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Big Banks Being Sued Over Foreclosures By NY

Mitch Mitchell — Mon, 06 Feb 2012 14:14:22 +0000

I’ve been waiting for this one to come. Last week the Attorney General for New York, Eric Schneiderman, finally sued Bank of America, J.P. Morgan Chase and Wells Fargo basically for fraud in the foreclosure mess from both 2010 and last year where many people were being foreclosed upon without the proper documentation or even evidence that they were behind on payments. What was known as robo-signing, where those tasked with verifying information decided to just sign foreclosure notices instead of doing their job, took place all across the country and caused a lot of headache to people, including displacements.

Probably the only reason those 3 banks are being sued is because overall New York didn’t suffer as much on loans as other states did because it’s highly regulated and thus doesn’t allow the kind of loans that destroyed countless families and lives in other states. Still, there were a high enough number of foreclosures because the state economy was suffering so foreclosures were occurring.

In my opinion this should have resulted in criminal prosecution for someone, whomever thought that they could get away with something like this. That a couple of the banks on this list got government support in 2009 so that they wouldn’t crash and burn is even more troubling because I had thought that the government was watching these banks to see what they were doing while they were waiting to get paid back for those loans although, to be fair, Bank of America did pay the government back in December 2009, although they really weren’t in a cash position to do so.

Still, with the housing crisis moving into year 5 and people still wondering if we’re going to pull out of it, even as it’s starting to show some signs of recovery, it seems like something criminal took place and that the banking powers that be got away with something.

Who’s with me on this one?

Will Bank Of America Survive?

Mitch Mitchell — Mon, 30 Jan 2012 14:17:41 +0000

Bank of America has a terrible 2011. They had to give up a lot of their foreclosures, got bad press because they tried to raise rates on checking and the use of debit cards, and their stock price fell so low that it almost went below $5 a share.

I haven’t been a big fan of Bank of America, and I feel like they brought a lot of these problems on themselves with bad management. I don’t believe they’re too big to fail, but I do believe it would be a tragedy if it did happen.

What’s going on with them lately? First, their stock price finally went back up, not close to the glory days but as of last Friday they were back around $7.29 a share.

They’re going to start offering deals to their consumers and their employees that are along the same type of thing Groupon does, where there will be discounts on services and items, with the caveat that since they pretty much know what you’ve been buying with our debit card they hope to steer you towards things they believe you want.

They’ve started working with some of the people that were hurt by the housing crisis, making deals to help those people stay in their homes, but by doing it they’ve been criticized by some states such as Arizona, who says that the deals are impeding fraud investigations against the bank. That’s because the deals include a non-disclosure agreement that can’t be broken. Yet even with those deals they’ve fallen to the 4th largest mortgage loan organization with no outlook for growth any time soon.

And they’re shaking up some of their leadership, especially in its investment banking area, to try to turn things around. Maybe it’s already working, as there’s conversation from financial analysts that are contemplating when their stock price might reach $10 a share.

So, is Bank of America on the brink of turning things around? It looks like it, but one slip up and they could be the largest bank to ever fail in this country. We should know more about their status in the coming months.

The Power Of Fussing – No Debit Card Fees

Mitch Mitchell — Thu, 03 Nov 2011 13:19:08 +0000

A few weeks ago I wrote my opinion here on the Occupy Wallstreet protests that are popping up everywhere. My major gripe is that, because people said they wanted it to be a “leaderless” campaign, it had no direction, and thus no real plan on what changes people wanted or any ideas on how to change them.

Based on what’s just happened concerning major banks and those folks with debit cards at those banks, it seems the Occupy Wallstreet people need to learn the art of “fussing” about something specific and targeted and be ready to do something a bit more drastic and personal. This is because the people, some of whom might be part of that movement, made their case and were ready to take some serious action (some people did) and basically got all the major banks to back down on proposed charges for people to use debit cards.

Bank of America was the last major bank to back off the threat after Wells Fargo & J.P. Morgan Chase had already backed down, and even smaller chains like SunTrust Banks and Regions Financial have decided they’re not going that route either. Citigroup, one of my favorite whipping boys here, and PNC Bank had already stated that they wouldn’t be adding fees to debit cards; smart boys.

So the people won; or have they? We still have to deal with higher bank fees from our checking and savings accounts, potential higher fees if we need to get money from ATMs that aren’t at the bank, higher prices to replace checks, and a host of other things banks could pull to try to recover money that they shouldn’t have been getting in the first place.

