Will Goldman Sachs stay standing?

As I reported in Turner Radio Network Part 1, the U.S. Treasury has said that the bank stress test results are not in yet. However, Turner Radio Network published on its blog what it says are the results of the tests conducted on the 19 biggest banks in the United States.

The report says that 16 of the 19 banks are technically insolvent, so if installment loans or other types of loans go into default the banks could go under. It has specific numbers for five giant financial institutions that have credit exposure that exceeds their capital.

By the numbers

Here are the results of the study regarding total credit exposure to derivatives, according to Turner Radio Network:

1. Bank of America: credit exposure to derivatives 179 percent of its risk-based capital
2. Citibank: 278 percent
3. JPMorgan Chase: 382 percent
4. HSBC America: 550 percent
5. Goldman Sachs: 1,056 percent

That means Goldman Sachs’ credit exposure is more than 10 times its capital.

Facing failure?

Turner Radio Network says that JPMorgan Chase, Goldman Sachs, Citibank, Wells Fargo, Sun Trust Bank and HSBC Bank USA are in danger of collapse. The report says there are “serious questions” about whether these six banks can continue in business.

The report also says “1,800 regional and smaller institutions are at risk of failure despite government bailouts.”

The end of the world as we know it?

The end of the report summarizes its findings pretty well, so I’ll quote it directly:

The debt crisis is much greater than the government has reported. The FDIC’s “Problem List” of troubled banks includes 252 institutions with assets of $159 billion. 1,816 banks and thrifts are at risk of failure, with total assets of $4.67 trillion, compared to 1,568 institutions, with $2.32 trillion in total assets in prior quarter.

Put bluntly, the entire US Banking System is in complete and total collapse.

The Associated Press reports from New York that Citigroup Inc.plans to stimulate the count of outstanding common shares and turn a reverse stock split. This will be a key element of the financial services company’s  goal to convert preferred shares to common shares. Early trading following the announcement reflected a share increase of more than 10 percent.

This is all part of Citi’s plan to exchange around $27.5 billion in public and private preferred securities as part of its agreement with the Treasury, which has promised to match up to $25 billion of the conversions. This will be the government’s third cash advance try in five months to keep Citi from sinking beneath the waves.

How will this break down?

All private holders of convertible preferred securities, valued at $12.5 billion, have OKed the swap. The bank will also offer holders of non-convertible preferred and trust preferred securities the option to exchange. Currently, the conversion price is $3.25 per share. The number of common shares will increase significantly following this exchange. Ultimately, Citibank’s capital will benefit to a large degree. Citigroup had gone under $1 per share earlier in March as fears that government bailout efforts wouldn’t be enough.

For those of you (like myself) who don’t know what a reverse stock split is, the AP writer explains: “It reduces the number of a company’s shares outstanding, but increases the value of its earnings per share. The market value of the shares remains the same. Companies often elect to do a reverse stock split in an effort to make their stock look more valuable if the share price is significantly low.”

2008 was tough, but 2009?

Citi’s stock dropped a whopping 77 percent in 2008, and has fallen another 54 percent so far in 2009. How did it fall in 2009 after having made a profit in January and February? That alone caused share price to triple… perhaps their press release and accompanying investor letter can make sense of it?

According to their Web site, Citigroup is the leading global financial services company. They hold 200 million customer accounts and do business in over 140 countries. Through Citicorp and Citi Holdings, Citi provides consumers, corporations, governments and institutions with “a broad range of financial products and services, including consumer banking and credit, corporate and investment banking, securities brokerage, and wealth management.” Additional is available at citigroup.com or citi.com.

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If you've got money to put in the bank, you could make a profit on it.

The savings rate among Americans has seen a hefty increase in recent months. That’s bad news for retail stores, but it gets banks and credit unions excited. They are excited about the question “How do we get people to save their money HERE?”

Banks are offering some great interest rates and bonuses on new accounts, so if you pick the right one you could really make your savings add up.

Big savings, big earnings

The savings rate is at a 14-year high, at about 5 percent. Banks are pushing the interest earned on checking and savings accounts to double normal rates. Many are offering 6 percent interest if you meet certain qualifications.

Several banks are offering 5.5 to 6 percent interest on regular, active checking accounts. Southern Missouri Bank and First Robinson Savings Bank are a couple of the bigger ones. Check out this article to find out more.

Well-known banks offer new perks

Some banks are even offering cash advances to customers in the form of bonuses if you sign up for certain accounts. Citibank is offering a $25 bonus to customers who maintain a savings account of $1,000 for three months. Wachovia is offering $25 to any customers who refer new customers. The new customer gets $25 as well.

