Banks complain about having to make an honest living

Previous corporate media headline: “Debit card fees: Debit cards likely to get much more expensive for consumers” – Los Angeles Times http://articles.latimes.com/2011/jun/25/business/la-fi-debit-card-fees-20110625

It’s not the first time activists have complained about banks’ debit card practices. In the past, financial institutions made piles of money by reordering customer debits so the largest transactions cleared first. For example, if a customer had $100 in a checking account and made three $10 debit purchases early in the day and a final one for $200, the bank would process the $200 transaction first, then the smaller ones. The result: $140 in overdraft fees as opposed to $35 if the transactions had been processed in order. Facing numerous lawsuits, most banks, including Wells, Chase and BofA, have abandoned the high-to-low sorting of debits (although those three still process checks that way).

The latest whining is about losing he debit cards exchange fee battle.  I covered that previously in these posts here and here. 

It’s a Run on the Banks!!!

WASHINGTON — Alarmed by the sharply eroding confidence in the nation’s two largest mortgage finance companies, the Bush administration on Sunday asked Congress to approve a sweeping rescue package that would give officials the power to inject billions of federal dollars into the beleaguered companies through investments and loans.

Treasury Acts to Save Mortgage Giants – NYTimes.com

In a separate announcement, the Federal Reserve said it would make one of its short-term lending programs available to the two companies, Fannie Mae and Freddie Mac. The Fed said that it had made its decision “to promote the availability of home mortgage credit during a period of stress in financial markets.”

An official said that the Fed’s decision to permit the companies to borrow from its so-called discount window was approved at the request of the Treasury but that it was temporary and would probably end once Congress approved Treasury’s plan. Some officials briefed on the plan said Congress could be asked to extend the total line of credit to the institutions to $300 billion.

I’m watching CNN right now report on this, and interviewing the people currently “running” on the bank.  All they want right now is to get their hands on their money, which is freaking them right the fuck out.  Since the only people worried are those with accounts over $100,000, they are all the rich folks…which makes it a great story for the 24-hour networks.

The banks have actually been running on empty for a good little while.  First there was the extra $200,000,000,000 that the Fed printed up a while back.  Which wasn’t really enough in the face of the disappearing mortgage money, the slowing economy, the weakening dollar, and the atmospheric oil.

Which killed the Bear (Stearns).

Which was the sign that things were already really bad.  What is happening with Freddie and Fannie is that they got stuck with all the crappy loans that filtered through the system. 

I actually know a bit about this topic, as I used to do some work for the FDIC involving closing banks.  Essentially we would consolidate loans and deposits and prepare them for sale to other banks.  The really crappy ones that couldn’t be sold would then be administered by the FDIC untill…whenever.

(note: I just heard a guy on CNN say “You could have a run on the banks” [which would be great for CNN])

So Fannie and Freddie got hit with all of the above and the necessity to take a bunch of shitty loans.  They are the drains for the mortgage industry and they got loaded with a whole bunch of crap, got clogged and the system starts to back up.

More on this later, but I thought it was funny when they were talking to the people waiting in line to make a run on the bank.