Thursday, February 26, 2009

Citigroup's still cheating all of us

A few weeks ago I was "RATE JACKED" by this most irresponsible and arrogant of banks. I received a notice informing me that my credit card rate would skyrocket to almost 17% from under 10%. As a former banker I understand very well the games the banks play so I called them and after speaking with a couple of representatives, I managed to get my interest rate lowered back down to 6%. That's right, 6% FIXED for another 6 months.

But that's not what I wanted to talk to you about today.

Just as Citi is about to absorb BILLIONS more tax dollars into the enormous financial black hole that this enterprise has come to be, another complication has emerged. One of Citigroup's most profitable holdings is in Mexico. Grupo Financiero Banamex. Some Citigroup executives are worried that an increased U.S. stake might subject the bank to pressure to relinquish some or all of its ownership of Grupo Financiero Banamex, the No. 2 bank in Mexico by assets, the Wall Street Journal said today. Really?

This is yet another outrage. Now there's talk that Citi and the Fed could consider "negotiating" with Mexico through diplomatic channels to have them "waive" this requirement in their laws. That's incredible. As the economy has worsened and my business revenue has declined dramatically, I have been forced to put some of my most treasured personal assets up for sale to pay my bills. But Citi is not being asked to do the same.

So while more of my tax dollars are being poured into this virtually bankrupt enterprise, I'm being forced to sell assets while Citi just keeps sucking up Fed money with no pressure to do the same. How is that possible??? Is it actually better to strong arm the Mexican government than to force Citi to unload some of its valuable assets? Apparently so.

I am just about ready to tell Citi to take my $24,000 credit card balance and stick it where the sun don't shine and I'll gladly take the hit on my credit score. It's gotten to that point.

With the economy in such bad shape I need to start looking out for myself and saving $24,000 is the first step in ensuring that I put my family and my financial well being in a position to survive the very crisis that Citi is responsible in great part for causing. I hope other courageous consumers that also have credit card balances with Citi will decide to do the same and send these bastards a clear message. What do you think?

Tuesday, February 24, 2009

AIG - Need I say more?

Today, Congressman Elijah Cummings said on CNBC that in a meeting with the CEO of AIG in mid January he was told that AIG planned on beginning to repay the money they had borrowed very soon. Yesterday, the Street began suggesting that AIG would report the world's largest ever quarterly loss, 60 BILLION dollars. How in hell will AIG repay taxpayers when their losses continue to mount at this rate??????? They can't. That's the simple answer.

It seems to me that taxpayers still don't know how AIG has used the funds it has already received and that a lot more money will have to be pumped into that irresponsible company to save it from complete collapse. Are we as taxpayers ready to sink more of our limited resources into AIG?

With CEO's of publicly held corporations misrepresenting the soundness of their businesses' financial health on a daily basis, shouldn't the SEC start looking into these officer's misleading statements? Where is the SEC anyway?? And where is Tim Geithner while these financial institutions continue to implode while they hide the true miserable state of their balance sheets and regularly mislead investors???

I suggest that AIG be forced into bankruptcy and the sooner the better. Why? Simply because a bankruptcy filling will force these deadbeat companies to reveal the true nature of their sad state of affairs. Without a bankruptcy filling, taxpayers and our government representatives are having the wool pulled over their eyes and nothing in the short term will change that.

CEOs of these "banks gone bad" have ZERO vested interest in telling us the truth. Let bankruptcy, the truth serum of failing business, be the medicine that sheds light on the current and real state of these enterprises and let the chips fall where they may. What do you think???

Friday, February 20, 2009

Biggest fraud perps stay out of jail

Are you amazed that the perpetrators of Americas largest financial frauds remain free and out of jail? Me too.

Get caught stealing a few hundred dollars worth of goods from a retailer and assuming you get caught, you got straight to jail. Not these guys. Madoff and Stanford and many others yet to be identified are still enjoying the comforts of their multi million dollar homes and the privileges that go with it.

In the Madoff case, it was disclosed today that Maddoff didn't register a single purchase of securities for his long list of client investors in over 13 years. He was able to do this despite having certified accountants review his books annually. Where were the regulators that were warned many times over the past 10 years!!!!!!!!!! that Madoff's business was a fraud?????

How was Madoff able to administer this fraud by himself? He wasn't. Yet despite the obvious involvement of dozens if not hundreds of co conspirators, not a single one has been identified publicly so far. WHERE ARE THE REGULATORS even today???? Where's the FBI???? Where was the NY state attorney general????

