With the credit markets dried up, and losses to banks mounting to the tune of 9000 foreclosures a day, banks are getting more aggressive. One of the ways I personally experienced banks raising money is on their "fee income." These fees come in the form of Late Fees, Unavailable Funds Fees, Over Draft Fees, Service Fees, Etc.. These banks could also care less that you are unemployed, on welfare, or just lost your home.
No fee, however is more profitable than the predatory Bank Fee, and employees at at branches are being trained in public combat. When the public complains about a Fee often bank tellers have a system of keeping their money down pat, it's called "No, No, and No" again and again to any refund of their predatory fees.
My personal experience at my own bank had to do with a check that was bounced to me, due to an honest mistake by a friend of mine. The unmentioned bank I no longer deal with, has a policy of maximizing their predatory fees. They do so by clearing the bigger checks first and then ratcheting up lots of overdraft fees on all the smaller checks that did not make it.
Sadly the photo above is true I ended up paying an exorbitant amount for a simple pizza. That aside, keep in mind that banks expect us all to be perfect. They know this is impossible, so they take advantage of our mistakes, they embarrass you, and then keep even more of your money. Peoples, bank keep in mind, recently lost many of their customers personal information and you got nothing for their mistake.
Anyone who feels their bank has been abusive does have some recourse by contacting the Banking Commissioner in Hartford. If your bank is desperate for money and has begun criminal and unethical fee practices call the Banking Commissioner and file a complaint.
Chairman Christopher Dodd of the Senate Banking Committee offered an alternative Monday to the financial rescue plan of the administration of President George W. Bush aimed at giving the U.S. Treasury an equity stake when it helps companies burdened by debt.
Dodd, a Connecticut Democrat, was circulating a draft of his bill as Congress sought to deal with a financial crisis that has been called the worst for the United States since the Great Depression.
The Bush administration is proposing a $700 billion plan to buy devalued assets from investment firms to keep the financial system from coming to a halt.
Democrats have pledged to act quickly on the measure, even as they seek to create an oversight structure, limit the compensation of executives at the companies benefiting from the rescue and provide mortgage relief for struggling borrowers.
"We cannot just turn over $700 billion in taxpayer money and not insist that that taxpayer is going to be protected in this," Dodd told reporters Sunday.
"We need this to be clean and quick, and we need to get it in place," Paulson said Sunday in an interview with ABC News.
The legislation would require Treasury to take an equity stake equal to the purchase price of the assets being bought. If the company is not publicly traded, the government would take senior debt instead, placing it in the front of the line of debt holders for repayment in the event of a bankruptcy.
Dodd's proposal also would create a five-member oversight board to supervise the Treasury secretary's purchase and sale of distressed mortgage debt.
It would consist of the chairmen of the Federal Reserve, Federal Deposit Insurance Corp. and the Securities and Exchange Commission as well as two members from the financial industry designated by congressional leaders.
The board would be authorized to set up a so-called credit review company consisting of Treasury employees to study the soundness of the purchases. Under the plan, the government would be required to obtain an equity stake equal to the value of the debt that is purchased from the companies, including those whose shares are not publicly traded. The Treasury secretary would also be required to issue weekly public reports on the amount of assets bought and sold by the U.S.
Dodd is proposing to penalize executives who take "inappropriate or excessive" risks. The executive compensation and severance packages could be reduced if that is "in the public interest," the proposal says. It would also force executives to give back profits they earned that were based on company accounting measures that are later found to be inaccurate.
The Republican presidential candidate, Senator John McCain, who has supported giving shareholders a bigger say in executive compensation in the past, said Monday that taxpayers should not pay for "golden parachutes" for officers of companies that have crumbled in upheaval on Wall Street.
"The senior executives of any firm that is bailed out by Treasury should not be making more than the highest paid government official," McCain said at a campaign event in Scranton, Pennsylvania.
The president is the highest paid federal official, with a salary of $400,000 a year.
There is no doubt, and all respected economists agree, that we are in a recession that is likely to last for the next several years. The question on my mind is what led up to this recession? The answer comes simply as 9/11 combined with a "sub prime crisis," or a policy of lending money to people with marginal credit. This type of lending became a generally accepted practice because banks believed that home equity would grow according to the historical trends of the late 1990's. Risk was also minimized because the loans were sold off on Wall street and often conspicuously re-packaged in investment funds that small investors owned as part of their stock portfolios.
Mortgage brokers had a banner year due to Alan Greenspan's (Former FED Chief) keeping U.S. interest rates very low, loans were also restructured to allow high "loan to value ratios" and "interest only" payments. This made it possible for Americans with the most limited incomes be able to purchase a home of their own. The real estate market started to tumble after the questionable attacks of 9/11.
