Press Release

Release Date: May 28, 2008

For immediate release

 

Frederic S. Mishkin submitted his resignation on Wednesday as a member of the Board of Governors of the Federal Reserve System, effective August 31, 2008.

Mishkin, who has been a member of the Board since September 5, 2006, submitted his letter of resignation to President Bush.  He will return to the Graduate School of Business at Columbia University as a professor of economics and resume teaching in the fall.  The Federal Open Market Committee meeting on August 5 will be his last.

"Rick's contributions to the intellectual underpinnings of monetary policy at the Federal Reserve have been invaluable," said Federal Reserve Board Chairman Ben S. Bernanke.  "His keen insights, deep analysis and humor have enriched our deliberations.  I greatly value his friendship and counsel and wish him all the best as he returns to teaching."

Mishkin, 57, was appointed to the Board by President Bush to fill an unexpired term ending January 31, 2014.  During his time on the Board, he served as Chairman of the Committee on Economic Affairs and as a member of the Committee on Supervisory and Regulatory Affairs and the Committee on Consumer and Community Affairs.

Before joining the Board, Mishkin was the Alfred Lerner Professor of Banking and Financial Institutions at the Graduate School of Business, Columbia University, from 1999 to 2006.  In addition, he has taught at the University of Chicago, Northwestern University, and Princeton University.

A copy of his resignation letter is attached.

 

Attachment (41 KB PDF)

Bear Stearns shareholders approve sale to JPMorgan

May 29, 2008 10:32 AM ET

NEW YORK (Reuters) - Bear Stearns Cos Inc shareholders approved the sale of the company to JPMorgan Chase & Co on Thursday, a JPMorgan spokesman said.

In March, Bear Stearns agreed to sell itself in a deal now worth about $9.46 a share after facing a run on the investment bank.

(Reporting by Joseph A. Giannone, writing by Dan Wilchins, editing by Gerald E. McCormick)

Copyright 2008 Reuters

What the rich teach their kids

By Abby Ellin

Understanding Points, Rates and Fees

Condo Trends: Vacationers Want No Mess, No Stress Experience

Vacation condo renters are looking for an easy experience during a week on the coast. Investment beach condos can be a good second home, providing income and fund for owners who want a rental they can relax in as well as build wealth. So what can make that little getaway a cash cow? Repeat rentals. Picard Realty Rentals in Orange Beach, Alabama published tips on its website on how to guarantee long-term loyalty from your vacationing tenants.

Forget neutral: Vacationers want color and lot's of it. The Caribbean décor doesn't mean earth tones and vanilla nn Caribbean look. Make them feel like they are much further away from home than they really are~~on a happy tropical island of fun. Forget beige & earthtones. And remember that the current big fad of Palm Trees and Monkeys will be very 'has been' shortly. Avoid these clichés.

Easy-to-use furniture. This means, don't worry about leaving a ring on the coffee table. Surfaces like glass, formica, slate are all good. Forget wood if you're afraid of the ice tea ring!

Create the Mood. Vacationers want to feel like they're, well, on vacation. People are paying you hundreds, if not thousands, of dollars to stay in your home for one week. This is not the time to outfit your pad with deals from yard sales.

Stock up. Outfit your condo with plenty of relaxing stuff -- board games, card games, puzzles, books of all genres, will make for a delightful stay to relax or if they get caught in a rainy week.

Flooring. Use hard flooring throughout living areas, forget carpeting. Nothing drives a renter more crazy than thinking they've just stepped into a cheap bar with stained carpet. Put the money in the hard fllor surface and cover with replaceable throw rugs.

Finally, let your furniture be as easy to clean as the table top. Wipe clean dining room chairs with an easy to clean surface are much better than an upholstered fabric -- which absorbs everything from morning juice to afternoon suntan lotion.

And don't forget some of the homey feel touches, like a local restaurant menu notebookMake a Local Restaurant Menu Notebook from a clear pocket front 3-Ring Binder and some clear page protector sleeves. Your guests will REALLY appreciate it and it costs you very little.

7 pitfalls retiring baby boomers must avoid

By Liz Pulliam Weston

As baby boomers near their retirement years they're discovering what previous retirees have been complaining about for years.

There's lots of information on how to plan for retirement, but not nearly enough on how to plan retirement itself.

