Under this new legislation, there would be a council of regulators that have the authority to take apart large financial operations. It would require the Treasury secretary’s approval to force a break down of assets worth at least $10 billion. If it is necessary to have a break up of a corporation worth more than $100 billion, then it would require consultation with the president.

Stiff Opposition

As should be expected, Republicans have voiced their discontent with the proposal calling it “draconian” and “unconstitutional”. Rep. Randy Neugebauer (R-Texas) was quoted as saying “When the government says you are too big and we’re going to make you dismantle, that is a taking of private property rights in this country.”

There are also some large financial firms voicing their concern over this new reform. Jamie Dimon, chief executive of JPMorgan Chase & Co., said that he would have no problem with allowing for the orderly dismantling of a large financial company on the brink of collapse. However, he believes that financial firms should not be capped because they will not be able to compete with massive foreign banks.

Some Strong Support

On the other hand this proposal is also gaining steam. Both Former Federal Reserve Chairmen Paul Volcker and Alan Greenspan have recently backed the proposal. Even the Bank of England endorsed the idea, so there are definitely some out there that want this to come to fruition. The Obama administration also backs this proposal but wants even tougher rules (for big financial firms) such as requiring them to have more capital at hand in case of losses. It will be interesting to see what happens, but do not expect everything to get passed in one smooth process.

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.

The Latest Failures

The most recent failures bring the total banks failed in the US to 122, the highest number of bank failures in a year since 1992, when 181 banks failed, but still a far cry from the record year in 1989, where 534 banks failed. The Florida banks that the FDIC announced as failed on Friday, November 13th are:

• Orion Bank, Naples, FL – With 23 branches and approximately $2.7 billion in assets, Orion Bank was the largest bank to fail this weekend. The cost of this failure to the FDICs Deposit Insurance Fund (DIF) is estimated to be $615 million.

• Century Bank, F.S.B, Sarasota, FL – Century Bank has 11 branches, and total assets of approximately $728 million. The cost of this failure to the FDICs DIF is estimated to be $344 million.

IBERIABANK entered into an agreement with the FDIC to buy both of the banks failed assets, and all branches of both Orion and Century Banks will reopen today as branches of IBERIABANK.

Also closed today was Pacific Coast National Bank of San Clemente, CA, which will be reopened under SunWest Bank. Pacific Coast National Bank had two branches and $134.4 million in assets. This closure cost the FDIC approximately $27.4 million, bringing the total cost of the weekend’s failure to the FDIC to almost $1 billion.

Jobless not hopeless photo by Steve Rhodes

Continuing claims, or the number of Americans continuously filing for jobless benefits, also fell. The total number of people decreased by 139,000, leaving the figure at 5.63 million in the week ended October 31. The four-week moving average for ongoing claims fell to 5.79 million as a result.

Unemployment Still Dismal

We shouldn’t forget that the recession began in December 2007 and, since then we have lost about 7.3 million jobs. This means that companies have probably cut close to as many jobs as they can, leaving the minimum number of employees necessary to operate. Furthermore, the unemployment rate increased to 10.2 percent in October and economists see it staying above 10 percent through the first half of 2010.

President Obama recently signed into law a bill that will provide up to 20 additional weeks of unemployment benefits. In all states, the duration of benefits will be increased by 14 weeks. However, in states with unemployment above 8.5 percent, unemployed Americans will be able to receive the additional 6 weeks of benefits. The President also announced plans to hold a forum with CEO’s and small business owners in December. This forum is one of the ways of trying to get jobs back for Americans.

The Case of Georgia

You might wonder why Georgia has so many banks that are in trouble, or you might even wonder why the state has so many banks in the first place.  Well, in 1996 a law was put in place that prevented local Georgia banking monopolies.  It was difficult for a lender based in one of the state’s 159 counties to open a branch in another and, as a result, Georgia currently has 309 unique banks (even after the recent failures).  Right now there are 57 banks in Georgia that have a very high Texas Ratio (greater than 100 percent), which is up from 49 in the second quarter of this year.  After Georgia, Florida has the next highest count of banks with high Texas Ratios with 43 and Illinois comes in third with 29 banks on that list.

