Financial Crisis Inquiry Commission - The New York Times

commission casts a wide net of blame, faulting the administrations of Bill Clinton and George W. Bush, the Federal Reserve and other regulators for permitting a calamitous concoction: shoddy mortgage lending, the excessive packaging and sale of loans to investors and risky bets on securities backed by the loans.

Of the 10 commission members, only the 6 appointed by Democrats endorsed the final report. Three Republican members have prepared a dissent; a fourth Republican, Peter J. Wallison, a former Treasury official and White House counsel to President Ronald Reagan, has written a dissent, calling government policies to promote homeownership the primary culprit for the crisis.

report seems aimed at shaping future debate over the crisis. “The greatest tragedy would be to accept the refrain that no one could have seen this coming and thus nothing could have been done,” the panel wrote in the report’s conclusions. “If we accept this notion, it will happen again

Click on the following for more details:  Financial Crisis Inquiry Commission - The New York Times

And remember Thursday is the first day for the real report.

Debit Card Predators - NYTimes.com

 

new F.D.I.C. rules require banks to clearly explain overdraft costs. Most important, if a customer is charged a fee for overdrawing his account more than 6 times in a 12-month period, the bank must offer a less costly alternative, like a reasonably priced line of credit or linking the card to a savings account.

These regulations will bring basic fairness to the system. But banks worry about profits, and some are threatening to change their charters so they can shop for a less rigorous regulator than the F.D.I.C.

A race to the regulatory bottom would be a disastrous idea. Anyone who doubts that should recall what happened when the bank’s regulator of choice, the Office of the Comptroller of the Currency, failed to rein in reckless mortgage lending and actually blocked the states from doing the job.

Click on the following for more details: Debit Card Predators - NYTimes.com

Fed pays US Treasury record $78.4B last year - Yahoo! Finance

Income from the Fed's portfolio of securities came to $76.2 billion last year, up from $48.8 billion in 2009, Federal Reserve officials said. Such income rose largely because the Fed bought a greater number of securities. Increases in the value of securities also played a role.

In early November, the Fed launched a program to bolster the economy by purchasing $600 billion worth of Treasury debt through June. T

Fed pays US Treasury record $78.4B last year - Yahoo! Finance

Bank Issues which received little news coverage

 

Thanks to a recent posting by City Barbs [http://www.citybarbs.com/?p=6007] this business news regarding Castle Bank has just come to light.  Much of this has not been covered by the local news media.

In June 2009 the Comptroller of the Currency [OCC] determined  that the “Bank has engaged in unsafe and unsound banking practices relating to its credit underwriting and administration, commercial real estate risk management, problem loan management, credit risk ratings, allowance for loans and lease losses, and Bank Secrecy Act program.”   OCC’s formal  “written agreement”  with Castle Bank is available at :  .http://www.occ.gov/static/enforcement-actions/ea2009-107.pdf  The various loan review and administration procedures that were required by that agreement are listed in that document.

The written agreement was signed by the Directors of the then Castle Bank, NA, DeKalb, Illinois and included the following notables:  John W. Castle (DeKalb), Jack D. Franks (Woodstock, State Representative of the 63rd District) and Herbert H. Franks (Marengo, attorney, father of Jack D.).  Mr. Castle is a long time Director of First National Bank of Omaha and First National of Nebraska, however currently (2010) he does not serve on either of those boards. The Franks  have been directors at Castle Bank since their family owned bank, First National Bank of Marengo merged with Castle Bank.  Castle Bank was founded in 1856 in Sandwich, Illinois and was owned by the Castle family for generations.

This enforcement action (EA#2009-107) was terminated on 11-1-2010; see:   http://www.occ.gov/news-issuances/news-releases/2010/nr-occ-2010-144.html .  This termination occurred after the merger of Castle Bank into First National Bank of Omaha.

Castle Bank of Illinois (current division name for the bank) has its main office in DeKalb with branches in Belvidere, DeKalb, Harvard, Huntley, Lake in the Hills, Marengo, Oswego, Plano, Sandwich, Sugar Grove, Sycamore, and Yorkville. 

Castle Bank is a division of First National Bank of Omaha, a subsidiary of First National of Nebraska. First National Bank of Omaha has 87 locations in Nebraska, Colorado, Illinois, Iowa, Kansas, South Dakota and Texas (see map), 251 ATMs, 3,500 employees and $13.7 billion in assets.

The largest privately owned banking company in the United States, Lauritzen Corporation, has controlled First National Bank of Omaha and First National of Nebraska for the past decade.   National City Corporation  and Lauritzen Corporation were the  two largest banking organizations denied TARP [Troubled Asset Recovery Program] funds in 2008 from the U.S. Treasury Department.