The stakes are perilously high. Errors made in the years surrounding retirement can haunt you for life. You can end up with less money, or less retirement, than you'd planned. Or you can face big tax bills that could have been avoided had you known better.

Here, according to retirement income experts, are some of the most common mistakes and how to avoid them:

Underestimating your life expectancy

Financial planners used to routinely create retirement plans that stopped at age 85, because the chances seemed pretty good their clients would be dead by then. (The average life expectancy at age 65 is 10.3 years for men, 12.4 years for women.)

But averages don't tell the tale. You may be in better health than the average Joe or Jane, take better care of yourself or have better genes. Even if you don't, your spouse might; Fidelity Investments has found that the chances of one member of a couple living past 90 are about 50%.

So now more planners are using 90 or 95 as the projected age of death, and you might want to project even longer: MSN Money's Life Expectancy Calculator can help.

By the way, the longer you live, the more you'll benefit from delaying the start of your Social Security checks. Although you can start receiving checks as early as age 62, the amount of your checks increases the longer you wait, up until age 70. An analysis by T. Rowe Price financial planner Christine Fahlund found that if you expect to live until at least 80, you'd be better off waiting until after age 65 to start drawing benefits.

Assuming you'll be able to work as long as you want

The baby boomers are famous for proclaiming that they'll work past retirement age; an AARP study last year found 79% predicted they would continue working at least part of the time during their retirement years.

How they'll actually feel once they're in their 60s and 70s, though, is an open question. Right now, the typical retirement age is 62, according to the Employee Benefit Research Institute, and 40% of retirees say they left the workplace earlier than they'd planned, often because of illness, disability or layoffs.

In fact, 42% of women over 65 and 38% of men in the same age group have disabilities, according to the U.S. Census Bureau. Only 12% of people over 65 are still in the work force (16.9% of men, 8.9% of women).

Many people find that even without chronic health problems, their energy begins declining in their late 60s and 70s, although a few are able to work into their 80s or even 90s.

So if you're counting on part-time work to supplement your retirement income, don't count on it for long. You may be the exception, but it's smart to plan as if your working years won't continue indefinitely.

Failing to factor in health-care costs

I've heard from folks who didn't bother to check health-care premiums until after they took early retirement -- and then were stunned by the four-figure monthly premiums they were asked to pay.

Employers increasingly are eliminating retiree health coverage, and you can't get Medicare coverage until you're 65. Even then, there are plenty of costs the government program doesn't cover. Fidelity projects the average couple will need nearly $200,000 at regular retirement age just to pay for out-of-pocket medical costs for the rest of their lives.

Long-term care costs can be particularly devastating. A 65-year-old man faces a 27% chance of needing long-term care, said actuarial expert Christopher Raham, while the same age woman has a 32% chance.

"Together, a couple has a 50% chance of having a long-term care 'event'," said Raham, a senior actuarial adviser for Ernst & Young in Atlanta and head of the company's retirement income innovation team. "And the average cost is about $150,000."

Buying long-term care insurance in your 50s or 60s can help you cover the expense if you can't "self insure" by building up a sufficient nest egg.

If you plan to retire before you qualify for Medicare, make sure you investigate your private health insurance options and have enough income to pay the premiums. If you don't, you might want to delay retirement a few more years until you do.

Locking in poor returns

There are a number of ways retirees can do this, but two of the most common are certificates of deposit and immediate annuities.

CDs typically offer interest rates that aren't much higher than the rate of inflation. Add in taxes, and you're often losing purchasing power. While CDs can be a part of your investment strategy in retirement, most retirees will need the long-term growth offered by stocks and stock mutual funds. The proportion of your portfolio that should be in stocks depends on your age, your risk tolerance and your growth needs, but many planners say the minimum for most people should be 50%.

Immediate annuities offer a similar pitfall. They're great in concept -- a way to lock in a lifetime stream of income in return for a lump-sum payment to an insurance company. The problem is that the payments you get typically reflect the prevailing interest rates at the time you purchase the annuity. If you buy an immediate annuity now, you could be locking in rates that are still near record lows, which is why leading financial planner Ross Levin of Accredited Investors, Inc. doesn't currently recommend them for his clients.

If the concept of an immediate annuity intrigues you, you have some choices, Raham said. You could wait a few years to see if you can get a better rate and a higher payout. Or you could "dollar-cost average" by splitting your annuity money into slices, and using each slice to buy an annuity each year for the next few years.

