Wachovia banking operations acquired by Citigroup
The FDIC has stepped in to facilitate the acquisition of Wachovia by Citigroup. The FDIC stresses that Wachovia did not fail, it has been acquired. "For Wachovia customers, today's action will ensure seamless continuity of service from their bank and full protection for all of their deposits." said FDIC Chairman Sheila C. Bair. "There will be no interruption in services and bank customers should expect business as usual." Wachovia customers should contact their normal banking representative with any further questions. 1-800-922-4684 or visit www.wachovia.com Source: http://www.fdic.gov/news/news/press/2008/pr08088.html
WaMu is the largest bank to fail in US history
The FDIC seized Washington Mutuals deposits last night and within hours JPMorgan Chase announced the purchase of WaMu's assets for $1.9 billion. For all you WaMu customers, this means you'll soon be Chase customers. "For all depositors and other customers of Washington Mutual Bank, this is simply a combination of two banks," FDIC Chairman Sheila Bair said in a statement. "For bank customers, it will be a seamless transition. There will be no interruption in services and bank customers should expect business as usual come Friday morning." This economy is tough to navigate. WaMu's customers didn't choose to be Chase customers. This is the consequence of consolidation. For all JPMorgan Chase stockholders, congrats! They are getting a great deal. JPMorgan Chase stock is up over 7% is premarket trading. Coincidentally, they failed on the 119th anniversary of it's founding in Seattle, Washington. Source: http://biz.yahoo.com/ap/080926/washington_mutual_future.html Source: http://www.reuters.com/article/mergersNews/idUSN2519733720080926
Finance for Freshman 101
I always wondered why high schools teach students how to dissect a frog but don't offer a 101 in Basic Financial Management for their graduating seniors. Telling students to lead a life of financial responsibility is one thing, but wouldn’t it be more useful to show them how? Here are the top five items I would have wanted to have outlined in my 101 syllabus:
Mortgage Applications Down 10.6% – Interest Rates Up
As expected, with continued strain on the economy, fewer people are buying homes. The average interest rate across banks has been raised from 5.82% to 6.08%. Paying 0.26% more for a mortgage adds about $16 per month for every $100,000 of your loan ($588.03 vs $604.70 per month on a $100,000 loan). Over the lifetime of a loan that means you'll spend more than $6,000 extra. Source: http://www.mortgagebankers.org/NewsandMedia/PressCenter/65261.htm
Attention Freshman: The New Freshman 15 – Credit Card Debt
There are many warnings out there about the legendary Freshman 15. Most common are the Cosmo features warning high school girls to take heed and avoid the fast food denizens of temptation that lurk on ever corner of the college campus. More recently are the headlines geared to incoming freshman about a different but ultimately weighty Freshman 15 -- Credit Card Debt.
German KfW lending bank trasferred $426 million to Lehman Brothers, just after the investment bank collapsed.
What a shocking and embarrassing mistake occurred this past Monday in the banking world. Here are some headlines from German Papers: The business daily Handelsblatt writes: "There are certain mistakes that just can't be allowed to happen at a bank. Transferring ~300 million euros ($426 million) to Lehman Brothers -- an institution that had already shown itself to be a candidate for bankruptcy the night before -- is one of those mistakes." The leftist daily Die Tageszeitung writes: "Anyone who watched TV, listened to the radio or read the newspaper over the weekend saw or heard images showing Lehman Brothers employees rushing to clean out their offices. But the two KfW employees must have slept through all that on their well-earned weekend. Now they'll likely lose their jobs." KfW draws consequences from Lehman: The Supervisory Board has intensively analysed the Lehman incident and decided at the proposal of KfW Managing Board Chairman Dr. Ulrich Schröder to suspend the two responsible Managing Board members Dr. Peter Fleischer and Detlef Leinberger from their functions with immediate effect pending final clarification of the incident. The Managing Board also suspended the Senior Vice President in charge of the Risk Controlling Department with immediate effect until the incident has been clarified. The Supervisory Board has acknowledged that Managing Board Chairman Dr. Ulrich Schröder has hired a law firm to examine whether the events that have been identified call for appropriate consequences.
The Financial Roller Coaster Continues
In the last few days we saw the biggest stock market crash since 9/11 and today the markets are off to their biggest gains on record. The U.S. government announced plans to halt short selling. In finance, short selling or "shorting" is the practice of selling a financial instrument the seller does not own, in the hope of repurchasing them later at a lower price (here is more about it). Short selling is dangerous for the overall health of the market. If a company is not doing well, short selling just worsens the situation by making the stock less attractive to the future investors. This becomes a vicious cycle, in that it drives the stock even lower, since less people are buying. Most financial professionals agree that halting of short selling will give the market a bit of room to breath. "For sentiment the worst could be over for financials,'' said Neil Dwane, chief investment officer for Europe at Allianz Global Investors' RCM unit. If you take this advice please make sure that you keep a tight eye on your financials. There is still a long way to go before this extreme volatility is driven from the market. We understand that it may be hard to keep away from the 20+% gains in some stocks, but the patient person will be rewarded.
Every dollar matters
Wacovia just announced that they successfully were able to attract over 1 million U.S. customers through their "Way2Save" automatic savings program within just 8 months. Way2Save encourages customers to save by transferring $1 from their checking account into a special savings account each time they make a Check Card purchase or an electronic payment. With Way2Save, customers earn a 5% Annual Percentage Yield (APY) plus a 5% annual bonus in the first year and a 2 percent APY and 2 percent annual bonus in the second and third years.
Are you Prepared for a Market Crisis?
By now you have read or heard about the hit to the American financial services industry which occurred today. Bank of America purchased Merrill Lynch in a $50 billion deal. Lehman Brothers filed bankruptcy and AIG borrowed $20 billion from its subsidiaries to bolster its capital as it faces potentially disastrous credit downgrades. On top of all this Washington Mutal looks to also be on its way towards filing bankruptcy. But the main question is - what does this mean to you the regular bank custommer? Today the New York Times, answered questions from readers about the impact this crisis has on consumers and investors, while Yahoo Finance and the Wall Street Journal listed out "10 Ways to Protect Your Finances From the Crisis". Both are really well written articles that I would recommend you all to check out, especially if you feel lost during this time of change. Below we have highlighted some points from both articles that speak to the average consumer:
Who says it’s “tough times”?
Bank of America Buys Merrill Lynch and a company unrivalled in its breadth of financial services and global reach. "Acquiring one of the premier wealth management, capital markets, and advisory companies is a great opportunity for our shareholders," Bank of America Chairman and Chief Executive Officer Ken Lewis said. "Together, our companies are more valuable because of the synergies in our businesses." Merrill is the second bargain picked up this year by Bank of America Chief Executive Officer Kenneth Lewis tied to the collapse of the mortgage markets. The bank bought Countrywide Financial Corp. for $2.5 billion in stock last July to become the nation’s biggest home lender. By Adding Merrill Lynch both enhances current strengths at Bank of America and creates new ones, particularly outside of the United States. Merrill Lynch adds strengths in global debt underwriting, global equities and global merger and acquisition advice. The Merrill takeover would be the largest in the financial- services industry this year.
