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Monday, December 31, 2012

NCUA Sues J.P. Morgan and Bear, Stearns Over Faulty Securities

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NCUA Sues J.P. Morgan and Bear, Stearns Over $3.6 Billion in Faulty Securities

Legal Action is the Agency’s Largest to Date against Wall Street Investment Firms

NCUA has eight similar actions pending against Barclays Capital, Credit Suisse, Goldman Sachs, J.P. Morgan Securities, RBS Securities, UBS Securities, and Wachovia.

NCUA was the first federal regulatory agency for depository institutions to recover losses from investments in faulty securities on behalf of failed financial institutions. To date, the agency has settled claims worth more than $170 million with Citigroup, Deutsche Bank Securities and HSBC.

ALEXANDRIA, Va. (Dec. 17, 2012) – The National Credit Union Administration (NCUA) has filed suit in Federal District Court in Kansas against J.P. Morgan Securities and Bear, Stearns & Co., alleging violations of federal and state securities laws in the sale of $3.6 billion in mortgage-backed securities to four corporate credit unions.

NCUA’s suit — the largest the agency has filed to date—alleges Bear, Stearns & Co. made misrepresentations in connection with the underwriting and subsequent sale of mortgage-backed securities to U.S. Central, Western Corporate, Southwest Corporate and Members United Corporate federal credit unions.

All four corporate credit unions became insolvent and were subsequently placed into NCUA conservatorship and liquidated as a result of losses from these faulty securities. These failures caused significant losses to the credit union system. J.P. Morgan Securities purchased Bear, Stearns & Co. in 2008, after the demise of Bear, Stearns & Co.

“Bear, Stearns was one of several Wall Street firms that sold faulty securities to corporate credit unions, leading to their collapse and enormous losses across the industry,” said NCUA Board Chairman Debbie Matz. “Firms like Bear, Stearns acted unfairly by ignoring the rules for underwriting. They packaged these securities and then told buyers the paper was sound. When the securities plunged in value, we learned the truth. NCUA is now working to hold these underwriters accountable and secure recoveries on behalf of federally insured credit unions.”

The complaint alleges Bear, Stearns & Co. made numerous misrepresentations and omissions of material facts in the offering documents of the securities sold to the failed corporate credit unions. The complaint states underwriting guidelines in the offering documents were “abandoned” and the misrepresentations caused the credit unions to believe the risk of loss was minimal. In fact, these securities were “significantly riskier than represented” and “routinely overvalued.” The faulty securities, the complaint states, “were destined from inception to perform poorly.”

As liquidating agent for the four corporate credit unions, NCUA has a statutory duty to seek recoveries from responsible parties in order to minimize the cost of any failure to its insurance funds and the credit union industry.

Corporate credit unions are wholesale credit unions that provide various services to retail credit unions, which in turn serve consumers, or “natural persons.” Retail credit unions rely on corporate credit unions to provide them such services as check clearing, electronic payments, and investments.

NCUA Sues J.P. Morgan and Bear, Stearns Over $3.6 Billion in Faulty Securities

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Thursday, December 27, 2012

The Real Fiscal Cliff: How to Spot the Ledge

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Peter Schiff

The Real Fiscal Cliff: How to Spot the Ledge | Peter Schiff

Archived from the live Mises.tv broadcast, this lecture by Peter Schiff was presented at the Mises Circle in Manhattan: "Central Banking, Deposit Insurance, and Economic Decline." Includes an introduction by Llewellyn H. Rockwell, Jr. Music by Kevin MacLeod.




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Saturday, December 22, 2012

USA Banks Loan Charge-Offs Increase


The USA Banks Loan Charge-Off Rate of +1.18% for the quarter ended September 30, 2012 is the first increase after 10 consecutive quarterly decreases (from QE 3-31-10 thru QE 6-30-12). The financial crisis losses have been mostly worked off - at least the worthless credits the regulators have identified and ordered written-off.

Total Loans increased by +1.4% from the prior QE June 30, 2012. However, banks are more risk-averse than before the 2008 USA financial system crisis and the Great Recession that officially ended the QE June 30, 2009. Therefore, Loan Charge-Offs should continue to level off at a relatively lower rate or even decease further as loan underwriting standards are more conservative. The Net Charge-Off Rate is still high compared to historical rates.

USA Banks Net Charge-Off Rate by Quarter The USA Banks Net Charge-Off Rate increased to 1.18% for quarter ended September 30, 2012, which is the first increase since the QE December 31, 2009 at 2.89%. The Net Charge-Off Rate peaked at that quarter, during the USA financial system crisis.



USA Banks Net Charge-Off Rate by Segment For the 9 months ended September 30, 2012, the annualized Net Charge-Off Rates by segments were:
All institutions +1.15%
Credit card banks +3.94%
International banks +1.53%
Agricultural banks +0.22%
Commercial lenders +0.75%
Mortgage lenders +0.78%
Consumer lenders +1.45%
Other specialized (< $1 billion total assets) +0.33%
All other (< $1 billion total assets) +0.41%
All other (> $1 billion total assets) +0.98%

Loan Losses Decline Across Most Loan Categories (FDIC Quarterly Banking Profile, December 4, 2012) For the ninth quarter in a row, net charge-offs (NCOs) were lower than a year earlier. Banks charged off $22.3 billion (net) during the quarter, $4.4 billion (16.5 percent) less than in third quarter 2011. The largest NCO declines occurred in credit cards (down $2.8 billion, or 30.4 percent), and in real estate construction loans (down $1.4 billion, or 61 percent). Charge-offs declined in all major loan categories except 1-4 family residential real estate loans, where NCOs were $1.3 billion (15.5 percent) higher than a year earlier. This increase was the result of new accounting and reporting guidelines applicable to national banks and federal savings associations concerning the reporting of restructured loans.

$XLF $DIA $SPY $IWM $QQQ $MACRO $FED

USA Banks Return on Assets at Post-Crisis High


USA Banks Return on Assets of +1.02% for the nine months ended September 30, 2012 signals continued improvement in profitability and ongoing stability in the banking system. There were 7,181 financial institutions reporting. The prior year, the nine months ended 9-30-11, was +0.92%. The current ROA is the highest since the full-year 2006 (+1.28%).

Return on assets reflects the overall performance, and health, of the banking system and takes into account all of the income statement components, including net interest margins, loan loss provisions, operating expenses, and income taxes. Return on assets also indicates how effectively and efficiently assets are being deployed and if the asset mix is ultimately profitable. An ROA of +1.00% is a banking benchmark.

USA Banks Return on Assets by Year The USA Banks Return on Assets (ROA) was +1.28% for the years ended 2004, 2005, and 2006. The ROA decreased to +0.81% and +0.03% in 2007 and 2008, respectively. The ROA then turned negative to -0.07% in 2009, before rebounding to +0.65% in 2010 and +0.88% in 2011.



USA Banks Return on Assets by Segment For the 3 months ended September 30, 2012, the Annualized ROA by banking segments were:
All institutions +1.06%
Credit card banks +3.19%
International banks +0.99%
Agricultural banks +1.36%
Commercial lenders +0.92%
Mortgage lenders +0.75%
Consumer lenders +1.67%
Other specialized (< $1 billion total assets) +1.42%
All other (< $1 billion total assets) +1.05%
All other (> $1 billion total assets) +1.01%

Quarterly Profits Continue to Improve (FDIC Quarterly Banking Profile, December 4, 2012) Reduced expenses for loan losses and rising noninterest income helped lift insured institutions’ earnings to $37.6 billion in third quarter 2012. This quarterly net income represents a $2.3 billion (6.6 percent) improvement over third quarter 2011, and is the highest quarterly total reported by the industry since third quarter 2006. The average return on assets (ROA) rose to 1.06 percent, from 1.03 percent a year earlier. More than half of all institutions (57.5 percent) reported higher earnings than a year ago, and only 10.5 percent reported negative net income for the quarter. This is the lowest proportion of unprofitable institutions in more than five years (since second quarter 2007).

