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Post Banks
This article caused the little flower to say a bad word!
:censor

Perks keep rolling at rescued banks :headbang
From jets to country club fees, CEOs’ fringe benefits rose 4 percent last year
By Tomoeh Murakami Tse
The Washington Post
updated 3:35 a.m. CT, Tues., Oct . 20, 2009

NEW YORK - Even as the nation's biggest financial firms were struggling and the federal government was spending hundreds of billions of dollars to save many of them, the companies as a group were boosting the perks and benefits they pay their chief executives.

The firms, accounting for more $350 billion in federal bailout funds, increased these perks and benefits 4 percent on average last year, according to an analysis of corporate disclosures filed in recent months.

Some chief executives, such as Kenneth D. Lewis of Bank of America and Jeffrey M. Peek of CIT Group, the major small-business lender now on the brink of bankruptcy, each received about $100,000 more than a year earlier for personal use of corporate jets. Others saw an increase in the value of chauffeured services, parking or personal security.

Ralph W. Babb Jr., chief executive of Dallas-based lender Comerica, was compensated for a new country club membership, with an initiation fee and dues of more than $200,000. GMAC Financial Services chief executive Alvaro de Molina benefited from a $2.5 million payment from his company to help cover his personal tax bill. :censor

"You would have thought that this would be the moment when everyone said, 'Okay, the perks have got to stop — at least while we're indebted to the government,' " said Paul Hodgson, senior research associate at the Corporate Library. "But that didn't happen." :flame

This year may turn out to be different. In June, the Treasury Department prohibited companies receiving bailout funds from reimbursing senior executives for their personal tax payments. :nono

In the meantime, Kenneth R. Feinberg, the Obama administration official assigned to set pay for top executives at seven of the companies receiving the most help, plans to curtail perks such as country club fees when he rules on compensation later this month, according to people familiar with the matter. Perks worth more than $25,000 are getting particular scrutiny from Feinberg. :clap

On average, the chief executives at 29 of the largest public financial companies that have taken bailout funds received perks and benefits worth more than $380,000 in 2008, according to compensation figures included in annual proxy statements and supplied by Equilar, a compensation data services firm. Individually, about half the banks increased their fringe benefits to the top executives. The figures do not include relocation costs and related taxes, typically one-time fees that can skew year-over-year comparisons.

In contrast to the 4 percent average increase in perks and benefits at these companies, the average awarded to top executives at non-financial companies in the Fortune 100 declined by more than 7 percent over the same period, according to Equilar.

Personal use of corporate aircraft and "gross-ups" — when the company pays taxes due on bonuses or other benefits — represented more than half of the $11 million in non-cash pay awarded to the 29 chief executives in 2008. Among the more common perks were company cars and drivers, as well as personal financial and tax-planning services.

'Well compensated'
Although perks represent a relatively small portion of an executive's overall compensation package, they have been targeted some shareholders who argue that these fringe benefits are meant largely to stroke the egos of top company brass.

"These executives are already well compensated," said Daniel Pedrotty, director of the AFL-CIO's office of investment. "The notion that some of these folks can't even leave a nickel on the floor, that they want to take every last dime and put it on the company card really rubs people the wrong way but points to a larger problem of lack of independence at the board."

Some banks, mindful of the popular resentment over the government's $700 billion bailout of banks and other financial companies, have eliminated certain perks. And a few executives have voluntarily given up benefits that lawmakers have criticized as excessive. At Bank of America, for instance, senior executives will no longer use corporate jets for personal travel starting this year, a bank spokesman said. Ahhhh - poor babies gonna have to ride with the peasants IN FIRST CLASS!

Still, some companies that have taken away perks are making it up to executives by boosting their pay. SunTrust Banks eliminated most executive perks in 2008, including financial planning services, club memberships and payment of taxes on the perks, according to a corporate filing. But the bank also noted that "base pay increases were made in 2008 to offset this reduction in perks."

A spokesman for SunTrust, a recipient of $4.9 billion in government funds, said in an e-mail that the bank seeks to "maintain an executive compensation framework that is competitive, appropriate and consistent with industry practice, and we periodically make adjustments in line with that goal." :nono

Corporations have long defended perks as necessary for attracting and retaining talented executives. They also say some perks — corporate jets and chauffeured drivers, for example — are provided for security and to ensure that executives can work efficiently. In fact, it is not uncommon for companies to mandate that their chief executive use the corporate jet and car for all travel. American Express is one such company. Last year, it provided its chief executive, Kenneth I. Chenault, with $415,000 in corporate jet travel for personal reasons, as well as $201,000 for a home security system and $46,000 for security during personal trips.

A spokesperson for American Express declined to comment. The company's proxy statement says it eliminated tax gross-ups as of 2008.

GMAC said it had stopped using its corporate aircraft altogether after receiving a federal bailout in late 2008 and that de Molina, its chief executive, had declined a year-end bonus for 2008. He did receive a nearly $6 million award earlier in the year, however, and GMAC covered the taxes due on that bonus.

De Molina, a former executive at Bank of America who arrived at GMAC in 2007 and became its chief executive in April 2008, was "instrumental in leading the company through an incredibly challenging period and successfully executed a series of actions to stabilize the company," said Gina Proia, a company spokeswoman. $6 million worth, seriously?

CIT, which cut its staff by 22 percent in 2008, declined to comment. Representatives for Comerica did not return phone calls.

http://www.msnbc.msn.com/id/33391452/ns/business-washington_post/

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Tue Oct 20, 2009 7:13 am
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Post Re: Banks
This is just a complete slap in the face, I am so discusted with the absolute greed of this world, it just makes me wanna puke

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Tue Oct 20, 2009 7:23 am
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Post Re: Banks
Citi closing Mastercards without warning :censor
People across country reporting their cards linked to gas companies denied
The Associated Press
updated 7:41 p.m. CT, Mon., Oct . 19, 2009

NEW YORK - Shannon Burdette tried to pay with her Shell Mastercard after filling up her gas tank this weekend but found the card rejected.

Confused, she called the customer service line on the back of the card, issued by Citibank, and was told the account was closed because of something that appeared on her credit report. But when the Sykesville, Md., resident got a copy of her credit report online, the only negative thing she saw was "closed at credit grantor's request" on the Shell MasterCard account.

"They said there was a routine review," said Burdette, who maintained that she and her husband, Brian, used the card regularly and always paid the bill on time.

Burdette isn't alone. People across the country have been reporting similar experiences in postings on various consumer Web sites.

Citi confirmed the basics. The bank said in a statement it "decided to close a limited number of oil partner co-branded MasterCard accounts." That includes not only Shell, but Citgo, ExxonMobil and Phillips 66-Conoco cards.

The close date was Wednesday, and letters were sent out Monday to customers informing them of the change, a Citi spokesman said. The bank would not say how many cards were shut down or how much available credit they represented.

But unlike the bank's move to shut down its Home Depot cards, Citi did not discontinue the sale of these cards altogether. It is still accepting applications, promising rewards like 3 percent cash back on fuel purchases and 1 percent cash back on other spending.

No law, including the Credit CARD Act that has started to take effect, prevents banks from closing down credit accounts without warning. Credit card issuers all maintain the right, typically listed in the fine print on credit card agreements.

Citi would not say why the cards in question were shut down, issuing a statement that said only it continuously evaluates its products.

"It is kind of an extraordinary action, but these are extraordinary times," said Ben Woolsey, director of marketing and consumer research for CreditCards.com.

He noted that Citi is not the healthiest bank. In fact, Citi posted $8 billion in consumer credit losses for its third quarter last week, including both mortgages and credit cards. Like many banks with big consumer lending portfolios, Citi is expecting defaults on credit cards to rise in coming months. Credit card delinquencies typically track the unemployment rate, which is at 9.8 percent and is expected to top 10 percent soon.

Analysts noted following the earnings report that Citi has sharply reduced its outstanding credit to consumers.

A card being closed may, but does not always, damage a person's credit score. :censor

Such scores, which lenders use to determine if you're a good credit risk, take into account a series of factors, including how long you've had credit accounts, your payment history and the balance versus available credit.

It could be that last factor that hurts consumers most, said John Ulzheimer, president of educational services for Credit.com. If a consumer had a high credit limit on the closed account, and that credit is no longer available, it could alter the "utilization ratio" for the person's remaining credit. If another type of credit carries a high balance, the loss of the credit line could push down their score.

Ulzheimer said banks have been routinely making such moves in the past year and a half, mostly on a case-by-case basis. "Every once in a while you'll get a huge pop in one particular card product," he said.

