Category Archives: banks

Can We Stop This Scam?

Tell me if you’ve received one of these phone calls:

Credit Card Services Scam

I get these calls several times a month, despite being on the “Do No Call” registry. Every time they call it’s from a different phone number, sometimes local, sometimes not. Once the name that showed on caller ID was “Michael Kors” — you know, the fashion designer from “Project Runway”? Took me a while to figure that one out, but I gleaned they had scammed the phone number from a new Michael Kors retail store that was going in to an upscale shopping mall in town.

If they call and I pick up, the message you hear is, “there are currently no problems with your account.” But of course if you don’t pick up, what gets recorded is clipped into “currently with your account” and, “it is URGENT that you contact us …”

The first few times I got these I thought it was my credit card company calling me about an issue with my account.

If you want to lodge a complaint about a “Do Not Call” registry violation, you have to have the company’s name and mailing adress. Which, if you’ve ever actually tried to talk to one of these scammers, you never get. One rookie operator let it slip that they were working out of Orlando, Florida. I’ve since learned that the company’s name is Leverage Connections. This is indeed a sleazy, scammy, spammy company. They’ve been doing this for years, telling people they can lower their interest rates, then charging people hundreds and even thousands of dollars for nothing. It’s time for this to stop.

I’ve filed complaints with the FCC but since this has been going on for years, I’m guessing no one in our regulatory agencies has the time to deal with a bunch of fraudsters ripping people off.

I’m no lawyer but any credit card company doing business with Leverage Communications is participating in fraud, near as I can tell. Since the FCC and FTC seem powerless to stop this harassment, maybe we can pressure the credit card companies? I mean really, how hard can it be to shut these shady operators down?

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Filed under banks, FCC, scam

Here We Go Again

What could possibly go wrong?

Investors place big bets on Buy Here Pay Here used-car dealers

Private equity firms are investing in chains of used-car lots, and auto loans are being packaged into securities much like subprime mortgages. They’re attracted by the industry’s average profit of 38% for each car sold

[…]

Loans on decade-old clunkers are being bundled into securities, just as subprime mortgages were a few years ago. In the last two years, investors have bought more than $15 billion in subprime auto securities.

Although they’re backed mainly by installment contracts signed by people who can’t even qualify for a credit card, most of these bonds have been rated investment grade. Many have received the highest rating: AAA.

That’s because rating firms believe that with tens of thousands of loans lumped together, the securities are safe even if some of the loans prove worthless.

Some analysts worry that the rush to securitization could lead to careless lending by dealers eager to sell more loans, as happened with many mortgage-backed bonds.

No. Just, no.

Just, fucking stop it, already. Stop the greed, stop the endless need for more more MORE. I am about to lose my shit here, people. Stop coming up with these irresponsible, crazy mechanisms that profit off the misery of financially strapped people because some idiot thinks there’s a pony in that pile of horseshit. Stop the greed machine. If you want to gamble, take it to Vegas, where the only person who gets hurt is you.

And while we’re at it, stop calling those of us who see the inevitable trainwreck up the bend “socialists” already. You assholes are the “socialists” because every time you decide to fiddle around with these complicated toxic assets you privatize the gains and socialize the losses. This time it’s not just no, it’s HELL no.

This:

“It might be an attractive model to investors, but when it’s designed to ruthlessly maximize profit, there’s no way it can’t hurt the consumer,” Keest said.

Have you people learned nothing over the past few years? Nothing at all?

Credit Acceptance combines some of the loans into securities and sells them to investors. The buyers are usually insurance companies, banks, mutual funds and other institutional investors.

What they’re buying, essentially, is the right to collect borrowers’ loan payments, which are passed on by dealers and assorted intermediaries. If borrowers default, investors are stuck with the loss.

Really? You promise, this time? Taxpayers won’t be bailing out some insurance company or bank or mutual fund that decided this was the next big Ponzi scheme profit center job creator because God forbid we should keep our greed in check during the Second Great Depression? Honest?

