- Created on 06 December 2013
Photo by Bloomberg via Getty Images
Unresolved technical problems on HealthCare.gov could lead to a rude surprise at the doctor's office next month for patients who think they successfully used the website to sign up for health insurance. They may find they're not insured after all.
HealthCare.gov, the federal online portal for health-insurance shopping in more than 30 states, has improved after more than a month of intense fixes, and enrollment is accelerating. But insurance companies are still getting information on their would-be customers that is garbled and incomplete, and in some cases they are getting no information at all. President Barack Obama's administration is scrambling to repair the faulty system, but scant time remains until the Dec. 23 deadline for consumers to choose a health plan that will be in place Jan. 1.
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- Created on 05 December 2013
Defense Secretary Chuck Hagel said he'll cut the Pentagon's headquarters' budget by $1 billion from 2014 through 2019, which will lead to layoffs and reduction in contracts.
Defense Secretary Chuck Hagel on Wednesday announced he's trimming the Pentagon headquarters' budget by 20%, starting in 2014. It will result in jobs cuts and reduction in contracts with private companies.
The budget cuts will happen even if Congress ends sequester, according to the defense agency. Hagel said the time is right to "pare back overhead and streamline headquarters," after the fast growth of the agency in the wake of the September 11, 2001 terrorist attacks.
"These reductions are only a first step in DoD's efforts to realign defense spending to meet new fiscal realities and strategic priorities," Hagel said.
The cuts would trim $1 billion from 2014 through 2019. Hagel said the first jobs to be cut will about 200 workers from his own team of 2,400.
Savings would come mostly by cutting back some contracts with private companies, but the agency said there would be "significant reductions to civilian personnel."
He stopped short of detailing other potential cuts, like those to commissaries -- military grocery stores -- and military pay, saying "difficult but necessary choices remain ahead for the Department on compensation reform, force structure, acquisitions and other major parts of DoD."
The Pentagon has had to cut $40 billion this year since March from the sequester. That led the agency to furlough workers for six days over the summer.
The $1 billion in savings announced Wednesday is only a tiny fraction of the $500 billion in defense cuts mandated over the next 10 years by the sequester. Still, Hagel said "every dollar that we save by reducing the size of our headquarters and back-office operations is a dollar that can be invested in war-fighting capabilities and readiness."
If the sequestration cuts are not reversed it is likely that more job cuts will be necessary, Hagel said.
The announcement is likely to have wide repercussions, especially for defense companies that rely on government contracts such as Boeing (BA, Fortune 500), Northrop Grumman (NOC, Fortune 500), Lockheed Martin (LMT, Fortune 500) and Raytheon. (RTN, Fortune 500)
The Defense Department is one of the largest federal agencies with a budget of $526 billion and a civilian work force of 800,000.
-- CNN's Jennifer Rizzo contributed to this report.
- Created on 04 December 2013
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EU antitrust regulators fined six financial institutions including Deutsche Bank, Royal Bank of Scotland and Citigroup a record total of 1.71 billion euros ($2.3 billion) on Wednesday for rigging financial benchmarks.
The move confirms what a source familiar with the matter had previously told Reuters.
The penalty is the biggest yet to be handed down to banks for rigging the benchmarks used to determine the cost of lending, one of the most brazen violations of conduct since the financial crisis. It is also the highest antitrust penalty ever imposed by the Commission, the EU's competition regulator.
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- Created on 03 December 2013
Protesters gathered outside the courthouse Tuesday.
NEW YORK (CNNMoney)
A federal judge has given a green light for Detroit to proceed with its bankruptcy, the largest municipal bankruptcy in history.
The ruling opens the door for the city to cut billions of dollars in payments that are owed to city employees, retirees, investors and other creditors.
Unions and pension funds had argued that the city should not be eligible to use bankruptcy court protections. They said that regardless of the Detroit's financial troubles, city and state officials did not negotiate with creditors in good faith in an effort to reach a deal on its liabilities.
In his ruling, Judge Steven Rhodes found the city did not meet that threshold, yet he ruled that such negotiations were impractical because of the huge number of creditors, which total more than 100,000. So, ultimately, he concluded that the city filed its petition properly.
One major union, the American Federation of State, County & Municipal Employees, has already said it plans to appeal the decision.
Detroit filed for bankruptcy court protection on July 18.
Once one of the nation's largest cities, Detroit was a symbol of U.S. manufacturing might. But decades of declining population and the departure of businesses have left it struggling with high crime, high taxes and poor city services.
Emergency Manager Kevyn Orr, who was appointed by Michigan Gov. Rick Snyder in March to oversee the city's finances, has proposed slashing more than $9 billion of $11.5 billion in unsecured debt.
But Orr's plan could mean deep cuts to the pension benefits and retiree health coverage that has been promised to city employees. It could also mean investors holding debt issued by Detroit would receive only pennies on the dollar.
Opponents have argued that pension cuts are barred by the state's constitution. But Judge Rhodes ruled that pensions are fair game under federal bankruptcy law, trumping state law, though he noted that didn't mean he would definitely approve cuts.
"He isn't going to do it lightly, and he recognizes the significance of these issues, but pension cuts are certainly on the table," said attorney Michael Sweet, an expert in municipal bankruptcy, who listened in on Tuesday's ruling.
No municipal bankruptcy has ever resulted in involuntary cuts to pension benefits, Sweet said. In California, Vallejo exited bankruptcy in 2011 without imposing cuts to its ballooning pension obligations, while nearby Stockton plans to do the same.
It's unclear just how deep pension cuts could be in Detroit.
But Orr can now prepare a proposal for the court on how the city will slash its debt, said attorney Michael Sweet, an expert in municipal bankruptcy. The judge will have to sign off on the plan.
Sweet said that Rhodes urged the parties to move quickly, though creditors may seek to delay proceedings during the appeals process.
"The big question looming out there is, 'Will the appeals slow the process down?'" Sweet said.
Meanwhile, Orr said in a press call with reporters that the city would continue to negotiate with its many creditors as it crafts its bankruptcy plan.
"We continue to try to work with both our unions and our creditors to reach consensual resolutions," he said.
As the bankruptcy moves forward, tens of thousands of workers and retirees are bracing for benefit cuts.
Retired Detroit fire captain Arthur Versace, 62, began applying for full-time jobs at Home Depot and Costco after Detroit's bankruptcy filing this summer.
Unable to find work, Versace said he isn't sure if he and his wife will be able to meet their monthly expenses, which include a mortgage payment, if his pension is cut. After taxes and his health care premium, he receives around $45,000 a year. And like many other public safety workers, he is not eligible for Social Security.
"I'm worried about how I'm going to pay my bills. How do I pay for my car insurance, my house insurance, my house taxes?" Versace said. "People don't want to hire someone that's 62 years old, they just don't."