Yes, the people did win. I’m of the opinion that a message has been sent to the major banks that we, the people, are ready to move our money to smaller, more consumer-friendly banks and credit unions, most of which have no fees whatsoever, and bypass the large banks altogether. I asked the question weeks ago as to why people still use big banks and only one person had what could have been considered a legitimate response. This means that the majority of you might be hanging on because the big names are, well, better known, not necessarily because they’re better banks.

But money will make us take action, and when banks keep trying to penalize us for using our money, which they’ve encouraged us to use, it seems we the people are ready to move our money to someone who will give us more respect. And the big banks are listening; way to go folks!

Why Are You Still Using Big Banks?

Mitch Mitchell — Sat, 08 Oct 2011 13:19:39 +0000

Can someone please explain to me why people are still using Citibank, Bank of America, and any other large multi-national corporation bank in America?

Last week’s news brought with it stories that said Bank of America was going to start charging a $5 a month debit card fee, even if you’re using your card as a credit card. That was followed by an announcement by Citibank that they were going to start charging $15 a month for checking accounts if you couldn’t keep at least $6,000 in it. You have to know that Wells Fargo & J P Morgan Chase won’t be far behind.

Are the days of free checking about to go away? I don’t know for sure. What I do know is that I bank at a much smaller chain that’s still in multiple states and that I still have free checking for my personal account, and I get charged $2 a month for my business account unless I do 5 transactions. I do need to learn what consists of transactions though, since I have had to pay them, but at $2 I’m not crying about it.

Most smaller banks still offer free checking of some kind, or at least won’t penalize you for using your card the way they’ve expected you to use it. It seems the big banks are trying to push consumers back into getting lots of credit cards again so they can generate revenue and make themselves relevant. After all, over the last couple of years the use of credit cards has declined drastically and people have spent more of their money paying off debt rather than buying a lot of stuff they didn’t need. I never really believed the massed could learn fiscal responsibility until I saw this. Of course, with unemployment still high it probably reduced the amount of income people had to begin with.

And you can bet that Visa and Mastercard aren’t upset with this move since they’ve been losing major profits. This benefits big business, but doesn’t benefit consumers; don’t believe the hype. This is the type of thing that got us into financial difficulties in the first place.

I’ve never had an account at one of these big banks, and the only reason I had an account at HSBC, which I gave up in 2004 after they instituted new fees, was because they had taken over the corporation that took over the corporation that took over the corporation that took over the bank that my original account was with back in 1975. Yes, I can be quite loyal at times, but there’s always a breaking point.

So, convince me; why would anyone still be using a conglomerate bank for their checking and savings accounts?

Can You Protect Yourself From ATM Scammers?

Mitch Mitchell — Sun, 18 Sep 2011 13:18:23 +0000

I have a story to tell. Back in 2005 I was consulting in Westchester County in New York state for many months. One evening I decided to go to one of the large malls in the area for dinner. I decided to wait until I got to the mall to get money to pay for dinner.

via Flickr

I went to an ATM right outside Washington Mutual Bank, which is no longer around. The ATMs were directly across from the security office of the mall, which would seem like one of the safest places around. I put my card in and hit my pin number; nothing happened. I thought that was strange so I pulled my card out, put it back in and tried again; no luck. I then decided I’d just pay for dinner using my card as a credit card and went on my way.

The next afternoon I left where I was consulting and stopped to get gas. I put my card in and it was rejected. I tried again; same thing. I switched to another card, got my gas, and went back to the hotel I was staying at. Once there I called the number on the back of my card to find out what was wrong, as I knew there was enough money in the account to not have to worry about anything.

The lady on the phone told me that overnight there were two large transactions taking money out of my account in a city in England. She said that they flagged as errors because the dates of the transactions were listed as being before I had used my card, and because I had shown myself to be in the United States by using the card at another place.

Just like that I was out close to $2,000; how scary does that sound? I reported it to both the security office and the bank branch. Neither seemed to believe it could be happening, and the bank people said I was the first person who’d called about the problem. Days later there was a big story in the New York Times about many people having money taken from their accounts by using ATMs belonging to Washington Mutual in New York City; I was fairly close to NYC, so I figured that was connected and it almost had to be an inside job. At least I did get my money back in a week; whew!

There are few things one can do to really protect themselves from ATMs that might take your money. At least there are these few, however. Here’s what I’d recommend:

Go inside to get your money. Anyone that’s tampered with an ATM on the inside will be on camera, and if your money is still taken, everyone will know it had to be an employee.