$XLF $DIA $SPY $IWM $QQQ $FED $MACRO

FDIC Deposit Insurance Fund Balance at 4-Year High

FDIC Deposit Insurance Fund The FDIC Deposit Insurance Fund (DIF) balance and related Provision for Insurance Losses (PIL) indicate continued improvement through the 3 months ended September 30, 2012. During the 2008 financial system crisis and the Great Recession, the Provision for Insurance Losses increased, and therefore the DIF decreased, as a result of bank failures and the resulting costs of seizure and liquidation. However, the FDIC problem bank list remains very high which indicates ongoing bank failures and DIF costs. Bank failures and the related charts of total failures and cost to the FDIC Deposit Insurance Fund are posted as occurring on this blog.

FDIC Deposit Insurance Fund by Quarter The FDIC Deposit Insurance Fund balance was +$25.2 billion at the quarter ending 9-30-12. This is the 6th consecutive quarterly positive balance, after 7 consecutive negative quarters, and a 16-quarter high. The peak balance was +$52.84 billion at QE 3-31-08. This was before the 2008 USA financial system crisis and Great Recession. The low balance was -$20.86 billion at the QE 12-31-09. The Provision for Insurance Losses (PIL), the cost of seizing and liquidating failed banks, was a negative -$84 million at QE 9-30-12. The PIL peaked at +$21.69 billion for the QE 9-30-09. Prior to the QE 3-31-08, the PIL was an immaterial amount, positive or negative, of less than $100 million each quarter.



DIF Balance Continues Positive (FDIC Quarterly Banking Profile, December 4, 2012) The condition of the Deposit Insurance Fund (DIF) continues to improve. The DIF increased by $2.5 billion during the third quarter to $25.2 billion (unaudited), the eleventh consecutive quarterly increase. Accrued assessment income increased the fund by $2.8 billion. A negative provision for insurance losses and unrealized gains on available-for-sale securities added $91 million to the fund balance. Operating and other expenses, net of other revenue, reduced the fund by $393 million. For the first nine months of 2012, 43 insured institutions failed, with combined assets of $9.5 billion, at a current estimated cost to the DIF of $2.3 billion. The DIF reserve ratio was 0.35 percent at September 30, up from 0.32 percent at June 30, 2012, and from 0.12 percent four quarters ago.

$XLF $DIA $SPY $IWM $QQQ $MACRO $FED

FDIC Problem Banks List Decreases to 3-Year Low


The FDIC problem banks list decreased by 38 to 694 at September 30, 2012 for the 6th consecutive quarterly decline and a 3-year low. The total continues very high, but has dropped below 700 after 11 consecutive quarters above. If the problem banks list has in fact peaked and continues a downtrend, then bank failures will also continue decreasing accordingly over time. Bank failures and the related charts of total failures and cost to the FDIC Deposit Insurance Fund are posted as occurring on this website.

There were 7,181 financial institutions reporting and the problem banks list of 694 represents 9.66% of the total and a 11-quarter low. This is down from 10.10% in the prior QE 6-30-12 and down from the peak of 10.72% for the QE 3-31-11. In a healthy economy and banking system, less than 1% of financial institutions are on the problem banks list and this can be as low as 0.50% (1/2 percent).

FDIC Problem Banks by Quarter The FDIC problem banks list peaked at 888 at March 31, 2011. The total problem banks remain elevated but is decreasing. The problem banks list has decreased 6 consecutive quarters, after increasing 18 consecutive quarters (from Q4 2006 through Q1 2011). The total assets of the problem banks from the year-ends 2004 through 2011 (in billions) were $28, $7, $8, $22, $159, $403, $390, and $319, respectively. The total assets of the current (9/30/2012) 694 problem banks is $262 billion, or an average of $378 million in total assets per problem bank. The FDIC reports the total problem banks on a quarterly basis.



Failures Fall to Lowest Level Since the End of 2008 (FDIC Quarterly Banking Profile, December 4, 2012) The number of insured institutions reporting financial results declined from 7,245 to 7,181 in the quarter. Mergers absorbed 49 insured institutions, and 12 institutions failed. This is the smallest number of failures in a quarter since fourth quarter 2008. For a fifth consecutive quarter, no new charters were added. The last time a start-up bank opened was in fourth quarter 2010. The number of institutions on the FDIC’s “Problem List” fell from 732 to 694, while assets of “problem” banks declined from $282.4 billion to $262.2 billion. This is the smallest number of “problem” institutions since third quarter 2009. The number of full-time equivalent employees at insured financial institutions declined by 2,352 (0.1 percent) from the previous quarter.

$XLF $DIA $SPY $IWM $QQQ $MACRO $FED

Thursday, December 13, 2012

Sunday, November 11, 2012

Largest USA Banks Ratings: U.S. Bancorp, Wells Fargo, Capital One Tops, Goldman Sachs Last

Big Banks Ratings Through September 30, 2012

The Largest USA Banks have reported third quarter 2012 financial results, the financial performance for the QE 9-30-12 and financial position at 9-30-12. There were several changes in the quarterly ratings: 4 downgrades and no upgrades. The median score is "D" and the average score for QE September 2012 is "C".

Above Average U.S. Bancorp is the sole leader at "A", followed by Wells Fargo and Capital One at "A-". These 3 banks have moved positively beyond the 2008 financial crisis. PNC Financial Services is next at "B+", followed by Bank of New York Mellon at "B" and Bank of America at "B-".

Below Average JPMorgan Chase is next at "D", which is the median rating. Citigroup follows with an "E+", below the median rating of "D". Farther below is Morgan Stanley at "E-". Trailing the field is Goldman Sachs, continuing at a dismal F-.

Rating, Bank, Change
A     U.S. Bancorp
A-    Wells Fargo
A-    Capital One
B+   PNC Financial Services
B     BNY Mellon
B-    Bank of America => (downgrade from B)
D     JPMorgan Chase
E+   Citigroup => (downgrade from D-)
E-    Morgan Stanley => (downgrade from E+)
F-    Goldman Sachs => (downgrade from G+)
C     Average

Largest USA Banks Rankings The 10 Largest USA banks ratings are presented below in a percentage format. The ratings range from A+ (100%) to G- (0%).



Based on fundamental analysis of both financial position and performance on a short-term and long-term basis, the largest 10 USA banks rankings have been updated with a composite score. There is no subjectivity involved from quarter to quarter, just objective data. The ratings are the result of the output from a model, with the latest quarterly financial statement data input.

The score can range from a high of A+ to a low of G-, a total of 21 tiers. The median score is D in this rating system. The average score can vary each quarter.

Financial position is weighted more than financial performance. Therefore, the rating is primarily a gauge of financial position, balance sheet strength, which indicates the ability of the bank to withstand a downturn in financial performance from either internal or external events. The rating is secondarily a gauge of financial performance, both short-term and long-term. A measure of financial safety and soundness, not future financial performance, is the predominant intent of the ratings.

$XLF $USB $PNC $WFC $BK $BAC $JPM $C $MS $GS $COF

Wednesday, October 24, 2012

Morgan Stanley Earnings Review: Downward Spiral


Morgan Stanley reported QE September 2012 financial results on October 18

Morgan Stanley reported a $956 million net loss resulting in a loss per share of $0.55. The operating loss was a quarter-busting $1.48 billion. This is the 3rd loss per share in the past 4 quarters, 4th in the past 6 quarters, and 5th in the past 9. This sums up overall financial performance or lack thereof. Financial position is weak and capital is marginal. Risk management is ineffective.

Morgan Stanley does this to themselves and to their clients. CEO James Gorman noted 3 quarters ago that MS continues "addressing a number of outstanding strategic and legacy issues." I guess that's one way to say it. Another way to say it is: we lie, cheat, and steal. The general public is not as familiar with Morgan Stanley as they are Goldman Sachs, JPMorgan, Bank of America, Citigroup, et al. in the Wall Street Banksters syndicate. They are just as criminally inclined if not more so.