What a bunch of incompetent civil servants. Shouldn't they be charged as negligent co-conspirators??? Shouldn't the auditors be charged with a crime???? Don't hold your breath. Even Arthur Anderson's guilty verdict was eventually overturned. That's the firm that audited Enron's books for years before that company imploded.

Our entire regulatory system is in shambles and has never really worked as it should have to start with. Oh, I forgot, the SEC did nail Martha Stewart for selling a couple of hundred thousands of dollars worth of stocks on an insider tip and lying to the regulators. I say bring back Spitzer and I'll pay for him to sleep with prostitutes. At least he was doing something about the corruption on Wall Street.

Our government is no longer on our side and hasn't been for years. Obama may have the best of intentions but the Congress still maintains their right to cozy up to big business at the expense of the taxpayers.

We need to start waking up and publicly objecting to what's going on. Wake up America, your future is being wiped out by your representatives in Washington. What do you think?

Thursday, February 19, 2009

No to more bailout money for Detroit

These days it seems as though the taxpayer's ability to provide funding for broken companies is unlimited. This week, GM and Chrysler presented their restructuring proposal to Congress. As I see it right now, shoring up the auto industry in Detroit could add up to $130 BILLION. Are you kidding me?

That number includes bailout money for the manufacturers, parts suppliers, dealers and consumers. For my money, I would rather have the government send me a check for $20,000 (since its our money anyway) to enable me to purchase a new, fuel efficient US made car of my choice. What's the point of lending BILLIONS to the auto manufacturer and other related automotive businesses if consumers won't buy cars??????

I am getting really tired of talking about one multi BILLION dollar bailout after another. How much more can this country borrow. How much more debt and leverage (the very behavior that got us in this mess in the first place) can the taxpayer silently agree to provide???

With any government expenditure, waste, corruption and outright theft are primary components and we can expect these bailouts to be NO DIFFERENT. Billions will simply disappear and / or be wasted by unscrupulous civil servants and greedy recipients.

Once again, enough is enough. Unless we decide that America is now fully committed to developing into a full blown socialist republic we need to put the brakes on this spending right now. Consumers and corporation, including the worst of all of the corporate citizens, our big banks, who all made bad decisions in the past decade DO NOT DESERVE to be bailed out.


There is no way given the current state of the American Auto Industry that these loans can EVER BE REPAID. Any suggestion to the contrary fully ignores the fact that GM and Chrysler cannot compete with the foreign manufacturers many of whom build their cars right here in America. Chrysler is a PRIVATELY held corporation whose shareholders are all rich, greedy churn and burn specialists that got caught up in a very bad investment. Let them fail. There is no hope for Chrysler unless they are acquired by another manufacturer. If that happens, WE SHOULD NOT PROVIDE the capital to make that happen. Why should we as taxpayers be burdened with the responsibility to save these bad investor's investment from going bad?

Jobs??? Those jobs are doomed and have been for decades as the top executives paid themselves huge salaries while their businesses were slowly dying. Let them disappear into the sunset of corporate failures and let this be a lesson to other large corporations.

Years ago when I took a course on the art of negotiating, the most important thing I took away from the class was that when you give up something, you must get something in return. What is the taxpayer giving up and what will he get in return? I submit that the answers are: everything and nothing. Let's pass on bailing out two of the worst managed companies in our country and let new blood purchase whatever assests are deemed to be useful and let's move on. What do you think?

Wednesday, February 18, 2009

The Banks win again - The homeowner bailout

Obama's latest government bailout program aimed at stabilizing the housing market is called the Homeowner Affordability and Stability Plan. It should be renamed "Taxpayer money to line the pockets of the same bad banks that made billions in profits funding bad home loans".

This program is primarily designed to help homeowners who made bad mortgage borrowing decisions and bought homes at the height of the housing market bubble and secured adjustable rate loans to finance 100% of those purchases. The banks that made those original bad loans: BofA, Citi, JPMorgan Chase, E-Trade and many others (Washington Mutual, Wachovia, Countrywide etc.) made billions of dollars in profits when they took these worthless loans and sold them to the investment banks: Bear Stearns, Merrill Lynch, Lehman Bros and many others as well. Those "investment banks" then packaged these very bad loans and sold them off to unsuspecting investors around the world as being backed by American homeowners, the most trusted borrowers on the planet after the US government itself. Problem is that these bad mortgage bundles went bust last year and these "investors" stood to loose billions if these securities went under.

In any event, the point of this article today is to point out that the very banks (see above) that created these worthless mortgage loans and made BILLIONS of dollars in profits when those loans were resold on the secondary markets (and then caused the enormous financial crisis and economic implosion of the past year) are now poised to have those bad loans guaranteed by taxpayer money. What an outrage.

