Move Your Money To Community Banks & Credit Unions! Consumer Power!

www.moveyourmoney.info







Move Your Money: A New Year's Resolution


Too-big-to-fail banks are profiting from bailout dollars and government guarantees, and growing bigger.

The big banks on Wall Street, propped up by taxpayer money and government guarantees, have had a record year, making record profits while returning to the highly leveraged activities that brought our economy to the brink of disaster.

In a slap in the face to taxpayers, they have also cut back on the money they are lending, even though the need to get credit flowing again was one of the main points used in selling the public the bank bailout. But since April, the Big Four banks -- JP Morgan/Chase, Citibank, Bank of America, and Wells Fargo -- all of which took billions in taxpayer money, have cut lending to businesses by $100 billion.

Meanwhile, America's Main Street community banks -- the vast majority of which avoided the banquet of greed and corruption that created the toxic economic swamp we are still fighting to get ourselves out of -- are struggling.

Many of them have closed down (or been taken over by the FDIC) over the last 12 months. The government policy of protecting the Too Big and Politically Connected to Fail is badly hurting the small banks, which are having a much harder time competing in the financial marketplace. As a result, a system which was already dangerously concentrated at the top has only become more so.

We talked about the outrage of big, bailed-out banks turning around and spending millions of dollars on lobbying to gut or kill financial reform -- including "too big to fail" legislation and regulation of the derivatives that played such a huge part in the meltdown.

As we contrasted that with the efforts of local banks to show that you can both be profitable and have a positive impact on the community, an idea took hold: why don't we take our money out of these big banks and put them into community banks?

And what, we asked ourselves, would happen if lots of people around America decided to do the same thing? Our money has been used to make the system worse -- what if we used it to make the system better?

Everyone around the table quickly got excited (granted we are an excitable group), and began tossing out suggestions for how to get this idea circulating.

Eugene, the filmmaker among us, remarked that the contrast between the big banks and the community banks we were talking about was very much like the story in the classic Frank Capra film It's a Wonderful Life, where community banker George Bailey helps the people of Bedford Falls escape the grip of the rapacious and predatory banker Mr. Potter.

It was a lightbulb moment!

And, unlike the vast majority of dinner conversations, the excitement over this idea didn't end with dessert. It actually led to something -- thanks in great part to Eugene and his remarkable team, who got to work and, in record time, created a brilliant, powerful, and inspiring video playing off the It's a Wonderful Life concept. Watch it below.

Within a few days, the rest of the pieces fell into place, including an agreement with top financial analysts Chris Whalen and Dennis Santiago, who gave us access to their IRA (Institutional Risk Analytics) database. Using this tool, everyone will be able to plug in their zip code and quickly get a list of the small, solvent Main Street banks operating in their community.

The idea is simple: If enough people who have money in one of the big four banks move it into smaller, more local, more traditional community banks, then collectively we, the people, will have taken a big step toward re-rigging the financial system so it becomes again the productive, stable engine for growth it's meant to be. It's neither Left nor Right -- it's populism at its best. Consider it a withdrawal tax on the big banks for the negative service they provide by consistently ignoring the public interest.

It's time for Americans to move their money out of these reckless behemoths. And you don't have to worry, there is zero risk: deposit insurance is just as good at small banks -- and unlike the big banks they don't provide the toxic dividend of derivatives trading in a heads-they-win, tails-we-lose fashion.

Think of the message it will send to Wall Street -- and to the White House. That we have had enough of the high-flying, no-limits-casino banking culture that continues to dominate Wall Street and Capitol Hill. That we won't wait on Washington to act, because we know that Washington has, in fact, been a part of the problem from the start. We simply can't count on Congress to fix things. We have to do it ourselves -- and the big banks are the core of the problem. We need to return to the stable, reliable, people-oriented approach of America's community banks.

So watch Eugene's amazing video, then go to www.moveyourmoney.info to learn more about how easy it is to move your money. And pass the idea on to your friends (help make this video -- and this idea -- go viral!).

JP Morgan/Chase, Citi, Wells Fargo, and Bank of America may be "too big to fail" -- but they are not too big to feel the impact of hundreds of thousands of people taking action to change a broken financial and political system. Let them gamble with their own money, not yours. Let's turn big banks into smaller banks. We'll all be better off -- and safer -- as a result.

Make it your New Year's resolution to move your money. We can't think of a better way to start 2010.