Tapping tax-deferred accounts too soon, or too late

You're allowed to start tapping regular IRAs and 401(k)s at age 59 1/2 without penalty, but distributions aren't required from these accounts until the year after you turn 70 1/2. (Roth IRAs have no mandatory distribution requirements.) The conventional advice is that you should avoid taking withdrawals from your tax-deferred retirement plans for as long as possible so that your savings can continue to grow.

This is still good advice for the vast majority of folks who are in danger of outliving their nest eggs, said Jonathan Guyton, a financial planner in Edina, Minn. But more affluent couples could face a problem. If they delay taking retirement distributions and one spouse dies, the other will likely face much higher taxes than had the withdrawals been started earlier.

Guyton uses the example of a couple, aged 80, who has an annual income of $30,000 plus $600,000 in an IRA earning 7% annually. The minimum distributions required by law would total $454,000 over the next 10 years. With a joint tax return, those distributions are taxed at 15%, for a total bill of $68,000.

If one spouse dies, however, the same minimum distributions will be required but the surviving spouse won't be able to take advantage of joint filing tax brackets or exemptions. That means the spouse will be pushed into the 25% bracket and pay a total of $114,000 in taxes, or 68% more.

This couple could have reduced and spread out the tax bill by starting distributions earlier, Guyton said.

Knowing whether you should delay or speed up tapping into your funds is a tricky proposition, which is why you might want to hire a CPA or savvy financial planner to help with the calculations and projections.

Withdrawing too much -- or too little

Are you confused about how much you can take out of your nest egg without running out of cash? The bad news: you're not alone.

What constitutes a "sustainable" or "safe" withdrawal rate is the object of a lot of controversy in the financial-planning world these days. Many planners are persuaded by the research of CFP Bill Bengen, who has shown that a 3% to 4% withdrawal rate is safest.

But Wisconsin planner Ty Bernicke argues that such low withdrawal rates may unnecessarily delay or impoverish retirements. Bernicke believes spending declines as people age, which means retirees could safely withdraw more from their accounts initially and naturally cut back as they get older.

If you're the belt-and-suspenders type, you might go for a low initial withdrawal rate to ensure your money lasts as long as you do. If you're more of a risk-taker, you could opt for a higher payout rate with the understanding that you may need to cut back your spending sharply later.

Failing to get a second opinion

You're a confirmed do-it-yourselfer who built a sizable retirement fund by the dint of your own sweat and investment savvy. Or you've been with the same adviser decades, and have been pretty happy with the results. Or you simply haven't thought about planning for retirement income; your whole focus has been on investing.

Whatever your situation, you could benefit from a thoughtful, independent review of your retirement plan.

Today's distribution rules and strategies for retirement accounts are mind-numbingly complex. It's easy to make a mistake, but often tough to fix those errors. Do-it-yourselfers often "don't know what they don't know," Raham said.

Furthermore, most of today's financial advisors have been focused on helping folks accumulate income for retirement, and may not be up to date on the best ways to tap that income, said CPA Ed Slott, author of "The Retirement Savings Time Bomb...and How to Defuse It."

It can be well worth seeking out an objective expert to review your retirement plans. Some sources to try include the National Association of Personal Financial Advisors, which represents fee-only planners; the American Institute of Certified Public Accounts for a referral to a CPA with a specialty in personal finance; or the Garrett Planning Network, which represents planners who charge by the hour. Make sure your adviser has experience counseling retirees and has stayed up to date with the latest changes in tax law regarding retirement plans.

Liz Pulliam Weston's column appears every Monday and Thursday, exclusively on MSN Money.

12 steps to become a millionaire

By Kiplinger's Personal Finance Magazine

A number of the people profiled in "Millionaires tell how they did it" made their millions as entrepreneurs. But working for the Man doesn't mean you have to be a wage slave or resort to buying lottery tickets to strike it rich. The trick is to maximize your income on the job (and know when to move on), make the most of your employee benefits and tax breaks and use that extra money to start investing.

1. Keep your eyes peeled for better ways to do your job. Streamline a procedure, shave costs, create a new profit center, become an expert on a specific topic, volunteer for a company committee -- anything that will make you stand out as a prime candidate for a promotion or a pay boost.

