Go Read This

Salon.com has an excellent article up about the financial crisis as part of their new "Talk to Me Like I'm 5" series. If you're feeling a bit lost as to what, exactly, you should be doing as your stomach drops every time you check on your 401k, it's required reading.

What to do with your money now.

Here's an excerpt I particularly liked:

I'm hearing more about people keeping their money under their mattress. What do you think about that?

It's a terrible idea! If your house goes up in flames, that money is gone. Also, money isn't that easy to sleep on -- it pokes out from the mattress, and it's uncomfortable. Honestly, if you are so terrified that your $250,000 won't be protected by FDIC, which it will be, and if you don't have enough trust that we will get through this crisis, which we will, then put your money in a safe deposit box in a bank. But I'm telling you, if the bank goes up in flames, your money is gone, which it will not be if you keep it in FDIC-insured savings.

It's incredibly important for people to be in control of their money. The idea that you're sleeping on it is a tangible way to feel that you have control, but it makes absolutely zero sense.

We've lost all of our trust in the financial markets, and we have to find it again. It takes some time. But it will happen.

Americans Working Longer as Jobs Contract

Check out this article from the New York Times:

Working Longer as Jobs Contract

A recent AARP survey found that the economic slump has been badly squeezing the nation’s 78 million baby boomers, those born between 1946 and 1964. In the survey, 20 percent of boomers said they had stopped contributing to retirement plans, 34 percent said they were thinking of delaying retirement and 27 percent acknowledged problems paying rent and mortgages.

It's hardly news that the recent economic troubles have been affecting those close to retirement most severely. Some have been forced to delay their long-planned for dates, some are getting laid off early and need to start over in a new job. Others are looking at their investment portfolio and realizing that current market conditions won't support their retirement.

Amid all this, there's been a renewed interest in savings rather than investing. There's a trade-off here: with savings, you know what you're going to get out of it - the fun and mystery and possibilities of investing in stocks is no longer there. Without the fun and mystery what you get in return is stability. Those who had a strong savings component in their portfolio didn't wake up to a nasty surprise when the market took a tumble.

If you can afford it, and you have some money to put away, consult with an expert on the best way to diversify your portfolio.

What's worked for you as you've tried to get the most out of your savings?

Regional Banks Included in Bailout

News regarding the bailout continues to pour in. Today it was announced that 10 regional banks are going to receive around $18 billion of the bailout funds.

The banks or firms in question:

KeyCorp (NYSE:KEY)

Huntington Bancshares (NASDAQ:HBAN)

Capital One Financial Corp. (NYSE:COF)

Valley National Bancorp (NYSE:VLY)

First Horizon National (NYSE:FHN)

Regions Financial (NYSE:RF)

SunTrust (NYSE:STI)

Provident Bancshares (NASDAQ:PBKS)

Northern Trust (NASDAQ:NTRS)

City National (NYSE:CYN)

Other regional banks, including Fifth Third (NASDAQ:FITB), are expected to follow.

Questions as to whether or not the bailout was the right thing to do aside, what does this mean for the average bank customer? It's another example of a current economic situation where, as the stock market wildly fluctuates, federally insured deposits in banks, protected by the FDIC (up to the recently changed limit of $250,000 per account) and backed by the federal government, are among the safest ways to safeguard your savings in this crisis.

I'd be remiss if I didn't mention that MoneyAisle is one of the best ways to find a bank - whether you want to put your money in a bank cd or High-Yield Savings account.

FDIC Says Government will Prevent Avoidable Foreclosures

From CNN:

Sheila Bair, chairwoman of the Federal Deposit Insurance Corp., told the Senate Banking Committee that her agency and the Treasury Department are working closely to find ways to prevent avoidable foreclosures. The plan would use the Treasury Secretary's new authority under the Emergency Economic Stabilization Act to provide guarantees to mortgage lenders.

The article goes on to say that the FDIC plans to adopt its IndyMac loan modification process (for loans that were 60 days or more past due and which IndyMac either owned directly or serviced) in a wider capacity.

