The Political Smoke and Mirrors Solution to the Real Estate Crisis

I was very interested to hear what President Bush was going to say this morning concerning the mortgage crisis we are facing in America. I figured it would be more of a political answer than a real solution.

He actually identified the real problem being the adjustable rate mortgage. He also made a point of saying that it was not the government's job to bail out speculators. (read: we are not going to bail-out the homeowners who are in trouble)

The Government cannot just step in and bail out the mortgage crisis. It would be rewarding mortgage companies and banks for being irresponsible and greedy.

He made some references to a few changes that really would not help all of the homeowners who are facing this ominous situation in the future. He basically offered up the political smoke and mirrors solution.

He made a big speech acknowledging the problem. Then assured the America people that they were going to implement some changes that will help solve the problem. It is the political smoke and mirrors answer. In politics, you just have to look like you are solving the problem when really you are just crossing your fingers and hoping it will blow over. (read:Irag)

The mortgage crisis in America will have to work itself out over time. This is the bursting of a major debt bubble with the mortgage crisis being the final phase of the bubble. You don't just take 25 years of debt accumulation and expect that the problem is just going to go away. We will have to go through the "de-tox" process.

An Open Letter to Senator Dodd

Dear Senator Dodd,

I have been listening to your sound bites over the past year and have become quite confused. It appears that you are very concerned about everything that has happened to the homeowner. You have been quick to scream for reform and imply that the Federal Reserve Board should clean up this real estate and mortgage crisis. You seem to be positioning yourself as the Champion of the people during your run for a Presidential bid.

Last week there was a lot of hype over your meeting with Federal Reserve Board President Ben Bernanke and Treasury Secretary Paulson about the foreclosure problem. You held a press conference telling of your position and even suggesting that a hot line has been set-up for people who are in trouble. I will comment on that latter in the letter. First, I want to take a step back and talk about your role in the Senate.

You are currently serving as the Chairman of the Senate Banking Committee. Banks are in trouble. Banks have been at the heart of a great deal of this irresponsible lending. Maybe I am a little uninformed. Wouldn't the Senate Banking Committee have some oversight over the banking system? Are these problems a big surprise to you? Is it reasonable to think that there might be a future problem when lenders are lending money at 100% of the value of the home to people with horrible credit, lending money without verification of income, using teaser rates, and writing loans whose interest rates change over time? Well, maybe I am just taking advantage of the use of hindsight. However, it seemed years ago that this was a train wreck in the making.

It just seems like the Senate banking committee has some role in the supervision of the banking system. Thus, is it reasonable to suggest that a little responsibility could be taken by you and your committee for this mess since it was on your watch?

Now back to this solution. You talked about a number consumers could call. It is a program put together for those who are facing foreclosure. It was a number that had the word HOPE spelled out. After further investigation, I discovered that this number takes the consumer to a hot line for consumer credit counseling. Statistics, personal accounts, and even Congressional testimony conclude that these organizations just make the debt situation much worst.

Senator Dodd, how about some real solutions? How about you and the rest of your colleagues taking some responsibility for this mortgage mess. For those of you elected to the Senate, you are elected to protect the people from this type of thing. Yet, you allowed it to happen for a number of years.

Your ideas are at best band aid approaches. Your HOPE idea is nothing more than leading consumers to the lions den. It sure does sound good as you attempt to secure a bid as Democratic nominee for the President of the United States. Once again, how about some real leadership in Congress? That is the best thing that you can do for the American People who are struggling because Congress conveniently ignored the creation of potentially one of the biggest real estate busts on record.

Senator Dodd Turning Desperate Homeowners over to the “Sharks”

Congress is really scrambling. They just realized (or so they would like for you to believe) that we have a real problem in the housing markets. They are just now acting on the huge foreclosure problem that we are facing in America.