Card holders who think their cards were unfairly shut down can try to contact the bank and ask for reinstatement, but Ulzheimer didn't hold out much hope for success. "In this environment," he said, "it's not as successful as it was in the heyday of credit cards, where you could in fact call and plead your case."

http://www.msnbc.msn.com/id/33388210/ns/business-consumer_news/

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Tue Oct 20, 2009 7:24 am
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Post Re: Banks
U.S. to Order Steep Pay Cuts at Firms That Got Most Aid :popcorn
By STEPHEN LABATON

WASHINGTON — Responding to the growing furor over the paychecks of executives at companies that received billions of dollars in federal bailouts, the Obama administration will order the companies that received the most aid to deeply slash the compensation to their highest paid executives, an official involved in the decision said on Wednesday.

Under the plan, which will be announced in the next few days by the Treasury Department, the seven companies that received the most assistance will have to cut the cash payouts to their 25 best-paid executives by an average of about 90 percent from last year. For many of the executives, the cash they would have received will be replaced by stock that they will be restricted from selling immediately. :heart

And for all executives the total compensation, which includes bonuses, will drop, on average, by about 50 percent. :crylaugh

The companies are Citigroup, Bank of America, the American International Group, General Motors, Chrysler and the financing arms of the two automakers.

At the financial products division of A.I.G., the locus of problems that plagued the large insurer and forced its rescue with more than $180 billion in taxpayer assistance, no top executive will receive more than $200,000 in total compensation, a stunning decline from previous years in which the unit produced many wealthy executives and traders.

In contrast to previous years, an official said, executives in the financial products division will receive no other compensation, like stocks or stock options. :clap

And at all of the companies, any executive seeking more than $25,000 in special perks — like country club memberships, private planes, limousines or company issued cars — will have to apply to the government for permission. The administration will also warn A.I.G. that it must fulfill a commitment it made to significantly reduce the $198 million in bonuses promised to employees in the financial products division.

The pay restrictions illustrate the humbling downfall of the once-proud giants, now wards of the state whose leaders’ compensation is being set by a Washington paymaster. They also show how Washington in the last year has become increasingly powerful in setting corporate policies as more companies turned to the government for money to survive.

The compensation schedules set by Kenneth R. Feinberg, the special master at Treasury handling compensation issues, comes as many other banks that received smaller but significant taxpayer assistance in the last year have been reporting huge year-end bonuses, setting off a new round of recrimination in Washington about the bailout of Wall Street.

Since his appointment last June by Treasury Secretary Timothy F. Geithner, Mr. Feinberg has spent months in negotiations with the companies as he seeks to balance compensation concerns against fears at the companies that any huge restrictions in pay could prompt an exodus of executives. Under a law adopted earlier this year, the Treasury Department was instructed to examine the salaries and bonuses for the five most-senior executives and their 20 most highly paid employees at companies that have received extraordinary assistance.

Mr. Feinberg has already achieved significant results at several companies. As a result of his discussions, Kenneth D. Lewis, the head of Bank of America who recently resigned, agreed to forgo his salary and bonus for 2009. (He will still receive a pension of $53.2 million, although Mr. Feinberg can issue an advisory opinion challenging it that would carry political weight.) And fearful of a political backlash over the pay of Andrew J. Hall, a successful energy trader who received nearly $100 million last year, Citigroup agreed two weeks ago to sell its Phibro unit that Mr. Hall heads to Occidental Petroleum.

http://www.nytimes.com/2009/10/22/business/22pay.html?_r=1&hp

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Wed Oct 21, 2009 1:31 pm
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Post Re: Banks
Wall Street titan should explain what he does for a living :agree

By Bob Greene, CNN Contributor
October 24, 2009 9:35 a.m. EDT

(CNN) -- The national rage directed at Wall Street seems to be intensifying.

Many Americans struggle in vain to find work. Those fortunate enough to have jobs worry that their pay will be cut. The mortgage meltdown has cost families across the country their homes. No matter what financial experts may say about the recession coming to an end, too many people still feel like they're at the bottom of a deep well.

Yet Wall Street banks -- notably Goldman Sachs and JPMorgan Chase -- are reporting spectacular profits. For them, it is as if the economic collapse last year was a little pothole that has long since disappeared in the rear-view mirror. They're zooming right along.

This month, Goldman announced that its profits in the last three months alone were $3 billion.

If the final quarter continues on this prosperous pace, Goldman's year-end bonus pool may exceed $20 billion, according to the New York Times -- enough to pay its 31,700 employees an average of $700,000.

That's the kind of news that many Americans may find difficult to swallow as a grim Christmas season arrives.

No wonder the anger at Wall Street is real and visceral. :fight

But here is a modest proposal.

It has to do with Lloyd C. Blankfein, the chairman of Goldman Sachs.

Blankfein, it has been reported, may receive a year-end bonus that is even larger than the one he got two years ago. :censor

Which is really saying something, seeing that his 2007 bonus was $67.9 million.

Here's the proposal:

Blankfein should go on television and make a public service announcement.

Not one of those 30-second ones that run late at night, promoting various worthy causes.

Blankfein should prepare a 30-minute announcement, to be delivered by him personally. He should buy time during the prime evening viewing hours on all the major networks. :heart

He should look into the camera and, as a service to an irate country, answer one simple question:

"What exactly do you do for a living?"

He should answer the question specifically, and in detail. :crylaugh

What is it that he and his employees do every day that makes their work so much more valuable than the work done by virtually anyone else in America?

This proposal is not made sarcastically; it's not a joke. Many of us don't know what Goldman Sachs does to make those billions of dollars in profits. And evidently those of us who are in the dark are not alone. New York Times business reporter Jenny Anderson, in a story on Goldman's success: "Quarter after quarter, Wall Street executives scour Goldman's results hoping to figure out how the bank makes so much money." :headbang

Goldman, and the other Wall Street giants, don't manufacture anything, other than those profits. What they do is, by definition, immensely lucrative. But for individual Americans who used to produce automobiles for a living, and no longer can; who want to build furniture for a living, but are no longer able to find an employer; who spend day after day, week after week, looking for a way to support their families. ...

Well, it would be instructive to hear Blankfein spell out, in unambiguous terms, just what it is that he and his colleagues do to make their money. If he is able to present his story convincingly, it could even be inspiring. There are a lot of children around the country who don't have much hope as the holidays approach. Maybe, if Blankfein expresses himself clearly enough, he could make them somehow believe they could grow up to be like him. You would assume that there is a learnable set of skills that combine to create a Wall Street titan. Perhaps Blankfein would be willing to share at least a little of the secret. Tell the rest of America how they might join the club.

He should be the person to speak not because he and Goldman are the only ones on Wall Street living the good life, but because they represent the apex. With their top-of-the-heap success comes a significant amount of criticism; Paul Krugman, winner of the Nobel Prize in economics, wrote earlier this year:

"Goldman is very good at what it does. Unfortunately, what it does is bad for America." :clap

Blankfein, and much of Wall Street, almost certainly disagree with that (at least the second part of it). They have to believe that what they do is essential, and represents the best of the United States. This is why it would be helpful to hear him explain to a fed-up nation why the knocks against Wall Street are wrong -- why he believes Americans should be grateful for what goes on in those office towers. :yamon

Can he do it? And have the country buy it?

He must be a persuasive guy -- he couldn't have gotten to where he is today if he didn't have the ability to make people see things his way.

Perhaps, because his company does so well for itself, he feels that he doesn't have to justify himself to the wider world.

But the anger and resentment about the chasm between the haves and the have nots in the United States is genuine, and it's growing. The most memorable song of 2009, the one that best summed up the mood of the year, will probably turn out to be John Rich's sad and livid "Shuttin' Detroit Down," the key verse of which was:

"While they're livin' it up on Wall Street in that New York City town, here in the real world they're shuttin' Detroit down."

Another hard American winter is on its way.

As, on a certain street where most of the country will never work, is a payday almost beyond comprehension.

http://www.cnn.com/2009/OPINION/10/24/greene.wall.street/index.html

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Sun Oct 25, 2009 8:56 am
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Post Re: Banks
Rate Of Bank Charge Offs Surpasses That Set During Great Depression
Created on 10:05:12 27-10-2009

Even as the cataclysmic events of last year fade into memory and most pundits are convinced that the government alone can push the country into prosperity, if it only wasn't for that pesky unemployment number that just refuses to cooperate, yet another comparison with the Great Depression emerges, one that shows that the current period is in fact even worse than what occurred in the years after 1930. Moody's has released an analysis which shows that the most recent rate of bank charge offs, which hit $45 billion in the past quarter, and have now reached a total of $116 billion, is at 3.4%, which is substantially higher than the 2.25% hit in 1932, before peaking at at 3.4% rate by 1934.

The estimated $45 billion in total charge-offs in the third quarter for rated U.S. banks compares to the $40 billion and $31 billion totals reported in second and first quarters of 2009, respectively.