Never try your card more than once at any ATM. If you don’t get your money the first time go inside and ask someone to check things out if you’re doing your transaction during the day.

Be wary if the person in front of you is having difficulties. Sometimes people think that something must be wrong with the other person’s card, but that’s not always the case.

Be alert and look at the ATM before using it. Sometimes there’s a plastic sheath that might not look right. Sometimes you get a feeling that something is amiss but you can’t quite put your finger on it. If you don’t feel comfortable, trust your instincts and don’t use it.

Never let anyone you don’t know help you with your card. They could be in on the scam, in which case you’ll have just opened your full bank account to strangers.

Copyright secured by Digiprove © 2011 Mitch Mitchell

Is Bank Of America Crashing And Burning?

Mitch Mitchell — Thu, 15 Sep 2011 13:17:12 +0000

Bank of America seems to be imploding. From the time when they were first bailed out until last week when they announced they were laying off around 40,000 employees, they’ve struggled to get back to the prominence they held before things started to go haywire. Not that no one believes they didn’t know what was coming, nor that they didn’t know part of their policies as it regards housing were to blame.

Just three years ago this month their stock price was around $56.000 a share. At the close last Friday it was sitting at $6.98. They seem to have made misstep after misstep if you ask me. They started off by being power hungry and aggressive on foreclosures. Then they tried to pay back the government bailout money without being on firm ground. Next they decided to try to generate big funds with some sneaky bank and credit card fees that ended up giving them bad publicity. And finally, when the press really seemed to be beating them down, they tried to change policy, be more friendly, hoping that people would forgive them for how they’d been treating them.

Is it bad leadership? Of course it’s bad leadership! It’s bad management, bad processes, bad decisions across the board. If you compare them to Citigroup, another bank that was in trouble, it makes you wonder about the talent pool. Citigroup’s closing price last week was $26.87, although, to be fair, their rate 3 years ago at this time was around $190, and 5 years ago was hovering near $340 per share. Maybe the words “genius” and “banking” don’t go together in the first place.

Will Bank of America totally crash and burn? If they do, it would be another crippling move to the economy, which is already shaky. There will be no more government bailouts; the Tea Party will see to that. That big tall tower in the Manhattan skyline either goes dark or gets taken over by someone else. All those branches across the country shut down, or the organization is broken up and taken over by multiple owners, because I doubt one bank could absorb them all in this economy.

Of course, they could always turn things around in some fashion; at least this news story gives them a potential plan. I guess we’ll see as time goes on.

Bank Closures Down; A Sign Of An Improving Economy?

Mitch Mitchell — Mon, 18 Jul 2011 13:42:19 +0000

Last year there were more bank closures than there were in 2009, which was a horrible year. The last time I talked about bank closures, which was around the middle of February, there were 18 closures, and by the end of the month there were 23 for the first two months of the year.

Since that time it looks like things have slowed drastically down. Not including April, which had 13 closures, the number for the other 3 months not only never reached double digits, only one of those months, June, hit 5. Last year through April there were 64 bank closures already; this year through June there’s only 48.

What could be causing this reversal of fortune? Well, there are a few factors that could be contributing to it. One, the worst performing banks have already crashed and burned for the most part, even though some banks are still closing (so far 7 banks have been closed in July).

Two, many bad performing banks have either turned things around or have already merged with more successful banks. This would be significant since there had been predictions that as many as 700 banks were in trouble, including banks for whom the majority of their clients were commercial companies.

Three, many banks were able to turn things around by offering things to some of their customers that helped them sustain themselves and not fall. Large banks probably needed to do this as well, but I’ve seen that customer service isn’t always promoted as the best interest for large banks. Some smaller banks began offering free checking again and were working with people who they’d given home loans to rather than foreclosing on properties as often.

Is this a sign of an improving economy? Not necessarily, but it is definitely a sign of stabilization, and it’s more legitimate than the rise of the stock market.

Bank Closures To Date

Mitch Mitchell — Wed, 16 Feb 2011 13:53:32 +0000

Is the economy starting to stabilize? Some statistics say yes, some are questionable. I figure one quick way to take a quick pulse reading is to look at bank closures so far in 2011.

To date, we’re sitting at 18 banks that have been closed. Last year at this time we had only 16 banks that had been closed. That’s basically a wash, but it does indicate that things just might not be all that rosy.

