By Jamie McGee
May 29 (Bloomberg) -- Ulish Hopkins, a former bus- dispatcher from Chicago, turned to a debt-settlement company last year after piling up about $30,000 in credit-card bills. Seven months later, he owed close to $40,000.
Hopkins says the company told him it could reduce his bills by about 50 percent through negotiations with lenders. He was told to stop paying creditors and to put monthly payments in an escrow account, which the firm used to cover its fees. Instead of reducing his bills, interest and late fees raised his indebtedness and damaged his credit score.
“They never told me that the money I was paying wasn’t going to my debt, it was going to them,” said Hopkins, 59, who quit work in January 2008 after a brain tumor led to surgery. He now receives $1,539 a month in disability checks. “You are better on your own.”
Credit-card delinquencies are at record highs, according to Fitch Ratings, and the U.S. unemployment rate of 8.9 percent is the highest since 1983. As more consumers fall behind on bills, settlement companies often end up adding to the debt burden rather than offering a cost-saving solution, said Gail Cunningham, a spokeswoman for the National Foundation for Credit Counseling in Silver Spring, Maryland.
“There has been significant growth in the debt-settlement industry based on the economic decline,” Cunningham said. “People are financially distressed and when that happens, the unscrupulous among us seem to come out in droves.”
Sued for Fraud
Wesley Young, legislative director of the Association of Settlement Companies, a Madison, Wisconsin-based lobbying group, said there are probably more than 500,000 customers of as many as 1,000 debt-settlement companies. The association, which includes about 30 percent of the industry, requires members to disclose payment plans and credit-score risks upfront, he said.
New York Attorney General Andrew Cuomo has begun a national investigation of settlement companies, and has sued two for fraud and false advertising. Illinois Attorney General Lisa Madigan has also filed two lawsuits against debt-settlement companies, alleging they “engage in deceptive marketing practices” and “do little or nothing to improve consumers’ financial standings.” Texas Attorney General Greg Abbott sued a debt settlement company in March, saying it engaged in “deceptive and misleading acts,” according to court documents.
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Monday, June 1, 2009
Oil Falls From Seven-Month High on Signs OPEC Output Climbing
By Christian Schmollinger
June 2 (Bloomberg) -- Crude oil retreated from a seven- month high in New York on signs OPEC’s output is climbing and as traders who bet on rising prices sell futures to lock in gains.
Oil jumped as much as 3.6 percent yesterday, capping a 12 percent increase since May 21, after the U.S. and China reported increases in manufacturing activity. The Organization of Petroleum Exporting Countries raised their production by 1.5 percent in May, according to 
a Bloomberg News survey.
“OPEC countries are starting to see prices at $70 and then they start exerting less discipline on the quotas,” said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. “The price ran pretty high overnight so we may be seeing some profit-taking as people still consider the fundamentals quite weak.”
Crude oil for July delivery fell as much as 78 cents, or 1.1 percent, to $67.80 a barrel on the New York Mercantile Exchange. It was at $68.42 a barrel at 12:07 p.m. Singapore time. Yesterday, oil closed at $68.58 a barrel, the highest settlement since Nov. 4. Prices are up 53 percent this year.
Futures climbed yesterday on expectation that fuel demand will increase as the economy improves later this year. The Institute for Supply Management’s U.S. factory index strengthened to 42.8 from 40.1 in April and China’s Purchasing Manager’s Index showed manufacturing in May gained for a third month.
Gold Gains to Three-Month High as Weaker Dollar Boosts Demand
By Jae Hur
June 1 (Bloomberg) -- Gold climbed to the highest in more than three months as a slumping dollar increased demand for the precious metal as a store of value. Silver gained to the highest since August.
Precious metals advanced as the dollar dropped to the lowest since Dec. 18 against a basket of six major currencies, after posting its biggest monthly loss this year in May. Silver rose 27 percent in May, the most since April 1987, and gold added 10 percent, the most since November.
“The dollar’s weakness continued to lend support to commodities, including precious metals and crude oil,” said Hiroyuki Kikukawa, general manager of research at IDO Securities Co. in Tokyo.
Gold for immediate delivery added as much as 0.7 percent to $985.70 an ounce, the highest since Feb. 24, and was at $983.51 at 1:57 p.m. in Singapore. Silver for immediate delivery climbed as much as 1.3 percent to $15.95 an ounce, the highest since Aug. 8, before trading at $15.865.
Spot silver has jumped 39 percent this year, while gold has gained 12 percent. One ounce of gold now buys about 62.1 ounces of silver, the lowest this year, according to data compiled by Bloomberg. This is down from a high of 84.39 in October, which was the most since March 1995.
“Both precious metals appeared to have been overbought,” Kikukawa said. Silver’s 14-day relative strength index, a gauge of momentum, rose above 70 on May 28, a signal some investors use to indicate prices may be about to decline. The index for gold climbed above 70 on May 29.
Record High
“Given the re-emergence of the typical inverse relationship between the dollar and gold, the likelihood of further weakness in the dollar should drive gold to a test of its 2008 record highs,” said Toby Hassall, an analyst at Commodity Warrants Australia Pty in Sydney.
Spot gold reached a record $1,032.70 on March 17, 2008.
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