All Posts Tagged With: "bank of america"
What will the credit card companies do?
Jennifer McClelland | RSS | Sat, Oct 24 2009 | 0 Comments
All the credit card companies are reporting a huge rise in delinquencies. The problem I see is that not only are there more and more defaults of credit cards, but these are the same banks that faced huge losses in the subprime mess.
Most the companies like Citigroup and Chase are going to be raising their rates before new credit card rules go into effect. There is only one company that comes to mind that says that it won’t raise its rates before the new rules go into effect and it is Bank of America.
The problem I am seeing is that with more fees and higher interest rate charges, people are not going to be able to afford their bills even more. So, it seems to me that those people who are facing problems now will almost definitely be defaulting on their high interest credit cards.
Of course, some of the credit card companies are currently telling their customers that if they want to avoid the new rate hikes then they can pay off their credit cards in a small time frame. I have read that most people are having to pay off their debt in 45 days if they want to keep their rates the same.
I just don’t see how people who have thousands of dollars of debt are able to pay off their debts in a matter of less than two months.
So, this brings us back to the issue of defaults that credit card companies will likely be facing in the near future.
Without the ability to increase rates (and mess over the customers that pay their bills on time every month) at the drop of a hat, what will the credit card companies do? How will they make up the amount of money that they will be losing on defaults?
Related posts:Wells Fargo wants to stand out and raise credit card rates
The number of credit card defaults increased by over 11% in August
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Tags: interest credit cards, high interest credit cards, interest rate charges
Bank of America’s executives won’t be seeing anything in the way of huge bonuses
Jennifer McClelland | RSS | Fri, Oct 23 2009 | 0 Comments
Kenneth Feinberg is the pay czar that is in charge of how the banks that took bailout money are running. When Bank of America proposed to cut pay for its top executives and top paid employees, he gave his own proposal in which he insisted the cash part of their salaries are to be reduced by 94% from the levels they were in 2008.
The letter that Feinberg sent to Bank of America’s chief administrative officer, Steele Alphin, outlined exactly what would be going on with their pay. Here is the summary:
•Retention and guaranteed bonuses are prohibited.
•The majority of one’s paycheck must come in stock awards, which aren’t redeemable for two years.
•Base salary will not exceed $500,000 and on average will be 94% lower than in 2008.
•Total compensation (retirement, fringe benefits, bonuses) will be 62% less than in 2008.
•Long-term bonuses can be awarded, but only after review by the pay czar’s office, and such bonuses must be in the form of restricted stock not redeemable for three years and subject to forfeit if the employee leaves the bank.
•All bonuses can be “clawed back” if the employee is terminated for misconduct or financial statements supporting the bonus turn out to be inaccurate.
Ok, so it’s unlikely that anyone that was making the huge amounts of money that the top executives making would be happy about rules set on how much money that they can make.
I am glad that the pay czar is setting rules on how much money these guys can make. If the banks weren’t operating on the taxpayer’s dollar then perhaps they could be trusted to do whatever they wanted, but are using federal money to pay their employees a crazy salary and huge bonuses, so they can’t be trusted.
Related posts:SEC is going to court with Bank of America over Bonuses
Bank of America has another loss for 3rd Quarter; Ken Lewis won’t be getting Paid this year
Ken Lewis Resigns as CEO of Bank of America
Tags: proposal, kenneth feinberg, administrative officer
A little “lol” of the day
Jennifer McClelland | RSS | Wed, Oct 21 2009 | 0 Comments
Ever wonder what the difference between bankers and pirates are? This little image I dugg is pretty funny in regards to the topic.
Banks have been letting their own companies fail for the past year and the only thing that saves them every time is the government. Unfortunately, the goverment is nowhere to be seen in the image.
It’s good to have a laugh at the expense of banks and the people who run them because, after all, they are the ones who took our taxpayer money and some (like AIG) won’t ever be able to pay it back. I think that the government should take AIG and split it into a lot of different branches then dissolve the non profitable branches. It would be like firing your under-producing employees, it happens.
