Volume 5, Number 38, September  19, 2008


This was a history-making week in the global financial markets. Lehman Brothers, a 158-year-old investment firm, has declared bankruptcy; the federal government is financially supporting AIG, a large insurance and investment company; and the United States Treasury is working on a plan to purchase the billions in “bad debt” carried by financial firms in an effort to improve the American economy.

Many of us have heard about the current financial crisis on Wall Street, but it can be difficult to understand exactly what it means. Recent events make crystal clear the need for increased regulatory oversight of large financial institutions to better protect consumers. But what does this week’s news mean to the average Florida family?

Simply put, this is NOT the time to panic and take your money out of your bank or out of the market. Many of your accounts are probably protected:
  • Your Bank—Make sure your bank is FDIC-insured. As an individual, your deposits are insured up to $100,000 in an FDIC-insured bank. This includes your savings, your checking, any certificate of deposits (CDs) and money market accounts. Joint accounts can be insured up to $200,000. IRAs and Keoghs for the self-employed — can be insured up to $250,000. Talk to your banker if you have questions or concerns about your accounts.
  • Lehman Brothers –If you have a brokerage account with Lehman Brothers, your investments will be protected up to $500,000 by the Securities Investors Protection Corp (SIPC). For more information on these protections, visit the SIPC Web site at www.sipc.org.
  • Merrill Lynch—If you have investments with Merrill Lynch, they will become part of Bank of America and are subject to the same SIPC protections. For more information, call your local Merrill Lynch advisor or their U.S. customer contact line at 1-800-MERRILL (637-7455)
  • AIG—If you have an insurance policy with American International Group (AIG), do not be alarmed. It is NOT AIG’s insurance companies that are having difficulty, and these policies are not impacted by the news. Even when an insurance company has financial problems, the state insurance regulator where the company is headquartered will take control of the company and ensure claims payments are made. If you have questions, contact your insurance agent for additional information.

If you have additional questions, please feel free to contact the Department of Financial Services Consumer Help line at 1-877-MY-FL-CFO. Or visit our Web site at www.MyFloridaCFO.com.


Florida Chief Financial Officer Alex Sink led the Florida Cabinet in objecting to using nearly $38 million in tax dollars to purchase a parcel of land known as Pine Plantation that the state twice appraised for $28 and $25 million, respectively. Following CFO Sink’s comments and a lengthy discussion, the Florida Cabinet voted 2-2 against paying a Central Florida attorney $15 million more than his purchase price only 2 ˝ years earlier.

Following the Florida Cabinet meeting, Chief Financial Officer Alex Sink offered the following comments:

“I’m proud that the Florida Cabinet made the right decision today to reject spending $38 million in tax dollars in an overpriced land deal. People are suffering right now, and our state has enormous economic needs.

"As Florida’s fiscal watchdog, I am committed to speaking out about wasteful government spending. Like Florida’s families are doing everyday, government must set priorities and only spend tax dollars when it is wise and economically sound to do so.”


Millions of Floridians awoke this past Monday to news of increased volatility among several global financial institutions. Monday’s tumultuous events continue the global financial turmoil witnessed during the last 18 months, and provide clear evidence that the federal government needs to provide increased oversight of large financial institutions to better protect consumers.

The Florida Treasury held $139.5 million par value in Lehman Brothers Holding, Inc., bonds as of Friday, September 12, 2008. Of this amount, $104.1 million was senior debt and $35.4 million was subordinated debt. The total exposure represents less than 0.6 percent of Treasury investments, which total $24 billion. The Treasury is proceeding with an orderly liquidation of the subordinated debt this month.

Florida Chief Financial Officer Alex Sink offered the following comments on the growing Wall Street financial crisis:

“As Florida’s Chief Financial Officer, my highest priority during the last 20 months has been working to increase safeguards over Floridians’ tax dollars. Under my direction, the Treasury has tightened its investment decisions and limited exposure to any one individual corporation. While our nation is experiencing significant financial disorder, investment firms can and do fail from time to time, and investors must position portfolios to weather financial storms. We have positioned Florida’s Treasury to meet the cash needs of investors and balance the obligations of the state.

“Finally, as one of three Trustees for the State Board of Administration (SBA), I have asked General Milligan, the Interim Executive Director of the SBA, to provide analysis during Tuesday’s Cabinet meeting of any potential impact the financial markets may have on our retirees’ pension fund and other SBA-managed funds.”


At Tuesday's meeting of the Florida Cabinet, Florida Chief Financial Officer Alex Sink designated the week of October 6 through 12, 2008, as “Financial Planning Week.”

CFO Sink’s resolution, also recognizing the Financial Planning Association of Florida, designates “Financial Planning Week” as a time to remind Florida’s citizens of the importance of financial planning to assist in making prudent financial decisions to achieve their goals and dreams.

“During this volatile economic climate, it is essential that Floridians plan financially as much as possible,” said CFO Sink, who oversees the Department of Financial Services (DFS). “Too many Floridians are living paycheck-to-paycheck, not saving for a rainy day and living above their means. This week and throughout the year, my office is working to educate Floridians on making better financial decisions and planning for a more financially secure future.”