Yet leave it to Moody's to put a favorable spin on things and to indicate that this will hardly require the rating agency to adjust their bank ratings:

These losses are consistent with our earlier estimate that rated U.S. banks will incur $415 billion of charge-offs in 2009 and 2010 ($299 billion remaining ($415 billion - $116 billion) As such, these losses have been incorporated into our U.S. bank ratings and therefore will not trigger rating actions.

However, based on our estimate, the rate of increase in the absolute dollar value of charge-offs has also slowed significantly in the third quarter of 2009.

How the charge off rate is "slowing significantly" when all factual sign point to the opposite is a bit of a mystery. Perhaps some Moody's analyst can take a walk to Stuy Town when not too busy getting advance info on upcoming LBOs to see what the economy really has in store.

In any case, a graphic representation of the Great Depression comparison is seen on the chart below:

con.

http://newsusa.myfeedportal.com/item.php?itemid=1124177

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Tue Oct 27, 2009 7:27 am
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Post Re: Banks
9 more U.S. banks fail; $2.5 billion hit for FDIC fund

By MarketWatch

SAN FRANCISCO (MarketWatch) -- Nine more U.S. banks, all owned by the same Illinois holding company, were closed Friday by regulators, and the Federal Deposit Insurance Corp. said U.S. Bank of Minneapolis would assume their deposits.

The closings brought the 2009 total to 115 in 2009 -- the first year since 1992 that more than 100 banks have gone under.

The banks as of Sept. 30 had combined assets of $19.4 billion and deposits of $15.4 billion, the FDIC said.

The deposit insurance fund will take an estimated $2.5 billion hit, the FDIC said.

All nine banks were subsidiaries of FBOP Corp., a holding company based in the Chicago suburb of Oak Park, Ill., according to the FDIC.

Privately held FBOP, which originated as the parent company of First Bank of Oak Park, wasn't involved in Friday's closures, the FDIC said.

The FBOP subsidiaries that were closed Friday were identified as Bank USA, Phoenix; California National Bank, Los Angeles; San Diego National Bank, San Diego; Pacific National Bank, San Francisco; Park National Bank, Chicago; Community Bank of Lemont, Lemont, Ill.; North Houston Bank, Houston; Madisonville State Bank, Madisonville, Texas; and Citizens National Bank, Teague, Texas.

http://www.marketwatch.com/story/9-more ... 2009-10-30

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Fri Oct 30, 2009 8:25 pm
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Post Re: Banks
Delaware beats Switzerland as most secretive financial center
Sun Nov 1, 2009 6:32am EST

WASHINGTON (Reuters) -- Move over Switzerland. The tiny state of Delaware beats the Alpine country in a contest for the most secretive financial jurisdiction, a tax justice rights group said on Saturday.

The United States, led by the eastern seaboard state, took in $2.6 trillion in deposits from non-resident corporations and individuals in 2007, according to a survey of financial jurisdictions analyzed by the Tax Justice Network.

The survey of laws, practices and size of inflows in 60 jurisdictions found Delaware coming in first, followed by Luxembourg and then Switzerland. The Cayman Islands and the United Kingdom round out the top five.

"While the U.S. has been jumping up and down and saying 'Aha, bad, wicked Swiss banks,' the U.S. is doing exactly the same things as far as non-resident bank account holders," said Sarah Lewis, executive director of the group, based in the U.K.

Switzerland has been the poster child for financial secrecy over the past year. The United State sued Swiss global banking giant UBS AG, which paid a $780 million fine to settle a lawsuit against it by the government. As part of the deal, UBS admitted it actively helped Americans evade U.S. taxes.

The ranking is based on a composite of total offshore activity and measures such as whether a jurisdiction obtains beneficial ownership information about companies and the degree of cooperation in turning over requested financial information.

Delaware is attractive because it does not tax profits realized outside the state and does not require companies to be physically present, according to the Tax Justice Network.

UBS and Credit Suisse have about 200 entities in the state, according to the group.

There are nearly 700,000 active entities registered in Delaware -- and about half of those publicly traded in the United States, according to the group.

Total U.S. deposits of non-residents rose from about $1 trillion in 2001 to $2.6 trillion in 2007, according to the study.

In Luxembourg, non-resident deposits rose to $500 billion from $101 billion over the same period. In Switzerland, such deposits rose to $1.45 trillion from $103 billion during the period.

Larry Hamermesh, a business law professor at Widener University in Delaware, said the state gets an unfair rap.

For example, he said tax justice groups criticize the state for not obtaining companies' beneficial ownership information when they incorporate in the state.

But no other U.S. state actually requires such information, Hamermesh said.

"Delaware is no more secret than any other U.S. state," he said, noting that Delaware's attraction to business is its flexible laws and expert courts. :roflmao

http://www.reuters.com/article/newsOne/idUSTRE59U1VB20091101

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Sun Nov 01, 2009 7:18 am
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Post Re: Banks
CIT Group to File For Bankruptcy Within Days

By editor|Nov 1, 2009, 12:19 AM|Author's Website

CIT Group to File For Bankruptcy Within Days CIT Group (CIT) intends to file for bankruptcy protection in New York within days, perhaps as early as Sunday, the WSJ reports, citing people familiar with the matter.

The filing, which was overwhelming approved by creditors in support of a prepackaged bankruptcy protection and comes as a consequence of the lender’s inability to obtain the required number of consents for its exchange offer, is aimed at lowering the firm’s liabilities and keeping it in business.

The creditors support of the co.’s prepack bankruptcy plan will affect only the holding company and one finance unit, and involves giving bondholders new debt worth 70% of the face value of their old debt, plus giving them an ownership stake in the co. equal to about 92.5% of the common stock.

The creditors support also includes that of billionaire investor Car Icahn who last week was pushing for CIT to stop making new loans and instead collect money from its existing loans and use the funds to pay off creditors. Mr. Icahn said he changed his mind on the prepackaged bankruptcy plan because he was pleased by changes the company made, including the acceleration process adopted by the CIT for appointing new directors.

“These changes significantly improve corporate governance and cash flow protections, and are positive for the company and all noteholders,” he said in a statement.

The below interview by FBN with Mr. Icahn should bring some clarity on his plans:

Worth noting here that in return for Mr. Icahn’s support for the plan, CIT obtained a $1 billion line of credit from Icahn Capital LP — which could be drawn as DIP financing in the event of a bankruptcy — to provide supplemental liquidity for CIT as it pursues its prepackaged plan.

The pre-packaged deal means passage through the bankruptcy court is now expected to be swift with the company emerging as soon as the end of the year.

With more than $70 billion in assets, CIT would be the fifth-largest bankruptcy filing in U.S. history, trailing only those of Lehman, WaMu, Worldcom, and GM. CIT’s Utah bank, note the Journal, which has about $10 billion in assets, wouldn’t be part of the bankruptcy filing.

One likely loser from a bankruptcy would be the U.S. Treasury. The $2.3 billion in TARP money injected late last year by the regulator to help stabilize the incompetently run lender, which was weighed down by billions of dollars of bad student loans and subprime mortgages, is likely to be wiped out.

http://wallstreetpit.com/11709-cit-grou ... ithin-days

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Sun Nov 01, 2009 11:10 am
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Post Re: Banks
CIT files for 5th largest U.S. bankruptcy
Small business lender seeks court approval for a debt reorganization that has approval of bondholders.

NEW YORK (CNNMoney.com) -- CIT Group Inc., one of the nation's leading funders of small and medium-sized businesses, filed for the fifth largest bankruptcy by assets in U.S. history Sunday as part of a reorganization plan that has the support of an overwhelming majority of debtholders.

In a statement, the company said it is asking the U.S. Bankruptcy Court for the Southern District of New York for a quick approval of the prepackaged plan. CIT said none of its operating subsidiaries would be affected by the filing, allowing them to continue operations.

"The decision to proceed with our plan of reorganization will allow CIT to continue to provide funding to our small business and middle market customers, two sectors that remain vitally important to the U.S. economy," said CIT (CIT, Fortune 500) chairman Jeffrey M. Peek.

In the bankruptcy filing, CIT said it had $71 billion in assets and $64.9 billion in liabilities. Only Lehman Brothers, Washington Mutual, Worldcom and General Motors had more in assets when they filed for protection.

CIT's position in the business world is crucial. It says it is the leading provider of factoring, a key element in the day-to-day financing of the retail industry. Its key role in shipping goods is illustrated by its statement that it is the nation's third-largest lessor of rail cars and the world's third-largest lessor of aircraft.

While the required percentage of debtholders approved the prepackaged bankruptcy procedure, the company said it did not receive the required support from bondholders for a $5.9 billion debt exchange offer that would have prevented the Chapter 11 filing.

CIT said it expects the reorganization to total debt by approximately $10 billion, significantly reduce its liquidity needs over the next three years, enhance its capital ratios and accelerate its return to profitability.

CIT said an additional $4.5 billion in credit obtained Wednesday will allow it to meet the needs of its clients and continue day-to-day operations during the bankruptcy approval process. The company said it has also obtained an additional $1 billion in credit to provide supplemental liquidity.

