Lehman Brothers

1. Q. Why has Lehman Brothers collapsed . It was one of the most exposed banks to the US sub-prime mortgage market. It did not give out mortgages to ordinary American citizens. Rather, it bought up billions of dollars worth of These loans from US banks, re-packaged them, and sold them on to global.
2. Q. Why has Lehman Brothers collapsed . It also invested heavily in property, both commercial and residential. With the US housing market in free-fall these re-packaged loans and its property portfolio have plummeted in value. In June to August last year, the bank said it would write off $700 million (£390 million), from its balance sheet as a result. In the same three months this year, this figure soared to $7.8 billion (£4.34 billion). The bank tried to sell itself but no one – including the UK's Barclays – was willing to take on these "toxic" assets
3. Q. Could others follow Lehman Brothers? A. Yes. Merrill Lynch, one of the most venerable Wall Street firms, has been bought out by the Bank of America to save it going under. AIG, the world's largest insurance company is also running short of funds, it is understood. It is almost certain another major financial institution will collapse
4. Why does it matter that Lehman has collapsed and others are in trouble? A. Lehman does not have any High Street branches, ordinary savers or mortgage customers. However, its collapse will have profound implications for people around the world – and not just for its 25,000 staff, 5,000 of them in the UK who are almost certainly out of a job. Crucially, the US's central bank, the Federal Reserve has refused to step in to rescue the firm, even though it bailed out Bear Stearns, Fannie Mae and Freddie Mac earlier this year. This has rattled Wall Street and the City as investors realise that others could be allowed to go to the wall. As a result, share prices have fallen heavily on stock markets around the world
5. CHRONOLOGY OF EVENTS(NEWYORK LOCAL TIME) FRIDAY 16:00: U.S. market closes after a see saw session dominated by the fate of Lehman Brothers. After initially opening 140 points down in the wake of disappointment that Lehman had not secured a rescue by early Friday, the Dow Jones Industrials index recovered and closed down just 10 points. 16:25: Sources say Lehman Brothers has received bids for its asset management division from private equity firms Clayton Dubilier & Rice and Bain Capital. 20:00: U.K. newspapers say Barclays is considering a bid for Lehman Brothers
6. CHRONOLOGY OF EVENTS(NEWYORK LOCAL TIME) SUNDAY 12:00 The rest of Wall Street's banks and brokers are called into work to start addressing Lehman Brothers outstanding trades in the over-the-counter derivatives markets. 12:57: Barclays says it is pulling out of its bid for Lehman Brothers 15:11: Newspaper reports say AIG is seeking to raise between $10bn and $20 billion from buyout investors including Kohlberg Kravis & Roberts and J.C Flowers & Co to bolster its balance sheet. 15:45: Bank of America says it is pulling out of talks to acquire Lehman Brothers 16:18 : The Wall Street Journal reports that Bank of America and Lehman Brothers are in merger talks 22:00: A global consortium of 10 banks announces it is provide a total of $ 70bn for a U.S. borrowing facility aimed at providing liquidity.

Bankruptcy

Bankruptcy legislation was originally intended to be primarily a “businessman’s” statute. Its original purpose was often stated to be twofold:

1. To permit an honest debtor, who has been unfortunate in business, to obtain relief from his/her creditors; and 2. To provide a regime whereby the creditors of a bankrupt can pursue their claims by collective action through a Trustee so that the assets of the bankrupt can be realized and distributed on an equitable basis subject to the rights of secured creditors and the priorities of preferred creditors.

In 1992 the Bankruptcy Act was radically reformed (and renamed the Bankruptcy and Insolvency Act) in a number of ways. One such reform was arguably inconsistent with the original purpose of the Act, and it ironically has had the most significant impact on how the Act is used today. I am talking of course about the addition of provisions to the Act to make it more easily accessible to consumer debtors. The statistics are mind boggling. Consumer debtors have and continue to seek relief from their debts under the Act in record numbers. The theory and reality behind what happens when a consumer debtor declares bankruptcy is as follows:

1. All unsecured claims against the bankrupt as at the date of bankruptcy are stayed. This is the immediate relief a consumer debtor obtains, and the main reason for the bankruptcy; 2. The trade off is supposed to be that all of the bankrupt’s property in existence as at the date of bankruptcy, or acquired thereafter up to the date of the bankrupt’s discharge, vests in his or her Trustee for distribution among the bankrupt’s unsecured creditors. However, in the case of property with a registered lien or mortgage, the Trustee’s interest only attaches to any equity available in the property, and the Trustee is not entitled to any property held in trust by the bankrupt for third parties, or any property exempt from seizure or execution by statute (like the $5,000.00 exemption for an automobile). In a typical consumer bankruptcy situation, there aren’t any significant assets for the Trustee to seize and sell and thus there is usually little or no return available for the unsecured creditors; 3. The Trustee has the power to review the affairs and conduct of the bankrupt with a view to setting aside any payments made or assets transferred by the bankrupt to third parties prior to bankruptcy if these payments or transfers constitute a preference, settlement, or reviewable transaction. However, Trustees are running a business themselves, and unless there are assets that can be converted to cash to fund litigation they generally will not spend their own money to litigate these matters. Under the Act there are procedures to allow a creditor to take over a Trustee’s right to pursue such transactions and thus the onus shifts to the individual creditors to take (and pay for) action; 4. Individual bankrupts are required to make monthly “surplus income” payments to their Trustee in accordance with published guidelines. In a typical consumer bankruptcy situation, the bankrupt is not a high income earner and has dependents. The reality is that these surplus payments are usually just enough to cover the Trustee’s fees and disbursements (with nothing left for the unsecured creditors); 5. First time individual bankrupts are entitled to an absolute discharge from bankruptcy after nine months unless an objection is filed by a creditor, the Trustee, or the Official Receiver. First time consumer bankrupts cross their fingers and hope no one files an objection thereby allowing them to get in and out of the bankruptcy system after nine months, and with relative ease (except for those bankrupts who still attach a stigma with going bankrupt); 6. If a bankrupt is required to proceed to a discharge hearing, the Registrar will consider the circumstances and either grant an absolute discharge, or refuse or suspend the discharge, or order that the bankrupt has to pay a sum of money to his or her Trustee as a condition of being discharged. An absolute discharge will be granted if the bankrupt can show the objections are not valid and that he or she “can not justly be held responsible” for going bankrupt. Refusals are only ordered in the rarest of cases where the bankrupt has engaged in really offensive conduct. The most common disposition at a discharge hearing is for an order to be made that the bankrupt’s discharge is to take effect after the bankrupt pays a certain sum of money to his or her Trustee, usually in monthly instalments of between one to three years. However, the amount of the monthly payments will depend on the bankrupt’s monthly household income and expense situation and much reliance is usually placed on the guidelines referred to above for determining “surplus income”. Again, unless the bankrupt is a high income earner these monthly payments may be a lot for the bankrupt but provide little or no return to the unsecured creditors; 7. Upon being discharged from bankruptcy, all claims against the bankrupt in existence as at the date of bankruptcy, which were stayed, are released and discharged. There are some exceptions. Most notably these are for family law support obligations, debts incurred by fraudulent misrepresentation, and criminal fines or penalties. These claims continue to survive and can be pursued against the bankrupt.

Investment Companies

Investors participate of these investment companies depending on the amount of their investments. Which means that even with a modest investment the investor is the owner of a share in diverse stock and bond portfolios.
Investment companies have reached near in relation to providing the ideal type of investment for millions of investors that do not want to manage their own investments. Managers of these investment companies invest funds from investors in varied stock portfolios, bonds and instruments in the money market.

An advantage of this kind of investments is that investors that do not have time to manage their own financial investments or do not have the knowledge of individual financial values can invest their money in a diversity of stock and bonds portfolios, as well as in the money market instruments that offer mutual funds. Even so mutual funds are more often being monitored by regulators (Securities and Exchange Commission and the New York Attorney General for example) because of the excessive fees charged and for using the market timing shares in some mutual funds.

This shocking practice done by some mutual funds have put them on a dilemma on whether to invest or not in mutual funds. Many of them have turned to the exchange-traded funds as a more popular investing alternative.

Money growth that are managed by mutual funds companies have made them become important pieces of the stock market. According to the Investment Company Institute by the end of 2004 the mutual funds industry had moved around a $16.06 trillion of investors capital all over the world. With that many mutual funds from where to choose the investor should be very careful when selecting a mutual fund as well as to invest in individual stocks.

Stock Exchange

The stock exchange, also denominated as the stock market, is one of the markets of the financial system were in an organized way professionals gather periodically to negotiate public or private securities.

A financial system is that which puts in contact, through a market, two types of economic agents: Those economic agents with a surplus of funds (money suppliers) and those economic agents with a shortage of funds (money requesters), being the financial assets the merchandise which is object of the exchange. So then, a financial system s composed of markets, assets and of contact all those participants in the market. The financial assets money and it constitutes for them a liability. It is a way to maintain wealth for those who posses it. Therefore, financial assets and liabilities are the two sides of a same coin (investment-financing). According to the source of emission of these securities we will talk about public securities (issued by public institutions or private (issued by private institutions).

Share Market

Stocks and shares are primarily issued for raising funds from the general investors and these funds are either used by the private companies for business expansion or are used by the government. In return, all the investors who invested in the company share the company's profit. Thus this market has become an important source of raising funds for the companies and it allows company to be publically traded. To control and regulates the functioning of stock exchanges, brokers, sub-brokers, portfolio managers, and investment advisors the government has formed the statutory body . Based on the performance of the stocks of 30 sound financial companies, sensex is compiled.

This financial market is majorly divided into primary and secondary markets. In primary market the shares are issued directly by the company and the transactions are made through the share brokers, which are appointed by the company. In secondary market, share brokers represent stocks of different companies listed on stock exchange on behalf of customers.

