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Shodan: The most Diabolical Search Engine on the Internet

Shodan: The most Diabolical Search Engine on the Internet

 

 
“When Internet users do not find their inquiries on Google, they think no one can find them; this is simply not true.”
 
This is according to John Matherly, the creator of Shodan, which is widely regarded as the scariest search engine on the Internet.  
 
Dissimilar to Google, which crawls the Web searching for websites, Shodan navigates the Internet’s back channels. Shodan is in essence a “dark” Google, looking for the printers, webcams, serves, routers and all the other things that is connected to and makes up the broader Internet. 
 
Shodan operates 24 hours a day, seven days a week to perpetually collect information on roughly 500 connected devices and services each month. 
 
Users and industry professionals claim Shodan offers stunning search results even from the basic of inquiries. Seemingly countless security cameras, home automation devices, traffic lights and heating systems are connected to Internet and easy to locate through a Shodan search. 
 
Shodan searches can find control systems for water parks, gas stations, and even a hotel wine cooler. Cyber security researchers were even able to locate command and control systems for nuclear power plants and particle accelerating cyclotrons by accessing Shodan. 
 
What is truly impressive about Shodan’s ability to locate all of these things, and the characteristic that makes Shodan so scary is that many of the aforementioned devices have legitimate security systems built into them. 
 
“You can access a scary amount of the Internet with a default passcode,” said HD Moore, the chief security officer of Rapid 7, which operates a private version of a database similar to Shodan for personal research purposes. 
 
A basic search for “default password” reveals countless serves, printers and system control devices that utilize “admin” as their user name and “1234” as their password. Several other connected systems require no credentials at all; for these systems all you would need is a Web browser that is connected to them. 
 
In a speech at last year’s Defcon cyber security conference, independent security penetration tester Dan Tentler revealed how he used Shodan to locate control systems for evaporative coolers, garage doors, and pressurized water heaters. 
 
Tentler located a car wash that be turned on and off and a hockey rink that could be defrosted with the click of a button. A city’s entire traffic control system was found to be connected to the Internet, allowing a hacker to put it into “test mode” with a single command entry. Tentler also located a control system for a hydroelectric plant in France with turbines generating over 3 megawatts each. 
 
“A hacker or evil person could really do some serious damage with this information and control,” Tentler said in a severe understatement. 
 
Source: CNN

Apple Facing the Heat: Tech Giant Questioned over Tax Havens

Apple Facing the Heat: Tech Giant Questioned over Tax Havens

 

 
Apple executives defended the tech giant’s tax strategy on Capitol hill today, claiming that the corporation pays one of the highest effective tax rates of any major company in the United States. 
 
A Senate panel called the hearing to investigate what committee leader’s claims was the company’s strategy of shifting income to an Irish subsidiary to avoid paying American taxes. Apple executives claim the money resided with its international operations, including those in Ireland, and not to avoid taxes because of the growth of the company’s sales overseas. 
 
Apple CEO Tim Cook said the tech company paid an effective tax rate of nearly 31 percent on profits it made on sales within the United States. Mr. Cook said the company paid over $6 billion in U.S. corporate taxes for the fiscal year of 2012 and expects to pay an even greater some this year.
 
“I am often asked if Apple still regards itself as an American company,” Cook said. “My answer will always be an emphatic yes. We are more than proud to be an American company, and equally proud of our contributions to the economy of the United States. 
Cook claimed that Apple has never considered moving its headquarters outside of the United States. “It is beyond my imagination, and I have a pretty crazy imagination,” Cook said. 
 
Carl Levin, chairman of the U.S. Senate’s Permanent Subcommittee on Investigations and John McCain both started the hearing with strong remarks of Apple’s practice of shifting income to foreign nations to avoid paying American taxes. 
Levin called Apple’s practice an utter “sham,” while McCain said that the company’s claim that its use of the Irish subsidiary did not diminish its U.S. taxes is “completely false.”
 
“American corporations cannot continue to avoid paying their share in taxes,” said McCain. “Our armed forces units cannot afford it, and our economy cannot endure it. Moreover, the American people will not tolerate it.” 
 
McCain asked Cook, “Can you see that there is a perception of an unfair advantage with what you do?”
 
In response, Cook said “honestly, I do not see it as being unfair; I am not an unfair person, and that is not who we are as a company.”
 