No tightening our belts, no siree, there’s always money to be made somewhere and none of these assholes ever has to suffer the consequences of their bad decision making.

There is no way this isn’t going to blow up in y’all’s faces and when it does, do not — I repeat do not — come crying to me.

[UPDATE]:

Apparently they’re also gambling on European debt:

U.S. banks increased sales of insurance against credit losses to holders of Greek, Portuguese, Irish, Spanish and Italian debt in the first half of 2011, boosting the risk of payouts in the event of defaults.

Guarantees provided by U.S. lenders on government, bank and corporate debt in those countries rose by $80.7 billion to $518 billion, according to the Bank for International Settlements. Almost all of those are credit-default swaps, said two people familiar with the numbers, accounting for two-thirds of the total related to the five nations, BIS data show.

Wonderful.

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Filed under banks, economy, rants, Wall Street

Oil Speculators & Gas Prices: Is Feature, Not Bug?

I’ve already written plenty about the dishonesty of “Drill Here, Drill Now, Pay Less” (for a rundown, check here.) That’s a nice little bumper-sticker slogan that caters to the low-information crowd who still believe in simplistic supply and demand models — something we all know does not apply so easily to oil and gasoline. Frankly, I don’t see that message getting much traction outside Fox News; American consumers are a little more sophisticated than that.

One thing I haven’t talked about too much though is the influence of Wall Street speculators on our gas prices. In that regard I found a recent interview with Ed Wallace on NPR’s “Here & Now” quite interesting. The interview built on his column of April 19, but then went into what interviewer Robin Young dubbed “provocative” territory. If you get a chance, give it a listen, it’s only around 15 minutes long.

I found his theory fascinating. He says that banks and investment houses need to make up for the money they lost in the mortgage meltdown, so they’re gambling it on oil futures instead of loaning it to small businesses and consumers. This is sending the price of oil soaring.

In the radio piece (around the 11:00 mark) he specifically blamed the Federal Reserve’s policy of loaning money to the nation’s banks at virtually zero interest. The idea was, banks would send that cheap money back out into the economy in the form of small business loans, consumer loans, and the like. But as anyone knows, banks are not giving loans these days. They’re being downright stingy in that department, actually. Wallace says it’s because they’re trying to get a bigger return on their investment by speculating in commodity futures like oil. The banks are making tons of money but they aren’t sharing the wealth with the rest of us; in fact, they’re costing us, because this speculative activity has sent gas and food prices soaring.

And while President Obama is calling for an investigation into such practices, Wallace thinks it’s all so much Kabuki theater. Indeed, the “provocative” thing is, he thinks this situation is a feature, not a bug. I’ve transcribed part of the interview Robin Young conducted here:

RY: But why can’t it be exposed?

EW: Because I think they have to keep it this way. And this … now let me speculate on my own story. The housing crisis is not over yet. They say that somewhere between 13% and 15% of all homes in America are now sitting vacant. Not all of them have been sold. The Wall Street Journal — what was it, last September? — did a story, said at our current sales rate for used homes in America, it’s going to take 9 years to clear off the backlog of these homes off the bank’s books and actually get them sold. That means they haven’t taken the losses, Robin. So how do you get the banks into a position where they make so much money they can slowly work out of this mess?

RY: You give them oil!

EW: You give them so much money at virtually no interest they can make money in commodities, food, oil, whatever. And these huge profits you’re piling up are actually gonna go to probably handle the losses that are still coming our way and will come our way for years to come.

RY: So it sounds like you’re saying that the government needs to keep this inflated oil market there because that’s how banks, investment houses, whoever these speculators are, can sort of offset their losses in homes.

EW: I think that’s as logical a theory, and I’m not saying that’s absolute, but why else would the government let it happen when the government’s the one that knows exactly why it’s happening, they’ve studied it. And yet they do nothing?

Why indeed!

It’s certainly a complicated issue, and while a few of Wallace’s ideas seem shaky — who is to say the sales rate of homes will stay at its current rate, for example? — I do think he’s onto something here.

