General Motors Geared To Sell The European Opel Division

General Motors is in talks with PSA Peugeot Citroen to sell the European Opel division. The PSA group has officially confirmed that the talks are ongoing to develop strategy initiatives. The deal is focused on improving operational efficiency and profitability of the group by acquiring Opel. The Opel division is one of the popular divisions for General Motors and it helps the automaker to reach the global audience. However, by selling it to the PSA group, GM is willing to step down from the competition regarding global auto sales.

Even though GM’s decision to stop its influence in the UK is shocking to many, the company has taken this decision carefully. The Chevrolet was not welcomed widely in Europe and the model has been pulled back already. Opel Marques also stopped selling in Russia by 2015. The European division was not making profits and several production plants were put on hold. When the UK left the European Union, GM has decided that it is time to pull back from the not-so-profitable European market.

The current profit strategy for GM has been overhauled to bring in more money to the company. The company is no more interested in sales volume. Instead, it focuses on increasing profits and raising margins. The fleet deliveries by GM were reduced by 12% last year. GM focuses on increasing retail sales to increase profits. The major element of interest for GM is improved return on invested capital (ROIC). In 2016, GM was able to increase its ROIC remarkably by 28.9%. Compared to the last year, this is a 170 point increase.

The decision to sell the Opel division is certainly profitable for GM, but the profits for PSA are unclear. By acquiring Opel division, PSA will be able to increase their capacity in Germany. However, Germany is one of the most expensive countries to make vehicles. As a result, it will result in excess capacity for Peugeot. PSA has different views on the issue. When it acquires Opel, PSA will become the single owner of 16% of the car market in Europe. It will grow to be the second largest automobile group in the continent. This boost will help the company to expand its scale and increase buying power. As a result, it can cut operational costs and thereby increase profits.

The deal can’t be finalized easily as there are numerous obstacles. The industrial union of Germany, IG Metall has warned that the deal can’t be finalized without the involvement of the union. The Economy minister of Germany also expressed his displeasure in deal talks without consulting with the local government. The French government has 14% shares of the PSA and it is expected to support the group to go through with the deal. While there is no confirmation that the deal is certain, it has resulted in increased demand for the shares of GM and PSA. GM will succeed in getting a clean cut from the Europe through this deal. It is of importance to the investors as GM focuses on developing driverless smart automobiles.

Federal Reserve Claims Dodd-Frank Act Is Good For The Banks

The POTUS Donald Trump has been issuing controversial executive orders after he took his office at the White House. Recently, he issued an executive order instructing the Treasury department to analyze the existing financial rules and send a report to him in 120 days. The Dodd-Frank Act was introduced by Obama in an attempt to control the banks during the times of global financial recession. Now, Trump claims that those laws are a disaster and they don’t allow the banks to enjoy profits and increase lending power. Federal Reserve chair Janet Yellen has rebutted this claim saying that the banks are safer and profitable.

Yellen commented during the congressional testimony that the lenders of the USA are competitive compared to the European counterparts. The stress tests are important to ensure that the banks have financial stability. The Republicans constantly attack the Dodd-Frank Act saying that small businesses are unable to get the loans they deserve. The Fed defended that there is no substantial data to prove this claim. She said that the US lenders are active in capturing their market share.

Janet Yellen said that she is eager to work with the Treasury Secretary Steven Mnuchin after his review. Yellen, however, said that she agrees with the financial goals and principles present in the executive order. The current executive order wants to prevent bank bailouts using taxpayers’ money. It will result in formulating efficient regulations that prevent the financial executives from taking unwarranted risks.

The Dodd-Frank Act commissioned the role of Vice Chairman for supervision for the Fed, but the role was never filled. Yellen said that she is open to working with a person appointed by Trump for this role. She added that the new appointee can represent the Fed in various international talks about the rules of the banks. Yellen mentioned that the entire Fed board will make the final decisions on rule making. However, the vice chairman can lead the bank-supervision committee of the Fed. He can also provide information about the regulatory work to the congress. The vice chairman can also represent the Fed for Basel Committee on Banking Supervision and other international bodies.

There were speculations that Jenet Yellen, appointed by Barack Obama would step down from her office before her term. In the meeting, Yellen assured that she will continue until her term expires in roughly 12 months. Even though Trump’s new vice chairman can give his opinion on the Fed’s agenda, the chairman will always make the final decisions.

