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SBA 7A loans are one of the best finance solutions to business owners, in the market today. There are two primary reasons for this – value and viability.
As commercial real estate values continue to decline the SBA 7A loan offers the highest financing available in the business, at 85%. Conventional bank loans in contrasts are normally capped at 65% loan to value.
This article is a follow-up to my recent piece on “America’s Financial Oligarchy” which was a synopsis of Simon Johnson’s “The Quiet Coup” on how the financial industry has effectively captured our government. It is an edit and review of a lengthy 231-page report prepared in March 2009 by the Consumer Education Foundation (see wallstreetwatch.org/reports/sold_out.pdf) on how, over the years, the ‘Money Industry’ as they refer to the financial oligarchy, sold out America to gain such control. Like Simon’s article the Consumer Education report deserves much more exposure than it will receive in its original format and hence my effort to distill it into a 3-page summary, with my comments where warranted, for your quick review.
The ‘Money Industry’ Bought Control of America for $5.2 Billion
Harvey Rosenfield, President of the Consumer Education Foundation, contends that “Over the last decade, Wall Street (i.e. the entire financial sector consisting of commercial banks, accounting firms, insurance companies, securities firms including hedge funds and private equity firms) showered Washington with over $1.738 billion in supposed ‘campaign contributions’ and another $3.441 billion on 2,996 officially registered lobbyists (more than five for each Member of Congress) whose job it was to press for deregulation. In return for the investment of this $5.179 billion, the Money Industry was able to get rid of many of the reforms enacted after the Great Depression and to operate, for most of the last ten years, without any effective rules or restraints whatsoever.”
The Transfer of Power Took 25 Years
• Beginning in 1983 with the Reagan Administration, the U.S. government acquiesced to accounting rules adopted by the financial industry that allowed banks and other corporations to take money-losing assets off their balance sheets in order to hide them from investors and the public.
• Between 1998 and 2000, Congress and the Clinton Administration repeatedly blocked efforts to regulate “financial derivatives” — including the mortgage-related credit default swaps that became the basis of trillions of dollars in speculation.
• In 1999, Congress repealed the Depression-era law that barred banks from offering investment and insurance services, and vice versa, enabling these firms to engage in speculation by investing money from checking and savings accounts into financial “derivatives” and other schemes understood by only a handful of individuals.
• Taking advantage of historically low interest rates in the first few years of this decade, mortgage brokers and bankers began offering mortgages on egregious terms to purchasers who were not qualified. When these predatory lending practices were brought to the attention of federal agencies, they refused to take serious action. Worse, when states stepped into the vacuum by passing laws requiring protections against dirty loans, the Bush Administration went to court to invalidate those reforms, on the ground that the inaction of federal agencies superseded state laws.
• The financial industry’s friends in Congress made sure that those who speculate in mortgages would not be legally liable for fraud or other illegalities that occurred when the mortgage was made.
• Egged on by Wall Street, two government-sponsored corporations, Fannie Mae and Freddie Mac, started buying large numbers of subprime loans from private banks as well as packages of mortgages known as “mortgage-backed securities.” (See my article entitled “Our Worst Nightmare: The Puncture of the U.S. Housing Bubble” which outlined their house of cards approach.)
• In 2004, the Securities and Exchange Commission, now operating under the radical deregulatory ideology of the Bush Administration, authorized investment banks to decide for themselves how much money they were required to set aside as rainy day reserves. Some firms then entered into $40 worth of speculative trading for every $1 they held.
• With the compensation of CEOs increasingly tied to the value of the firm’s total assets, a tidal wave of mergers and acquisitions in the financial world — 11,500 between 1980 and 2005 — led to the predominance of just a relative handful of banks in the U.S. financial system. Successive administrations failed to enforce antitrust laws to block these mergers. The result: less competition, higher fees and charges for consumers, and a financial system vulnerable to collapse if any single one of the banks ran into trouble.
• Investors and even government authorities relied on private “credit rating” firms to review corporate balance sheets and proposed investments and report to potential investors about their quality and safety. But the credit rating companies had a grave conflict of interest: they are paid by the financial firms to issue the ratings. Not surprisingly, they gave the highest ratings to the investments issued by the firms that paid them, even as it became clear that the ratings were inflated and the companies were in precarious condition. The financial lobby made sure that regulation of the credit ratings firms would not solve these problems.
