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Estate planning attorneys may worry that their persistent headaches are a sign of something more serious. But once they remember what they do for a living, the headaches start to make perfect sense.

That’s because they are operating in a kind of weird estate tax limbo. The federal estate tax was here, now it’s gone for a year. It’s probably coming back soon, although no one can say exactly what it will look like.

Unless Congress acts, the estate tax will be back next year and no more than $1 million of a person’s estate would be exempt from it. That’s well below the $3.5 million exemption in place last year. And the top estate tax rate would be 55%, up from 45% in effect last year.

Oh, and just because there is no federal estate tax this year doesn’t mean heirs of someone who dies in 2010 have no federal tax liability on their inheritance. They very well may, but it can be hard to tell them in some instances what it will be because of ambiguities in the law.

So what’s an estate planner to do?

"You try to do as little as possible," [[for the estate of] someone who died in 2010," said Steve Hartnett, associate director of education at the American Academy of Estate Planning Attorneys.

And when you absolutely have to do something, he said, you make your best guess and hope it turns out to be the right one when Congress gets around to clarifying the estate tax rules of the road.

One potential minefield is how to deal with the change in "step up" rules for heirs.

Under the old regime, heirs who wanted to sell inherited assets had to pay the capital gains tax on the gains accrued since the day they inherited the asset. In other words, the "cost basis" of the asset was essentially stepped up to present day. Those rules go back into effect next year.

This year, however, when heirs sell appreciated assets they will owe capital gains tax on all the gains since the deceased bought the asset. But the first $1.3 million in gains is treated as tax free. And for surviving spouses, another $3 million is as well.

Say an estate’s assets with $5 million of gains are sold. Non-spousal heirs would only pay the capital gains tax on $3.7 million. A widow who is sole beneficiary would only owe tax on $700,000.

As a result of the new step-up rules, estate planners face an array of new complexities. One of them is advising clients when to sell an asset to minimize the tax bite. For instance, if the heirs of someone who dies this year don’t sell an appreciated asset until 2011 or beyond, which step-up rules will they be subject to? Hartnett says how the law will be applied isn’t clear.

Equally confusing is how best to cook up an estate plan for someone who is living now and plans on doing so at least until 2011.

The ‘who knows?’ factor

The only good news is that generally speaking relatively few taxpayers are affected by the federal estate tax itself.

At most, only an estimated 1.76% of estates would be affected in 2011 if the estate tax is resurrected with a $1 million exemption, according to a recent report by the Congressional Research Service.

Then again, every estate of someone who died this year, no matter how small, will be affected by changes to rules governing heirs’ step-up in cost basis.

Optimists still hold out hope Congress will offer clarity before 2011, but the smart money says it won’t come before the mid-term elections in November.

Then again, who knows?

Lawmakers shocked the death rattle out of people by actually letting the estate tax lapse this year. Soon after, there was talk that they would reinstate the estate tax retroactively. Wrong again. Now halfway through the year, few expect that will happen.

Next expectation? Lawmakers absolutely, positively will come up with a more lenient version of the federal estate tax for 2011 than the one slated for currently.

Several key senators have been trying to cut a deal for months. Negotiations have stalled on more than one occasion.

"We’re almost half a year away from a tax policy that a super majority of senators say they don’t support. Yet, we’re stuck," Sen. Charles Grassley, R-Iowa, said earlier this week. "This time-sensitive issue has taken a back seat to everything else."

Anne Mathias, director of research at Concept Capital’s Washington Research Group, thinks it’s a fair bet to assume the new exemption level will fall somewhere between $3.5 million to $5 million.

But she also said if Republicans sweep the mid-term elections, and win at least 60 seats in the Senate, they may push to extend the repeal of the tax.

When Hartnett was asked what he thinks will happen with the estate tax next year, he gave the only answer he and his colleagues can give for many estate tax questions these days: "I don’t know." 

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No faxing fast cash advance gets you cash fast and easily.

The banking industry in St. Louis isn’t quite over the recessionary hump, but it’s heading in the right direction, industry observers say.