What’s interesting is that there are some new players in the game. Whereas we got used to seeing banks closing in many states that had housing problems, on this year’s list so far is a bank in South Carolina, one in Oklahoma, one in North Carolina and one in New Mexico. Not that banks haven’t closed, but it’s rare. South Carolina had 3 banks close last year, all in the same week. Oklahoma only had one bank closing, New Mexico had 2 close and North Carolina didn’t have a single bank close.

Unfortunately, Georgia is leading the way with 4 banks closed, and that doesn’t bode well for their market. On the other hand, Arizona has only had one bank close so far this year, and Nevada hasn’t had any close. Maybe they’ve finally come close to hitting bottom in their housing market and are ready to rebound.

The best thing so far, at least in my estimate, is that the high numbers of banks that were predicted to be possibly closing fell way short. And the collapse of commercial lending banks didn’t happen either; at least not yet. If things continue as they were predicted to for 2011, maybe we’ll see our way out of most of our financial difficulties by the end of the year.

Visa & Mastercard Lose Big Profits; Are You Sad?

Mitch Mitchell — Thu, 23 Dec 2010 17:14:26 +0000

It seems that Visa and Mastercard are lamenting the old days of being able to stick it to, well, us. That’s because a new law will eliminate many of the fees they’ve been adding to transactions for years, which have driven up prices, in essence saying they’re frivolous and not needed for the reason these companies said they were charging the fees in the first place.

What? You hadn’t noticed it? That’s because most of us have had no clue just how much these companies charge businesses we frequent for the luxury we all enjoy of using our debit cards as credit cards when we go to buy something. Right now, these two charge around 1% of whatever we purchase, which might not seem like a lot on the surface, but when you’re talking volumes it’s quite high.

As a for instance, you spend $100 at a store, they get paid a dollar. Sounds small? Well, these companies combined for more than $16 billion in fees last year; still sound small?

What’s going to happen now? The limit on fees is going from 1% to 12 cents; you read that correct, “cents”. Supposedly that’s how it works in other corners of the globe; only the U.S. has been taking it on the chin like this for awhile. Of course, there’s a major difference between 1% and 12 cents on $100. The amount starts getting close if you don’t spend that kind of money, which means if you go to your grocery store and only buy $6 worth of gum and candy, Visa and Mastercard will still benefit from your purchase.

As a matter of fact, anything less than $12 benefits Visa, Mastercard, and the banks, who got a large portion of those extra funds. That’s the part that may not be to our benefit with this legislation. If banks don’t think they’ll generate enough income from this process, they could decide not to put out those cards anymore, which then might mean any purchases we made would have to either be cash, check, or debit card, which everyone might not accept and would allow banks to charge us those debit fees that we hate. Talk about a double edged sword.

Where do you stand on this? Do you like the possibility of lower prices versus higher bank fees?

Foreclosures And The Impact On The Housing Crisis

Mitch Mitchell — Thu, 09 Dec 2010 14:39:41 +0000

Foreclosures have changed the housing industry more than anyone can imagine. They’re the fault of banks; my opinion. They’ve also ended up hurting a lot of banks, and that story is told over and over by the number of banks that have closed because of it. But the overall housing industry is reeling.

Here’s the thing about foreclosures. It seems that banks haven’t even been trying to be fair to home owners. We now know that the scandal of banks having people sitting in rooms just signing papers they weren’t reading or evaluating, called “robo-signing”, has caused banks across the United States to be investigated by the Department of Justice. There have been stoppages in foreclosures, and in the last few weeks of the year it’s expected that all foreclosure activity will probably cease, as it did last year. This time it might not be because of the government; it just might be because even banks need a breather from the bad behavior and overwhelming numbers of foreclosed properties they’ve helped cause.

At first, it seemed like banks would make out like, well, the bandits I say they were. They now had all these properties back that they could put on the market and make a lot of their money back. Lo and behold, they found that not only were there too many properties, which reduced the amount they could offer these homes for, but that the overwhelming number crushed the new home building industry, which they relied on for real monetary sustenance. Wow, a two pronged attack; terrorists couldn’t have done a better job.

Where does it all leave us now? Banks are still being investigated. Some states have banks withholding the number of homes they’re putting on the market, trying to artificially keep home prices up. Companies that were buying up foreclosed properties, fixing them, then reselling them have stopped buying as many of these properties because they don’t want to get caught up in the scandal. Because unemployment is still fairly high sales have dwindled. And banks still aren’t approving people who have pretty good credit at a rate sufficient to move merchandise because they don’t want to get burned again, even though they’re the ones who caused the mess in the first place.