None of these milestones on the road to economic ruin were kept secret, says Rosenfield. The dangers posed by unregulated, greed-driven financial speculation were readily apparent to any astute observer of the financial system but few of those entrusted with the responsibility to police the marketplace were willing to do so and those officials in government who dared to propose stronger protections for investors and consumers consistently met with hostility and defeat. The power of the Money Industry overcame all opposition, on a bipartisan basis.
In economics, the term ‘recession’ means “The reduction of a country’s Gross Domestic Product (GDP) for at least two quarters; or in normal terms, it is a period of reduced economic activity”.
Capitalism and Interest Based financial System are the root causes of world financial system’s failure. It is going to convert into economic crisis. If it is not going to handle properly, its results may be more adverse than Great Depression. Pakistan was in crisis right from the beginning but financial crisis is increasing its rate of knots.
Continue reading ‘Capitalism And Interest Based Pakistan Economy, Recession’ »
Are High Interest Savings Accounts the Answer?
In the present economy, everyone I know is striving to keep his or her head above water. Retrenchment has more than doubled and people everywhere are looking for a way to cut corners and possibly even save for that rainy day.
Now I have heard of high interest savings accounts but always thought there was a catch to apply for high interest account. Most banks today in Australia will give you more than around 3% (before tax) return on your invested money. You cannot get that with a regular bank account which usually runs about 0.2%. With a little research, I found out more about these high interest savings account.
How does it Work?
The first thing to do is find an bankthat has no fees. Why pay someone to hold your money for you? They are out there. If you get this far, look for one that does not require too much of a minimum balance. You are looking at approximately $1,000.00 for a minimum deposit on the high interest savings accounts from reputable Financial institutions. Banks have the best credit rating AA or Above . There are some paying 3.40% and you may even get more money return at the end of the year. Some of the requirements of a high interest savings account are explained here. As noted above, most require a minimum balance. You will also be required to keep your money in the account with no withdrawals in order to obtain the highest interest payout. There are also some banks that pay out bonuses after a year with the untouched savings account. The other thing you may need to take note is the required monthly or even weekly deposits. If you fail to keep up on this point of your high interest savings account, you will not only get the lowest possible rate on your savings, but you will have to give up the yearly bonus.
Continue reading ‘What people would invest in Australia now?’ »
When it comes to raising community awareness about a special interest, a local charity or a health concern, don’t overlook your community bank. That’s right; community banks are in the business of doing business in the community – FOR the community.
In fact, according to Robert Sumner, CEO of First National Bank of Pasco (FNB Pasco) near Tampa, Florida, “Banking is a people business. Believe it or not, bankers get into the business to help people, as well as to make money.”
Wer heute dem potentiellen Kunden als beste Girokonten etwas Besonderes zeigen will, muss sich etwas besonderes überlegen. Denn der potentiellen Kunden wird wiederkehrend mit vielen Angeboten für angeblich „beste Girokonten“ beworben.
Viele Banken, Sparkassen und Kreditinstitute werben um fast jeden Interessenten, seitdem das Geld nicht mehr einfach zu verdienen ist. Längst hat der Wandel vom Anbietermarkt zum Nachfragemarkt in der Finanzbranche schon stattgefunden.
Ten Reasons why you should open a saving account in Australian Banks
Saving is an important factor by which we can enjoy great benefits in our problem days. Natural disasters and family problems can come any time so we must be ready to face them by making some savings. It is difficult to save money these days after allocating & budgeting for important items like transportation, housing, and food but it is very important to save money, even a small amount, as the benefits are multiple. A bank saving account in Australia is a very important financial tool which is providing lots of facilities to people with all time saving benefits. I want to save money but why should I open a saving account? It is a natural question which comes to every savers mind; let’s check ten reasons why you should open a saving account!
Saving in Secure Accounts
Australian Banks provide different choices in saving accounts like online saving accounts, simple saving accounts with different rates and choice of withdrawals (with and without withdrawals). People can choose according to their suitable rates, everything is a secured saving option.
Free and No minimum balance
Many Australian banks are providing saving accounts to its customers without any fee and with no minimum balance required. You can open saving account with any amount you want to save and deposit.
Australian Government’s Guarantee
Federal govt. of Australia announced a complete guarantee for all deposits in Australian owned banks including saving accounts. There is no fear for account holders due to any international economic problem.
