too soon. Indeed, more than 40% of respondents to a MetLife survey said a 10% annual drawdown of their retirement savings seemed on target. But that aggressive pace would deplete your retirement funds in under 10 years; given longer life expectancies, it's prudent to aim for a retirement income stream running for at least 20 years, and preferably 30. (In fact, the universally accepted initial annual withdrawal rate to ensure your money will last as long as you, is 4%.)

So that brings us to the new legislation introduced by Reps. Earl Pomeroy (D-N.D.) and Ginny Brown-Waite (R-Fla.) that holds out a nice tax carrot to get us to convert some of our lump sums into annuities that will provide a lifetime income stream. The idea is to get us to  create our own old-fashioned pension plans that deliver steady payouts. Key provisions of the bill include:

•    You will be allowed to exclude 50% of annual annuity payouts from a non-qualified plan (one you invested after-tax dollars in) from taxable income. The annual maximum exclusion would be $10,000.
•    You will be allowed to exclude 25% of annual annuity payouts from a qualified plan (401(k), IRA and other tax-deferred accounts) from taxable income.

The bill also creates a tax incentive to purchase longevity insurance, an annuity usually structured so it doesn't start paying out until you're in your eighties. (In return for that delay of gratification, you get higher annual payments than you would from annuities that start paying earlier.)

In 2005 Pomeroy floated a similar idea (the more catchily-named Lifetime Pension Annuity for You Act) that never made it out of committee. But that was long before retirement security was threatened by a severe bear market and the bursting of the real estate bubble.  And according to academics who studied the 2005 version, the tax breaks would help to reduce the cost of annuities (by getting more folks to buy ‘em) and wouldn’t be a huge hit for Treasury’s coffers. Then again, back when the study was conducted we didn’t have massive deficits to pay for, so any hit to future tax revenue may be a tough sell in Congress today.

And what about you? Would a tax break entice you to consider converting some of your retirement savings into an fixed annuity?

Last week  Senator Johnny Isakson introduced legislation that would extend a $15,000 tax credit to any and all home buyers. And I do mean any and all. The current maximum tax credit for home buyers is limited to $8,000 for first-timers with adjusted gross income below $75,000 ($150,000 for joint filers). The Republican senator from Georgia — who made his fortune as a real estate broker, I should point out — wants to swing Treasury’s doors wide open. His bill nearly doubles the maximum credit, doesn’t have an income cutoff and isn’t limited to making home-buying more affordable for first-timers.

"The first-time home buyer tax credit has made a difference," said Isakson when announcing the bill. "First-time home buyers used it and the market stabilized, but we don't have a recession in first-time home buyers. We have a recession in the move-up market.” Continued the senator, “One of the biggest problems facing the American people today is an illiquid housing market, a decline in their equity, a decline in their net worth and a depression in the housing market that we are obligated to correct if we possibly can."

There’s just one big catch.  If this legislation passed it would be at an estimated cost of more than $35 billion for taxpayers.  Maybe that’s just a rounding error in a world of trillion-dollar deficits and $700-billion-plus stimulus deals, but geez, it’s still $35 billion of taxpayer money. And it’s not about helping folks facing foreclosure or exploding mortgage rates. If this ever became law it would be a boon to the well-off that can already afford to trade up. The only way you can make a move today is if you are sitting on a wad of home equity or a nice stash of cash: You need something to come up with a down payment to satisfy  tighter lending standards. You can’t use a credit for a down payment (HUD backed away from that notion a few weeks ago.) So the big winners under Isakson’s bill would be folks who are already in good enough shape to be able to trade up anyway.

A similar provision spearheaded by Isakson made it through a Senate vote back in February, but it was one of the casualties left on the cutting room floor when Congress had to trim the stimulus package to its final $787 billion price tag. Given the steep cost of Isakson's bill it is unlikely to be fast-tracked anytime soon, but you have to give the former real estate broker chutzpah points for trying it again.

If there's one regulatory trend that may define 2009, it could be the creation of exchanges. The U.S. Treasury wants to start a type of exchange, or clearinghouse, for the buying and selling of over-the-counter derivatives, those obscure asset-backed contracts that helped bring the financial system to its knees.

Now, Congress is dabbling with the idea of creating a health insurance exchange.

Legislation with more details isn't likely to become available until later this summer. But the House Committee on Ways and Means introduced an outline this week. The Senate Committee on Health, Education, Labor & Pensions, led by Sen. Ted Kennedy (D-Mass.), has also put forward a bill, (though at the moment the bill does not come up online, only the press release). At any rate, the Senate's proposal also calls for a "gateway" through which individuals can shop for insurance.

What's the point of an exchange? Well, it would set some ground rules for how insurance is bought and sold, just as there are rules for how stocks are traded in the market. For example, insurers wouldn't be allowed to sell policies that exclude pre-existing conditions. Individuals could choose between a newly formed public health insurance option and private plans, encouraging competition among insurers. Furthermore, the exchange would make it easier for consumers to comparison-shop policies.

In other words, the exchange would help create a more equitable, controlled health insurance market. At least that's the theory–but one perhaps worth gambling on. Because we've seen what happens when an opaque market, such as OTC derivatives, is allowed to run wild. I certainly don't want to take as much risk with my, your and future generations' health. (Click here to see the White House report, "The Economic Case for Health Care Reform.")