Lawsuit seeks all the money in the whole world
Dalton Chiscolm has filed a lawsuit against Bank of America seeking “1,784 billion, trillion dollars,” Reuters reports. He would like it placed in his account today, according to the lawsuit. He’d also like another $200 million.
His case is as clear as mud.
“Incomprehensible,” U.S. District Judge Denny Chin said in a brief order.
“He seems to be complaining that he placed a series of calls to the bank in New York and received inconsistent information from a ‘Spanish woman,’” the judge wrote. “He apparently alleges that checks have been rejected because of incomplete routing numbers.”
Don Mecoy
Business Writer
Banks declining TARP funds show better returns
CNNMoney.com reports on banks that opted not to partake of federal TARP funds distributed to shore up the industry during the financial collapse. As editor-at-large Paul R. La Monica notes, it looks like it was a good decision for those that declined the government aid:
Consider this: Shares of the 54 banks that didn’t want a bailout are, on average, down just 16% since last September. That’s compared to a 30% drop for the KBW Bank Index and 36% plunge for the S&P Regional Bank Index.
And why did these TARP-shunning banks hold up better than their peers? They didn’t get involved in as much risky subprime lending as other banks. In fact, only three of these 54 banks reported a loss over the past four quarters.
Tulsa-based BOK Financial Corp., parent of Oklahoma’s largest bank, was the largest bank to refuse the TARP money.
Don Mecoy
Business Writer
More on overdraft fees
The American Bankers Association has responded to a series of stories appearing in newspapers and elsewhere about the high cost of overdraft fees at many of the nation’s banks. The Oklahoman recently ran a story on the topic.
A survey commission by the association found that 82 percent of bank customers did not pay an overdraft fee in the past year, and that 96 percent of those who did pay a fee were glad the bank covered their check.
“Clearly, consumers who pay overdraft fees are the minority, and that number is shrinking. More importantly, most consumers want banks to pay their overdrafts so they can avoid the inconvenience, embarrassment and potential costs of having a payment or transaction rejected,” said Nessa Feddis, ABA senior federal counsel and retail banking expert.
Feddis said the fees are designed to be “a deterrent,” and that the fees are easily avoided by careful consumers.
However, he doesn’t address the fact that many of the nation’s largest banks charge among the highest fees and some use programs designed to boost those fees by paying larger checks first to deplete accounts and trigger more payments as smaller checks clear. Those fees can make pay-day lenders look like pikers. The FDIC reported that a bank charging a $27 fee to cover a $20 purchase made from an overdrawn account is loaning money at an annual percentage rate of 3,520 percent if paid back in two weeks.
Overdraft fees have become a major revenue source for many banks. Last year, 45 percent of U.S. banks and credit unions made more in overdraft fees than in profits.
The key is to shop around. Some Oklahoma banks charge less than $20 for overdraft protection, and customers generally can opt out of the service.
Don Mecoy
Business Writer
Loans: the good, the bad and non-performing
The state’s largest banking company, BOK Financial Corp., issued a good earnings report this week. But buried within were some numbers that help illustrate the bright side of Oklahoma’s economy and the stark contrast with states that aren’t doing so well — such as Arizona. BOK operates Bank of Oklahoma and separate banks in six other states.
The company reported that its non-accruing loans totaled $353 million on June 30, or nearly 3 percent of all outstanding loans. A non-accruing loan is one that is months past due and no interest is being charged. In Arizona, 20 percent of the company’s loans are non-accruing. Less than 5 percent of BOK loans in Colorado and New Mexico were non-accrual. In Oklahoma and Texas — BOK’s largest markets — the rates were less than 2 percent.
Meanwhile, the picture was even worse when focused on commercial real estate loans. In Arizona, 38 percent of BOK’s commercial real estate loans were non-accruing, compared with 12 percent in Colorado, 6 percent in New Mexico and just 3 percent in Oklahoma.
Another sign that you’re doin’ fine, Oklahoma.
Don Mecoy
Business Writer
The $60 million gift
Leonard Abess
When Leonard Abess sold a majority stake in Miami-based City National Bank last fall, he took $60 million of that money as bonuses to 399 current bank employees and 72 former employees. He didn’t notify the media, or call attention to it in any way. And while he was mentioned in President Obama’s inauguration speech and was ABC News Person of the Week, these things were not done at his instigation. In fact, he wasn’t even on site when the money was given out. He decided to share the wealth, he said, as a way to reward the people who had helped make the bank successful.
An interview with Abess by Knowledge @ Wharton:
We have never had a layoff. We have paid a bonus to every employee, every year. We have never raised the cost of insurance. Today, the employee’s cost is the same as it was 20 years ago…. I tell young CEOs, that before you cut anybody’s compensation, before you fire anybody for economic reasons, you deal with yourself. Your perks go, your bonus goes, your salary goes. I am very surprised when I see huge amounts of money that go to the people at the top [even] as there are massive layoffs, especially when they accept government money.
Don Mecoy
Business Writer
TARP recipients decrease lending
This isn’t how this government stimulus program was supposed to work. Huge U.S. banks have cut back on lending despite the infusion of billions of government dollars designed to prime the lending pump, the Wall Street Journal reports today.
According to a Wall Street Journal analysis of Treasury Department data, the biggest recipients of taxpayer aid made or refinanced 23% less in new loans in February, the latest available data, than in October, the month the Treasury kicked off the Troubled Asset Relief Program.
Treasury officials respond by claiming that lending would have fallen much more dramatically without the stimulus, but they can’t be happy about this result. Solid reporting by the WSJ.
Don Mecoy
Business Writer
FDIC collected no premiums from 1996 to 2006
The Boston Globe reports that the FDIC, which recently boosted banks’ fees to replenish its fund that insures our deposits, collected no premiums from most banks from 1996 to 2006. Because bank failures had become rare, the FDIC with Congressional approval suspended the collection of insurance premiums paid by many banks.
But a recent spate of bank failures, especially large ones such as Washington Mutual and IndyMac, have seriously depleted the insurance fund. No Oklahoma banks have failed in recent years.
Roger Beverage, president of the Oklahoma Bankers Association, reacted with anger to the new FDIC assessment of 20 basis points (0.20 percent) of every dollar of deposits.
“To say the least, this is outrageous,” Beverage said. “Our member banks have played by the rules, done things appropriately, made a profit, served their communities, and stood by while the Wall Street gang has gotten away with murder. They’ve stood by patiently, in an effort to be supportive of their regulators and their government while their reputations have been trashed by the media and the general public has increasingly lost confidence in their profession. They’ve been painted with the ‘bad guy’ brush, and now they get to pay for the sins of the clowns that took the banking system in the United States to the edge of the abyss? I mean, this is crazy.”
“As long as we’re on a spending spree in Congress and ‘bailing’ everyone else out, how about bailing out the good guys, the Oklahoma banks and the banks around the country that did it right, were honorable, played by the rules and stuck to their mission of trying to help their customers and their communities? Why are these guys the ones that are being punished and being painted as the bad guys? This is just incredible. I don’t know what we’re going to do yet, but we have to do something.”
Here’s a “60 Minutes” report on the FDIC’s closing of a Chicago-area bank, which includes an interview with FDIC Chair Sheila Bair.
Don Mecoy
Business Writer