Cook claims that his company strongly supports corporate tax reform and that he was happy to testify at the hearing if it would advance the change of said reform being passed. 
 
 
Source: Internal Revenue Service

Cyber Currency is Booming

Cyber Currency is Booming

 

Bitcoin—digital currencies created by an anonymous hacker–sounds like something from the future or science fiction; however, the four-year-old currency is quite real and trading at an all-time high. 
 
One Bitcoin was worth approximately 40 U.S. dollars earlier this week, and surged today to nearly $50. That’s an increase from roughly $13 in January and 5 cents in 2010, according to Mt. Gox, the digital currency’s primary exchange. On Mt. Gox and other trading platforms, traders can purchase or sell their digital coins for real cash. 
Watchers of the alternative currency attribute Bitcoin’s success to the recent decision by several popular technology vendors and networking sites to accept the currency. Just recently, online community Reddit and blog hosting site WordPress decided to accept Bitcoins as an acceptable form of payment. 
 
In addition to their acceptance the counts are much easier to obtain; until recently, buyers typically needed to navigate international wire transfers and wait days for Bitcoin transactions to clear. Popular sites like Bitinstant and Coinabse now let customers purchase bitcoins with cash or bank transfers. 
 
That said, some longtime advocates of the digital currency are leery of the recent surge in value. “The majority of people do not think $40 is an acceptable price right now,” claimed Jon Holmquist, head of marketing at two related startups, Bitcoinstore and Coinabul. 
 
The price fluctuations are widely due to the relatively low number of transactions and overall value of coins in circulation—the value of Bitcoins went from below $1 to over $28, then back to under $7 in 2011 alone. 
 
The digital currency was created in 2009 by an anonymous hacker using the screen name “Satoshi Nakamoto”—the Japanese equivalent of a vanilla name like “Paul Smith.” Bitcoin has no central-bank backing the currency; the idea behind Bitcoin was to create a currency that is free from government intervention to conduct transactions without processing or exchange fees. 
 
The digital currency is “minted” by a network of computers using specialized software on powerful hardware systems. The technology is designed to release new coins at a steady pace. Currently, a new block of 25 Bitcoins is generated every 10 minutes, adding to the pool of roughly 11 million circulating coins. 
 
The system used to generate coins is extremely difficult to infiltrate, but the digital wallets used by Bitcoin owners to purchase goods in online stores aren’t so protected. A series of thefts in 2011 crashed the currency’s value and one operator lost over 24,000 Bitcoins to an online thief in September of last year. Skeptics also contend that the anonymous culture of the currency could make it an instrument for money launderers. 
 
However, Bitcoin supporters think the currency’s recent rise is a sign of its widespread acceptance and growing community. Those supporting the currency see it as a legitimate alternative to more traditional payment methods. 
 
 
Source: AP
 

Workers not getting their Piece of the Pie

Workers not getting their Piece of the Pie

 

The gap between hourly pay and productivity is the highest it’s been since the few years following World War II. “A larger share of what companies in the United States are producing is going to the owners, and operators of the firms and the lenders who financed the firm’s projects while a smaller percentage is going to the workforce,” claims Gary Burtless, a senior fellow in economic studies at The Brookings Institution. 
Productivity, which measures goods and services created per hour worked, jumped nearly 81 percent between 1973 and 2001, compared to a marginal increase of 10.7 percent in median hourly compensation, according to the Economic Policy Institute. These figures represent a shift from the trend between 1948 and 1973, when hourly compensation and productivity ran analogous to one another. 
 
The primary reason for the wider gap is saturated wage growth in recent years among both college-educated workers and those workers without degrees, said the Institute’s President Lawrence Mishel. National deregulation and increased global competition have also kept compensation down.
 
The split between the two figures has been acute since the beginning of the 21st century, when wage growth flattened out; and now with unemployment rising, the bulk of the workforce feels lucky just to have a job. As a result of the weak employment numbers, many companies are using their leverage to get a better deal out of their workforce. 
 
Employers are also achieving their gains with fewer workers; economic activity in the United States is 2.5 percent higher than it was when the recession struck in the latter portion of 2007 with less than 3 million workers in the labor force. 
 
Evaluating hourly compensation by itself does not tell the story because these figures do not include benefits, which make up roughly 30 percent of a worker’s compensation package. That said, costs of benefits are rising over time, which serves as a factor in the widening of productivity figures versus hourly compensation rates. 
 
