Berkshire Hathaway chairman suggests greater taxes for private equity firm managers and super rich to presidential hopeful.

NEW YORK (CNNMoney.com) — Presidential hopeful Hillary Rodham Clinton was all ears at a fundraiser Tuesday evening when famed billionaire investor Warren Buffett suggested ramping up the tax code on big businesses and the super rich.

The Berkshire Hathaway (Charts, Fortune 500) chairman touched on a variety of issues in a question and answer session with Clinton, including his disdain for private equity firm power brokers.

“The people that earn their living doing that should be subject to taxes that reflect their labors,” he said in the gathering at a hotel in midtown Manhattan.

Recently private equity firms have become targets of Congress, who claim that fund managers benefit from unfair tax advantages. One Senate committee has proposed raising taxes on publicly traded private equity firms such asBlackstone Group (Charts).

Speaking to several hundred supporters of the U.S. Senator from New York, Buffett revealed his puzzlement that he was taxed at a lower rate than many of the lesser-paid individuals working for his company.

Buffett said he makes $46 million a year in income and is only taxed at a 17.7 percent rate on his federal income taxes. By contrast, those who work for him, and make considerably less, pay on average about 32.9 percent in taxes – with the highest rate being 39.7 percent.

To emphasize his point, Buffett offered $1 million to the audience member who could show that one of the nation’s wealthiest individuals pays a higher tax rate than one of their subordinates.

“I’m willing to bet anyone in this room $1 million that those rates are less than the secretary has to pay,” said Buffett.

The Berkshire Hathaway chairman remained relatively positive about the U.S. economy overall, and remained doubtful that the recent woes in the subprime mortgage market would spread to the rest of the housing sector and the larger economy.

“Overall if the unemployment rate doesn’t increase and interest rates don’t increase then I don’t think it will have an effect on the rest of the economy,” he said.

As many as 28 million people in the United States are forgoing traditional financial institutions because of mistrust, cultural and language barriers or a belief that by the time all the bills are paid there will be nothing left for an account.

That can be expensive and risky. People can run up big fees to cash checks, pay bills and meet their other financial needs. Walking around with large amounts of cash can make them a target for thieves.

The bankless are estimated to earn hundreds of billions of dollars a year in income. Seeing a business opportunity, banks are trying to draw in these potential customers. So, too, are check-cashing businesses and retailers, including Wal-Mart.

Many people, however, still resist, preferring to remain in the financial shadows.

They tend to be minority — Hispanic or blacks especially — as well as low income and young.

According to the Federal Reserve, about one in 12 families — 8.7 percent — does not have a bank account.

The number is higher for the poorest — nearly a quarter of families earning less than $18,900, the Fed said, citing 2004 data.

For some, like Rosa Alvarez, the financial choices can be bewildering.

“I don’t understand about this bank stuff,” says Alvarez, 54. A nagging fear that she might make a mistake “if I don’t keep up with it right or something” keeps her from opening an account. She had one once, briefly. But she had trouble keeping track of her balance. She thinks that when the account closed, she owed the bank $12.

Carlos Maren, 25, a cook, is afraid that if he opens a bank account in the U.S., he will get hit with fees for not keeping in enough money or for taking out more money than he has.

“My uncle sometimes says that it’s expensive … because if you don’t have money in the account, (the bank) is going to be charging you,” Maren says.

Leonel Mendoza, 32, a hospital worker, is not comfortable with banks in this country.

Both he and Maren do their financial transactions at a check-cashing outlet in the Adams Morgan neighborhood of Washington, D.C. They say it is convenient and they like knowing upfront what they will be charged to cash their paychecks, buy money orders, and, in Maren’s case, wire money to his native Mexico. He has a bank account there.

“It’s not real expensive,” Maren says.

Yet those charges can add up.

A Consumer Federation of America survey of check-cashing outlets, found that on average it cost $24.45 to cash a $1,002 Social Security check last year. A blue-collar worker pays an average $19.66 every week to cash a $478.41 handwritten paper check.

Having a bank account can be expensive, too, if it is not managed wisely.

Failure to keep track of an account balance can incur a penalty of $20 to $35 each time a check is bounced or an account is overdrawn.

“It can be costly to be outside the banking system. The poor pay more,” says John Caskey, economics professor at Swarthmore College.

“On the other hand, if all you did is take that low-income person, living paycheck to paycheck and moved them into the banking system and they are bouncing checks and incurring fees, you haven’t done much and you may not have done them a favor,” Caskey says.

