Three Gulf States Seek Answers on BP Oil Spill Payout

Photo Courtesy - Getty Images(WASHINGTON) -- Top officials from three states along the Gulf Coast, whose shores were hit particularly hard both environmentally and economically following the BP oil spill in 2010, are having no qualms about publicly criticizing the man in charge of distributing the relief funds.

Kenneth Feinberg, the man appointed by President Obama to be his administration's pay czar, has been particularly slow and less than transparent in his dealings with BP and the funds, the attorneys general from Louisiana, Mississippi, and Florida say.

As of Thursday, the $20 billion Gulf Coast Claims Facility established by BP had paid 168,634 claims for a total of $3.4 billion, The Washington Post reported. Many of those claims have been dismissed as having no merit, causing outrage among those whose livelihood was severely impacted by the spill.

The attorneys general have taken large issue with the fact that Feinberg, as they allege, has been encouraging those appying for relief funds to settle with BP for a one-time payout, in exchange for waiving their right to sue in the future.

Louisiana had the highest percentage of claims to the fund, with 39 percent of overall requests coming from individuals or businesses within the state. Florida accounted for 33 percent, and Mississippi for 10 percent of claims.

All three states are appealing to a U.S. District Court Judge to ask for more transparency into the process used by Feinberg to distribute the relief money and on Feb. 18, when the next arguments are scheduled in the complaint process, may ask for court-mandated changes to the process.

Copyright 2011 ABC News Radio


Tax Tip: Using the Right Forms

Photo Courtesy - Getty Images(NEW YORK) -- There are literally hundreds of IRS tax forms. Fortunately, there are only a dozen or so that apply to most people. When it comes to choosing which 1040 to use, Mary Beth Franklin from Kiplinger's Personal Finance says “pick the simplest tax form for you.”

“If you simply have wage income W-2, you can go with the 1040EZ,” Franklin said. That one won't allow you to make anything but the standard deduction, and it might be the wrong move, according to accountant Janice Hayman.

“A lot of people file the short form mistakenly when they truly do have enough to use the long form and itemize their deductions," Hayman said. "What is commonly overlooked are the state and local income taxes that are right there on their W-2 form. They are part of the itemized deductions.”

You have to use the full form -- a 1040 -- if you want to itemize your deductions, make more than $100,000, or have self-employment income.

Copyright 2011 ABC News Radio


Online Music Player Pandora Plans to Go Public

Photo Courtesy - Getty Images(OAKLAND) -- Online music provider Pandora Media on Friday announced that it plans to go public and will attempt to raise up to $100 million through sales of stock.

The company has filed the necessary paperwork with the Securities and Exchange Commission in the proposed initial public offering, with the aim of generating funds to help expand its operations. For the fiscal year ending Jan. 31, 2010, Pandora raked in $55.1 million in revenue, and reported a loss of $16.8 million. For the period of Feb. 1, 2010, through Oct. 31, 2010, the company’s reported loss wasn’t as severe, dipping to $300,000, while its revenue shot up significantly to $90.1 million.

According to reports, Pandora, which generates most of its revenue from advertising and subscription fees, spends a hefty amount on licensing fees. The company says it currently has some 800,000 songs in its database and over 80 million users, but since most of the listeners choose not to opt for the paid subscription, consumers aren't a major source of revenue. Pandora’s attempt to go public could possibly lead to it posting its first profit.

Copyright 2011 ABC News Radio


Bankruptcy Appears Imminent for Borders Books

Photo Courtesy - Getty Images(ANN ARBOR, Mich.) -- Bookseller Borders Group Inc. is reportedly preparing to file for bankruptcy.

Financial trouble could force Borders to file for Chapter 11 bankruptcy protection as early as Monday or Tuesday according to a report by the Wall Street Journal. Borders has reportedly stopped trying to refinance its debt. The value of the company's shares recently dropped 33 percent to 25 cents on the New York Stock Exchange.

Borders is reportedly trying to reach financing agreements that would enable it to continue operating while under Chapter 11 protection. Filing for bankruptcy may result in the closure of over 200 Borders and Waldenbooks stores, a move that would force thousands of employees from their jobs, according to the Wall Street Journal report.

In addition to its mountain of debt, technological improvements have changed the way people buy and read books, and Borders has seemingly been unable to keep pace with technological advances. These factors have contributed to the company’s financial woes, putting it on the brink of bankruptcy filing.

Copyright 2011 ABC News Radio


Tax Tip: Taking Classes? Inquire About Tax Credits

Photo Courtesy - Getty Images(NEW YORK) -- The government wants you and your children to go to college and offers up a few tax savings to help you foot the bill.