 

 

 

 

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Government can’t print money properly - Yahoo! News

 

Treasury and the Federal Reserve had touted the new bills' sophisticated security features that were 10 years in the making, including a 3-D security strip and a color-shifting image of a bell, designed to foil counterfeiters. But it turns out the bills are so high-tech that the presses can't handle the printing job.

1 billion unusable bills have been printed. Some of the bills creased during production, creating a blank space on the paper, one official told CNBC. Because correctly printed bills are mixed in with the flawed ones, even the ones printed to the correct design specs can't be used until they 're sorted. It would take an estimated 20 to 30 years to weed out the defective bills by hand, but a mechanized system is expected to get the job done in about a year.

flawed bills, which cost around $120 million to print, will have to burned.

 

Government can’t print money properly - Yahoo! News

TARP, the Long Goodbye - Yahoo! Finance

Troubled Asset Relief Program, or TARP, is over - more specifically, its legal authority expires on Sunday, so it cannot be used for new "bailout" activities (although legacy programs, with money already disbursed, could last 5 to 10 years.)

three mistakes were made in the implementation of TARP.

• there was no need to be so excessively generous to the financial executives (and their boards) at the institutions that had to be saved. In part this generosity was due to insufficient safeguards
• missed the opportunity to change the structure and the incentives of Wall Street when it had the chance,…notion that our biggest six banks are untouchable today is uncontroversial.  Their creditors know this, so these banks can borrow more cheaply than their smaller competitors, they can become larger relative to the economy, and if you doubt the risks that this poses, just look at the situation today in Ireland.
• time the administration put forward its financial reform ideas, the big banks were back on their feet - and ready to throw huge numbers of lobbyists and unlimited cash into the fight to preserve their right to take inordinate risk and to mismanage their way into disaster….Dodd-Frank Act, while including some sensible consumer-protection measures, essentially does very little to reduce system risk as we move into a new credit cycle.

Click on the following for more details:  TARP, the Long Goodbye - Yahoo! Finance

Geithner pressed on bank losses, homeowner aid; says taxpayers recovering bailout investment - chicagotribune.com

 

Geithner told the Congressional Oversight Panel at a hearing that banks have repaid about 75 percent of the bailout money they received, and the government's investments in aided banks have brought taxpayers $21 billion. He acknowledged there likely will be a partial loss from the rescue of giant insurer American International Group Inc., into which the government plowed $182 billion.

prospects that General Motors and Chrysler will repay the nearly $60 billion in bailout money have improved.

Click on the following for more details: Geithner pressed on bank losses, homeowner aid; says taxpayers recovering bailout investment - chicagotribune.com

No Good Deed Goes Unpunished as Banks Seek Profits From Bailout

The Fed’s paid to free big banks of “toxic assets” and will pay again as these same banks profit on the final sale of “toxic assets”.  The PPIP was designed to lower the amount of these risky bonds which the big banks had on their balanced sheets—the banks actually increased their holdings.

Public-Private Investment Program was introduced in March by Geithner as a means of helping struggling banks by reviving the market for unpackaged loans and mortgage securities that aren’t backed by government-supported institutions, such as Fannie Mae or Freddie Mac. Under the program, asset managers were supposed to raise money from investors and, with additional capital and loans from taxpayers, buy as much as $1 trillion in toxic assets from U.S. banks, freeing up money for lending.

banks, which were expected to reduce their holding of such volatile mortgage securities, bought them before the government program was running and may now profit, said Michael Schlachter, managing director of Wilshire Associates, the Santa Monica, California- based investment-consulting firm. “Some of them created this mess, and they are making a killing undoing it.”

Click on the following for more details:  No Good Deed Goes Unpunished as Banks Seek Profits From Bailout - Bloomberg.com

FACTBOX: Keys to House financial regulation reform bill | Reuters

This article supplies a bullet presentation of the major issues being addressed by the re-regulation of the financial industry.  It also supplies a web site to read the entire bill.

(Reuters) - The House of Representatives on Thursday will debate historic legislation to overhaul financial regulation, with passage seen soon, possibly on Friday.

Click on the following for the “bullet” article:  FACTBOX: Keys to House financial regulation reform bill | Reuters

Treasury Forecasts Smaller Loss From Bank Rescue

 

The Treasury Department expects to recover all but $42 billion of the $370 billion it has lent to ailing companies since the financial crisis began last year, with the portion lent to banks actually showing a slight profit, according to a new Treasury report.

$42 billion in losses is a net figure that accounts for some profits to offset the losses. The Treasury officials said the government had lost about $60 billion, roughly half to Chrysler and General Motors and the other half to the insurance giant American International Group.

Click on the following for more details:  Treasury Forecasts Smaller Loss From Bank Rescue - NYTimes.com

Officials deny UK media report on move from dollar - Yahoo! Finance

If true, this is really an indication that recovery is going to become difficult as the cost of US Treasury borrowing increases. 

