Sol Trujillo joins the pudding club

Pic from Bloomberg interview on 11th January 2011

Sol is obviously living off the fat of the land since leaving Telstra and is beginning to look as padded as the popular cartoon image of the merchant banker he's become:
Garcia Trujillo Holdings LLC....After being CEO of three $45 billion market cap companies on three different continents, Sol Trujillo who serves on the board of directors of Target (NYSE:TGT) and WPP Group (NASDAQ: WPP) says that companies have a “domestic emerging market” with just as great a potential as other international markets. Trujillo joined forces with Charles P. Garcia, a member of the Board of Directors of Winn-Dixie Stores (NASDAQ:WINN) as well as Nina Vaca, Gary Trujillo who sits on Blue Cross Blue Shield of Arizona and Well Fargo Bank Desert Region, Alejandro Silva, who sits on the Board of Directors of Walgreen’s (NYSE: WAG), and other Hispanic business leaders in this new venture.

Saffin on the attack over those bank interest rate hikes

The big banks close ranks over rates
Image: Herald-Sun 13 November 2010

In the wake of the financial feeding frenzy as big banks raise interests rates between 10 to 20 basis points above the recent Australian Reserve Bank increase of 0.25 per cent (affecting an estimated 80 per cent of homeowners), Federal Labor Member for Page Janelle Saffin sent out this media release which would appear to accurately reflect the mood of many people living on the NSW North Coast:

Page MP Janelle Saffin has joined the attack on the Commonwealth, NAB and ANZ banks for raising interest rates above and beyond moves by the Reserve Bank.

“The time is not right and mortgage holders rightly feel ripped off.

The banks have a guaranteed profit making business, with less risk than our small businesses and family operated businesses but pay their executives at the top levels as though they are running really risky businesses.

The grab these higher fees and yet they provide us with the most basic services.

It is time the big banks were held to account.

Our banks came out of the global financial crisis strong, and there is no justification for moving interest rates above Reserve Bank rates.

Local customers are tired of the arrogant way the banks treat them.

“This is yet another case of the big banks putting profits before their customers and before the community’s standards,” Ms Saffin said.

“It is because of this arrogance that so many people turn to the community-based banks and credit unions.”

A thought bubble I can believe in....

RaboDirect general manager Greg McAweeney told an audience from the finance sector in Sydney last week that companies such as Google and PayPal are more responsive and trusted than banks.
"If Google got up and said we are going to offer a savings account, for me, that would be very difficult and confronting," McAweeney said.

Graphic from Darren Pauli/ZDNet Australia

Bank finances in pictures to compare with the Commonwealth Bank's overblown rhetoric

With Commonwealth Bank CEO Norris (of the $16M salary package) currently defending that bank's blatant cash grab when it raised its loan rate 45 points on the back of the latest official interest rate rise of 25 points, perhaps it's time to look at what The Reserve Bank of Australia had to say on domestic financial markets in November 2010:

The average cost of the major banks’ long-term
funding continues to rise as maturities are rolled over
at higher spreads. However, in recent months, this has
been largely offset by the narrowing in the spread
between bank bills and OIS rates. Overall, this suggests
that, in aggregate, the major banks’ funding costs are
likely to have been little changed over recent months,
though trends differ for individual banks depending
on their mix of funding.

In terms of net interest margins, banks have recently
reported mixed results; most have experienced a small
decrease in margins, though some have experienced
a small increase. In aggregate, the net interest margin
of the major banks has fluctuated in a relatively narrow
range since 2004, between 2¼ and 2½ percentage
points......

Financials’ profits rose by 10 per cent, largely as a result

of lower bad and doubtful debt charges and an increase in net
interest income.

UPDATE:

Commonwealth Bank chief executive Sir Ralph Norris has conceded his bank's 0.45 per cent interest rate hike will cost some of his customers their homes, a reality he says troubles him.
But in defence of his bank's Melbourne Cup Day hike, Sir Ralph said it was better to see "a few" foreclosures than have an economy hamstrung by a low-profit banking system.

Read more in The Courier Mail here.

Hockey one, hockey two, hockey three.....

