Debt

Roberto Pagan-Franco didn't have a bank account for decades. His employer paid him in cash or with a check that the Baltimore resident took to a check-cashing store. A few years ago he lost his job after a severe illness and for a time was homeless. Not exactly the type of customer you'd expect a big bank to court. But Pagan-Franco enrolled in a PNC Bank program that targets consumers who otherwise might be shut out of the banking system. And today, the 54-year-old has checking and savings accounts at PNC and is in the process of getting a credit card.

For a long time, you had to pay income tax on debt that your mortgage lender forgave. During the height of the housing crisis, the federal government offered a reprieve - it stopped collecting income tax on up to $2 million of forgiven mortgage debt on a primary residence. This tax leniency is expected to expire at the end of the year, and there's some doubt it will be renewed. Maryland will step in with its own relief if the federal tax break disappears. Under legislation signed into law yesterday, Maryland won't collect state income tax on up to $1 million of forgiven mortgage debt for singles, and $2 million for joint filers.

Ever since the Reagan administration amassed more public debt than all its precessors in history combined, the federal government has continued to run ungodly massive deficits, sometimes cutting taxes to do so. Our history includes such expensive catastrophes as the Civil War, the Great Depression and World War II, but our generation needed more money than all of them put together. We don't want our taxes raised, but we don't want our favorite government programs cut, either. Caught in this dilemma, what we needed was a group of people who could not squeal if their taxes were raised.

While your co-workers hover around the water cooler debating whether it matters if Mitt Romney bullied some kid in his youth, a formerly First World nation called Greece is teetering on the brink of bankruptcy. Why, you might ask, should Middle America pry its overworked eyes away from Jennifer Lopez gyrating around in a bodysuit on "American Idol" long enough to bother caring? Now replace "Greece" with "your bank. " It suddenly matters a little more, doesn't it? What if your bank couldn't loan you money, give you a mortgage or allow you to ring up credit-card debt, all because the bank abruptly had much less with which to leverage your lifestyle since Greece decided to finally pull itself off fiscal life support?

I am sure I will take some flack for this. But here goes anyhow. Our elected leaders are mostly talk and no action. Why? Because they know we as a country are short of the cash it takes to get things done. Remember it is always the money. The rest of us are just whining, and hoping somebody else will fix the problems. So here's an idea. Add a $1 tax to all the gasoline sold in this country for one year. Let the individual states collect it, keep half, and send the rest to the federal government.

Like my fellow Americans, I am deeply concerned about our nation's financial future. Our country will face a fiscal catastrophe if Washington can't address our crushing debt. Fortunately, some in Congress understand the urgency. For months, a bipartisan group of Senators known as the "Gang of Six" have been working together to produce a comprehensive plan to address the ballooning deficit. Their approach has earned the backing of No Labels, a new political group encouraging bipartisan problem-solving.

Consumer borrowing fell again in February, reflecting weakness in credit cards and auto loans. Analysts said the sharp reduction showed that the weak economy is still making consumers hesitant to take on more debt. The Federal Reserve said Wednesday that borrowing declined by $11.5 billion in February, surprisingly weaker than the small, $500 million gain that economists had expected. The February decline was the 12th decrease during the past 13 months as consumers slash borrowing in the face of a deep recession and high unemployment.

Most of us might feel overwhelmed owing tens of thousands of dollars. Not college students. A study by Ohio State University, found that young adults not only see debt as positive, but being in hock boosted their self-esteem. The more credit card and college loan debt they held, the “higher their self-esteem and the more they felt like they were in control of their lives,” according to a release about the study. These feelings were more pronounced among students from low-income families, the study found.

In his commentary ("Difficult choices await on spending, debt," June 15) Sen. Mitch McConnell talks of the "need to develop a plan that reins in our debt without raising taxes …" Well, since about a third of the federal budget is on borrowed money, the only way we can stop increasing debt without increasing taxes is to cut the federal budget by a third: defense, Medicare, Social Security, subsidies, all cut by a third. Mike Brown, Columbia

Maryland's highest court on Wednesday approved changes to a set of rules that require debt collectors to provide greater proof that they are entitled to sue consumers, according to a Baltimore-based legal advocacy group. The Maryland Court of Appeals agreed to revise three rules of the Maryland Rules of Procedure that will, in part, force companies that buy past-due consumer debts — and attempt to collect by suing — to present sufficient evidence to back up their claims, said Jonathan F. Harris, an attorney with the Public Justice Center.

