An Expensive Puppet Show

Rumors have a lot of weight when you're dealing with confidence. More
so during this financial crisis. Look for them, Bear Stern was plagued
by rumors that plunged its value in the eyes of the customers.
Followed by more rumors about Lehman Bros, AIG, Fanie and Fredie and
others, the result is a market with very little confidence. Next in
line is Citi Group. I never believe in coincidences so I always look
for who is to benefit from this. So in this puppet show, who's pulling
the strings?

Money

What is money? It is an idea backed by confidence. That's all. Meaning
that you know that the piece of paper in your hand has some worth. But
this trust also extends to others, like the the grocer, he knows that
the paper that you're handing over to him has value proportionate to
the goods you're getting. That's all there is to the subject. Others
may say otherwise but that is to justify those years in college
studying a myriad of books that say the same thing in many other
words.

Financial Crisis And Confidence (Lack Thereof)

What is going on with this financial crisis? Now businesses are
looking up to governments for guidance. The situation persists because
there is a lack of confidence. Sadly it will keep going until enough
people decide to take responsibility for the scene and start handling.
But this won't happen soon, why? Because doing it entails admiting to
shady practices, loosing millions and opening the door to regulations.
With a few million$ as a cushion, who cares what happens to the
regular Joe?

Credit crisis, who's at fault?

Things always happen for a reason, and the current credit crisis is
not excempt from this rule. There is something done or not done,
always. While the following article may not be the only reason it
portrays what may be the general attitude that brought this crisis
upon us. However there is something missing here. Those people who
were 'victims' to these practices agreed to them. You can never spend
more than you earn, it's basic economics. And on that a lot of people
need more education.

---------- Forwarded message ----------
From: "michaelrivera0619@gmail.com" <michaelrivera0619@gmail.com>
Date: Fri, 26 Sep 2008 08:15:58 -0400 (EDT)
Subject: CNN - Ex-bankers on pushing customers to rack up debt
To: "michaelrivera0619@gmail.com" <michaelrivera0619@gmail.com>
Cc: "michaelrivera0619@gmail.com" <michaelrivera0619@gmail.com>

Sent from michaelrivera0619@gmail.com's mobile device from http://www.cnn.com.

Ex-bankers on pushing customers to rack up debt

As an account manager for credit card giant MBNA, Cate Colombo spent
four years speaking to customers, answering questions about interest
rates and waiving late fees.

Kathy Ellingwood did the same. She lasted only a year and a half
before quitting this summer.

The women worked in different departments at the sprawling customer
call center in Belfast, Maine, yet they share similar stories about
aggressive selling tactics they claim they were told to use to push
cash advances, sometimes getting customers to max out their credit
cards.

"Every customer who calls in is a mark. It's a great big con," said
Colombo, who estimates that she alone sold almost a quarter of a
billion dollars in the four years she worked for MBNA before it was
bought in 2005 by Bank of America.

Americans now carry $850 billion in credit card debt. Consumer groups
are lobbying Congress to include better protection for credit card
holders, demanding legislation to prevent what they call unjustified
interest charges and deceptive practices, especially in light of the
massive financial bailout now being considered.

Colombo and Ellingwood said that within seconds of a customer's call,
they would have his or her entire credit history on screen, and they
were trained what to say to sell people money.

"I would say 90 percent of the time, people were pragmatic. They would
say, 'I don't need $100,000,' and we would find a way to convince them
they needed the money," Ellingwood recalled.

She said they would look for trigger words like, "I'm in financial
difficulty" or "I can't make my payments." Colombo said other triggers
were, "I have to send my son to college. My car is not running. I'm
moving."

Colombo said some people even asked about getting a $50,000 cash
advance -- usually at zero percent interest -- for a down payment on a
house. And although that's illegal, the former employees say they were
trained to get around it by saying, "I cannot give you money to use as
a down-payment on a home. However, what I can do is, I can deposit
some money into your checking account, and once it's there, the funds
are there, it's yours to do with what you please."

Bank of America told CNN, "Only customers in good standing and with
good payment history are able to access cash up to available credit
line."

But Colombo and Ellingwood say they were told to sell hard to
everyone. Once the customer agreed, they say, they would speed through
intricate disclosure notices. Among the details, how a zero-percent or
low interest rate could convert to as much as 28 percent if a payment
was even a day late.

"You're basically looking at people who need the money most, who may
not be able to afford it," Ellingwood said.