Continue reading ‘Ten Reasons why you should open a saving account in Australian Banks’ »
On one occassion, I checked my account balance at the ATM and it showed a positive amount of over $200. We went on our trip, ate at a restaurant and purchased a few other items the same day. I was shocked when we got back to see 5 overdraft fees at $33.00 each posted on our account. When I contacted BOA and told them I had a bank receipt showing my account in the positive before we made the transactions, they told me I had some transactions ‘pending’ that had not yet been posted to my account and therefore did not show up when I went to the ATM. Yet they still insisted that my account balance at the ATM was ‘realtime.’ This was what they had advertised, and of course, what I believed. How can they advertise that their online and atm balances are up to date if there are still transactions on hold? We also would not have been hit with so many fees if they had posted them by the time of day and not the amount! The bank continues to allow use of the ATM card to make purchases even if there is a negative balance. It would be easy enough for them to decline payment if a card with a negative balance is presented, but thier excuse for this is that it is a ‘courtesy’ to their customers. Hogwash! It’s so they can wrack up more service fees – their bread and butter. We’ve been customers of BOA for over 10 years and have NEVER had this problem before.
Recently, we got hit with 5 overdraft fees because they posted the transactions, not at the time they were presented, but based on the transaction amount – higher to lower. The ‘best’ part though is that we deposited enough money to cover all the transactions the same day. I of course contacted them through their mail system online (which is the only way to contact them via the Internet) and they refused to refund the fees because we had deposited the check AFTER the transactions had presented. Can you believe it?
Apart from the stock market crash and the severing of international credit lines to Nigerian banks, analysts still maintain that the nation is yet to feel a stint of the global financial meltdown. But one part of Nigeria that is definitely been affected by this financial meltdown is the federal government income as its revenue generation capacity has been greatly diminished due to falling oil prices – a fall out of reduced demand for crude. For a country that sold a barrel of crude for $140 a few months ago and now desperately seeking buyers at $45 thereabout, the global financial crisis couldn’t be closer.
The issues that this raises however, is far of greater importance than how much we sell or make from a barrel of oil. It has exposed the inability of successive governments in Nigeria to diversify the Nigerian economy, a once vibrant agricultural economy, from the mono-product, oil dependent economy that it currently is.
Currently, Nigeria generates 80% of its revenue from oil exports and about 90% of its foreign exchange putting the country always at the mercy of crude oil price fluctuations. As the Nigerian economy again cycles down with falling oil prices, the need for the creation of more options for the economy comes to the fore with the government in need of more revenue, more employment for its people and better infrastructure.
Reviving the real sector of the economy, especially the manufacturing sector which serves as the industrial base of the economy and encouraging private enterprise remains a ready alternative for any attempt at diversifying the economy beyond oil exporting. Without any statistical backing it is obvious that real sector growth in Nigeria has been on the negative in the last two decades. Large, small and medium sized industries wind up almost daily. New entrants always find it difficult to survive and close doors as quickly as they opened them.
After the latest phase of banking consolidation was concluded at the end of 2005, Governor of the Central bank of Nigeria, Chukwuma Soludo assured Nigerians that they could now afford to keep their money in any of the 25 banks which emerged after consolidation and go to sleep with both eyes shut. Renewed confidence in the banks increased interest in banks and citizens developed faith in the banking system unlike the era of distress that once characterized the industry.
But in June 11 2007, jitters where sent down the spines of investors and depositors as news that the Central Bank had dissolved the board of directors of Spring bank plc came in. The Central Bank in the letter dated June 5 admitted that the bank was in a grave situation.
In a statement, the CBN gave the reasons for dissolving the board as ‘negative shareholders’ fund contrary to prudential requirements stipulated by the CBN pursuant to the provisions of the Banks and Other Financial Institutions Act 1991, and the CBN Act 1991 as amended’.
A few days later, erstwhile chairman of the bank Rev Segun Agbetuyi in an open letter dated June 11 published in major Nigerian newspapers convicted the CBN banking supervision unit of complicity in aiding fraud in the bank. Accusations and counter accusations dampened confidence and ensured that the bank’s profile nosedived and set it in need of salvation. If not, perhaps Nigerians could look forward to the first liquidation less than 2 years after consolidation.
Hope was however raised in 2008 when Bank PHB offered to purchase majority stake in the bank whose shares had become a burden on investors’ portfolio haven not made profit or declared any dividend. Shareholders ratified the takeover and the deal was sealed. The reconstituted board was approved by the CBN late December 2008 and Charles Ojo an Executive Director in Bank PHB in charge of Abuja operations was appointed the new Managing Director of Spring bank. For a bank that had been rocked by various controversies (including the consolidation of the bank which was revealed to be inconclusive and a large bad debt portfolio) the task ahead for the new managing director is a daunting one.