At QE 9-30-12, I have rated Morgan Stanley an "E-" on a scale of A+ to G-. This is a downgrade from "E+" at the prior QE 6-30-12. The median rating is "D" and the average rating at QE 6-30-12 was "C". Financial position is weighted more than financial performance. The QE 6-30-12 bank ratings review is here.







James P. Gorman, Chairman and Chief Executive Officer, said, “Our third quarter results show a balanced, strategically focused franchise that has attained stronger revenues and executed on key goals. The rebound in Fixed Income & Commodities sales and trading indicates that clients have re-engaged after the uncertainty of the rating review in the previous quarter. We are beginning to unlock the full potential of the Global Wealth Management franchise, having increased our ownership of, and agreed on a purchase price for the rest of, Morgan Stanley Wealth Management. I am confident in our potential to enhance profitability and increase value for our shareholders in the quarters ahead.”

$MS $XLF

Bank of America Earnings Review: Ongoing Volatility


Bank of America reported QE September 2012 financial results on October 17

Bank of America, the World's Most Unstable Bank, is inexplicable at this point in their corporate life cycle. I continue to have the vague, hopeful feeling that BAC has moved on from the very worst of their troubles. However, doom is most likely alive and well in the background and may be in the form of junk mortgage repurchases and retribution for various morally reprehensible deeds performed. For now, a sigh of relief is in order as we wait and see what financial catastrophe the next quarter might bring.

CEO Brian Moynihan continues cleaning up the carnage from the biggest debacle in American banking history. Moynihan announced last quarter Project New BAC: a multi-year, multi-billion dollar cost cutting plan which will include a workforce reduction of tens of thousands. The past "banking" model was broken (actually it shattered and collapsed into rubble).

The foremost problem is contingent liabilities, ongoing legacy losses, that surface and the lawsuits and government regulatory actions that result. After reserving billions of dollars, the worst of the incredible and extraordinary losses appear accounted for. Only time and fate will tell.

Therefore financial performance is and will be volatile. Risk management consists of all hands on deck searching the skies for incoming realized losses and hoping they are adequately reserved for. Financial position has stabilized and capital is actually strong.

At QE 9-30-12, I have rated Bank of America a "B-" on a scale of A+ to G-. This is a downgrade from "B" at the prior QE 6-30-12. The median rating is "D" and the average rating at QE 6-30-12 was "C". Financial position is weighted more than financial performance. The QE 6-30-12 bank ratings review is here.







"We are doing more business with our customers and clients: Deposits are up; mortgage originations are up; we surpassed 11 million in mobile customers; small business lending is up 27 percent year over year; loans to our commercial clients rose for the seventh consecutive quarter; and our corporate clients made us the second-ranked global investment banking firm," said Brian Moynihan, chief executive officer. "Our strategy is taking hold even as we work through a challenging economy and continue to clean up legacy issues."

"Our focus on strengthening the balance sheet continued this quarter," said Chief Financial Officer Bruce Thompson. "We ended the quarter with record Tier 1 common capital ratio of 11.41 percent and an estimated Basel 3 Tier 1 common capital ratio of 8.97 percent, up from 7.95 percent as of the second quarter of 20121. With these gains, we have turned our attention to driving core earnings."

$BAC $XLF

Tuesday, October 23, 2012

Goldman Sachs Earnings Review: Moderate Rebound by Banksters


Goldman Sachs reported QE September 2012 financial results on October 16

Goldman Sachs, The World's Most Hated Bankers, led by CEO Lloyd Blankfein, the World's Most Corrupt Banker, reversed the financial performance downtrend with a moderate rebound. Financial position has been stable, but capital continues questionable. The 7 Deadly Sins have superseded risk management. We await what hell this Epitome of Evil will contrive next for America, currently they are busy focusing on scamming Europeans.

At QE 9-30-12, I have rated Goldman Sachs an "F-" on a scale of A+ to G-. This is an upgrade from "G+" at the prior QE 6-30-12. The median rating is "D" and the average rating at QE 6-30-12 was "C". Financial position is weighted more than financial performance. The QE 6-30-12 bank ratings review is here.







“This quarter’s performance was generally solid in the context of a still challenging economic environment,” said Lloyd C. Blankfein, Chairman and Chief Executive Officer. “We continue to be disciplined in managing our operations and capital, while effectively serving our clients’ needs. The focus on these priorities will serve our shareholders and the firm well over the longer term.”

$GS $XLF

Citigroup Earnings Review: Masquerading as Financial Institution


Citigroup reported QE September 2012 financial results on October 15

CEO Vikram Pandit continues his incredible legacy of proving he is neither an investment banker nor a traditional banker, yet is steward of almost $2 trillion in assets. Never has so much been so mismanaged, with the exception of Bank of America. Financial position is stable but financial performance is downtrending. Capital is adequate. Risk management has been trumped by incompetence. Citigroup is in the Trillion Dollar Assets Club with JPMorgan, Bank of America, and Wells Fargo.

Another colossal error in judgement resulted in a $2.9 billion after-tax loss. That would be the partial sale and impairment of the Morgan Stanley Smith Barney (MSSB) joint venture, which wiped out the quarterly financial results. Only a kindred, i.e. depraved, soul would have entered into a partnership with that den of iniquity.

At QE 9-30-12, I have rated Citigroup an "E+" on a scale of A+ to G-. This is a downgrade from "D-" at the prior QE 6-30-12. The median rating is "D" and the average rating at QE 6-30-12 was "C". Financial position is weighted more than financial performance. The QE 6-30-12 bank ratings review is here.







Vikram Pandit, Citi’s Chief Executive Officer, said: "Our core businesses showed momentum during the quarter as we increased lending and generated higher operating revenues. These earnings highlight the strength of Citicorp and its diversification by product and region. For the third straight quarter, we had positive operating leverage in each of our three core businesses. Citigroup in total also had positive operating leverage as Citi Holdings had a smaller impact on our overall results."

"Last month’s price agreement on MSSB has given us more certainty on our exit from that business and added to the reduction of Citi Holdings, which is now only 9% of our balance sheet. We generated additional capital during the quarter, and our Tier 1 Common Ratio was estimated at 8.6% on a Basel III basis at the end of the period. We are managing risk very carefully given global economic conditions so we can continue to grow our businesses safely and soundly,” concluded Mr. Pandit.

$C $XLF

Saturday, October 20, 2012

Wells Fargo Earnings Review: Another Record Performance!


Wells Fargo reported QE September 2012 financial results on October 12

Wells Fargo reported yet another superb quarter. CEO John Stumpf has continued to improve both financial performance and position. Capital is strong. Risk management appears excellent. Earnings per share of $0.88 is yet another all-time high.

Wells Fargo is easily the preeminent USA bank with assets greater than $1 trillion and the largest traditional American bank. The other banks in the Trillion Dollar Assets Club are JPMorgan, Bank of America, and Citigroup.

At QE 9-30-12, I have rated Wells Fargo an "A-" on a scale of A+ to G-. This is no change in the rating from the prior QE 6-30-12. The median rating is "D" and the average rating at QE 6-30-12 was "C". Financial position is weighted more than financial performance. The QE 6-30-12 bank ratings review is here.







“Through the efforts of our more than 265,000 team members, we've now achieved six consecutive quarters of record net income and EPS,” said Chairman and CEO John Stumpf. “By focusing on earning all of our customers' business and providing outstanding service, we continued to generate growth across our diversified set of businesses. In the third quarter, core loans grew by $11.9 billion and we saw continued strength in our mortgage and deposit businesses. We remained diligent in managing costs and continued to have strong underlying credit performance as our loss mitigation efforts and the low interest rate environment helped improve affordability for our customers.”

$WFC $XLF

JPMorgan Earnings Review: Solid Quarter!


JPMorgan reported QE September 2012 financial results on October 12

CEO Jamie Dimon and accomplices reported a solid quarter with an impressive earnings per share of $1.40, a post-financial crisis high. Both financial performance and position improved. Capital is adequate. Risk management is always the great uncertainty at the largest of the Wall Street Banksters.

