Small businesses continue to show improvements, remain steady, but express concerns for remainder of the year, according to second quarter 2012 survey data.
MCLEAN, Va. - (BUSINESS WIRE) - August 21, 2012 - Small businesses across the country are reporting generally modest but steady improvement in their finances, according to Capital One’s second quarter 2012 Small Business Barometer, a quarterly survey of small businesses across the nation examining general economic indicators and small business perceptions of the economic environment, gauging current financial conditions and business projections for the next six months. Looking back over the past year, the survey results indicate that small businesses continue to show signs of improvement. Small businesses started the year off on more solid footing in the first quarter of 2012 and the initial gains over 2011 have remained consistent, even showing some improvement in the second quarter of the year. On the hiring front, the survey found a two-year high in the percentage of small businesses planning to add jobs over the next six month, with 37 percent reporting plans to hire.
The majority of small businesses report that their business financials have remained stable or improved, with 44 percent reporting improved financial position compared to one year ago. However, small business perceptions regarding local economic conditions remain relatively unchanged and, despite the improvement in company financials, the data shows small business owners are less optimistic about business prospects in the months ahead. The national business outlook indicates that concerns over sales and price margins, have diminished small business confidence in their prospects for the remainder of 2012.
“This quarter’s survey results suggest that business is generally holding steady for small businesses; the current economic environment and overall business performance continue to hold their own or improve, and while hiring is far short of pre-recession levels, we’re seeing small businesses making plans to hire new employees in numbers that are among the highest we’ve seen in the past two years,” said Jon Witter, President, Retail and Direct Banking at Capital One. “Though these are promising signs, as we look forward, we’re also seeing some hesitancy and concern about prospects for the remainder of the year, as well as a limited line of sight to growth – demonstrating small business owners are moving forward with continued caution and pragmatism as they consider their plans and projections for the coming months.”
Neil Barofsky on the Ongoing Bailout of Wall Street and the Lack of Criminal Prosecutions
Welcome to Capital Account. The legacy of the financial crisis and the response from the government is still making headlines. It has turned into a legacy with taxpayers footing the bill and Wall Street paying less for its crimes. Today the SEC charged Wells Fargo's brokerage firm, as well as a former Vice President, for selling investments tied to Mortgage-Backed Securities without fully understanding their complexity or disclosing the risk to investors. Wells Fargo agreed to settle the charges. However, a fine of $6.5 million, no admission of guilt, and a 6-month suspension of the Vice President sounds like a handslap playing on a broken record. We talk to Neil Barofsky, the man who helped prosecute the CEO and President of Refco, and the watchdog for TARP -- the government-sposered bailout of Wall Street.
Neil Barofsky discuses the costs associated with the taxpayer funded bailouts of wall street doled out through tarp and the false promises made under the pretense of bailing out main street. He provides an in-depth account of his experience behind the scenes, as he tried to negotiate what he initially believed, was a program designed to save main street, but that he later discovered was really created with the full intention of bailing out wall street. That man is Neil Barofsky, the former Special Inspector General for TARP and author of "Bailout: An Inside Account of How Washington Abandoned Main Street While Rescuing Wall Street."
Also, Bloomberg reports that Russell Wasendorf Sr., the CEO of the bankrupt Peregrine Financial Group, was indicted on 31 counts for making false statements to regulators. We ask Neil Barofsky if, even without blatant confessions of guilt, there are legitimate criminal cases that could be built around executives at major firms. He cites the LIBOR scandal as the most current, and most obvious example of an opportunity for criminal charges and prosecutions to be filed by authorities.
Wall Street Bankster, Con Artist, and Financial Terrorist: JPMorgan CEO Jamie Dimon
Max Keiser: We're in A Financial Holocaust!
On the Sunday, August 12 edition of Infowars Live, Alex hosts Max Keiser discussing the ravaged state of the U.S. economy and fragility of markets as published in a recent Fox News article The Coming Economic Collapse.
Only 2 of the 10 Largest USA Banks reported gains in net income from the prior year Q2 2012. The other 8 reported year over year decreases. Shining were U.S. Bancorp (+18%) and Wells Fargo (+17%). Reporting the smallest YoY decreases were JPMorgan (-9%), Goldman Sachs (-12%), and Citigroup (-12%). Those dropping more significantly were BNY Mellon (-35%), PNC Financial (-40%), and Morgan Stanley (-50%). Even worse at next-to-last and last-place were Capital One (-90%) and Bank of America (-128%).