Although there is no federal requirement for banks to offer low-cost, no-frill accounts, some do.

“Some have very low dollar accounts. Some have accounts that have to maintain a minimum balance,” says James Ballentine, director of community and economic development at the American Bankers Association.

Ballentine’s advice: “Do some shopping around.”

The share of families without bank accounts decreased gradually from 1989 to 2001, then leveled off, the Fed said.

Banks have an economic interest in reeling in people outside the banking system — 10 million to 28 million individuals who earn $510 billion a year — and turn them into customers who eventually may need loans to buy homes, cars and other items.

Banks are working through community groups to ease fears, build trust and to educate people about financial options. It is a challenge that can take years, bank officials say. Moreover, what may work in Houston does not necessarily prove fruitful in Fresno, Calif.

Adding to the challenge, the bankless are slowly spreading out. Hispanics and immigrants have moved beyond traditional ports of entry, such as big cities on the coasts and in border states; they are settling in Tennessee, North Carolina and Indiana. In the same way, people without bank accounts have move around.

The FDIC has spearheaded a project to help bring the bankless into the financial mainstream. Financial institutions, community groups and others are teaming up in nine markets — including parts of Alabama, Chicago, Los Angeles and Wilmington, Del. — to provide services including affordable small loans, check cashing, savings and financial education and for wiring money outside the U.S.

Nationwide, there are fewer banks in poor neighborhoods versus wealthy ones but the difference is small, according to the Federal Reserve.

In some neighborhoods, however, there are no banks conveniently located. Federal banking regulators just weeks ago identified 3,500 middle-income neighborhoods in rural areas — from parts of Clarke, Ala., to parts of Washakie, Wyo. — that they consider to be underserved by financial institutions.

Federal Reserve research found that the most common reason families gave for not having checking accounts was that they did not write enough checks to make it worthwhile. Many people said they did not like dealing with banks.

Some — regulators could not provide a percentage — are in the country illegally. Without some proof of identification such as a driver’s license or a passport, they cannot set up a bank account.

Check cashers and other outlets give them a financial lifeline.

“You purchase the transactions you need, when you need them. Prices are posted. There are no surprises,” says Joseph Coleman, president of Rite Check Cashing Inc., which operates stores in New York City’s Harlem neighborhood and the borough of the Bronx.

New York is among the roughly two dozen states plus the District of Columbia that regulate check-cashing fees.

“We are like financial oxygen. People in our communities rely on us,” says Coleman, who once worked for Citibank. He hires people who speak languages in addition to English, easing communications with the customer.

Is the average 2 percent fee that customers pay for cashing a paycheck too high?

I would say no,” says Cynthia Vega, spokeswoman for the Financial Service Centers of America, whose members include check cashers. Customers pay for the convenience of having quick access to their cash, she says.

Over the years, technological innovations have spurred a range of products for people without bank accounts.

Some employers, not wanting to deal with the expense of paper checks, load employees’ paychecks onto electronic cards that can be swiped at the supermarket, restaurant and other places or used to pay bills. These cards have federal protections, such as liability limits for unauthorized use, says Jean Ann Fox, director of consumer protection at the Consumer Federation of America.

Check-cashing outlets also sell electronic cards on which money from paychecks or a tax refund can be loaded. These cards on average cost $10.86, the federation says. Fox says some of these cards can carry usage fees and may not have the same protections by bank-issued debit or ATM cards.

Wal-Mart, the world’s largest retailer, recently announced it will sell for $8.94 each a prepaid Visa debit card. This step is aimed partly at shoppers who do not have bank accounts. Those cards have protections against theft and loss.

Alvarez, a cake decorator, does not bother with any of these options. She cashes her check for free at the supermarket where she works and hides her cash in books at home.

“When I need money for gas, I get a little bit out,” she says. “When I pitch in for groceries, I get it out. But sometimes I’m scared the house can burn down. My money will be burned with it,” she says. Or, there could be a break-in, she worries.

Some of the potential perils for the bankless include theft, forgetting where you stashed your cash or losing your money.

“If you have most of your money in a bank. You have protection. If you are carrying it all in cash, it is easy to lose, easy to be stolen and easy to spend,” Fox says

In Prince William County, Va., there were 351 robberies last year and more than 40 percent involved Hispanic victims — many of whom were new to the country — who had large amounts of cash on them, says Police Chief Charlie Deane. Many of the robberies occurred on paydays — Thursday or Fridays.

