Category: Economics & Business

Bank scoreboard

Bank failures 23, 24, 25 and 26 of 2010 were consummated Friday evening.

One each in Florida, Maryland, Illinois and Utah.

Three Albuquerque and two other New Mexico banks are reportedly among the more than 600 banks with some problems. The following are from FDIC documents.

The Federal Deposit Insurance Corporation (“FDIC”) has determined that Bank 1st, Albuquerque, New Mexico (“Bank”), is a Significantly Undercapitalized depository institution … [August 31, 2009]

High Desert State Bank, Albuquerque, New Mexico (“Bank”), through its board of directors, having been advised of its right to the issuance and service of a NOTICE OF CHARGES AND OF HEARING detailing the unsafe or unsound banking practices and violations of law and/or regulations alleged to have been committed by the Bank … [June 22, 2009]

Sunrise Bank of Albuquerque, Albuquerque, New Mexico (“Bank”), having been advised of its right to a NOTICE OF CHARGES AND OF HEARING detailing the unsafe or unsound banking practices alleged to have been committed by the Bank … [September 29, 2009]

Best telling-it-like-it-is line of the day

The only reason such apathy exists, however, is because there’s still a widespread misunderstanding of how exactly Wall Street “earns” its money, with emphasis on the quotation marks around “earns.” The question everyone should be asking, as one bailout recipient after another posts massive profits — Goldman reported $13.4 billion in profits last year, after paying out that $16.2 billion in bonuses and compensation — is this: In an economy as horrible as ours, with every factory town between New York and Los Angeles looking like those hollowed-out ghost ships we see on History Channel documentaries like Shipwrecks of the Great Lakes, where in the hell did Wall Street’s eye-popping profits come from, exactly? Did Goldman go from bailout city to $13.4 billion in the black because, as Blankfein suggests, its “performance” was just that awesome? A year and a half after they were minutes away from bankruptcy, how are these assholes not only back on their feet again, but hauling in bonuses at the same rate they were during the bubble?

The answer to that question is basically twofold: They raped the taxpayer, and they raped their clients.

Matt Taibbi in “Wall Street’s Bailout Hustle”.

This article is important in understanding what happened and how we taxpayers bailed out Wall Street.

Seriously.

Borrowing at zero percent interest, banks like Goldman now had virtually infinite ways to make money. In one of the most common maneuvers, they simply took the money they borrowed from the government at zero percent and lent it back to the government by buying Treasury bills that paid interest of three or four percent.

To sum up, this is what Lloyd Blankfein meant by “performance”: Take massive sums of money from the government, sit on it until the government starts printing trillions of dollars in a desperate attempt to restart the economy, buy even more toxic assets to sell back to the government at inflated prices — and then, when all else fails, start driving us all toward the cliff again with a frank and open endorsement of bubble economics. I mean, shit — who wouldn’t deserve billions in bonuses for doing all that?

Thanks to Avelino for the pointer.

Keeping score

Five bank failures today. Two of the five had more than $1 billion in assets.

That’s 9 so far in 2010.

One of today’s banks was nearby.

Charter Bank, Santa Fe, New Mexico, was closed today by the Office of Thrift Supervision, which appointed the Federal Deposit Insurance Corporation (FDIC) as receiver. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Charter Bank, Albuquerque, New Mexico, a newly-chartered federal savings bank and a subsidiary of Beal Financial Corporation, Plano, Texas, to assume all of the deposits of Charter Bank.

It has been nearly 11 years since a New Mexico bank failed.

Hindsight

Five years ago today Apple introduced the iPod Shuffle and the Mac Mini. Apple stock closed that day at $64.56 and later split 2:1. As this is written Apple stock (AAPL) is at $210.20.

So, despite the crash, if you had bought $10,000 worth of Apple five years ago and held it, it would be worth $65,117 today.

Bank Scoreboard

One bank was taken over by FDIC yesterday.

The 2009 final total of failed banks was 140.

It was 25 in 2008.

It was 3 in 2007.

It was none in 2006 and 2005.

It was 4 in 2004 and 3 in 2003.

Source: FDIC

Move Your Money

How about a little populism?

The idea is simple: If enough people who have money in one of the big four banks move it into smaller, more local, more traditional community banks, then collectively we, the people, will have taken a big step toward re-rigging the financial system so it becomes again the productive, stable engine for growth it’s meant to be. It’s neither Left nor Right — it’s populism at its best. Consider it a withdrawal tax on the big banks for the negative service they provide by consistently ignoring the public interest. It’s time for Americans to move their money out of these reckless behemoths. And you don’t have to worry, there is zero risk: deposit insurance is just as good at small banks — and unlike the big banks they don’t provide the toxic dividend of derivatives trading in a heads-they-win, tails-we-lose fashion.

Arianna Huffington: Move Your Money: A New Year’s Resolution

More information from Move Your Money.

The Secret Diary of Steve Jobs

If you love Apple, but hate AT&T — and who doesn’t? — this is a must read.

