Grumpy Editor

Easier loans? Bloomberg News, WSJ differ on report

So are banks making it easier to obtain loans?

Well, yes and no, depending on the news source --- which makes the situation confusing for loan seekers, finds Grumpy Editor. 

Bloomberg News, in pointing out “banks are lending the most since the recession ended in June, 2009,” said yesterday the latest Federal Reserve quarterly loan officer survey showed U.S. banks “continued to report having eased their lending standards across most loan types over the past three months.” 

Bloomberg noted banks cited “stronger demand for auto and credit card loans.” 

Bloomberg also quoted an investment strategist saying, “banks are lending, people are borrowing, housing prices are going up and a sense of normality is returning.” 

Sounds encouraging.

But then The Wall Street Journal, working off the same Fed survey, yesterday reported “despite the increase in mortgage demand, lenders were keeping standards tight for mortgage borrowers, as well as for small business loans.” 

The Journal added that among loan officers surveyed, 93 percent said standards for approving mortgages to those with strong credit “were unchanged from the prior quarter” and 95 percent said standards for businesses with under $50 million in annual sales also were unchanged.

 

Hocus-pocus: ‘Atlantic Bank’ in Delaware disappears

A Chinese businessman’s claim of buying Atlantic Bank in Delaware --- where there was no such financial institution --- points out that business news out of China has to be verified before hitting print or going airborne, reminds Grumpy Editor. 

With China’s rising economic power, such announcements don’t raise too many eyebrows these days. 

However, with Chinese acquisitions mounting in North America, major media should be devoting a chunk of time on fact checking --- as they should with other announcements. 

Chinese businessman Lin Chunping grabbed attention in January when he announced the purchase of “Atlantic Bank” in Delaware for $60 million.

Lin told media the 85-year-old U.S. bank went bankrupt in 2008 as a result of the global financial crisis and that he planned to rename it the (mouthful) USA New HSBC Federation Consortium Inc. 

Media in China called his business experience "legendary."

His hometown, Wenzhou in east China’s Zhejiang province, gave him a prestigious municipal-level political appointment.

Later, it was found that there was no Atlantic Bank in Delaware.

Lin, 41, a rice trader, was arrested earlier this month but for an unrelated fraud. 

With that action, he was forced to give up his appointment to the Chinese People's Political Consultative Conference, a top advisory body.

And Atlantic Bank in Delaware remains a dream that some say underscores the fakery --- from iPhones to fancy bags --- coming out of China.

 

U.S. population grows, wolf enters California, radio talk show replays, Kodak stock sinks, among year-end events

Catching up on some year-end events that Grumpy Editor feels some folks (and editors) may have missed --- 

+ The Census Bureau’s projected U.S. population going into 2012:  312,780,968.  The agency also calculated one birth is expected every eight seconds and one death every 12 seconds in the U.S. 

One would think that with more people contributing to the federal pot, taxes would be lowered much like a going-away office party in which the more participants involved mean less contributions per person toward an outlay for a gift. 

+ A dopey year-end Verizon Wireless move to yank $2 a month for online or telephone payments from each customer lasted a day before the pickpocket idea was shelved.  The “convenience fee” plan immediately triggered a lot of grumbling and complaints from users of Verizon Wireless, a joint venture of Verizon Communications Inc. and Vodaphone Group Plc. 

It followed the bad PR Bank of America received two months earlier when it attempted to impose a $5 monthly fee for debit card use. 

+ Associated Press got excited when a lone gray wolf crossed into California from Oregon.  That warranted an eleven-paragraph report, noting the animal --- wearing a global positioning system collar since February --- had wandered more than 300 miles from its original location.  Last gray wolf spotted in California was killed in 1924. 

+ Radio listeners during the holidays heard much of “best of” (the upscale name for repeats) talk shows.  What talk show hosts and their syndicators seem to forget is that radio is hailed for immediacy.  Year-end airing of such things as preparing for Thanksgiving dinners and other “upcoming” events that have long passed is just plain stupid. 

Guest hosts should be used to keep the focus on current events in a fast-moving world.  It’s an opportunity, too, to develop fresh fill-in talent at microphones. 

+ The stock of once-booming Eastman Kodak Co. closed 2011 at 65 cents a share, compared to the year’s high of $5.85.  The struggling image and printing company’s stock sold for about $30 a share on the New York Stock Exchange as recently as mid-2007.  Its last dividend was in December, 2008. 

Three Kodak directors resigned in December as the company works on shoring up an eroding cash position.

Year-end observations conclude tomorrow.

 

Growing ‘Big Bank’ fees trigger Bank Transfer Day

Look for “Bank Transfer Day” tomorrow to inspire further account shifting but expect spotty coverage by newspapers that run large ads of major banks such as Bank of America, predicts Grumpy Editor. 

It comes at a time when “Big Banks” face a huge public relations problem in retaining customers. 

Their marketing departments may have to take a promotion page from yesteryear and roll out inducements such as toasters and other small appliances with new account openings. 