Short-Term Quarter on Quarter Earnings Performance
Sequential quarterly net income results, the change from the prior quarter Q1 2012, were better. 6 of the 10 Largest USA Banks reported increases with Morgan Stanley and Bank of America at the top with +729% and +277%, respectively. Next were Wells Fargo (+9%), U.S. Bancorp (+6%), JPMorgan (+1%), and Citigroup (+1%). Reporting decreases QoQ were BNY Mellon (-21%), PNC Financial (-33%), Goldman Sachs (-54%), and Capital One (-94%).
All 10 of the Largest USA Banks reported net income for the QE 6-30-12, reaching an aggregate quarterly net income of $19.1 billion. This is a small increase of +$142 million and +0.75% from the prior QE 3-31-12, but a strong increase of +$9.1 billion and +48% from the prior year QE 6-30-11.
Bank of America (+$1.81 billion) and Morgan Stanley (+$685 million) reported the largest sequential QoQ increases. Capital One (-$1.31 billion) and Goldman Sachs (-$1.15 billion) reported the largest sequential QoQ decreases.
The Billion Dollar Club: JPMorgan Chase led the way at #1 with $4.96 billion in quarterly net income. Wells Fargo was #2 at $4.62 billion. Citigroup ($2.95 billion), Bank of America ($2.46 billion), and U.S. Bancorp ($1.42 billion) were next. Below $1 billion in quarterly net income were Goldman Sachs ($962 million), Morgan Stanley ($591 million), PNC Financial Services ($546 million), and BNY Mellon ($496 million). Capital One was last and #10 with quarterly net income of a near break-even $93 million.
Return on Assets
The 10 Largest USA Banks reported an average return on assets of +0.83% for the QE 6-30-12, which was a small decrease -0.03% from the prior QE 3-31-12 of +0.86%.
The 1%+ Club: U.S. Bancorp and Wells Fargo were the clear leaders with an ROA of +1.60% and +1.30%, respectively. Capital One was #3 at 1.13%. Just below the 1% ROA benchmark was PNC Financial Services at +0.96%. Next were JPMorgan Chase (+0.78%) and BNY Mellon (+0.72%). Further down were Citigroup (+0.55%) and Bank of America (+0.52%). Trailing at #9 and #10 were Goldman Sachs (+0.39%) and Morgan Stanley (+0.31%).
Federal Reserve Board announces issuance of monetary sanctions against MetLife
(Federal Reserve; August 7, 2012)
The Federal Reserve Board on Tuesday announced the issuance of monetary sanctions totaling $3.2 million against MetLife, Inc. for failure to adequately oversee its subsidiary bank's mortgage loan servicing and foreclosure processing operations. The oversight deficiencies represented unsafe and unsound practices at MetLife and corrective measures were required by a formal enforcement action issued against the company on April 13, 2011.
The $3.2 million assessed against MetLife takes into account the maximum amount prescribed for unsafe and unsound practices under the applicable statutory limits, the comparative severity of MetLife's misconduct, and the comparative size of MetLife's foreclosure activities.
The April 2011 action against MetLife was among 14 corrective actions issued against large mortgage servicers or their parent holding companies for unsafe and unsound processes and practices in residential mortgage loans servicing and foreclosure processing. Those deficiencies were identified by examiners during reviews conducted from November 2010 to January 2011.
The Board's assessment order against MetLife contains similar terms to those in the assessment orders issued by the Board in February 2012 imposing monetary sanctions against five other mortgage servicing organizations. The Board's assessments against these five organizations were issued in conjunction with a comprehensive settlement agreement between the organizations and the state attorneys general and the U.S. Department of Justice requiring the organizations to provide payments and designated types of monetary assistance and remediation to residential mortgage borrowers. Although MetLife was not a party to the settlement in February, the Board's monetary sanctions against MetLife contemplate the possibility of a similar settlement under which MetLife agrees to provide borrower assistance or remediation.
In particular, if by June 30, 2013, MetLife enters into a settlement with the attorneys general and Justice Department similar to the February agreement, MetLife must pay the Board the amount not expended by MetLife within two years of its agreement for borrower assistance or remediation in compliance with the settlement agreement. If there is no settlement agreement by June 30, 2013, MetLife will be required to pay to the Board the portion of the $3.2 million that it has not expended by August 6, 2014, on funding to nonprofit organizations for counseling to borrowers who are facing default or foreclosure, or in connection with the independent foreclosure reviews required by the April 2011 enforcement actions.