The company also said it has filed motions in the bankruptcy court to allow for the continued payment of employees, and to allow the company to pay vendors and other creditors in full.

Common shareholders, however, will be out of luck. CIT said all existing common and preferred stock will be cancelled upon emergence from bankruptcy protection. That would likely include preferred stock from the $2.3 billion in funding from the U.S. government's Troubled Asset Relief Program (TARP) the company received in its efforts to stay afloat.

CIT sought a second federal bailout in July but was rejected. It was then able to get a $3 billion loan from bondholders in order to stave off bankruptcy -- at least for a little while.

CIT shares were trading at 64 cents after hours Friday, having closing at 72 cents during regular trading hours. The stock traded above $60 as recently as 2007.

On Friday, it reached an agreement under which Carl Icahn, a prominent investor who had opposed the company's efforts to reorganize. will now support the firm's restructuring. Icahn's hedge fund firm, Icahn Capital LP, will provide CIT with a $1 billion credit line.

The credit line can be used as debtor-in-possession financing as part of the bankruptcy procedure.

Separately, the company said in a filing with the Securities and Exchange Commission on Friday that it had struck an agreement with Goldman Sachs (GS, Fortune 500) to change the terms of a loan it had originally sought from the Wall Street firm in June.

In reducing the size of the loan to $2.125 billion from $3 billion, CIT Group will pay Goldman a termination fee of $285 million and will post $250 million in collateral.

In return, Goldman agreed not to terminate the credit facility in the event of a CIT bankruptcy. Prior to Friday's announcement, Goldman Sachs was poised to collect $1 billion when CIT filed for bankruptcy, according to reports. Of course they were - these :censor NEVER lose money - do they?

http://money.cnn.com/2009/11/01/news/companies/cit_group/index.htm?postversion=2009110116

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Sun Nov 01, 2009 5:46 pm
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Post Re: Banks
Shareholders of other Financials will likely dump shares tomorrow.
M


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Post Re: Banks
Quote:
Shareholders of other Financials will likely dump shares tomorrow.


:awe

Mizar - do you see a steep decline for today?

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Mon Nov 02, 2009 7:13 am
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Post Re: Banks
Hat tip to Anastasia Slaymaker at GLP

Drug money saved banks in global crisis, claims UN advisor

Drugs and crime chief says $352bn in criminal proceeds was effectively laundered by financial institutions


Drugs money worth billions of dollars kept the financial system afloat at the height of the global crisis, the United Nations' drugs and crime tsar has told the Observer.

Antonio Maria Costa, head of the UN Office on Drugs and Crime, said he has seen evidence that the proceeds of organised crime were "the only liquid investment capital" available to some banks on the brink of collapse last year. He said that a majority of the $352bn (£216bn) of drugs profits was absorbed into the economic system as a result.

This will raise questions about crime's influence on the economic system at times of crisis. It will also prompt further examination of the banking sector as world leaders, including Barack Obama and Gordon Brown, call for new International Monetary Fund regulations. Speaking from his office in Vienna, Costa said evidence that illegal money was being absorbed into the financial system was first drawn to his attention by intelligence agencies and prosecutors around 18 months ago. "In many instances, the money from drugs was the only liquid investment capital. In the second half of 2008, liquidity was the banking system's main problem and hence liquid capital became an important factor," he said.

Some of the evidence put before his office indicated that gang money was used to save some banks from collapse when lending seized up, he said.

"Inter-bank loans were funded by money that originated from the drugs trade and other illegal activities... There were signs that some banks were rescued that way." Costa declined to identify countries or banks that may have received any drugs money, saying that would be inappropriate because his office is supposed to address the problem, not apportion blame. But he said the money is now a part of the official system and had been effectively laundered.

"That was the moment [last year] when the system was basically paralysed because of the unwillingness of banks to lend money to one another. The progressive liquidisation to the system and the progressive improvement by some banks of their share values [has meant that] the problem [of illegal money] has become much less serious than it was," he said.

The IMF estimated that large US and European banks lost more than $1tn on toxic assets and from bad loans from January 2007 to September 2009 and more than 200 mortgage lenders went bankrupt. Many major institutions either failed, were acquired under duress, or were subject to government takeover.

Gangs are now believed to make most of their profits from the drugs trade and are estimated to be worth £352bn, the UN says. They have traditionally kept proceeds in cash or moved it offshore to hide it from the authorities. It is understood that evidence that drug money has flowed into banks came from officials in Britain, Switzerland, Italy and the US.

British bankers would want to see any evidence that Costa has to back his claims. A British Bankers' Association spokesman said: "We have not been party to any regulatory dialogue that would support a theory of this kind. There was clearly a lack of liquidity in the system and to a large degree this was filled by the intervention of central banks."

http://www.guardian.co.uk/global/2009/d ... ief-claims

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Sun Dec 13, 2009 4:34 pm
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Post Re: Banks
Time for the dumb question of the day - are these a$$holes repaying us with our own money?

If they are repaying us with a common stock offering - doesn't this mean they have now diluted the value of the stock currently held by the US?

I ain't the sharpest tack in the box - but this definitely makes me go hmmmmmmm

C
itigroup strikes deal to repay TARP
Bank says it will return $20 billion in bailout money through combination of stock and debt offerings.
By David Ellis, CNNMoney.com staff writer
Last Updated: December 14, 2009: 7:41 AM ET

NEW YORK (CNNMoney.com) -- Citigroup said Monday it has struck a deal with the government to return $20 billion in bailout money to taxpayers.

The New York City-based lender said it would raise the money through a combination of stock and debt, the bulk of which would come from a $17 billion common stock offering.

"We are pleased to be able to repay the U.S. government's trust preferred securities and to terminate the loss-sharing agreement," Citigroup CEO Vikram Pandit said in a statement.

"As I have stated many times over the past year, we planned to exit TARP only when we were convinced that it was prudent to do so."

Citigroup became one of the biggest recipients of bailout money last year after the government injected $45 billion into the company to help stabilize the embattled lender.

Concerned about the company's underlying health and ability to endure future loan losses, the government converted $25 billion of its preferred-stock stake in the company into common stock over the summer. That effectively gave U.S. taxpayers a 34% stake in one of the world's largest financial institutions.

Citigroup said Monday that the government would get rid of those shares, starting with the sale of $5 billion worth of stock. The remaining shares would be sold "in an orderly fashion" over the next 6 to 12 months.

The company also said it was terminating the loss-sharing agreement it had struck with regulators in November in which the government agreed to backstop some losses against more than $300 billion in troubled assets.

Monday's announcement, while encouraging for taxpayers, is expected to push the company even deeper into the red when it delivers its fourth-quarter results on Jan. 19. Analysts are currently expecting the company to report a loss of $1.1 billion.

More importantly, it will ultimately free the company from a variety of government restrictions, namely pay limits for its top executives.

On Friday, White House "pay czar" Kenneth Feinberg capped base salaries for 75 Citigroup employees at $500,000 for the remaining three weeks of 2009. Those changes were expected to serve as the model for their pay next year as well.

Fearing such changes, large financial institutions have been scrambling to return bailout money to the government.

Last week, rival Bank of America (BAC, Fortune 500) got out from under the government's thumb by repaying the full $45 billion in bailout money it received.

Citigroup (C, Fortune 500) shares were unchanged in pre-market trading Monday after climbing 2% in the previous session.

http://money.cnn.com/2009/12/14/news/companies/citigroup_tarp/index.htm

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Mon Dec 14, 2009 7:15 am
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Post Re: Banks
President Obama To Bank Execs: You Guys Are Like Overpaid Pitchers -- And You Didn't Win The World Series

Image

ABC News has more details from Obama's meeting with top banking executives on Monday -- according to their White House source, the President told the bankers that they were like "overpaid pitchers on a team doing poorly." The subject was executive compensation. "The concern is less when your team is successful," Obama added, "but you guys didn't win the World Series this year."

Those aren't the only harsh words Obama has had for bankers recently. In his 60 Minutes interview which aired last Sunday, the President called them "fat cats," as in: "I did not run for office to be helping out a bunch of fat cat bankers on Wall Street."

Obama's lecture to bankers on Monday had, in his words, a simple message: "America's banks received extraordinary assistance from American taxpayers to rebuild their industry, and now that they're back on their feet, we expect an extraordinary commitment from them to help rebuild our economy."