Of course, beyond bailing homeowners out, there is not much they can do to solve the problem. This problem could have been prevented had Congress acted years ago and set up proper regulations for the mortgage lending industry. However, that would not have been a good political solution . After all, those loose lending practices fueled economic growth. So the “party now and worry about the consequences later strategy” is now taking effect.

In a symbolic gesture, Senator Dodd held a press conference to discuss the foreclosure problem in America. He also suggested that the Federal Reserve Board should in a sense bail everyone out of this problem. He also announced that they have set up a program to help people out. He wants to make sure that no one goes through foreclosure. So, he announces a program for anyone that is going through this mess. Just call, 1-888-995-HOPE. This was a hotline for those facing foreclosure.

I called the number. To my disbelief, it was a number for an organization that feeds people into companies in the credit counseling business. Yes, the same industry that Congress investigated in 2004 and came to the conclusion that this industry needed reformed. (which little reform actually occurred following the announcement of their findings)

Senator Norm Coleman who headed up that investigation had this to say in his opening remarks:

“Over the past several years, however, the credit counseling industry has undergone significant changes. New and aggressive credit counseling agencies have changed the manner in which consumers are treated. These changes have resulted in consumer complaints about excessive fees, pressure tactics, non-existent counseling and education, promised results that never come about, ruined credit ratings, poor service, and in many cases being left in worse debt than before they initiated their debt management plan.”

“Make no mistake, these credit counseling agencies were designed to sell a product –the Debt Management Plan—not to deliver a service of education or counseling. “ He even referred to this industry as a bunch of "sharks."

Consumer Credit Counseling is just a part of an industry that markets HOPE and sells problems. I have a numerous examples of how in many cases these services not only make the problem worse but rip people off through the use of excessive fees.

So, this is the solution. The industry that Congress said needed reform and is ripping off consumers is now the answer to the country’s foreclosure problem. Although Senator Dodd has presented many bills to Congress and positioned himself as the Champion of the people when it comes to predatory lending, it appears that all of those presented bills as well as what he is currently doing is nothing more than political positioning and resume building. Talk is cheap until he can actually get something done in Congress. A true consumer champion would never have offered this as a solution.

This "solution" should be viewed as an insult to one’s intelligence. The list is a mile long of why these credit fix solutions are dangerous for consumers. These companies are of no value unless they can actually get the mortgage lender to re-structure the mortgage. It will take an act of Congress for that to happen. (literally and figuratively speaking)

Further Evidence of the Damage in the Credit Markets

Countrywide, your checks are no good! The Cuyahoga County in Cleveland Ohio said that they will no longer accept checks from Countrywide because they are concerned about their financial problems. "We're just trying to protect the assets of the county."

The biggest problem that we have regarding everything that is financial related is loss of confidence. This is how a bear market starts. I talked about this on my radio show yesterday. There is a big category 5 financial hurricane brewing. It might weaken and the damage to the economy and financial markets might be minimal. It might also hit the financial system hard (bear markets and recession)

You just need to know that it is brewing and risk is high.

There is a huge loss of confidence in the system. With the bursting of a debt bubble, you never know what news will come each day. Just be careful with your investments right now.

Ultra-Short Bond Funds in Trouble

This is what happens when debt bubbles burst. The problems start out with the low quality or riskiest debt first. Then it spreads to the higher quality debt.

Ultra-short bond funds also known as money market substitutes, are used by investors who want to attempt to make more interest than a money market or savings account. A little more risk is assumed through the use of these investments. However, they are generally considered to be pretty conservative.

Over the last four weeks, this has been the worst place to be. Apparently, many of these funds are have as part of their portfolios investments in sub-prime debt. How could that have happened? They placed client's money into investments that were rated high quality. How sub-prime debt could ever be rated high quality is beyond me.

One fund in particular is -6.26% over the last 4 weeks. This particular fund which has been opened since 1992 has never lost money.

Just when you think you are playing it safe, you find out otherwise. It is a real good idea to check out your money market account as well as your ultra-short bond funds to make sure that you are not taking unattended risk.