“Financial Planning Week” will focus on educating Floridians about important financial issues such as the importance of financial planning, including tax, estate, investment, risk and retirement planning. Citizens will be given the tools necessary to increase their financial literacy and learn to apply the financial planning process to their personal situations. The financial planning process provides a template for assessing, evaluating, and achieving financial objectives through personal goal setting, budgeting, making smart financial decisions and monitoring results.

CFO Sink is a strong proponent of financial literacy. Through outreach coordinators, DFS has reached out to local communities to educate consumers on topics such as the wise use of credit cards for teens, credit card identity theft, hurricane preparedness, small business security, life insurance, and first-time homebuyer workshops. Last year alone, the department conducted over 2,680 outreach events around the state.

The Financial Planning Association of Florida is the membership organization for the financial planning community, representing 1,700 members dedicated to supporting the financial planning process as a way to help Floridians achieve their financial goals.


Energy tips  for Florida families - these actions represent ways to behave kindly toward Mother Earth, AND save money as well as energy.

Presented by CFO Alex Sink's science advisor Meg Lowman, Ph.D., on the faculty at New College of Florida. Dr. Lowman has written numerous award-winning books and is an expert on the rain forests of the world.

Lower your energy bill with efficient water heating

Water heating is the third largest energy expense in your home, typically accounting for about 13 percent of your utility bill. Try to cut your water heating bills by turning down the thermostat on your water heater, using less hot water, insulating your water heater, buying a new, more efficient water heater or installing a solar water heater.

Much of your household energy bill comes from maintaining hot water in the storage tank, ever ready to be utilized. Lower the thermostat - water heaters come from the factory with high temperature settings, but a setting of 120°F provides comfortable hot water for most uses.  First try a few degrees lower than it is currently set, then lower again to reach the optimum level of comfort for your family.

Bathing uses the most hot water in the average household. Showers are more efficient than baths - and take shorter showers.

Insulate your hot-water storage tank, being careful to follow the manufacturer's recommendations. Although most storage-tank heaters last 10-15 years, start thinking about a new one if yours is more than seven years old.  Efficiency has improved in newer models.

Demand water heaters (tankless) can easily replace traditional water heaters and are highly energy efficient. Cold water is piped through a heating (gas or electric) element direct to the hot water tap, delivering a constant supply of hot water which never runs out. No water tank stores hot water all day long, as in traditional systems. For homes using 41 gallons or less of hot water a day, demand water heaters can be 24-34 percent more energy efficient than conventional storage tank water heaters. Equally appealing is the fact that most tankless water heaters have a life expectancy of more than 20 years. Traditional water heaters, on the other hand, last 10-15 years. Combine the energy savings of a tankless water heater with the long life, and you may find yourself getting such a system. Many are on the market, so carefully consider the different brands before you buy.

If you have an unshaded, south-facing location, like a roof, on your property, consider installing a solar water heater. Solar units are environmentally friendly and can be installed on your roof to blend with the architecture of your house. Solar water heating systems are also good for the environment by avoiding the harmful greenhouse gas emissions associated with electricity production. During a 20-year period, one solar water heater can avoid over 50 tons of carbon dioxide emissions. Look for systems certified by the Solar Rating and Certification Corporation or the Florida Solar Energy Center.

Florida has a rebate program to encourage the use of solar heating systems:  Florida Solar Energy System Incentives Program


A Florida mortgage broker and her husband, a pastor and popular radio show host from Jensen Beach, are facing numerous felony charges stemming from a state investigation that found the couple allegedly scammed consumers in a real estate investment scheme. Investigators said the couple has been enjoying expensive leased vehicles while sticking their “clients” with more than $1 million in mortgage debt.

Shalonda McGill and her husband Rodney McGill were arrested today on charges of Racketeering, first degree; Conspiracy to Commit Racketeering, first degree; Grand Theft, first degree; Grand Theft, third degree; and Obtaining a Mortgage by False Representation, third degree. The Department of Financial Services’ (DFS) Division of Insurance Fraud and the Office of Financial Regulation (OFR) conducted the investigation.

“It appears that these individuals used their positions in the community to take advantage of people who trusted them,” said Florida Chief Financial Officer Alex Sink, who oversees DFS. “The evidence our investigation uncovered indicates these two improved their own bottom line while financially devastating the Floridians they promised to help.”

The OFR is overseen by the Financial Services Commission, which includes the Governor, Attorney General, the Agricultural Commissioner and CFO Sink.

The McGills are being held in the Martin County Jail, with bond set for each at $1.4 million. Deputies with the Martin County Sheriff’s Department made the arrests during a traffic stop.

The McGills garnered clients through various programs including the Young Millionaire’s Group, Inc. (YMG); RSM Investment and Mortgage (RSM); and New Hope Outreach Center, Inc. (New Hope), all of which operated out of a facility located at 2110 Arch St. in Jensen Beach. Florida corporation documents identify Rodney McGill as president and Shalonda McGill as vice president of New Hope, which is incorporated as a non-profit church with the McGills listed as pastors.

