Jim Reynolds, Jr., Chairman and CEO of Loop Capital Markets

TARP funds may have given America’s large investment banks short term loans of operating capital, but it has also given these banks black eyes in the perception of investors. The reaction is understandable; if an investment bank is in so much trouble that they require taxpayer funds to remain afloat, would you want to invest in it and place your trust in their leadership?

It’s a wonder that any investment firms are seeing growth these days, but Loop Capital Markets happens to be one of them. CEO and co-founder Jim Reynolds, Jr. recently sat down with CNBC to discuss his company’s success (see Related Video link below). The largest minority-owned investment firm in the United States, Loop Capital is currently hiring employees and growing into areas where big investment banks are losing ground.

“An exciting entrepreneurial environment”

Known as a boutique investment banking firm, Loop Capital Markets have experienced growth over the past two years that other firms haven’t been able to match. The reasons for this, according to Reynolds, are that Loop Capital has been able to recruit from top-tier talent (read: those who the Wall Street monoliths have laid off due to financial shenanigans from the government and top executives) and that they have become more accepted by their client base.

Why are they more accepted? Because they didn’t accept TARP bailout funds, that’s why. And it’s a great reason why Reynolds and his charges have done right while everyone else played games with your money.

Serving medium-sized clients

Reynolds freely admits that the bulk of Loop Capital Markets’ work is with medium-sized clients. He calls the recent changes in the investment banking field a “combination push/pull.” Large investment banks had to get out of certain businesses because they were taking on too much toxic debt. This is what triggered the need for mass reconfiguration, which is still occurring.

In their reconfiguration, the middle-sized investors were generally left behind. Firms like Loop Capital Markets are happy to serve them.

Related Video:

CNBC – “Boutique Firms Benefitting”

MSNBC reports that while America’s rage over AIG continues to burn with righteous fury, there is at least one vocal senator who wants to step up the punishment. Senator Charles Grassley of Iowa made the following exclamation regarding AIG executives:

Obviously, maybe they ought to be removed. But I would suggest the first thing that would make me feel a little bit better toward them if they’d follow the Japanese example and come before the American people and take that deep bow and say, I’m sorry, and then either do one of two things: resign or go commit suicide.

Who made him Shogun?

Surely AIG is in the wrong. After taking billions in federal cash advance bailout money, they gave $165 million in bonuses to executives. The government wants to tax it. Furthermore, New York Attorney General Mario Cuomo found that “AIG paid 73 employees bonuses of $1 million or more, 11 of whom are no longer there.” And don’t forget the retention bonus scandal, which AIG paid to many employees to keep them from quitting.

But honestly, Mr. Grassley. This isn’t Japan. Ninjas aren’t about to infiltrate the Federal Reserve. President Obama is not gaijin, no matter how much Alan Keyes sounds his barbaric yawp (kiai). AIG executives are on the president’s mind. He knows they are “reckless and greedy.”

Ritual suicide would be too easy for them

Thank you for your input, Mr. Grassley.

Interestingly, Grassley is up for re-election next year. He voted for the TARP (Troubled Asset Relief Program), which allocated some money to AIG. Something tells me he won’t be re-elected. If he is, the voters of Iowa should get set to genuflect and work long days in the rice paddy fields for the great lord and his vassals of swift judgment.

Here’s what I think. I believe in public service. Intense public service. If AIG executives refuse to give back the money, whether it be in the form of taxation or a simple handover to taxpayers, AIG executives give up their freedom and begin to work very hard doing the jobs that nobody else wants to do. Put your back into it, Edward Liddy. Or your spleen.

You’ll live in a boarded up storefront off the same food children in destitute Third World countries eat. If we deem it necessary, we’ll tap into your organs as a power source. Keep pedaling that bike, Mr. AIG; power for a taxpayer’s foreclosed home depends upon it. You will be allowed to live.

Say it straight

“This is ridiculous,” exclaimed Sen. Jon Tester, a Democrat from Montana. AIG executives “need to understand that the only reason they even have a job is because of the taxpayers.”

I couldn’t have put it better myself. Let’s make Tester shogun!

Related Videos:

IBERIA Bank, a Louisiana company that previously accepted $90 million in government aid, says it will now give the money back. Changes to the Troubled Asset Relief Program would put the bank at a disadvantage, said Daryl Byrd, the bank’s chief executive.

Regulations

It’s true, there are a lot more rules and restrictions on banks that take bailout money now than there were under the Bush administration. So it makes sense that a bank that’s doing just fine would want to forego government aid.

But if the bank was doing just fine, what was it doing taking government aid in the first place?