Many professionals attribute the widening gap to market forces. Professionals expect the gap to narrow as the economy further recovers from the collapse of 2007. As the economy improves, the labor market will ultimately tighten, and companies will raise wages. One sector where this shift has become tangible is the energy market in the Midwest, where employers are beginning to boost compensation for their workers. 
 
 
Source: US Department of Labor
 

Interest Calculator

Interest Calculator

 
 
What is an interest calculator?
 
 
An interest calculator is a way for individuals, and businesses, to determine the expected cost, or income of giving and accepting loans.  An interest calculator can also be used by investors to determine the amount of money they can expect from returns on investments.  There are many different types of interest calculators that range from the very basic to the complex.  
 
 
Definitions
 
 
Before going into any conversation about interest calculators it is important to know the different ways that interest can be computed and how it will effect your decision making.  The three main types of interest calculators that are used in most financial transactions are simple interest; compound interest; and amortized interest.
 
 
Simple interest, as per its definition, is a very simple interest calculator.  A simple interest calculator formula will be: Interest=principal (x) interest rate (x) length of time.  For example, if you receive a loan for $1,000 for one year at an interest rate of 7% the tax calculation will be as follows:  1000 (x) .07 (x) 1.  This will give you an annual  interest payment of $70.  This is the most basic type of tax calculator, but this is usually not the case in most financial transactions.  Most financial transactions involve some form of compounding.
 
 
Compound interest is a more complex form of interest calculator.  In a compound interest calculator the amount of money interest is charged to increases over time.  This is reflected in the Annual Percentage Yield.  An example of a compound interest rate would be a savings account.  You may have a savings account that has a 4% interest rate.  When this is compounded the total interest you receive will be slightly more than 4% depending on how often that interest is compounded.  When looking for investments or picking a bank to have a savings account the amount of interest that the bank offers is only one of the factors that you should use in your interest calculator.  You should find out how often that interest is compounded.  Most banking institutions compound interest on a monthly basis.  This means that your interest on your investment will be calculated every month and every month that new figure will be subject to the interest rate for the next month.  For example, if you invest $1000 in a savings account that has a 5% interest rate that is compounded monthly then the interest calculation will look like this:
 
 
Initial investment:  $1000
 
End of month 1 at 5% interest: $1050
 
End of month 2 at 5% interest:  $1,102
 
End of month 6 at 5% interest:  $1,276
 
End of month 12 at 5% interest: $1,795
 
 
In the previous example the interest calculator works by multiplying the newly generated balance every month by the interest rate, 5%.  As you can see by having compounded interest the interest calculator generates an end of year balance of exceedingly more than if we followed the simple interest calculator, which would leave you with a year end total of $1,050.  If you have investments for extended periods of time it is often simpler to use a tax calculator that involves converting the interest rate to the power of whatever amount of time the interest will be compounded for.  For example, if you have a $1,000 investment that accumulates interest on a monthly basis at 5% interest compounded over the course of 5 years you will want to use the following calculation:
 
 
Interest=(principal (x) (1+interest rate)^(months(x)years of investment))- principal
 
Interest = (1000 (x) 1.05^(12(x)5)) – principal
 
Interest = (1000 (x) 1.05^60) – 1000
 
Interest =(1000 (x) 18.58) – 1000
 
Interest = 18,580 – 1000
 
Interest = 17,580
 
 
Credit card companies often use the same interest calculator but the amount of money that you owe on your credit card is often compounded daily.  This is one of the reasons why it is beneficial to maintain a month to month balance where you pay off the amount you owe as soon as you receive your bill.   Those individuals who maintain a high credit card balance will find that they are paying large sums of money in interest, which is akin to throwing money in the toilet.  Student loans also use compounded interest rates.  It is important, when getting student loans, to find out when they begin compounding.  Subsidized student loans do not begin compounding interest until after you have completed your education, or left.  Unsubsidized loans begin to compound interest as soon as they are taken out.  It is these loans that can cause individuals to owe exhorbitant amounts of money upon graduation.  It is important to use a interest calculator to decide how much the loan now will cost you in the future.  Find out whether, and how often, the interest on all loans are compounded by using the interest calculator. .  It may be more beneficial for you to take a loan at 4% interest compounded yearly than to take a 1% loan that is compounded on a monthly basis.  
 