Unfortunately, Americans can be intellectually lazy. Rather than exercise the gray matter on such intricacies as the global commodities markets and real estate inventory, they’ll jump on board the more simplistic “demand is up so gas prices are up” tale Grand Old Petroleum is selling. And any attempt to pressure the Fed to change its policy and prevent such gambling by banks in the Wall Street casino will be viewed as unpatriotic, Socialism, Fascism, tinkering with the free hand of the market, class warfare, punishing the rich, etc. etc. etc. I mean, we’ve seen this movie before, haven’t we? Instead we’ll get more oil leases off the coast of Viriginia and in the Gulf of Mexico, which won’t do a damn thing because the oil companies are already sitting on more untapped, unused leases than they know what to do with. And gas prices will go up, and on and on. Lather, rinse, repeat.

C’est la guerre!

[UPDATE]: I just realized I contradicted myself when I said the “drill here drill now” slogan wasn’t getting much traction outside of Fox News audiences, and then concluded that Americans are intellectually lazy. I guess what I meant is that while I believe most Americans understand the price of gas and the price of oil are complicated issues affected by more than just how many oil platforms are in the Gulf of Mexico, they aren’t necessarily researching this stuff on their own to find out all the many ways prices are manipulated. It’s too easy to grab onto whatever message the media is peddling today and buying into certain assumptions, such as “demand is high!” Um, well, no, actually, it’s not. The media also likes to conveniently blame China and forget about the role of refineries which have cut capacity, something Wallace goes into in his April 19 column.

So, as always … ’tis complicated.

[UPDATE] 2:

That was fast. Gosh I hate it when I’m right. I said we’d get more oil leases off the coast of Viriginia and in the Gulf of Mexico and that’s exactly what our clueless House of Representatives has authorized.

I’m not worried about this. As I’ve said before, the oil companies have more leases than they know what to do with. The problem is not oil leases. They already know where all the oil is, the problem is pulling it out of the ground (or, in this case, the seabed.) There will be windfarms off the coast of Virginia long before there are oil platforms.

But if Congress wants to do something to lower gas prices, they’re barking up the wrong tree. And perhaps, as Wallace suggests, that’s all part of the Kabuki theater. They want to give the appearance of taking action, all the while knowing that what they’re doing won’t affect anything at all. Because they want this oil speculation to continue.

I dunno, it’s a theory … but a damn good one.

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Filed under banks, gas prices, Wall Street

>So Glad We Gave Them $12 Billion

>JP Morgan was apparently not just too big to fail, it appears they were too big to warn American regulators about crook Bernie Madoff’s Ponzi scheme. But authorities in the UK were much luckier:

The UK’s Serious Organised Crime Agency (Soca) was warned about Bernard Madoff in October 2008, two months before the fraudster confessed that his investment empire was a sham, according to a lawsuit unsealed in New York.

The allegation was made in a suit filed against JP Morgan, one of Madoff’s banks, on behalf of the fraudster’s victims.

According to the suit, filed by the court-appointed trustee Irving Picard, executives at JP Morgan allegedly told Soca that they were concerned about “investment performance achieved by its [Madoff’s business] funds which is so consistently and significantly ahead of its peers, year-on-year, even in the prevailing market conditions, as to appear too good to be true – meaning that it probably is”.

Wow, that’s nice. Meanwhile, over at the New York Times, their reporting on the same lawsuit looks a little different:

Senior executives at JPMorgan Chase expressed serious doubts about the legitimacy of Bernard L. Madoff’s investment business more than 18 months before his Ponzi scheme collapsed but continued to do business with him, according to internal bank documents made public in a lawsuit on Thursday.

On June 15, 2007, an evidently high-level risk management officer for Chase’s investment bank sent a lunchtime e-mail to colleagues to report that another bank executive “just told me that there is a well-known cloud over the head of Madoff and that his returns are speculated to be part of a Ponzi scheme.”

I find this interesting. Both stories are extremely damaging, but the New York Times makes no mention of SOCA and the tip British authorities received. Curious.

