Archive for January, 2011

Goldman’s Tourre cannot delay SEC case, judge says

Monday, January 31st, 2011 | Finance News


NEW YORK (Reuters) – Goldman Sachs Group Inc vice president Fabrice Tourre lost his bid to delay depositions in a U.S. regulator's lawsuit accusing him of misleading investors about a product linked to subprime mortgages.

U.S. District Judge Barbara Jones upheld a January 26 order by a different judge, which allows scheduled depositions to begin Tuesday in the U.S. Securities and Exchange Commission's lawsuit against Tourre.

The defendant had argued it would be unfair to subject him to depositions because his lawyers have yet to review 300,000 documents, and he has yet to receive documents from Germany's IKB Deutsche Industriebank AG, an alleged victim of his supposed fraud. He also sought to delay depositions until his motion to dismiss the SEC lawsuit was addressed.

Pamela Chepiga, a lawyer for Tourre, did not immediately return a call seeking comment.

The SEC last April 16 sued Goldman and Tourre over a 2007 collateralized debt obligation transaction known as Abacus.

It accused them of failing to tell investors that the hedge fund Paulson & Co helped choose and bet against securities underlying Abacus.

Goldman agreed in July to settle the case for $550 million, without admitting wrongdoing. Tourre has also denied wrongdoing. He is the only individual sued in the case.

The case is SEC v. Goldman Sachs & Co et al, U.S. District Court, Southern District of New York, No. 10-03229.

(Reporting by Jonathan Stempel. Editing by Robert MacMillan)


How to Get the Most Out of Your Roth IRA

Monday, January 31st, 2011 | Finance News

The way this economy is going, no one feels confident managing investments. At least most of us have figured out whether we should have a traditional IRA or a Roth. If you chose a Roth, then you figure today's tax rate is lower than the one you'll pay in your golden years when you've reached retirement age and it's time to withdraw. You might have just decided you would rather know you'd have tax-free money in your golden years.

If you have not yet made up your mind about a Roth IRA, you should learn all you can about these tax-protected accounts. The government is making it easy to rollover your traditional IRA this year, even giving you the chance to change your mind if you decide it is not for you. That could change next year, so 2011 is definitely the year to do it.

[In Pictures: 12 Money Mistakes Almost Everyone Makes]

The hardest part about a rollover is coming up with the taxes you have to pay on the money you put in so far. If you are young, it should be easy, but those in mid-career might find it hard. If you just do not have the money, the best course might be to just start a Roth and keep both accounts. However you acquire a Roth IRA, here are five tips for getting the most out of it.

1. Say, "Yes" to Free Money

If your employer matches your contributions, then you should be entering the maximum contribution they will match. Confirm the limit with your HR department rather than assuming the rate is the same as it was when you enrolled. Understand however that your employer can only make pre-tax contributions to match. That means the amount contributed will be a little less than a perfect match, after taxes are taken.

2. Don't Limit Yourself

Even though the IRS limits your Roth IRA contributions to $5,000 ($6,000 if you are age 50 or older), that is no reason to avoid socking away additional funds in another investment account. Take your retirement into your own hands. You will have to pay taxes on gains from your own IRA, but that is no reason not to save extra money for retirement.

3. Watch Your Tax Bracket

Contributing to a Roth 401k or IRA is great until your income puts you into a higher tax bracket. If your employer is not matching contributions, then you should have the funds automatically withdrawn to a savings account, rather than directly into the Roth. At the end of the year, you can see if contributing the funds to a traditional IRA might be better, potentially saving you thousands in taxes. You can then take that tax savings and put in it towards next year's Roth. No matter how you distribute your contributions, put in the full $5,000, the total allowed each year for all of your retirement accounts combined.

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4. Take Advantage of Your Roth IRA Freedom

One of the best advantages of a Roth IRA is greater flexibility. You can take out your contributions at any time, for any reason. Understand that you cannot withdraw the account's investment earnings without penalty until you reach retirement age, but this is a handy umbrella should your emergency fund fall short. You can always pay it back, but the point is that you do not have to.

Once you reach retirement age, you can take as much as you need free of taxes. This can come in very handy when you are living on a fixed income from Social Security. Alternately, if you do not need to spend it, you can let the money stay in the account and grow. Unlike the traditional 401k, there are no minimum distributions at age 70 and one-half, so your Roth IRA can outlive you and go on to benefit your heirs.

5. Use the extra time

The IRA gives you until tax time to contribute to the prior year's IRA. Use that time to scrape together any contributions you can. Whether you contribute solely to a Roth or share contributions between a Roth and traditional 401k, do your best to contribute the full amount allowed. When you reach retirement age, you will be glad you did.

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Lockhart: Fed support still needed for fitful recovery

Monday, January 31st, 2011 | Finance News

MIAMI (Reuters) – The U.S. economy is recovering, but the speed of improvement should not be overstated and "it is too early to declare victory", a top Federal Reserve policy-maker said on Monday.

Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, cited weak U.S. housing markets, state fiscal pressures and the European sovereign debt crisis as risks to the recovery, underscoring the need for the Fed's $600 billion bond purchase program.

"Progress is real, but fitful, and support of accommodative Fed policy is still required, in my view," he said.

He said unemployment, currently at 9.4 percent, was "nowhere near acceptable levels." A number of factors including moderate economic growth, slower business formation and productivity enhancements in the workplace were holding back job growth, he said.

At its January 27 meeting, the Fed said high unemployment still justified its $600 billion bond-buying plan even though the economy has shown some signs of improvement.

Policymakers unanimously backed continuation of the Fed's bond purchases, the first time there was no dissent since December 2009. Regional Fed presidents rotate voting on monetary policy. Lockhart will next vote in 2012.

Lockhart's view was in line with his previous comments.

He said there were "definitely hopeful signs of a sustained recovery in 2011", but added that "the appropriate outlook at this juncture is one of cautious optimism, avoiding overstatement of the likely speed of improvement."

Economists at the 18 U.S. primary dealers -- the large financial institutions that do business directly with the Fed -- gave a median forecast for annualized growth in 2011 of 3.23 percent, according to the Reuters poll last week. That was up from an outlook of 3.10 percent growth in a similar poll on January 7.

Lockhart said inflation is currently at "lower-than-desired" rates, but the fear of deflation has abated. He said while concern about inflation is rising due to higher commodity prices, higher input costs for businesses have not translated into broader price pressures.

The Fed's calm view of price pressures is in sharp contrast to the European Central Bank, whose president has warned that the surge in commodity prices poses an inflation threat. While headline inflation has picked up in the United States, core inflation has held near a five-decade low.

(Reporting by Kevin Gray, writing by Kristina Cooke, Editing by Chizu Nomiyama)