 
There are also things called amortized interest .  To calculate amortized interest one uses interest calculators in a different way.  Amortized interest calculators are used when you receive a mortgage, car loan, or any other type of loan from a lending institution.  An amortized interest rate is negotiated along with a period of time for repayment.  This is usually done with large investments where payment needs to be spread out over a long period of time.  For example, when you get a mortgage for real estate you will often get a mortgage with a specific interest rate that is amortized, or depreciated, over a period, usually between 20 and 30 years.  As in the above discussion, this interest rate is compounded over the period of time of the loan.  In an amoritized interest calculator  each payment that you make will pay for the interest accumulated over that period of time and also allocate a specific amount towards the principal of the loan.  In describing how amortization works it is easier to leave out the computation for compounding.  If your mortgage is compounded over a period of months or years you should use an interest calculator that reflects that but for this example we will make it simple.  In this example you have a mortgage of $300,000 at 5% interest that is amortized over a period of 30 years that is paid on a yearly basis.  The interest that you pay is $15000 or the first year.  In addition to the interest you will also pay 1/30 of the principal.  
 
 
1st year payment = interest + 1/30 of principal
 
1st year payment = $15000 + $10,000
 
1st year payment = $25,000
 
 
By using this interest calculator you determine that your first year payment is $11,500, which includes interest and 1/30 of the principal balance.  The total principal is amortized, in that the total principal is diminished in that one year period.  As a result, your next years payment is decreased.  This happens over the course of the 30 year life of the loan until the loan is completely paid off.  Now let’s calculate the second years payment.  First you need to use the interest calculator to determine what your updated principal balance is:
 
 
2nd year principal balance = $300,000 – first years payment on principal
 
2nd year principal balance = $290,000
 
 
Once this is done you use the previous calculation to determine the payment for the 2nd year:
 
 
2nd year payment = (5% interest on outstanding principal) + (1/30  of initial mortgage)
 
2nd year payment = (5% of $290,000) + (10,000)
 
2nd year payment =$14,500 + $10,000
 
2nd year payment = $24,500
 
 
As you can see, by using the interest calculator, the total amount that is due at the end of each successive year diminishes.  This is due to the decrease in the amount of principal that interest is charged to.  This calculation becomes more complex when the interest is compounded on a monthly basis.  
 
 
Fixed and Variable Interest calculator
 
 
In addition to the basic principle of simple interest, compound interest and amortized interest there are other factors that need to be included in the interest calculator that can severely affect the amount of interest, and the long term nature of your loan, or investment.  These are the interest rates that are charged by lenders.  There are two main types of interest rates that are charged by lenders, and should be used in your interest calculator.  These are fixed interest rates and variable interest rates.
 
 
A fixed interest rate is, just like it sounds, fixed over a period of time.  If you get a loan at a fixed interest rate of 5% for the life of the loan that means that, no matter what the economic conditions, you will be charged an interest rate of 5% over the life of the loan.  For example, if you have a yearly fixed interest rate of 5% for a 10 year loan you will pay 5% interest on your outstanding balance in year one and 5% interest on your loan in year 10.
 
 
When you have a variable interest rate it gets a little more complicated and a little more risky.  In a variable interest calculator a lender will provide you with a fixed rate of a certain amount of interest on top of a variable interest that is determined by the federal reserve.  For example, your lending institution may charge you a 2% interest rate in addition to 3% interest that is designated by the federal reserve for a total of 5% interest for the life of the loan.  The interest rate charged by the federal reserve changes over time and may decrease or increase.  In the previous example, if you have a variable interest loan and the federal reserve increases its interest rate to 5% your interest will be reflected by the increase and, using the interest calculator, you will realize a new interest rate of 7%.  The interest calculator is more complex than this for the increase in the interest rate by the federal reserve will be retroactive to the beginning of your loan.  In other words, if you have a 10 year loan with a 2% interest rate from the lender and a 3% interest rate at the federal reserve level then your interest rate is 5%.   This may continue for 2 years and then the federal reserve raises interest rates for the following 8 years to 5%.  This will not only increase your interest rate to 7% but the lender will charge you more interest to make up for the diminished interest rate you paid in the first 2 years.  Essentially, for the last 8 years of your loan you will be paying an interest rate so that the life of your loan reflects an annual 7% interest rate.
 