Poor Uncle Joe. It felt so right when he practiced his indignation in front of the bathroom mirror, but then it all started to unravel after the Australian Industry Group’s national forum wound down.
First his fearless leader publicly failed to support him – not once but thrice.”
“Back home on the political front today, the spotlight was on the Opposition after Coalition Leader Tony Abbott declined three times to back his Shadow Treasurer's nine-point plan for a more competitive banking system before finally rectifying the matter.”
Then the banks began to bite back at his 9 Point Banking Plan. With “populism” being the kindest term used for his wish list.
Finally Joe fronts the cameras and tells the world that the Federal Treasurer agreed with him in Parliament, but neglected to point out that it was Graham Samuels with whom Swan was agreeing.
Joe obviously forgets that both Hansard and Open Australia have the exchange word for word
And I was actually beginning to feel for the bloke – until that pork pie on national television.

Customer bites back at bank

It's not often a bank comes out on the wrong side of an argument concerning the status of an account, but Westpac did just that according to Banking Day this month:
"The High Court has ruled that a bank could not claim qualified privilege against a defamation claim when it sent dishonoured cheques back to payees, based on a clerical error.
In December 1997 Westpac dishonoured 30 cheques drawn by Homewise Realty, a real estate agency run by Paul Aktas. The cheques were returned to the payees or collecting banks marked "refer to drawer".
The term "refer to drawer" is widely understood to mean that there were insufficient funds to meet the cheque. According to the court record, some members of the Turkish community in the Sydney suburb of Auburn, where Aktas ran his business, "reacted adversely and with some hostility to Mr Aktas after it became known that trust account cheques had bounced."
Westpac made a mistake in dishonouring the cheques...."

I don't care what it costs - my pets are like family

APN online survey results in The Daily Examiner - early morning of 6 May 2010 in response to the question How much do you spend on your pooch each year?

Who said bankers aren't in touch with real life? BankWest is obviously putting a little toe in water with its Social Indicator Series which covers everything from retirement, stay-at-home kids and state of the nation's piggy banks.

It even has a Family Pooch Index, with a national report also differentiated by states:

The latest in Bankwest's on-going Social Indicator Series has revealed that a dog's life certainly isn't cheap anymore, with Australian families spending more than $25,000 on their pet dog over its life-time.

The latest Bankwest Social Indicator Survey, the 'Family Pooch Index', revealed the average Australian family outlays $2,452 per year for the care of their canine, on top of their initial purchase of the pup of $585. Over the average life span of a dog, ten years, this equates to more than $25,000.

Not surprisingly, pet food and other gourmet doggy treats gobble up the bulk of the annual cost - $1200. This was followed by veterinary costs, at $450 per year, and additional dog care, such as grooming, dog walking, dog dietician and a dog trainer at $405 each per year.

The research also revealed what many of us have suspected for a long time, namely that half of Aussie pet owners consider their pet to be equally important as their kids. An overwhelming 96 per cent of respondents consider their pet as a member of their family.

Here are some of the findings in the 2010 NSW report Pets NSW:

* The research has revealed that pet owners think the cost of a pet dog is a small price to pay in return for what a dog provides its family. Survey respondents noted their love for dogs, the companionship provided by a 'man's best friend' and the peace of mind and security a pet canine creates as the main reasons for owning a dog.

*.....the average New South Wales family outlays $2,600 per year for the care of their canine, on top of their initial purchase of the pup of $580. Over the average life span of adog, ten years, this equates close to $27,000.

 NSW is the state that spends the most on pets. WA spends the least.
 25 per cent of Aussie dog owners pay a dog groomer to maintain their dogs appearance.
 50 per cent of Aussie dog owners buy their dog gifts for special occasions
e.g. birthday, Christmas etc.
 80 per cent of Aussie dog owners have a dog for companionship
 Over 30 per cent of dog owners have a dog to encourage them to exercise. 5 per cent of people have their pets in their will.
 11 per cent of respondents said they regret having a pet.
 8 per cent of people take their pet with them on holiday.

* Not surprisingly, spend-thrift Generation Y pay out the most when it comes to the upkeep of their pet dog. Interestingly though, over 10% of Gen Ys surveyed said that their parents fork out the cash to cover all these incurred costs.

Fess up - you grinned when you heard that Goldman Sachs was charged with fraud, didn't you?

"WALL STREET POWERHOUSE ACCUSED OF FRAUD: The government says Goldman Sachs & Co. sold mortgage investments without telling the buyers that the securities were crafted with input from a client who was betting on them to fail. Goldman denies the civil fraud allegations."
{Google News}

The Commission brings this securities fraud action against Goldman, Sachs & Co. ("GS&Co") and a GS&Co employee, Fabrice Tourre ("Tourre"), for making materially misleading statements and omissions in connection with a synthetic collateralized debt obligation ("CDO") GS&Co structured and marketed to investors. This synthetic CDO, ABACUS 2007AC1, was tied to the performance of subprime residential mortgage-backed securities ("RMBS") and was structured and marketed by GS&Co in early 2007 when the United States housing market and related securities were beginning to show signs of distress. {SEC versus Goldman Sachs & Co. and Another}

I know I had a grin from ear to ear when I heard that the financial anaconda had finally been caught out and I think I'm not alone in that. I'm not sure who demanded trial by jury but I'm willing to bet that there will be few in any American juror pool who will be unaffected by the sub-prime debacle and it aftermath.