The best deal appears to be through Compass Bank or M&T Bank. Simply open a checking account with at least $100, set up direct deposit and opt out of paper statements. Just for that, you can get $100.

Online banking brings in bucks

Online-only bank accounts are also offering higher-than normal interest rates. They aren’t as high as the brick-and-mortar banks, but if you don’t have much cash and prefer online only accounts, check out GMAC Bank and FNBO Direct. Both only require a $1 minimum balance.

Citigroup Inc. has stepped up to the plate when it comes to helping out people who are joining an ever-larger category: the unemployed.

The bank has started the Homeowner Unemployment Assist program, which allows unemployed mortgage holders who are late on their personal loans to make payments of (on average) $500 monthly for three months.

A little help

Granted, it’s pretty unrealistic to think that in this job market unemployed workers will find new employment in three months. But it’s a start.

Thousands may be eligible for the program, which is aimed at avoiding more home foreclosures.

Borrowers with first mortgages whose loans are owned and serviced by CitiMortgage and who meet certain other criteria will be eligible to participate in the program, according to CNN Money.

After a job search well done

If mortgage holders taking advantage of the program do find employment during the three-month period, they can resume their original monthly payments or get a long-term loan modification.

This makes perfect sense to me, as many “re-employed” workers are accepting pay that is far lower than their previous jobs. Borrowers will be able to retool their loans to fit their new circumstances.

A gray area

Citibank is apparently aware that many customers will not be able to find employment during the three-month stint.  A company spokesperson has said that its customers will not be left hanging in the event their situation does not improve.

“If the customer is not employed within three months, Citi will work with customers on a case-by-case basis to explore the best solutions,” the company said in an announcement.

Still in foreclosure moratorium

The bank has said it will consider extending the Homeowner Unemployment Assist program to borrowers who are not yet delinquent on payments, if the situation warrants it.

Feb. 12, Citigroup put a one-month moratorium on home foreclosures. It is still waiting for final details on the Obama administration’s loan modification program.

Benjamin Weiser of the New York Times proves beyond a shadow of a doubt that even large organizations fall for those fly-by-night Internet scams and need quick loans to dig their way out. But, come on, seriously? You were taken in by a Nigerian con artist, Citibank?

That’s right. A con artist by the name of Paul Gabriel Amos worked with a team to create documents that fooled Citibank into wiring them money in transactions totaling about $27 million. The money came from a Citibank account in New York held by the National Bank of Ethiopia. The con artists posed as Ethiopian bank officials and approved the transactions. They could quickly get loans from the bamboozled financial megalith that never required them to repay.

Not-as-famous Amos has been arrested

He was charged with conspiracy to commit bank and wire fraud. If the Nigerian scammer is convicted, he could spend 30 years in prison.

According to Weiser, the prosecutors traced the scheme back to September of 2008, when Citibank received documents instructing them to accept instructions by fax from the Ethiopian bank. Included was a list of officials who would confirm the requested transactions (each of them a member of the con team, of course). The signatures of the officials on these documents even appeared to match those in Citibank’s records, so it was all accepted.

In October, Citibank received the faxed requests for money to be wired, and it transferred $27 million to accounts in Japan, South Korea, Australia, China, Cyprus and the United States. After the ruse was discovered, Citibank credited all lost funds. However, the damage to the bank’s already teetering credibility had long since been done. Now, with banks like Citibank nationwide crying to the government for quick loans to help them remain solvent, it makes you wonder why President Obama and his team continue to put up with bank leadership that fall for schemes like this. If it’s because the verification process itself is flawed, then FIX IT!

Related articles

• Citibank Sends Nigerian Scammer $27 Million [Whoops] (consumerist.com)
• DOJ: Nigerian Scammed Citibank Out of $27 Million (gothamist.com)
• 419 scammer impersonates the nation of Ethiopia, takes $27 million from Citibank (boingboing.net)

You may already be safe from foreclosure!

President Obama’s plan to revamp the mortgage industry and save families – including the octuplet mom and her kids – from foreclosure is now in full gear, like a fast cash advance for the afflicted. As part of the package, mortgage lenders like Citigroup and JP Morgan Chase have gone into a temporary moratorium phase for new foreclosures. Mr. Obama’s housing plan, which launches March 4, will distribute a sum total of $75 billion.

But how can those in need take advantage? Thanks to The Street, there is a formula threatened homeowners can follow. If you need help, try some of the good ideas they have compiled for your benefit.

