Friday Financial Five–July 12th, 2013

Friday, July 12, 2013

Dan Forbes, GoLocalProv Financial Expert

 

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Providence about to have another $1 million deficit to contend with

It appears the city is going to do right by seniors and veterans by restoring tax breaks lost during the reshuffling of the property tax code. Of course, it does raise the question of how this wasn’t accounted for in the first place. As a result, the city of Providence must now find over $1 million and it stands to reason that property owners won’t be receptive to another tax increase.

Rhode Island still bad for business

For those that may not have heard, CNBC recently ranked Rhode Island 49th for business friendliness. That makes it three years in a row finishing last or second from the bottom. This year’s worst state for business, Hawaii, is located in the middle of the Pacific Ocean and operates in many ways as an independent economy. High costs that weren’t addressed in the most recent budget don’t bode well for the 2014 assessment either.

Megabank capital requirements close to going into effect in 2018

In continued efforts to eliminate “Too Big to Fail”, the FDIC and OCC approved a proposed rule this week to increase megabank capital beyond the international requirements of Basel III. If approved, the 8 megabanks with 700 billion dollars or above in assets would have less than 5 years to meet the 6 percent capital ratio. Wells Fargo is considered already in compliance, while Morgan Stanley is considered most in need of capitalization. Dividend payouts may suffer as the banks retain much of their earnings as possible.

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Federal student loans still stuck at 6.8 percent

Senate Democrats proposed a bill this week to reduce the rate on Federal student loans to 3.4 percent for one year. They were able to garner only 51 votes in a test vote, well below the 60 needed. Senate Republicans are looking for a longer term solution to the college funding impasse.

James Gandolfini and an estate planning lesson

A sad byline to the passing of James Gandolfini, star of “Sopranos”, is that he may be remembered for something other than playing one of the most iconic characters in television history. The estate left after his sudden heart attack has been described as a disaster by a reputable estate attorney. Gandolfini may join Marilyn Monroe and Elvis Presley as famous decedents leaving a probate labyrinth for family members or an unnecessarily high estate tax burden. Unfortunately, it sometimes takes a high profile case to remind us to get our own financial house in order.

 

Dan Forbes is a regular contributor on financial issues. He is a CFP Board Ambassador. He leads the firm Forbes Financial Planning, Inc in Providence, RI and can be reached at [email protected].

 

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