Why should taxpayers, after providing $750 billion in TARP funds to the financial industry, now have to fork out another $275 BILLION to rescue them from the remaining mortgages still out there that will default in the coming months???

It was their inability (or unwilligness) to properly asses the initial risks that led to this economic crisis and the initial TARP bailout. Now we're going to put another $275 Billion dollars of taxpayer money into their pockets to bail them out of the very policies they initially created to generate BILLIONS of dollars in profits. Where did all those profits go???? Where's the BILLIONS they made from the sales proceeds of these bad mortgages to other institutions? Who knows.

All I know is that this is really making me mad. The same banks that created ways to lend TRILLIONS of dollars to worthless borrowers and then made BILLIONS selling these worthless investments to other unsuspecting investors are now going to be bailed out for their outrageous actions over the past 5-7 years.

Its time for people like me to think about defaulting on credit card debt. It's the only way I can punish these banks for putting me and my lively hood in jeopardy. It's not enough for them to raise my interest rates, lower my credit limits and curtail future lending, no, now they're taking federal tax money to stay in business while I'm potentially going to be forced out of business.

These outrageous banks will receive $1,000 up front for each and every modification they start regardless of whether or not the modification works out. If the target is to modify 9 million loans, that's a 9 BILLION dollar windfall for the banks.

Enough is enough. Let the big banks fail and let the government return these tax dollars to me to do with that money what I need to do to keep my family housed and fed. What do you think?

Tuesday, February 17, 2009

Pay the big fine but deny any and all wrongdoing!!

Here's one for you: Large corporation does a bad thing and the government investigates. Government finds sufficient grounds to support its claims that the offending corporation has in some way broken the law and defrauded the consumer so it begins the "negotiation" process to "resolve " the dispute. Negotiations usually result in a big fine (never big enough) being assessed and the corporation paying the "get out of jail" fine, admitting no guilt and insisting it did nothing wrong. Sound familiar?

A few weeks ago I was reading the WSJ and noticed that over an area of two pages of stories, various companies were identified as having paid over 1.3 billion dollars in fines to "settle" government allegations of wrongdoing. What? That's right, do wrong and just pay a relatively small fine to sweep the crime under the rug. It happens almost weekly. A big company defrauds you and the government settles the dispute by "working out" a fine that lets the perpetrator completely off the hook.

Unlike drug busts where the cops seize any assets (house(s), cars, boats, planes, cash etc.) you own that "might" have been associated with ill gotten profits from dealing in illegal drugs, big pharmaceutical companies (the biggest of the world's drug dealers) pay relatively small fines for breaking civil law and they NEVER have their "crime producing" assets seized. So small are most government imposed fines that they barely make a dent in the ill gotten profits resulting from these breaches of the law. The DEA seizes assets even before a suspect is ever found guilty. For the big corporations, life on the dark side is much more manageable.

No jail time (in the overwhelming majority of cases), no public trial, no witness testimony, no real embarrassing disclosures and NO asset forfeitures. Just a small fine to be negotiated between well heeled friends.

Imagine if you could agree to pay your traffic fine but admit no wrongdoing. There would be no record of your offense, no DMV demerit points and no ensuing increase in your insurance premiums. Alas, this option is only reserved for corporations.

I believe that ANYTIME anyone agrees to pay a fine for WHATEVER REASON, the law should be such that you have to plead "guilty" to committing the offense as charged. As a result of pleading guilty, a criminal record is established whether you're an individual or a corporation. Enough is enough.

Why should corporate crime punishment boil down to paying fines that are usually not even high enough to deny the offending company the ill gotten profits it generated from its transgression let alone punish them for doing so? THIS MUST STOP!

You commit the crime, you plead guilty AND you pay the fine or, in America, you always retain the right to fight the charges in court and let a judge or jury decide the outcome. If you did nothing wrong, you pay nothing - what a concept! If you are found guilty, then you pay the fine.

Don't be fooled: NO ONE EVER CASUALLY PAYS A FINE FOR AN OFFENSE THEY DID NOT COMMIT. They pay the fines because its a good way of doing business. It's cheaper than going through a trial and no one has to admit any wrongdoing. You even get to keep all the money you made defrauding people by your planed actions. What a deal!!!!

Just today we heard that the top executives at RIM the maker of Blackberry phones committed fraud over several years by manipulating and back dating huge stock options that enabled them to make millions in illicit gains. They agreed to pay more than $1 milliuon in fines but were never compelled to admit any wrongdoing whatsoever!!!!!!!