Oh yeah, and now mortgage rates are going up, which will also reduce home sales. One industry is imploding and it’s taking everyone else with them. There never was a true symbiosis between banks and the housing industry; it just seemed that way. The reality is that banks have controlled the industry, and many others, for decades, and they need to right themselves so everyone else has a chance to recover.

Don’t bet on it; greed is hard to give up.

Bank Closures At 149 And Counting

Mitch Mitchell — Fri, 26 Nov 2010 23:42:54 +0000

The bad news is that we’re now sitting at 149 banks that have been closed in 2010. That exceeds the 140 banks that were closed last year with five weeks still go to.

The good news is twofold. One, no banks closed this week, though this is Thanksgiving week. Two, analysts really believe that the high number of bank closures has peaked and that the numbers will start going down. I’m trying to figure out where they’re getting this figure since there had been way more banks predicted to be teetering on the edge months ago, but maybe some of those banks have solved their issues.

Two of the banks that closed are somewhat of a surprise because they were in states that haven’t had as many problems as other states. Allegiance Bank of Bala Cynwyd, PA was the first bank closed in Pennsylvania this year. First Banking Center of Burlington, WI, is only the second bank in Wisconsin that closed this year. The only one that really wasn’t as much of a surprise was Gulf State Community Bank out of Carrabelle, FL, as the housing industry continues to bring down the banking system out that way.

Of course, there’s other banking news not related to banks necessarily closing, but trimming down. Meredith Whitney is predicting that by 2012 there will be more than 5,000 bank branches closed across the country for major banks as bank profits continue to fall. She’s the lady who predicted the banking crisis was coming, so people are listening to her. This could get ugly for some people; personally, I’m thinking this isn’t a bad thing except for the jobs that will be lost. In my area, the only large banking system around is Chase, and they don’t have a lot of branches, so it’ll be interesting to see what happens across the board.

FDIC Investigates Bank Executives

Mitch Mitchell — Tue, 23 Nov 2010 20:59:15 +0000

Well, this was a long time coming. Last week it was reported that the Federal Deposit Insurance Corporation (FDIC) was going to start investigating about 50 bank executives to see what their part might have been in the financial crisis our country’s been in. They think that some of what happened might have come right from the horse’s mouth, in other words.

I think it’s about time this happened, but I also think they’re about a year too late. Wouldn’t Congress normally have already had one of their famous sessions where they pull all the players into a room and grill them on what’s going on for hours at a time? Sure, they did talk to the major banks and the car industry people, but this seems like a much bigger deal.

What could be involved is either jail time or big time fines for these guys if something is found. However, supposedly it’s a civil case rather than a federal one, which means those doing the investigations are going to have to come up with some really serious evidence of misdeeds.

I’m not really sure how they do that. Can they interpret an email as an act of intentional behavior or just the moves of someone who did something really stupid? Not saying they’re looking for it, but were there examples of collusion, or did any of these guys personally profit from some of the transactions in any way?

This is a story we should be hearing more about in a few months, probably after the new Congress has been seated, even though, so far, they have nothing to do with it.

Free Checking Is Over… Kind Of…

Mitch Mitchell — Fri, 12 Nov 2010 14:55:06 +0000

I’ve had free checking since 2004 for both my personal and business accounts. That happened when I left the big bank, which for me was HSBC, and went to a smaller bank, which at the time was called Charter One.

Then we hit the banking crisis and the federal government got into the mix, and I held out high hopes that my small bank, which had been taken over and is now called Citizens Bank, which is also continually growing, might decide to keep my accounts as they are. Well, it was a nice dream.

My bank so far is leaving my personal account alone. However, they are adding a $10 fee to my business account. That’s depressing, and I don’t like it. However, I’m also lucky. They’ve set up a caveat that I should easily be able to handle. All I need to do is 5 transactions with the account a month and the fee is waived. I feel like I dodged a bullet, and I’m pretty happy about it.

Of course that’s not happening for everyone, especially large banks. Many of them are finding ways of hitting people up with all sorts of fees, like the $8.95 a month Bank of America is charging anyone who still wants paper over doing their banking online, or if you go into the bank to take care of transactions that they believe you could do online.

Some banks that never had free checking to begin with are raising their rates as well. Bankrate.com states that only 65% of banks still offer free checking, down from 75% last year. And banks that have been paying interest are either reducing the amount, or setting up new ways for you to earn that. Wells Fargo now requires customers to link their checking and savings accounts together to earn .05% on balances of $500 or more.