The first is the American Opportunity Credit, which offers a maximum $2,500 credit.

“To qualify for the maximum credit, you only need to spend as little as $4,000, and with the cost of tuition, fees and books what they are today, it doesn't make much to get to that level,” said Eric Smith of the IRS.

“They need to be part of a degree program of some kind,” Smith said. “You need to be at least a half-time student.”

Say you want to take a class – maybe just an evening course to help update your job skills – there’s a tax credit for you, as well.

“The Lifetime Learning Credit may be something they could take advantage of if they're not able to go to school full time,” said H&R Block’s Kathy Pickering.

Check out Publication 970 at to see if you qualify.

Copyright 2011 ABC News Radio


Stocks Up, Oil Down as Egypt Reverberates onto the Markets

Photo Courtesy - Getty Images(NEW YORK) -- U.S. stock markets ended the week with a modest celebration of the revolution in Egypt. The Dow Jones Industrial Average settled up 0.36 percent or 44 points (a 105 point swing from the low point of the day) to settle at 12,273.26. The broader S&P 500 saw an increase of 0.68 percent to settle at 1,329.15.
The price of oil, driven up in the past two weeks by concerns over the uncertain status of the Suez Canal and Sumed pipeline, fell during U.S. trading. NYMEX futures showed the price of a barrel of oil falling by $1.15 to close at $85.58 a barrel Friday.
One reason for the rather tepid improvement is the long journey ahead -- Egypt must take the revolution and turn it into some form of government that reflects the diversity of one of North Africa’s most vibrant countries. Not an easy task.
“We are not yet done with instability in Egypt, and the market will no doubt be reactive,” said Diane Swonk, economist at Mesirow Financial. “It remains unclear, however, how much these shifts could affect the actual outlook for oil production and distribution, which is what would have the largest impact on our economy.”

Copyright 2011 ABC News Radio


GM and Chrysler Prepare to Give Workers Bonuses

(DETROIT) -- General Motors and Chrysler Group say they will give their white-collar workers performance bonuses this year. This comes less than two years after the companies emerged from bankruptcies.

GM announced more than 96 percent of salaried workers will receive bonuses ranging from 4 percent to 16 percent of their base salaries. Fewer than one percent of workers are slated to get 50 percent or more.

Chrysler says it will give a $750 performance bonus to hourly workers.

General Motors is expected to end the 2010 fiscal year in the black with a reported $4.2 billion profit through September. Although it doesn’t look like Chrysler will end 2010 with profit, the revamping of 16 vehicles for this model year is expected to make 2011 more lucrative.

Chrysler and GM  both accepted assistance from the government to make it out of bankruptcies. The U.S. Treasury provided GM with a $49.5 billion bailout during the 2009 bankruptcy, giving the government one third ownership of the auto maker.  As a result of the transaction, the government must approve compensation of the auto maker's 100 highest paid executives.

The government owns approximately 9.2 percent of the Chrysler, since most of the cash the automaker accepted from the government was in the form of loans.

Copyright 2011 ABC News Radio



Government to Wind Down Backing of Freddie Mac, Fannie Mae

Photo Courtesy - Mark Wilson/Getty Images(WASHINGTON) -- The U.S. Treasury introduced its plans Friday to do away with troubled mortgage giants Fannie Mae and Freddie Mac.

The two firms have been the primary driving force behind the expansion of American homeownership since Fannie was founded in 1938.

Today they provide a secondary market for nine of 10 American mortgage loans, buying up the paper from issuing banks, packaging them and selling them to investors as guaranteed mortgage securities.

During the 2008 financial crisis they collapsed into government conservatorship as a massive number of loans in its vast $5.6 trillion portfolio started to fail.

“This is a plan for fundamental reform of the housing market,” said Treasury Secretary Tim Geithner.

The Treasury’s plan is committed to winding Fannie and Freddie down over a term of five-to-seven years, putting in place new regulations which will allow the private sector to replace the government involvement in the housing market.

The authors offered up three distinct “options” for how the future housing might work -- a government “re-insurance” program to backstop private investors, a limited “re-insurance” program that scales up during recessions, or no government backstop at all.

Treasury and White House officials will begin the process of working with Congress to build consensus around one of the three options and bringing legislation to the floor for reforms, “…in the next couple of years.”

Copyright 2011 ABC News Radio


College Loan Forgiveness: When Student Dies, Should Parents Have to Pay?

Photo Courtesy - Getty Images(LAWRENCE, Kan.) -- When John Roark's 26-year-old daughter Jessica died of cancer last August, he went about the sad task of tending to matters related to her death, including finding a burial plot and tombstone and forwarding her mail.