Obama’s plan will advance cash fast

The Homeowner Affordability and Stability Plan is the key to disadvantaged homeowners. Essentially, it will allow people to restructure their mortgages so that they can avoid foreclosure. If you owe more than 80 percent of your home’s value, more refinancing options to advance cash fast will be available.

Up until March 4, here’s what The Street suggests homeowners do to put them in the best possible position to benefit:

1. Continue to make your mortgage payments: “Homeowners that are current [on payments] but eligible for the new plan should continue to make their mortgage payments in a timely manner,” says Gail Cunningham of the National Foundation for Credit Counseling. “Doing otherwise could compromise their credit report and score.”
2. Know what’s on your credit report: If there are errors on your credit report – and this does happen – you want to report it and have the error removed. The easiest way to get a hold of your credit report is entirely free; download it from annualcreditreport.com. Making sure that all information is accurate will speed up the process through which your home loan is modified.
3. Consider the refinance option: For those of you who still owe more than 80 percent of your home’s value, you may be able to refinance if your original loan was guaranteed by either Freddie Mac or Fannie Mae. If you need more information on how low mortgage rates are in the area in which you live, Web sites like BankingMyWay.com can help.

President Obama envisions his plan keeping as many as nine million homes out of foreclosure. “The plan I’m announcing focuses on rescuing families who have played by the rules and acted responsibly,” he said. “It will not rescue the unscrupulous or irresponsible by throwing good taxpayer money after bad loans.” May this fast cash advance keep more families safe and warm.

Related articles

• What’s In This New Obama Foreclosure Plan? [Foreclosure] (consumerist.com)
• Wither Phoenix? (andrewsullivan.theatlantic.com)
• Foreclosure Freeze Continues (azmortgageguru.com)

Well everybody, you may be aware of the economic recession, the mortgage crisis, and the subsequent $700 billion dollar quick payday loans bailout that we as taxpayers get to foot the bill for, but, and this is a BIG but, did you know that yesterday the feds designated $20 billion dollars of this bailout bill to Citigroup, once the nation’s largest credit lender. Taxpayers will also be responsible for $306 billion in quick payday loans to the company. This is all in addition to the $25 billion invested in the company by the US Treasury Department.

Behold your hinus Prince Alaweed. The latest recipient of your tax dollars.

Wait, It Gets Even worse

Citigroup, as it turns out was largely responsible for its own demise and its major share holder is Suadi Arabian prince Alwaleed bin Talal–the nephew of Saudi King Abdullah. Alwaleed also has major stakes in Fox News, Time Warner (parent company of Time and CNN) as well as The Walt Disney Company.

Alaweed was listed as one of the most powerful people in the world in 2008 and bailed out Citibank in the mid 90’s when no one else would.

His website Kingdom.com quotes the following:

“Perhaps no single transaction has catapulted Prince Alwaleed to the world’s financial stage in as spectacular a fashion as did his acquisition in 1991 of Citibank (subsequently, Citigroup) stocks.”

“Few people could then imagine that a Saudi Arabian, and a royal at that, would burst onto the international scene, seemingly out of nowhere, to invest so heavily in one of the major banks of the world and to help restore it to such health that it would become the leading financial institution in the world.”

Prince Alwaleed is referred to as the “Warren Buffet of the Gulf” and lives in a $100 million dollar 317 room palace.

Your American Tax Dollars Are Hard At Work. Overseas That Is!

Isn’t it nice to know that your hard earned tax dollars will go to help bailout a rich Saudi prince. The fact that our government is providing these quick payday loans bailout funds to foreign investors should make you at the very least somewhat suspicious of the whole matter.

Whether you’re a Democrat or Republican you may like to know before you start pointing fingers that both the president, George W. Bush and the president elect Barack Obama worked closely together on the outcome.

The justification for the bailout of many of the nation’s largest banks, despite their less than kosher activities, has echoed that a further failing economy would be the result if they didn’t bail out the banks.

What if instead of taking money out of the taxpayers’ pockets to bail these giants out of their self-induced mistakes, we gave the money to the people of America and made provisions in the law that the receivers of these funds pay down their mortgages and or pay off their existing creditors. Naturally, this would provide relief to the American people as well as the American economy because these funds would flow back to the banks as creditors are payed off and homes are payed down. Consumer spending would then increase as people could now afford more. It seems as if it might just work.

Rest assured you and I and our concerns are at the top of the feds priority list… or is it our pocketbook?

The American Taxpayer as become the free quick payday loans source for the bad decisions of the financial elite.