Experts recommend that consumers shop around for the best rates, starting at credit unions, some of which are accepting clients they never have before. Smaller, local banks that are stable are also great options. And keep your eye on your bank accounts for hidden fees that take money from you.

Bank Of America Loses More Than $7 Billion!

Mitch Mitchell — Tue, 19 Oct 2010 14:27:33 +0000

When Malcolm X talked about chickens coming home to roost, he certainly should have been talking about banking.

Bank of America must be feeling like the chickens came and stomped on their heads. They announced earlier this morning that they lost $7.65 billion in the third quarter and, of all things, blamed it on the credit card legislation Congress passed this summer.

Please! Everyone knew this type of thing was coming since last year and banks haven’t been able to get out of their way to stick it to consumers. About a month ago I wrote about new bank fees coming because of the new legislation, and how Bank of America was going to fund themselves by charging their customers $8.95 a month for receiving paper bills instead of getting them electronically. It’s stuff like that which lends me to not having any sympathy for the banking industry.

At the same time they made this big announcement they also said they’re going to turn the attention to finding ways of attracting new consumers to bank with them instead of continually trying to find more fees that drives business away. What they’re going to do is a mystery, especially since they were the first bank to announce that they were going to resume foreclosure processes. They’ve already started some incentives that, in my opinion, are minor (as in nothing that would convince me to switch banks). Maybe they should do a campaign like Domino’s did, admit they’ve been stinking up the joint, start working with people who are having trouble keeping up with their mortgage, start finding ways to help potential new home buyers get those new homes (making sure they’re financially qualified but not being punitive about it) and stop being sneaky.

Earn trust instead of beating people over the head with fees. Maybe that will put you ahead of all the other banks, who I’m sure will learn their lesson as time goes on.

Wells Fargo Forgives $772 Million In Loans

Mitch Mitchell — Fri, 08 Oct 2010 13:58:04 +0000

It doesn’t seem to pay to be Wells Fargo these days. Just a couple of months after losing a court case involving some sneaky way they were calculating overdraft fees, on Wednesday it was announced that they’re going to be forgiving around $772 million in home loans for around 8,700 people, and at the same time paying a $24 million fee to settle allegations of deceptive marketing about the risky loans from eight states. This extra bit just piles onto the $3.4 billion they’d already forgiven for the same thing back in August, mainly through loan modifications.

Actually, though they’re paying, it’s not because of anything they did, but what the banks they acquired, Wachovia and World Savings Bank did. Turns out those adjustable mortgage rates, which could look so enticing to many sometimes, had never been fully explained to the people who signed up for them. And, of course, housing goes south and so do many homeowners suddenly hit with large payments they can’t afford to make.

Of course, Wells Fargo is coming across as quite magnanimous, yet I still can’t forget the thing about predatory and unfair minority mortgage practices they were found to be doing in the Baltimore and Memphis area when they were called to task in January; have those people had their loans forgiven as well? And, before you start thinking how gracious Wells Fargo is being, realize that they’re one of the few major banks that’s stated they’re going to keep foreclosing on homeowners, even though their competitors JPMorgan Chase & Co., Bank of American Corp. and the GMAC Mortgage unit of Ally Financial Inc. said they would halt foreclosures for the time being. Obviously they’re one of the few banks in California that’s been able to keep up with the foreclosure process.

At least their stock price seems to be going up, so they can afford it.

Here Come The Bank Fees

Mitch Mitchell — Mon, 27 Sep 2010 12:50:19 +0000

Faced with the loss of many millions from the ending of all those bank fees due to being overdrawn, many banks are coming out with new ways to stick it to consumers so that they can build up their coffers once more. Of course last November I wrote about Citibank and Bank of America raising checking fees, but obviously that wasn’t enough.

What’s coming? There will be higher fees on balance transfers to other cards and higher fees for cash advances as well. Many of the large banks have totally thrown out the thing where you can pay your bill for anything you purchased in that month period without incurring any fees, which is the biggest scam in the world. You get better rates from loan sharks sometimes.

Something else some banks are using to stick it to you are fees for receiving paper bills. Of course this one isn’t just banks, but it’s sneaky and a way to get you to forget to make your payment so they can hit you with heavier late payment fees. I’m happy so far that my bank hasn’t gone this route, but there’s nothing saying it might not. These fees seem to be ranging anywhere from $1 a month to the $8.95 that Bank of America‘s about to hit some people with; that’s not fair at all. Their explanation is that if you signed up to pay bills electronically, you should do everything electronically; weasels.