Overall, the 78 banks headquartered in St. Louis turned a small profit — $15 million — in the first quarter after losing $433 million in 2009. Only nine banks lost money from January through March.

"These are the best numbers we’ve seen since the first quarter of 2008," said Julie Stackhouse, chief bank regulator at the Federal Reserve Bank of St. Louis. "It is a turning point, and that’s a good thing to see."

That doesn’t mean that it’s easier to get a loan. As of March, loans were down 4 percent from last December and down 9 percent from March of last year.

That drop isn’t solely due to fearful bankers’ becoming tight-fisted. Bankers say their best business borrowers are hoarding cash and not ready to borrow to fund expansions.

"They’re still waiting," said Rick Sems, regional president for PNC Bank, which owns National City Bank in St. Louis. Local business have seen their profits rise, but that’s because of cost cutting.

"They’ve completely rationalized their organizations, and now we’re seeing a little bit of top line growth," Sems said. That revenue growth should lead to more borrowing over time.

The Fed’s national survey of lenders shows that bankers have at last stopped tightening their lending standards for business loans, although they haven’t begun to loosen. "We expect that credit is going to continue to be tight," said Craig Fehr, financial services analyst for the Edward Jones brokerage.

The count of problem loans held steady at local banks from December through March, although it’s still up 43 percent from March 2008.

"Unless we have an economic shock, it’s reasonable to expect that we’ll see stabilization," says Stackhouse.

About 4.6 percent of loans are troubled at local banks — more than double the figure that banks see in normal times. The count includes loans where payments are far behind, foreclosed loans and loans that were modified because borrowers couldn’t pay.

The wild card involves commercial real estate. Loans for office buildings, apartment complexes and the like make up 36 percent of loan portfolios at local banks.

Commercial real estate loans go bad with a lag — landlords can keep up their loan payments for a while even after tenants have moved out payday loans no faxing. The Congressional Oversight Panel, set up to monitor the federal bank bailout, warned in February that "a wave of commercial real estate loan failures could threaten America’s already-weakened financial system."

Meanwhile, banks are benefitting from a widening profit spread between the interest they must pay depositors and what they can charge borrowers, says Joe Stieven of Stieven Capitol Advisors, a longtime St. Louis bank analyst.

The recession killed off much competition from non-banks — insurance firms, business finance companies and other lenders who often undercut the interest rates offered by banks. "They had destroyed rational loan pricing for about five years," said Stieven.

The local bank numbers exclude banks with big St. Louis operations but that are based elsewhere — such as U.S. Bank and Bank of America. They generally don’t break out their results by region.

Among local banks, nearly all of last year’s loss came from a single player, First Bank of Clayton. The bank lost $405 million last year, much of it on development loans made in California. First Bank lost money in this year’s first quarter, but the loss was down dramatically to $23 million.

First Bank has been selling off pieces of its business, including some loans, to raise cash and improve its capital levels. Only about a third of the bank’s operation is in St. Louis. Excluding First Bank, loans by St. Louis banks are down only 3 percent from a year ago.

Three small locally based banks — Westbridge, First Advantage and People’s Bank & Trust — failed to meet the federal standards as "well capitalized" as of March. A spokesman for First Advantage said it climbed back to the well-capitalized level in April. David Thompson, president of Peoples, called it a "temporary setback" and said the bank had a plan to improve capital.

Westbridge was below the level of "adequate" capital under federal guidelines. A bank without adequate capital is considered in danger of failure. Westbridge CEO Rick Hummell said that a group of investors still planned to buy and rescue the bank, and that they hoped to get regulatory approval in June.

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Since cratering at 12-year lows in March, the S&P 500 has staged a powerful rebound as investors turned what could have been an abysmal 2009 into the second best year of the decade for stock returns.

Between war, recession, corporate malfeasance, and the collapse of the housing market, investors have had a tumultuous 10 years. The S&P 500 plunged 23%, seeing its first losing decade in close to a century.