Image source: Politico
Related posts:The Fed may lose its ability to bailout huge companies
Tags: merrill lynch, bank of america, bailout
Bank of America has another loss for 3rd Quarter; Ken Lewis won’t be getting Paid this year
Jennifer McClelland | RSS | Fri, Oct 16 2009 | 0 Comments
Bank of America reported a $2.24 billion loss in the third quarter of this year today. The latest news has shaken investors and the bank has failed to meet analysts expectations. BofA posted a net income of $704 million, representing 15 cents per diluted share in the third quarter of 2008. Many analysts expected the bank to lose around 7 cents per share in this quarter.
The latest quarter’s loss includes $893 million that was paid back to the United States government for the money borrowed from the TARP funds. It also paid $402 million to end a government guarantee term sheet.
The blame for the loss can be pointed anywhere. Most are putting the blame on the economy. Poor economic conditions are still haunting the financial sector. There are still rising foreclosures and credit card defaults are still on the rise as well.
The bank also charged off a huge amount of loans in the third quarter. Here are some examples:
•Credit card debt 30-plus days past due dropped to 7.4 percent from 7.6 percent in the second quarter. But the bank charged off 12.9 percent of its credit card portfolio, up from 11.7 percent in the second quarter.
•Home equity loans 30-plus days past due were reported at 1.4 percent, compared with 1.3 percent in the second quarter. Charge-offs increased to 5.1 percent, up from 4.7 percent in the second quarter.
•Consumer loans, including auto loans, 30-plus days past due increased to 10.1 percent from 9.9 percent in the second quarter. Charge-offs also increased to 20.3 percent in the third quarter, up from 18.9 percent in the second quarter.
BofA also reports that it charged off $873 million, or 4.67 percent of commercial real estate loans in the third quarter, up from $629 million in the previous quarter.
The bank charged off $796 million in small-business loans, or 17.45 percent, in the latest quarter, up from $773 million in the second quarter.
In other Bank of America news, Kenneth Lewis, exiting CEO of the company, will not be getting paid for work that he has done this year. He will not even be receiving a bonus of any kind. All of this is at the request of the “pay czar.”
Related posts:Ken Lewis Resigns as CEO of Bank of America
Sprint lost nearly half a billion dollars in the third quarter
Bank of America says it won’t raise fees ahead of new regulations
Tags: card portfolio, bank of america, credit card debt
Bank of America says it won’t raise fees ahead of new regulations
Jennifer McClelland | RSS | Wed, Oct 07 2009 | 3 Comments
Of all the bad that Bank of America has done in the past, at least it is trying to make up for it in the future, or at least they say they are. With the new regulations, Bank of America has decided that it would not hike credit card rates or increase fees before the new law is to go into effect.
New regulations are set to take effect in February. The new laws are meant to reform practices in the credit card industry including limiting banks’ and other lenders’ abilities to raise their fees and rates. It also requires that they give borrowers a greater understanding of the lending process and the costs associated with borrowing through greater disclosure.
The regulations may actually be moved up two months. Lawmakers in Congress have introduced some legislation that would cause the new laws to go into effect on December 1st instead of in February. The reason for the move is that credit card companies are raising rates and charging higher fees ahead of the new laws. Unfortunately for the borrower, the bureaucratic process takes longer than a credit card company’s decision to increase the interest rate on their card.
Some credit card companies have taken it upon themselves to change the terms of their agreements with their borrowers. Discover cards decided that it was going to “transition” some of its fixed interest rate card holders to a less-than-ideal variable rate. It is business practices like this that caused the government to take action against the companies and to set new laws and regulations for the industry.
Bank of America has done a lot in the past to make their customers leave in droves. The company has really taken a more consumer oriented approach in an attempt to gain back some of the customers that it lost when it started the shady business practices that are now being regulated against.
Bank of America was once one of the worst offenders. It was raising rates for customers who never missed a payment and would even pay more than their minimum payment.
Related posts:Bank of America reduces overdraft fees: Opting out is now an option!
Wells Fargo wants to stand out and raise credit card rates
SEC is going to court with Bank of America over Bonuses
Tags: bank of america, new laws, shady business