2. Don't be afraid to negotiate. In a study of master's degree graduates from her university, Carnegie Mellon economics professor Linda Babcock found that those who negotiated their first salary boosted their pay by 7.4% compared with those who didn't bargain.

3. Get your ducks in a row and your numbers on paper. If possible, quantify how much your efforts add to the company's bottom line. If that's not feasible, spotlight your value with comparable salaries for workers in your position from a Web site, such as Salary.com, or from a professional association.

4. Plot your strategy when it's time to move on. Create a professional-looking page on MySpace that tells prospective employers why you're an exceptional candidate, recommends John Challenger of the outplacement firm Challenger, Gray & Christmas. And don't neglect more conventional networking: Join a professional association or show up at school reunions toting business cards.

Milk your benefits

5. Contribute as much as you can to your 401(k) and other tax-deferred retirement plans. You'll not only build a bigger nest egg, but you'll also cut your tax bill. In the 25% federal tax bracket, every $1,000 you contribute to a 401(k) trims your taxes by $250. And you'll save on state income taxes, too.

6. Flex your tax-saving muscle. Contribute pretax dollars to a flexible spending account to pay for dependent care or out-of-pocket medical expenses. If you set aside $1,500 per year and you're in the 25% bracket, avoiding federal income and Social Security taxes means Uncle Sam will subsidize almost $500 of your expenses.

5 Things to Know About Title Insurance

Title insurance protects the holder from any losses sustained from defects in the title. It’s required by most mortgage lenders. Here are five other things you should know about title insurance.

1. It protects your ownership right to your home, both from fraudulent claims against your ownership and from mistakes made in earlier sales, such as mistake in the spelling of a person’s name or an inaccurate description of the property.

2. It’s a one-time cost usually based on the price of the property.

3. It’s usually paid for by the sellers, although this can vary depending on your state and local customs.

4. There are both lender title policies, which protect the lender, and owner title policies, which protect you. The lender will probably require a lender policy.

5. Discounts on premiums are sometimes available if the home has been bought within only a few years since not as much work is required to check the title. Ask the title company if this discount is available.

5 Things to Know About Homeowner’s Insurance

1. Know about exclusions to coverage. For example, most insurance policies do not cover flood or earthquake damage as a standard item. These types of coverage must be bought separately.

2. Know about dollar limitations on claims. Even if you are covered for a risk, there may be a limit on how much the insurer will pay. For example, many policies limit the amount paid for stolen jewelry unless items are insured separately.

3. Know the replacement cost. If your home is destroyed you’ll receive money to replace it only to the maximum of your coverage, so be sure your insurance is sufficient. This means that if your home is insured for $150,000 and it costs $180,000 to replace it, you’ll only receive $150,000.

4. Know the actual cash value. If you chose not to replace your home when it’s destroyed, you’ll receive replacement cost, less depreciation. This is called actual cash value.

5. Know the liability. Generally your homeowner’s insurance covers you for accidents that happen to other people on your property, including medical care, court costs, and awards by the court. However, there is usually an upper limit to the amount of coverage provided. Be sure that it’s sufficient if you have significant assets.

10 Questions to Ask Home Inspectors

Before you make your final buying or selling decision, you should have the home inspected by a professional. An inspection can alert you to potential problems with a property and allow you to make an informed decision. Ask these questions to prospective home inspectors:

1. Will your inspection meet recognized standards? Ask whether the inspection and the inspection report will meet all state requirements and comply with a well-recognized standard of practice and code of ethics, such as the one adopted by the American Society of Home Inspectors or the National Association of Home Inspectors. Customers can view each group’s standards of practice and code of ethics online at www.ashi.org or www.nahi.org. ASHI’s Web site also provides a database of state regulations.

2. Do you belong to a professional home inspector association? There are many state and national associations for home inspectors, including the two groups mentioned in No. 1. Unfortunately, some groups confer questionable credentials or certifications in return for nothing more than a fee. Insist on members of reputable, nonprofit trade organizations; request to see a membership ID.

3. How experienced are you? Ask how long inspectors have been in the profession and how many inspections they’ve completed. They should provide customer referrals on request. New inspectors also may be highly qualified, but they should describe their training and let you know whether they plan to work with a more experienced partner.

