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Monthly Archives: August 2011

Jim Rogers: “The idea that the U.S. is downgraded and the UK is not is lunacy “

“Britain and several euro zone countries are likely to have their credit ratings cut in coming months as debt problems worsen, and Western policymakers are bound to embark on more quantitative easing….”

“There are many countries, Belgium, Spain, lots of countries in Europe, that should be downgraded just as the U.S. has been downgraded,”

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WINNING THE FUTURE: Broke Town Asks Citizens for Loans

OAKRIDGE, Ore. – Oakridge is facing a serious cash shortage after its bank statement showed the City had $420,000 less than planned, prompting a city planning commissioner to solicit private loans from citizens.

George Custer began seeking “investors” soon after the City acknowledged it would be laying off eight city employees, about one quarter of the staff, to fill the budget gap, saying it was a win-win for the City and the citizens.

Custer is a volunteer planning commissioner for the City of Oakridge and claims he was not working on behalf of the City. Instead, he was soliciting loans for the City as a “concerned citizen.”

Both the city administrator and the mayor knew about the plan and considered it an option to keep the City from defaulting on its payments and going into bankruptcy.

“That was a plan B in case other things didn’t work” said Donald Hampton, City of Oakridge mayor.

Custer says that half a dozen citizens have agreed to give the City a loan if a loan from the bank does not materialize, but the list of citizens will remain anonymous for now.

Not all of the citizens solicited to loan the City money were happy. Eddie Roberts, an 87-year-old man, and well-known figure in the City of Oakridge and Westfir, says Custer, a man he has never met, asked him to loan the City money, to which he replied no.

“Why would I loan them money if they can’t even balance their checkbook each month?” asked Roberts.

The City recently discovered it had far less money than officials thought. According to Gordon Zimmerman, the city administrator, the adopted budget has the City about $420,000 richer than it actually is.

The shortfall wasn’t discovered until the City become aware it did not have enough money to pay all of its bills, leading to the realization that there might be something amiss in the City’s finances.

For a city with a general fund budget of just over $3 million, a $420,000 budget mishap is a big deal.

According to Hampton and Zimmerman, the responsibility of reconciling the City’s bank account to the budget falls on Ruth Ann Plumlee, the City’s finance director, although both acknowledged the oversight ultimately fell on the city administrator.

“I am not casting blame on anyone but myself,” said Zimmerman.

The City of Oakridge has not completed an audit since 2008, something Zimmerman blames on “the difficulty in making the numbers work.”

The 2009 audit currently in process has run into a number of problems, resulting in delays and the auditor’s refusal to sign off on the audit. Zimmerman says the auditors have had a number of questions and issues over the years that needed to be resolved before the audit could be completed.

At issue now is a $67,000 temporary account with insufficient documentation, and thus the 2009 and any subsequent audits have yet to be completed.

This isn’t this first time auditors have said the City has insufficient documentation. In the 2008 audit, auditors noted a total of eight “significant deficiencies”:

  1. Lack of internal control policies;
  2. Difficulties in obtaining documentation;
  3. Untimely account balance reconciliations;
  4. Lack of compensating controls in: journal entries, bank reconciliations, cash disbursements, and utility billing revenues;
  5. No consistent process of journal entry reviews;
  6. Excessive journal entries made to correct or adjust initial journal entries;
  7. Bank reconciliations were not correctly reconciled to the general ledger;
  8. The City did not keep adequate backup for adjustments to customers’ utility accounts.

Zimmerman says most of the 2008 deficiencies have been addressed but couldn’t say which ones.

The $67,000 temporary account issue is expected to be discussed at Thursday’s Council meeting along with the bank tax anticipation loan, according to Zimmerman.

SOURCE

 

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Fannie Mae to Taxpayers: We Need Another $5.1 Billion

Mortgage finance giant Fannie Mae said it would ask for an additional $5.1 billion from taxpayers as it continues to suffer losses on loans made prior to 2009.The largest U.S. residential mortgage funds provider on Friday also reported a second-quarter net loss attributable to common shareholders of $5.2 billion, or 90 cents per share.Including the latest funding request, Fannie Mae has needed $104 billion in government capital injections since the U.S. Treasury seized control of it in 2008 during the financial crisis. Fannie Mae has paid back $14.7 billion in dividends.

Read more: http://www.foxbusiness.com/industries/2011/08/05/fannie-mae-to-taxpayers-need-another-51-billion/#ixzz1UOC7FSEy

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