“The criminal element is aware that many of these people do not put their money in a bank,” Deane says. “Many of these individuals are living in conditions where they have to share common space, so they often don’t have ways of securing their cash where they live. So therefore they carry the cash with them,” he says.

The robbers, when caught, have told police they targeted the victims because “they knew they were carrying cash,” he said.

There also is a long-term impact for those who opt to do without banks.

“The ability to sock away money for a rainy day and to cover emergency costs are enhanced if somebody is using a mainstream financial institution and begins to get on a pattern of regular savings,” says Barry Wides, deputy comptroller of community affairs at the Office of the Comptroller of the Currency.

The ability to establish good credit through a bank is crucial to getting competitive interest rates on loans for homes, cars and other items. Those with spotty credit are charged higher rates.

Despite all her fears about banks, Alvarez says one day she would like to become a steady bank customer. She thinks it will help her build a nest egg and feel more financially secure.

A health inspector noticed rodent droppings Monday. A contractor laid out glue traps and caught six by Tuesday morning. An employee called the health department to report the mice and says her bosses fired her.

Raleigh, NC — Health inspectors closed a Pizza Hut restaurant in east Raleigh after a worker found live mice inside it. The employee who notified the health department about the mice says she was fired for reporting the problem.

The restaurant scored a 90 during an inspection on Monday, but the inspector noted rodent droppings behind an ice machine. The inspector says the droppings weren’t enough to close the restaurant because she didn’t see any live animals inside during the inspection.

A contractor laid out glue-covered boards Monday night to get rid of the rodents, and an employee found six live mice stuck to the boards Tuesday morning.

That employee called the Wake County Health Department, and an inspector ordered the Pizza Hut closed. The inspector also pulled the restaurant’s permit so it can’t operate until the rodent problem is corrected.

It’s called “Piggybacking” and, like the childhood game, it involves getting a lift. Only with this piggyback ride, it’s your credit that’s getting a boost.

Repairing bad credit is only a click away through a service called Credit Piggybacking. Through sites like instantcreditbuilders.com, you can buy established lines of credit with years of payment history.

The “good” credit history runs for around $900 for the first credit card spot and you get a discount for additional.

But, financial experts see a dangerous side to Piggybacking, likening it to issues surrounding subprime lending.

“I think credit rating should be established based on your proper use of credit,” said financial planner Troy Daum. “If you take someone who doesn’t have a good credit rating, and most studies have shown if they’re irresponsible once, they’ll be irresponsible again.”

Some of the plaintiffs were rounded up in federal workplace raids in February and deported before receiving their final paychecks, the suit charges. Others said they worked 80- or 100-hour weeks without earning overtime pay or even the prevailing minimum wage.

“People should be aware of the kinds of exploitative situations that are happening out there, in particular with immigrant workers,” said lawyer Nadia Hewka of Community Legal Services in Philadelphia, who helped file the federal suit. “Someone who worked 80 hours a week should get paid fairly for those hours, no matter their immigration status.”

The 14 plaintiffs – most from Mexico – worked for Rosenbaum-Cunningham International Inc., a Palm Beach, Fla.-based janitorial contractor. In Philadelphia, the company placed workers in Dave & Buster’s Inc., the restaurant chain that has a popular waterfront outpost in the city.

Other immigrants who worked in restaurants in Pittsburgh, New York, Anaheim, Calif. and elsewhere are expected to join the suit as early as this week.

They plan to seek class-action status, but would have to try to recover any judgment they might win from the government, which has seized the shuttered firm’s assets, lawyer Justin Mixon said.

Rosenbaum-Cunningham and three top executives were indicted this year in Michigan on federal charges they harbored illegal immigrants for profit and failed to pay the federal government more than $18 million in employment taxes. The charges are still pending.

The immigrants say they worked as many as 110 hours a week cleaning kitchens, washing floors and scrubbing toilets. Many were locked in at their work sites and most put in 11-hour days, seven days a week without breaks, their lawyers said.

They typically earned less than the federal minimum wage of $5.15 an hour or the higher minimum wage in Pennsylvania and other states where they worked, the suit charges.

The attorneys are trying to reach the approximately 200 immigrants detained in the February raids, which targeted 63 restaurants in 18 states that used Rosenbaum-Cunningham workers. The restaurants included the Hard Rock Cafe, House of Blues, ESPN Zone and Planet Hollywood.