Colombo remembers having a conversation with one man in his 90s.

"He had all this available credit, maybe $100,000. I have my manager
screaming, 'Colombo, you need to sell. You need to sell. You need to
sell,' " she said.

Bank of America calls its terms "clear and transparent." But credit
card lending practices have now gotten the attention of Congress.
Consumer groups support a bill to curb what they call predatory
lending.

The American Banking Association opposes it, saying, "Consumers have
benefited from a competitive marketplace that allows for pricing based
upon risk."

Americans for Fairness in Lending, which put CNN in touch with Colombo
and Ellingwood, wants deceptive credit card practices included in the
financial bailout legislation that is now before Congress.

Its director, Jim Campen, said, "We haven't identified any illegal
practices. What we've seen are practices that are highly unethical.
It's extraordinarily common."

The two women say their conversations were monitored, and the more
they sold, the bigger their salaries.

"If you didn't do it, you got yanked off the phone," Colombo said.

She said a manager once yelled, "You let your team down. You let the
bank down. You let the stockholders down!"

Bank of America said it does not talk about individual cases but calls
the allegations by the former employees "incorrect."

Spokeswoman Betty Reiss said, "Our call center associates are focused
on serving customer financial needs and responding to questions about
their accounts."

But Colombo said her performance reviews -- which she provided to CNN
-- tell a slightly different story about selling tactics. In one, she
is told by supervisors to be more aggressive: "You cannot sell what
you don't offer." Another reads, "Understand the importance of selling
at the highest possible rate."

CNN asked whether the customer call center in Belfast was perhaps
operating independently; both women shook their heads and described an
environment in which call centers across the country would compete
with one another.

"I worked four 10-hour shifts. The goal was to make $25,000 an hour,
which is $250,000 a day, which is $4 million a month," Colombo said.

Although Colombo does not know whether the practices were widely known
at Bank of America headquarters in Delaware, she said this about her
immediate managers: "Everyone on that level knew what we were doing.
We were being told to do what we did."

Do the women feel guilty about what they did?

"Yes, without question," Colombo said.

"Absolutely," Ellingwood added.

Americans for Fairness in Lending said it wants the Senate to ensure
that consumers are protected from what it describes as the deceptive
practices of many of the same financial institutions likely to benefit
from the $700 billion bailout.

The Credit Card Bill of Rights passed the House this week. But it's
opposed by the banking industry and the White House, which said it
would lead to less access to credit and higher interest rates for
consumers. For its part, Bank of America would not talk about
individual cases or provide a copy of the disclosures that its
accounts managers read to customers over the phone. It also refused to
answer questions about training procedures for account managers at
call centers across the U.S.

However, the spokeswoman said the bank "has nothing to gain by
extending credit to people who do not have the ability to pay back."

How We Got Into This Money Mess?

Came across this article and loved the simple simon way it explained
this economic mess were in.

---------- Forwarded message ----------
From: "michaelrivera0619@gmail.com" <michaelrivera0619@gmail.com>
Date: Thu, 18 Sep 2008 11:08:29 -0400 (EDT)
Subject: CNN - Commentary: How we got into this money mess
To: "michaelrivera0619@gmail.com" <michaelrivera0619@gmail.com>
Cc: "michaelrivera0619@gmail.com" <michaelrivera0619@gmail.com>

Sent from michaelrivera0619@gmail.com's mobile device from http://www.cnn.com.

Commentary: How we got into this money mess

"Greed is good."

At least, that's what Michael Douglas' character Gordon Gekko claimed
in the movie Wall Street. But, just like Gekko, the modern-day
companies that followed that motto now find themselves wondering how
everything could collapse so fast.

You know the names by now: Countrywide Financial, Bear Stearns,
IndyMac, Fannie Mae, Freddie Mac, Lehman Brothers, AIG. And that's not
even counting companies like Citigroup, Merrill Lynch, and Goldman
Sachs that, while still in existence, have lost untold billions in
market value and have laid off thousands of employees.

Maybe greed isn't so good after all.

Lehman was founded in 1844 when Henry Lehman, a German immigrant,
opened a small shop in Montgomery, Alabama. His brothers joined him
six years later and, by 1858 they were busy turning cotton provided by
local farmers into a cash crop -- a business that didn't have anything
to do with helping low-income families afford 27-bedroom McMansions.