It includes this:

Used to be, we [in this country] were innovators. We were leaders. We were builders. We were engineers. We were the best and brightest. We were the kind of guys who, if they were running the biggest mobile network in the U.S., would say it’s not enough to be the biggest, we also want to be the best, and once they got to be the best, they’d say, How can we get even better? What can we do to be the best in the whole fucking world? What can we do that would blow people’s fucking minds? They wouldn’t have sat around wondering about ways to fuck over people who loved their product. But then something happened. Guys like you took over the phone company and all you cared about was milking profit and paying off assholes in Congress to fuck over anyone who came along with a better idea, because even though it might be great for consumers it would mean you and your lazy pals would have to get off your asses and start working again in order to keep up.

Sad but true line of the day

“It was truly amazing the way last week’s employment report was hailed by many people as a sign that our troubles are over. Here we are, having suffered huge job losses, and needing to make up the lost ground — and a report showing that we’re still losing jobs, but not as fast, is grounds for celebration?”

Paul Krugman

Krugman calculates we need to ADD 580,000 JOBS A MONTH for two more years to get back to where we were in 2007.

Or ADD JUST 300,000 JOBS A MONTH every month through 2014 to get back to where we were at the end of 2007.

So we need to add, nationwide, an economy the size of Albuquerque’s EVERY MONTH to get back to where we were two years ago.

Bank shot

More than one in four American households, including more than half of black households, use check cashers, payday lenders or pawnbrokers rather than a bank, according to a Federal Deposit Insurance Corporation report to be released today.

Nearly 30 million households have no bank account or have one but also use alternate financial services at least occasionally, according to the FDIC report. The survey, the FDIC’s first in-depth study of the issue, was conducted by the Census Bureau.

The problem is most acute among minorities: 53% of African-American households and 43% of Hispanic households use check cashers or similar services instead of or in addition to banks.

USATODAY.com

Things to come

On his blog, Nobel-laureate economimist and Times columnist Paul Krugman suggests the future. He begins:

What’s going to happen, economically and politically, over the next few years? Nobody knows, of course. But I have a vision — what I think is the most likely course of events. It’s fairly grim — but not in the approved way. This vision lies behind a lot of what I’ve been writing, so it might clarify things for regular readers if I laid it out explicitly.

The rest is worth your time. He’s been right on most things.

Scary economic news line of the day

“Nearly 10.7 million, or 23 percent, of all residential properties with mortgages were in negative equity as of September, 2009. An additional 2.3 million mortgages were approaching negative equity, meaning they had less than five percent equity. Together negative equity and near negative equity mortgages account for nearly 28 percent of all residential properties with a mortgage nationwide.”

Via Calculated Risk

“The distribution of negative equity is heavily concentrated in five states: Nevada (65 percent), which had the highest percentage negative equity, followed by Arizona (48 percent), Florida (45 percent), Michigan (37 percent) and California (35 percent).”

So, two-thirds of the people with mortgages in Nevada owe more than their property is worth; nearly half in Arizona.

Stuff

Banks 121, 122 and 123 of 2009 were taken over by the FDIC Friday. There are five New Mexico Banks on the unofficial problem bank list.

Rudolfo Carillo has a remembrance worth reading about Bruce King, the three-term governor of New Mexico who died yesterday. You don’t need to be a New Mexican to appreciate the story.

Elaine hasn’t posted this morning’s sunrise photo yet, but I’m guessing it’d be mostly grey (or is it gray?) and snowy. She lives in the foothills near Colorado Springs. The set of photos on her home page right now surely deserves your click.

And, again, I recommend you read Cameron Todd Willingham, Texas, and the death penalty.

I got home Thursday night after 22 days away. I missed clear blue skies, the smell of wood burning in the fall evening, lots of stars at night and New Mexican food. But you know what I missed most, don’t you? That little silver car in the garage.

Even so, I suppose that doesn’t justify 85 mph on Paseo del Norte when I took it out yesterday. 🙂

Kind of you to offer, but no thanks

[Y]ou are not required to show a receipt unless you agreed to as a part of a membership contract (like at Sam’s Club, Costco, or BJ’s). In most places in the U.S., if a store employee has a reasonable suspicion that you are shoplifting, they have a right to detain you for a reasonable amount of time and in a reasonable manner. Reasonable is an important word here. …

If you don’t want to show your receipt, just walk around the receipt checker and say “no thanks” if the person asks. If you are stopped, ask if you are being detained and if you are being suspected of shoplifting. If you are prevented from leaving the store, you’ll want to call police and/or your lawyer.

Whatever you do, do not hit the receipt checker ….

Consumerist

The above only valid if in fact you are not shoplifting.

A Consumer Story with a Happy Ending

I picked up two prescriptions at CVS this afternoon. They had the price wrong on one so I had to wait a few minutes for the correction, but no big deal. Later however, after driving to Santa Fe, I remembered I needed to take one of the pills today. When I opened the bag, that bottle, the one with the price discrepancy, was missing.

I called the pharmacy. They were aware they hadn’t included the pills and apologized. They would be closed when I could get back by, but they said they would leave the prescription for me at the front check out counter, which is open until 10.

Four hours later I stopped to get the pills. And sure enough they were at the front counter — along with a $25 gift card for my inconvenience.

I thought CVS deserved a shout out.