Florida 4th in Bank Failures

This latest failure announcement by the FDIC means that Florida and Georgia now have 33 bank failures between them, after two Floridian banks, Orion Bank and Century Bank, both failed on November 13th. Florida has 3 fewer failures than California, 7 fewer failures than Illinois, and 9 fewer than Georgia, the state with the most bank failures by far this year.

“Assuming Institution”

The failed assets and deposits from Commerce Bank of Southwest Florida will be transferred to Central Bank of Stillwater, MN over the weekend. The FDIC entered into the deal with Central Bank, saying that it was the “least costly option” for the Deposit Insurance Fund (DIF). The single branch of Commerce Bank of Southwest Florida will reopen on Monday as a Central Bank branch. Depositors will be able to access their funds as usual over the weekend, and the FDIC has assured them that all of their deposits up the $250,000 limit are insured.

Wells Fargo

A Settlement

By agreeing to pay the settlement, Wells Fargo is not admitting to any wrongdoing, but instead simply reimbursing the investors who were unable to cash in their securities after the auctions markets froze back in February 2008. The bank will also pay the attorney generals office for its fees, but will not pay any civil fees or fines.

For many investors, this money will be the first return on the auction-rate securities that that they have seen. The securities were marketed as highly lucrative investments by Wells Fargo, but the lawsuit claims that the bank ignored or even purposefully withheld industry warnings about the true risks involved. These risks were made evident to institutions by the Securities and Exchange Commission and the Financial Accounting Standards Board, which specifically stated that auction-rate securities should not be considered safe, “cash equivalent” investments.

Auction-Rate Securities

An auction-rate security, or ARS, is a long term corporate or mutual bond with an interest rate that is set by auction. Problems with auction-rate securities rose in 2008 when many auctions failed, meaning that there were not enough buyers willing to purchase all of the shares that were being sold. When the ARS market failed, these were frozen and many investors were unable to withdraw their funds. Therefore, as the lawsuit alleges, many investors were left with securities that were useless, despite the fact that banks like Wells Fargo had all but assured them that they were going to be lucrative investments.

In the settlement, Wells Fargo has agreed to buy back at face value any securities purchased thorough them before February 13th 2008, as well as reimburse investors who were forced to sell their securities at a discounted rate after the market froze.

A Winner At Every Branch

All you have to do to be eligible for the drawing is go into a TD Bank branch and sign up for the weekly drawing. If you can’t get to one of the TD Bank branches, you can also sign up online. TD will draw five $250 winners every week on Friday for four weeks.

In addition to the weekly $250 winners, TD will also announce 13 Grand Prize winners during the week of December 14th, celebrating each of the banks metro areas. These lucky customers will win a $2500 vacation getaway.

A Big Thank You From TD to Customers

TD Bank Regional Retail Banking President Fred Graziano said that this giveaway is in appreciation of their customers. With the latest acquisition of TD Banknorth, now TD Bank serves locations all along the east coast from Maine to Florida, with over 1000 banking locations. Enter to win weekly at one of these locations, or simply fill out your name, address, phone number and email address on their online form to be entered to win $250.

To sign up for your chance to win, visit the TD Big Thanks promotion site here or visit your local TD Bank branch.

Visa Mobile

Visa Mobile made its debut in 2008, but was enhanced for the US Bank application, providing users with greater functionality, more information and an added layer of security. Some of the new features Visa Mobile offers are:

• Alerts – account holders can select from a list of preferences what they would like to be notified of, such as transaction amount, gasoline purchases, declined transactions and purchases made with the card not present. All of these are near-real time alerts, given within seconds of account activity.

• Offers – Users can select from a list of merchants that they would like to receive offers from, including Papa John’s Pizza, Planet Hollywood, and Omaha Steaks, to name a few.

• Locator – Allows users to locate merchants offering deals or US Bank ATMs, using Google Maps, and will even provide directions.

Mobile Banking is a Growing Market

With nearly everyone today walking arounf with a cell phone on their ear or in their pocket, mobile banking seems to be the next big thing to make banking faster and more convenient for the consumer. The Federal Reserve agrees, saying that mobile financial devices are expected to take over as the primary means of bank/client interaction by 2015, if the current trend continues. Tim Attinger, head of product innovation at Visa, is hopeing that Visa can capitalize on some of this new market ith Visa Mobile, saying that “More and more consumers around the globe rely on their mobile device as an everyday financial tool.”