Apparently this stems partly from voter outrage that the bailout package initially did much to help out flailing corporatons and little to help flailing homeowners.'

One proposal I heard on the radio last night was this: homeowners having difficulty paying their mortgages should be granted the option to extend their loans from 30 years to 40 years, bringing down the monthly payment (but increasing the overall interest paid.)

What do you think? Is there a way out of the current mortgage mess?

A Second Stimulus Package?

Fed Chairman Bernanke gave his blessing for another stimulus package, telling Congress another stimulus plan would be "appropriate". This was the first time the central bank chairman had explicitly endorsed a second stimulus package. Reuters video above.

Democrats and Republicans are divided on what form the stimulus package should take (Democrats and Republicans divided during an election season? Astounding!) - with Democrats supporting extending unemployment benefits, increasing food-stamp benefits and sending extra money to state governments to offset proposed spending cuts that could lead to layoffs of public-sector workers. Republicans are calling for tax breaks for businesses and consumers.

What do you think? Are you with Democrats or the Republicans on this one (or, if you want a third option, do you think a second stimulus package is a bad idea altogether)?

Advice on Open Enrollment

Where I am, Autumn is in full swing. Halloween decorations are everywhere, leaves are changing color, and the open enrollment period for health-care coverage has arrived for a lot of workers.

Balancing what you pay for health care with getting the best coverage for you and your family can be both tricky and headache-inducing, so I found the following article (originally from Money magazine and reproduced on CNN's site) really helpful and informative. I wanted to pass it on.

Open enrollment: So many choices

Here's an excerpt:

Start by deciding if the high-deductible plan with an HSA is right for you. This may be the first time you've seen such a plan. At first glance, it will stick out the most with its comparatively low premiums - for 2008, employees paid an average of $2,330 for family coverage vs. $3,340 to $3,730 for the other plan types, reports the Kaiser Family Foundation.

Hope you all get something out of it. If you find any similarly useful articles, email them to me (you can use the green graphic on the right-hand-side of the screen to do so) and I'll pass them on through the blog.

Finovate 2008 Best of Show Winners: More Details

Over at the Netbanker blog, Jim Bruene has more details on the Best of Show winners at Finovate 2008.

In alphabetic order, the winners:

CheckFree, which demonstrated its new online banking platform packed with new features.

Credit Karma, which showed several new features including a tool that allows you to conduct "what-if" calculations with your credit file.

Mint, which announced its move out of beta and demoed several new investment management functions.

MoneyAisle (that's us), which demonstrated its unique real-time reverse auction platform for matching consumers up with great High-Yield Savings and CD rates.

All of the presenters at Finovate were outstanding, and we at MoneyAisle are honored to be voted Best of Show among such a competitive field. Congratulations to the other winners, and to all the participants.

MoneyAisle Wins Finovate "Best of Show" 2008

I just received word from our team at Finovate '08 - MoneyAisle has been awarded the prestigious "Best of Show" prize. 24 of the top companies in the world of online finance got 7 minutes each to demo their latest innovations (no PowerPoint allowed!)

Think of it like the martial arts tournament in "Enter the Dragon" - the top competitors went to an island (hey, technically Manhatten IS an island!) and showed off their technique in competition. The audience then voted, "American Idol"-style, for the companies.

We'll have more on this exciting announcement as more details become available.

Now if you'll excuse me, I'm going to go practice my Crane-kick.

FDIC's Electronic Deposit Insurance Estimator

There's a cool new feature on the FDIC's Website: EDIE, the Electronic Deposit Insurance Estimator. It helps ensure that all of your funds are protected by the FDIC. FDIC insurance limits were recently raised to $250,000 per account ($500,000 for a joint account) through December 31, 2009.

Take it one FDIC-insured bank at a time. Enter all of your personal and business accounts for that bank, then go through all three steps. When your report for the first bank is complete, start back here with your next bank and so on, until you have a report for each bank where you have deposit accounts.

Check out EDIE here.

And remember, all of the banks in the MoneyAisle network are Members FDIC.

Finovate Tomorrow

Tomorrow, October 14, MoneyAisle will be one of the featured presenters at the Finovate 2008 conference in New York City.

