Archive for category Banking

A Changing Landscape on Wall Street

I find it unbelievable that Bank of America is buying Merrill Lynch for a 70% premium ($29/share). If you remember, earlier in the year they also picked up troubled mortgage lender Countrywide for a premium.

It’s amazing they would pass up a deal to buy Lehman Brothers which likely could of been had for a deep discount. Do you think that government played a role behind the scenes? Just how bad are Lehman’s books that nobody wants to but them?

Tags: , , ,

Are Customer Complaints A Worthy Measure Of How Good a Bank Is?

I was just reading an article over at MarketWatch about the best and worst banks in the US based on customer complaint data. The article doesn’t really dig deeply into any of the data provided. It just provides an overview of total complaints – it’s not broken down by division or in any other meaningful way.

It’s quite obvious that larger institutions receive more complaints than smaller institutions. A better measure of the complaints might be – 1 complaint/1000 customers. At least this ratio would give some perspective.

Here’s the data:

10 national banks with largest number of complaints in 2007

Bank Number of complaints % of total
Bank of America 7,230 25.5
J.P. Morgan Chase 4,890 17.3
Citigroup 3,742 13.2
Wells Fargo 2,695 9.5
HSBC North America 1,963 6.9
Wachovia 1,265 4.5
U.S. Bancorp 1,027 3.6
National City 586 2.1
The Royal Bank of Scotland Group 537 1.9
Key Corp 343 1.2
Total Top 10 complaints 24,278 85.7
Total complaints 28,316 100

I’m a customer at Bank Of America and have always received great service from them. On several occasions I have called them and always received prompt service and accurate answers. When I’ve needed changes to my account, they have been completed accurately and in a timely manner. I have no complaints. My personal list of best banks has Bank of America at the top of it.

Would the above data influence you to do business with one bank over another? Based on your experience, are these numbers right?

Tags: , , ,

Disdain For The Federal Reserve Interest Rate Cuts

How can so many people be excited about the latest fed cut? You know, the one that lowered the federal funds rate 0.75 percent? Sure, this helps banks borrow money at a cheaper rate. It allows banks, if they choose, to pass on the savings in the form of lower interest loans. But it does nothing for me, the person trying to save money for a home.
Federal Reserve Building
While my money sits in a high-yield savings account, the interest I make on it keeps going down. If this trend continues, I’m not sure the account will qualify as so-called “high yield” if there’s another rate cut. Everywhere I turn for news, I read that people are worried about inflation–which, to me, seems to be a legitimate worry. The cost of gas, utilities and food continues to rise — there’s no doubt about that. And in turn people are reeling in their discretionary spending and focusing on putting gas in their cars and food on their tables. Yet the Fed continues to cut rates and increase the money supply.

I understand what the Fed is trying to achieve by lowering the federal funds rate, but I don’t necessarily agree with it. These actions seem to encourage companies to continue the risky behavior that got them in this mess in the first place. I believe it sends an entirely wrong message: “Go ahead and do what you want — we’ll bail you out again.”

I’m most peeved that the government seems to have turned their backs on those that have been responsible with their money. Why should I have to pay for the foolish decisions made by others? I think the economic landscape will get a lot worse before it gets better. My guess is that the credit card industry is next in line for problems, i.e. more people will begin using credit cards to make monthly payments just to keep their heads above water for a little while longer.

Tags: , , , , , ,

ING Lowers Orange Savings Account Interest Rate Again

Once again, ING has lowered the interest rate if its Orange Savings Account. The rate has changed to 3.10% APY. This is a 0.3% reduction from the previous 3.40% APY. Though it seems unlikely, the interest rate for the Orange Savings account could move lower if the fed decides to reduce the benchmark rate at their March 18th meeting.

Tags: , , , ,

ING Direct Lowers Interest Rate After Surprise Fed Move

Following yesterday’s interest rate reduction by the Fed, ING Direct has lowered the interest rate on their Orange Savings Account from 4.1% to 3.65%.

Other banks will likely to do the same.