The new enhancements for the US Bank application show a great deal of progress, but Visa plans on more expansion by working with other financial institutions as well as wireless operators and handset manufacturers so that it can continue to make innovations in the mobile banking market.

Actual figures

The data found in the table below shows that the charge-off and delinquency trends are consistent for most of the six major US credit card companies. Only American Express Co., the biggest credit card issuer by purchases, bucked the trend by managing to maintain the percentage of cardholders who were behind in their payments at the same level as last month’s.

Credit card delinquencies vs. charge-offs

As a general rule, a credit card account is deemed to be delinquent when a payment is already more than 30 days overdue. Charge-offs, on the other hand, are accounts that the issuing company believes it will no longer be able to collect. The slight decline in charge-offs or defaults shown in the above data is a result of the slowdown in delinquencies earlier this year due to tax refunds and government moves to stimulate the economy.

At this point however, the increasing rate of late payments should be a more telling indicator that hard times are still ahead. Unemployment is the biggest factor that can bring about credit card delinquencies, and as jobless rates enter the double digit figure, credit card issuers should prepare for more losses.

Balances increasing as holidays approach

Recent data from two credit card tracking firms, Synovate Mail Monitor and Credit Karma, shows that with the holiday season approaching, average credit card balances for October increased as consumers who had earlier kept their wallets shut, now used their credit cards to make new purchases. The economic crisis was said to have developed in Americans better spending and saving habits, but apparently not enough for some to resist the lure of the busiest shopping season.

As John Ulzheimer, president of consumer education for Credit.com puts it, “It’s silly to expect people to have a complete change in the model of how they buy things forever – and especially in the holiday season.”

If this trend continues over the next two months, it could spell another wave of credit card delinquencies, and ultimately defaults, in the future.

In a program called Chase Community Giving: You Decide What Matters, Chase gives Facebook users the chance to support their local charities by voting for them and encouraging their network of Facebook friends to do the same.

Chase Community Giving on Facebook

“We are moving from a centralized way of philanthropic giving to the wisdom of friends,” said Elliot Schrage, Vice President for Communications of Facebook.

Facebook users can get to choose from the bank’s list of more than 500,000 charitable organizations that work on an operational budget of less than $10 million. These nonprofits make a huge impact in their respective communities doing the good work they do but don’t have the resources to go around lobbying for grants.

The program has two rounds. In the first round, the top 100 charities which get the highest number of votes by December 11, 2009 will each get $25,000 from Chase. In the second round of voting that runs from Jan 15 to 29, 2010, Facebook fans will again get to vote from among the top 100 charities, and the one that gets the most votes will be awarded $1 million. Five runners-up will receive an additional $100,000 each.

The remaining $1 million will be distributed by a separate advisory board composed of celebrities and experts in different philanthropic areas, to any of the committee’s chosen charities from among those nominated. Winners for the first round or the top 100 finalists will be announced on December 15, 2009, while the grand winners will be revealed on February 1, 2010.

Now we know that social media sites are not only good marketing tools that business can use, or a way to reconnect with friends for most people, they can also be instrumental in helping our local communities.

According to Kimberly Davis, president of the JPMorgan Chase Foundation, “Such ‘crowdsourcing’ of charitable organizations lets Chase expand its giving from the 3,000 to which it currently donates.”

• 

  Discover bank Mobile Applications

  View your account summary including: current balance, last statement balance, minimum payment due, payment due date, last payment made, credit available, and Cashback Bonus balance

• Make a Discover card account payment

• View recent transactions

• View recent and pending payments

• View rewards activity

• Enroll in quarterly 5% programs

For more information, make sure to visit Discover.com Mobile here.

To download the application click here to visit the Apple iTunes Store.

If any MyBankTracker.com readers are currently testing out the new app, make sure to post a comment and let us know if it is a hit or miss.

Construction site

A Tough Fall For the Housing Market

Almost none of the experts predicted such as pronounced slump in home starts.  Some economists were optimistic, estimating that housing starts would rise to an annual pace of 600,000. According to a survey conducted by Bloomberg News there was a wide variation of estimates ranging from 570,000 to 630,000. Permits, which are down to an annual pace of 552,000, were forecast to be at 580,000.  September’s figure of 575,000 home starts is important since it is hopefully a sign of future construction.

Construction of single-family houses during that time fell 6.8 percent to an annual rate of 476,000. Single-family houses account for 75 percent of the industry so this is definitely viewed as a disappointing figure. Multi-family home construction took a 35 percent plunge to a rate of 53,000, which is the lowest on record.