The bankers said that they got it.

http://www.huffingtonpost.com/2009/12/1 ... 91977.html

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Post Re: Banks
Citigroup gains huge tax break in deal with IRS :censor :flame :headbang

U.S. gives up billions in revenue to secure repayment of bailout funds
By Binyamin Appelbaum
The Washington Post
updated 8:21 a.m. CT, Wed., Dec . 16, 2009

The federal government quietly agreed to forgo billions of dollars in potential tax payments from Citigroup as part of the deal announced this week to wean the company from the massive taxpayer bailout that helped it survive the financial crisis. :flame

The Internal Revenue Service on Friday issued an exception to long-standing tax rules for the benefit of Citigroup and a few other companies partially owned by the government. As a result, Citigroup will be allowed to retain billions of dollars worth of tax breaks that otherwise would decline in value when the government sells its stake to private investors.

While the Obama administration has said taxpayers are likely to profit from the sale of the Citigroup shares, accounting experts said the lost tax revenue could easily outstrip those profits. :banana :roflmao

The IRS, an arm of the Treasury Department, has changed a number of rules during the financial crisis to reduce the tax burden on financial firms. The rule changed Friday also was altered last fall by the Bush administration to encourage mergers, letting Wells Fargo cut billions of dollars from its tax bill by buying the ailing Wachovia.

"The government is consciously forfeiting future tax revenues. It's another form of assistance, maybe not as obvious as direct assistance but certainly another form," said Robert Willens, an expert on tax accounting who runs a firm of the same name. "I've been doing taxes for almost 40 years, and I've never seen anything like this, where the IRS and Treasury acted unilaterally on so many fronts." :sarcasism

Effort to ‘stop corporate raiders’
Treasury officials said the most recent change was part of a broader decision initially made last year to shelter companies that accepted federal aid under the Troubled Assets Relief Program from the normal consequences of such an investment. Officials also said the ruling benefited taxpayers because it made shares in Citigroup more valuable and asserted that without the ruling, Citigroup could not have repaid the government at this time. :whistle

"This rule was designed to stop corporate raiders from using loss corporations to evade taxes, and was never intended to address the unprecedented situation where the government owned shares in banks," Treasury spokeswoman Nayyera Haq said. "And it was certainly not written to prevent the government from selling its shares for a profit."

Congress, concerned that Treasury was rewriting tax laws, passed legislation earlier this year that reversed the ruling that benefited Wells Fargo and restricted the ability of the IRS to make further changes. A Democratic aide to the Senate Finance Committee, which oversees federal tax policy, said the Obama administration had the legal authority to issue the new exception, but Republican aides to the committee said they were reviewing the issue.

A senior Republican staffer also questioned the government's rationale. "You're manipulating tax rules so that the market value of the stock is higher than it would be under current law," said the aide, speaking on the condition of anonymity. "It inflates the returns that they're showing from TARP and that looks good for them." :doh

Hastening to part company
The administration and some of the nation's largest banks have hastened to part company in recent weeks. Bank of America, followed by Citigroup and Wells Fargo, agreed to repay federal aid. While the healthiest banks escaped earlier this year, the new round of departures involves banks still facing serious financial problems.

The banks say the strings attached to the bailout, including limits on executive compensation, have restricted their ability to compete and return to health. Executives also have chafed under the stigma of living on the federal dole. :spit President Obama chided bankers at the White House on Monday for not trying hard enough to make small-business loans.

The Obama administration also is eager to wind down a program that has become one of its largest political liabilities. Officials defend the program as necessary and effective, but the president has acknowledged that the bailout is "wildly unpopular" and officials have been at pains to say they do not enjoy helping banks.

Federal regulators initially told Citigroup and other troubled banks that they would be required to hold on to the federal aid for some time as they return to health. But in recent months, the government switched to pushing the companies to repay the money as soon as possible. All nine firms that took federal money last October now have approved plans to pay it back.

Companies' health?
This urgency has come despite the lingering concerns of many financial experts about the companies' health. These analysts said they worry that the firms could face rising losses next year as high unemployment and economic weakness continue to drive great numbers of borrowers into default.

"They are rolling the dice big time," said Christopher Whalen, a financial analyst with Institutional Risk Analytics. "My fear is that the banks will definitely have to raise a lot more capital next year. The question is from whom and on what terms."

The Citigroup repayment deal required significant sacrifices by both sides, underscoring the mutual determination to get it done. Citigroup was required to replace its federal aid with an equal amount of money from private investors, more than any other bank. The government concluded that Citigroup needed the IRS ruling because a reduction in the value of its tax breaks would have eroded its capital, forcing the company to raise more money, officials said. :whistle

Federal tax law lets companies reduce taxable income in a good year by the amount of losses in bad years. But the law limits the transfer of those benefits to new ownership as a way of preventing profitable companies from buying losers to avoid taxes. Under the law, the government's sale of its 34 percent stake in Citigroup, combined with the company's recent sales of stock to raise money, qualified as a change in ownership.

Saved from the consequences
The IRS notice issued Friday saves Citigroup from the consequences by stipulating that the government's share sale does not count toward the definition of an ownership change. The company, which pushed for the ruling, did not return calls for comment. :crylaugh

At the end of the third quarter, Citigroup said that the value of its past losses was about $38 billion, allowing it to avoid taxes on its next $38 billion in profits. Under normal IRS rules, a change in control would sharply reduce the amount of profits that Citigroup could shelter from taxes in any given year, making it much more difficult for Citigroup to realize the entire benefit before the tax breaks expired.

The precise value of the IRS ruling depends on Citigroup's future profitability and other factors, but two accounting experts said it was fair to estimate that Citigroup would save at least several billion dollars as a result.

Treasury acknowledged that the tax break was significant, but a senior official said the benefit was unavoidable. Either the government changed the rules and parted ways with Citigroup or the company kept the government as a shareholder and kept the tax break anyway.

"The choice is whether Treasury sells or doesn't sell," the official said. :censor

http://www.msnbc.msn.com/id/34442183/ns/business-washington_post/

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Wed Dec 16, 2009 8:34 am
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Post Re: Banks
Hat tip to guanosphere

Deposit Insurance Fund, UNoffcially
Dec 18, 2009 18:38 EST

I was heading out for Thanksgiving vacation when FDIC released the quarterly banking profile, so I wasn’t able to update an important chart: Total Insured Deposits, Unofficially…..

Image

(ht Stephen Culp)

When the world was falling apart, FDIC increased deposit insurance limits….to $250,000 for individual non-retirement accounts and unlimited for business transaction accounts. But those increases were treated as “temporary” and so left out of FDIC’s total.

Since the $250,000 limit was extended to 2013 — decidedly not “temporary” — FDIC started collecting that data from its member banks. The data was published for the first time in Q3.

So in Q3, the official figure — which includes $250k limits — jumped from $4.8 trillion to $5.3 trillion. Throw in the $761 billion insured by the transaction account guarantee program and you’ve got a total of $6.1 trillion of insured deposits. Compare to Q3 ‘08. Back then, before all the emergency measures, the total was $4.5 trillion. So the increases added $1.6 trillion, or 34%, to the total.*

I’ve juxtaposed that with the reserve balance on the Deposit Insurance Fund. It’s now negative, though that doesn’t mean FDIC is out of cash. And they’ve got another $45 billion coming this quarter, but for accounting reasons the reserve will still be listed as negative.**

But even with that cash coming in, the FDIC’s resources are under a lot of pressure. With 552 banks and $346 billion in assets on the “problem” list, FDIC will struggle to pay its bills.

Sheila will have to increase assessments on banks at some point, or start drawing on FDIC’s credit line at Treasury…

————

*The transaction account guarantee program is scheduled to expire in June of next year.

**The $45 billion to be collected isn’t a “special” assessment, it’s front-loading three years of “regular” assessments. The distinction is crucial. Since these assessments are regular, banks can treat them as a prepaid expense on their balance sheet, i.e. as an asset to be drawn down quarterly. That means they only have to draw down capital quarterly. The flip side is that FDIC can’t count the $45 billion as revenue. It has to treat it as “deferred revenue.” Deferred revenue is a liability on the balance sheet. Normally an assessment counts as revenue, which is added to the DIF’s equity balance.

Don’t you just love accounting?

http://blogs.reuters.com/rolfe-winkler/ ... offcially/

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Wed Dec 23, 2009 12:08 am
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Post Re: Banks
Debit card secret banks love: You sign, they win
By ANDREW MARTIN New York Times
Jan. 5, 2010, 8:01AM

Every day, millions of Americans stand at store checkout counters and make a seemingly random decision: after swiping their debit card, they choose whether to punch in a code, or to sign their name.

It is a pointless distinction to most consumers, since the price is the same either way. But behind the scenes, billions of dollars are at stake.

When you sign a debit card receipt at a large retailer, the store pays your bank an average of 75 cents for every $100 spent, more than twice as much as when you punch in a four-digit code.

The difference is so large that Costco will not allow you to sign for your debit purchase in its checkout lines. Wal-Mart and Home Depot steer customers to use a PIN, the debit card norm outside the United States.

Despite all this, signature debit cards dominate debit use in this country, accounting for 61 percent of all such transactions, even though PIN debit cards are less expensive and less vulnerable to fraud.

