Monthly Archives: April 2009

Credit card crackdown coming next month

Washington insiders, according to this article, believe that a bill cracking down on the excesses of credit card companies will be signed into law next month.

The proposed legislation does seem to clean up some of the unilateral aspects of today’s credit card contracts.

What no reporting whatsoever covers, however, is what becomes of the current three-month salvo of rate- and payment-hiking many issuers have been on since the Federal Reserve announced plans to re-regulate the industry beginning in 2010.

Obama’s bill will turn out to be lip service if it doesn’t address the doubled rates and payments binge of 2009.

Cheap boxes

A lady called in this morning looking for help with basement flooding. If you’re trying to find a disaster recovery company, look in the yellow pages under carpets. And she said she found a good prices on boxes at Home Depot.

Layoff insurance rears its head in home sales

I’m surprised it’s taken this long for someone to take the auto industry’s “buyer reassurance” plan and translate it into the homebuying industry, but it has:

LifeStyle Builders and Developers, Inc., a Richmond based homebuilder, has announced a new job loss mortgage protection program, Mortgage Guardian. Under this program, if a homeowner becomes involuntarily unemployed, $1,500 of their mortgage will be covered for up to six months.

“For anyone who has even thought about buying a new home, now really is the best time to take action. There is a large selection of available inventory, and prices are at an all-time value. However, with today’s economic climate, many people are hesitant to take that step towards home ownership. We hope that our Mortgage Guardian program will ease the stress and concern about possible job loss, and give homebuyers the confidence to take advantage of today’s great real estate deals.” said Lloyd Poe, owner of LifeStyle Builders.

LifeStyle Builders’ Mortgage Guardian offers coverage for 12 months from the closing date, and a maximum benefit of $1,500 per month, in cash, payable to the homeowner, for up to six months. An additional feature is a $10,000 Accidental Death Benefit. LifeStyle Builders will automatically include Mortgage Guardian with all contracts written after May 1 at no cost to the new homeowner.

Since analysts and brokers agree that declining consumer confidence is the biggest challenge before the Wichita housing market, it shouldn’t be long before a homebuilder duplicates this program here.

Tom Page on big banks

Emprise Bank president Tom Page is a beacon of humor and information in his industry.

And Page, who’s not shy about dropping a little wit into his remarks, struck again Thursday afternoon.

A questioner at a Martin Pringle forum asked Page about the impact that huge first-quarter profits by national banks would have on community banks in Wichita.

“Profit is an opinion,” Page opined. “Cash is fact.”

Seven words that speak very loudly, I think.

Today’s quote of the day:

From today’s House vote advancing a bill cracking down on abuses by credit card companies:

“I haven’t heard any evidence that the competitive market isn’t working,” said Rep. Jeb Hensarling, R-Texas. “In the absence of that, why are you attacking risk-based pricing?”

Who’s reading your business e-mails?

emailThe next time you dash off an e-mail to a business executive, you might want to consider:

There’s a good chance the CEO, CFO or C-whatever will never see it. According to a 2009 survey conducted by the International Association of Administrative Professionals and the ePolicy Institute, there’s a 59 percent chance your message will be intercepted by an administrative assistant.
Those electronic gatekeepers are often asked to screen, delete and ghostwrite the boss’s e-mail.

And it’s on the increase.

Of the 614 administrative professionals surveyed, 59 percent said they ghostwrite responses, up from 43 percent in a 2002 survey.

Fifty-two percent said they read or screen executives’ incoming e-mail, twice the number reported seven years ago. Thirty-eight percent delete messages addressed to executives, up from 29 percent in 2002. Another 55 percent are authorized to use executives’ electronic signatures.

Nancy Flynn, executive director of  ePolicy Institute, said 72 percent know that an electronic signature is “as legally binding as a hand-written signature.”

Are the oil price manipulators back?

Ran across this interesting piece from Business Week, which doubles as a fairly strong indictment of business journalism. Sounds like the efforts to force gas prices back up are under way – again.

And, it reminds me of one of my pet peeves about television journalism: During the runup to $4 a gallon gas, invariably you’d find a TV reporter sitting in front of a commodities broker asking them the future of gas prices.