Shades of 1929

Some people get a little irritated when I make references to the great crash of 1929 because:

a) It is different this time.
b) Something like that could never happen again.
c) We are in a super bull market
d) Our economy is much different than in 1929

You can pick your own answer. I keep going back to 1929 because of all of the similarities. This morning Goldman Sachs announced that some wealthy individuals were going to pump in about 3 billion dollars into their failing funds in an effort to save them. It is a "great buying opportunity."

If you go back and read the history books, the exact same thing happened in 1929. The markets were getting into big trouble and a "pool" of investors would go in and buy tons of stock to prop up the stock market. Investors in the 20's would get a feeling of relief knowing that this group of wealthy individuals were pooling together to save the markets. It was the big name people back then and it is the big name investors this time around as well. Besides, what is a few billion among friends?

Now my favorite part of the press release about this influx of capital was the highlights from the Goldman letter sent to the clients (read: individuals losing a lot of money) into their funds. (read:ponzi schemes). Here is the excerpt:

....according to an Aug. 10 letter to clients from Clifford Asness, the firm's founder and managing principal. Asness blamed the losses on the ``strategy getting too crowded,'' rather than the models not working.

In other words, it wasn't our fault that we invested all of your money into sub-prime debt. I would argue the model was terribly flawed from the start.

This is the problem with Wall Street, politicians, the Federal Reserve Board, _____ (fill in the blank) - No one will take responsibility for the irresponsibility that has taken place.

This Isn't a Sub-Prime Problem

The headlines read that the stock market is heading for trouble because of the "sub-prime" mortgage problem. Ben Stein said last weekend that the sub-prime problem is grossly overstated. He points out that sub-prime mortgages make up such a small part of the entire mortgage universe. (I still cannot figure out how an actor turned economic commentator is qualified to give economic analysis.)

Well, that is a relief! That makes for a great soundbite and something that the fox commentators can argue over for an hour while whipping its television audience in the process.

This is a credit problem resulting from a 25 year busting of a credit bubble. This stems from lenders writing irresponsible mortgages to consumsers who could not ultimately afford them. At the root of the problem is the adjustable rate mortgage. These mortgages come due and consumers cannot make their new higher payment. Consumers are dropping like flies and homes are going into foreclosure. Incidentally, 120 billion dollars these loans are coming due the second half of the year.

AIG and Countrywide (the biggest of the biggest mortgage writers) both said in a statement that this is spreading to the prime loans. Adjustable rate mortgages were written on ALL types of loans and in great number. Mortgage lenders were (and still are) selling the American Dream for the low monthly payment.

Now these consumers are in a world of hurt.

So follow the smoke and you will see the problem. Irresponsible lending equals Consumer problems equal high foreclosures equal a worsening of the real estate bust equals problems problems in the credit markets equal problems in the stock market equals problems for the economy.

Good credit, not so good credit, and bad credit. It is all about the bursting of a credit bubble that has been building for 25 years. That is the problem.

My problem with pop culture analysis is that it has no substance. No one on financial television is brave enough to tell the real story. Many of these analysts work for big brokerage companies and have taken the creed. Repeat after me....We are always in a bull market and there are no problems ever. Even when there are problems we are still in a bull market. Bear markets don't exist.

Then some of them are just actors.....Bueller, Bueller, Bueller??

Dow Jones Drop of 387 points - A Mini-Panic?

I really get amused as to what the media writes about the stock market. The AP refers to the drop in the market as a "mini-panic." 387 points sounds like a big drop. That is about a 3% drop in the Dow. If the Dow was extremely negative for the year, I would start using words like panic. However, the Dow is well above normal averages and is positive for the year.

No, I have not turned bullish on things. I think that want we found out this morning in the news concerning banks in France is not good. The credit problem is a global problem. Unfortunately, this is a problem in the credit markets. Every day we can wake up to a new negative surprise.

I cannot stress enough the importance of understanding risk and making sure you are not in a situation where you could lose a ton of money. There are ways to invest in a declining market and make money. If you want more information, send me an e-mail at bob@prudentmoney.com.

