Derek Hernquist Bank of America Bosses Find Friend in the Fed: Jonathan Weil One of the reasons so many Americans are ticked off at the Federal Reserve is a lingering sense that it puts big banks’ interests above those of ordinary taxpayers. The news that the Fed is taking Bank of America Corp.’s side in a dispute over where to park some of the company’s holdings only reinforces that impression. Here’s the gist of the story, broken two days ago by Bloomberg News. Bank of America, which got hit with a credit-rating downgrade last month by Moody’s Investors Service, has moved an undisclosed amount of derivative financial instruments from its Merrill Lynch unit to its biggest commercial-banking subsidiary. The Federal Deposit Insurance Corp. is objecting to the transfers. The Fed, however, has signaled to the FDIC that it favors the transfers. Pushing an Agenda Among the big questions we’re left with: Why is the Fed going to bat for Bank of America in the first place? Unfortunately, none of the actors here went on the record to explain what’s going on.
The Great American Bubble Machine | Politics News The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money. In fact, the history of the recent financial crisis, which doubles as a history of the rapid decline and fall of the suddenly swindled dry American empire, reads like a Who's Who of Goldman Sachs graduates. Invasion of the Home Snatchers By now, most of us know the major players. But then, any attempt to construct a narrative around all the former Goldmanites in influential positions quickly becomes an absurd and pointless exercise, like trying to make a list of everything. The Feds vs. They achieve this using the same playbook over and over again. BUBBLE #1 The Great Depression Goldman wasn't always a too-big-to-fail Wall Street behemoth, the ruthless face of kill-or-be-killed capitalism on steroids —just almost always. Where to go?
PeterLBrandt Bailout Ingrate Bank of America to Impose Monthly Fees on Many “Basic” Checking Account Customers Of all the big US banks that managed to survive the global financial crisis, Bank of America and Citigroup were the two widely recognized to be at risk of failure in late 2008-early 2009. Sheila Bair, then head of the FDIC, really wanted to replace Citi’s CEO, Vikram Pandit, but settled for forcing the bank to do some pretty serious downsizing and streamlining. By contrast, Bank of America has not only been spared this sort of treatment (save being told it can’t pay dividends until its balance sheet is stronger) but it’s also the biggest beneficiary of the most recent “help the banks” full court press, namely, the mortgage settlement. So how does Bank of America propose to shore up its equity base? Nah, the path of least resistance is to charge customers more. The Wall Street Journal reports on latest plan for preserving BoA’s imperial right to profit: On the one hand, banks aren’t charities. And the current unattractiveness of small customers is in no small measure due to ZIRP. J.P.
OCC Probing JPMorgan Chase Credit Card Collections First in a series JPMorgan Chase & Co. took procedural shortcuts and used faulty account records in suing tens of thousands of delinquent credit card borrowers for at least two years, current and former employees say. The process flaws sparked a regulatory probe by the Office of the Comptroller of the Currency and forced the bank to stop suing delinquent borrowers altogether last year. The bank's errors could call into question the legitimacy of billions of dollars in outstanding claims against debtors and of legal judgments Chase has already won, current and former Chase employees say. For the banking industry at large, the situation at Chase highlights the risk that shoddy back-office procedures and flawed legal work extends well beyond mortgage servicing. "We did not verify a single one" of the affidavits attesting to the amounts Chase was seeking to collect, says Howard Hardin, who oversaw a team handling tens of thousands of Chase debt files in San Antonio. 'Outhouse' Attorneys
UPDATED: The Apple App Store Economy – GigaOM Update: Thanks to everyone for weighing in about the infographic. The data used was given to us on an exclusive basis from analytics firm Flurry. Indeed, three-quarters of the apps in the App Store are “paid apps,” which was used to calculate the average app price and the subsequent revenue figures in the previous version. For clarification purposes, here is the math: According to Flurry, Average listed price of a paid app: $3.63 74% of apps listed in the app store are paid. Only 1/4 of downloaded apps are paid. While we make every effort to ensure the accuracy of all the information contained in our posts, sometimes errors make their way onto our site, and this was one of them. best, Om digg Related GigaOM Pro Research Report: Surveying the Mobile App Store Landscape Graphic courtesy of Column Five Media