Extended Tax Credit May Help

President Obama and Congress have extended the tax credit (of $8,000) for new homes to April 30 2010. It was supposed to expire at the end of this month, so this announcement may give new housing construction a boost. They also extended the eligibility to accommodate some current homeowners as well. This may have already started to turn things around because Toll Brothers, the largest U.S. luxury homebuilder, has seen a 42 percent increase in orders for the quarter that ended October 31. According to the company’s CEO Robert Toll, higher consumer confidence, fewer unsold house and more stable home prices make it seem like the market for new homes is improving.

However, even though the housing market is set to stabilize, there still needs to be an improvement in the job market to ensure sustainability. With economists forecasting unemployment to be over 10 percent through the first half of 2010, we cannot be sure of a turnaround yet.

Too much, too soon?

Quoting sources familiar with the situation, the Wall Street Journal earlier reported that Benmosche allegedly told the company board that he was quitting his post, a mere three months after starting the job. Expressing his frustration on the restrictions, particularly on pay limits, which the government was imposing on the firm, the CEO reportedly said he was “done.”

Fortunately, Benmosche was able to calm down long enough to think things over and reconsider. Following that reported threat to quit, the AIG chief then addressed the company’s employees in a letter last Wednesday (Nov. 11) saying that he continues to be “totally committed to leading AIG through its challenges and to continuing the fight on your behalf.”

Bailout Strings

It can be remembered that the New York-based firm became 80% taxpayer-owned last year after serious financial troubles at the height of the credit crisis last year forced it to accept government help amounting to more than $180 billion in bailout or TARP funds. Limits on executive compensation were part of the package that AIG signed up form in submitting to government control.

Despite government assistance, the insurance company continues to struggle with holding on to its client base. After taking over Edward Liddy who resigned as AIG CEO last August, Benmosche has been leading the company in selling off assets, streamlining operations, and in general, increasing the bottom line to be able to repay the government.

Pay Limits

Under the government’s pay rules, cash salaries for the company’s top 25 executives will be limited to $500,000, and perks would also have a cap of $25,000. Restrictions have also been set on the compensations of the insurer’s top 100 highest-paid employees.

But with these pay limits, the firm’s top talent could leave for other companies which don’t have these salary caps. This would only serve to worsen the situation of AIG, putting it in a severe competitive disadvantage. The same holds true for the seven other companies named by the government, including top banks Citibank and Bank of America.

Benmosche is said to be currently in talks regarding these pay restrictions with the Treasury and pay czar Kenneth Feinberg who is tasked to oversee the implementation of the compensation packages. “We are all working aggressively to overcome this compensation barrier that stands in the way of restoring AIG’s barrier,” Benmosche said in the letter to employees.

Revolution Money

Revolution Card

Revolution Money is a Web 2.0 payment platform designed by AOL co-founder Steve Case that seeks to change the way that people pay using cards, by providing a secure, low cost payment card network for consumers who prefer to purchase and do their finances online. The RevolutionCard does not display a name, signature, or account number but merely works with a secure PIN code, ensuring your anonymity even if you lose your card. By utilizing secure yet cost-effective online transfer technology, merchants who use a RevolutionCard payment system can offer rates and offers that traditional credit card agencies cannot.

Revolution Money has also released Revolution MoneyExchange, the first P2P online money exchange service. This service allows subscribers to safely send and receive money to each other over the internet without using a third party such as a bank. The Revolution Money platform is now accepted at over 1 million merchants, and is sure to increase that number with AmEx’s support.

AmEx’s Investment

American Express sees the acquisition of Revolution Money as the best kind of investment; a relatively small short term cost for a much larger long term gain. By getting into the internet payment platform game now, AmEx is hoping to gain an advantage over its competitors in this field, onw which they see as growing rapidly in the near future. One of the biggest advanteges that Revolution Money has over its competitors is that while other online payment transfer firms require football field sized warehouses to support millions of customers online tranfers, the P2P platform developed by Revolution Money harness the power of social networking sites like MySpace to accomplish the same support with only a few PC’s.

The acquisition is beneficial to Revolution Money as well. By joining with AmEx, the small firm gains access to the millions-strong pre-existing customer base of AmEx, allowing their business to expand exponentially. AmEx hopes that the deal will be completed in the first quarter of 2010.

For more information on Revolution Money or the RevolutionCard, visit the website here.