But the decade could have been even worse, if not for the turnaround in 2009.

In the just-completed year, the S&P 500 gained 23.4%, the Dow industrials gained 18.8% and the Nasdaq added 44%. That’s trumped only by 2003, when the S&P 500 gained 26.4%, the Dow added 25.3% and the Nasdaq climbed 50%.

Like 2009, 2003 marked a big turnaround for the stock market as the economy emerged from a recession brought on by the 9/11 attacks and the collapse of the tech bubble.

For 2009, the big recovery has come in the aftermath of the housing market collapse and credit crisis and the worst recession since the Great Depression.

Although 2009 gains are strong historically, gains are even more substantial since stocks bottomed in March at the height of the financial market crisis. Since closing at a 12-year low on March 9, the Dow has gained 59% and the S&P 500 has gained 65%. Since closing at a 6-year low on the same date, the Nasdaq has risen 79%.

All 10 S&P 500 economic sectors managed gains this year, with technology the leader, rising 62% versus a year ago. Materials took second place, rising 47.1% from a year ago. The biggest losers were telecom, up just 3.6% and utilities, up just 8.4%.

Gains this year were driven by several factors, notably the government injection of trillions in fiscal and monetary stimulus into the economy.

A weak dollar also played a big role, boosting commodity prices and shares as well as the stocks of big blue chips that do a lot of business overseas who benefit when the U.S. currency is weaker.

Investor psychology also contributed, as investors went from factoring in another Depression to a recession to an eventual recovery.

But the year ahead is unlikely to see similar gains, either for the major indexes or the individual sectors, as investors look for signs that the slow-growing economy can charge ahead without unusual assistance.

"The biggest question is employment and whether the economy can start creating enough jobs to create a sustainable economic recovery," said Michael Sheldon, chief market strategist at RDM Financial Group business card design.

He said that as this issue works its way through the market, stocks could be vulnerable, particularly if the dollar continues to firm up, as it has through most of December. The other potential catalyst for a selloff later in the year ahead could be rising interest rates, although the Ben Bernanke-led Federal Reserve is unlikely to change its policy stance until the second half of next year.

"I think that prices will drift moderately higher in the year ahead, at least until Ben Bernanke decides to land the helicopter," said Mark Travis, president and CEO at Intrepid Capital Funds. "We could end up as much as 8% higher by this time next year."

Next year also starts what is likely to be a better ten-year period for Wall Street, after a rough decade.

The awful 00s: A tumultuous 10 years brought two recessions, two major wars, one contested presidential election, terrorist attacks in the U.S. and abroad, the credit crisis, the housing market bust and the near collapse of the financial market.

In light of the events that took place, perhaps its unsurprising that the stock market experienced its worst decade in nearly a century. The S&P 500 plunged 23%, seeing its first decade of losses in 90 years. Compare that to the 1990s, when the S&P 500 gained 316%.

The Dow lost 8% this decade after gaining 418% in the 1990s and the Nasdaq, still reeling from the bursting of the tech bubble, is down 44% in the 10-year period. In the 1990s it gained 794%.

For a look at the best and worst stock performers of the decade, click here

The best-performing sector of the decade was energy, up 104%, according to Standard & Poor’s. That’s roughly the same gain it made in the 1990s, but in that decade, nine of the S&P’s 10 sectors added at least 100%, with utilities the lone exception. Utilities gained 37%.

In this decade, only half of the ten sectors gained, with the rest sliding. Telecom and technology were the two worst performers of the decade, notable in that both were stars of the 1990s, in particular tech. Telecom lost 66% in this decade after gaining 223% in the 1990s. Technology lost 57% this decade after gaining 1,148% in the 1990s, the decade it defined. 

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Critics say a $139 million settlement reached this week between securities regulators and eight big financial institutions is small potatoes.

Don’t be fooled.

I think this settlement is a big enchilada.

It’s not far behind the $205 million paid by five mutual fund managers in 2005 to settle complaints about short-term trading of fund units.