I say enough is enough. No more letting the bad guys off the hook so easily. If you agree to pay the fine, you must also plead guilty as charged! What do you think?

Friday, February 13, 2009

Bankruptcies, business vs individuals

Have you noticed how many companies are lining up to file for bankruptcy lately? It seems that in many cases, the failure of these businesses was the result of making bad investment decisions and taking on way too much debt. This debt was assumed for a variety of different reasons but in most cases, it was taken on to buy other businesses or expand their own.

These companies bought into the concept that the economy would just keep expanding and that the value of their investments would continue to grow. Sounds an awful lot like the same reasons under which the average consumer loaded up on cheap credit over the past decade to buy new homes, cars and other consumer goods.

Here's the big difference: when a big business makes poor investment decisions and takes on too much debt, they can file for bankruptcy protection, reduce their outstanding debt and, as a result, become more competitive. All this is done with the help of outside financing to fund the costs associated with the bankruptcy filling. If a company can't pay their current bills, how can they secure more debt? Good question!

After a company files for bankruptcy protection, they'll usually continue to operate and do business as usual. There's little stigma associated with a business filing for bankruptcy and suppliers are usually eager to return to doing business as usual with the bankrupt entity.

If you are a consumer however, the rules appear to be much more unfavorable. You certainly can't really borrow money to cover the cost of hiring an attorney to represent you. A judge decides what debts you must repay and which can be eliminated (you can't negotiate directly with your creditors as companies can) and your credit standing is destroyed for years to come. Forget about getting loans or credit for seven to ten years as punishment for your bad past credit behavior.

Not so for companies. In fact, if you're big enough, the government will actually step in and provide capital to keep you in business. The source of that capital is taxpayer money. Hummmmm! Let's take a look at that: company makes bad decisions and gets rewarded by being allowed to restructure their debt and collect taxpayer money as life goes on as usual. Consumer files for bankruptcy and immediately becomes a deadbeat, a bad risk, an irresponsible consumer.

Businesses shun bad consumers while consumers continue to do business with bad companies??

Here's my take: If consumers are going to be saddled with the negative implications of filing for bankruptcy, so should businesses. Consumers should avoid doing business with bankrupt companies and refrain from buying their products. Don't support a company that's in bankruptcy. It's the only way to express your outrage at their irresponsible past behavior.

The average consumer is always on the receiving end of rules that make their lives more miserable after a bankruptcy filing while businesses continue to operate with impunity after their filing. The very executives that led these companies into catastrophic failure are rewarded by receiving big salaries and bonuses and, worse, are typically allowed to remain in charge? How is that possible. The very people responsible for bad decisions, get a second (and sometimes a third and fourth chance) to get it right. Not so for the average consumer that must lose everything before starting over again under the most difficult of circumstances.

In many cases, the individual's bankruptcy is caused by the failure of his employer to make sound financial decisions in the first place, leading to a loss of their job.

Bankruptcy laws must change again (our Congress made bankruptcy more difficult for consumers several years ago at the insistence of big credit card issuing banks) to remove the stigma associated with this action and to make it easier for individuals to get out from under their debt burdens, just like businesses can and to make a faster and simpler fresh start.

That's my outrage of the day. What do you think?

Thursday, February 12, 2009

Why are gas prices so high?

With the price of a barrel of oil dropping 20% in the past month, why has the pump price increased by 20%? Hummmmmm!

The simple answer is that refiners are reducing their output to control the supply of refined petroleum and therefore, the final price of the product. This is outrageous. Cutting back on our consumption does not in and of itself cause the prices to decline. Speculators at the commodities exchanges in the US and abroad really control the price you pay at the pump. Some of the players include the big oil companies, Goldman Sachs, Morgan Stanley and many other entities that have a vested interest in fixing the price of oil artound the world.

Enough is enough. It's time for government to nationalize at least one of the big oil companies to help control prices and to keep the rest of the industry honest. Speculators should not be allowed to own oil contracts unless they actually take possession of the oil they purchase. Right now, only about 20% of those future contracts end up with actual oil being delivered. That's nonsense.

Drive your brains out because no matter what you do, cutting back on consumption only leads to more cuts in the supply chain, be it exploration, extraction or refining.

Based on the current price of a barrel of oil today, the average pump price should be closer to $1.25 than $2.00. We are being charged more than a 50% premium for gas right now.

Write to your congressional representatives and give them a piece of your mind and stay on them like a Chihuahua on a pantleg.

That's my outrage of the day. What's yours?