How this came to be is largely a result of a successful if controversial strategy hatched decades ago by Visa, the dominant payment network for credit and debit cards. It is an approach that has benefited Visa and the nation’s banks at the expense of merchants and, some argue, consumers.

Competition, of course, usually forces prices lower. But for payment networks like Visa and MasterCard, competition in the card business is more about winning over banks that actually issue the cards than consumers who use them. Visa and MasterCard set the fees that merchants must pay the cardholder’s bank. And higher fees mean higher profits for banks, even if it means that merchants shift the cost to consumers. :gah

Seizing on this odd twist, Visa enticed banks to embrace signature debit — the higher-priced method of handling debit cards — and turned over the fees to banks as an incentive to issue more Visa cards. At least initially, MasterCard and other rivals promoted PIN debit instead.

Squeezing the merchants
As debit cards became the preferred plastic in American wallets, Visa has turned its attention to PIN debit too and increased its market share even more. And it has succeeded — not by lowering the fees that merchants pay, but often by pushing them up, making its bank customers happier. :headbang

In an effort to catch up, MasterCard and other rivals eventually raised fees on debit cards too, sometimes higher than Visa, to try to woo bank customers back.

“What we witnessed was truly a perverse form of competition,” said Ronald Congemi, the former chief executive of Star Systems, one of the regional PIN-based networks that has struggled to compete with Visa. “They competed on the basis of raising prices. What other industry do you know that gets away with that?” :rant

Visa has managed to dominate the debit landscape despite more than a decade of litigation and antitrust investigations into high fees and anticompetitive behavior, including a settlement in 2003 in which Visa paid $2 billion that some predicted would inject more competition into the debit industry.

Yet today, Visa has a commanding lead in signature debit in the United States, with a 73 percent share. Its share of the domestic PIN debit market is smaller but growing, at 42 percent, making Visa the biggest PIN network, according to The Nilson Report, an industry newsletter.

Critics complain that Visa does not fight fair, and that it used its market power to force merchants to accept higher costs for debit cards. Merchants say they cannot refuse Visa cards because it would result in lower sales.

“A dollar is no longer a dollar in this country,” said Mallory Duncan, senior vice president of the National Retail Federation, a trade association. “It’s a Visa dollar. It’s only worth 99 cents because they take a piece of every one.”

Visa officials say its critics are griping about debit products that have transformed the nation’s payment system, adding convenience for consumers and higher sales for merchants, while cutting the hassle and expense of dealing with cash and checks. In recent years, New York cabbies and McDonald's restaurants are among those reporting higher sales as a result of accepting plastic.

“At times we have a perspective problem,” said William M. Sheedy, Visa’s president for the Americas. “Debit has become so mainstream, some of the people who have benefited have lost sight of what their business model was, what their cost structure was.” :censor

Visa officials said the costs of debit for merchants had not gone down because the cards now provided greater value than they did five or 10 years ago. The costs must not be too onerous, they say, because merchant acceptance has doubled in the last decade.

'Value-based calculation'
The fees are “not a cost-based calculation, but a value-based calculation,” said Elizabeth Buse, Visa’s global head of product. :roll

As for Visa’s market share, company officials maintain that it is rather small when considered within the larger context of all payments, where, for now at least, cash remains king.

While Visa may be among the best-known brands in the world, how it operates is a mystery to many consumers.

Visa does not distribute credit or debit cards, nor does it provide credit so consumers can buy flat-screen televisions or a Starbucks latte. Those tasks are left to the banks, which owned Visa until it went public in 2008.

Instead, Visa provides an electronic network that acts like a tollbooth, processing the transaction between merchants and banks and collecting a fee that averages 5 or 6 cents every time. For the financial year ended in June, Visa handled 40 billion transactions. Banks that issue Visa cards also pay a separate licensing fee, based on payment volume. MasterCard, which is roughly half the size of Visa, uses a similar model.

“It’s a penny here or there,” said Moshe Katri, an analyst who tracks the payments industry for Cowen and Company. “But when you have a billion transactions or more, it adds up.”

With debit transactions forecast to overtake cash purchases by 2012, the model has investors swooning: Visa’s stock traded at $88.14 on Monday, near a 52-week high, while shares of MasterCard, at $256.84 each, have soared by more than 450 percent since the company went public in 2006.

While there is little controversy about the fees that Visa collects, some merchants are infuriated by a separate, larger fee, called interchange, that Visa makes them pay each time a debit or credit card is swiped. The fees, roughly 1 to 3 percent of each purchase, are forwarded to the cardholder’s bank to cover costs and promote the issuance of more Visa cards. :shock:

The banks have used interchange fees as a growing profit center and to pay for cardholder perks like rewards programs. Interchange revenue has increased to $45 billion today, from $20 billion in 2002, driven in part by the surge in debit card use.

Some merchants say there should be no interchange fees on debit purchases, because the money comes directly out of a checking account and does not include the risks and losses associated with credit cards. Regardless, merchants say they inevitably pass on that cost to consumers; the National Retail Federation says the interchange fees cost households an average of $427 in 2008. :censor

While the cost per transaction may seem small, at Best Buy, the biggest stand-alone electronics chain, “these skyrocketing fees add up to hundreds of millions of dollars every year,” said Dee O’Malley, director of financial services. “Every additional dollar we are forced to pay credit card companies is another dollar we can’t use to hire employees, or pass along to our customers in the form of savings.”

The Justice Department is investigating if rules imposed by payment networks, including Visa, on merchants regarding “various payment forms” are anticompetitive, a spokeswoman said. Several bills have been introduced in Congress seeking to give merchants more ability to negotiate interchange, which is largely unregulated. :whistle

While interchange remains legal despite repeated challenges, a group of merchants is pursuing yet another class-action suit, this time in federal court in Brooklyn, against Visa and MasterCard that seeks to upend the system for setting fees.

Visa and MasterCard have morphed into a giant cookie jar for banks at the expense of consumers,” said Mitch Goldstone, a plaintiff in the case.

Fees were not an issue when debit cards first gained traction in the 1980s. The small networks that operated automated teller machines, like STAR, Pulse, MAC and NYCE, issued debit cards that required a PIN. MasterCard had its own PIN debit network, called Maestro.

Merchants were not charged a fee for accepting PIN debit cards, and sometimes they even got a small payment because it saved banks the cost of processing a paper check.

That changed after Visa entered the debit market. In the 1990s, Visa promoted a debit card that let consumers access their checking account on the same network that processed its credit cards, which required a signature. :gah

To persuade the banks to issue more of its debit cards, Visa charged merchants for these transactions and passed the money to the issuing banks. By 1999, Visa was setting fees of $1.35 on a $100 purchase, while Maestro and other regional PIN networks charged less than a dime, Federal Reserve data shows. Visa says the fee was justified because signature debit was so much more useful than PIN debit; at the time, roughly 15 percent of merchants had keypads for entering a PIN. :roll

Merchants said they had no choice but to continue taking the debit cards, despite the higher fees, because Visa’s rules required them to honor its debit cards if they chose to accept Visa’s credit cards.

Wal-Mart, Circuit City, Sears and a number of major merchants eventually sued. After seven years of litigation, Visa and MasterCard agreed to end the “honor all cards” rule between credit and debit and to pay the retailers a settlement of around $3 billion, one of the largest in American corporate history. Visa paid $2 billion, and MasterCard the remainder.

Since then, only a handful of retailers have stopped accepting Visa debit cards, an indication that the crux of the lawsuit was “much ado about nothing,” Mr. Sheedy says. :censor

And while some merchants said they thought the lawsuit would pave the way to a new era of competition, a curious thing happened instead: while Visa temporarily lowered its fees for signature debit, it raised the price on PIN debit transactions and passed the funds on to card-issuing banks, and its competitors soon followed.

The current class-action lawsuit joined by Mr. Goldstone contends that Visa’s PIN debit network, called Interlink, is offering banks higher fees as an incentive to issue debit cards that are exclusively routed over this network. Interlink, which has raised its PIN debit fees for small merchants to 90 cents for each $100 transaction, from 20 cents in 2002, is often the most expensive, especially for small merchants, Fed data shows.

One large retailer, who requested anonymity to preserve its relationship with Visa, provided data that showed Interlink’s share of PIN purchases rose to 47 percent in 2009, from 20 percent in 2002, even as its fees steadily increased ahead of most other networks — to 49 cents per $100 transaction in 2009, from 38 cents in 2006.

Visa officials say its PIN debit network is taking off despite rising costs because it offers merchants, banks and consumers a level of efficiency and security that regional networks cannot match. “We are motivated as a company to try to drive value to each one of those participants so that they accept the card, issue more cards, use the card,” Mr. Sheedy said.

At checkout counters, meanwhile, consumers are quietly tugged in one direction or the other.