4. How do you keep your expertise up to date? Inspectors’ commitment to continuing education is a good measure of their professionalism and service. Advanced knowledge is especially important in cases in which a home is older or includes unique elements requiring additional or updated training.

5. Do you focus on residential inspection? Make sure the inspector has training and experience in the unique discipline of home inspection, which is very different from inspecting commercial buildings or a construction site. If your customers are buying a unique property, such as a historic home, they may want to ask whether the inspector has experience with that type of property in particular.

6. Will you offer to do repairs or improvements? Some state laws and trade associations allow the inspector to provide repair work on problems uncovered during the inspection. However, other states and associations forbid it as a conflict of interest. Contact your local ASHI chapter to learn about the rules in your state.

7. How long will the inspection take? On average, an inspector working alone inspects a typical single-family house in two to three hours; anything significantly less may not be thorough. If your customers are purchasing an especially large property, they may want to ask whether additional inspectors will be brought in.

8. What’s the cost? Costs can vary dramatically, depending on your region, the size and age of the house, and the scope of services. The national average for single-family homes is about $320, but customers with large homes can expect to pay more. Customers should be wary of deals that seem too good to be true.

9. What type of inspection report do you provide? Ask to see samples to determine whether you will understand the inspector's reporting style. Also, most inspectors provide their full report within 24 hours of the inspection.

10. Will I be able to attend the inspection? The answer should be yes. A home inspection is a valuable educational opportunity for the buyer. An inspector's refusal to let the buyer attend should raise a red flag.

Source: Rob Paterkiewicz, executive director, American Society of Home Inspectors, Des Plaines, Ill., www.ashi.org.

• Chicago The city’s prized Gold Coast neighborhood had record sales prices in the last year, but bargains abound in the city’s periphery. In Bronzeville, a gentrifying community, prices have dropped to as low as $85,000. Chicago’s desirable North Shore suburbs are continuing to do well: Prices are up, though sales volume has declined.

• New York Manhattan neighborhoods like SoHo, the Lower East Side, Greenwich Village and the Upper West Side are all up in the last year. Brooklyn is also holding up well. Meanwhile, sales in New Jersey and Connecticut commuter suburbs are down 8 percent from the peak in mid-2006.

• Boston Prices in the core part of the city are flat or slightly higher over the past year, though sales are taking longer. However, Condo prices in suburban Brookline, one of the most desirable neighborhoods, are down about 7 percent. City neighborhoods like Jamaica Plain and West Roxbury are up about the same amount.

• San Francisco Prices are up strongly in the city’s favorite neighborhoods, including the Financial District, Telegraph Hill and Russian Hill. Distant suburbs have weakened. Sales in Alameda and Contra Costa, across San Francisco Bay, are down 18 percent and 27 percent respectively.

• Los Angeles Without an active downtown residential core, L.A. is an anomaly, Riverside and San Bernardino counties are down sharply. Lower-priced homes in Palm Springs have lost about 24 percent of their value. Less-affluent cities like Ontario and Chino are down between 15 per cent and 31 percent. But prices are up in posh areas like Brentwood, Westwood, and the Hollywood Hills

Pros and Cons of Going Condo
                                                                                                                                                  Condominiums and townhouses offer an affordable option to single-family homes in many markets, and they’re ideal for those who appreciate a maintenance-free lifestyle. But before you buy, make sure you do your legwork. These are some of the important elements to consider:

• Storage. Some condos have storage lockers, but usually there are no attics or basements to hold extra belongings.

• Outdoor space. Yards and outdoor areas are usually smaller in condos, so if you like to garden or entertain outdoors, this may not be a good fit. However, if you dread yard work, this may be the perfect option for you.

• Amenities. Many condo properties have swimming pools, fitness centers, and other facilities that would be very expensive in a single-family home.

• Maintenance. Many condos have onsite maintenance personnel to care for common areas, do repairs in your unit, and let in workers when you’re not home — good news if you like to travel.

• Security. Keyed entries and even doormen are common in many condos. You’re also closer to other people in case of an emergency.

• Reserve funds and association fees. Although fees generally help pay for amenities and provide savings for future repairs, you will have to pay the fees decided by the condo board, whether or not you’re interested in the amenity.

• Resale. The ease of selling your unit may be dependent on what else is for sale in your building, since units are usually fairly similar.