Both cases showed that investors have rights that can’t be trampled upon by large financial firms.

In 2005, fund managers agreed they should treat investors’ money as carefully as if it were their own.

They were failing to protect the interests of long-term investors by letting short-term traders take away some of their profits.

In the current case involving third-party asset-backed commercial paper (ABCP), there were several key principles at stake for investor rights. These principles include the following:

Investment advisers should not sell products they don’t understand.

Two firms were selling ABCP to smaller retail investors.

Cannacord Financial Ltd. will pay $3.1 million and Credential Securities Inc. will pay $200,000 under a deal with the Investment Industry Regulatory Organization of Canada. IIROC said the two firms did not do enough homework on the product in order to learn about its complexities and underlying risks.

They relied primarily on the credit rating provided by Dominion Bond Rating Service, an agency whose work was paid for by the issuers of the rated securities.

Interviews with several advisers working for these firms showed they knew nothing about the issuers or the composition and structure of the product, IIROC said.

Some advisers were representing it to their clients as a safe and secure product that was similar to a T-bill, guaranteed investment certificate or a term deposit.

Investment dealers should disclose known risks of products to investors.

Two firms were selling ABCP after learning of its risks from the product issuer.

CIBC World Markets will pay $21.7 million and HSBC Bank Canada will pay $5.9 million under separate deals reached with the Ontario Securities Commission.

They were dealing with an ABCP issuer, Coventree Inc., which had said that its average exposure to U.S. subprime mortgages was 7.4 per cent.

But in late July, Coventree sent an email to all dealers noting that its exposure to subprime mortgages in some conduits was as high as 42 per cent.

Coventree did not put any limits on disclosing information in its email, the OSC said.

But neither firm notified investors of the risks.

"CIBC continued to sell Coventree and certain other third-party ABCP from July 25 to August 3, 2007," the OSC said.

"During that period, CIBC sold $245 million to investors who may not have been aware of those issues."

HSBC sold $172 million in ABCP to clients who didn’t know about the risks that it had been made aware of during the same period.

Short-term credit products can be as risky as stocks.

ABCP was sold under an exemption from securities rules that allowed it to avoid much of the disclosure required for other securities, such as company shares.

The Canadian Securities Administrators has proposed that distributors of asset-backed short-term debt should have to issue a prospectus, similar to stock issuers.

It also wants to reduce reliance on the use of credit ratings in securities legislation.

I think both recommendations should go ahead.

Few investment products are safe and secure any more, even short-term debt.

Meanwhile, buyers aren’t protected in a system in which sellers rely on endorsements from for-profit commercial agencies.

eroseman@thestar.ca

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The Bank of Canada is widely expected to keep its hands off interest rates Tuesday, holding them at near zero and committing to do so until at least July, despite growing evidence the economy is kicking back to life.

Fears of prolonged economic stagnation eased Friday with a report showing employers hired five times as many workers as expected. The data supported the Bank of Canada's view that economic growth will speed up in the fourth quarter after a disappointing third quarter, when it barely crept out of recession with tepid 0.4 per cent annualized growth.

All 12 of Canada's primary securities dealers forecast the central bank would hold its overnight target rate unchanged at 0.25 per cent at its final policy-setting meeting of the year. The bank releases its rate decision and accompanying statement at 9 a.m. ET.

Two-thirds of the traders think the bank will follow through on its pledge to hold rates at that level through mid-2010, conditional on inflation staying on track.

Reuters News Agency

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The number of Americans filing first-time claims for unemployment insurance fell last week to their lowest level this year, the government said Thursday.

There were 502,000 initial job claims filed in the week ended Nov. 7, down from an upwardly revised 514,000 the previous week, the Labor Department said in a weekly report. It was the lowest number since the week ended Jan. 3, when 488,000 initial claims were filed.

The tally was also smaller than expected. A consensus estimate of economists surveyed by Briefing.com anticipated 510,000 new claims.

The 4-week moving average of initial claims was 519,750, down 4,500 from the previous week’s revised average of 524,250.