Safeway, 7-Eleven and CVS drugstores automatically prompt consumers to do a less costly PIN debit transaction. The banks, however, still steer consumers toward the more expensive form of signature debit. Wells Fargo and Chase are among those that offer bonus points only on debit purchases completed with a signature.

Visa says it does not care how consumers use their debit card, as long as it is a Visa. But for now at least, the company says the only way to ensure that a purchase is routed over the Visa network is to sign.

“When you use your Visa card, you have a chance to win a trip to the Olympic Winter Games,” a new Visa commercial promises.

The commercial does not explain the rules, but the fine print on Visa’s Web site does: nearly all Visa purchases are eligible — as long as the cardholder does not enter a PIN.:flame

http://www.chron.com/disp/story.mpl/business/6798782.html

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Tue Jan 05, 2010 7:29 am
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Post Re: Banks
Friday, January 08, 2010
Unofficial Problem Bank List increases to 576

by CalculatedRisk on 1/08/2010 07:15:00 PM

This is an unofficial list of Problem Banks compiled only from public sources.

Changes and comments from surferdude808:

The Unofficial Problem Bank List changed by a net of one institution this week to 576 with assets of $304.8 billion.

Additions include North Valley Bank, Redding, CA ($910 million); First Trade Union Bank, Boston, MA ($690 million); Wheatland Bank, Naperville, IL ($481 million); and Decatur First Bank, Decatur, GA ($241 million).

Removals are terminations of Formal Agreements issued by the OCC against First National Bank of Baldwin County, Foley, AL ($263 million); Capitol National Bank, Lansing, MI ($229 million); and First National Bank of Wyoming, Laramie, WY ($218 million). These removals could be temporary as the OCC may be converting the action against these banks from a Formal Agreement to a Consent Order. The OCC is much prompter in posting its terminations than its new actions.

Other changes to list this week are Prompt Corrective Action orders being issued against banks-- Mainstreet Savings Bank, FSB, and Sun American Bank -- that are
already operating under a formal action.

The list is compiled from regulator press releases or from public news sources (see Enforcement Action Type link for source). The FDIC data is released monthly with a delay, and the Fed and OTC data is more timely. The OCC data is a little lagged. Credit: surferdude808.

See description below table for Class and Cert (and a link to FDIC ID system).

For a full screen version of the table click here.

The table is wide - use scroll bars to see all information!

NOTE: Columns are sortable - click on column header (Assets, State, Bank Name, Date, etc.)

(Chart can be seen here: http://www.calculatedriskblog.com/2010/ ... es_08.html

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Fri Jan 08, 2010 8:04 pm
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Post Re: Banks
NY AG Cuomo To Make Statement Monday On Banker Bonuses

Submitted by Tyler Durden on 01/11/2010 09:58 -0500

Well now you've done it Lloyd - the New York Attorney General has just gotten involved in banker bonus deliberations.

From Dow Jones:

New York Attorney General Andrew Cuomo is expected to make an announcement Monday concerning Wall Street's 2009 year-end bonus plans.

According to a press advisory, the attorney general will discuss the upcoming Wall Street bonus season on a conference call with reporters at 12 noon, EST, Monday.

Wall Street firms, which are facing criticism over potential record payouts while the U.S. economy continues to struggle, are expected to begin awarding 2009 bonuses to employees in the coming weeks.

The Wall Street Journal reported Monday that banks and securities firms have told their employees to expect a higher percentage of their year-end bonuses to be comprised of stock, rather than cash.

http://www.zerohedge.com/article/ny-ag- ... ent-monday

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Mon Jan 11, 2010 12:37 pm
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Post Re: Banks
Those :censor ! Good - maybe someone, somewhere, somehow will finally get to the bottom of alllll the dirty deeds.

We can hope, right?

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Mon Jan 11, 2010 3:13 pm
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Post Re: Banks
SEC expands charges against BofA :mrgreen:
Bank accused of failing to disclose losses at Merrill Lynch
The Associated Press
updated 3:45 p.m. CT, Mon., Jan. 11, 2010

WASHINGTON - Federal regulators have expanded their charges against Bank of America Corp. over billions in bonuses paid at Merrill Lynch, accusing the bank of failing to disclose mounting losses at Merrill before a shareholder vote approving the combination of the two firms.

The Securities and Exchange Commission announced Monday it had asked a federal judge in Manhattan to allow it to file the new charges against the biggest U.S. bank.

The SEC and Charlotte, N.C.-based Bank of America are scheduled to go to trial on March 1. The SEC previously accused Bank of America of failing to disclose to shareholders payment of the bonuses to Merrill employees after Merrill was acquired a year ago by the bank. Last fall, the judge threw out a proposed $33 million settlement of those charges and rebuked the SEC for not pursuing charges against individual executives of Bank of America. :clap

The SEC said Monday it was seeking to charge the biggest U.S. bank with failing to disclose "extraordinary financial losses" at Merrill in the two months preceding the shareholders' Dec. 5, 2008, vote approving the takeover of the storied Wall Street brokerage house.

The regulators said they would allege that Bank of America "erroneously and negligently concluded that no disclosure concerning these extraordinary losses was required as shareholders were called upon to vote on the proposed merger with Merrill Lynch." :roll

Spokesmen for Bank of America didn't immediately return a telephone call seeking comment.

The $20 billion takeover deal was forged at the height of the financial crisis, on the same September weekend that Lehman Brothers collapsed. It was first questioned after Bank of America disclosed that Merrill would post 2008 losses of $27.6 billion — far more than expected. Bank of America, which had already received $25 billion in U.S. bailout aid, then asked for and received an additional $20 billion from the government to help offset those losses. :rant

The SEC noted in its announcement Monday that Merrill had a net loss of $4.5 billion in October 2008 and estimated that it had sustained billions of dollars of additional losses in November. The actual and estimated losses together represented about a third of the value of the merger at the time of the December shareholder meeting and more than 60 percent of the total losses that Merrill posted in the preceding three quarters, the SEC said. :shock:

The agency said that Merrill's "slumping performance represented a fundamental change" to the information that Bank of America had provided to shareholders in its Nov. 3 proxy statement seeking their votes to approve the merger. The bank also had promised to update its disclosures to shareholders with any substantial changes, the SEC said. Its failure to do so made its prior disclosures "materially false and misleading," the SEC said.

http://www.msnbc.msn.com/id/34811292/ns/business-us_business/

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Mon Jan 11, 2010 3:18 pm
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Post Re: Banks
The Other Plot to Wreck America
By FRANK RICH
Published: January 9, 2010

THERE may not be a person in America without a strong opinion about what coulda, shoulda been done to prevent the underwear bomber from boarding that Christmas flight to Detroit. In the years since 9/11, we’ve all become counterterrorists. But in the 16 months since that other calamity in downtown New York — the crash precipitated by the 9/15 failure of Lehman Brothers — most of us are still ignorant about what Warren Buffett called the “financial weapons of mass destruction” that wrecked our economy. Fluent as we are in Al Qaeda and body scanners, when it comes to synthetic C.D.O.’s and credit-default swaps, not so much.

What we don’t know will hurt us, and quite possibly on a more devastating scale than any Qaeda attack. Americans must be told the full story of how Wall Street gamed and inflated the housing bubble, made out like bandits, and then left millions of households in ruin. Without that reckoning, there will be no public clamor for serious reform of a financial system that was as cunningly breached as airline security at the Amsterdam airport. And without reform, another massive attack on our economic security is guaranteed. Now that it can count on government bailouts, Wall Street has more incentive than ever to pump up its risks — secure that it can keep the bonanzas while we get stuck with the losses. :censor

The window for change is rapidly closing. Health care, Afghanistan and the terrorism panic may have exhausted Washington’s already limited capacity for heavy lifting, especially in an election year. The White House’s chief economic hand, Lawrence Summers, has repeatedly announced that “everybody agrees that the recession is over” — which is technically true from an economist’s perspective and certainly true on Wall Street, where bailed-out banks are reporting record profits and bonuses. The contrary voices of Americans who have lost pay, jobs, homes and savings are either patronized or drowned out entirely by a political system where the banking lobby rules in both parties and the revolving door between finance and government never stops spinning.

It’s against this backdrop that this week’s long-awaited initial public hearings of the Financial Crisis Inquiry Commission are so critical. This is the bipartisan panel that Congress mandated last spring to investigate the still murky story of what happened in the meltdown. Phil Angelides, the former California treasurer who is the inquiry’s chairman, told me in interviews late last year that he has been busy deploying a tough investigative staff and will not allow the proceedings to devolve into a typical blue-ribbon Beltway exercise in toothless bloviation.