At QE 9-30-12, I have rated JPMorgan a "D" on a scale of A+ to G-. This is no change in the rating from the prior QE 6-30-12. The median rating is "D" and the average rating at QE 6-30-12 was "C". Financial position is weighted more than financial performance. The QE 6-30-12 bank ratings review is here.







Jamie Dimon, Chairman and Chief Executive Officer, commented on financial results: "The Firm reported strong performance across all our businesses in the third quarter of 2012. Revenue for the quarter was $25.9 billion, up 6% compared with the prior year, or 16% before the impact of DVA. These results reflected continued momentum in all our businesses."

Dimon continued: "The Investment Bank reported favorable Fixed Income Markets results and maintained its #1 ranking for Global Investment Banking fees. Consumer & Business Banking average deposits were up 9% and Business Banking loan balances grew for the eighth consecutive quarter to a record $19 billion, up 8% compared with the prior year. Mortgage Banking originations were $47 billion, up 29% compared with the prior year. Credit Card sales volume1 was up 11% compared with the prior year. Commercial Banking reported record revenue and grew loan balances for the ninth consecutive quarter to a record $124 billion, up 15% compared with the prior year. Treasury & Securities Services assets under custody rose to a record $18.2 trillion, up 12% compared with the prior year. Asset Management reported positive net long-term product flows for the fourteenth consecutive quarter and record loan balances of $75 billion."

Dimon commented: "Importantly, we believe the housing market has turned the corner. In our Mortgage Banking business, we were encouraged that credit trends continued to modestly improve, and, as a result, the Firm reduced the related loan loss reserves by $900 million. Despite this improvement, the absolute level of charge-offs remains elevated. We also expect to see high default-related expense for a while longer. We are acting responsibly to help homeowners and prevent foreclosures, offering nearly 1.4 million mortgage modifications and completing 578,000 since 2009. Credit trends in our credit card portfolio continued to improve, and the wholesale credit environment remained stable."

$JPM $XLF

Monday, October 8, 2012

American Express & Walmart Launch Bluebird: Alternative to Debit & Checking Accounts

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American Express and Walmart Launch Bluebird®: a New Alternative to Debit and Checking Accounts

Bluebird addresses the need for an affordable, transparent way to manage everyday finances, with premium features, no minimum balance, monthly, or overdraft fees

BENTONVILLE, Ark.--(BUSINESS WIRE)--Oct. 8, 2012-- Walmart and American Express today announced the launch of Bluebird, an alternative to debit and checking accounts designed to help consumers better manage and control their everyday finances. Bluebird has been developed for the tens of millions of Americans who are looking for advanced capabilities such as deposits by smartphone and mobile bill pay, fee transparency, and no minimum balance, monthly, annual or overdraft fees. Bluebird puts the power back in the hands of consumers and will be available next week online at www.bluebird.com and in more than 4,000 Walmart stores.

Building on a pilot program launched in late 2011, Bluebird was shaped by feedback from consumers who said they were not getting the value they expect from traditional checking account and debit services because of increasingly higher fees. According to an independent study by Bretton Woods 1, consumers now pay an average of $259 per year for a basic checking account and that cost is rising due to higher minimum balance requirements and a growing list of fees being added to these services.

"Our customers tell us that they're tired of navigating a complex maze of dos and don'ts to avoid the ever growing list of fees found on checking products. Bluebird solves this problem and we believe it's the best product on the market to help customers affordably manage their everyday finances," said Daniel Eckert, vice president of financial services for Walmart U.S. "At Walmart, we are always looking for ways to make a difference by using the strengths that come with our size, scale and reach to take on the challenges that matter most to our customers. Reducing the costs and frustration that come with high fees is one of these issues."

"The financial services landscape is changing. Technological advances, regulatory changes, and evolving consumer needs are redefining payments ranging from prepaid, to checking and debit. Bluebird is our solution to help consumers who currently may be poorly served by traditional banking products. It allows them to easily and safely move, manage, and spend their money. In an era where it is increasingly "expensive to be poor," we have worked with Walmart to create a financial services product that rights many of the wrongs that plague the market today," said Dan Schulman, group president, Enterprise Growth, American Express.

Read more

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Thursday, October 4, 2012

USA Small Business Outlook Retreats As Election Looms

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U.S. Small Business Outlook Retreats As Election Looms

PNC Survey Findings Show Decline in Hiring, Expectations; Majority Say They Are Not 'Better Off'

PITTSBURGH, Oct. 4, 2012 /PRNewswire/ -- A soft outlook on sales has only one in four small business owners planning to hire in the next six months as business optimism retreats ahead of next month's presidential election, according to the latest findings of the PNC Economic Outlook.

The fall findings of PNC's biannual survey, which began in 2003, show a decline in owners' expectations for sales and profits as the lackluster economic recovery struggles to gain steam. Business owners have less optimism about their local economies and are significantly more negative on the national level compared to last spring. Despite this dip in sentiment, owners remain more upbeat than this time last year, when optimism hit near-historic lows.

"The pace of the U.S. economic and jobs recovery remains disappointing," said Stuart Hoffman, chief economist at PNC. "Despite significant headwinds like the deepening recession in Europe and impending 'fiscal cliff,' the hiring plans and business outlook reflected in this survey are just enough to keep the modest recovery persistent into 2013."

Are You Better Off?
One out of two (48 percent) owners say they are currently "worse off" compared to 2007, when the recession officially began, while only 26 percent claim they are "better off." When asked how they have adapted to survive in the new economic environment, more than two-fifths (42 percent) said they seek greater productivity or efficiency from their employees, and one-third (33 percent) have reduced or consolidated their operations since 2007.

Highlights: Sales, Profits and Hiring Take a Hit
 The survey, which gauges the mood and sentiment of small and medium sized business owners, found that only 46 percent expect their sales to increase in the next six months, significantly lower than last spring (58 percent). Profits are also expected to be lower, as only 38 percent expect an increase compared to 43 percent in the spring. Only 23 percent expect to add new employees, lower than in spring (28 percent) but still higher than a year ago (20%).

Other findings about the next six months include:

* Optimism is Fading: Six in 10 (57 percent) are now pessimistic about the national economy over the next six months, up from just 43 percent in the spring. Seven out of 10 (69 percent) are pessimistic about the global economy over the same period.

* Capital Spending Declines: Only 58 percent plan to spend on capital investments in the next six months, down significantly from 70 percent last spring. Spending on technology equipment remains the top priority.

* Loan Demand Flattens: Less than one-fifth (19 percent) will probably or definitely take out a new loan or line of credit in the next six months, compared to 23 percent last spring. Nearly one in three (30 percent) have no current need for credit, a major increase from 13 percent last spring.

* House Prices Rebounding: In a dramatic turnaround from the past five years, two-fifths (37 percent) expect home prices in their local market to rise in the coming year, while only 13 percent expect them to drop. A year ago those numbers were almost exactly reversed (14 percent expected a rise, 32 percent expected a drop).

* Healthcare Hurts Hiring...: More than two-fifths (42 percent) believe the Supreme Court ruling to uphold the Affordable Care Act will negatively affect their hiring plans in the coming year.

* ... But More Federal Action Could Help: Nearly two-thirds (63 percent) think Federal action following the election will positively influence their hiring plans, with reduced regulations the top choice and reduced government spending a close second.”

The PNC Financial Services Group, Inc. (www.pnc.com) is one of the nation's largest diversified financial services organizations providing retail and business banking; residential mortgage banking; specialized services for corporations and government entities, including corporate banking, real estate finance and asset-based lending; wealth management and asset management. Follow @PNCNews on Twitter for breaking news and announcements from PNC.

Methodology
The PNC Economic Outlook survey was conducted between July 23 to September 10, 2012, by telephone within the United States among 1,697 owners or senior decision-makers of small and mid-sized businesses with annual revenues of $100,000 to $250 million. The results given in this release are based on interviews with 506 businesses nationally, while the remaining interviews were conducted among businesses within the states of Florida, Georgia, Illinois, Indiana, Michigan, New Jersey, North Carolina, Ohio and Pennsylvania. Sampling error for the national results is +/- 4.3 percent at the 95 percent confidence level. The survey was conducted by Artemis Strategy Group (www.ArtemisSG.com), a communications strategy research firm specializing in brand positioning and policy issues. The firm, headquartered in Washington D.C., provides communications research and consulting to a range of public and private sector clients.