A new jobs forum

President Obama said the figures were a "hopeful sign" but cautioned that unemployment is one of the "great challenges" facing the U.S. economy.

"Given the magnitude of the economic turmoil that we’ve experienced, employers are reluctant to hire," he said.

Speaking at the White House, Obama announced plans to hold a new forum on jobs and economic growth in December. He said the forum will bring together chief executives, small businesses and labor groups to discuss ways to improve the job market.

"We have an obligation to consider every additional responsible step that we can to encourage and accelerate job creation in this country," Obama said.

Initial jobless claims have been declining for several weeks, raising hopes that employers could begin adding jobs as the economy appears to be emerging from one of the deepest recessions on record.

Government figures showed last month that the U.S. economy grew at a 3.5% annual rate in the third quarter, ending a string of declines over four quarters.

However, many economists expect the national unemployment rate, which rose to 10.2% in October, to remain elevated even as the economy recovers.

"The numbers are still terrible in absolute terms, but at least they are clearly heading in the right direction," said Ian Shepherdson, chief U.S. economist at High Frequency Economics.

Continuing claims. The number of Americans continuing to file weekly claims for jobless benefits fell by 139,000 to 5.63 million in the week ended Oct. 31, the most recent data available.

The 4-week moving average for ongoing claims fell to 5.79 million.

But the decline in continuing claims may reflect a growing number of fliers that have dropped off those rolls into extended benefits.

Last week, President Obama signed into law a bill to provide up to 20 additional weeks of jobless benefits to unemployed Americans.

The legislation will extend jobless benefits in all states by 14 weeks. Those that live in states with unemployment greater than 8.5% will receive an additional six weeks. The proposal will be funded by extending a long-standing federal unemployment tax on employers through June 30, 2011. 

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A reserve fund must be established ahead of time to give the government the working capital it needs to dismantle large, troubled financial companies, a top U.S. bank regulator said on Tuesday.

Sheila Bair, chairman of the Federal Deposit Insurance Corp, said she opposes the proposal by the Obama administration and a leading senator to collect fees from financial companies after another firm is seized and dismantled.

“This would not be a bail-out fund. This would not be an insurance fund,” Bair said in prepared remarks to the Institute of International Bankers. “It would provide short-term liquidity to maintain essential operations of the institution as it is broken up and sold off.”

Senate Banking Committee Chairman Christopher Dodd earlier on Tuesday released draft legislation that calls for any government expenses to be recouped after a financial company fails and is liquidated. The FDIC would be in charge of dismantling the company.

Treasury Secretary Timothy Geithner has been adamant that creating a standing fund would enhance moral hazard and be viewed by the financial industry as an insurance fund that would insulate it from risky bets.

Bair, however, has been successful in convincing Representative Barney Frank to reverse his opinion on the topic. He recently said he now supports pre-funding the so-called resolution authority.

The resolution authority is just one piece of sweeping legislation moving through Congress to overhaul financial regulation. Other pieces include creating a new consumer agency to police financial products, consolidating bank regulators and creating a new council to oversee risks to the financial system.

The House has made considerably more progress through public bill-writing sessions and hopes to have a full House vote by early December low fee payday loans.

The Senate Banking Committee will start drafting formal language and consider amendments in early December, Dodd said on Tuesday. He did not estimate when the full Senate might vote.

Bair said during her remarks on Tuesday that Frank, chairman of the House Financial Services Committee, is going to take other measures to strengthen his version of financial reform.

She said he will eliminate the government’s ability to assist open but troubled financial companies, will ban the government from investing capital in those institutions, and will create a higher standard for the FDIC and Federal Reserve to provide support to healthy companies in the event of a systemic meltdown.

“We’ve had too many years of unfettered risk-taking, and too many years of government-subsidized risk,” Bair said. “It’s time we closed the book on the doctrine of too big to fail.”

Bair also said regulators can restrain risk in the system by ensuring that large financial companies hold high amounts of capital. She said recent improvements in market conditions cannot deter the effort to follow through on tough new capital standards.