I’m also curious why JP Morgan executives warned British law enforcement about Madoff, yet said nothing to American regulators or law enforcement. Remember: the lid was blown off Madoff’s scheme when his sons came forward — it was Madoff’s children who turned him in to the FBI. Yet all this time JP Morgan knew about the fraud, and some bank employees even privately warned their own clients. Even worse, bank executives tipped off the British authorities. But Americans were kept in the dark. Thousands of clients lost close to $65 billion — many of them philanthropic funds. That’s money which would have gone into our communities. JP Morgan said nothing.

Why?

According to The Guardian:

The suit is damning of JP Morgan’s alleged role in the scandal. It claims that Soca was informed by JP Morgan “only in an effort to protect its own investments” and the bank did nothing further to stop the fraud even though it had informed the authorities.

And these are the assholes we give $12 billion to? Hey, fuck you, you anti-American, taxpayer-fleecing, selfish dicks. Too big to fail, my ass.

I wonder if there is some difference between the two country’s regulatory laws which made Britain the recipient of this information and America not. I guess it’s not polite to ask such things.

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Filed under banks, JP Morgan, Madoff, New York Times

>Got Price Controls?

>Earlier this month I posted about how a drunken British oil futures broker, apparently confusing very real trades with a video game, single-handedly drove up the global price of oil in a weekend booze-fueled binge of laptop trades.

Yesterday’s New York Times has a story about hedge fund manager Anthony Ward cornering the market on cocoa:

Now, traders here are buzzing that Mr. Ward has placed an audacious $1 billion bet in the London market for cocoa futures. This month, he bought 241,100 metric tons of beans, they say.

His play has some people up in arms. While some see it as a simple bet that cocoa prices will rise on falling supply, others say Mr. Ward has created a shortage of cocoa simply to drive up the price himself.

Last month Harper’s did an excellent, in-depth story on how Goldman-Sachs’ Commodity Index created the global food riots of 2008 (for more on how international banks manipulate the price of food, see the World Development Movement.)

You know, didn’t all of this used to be illegal? Doesn’t it make anyone nervous that one trader–drunk or sober–can manipulate the global price of a commodity like wheat, cocoa, or oil? How is this a good thing?

Remember how after 9/11 we were all put on high alert over the security of our local water supplies? We were told all sorts of scary stories about how terrorists could poison the nation’s milk supply with botulism or slip a vial of something into the city reservoir. Dairy farmers were put on high alert and cities closed public roads and trails around reservoirs.

But I ask you: why would a terrorist need to do that? All they have to do is get one commodities trader drunk and get him to play roulette with these index funds. These traders can wreak havoc on the global price of food, causing price-created food shortages. Banks profit off of the starving, just because they can; how is this not terrorism?

And why isn’t this illegal? What are all these assholes at the G20, G8 G-whizz summits doing? Carving up the goodies and handing them out to their buddies? The ability of banks like Goldman Sachs to manipulate global food prices presents a far bigger danger to our security than someone slipping a vial of botulism toxin into milk.

Why aren’t we doing something about it?

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Filed under banks, commodity prices

>Show Me The Money

>Tea Partiers have arrived in Nashville for three days of hollering about government spending, which I find amusing. Just curious, folks: if the government doesn’t spend money at this moment in our economic crisis, who do you think will? Because near as I can figure, everyone else has hit their miser button. People are not spending money on anything, and neither are those institutions which pre-meltdown were the engines of our economy.

Let me explain. Mr. Beale and I have gone a few rounds with the bank recently as we try to complete a re-fi on the house. We started this process, I kid you not, back in August. I’ve owned two houses in my day, refinanced both, so this is my fifth turn around the home mortgage block and I’ve never been asked to jump through so many hoops or had so many bars moved on me before. We are not happy.

Keep in mind: I have excellent credit, no debt, and my house is still worth considerably more than what I’m asking from the bank. In other words, I’m among the least risky customers this major lending institution will see walk through its doors. Yet they are treating me like a low-life criminal. In fact, they are asking so many bizarre questions that I now suspect they are simply fishing for a reason to say no.