Activists Call for Breakup of Bank of America Jim Wilson/The New York TimesProtesters chained themselves to the doors of Bank of America and Wells Fargo branches in San Francisco last week. Public Citizen, a consumer advocacy group, is calling for the breakup of Bank of America. In a petition to Treasury Secretary Timothy F. Geithner and Ben S. Bernanke, chairman of the Federal Reserve — who are the chairman and vice chairman of the Financial Stability Oversight Council, respectively — the group argues that the bank is too big to be either governed or regulated, and represents a real risk to the financial system. They are urging Mr. In an accompanying letter, a group of leading business law professors urges regulators to “take any actions necessary to ensure systemic stability,” although the professors do not go as far as urging a breakup of the bank. Chris Ratcliffe/Bloomberg NewsTreasury Secretary Timothy F. Joshua Roberts/Bloomberg NewsBen S. Think the collapse of MF Global was a problem? The bank’s chief executive, Brian T.
Banks and Congress Grapple with Stubborn, Stupid Facts | On Democracy Facts are stubborn things, said founding father John Adams, a basic truth Ronald Reagan famously mangled at the Republican National Convention in 1988, when he tried to quote Adams and declared, “Facts are stupid things,” before correcting himself. Nonetheless, in practice, certain financial and political leaders seem to embrace Reagan’s verbal misstep as closer to reality than Adams’ original aphorism. Witness the resistance on the part of banking institutions and certain members of the congressional leadership, despite regulations demanding that they allow facts and figures to be reported, information that could keep us from the edge of yet another economic meltdown. “Three years ago, as the financial crisis was abating, the Fed published potential loan losses and how much capital each institution would need to raise to absorb them. Banks also are dragging their heels over a requirement that arose from last November’s G-20 meeting. The wills are an idea that makes perfect sense.
The Big Picture Bank of America Settlements Impede Fraud Probe, Arizona Says (Adds Arizona’s participation in multistate settlement in 13th paragraph.) Jan. 26 (Bloomberg) -- Bank of America Corp. is impeding an investigation of its loan modification practices by negotiating settlements with borrowers who must agree to keep them secret and not criticize the bank in exchange for cash payments and loan relief, Arizona officials say. The Arizona Attorney General’s office is asking a court to block those aspects of the settlements and require the bank to turn over all the agreements. The bank denies any wrongdoing. One 2011 accord involving a borrower facing foreclosure who defaulted on a $253,142 mortgage included a $5,000 payment, plus $7,500 for legal fees, and the defaulted payments were waived and the loan was modified to a 40-year term with a 2 percent interest rate, court documents show. Non-Disparagement A hearing is set for Feb. 1 on the dispute. Frequent Contact Only four returned phone calls and none would provide a copy of the settlement, Matthews said.
Bob Samuels: Romney, Private Equity, and the Future of American Capitalism While Mitt Romney would like to portray private equity (PE) firms, like his own Bain Capital, as examples of free market capitalism, the reality is that the only way many of these entities can make a profit is by manipulating the tax code and lobbying for favorable tax legislation and low interest rates. First of all, Wall Street and related financial institutions have spent millions on campaign contributions and lobbying efforts to make sure that profits made from private equity deals are only taxed as capital gains (15%). In turn, large institutional investors, like pensions and endowments, do not have to pay taxes on their private equity profits if these firms are based in places like the Cayman Islands, which it turns out is true for many of Romney's investments. Inside the PE Machine The way that private equity deals usually work is that the PE firm will borrow a large amount of money, and then use this debt to buy a company. Romney's Role in Vulture Capitalism Romney's America