Economic Crisis: Stocks, Podcasts, and Fireside Chats

Stocks have been see-sawing all morning - the Dow took a big tumble, then bounced back a bit. I'm not sure where it's going, but this article tells us where it's been for today.

A relatively new podcast, called Planet Money, is one of the best ways to follow the current economic situation - it's been spun out of a recent This American Life episode, and it manages to explain some of the complex factors of the current situation in an easy-to-understand way. Highly recommended.

Finally, I thought this was interesting: FDR's Fireside Chat on backing up the banking system, from 1933.

MoneyAisle on CNBC, FOX Business

The coverage of MoneyAisle in the media has been arriving at a fast clip, and we have a couple more national videos to share.

First, our President and CEO (and fellow blogger) Mukesh Chatter appeared on the FOX Business Channel to talk about how MoneyAisle helps consumers find great High-Yield Savings and CD rates. I've embedded that video below.



Second, MoneyAisle was also featured on a recent segment of Carmen Wong Ulrich's CNBC show.

Meet the Save! America Winner

This morning we announced the winner of MoneyAisle's "Save! America" sweepstakes - you can read the full details here, but I wanted to also mention it here in the blog and to put up the video of the winner - Sarah Magoveny of East Haven, CT, talking about her experience with MoneyAisle's reverse auction technology. Her thoughts on the rate received on the $5,000 High-Yield Savings account gained through a MoneyAisle auction, and her thoughts on her experience using the MoneyAisle site to run a live auction.

Congratulations, Sarah!

Bush Signs Bailout Bill

From CNN:

President Bush has signed the far-reaching and historic plan to bail out the nation's ailing financial system. The measure passed the House today by a comfortable margin. "We have acted boldly to prevent the crisis on Wall Street from becoming a crisis in communities across our country," Bush said. Treasury Secretary Henry Paulson pledged quick action to get the program up and operating.

If you're wondering what, exactly, the bailout bill puts into effect, this is a good rundown of the changes. Of special note to MoneyAisle users is the increase of FDIC deposit insurance from $100,000 per individual to $250,000.

10 Questions with Colin Henderson from The Bankwatch Blog

Occasionally, I will use this blog as a forum for interviewing members of the banking and finance community as a means of getting new and fresh perspectives on the monetary issues facing all of us.

Colin Henderson maintains the excellent blog, The Bankwatch.

1. Please provide a short overview of The Bankwatch.

The Bankwatch began as a simple way to express what I saw in banking that needed to get fixed. My tagline “which Banks understand the web lifestyle?” seems kind of dated now, but in 2003 when I began blogging, banks knew little about the Web. Today, well, there has been some improvement, but still a long way to go.

2. You've been involved with the banking industry for many years. Please describe some of your career highlights.

I was with the Bank of Scotland for 8 years, in branches and securities in Scotland and in London. Then Bank of Montreal for 30 years. There I was in branches, local headquarters and national headquarters. I saw everything from far north, farming country to small towns and large cities. The roles included area management, covering retail and commercial business. The best parts were when we were covering a small geographic area with full accountability for everything that happened in that area. Good times. Then, even better times when we opened mbanx, the first North American direct bank in 1996. mbanx was a lot of fun, and rooted much of my belief in what works and does not work in banking and online banking.

3. You recently founded CommunityLend, a Canadian peer-to-peer lending community. How do you see the Internet impacting the retail banking industry in the coming months and years?

Great question. I see three basic issues that suggest to me that the banking model is flawed, and it’s probably not what people expect. 1.) Banks’ capacity to scale their information about customers is limited by their history, and technology set-up. 2.) Banks’ brand model is broken, and not adaptable to Web 2.0 land. 3.) Disintermediation of services and elimination of the middleman is a reality for financial services now.

4. The recent financial market downturn has put the spotlight on the concept of safer investing. What are some of the best saving and investment choices for consumers in today's uncertain economy?