“We didn’t want this”

Earlier this week I wrote about Northern Trust bank. The company threw a large, lavish party in Los Angeles after accepting more than $1 billion in federal aid. Naturally, Congress was outraged and asked the bank to return to the government the amount it spent on the party.

Northern Trust responded that it had never wanted government aid and had only gone along with the program because of politicians pushing for participation.

A strange story

So what’s going on here? A bank that took $90 million is returning it, so clearly that bank didn’t need the money. Another bank came right out and said it doesn’t need the money. So is the government really asking banks that don’t need help to take the money? And why?

If there are any readers out there who know the answer, I’d really like to know.

More questions

I understand that the money is to encourage banks to resume lending “normally.” But why would banks who were doing fine change their lending practices in the first place? And did they?

The new administration is being a lot more careful about tracking where the money goes. However, it seems that if it’s encouraging “full participation,” it’s not being very discriminant about who gets it. I am glad that the new regulations are discouraging banks that don’t need the money from taking it. But is that enough?

Easy loans are a sign of the times. By that, I mean that Americans live in an age where consumers have choice as to how they will manage their short-term finances. It’s been easy for microloans to become popular, as they are fast, convenient and discreet. What a person needs money to cover before their next payday is nobody’s business but their own.

But when it comes to the U.S. banking system, it’s everybody’s business. Former Federal Reserve chairman Alan Greenspan, who is not enamored of President Obama’s Troubled Asset Relief Program, predicts more trouble during this recession.

Politico quoted Greenspan on the crisis:  “Since the collapse of Lehman Brothers in September, we have been exposed to the most rapid and unremitting set of gloomy statistics that I have ever seen. It’s a once-in-a-century type event.”

Banks should fall under government control

According to the Wall Street Journal, Greenspan took an uncharacteristic step by referring to a new period of “increased regulation.” Turning away from his free-market roots and toward the appropriate plane of sense for this dire situation, Greenspan went on to say that

All of the sophisticated mathematics and computer wizardry essentially rested on one central premise: that enlightened self interest of owners and managers of financial institutions would lead them to maintain a sufficient buffer against insolvency by actively monitoring and managing their firms’ capital and risk positions. This premise failed in the summer of 2007.

So the government will step in?

The Financial Times reports that Greenspan is for the nationalization of banks. “It may be necessary to temporarily nationalise some banks in order to facilitate a swift and orderly restructuring,” he said. “I understand that once in a hundred years this is what you do.” Eating up toxic assets so that the industry can move forward. Whether President Obama and Timothy Geithner will put this into action remains to be seen. What happens with banks will be the business of each and every American who has hopes for a future of credit, jobs and trade, to name just a few. But as always, what happens when they need easy loans is the business of nobody but the individual in need.

Related articles

• G7 Finance Ministers Reject Protectionist Measures (huffingtonpost.com)
• Alan Greenspan Vouches for Nationalization (businesspundit.com)
• Treasury Weighs Hard Choices To Save Banks (cbsnews.com)

Payday loan customers and everyone else want to know… where does the arrogance of bank CEOs end and sanity begin?

Bloomberg’s David Glovin reports that Wells Fargo & Co. CEO John Stumpf is on the defense over “misleading” media coverage of non-essential corporate events that are continuing to occur thanks to American taxpayer money. Stumpf’s claims are that these events were necessary to “honor top bankers, financial advisers, tellers and mortgage salespeople” within their organization.

Wells Fargo received $25,000,000,000 in taxpayer bailout dollars in 2008. Want to know what I think? I think those employees could get by with the honor of still having their jobs. They will be happy knowing that they are not among the hundreds of thousands who have fallen into the downsizing abyss.

Is Stumpf using the expense as a tax writeoff?

“These one-sided stories lead you to believe every employee recognition event is a junket, a boondoggle, a waste, or that it’s for highly-paid executives. Nonsense!” says Stumpf. Then you have no reason to back down on these events that boost the spirits of your grunt workers, do you, Mr. Stumpf? They use a no fax payday loan now and again when they need a little bridge between paychecks. Oh, wait…

Seems that John Stumpf did decide to cancel some taxpayer-funded corporate events. His bank lost $2,550,000,000 in the fourth quarter of 2008, then received $25,000,000,000 in TARP funds, straight from American wallets. How big of him to cancel those events and use every penny of the money GIFTED him to keep the bank running and give loans. Stumpf says the employees to be honored at the events deserved the “attaboys.” I’m sure they did. I’m not disputing that. However, I do marvel at the gall top executives like Stumpf seem to have at times.