U.S. Small Business Outlook Retreats As Election Looms

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NCUA Sues Credit Suisse over Faulty Securities

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NCUA Sues Credit Suisse over Faulty Securities

Legal Action is the Agency’s Eighth against Wall Street Investment Firms

NCUA has previously filed similar actions against J.P. Morgan Securities, LLC, RBS Securities, Goldman Sachs, Wachovia, UBS Securities, and Barclay’s. NCUA has already settled claims worth more than $170 million with Citigroup, Deutsche Bank Securities and HSBC, making it the first federal regulatory agency for depository institutions to recover losses from investments in faulty securities on behalf of failed financial institutions.

Recoveries from these eight additional legal actions will further reduce the total losses resulting from the failure of the five corporate credit unions. Losses from those failures must be paid from the Temporary Corporate Credit Union Stabilization Fund. Expenditures from this fund must be repaid through assessments against all federally insured credit unions, so any recoveries would help reduce future assessments on credit unions.

(NCUA; September 25, 2012)

ALEXANDRIA, Va. (Oct. 4, 2012) – The National Credit Union Administration (NCUA) today filed suit in Federal District Court in Kansas against Credit Suisse Securities (USA).

NCUA’s suit alleges Credit Suisse, a subsidiary of the Swiss-based financial services firm, violated federal and state securities laws through misrepresentations in connection with the underwriting and subsequent sale of mortgage-backed securities to U.S. Central Federal Credit Union (US Central), Western Corporate Federal Credit Union (WesCorp) and Southwest Corporate Federal Credit Union (Southwest).

The price paid for the securities by the three corporates exceeded $715 million. All three corporate credit unions subsequently failed.

“Credit Suisse is one of several firms that sold faulty securities to corporate credit unions, which led to their collapse,” said NCUA Board Chairman Debbie Matz. “These Wall Street firms ran a bait and switch operation, and the effects were felt not only in credit unions, but throughout the financial industry. NCUA and credit unions have successfully worked together to restore stability to the credit union system. Now we are holding responsible parties, like Credit Suisse, accountable for their actions.”

NCUA’s complaint alleges Credit Suisse made numerous misrepresentations and omissions of material facts in the offering documents of the securities sold to the failed corporate credit unions. The complaint also alleges systemic disregard of the underwriting guidelines stated in the offering documents. These misrepresentations caused the credit unions to believe the risk of loss was minimal, when in fact the risk was substantial.

As liquidating agent for US Central, WesCorp and Southwest, NCUA has a statutory duty to seek recoveries from responsible parties in order to minimize the cost of any failure to its insurance funds and the credit union industry.

Corporate credit unions are wholesale credit unions that provide various services to retail credit unions, which in turn serve consumers, or “natural persons.” Retail credit unions rely on corporate credit unions to provide them such services as check clearing, electronic payments, and investments.

NCUA Sues Credit Suisse over Faulty Securities

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Wednesday, October 3, 2012

OCC: Mortgage Performance Deteriorates from Prior Quarter, Improves from Year Ago

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OCC News Release: Mortgage Performance Improved from a Year Ago, OCC Report Says

(OCC; September 27, 2012)

WASHINGTON — The overall quality of first-lien mortgages serviced by large national and federal savings banks improved from the same period a year ago but showed seasonal decline from the prior quarter, according to a report released today by the Office of the Comptroller of the Currency (OCC).

The OCC Mortgage Metrics Report for the Second Quarter of 2012 showed the percentage of mortgages that were current and performing at the end of the quarter was 88.7 percent, compared with 88.9 percent the prior quarter and 88.1 percent a year earlier. The percentage of mortgages that were 30 to 59 days past due was 2.8 percent, up 12.1 percent from the prior quarter but down 7.5 percent from a year ago. Seriously delinquent mortgages—60 or more days past due or held by bankrupt borrowers whose payments are 30 or more days past due—fell to their lowest level in three years. The percentage of mortgages that were seriously delinquent was 4.4 percent, down 0.8 percent from the prior quarter and 9.2 percent from a year earlier.

Several factors contribute to the year-over-year improvement, including strengthening economic conditions, servicing transfers, and the ongoing effects of both home retention loan modification programs as well as home forfeiture actions.

Servicers continued to emphasize alternatives to foreclosure during the quarter. Servicers implemented 416,036 new home retention actions during the quarter, while starting 302,636 new foreclosures. The number of home retention actions implemented by servicers increased 17.9 percent from the prior quarter but decreased 8.8 percent from a year earlier.

Other key findings included:

* On average, the modifications implemented in the second quarter of 2012 reduced borrowers’ monthly principal and interest payments by 24.6 percent, or $381. Modifications made under the Home Affordable Modification Program (HAMP) reduced payments by 35.3 percent on average, or $576.

* Modifications that reduced payments by 10 percent or more performed better than those that reduced payments by less. At the end of the second quarter of 2012, 55.4 percent of modifications made since the beginning of 2008 that reduced payments by 10 percent or more were current and performing, compared with 34.3 percent of modifications made during that time that reduced payments by less than 10 percent.

* Since the beginning of 2008, servicers have modified 2,645,290 mortgages through the end of the first quarter of 2012. At the end of the second quarter of 2012, 48.6 percent of those modifications remained current or had been paid off. Another 7.6 percent were 30 to 59 days delinquent, and 14.9 percent were seriously delinquent. There were 10.5 percent in the process of foreclosure and 6.5 percent had completed the foreclosure process.

The report covers 30.5 million first-lien mortgages worth $5.2 trillion in outstanding balances, about 60 percent of all first-lien mortgages in the United States. The complete report can be downloaded from the OCC Web site, www.occ.gov.

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FDIC Penalizes American Express Centurion Bank for Deceptive Debt Collection Practices and Credit Card Marketing

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FDIC Announces Settlement With American Express Centurion Bank for Unfair and Deceptive Practices in Debt Collection and Credit Card Marketing

(FDIC; October 1, 2012)

The Federal Deposit Insurance Corporation (FDIC) and the Consumer Financial Protection Bureau (CFPB) have reached a settlement with American Express Centurion Bank (Bank), Salt Lake City, Utah, for deceptive debt collection and credit card marketing practices, in violation of section 5 of the Federal Trade Commission Act.

This action results from a FDIC and Utah Department of Financial Institutions examination, in which the Consumer Financial Protection Bureau (CFPB) joined last year. The CFPB, the Office of the Comptroller of the Currency (OCC), the Utah Department of Financial Institutions, and the Board of Governors of the Federal Reserve System took separate actions against various entities related to the Bank (collectively referred to as American Express). Under the settlements, American Express agreed to the issuance of Consent Orders, Orders for Restitution, and Orders to Pay (Orders) which result in total restitution from all entities of approximately $85 million to more than 250,000 affected consumers, and the imposition of civil money penalties totaling approximately $27 million.

The FDIC and the CFPB determined that the Bank violated federal law prohibiting unfair and deceptive practices by, among other things:
=>  Misrepresenting to consumers that if they entered into an agreement to settle old debt (that was no longer being reported to consumer reporting agencies), such settlement would be reported to consumer reporting agencies and thereby improve the consumers' credit scores. In fact, no such reporting occurred.
=>  Using settlement solicitations that implied that consumers who entered into settlement agreements to partially pay such debts would have the remaining balance of their debts forgiven, when in fact the balance remained a debt owed to American Express.
=>  Using solicitations that misrepresented the points and awards consumers would receive upon enrollment in one of American Express' credit card products.

In addition to restitution and CMP, the Consent Order requires the Bank to correct all violations, provide clearly written disclosures on debt collection statements, and stop using deceptive credit card solicitations. In addition, the Bank will improve its compliance management system and improve board oversight of affiliates and third-party service providers in order to adequately manage third-party risk.