Let’s Do The Math

Leading the list of Georgia banks in the third quarter would be Commercial Bank, a small Atlanta-based lender, with a Texas ratio of 1,144 percent. This means that their bad loans amount to more than 11 times the amount of equity and reserves that they have to support it. This figure has actually increased 10 times since the second quarter so either they’re either still making bad loans or their capital is shrinking. If you look at the biggest banks in the country you would see how disastrous that figure is. For instance we have Citigroup registering a Texas Ratio of 28.9 percent and JP Morgan (Chase) with a ratio of 7.59 percent. Let’s not forget that they had a bit of help from the government so that does not reflect a completely accurate figure.

Some Troubled Georgian Banks

Now let’s look at a few of the banks that could potentially make Georgia a continued leader on the FDIC’s failed bank list. Some of the banks with the highest Texas Ratios are as follows:

• First Security National Bank Norcross – 868%

• Buckhead Community Bank Atlanta – 711%

• McIntosh Commercial Bank Carrollton – 592%

• First National Bank of Georgia Carrollton – 480%

• Century Security Bank Duluth – 474%

• United Security Bank Sparta – 440%

• Appalachian Community Bank Ellijay – 398%

• Tattnall Bank Reidsville – 397%

• Community Bank & Trust Cornelia – 383%

As we can see, Georgia definitely could have more problems to come. Only time will tell if they can ride it out or if the state may soon encounter a situation that can see them overtake Florida and California in the headlines.

Using a Debt Negotiation Company

Many companies advertise debt arbitration or renegotiation services both online and offline. Typically they offer to cut your debts in half if you will repay them in less than four years. One common strategy is for the company to suggest ceasing to make payments to the creditor and instead make payments to a new account. Once this account reaches a certain amount they will approach the creditors to negotiate the debt settlement. Frequently this will take around six months, but it may take significantly longer.

Beware of Costly Debt Renegotiations

The National Foundation for Credit Counseling (NFCC) warns consumers that there are many potential pitfalls awaiting debtors who hope to relieve the pressures by turning to the services of debt renegotiation companies. If you cease to pay creditors while you deposit money in a new account set up by the debt negotiation company, the creditors continue to charge interest and penalties. The creditors are also going to continue to report each month your debt delinquency to the credit bureaus and this can reduce your credit score, which will make future borrowing that much more expensive and possibly prejudice future job prospects.

Additional costs of working with debt negotiation companies are in the fees charged. It is not uncommon for debt negotiation companies to ask for payment upfront before they start working on your behalf. They often base fees on the proportion of the debt that they manage to renegotiate or on the total debt. In the latter case the percentage charged may be as high as 35% and in the former case as high as 20%. Monthly administrative fees of around $50 are also usually charged.

There are a few more factors that ought to be taken into consideration before deciding to work with a debt renegotiation company. First of all forgiven debt is liable to income tax since it can be classed as additional income. Secondly, resettled debt is recorded as such on your credit report; future potential lenders might think twice about lending to someone who was unable to repay the whole amount of their loan without resettlement.

The Recommended Approach

Because of the serious disadvantages of working through debt settlement companies, the NFCC concludes that the costs are likely to exceed the benefits. They recommend approaching banks and other creditors directly and ask to negotiate a settlement. The terms available to debtors making a direct approach can be just as good as those obtained through a company and the amount saved in fees and accrued interest charges, and possibly even legal proceedings, make this approach the best one to choose.

Nevertheless, if for other reasons someone prefers to work through a company they should first of all make inquires through the Better Business Bureau and their state Attorney General or Commissioner of Banking to make sure that it is a legitimate business with a good reputation. They should also make sure that everything is set out in writing, including an estimate of the costs involved. Any deposit accounts opened for a debt resettlement should be FDIC-insured.

United Security Bank, Sparta, GA

The 21st bank to fail in Georgia, United Security Bank’s assets were transferred to Ameris Bank of Moultrie, GA by the FDIC in order to protect depositors. United Security Bank locations reopened on Monday as branches of Ameris Bank. As of September 14, 2009, United Security Bank had total assets of $157 million and total deposits of approximately $150 million. The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $58 million.

