Bank of America and Citigroup want to lead the charge (no pun intended) on charging customers who pay off their balances each month and have perfect credit….because they just aren’t making any money off them. This is right up there with increasing taxes in hopes of making more revenue and finding that you just made tax revenue go through the basement. Obviously, there are no true economists that can add using real math instead of red crayon figures at any of these companies.
NEW YORK (CBS) ―Loraine Mullen-Kress carries a Bank of America credit card and religiously pays off her balance.
“Flawless credit,” she boasted.
Yet now, her good credit habits could cost her. Earlier this month Bank of America started notifying customers like Mullen-Kress that they will be charged a new annual fee of $29 to $99.
“There is a big segment of their population that they will have never made money on, which is people who pay their bills on time every month,” said Ben Woolsey, Director of Consumer Research at CreditCards.com.
Bank of America said in a statement: “At this point we’re testing the fee on a very small number of accounts and haven’t made any final decisions.” Citigroup is also trying out an annual fee with some card holders, and analysts expect more banks to follow their lead.
The banks are starting to charge fees to reliable customers in response to a slew of new credit card industry regulations that will limit when banks can hike interest rates. Cardholders who get a new annual fee notice in the mail will be in a no-win situation.
“They can either pay that fee or they can close the account, and if they have had the account for a while and they close it, they are potentially going to hurt their credit card score,” said Woolsey. (emphasis mine)
Have ya coming and going there don’t they? Thanks to Barney Frank and the rest of congress that created this mess with their new credit card rules.
Analysts say right now the banks are trying to figure out what their customers will tolerate. Many say they’d cancel cards with a high new annual fee.
“I think it is really bad. They’re encouraging you to be a bed creditor or not have good credit,” one New Yorker told CBS 2 HD.
Said Mullen-Kress: “An annual fee would not be tolerated.”
Credit card companies call the fees an experiment. Whether they stick depends on whether customers are willing to pay for something that’s been free for so long.
I have so found someone after my own heart, and readers, you are going to love this writer, but we need to cover something else first. Bambi and the Bankers.
On March 27th, a group of bank CEOs met with the usurper-in-charge at the White House and now the back story to that meeting is starting to leak out. I was wondering what the newspapers were going to print about this meeting, knowing full well that we probably could not believe a word of it because at this point it is all smoke and mirrors with AIG as the front piece and funnel for American taxpayer dollars to every other bank, and the American aristocracy milling in the shadows. Lovely touch; the comment about pitchforks – intended to get your blood racing and make you feel like Bambi is actually on the side of the American public.
The bankers struggled to make themselves clear to the president of the United States.
Arrayed around a long mahogany table in the White House state dining room last week, the CEOs of the most powerful financial institutions in the world offered several explanations for paying high salaries to their employees – and, by extension, to themselves.
“These are complicated companies,” one CEO said. Offered another: “We’re competing for talent on an international market.”
But President Barack Obama wasn’t in a mood to hear them out. He stopped the conversation, and offered a blunt reminder of the public’s reaction to such explanations. “Be careful how you make those statements, gentlemen. The public isn’t buying that.”
“My administration,” the president added, “is the only thing between you and the pitchforks.”
The fresh details of the meeting – some never before revealed – come from an account provided to POLITICO by one of the participants. A second source inside the meeting confirmed the details, and two other sources familiar with the meeting offered additional information.
The accounts demonstrate that despite the public comments on both sides that the meeting was cordial, the tone in the room was in fact one of mutual wariness. The titans of finance – men used to being the most powerful man in almost any room – sized up a new president who made clear in ways big and small that he expected them to change their ways.
There were signs from the outset that this was a business event, not a social gathering. At each place around the table sat a single glass of water. No ice. For those who finished their glass, no refills were offered. There was no group photograph taken of the CEOs with the president, which typically happens at ceremonial White House gatherings, but not at serious strategy sessions.
“The only way they could have sent a more Spartan message is if they had served bread along with the water,” says a person who attended the meeting. “The signal from Obama’s body language and demeanor was, ‘I’m the president, and you’re not.’”
Just for your information, here are the names of the CEOs in the meeting. Please note that the House of Morgan and the House of Mellon among others was in attendance.