"Ever since the financial catastrophe of 2007-08, Goldman Sachs has been hyper-vigilant when it comes to the media. Many like myself have been complained about and rudely denied access. The blogosphere has been patrolled 24/7 so that critics can be promptly pounced on.
Now we know why.
Yesterday's bombshell announcement that Goldman was charged with fraud by the U.S. Securities and Exchange Commission is hardly surprising. This is Wall Street's last survivor, and it is about to be ordered off the island too, so to speak." {My confidence in the SEC is restored}

Tweets on the subject:
timbray: Any morning where Goldman Sachs is getting prosecuted by the Feds is a good morning. Pity it's civil not criminal.

theexpert: Please ... PLEASE, prove to me that Twitter has some relevance. Make Goldman Sachs a trending topic.

bobhayward: RT @Lucas_Wyrsch: In Goldman Sachs We Do Not Trust http://dlvr.it/XFbl http://myloc.me/65XdS

KeithSwiderski How can the government sue Goldman Sachs? I thought Goldman Sachs ran the government?

Anyone else just a mite suspicious of the G20's motives?

The G20 has been around since 1999. It's a group of finance ministers and central bank governors. Many of the same ministers and bankers who sat complacently by while the global financial crisis grew into a tsunami which threatens to widen the gap between the developed and developing world, between rich and poor, between those countries with enough resources to buffer against climate change and those that will simply sink into the ocean or blow away on the wind.
One or two of its members countries have also been on record in the past as wanting to sideline the United Nations as an international forum and decision making body.
I think that the dynamic duo, Kev and Wayne from Nambour, need to be careful here because in this group of twenty they will still be mice in bed with at least two elephants - the USA and the European Union.
Even though Australia is now considered a developed country by those heavies participating in setting G20 policy, the International Monetary Fund and the World Bank; it's still privately rated as something of a wannabee.
When I look at how things went down at Pittsburgh this month I can't help feeling that what I'm really seeing is the international banking and business world shoring up the status quo and trying to kick the UN off the field.

Pic from Financial Axis

Update:
Mungo MacCallum writing over at Crikey believes that the G20 Pittburgh Summit is a true change in the world economic order:
"It is almost impossible to overstate the significance of the events last week in Pittsburgh.
The acceptance by all the major players of the role of the G20 as a rule maker for the conduct of the financial systems of member nations quite literally ushers in a new world economic order.
And this is not some kind of Orwellian nightmare in which a conspiracy of plutocrats (or Jews, or Masons, or Martians) use their might to enslave the wretched of the earth, but a genuine democratisation that directly includes two thirds of the world’s population and indirectly gives a voice to the rest.
The London meeting of the G20 in April proved that the new organisation could actually work; that the diverse array of interests could co-operate in reforms to a system in desperate need of them. Now the process has been formalised and we have a long-overdue representative body with the power and the will to lead the world out of the global economic crisis and towards a better and fairer model of interdependence for the future.
Unsurprisingly, the Australian media have made much of the fact that Australia, as an active member of the club, now has a seat at the top table and this is indeed a cause for rejoicing. But far more important is the part Australia played in its construction, which is a matter for genuine and bipartisan pride."

Favourite tabloid headline of the week

From the U.K. Guardian on 14 July 2009 and worth a read:

Is Goldman Sachs a blood-sucking vampire squid?

Now who were Australian Opposition Leader Malcolm Turnbull's former business partners again?

All's well with the world as the rich keep getting richer

Sometimes it is hard to fathom how inequitable the global distribution of wealth is, particularly as the current economic crisis is affecting the relatively little advanced economies give to the hungry, ill and dying across the world from Africa and Asia through to the Americas.
Ordinary people who more often than not live on less than two dollars a day.

Or why the UN Millennium Project does not appear to be meeting its goals.

But never fear, the world is righting itself and greed is once again triumphing as a Goldman Sachs recent media release attests.

Yesterday the Goldman Sachs Group reported that total assets were worth $890 billion, total capital as of end June 2009 was $254.05 billion, with net revenues of $13.76 billion and net earnings of 3.4 billion for the second quarter of 2009.