Get this one. HSBC is not only charging a fee to open a line of credit, which isn’t all that bad, but if you use it they’re going to charge you $10 a day to use it. That’s if you use it to protect you from overdrawing your checking account; what the hey? Now, not only will you get hit because you overdrew your checking account but you’ll get an extra fee for them to take it out of an account you hooked it to? That’s one of the worst cases of double dipping I’ve ever heard of. They’re saying other banks are doing it as well; who?

And Citibank, one of my favorite whipping boys, isn’t letting me down either. They’re coming up with creative ways of hitting you with other fees on your bank account that could end up costing as much as $30 a month in bank fees, where you might have only had to pay $3 before. They’re trying to encourage you spend your money for the right to not be charged; I thought the idea of banks was to encourage you to “save” your money. Yeah, many banks do this with your savings account if you haven’t done anything with it in awhile, but this just stinks.

Strangely, Discover and Chase aren’t doing anything to you for now, and that’s a welcome change. Then again, Discover’s always been a maverick and Chase has been doing pretty well ever since the bailout was paid back. Maybe the other banks need some new lessons.

Banks To Start Shedding Jobs As Well

Mitch Mitchell — Fri, 10 Sep 2010 14:03:37 +0000

In a recent news article, it was reported that banks will also start laying off people as the economy struggles to recover. It’s not just American banks, but banks across the United States.

The article mentioned that around 330,000 employees have already been let go because of the financial mess, but believes there will be another 80,000 jobs slashed over the next 18 months.

Once again, my comment on that is thus; duh! It seems obvious that banks would have to be shedding jobs at close to the same rate as other industries have shed jobs. Although we haven’t had a bank closed in the last two weeks (of course, many banks are closed on a Friday so we’ll see what happens later in the day), there have been 117 banks closed so far in 2010. Last year at this time we were at 84 banks. And there are many more that are considered as being dangerously close to the chopping block.

Notwithstanding my belief that the banking industry overall was responsible for the collapse of the world economy, it seems like it’s also the main industry that could have a big hand in helping to turn things around. The industry has become turtle-like. It has decided to not only restrict the money it’s going to loan those potential customers with questionable credit, it’s also restricting money it could lend to those customers that actually are doing quite well. When the super-rich have problems selling their homes to other super-rich because the banks won’t get up off the money, that’s some serious paranoia.

We all want our banks to show some fiscal responsibility. We also want our banks to help as much as they can to help push the economy in a more positive direction. Stop being more beholden to your investors and start being more beholden to your consumers. There’s a strong likelihood that when you start trusting a few more people just a little bit, you and the rest of the world will find things starting to become a little better.

Wells Fargo Loses Unfair Fees Trial

Mitch Mitchell — Mon, 16 Aug 2010 13:51:55 +0000

Wells Fargo is a multiple offender. Therefore, it came as no surprise to anyone that they lost their court challenge against having to pay a fine for excessive overdraft fees they imposed on their customers.

A California judge determined that they have to pay back $203 million in what the judge determined was a tricky “bookkeeping device” that allowed them to multiply the number of times Wells Fargo could hit its consumers for a fee, even if there was only one breach such as a single overdraft. The judge concluded that sometimes Wells was hitting customers for as many as 10 times for one oversight; that’s just not right.

And what does Wells Fargo do? They’ve stated that they’re going to appeal the case, even though, in my opinion, they’ve gotten off easy because the fees they overcharged consumers was determined to be more than $1.7 billion. In essence, they didn’t even get hit with 20% of what’s now deemed criminal action against its customers and they’re whining that the judge got it wrong. We heard this same type of thing when they were accused of improper handling of minority mortgages.

Although I understand Wells Fargo figuring that they have to try to protect their reputation, I’m mystified that they’re trying to insult the intelligence of the American public and wasting the money of their depositors on something that everyone knows they did. They’re not alone; all large banks have had interesting ways of charging overdraft fees to their customers for years. That’s why there was legislation clamping down on the process in the first place, to protect those of us who every once in awhile calculate our finances incorrectly and thus get hit with a fee. And speaking of which, I hope everyone has gone to their banks and made a decision on how they want the banks to handle their overdraft protection process, as the deadline is near.

This is why I recommend moving your money to local banks you can trust, that will treat you properly, and that might be a bit more stable than these giants, who care more about protecting their reputations than doing right by you, the consumer.

Is The Banking Industry Killing The Housing Industry?