My concern is everyone who is listening to financial media such as CNBC or Fox news (which is fair and balanced with everything except for the stock market) who is saying this is no big deal. This is a big deal.

Sub-Prime Mortgages (Predatory Lending) Still Being Marketed

I received an e-mail from a listener about an offer that he received. Now keep in mind, he has a 6.5% 30 year fixed mortgage. This is a good note. However, he called the number on the marketing piece because it sounded like a good deal. This what the note said:

Veterans's Savings Program
You DESERVE the lowest possible payment!
Recent purchase or refinance, OK! (Ask about Cash-Out Options!)
NO APPRAISAL! NOCREDIT QUALIFYING! NO HASSLE!
NO PAYMENTS UNTIL OCTOBER!
YES, WE WILL REPAIR YOUR ESCROW ACCOUNT AND REFUND YOUR CURRENT ESCROW TO YOU!!
NO OUT OF POCKET COST TO YOU!
CALL IF RATE IS HIGHER THAN 5.%

*CALL US TODAY AND SPEAK TO A VA LOAN SPECIALIST!

This has all of the qualities of a sub-prime loan. Plus, they were recommended that he go from a fixed note to an ARM where the interest rate changes in 3 years.

The listener asked the "loan specilist" (read:salesperson) if they had anything dealings with sub-prime loans. He actually denied that they even exercise such practice or suggest such loan to any one.

Predatory lending continues.......

One of the Most Anticipated Fed Meetings in a Long Time

Today the Federal Reserve Board met to determine the direction in interest rates. Due to all of the problems in the credit markets written about week after week on this web-site, the bulls were betting on the Federal Reserve Board bailing out the markets.

Although highly unlikely, they were hoping for an interest rate cut. If not, at least there was hope that the Federal Reserve Board to acknowledge that there is a problem and state that they are open to lowering interest rates.

Unfortunately for the bulls, none of that happened. In fact, the Federal Reserve Board is still aggressively fighting inflation.

Jim Cramer has been screaming every night on his stock show that the Federal Reserve Board should bail everyone out. He literally threw a 3 year old fit on television today following the fed announcement.

There is something that the bulls do not acknowledge in the desperate plea for someone to bail out these problems so the party can continue. The fed has every right to be concerned about inflation. However, it is not the type of inflation that they typically worry about during the meetings. They are worried about ASSET inflation getting out of control.

They cannot afford to lower interest rates here. If they do, the real estate markets will ignite again and a good possibility exists that all assets (Stocks, bonds, real estate, etc) would morph into an incredible out of control bubble environment. (See China) Remember bubbles don’t end very well. It would only be putting off the inevitable.

They cannot afford to ignite the speculative spirits of the markets. Thus they are forced to stay on the sidelines and do nothing.

Unfortunately, the economy is weakening and the real estate markets are making it tougher for the Federal Reserve Board to sit on the sidelines. They have to take the lesser of two evils. They are between the ultimate rock and a hard spot. So, they do nothing.

Only a very desperate situation will motivate the Fed to lower rates.

Desperate for Business?

Every morning the first stop of my business day is http://www.minyanville.com/. In fact, I am at this site all day long. It is the best market analysis site available.

I found this article on the site this morning and just looked at my computer with disbelief. This was the ultimate "insult to intelligence" article. The Overstock.com CEO has an ingenious business plan and motto. "Buy it on overstock, then sell it on E-Bay."

“Our motto is buy it on Overstock, sell it on eBay,” Byrne said on a conference call Tuesday with investors.

"If you compare the prices of the stuff on Overstock, it is cheaper than on eBay for commodity goods and such. In fact, there are people — there are lots of people who make their living buying on Overstock and selling on eBay.”

Let's take a step back for a minute. I want to let you in on a little secret. Instead of buying the merchandise on E-bay, you can buy it direct from Overstock.com and avoid paying the additional money.