“Some of our clients were deported, some left voluntarily and some were not picked up at all,” Hewka said. “The challenge right now is finding them.”

No lawyer has yet registered to represent Rosenbaum-Cunningham in the civil case, according to court records.

Shannon D. Farmer, a lawyer representing Dave & Buster’s, said she could not immediately comment on the suit.

RCI co-owners Richard M. Rosenbaum and Edward Scott Cunningham and firm controller Christina Flocken face criminal fraud, immigration and tax charges in the 23-count indictment.

Their workers may not have known about U.S. overtime laws or may not have had the energy to fight for the money they were owed, Mixon said.

“You’re aware people are taking advantage of you. You’re just trying to feed your kids,” he said. “Unfortunately – even the American public – a lot of people don’t understand overtime.”

Birth-Control Pill Meant to Put Stop to Women’s Monthly Periods Indefinitely Wins FDA Approval

WASHINGTON (AP) — The first birth-control pill meant to put a stop to women’s monthly periods indefinitely won federal approval Tuesday. Called Lybrel, it’s the first such pill to receive Food and Drug Administration approval for continuous use. When taken daily, the pill can halt women’s menstrual periods indefinitely and prevent pregnancies.

Lybrel is the latest approved oral contraceptive to depart from the 21-days-on, seven-days-off regimen that had been standard since birth-control pill sales began in the 1960s. The pill, manufactured by Wyeth, is the first designed to put off periods altogether when taken without break.

The pill isn’t for everyone, an FDA official said. About half the women enrolled in studies of Lybrel dropped out, said Dr. Daniel Shames, a deputy director in the FDA’s drugs office. Many did so because of the irregular and unscheduled bleeding and spotting that can replace scheduled menstruation.

“If you think you don’t want to go down this road, this is not for you,” Shames told reporters.

Wyeth plans to start Lybrel sales in July. The Madison, N.J., company said it hasn’t yet determined a price for the 28-pill packs. The pill contains a low dose of two hormones already widely used in birth-control pills, ethinyl estradiol and levonorgestrel.

A study showed Lybrel was just as effective in preventing pregnancy as a traditional pill, Alesse, also made by Wyeth. However, since Lybrel users will eliminate their regular periods, it may be difficult for them to recognize if they have become pregnant, Shames said.

Most of the roughly 12 million American women who take birth-control pills do so to prevent pregnancy. Others rely on hormonal contraceptives to curb acne or regulate their monthly periods.

Some nontraditional pills such as Yaz and Loestrin 24 shorten monthly periods to three days or less. Seasonique, an updated version of Seasonale, reduces them to four times a year. With Lybrel, in one test, 59 percent of the women who took Lybrel for a year had no bleeding or spotting during the last month of the study. However, because of dropouts, that translates into only about one-third of all the women originally enrolled in the study, Shames said.

“Women who use Lybrel would not have a scheduled menstrual period, but will most likely have unplanned, breakthrough, unscheduled bleeding or spotting,” Shames said. The bleeding can last four to five days and may persist for a year, he later added. Women who take other low-dose pills have reported similar issues.

Still, a women’s health expert said Lybrel would be a welcome addition for the woman who seeks relief from the headaches, tender breasts, cramps and nausea that can accompany monthly periods. Whether Lybrel relieves those symptoms was not directly studied.

“Over time she will experience markedly less bleeding episodes or no bleeding episodes,” said Dr. Vanessa Cullins, vice president for medical affairs at Planned Parenthood Federation of America Inc. “That is very beneficial for some women — and is wanted by some women.”

University of New Hampshire sociologist Jean Elson pointed to advantages for what she characterized as a small number of women who suffer extraordinarily during menstruation, but overall she said the pill left her with mixed feelings.

“For women in that situation, I certainly can understand the benefits of taking these kinds of medications, but for most women menstruation is a normal life event — not a medical condition,” said Elson, who researches the sociology of gender and medical sociology. “Why medicate away a normal life event if we’re not sure of the long-term effects?”

In recent years, as the hormone content of birth-control pills has dipped, failure rates have climbed. The FDA is considering whether to establish an acceptable failure rate for the pills. In January, a panel of agency advisers said less-effective birth-control pills should still merit federal approval if they promise other benefits, including improved safety.

Generally, lower-dose birth-control pills can reduce the risk of serious and sometimes deadly side effects, including blood clots and stroke, associated with their use.

The injectable hormonal contraceptive Depo-Provera also can eliminate monthly periods.

By Andrew Bridges, Associated Press Writer