Legg Mason's stock rose nearly 7.5 percent Wednesday on news that the company will pay off $1.25 billion in senior notes held by private equity firm Kohlberg Kravis Roberts & Co. to reduce its outstanding debt. Its shares gained $1.67 to close at $24.05 each. Under the terms of the repurchase, the Baltimore money manager said it will take a $70 million to $80 million noncash charge in its fiscal first quarter. The move would reduce the company's debt by a net $350 million, Legg said.

The Federal Trade Commission has been cracking down on businesses that try to collect debts from consumers that they don't even owe. Today, the agency says it had reached a $3.1 million settlement with Illinois-based Luebke Baker and Associates Inc. that tried to collect on bogus magazine subscriptions. What caught my attention is that the FTC accused Luebke defendants as posing as Ed McMahon. Apparently, according to the FTC complaint, caller ID information was somehow rigged so that it looked like consumers were being called by McMahon, who died in 2009.

Your recent editorial on European elections states that "the real lesson to be drawn from the rise ofFrance's Francois Hollande and others is that many in Europe are fed up with austerity measures" ("Rejecting austerity," May 9). Contrary to that assertion, the real lesson to be drawn from the European debt crisis is that a country cannot afford to be so deeply in debt that its prospective creditors are in a position to demand onerous loan covenants that are politically untenable.

It is something of a truism that whenever the federal government steps in, costs usually rise and efficiency declines. That is especially true when it comes to a college education, which President Barack Obama promised during the 2008 campaign to make more affordable. "We've got to make sure every young person can afford to go to college," he said then. Instead, tuition costs keep rising, along with the debt owed by increasing numbers of graduates, who are now campaigning -- with bipartisan approval in an election year -- for Congress to stop interest rates on their subsidized Stafford loans from doubling in July.

Young people face a cruel irony. Most can't land a decent job without a college education, yet many graduates are locked into poorly paying positions that don't permit repayment of student loans. For two generations, college price tags have risen much faster than inflation and families' ability to pay. More importantly, costs have leaped faster than what graduates can earn over working lifetimes, and many diplomas do not offer a positive return on investment, as measured by graduates' ability to service their debt.

Regarding you editorial "Twice as nice" (April 25), my wife and I along with our kids went through credit card debt not once but twice. The second time we had to cut up the credit cards and simply decide that if we couldn't afford something, we wouldn't buy it. (Of course there were exceptions, such as medical emergencies.) What has always bothered me about government spending when as a nation we find ourselves deeply in debt - to the tune of some $15 trillion currently - the government always threatens to cut police, firemen, teachers or other vital public services.

First Mariner Bancorp, under pressure from regulators to improve its financial soundness, announced it completed a deal with a former board member that will raise the Baltimore-based company's capital and reduce its debt. John McDaniel, who had served as a director until last month, earlier this year had purchased at a discount $1 million worth of debt in the form of trust preferred securities. At the end of last month, McDaniel exchanged that debt for $100,000 worth of First Mariner stock, according to a document filed with the Securities and Exchange Commission.

I am writing to express my fear and frustration about our ongoing debt crisis. I am a senior living on a pension and being kept alive by Medicare. As a senior, I have a lot of life experiences and know that we are spending more money than we can ever afford. I hear the current administration tell us that if we only tax the rich more we can pay all our bills. Presently, the rich are paying nearly 70 percent of our federal taxes, and if we took all their money it would not begin to cover our current $3 trillion to $4 trillion annual debt and not even begin address our $63 trillion unfunded obligations.

If you have a college student in the family - or an interest in presidential politics - by now you've probably heard that the interest rates on Stafford student loans are set to double on July 1 unless Congress takes action. President Barack Obama has been touring college campuses this week asking that rates be held to 3.4 percent. As one might imagine, this is a message that has some traction with young voters, a crucial bloc for Democrats, and the reception at places like the University of North Carolina at Chapel Hill and the University of Colorado at Boulder, where the president has taken his message, has been warm and welcoming.