This guy is getting paid big bucks for coming up with this game plan. In a conference call to investors, is this the best that he can do? Could this be sign of the times? Is business this tough? If I were a shareholder, I would be concerned.

On a side note, the writer of the above article points out that the advice to buy it at overstock.com and sell it on ebay doesn't even work. Apparantly, the prices are lower on e-bay.

Consumer Confidence at 6 year high? Foreclosures up 58%?

Something doesn't seem right. I acknowledge that I have a negative bias on the stock market and the economy and desperately try to stay open minded. At the same time, how in the world does consumer confidence report a 6 year high with the mess that is occurring in the real estate markets?

Well the CNBC analysis says that it is because employment is so strong and the sub-prime mortgage crisis is well contained. Well, that explains that one to me. I guess??

Countrywide the nation's largest mortgage lender says that the defaults are spreading to the prime loans. The sub-prime loan crisis (clearly in the early innings) doesn't sound so "well-contained." The estimated 2 millionj foreclosures this year should stay "wel-contained."

What about that strong employment? The government actually estimates a good portion of those created jobs each month through their own analysis. In other words, they make up job growth. John Mauldin reports that 86% of the jobs that have been reported this year have been created out of thin air by the government.

The bottom line is that the government can spin the numbers at will and create a fantasy economy. The CNBC analysts can tell you don't worry about it and just go back to sleep. One analyst actually said last week that there was clearly "no reason for the sell-off." As Gordon Gecko said in Wall Street," The whole world must be off its rocker." By the way for all of you Wall Street movie fans, there will be a sequel.

Has I have written many times on this site, there are clearly big problems in the markets right now. These are foundational problems. It pays to think differently and not follow the advice of those who clearly have a lot to lose in the event that this bull turns into a bear. That would be every politician, every fund manager who can only invest for a bull market, every financial advisor who thinks that we are in a perpetual bull market, and anyone on CNBC.

Just a Correction in the Stock Market or Something Else?

With last week's stock market decline (largest in weekly drop in the Dow in 5 years), the forever bullish are claiming that this is no big deal. It is a "correction." Let's first define correction. A correction is a pause in a bull market. It is a normal decline that should create any worry.

This is the mantra of Wall Street. They made that claim through the bear market in early 2000. The problem as I outline this week in the Stock market outlook is structural. It is within the credit system. The credit system has been the foundation for this stock market bull rally that started back in 2002.

We are talking about foundation problems. If this problem worsens, there will be big problems on Wall Steet. I am not in the business of making predictions. I am looking at the data and see the problems. I just don't see how Wall Steet dodges this mess. A good proxy for this credit problem can be found in the mortgage market. The sub-prime loan crisis has been noted and written about many times. It has been a prime reason for the foreclosures.

Last week it was announced that Alt-A loans (the next level of loans up from sub-prime) are now producing more foreclosures. Then Countrywide (nation's largest lender) said last week that the PRIME loans are now starting to have problems. Prime loans are supposedly the high quality mortgages.

Be very careful and weigh the facts in the argument of correction versus the start of a bear market. For a good read on the reasoning behind the problemsm go to his link:

http://www.msnbc.msn.com/id/19935772/

Have no fears – the group who calls itself the Invincible American Assembly says that everything is under control. They are meditating calmness into the world and the stock market. I really cannot make this stuff up.

Another Bank of America Complaint

Between paying.5% on their savings accounts to offerring credit cards to illegal aliens, it also seems that Bank of America is getting a little fee happy. An over the limit fee on a savings account? That one is a new one for me. Read more.......