View Larger Map


Sources: Huffington Post, www.Moveyourmoney.info, Weblogs, Youtube, Google Maps

Small Community Banks Failing While BOFA Parties

More Bailed-out Community Banks Failing To Pay U.S. Dividends


A growing number of community banks that got federal bailouts are failing to pay quarterly dividends they owe to the government, including two banks that got aid after congressional intervention on their behalf, according to data released Monday by the Treasury Department.

Fifty-five banks failed to make dividend payments in November, a 67 percent jump over the number of delinquent banks three months earlier.

The missed payments reflect the struggles of many community banks, which have not benefited from the Wall Street windfalls that have helped return the largest banks to profitability. Many smaller banks focused their lending on real estate development in recent years, particularly in the suburbs of sprawling Sun Belt cities. The banks now are losing money as developers default on those loans.

The Obama administration has expressed concern about the problems faced by smaller banks because they play a key role in the economy through their lending to small businesses.

President Obama plans to meet at the White House on Tuesday with a group of community bankers to discuss ways to spark increased lending. The president met earlier this month to discuss the same subject with the heads of the nation's largest banks, which have not increased lending despite renewed profitability of their investment banking operations. Treasury is planning to offer banks about $30 billion in federal aid for a mix of programs to support lending to small businesses, according to people familiar with the matter.

$200 billion invested

Treasury has invested more than $200 billion in almost 650 banks under its Troubled Assets Relief Program. Many of the largest banks have repaid the government, but almost 600 banks still hold federal aid. Under the program, most of those banks agreed to pay the government an annual 5 percent dividend in quarterly installments. In most cases, if a bank misses payments, it must make them up later.

The government collected about $1.2 billion in dividend payments from banks in November. But that was about $60 million less than it was owed, a shortfall of about 5 percent.

"Treasury does not force institutions to pay dividends," said Meg Reilly, a department spokeswoman. "Institutions must make their own determination about whether to declare, and therefore pay, a dividend."

Reilly noted that in many cases, banks are required to make up missed payments if they return to health. But two of the largest companies that have missed payments, CIT and UCBH, have filed for bankruptcy, wiping out Treasury's initial investment and eliminating any obligation to make up missed payments. An additional 14 of the delinquent banks signed contracts with the government that do not require them to make up missed payments. The government allowed those terms because the ownership structures of those companies made it impossible for the government to invest on other terms.

The Bush administration initially presented the plan to invest in banks as a way to support increased lending. Instead, lending has declined for five consecutive quarters.

Both the Bush and Obama administrations also described the investments as available only to healthy banks. But many recipients faced significant financial problems, and the number of banks missing dividend payments has climbed each quarter. Fifteen banks failed to make the required payments in May, federal data show. The number climbed to 33 banks in August, and 55 banks failed to make the dividend payments due Nov. 17.


Special consideration

OneUnited Bank in Massachusetts got aid after Rep. Barney Frank (D-Mass.) inserted language into the bailout bill that effectively directed Treasury to give the bank special consideration. Rep. Maxine Waters (D-Calif.) also helped the bank, in which her husband held shares, by arranging a meeting between government officials and a group including OneUnited's chief executive. The bank got $12.1 million last December, but it has made only a single dividend payment. It has now missed payments in three straight quarters, and it is not required to make up the missed payments.

Central Pacific Financial of Hawaii got aid after an inquiry about the status of its application by the office of Sen. Daniel K. Inouye (D-Hi.), one of the bank's founders. The financially troubled company got $135 million in January. It has now missed two straight dividend payments. Unlike OneUnited, however, the company is required to make up those payments.

Treasury has the right to assert greater control over companies that miss dividend payments in six consecutive quarters.

Three banks in Maryland and Virginia also made the delinquent list.

Hampton Roads Bankshares of Norfolk missed its first dividend payment in November on $80 million in aid it took from Treasury last December. The company, which also has suspended dividend payments on preferred shares held by private investors, said it is trying to preserve capital. Maryland Financial Bank of Towson, which got $1.2 million in March, and Rising Sun Bancorp in Rising Sun, Md., which got $6 million in January, also missed dividend payments for the first time in November.

Other local banks are faring better. Middleburg Financial of Middleburg said Monday that it had received regulatory approval to repay $22 million in federal aid after it raised $24.3 million from investors. Eagle Bancorp of Bethesda, which got $38.2 million last December, said Monday that it would make a partial repayment of $15.1 million this week. The company's chief executive, Ron Paul, said the company had no "definitive plans" to repay the rest of the government's investment.