“There is little doubt that there will be eye-popping reductions in required capital when the good times return to banking,” she said.

(Reporting by Karey Wutkowski in Washington and Clare Baldwin in New York, Editing by Andrea Ricci and Gerald E. McCormick)

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General Motors Co GM.UL is confident that it can find the financing to keep and restructure its European Opel unit, Chief Executive Fritz Henderson said on Thursday.

Henderson declined to say how many jobs would have to be cut at Opel or what plants would be closed, saying those details would be presented to Germany and other European governments soon as part of a restructuring plan.

Opel has the liquidity it needs to pay off the 900 million euros ($1.34 billion) remaining on bridge loan from the German government.

At the same time, GM can find ways to provide financing to Opel from its U.S. operations even after a restructuring funded by U.S. taxpayers that had placed some initial restrictions on the automaker’s ability to shift funds to its overseas units.

GM’s decision to keep Opel rather than selling a majority stake to a group that includes Canada’s Magna International and Russia’s Sberbank has touched off controversy in Europe.

Thousands of Opel workers in Germany on Thursday downed tools in a protest.

“We will be very shortly presenting our plan,” Henderson told reporters at a briefing at GM’s headquarters. “We feel confident that the plan will be financeable.”

Henderson said GM could provide liquidity to Opel by reducing the royalties that the European unit would otherwise pay to headquarters online payday advance.

The terms of GM’s exit from bankruptcy in the United States after taking $50 billion in U.S. government financing also allow GM to send funding directly to Opel if needed, he said.

“We are able to run a global business. We certainly need to be prudent about it. We need to be careful about it but we can run a global business,” Henderson said.

Henderson acknowledged that the automaker had “work to do to repair” its relations with the European unions.

GM’s Opel unit was rescued temporarily by a bridge loan from the German government that requires repayment by the end of November.

GM is outperforming its financial plans since emerging from bankruptcy in July and now sees more stability around its sales forecasts, Henderson said.

Henderson said the GM board meeting this week that scrapped plans to sell Opel had been “very vigorous.”

(Reporting by Kevin Krolicki, writing by David Bailey, editing by Dave Zimmerman)

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CIT Group Inc is planning to offer its unsecured debt holders two options: either to exchange their debt voluntarily, or agree to a prepackaged bankruptcy, people close to the matter said on Wednesday.

The debt exchange would allow bondholders to swap their securities for new debt, or equity. CIT has about $32 billion of unsecured debt on its balance sheet, and is hoping to reduce its indebtedness and to put off repaying maturing obligations.

Few financial companies have survived bankruptcy, but CIT believes its customers will continue to borrow from it even if it is reorganizing in bankruptcy court, the sources said. The sources declined to be identified because the plans are not yet public.

(Reporting by Dan Wilchins and Paritosh Bansal, editing by Leslie Gevirtz)

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Throughout history, people have complained about the companies they do business with. Until the Internet came along, those gripes were directed at small groups of family, friends and co-workers.

But e-mail, discussion forums, blogs and social networks have created a world where a once relatively harmless rant can do serious damage to a company and its reputation. Unhappy customers can, quite literally, broadcast their irritation to the world. It’s a fact that’s forcing some rather significant changes in the way many companies — including Dell, Coca Cola, Starbucks, Southwest Airlines and Charter Communications — are approaching customer service.

No longer is it enough to staff a call center and wait for customers to complain or ask for help. The smart companies, experts say, are the ones using social media to reach out to customers — particularly those who are unhappy and vocal about it.

"Those who wish it away and who think it’s just a fad — those are the ones who are going to be caught flat-footed and run over," said Steve Rosa, chief executive officer of (add)ventures, a Providence, R.I.-based marketing firm.
Of particular interest these days to companies is Twitter, the fast-growing microblogging site that allows users to communicate instantly, on their computers or cell phones, in 140-character messages, referred to as Tweets.