• Condo rules. Although you have a vote, the rules of the condo association can affect your ability to use your property. For example, some condos prohibit home-based businesses. Others prohibit pets, or don’t allow owners to rent out their units. Read the covenants, restrictions, and bylaws of the condo carefully before you make an offer.

• Neighbors. You’re much closer to your neighbors in a condo or town home. If possible, try to meet your closest prospective neighbors.

• Public transportation
• Airport
• Expressway
• Neighborhood shopping
• Schools
• Other

• What architectural style(s) of homes do you prefer?
• Do you want to buy a home, condominium, or townhome?
• Would you like a one-story or two-story home?
• How many bedrooms must your new home have?
• How many bathrooms must your new home have?

• Do you prefer a new home or an existing home?
• If you’re looking for an existing home, how old of a home would you consider?
• How much repair or renovation would you be willing to do?
• Do you have special needs that your home must meet?

How High Tech is Your Home?
                                                                                                                                                                      If the latest technology or entertainment options are important in your new home, add the following questions to your buyer’s checklist.

1. Are there enough jacks in every room for cable TV and high-speed Internet hookups?

2. Are there ample telephone extensions or jacks?

3. Is the home pre-wired for home theater or multiroom audio and video? Does it have in-wall speakers?

4. Does the home have a local area network (LAN) for linking computers?

5. Does the home already have wiring for DSL or another high-speed Internet connection?

6. Does the home have multizoning heating and cooling controls with programmable thermostats?

7. Does the home have multiroom lighting controls, window-covering controls, or other home automation features?

8. Is the home wired with multipurpose in-wall wiring that allows for reconfigurations to update services as technology changes?

To rate the home on its technological sophistication, fill out the Consumer Electronics Association’s TechHome checklist at www.ce.org/techhomerating

5 Most Dangerous Hazards in a Home

Home owners beware: Several dangers may lurk in a home. If you’re not careful, they could make you sick. Pillar to Post, a home inspection company, reviews how to spot these dangers in the home and encourages you to contact a home inspector if your home may be at risk for any of these potential dangers.

1. Radon: a colorless, odorless gas that can seep into the home from the ground. Radon has been called the second most common cause of lung cancer.
What to look for: Basements or anything with protrusion into the ground offer entry points for radon. The Environmental Protection Agency publishes a map of high prevalence areas for radon. A radon test can determine if high levels of radon are present.

2. Asbestos: a fibrous material once popular in building materials because it provides heat insulation and fire resistance. But asbestos was banned in 1985. It may still be found in older home’s insulation materials, floor tiles, roof coverings, and siding. If disturbed or damaged, it can enter the air and cause severe illness.
What to look for: Homes built prior to 1985 are at risk of having asbestos within construction materials. Home owners should especially be careful when remodeling because disturbing insulation may cause the asbestos to become airborne.

3. Lead: a toxic metal used in home products for many years that can contribute to several health problems, especially among children. Exposure can occur from deteriorating lead-based paint, pipes, or lead-contaminated dust or soil.
What to look for: Homes built prior to 1978 may have lead present. Look for peeling paint and check old pipes. To get a HUD-insured loan, buyers must show a certificate that homes built prior to 1978 are lead-safe.

4. Hazardous products: stockpiles of hazardous household items — such as paint solvents, pesticides, fertilizers, or motor oils — that can create a dangerous situation if not properly stored or disposed. They can cause illness or even death if small amounts are ingested.
What to look for: Make sure these items aren’t tucked away in corners, crawl spaces, garages, or garden sheds. Home owners often don’t realize these products can pose a danger and may forget they’re storing them. But buyers don’t want it to become their problem — and expense — to dispose of. If these products are found, make sure the buyer requires their removal and gets a disposal certificate prior to closing, which proves the products were disposed of properly and not just dumped in the backyard.

5. Groundwater contamination: the result of hazardous chemicals that are illegally disposed of and then seep through the soil and enter water supplies. A leaking underground oil tank or faulty septic system can contribute to this.
What to look for: Look for any conditions that may be conducive to leakage. Homes near light industrial areas or facilities may be at risk. Also a concern: areas once used for industry that are now residential. Pillar to Post offers a Neighborhood Environmental Report that details any dangers or remedies of environmental incidences and sources of contamination that have occurred at a specified address and within its vicinity.

Source: Pillar to Post

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