 
Variable interest rates can have their advantages and disadvantages.  For one, the interest rate by the federal reserve may diminish, which means that the interest rate that you initially agreed to will be decreased for the life of your loan.  Those investors who have a great knowledge of the securities market can predict increases and decreases in the federal reserves interest rates and take advantage of predicting the federal reserves decisions in their interest calculators.  Variable interest calculators are also beneficial for individuals who are investing in short term projects.  Those who invest when interest rates are low are more likely profit if they invest for a short period of time before federal reserve interest rates change.  Those who are investing long term assets should stick to fixed interest rates.  Variable interest calculators are also beneficial in that there is more risk involved in a variable interest rate loan.  In that regard, lending institutions are more likely to offer variable interest rate loans at a lower interest rate than if they were to offer fixed interest rates.  The downside to using variable interest rates is that is less favorable to planning.  Because you are unaware of how much interest you will be charged in the overall investment you will need to keep money on hand in the case that interest levels increase and you are required to make larger payments than you initially intended.  
 
 

Loan Calculator

Loan Calculator

 
 
Using the loan calculator is a very simple process that allows you to estimate what your loan amounts will be without contacting a lender or viewing various loan websites.  Loan calculators have helped many people seeking loans to narrow down their search and determine what loans will be best for them.  Many different types of loan calculators are available, however many times people need only a basic loan calculator in order to see what estimated payments will be for a certain type of loan or how long the loan will take to be paid.   
 
 
A loan can be any type of debt which needs to be paid off.  Informal loans, from family and friends, occur all the time.  However, many banks and lenders are in the business of providing loans to customers who cannot afford things right away, but can instead spread the payments out over a period of time.  These banks and lenders make money from charging interest from the loans, which is calculated as a percentage of the total amount.  
 
 
Some loans have compounding interest, which means the interest will be calculated every year and interest on unpaid interest will be charged.  Other loans do not have compounding interest, which means they only charge interest from the principal, which is the original amount taken in the loan. 
 
 
Most loans require a security which the lender will hold in case the loan goes unpaid and is in default.  Most lenders, for items such as cars and homes, retain a legal right to repossess the property should the loan go into default.  These secured loans often have much lower interest rates, as the lender can always just take back the item in order to fulfill the loan amounts.
 
 
Some loans are unsecured, which means the lender retains no right to repossess property should the loan go into default.  These types of loans are typically used in student loans or personal loans.  The interest rates on these loans will typically be significantly higher.  
 
 
Loan calculators can be used for determining numerous types of loans.  Use a loan calculator for the following:
 
 
– Auto, boat, and motorcycle loans.
 
– Lease payments on a vehicle.
 
– Home mortgage loans.
 
– Student loans and financial aid for college and universities. 
 
– Business loans.
 
– Personal loans. 
 
 
Enter the data as it is asked for on the loan calculator screen.  You will need to include the following:
 
 
– Principal Amount
 
– Interest Rate
 
– Payment Period
 
– Term/Length of Loan
 
– Payment Amount
 
– First Payment Date
 
 
Once you have entered each value, select the calculate button.  You can reset your entered information at any time by pressing the reset button, or you can change each individual box at any point during the process. Once you finalize all of the numbers and press the calculate button, all available loan information will become available to you.  You may print this information, save it to your computer, or go back and change the values in order to see the effects they have on your loan information.  
 
 
Below are the definitions of each area of data which needs to be put in the loan calculator.  Better understanding each term can help you modify your loan information to get you the best loan that fits your needs. 
 
 
1. Purchase Price – The purchase price is the total sale amount of the item you are financing.  If you are unsure of the actual final purchase price, enter your best estimate into the loan calculator. 
 
 
2. Down Payment – The down payment is the upfront payment on the item you are purchasing.  Not all loans require a down payment, however many lenders will only give a loan if a certain percentage of the total purchase price is paid upfront (for example, for a home loan, this is generally 20% of the purchase price)
 
 
3. Sales Tax – If the item purchased is subject to sales tax in your state, you should enter the sales tax that will be added to your final purchase price.  If you are unsure, check online to determine if your item is subject to the sales tax and the rate in which the sales tax will be calculated.  Most states will require a sales tax on items such as cars, boats, personal items, and other similar items, and the rate usually ranges between 5% and 8%.
 
