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Citibank – Seven day advance notice for withdrawals

Feb 23

Posted by robparis in General | 9 Comments

According to the Citibank’s client manual (see the last paragraph on page 23),

Withdrawal Notice
We reserve the right to require seven (7) days advance notice before permitting a withdrawal from all checking, savings and money market accounts. We currently do not exercise this right and have not exercised it in the past.

After receiving a lot of attention online, Citibank confirmed the notice with the following comment:

When Citibank moved to unlimited FDIC coverage in 2009, we had to reclassify many checking accounts to allow for immediate withdrawals in order to ensure all customers qualified for the additional coverage. When we moved back to standard FDIC coverage with most major banks in 2010, Citibank decided to reclassify those accounts back to make them eligible again for promotional incentives. To do so, Federal Reserve Reg D requires these accounts, called NOW accounts, to reserve the right to require a 7-day notice of withdrawal. We recently communicated this technical requirement to our customers. However, we have never exercised this right and have no plans to do so in the future.

While Citibank claims to have no plans to enforce this rule, its good to know that it exists.

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Bank failures 1/2010

Feb 3

Posted by robparis in General | No Comments

Here’s an update on my previous post on bank failures.

 

Since the end of October there have been 40 more bank failures (9 in November, 16 in December and 15 in January).

 

With 15 bank failures in January, it’s still too early to tell if we’ll break 2009′s record of 144 failures, but my money is on yes! We might even break the 181 bank failures of 1992. Going any further back isn’t a fair comparison because multi-branch banking wasn’t nearly as popular.

 

6 month trend

Although there was a small drop in the 6-month trend in January, the trend is still upward.

 

Failures by state

Georgia (34), Illinois (26), California (24) and Florida (24) combined now account for a slight majority (51% or 108/212) of bank failures across the country.

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Tag cloud of Obama’s 2010 State of the Union Address

Jan 27

Posted by robparis in General | 16 Comments

Here’s a tag cloud of Obama’s 2010 State of the Union Address. Thanks to the New York times for the text and to Wordle for the tool.

Obama tag cloud

Update: A lot of people are asking why the words “I” and “me” aren’t included.  The reason is that Wordle probably thinks that the word is a “stop word” (a frequently-used, but unimportant word, such as “the”, “and” or “but”).

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Closure Of Guantanamo Detention Facilities

Jan 25

Posted by robparis in General | 5 Comments

On January 22, 2009 Obama issued an Executive Order stating, among other things, that

The detention facilities at Guantánamo for individuals covered by this order shall be closed as soon as practicable, and no later than 1 year from the date of this order. If any individuals covered by this order remain in detention at Guantánamo at the time of closure of those detention facilities, they shall be returned to their home country, released, transferred to a third country, or transferred to another United States detention facility in a manner consistent with law and the national security and foreign policy interests of the United States.

That’s right. By January 22, 2010, the Guantanamo Detention Facilities will be closed. Except it didn’t happen. It’s one year later, and Guantanamo is still open. Sure some of the detainees have been transferred to other countries, and there’s talk of moving many of the inmates to another prison in Illinois (still without a trial), but bottom line, this hasn’t happened yet. Obama’s Executive Order has come due, and has been ignored. What’s the point of speaking and writing up documents when they’ll just be ignored. Was Obama hoping we’d just forget what he was saying a year ago? Maybe if he messes up the economy enough, he’ll be able to take our minds off of Guantanamo?

In the end, there is no accountability. It doesn’t matter what Obama said last year, because things are different now. We should forget about what he said the same way we’ve forgotten about bi-partisanship (when it comes to health care trying to eke by along party lines).

So Obama – don’t make promises you won’t deliver just to look good. You’ll end up looking like a fool with your pants on the ground … sorry couldn’t resist.

It’s no wonder Obama’s ratings continue to drop. There’s no way he’ll be able to keep his 510 promises, if he ever even intended to. Each broken promise will disappoint a little more.

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Quote on health care

Jan 13

Posted by robparis in General | 2 Comments

“Now, let me get this straight…We are going to pass a health care plan written by a committee whose chairman says he doesn’t understand it, passed by a Congress that hasn’t read it but exempts themselves from it, to be signed by a president that also hasn’t read it and who smokes, with funding administered by a treasury chief who didn’t pay his taxes…all to be overseen by a surgeon general who is obese, and financed by a country that’s nearly broke. What could possibly go wrong?”