Repaying U.S. and Reaping Bounty in Fees



Here comes another payday on Wall Street, just in time for the holidays.

No, I’m not talking about the big bonuses you’ve been reading about already.

I mean a new one, courtesy of companies like Citigroup, Wells Fargo and Bank of America returning their federal bailout money and raising new capital to replace it.

And that means big fees for all the banks that will hawk these new shares for themselves and their rivals.

More than $50 billion of new capital was raised as part of the effort by the biggest banks to repay the money from the Troubled Asset Relief Program and get out from under the thumb — and pay caps — of Washington.

All told, December was the biggest month in history for offerings, according to Thomson Reuters.

Here’s what the post-bailout bonanza means for all the banks that helped find investors for the new shares: Bank of America’s $19.3 billion offering generated $482 million in fees; Citigroup’s $17 billion offering resulted in $425 million in fees; and Wells Fargo’s $12.2 billion offering led to $275.6 million in fees. (The banks paid themselves roughly 2.5 percent of the offering price.)

Other banks were beneficiaries as well. As part of the Citigroup offering, for example, Citi syndicated part of the sale to Morgan Stanley, BNP, Lloyds and ING. (Why can’t Citi do it alone? The answer is that to raise that kind of money, you need a little help from your friends, some of whom are better at raising money than others.)

Those fees are likely to factor into the bonuses for the investment bankers involved.

“Ironically, the mechanics of exiting TARP turned out to be lucrative business for equity underwriters this year,” said Matthew Toole, director of the Deals Intelligence unit of Thomson Reuters’ Investment Banking Division.

Mr. Toole ran some numbers and turned up a startling figure: fees over the last two years for follow-on share offerings among financial companies in the United States totaled $5.4 billion. That’s more than the $4.8 billion that was raised in the previous 20 years.

There’s one wrinkle in the case of Citigroup, and it is good news. When the Treasury Department begins to unload its shares in Citigroup — it originally said last week that it planned to sell $5 billion worth, but then said it would delay the sale — the taxpayers are not likely to be asked to pay the fees. Citigroup has privately signaled that it will pay the fees, though — wait for it — Citigroup will participate in the offering itself, so it will in effect pay fees to itself.

These outsize fees are even providing a bit of funhouse-mirror distortion to so-called league tables, which rank banks based on the size of the deals they handle each quarter.

Banks that were in such bad shape that they needed the government’s aid are now, perversely, getting extra bragging rights from raising money to replace the capital they have returned to the government.

Consider this: Citigroup, which has long been an also-ran when it comes to stock offerings, is ranked No. 4 by Dealogic, which tracks financial data, leapfrogging the likes of stalwarts like Morgan Stanley.

Why? Not because it worked for the largest number of clients on offerings this year, as the measurement usually implies, but because of the work it is doing on its own offering.

By the way, Thomson Reuters, which similarly tracks the data, doesn’t give credit to banks doing their own offerings, so Citigroup is further back in the pack. Which ranking do you think Citigroup will use in its brochures for clients next year?

(While we’re on the subject of rankings, here’s an interesting aside: this year Dealogic anointed Goldman Sachs the top mergers adviser, while Thomson Reuters said the top firm was Morgan Stanley. Goldman Sachs has historically used the Thomson Reuters numbers. But guess what? Now Goldman bankers are sending out the Dealogic numbers.)

On the fees from the post-bailout offerings, there is an element in all of this of just moving money from one pocket to another.

After all, paying yourself a fee just means the cost of the offering is lower than if you had used an outside bank to do the work. It’s not real revenue.

But when bonus time comes, and when employees tally up the work they did for the year, they will be compensated for their work on these offerings as if they had worked for an outside client.

That’s not to say that an offering like this, especially at this size, doesn’t require real work. Indeed, most banks typically take 1 to 5 percent of the total offering as a fee for rounding up money from investors. The harder the offering, the more money they usually seek.

In the case of Citigroup, its enormous size made it especially difficult. (Still, in an age of Wal-Mart and squeezed margins in just about every industry in the nation, it is surprising that Wall Street has been able to hold onto such large bounties.)

While many on Wall Street may hold a dim view of the Treasury, one banker I spoke with said he had a message for Timothy F. Geithner: “Thank you.”



View Larger Map


Sources: Washington Post, NY Times, Huffington Post, AP, Google Maps