Inspire employees by allowing them to keep their jobs, Mr. Stumpf. Inspire them by making wise, unselfish choices that keep your organization running. Inspire them by cutting your own pay and bonuses and giving it to the hungry family men and women who deserve the chance to get their jobs back.

That would truly be inspiring, Mr. Stumpf

Until then, America waits. We wait to see if President Obama’s new stimulus package will help us turn the corner. We wait for the government to take control of the banking system. That would inspire Cash Advance Mojo and countless millions across this nation, payday loan customers, small business owners, even some large corporate heads who may keep their feelings on the matter private… not to mention so many other people. They’re just like you and me. We need to feel inspired by the course of action our leaders take.

Related articles

• Take this TARP and shove it? Not so fast. (money.cnn.com)
• AP IMPACT: US Bets on Bank Execs to Fix This Mess (abcnews.go.com)
• Bailout Bank Pay Caps Leave Wiggle Room (cbsnews.com)

Citigroup Center in New York

Your online payday loan store keeps you up to date on financial news.

Several weeks ago, a congressional watchdog panel came down hard on the Treasury for its use of the first $350 billion in bailout money. The panel accused the Treasury of not keeping track of how banks were using the money. One bank has taken matters into its own hands, and has issued a report on how it spent its share of the Troubled Asset Relief Program funds.

To read about the congressional panel’s criticism, check out this article by your online payday loan store.

Citigroup issues quarterly progress report

Citigroup received $45 billion in bailout money from the Bush administration last year. The bank’s quarterly report reveals that it used $36.5 billion in TARP funds for home loans and various other loans, including $1 billion in student loans and $2.5 billion for business and personal loans.

The bank used $27.5 billion to help stabilize the housing market. It spent most of it purchasing mortgages, and about $8.2 billion went to giving new home loans to customers with good credit. A survey published this week says lending at most banks is still pretty tight, even with government aid.

More banks to follow suit

Bank of America says it will also include its TARP spending when it files its quarterly reports. B of A received $45 billion in bailout money. There is no word on when the bank will file its reports.

Wells Fargo has not filed a full report of its fourth quarter activity. However, the bank has said that it “paid a $371.5 million quarterly dividend to the U.S. Treasury in exchange for the $25 billion that the Treasury Department invested in the bank last fall,” according to CNN Money.

Check back with your online payday loan store for more financial news.

History tries to repeat itself

The Federal Housing Authority says it doesn’t have the resources to police predatory lenders. Officials from the Department of Housing and Urban Development say the FHA needs more staff, better technology and added legal authority if it is going to stop another wave of shady lending practices from hitting the country.

The Troubled Asset Relief Program, which so far has spend $350 billion, was put in place to aid lenders by giving them federal funds. The FHA is charged with screening people who apply for bailout money or otherwise try to get involved with federally backed loans. However, recent examples have shown the FHA is ill-equipped to do so. Too bad a payday loan can’t help.

Finding ways around the law

The first example seems to be simply of slipping through the cracks. An FHA lender in New York was debarred five  years ago. That lender was somehow able to go back into the business, and it continued using the same fraudulent practices that got its license taken away in the first place.

A lending company in Arizona had its license suspended and then filed for bankruptcy. The company promptly resumed operations by putting the company under a different owner’s name.

Evaluating evaluators

The FHA isn’t just in charge of screening lenders. It is also responsible for screening appraisers, people who assign value to homes or property. Right now the government’s list of appraisers still names 199 who have been disciplined by the states. The list also includes 3,480 with expired licenses.

As home prices continue to fall and property taxes continue to rise, homeowners are challenging the appraisal value of their property. Appraisers are being overloaded with requests for re-evaluating a home’s worth. The more appraisers are hit up with these requests, the more bogged down the FHA will become.

Get on the right track

In my opinion, it is imperative that these organizations immediately get the staff and the technology they need in order to be able to properly screen requests for federal funds. Obama has requested access to the remaining $350 billion in TARP funds. If the FHA’s problems aren’t fixed before the government starts handing out money again, Americans will be vulnerable, once again, to predatory lending practices. And this time it’ll be our own government paying those shady lenders.

The first step toward fixing these problems comes with double benefits: Hire people! If some bailout money is used to pay more staff it will have the added affect of giving jobs to part of the 7.2 percent of the population that is unemployed right now. Add that to preventing more of the same mistakes that caused the mortgage crisis in the first place, and we have a winner. I think getting the proper technology for these organizations would be a worthy investment, as well.

This article was brought to you by your payday loan source.