That’s a tough one. Criteria of investment safety is a personal objective, and I would strongly advise anyone with this question to seek professional advice. The situation today is volatile. My mother in Scotland had a panic last week when Bank of Scotland, which accounts for 20% of all UK bank accounts, almost went under. If you worry about your money, then keep within the government insurance limit for any one Bank.

5. Please outline potential consequences of the U.S. government's $700 billion bailout plan for Wall Street -- for both consumers and banks?

I have a review of the bailout plan here. Short version: Banks are undercapitalized and the plan misses that point. I think we are in for rough weather the next few weeks.

6. Recent dynamic changes in the financial services community include investment banks Morgan Stanley and Goldman Sachs converting to bank holding companies and crowding an already competitive retail banking market. How will these changes impact banks and consumers?

This is a red herring. Investment Banks have no direct impact on real people. They do have an impact on the economy in the long term, though, as a result of the Glass Steagal Act, and the shift to being banks is a good thing imho.

7. Turmoil on Wall Street has left consumers understandably wary of the financial services industry. What steps can banks take to regain consumer trust?

Recapitalize. Develop financial strength, and prove they are better than the system. Fire the investment bankers. Get back to basics. Listen to customers. Get into Facebook, Twitter, blogging but not as advertising. Talk to people in those vehicles. Get into conversations. Have patience. These are all things Banks find really hard. The better ones, such as Wells Fargo, could be the ones to get the mix right.

8. What should consumers look for in a bank when determining where to park their hard-earned money? How have these requirements changed since the recent crisis?

Another tough call. Ask the Bank what they feel, and find out if they have an opinion. Never lose sight of the government guarantee, as long as banks are undercapitalized, this is essential.

9. What advice do you have for consumers struggling to save (and make) money in this tough economy?

Focus on saving, not on credit. It’s that simple. Hard to do, and often requires a change in lifestyle, but will pay dividends when they hit 55 years old.

10. Is there anything else you'd like to add that we didn't cover?

Great questions. I would add this. While I believe banking is broken, it's also not going to happen overnight. We are in a period of transition and disruption. Such periods are only defined in retrospect. In 2030 when we look back all will be clear. In the meantime we will experience messy situations, and frankly, consumer problems. We are in the midst of an epoch ... a shift in how things work, and banks/financial services will look very different in 2030. Until then, consumers ought to consider how to shift their financial services and watch for new opportunities and services that are not confined to traditional banks.

Thanks for the time to communicate with our readers, Colin.

The Bailout: Some Thoughts

There's been a lot of controversy surrounding the bailout bill - politics and idealogy have collided in such a way that lawmakers have to choose between voting to help the country or angering their constituents, who they nominally work for.

However, there is no denying the intense anger in the "Main Street" part of the "Main Street"/"Wall Street" equation we heard so much about during last week's debate. The anger is further amplified by the absence of any commitment on the part of those drafting the bailout to find and punish the guilty parties who got us into this mess in the first place. I believe it's this lack of accountability that is fueling the rage your average person on the street is feeling. The bailout proposal should include a plan to address this fairness issue to get the public on board.

The following actions would be a good start:

• All the executives (going back the past three years) of these firms should be required to return any money collected beyond wages to this bailout fund.
• A commitment should be made by the government to thoroughly investigate any potential wrong-doing on Wall Street.
• Those firms benefiting from taxpayer money should be required to contribute a small fee per transaction in the coming 5 years towards a rainy day fund to prevent further calamity.
• No more bonuses - NONE - until this bailout is paid off – this year $37 Billion was paid to the top 5 Wall Street firm executives for their “top-notch” 2007 performance.
• Just like short selling is not allowed at financial firms these days, financial firms should be excluded from hiring any lobbying firms or make any political contributions for at least the next 5 years (this one will probably never see the light of the day, but it may also be the most effective).

If you agree with me, please share it with your friends. I am curious to know what you think.

Robert Scoble (aka Scobleizer) at MoneyAisle: The Full Interview

There's been a lot going on here at MoneyAisle HQ over the past few days (and I'll have more cool things to share later today) but I wanted to follow up this post by embedding the full video of Mukesh's interview with blogger Robert Scoble from Fast Company TV's site.