In agreeing to the issuance of the Order, the Bank neither admits nor denies any liability



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Monday, October 1, 2012

Bank of America Reaches $2.43B Settlement Related to Merrill Lynch Acquisition

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Bank of America Reaches Settlement in Merrill Lynch Acquisition-Related Class Action Litigation

Total Third-Quarter 2012 Litigation Expense Estimated to Be Approximately $1.6 Billion Litigation Expense, Valuation Adjustments for Improvement in the Company’s Credit Spreads and U.K. Tax Charge Are Expected to Negatively Impact EPS by Approximately $0.28 in Third Quarter 2012

(Bank of America; September 28, 2012)

CHARLOTTE, N.C., Sep 28, 2012 (BUSINESS WIRE) --Bank of America today announced it, and certain of its current and former officers and directors, have agreed, subject to court approval, to settle a class action lawsuit brought in 2009 on behalf of investors who purchased or held Bank of America securities at the time the company announced plans to acquire Merrill Lynch.

Under terms of the proposed settlement, Bank of America would pay a total of $2.43 billion and institute certain corporate governance policies. Plaintiffs had alleged, among other claims, that Bank of America and certain of its officers made false or misleading statements about the financial health of Bank of America and Merrill Lynch. Bank of America denies the allegations and is entering into this settlement to eliminate the uncertainties, burden and expense of further protracted litigation.

“Resolving this litigation removes uncertainty and risk and is in the best interests of our shareholders,” said Chief Executive Officer Brian Moynihan. “As we work to put these long-standing issues behind us, our primary focus is on the future and serving our customers and clients.”

The proposed settlement will be reviewed by Judge Kevin Castel in the United States District Court for the Southern District of New York, where the class action is pending. Further information concerning the details of the settlement are available from the court’s docket, In Re Bank of America Securities Derivative & Employment Retirement Income Sec. Act (ERISA) Litigation, 09 MDL 2058 (PKC) or from plaintiffs’ lead counsel, Bernstein Litowitz Berger & Grossmann LLP; Kaplan Fox & Kilsheimer LLP; and Barroway Topaz Kessler Meltzer & Check, LLP.

The amount to be paid under the proposed settlement will be covered by a combination of Bank of America’s existing litigation reserves and incremental litigation expense to be recorded in the third quarter of 2012. The company estimates total litigation expense will be approximately $1.6 billion for the three months ended September 30, 2012, which includes the incremental costs of the related settlement above previous accruals and other litigation-related items.

The settlement agreement also contemplates that Bank of America will institute and/or continue certain corporate governance enhancements until January 1, 2015, including those relating to majority voting in director elections, annual disclosure of noncompliance with stock ownership guidelines, policies for a board committee regarding future acquisitions, the independence of the board’s compensation committee and its compensation consultants, and conducting an annual “say-on-pay” vote by shareholders.

Litigation expense, improvements in the company’s credit spreads and the U.K. tax charge are expected to negatively impact reported third-quarter EPS by approximately $0.28

In addition to the litigation expense, the company expects that its third-quarter 2012 financial results will be adversely impacted by approximately $1.9 billion (pretax) in negative fair value option (FVO) adjustments and debit valuation adjustments (DVA) related to the improvement in the company’s credit spreads, and the previously reported charge of approximately $800 million to income tax expense for changes in the U.K. corporate tax rate and the related effect on the deferred tax asset valuation.

Bank of America is scheduled to report third-quarter 2012 financial results on October 17.

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Federal Reserve Penalizes American Express for Deceptive Debt Collection Practices

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Federal Reserve Board Issues Consent Order and Order of Assessment of a Civil Monetary Penalty

(FRB; October 1, 2012)

The Federal Reserve Board on Monday announced a formal enforcement action, including a $9 million civil money penalty, against American Express Company (Amex) and American Express Travel Related Services Company, Inc. (TRS) to address deceptive marketing and debt collection practices and associated deficiencies in compliance risk management and internal audit. Amex and TRS are both registered bank holding companies based in New York.

TRS provides debt collection and marketing services to its subsidiary banks, American Express Centurion Bank (AECB) and American Express Bank, FSB (AEFSB), and also services its own credit card portfolio. In providing those services, TRS allegedly led customers to believe that their defaulted debt would be "waived" or "forgiven" by acting on a settlement offer without also disclosing the effect that settling for less than the full debt would have on the customers' future credit opportunities. TRS also allegedly made deceptive representations in credit card solicitations concerning the benefits customers would receive by acting on the offer. The Federal Reserve also found that deficiencies in compliance risk management and internal audit, which are firm-wide functions at Amex, allegedly allowed these practices to occur.

The Board's action was taken in coordination with the Consumer Financial Protection Bureau, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Utah Department of Financial Institutions. Each agency is announcing formal enforcement actions against entities in the American Express organization that they supervise, which include AECB and AEFSB. TRS's credit card customers affected by the allegedly deceptive practices will be compensated according to the CFPB's enforcement action against TRS.

In addition to the $9 million civil money penalty, the Board's enforcement action requires Amex and TRS to improve consumer compliance oversight and compliance risk-management and internal audit programs.

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OCC Penalizes American Express for Deceptive Debt Collection Practices

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OCC Assesses Civil Money Penalty Against American Express, Orders $6 Million in Restitution

(OCC; October 1, 2012)

WASHINGTON - The Office of the Comptroller of the Currency (OCC) today announced a $500,000 civil money penalty against American Express Bank, FSB, for violations of section 5 of the Federal Trade Commission Act and ordered the bank to provide approximately $6 million in restitution to an estimated 17,000 affected customers.

The OCC also ordered the bank to establish an effective vendor management program to oversee the provision of products to the bank’s customers.

The OCC based its penalty on the bank’s failure to properly manage vendors who engaged in deceptive debt collection practices in violation of the statute. The estimated $6 million in restitution will be paid to compensate consumers for the injury suffered as the result of these violations.

The OCC is taking these actions in coordination with separate actions by the Board of Governors of the Federal Reserve System, Consumer Financial Protection Bureau (CFPB), and Federal Deposit Insurance Corporation against American Express companies under their jurisdictions. In addition to the penalty assessed by the OCC against American Express Bank, FSB, the CFPB is assessing a $1.2 million penalty which covers both violations of the Truth in Lending Act, for which the bureau has exclusive enforcement authority, and the deceptive debt collection practices addressed by the OCC penalty and order.

Restitution payments made by the bank pursuant to the OCC’s order will also satisfy identical payment obligations required by the CFPB. The civil money penalties assessed by the OCC are payable to the U.S. Treasury.

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Tuesday, September 25, 2012

NCUA Sues Barclay’s Capital for Misrepresentations

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NCUA Sues Barclay’s Capital

Legal Action Is the Agency’s Seventh Against Wall Street Investment Firms

NCUA has previously filed similar actions against J.P. Morgan Securities, LLC, RBS Securities, Goldman Sachs, Wachovia and UBS Securities. NCUA has already settled claims worth more than $170 million with Citigroup, Deutsche Bank Securities and HSBC, making it the first federal regulatory agency for depository institutions to recover losses from investments in faulty securities on behalf of failed financial institutions.

(NCUA; September 25, 2012)

ALEXANDRIA, Va. (Sept. 25, 2012) – The National Credit Union Administration (NCUA) today filed suit in Federal District Court in Kansas against Barclay’s Capital, Inc.

NCUA’s suit alleges Barclay’s, the U.S. subsidiary of the British financial services firm, violated federal and state securities laws through misrepresentations in the sale of mortgage-backed securities to U.S. Central Federal Credit Union (US Central) and Western Corporate Federal Credit Union (WesCorp). The price paid for the securities by US Central and WesCorp exceeded $555 million. Both corporate credit unions subsequently failed.