Home Federal Savings Bank, Detroit, MI

Home Federal Savings Bank’s assets were transferred to Liberty Bank and Trust Company of New Orleans, LA by the FDIC in order to protect depositors. Home Federal Savings Bank locations reopened on Monday as branches of Liberty Bank and Trust Company. As of September 24, 2009, Home Federal Savings Bank had total assets of $14.9 million and total deposits of approximately $12.8 million. The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $5.4 million.

Prosperan Bank, Oakdale, MN

Prosperan Bank’s assets were transferred to Alerus Financial, N.A. of Grand Forks ND by the FDIC in order to protect depositors. Prosperan Bank locations reopened on Monday as branches of Alerus Financial. As of August 31, 2009, Prosperan Bank had total assets of $199.5 million and total deposits of approximately $175.6 million. The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $60.1 million.

Gateway Bank of St. Louis, St. Louis, MO

Gateway Bank of St. Louis’s assets were transferred to Central Bank of Kansas City, MO by the FDIC in order to protect depositors. Gateway Bank of St. Louis locations reopened on Monday as branches of Central Bank of Kansas City. As of September 25, 2009, Prosperan Bank had total assets of $27.7 million and total deposits of approximately $27.9 million. The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $9.2 million.

United Commercial Bank, San Francisco, CA

United Commercial Bank’s assets were transferred to East West Bank of Pasadena, CA by the FDIC in order to protect depositors. This agreement included all U.S. branches of United Commercial Bank, the Hong Kong branch of United Commercial Bank, and the subsidiary of United Commercial Bank headquartered in Shanghai, China. United Commercial Bank locations reopened on Monday as branches of East West Bank. As of October 23, 2009, Prosperan Bank had total assets of $11.2 billion and total deposits of approximately $7.5 billion. The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $1.4 billion. United Commercial was the 14th bank to fail in California this year, and the largest of the banks to fail on Friday.

The total amount that this past weeks failures is estimated to have cost the FDIC’s Deposit Insurance Fund (DIF) is $1.53 billion. For more information on the 2009 bank failures and an interactive map of the location of bank closures, visit our continually updated Failed Bank List page here.

Swine Flu

Who Gets The Shot

The H1N1 flu vaccine is still in short supply in the US, and distribution is determined by state. Generally, the shot is reserved for those at risk, such as those with chronic illnesses or who are pregnant. According to the New York Times, New York City has ordered 858,000 doses of the vaccine, with 39% set aside for school vaccinations, 21% for private pediatricians, 10% for hospitals and 6% for doctors and employee health services. (NY Times)

However, there have been some complaints as to how this distribution is working out, saying that companies like Goldman Sachs and Citibank have received more of their requested doses than even some hospitals. According to the NY Department of Health and Mental Hygiene, Citibank has received 1,200 doses, over half of what it has requested, and while Goldman Sachs has only received about 4% of the 5,400 does it has asked for, this is far more than the 0.7% received by Memorial Sloan-Kettering Cancer Center. Continuum Health Partners, which included Beth Israel Medical Center and St. Luke’s-Roosevelt Hospital Center, had only received 11% of the 91,200 doses it requested by the end of October. (NY DOH)

New Vaccination Priority List

In a press release given this Wednesday, the Health Department, in response to a shortage of the vaccine caused by increased use and production complications, suspended recommendation of vaccinations for healthy, non-elderly adults until supplies are replenished. The new priority list is:

• Children between 6 and 8 months

• Adults 65 years old and older

• People 19 through 64 years of age who have underlying health conditions that increase the risk of complications from influenza*

• Pregnant women

• Health care workers who have direct contact with patients in the categories above

• Caregivers of children less than 6 months old

* Includes diabetes, lung disease, asthma, heart disease, kidney disease, sickle cell anemia, weakened immune system, seizure, neuromuscular, and other disorders that may cause breathing problems.

