Bankers | Senior Money Memos

Some posts just cry out to be written in and for me, this was one. The title, Elizabeth Rocks, came quickly to mind when I considered what I should write.

I realize that there are a number of Elizabeth’s I know that really are most impressive. As a Brit, Queen Elizabeth II is one of these fine ladies. She provides a unifying element in her various realms, and not least in Canada. She is almost universally liked, no small feat given her position.

Another impressive Elizabeth is Elizabeth Able, a co-moderator at Cre8asite Forums. She has a number of intriguing online properties and QuoteSnack is perhaps the best-known of these.

The urge to write this post however did not come from an Elizabeth I know already. However a CNN article entitled, What’s so scary about Elizabeth Warren? was the trigger that encouraged me to be to put pen to paper, as you might say.

Elizabeth Warren doesn’t look or sound scary. She’s a 61-year-old Harvard Law School professor from Oklahoma who has written personal finance books, some with her daughter.

But conservatives and some bankers are trying to kill any chance that Warren – a consistent critic of the financial sector before it was cool to be one – will run the consumer financial protection agency that’s part of the Wall Street reform measure just signed into law by President Obama.

Here is what the article suggests she will be bringing to her new position:

Her ideas for a regulator for financial products became the template for the new agency, which is tasked with regulating mortgages and credit cards, as well as making new rules for much of the financial industry and enforcing them at the largest banks.

Before the financial crisis, she was already the authority on mounting credit card debt. And her books about the financial decline of the middle class have been must-reads in the consumer advocacy community for years.

Warren’s nomination would send a strong signal that the White House is willing to stand behind an aggressive regulator who will emphasize consumer needs over bank needs. White House spokesman Robert Gibbs called her “very confirmable” on Monday.

Like many I share the popular opinion that bankers in general can be somewhat arrogant and are certainly not very customer centric. They are already circling the wagons but hopefully Elizabeth Warren will be given the power to ensure US society gets a more customer-responsive banking system.

Technorati Tags: bankers, Credit card, debt, elizabeth warren

With all the headlines on the somewhat questionable behavior of bankers, particularly in the US and the UK, you might wonder where on earth you might find a good solid bank you can trust.

Googling trust, bankers and bonuses you tend to turn up items like that in The Herald in the UK entitled Betraying trust, blighting lives, bagging bonuses. That is certainly not an article to give you comfort.

The City of Glasgow Bank debacle of October, 1878, was a catastrophe for Scotland, wiping out 10% of the country’s banking capital at a stroke. In an age of unlimited liability, it also destroyed shareholders.

…

Yet as the writer James Buchan described, the City’s directors had “appeared to be sound men, of a certain age, severe and whiskery of face and sober of dress, pillars of their kirks and Masonic lodges”. On paper, their bank was solid. Paper was its only foundation.

As one of the Vancouver Sun op-ed items this morning signals Wall Street shenanigans put spotlight on bogus bonuses.

But like any good thing, bonus systems are vulnerable to misuse and outright abuse. In 2008, while the global economy was heading south in a hurry, Wall Street bankers and investors pocketed $20 billion in these little extras. Some of this money will come from American taxpayers, who footed the bill for financial industry bailouts.
…

The best employees are those who understand the importance of customer satisfaction and also the importance of good judgment and ethical behaviour.

Thankfully there are still apparently some good solid banks that deserve your trust. The Washington Post suggested there were Big Lessons in Finance From a Little Bank You’ve Never Heard Of.

Kim Price is the president of Citizens South, a 104-year-old community bank with about $800 million in assets, 15 offices and 150 employees in Gastonia, N.C. Citizens is among the stronger and more conservative banks in the Charlotte market.

Price came up with the ingenious idea that Citizens would use its federal bailout money to offer below-market mortgage rates with no closing costs to consumers who would buy a house, or a house lot, from builders and developers who had borrowed money from Citizens. Last week, Citizens launched its $20.5 million program, in collaboration with its builder-developer customers, offering 30-year loans with an initial teaser rate of 3.5 percent for the first two years, rising to a fixed 5.5 percent rate (the current market rate) for the balance of the loan.

Citizens wins because it lowers the risk that it will have to write off even more of its commercial loans while taking a modest step to help stimulate the local economy. In truth, Citizens won’t literally be using its federal bailout money to make these mortgage loans. What each dollar of government capital does for Citizens, or any other bank, is give it the ability to go out and borrow another $9 from depositors or the Federal Home Loan Bank at a rate of 2.5 percent or less.

Now that is a good solid bank you can trust, which is thinking of how to best cover your banking needs. What more could you could wish for.

Geithner outlines plans to stabilise banks (guardian.co.uk)

Technorati Tags: Bank, bankers, bonus, City of Glasgow Bank, Wall Street

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Elizabeth Rocks

A Good Solid Bank You Can Trust

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