The Federal Reserve will closely monitor expenditures on borrower assistance and remediation and the counseling program and compliance by MetLife with the requirements of the monetary sanctions issued by the Board. Any money paid by MetLife to the Board will be remitted to the U.S. Treasury.
The Board is taking action against MetLife at this time in light of MetLife's publicly announced decision to sell its subsidiary bank's deposit-taking operations. Because that sale is subject to formal approval by regulators other than the Board and would result in MetLife no longer being a bank holding company, the Board believes it is appropriate to act at this time.
The Board continues to believe that monetary sanctions in the remaining cases are appropriate and plans to announce monetary penalties against those organizations.
FDIC Announces Settlements With Higher One, Inc., New Haven, Connecticut, and the Bancorp Bank, Wilmington, Delaware for Unfair and Deceptive Practices
(FDIC; August 8, 2012)
The Federal Deposit Insurance Corporation (FDIC) announced settlements with Higher One, Inc., New Haven, Connecticut, (Higher One) and The Bancorp Bank, Wilmington, Delaware, for alleged unfair and deceptive practices in violation of Section 5 of the Federal Trade Commission Act (Section 5). Higher One is an institution-affiliated party of The Bancorp Bank. Under the settlements, both Higher One and The Bancorp Bank have agreed to Consent Orders and Higher One has agreed to provide restitution of approximately $11 million to approximately 60,000 students. In addition, the FDIC has imposed civil money penalties of $110,000 for Higher One and $172,000 for The Bancorp Bank.
The FDIC determined that Higher One operated its student debit card account program (OneAccount) with The Bancorp Bank in violation of Section 5. Among other things, the FDIC found that Higher One and The Bancorp Bank were: charging student account holders multiple nonsufficient fund (NSF) fees from a single merchant transaction; allowing these accounts to remain in overdrawn status over long periods of time, thus allowing NSF fees to continue accruing; and collecting the fees from subsequent deposits to the students' accounts, typically funds for tuition and other college expenses. The Bancorp Bank, as issuer of the OneAccount debit card, was responsible to ensure that Higher One operated the OneAccount program in compliance with all applicable laws.
The Consent Order requires Higher One to change the manner in which it imposes NSF fees. It is required: 1) to not charge NSF fees to accounts that have been in a continuous negative balance for more than 60 days; 2) to not charge more than three NSF fees on any single day to a single account; and 3) to not charge more than one NSF fee with respect to a single automated clearing house (ACH) transaction that is returned unpaid within any 21-day period. In addition, Higher One is required not to make misleading or deceptive representations or omissions in its marketing materials or disclosures and to institute a sound compliance management system.
Higher One has agreed to make restitution to eligible OneAccount holders for certain NSF fees for a period beginning July 16, 2008, to such time as Higher One ceased charging the fees in question. Restitution is estimated at $11 million and may be in the form of credits to current account holders and charged-off accounts, and by check where the account is closed, to the extent that the credit exceeds any charged off amount owed to Higher One.
The Consent Order requires The Bancorp Bank to increase board oversight of all compliance matters, improve its compliance management system, enhance its audit program, correct all violations, significantly increase its management of third party risk, and provide to the FDIC details relating to the termination of its relationship with Higher One. In addition, if Higher One fails to complete restitution, the FDIC may require The Bancorp Bank to establish a restitution account in the amount of restitution unpaid by Higher One.
In agreeing to the issuance of the Consent Orders, neither The Bancorp Bank nor Higher One admits or denies any liability. A copy of the FDIC's Orders issued against The Bancorp Bank and Higher One are attached.
The 10 Largest USA Banks reported aggregate total assets of $10.69 trillion for the QE 6-30-12. This is a small decrease of -$57 billion and -0.53% from the prior QE 3-31-12, but a strong increase of +$105 billion and +1.00% from the prior year QE 6-30-11.
The 3 largest banks in the USA, JPMorgan, Bank of America, and Citigroup, all reported decreases in total assets as did 5 of the 6 biggest. The remaining 4 reported increases. JPMorgan reported the largest decrease (-$30 billion) followed by Citigroup and Morgan Stanley (both -$28 billion). BNY Mellon reported the largest increase (+$30 billion) followed by U.S. Bancorp (+$12 billion).