“Trust and accountability are two cornerstones of our financial system,” said NCUA Board Chairman Debbie Matz. “As clearly outlined in our complaint, Barclay’s violated that trust by issuing faulty disclosures on securities underwritten by the firm. As a result, two corporate credit unions collapsed, and the entire credit union industry experienced a crisis. Since then, NCUA has successfully worked to restore stability to the credit union system. Now we are working to hold Barclay’s, and other responsible parties, accountable for their actions.”

NCUA’s complaint alleges Barclay’s made numerous misrepresentations and omissions of material facts in the offering documents of the securities sold to the failed corporate credit unions. The complaint also alleges systemic disregard of the underwriting guidelines stated in the offering documents. These misrepresentations caused US Central and WesCorp to believe the risk of loss was minimal, when in fact the risk was substantial.

As liquidating agent for US Central and WesCorp, NCUA has a statutory duty to seek recoveries from responsible parties in order to minimize the cost of any failure to its insurance funds and the credit union industry. Recoveries from these seven additional legal actions would further reduce the total losses resulting from the failure of the five corporate credit unions. Losses from those failures must be paid from the Temporary Corporate Credit Union Stabilization Fund. Expenditures from this fund must be repaid through assessments against all federally insured credit unions. Thus, any recoveries would help to reduce the amount of future assessments on credit unions.

Corporate credit unions are wholesale credit unions that provide various services to retail credit unions, which in turn serve consumers, or “natural persons.” Retail credit unions rely on corporate credit unions to provide them such services as check clearing, electronic payments, and investments.

NCUA Sues Barclay’s Capital
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FDIC & CFPB Penalize Discover for Deceptive Marketing

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Federal Deposit Insurance Corporation and Consumer Financial Protection Bureau Order Discover to Pay $200 Million Consumer Refund for Deceptive Marketing

Discover Pays Additional $14 Million Penalty for Deceptive Marketing of Credit Card 'Add-On Products

(FDIC; September 24, 2012)

WASHINGTON, D.C. – Today, the Federal Deposit Insurance Corporation (FDIC) and the Consumer Financial Protection Bureau (CFPB) announced a joint public enforcement action with an order requiring Discover Bank to refund approximately $200 million to more than 3.5 million consumers and pay a $14 million civil money penalty. This action results from an investigation started by the FDIC, which the CFPB joined last year. The joint investigation concerned deceptive telemarketing and sales tactics used by Discover to mislead consumers into paying for various credit card “add-on products” – payment protection, credit score tracking, identity theft protection, and wallet protection.

The agencies jointly determined that Discover engaged in deceptive telemarketing tactics to sell the company’s credit card add-on products. Payment Protection was marketed as a product that allows consumers to put their payments on hold for up to two years in the event of unemployment, hospitalization, or other qualifying life events. Discover also sold its Credit Score Tracker, designed to allow a customer unlimited access to his or her credit reports and credit score. The third product was Identity Theft Protection, which was marketed as providing daily credit monitoring. Lastly, Discover’s Wallet Protection product was sold as a service to help a consumer cancel credit cards in the event that his or her wallet is stolen.

Discover’s telemarketing scripts contained misleading language likely to deceive consumers about whether they were actually purchasing a product. Discover’s telemarketers also often downplayed key terms and spoke quickly during the part of the call in which the prices and terms of the add-on products were disclosed. Because of the misleading language in thescripts and the actions of Discover’s telemarketers, consumers were:
=> Misled about the fact that there was a charge for the products: Discover’s telemarketing scripts often used language implying that the products were additional free “benefits,” rather than products for which a fee would be applied to their accounts.
=> Misled about whether they had purchased the products: The telemarketing scripts frequently suggested that consumers would not be charged for the products until after having a chance to review printed materials from Discover. Discover, however, did not provide consumers with the information until after Discover had already initiated the consumer’s purchase of a product.
=> Enrolled without their consent: Discover representatives processed the add-on product purchases without some consumers’ consent. These consumers were then charged for the product on their Discover card.
=> Withheld material information about eligibility requirements for certain benefits: Discover’s telemarketers typically did not disclose critical eligibility requirements for certain payment protection benefits, such as exclusions for pre-existing medical conditions and certain limitations concerning employment.

Enforcement Action

=> Stop deceptive marketing: Discover is required to institute certain changes to its telemarketing of these products that are designed to ensure that these unlawful acts do not occur again. Discover has also agreed to submit a compliance plan to the FDIC and the CFPB for approval, and to take specific corrective actions related to the products.
=> Pay restitution to consumers who purchased the products: Discover will pay approximately $200 million in restitution to more than 3.5 million consumers who were charged for one or more of the products between December 1, 2007 and August 31, 2011. Generally, all consumers affected by Discover’s deceptive practices regarding these products, except those who affirmatively made use of Payment Protection, will receive restitution, with amounts varying depending on when they purchased, and how long they held, the add-on products. All consumers will receive at least 90 days’ worth of fees paid (minus any refunds they have already received), with approximately 2 million consumers receiving full restitution of all of the fees they paid (minus any refunds they have already received).
=> Provide refunds or credits without any further action by consumers: Consumers are not required to take any action to receive their credit or check. If an affected consumer is still a Discover customer, he or she will receive a credit to his or her account. If an affected consumer is no longer a Discover credit card holder, the consumer will receive a check in the mail or have any outstanding balance reduced by the amount of the refund.
=> Submit to an independent audit: Compliance with the restitution terms of the order will be assured through the work of an independent auditor, who will report to the FDIC and the CFPB on Discover’s compliance with the joint FDIC-CFPB Consent Order.
=> Pay a $14 million penalty: The FDIC and the CFPB imposed civil money penalties of $14 million. Discover will pay $7 million of that penalty to the U.S. Treasury and $7 million to the CFPB’s Civil Penalty Fund.


Federal Deposit Insurance Corporation and Consumer Financial Protection Bureau Order Discover to Pay $200 Million Consumer Refund for Deceptive Marketing

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America: Land of Indefinite Corporate Power, Debt, Detention, Quantitative Easing, Wars



Ah yes, America, the Land of the Fee and  Home of the Grave. Big Brother wages perpetual war to keep the masses rooting for him while the national security and surveillance state ramps up and comes down on you, your family, friends, neighbors, and fellow Americans. Ahead is not only a Fiscal Cliff, but a Day of Reckoning - not more and more exciting TV shows, celebrity news, and 'all is well' corporate mass media coverage. The Matrix has plans for you and your best interests are not in their equation.

You and your descendants will be expected and forced to pay up in taxes, fees, and inflation. Your discretionary income will continue shrinking - but not for the Wall Street Banksters, corporate elite, and politicians wealthy from bribes. They are exempt from paying up by design. You pay, they play. The tab per American citizen (man, woman, child) for the funded USA debt is $51,038 and your share of the FYE 2012 interest expense is $1,191. Both of these per capita amounts, from government data, are grossly understated.

The Supreme Court in January 2010 swept aside the individual citizen with a ruling that corporations are persons with electioneering rights and can attempt to sway elections by authority of the Citizens United case. Even Presidential candidate Mitt Romney said, "corporations are people".

President Obama crushed individual liberties, with the overwhelming support of Congress (from the Tea Party caucus to the Progressive caucus voting 'Yes'), by signing the National Defense Authorization Act late on New Year's Eve (December 31, 2011). This provided for the indefinite detention of America citizens (without legal counsel, a judge, a trial, or a jury of peers) as decided by the Office of the President. This is, of course, the Stalin, Mao, Hitler, Mussolini, Pol Pot totalitarian system of citizen control and ultimately annihilation.

Congress has shown blatant and willful disregard for over a decade of the USA's fiscal future by running up funded debt of over $16 trillion (unfunded is easily in excess of $50 trillion). Next will be Internet censorship. Dissent is the new inconvenient truth. Dissenters will be labeled terrorists for NDAA indefinite detention purposes. The War on Terror is the War on You. The security searches and checkpoints, including groping your genitals to teach you compliance and submission, have already begun.