 

 

I’m not sure who said it, but I like it.

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Bernanke quotes

Jan 4

Posted by robparis in General | 3 Comments

Here’s a select collection of Bernanke quotes from 2005-2008. For similar quotes from the Great Depressions, see my earlier post.

7/1/05  – Interview with CNBC

“We’ve never had a decline in house prices on a nationwide basis. So, what I think what is more likely is that house prices will slow, maybe stabilize, might slow consumption spending a bit. I don’t think it’s gonna drive the economy too far from its full employment path, though.”

10/20/05 –  Testimony before the Joint Economic Committee

“House prices have risen by nearly 25 percent over the past two years. Although speculative activity has increased in some areas, at a national level these price increases largely reflect strong economic fundamentals.”

11/15/05 -  Nomination of ben s. bernanke, of new jersey, to be a member and chairman of the board of governors of the federal reserve system

“With respect to their safety, derivatives, for the most part, are traded among very sophisticated financial institutions and individuals who have considerable incentive to understand them and to use them properly. The Federal Reserve’s responsibility is to make sure that the institutions it regulates have good systems and good procedures for ensuring that their derivatives portfolios are well-managed and do not create excessive risk in their institutions.”

2/15/06 – Hearing before the Committee on Financial Services

“Housing markets are cooling a bit. Our expectation is that the decline in activity or the slowing in activity will be moderate, that house prices will probably continue to rise.”

2/15/07 -  Semiannual Monetary Policy Report to the Congress

“Despite the ongoing adjustments in the housing sector, overall economic prospects for households remain good. Household finances appear generally solid, and delinquency rates on most types of consumer loans and residential mortgages remain low.”

3/28/07 -  Testimony before the Joint Economic Committee

“At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained. In particular, mortgages to prime borrowers and fixed-rate mortgages to all classes of borrowers continue to perform well, with low rates of delinquency.”

5/17/07 -  At the Federal Reserve Bank of Chicago’s 43rd Annual Conference on Bank Structure and Competition

“All that said, given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system.  The vast majority of mortgages, including even subprime mortgages, continue to perform well.  Past gains in house prices have left most homeowners with significant amounts of home equity, and growth in jobs and incomes should help keep the financial obligations of most households manageable.”

8/31/07 -  At the Federal Reserve Bank of Kansas City’s Economic Symposium

“It is not the responsibility of the Federal Reserve–nor would it be appropriate–to protect lenders and investors from the consequences of their financial decisions.”

1/10/08 -  Q&A after speech

“The Federal Reserve is not currently forecasting a recession.”

2/27/08 -  Q&A after testimony to Senate Banking Committee

“I expect there will be some failures [referring to smaller regional banks]. Among the largest banks, the capital ratios remain good and I don’t anticipate any serious problems of that sort among the large, internationally active banks that make up a very substantial part of our banking system.”

6/10/08 -  Boston Federal Reserve’s 52nd annual economic conference

“The risk that the economy has entered a substantial downturn appears to have diminished over the past month or so.”


7/18/08 -  Remarks to the House Financial Services Committee

“The GSEs are adequately capitalized. They are in no danger of failing.”

Many of these quotes were found across the Internet and have been compiled before. Thanks to the following sites for source material:

The Market Oracle
Center for Economic and Policy Research
Bernie Sanders: US Senator for Vermont

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On holidays and gift giving

Dec 30

Posted by robparis in General | No Comments

It’s the end of the year. Time for the wasteful, inefficient tradition of exchanging presents. If you disagree, try reading Jeffrey Tucker’s Is Christmas Inefficient?, Bob Murphy’s Putting the Economics Back in Christmas or Joel Waldfogel’s Scroogenomics: Why You Shouldn’t Buy Presents for the Holidays.

Don’t get me wrong; I enjoy getting a good gift. To me, a good gift (assuming it’s tangible), like a good purchase, is something that I value more than the cost of the gift itself. A good gift is something that I would have purchased myself had I known about it. If the gift is something I wouldn’t have bought on my own, then it’s likely that I value the money spent on the gift more than the gift itself. Accordingly, I would have been happier with the money.

As anybody familiar with the holiday tradition knows, in most cases, exchanged gifts between two people should have approximately the same value. It’s this rule that’s put me in an awkward situation. Somebody who I didn’t plan on exchanging gifts with got me something. This something was expensive. Just how expensive? $42,105. A $42,105 gift is very expensive, especially coming from somebody who I didn’t plan on exchanging gifts with in the first place.