Jamie Dimon, JP Morgan Chase Ken Chenault, American Express John Koskinen, Freddie Mac Ronald Logue, State Street Robert Kelly, BONY-Mellon Rick Waddell, Northern Trust James Rohr, PNC Lloyd Blankfein, Goldman John Mack, Morgan Stanley Vikram Pandit, Citi John Stumpf, Wells Fargo Cam Fine, Independent Community Bankers Edward Yingling, ABA Richard Davis, US Bank Ken Lewis, Bank of America
Now let’s get to what I really wanted to share. A few weeks ago I had a choice to start digging on AIG or go find the “spider” (Pilgrim Society). I am going to finish what I started with AIG, their board, their owners, yada, yada, yada…but wanted to introduce you to Justice Litle, Editorial Director, Taipan Publishing Group.
Back in my student days, I had the privilege of living abroad in three countries. (I would say studying abroad, but there wasn’t a whole lot of studying taking place.)
For one of those semesters I was based in a little town called Olomouc, on the Morava River in the Czech Republic. This was in the mid-nineties, when Eastern Europe was still amazingly cheap. You could get a seven-course meal in Prague, complete with drinks and dessert, for under 10 dollars. The best beer in the world was less than 50 cents a pint. A number of Americans working for U.S. corporations in Prague were earning $30K a year in after-tax income, saving $20,000 of that, and using the other ten grand to live like kings.
One of the interesting things we quickly discovered about Olomouc – a fairly provincial town at the time, and a far cry from Prague – was the surprising number of bars, jewelry stores and restaurants. The locals had very little money for the most part. Besides students and backpackers, who was frequenting these places? The setup just didn’t make sense.
A local Czech we befriended quickly clued us in. These were real businesses – as we knew from firsthand acquaintance with the bars and restaurants, though not the jewelry stores – but the real “business” wasn’t taking place up front. It was happening in the back.
Most of the high-end joints in Olomouc were little more than mafia fronts.
The whole town had a very strong organized crime presence. (Again, this was well over a decade ago. I don’t know if it’s the same way now.) Once we knew what to look for, the clues were easy to spot. On the battered San-Francisco-style trams that ran down the cobblestone streets of Olomouc, for example, you would notice that all the locals wore basically the same clothing… drab, post-communist-era type stuff… and then you would spot the bald guy with the black gloves and full-length Armani trenchcoat, talking on his new-model cell phone.
Or if you watched the cars go by on the main thoroughfare, 19 out of 20 would be durable little Skodas – and then a shiny new Mercedes Benz would hulk along. That kind of thing.
So what does this have to do with our Wall Street detective story?
Well, as it turns out, the Washington guys seem to have taken a page from the Czech mafia guys. AIG has been made into a “false front,” like all those Olomouc joints – the real business of which is to hand out taxpayer dollars under the table.
Flashback, September 2008
The plot stretches back to that fateful weekend in September 2008 when Lehman Brothers collapsed. (I’ll never forget it – I was in Paris at the time, wondering what the hell just happened and how soon I could get home.)
Immediately after letting Lehman go bust, the Fed and Treasury realized the magnitude of their error and announced a massive bailout of AIG. The amount was crazy – if I recall correctly, something like $80 billion right off the bat. (That number has since grown much bigger.)
So here’s a picture of what AIG did with that money, and how they got into the “false front” business of spreading cash around to other players.
As soon as the bigwigs at AIG realized they were hosed, they called up the Treasury and the Fed (Hank Paulson at the time, and Ben Bernanke still) and probably said something like the following:
Listen, we’ve got payout exposure to credit default swaps and other exotic derivatives out the yin-yang here – hundreds of billions’ worth – and if you let AIG go the way of Lehman, it’s going to be full-on financial armageddon. You had better bail us out right now if you don’t want to see the global economy vaporized.
Of course, Paulson and Bernanke gave in, authorizing an insanely massive lump sum of funds to go to AIG.
So what do you think AIG did with the money? They gave it to the counterparties on the other side of their trades.
As soon as the government stepped in to bail out AIG lock, stock and barrel, the AIG execs stopped caring about profitability. The game of being a viable business was toast, and the taxpayer was on the hook for everything. So it looks like AIG’s traders were ordered to unwind many of their mind-bendingly complex deals at fire-sale prices that were massively favorable to the parties on the other side of the trades.