The banks are disappointed with the Fed’s stress testing programs and Senator Pat Toomey urged the Fed to remove the Comprehensive Capital Analysis and Review. Yellen defended this program as she said that it is imperative to improve supervision. The Fed participates in various international talks on bank rules and it is useful in building a stable and strong financial system for the USA. The Republicans wanted to halt international talks until Trump’s officials take over the Fed. However, Janet Yellen has said that she will continue as the Chairman until the end of her term and Fed will continue with its responsibilities.

Comcast Hit with Record FCC Fine for Unauthorized Charges

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Comcast has been hit by the FCC with a record high fine on a cable company for charging its customers for products and services they did not request for.

The federal agency revealed on Tuesday that it has imposed a fine of $2.3 million on the cable company following confirmation that it had been charging customers for services and equipment they didn’t order. It described the fine as “the largest civil penalty assessed from a cable operator by the FCC.”

“It is basic that a cable bill should include charges only for services and equipment ordered by the customers – nothing more and nothing less,” Travis LeBlanc, chief of the regulator’s Enforcement Bureau, said in a statement. “We expect all cable and phone companies to take responsibility for the accuracy of their bills and to ensure their customers have authorized any charges.”

The fine on Comcast comes a year after the FCC requested customers of Internet and cable companies to send in their complaints in large number so as to provide sufficient basis for investigations and possible actions against these companies.

The communications commission said it received more than 1,000 complaints from Comcast customers. These alleged being charged for products such as cable boxes, premium channels and DVRs they never ordered. The charges sometimes came even when customers had indicated that they did not need add-on options.

Some of the customers claimed that they were sometimes not aware of unauthorized charges until the product or equipment which they did not request was delivered to their homes. The FCC said customers also complained about spending “significant time and energy to attempt to remove unauthorized charges from their bills and obtain refunds.”

The fine imposed was the result of investigation said to have been started by the commission almost two years ago.

Comcast has agreed to pay the fine without any admission of guilt. It said the complaints by its customers did not arise out of a “problematic policy or intentional wrongdoing,” but were the result of mediocre customer service or human error.

In addition to the fine, the cable company is also required to immediately commence implementation of a five-year compliance plan. This requires it to obtain affirmative and informed consent from its customers before they are charged for any service or equipment. Under the plan, customers must be sent special notifications whenever a new service or charge is added to their bills.

Comcast is also now required to provide a no-cost means for its customers to prevent new services or equipment from being added to their accounts. It will need to urgently revise its charge-dispute processes and ensure that customers’ complaints are properly addressed, with compensation provided when necessary.

Furthermore, the FCC will bar Comcast from sending accounts to collection or suspending a service while there is ongoing dispute over a charge.

The cable company said in a statement made available to Ars Technica that it already had commitment to effect most of the changes before they were ordered by the FCC. It said many were already being implemented or about to be.

Consumers Choose Credit over Cash

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People are choosing credit cards over cash when it comes to everyday spending. Many of the cards either offer cash-back incentives or reward points that can be used for air travel and hotels. Therefore, it just makes sense to many of today’s travel-friendly consumers and cost-conscious customers to make use of credit cards for everyday purchases over cash.

Incentives, such as frequent-flier miles only accelerate a temptation that financial institutions have profited from for years. Financial professionals say that paying with credit and cash incentives consumers to spend more. When you are not paying cash for most purchases, the loss is not as intense.

According to research, study participants who were told they had to pay by credit card only paid twice as much as participants who could only pay cash. Researchers noted that it is unusual to see examples of individuals who offer double of what they would have otherwise spent.

However, the ease that comes with purchasing with plastic, or what marketers note as “friction-free spending,” is not the only reason consumers now prefer to use credit cards. They are also conditioned by the sight of credit card logos to spend more as well.

Researchers indicate that people will spend more when these kinds of stimuli are present. According to scientists, paying $5.00 for a cup of coffee may seem substantial if you only possess $10 cash. However, if you hold a credit card with a $10,000 credit limit, that same $5.00 does not seem like much of an expense.

However, researchers also note that incentive cards do not work unless the user pays off their balance each month. For the roughly 60% of consumers who cannot pay the monthly amount owed, it is best to seek out a card with a low interest rate. According to current news, the typical consumer owes about $2,000 in credit card debt – a debt that comes with a yearly rate of interest of about 16%.

