All Posts Tagged With: "citigroup"
Stocks jump back up as Dubai is thrown a lifeline and Citi announces it will pay $20 billion back.
Jennifer McClelland | RSS | Mon, Dec 14 2009 | 1 Comment
The stock market has been doing better as compared to the same time last year, which was just a month or two after the biggest financial disaster of the decade. However, there have been some bumps along the way. If you look at something that has unfolded over just the past two or three weeks. Dubai was going bankrupt and there looked to be no one to save the country. That is, until today when Abu Dhabi surprised the country with it’s own $10 billion bailout.
With the country accepting a payment like that, it is easy to see why the stock market has kind of shot up today. Investors of the oil rich nation have had their fears calmed regarding the longevity of the emirate.
That is not the only financial news that has helped out the markets today. Citigroup has also announced this morning that it would be paying back $20 billion of bailout money that it has received from the United States government. The move will help put Citi back in control of its own company and will help out the government, which just passed a huge spending bill.
Financial news over the past two weeks has really been overshadowed by the whole “Tiger Woods” debacle. His story has completely caused a media frenzy and no one has mentioned that the Dow Jones has been over 10,000 for a while now. While there is plenty of good financial news to report on, there aren’t many news organizations that are doing so right now (that is, unless you watch cable news which has to report on several different things to fill up the time).
Related posts:AIG will likely not be able to pay back all their loans
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Tags: dow jones, financial disaster, media frenzy
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
Bank of America says it won’t raise fees ahead of new regulations
Tags: citigroup, bank of america, delinquencies
Citibank has decided to change to a fee based system
Jennifer McClelland | RSS | Tue, Oct 06 2009 | 0 Comments
After selling a lot of its brokerage business, Citibank has decided to regroup and change how it runs its brokerage business in the United States and across North America. The biggest change that it is going to implement is the decision to have the financial advisers that work for the company to charge a service fee for any advice that they may give. Right now, the company has a commission based service for the sale of stocks, bonds, mutual funds, etc.
Citibank issued a statement and said that it wanted to get rid of commission based compensation by 2011.
This would be out of line with the competition. Other brokerages that are the main competitors of Citibank are Morgan Stanley Smith Barney as well as Merrill Lynch Wealth Management. They still, and will continue to have commission based sales.
Citibank wants to start the shift immediately. The company has decided to assign 600 branch based brokers into teams. The branch based brokers were only the ones not included in the sale of Morgan Stanley.
The current CEO of Citigroup, Vikram Pandit, wants to be a larger competitor in the financial investments business. It is having to find new ways to do that since it had to sell off its share of Smith Barney to generate capital for the company.
While some feel that the move is good for the customers, I am not sure because there is no fee structure that was announced. Customers could find themselves paying more for services than they did in the commission based structure that the company used to have. I suppose that, when compared to the main competitors of Citibank, the fee structure could be seen as an advantage, but only if it means that the customer will be happier with the service and paying less.
It’s all about how much the customer is getting for his or her money. No one wants to pay more for a service that was once less expensive.
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The change in the way we rent movies is amazing
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Tags: financial investments, wealth management, compensation
The number of credit card defaults increased by over 11% in August
Jennifer McClelland | RSS | Thu, Sep 24 2009 | 2 Comments
A report from Bloomberg said that defaults of credit cards in the United States rose by 11.49% in August. The number is up from the 10.52% it increased from the month of July. The percentage reflects complete write offs and not delinquencies that are still being sought by the banks and lenders.
Because of the rising unemployment, there is a problem with many people being able to pay down their debts or be able to pay their debts at all. With unemployment currently hovering just under 10%, 1 in 6 Americans are out of work.
The biggest lenders in the United States, JPMorgan Chase, Bank of America, as well as Citigroup all reported an increase in defaults for the month of August.
It is now predicted that unemployment may reach 10.5% sometime in mid-2010 and at the same time there will be an increase in write offs between 12 and 13%.
As an American, I am well aware of many people of the country having a dependency on credit. For the longest time, everything that was purchased was paid for with plastic (an no, I don’t mean debit cards). Delinquencies were bound to rise at some point in time and they were going to rise by a lot. After all, with all the people defaulting on their mortgages and going into foreclosure, why would they hold on to their credit cards and try to pay them off?
Credit card companies know that this is what is happening, which is the reason for why they all want to hike their interest rates. If they didn’t hike interest rates then how would they make up their money from all of the people who are defaulting on their loans? The government won’t be bailing out these companies anymore.
Related posts:What will the credit card companies do?
Credit is still affordable.
What are the lies that got you into credit card debt?
Tags: Money, jpmorgan, foreclosure
Banks that were too big to fail are now bigger?
Jennifer McClelland | RSS | Mon, Aug 31 2009 | 0 Comments
The banks that were supposedly too large to fail last year when the government decided to bail out crumbling banks are now bigger than they were just a year ago. Even with measures in place to try to keep banks from getting too large, somehow these banks have gotten bigger and continue to grow.
J.P. Morgan Chase holds more than $1 out of every single $10 deposit made in the United States. Big surprise, so does Bank of America and Wells Fargo. Along with Citigroup, these banks issue half of the mortgages in the country and two out of every three credit cards.
FDIC chairman Sheila C. Bair has said regarding the weight of the banks on the financial system, “It is at the top of the list of things that need to be fixed. It fed the crisis and it has gotten worse because of the crisis.”
A few problems with these banks being bigger than they once were is that:
1) Consumers will have less choice when it comes to banking services and these banks will likely take advantage of that situation.
2) The bigger the bank, the more likely it is to think that the government will prop it up if things start to go south. This could lead to more risky moves on the banks’ parts.
3) The government’s stakes in these companies is large, but it still does not have voting shares.
Of course, this all came about due to banks failing or otherwise being “too good of a deal to pass up.” Meaning, that banks like Wachovia were simply too cheap with too large of a customer base to not purchase. That’s what Wells Fargo did, and that’s what has been happening all across the banking industry. However, it does seem a bit counter productive when you start to think about it.
These banks were once too large to fail and nothing has changed it seems. The only difference is that every dollar banks are lending is being scrutinized and those who want to borrow money to buy homes or other things are also being scrutinized as hard as the banks are in some situations.
Related posts:As more small banks fail, the FDIC is hurting
Nine banks went out of business on Friday
Wells Fargo’s profit nearly doubles in the third quarter
Tags: Money, citigroup, consumers