Compensation and benefits (including salaries, severance expenses, bonuses, payroll tax etc.,) for the same period were $6.65 billion.

On 17 June it even repaid the $10 billion is borrowed from the U.S. Government and taxpayers in that over-the-top bankers feeding frenzy at the beginning of the global economic crisis.

Goldman Sachs Group media release, 14 July 2009

New York Times article, 12 July 2009

Photo: Google Images

The International Monetary Fund report pretends to tell us something we didn't already know (transcript)

With so much media coverage of the global financial crisis it would be hard not to understand that toxic debt is actually higher than originally anticipated, working capital is hard to find and, in the case of Australia, that the national economy was bound to go into recession this year, government revenue fall and unemployment deepen.

So the International Monetary Fund's April 2009 report on global financial stability does not report the unexpected:

The global financial system remains under severe stress as the crisis broadens to include households, corporations, and the banking sectors in both advanced and emerging market countries. Shrinking economic activity has put further pressure on banks' balance sheets as asset values continue to degrade, threatening their capital adequacy and further discouraging fresh lending. Thus, credit growth is slowing, and even turning negative, adding even more downward pressure on economic activity. Substantial private sector adjustment and public support packages are already being implemented and are contributing to some early signs ofstabilization. Even so, further decisive and effective policy actions and international coordination are needed to sustain this improvement, to restore public confidence in financial institutions, and to normalize conditions in markets. The key challenge is to break the downward spiral between the financial system and the global economy. Promising efforts are already under way for the redesign of the global financial system that should provide a more stable and resilient platform for sustained economic growth.To mend the financial sector, policies are needed to remove strains in funding markets forbanks and corporates, repair bank balance sheets, restore cross-border capital flows (particularly toemerging market countries); and limit the unintended side effects of the policies being implemented to combat the crisis. All these objectives will require strong political commitment under difficult circumstances and further enhancement of international cooperation. Such international commitment and determination to address the challenges posed by the crisis are growing, as displayed by the outcome of the G-20 summit in early April. Without a thorough cleansing of banks' balance sheets of impaired assets, accompanied by restructuring and, where needed, recapitalization, risks remain that banks' problems will continue to exert downward pressure on economic activity. Though subject to a number of assumptions, our best estimate of writedowns on U.S.-originated assets to be suffered by all holders since the outbreak of the crisis until 2010 has increased from $2.2 trillion in the January 2009 Global Financial StabilityReport (GFSR) Update to $2.7 trillion, largely as a result of the worsening base-case scenario for economic growth. In this GFSR, estimates for writedowns have been extended to include other mature market-originated assets and, while the information underpinning these scenarios is more uncertain, such estimates suggest writedowns could reach a total of around $4 trillion, about two thirds of which would be incurred by banks. There has been some improvement in interbank markets over the last few months, but funding strains persist and banks' access to longer-term funding as maturities come due is diminished. While in many jurisdictions banks can now issue government-guaranteed, longer-term debt, their funding gap remains large. As a result, many corporations are unable to obtain banksupplied working capital and some are having difficulty raising longer-term debt, except at much more elevated yields.

Global Financial Stability Report, April 2009 Summary Version and Statistical Appendix

Goldman Sachs threatens blogger but only ends up advertising the dissident blog

Goldman Sachs like any other big financial institution is more than a little sensitive to criticism since the global financial crisis exposed the greedy underbelly of financial institutions.

On 25 March 2009 Mike Morgan set up a blog at www.goldmansachs666.com aimed at airing information about this merchant bank.

The blog's banner is Info, Comments, Opinions and Facts About Goldman Sachs, its first post was on 26 March and its first legal letter on behalf of Goldman Sachs was dated 8 April.

Apparently the banking group is asserting that use of the wording goldmansachs666 is a breach of copyright, unfair competition and implies the blogger has an affiliation or relationship with Goldman Sachs.

Rather a thin argument to put forward I would have thought and somewhat misleading; as it is clear as day that what these bankers are really objecting to is information being published about such matters as the amount of taxpayer money Goldman Sachs received from the US Government's financial institutions bailout.
Information which unsurprisingly is already in the public domain at websites such as Market Watch.

It is very interesting to note that a copy of the legal letter was sent to the blog's host GoDaddy Inc. in what looks like a move to unsettle the host and have it bring pressure to bear on Mike Morgan.

This would have to be a first surely for a young blog - threatened with litigation within the first fortnight of its existence.