The investigation found that Rodney McGill, as president of YMG, solicited listeners through a daily local radio program on WJFP Radio. He stated his purpose was to teach and mentor individuals on how to buy and sell real estate without any out-of-pocket expense, with the goal of earning $50,000 in 90 days.

In July 2006, investigators said, Rodney McGill solicited listeners of the radio show to call in and qualify, based on their credit, to become one of his “Fab 5.” Callers allegedly were assured that they would learn McGill’s real estate investing “cash-out technique.”

The McGills purchased real estate in Martin and St. Lucie counties, allegedly by preparing and submitting fraudulent loan applications, and then “flipped” the properties to the “Fab 5” for huge profits. Based on the fraudulent loan applications, four mortgages were obtained in excess of the property’s actual worth, and the McGills allegedly skimmed off the profits leaving three members of the “Fab 5” with more than $1.115 million in mortgage payments they were unable to make.

Investigators said all of the properties are either in or are facing foreclosure. The buyers all believed they were part of the “Fab 5” and were learning the McGill’s real estate investing techniques.

The investigation is ongoing into other real estate transactions in which the McGills were involved. Anyone with information is asked to contact Detective Ted Padich, (561) 837-5635, with the Division of Insurance Fraud, or Investigator Steve Brignola, (561) 837-5233, with the Office of Financial Regulation.

My Family CFO
Are you the chief financial officer of your family? Are you always looking out for the best deals, wise investments and smart moves for your family's financial security?

As your family's fiscal watch dog, keep an eye on this column for money-smart ideas from the Chief Financial Officer of Florida, Alex Sink.

IDEA: Know the details of your financial accounts

Your brokerage account will be protected up to $500,000 by the Securities Investors Protection Corp. The Securities and Exchange Commission has strict rules about keeping the brokerage’s money separate from your investments. If the firm goes under, your money should still be there.

If you’re worried about the health of your bank, make sure your bank is FDIC-insured. As an individual, your deposits are insured up to $100,000 in an FDIC-insured bank. This includes your savings, your checking, any certificate of deposits (CDs) and money market accounts. Joint accounts can be insured up to $200,000. IRAs and Keoghs — these are retirement plans for people who are self-employed — can be insured up to $250,000.


The third annual Northwest Florida Volunteer Firefighter Weekend will be held September 19 -22, 2008, at the Okaloosa/Walton College, 100 College Blvd., in Niceville, Florida.

Chief Financial Officer Alex Sink's State Fire Marshal's office and the Florida State Fire College will be assisting with the volunteer firefighter weekend which offers Florida’s volunteer firefighters access to training to keep them up-to-date on new firefighting techniques so they can better protect their communities.

Starting today, firefighters from across Florida will kick-off the weekend of free training with an extrication extravaganza. A record number of participants is expected, with the opportunity to view and use some of the newest technology available for rescuing those trapped by accidents and disasters, manmade or natural.

The weekend classes, ranging from four to 16 hours in length, will feature live fire evolutions, a National Fire Academy program, a wild lands fire class, a firefighter safety and survival program and a highway safety operations class.

Regulatory Safeguards Offer ‘Insurance Policy’ in Times of Crisis

KANSAS CITY, Mo. — National Association of Insurance Commissioners (NAIC) President and Kansas Insurance Commissioner Sandy Praeger issued the following statement in response to the financial issues facing American International Group (AIG):

“We have a very strong message for consumers: If you have a policy with an AIG insurance company, they are solvent and have the capability to pay claims. Our job is to ensure that they continue to have the ability to pay.

“In this particular instance, AIG’s insurance subsidiaries are being asked to provide liquid assets to the financially distressed non-insurance parent company in exchange for non-liquid assets. The New York State and Pennsylvania Insurance Departments are working with AIG to review the transaction. State insurance regulators will only approve this type of action if they are assured it is part of a total resolution of the liquidity issue at the parent company and fairly compensates its insurance company subsidiaries.

“As a holding company, AIG is a separate, federally regulated legal entity that is distinct and apart from its subsidiary insurers. The subsidiary insurers are governed by state laws designed to protect the interest of policyholders. State insurance regulators are committed to protecting the interest of policyholders and will work closely with AIG management and other regulators to fulfill this commitment.

“The No. 1 job of state insurance regulators is to make sure insurance companies operate on a financially sound basis. If needed, we immediately step in if it appears that an insurer will be unable to fulfill the promises made to its policyholders. This includes taking over the management of an insurer through a conservation or rehabilitation order, the goal being to get the insurer back into a strong solvency position.

“In the rare event that the efforts of the state insurance regulators cannot prevent an insurer from failing, the insurer will be liquidated. Claims from individual policyholders are given the utmost priority over other creditors in these matters — and, in the event that assets are not enough to cover these claims, there is still another safety net in place to protect consumers: the state guaranty funds. These funds are in place in all states. If an insurance company becomes unable to pay claims, the guaranty fund will provide coverage, subject to certain limits.

“It is a state insurance regulator’s responsibility to protect policyholders and ensure a healthy, competitive market for insurance products. Strict solvency standards and keen financial oversight — based on conservative investment and accounting rules — continue to be the bedrock of state-based insurance regulation.”

Consumer Services Helpline 1-877-MY-FL-CFO

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