Thank you for the information on Bank of America. I have had an account with them for 10 years and today I think I will switch banks. Today I discovered they assessed me a $27.00 over the limit fee from my savings account. I did not know I had a withdrawal limit from my savings account. I don't recall signing or agreeing to anything that would limit the amount I could withdraw from my savings account. Can you tell me if anyone else you know has had this problem or concern? I had a previous problem with them before when I agreeed to sign up for overdraft protection. I thought what this meant was that if I had insufficient funds in my checking account it would be covered with monies from my savings account. Appparently this wasn't the case because on one occasion I was assessed a $30.00 insufficient funds fee. I don't know what to expect next from this bank. I would appreciate any advice you could give me. Also, I know you cannot indorse or recommend another bank to me but what type of services (free checking, etc.) do good banks usually offer?

From Bob - Century Bank is an excellent local bank.

Just Plain Bad Advice - Nothing Always Works All of the Time

I was reading an investment periodical that I received at my office. It was from a real estate mutual fund company. The title of the article was "The Importance of Remaining Invested." They were talking about the importance of buying and holding investments for the long-term.

The article is talking about helping your clients feel comfortable with the risk in their portfolio. If your client doesn't feel comfortable with the traditional stock/bond/cash portfolio, consider adding real estate to make it more diversified. The article was making the point that by adding real estate to the mix "the correlation between real estate and stocks, bonds, and cash may help manage the volatility in a portfolio." In other words, reduce the risk.

That might have worked decades ago. Today, that is bad advice. The average year to date return of real estate funds is -7.25%. The fund that this article promotes is down over -9% year to date. (through 7/25/07)

The problem is that a stock is a stock whether it is international, domestic, or real estate. We are in an environment that traditional diversification might just not work. Stocks have all classifications are carrying the same type of risk today.

The flaw in this line of thinking is that traditional diversification and buy and hold ALWAYS work. Just remember that nothing always works. That is why you have to think differently when investing.

Reply to my Chase Post about On-Line Bill Paying

Paul from Chase Card Services/Communication & Public Affairs wrote me in response to my blog on the listener who had problems with the on-line bill paying. In all fairness, I wanted to post his response.


Just saw your blog posting about a problem a Chase customer had making a payment and wanted to follow up with you.

We recently rolled out an initiative we are calling "clear & simple" that is designed to provide customers with information and tools to manage their credit better, avoid fees and protect their best rate. You can learn more about this at http://www.chaseclearandsimple.com/.

On the topic of payments, I'd like to point out that Chase offers a number of tools to help customers always make on-time payments:

1. Setting up free phone/text/e-mail alerts that let them know when their payments are due and/or when a payment has been credited.
2. By setting up automatic payments, customers can choose to make payments in full or minimum payments on their due dates, ensuring that their payments are always made on time.
3. By using online payments, customers can schedule their payment in advance so that it is made on the due date, maximizing use of their funds and ensuring their payment is made on time.

I hope this is helpful. Thanks for your time, and please feel free to contact me if you have questions or would like additional information.

Bob - your information is always appreciated

Who Monitors the Politicians?

I always find Congressional testimony interesting. You have a panel of elected politicians grilling someone who has taken the stand on some issue. The politicians ask the tough questions and seek to lay blame.

As I write, Federal Reserve Chairman Ben Bernanke is on the stand. The Federal Reserve Chairman has the responsibility to report to Congress two times a year. The politicians are grilling the Fed Chairman on consumer debt and of course the crisis known as sub-prime loans.

One democratic politician just made the statement that the Federal Reserve was a sleep at the wheel. They allowed this to happen. There should have been safeguards built into the system to prevent predatory lending.

Our political system is a joke as are these hearings. The blame lies with our politicians. They conveniently ignore all of these lending practices and allow them to happen for two reasons. First, it gives the economy a short-term boost. It produces economic growth. Second, these banks pay their bills. I might add that MBNA is President Bush’s second largest campaign contributor. You certainly don’t want to bite the hand that feeds you.

Even more frightening is the lack of knowledge that these politicians have regarding these issues. Much of the questioning makes absolutely no sense.

When do we get to put the politicians on the stand and ask the tough questions? When do they take responsibility? They all look shocked that this sub-prime crisis is happening. You could see this train wreck coming a mile away.