In short: if banks won’t give me a loan, they won’t give anyone a loan. They are holding onto their money with both hands, and they won’t cough up one dime.

And it gets worse. I’ve heard from business people in our community that they cannot get loans, either. And if a business can’t get a loan, then what will drive our economic recovery?

Yes, to a certain extent this re-settling has been long overdue. As a nation, we’ve floated on a sea of debt and promises for far too long, and it was bound to catch up with us. But I do think, as President Obama himself pointed out, that the pendulum has swung too far the other way. It’s probably good that people are saving their money, that businesses are being challenged to use more real capital to finance whatever they want to do, that banks aren’t handing out loans to people who declared bankruptcy in the past 90 days. But by refusing to make even reasonable loans, it’s leading to unemployment and prolonging the economic collapse. Unemployed people do not spend money.

So who is at fault here? What the heck is going on? The banks are blaming the government, and the government is blaming the banks. And I have no clue which party is lying here, except to say in my own dealings with my own bank, they’ve behaved like huge dicks. I’m sure there is plenty of blame to spread around.

A prominent person in our local real estate world has said there is a new government rule limiting how vested a bank can be in one area of the economy when it comes to making business loans. So, for example, there’s a limit to how many real estate development loans a bank can make in one city, and because Nashville was such a real estate boom town, local banks are maxed out in this business sector. As a result, he says, he can’t get a loan for any development projects.

Now, let me say, that sounds like bullshit to me. But what do I know? Has anyone else heard that?

I bring that up because the Administration wants to funnel $30 billion worth of TARP funds to small community banks so they can make loans to small businesses. Problem is, the community banks don’t seem to want the money. They say they don’t need it and even if they did, there are too many “onerous restrictions” on the money to make it attractive. ABC News reported:

To entice community bankers to use TARP funds, says Mr. Merski, Congress would have to change restrictions on dividend payments, a provision that gives the government partial ownership in the recipient banks, and the cap on executive compensation.

“The key is to remove all those onerous restrictions,” says Merski, who doubts Congress would agree to do so. “On top of that, the cost of the TARP funding is extremely expensive, so they would have to change all these rules and restrictions to make it viable.”

Merski represents the Independent Community Bankers of America. I just want to call bullshit, bullshit, bullshit all over the place. What the hell? Can we get a straight answer here? I don’t think taxpayers want to see TARP funds used for executive bonuses and political contributions. That’s not onerous, it’s common sense. We don’t want to see TARP funds going to Dubai. That’s not an onerous restriction either.

Neither is paying interest, though that depends on how much interest has been charged. How about one percent? I’ll take one percent.

I’m just not getting what the complaints are about.

Our economy needs money, and the banks don’t seem to want to give it out. And let me add, if we hand over TARP funds to a community bank, what makes anyone think they will make the loans? The major institutions sure haven’t.

I’m getting pissed off here. And I’m not the only one. I’m sure we’ve all heard of the Move Your Money campaign. The movement is spreading: in New Mexico, two state legislators have proposed moving the state’s $1.8 billion away from Bank of America to community banks. Ouch. Memo to BofA: keep pissing people off and you might find yourself small enough to fail.

But is there reason to think a community bank will behave any less dickish than a big national institution? Sounds like we’re hearing the same whining from the community banks that we heard from BofA.

In Oregon, gubernatorial candidate Bill Bradbury has suggested forming a state bank. His Bank of Oregon idea is very intriguing:

Under the proposal, all state government agencies would be required to deposit their funds in the bank. The lender would then invest the funds within the state, with the investments serving as an economic development tool. It would also attempt to turn a profit, like a typical commercial bank.

I like this idea. If the banks are saying the government is putting too many restrictions on them, then screw it. Let the government start its own bank to make loans.

Sound socialist? Meh. It’s worked for North Dakota for nearly 100 years.

Anyway, this post has rambled on long enough. But I’d really like to hear some ideas on how we move through this. Anyone?

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Filed under banks, economy