The big bank finds itself struggling with bad mortgages, lawsuits from foreclosures, public resentment over debit card fees and the end of free checking. What does BofA's troubles mean for the banking industry and consumers like you?
As Bank of America prepares to undergo yet another round of “stress tests” as mandated by the Federal Reserve Bank, questions continue to be raised regarding its ability to weather the slow-paced economic recovery that at times remains stalled. The Fed’s stress-tests, more formally known as the Comprehensive Capital Analysis and Review (CCAR) program, recently announced the next evaluation will require banks to submit their plan by January 9th to the Fed. Banks with assets of $ 50 billion or more must comply with the requirement.
In early 2011 19 banks participated in CCAR, the Fed expects an additional 12 banks to comply in the current review cycle. A feature in the New York Times described the most likely stress-test scenario as “a sizable shortfall in U.S. economic activity and employment, accompanied by a notable decline in global activity.” Obviously, the proposed scenario is not much different than the reality of yesterday, today, or tomorrow for that matter.
Concern about BofA stems from its long list of troubles with mortgage write-offs, home foreclosures, their debit card fee fiasco, and new fees for free checking accounts. Old problems returning to the forefront include the acquisition of Countrywide Mortgage and an ongoing investigation that 60 Minutes reported on recently. Previously, the bank set aside nearly $ 13 billion to settle legal claims from clients and investors. Add to this a new $ 315 million settlement on behalf of BofA’s Merrill Lynch division for their involvement in mortgage-backed investments and you can see why Brian Moynihan, CEO of BofA, is probably not getting much sleep these days.
The Occupy Wall Street (OWS) movement is setting their sights on banks and has BofA in their crosshairs. Whether OWS has any valid claim is an open question, but the bank needs more distraction from OWS like it needs another hole in its $2.2 trillion balance sheet. Despite an announcement of cutting 30,000 jobs and reducing expenses $ 5 billion by 2014, BofA’s share price continues to trade in a narrow range of $ 5 to $7. It’s lost 2/3 of its share price in 2011, starting in January at $ 15.25 and dropping to $ 5.08 in late November.
Consumers must decide if they’re willing do business with a bank that has so many critical issues to deal with while serving their customers. The huge backlog of bad loans and the overhang of litigation makes for a challenging environment for bank executives to function in, let alone to attract new customers and retain existing customers. Despite 30-year mortgage rates near lows, BofA is finding it difficult to write loans to qualified borrowers. The continued decline in home values and home prices while foreclosures begin to rise again, present a scenario that may very well be a real-time stress-test for Bank of America and the banking industry. Again.
Millions of individuals use online banking as a convenient and fast way to manage their finances. Yet, many people also do things that jeopardize the security of their account information. If you decide to bank online, here are a list of the top ten things you can do (or not do) to help you bank more securely online.
Millions of individuals use online banking as a convenient and fast way to manage their finances. Yet, many people also do things that jeopardize the security of their account information. If you decide to bank online, here are a list of the top ten things you can do (or not do) to help you bank more securely online.
Keep your password private. Do not give someone else your password.
Do not click on a security alert email from bank telling you to login and change your password. Banks will never ask you to do this via email.
Do not email your password or account information over the Internet. Most email is not secure and can be intercepted and read by others. Call or use a secure messaging system if your bank provides it.
Do not use public wi-fi hotspots to connect to online banking. Public wi-fi can be hacked. Either wait until you are in a private location, or if using a mobile phone, turn off wi-fi and use 3G or 4G, both of which are more secure than public connections.
Do not use public or shared computers for financial transactions. You shouldn't use public computers for online banking period but if you do, be sure to logout and close the browser.
Be sure your computer has up-to-date virus protection and scan your computer regularly - especially if you use a PC. Trojans and worms can infect your computer and use keystrokes and other tactics to get your bank credentials.
Change your password regularly and do not make it obvious (birthdays or other personal information that someone may be able to guess are a bad idea).
Do not ignore your account. Check it frequently to make sure you do not see any strange account activity.
Be sure to check or follow up if you see a strange transaction. Banks are required by Reg E to cover losses beyond $50 as long as you contact them within 2 days of receiving a statement. Stay on top of your account.
Disable the ability for your browser to remember your username and password for any bank sites you use.
Have other tips? Share them below. Here's to safe online banking!
First Trade Union Bank is rolling out the welcome mat for its online checking account by providing a $100 bonus to new accounts that meet the qualifying criteria.
First Trade Union Bank is rolling out the welcome mat for its online checking account by providing a $100 bonus to new accounts that meet the qualifying criteria. These criteria include:
Opening a new First Trade Virtual Checking account between 10/5 and 12/31/11.
The first $50 will be paid if you enroll in online bill pay and pay one bill through the service by 1/31/2012.
The other $50 will be paid to you if you set up a direct deposit and have one deposit made through the account by 1/31/2012.
Your checking account must have a balance over $1 in order for the bonus to be credited.
That's it! Obviously the bill pay and direct deposit requirements are there to prevent bonus shoppers from opening an account just for the cash. First Trade Union wants to open accounts that stick with the bank and direct deposit and bill pay are two of the stickiest services. Other features of the checking account include:
No minimum balances
Rebate of ATM fees that other banks charge.
Interest on balances of $1,000 or more.
The checking account pays 0.25% APY in interest on balances over $1,000 so this is not a super-high yield account. But First Trade Union does have a high yield savings account that pays 0.90% APY, one of the better online savings account rates. Opening the two accounts in tandem may make sense.
First Trade Union Bank is located in Boston, MA and has six branches located in Boston, Rhode Island, and Long Island. In addition, it offers online savings, checking,and CDs. The bank's assets have grown from $407 million in 2006 to $620 million today. The bank's Texas Ratio of 23.39% if slightly higher than the national average of 21.06% but far below the 100% level considered to be a sign of bank problems.