 
4. Yearly Interest Rate – The yearly interest rate is the percentage of the total loan that will be turned into interest that must be paid to the lender.  The yearly interest rate can also be referred to as the APR (Annual Percent Rate), APY (Annual Percent Yield), or just as the interest rate.  If you are using loan calculators to determine the yearly interest rate, leave this field blank and the calculator will tell you what the rate will be considering the other amounts entered in the other boxes.  
 
 
5. Payment Period 
 
 
This will determine how often you will make repayments on your item.  You can choose between paying monthly (30 day payments), annually (one payment every year), quarterly (payment every 3 months), semi-monthly (payment every 15 days), bi-weekly (payment every 14 days), and weekly (one payment per week).  You may also select a custom payment period on the loan calculator.  
 
 
– Typically, most lenders require a monthly payment on their loan.  However, you may occasionally find bi-monthly payment plans or quarterly payment plans, depending on the type of loan and your credit history. 
 
 
– The payment period must be used along with the proper length of loan.  Typically, the length of loan will highly depend on the type of loan taken.  Car loans are typically between 4 and 6 years in length.  Home loans are typically much longer, with the standard repayment 15 or 30 years.  
 
 
6. Length of Loan (Term) – The length of the loan is the overall length of time it will take to pay off your loan.  You can enter any amount of time in which to pay your loan.  If you are using the loan calculator to determine you length of loan, leave this field blank and the loan calculator will tell you how long it will take to pay your loan considering the loan amount, interest rate, and payment terms.   
 
 
7. Payment Amount – The payment amount is how much each payment will be on your loan.  Typically, this is what most people want to find out when using loan calculators, as this is the payment you will be responsible every payment period.  Leave this area blank in order for the loan calculator to tell you what your payment amounts will be. Note that you must enter a length of loan, interest rate, and loan amount in order to get your payment amount.  
 
 
8.  First Payment Date – The first payment date is when you will first start making payments.  The loan calculator does not require this information in order to perform its basic functions, however entering a first payment date will provide you with a more accurate description of when your overall payments will end and the loan will be fully paid off. 
 
 
Note:
 
 
– Loan calculators for mortgage loans may provide slightly different information than a standard loan calculator.  This is because taxes, insurance, and PMI must all be calculated into the total price of purchasing a home, which are often much more significant amounts than for smaller personal and business loans. Indicate on the loan calculator if you are attempting to figure out mortgage loan information or you can use one of our other loan calculators geared towards home mortgage payments.  
 
 
– Payment Amortization – Amortization is a map that details every payment that will be made during the life of a loan and exactly when those payments will be due.  They spread the payments out according to the length of the loan and detail each payment according to the payment period.  This can be a valuable tool in showing exactly how your loan will be paid off and how often you will need to make your payments.  It provides a good visual for those who have trouble envisioning exactly what their loan payments will look like over an extended period of time.    
 
 
– While the loan calculator can usually provide accurate numbers to determine your loan obligations, you should always consult with the lender about the terms of your repayment.  The online loan calculators should only be used to provide you with a general framework of how your loan will look and your estimated monthly or quarterly payments.  
 
 
– Many lenders also require additional fees and expenses, which cannot be put into the loan calculator.  Therefore, you should always expect a slightly higher loan amount than the purchase price. Contact your lender or lenders you are considering to determine what their fees and expenses may be.  Do not agree to any loan in which fees and expenses are brought to your attention right before signing, as you should be given these amounts well in advance to consider whether you can pay this loan within your budget.  
 
 
Tax Issues
 
 
The following are the generally accepted guidelines concerning loans and income tax in the United States.  If you have concerns about the tax implications on your loans, consult with a tax professional or further explore the tax laws using legal resources available online. 
 
 
1. A loan is not gross income for the borrower.  Because the borrower is under obligation to repay the loan, it is not considered taxable income despite the transfer of funds. 
 
 
2. A lender may not deduct the loan amount from their gross income.  Just as a loan is not considered income, it also cannot be used as a deduction when it is given. 
 
 
3. Any amounts paid to satisfy the loan are not deductible by the borrower and is not considered income to the lender.
 
 
4. The interest paid on a loan is considered income for the lender.  This is money made off the loaning the money, so it is therefore listed as gross income.
 