Just who spent $42,105 on a gift for me this year? Well it was the generous federal government. The government has “spent, lent or committed $12.8 trillion… The money works out to $42,105 for every man, woman and child in the U.S.” This gift was so generous, that Bloomberg decided to write an article about it!

Like most holiday gifts, it wasn’t something I wanted. In fact, I wish I’d never received it.

So now I’m in an awkward situation. The government spent $42,105 on a gift for me, and I got it nothing in return… and the year is almost over. I did what any prospective gift-buyer does. I snooped around. Trying to find out what the government really wanted, I started searching. On the FAQ’s for the Treasury, down at the very bottom of the page, I finally found it. The government wants more money! Even with the ability to make an infinite amount of worthless green paper, the government still wants more of it. Why? So it can go waste it on something else that we didn’t want in the first place.

The final Frequently Asked Question about the Public Debt:

Q. How do you make a contribution to reduce the debt?

A. Make your check payable to the Bureau of the Public Debt, and in the memo section, notate that it is a Gift to reduce the Debt Held by the Public. Mail your check to:

Attn Dept G
Bureau of the Public Debt
P. O. Box 2188
Parkersburg, WV 26106-2188

So that’s what it wanted all along. As I write a check for $42,105, I wonder how this can possibly be a Frequently Asked Question. I wonder how many people would actually mail the Treasury more money than it already steals.  I wonder if anybody has ever used P.O. Box 2188 in Parkersburg, West Virginia. I get my head back together and focus in on the task.  I make sure to write a cheery holiday letter. I even throw in some holiday cookies. As I get ready to mail $42,105 to a P.O. Box in West Virginia, I try not to think about how shady a P.O. Box in West Virginia really is. Or even worse, how the government who thinks it can solve problems by throwing money at it, somehow thought it knew what I wanted for the holidays.

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Happy Holidays!

Dec 24

Posted by robparis in General | 4 Comments

And many more!

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College Football Playoff Act of 2009

Dec 9

Posted by robparis in General | No Comments

H.R. 390: College Football Playoff Act of 2009 approved legislation to force college football to ban the promotion of a postseason NCAA Division I Football Bowl Subdivision game as a national championship. The bill favors a switch to a ‘more fair’ playoff system.

I don’t see what the real objection is. Congress has nothing else on its plate now. And anyway, its right there in the Constitution :

U.S. Constitution – Article 1 – Section 11 – Clause 3

The Congress shall have Power To Define and Regulate all Competitive Collegiate Activities that Define a National Champion for the common Entertainment and general Welfare of the United States. All Championship Competitors must be Drawn in uniform throughout the several States, and with the Indian Tribes.

The Congress shall have Power, by and with the Advice and Consent of the Senate, to Declare a National Champion upon Completion of the Competition, provided two thirds of the Senators present concur.

That’s right, the Constitution gives Congress the express power to determine how a college football playoff system should work.

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Bank failures 10/2009

Oct 25

Posted by robparis in General | 2 Comments

The seven new bank failures on Friday, October 23, 2009 brings the total for the year up to 106 – the most bank failures since the savings and loan crisis in 1992. 106 is still small compared to the 416 unnamed banks on the FDIC’s watch list. Which way is the trend going? Where are the bank failures taking place? See below.

Which way is the trend going?

During the current recession, the month with the most bank failures (so far), was July 2009 with 24. Although failures have slowed down, the six month trend is still upward.

bankfailurestime

Where are the bank failures taking place?
bankfailuresstate

unemploymenthousingMost of the bank failures so far have taken place in the southeast (Georgia and Florida) and southwest (California and Nevada). Illinois also ranks high on the list. What do these states have in common?

These states are suffering from a severe housing bust, and are suffering from the highest unemployment rates. There are currently only 14 states with unemployment over 10%, and all five of these states fall into that category.

Where are we going from here?
The facts end here. Now it’s a matter of prediction. I don’t see any “green shoots”. I don’t expect a quick turnaround. I expect bank failures to continue and become more frequent. I expect the FDIC to run out of money shortly. The FDIC will either require multiple years of pre-payments from the banks, or it will tap into its credit line with the US Treasury. If the FDIC asks for bank pre-payments, the stuggling banks will come under even more stress. I expect the FDIC to tap into its $500 billion credit line from the US Treasury. What happens if that credit line runs dry? There will be an even bigger one.

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