He wants to examine the financial sector’s “greed, stupidity, hubris and outright corruption” — from traders on the ground to the board room. “It’s important that we deliver new information,” he said. “We can’t just rehash what we’ve known to date.” He understands that if he fails to make news or to tell the story in a way that is comprehensible and compelling enough to arouse Americans to demand action, Wall Street and Washington will both keep moving on, unchallenged and unchastened. :flame

Angelides gets it. But he has a tough act to follow: Ferdinand Pecora, the legendary prosecutor who served as chief counsel to the Senate committee that investigated the 1929 crash as F.D.R. took office. Pecora was a master of detail and drama. He riveted America even without the aid of television. His investigation led to indictments, jail sentences and, ultimately, key New Deal reforms — the creation of the Securities and Exchange Commission and the Glass-Steagall Act, designed to prevent the formation of banks too big to fail.

As it happened, a major Pecora target was the chief executive of National City Bank, the institution that would grow up to be Citigroup. Among other transgressions, National City had repackaged bad Latin American debt as new securities that it then sold to easily suckered investors during the frenzied 1920s boom. Once disaster struck, the bank’s executives helped themselves to millions of dollars in interest-free loans. Yet their own employees had to keep ponying up salary deductions for decimated National City stock purchased at a heady precrash price.

Trade bad Latin American debt for bad mortgage debt, and you have a partial portrait of Citigroup at the height of the housing bubble. The reckless Citi executives of our day may not have given themselves interest-free loans, but they often walked away with the short-term, illusionary profits while their employees were left with shredded jobs and 401(k)’s. Among those Citi executives was Robert Rubin, who, as the Clinton Treasury secretary, helped repeal the last vestiges of Glass-Steagall after years of Wall Street assault. Somewhere Pecora is turning in his grave

Rubin has never apologized, let alone been held accountable. But he’s hardly alone. Even after all the country has gone through, the titans who fueled the bubble are heedless. In last Sunday’s Times, Sandy Weill, the former chief executive who built Citigroup (and recruited Rubin to its ranks), gave a remarkable interview to Katrina Brooker blaming his own hand-picked successor, Charles Prince, for his bank’s implosion. Weill said he preferred to be remembered for his philanthropy. Good luck with that. :spit

Among his causes is Carnegie Hall, where he is chairman of the board. To see how far American capitalism has fallen, contrast Weill with the giant who built Carnegie Hall. Not only is Andrew Carnegie remembered for far more epic and generous philanthropy than Weill’s — some 1,600 public libraries, just for starters — but also for creating a steel empire that actually helped build America’s industrial infrastructure in the late 19th century. At Citi, Weill built little more than a bloated gambling casino. As Paul Volcker, the regrettably powerless chairman of Obama’s Economic Recovery Advisory Board, said recently, there is not “one shred of neutral evidence” that any financial innovation of the past 20 years has led to economic growth. Citi, that “innovative” banking supermarket, destroyed far more wealth than Weill can or will ever give away. :clap

Even now — despite its near-death experience, despite the departures of Weill, Prince and Rubin — Citi remains as imperious as it was before 9/15. Its current chairman, Richard Parsons, was one of three executives (along with Lloyd Blankfein of Goldman Sachs and John Mack of Morgan Stanley) who failed to show up at the mid-December White House meeting where President Obama implored bankers to increase lending. (The trio blamed fog for forcing them to participate by speakerphone, but the weather hadn’t grounded their peers or Amtrak.) Last week, ABC World News was also stiffed by Citi, which refused to answer questions about its latest round of outrageous credit card rate increases and instead e-mailed a statement blaming its customers for “not paying back their loans.” This from a bank that still owes taxpayers $25 billion of its $45 billion handout! :censor

If Citi, among the most egregious of Wall Street reprobates, feels it can get away with business as usual, it’s because it fears no retribution. And it got more good news last week. Now that Chris Dodd is vacating the Senate, his chairmanship of the Banking Committee may fall next year to Tim Johnson of South Dakota, home to Citi’s credit card operation. Johnson was the only Senate Democrat to vote against Congress’s recent bill policing credit card abuses. :doh

Though bad history shows every sign of repeating itself on Wall Street, it will take a near-miracle for Angelides to repeat Pecora’s triumph. Our zoo of financial skullduggery is far more complex, with many more moving pieces, than that of the 1920s. The new inquiry does have subpoena power, but its entire budget, a mere $8 million, doesn’t even match the lobbying expenditures for just three banks (Citi, Morgan Stanley, Bank of America) in the first nine months of 2009. The firms under scrutiny can pay for as many lawyers as they need to stall between now and Dec. 15, deadline day for the commission’s report.

More daunting still is the inquiry’s duty to reach into high places in the public sector as well as the private. The mystery of exactly what happened as TARP fell into place in the fateful fall of 2008 thickens by the day — especially the behind-closed-door machinations surrounding the government rescue of A.I.G. and its counterparties. Last week, a Republican congressman, Darrell Issa of California, released e-mail showing that officials at the New York Fed, then led by Timothy Geithner, pressured A.I.G. to delay disclosing to the S.E.C. and the public the details on the billions of bailout dollars it was funneling to its trading partners. In this backdoor rescue, taxpayers unknowingly awarded banks like Goldman 100 cents on the dollar for their bets on mortgage-backed securities.

Why was our money used to make these high-flying gamblers whole while ordinary Americans received no such beneficence? Nothing less than complete transparency will connect the dots. Among the big-name witnesses that the Angelides commission has called for next week is Goldman’s Blankfein. Geithner, Henry Paulson and Ben Bernanke should be next.

If they all skate away yet again by deflecting blame or mouthing pro forma mea culpas, it will be a sign that this inquiry, like so many other promises of reform since 9/15, is likely to leave Wall Street’s status quo largely intact. That’s the ticking-bomb scenario that truly imperils us all.

http://www.nytimes.com/2010/01/10/opinion/10rich.html?em

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Mon Jan 11, 2010 3:28 pm
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Post Re: Banks
Sadly enough, this doesn't even make me mad anymore. It's really getting to be funny!
:roflmao

BofA spends $4.4B on its Wall Street bankers
By David Ellis, staff writerFebruary 3, 2010: 11:44 AM ET


NEW YORK (CNNMoney.com) -- Bank of America spent $4.4 billion last year on its Wall Street bankers , according to a person familiar with the matter.

The nation's largest bank used 19% of the $23 billion in revenues it generated in 2009 within its markets and investment banking businesses to pay workers' salaries benefits as well as year-end bonuses.

That works out to an average of about $440,000 per employee. The bank has roughly 10,000 workers in its markets and investment banking units.

Bob Stickler, a spokesman for Bank of America (BAC, Fortune 500), would not confirm the figures, although he said that the company tried to walk a fine line when it structured worker pay this year.

"We are trying to balance the need to pay competitively and to respond to concerns about the level of compensation on Wall Street," said Stickler. :spit

Faced with a public backlash over outsized bonuses, many of the nation's largest financial firms have incrementally lowered pay levels for traders and investment bankers.

Many institutions have offered workers less cash and more stock, in an effort to tie workers' performance with the firm's fortunes and the interest of shareholders.

The use of so-called "clawback" provisions, which would reclaim pay from workers whose actions may damage the firm's long-term financial health, have also gained momentum recently.

The issue of compensation has haunted Bank of America for much of the past year after it was revealed that the firm paid $3.6 billion in year-end bonuses to Merrill Lynch workers for fiscal year 2008. The firm is currently facing two legal actions by the Securities and Exchange Commission over the matter. ;)

Compared to some of its peers, the amount Bank of America spent on its Wall Street employees appeared to fall in the middle of the pack.

Last month, JPMorgan Chase (JPM, Fortune 500) said it spent $9.33 billion to compensate workers in its investment banking division. Divided among the nearly 25,000 individuals in this business, the average annual compensation per employee was nearly $380,000.

Goldman Sachs (GS, Fortune 500) also revealed during the latest earnings season it spent approximately $498,461 a person, if its compensation pool were divided evenly among the firm's 32,500 employees.

http://money.cnn.com/2010/02/03/news/companies/bank_of_america_compensation/index.htm?hpt=T2

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Wed Feb 03, 2010 12:00 pm
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Post Re: Banks
Hat tip to AC at GLP

BIG DEPOSIT: This could end up as one of the largest suburban leases of the year, but it can't be good. The Federal Deposit Insurance Corp. has leased 150,000 square feet, the entire building, at the Woodfield Corporate Center, 200 N. Martingale in Schaumburg. The federal guarantor of bank accounts needs what it calls a "temporary Midwest satellite office" as it processes receiverships and asset sales involving Midwestern banks. The FDIC said it will move in beginning in March and that the office will have up to 500 workers.

KBS Realty Advisors of Newport Beach, Calif., owns the building. Its broker in the deal was CB Richard Ellis Group Inc., while Grubb & Ellis Co. represented the FDIC.

http://www.suntimes.com/business/roeder ... eb.article

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Tue Feb 16, 2010 11:24 am
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