He eventually had to settle matters with three lenders related to her college student loans, though he had not co-signed on them. Even after sending her death certificate to one lender, Wells Fargo, he says he received three letters a week from the bank to collect about $6,000. The other two lenders, Sallie Mae and a Missouri student loan company, expressed their sympathy for the death of his daughter when they forgave the loans, said Roark. However, he said Wells Fargo was "persistent" in trying to collect his daughter's debts.

After her death in August, Roark started receiving the letters, and he called Wells Fargo to explain the situation.

"The operator said they weren't in a position to forgive the loan and wanted to collect on it," Roark said. He then requested to speak to a supervisor who repeated the message, but said that he could write to the Wells Fargo corporate office.

He said Wells Fargo continued to send him notices requesting payment, now addressed to him and not his daughter.

Then, during the same week a local television news station was interviewing Roark about his dilemma, he received a call from Wells Fargo: they were forgiving the loan.

A Wells Fargo spokesperson said the company identified early last year the need for a more formal policy of loan forgiveness in the event of a student's death or permanent disability. Wells Fargo formally enacted a policy in mid-December.

"This policy took some time but the good news is we were able to apply it to this family's situation," said Erin Downs of Wells Fargo. "That's why we're proud to be one of the only private student loan lenders that give forgiveness to co-signers in the event of death or permanent disability."

The increasing cost of college tuition has led to increasing number of students who must borrow for their education. The amount of outstanding student loans in the U.S. is approximately $888 billion, according to

One of the largest providers of private student loans, Wells Fargo has a portfolio of $26.4 billion of both federal and private education loans, according to the company. Downs said the bank serves 1.9 million student and family customers.

Co-signers are usually responsible for the debt obligations of the deceased. But a student loan may be eligible for cancellation due to death depending on the guarantor, loan type, and terms of the loan, according to Sallie Mae, a provider of federal and private loans. Federal student loans have historically provided loan forgiveness in the case of death, according to Downs.

Roark advises other families who are dealing with their children's estates to take heed when communicating with financial institutions, including taking down names of employees and dates of conversations.

"It's something you have to be vigilant about. You have to take notes or it won't go away," said Roark. "Eventually it was all taken care of. It's all behind us now."

Copyright 2011 ABC News Radio 


Feds: Hezbollah Gets Into the Used Car Business

Photo Courtesy - Getty Images(WASHINGTON) -- The DEA and the Treasury Department announced Thursday that under provisions of the Patriot Act, the U.S. is barring American financial institutions from doing business with the Lebanese Canadian Bank (LCB). Treasury officials allege that the bank has been laundering narcotics proceeds -- as much as $200 million per month -- on behalf of an international drug ring run by a Lebanese trafficker named Ayman Joumaa. According to officials, a big slice of the drug profits were then funneled back to Hezbollah in Lebanon by Joumaa and nine coconspirators through an African affiliate of LCB.

According to the Treasury, cash from drug sales in Europe, Latin America and the Middle East was first laundered through money exchanges in Lebanon, then wired to U.S. car dealers via LCB. The dealers then shipped cars to West Africa, and the proceeds from the sales of the cars in Africa were sent via an LCB affiliate in The Gambia to Hezbollah in Lebanon. None of the American used car dealers allegedly involved in the transactions were identified.

Treasury officials also said that wire transfers from LCB were sent to U.S. correspondents to pay Asian suppliers of consumer goods. The goods were then shipped to Latin America and sold for local currency.

Under the Patriot Act, LCB has now been labeled a "financial institution of primary money-laundering concern." The U.S. government has designated Hezbollah a "Foreign Terrorist Organization."

"This action seeks to protect the U.S. financial system from the illicit proceeds flowing through LCB and to deprive this international narcotics trafficking and money laundering network of its preferred access point into the formal financial system," said Stuart Levey, the Treasury Department's under secretary for terrorism and financial Intelligence. "Any financial institution that collaborates in illicit conduct on this scale risks losing its access to the United States."

LCB is based in Beirut and maintains a network of 35 branches in Lebanon and a representative office in Montreal, Canada.

Ayman Joumaa and his alleged drug-trafficking and money laundering network have been on Drug Enforcement Administration's radar for some time. On Jan. 26, Treasury designated Joumaa and 19 other associated individuals and entities as Specially Designated Narcotics Traffickers under the Foreign Narcotics Kingpin Designation Act.

Joumaa is believed to be in Lebanon, and no criminal charges have been filed in the U.S. against him or his alleged co-conspirators.

Copyright 2011 ABC News Radio

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