Now, if you’re a muckety-muck high up in the Treasury Department, think how efficient this setup is.
What you really want to do is write big fat taxpayer-funded checks for all your buddies. Billions for Goldman, billions for Morgan Stanley, heck, billions for those European guys who are always so nice when you hop across the pond… billions for everyone.
The trouble is, writing all those checks would be a public relations disaster. People would be furious. Congress would go crazy. More than likely they’d give you major grief and try to block your efforts, just like they did with the multiple tries it took to pass the original TARP plan.
So writing many checks is a political no-go… but what if you could just focus your bailout efforts on ONE player? What if you could shovel hundreds of billions into one overly complex black hole… and then let all that money trickle out to your friends via the back door?
AIG offered the perfect set-up for this.
As a huge global insurance firm, people intuitively accepted the notion that an AIG failure would be devastating to the financial world.
As a firm with notoriously complex and impossible-to-read accounting records, AIG also acted as the perfect sinkhole in terms of being able to plausibly pour hundreds of billions in.
As a scapegoat, AIG was almost perfect too. Instead of blaming all of Wall Street for this whole toxic mess, AIG allowed the powers that be to mop up all the public outrage and focus it on just one player.
Last but not least, the whole $165 million bonus flap was icing on the cake. Congress got so lathered up over the bonuses, they forgot to notice that AIG itself had become a massive “false front” conveniently used to funnel billions of dollars to every major counterparty on Wall Street that had connections to AIG. (And that counts as most all of them.)
Sleight of hand, folks, sleight of hand. Kind of beautiful in a sick way, no? They figured out how to concentrate all the outrage into one convenient spot, deflect it onto a trivial issue, and set up a powerful funnel that would let the real handouts (from AIG to various counterparties) go virtually undetected.
Bravo, sirs. Bravo.
Make sure to go over and read the whole post and check out the included links. I definitely have a grin on my face.
Here is a little bit of information about AIG to get your started, and just pick one name and click on the relationships (i.e. Richard Holbrooke), and look at all the people and companies owned by the aristocracy in the background.
Senior Vice Chairman, Senior Vice Chairman of Life Insurance, Head of AIGs Worldwide Life Insurance Operations, Director, Chairman of American International Assurance Company Ltd and Chief Executive Officer of American International Assurance Company Ltd
Vice Chairman of Human Resources, Vice Chairman of Corporate Communications & Corporate Affairs, Vice Chairman of Legal, Vice Chairman of Corporate Affairs, Executive Vice President, Senior Regulatory & Compliance Officer, General Counsel and Director
Monster readers know what I think about The Fed. Is it any wonder that I believe that confirming the president of the New York Federal Reserve Bank, Timothy Geithner, to be the Treasury Secretary will be just one more reason to FIRE CONGRESS?
I was watching C-SPAN this morning and listening to Geithner say that “he should have asked more questions” when he was being audited by the IRS. We are talking about 4 years of unpaid taxes and an IRS audit, and yet, he did not ask every single question that comes to mind; or was it that the questions that occur to you and I just did not occur to him? It really does not matter at this point, Geithner has proven that he is either completely untrustworthy or he is rather stupid; both qualities that NOBODY in OUR government, (remember “We The People”), should be espousing. Think about this question as you read the following excerpts. “Knowing what I know now, and as a Senator of the United States, would I confirm Geithner?”
As president of the New York Federal Reserve Bank, Timothy Geithner often preached that gargantuan financial firms like Citigroup should be held to the highest regulatory standards to make sure they couldn’t take on too much risk.
But when it came to supervising Citigroup in recent years, the record shows that the New York Fed eased the reins as the company blew billions on subprime mortgages and other risky deals that ultimately forced the biggest bank rescue in U.S. history.
Now, the 47-year-old Geithner heads to the Senate in coming days as President-elect Barack Obama’s nominee for Treasury secretary. He’s won accolades for his expertise and work ethic, but there’s been little attention to his record as a Fed watchdog.
Geithner’s tenure at the New York Fed – which bore the major responsibility for supervising Citigroup – covers a tumultuous span in which the sprawling conglomerate spiraled from the country’s biggest banking company to one of its largest welfare cases.
Now under much closer government supervision – after a $52 billion rescue – Citigroup appears headed for dismantling amid a leadership shuffle that included last week’s announced departure of former Treasury Secretary Robert Rubin as senior counselor and director.
