Archive forJanuary, 2016

Who Holds Cash?

Everyone has a different relationship with cash. Some carry and use it regularly while others never carry cash. Still others keep it on hand for emergencies but prefer a debit or credit card for everyday purchases. Can these behaviors provide insight into the future of cash holding for consumers? Thats the question explored in a new FedNotes paper, Who Holds Cash?

Using data from the 2012 Diary of Consumer Payment Choice (DCPC), the Federal Reserve’s Cash Product Office (CPO) analyzed survey responses from nearly 2,500 study participants. Findings from the DCPC show that 89 percent of the population holds cash to some extent (either sometimes or always). Additionally, the number of notes held by the public continues to grow with nearly $1.4 trillion in circulation worldwide.

In the new paper, researchers found that people who hold cash tend to have a larger preference for credit cards, and tend to be older and more affluent. Beyond this, different subgroups of people who hold cash exist, with some using cash exclusively as a payment instrument and others holding onto cash solely for emergency uses.

By looking at how often participants from the DCPC study held cash and how often they made cash transactions, four subgroups emerged:

  • Cash Lovers: Always hold and always spend cash.
  • Just-in-Case Holders: Always hold cash but never use it. They view cash as a contingency fund.
  • Cash-Averse: Neither holds nor uses cash as a payment instrument.
  • Limited Choice Spenders: Do not hold cash but consistently use it to make purchases.

How do your cash holding patterns match up to these profiles? Read the paper to find out.

You may also want to read:

  • What Does Your Payment Diary Reveal?
  • How the Fed Disposes of Old Cash
  • Inside the $5 Savings Plan
  • Cash Remains a Leading Payment Form

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Renting instead of owning may be the right choice

We made a budget and we think we can pay off the equity loan within three years. Should we go ahead with our plan? — Stella

DEAR STELLA: It sounds like you have your affairs in order. I dont see anything wrong with the proposal you have made. Youre correct in observing that you will be paying substantially less to the bank than you are to the credit card companies. In short, you thought it out well, and I applaud your thinking.

DEAR BRUCE: I saw an article about a firm that was trusted to do debt consolidation. Could you please tell me how to reach them? — RS

DEAR RS: There are a number of companies that can be trusted to help with debt consolidation. My personal experience leads me to recommend American Consumer Credit Counseling. They will take you under their wing and show you how to reconstruct your payments to your best advantage.

I am not suggesting this is going to be easy, but the fact that you recognize that you need some help is a wonderful first step. If youre not satisfied with this company, there are many others that would be productive.

Send questions to Questions of general interest will be answered in future columns. Owing to the volume of mail, personal replies cannot be provided.

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Hillary Clinton Doing Finance Industry Fundraiser Just Before Iowa

(UPDATE: The Hillary Clinton campaign has postponed a New York City fundraiser scheduled for Thursday until Feb. 16, according to Marisa Faltelson, New York finance co-director at Hillary for America. This story, previously headlined Hillary Clinton Doing Back-to-Back Finance Industry Fundraisers Just Before Iowa, has been updated to reflect the postponement.)

Despite being dogged with questions about her ties to Wall Street, Hillary Clinton will take a detour from the campaign trail in Iowa to do a finance industry fundraiser on Wednesday.

Clinton will appear in Philadelphia at a gala fundraiser hosted by executives at Franklin Square Capital Partners, a $17 billion investment fund. Rocker Bon Jovi will reportedly play an acoustic set for friends who pledge $1,000 and hosts who bundle up to $27,000. (Giancarlo Stefanoni, a Clinton campaign staffer, confirmed that as of Tuesday afternoon, the event is still on.)

The Philadelphia Inquirer notes that Franklin Square employs Ivy League-educated money managers and salespeople with experience at big Wall Street firms — plus four personal trainers and a dietitian to keep staff happy and productive amid the gym, yoga and nap rooms, Sol LeWitt art installations, and fancy cafeteria.

Clinton was then scheduled to head to New York City on Thursday, where she was to speak at a lunchtime Conversations With Hillary fundraiser, now set for next month. This one is co-hosted by Matt Mallow, a senior managing director and general counsel at BlackRock, the world’s largest asset management firm. As we’ve reported before, having a conversation with Hillary is not cheap.

BlackRock’s ties to Clinton go particularly deep: Cheryl Mills, one of Clinton’s closest advisers at the State Department, sits on BlackRock’s board, and perhaps not surprisingly, Clinton’s plans for the industry align with the company’s financial strategy.

As David Dayen wrote for The Intercept, the company buys and holds most of its investments, meaning that any policy punishing short-term capital gains and rewarding longer-term strategies would personally benefit the firm. You could see Clinton’s proposals [to limit high-frequency trading] as clearing much of the competition to BlackRock’s asset management business.

While Clinton certainly has an interest in raising money for her campaign, the organizers are banking on less government regulations in the future.

One of Franklin Square Capital’s investment funds, the FS Energy amp; Power Fund, is heavily invested in fossil fuel companies, including offshore oil drilling and fracking. A disclosure posted by the company cautions that changes to laws and increased regulation or restrictions on the use of hydraulic fracturing may adversely impact the fund’s performance. As secretary of state, Clinton worked to spread fracking around the world.