Trading Forex

Forex Trading has become a hot topic all over the world today. The interest has 'compounded' post the big crashed in the stock markets of US and UK, as more proactive investors have already started searching for greener pastures. And amongst all this talk of forex market and , one can't help but feel the need to learn to trade forex and keep oneself up-to-date with the present knowledge. So you can learn to trade forex, courtesy this article!

Unlike the national stock exchange, a forex market is multinational and a lot more volume is traded on it. Hence you, as an individual investor with foreign exchange, might not have much of a say in the price fluctuations and demand, as there are other institutional investors that are trading in a much greater volume.

While your broker is managing your investment, you can keep a track on your investment using some charting software. You can also chart the progress of other currencies and keep notes. Keeping an eye on the news and the newspapers is also a good practice.

Remortgaging

Remortgaging is when you replace an existing mortgage with a new mortgage without moving home in order to release capital or reduce interest payments. It might involve changing mortgage lender or opting for another product with your existing lender.

Remortgaging has historically been a popular way of reducing repayments and releasing capital as well as paying off a mortgage early and can be useful as a means of consolidating debts. Taking remortgage advice can therefore be beneficial financially.

Remember that the value of your home may have increased since you bought it and the current market value may affect the choices you have.

Can I remortgage to pay off debts?

Remortgaging can offer some relief as a debt solution for people experiencing a certain level of debt. If you have owned your property for some time, the chances are it could be worth more than your outstanding debt.

Reduced monthly payments at a better rate will mean that you have more disposable income - and this in turn could help you pay off higher rate debts such as credit cards or loans as well as releasing money for home improvements, etc.

I've got a bad credit history - will I be eligible for remortgaging?

In the current economic climate, it's reassuring to know that there's a company with experience and expertise in sourcing appropriate mortgages or remortgages for people with credit difficulties or debt issues. Therefore, it makes perfect sense for Payplan clients to seek free remortgage advice from an organisation like Who's Lending who specialise in adverse credit mortgages.

In recent months, many lenders have withdrawn from the sub prime mortgage market (mortgages for people with poor credit ratings) which has strong implications for people with debt issues seeking to remortgage. Fortunately, Who's Lending has forged strong partnerships to facilitate mortgages for people with poor credit ratings or debt issues.

Auto Insurance

Third-Party Liability Coverage:
This section of your automobile insurance policy protects you if someone else is killed or injured, or their property is damaged. It will pay for claims as a result of lawsuits against you up to the limit of your coverage, and will pay the costs of settling the claims. By law you must carry a minimum of $200,000 in Third-Party Liability coverage.
Statutory Accident Benefits Coverage:
This section of your automobile insurance policy provides you with benefits if you are injured in an automobile accident, regardless of who caused the accident including supplementary medical, rehabilitation, attendant care, caregiver, non-earner and income replacement benefits.
Direct Compensation - Property Damage (DC-PD) Coverage:

This section of your automobile insurance policy covers damage to your vehicle or its contents, and for loss of use of your vehicle or its contents, to the extent that another person was at fault for the accident. It is called direct compensation because even though someone else causes the damage, you collect directly from your own insurer, instead of the person who caused the damage.

Note: Coverage under the DC-PD section of your automobile insurance policy only applies if the following conditions are met:

• the accident took place in Ontario;
• there was at least one other vehicle involved in the accident; and
• at least one of the other vehicles is also insured by an insurance company that is licensed in Ontario or has signed a special agreement with FSCO to provide this coverage.

If these conditions are not met, then you can make a claim on your optional Collision coverage (if you have it), whether or not you are at fault. If you don't have Collision coverage, you may be able to pursue recovery from the at-fault driver to the extent you were not-at-fault for the accident.

Refinance Mortgage Rates

Choosing Viable Refinance Mortgage Rates:

Various mortgage refinancing rates should be compared to choose the best rates before you decide on a good mortgage refinancing. The list includes more than 10,000 mortgage rates offered by various mortgage lenders which become quite overwhelming. The rates offered by these lenders may change depending on your case. For example, if a lender offers the best rate with a 25% deposit, those only able to make a 10% deposit will have to pay an extra 0.2% interest.

Factors Influencing the Best Refinance Mortgage Rates:

Some of the main factors that influence the best and lowest refinance mortgage interest rates are:

• Credit score of you as well as your spouse
• Repayment frequency - regularity compared to the number of times you have defaulted
• The kind of the refinance loan and its duration
• Security that can be provided with regard to the value of the property
• Whether the property is bought as a primary residence or just as an investment
• The prevalent interest rates in the current loan market

Refinancing your home mortgage is useful if the current mortgage refinance rates are less than the ones in the original mortgage. If you need better rates on an adjustable rate mortgage, mortgage refinancing is the best option. It is viable if the present loan is 2 percentage points higher than current rates.
You must keep in mind the timeline for occupying the property when considering a good refinance mortgage rate. You can even pay a lower collected interest rate during the loan term if you shift the refinancing from a 30 year fixed rate mortgage to a shorter period loan. Alternatively, you might need to refinance your mortgage rate from the ambiguity of an adjustable rate mortgage to the known rates of a fixed rate mortgage.