Bank Transfer Day rises from major banks’ growing fees, spurred by Bank of America’s month-ago announcement to charge a $5 monthly debit card fee --- which it canceled on Tuesday following a national uproar.

Also reversing course a few days prior by scrubbing fees linked to debit cards were other giant banking operations JPMorgan Chase & Co. and Wells Fargo & Co., among others. 

Those actions, coupled with other treatment (dreadful in some cases), triggered many consumers to transfer accounts to other financial institutions such as community banks and credit unions. 

A Harris Poll released yesterday found credit unions enjoy best-in-class customer retention rates while “the nation’s largest banks fail to engender the same degrees of loyalty from their customers.” 

“For example, only two in five of Bank of America's customers are extremely or very likely to continue (40 percent), as are less than half of JPMorgan Chase's customers (46 percent) and just over half of Wells Fargo/Wachovia's customers (54 percent),” Harris reported after polling 2,463 adults online between Oct. 10 and 17. 

"Customers express their loyalty through their actions, but the underlying motivation for these actions is rooted in the degree to which the bank connects with its customers on both a rational and emotional level, which in turn impacts their future intentions of continuing to use and recommend their bank to others,” Harris pointed out. 

Harris added, “Credit union members are three times as likely as customers of Bank of America to experience a trustworthy relationship (74 percent vs. 25 percent) and feel valued as a customer (72 percent vs. 24 percent), primary drivers of a strong emotional commitment to a relationship.” 

Meanwhile, Norma Garcia, director of Consumers Union’s financial services program, said Bank of America’s debit card fee “was the last straw for many consumers who are tired of banks that got bailed out that are now turning around and hiking fees.”

She added, “Consumers who are unhappy with new bank fees can vote with their feet and take their money elsewhere.  There are many banks and credit unions that are eager to serve consumers fed up with rising fees.”

 

FDIC spends funds on WSJ ‘notice’ on Aug. 5 bank closure

A lengthy legal notice from the Federal Deposit Insurance Corp. in The Wall Street Journal yesterday caught the attention of Grumpy Editor who wonders why the FDIC --- with wide efforts to reduce federal expenditures out of Washington --- is spending advertising money on information and material on a failed bank that has already been covered by news media and the FDIC’s own Web site. 

Purpose of the paid space was “Notice to creditors and depositors of Bank of Whitman, Colfax, Washington.” 

Even more interesting and raising eyebrows:  The public notice in English was duplicated in Spanish. 

Why the need for dual languages?  Following the Spanish language version at the bottom of the two columns by 14-inches paid space: 

“This translated notice is solely for information purposes only.  The official notice is the version published in English.  All proof of claim forms submitted to the FDIC as receiver of Bank of Whitman must be in English.” 

The bank was closed on Aug. 5 and all depositors’ accounts were transferred to Columbia State Bank, Tacoma. 

Information, phone numbers and contacts were spelled out in an Aug. 5 FDIC press release.   

Points raised by Grumpy Editor: 

Why the legal notice route in a major publication more than two months after the event that was already detailed in local newspapers and the FDIC’s own Web site? 

Thirteen other banks have failed since then.  Will these also get the delayed “legal notice” treatment? 

Why run a Spanish language version of the notice when the profile of Colfax, where Bank of Whitman was based, showed about 2,700 residents with 97 percent white and only 1.5 percent Hispanic? 

Proof of claim form, mentioned in the paid notice in the WSJ, for creditors and other information is easily obtained at:

http://www.fdic.gov/bank/individual/failed/whitman.html 

The legal notice in print warned claims must be submitted on or before Nov. 8.  But the FDIC’s Web site cited the cutoff date a day later, Nov. 9.

 

Fortune trips over Bank of America founder’s name

Giovanni or Giannini? 

Grumpy Editor notes a bit of confusion over the name of Bank of America’s founder on the Fortune Digital page in the latest issue of Fortune magazine.

In referring to Fortune Classics on the Web, a “Take a Trip Back in Time” item mentions the recent posting of a 1947 story “on the bank founded by A.P. Giovanni.” 

While the A.P. (for Amadeo Pietro) is correct, the accurate last name of Bank of America’s founder is Giannini. 

Fortune’s version --- Giovanni, the Italian equivalent of John --- usually is the first name of males. 

BofA’s Giannini, born in 1870 in San Jose, Calif., of Italian immigrants, in 1904 opened what then was known as Bank of Italy in San Francisco. 

With rapid expansion, the bank’s name in 1930 was changed to Bank of America National Trust and Savings Association. 

Now it’s simply Bank of America Corp. 

Giannini, retiring as bank chairman in 1945, is credited as developer of many modern banking practices.  He died in 1949.

 

Where are the jobs? 'Tight' bankers curb hiring by firms

With unemployment figures rising to 9.2 percent in June and cries for creating jobs, one of the overlooked --- especially by media --- “villains” in the picture are banks which continue to be stingy on making loans for expansions of businesses, notes Grumpy Editor.

More than 14.1 million workers are currently unemployed. The number of long-term unemployed, those jobless for 27 weeks or more, remains steady at 6.3 million. 