Should the New York Fed have seen trouble coming and prevented it? As Citigroup took on risk and its capital deteriorated, what oversight did Geithner exercise? And what contacts, if any, did Geithner have about regulatory matters with Citigroup officials, including Rubin, under whom Geithner worked at Treasury in the 1990s?
Barack Obama is failing his first hard choice as president by pushing hard for Tim Geithner to be confirmed as secretary of the treasury despite Geithner’s serial cheating on his taxes and Geithner’s utter failure in his previous job as head of the New York Fed.
Geithner’s low personal profile and Wall Street’s high comfort level with him will probably guarantee he’ll survive Wednesday’s hearing before the Senate Finance Committee. Who wants to dwell on this little guy when we finally have something big to celebrate? Besides, how important is one appointment? Newsweek thinks it’s pretty important. They just listed Geithner as the 15th most powerful person in the world.
“Tim Geithner, when I nominated him, was rightly lauded by people from both sides of the aisle, from the market, from labor, as somebody who was uniquely qualified.” Obama responded when questioned about Geithner’s taxes. “Is this an embarrassment for him? Yes. He said so himself. But it was an innocent mistake. It has been corrected. He paid the penalties.”
Geithner didn’t make one mistake. He committed multiple transgressions over the course of many years. To call them “an innocent mistake” is as insulting as deducting your kid’s expensive summer camp as a child care expense, which Geithner tried to do. Furthermore, Geithner paid the majority of his missing taxes and penalties only after he was nominated to be secretary of the treasury. His situational ethics are directly at odds with the culture of personal responsibility that Obama has set as his foremost goal.
Is it even possible at this moment in our history to find an honest “money person” who is not locked into The Fed, the NY Banks, and the corrupt government, (see Chris Dodd and Barney Frank), to watch over our economy and get us back on the solid, sound, precious metals backed monetary system that our Founding Fathers enjoined Americans to create and maintain?
Next Topic: I would like to welcome Halliburton’s subsidiary KBR back to the Monster. I have decided to shine the light on these creepy and strange visitors when they show up. I will also let you know what they are looking at if that information is available. Am I breaking internet etiquette rules? You tell me….I just think that Americans should know who is watching; the blade cuts both directions….
There is someone or multiple somebodies behind the drive in the last hour each day pushing the market to collapse and then pushing the American public to panic and vote for Barack Obama’s socialist agenda.
I will start digging….I already have a pretty good idea, but nothing to back it up yet….keep ya posted….
UPDATE: George Soros may or may not be involved in this, but everybody needs to start thinking bigger and stop looking for the culprits on our shores……
I was wrong about one thing; getting The One elected is not the only motive for the people that are involved, and rest assured, there is more than just one, two or three people involved. I have been watching the chess game happen each day with our market; some days the good guys win, some days the bad guys win. Currently the bad guys have the upper hand. The defeat of the Auto Bailout today and the look of dissappointment on Pelosi and Reid’s faces made me smile, but then I remembered that the Communist Party here in this country WANTS the Big 3 to collapse….so do we save them because the Communists consider the failure a way to move their anti-American agenda forward?
Anyways, back to the point at hand….
I started digging and came up empty as to actual evidence, and felt that waiting for “possible players” to surface was going to be the only way to start piecing this particular puzzle together. Today, a possible player, and I repeat, possible player has surfaced. According to International Business Times:
NEW YORK – Citigroup Inc. shares tumbled below $5 a share Thursday to their lowest level in more than 15 years, a sign that a Saudi prince’s decision to boost his stake in the bank has failed to galvanize confidence among increasingly anxious investors.
Prince Alwaleed bin Talal, a longtime investor in Citigroup, said he plans to increase his stake in the bank to 5 percent from less than 4 percent. He also expressed “his full and complete support” of the bank’s management–including Vikram Pandit, who has been CEO for less than a year.
Draw your own conclusions folks, but my theory includes, but is not limited to, the Middle East; I just can’t prove it yet. Ask yourselves, what is the payoff if Citigroup comes back from the brink, and/or what is the payoff if Citigroup collapses and the resulting effect on our economy?
At this point, we can either start buying Citigroup stock or we can wait for the Saudi Prince to lose his money….which horse do you want to bet on?