The selling was stoked by an article in Britain's "Independent" newspaper that said secret meetings were taking place between Arab states, China, Russia, Japan and France, to end dollar dealings for oil and moving instead to a basket of currencies, including the euro, the yen and the Chinese yuan.

Read more of the story by clicking on the following:  Officials deny UK media report on move from dollar - Yahoo! Finance

Fed’s deadline approaches for AMCORE - - BusinessRockford.com

 

Christopher McGratty, a banking analyst who covers AMCORE for Keefe, Bruyette & Woods of New York, said the fact that AMCORE has not been released from the order means it hasn’t been able to raise capital. He had estimated in June that AMCORE would need to raise $150 million to make regulators happy.

Fed’s deadline approaches for AMCORE - - BusinessRockford.com

US, Switzerland sign treaty increasing information exchange to counter tax evasion

Since March, Switzerland has signed 11 tax information exchange agreements, one short of the number required by OECD [ a Common Market Org] for it to be removed from a 'gray list' of uncooperative tax havens

U.S. tax authorities will be able to request information on Americans suspected of concealing Swiss bank accounts, the Swiss Finance Ministry said.
The treaty forbids so-called 'fishing expeditions,' meaning U.S. authorities have to provide specific details on the person they are seeking further information about and can't simply ask for wholesale lists of Americans with Swiss accounts, the ministry said.

US, Switzerland sign treaty increasing information exchange to counter tax evasion -- chicagotribune.com

Bank Of America To Pay U.S. $425M To Exit Agreement

Bank of America is paying the fee to exit an arrangement in which the government had promised to cover $118 billion in risky assets

Bank of America has received a total of $45 billion from the Treasury's $700 billion financial bailout pot, which is financed by taxpayers.

The company says it wants to repay $20 billion of that money, which would remove the company from a list of firms that have received "exceptional" assistance from the government.

Such companies are subject to greater government scrutiny, including having to provide plans outlining compensation packages for their highest-paid employees. The Obama administration's pay czar, Kenneth Feinberg, has the power to veto them.

Click on the following for more details from NPR:  Bank Of America To Pay U.S. $425M To Exit Agreement : NPR

Thinking prudently | Daily Chronicle

And where is Boone County—not thinking at all?

The [DeKalb] county board is considering making DeKalb County a “recovery zone,” another program of the stimulus package that would bring $15 million in a different kind of low-interest bonds to the county.

Taxpayers are understandably hesitant to embrace borrowing by local governments. In appearances alone, spending millions during a recession is a tough case to make. But it could also be the financially prudent thing to do, and for that reason local governments should strongly consider using these programs

Click on the following for the entire editorial:  Thinking prudently | Daily Chronicle

Fiat Completes Takeover of Chrysler - NYTimes.com

 

Under the plan, the carmaker would emerge from bankruptcy with a union retiree trust owning 55 percent, Fiat owning a 20 percent share that could eventually grow to 35 percent, and the United States and Canadian governments holding minority stakes.

Fiat Completes Takeover of Chrysler - NYTimes.com

Carmakers’ bankruptcies face skeptics - - BusinessRockford.com

 

Congress had no opportunity to review the Obama administration’s decision to take 60 percent ownership of GM and a smaller stake in Chrysler

Carmakers’ bankruptcies face skeptics - - BusinessRockford.com

In Overhaul, G.M. May Look to Its Far-Flung Arms - NYTimes.com

 

Unlike G.M.’s United States business, these operations have been growing. Sales increased 10 percent last year in Brazil, 9 percent in India and 6 percent in China. Recent numbers in some areas are even better — G.M.’s sales in the Asia Pacific region were up 44 percent in May compared with the year before.

In Overhaul, G.M. May Look to Its Far-Flung Arms - NYTimes.com

Why taxpayers won’t get return on GM investment | csmonitor.com

 

America will own a majority of GM, but for now it may be more accurate to say that GM owns a piece of every American taxpayer.

Why taxpayers won’t get return on GM investment | csmonitor.com

Bailed-Out Bank Tries Golden Parachute Loophole - ProPublica

This bank holding company has seven branches in the Rockford area. 

When is a golden parachute not a golden parachute? Associated Banc-Corp [1] of Wisconsin, which received $525 million in TARP money last year, seems to have found an answer to the riddle.

Lisa Binder, Associated Banc-Corp [1]’s president and chief operating officer, resigned. But she didn’t leave empty-handed: The bank agreed to pay her $1.65 million.

Binder’s severance agreement [3], filed last week with the Securities and Exchange Commission,  acknowledges the ban on golden parachutes. But Binder’s payment isn’t a golden parachute according to the agreement: It’s compensation for “services rendered.”  Those services? Not competing with the bank.

Click on the following for the rest of the story:  Bailed-Out Bank Tries Golden Parachute Loophole - ProPublica