A representative from Goldman Sachs has said that the company will only supply it to employees who fall within the priority groups. One reason that these companies may have received more that other is that they requested several doses from multiple clinics, which filers might not have noticed was from one company.

For more information on the flu, visit the NY Department of Health Flu Site here.

by CouchObjects

Why It Failed

When a bank fails, it is usually because it has become undercapitalized. There are many ways that undercapitalization is measured, and the exact measurement can vary by state, but if a bank looks as though it does not have enough money to cover the transactions that it processes, than regulators will generally issue a warning and conduct a further investigation. If a bank is found to consistently not have enough reserve funds to cover losses, such as those that were suffered in the mortgage loans this year, the regulators will shut the bank down.

What to Do: Look out for statements from your bank about warnings and pay close attention to the bank assets and other financials issued by the bank in its monthly shareholder letters.

What Happens Now

When a bank fails, it is usually announced by the FDIC on Friday afternoon, so that the bank has the weekend to do whatever it needs to do to smoothly transfer its accounts to the “assuming institution,” the bank that the FDIC has chosen to buy up the failed banks assets and deposits. If this is the case, then the depositor will not notice any changes (except for policy changes imposed by the new bank) and their branches will generally open up as normal under the new name the following week.

If the FDIC is not able to find a buyer, then it will have to dip into its Deposit Insurance Fund (DIF) in order to pay back the deposits of the failed banks customers. Although this has not been the case with most of the banks failed this year, if this does happen the FDIC will make payouts “as soon as possible” after the failure announcement.

What to Do: When you bank fails, see if the FDIC was able to sell the assets to another bank. If you don’t mind being a customer of the new bank, do nothing; your deposits will be transferred automatically. If the FDIC does not find a buyer, then it will contact you by mail about the failure, and the steps it is taking to insure your account. The FDIC will never send unsolicited emails to consumers, so be careful if you see an email from the FDIC, as it may be a phishing scam.

The End of Your Bank Is Not The End of The World

It is important to realize that even if your bank does fail, this isn’t the end of the world. While it could cause some minor annoyances as the banks shuffle their employees and switch over to a new system, deposits at FDIC insured institutions still protect all of your deposits, and usually the bank simply opens up under a different name the next day. However, if you want to be able to choose your new bank for yourself rather than just become a customer of whatever new bank the FDIC decides to enter into a deal with for the failed banks assets, than having advance knowledge can give you the time to shop around and make the switch before you bank fails and the decision is made for you.

by 1Flatworld

Necessary Changes

However, it may be about to get even harder because there is now a 10% increase in the withholding tax rate that will last through 2010. Now this is technically not a tax increase, it just withholds more money from your paycheck while keeping your annual tax amount the same. You can think about it this way; if you were already going to receive a tax refund in California this April, then this year you will be getting a bigger one. This is something that the state will plan to do for a few years so that they can have an additional $1.7 billion in available tax revenue, “just in case.”

The state will also have the option of trying to slash that amount off their budget, but that will not be easy or likely. There will always be stiff opposition to such cuts. For example, in September, thousands of students, faculty members and employees at the 10 University of California campuses recently rallied to voice their outrage at proposed budget cuts and tuition increases.

Extra Tax Withheld by Income

* Note: This table is only for a single filing with no dependents; other situations may vary.

Holiday Spending

This new withholding rate increase could have an adverse effect on the already weakened holiday spending, so you can imagine the dismay of some retailers and consumers in the Golden State. However, it will be interesting to see the actual outcomes based on estimated increases for each person individually. For example, someone with a taxable income of $51,000 and no dependents will see about an extra $18 withheld per month. That may not seem like a drastic decrease, but that monthly amount can add up to a big pressure on spending for some, as well as a potential decrease in sales for California businesses over the important holiday season.

If you are a California resident, you should note that this change is not a tax increase and if you are not on a tight budget, it may not pose much of a problem. If you’re not a California resident, hopefully these sort of increases don’t become common practice for other states who can’t balance their budget. Nobody, especially after a year like the one we’ve just been through, want Uncle Sam dipping deeper into his or her pockets.