In August of last year, the service had 2.3 million unique visitors. A year later, the number had surged to 24.6 million, according to Nielsen Online.

And although Twitter itself hasn’t yet found a way to turn a profit, companies both large and small are finding uses for it. Some of them even make money. Dell, for example, announced earlier this summer that it has raked in some $3 million in sales directly related to its Twitter efforts. That’s not a lot for one of the world’s top computer makers — with more than $12 billion in annual revenue — but it does demonstrate potential.

Others, such as Progress West HealthCare Center in O’Fallon, Mo. are using it to communicate quickly with customers or, in this case, patients. The facility’s emergency room tweeted every couple of hours with updates on expected wait times. Emergency room staffers also use the Twitter feed to send notes to patients and are starting to answer questions. But the emphasis, at least for now, is on managing patient expectations, said Paula Szwargulski, manager of the emergency department.

"People expect to wait. But if they know how long they’ll have to wait and why they’ll have to wait, it’s not as painful," Szwargulski said.

More companies, however, are employing Twitter to put out fires before they have a chance to spread.

That’s what Michael Tomko of St. Louis learned earlier this summer when he complained on Twitter about a bill from Town and Country-based Charter for his phone service. He was annoyed by a range of fees and regulatory charges.

The brief rant caught the attention of Charter’s social media team, a group of five men charged with monitoring Internet traffic — Twitter, Facebook, blogs, discussion forums and consumer sites — for just that sort of thing. A rapid response quickly blunted Tomko’s anger.

"They could have gotten defensive. Instead, they wanted to know what was going on," Tomko said. "It felt like a real person talking to me."

The encounter offered Tomko a way to vent fast payday loan. He still canceled the phone service. But it turned him into a fan of Charter’s social media initiative, which has eliminated a source of irritation — the phone call-in center. Now he says all of his dealings with the company start with Twitter and the Umatter2Charter group.

"I’m not proclaiming that Charter is fixed," Tomko said. "But I’m saying there is a team of like five guys who are doing it right."

The company is quick to point out that the social media approach won’t subtract anything from other service avenues. And it should be noted that the five teammates — they’ve assisted some 7,000 customers this year — represent a tiny piece of Charter’s customer service operation, which deals with millions of calls annually.

But one thing it does seem to do is provide some customers with a more personalized touch. Each of the five social media guys has his own Twitter page, complete with name and photo.

Customers can essentially decide whom they’d like to talk to. That’s the thing that makes it work for Alexander Chow-Stuart, an author and screenwriter who lives in Woodland Hills, Calif.

"We’re on a first-name basis," Chow-Stuart said. "But when you call, you get a different person every time."

Although Charter has been increasing its involvement in social media — the company hired its first team member in January — it certainly wasn’t the first to go this route. But in recent months, the team has noticed a shift in customer attitude that should probably scare any company not active in this sphere.

In the early days, a customer ranting about Charter on his Twitter feed would express surprise when someone from Charter reached out to help. But those reactions are growing rare, said Eric Ketzer, communication manager for the social media team.

"We don’t have the shock-and-awe responses we used to get," Ketzer said. "So many companies are on Twitter now that they’re just kind of used to it."

That raises a couple of issues for companies who haven’t spent much time thinking about their online reputations.

The first is simply a lost opportunity, said Lorrie Thomas, a Web marketing expert who teaches social media at the University of California, Berkley.

She compares Twitter to a focus group. It’s just a lot bigger and free: "You are getting truly authentic messages. You can watch real, live conversations happening."

More importantly, she said, those companies aren’t doing enough to protect their image in an arena where attendance is expected.

"There are organizations that are completely behind," she said. "If you don’t build your brand, someone else will do it for you."

The challenge facing some companies, however, is convincing profit-oriented chief executives to invest money in an area without being able to promise a monetary return, said Chad Mitchell, a senior analyst at Forrester Research. It doesn’t help that the companies having the most success aren’t eager to share their expertise, out of fear of helping competitors, he said.

"How are you making money with this? That’s hard to measure," Mitchell said.

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