  • Half the Foreign Policy Experts Signing Clinton’s Anti-Sanders Letter Have Ties to Military Contractors
  • Hillary Clinton Laughs When Asked if She Will Release Transcripts of Her Goldman Sachs Speeches
  • Hillary Clinton Made More in 12 Speeches to Big Banks Than Most of Us Earn in a Lifetime 
  • The Problem With Hillary Clinton Using a Progressive Hero to Attack Bernie Sanders
  • Hillary Clinton’s Single-Payer Pivot Greased by Millions in Industry Speech Fees

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How to Make Extra Cash on Land Holdings

Congress has slammed a door on companies trying to spin off their property holdings into real-estate investment trusts. But there is more than one way to make extra money from land holdings.

Late last year, lawmakers tucked a rule into a tax-extenders bill that essentially eliminates the tax advantages of REIT spinoffs for the parent company.

The maneuvers had become popular with activist investors, who favored separating…

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The agency that enforces our campaign finance laws doesn’t do its job. And many people like it that way.

In the 2010 election, the CHGO spent about $4 million on campaign advertisements without disclosing its donors. After an investigation, the Federal Election Commissions general counsel reported that the CHGO was trying to influence federal elections and thus should let the public know where its funding came from.

Despite this evidence, the FECs membership repeatedly deadlocked on enforcement action. Finally, in November 2015, the FEC ruled that the statute of limitations had expired and no action would be taken against the CHGO. This sad tale has been only too typical for the commission.

The Federal Election Commission was created in 1975 to carry out the campaign finance laws passed in the wake of Watergate. Previous laws had failed, in part because of the lack of an entity charged with enforcement. But the FEC was always hindered by a structure that undermined its effectiveness.

Originally, only two of the six commissioners were named by the president, with others chosen by leaders of the House and Senate. The Supreme Court ruled that this appointment process was unconstitutional, but it continued in practice.

Congressional leaders recommend appointees to the president, with no more than three coming from the same party.While this curbs any partisan abuses by the FEC, it also set up the commission for repeated deadlock, especially since Congress required four votes to conduct many actions. In addition, Congress has frequently saddled the FEC with an inadequate budget and time-consuming procedural requirements.

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My No. 1 Tip for Today’s Market: Hold Cash

Whenever I hear definitive pronouncements in investing — guaranteed returns, forecasters who are 100% accurate or hedging strategies that promise to be market neutral — I immediately shut them off. Still, Im comfortable definitively recommending what I see as the single best investment right now: Cash.

Without a doubt, having cash in todays market is going to give you an incredible edge. After all, the global environment is a near-perfect recipe for volatility — which in my view is merely a function of uncertainty.

We have uncertainty about oil prices, uncertainty about terrorism, uncertainty about China and other emerging markets and the uncertainty about what central banks will do. Oh yeah — theres also uncertainty about who the next president will be in the worlds largest economy.

Volatility might be nonexistent if any of the above were occurring in isolation. But when multiple risk elements come together, they create a sort of negative-feedback loop, with each added piece of uncertaintyexacerbating the others.

So, uncertainty creates volatility — but volatility creates opportunity. In 2008, volatility created an opportunity to own Starbucks (SBUX) for under $9 a share instead of the roughly $58 that the stock trades for today. Or you could have bought Amazon (AMZN) for under $50 rather than todays roughly $592, or Wells Fargo (WFC) for $9 instead of about $48 a share.

However, you couldnt have seized on any of those opportunities in 2008 without cash. Theres an old saying on Wall Street that money is made when an asset is bought, not sold — and the person with cash is truly king in times like these.

Buyers who provides liquidity in an illiquid environment will make a killing if they possess a fundamental understanding of business and markets.That was true in 2008 — and it wont be any different this time around.

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Cramer on Apple’s massive cash hoard: Expect this

Jim Cramer finally saw the market separate itself from the crazy connection to oil, and individual companies once again started to matter on Tuesday.

The one thing we really wanted to hear, though, is actual quality earnings from big international companies that arent turnaround plays, just plain-old great companies with good management. And suddenly we got them, the Mad Money host said.

The two big surprises for Cramer were when 3M and Johnson amp; Johnson reported. The last quarter brought out the sellers in both stocks, but Cramer was impressed with how much better these two companies are doing than what he thought.

Given how beat down both stocks were going into the quarter, it didnt surprise him when the stocks roared higher.

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New online student loan resource center in Ohio

COLUMBUS, Ohio — There is a new resource for prospective, current and former college students in Ohio to help pay for their education.

Ohio Attorney General Mike Dewine announced Thursday that his office has developed a comprehensive online Student loan center.

The goal is to help students understand and manage student loans. 

For many Ohioans, getting an education requires taking out loans, Attorney General DeWine said. Student loans can help Ohioans get the education they need to reach their full potential, but far too often students leave school with substantial amounts of debt. The Attorney Generals Student Loan Center provides resources and tools to help consumers make smart borrowing decisions.

According to the Federal Reserve, Americans owe more than $1.3 trillion in outstanding student loan debt, growing at a rate of more than $2,700 a second.