Many on Main Street don’t recover after rescue

After $350 billion was pumped into relieving the mortgage crisis, the majority of homeowners who modified their loans still ended up in default, CNNMoney reported last month.

The original bailout plan seems to be failing homeowners more than it is helping them. However, that’s not stopping Federal Reserve Chairman Ben Bernanke from asking the government to throw more money at struggling financial institutions.

Fighting debt with debt

In 2008, banks began modifying home loans in the midst of a high level of foreclosures. Within six months, 53 percent of the loans that were modified in the first quarter ended up back in default. Fifty-one percent of the loans modified during the second quarter ended up back in default within six months as well.

Obama has requested that Congress allow access to the other $350 billion that was slated for the Trouble Asset Relief Program. Bernanke is saying that additional capital will likely need to be injected into financial institutions in order to provide lasting economic recovery.

Where would extra money go?

In order for the economy to recover, Bernanke says, troubled assets must be removed from banks’ balance sheets. They also need more debt guarantee, he says.

He conceded that better regulation and new global policy needs to be put into place. But he also stressed the need for immediate action to keep financial institutions and the economy from further turmoil.

“It’s good advice in general if there’s a fire burning, you try to put it out first, and then think about the fire code,” Bernanke said.

He also recommends that the Fed leave its key interest rate near zero for now. The Federal interest rate does not directly affect the payday loan industry, but some states are pushing for laws to set interest rate caps for short-term loans.

Moving ahead

Evidence shows that the initial $350 billion in bailout money is not helping the majority of homeowners. Furthermore, the Treasury was lax in keeping track of where the money was being spent. A Congressional panel last week criticized the Treasury for both ineffective and vague use of the bailout funds.

Obama has assured the public that he plans oversight reform to be applied to the remaining funds. He also want to toughen conditions placed on financial  institutions that receive rescue money.

More money, more problems

Bernanke made his statements about needing more bailout money at the same time he said he believes that Obama’s $800 billion stimulus plan will be effective, to an extent. At this point, none of the stimulus package funds are slated for helping financial institutions.

In short, at this point the remaining $350 billion in TARP funds is the only money dedicated to continuing to fix the mortgage crisis. Both Republican and Democratic lawmakers have expressed frustration with the way the initial $350 billion was spent and monitored. Democratic leaders have made it clear that reducing foreclosures must be a primary goal in using the remainder of the funds.

Check back with your payday loan source for more news on the economy.

The Paulson Plan has provided relief for floundering banks in America, but the help mortgage lenders have sought for their own credit repair hasn’t been forthcoming. Until now.

The FDIC has announced its home loan modification program

With this new plan, the Federal Deposit Insurance Corp will seek to prevent about 1.5 million homes from facing foreclosure. In order to encourage mortgage lenders to refinance certain homeowners’ mortgages, the FDIC has promised to absorb some of the losses.

It is estimated that the FDIC’s plan will cost somewhere in the neighborhood of $24.4 billion, and the funds will be taken from Paulson’s $700 billion financial industry bailout plan, aka the Troubled Asset Relief Program (TARP) (Which are gigantic payday loans that don’t have to be paid back).

FDIC Chairman Sheila Bair had been trying to get early versions of this plan past President Bush for weeks, but this plan that passed muster came just a couple of days after Paulson dismissed the idea of government underwriting failing mortgages.

What’s the difference – how does it help repair credit?

Paulson said that Bair’s foreclosure plan is a subsidy (spending) program, while his TARP program is “investment, not spending.”

Here is the language of the FDIC’s plan. Their reasoning in the matter is as follows:

Although foreclosures are costly to lenders, borrowers and communities, the pace of loan modifications continues to be extremely slow. It is imperative to provide incentives to achieve a sufficient scale in loan modifications to stem the reductions in housing prices and rising foreclosures.

In addition to saving around 1.5 million homes from foreclosure and alleviating the need for consumer  payday loans, 2.2 mortgage loans would receive aid in the form of financial incentives to the lenders. $1,000 would be paid to lenders to cover the cost of modified mortgages. If a loan defaults, up to 50 percent of the loss would be shared by the FDIC.

Treasury Interim Assistant Secretary Neel Kashkari said this to the U.S. House of Representatives:

We continue to aggressively examine strategies to mitigate foreclosures and maximize loan modifications, which are a key part of working through the necessary housing correction and maintaining the strength of our communities.

In closing, here’s a funny look at some “magic math” that has gone on during this mortgage crisis:

This is something the U.S. government has been working on for a while, and their efforts won’t stop with this initial wave of credit repair. If your finances are struggling you can always apply for payday loans to help make ends meet.