Wednesday, August 20, 2008
2008-08-18: Home Equity Frenzy Was a Bank Ad Come True
That catchy slogan, dreamed up by the Fallon Worldwide advertising agency, was pitched in 1999 to executives at Citicorp who were looking for a way to lure Americans to financial products like home equity loans. But some in the room did not like it. They worried the phrase would encourage people to live exorbitantly, says Stephen A. Cone, a top Citi marketer at the time.
Still, “Live Richly” won out. The advertising campaign, which cost some $1 billion from 2001 to 2006, urged people to lighten up about money and helped persuade hundreds of thousands of Citi customers to take out home equity loans — that is, to borrow against their homes. As one of the ads proclaimed: “There’s got to be at least $25,000 hidden in your house. We can help you find it.”
Many experts say the ads encouraged Americans to go deeper into debt.
Live Richly Showcase
Citi History 101:
2001-03-19: Is Citi Bleeding Its Weakest Borrowers?
With its $30 billion purchase of Associates First Capital Corp. last year, Citigroup cemented its position as the country's largest subprime lender--catering to those who don't qualify for normal bank loans.
CitiFinancial's Web site advertises a debt-consolidation loan featuring a customer endorsement--"I now can afford so much more than I thought possible," says Spencer L. of Worcester, Mass. A sample worksheet shows that Spencer can take out a $20,000 home-equity loan to consolidate his bills, pay off credit cards, and reap $310.57 in "monthly savings." The fine print notes that Spencer will pay that back in 120 months at a 13.49% interest rate. But nowhere on the Web site does it say that it would cost $36,500 to pay off starting debts of $17,000.
Citi said it's proud of the progress it has made and that it has the best practices in the industry. Nonetheless, debt-consolidation loans rarely save consumers money in the long run. True, they are usually tax-savers, but such loans mostly lower monthly payments by heaping on long-term debt. And many subprime borrowers quickly ramp up credit-card debt--starting the cycle all over again.
Monday, August 18, 2008
From Communist China Star:
To Mark of the Beast:
Walmart fed off the housing bubble, stoking the consumeristic fires that this country now feeds off. But what happens when there is no money pouring in from that sweet home "equity"? People will have to rely on income from their jobs. But where did their jobs go? Yep; straight to China thanks to these 'sumina bi***es'!
And now this... (thanks, tom12008)
2008-08-04: Wal-Mart Denies Pressuring Workers To Vote GOP
Wal-Mart is denying reports that company officials encouraged store managers to "vote Republican" in November. Company officials are said to be concerned that a Democratic victory would make it easier for employees to unionize. Labor unions say the meetings amount to intimidation.
Tuesday, August 12, 2008
So many shameful acts, so little time...
2008-03-27: Zippy Cheats & Tricks (Calculated Risk)
2008-04-01: JPMorgan memo shows dirty tricks of mortgage trade
NEW YORK (Reuters) — An internal JPMorgan Chase (JPM) memo titled "Zippy Cheats & Tricks" offers a peek into just the sort of dubious lending tactics that underpinned the housing market's deepening downward spiral.
Originally obtained by reporters at The Oregonian newspaper, which published a story Thursday, the memo offers step-by-step instructions on how to beef up mortgage applicants' stated incomes in order to help them qualify for home loans.
1. Make sure you input all income in base income. DO NOT break it down by overtime, commissions or bonus.
2. If your borrower is getting a gift, add it to a bank account along with the rest of the assets. Be sure to remove any mention of gift funds.
3. If you do not get (the desired results), try resubmitting with slightly higher income. Inch it up $500 to see if you can get the findings you want. Do the same for assets."
JPMorgan says that these were the wayward actions of a rogue employee who has since been fired, and by no means represent company policy.
"Clearly it's nothing that we condone," said Tom Kelly, a spokesman for JPMorgan Chase. "As soon as we learned about it, we stopped it."
Still, in the context of a broader housing debacle, the memo does provide some clues into just what lengths bankers went to push loans through the system.
Over the past six months, rising defaults on home loans have not only battered the mortgage sector, threatening recession, but also sent the banking industry into a tailspin.
Many large banks repackaged mortgages and held them on their balance sheets as complex derivatives securities, essentially bonds backed by other types of loans.
These developments have many politicians in Washington, including Democratic presidential hopefuls Hillary Clinton and Barack Obama, calling for greater regulatory oversight.
The conclusion of the JPMorgan memo, written in bright purple letters, certainly hints at a credit system gone awry: "It's super easy! Give it a try!" it reads. "If you get stuck, call me ... I am happy to help!"
2008-08-12: JPMorgan has $1.5 bln in Q3 mortgage asset losses
WASHINGTON (Reuters) - JPMorgan Chase & Co (NYSE:JPM - News) said it has racked up $1.5 billion of losses so far this quarter on mortgage-linked assets, reflecting deepening turmoil in credit markets.
Shares of the third-largest U.S. bank by assets fell 9.5 percent, as investors grew increasingly disappointed with a bank that had largely sidestepped the worst of the credit crunch, and analysts cut their profit estimates.
Monday, August 11, 2008
There's a new land grab starting in America.
The search, which is being carried out, in part, by Field Check Group mortgage consultant Mark Hanson, who was retained by the broker, Steve Iversen, is concentrating on single- and multi-family REO (real estate owned) homes, or homes that have already been taken over by the mortgagee.
Friday, August 1, 2008
Inflation--not a problem. Increasing unemployment--not a problem. We have stability in California house prices!!