 
5. Likewise, a borrower can deduct the expenses of interest payments, however this generally only applies to loans taken for business purposes.  Personal loans generally are not deductible, unless special rules apply. (Student loans and home mortgages are examples of loans that are given special tax treatment).  
 
 

Large Financial Institutions Must Annually Conduct Stress Test

Large Financial Institutions Must Annually Conduct Stress Test


On October 9, 2012, the Federal Deposit Insurance Corporation (FDIC) announced the final rules for stress testing by large financial companies required under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.  The final rules apply to federally insured financial institutions with consolidated assets equaling $10 billion or more.  


The final rule has added section 165(i)(2)(A) to the Dodd-Frank Act.  The section requires the large financial institutions that are insured by the FDIC to conduct and submit a “company-run stress test.”  Additionally, the final rule requires financial institutions with total consolidated assets over $50 billion to start the stress tests this very year.  


The FDIC has authoritative power to grant a delay for the covered financial institutions with more than $50 billion in consolidated assets, but the delays are only allowed after an evaluation of the financial institution.  The final rule allows financial institutions with consolidated assets between $10 billion and $50 million to delay stress tests until October of 2013.  


The FDIC will release scenarios for stress-testing for the institutions with assets over $50 billion in November.  The large financial institutions are required to use data up to September 30, 2012 and submit their results by January of 2013.  


The final rule updates the deposit insurance assessment system for institutions with over $10 billion in assets as well.  The rule changed the definitions that were used to target and define groups of high-risk assets in order to help the FDIC determine the degree of risk.  


The FDIC reports that there were 108 institutions as of June 30, 2012 with over $10 billion in assets.  


Lastly the FDIC updated loss, income, and reserve ratio projections that are used for the Deposit Insurance Fund (DIF).  Acting Chairman Martin J. Gruenberg stated, “We are continuing on a path to gradually rebuild the fund in a manner that should not unduly burden bank while the economy continues to recover.”


Source: Federal Deposit Insurance Corporation
 

American and US Airways Announce $11 Billion Merger

American and US Airways Announce $11 Billion Merger

 

Ending a courtship that lasted over a year on the part of US Airways, American Airlines agreed to merge with the smaller US Aiway’s to pave the way for the creation of the country’s largest airline. 
 
The boards of both companies unanimously approved the deal, which is to be valued at roughly $11 billion, according to press releases on Thursday morning. The prospective merger would bolster American’s national footprint, strengthen its presence in the congested Northeast and provide a larger network to attract corporate accounts and business travelers.
 
Under the terms of the agreement, US Airways shareholders would control 28% of the newly-formed airline while American Airlines shareholders, labor unions, employees and creditors would own the remaining 72 percent. 
 
The merger creates a company with the size to compete against Delta and United airlines, the nation’s largest carriers, which have also grown through mergers in recent years. Following the closure of the deal, the combined airline will have in excess of 100 million frequent fliers. 
 
That said, while Delta and United went through mergers and bankruptcies in the last decade, American was losing ground while racking up losses of $12 billion since 2001—American was the last major airline to pursue court protection through reorganization when it filed for bankruptcy in November of 2011.
 
The stream of large mergers in the industry has created more profitable airlines that are now able to provide new planes and products, including individual entertainment screens, Wi-Fi and more comfortable seats for business travelers. These amenities; however, come with a cost as many consumer advocates are worried that the reduction in the number of airlines will lead to increased fares over the long run. 
 
The deal, which was finalized in recent days, should be formalized as American exits bankruptcy. The deal calls for Thomas Horton, chief executive of the AMR corporation and parent company to American, to act as chairman of the combined company, with W. Douglas Parker, the chairmen and CEO of US Airways, to assume the CEO position of American. 
 
Mr. Parker is a long proponent of consolidation in the airline industry and claims that the deal is the last piece to rationalize the business. The CEO went onto say that the two airlines have few overlapping routes (12 out of 900 total routes), which would ultimately increase service: US Airways flies to 62 American cities that are not served by American while American flies to 130 U.S. cities that US Airways does not reach. 
 
The combined airline will offer roughly 6,700 daily flights to 336 locations in 56 countries. Before these offerings; however, the merger must be approved by America’s bankruptcy judge in New York City and US Airways shareholders. 
 