Another Example of Being Careful Making a Credit Card Payment

Dear Bob,

- In August of '04, I was moving from California to Dallas, TX and I lost my checkbook in the meantime so I couldn't send my payment to Chase Credit Card. I called them to let them know the situation and they said I can make payment by phone but they'll charge $10 to do so. Well, I was a college student at the time so $10 goes a long way. I refused and told them that I'll make the payment on-line. They said okay. I made the payment on-line and it was a done deal. Well, the next months statement said that I didn't make a payment and they charged with a late fee and everything else they could think of. I called them immediately to find out what happened. Well, they had the wrong acct number that I had originally entered. I confirmed with them that if the internet system works and they said yes. So I tried again and it showed an accepted payment. Unfortunately, the situation occurred again and the payemnt quadrupled. Every assistant I talked to did not help me at all and gave no grace, but just demanded the payment. There was no solution. Eventually the payments were so high that I couldn't make it. I left it alone and they handed my acct to the collection agency. I talked to an agent and he himself was surprised because I've had perfect credit since '98 and all of a sudden there was a tragedy. I had to transfer all funds to one credit card and continue making high payments with that card. Is there anything that I could have done, or anything I could still do in that/this situation? Thanks.

Henry

You are not going to like this answer. The bottom line is that the payment (regardless of the issue) did not make it to the account. My assumption is that the payment was never drawn from your account. If it was drawn from your account and credited elsewhere, then that would be a different story.

They look at it from the standpoint that the payment never arrived. From their standpoint you could use any excuse as a reason for not making a payment. It is unfortunate. It is a sleazy system set out to damage credit for the smallest of mistakes.

Keep the Faith

Bob

True Credit Lock Very Different from LifeLock

I had a question come up regarding the new Truecredit (http://www.truecredit.com/) credit file lock. I have commented in the past on how Lifelock (http://www.lifelock.com/) works. Lifelock is simply putting fraud alerts on your credit reports every 90 days in order to help you fight identity theft.

As a review, the law states that you may only issue a fraud alert in the event that you are a victim of identity theft or you think that you might be a victim of identity theft. It doesn’t say that consumers should just apply a fraud alert because of general identity theft concern. So, this is a company taking advantage of a gray area in the law. If you don’t have an ethical issue with it ( I do by the way) then you can do it for free for yourself.

I have always stated that Truecredit is an outstanding company. So, I don’t want you to get these two programs mixed up. Truecredit are just stating that the company will put a lock on your TransUnion credit reporting agency credit report and not all three. They are not issuing fraud alerts.

TransUnion owns Truecredit. They can easily offer this program due to the ownership. Thus, TransUnion can elect to lock a consumer’s credit file outside of whatever the law says. Is it a benefit? Truecredit doesn’t charge for it. Locking up 1 of the 3 in a sense is a false sense of security. An identity thieve can still access the other two credit reporting files. In a business of aggressive marketing, it is probably Truecredit’s way to stay up with the competition without taking the low road like Lifelock.

The Gut Feel of a Terrorist Attack

This is not the typical Prudent Money post. However, I watching Fox News and the ridiculous commentary on Michael Chertoff. Homeland Security Chief Michael Chertoff made the statement on Wednesday that he had a "gut" feel that a terrorist attack was imminent. He has caught a great deal of criticism for making these statements. The argument is that someone in his position shouldn't make these types of "fear based" statements without any factual information. He should make statements that are credible based on fact. If there is specific information, give the American public the information.

First, the homeland security agency cannot give specific information. They have to stay very vague. Think about it for a second. Let's make public everything that they know so the terrorists can be a bit more informed. They cannot share everything that they know. Second, I think that you have a guy who is bombarded with all of the risks. At the least, he wants to send an indirect warning.

I would take his "gut" very serious. This guy sees what is happening. We don't need to know the details. We just need to know that the risk is higher today than usual.

Unfortunately, people in politics want to take this and use this to their own agenda. Terrorism is a very real thing. To just pretend it is not there is the risk.