Many small businesses, especially, are handcuffed in hiring additional workers, expanding or making capital expenditures because of tight credit. 

This includes businesses with solid bottom lines and long relationships with financial institutions that remain frugal when it comes to loans. 

However, major banks welcome deposits, but at puny interest rates. 

Citibank, Bank of America, Wells Fargo and other major banks pay a minuscule 0.30 annual percentage yield (APY) or less on one-year certificates of deposit (CDs). 

Despite sluggish loan growth in its latest quarter, J.P. Morgan Chase, for example, posts a strong increase in profit while loans fall 4 percent from a year prior. 

Many financial institutions are thriving on fees and other charges. 

Some businesses need bank funds to cope with inflationary pressures, even though federal announcements claim inflation remains “tame,” a word echoed in media reports. 

Meanwhile, bankers with low loan output point to regulators urging lenders to demand proof that loans will be repaid.  In addition, loan officers claim there is less money to lend because regulators are requiring banks to hold more capital in case loans default. 

Bottom line:  Correcting the current tight money problem for businesses still points to Washington legislators and the White House which can remedy the situation in efforts to boost the economy and create jobs to get America back on track.

 

Financial writers overlook BofA’s zig-zag stock action

It’s rather rare that a New York Stock Exchange-listed company is spotlighted under good news, then bad news within 24 hours in The Wall Street Journal, but that was achieved by Bank of America, the nation’s largest bank by assets, notes Grumpy Editor.

The zig-zag action illustrated how fidgety investors are these days. 

BofA’s quick up-and-down movement was missed by financial writers who focused on the market’s blue chips ending June with a win, boosted by a nearly 480-point gain last week that saw the Dow Jones Industrials end the second quarter up 0.8 percent. 

On June 30 in the Journal’s “Stocks in the News” feature, which lists four news-making stocks in both “The Good News” and “The Bad News” categories, BofA made it under the former with a 32-cent gain, up 2.96 percent to $11.14 following word that it reached an $8.5 billion settlement with holders of soured mortgage-backed securities. 

Then the next day, BofA was among the four featured news makers in “The Bad News” category, slipping 18 cents or 1.62 percent to $10.96. 

That made BofA the worst performer among the Dow Jones Industrials on that day. 

The drop was attributed to investors taking a second look at the soured mortgage securities settlement.

 

In a switch, homeowners ‘foreclose’ on Bank of America

Adding to Bank of America’s public relations problems --- and rather embarrassing for management --- is word that the banking giant had the tables turned on it when Florida homeowners dispatched sheriff’s deputies to foreclose on a B of A office to collect fees due, notes Grumpy Editor.

While the unusual switch received some play in the southeast, most national media overlooked the action.

When the bank attempted to foreclose on Warren and Maureen Nyerges’s cash-purchased single-story, 2,700-square-foot home in 2009, the couple spent weeks on the phone and in court before the case was dismissed.

The bank had wrongfully filed foreclosure papers on the Naples home.

A judge ordered the bank to pay $2,500 in attorney fees for the couple’s troubles.  After five months and additional phone calls, neither the bank nor its local counsel had paid.

So, with media in tow last Friday morning, the homeowners' attorney, Todd Allen, arrived outside a local B of A branch with deputies, a moving company's truck and the court’s permission to seize branch assets.

“I’m either leaving the building with a whole bunch of furniture, or a check or cash or something,” declared Allen.

The action came amid mounting pressure on big U.S. banks to examine sloppy foreclosure-documentation problems.

Collier County sheriff’s deputies entered the bank and presented the manager with a court writ and the choice of paying the money owed or see removal of computers, desks, copiers, file cabinets and other equipment.

In about an hour, the bank manager handed Allen a check for the legal fees.

 

India inspires more savings with higher deposit rates

In an effort to give the U.S. economy a solid shot in the arm, perhaps business writers should ask Washington lawmakers and the White House on their thoughts of implementing a plan along the lines India promptly put into effect to spur savings and investment, suggests Grumpy Editor.

India authorities acted with speed.

Note the time span:

On Friday, Reserve Bank of India Governor Duvvuri Subbarao said that country’s banks need to increase deposit rates and reduce lending rates to help the economy.

Then yesterday, State Bank of India, Bank of India and other financial institutions raised their deposit rates by up to 150 basis points across various maturities ensuring higher returns for depositors.

Subbarao just before the weekend said, “To achieve our collective aspiration…we need to raise the level of national savings and channel those savings into investment.”

The decision of State Bank of India and Bank of India to raise fixed deposit rates will prompt other lenders to hike their rates to compete for savers' money, reports The Hindu, a New Delhi daily newspaper with a circulation of 14.7 million copies.

Higher interest rates on savings in the U.S. would provide account  holders with more income. Thus, more funds would inspire more purchases, boosting the economy and creating jobs.

Current annual percentage yield (APY) for a one-year certificate of deposit in the U.S., according to Bankrate.com, is 0.51 percent --- that’s a shade over half of 1 percent --- and doesn’t add much to U.S. wallets.