This was the first massive loss in real estate due to the free-fall collapse of five Manhattan buildings hit by two planes. The losses paralyzed the economy and sent stocks plummeting on Wall Street. 9/11 resulted in massive increases in all types of insurance, from home owners to car insurance to many other types of insurances netting billions in additional revenue to the insurance industry.
As volunteers at "Ground Zero" were heroically working in an environment full of pulverized concrete and the airborne Asbestos that insulated the lower floors of the World Trade Center Buildings. The Real Estate calamity was already set in motion.
The first warning came a few short years later on February 8, 2007 when HSBC - Europe's biggest bank blamed the U.S. sub prime defaults for its first-ever profit warning.
On April 2, New Century Financial Corp. filed for bankruptcy, their stock plummeted under 35.1 Billion in debt. The company was liquidated with court approval sending a "Red Alert" on Wall Street.
July 30, HSBC loses $6.35 billion due to bad U.S. loans in the first half of the year, up 63 percent from $3.89 billion in the same period last year.
October 15, CITIGROUP, the largest U.S. bank, says Q3 profit fell 57 percent due to sub prime losses. Their income down to a mere $2.38 billion from $5.5 billion the previous year.
October 19, WACHOVIA CORP - The fourth-largest U.S. bank posts a 10 percent decline in Q3 profit, to $1.69 billion from $1.88 billion a year earlier, having suffered $1.3 billion of write downs due to credit market turmoil.
October 24, MERRILL LYNCH stuns Wall Street by writing down $8.4 billion in bad investments related to sub prime lending.
December 19, MORGAN STANLEY posts a $3.59 billion Q4 loss and $9.4 billion of mortgage-related write downs.
January 15, 2008 CITIGROUP - The largest U.S. bank posts its first quarterly loss since Citigroup's creation in 1998, hurt by $18.1 billion of subprime-related write downs.
Jan 17, MERRILL LYNCH reports its worst-ever quarter, revealing around $16 billion in mortgage-related write downs.
February 14, UBS says it is writing down $18 billion in bad loans.
February 19, CREDIT SUISSE marks down the value of asset-backed investments by $2.85 billion.
October 26, U.S. mortgage lender Countrywide Financial Corp posts a $1.2 billion third-quarter loss after writing down $1 billion in sub prime loans.
Jan. 16, JPMorgan Chase boosts its provisions for loan losses by $2.54 billion during the third quarter.The investment bank's profit plunges 88% to $124 million.
March 3, HSBC's investment banking arm takes a $2.1 billion write down on assets tarnished by the sub prime crisis.
March 17, Bear Sterns collapses without warning or provocation. Federal reserve rushes to organize an emergency merger with J.P. Morgan to avoid bankruptcy.
April 1, UBS doubles its write downs to $37.4 billion.
April 8, Washington Mutual Inc, battered by mortgage delinquencies and defaults, obtains a $7 billion capital injection from private equity firm TPG Inc and other investors, but projected a $1.1 billion quarterly loss and set plans to eliminate 3,000 jobs.
April 15, JPMorgan Chase & Co.'s profit fell 50 percent in the first quarter after the bank took a provision of $5.1 billion to strengthen its reserves by $2.5 billion and account for $2.6 billion in losses in its loan portfolio.
April 18, 2008 Citigroup Inc. said it will eliminate about 9,000 more jobs, after poor bets on defaulting loans and the tumultuous credit markets lopped $14 billion in value from its investments during the first quarter.
So far the Federal reserve has created an estimated three Trillion in new currency to bail out the global economy. This creation of money is called M3 and is the worst economic indicator for inflation and the devaluation of the dollar uder the simple premise of "supply and Demand."
These losses also do not take into consideration those incurred by banks overseas, nor due they reflect the true nature of derivative losses, or losses based on real estate assets being worth less than what they are stated as being worth in a big banks portfolio.
The Federal Reserve Chairman Ben Bernake has grappled with the doomed economy by once again following in the footsteps of his predecessor Alan Greenspan and lowering interest rates accelerating the demise of the U.S. dollar.
As of today, the devalued U.S. dollar has created high inflation in food and energy, and quietly taxed the investments of every American whose savings are being depleted by way of its loss in purchasing power.
Tent cities trends of displaced Americans have propped up in Southern California, Florida, Detroit, and many other cities around America as top investors continue to flee the falling dollar.
The situation is becoming increasingly dire, and as the value of the dollar continues to plummet it will eventually set off an "alarm." This will result in more major Dollar holders like China, and Japan to make the dreadful decision of having to divest from it to limit their losses.
In the near future, America could be facing a crisis that combines both the public hardships of high interest rates seen in the 1970's, inflation, and the bank failures and joblessness of the great depression.
In conclusion, it is important to note that the American founders pegged the value of the dollar to gold and silver because they knew central banks, through abuse of their authority, would do exactly this to our economy. When Richard Nixon took America off the gold standard in the 1970's he doomed the entire country to exactly this kind of malaise.
