The recent financial crises which hit the U.S. economy ended with a large increase in the rate of unemployment, as most businesses had shutdown where as other businesses had to sack employee’s to cope up with the increasing pressure of recession. However, if we to prevent this from happening again in the future then we need to diagnose the cause which triggered this crisis.

The president of the Federal Reserve Bank of New York, William Dudley, outlined the main problem which was the shadow banking system. This is a system when institutions such as Lehman Brothers perform the same function that of a traditional bank but are not subjected to the same regulations. Under this, the mechanism works in such a manner that the regulators and the market participants needs to fully appreciate the strength of the financial system. At the most basic level, the prime cause of the crisis was the rapid growth of the shadow banking system over the past few years and how it collapsed in the last two or three years.

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In order to help out those students who are still waiting for their loans, many universities in England and Wales have started to use their hardship funds.

As the Student Loans Company (SLC) has yet to process loan applications that should have made cash available in September, thousands of students had to get financial assistance to pay for books, food and rent.

According to a survey by BBC this week, most of the universities said that they had to use their hardship funds to pay out an average of £44,000 to help needy students.

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According to a recent news story in Associated Press, It is highly unlikely that Federal Reserve Bank will change the key interest rates any time soon. Since the interest rates are currently at historic low for some time now and practically this is as low as Fed can keep them to kick start the jammed US economy. Despite the faint signs of improvement in economic activity, Fed is not likely to touch the rates at least not for next two quarters.

After spending more than a year in deep recession, US economy finally started to grow in the last quarter. The rate of growth is very minimal and no one knows if the growth can sustain itself over next few quarters or not. So far the economy is running on essential life support system provided by federal government.  It is yet to be seen how it performs without oxygen mask.

The Core policy making team at Federal Reserve Bank of America resumed its meeting on Wednesday morning. They are likely to discuss and analyze available economic and financial data over the period of next two days.

Although their is some data that indicates the recovery but still the rising un-employment and non-availability of easy credit to individuals and small business owners are some of the factors that are putting a drag on faster recovery from recession. Commercial and residential real estate markets have yet to coup with the impact from loans that went bad and took along them many a banks.

Mortgage rates are still very high. In September, when the key policy makers of Fed met, the team outlined  a very pragmatic plan to bring the mortgage rates down for the main street consumers and try to kick start the housing sector. It is very likely that we will see some positive movement in the same direction at end of current meeting.

Since the inflationary effect of recent stimulus packages is almost none, Fed might try to take some drastic measures to keep Prime Mortgage Rates at or around 3.25 percent. These measures, that would seem stupid if seen out of context, include pushing the target rate for it bank lending further down and keep it between zero percent and 0.25 percent. This will impact all aspects of economy as the commercial bank’s prime lending rate is used as a yard stick to determine interest rates  for home equity loans, credit cards and other types of consumer finance products.

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There have been several changes in the college financial aid system. Here are the six most important developments.

1. More generous Pell grants

The Pell grant is one of the most important kinds of federal student aid that is available. Dependent students with family incomes up to about $50,000 are eligible for this kind of grant. Independent students who have low incomes can also avail this grant. Every year, the Congress sets the maximum grant. The maximum grant was $4,731 in 2008-09; and in 2009-10, it will be $5,350.

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Acquiring a new home is one of the biggest decisions affecting one’s financial life. Most of the people will never make a more costly purchase, or more significant, with respect to their overall financial position.

No doubt, if you make the right decision, you can make you future bright, otherwise you’ll spend most of your life paying back the cost. Certainly, the purchase of the right home can make, or break your finances for the next several decades.

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The recent recession has taught everyone to spend cautiously, monitoring ones habits and following a tightened budget. Raised gas prices, enormous mortgage bills, ever-accumulating credit card debt, and many other factors have all contributed to make us better spenders. However, even all this may not be enough when it comes to getting rid of debt.

The first thing everyone tries, when fighting off debt, is to cut off extra expenses and tighten up the budget. But after doing that, fewer choices remain. One of those choices that can improve our lives is to get a second job.

Increase Income to Fight Debt

Debt accumulates when we spend more than we earn. In order to reduce debt, we cut back on our spending. And when there is nothing left to reduce from our spending, then it is obvious that we need to increase the income in order to survive.

Combine Careful Budgeting With Secondary Employment

Many of us find ourselves in challenging situations, where we simply don’t have the money to get by, no matter how we budget. However, by combining careful budgeting and secondary employment, we can reduce the amount of stress and contribute to our overall well-being. Read the full story

In response to the U.S. Treasury’s call to speed the process and help prevent foreclosures, Citigroup Inc has significantly boosted its mortgage modification offers this month.

In a report released on Tuesday, CitiMortgage said that it has already helped 108,000 homeowners in the last quarter to avoid potential foreclosure, a rise of nearly 30 percent over the previous period.

It has participated fully in the President Barack Obama’s Home Affordable Modification Program, known as HAMP, to ease loan terms for up to 4 million borrowers.

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Ultimately, we have all accepted the fact that the economy is going through recession. However, as many might know, there’s a positive side to this too.

Although an economic recession has many disadvantages, it forces companies and people to survive by eliminating extravagant behavior and becoming more efficient about their business, which may bring in a good change in people’s attitude. Likewise, by implementing the same reaction into their lives aimed at defeating debt, the average American can benefit from this too.

Learn Your Lesson

You have fewer options to spend your money, when the economy slows down. There are fewer jobs, and thus lesser pays. So, we’re forced to comply and live by using lesser luxuries. This is a great time to learn valuable lessons regarding our spending habits and to improve the way we manage our finances.

We can realize our financial limitation when there is a lack of excess. This is a good thing, as this way we can learn how to become responsible with our money. Read the full story

Although most of us cant imagine it, but it is possible to have tons of money to lend out, but few to lend it to. This is the current situation in which, Small Business Administration District director of San Diego, Ruben Garcia , is stuck in.

He is currently looking to “sell” small business loans to California’s entrepreneurs. Such low-cost loans are now available through SBA in the 2009 budget.

California’s Hispanic Chamber of Commerce had its its annual convention in San Diego, where Garcia spoke on a panel.

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This week, the mortgage rates for 30-year fixed loans fell to the lowest level since May. This has led to reduced borrowing costs for hesitant buyers. Recent signs show that the recession in the U.S. housing market may be bottoming.

According to Freddie Mac of McLean, Virginia, the average 30-year rate fell to 5.12 percent from 5.29 percent. The 15-year rate was 4.56 percent.

The fall in home prices and a government tax credit for first- time buyers is reinforcing the tepid demand. According to the Washington-based MBA, the Mortgage Bankers Association’s index of applications to purchase a home or refinance a loan rose 5.6 percent to 527.

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