Office Depot Announces Merger with Rival OfficeMax

Office Depot Announces Merger with Rival OfficeMax

 

Office Depot just announced a deal to merge with smaller rival OfficeMax in an all-stock transaction worth approximately $1.2 billion. Details on the prospective deal; however remain limited. 
 
The companies claim they expect to save approximately $400 to $600 million annually from the merger, but there were no estimates provided regarding store closings or staffing cuts. 
 
The decision concerning what to name the combined company will be determined once a CEO is selected by the company’s respective boards. The new company will first look at both current CEOs along with outside candidates before deciding who will run the newly-formed company.
 
The announcement of the merger was a bit of an embarrassment and cast a widespread negative light on Office Depot’s operational abilities.
 
First news of the prospective deal came when Office Depot posted, seemingly by mistake, a fourth quarter earnings report which mentioned the forthcoming deal on page 4 under “other matters.” This statement was then removed from the corporation’s investors relations Web Page later in the morning. That said, once the earnings statement was removed from the site, the New York Times reported that talks on the deal were still ongoing. Then immediately following the market opening came the official joint announcement of the merger, which the company described as a “deal of equals.” News of mergers are typically announced prior to or following market trading hours, not immediately prior to the start of trading. 
 
Neil Austrian, CEO of Office Depot, blamed the premature announcement on the company’s Webcast provider and deeply apologized to analysts during a conference call Wednesday. 
 
The prospective deal is clearly an attempt for the two office supplies companies to compete with larger rival Staples. 
Office Depot currently has 1,629 stores and 38,000 employees throughout the world, while OfficeMax had 940 stores at the end of 2012 and roughly 29,000 employees in 2011. These figures are meager compared to Staples, which has over 2,250 stores worldwide and over 90,000 employees. In addition to Staples, all companies in the retail sector are facing stiff competition from online players, such as Amazon. 
 
Executives from OfficeMax and Office Depot believe they can provide estimates as to how many stores would be closing, claiming that they had not been able to speak on such matters during the initial merger talks. 
 
According to the prospective deal, OfficeMax shareholders will receive 2.69 shares of Office Depot Stock for each of their individual shares. This figure is roughly a 4% premium, based on Tuesday’s closing prices. However, OfficeMax shareholders had already profited on reports of the deal, which drove up share prices 21% on Tuesday alone. While., Office Depot shares closed roughly up 10% on Tuesday. 
 

Henry Barbour: ‘Two Sides to Every Issue

Henry Barbour: ‘Two Sides to Every Issue

Henry Barbour, a member of the Republican National Committee and one of five GOP members tasked with developing a new GOP strategy following the failed 2012 elections, refused to say if climate change is one of the focal points his party should address, stating “there are two sides to every issue.”

During a Thursday appearance on NPR to discuss the Republican Party’s post-election revamping, Barbour fielded a question from a caller who lambasted the Republicans for ignoring climate change as a and refusing to accept its standing as a legitimate concern.

“The Republican Party has to be concerned with fixings its own problems,” said Barbour, a Mississippi Republican. “Whether it’s looking at the environment or whether it’s dealing with education, security or spending, or whatever it is.”

The program’s host then pressed Barbour on the caller’s question by saying, “you can’t fix these issues unless you acknowledge them first.”

“There are certainly two sides to every issue and I’m not going to site her and give you a position on climate change,” Barbour replied. “As a party, we must focus on the ideas that help improve the country, whatever those might be, we need to focus on the ideas that unite us and not divide us.”

Barbour, the nephew of former Mississippi Governor Haley Barbour, was elected to the Republican National Committee in 2005 and has held crucial roles in several GOP campaigns. Last month, Barbour was appointed to the Growth and Opportunity Project, an initiative aimed at broadening the party’s appeal and responsible for examining where candidates failed during the 2012 election cycle.

“We must articulate our policies in a manner in which people can tell the benefit of what we’re trying to do,” Barbour told Bloomberg news. “Democrats were better at connecting with people in this regard and I think we came across as the old accountant too many times.”

Recent data suggests that climate change is an area where voters from both sides show great concern. Various polls released last month show that 83 percent of Democrats and over 70% of Republicans acknowledged rising temperatures, and 80 percent of total respondents stated that global warming is a serious problem.

These comments echo the GOP’s political tip-toeing when it comes to climate change. The bulk of GOP members feel that climate change is a non-issue.