The Attorney Generals Student Loan Center provides information and resources to explore careers, choose a school, apply for student loans, and repay loans.

It also provides tips on how to reduce the cost of attending college and two calculators to help students budget their expenses and plan their loan repayment.

Click here for more information.

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Cash Is King as Europe Adapts to Negative Interest Rates: Chart

Europe’s ATMs worked overtime in 2015. A record 1.08 trillion euros ($1.17 trillion) of banknotes were in circulation, almost double the value 10 years ago, according to data compiled by the European Central Bank. That’s a counterargument to some bankers who say that electronic forms of cash will replace paper money sooner rather than later.

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Why a Digitally Savvy Finance Brand Decided to Go ‘Old School’ With a Super Bowl Ad

Despite some initial skepticism about whether it was the right move, financial services company Social Finance, or SoFi, is now all in on the Super Bowl.

Part of a larger introductory campaign from creative shop Muh-tay-zik Hof-fer, one 30-second ad will appear during the game, with another running shortly before kickoff. The in-game spot looks to give consumers a taste of what exactly SoFi is and how it is different from traditional banking.

The humorous approach seeks to explain the companys unique business model in a lighthearted way.

Not everyone qualifies for our products, so we didnt want to say, Hey everyone come in here and get a loan, said Joanne Bradford, chief operating officer of SoFi.

The 30-second spot, which will run in the first half of the Super Bowl, was shot by director Marc Forster who is known for films like Finding Neverland, Monsters Ball and Quantum of Solace.

With this campaign SoFi is looking to boost its brand awareness, though Bradford was initially leery of Muh-tay-zik Hof-fers suggestion to go to the Super Bowl to do that.

With [my] background in digital, I was like, thats so old school, why would we do that? said Bradford. In the end, I went and got proposals from many digital publishers and I went and added them all, and it didnt get you the reach, the excitement or the opportunity to introduce ourselves to the marketplace in a cost-effective way. No amount of homepage takeovers, no amount of native content, no amount of posting would bring you the reach and the impact that a Super Bowl ad would.

SoFi will also be running another spot shortly before the Super Bowl, leaning on consumers distrust of traditional banking following 2008s financial crisis. The ad uses phrases like Too big to fail, before the Big Game to get consumers curious about the company.

For more Super Bowl 50 news, check out Adweeks Super Bowl Ad Tracker, an up-to-date list of the brands running Super Bowl spots and the agencies involved in creating them.


Client: SoFi
Project: Great Loans for Great People

Executive Creative Directors: John Matejczyk, Jay Berry
Associate Creative Directors: Adam Ledbury, Guy Lemberg
Director of Strategy: Matt Hofherr
Associate Strategy Director: Rachel Gold
Designer: Bob Dinetz
Head of Production: Michelle Spear Nicholson
Senior Producer: Jona Goodman Suarez
Producer: Megan Ubovich
Account Director: Noel McKenzie-Johnson
Account Supervisor: Veronika Luquin Campbell
Director of Media: Eric Perko
Media Strategist: Nadia Last

Production / Tool
Director: Marc Forster
Director of Photography: Nicholas Loir
Executive Producer: Robert Helphand
Executive Producer:Oliver Fuselier
Producer Lindsay Skutch

Editorial / Arcade
Editor: Kim Bica
Executive Producer: Nicole Visram
Post Producer: Adam Becht

Senior Visual Effects Producer: James Alexander
Senior Executive Producer: James Razzall
Visual Effects Supervisior: Michael Ralla
Executive Creative Director: Aron Hjartarson

Color / Frame Store:
Senior Colorist: Beau Leon

Record and Final Mix / Eleven
Senior Engineer: Jeff Payne

Music / Squeaky Clean
Composer: Rob Barbato
Executive Producer: Carol Dunn
Music Producer: Chris Shaw

Client: SoFi
Project: This Is the Beginning of a Bankless World

Executive Creative Directors: John Matejczyk, Jay Berry
Associate Creative Directors: Adam Ledbury, Guy Lemberg
Creative Director: Todd Bois
Designer: Bob Dinetz
Head of Production: Michelle Spear Nicholson
Senior Producer: Jona Goodman Suarez
Producer: Megan Ubovich
Account Director: Noel McKenzie-Johnson
Account Supervisor: Veronika Luquin Campbell
Director of Strategy: Matt Hofherr
Associate Director of Strategy: Rachel Gold
Director of Media: Eric Perko
Media Strategist: Nadia Last

Production / FURLINED
Director: Douglas Avery
Director of Photography: Max Goldman
Head of Production: Sheila Eisenstein
Senior Executive Producer: David Thorne
Executive Producer: David Richards
Producer Greg Haggart

Editor: Brandon Porter
Head of Production: Joanna Manning
Post Producer: Jennifer Mersis

Finishing / CARBON LA
Executive Producer: Matthew McManus

Color / COMPANY 3
Senior Colorist: Dave Hussey

Record and Final Mix / ONE UNION
Senior Engineers: Eben Carr, Matt Zipkin

Executive Producer: Kala Sherman

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