More than 150 years later, after surviving the Great Depression, Black
Monday, the savings and loan crisis and the dot-com bust, Lehman
Brothers filed for bankruptcy protection. They had gone 14 years as a
public company without ever reporting a single quarterly loss. Now
they will never again post a profit.

Bear Stearns' story is eerily similar. Founded in 1923. Survived every
crisis. Never posted a quarterly loss until last year. Gone without a
trace.

So how did 235 years of rock-solid American finance disappear
virtually overnight? Well, it's not as complicated as you think. If
you replace all of the acronyms invented by the brainiacs on Wall
Street with references to things that Main Street understands, it
becomes a lot easier to see how it all happened. Here's a quick story
I invented that does just that.

(Note to any Wall Street executives who might be reading this: I know
this simple little story isn't perfect, but let's remember that you're
the ones who tried to make everything complicated and I'm the one who
still has a job.)

It's just before Christmas,1996, and as you watch overeager parents
trample each other to buy Tickle Me Elmo dolls for their kids, you see
an opportunity. "This isn't a Tickle Me Elmo bubble," you think to
yourself, "this is a long-term trend. Every person in America will
soon own a Tickle Me Elmo, maybe even two. It's the American dream."

You approach your local banker about a loan and, naturally, he loves
your idea. In fact, he loves it so much that for every $1 you have in
your account, he's willing to lend you $34. Great deal, you think, as
you max out your credit line and buy as many Tickle Me Elmos as you
possibly can.

Sales are easy at first. People are lining up to buy your dolls and
the prices are going far higher than you ever thought. The only person
happier than you is your banker.

But the following year something unexpected happens: Kids stop asking
for Tickle Me Elmos. You try to cut the price, but no buyers show up.
You cut the price more, but your store remains empty.

Panic sets in.

You're pretty sure that this downturn is just temporary (after all,
who wouldn't want a Tickle Me Elmo?) but you're quickly running out of
cash. Your only option is to buy time and hope that Tickle Me Elmos
start flying off your shelves again.

You visit every bank in town and, using your piles of Tickle Me Elmo
dolls as collateral (which, of course, you purchased with money you
didn't have) you get as much new capital as possible.

Soon that money is also gone. Even your friends and family refuse to
give you any more loans. At the end of your rope, you go to your town
council, which gives you a "bridge loan" to get you through the next
few months (something that makes your Furby-selling competitors
extremely upset).

Unfortunately, no matter how much you borrow, there's still one
nagging little problem: No one wants to buy your stupid Tickle Me Elmo
dolls anymore.

The longer you wait, the less they're worth. You sell some for pennies
on the dollar, but pretty soon you can't even do that. Then things get
even worse: News breaks that China is poisoning some Tickle Me Elmos
before shipping them to the United States. Now your dolls are not just
out of favor, they're toxic. You literally can't even give them away.

Soon the rest of your money dries up, as do the people who are willing
to lend you any more of it. Now you're out of cash; out of a job, and,
if not for the pile of poisonous Tickle Me Elmo dolls in your
basement, completely alone -- which sounds kind of like the CEOs of
Lehman Brothers and Bear Stearns.

Believe it or not, this ridiculous story may be far from reality, but
it's not that far off from describing what these financial and
mortgage companies did to themselves. Just replace the Tickle Me Elmo
references with the once popular, then discounted, now completely
toxic subprime mortgages and you're pretty much there.

When you cut through all the noise about "bridge loans" and "discount
windows," what you're left with is the fact that too many companies
still own way too many Tickle Me Elmos that no one wants to buy.
Giving those companies more money doesn't solve anything, it just buys
time. Unless and until the underlying problem is fixed, no real
turnaround can happen.

But we all know that investors (and elected leaders worried about
their careers this November) aren't all that patient. That's why the
new chorus you're likely to soon hear will be from people arguing that
the only way out of this mess is for the federal government to step in
and purchase all of the toxic mortgages themselves. That would allow
the companies with eyes bigger than their balance sheets to start
over, with barely any repercussions whatsoever and without ever taking
responsibility for their mistakes.

Come to think of it, maybe greed isn't so bad after all.

Would the government actually consider that idea? They already are. In
fact, the only thing stopping politicians from "rewarding" us with a
new government agency that will put billions more of our tax dollars
at stake is, ironically enough, the election of new politicians.

Disclaimer: Tickle Me Elmo is still an extremely popular, non-toxic
product and, to the best of my knowledge, is not responsible for the
credit crisis.

The opinions expressed in this commentary are solely those of the writer.