With all 3 branches of the USA federal government assaulting the American citizen's right to life, liberty, and the pursuit of happiness that leaves the Federal Reserve for the final blow. Now Federal Reserve Board Chairman Ben Bernanke has announced the beginning of the end of the The Great American Empire with indefinite quantitative easing, with indefinite money printing, with indefinite inflation. This is not QE 3, this is QE Infinity. This announces the "U.S. Dollar in not worth the paper it is not printed on" - more and more dollars, less and less value. The final financial and economic assault on the American citizen has begun and will now intensify. You'll be seeing more of this, as you already have, as you shop for food, fuel, and basic living needs.

Egan-Jones rating agency immediately downgraded USA sovereign debt from AA to AA- upon the Federal Reserve's QE Infinity announcement. The SEC most likely will announce a retaliatory investigation of Egan-Jones later in an effort of intimidation and censorship of the truth. The SEC and Federal Reserve are controlled by the Wall Street Banksters and they don't want you to know America has been pillaged by them. The world's worst and most criminal credit rating agencies who also serve the Wall Street Banksters (Standard and Poor's, Moody's, and Fitch) have negative outlooks on the bankrupt American Dream but that is as far as they dare go. Moody's and Fitch continue to think we will believe the USA is AAA while Standard and Poor's rates America at AA+. Among other credit rating agencies a more dismal and accurate story is told:
Dagong Global Credit (China): A, Outlook Negative
Weiss Ratings: C-, equivalent to BBB- or 1 level above junk, Outlook Not Provided

Egan-Jones cited the obvious in their American sovereign debt downgrade: debt greater than GDP, a weaker U.S. Dollar resulting from indefinite quantitative easing, an ongoing zero interest rate environment, unsustainable budget deficits.

With the Federal Reserve's QE Infinity, Congress can continue deficit spending, the oldest sovereign trick in the book. No need to balance the budget until the Day of Reckoning. This props up the financial system, prices will go higher, commodity prices will increase, other hard asset prices will rise, and the markets will continue well aloft. The ridiculous and criminal idea that the Fed is creating  jobs with printing money will ultimately be shown a sham. The global corporations want the cheap labor of Asia and South America, not the higher cost American labor. The USA's future is 'post-industrial' which means most jobs will be low-paying service jobs. A poor nation is easier to control per totalitarian doctrine. A middle class is pesky and has higher expectations such as a future.

Through federal government accounting chicanery, the July 2012 interest expense was a negative -$52 billion and this reduced the annualized interest expense and related annualized effective interest rate paid. No matter, the financial truth and facts will ultimately prevail, they always do, and the FY 2012 interest expense is actually an all-time high no matter what the proven liars in Washington say.



The graphic story of the pillaging of a nation.



The real reason the Federal Reserve's zero interest rate environment is indefinite. America will financially collapse if interest rates spike when the debt is $16+ trillion. That's why the Federal Reserve has to buy a significant portion off the U.S. Treasury debt - to keep rates low and fund the ongoing deficits. There's not enough lenders, buyers of U.S. Treasury bills, notes, and bonds, to keep the Ponzi scheme afloat.



Charts consist of the latest data available from the Bureau of Economic Analysis (GDP at 6-30-12), U.S. Treasury (Public Debt at 9-16-12), and U.S. Census Bureau (Population at 9-16-12):
Public Debt $16.05 trillion GDP $15.61 trillion
Population 314.39 million
Annualized Interest Expense $374.29 billion (the books are cooked)
Effective Interest Rate 2.53% (actually higher than 3.0%)

USA Sovereign Debt Now Exceeds GDP: Greetings From Big Brother

$SPY $DIA $QQQ $IWM

Tuesday, September 18, 2012

USA Banks Loan Charge-Offs Drop to 4-Year Low


Net Charge-Offs Decline Across All Loan Categories

Net charge-offs totaled $20.5 billion in the second quarter, an $8.4 billion (29.1 percent) reduction from second quarter 2011. This is the eighth consecutive quarter that charge-offs have declined from year-earlier levels and represents the lowest quarterly charge-off total since first quarter 2008. The year-over-year improvement was led by a $2.2 billion (24.6 percent) decline in credit card charge-offs, a $1.5 billion (25.2 percent) decline in charge-offs of residential mortgage loans, and a $1.2 billion (51.5 percent) drop in real estate construction loan charge-offs.

All major loan categories posted lower charge-offs compared with a year ago. Half of all insured institutions (50.6 percent) reported year-over-year declines in charge-offs.

USA Banks Net Charge-Off Rate by Quarter

USA Banks Return on Assets Rise to Post-Crisis High


Earnings Improvement Trend Reaches Three-Year Mark

The benefits of reduced expenses for loan losses outweighed the drag from declining net interest margins, as insured institutions posted a 12th consecutive year-over-year increase in quarterly net income. Banks earned $34.5 billion in the quarter, a $5.9 billion (20.7 percent) increase compared with second quarter 2011. Almost two out of every three banks (62.7 percent) reported higher earnings than a year ago. Only 10.9 percent were unprofitable, down from 15.7 percent in second quarter 2011.

The average return on assets (ROA) rose to 0.99 percent from 0.85 percent a year earlier. This is the third-highest quarterly ROA for the industry since second quarter 2007.

USA Banks Return on Assets by Year

FDIC Deposit Insurance Fund Balance at 15-Quarter High


FDIC Deposit Inurance Fund Indicators

* The DIF Reserve Ratio Rises 10 Basis Points to 0.32 Percent
* Fees Earned from Debt Guarantees Under the Temporary Liquidity Guarantee Program Add $4 Billion to the DIF
* $1.4 Trillion Temporarily Insured in Noninterest-Bearing Transaction Accounts
* 15 Institutions Fail During the Second Quarter

Total assets of the nation’s 7,246 FDIC-insured commercial banks and savings institutions increased by 0.8 percent ($105.3 billion) in the second quarter of 2012. Total deposits increased by 0.6 percent ($61.6 billion), domestic office deposits increased by 1.0 percent ($88.1 billion), and foreign office deposits decreased by 1.8 percent ($26.5 billion). Domestic noninterest-bearing deposits increased by 2.9 percent ($65.6 billion), while domestic interestbearing deposits rose 0.3 percent ($22.5 billion). For the 12 months ending June 30, 2012, total domestic deposits grew by 8.4 percent ($688.1 billion), with domestic noninterest-bearing deposits rising by 20.2 percent ($387.2 billion) and domestic interest-bearing deposits increasing by 4.8 percent ($300.9 billion).

At the end of the second quarter, domestic deposits funded 63.5 percent of industry assets. Insured institutions held $1.6 trillion in domestic noninterest-bearing transaction accounts larger than $250,000 at June 30. Of this total, $1.4 trillion exceeded the basic coverage limit of $250,000 per account, but is temporarily fully insured through December 31, 2012. Balances exceeding the $250,000 limit in noninterest-bearing transaction accounts increased by 5.0 percent ($65.7 billion) during the second quarter and by 32.1 percent ($335.8 billion) over the past four quarters.

FDIC Deposit Insurance Fund by Quarter: Fund Balance and Provision for Insurance Losses

FDIC Problem Bank List Decreases to 10-Quarter Low


More Than a Year Since Last New Charter

During the second quarter, the number of insured institutions reporting financial results declined from 7,308 to 7,246. Forty-five institutions were merged into other institutions, and 15 institutions failed. No new charters were added during the quarter. This is the fourth quarter in a row in which no new charters have been added. It has been more than six quarters since the last time a new charter was created other than to absorb a failing bank.

The number of full-time equivalent employees at FDIC-insured institutions increased from 2,102,280 to 2,108,200.

The number of institutions on the FDIC’s “Problem List” fell for a fifth consecutive quarter, from 772 to 732. Total assets of “problem” institutions declined from $291 billion to $282 billion.

FDIC Problem Banks by Quarter

Monday, September 17, 2012

Federal Reserve Releases GDP, Unemployment, Inflation Projections

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Federal Open Market Committee GDP Projections


Federal Open Market Committee Unemployment Rate Projections



Federal Open Market Committee PCE Inflation Projections



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