Friday Financial Five – January 16th, 2015
Friday, January 16, 2015
President Obama Pushes For “Healthy Families”
The ironically named Healthy Families Act the president championed this week would allow workers to earn seven days a year of paid sick time. Additionally, a Presidential Memorandum would allow Federal employees to take at least six weeks of paid sick leave when a new child arrives. The White House estimates that 43 million people are currently without company obligated paid sick leave, with only California, Rhode Island and New Jersey offering paid medical and family leave.
The Swiss National Bank Removes Euro Cap
Currency wars are nothing new but the Swiss National Bank surprised the world as they unexpectedly removed a cap imposed in 2011 to keep the franc from rising too high against the euro. A rising currency hurts Switzerland’s domestic exports, but the country must have weighed any adverse effects against the prospect of buying euros to keep the conversion rate in line. With the euro still weakening, the country no longer wants to be beholden to continued buying. There is also the prospect of more easing from the European Central Bank.
Unemployment Rate Positive, Wage Increases Lagging
Unemployment in December again decreased approaching a level many consider full employment at 5.6 percent. This may worsen if the energy sector faces layoffs due to continued depressed oil prices, but the main concern continues to be the lack of wage increases in conjunction with economic recovery. Part of this may be explained by improved technologies which allow employers to do more with fewer employees. Those, coupled with corporate indecision in the face of changes in healthcare and regulation, are playing a role in keeping wages depressed.
2014 Short Sellers Save Big Tax Dollars
Short selling is the process of selling a home for less than the outstanding mortgage, a deal that has to be approved by the lender. Typically, the amount of loan forgiven is taxable to the borrower. For the 100,000 plus that sold their home short in 2014, there will be significant savings come tax time in April thanks to the extension of the Mortgage Forgiveness Debt Relief Act, which occurred in late December. For example, a home selling last year for $200,000 with $250,000 owed may have been saved over $10,000 in taxes thanks to the last minute extension. The extension was for 2014 transactions only, so those selling this year don’t know about possible tax ramifications at this point.
Metlife Sues U.S. Government
One of the main emphases in recent regulation was to eliminate the prospect of “too big to fail” institutions taking down domestic or global economies. Most of the institutions are banks but there are four non-banks that have this designation. One of the non-banks, Metlife Inc, is fighting the label imposed by the government, arguing that this classification leads to higher regulatory costs and impacts customers adversely. If Metlife is successful in fighting the government’s assessment, it may open the door for other institutions to fight the added compliance costs.
Dan Forbes is a regular contributor on financial issues. He is a CFP Board Ambassador. He leads the firm Forbes Financial Planning, Inc in East Greenwich, RI and can be reached at [email protected].
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