And equally invariably, the answer would be $5 a gallon. Or $6. Or $7. Or something typically self-serving.

Asking a commodities trader about the future of gas prices is a little bit like asking John Dillinger for a projection on bank robbery numbers nationwide.

An update on legalized loan sharking

It appears today that the Obama administration is barreling down the tracks toward a Thursday train wreck with credit card companies.

A White House meeting is on the books with representatives of Bank of America, HSBC, Capital One and others who, flush with taxpayer cash from the TARP program, are further bolstering their balance sheets by unilaterally jacking interest rates into the stratosphere. The reason? The “risk of doing business,” they say.

While I remain skeptical that Obama and Congress can withstand the onslaught from the phalanx of credit card lobbyists, it’s at least interesting to note that they’ve been called on the carpet like their other financial brethren.

I wonder if Obama will limit them to one glass of water and no munchies, as he did some of the bankers when he warned them, “We’re the only thing between you and the pitchforks.”

While I don’t question the banks’ risk of doing business, it appears to me that the real risk lies with consumers who made the unfortunate decision to do credit card business with some of these institutions.

An additional note: Once you complete the McClatchy piece, go down to the bottom and read the credit card practices study by Pew Charitable Trusts. It directly contradicts industry claims that they can’t remain profitable without unilateral account control.

Former Protection One boss involved in scandal

To every story, there’s a Wichita connection:

The Wall Street Journal reports that Steve Rattner, who has been appointed to run Obama’s automobile industry task force, is being investigated as part of an alleged kickback scheme to gain $122 billion in New York State pension funds for his private equity firm. That firm, Quadrangle Partners, owns 70 percent of Protection One. Rattner sat on Pro One’s board until February when he resigned from Quadrangle to take the administration job.

Tagging paid-for homes?

Consider this an appeal for information, from our readers and their friends.
A reader called this afternoon to offer up some interesting anecdotal information about Wichita home appraisals.
He says that he’s aware of some homeowners, in paid-off homes, whose valuations spiked 14 percent and more this year.
Meanwhile, the caller says, adjacent homes with mortgages saw their values move very little.
“I just wonder,” the caller said, “if the county’s tagging paid-off homes and giving the mortgage holders a little break.”
Good question. So, if you have seen this scenario play out, contact me, Bill Wilson, at 268-6290 or at bwilson@wichitaeagle.com

Legalized loan sharking

A reader forwarded me an interesting link from last month in the Los Angeles Times on credit card interest rates, further reinforcing my long-held belief that taking out a credit card is my biggest life mistake.

Kudos to Bernie Sanders for having the nerve to walk face-first into the lobbying hurricane that any bill to cap credit interest rates at a quasi-reasonable level slightly below that of your friendly local gun-toting Mafioso will create.

And never mind that some of those same financial institutions are playing today with a hefty chunk of money from the same taxpayers they’re pushing into bankruptcy.

But let’s not be naive here. The credit card companies – read: banks – have the keys to the cashbox of every American silly enough to take out a card. They’re not giving them up without a fight, especially since free money is a nice cure for all the stupid mortgage paper they’ve been writing and buying.

Idealistic nitwit that I am, I’m of the belief that unilateral bank-initiated changes in the terms of any credit card agreement ought to be illegal. You guys need more interest? Then levy it on new card holders. You were offering them to everyone with a pulse for awhile, including my dog. I can’t imagine why “The Doodle” didn’t tip you guys off.

Sanders is going to slam into a plastic-reinforced brick wall, no question about it. I’ll just have to amuse myself with all the bank whining about default rates. Seems to me that if you want folks to pay their credit card bills, one way to get that done might be to STOP JACKING THOSE BILLS INTO THE STRATOSPHERE.

No small feat

Kudos to Landmark National Bank, a Topeka-based bank that was awarded an outstanding rating on its Community Reinvestment Act evaluation by the Comptroller of the Currency, which regulates nationally chartered banks.

Kudos because achieving an outstanding rating is not an easy thing to do and the comptroller gives out that rating sparingly. At least not as often as it does a satisfactory rating.

The comptroller said Landmark’s record of lending to businesses of different sizes and to borrowers of different income levels is excellent.

Read the examination assessment here.