The US FDIC , the Federal Deposit Insurance Corp that guarantees the deposits in US banks, is now in deep trouble with the reserve fund near zero due to 94 bank closures in the last nine months. The US FDIC was very healthy till Lehman Bros collapse happened last year.
Against 25 bank closures in the entire 2008, the FDIC has seen 94 bank closures in the first nine months of 2009, which is eating into its reserves. Now the FDIC is planning to tap either the reserve backup from US FED or apply a new fee on bigger banks to generate additional funds.
Either way it is not a good sign for the US banking system because the US FDIC will continue to face tough times till 2010 end as US banks collapse may continue.
The Swiss government is reaping an immediate four billion dollars benefit by signing the data sharing deal with the US authorities. The sharing of 4450 account holder details yesterday, has enabled the Swiss government to sell the 9% stake it is holing in UBS bank.
But the Swiss government might end up losing more in the long term only because more US account holders will close down their Swiss bank accounts in the coming months, due the latest agreement between US government and the Swiss banks.
The largest bank failure in US happened last week, when Colonial Bancgroup was closed down by the US regulators, and sold to BB&T group. Colonial was once a great success story of Alabama, but it went bankrupt due to the over exposure to real estate sector, that too outside Alabama.
Since 1998 the Colonial Bancgroup saw doubling of its loan portfolio with over 80% of the incremental growth coming from lending to real estate sector. So when the real estate sector faltered, Colonial was affected the most, and eventually it succumbed to bad loans last week.
When you have a lot of debt to pay off, what do you do? You have three choices. One, you can try to pay off. Problem is, you may not succeed since you are drowning in a mountain of debt and your cash flow post your living expenses is far little compared to the cash flow required to pay off the debt. Two, you can declare yourself insolvent and apply for bankruptcy. But, this is a humiliating option. This can be very self destructive. Three, you can negotiate and consolidate your debt and wriggle your way out of the crisis. This looks like a neat option but you should know how to work it out. And you need lots of guidance to get this done.
That guidance on debt consolidation is what is provided by the site 3debtconsolidation.com. The site provides a wide array of advice on things relating to debt and how to get out of it and how to negotiate one’s way out of a mountain of debt. It tells you how to get debt consolidation loans and what to do to get out of the climbing credit card debt .
It gives you a step by step guidance on all kinds of topics relating to debt consolidation. It educates people on debt and how to manage it.
One of the most useful phone numbers in this financial crisis ridden times is going to be 877-550-0595. This is the number of the debt consolidators who are even currently working with a number of people and heling them to get out of their debts.
The non profit body, debtconsolidator.net works with any individual who is interested in managing his financial affairs properly. They work on bill consolidation and ensure that the individual gets the bill consolidation loans which can replace all the current debt structure. This will go a long way for the individual in managing debts which would seem otherwise unmanageable.
How does it work? It is actually very simple.
There are a number of debts that an individual gets into. It may be credit card debts as there could be multiple credit cards. And, there could be personal loans taken on buying vehicle, other loans taken to buy other things and so on. Remember, we are the biggest credit society in the world.
However, the problem with all these is that the rate of interest is not low. When you take a loan for a small amount, the interest rate is at a higher level. If you can replace it with a higher amount loan? You reap the benefit of the lower interst rates.
So, in the place of say 10 small debts, the debt consolidator takes one huge debt, mostly a housing equity loan, but which works out at a very low rate of interest. With the effect that your actual outflow comes crashing down and you can suddenly start managing your debt much better.
Life insurance is a must for every family, because you need to provide financial security for your family in case of any unexpected event on your life. And you can preferably go for term life insurance , through reliable online source like www.wholesaleinsurance.net.
Because of their excellent network with all the leading insurance companies, and their sleek business model, they will be able to get a better insurance cover at lower annual premium payments.
A congressional oversight committee, which is looking into the errors and omissions of the Merrill Lynch takeover by Bank of America, has ordered the FED to relinquish all the documents relating to the deal.
Most of the committee members feel that there are important and sensitive data which was kept away from the investors , in an unacceptable manner. The committee will probe whether government officials pressured the Bank of America management to keep these critical data points, away from investors.
It is important to note that this is the first subpoena to be issued by the committee this year 2009.
The US Treasury department is set to allow ten banks to refund part of the loan taken by them under the TARP funds. At the peak of their financial mess nearly eight months back, all these weak US banks have taken over 85 billion dollars of loan from the US Treasury to avoid bankruptcy.
But with a healthy capital market in the last few months, all these banks have raised over 60 billion dollars, most of which is set for returning back the TARP loans. But the refunding might also mean that these banks will have lesser leverage in case the financial crisis hits the US banking system again.
In fact, the US FED does see a possibility for the relapse of the financial crisis, and that is what lead to the stress-tests on the top US banks two months back. The refunding of the TARP funds is necessitated for these banks, because they are now restricted on executive salary package. Refunding of the TARP funds will give them freedom in fixing executive salary package in the future.
The excellent stock market conditions are helping the ailing US banks to raise new funds of over 65 billions in the last four weeks. That has helped them to plan for repayment of part of the TARP funds back to the US government.
Why are these banks in a hurry to return back the TARP funds to the government ?
It is only because the government is planning to put the axe on executive compensation at these institutions which have taken TARP funds. Also these banks will have restrictions placed on dividend payouts. So all these banks have raised a little more than what they want immediately as per stress test requirements, and are planning to return back the government funding.
For the US government, these funds are going to be handy in handling the wide budget deficit, without resorting to market borrowing. The US FED is worried that these banks might be in trouble in no time, if the markets were to turn bad.
The Indian stock markets have shot up by over 80% in the last four months, with over 30% gains coming in the last three weeks. The key reason behind the surge is the rushing of foreign institutional investors to cash in on the expected surge in the market, due to political stability.
But what they are forgetting is the current 10% plus level of fiscal deficit, and crashing government revenues, which does not give any real leeway for the new government to provide further fiscal stimulus. So it would be prudent to wait for another month or so, before putting your dollars into Indian shares.
