Reading: Citi embarrassed over $100m pay deal

Reading: Citi eyes plan to roll out new ad (hock) campaign

Reading: Banks Lobby Government to Save Billions on Derivatives

What subprime lenders gave Congress for free rein

The Center for Public Integrity has released a report on the $370 million spent on campaign donations and Washington lobbying by subprime lenders.

Most of the largest originators of subprime loans were owned or financed by (now) household names including Citigroup, Goldman Sachs, Wells Fargo, JPMorgan and Bank of America - yes, the same banks who have received the lion's share of the TARP bailout funds.

It is time to lock down rampant, destructive flows of money into politics.

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Bankers pay: seeding the next bubble

If a picture tells a thousand words, try these graphs prepared by the New York Times.

 

There are plenty of assumptions built into these figures, so examine them carefully. But the year-on-year first quarter figures are very telling. The only way I can think of that they might provide a misleadling impression of likely banker pay for the year is this: banks are moving towards lowering bonus components in exchange for awarding higher (twice or three times higher perhaps, but not bonus-level higher) basic salary. Depending on whether the banks had already implemented this policy at the time the first quarter figures were reported, the NYTimes estimates may over or underestimate the 2009 total pay level.

 

Its good indignance candy though.

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Obama to confirm backing to borrower "Bill of Rights"

The Credit Cardholder Bill of Rights was approved by the House Financial Services Committee yesterday.

 

The measure, which has faced fierce opposition from the American Bankers Association, targets deceptive practices, such as raising interest rates onn existing balances arbitrarily and charging interest on debts that have already been repaid.

 

President Obama has called a meeting of industry executives today at the White House in order to impress upon them his own support for the measure. The measure should go to the House next week, and a similar measure is being looked at in the Senate.

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Credit cards: predatory lending for everyone!

Now even those with "stellar" credit ratings can enjoy the same predatory practices that those with poor credit ratings have experienced for years, as credit card companies jack their interest rates and find creative ways to slap users with penalties and fees, such as reducing their credit limit below the amount they currently owe. 

Smart Money: "

“I certainly don’t feel like a valued customer,” says Echo Garrett of Marietta, Ga., who saw the rate on her 20-year-old Citi American Airlines (AMR: 3.31, +0.27, +8.88%) AAdvantage account jump to 19.99% from 10.9% earlier this year. Garrett’s husband’s Citi Hilton HHonors card got hit even harder, with the rate nearly tripling to 19.99%. “We’ve been good, longtime customers and there’s never been a problem with our accounts,” she says. “I just don’t understand.” Citibank spokesman Samuel Wang said the bank re-priced accounts whose rates had not changed for at least two years, to reflect ongoing risk. He declined to comment on individual accounts.

Jacking up interest rates is not only an easy way for card issuers to boost profits, but it also makes them look more financially sound amid rising defaults, says Richard Cripps, chief market strategist for investment bank Stifel, Nicolaus & Company.

Issuers may also be trying to get the most money they can out of consumers before new Fed rules go into place in July 2010 that prohibit them from raising interest rates on existing balances unless the cardholder is more than 30 days late with a payment. “They’re trying to put themselves in a better position to continue to profit,” says José Garcia, a senior researcher at New York-based economic think tank Demos."

In the current climate it looks safe to say that there will be further legislation outlawing many of the card issuers' favorite practices.  in the meantime, they'll take all the money they can shake out of their loyal customers.

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Banks accused of helping dictators plunder their people

Bank secrecy is coming in for multiple challenges: the risk opacity behind the credit crunch, tax avoidance schemes, and now aiding corruption.

In a new report, "Undue Diligence: How banks do business with corrupt regimes", Global Witness attacks the way banks that have helped hide the money of dictators and other unsavory siphoners of developing country resources.

"By doing so they have facilitated corruption and looting of natural resource revenues, denying
some of the world’s poorest people a chance to escape poverty.

‘The same lax regulation that created the credit crunch has let some of the world's biggest
banks facilitate the looting of natural resource wealth from poor countries,’ said Gavin
Hayman, Global Witness Campaigns Director. ‘If resources like oil, gas and minerals are to
truly help lift Africa and other poor regions out of poverty, then governments must take
responsibility to stop banks doing business with corrupt dictators and their families.’"

The non governmental organization goes on to recommend to the G20 four financial sector reforms to clamp down on banks taking on such people as clients:

"• Banks must change their culture of ‘due diligence’ – the process by which they check that a customer is legitimate. This isn’t about box ticking. Banks should only take the business if they have identified an ultimate beneficiary who does not pose a corruption risk. Other business should be turned away.
• Governments must ensure that anti-money laundering laws in each jurisdiction are absolutely explicit that banks must do this due diligence properly, and financial regulators must actively enforce these laws.
• Cooperation between governments has to improve to ensure that national bank regulations become globally compatible, accountable and transparent, and are not hindered by bank secrecy laws. This must begin with reforms to the intergovernmental body that oversees the anti-money laundering regime, the Financial Action Task Force.
• Governments must ensure that new global rules are put in place to help banks avoid corrupt funds. The most important change is to ensure that every country produces full public online registers of the ultimate beneficial ownership of all companies and trusts under its jurisdiction, to help banks identify and avoid business with a corruption risk."

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Old habits: Citibank to cap credit card interest at 45%

Citibank has been accused by Hong Kong legislators of charging an interest rate of 50% where credit card clients miss a cash advance payment.

Rates higher than 48% are presumed extortionate under the country's Money Lenders Ordinance.

Citibank has agreed to reduce interest to less than 45% from next month.

Me, I'm just reeling at the figures.

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