Largest USA Banks by Total Assets The Trillion Dollar Club: JPMorgan Chase continues #1 with total assets of $2.29 trillion, Bank of America is #2 with $2.16 trillion, Citigroup is #3 with $1.92 trillion, and Wells Fargo continues #4 with $1.34 trillion. Next are Goldman Sachs at $949 billion and Morgan Stanley at $754 billion. U.S. Bancorp $353 billion, Bank of New York Mellon $330 billion, PNC Financial Services $300 billion, and Capital One at $297 billion round out the top 10.
The 10 Largest USA Banks reported an average capital to assets ratio of 10.39% for the QE 6-30-12, an increase from the prior QE 3-31-12 (10.27%). The increase was broad with 8 of the 10 reporting higher ratios. BNY Mellon reported the only notable decrease (from 11.60% to 10.71%) and the Capital One decrease (from 12.55% to 12.54%) was negligible.
Largest USA Banks by Capital Ratio The 10%+ Club: PNC Financial Services, Capital One, Wells Fargo, U.S. Bancorp, Bank of America, and BNY Mellon all have capital ratios greater than 10%, which is very good. Citigroup, JPMorgan, Morgan Stanley, and Goldman Sachs are below 10%.
The Largest USA Banks have reported second quarter 2012 financial results. There were several changes in the quarterly ratings: 3 upgrades and 2 downgrades. The median score is "D" and the average score for the QE June 2012 is "C".
Above AverageU.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 and Bank of America at "B".
Below Average JPMorgan Chase follows at "D". Citigroup is next with a "D-", below the median rating of "D". Farther below is Morgan Stanley at "E+". Trailing the field is Goldman Sachs, continuing at a dismal G+.
Rating, Bank, Change A U.S. Bancorp A- Wells Fargo A- Capital One => (downgrade from A) B+ PNC Financial Services => (downgrade from A-) B BNY Mellon => (downgrade from B+) B Bank of America => (upgrade from C+) D JPMorgan Chase D- Citigroup E+ Morgan Stanley => (upgrade from F-) G+ Goldman Sachs 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 June 30, 2012 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 varies each quarter.
Financial position strength, notably the capital ratio, 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 predominate intent of the ratings.
Ben Bernanke, Chairman of the Board of Governors of the Federal Reserve
Federal Reserve Issues FOMC statement
Information received since the Federal Open Market Committee met in June suggests that economic activity decelerated somewhat over the first half of this year. Growth in employment has been slow in recent months, and the unemployment rate remains elevated. Business fixed investment has continued to advance. Household spending has been rising at a somewhat slower pace than earlier in the year. Despite some further signs of improvement, the housing sector remains depressed. Inflation has declined since earlier this year, mainly reflecting lower prices of crude oil and gasoline, and longer-term inflation expectations have remained stable.
Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects economic growth to remain moderate over coming quarters and then to pick up very gradually. Consequently, the Committee anticipates that the unemployment rate will decline only slowly toward levels that it judges to be consistent with its dual mandate. Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook. The Committee anticipates that inflation over the medium term will run at or below the rate that it judges most consistent with its dual mandate.
To support a stronger economic recovery and to help ensure that inflation, over time, is at the rate most consistent with its dual mandate, the Committee expects to maintain a highly accommodative stance for monetary policy. In particular, the Committee decided today to keep the target range for the federal funds rate at 0 to 1/4 percent and currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run - are likely to warrant exceptionally low levels for the federal funds rate at least through late 2014.
The Committee also decided to continue through the end of the year its program to extend the average maturity of its holdings of securities as announced in June, and it is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities. The Committee will closely monitor incoming information on economic and financial developments and will provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; William C. Dudley, Vice Chairman; Elizabeth A. Duke; Dennis P. Lockhart; Sandra Pianalto; Jerome H. Powell; Sarah Bloom Raskin; Jeremy C. Stein; Daniel K. Tarullo; John C. Williams; and Janet L. Yellen. Voting against the action was Jeffrey M. Lacker, who preferred to omit the description of the time period over which economic conditions are likely to warrant an exceptionally low level of the federal funds rate.
Fed Pledges Help But Waits to Act on Economic Vulnerability