So, if you are using your credit card over cash, but cannot pay off the balance each month, the main incentive you should seek is a lower interest credit card. If you want to use a rewards card, make sure you can pay off the balance owed on your monthly statement.

Alabama consumers took out two million payday loans in 2015

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The state of Alabama really likes payday loans. Last year, Alabamians took out millions of payday loans, says a new report from a government agency released on Wednesday.

According to information from the Alabama Consumer Protection Task Force database, Alabama consumers borrowed approximately two million payday loans. This is an enormous sum, considering that the state government has been trying to rein in the industry for the last few years.

State officials were pleased, though, that 400,000 payday loans were declined last year.

Ostensibly, the numbers point to an alarming trend: many of the payday loan borrowers are repeat borrowers. The state database suggested that roughly 250,000 people accounted for the two million payday loans.

The average payday loan was $326, and consumers had doled out an average of $56 to borrow the funds.

“We’ve got to make sure consumers are protected. I want our companies to make a reasonable profit. They have to. They can’t stay in business if they don’t, but we have to protect,” said Alabama Republican Governor Robert Bentley at a government meeting.

The Heart of Dixie established the database in 2015 to record and monitor payday loan transactions. The database also assisted state officials in enforcing current limits on how much people could borrow at one time. The task force, meanwhile, consists of dozens of 33 experts appointed by the Office of the Governor, Alabama Legislature, Alabama Law Institute, Attorney General’s Office, Alabama Bar Association, Alabama State Banking Department and other state-level departments.

Since the database was founded, it has provided the government with a plethora of data pertaining to payday loans.

“The database proved what we’ve long been saying, that it creates a cycle of debt,” said Shay Farley, legal director of Alabama Appleseed. “People can’t afford to pay off lump sum balloon payments.”

In April, the Alabama Senate approved a payday loan reform bill. One of the key passages of the legislation includes extending the time to pay off the payday loans to six months, up from 30 days. It would also regulate the interest rates that payday lenders can charge to borrowers.

Soon after the Senate bill was approved 28 to one, GOP State Senator Arthur Orr said that it strikes a fine balance between enabling payday loan companies like Landmark Cash to operate and to protect consumers from high costs.

“It allows the industry to continue,” Orr said in a statement. “It allows a product that a lot of people rely upon. But it decreases the punitive nature of our current system.”

Although critics of payday loans wanted a 36 percent APR cap on payday loans, the state senator’s reform bill was a step in the right direction for many consumer advocacy groups.

Opponents of the payday loan industry make the case that the alternative financial product is dangerous because it sends millions of vulnerable consumers into an endless cycle of debt. Payday loan supporters say that it allows the impecunious to access credit when traditional financial institutions turn them down.

Financial experts sum up U.S economy in three numbers

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Mexican Imports Are Actually US-based

The managing editor at the Financial Times has released a video online that sums up the US economy in three numbers. The first number or statistic is 40%. This statistic demonstrates that almost all supposed Mexican imports actually begin in the United States. During the manufacturing process, for instance, a vehicle part can cross between the US and Mexico as many as 8 times. However, the ping-pong journey begins in the US.

The Number of People Currently Self-employed

The second number on the video is 53 million. That is the number of people in the US who are self-employed. If you cannot fathom this number in terms of population, it roughly can be equated to the population in South Africa. The Times reports that the number is projected to rise, thanks to what is being termed as a “gig” economy. Part of this economy are made up of the people who drive for Uber.

Millennials Strongly Support Solopreneurship

In fact, according to a recent article in Forbes, the Millennials are “Generation Gig.” According to the report nearly 80% of Millennials are interested in dropping out of the full-time workforce in order to work freelance. The other 20%, one must assume, are already working on their own. Reports further indicate that eight out of 10 solopreneurs state they are satisfied with their work. It is clear there is a massive upswing in entrepreneurship that is not slowing down.

Inherited Money

The last number on the video is 12 trillion. That is the amount, in US dollars, that will be inherited by the children and grandchildren of people born in the 1920’s and 1930. This amount is expected to be allocated during the next ten years. The number has also been established as the largest transfer of weather ever – an amount that is 152 times the wealth of computer entrepreneur and developer Bill Gates.

When you view these numbers, you can make your interpretation of what they mean for the future US economy. This is one of those financial areas that make you stop and contemplate about how the future generation will work and spend and save what they inherit and make.