Mitch Mitchell — Mon, 26 Jul 2010 13:23:16 +0000

Many states are trying to work their way out of what’s been deemed a housing industry crisis. To say that things have been bad across the country would be an understatement. In 2009, the top housing markets were those that weren’t in a freefall, including my home area of Syracuse, which was flat yet considered as the 2nd best in the country.

Whether or not you believe unemployment has improved (it hasn’t), things have definitely stabilized in a fashion. And in some states there are plenty of houses that are available for purchase. And yet, not including places like Chicago, which has rebounded fairly well, those homes aren’t being purchased, and home ownership isn’t growing, or at least not growing enough to overcome the bad times.

What’s the problem? In my opinion, it’s all in the hands of the banking industry. True, I blame the banking industry for causing the problem in the first place, and now I’m blaming them for keeping it down. There are many reasons I’m blaming them; let’s take a look.

1. Not giving up the loans. I understand that banks have had a hard go of it, but many of them have gone too far in the other direction and are looking to loan people money who don’t really need it. When rich people with credit scores over 800 can’t get home loans, you know that banks have become skittish on who they want to loan money to.

2. Bank closings. So far, 102 banks have been closed in 2010; this is about 45 more banks than were closed at this point last year. Many more banks are projected to be closed this year. Many of the banks that have been closed are in states that are still having major problems with housing. As other banks are taking over, they’re being a lot more judgmental in who they’re going to give loans to.

3. Banks holding on to foreclosed homes. In some states that have had high foreclosure rates, banks are artificially trying to keep home prices up by keeping some homes off the market. Picking and choosing which homes they want to put on the market means there are many homes that someone might want that they can’t buy. Florida has many homes at low prices, and many of those homes are starting to be snapped up. It’s better for everyone if they can buy whatever home they want, even if the prices are lower, because it helps stimulate the entire industry. Banks, let up on the foreclosed properties.

4. Not processing loans quicker. The reason the federal government had to extend the time for people to finish qualifying for loan modifications is because banks could care less whether people qualify for it or not. They got called out for not processing more of these loans in a timely matter, but the truth is that it didn’t work in their favor, or at least they didn’t perceive that it did, so they didn’t have any reason to try.

That’s enough for the moment. To be somewhat fair, banks do have to change up their criteria a little bit. Some people who purchased homes before weren’t really qualified to buy those homes at the prices they got them for. Low interest rates don’t protect banks from people with risky credit, and that’s understood as well. However, as long as banks in areas with depressed housing markets won’t work with brokers and consumers to try to get them into homes, those markets will continue to suffer, which means the entire country will suffer along with them.

One Month Before Overdraft Choice Must Be Made

Mitch Mitchell — Tue, 06 Jul 2010 13:59:11 +0000

Actually, it’s just a bit longer than a month. By August 15th, consumers are supposed to make a decision with their bank accounts as to whether they want overdraft protection or not. It’s something I originally wrote about in February, but since we’re close to the date I felt it was a good time to look at it again.

In that previous post, I laid out the two main scenarios for help in making a decision on whether to opt in or not. At that time, I wasn’t sure if it was inclusive of credit cards as well or just banks. Based on knowing that, at least for now, that it seems to only concern banks (unless I’ve just missed the inserts in my credit card bill), I’m thinking I’d like to clarify my stance just a little bit.

If this included all credit cards, I’d probably say that it’s not worth the cost to have it added to your credit card account. In my opinion, it’s better to not be able to buy something using your credit card than going over the limit. However, the rules have changed on that front, such that credit cards can’t hit you with extra fees for going over your balance in that particular pay period. They can stop you from going too far over the limit, but if you’re over by less than $50, you’re okay.

When it comes to your bank account, that’s another matter entirely. All of us have had a time in our lives when we’ve written checks without knowing that older checks have never cleared. Some people you pay won’t cash your check for six months. Sure, we should all be balancing our checkbooks monthly, but we don’t. So, it might not be such a bad idea to have that extra layer of protection.

It depends on how much your bank is going to hit you for each transaction, though. For instance, my bank is going to charge $22 per overdraft, while my wife’s bank will be charging $25 per. The upper limit per day for everyone is $100, which is a good thing, but in essence, if I have 4 checks hit that puts me over I only pay $88, whereas my wife will be at the max. That’s not much difference, and it’s making me think about leaning towards the protection. My wife decided she was going that route, and it’s already been set.

Everyone needs to know their buying habits, but knowing that it’s not always in your control could lead you to decide for the bank protection, instead of bouncing checks all over the place. I think it’s a wiser move than I believed it was in February.