Financial Fitness Sought Through Bank “Stress Tests.”

The US Treasury has made it mandatory for banking institutions with more than $100 billion in assets to undergo “stress tests” which will be partly used to determine whether the banks need additional capital from a new program that could provide additional monetary reinforcement.

The stress test, a kind of financial fitness workout,  is based on a hypothetical scenario in which the economy shrinks 3.3 per cent this year and barely grows next, with unemployment averaging 8.9 per cent this year and 10.3 per cent in 2010.  The idea is to look at how banks would hold up under such a stressful scenario.

Troubled US banks will have six months to raise capital from either the market or the US Treasury if the government’s stress tests determine they need to bolster their balance sheets.

“US government ownership is not an objective” of the program,” Treasury said. “However, to the extent that significant government stake in a financial institution is an outcome of the program, our goal will be to keep the period of government ownership as temporary as possible.”  Treasury secretary Tim Geithner and Federal Reserve chairman Ben Bernanke both said the alternative of regulatory seizure and outright nationalisation of weak banks was not the best way forward.

A senior administration official said the hope was that by strengthening the big banks pre-emptively they would make this adverse scenario less likely.

Turning the Corner or Hitting a Detour?

“It was the worst of times, it was the best of times.” “The glass is half-empty, or is it half-full?”  Depending on your outlook, your optimism and which side of the mortgage meltdown you have been on — lender, borrower, investor or innocent bystander — your answers and your “smile-age” will vary.

Thanks to a new Housing Bill, those at risk of foreclosure, have received a stay of execution and a new lease on life in the form of a government backed refinance of up to 105% of their home’s current market value.  Financing for 5% more than a home’s appraised worth sounds like a glass half- full proposition.

But there are new concerns for those who are jittery.  Like whether nationalization of one or more large financial groups, a word that sounds more ominous than the federal government taking a majority share of bank stock, is enough to cause new stresses.  Funny, it is the “stress test” that the U.S. Treasury Dept. wants to use to separate the bad banks from the good.

What color is your mood ring?  Are we starting to turn the corner or is the road a dead end? You tell us. We’d like to know!

Celebrating “The Year of the Ox”

The Chinese New Year has begun with fireworks and celebration. This year marks “The Year of the Ox.”  People born in the “Year of the Ox” are said to be patient, speak softly, and inspire confidence in others.  Perhaps the children of this “Year of the Ox” will acquire those characteristics, qualities which are so important to turning the corner in our national economic recovery.

We hope for the strength and patience that are necessary to pull together as a people and create a renewed sense of purpose.  Indeed, without the patience to withstand economic adversity, we risk losing the resolve and commitment to see our way through the challenges we face and press forward to the dawn of a new day, and a new era,  in our nation’s economic revival.

“The Year of the Ox”  symbolizes the inner strength and power to engender progress and create confidence.   It is confidence that is needed to generate the momentum needed for recovery.

In this “Year of the Ox,” will our elected politicians be able to truly speak less and listen more? Will they plow ahead with the quiet determination of the Ox?  A new commitment in this new year is the way towards the future.  Let us “speed the plow” and harvest what we sow together.  Tell us, what does “The Year of the Ox”  symbolize to you?

Health care insurance can learn from software industry

While policymakers and Congress focus on how we’re going to pay for health care, tech publisher Ziff-Davis suggests they take a look at the most innovative industry model instead of just the payment model, starting with the one right behind their computer screens – the software business.

In health care, the traditional fee-for-service  model is basically piecework, although prices vary widely. You get charged for an office visit, for an x-ray or MRI. You are charged for drugs and, if they must be injected, you are charged for that.

But as the software industry has learned,  the business model designs the industry.  Compare the custom design of a proprietary software program for a specific purpose with an “open source” model designed from the ground up.  Both produce software, but the way they go about doing it is very different.

Learn more about innovative health insurance techniques

The Economic E -Factor. The “E”-motions of Finance…and “E”-financial!

We at Efinancial are here to relieve the stress that sometimes occurs in the search for financial value. We do that in the form of insurance products and services. Our job is a simple one. To find you the very best values in life insurance, health insurance and other protections your family depends on.

The “E” in our name seems especially fitting to a story about Financial E-motions which was published this week in TIME magazine.

Many experts speculate that our current financial crisis is one that is based on emotions. A lack of confidence is what is ailing us they say.  If people would only “feel better” about the economy and feel more secure (like banks about lending money), then the pistons of our financial engine could get moving again.

Read more about consumer confidence in the economy