One wonders if Sinewave who created the Goldman Sucks blog in April 2009 will also eventually fall foul of these bankers.

Of course once Goldman Sachs decided to set out down the legal path the outcome was inevitable.

Now the blogosphere is discussing the situation with posts such as What's Goldman Sachs Hiding? Is it another Madoff scam?, Goldman Sachs is worried about its reputation ~ LOL and Goldman Sachs Seeks To Stifle Blogger Critic (GS)
While Google is returning over 2,000 results on a search for the term goldmansachs666.

Goldman Sachs Group Inc Chairman and CEO Lloyd Blankfein stated in a speech to the Council of Institutional Investors in Washington earlier this month:

To begin with an obvious point, much of the past year has been deeply humbling for my industry. We held ourselves up as the experts, and the loss of public confidence from failing to live up to the expectations that we created will take years to rebuild. Worse, decisions on compensation and other actions taken and not taken, particularly at banks that rapidly lost a lot of shareholder value, look self-serving and greedy in hindsight.

Might I suggest to Mr. Blankfein that trying to bully a blogger into silence when he does not appear to have actually breached any law (yet) is not the way to rebuild confidence in the Goldman Sachs brand.

G20 in London, March 2009: words in pictures

Montage by Stephen Hird

"Neo-Liberal Meltdown": the global financial crisis explained

Robert Mann writing in the March 2009 issue of The Monthly magazine explains the beginnings of the global financial crisis, for those of us who don't have an economics degree or work in the financial sector.
He makes a better fist of it than the Prime Minister in his previous essay in the same magazine.

The causes of the global financial crisis are already reasonably clear. The crisis originated in a series of interconnected developments within the American financial sector. From the 1980s a vast market in obscure and opaque financial instruments known as derivatives developed there. The market grew at an accelerating pace. In 1989 it was worth US$2 trillion; by 2002, $100 trillion; and by September 2008, almost $600 trillion. (The annual GDP of the United States is presently about $15 trillion.) This explosion of the market in derivatives depended, in turn, on ideological convictions and political acts. In 1998 Brooksley Born, the head of the Commodity Futures Trading Commission, argued for the regulation of this market. Without it, she argued, the American economy and the global economy were being placed at risk. She was overpowered by the chairman of the Federal Reserve, Alan Greenspan, and President Clinton's Treasury secretary, Robert Rubin. Shortly after, Congress withdrew from the CFTC the authority to regulate derivatives. At much the same time, as a consequence of a $300-million lobbying campaign by financial corporations, Congress also repealed President Roosevelt's 1933 Glass-Steagall Act. Its purpose had been to separate the commercial banks, which had become involved in the speculative frenzy of the '20s, from the activities of the investment banks. The repeal of the Glass-Steagall Act opened all the American major banks to massive involvement in the derivatives market. More deeply, as Joseph Stiglitz has argued in Vanity Fair, the repeal completed the transformation of American banking culture.

The post-2000 derivatives explosion was also aided by American monetary policy. Greenspan reacted to the bursting of the dotcom bubble by steadily lowering official interest rates. In 2000-01 they dropped rapidly from 6.5% to 3.5%. By 2003 they had reached 1%. Effectively, at least for bankers, as Charles Morris puts it in his book The Two Trillion Dollar Meltdown, money was now free. At this time the explosion in the derivatives market intersected with the explosion in another market, sub-prime mortgage lending, which rose from US$145 billion in 2001 to $625 billion in 2005. On the basis of a housing bubble, which increased the price of houses by an annual 7-8%, borrowers with low incomes and no assets were encouraged by banks and mortgage brokers to purchase houses worth several hundred thousand dollars. Derivative traders saw these sub-prime mortgages as a splendid opportunity. They bundled up the mortgages and created from them esoteric derivatives products - like collateralised mortgage obligations or collateralised debt obligations - which were then sold on in their trillions to investors and pension funds. In an article for Portfolio, Michael Lewis gives a telling example of how the racket worked. Big Wall Street firms took piles of sub-prime mortgages with a BBB rating. They bundled them into new products and divided these products into tranches. The top 60% of these tranches were rated AAA. Lewis's informant, Steve Eisman, who made his fortune by 'shorting' the corporations and the products involved in this trade (that is, gambling on their failure), kept asking himself: How is this possible; why is this allowed?......

The systematically phoney evaluations of the derivative products and the corporations which dealt in them, pocketing substantial fees with each contract, arose as a result of a straightforward but fatal ratings-agency conflict of interest. The profits of the agencies derived from the Wall Street banks and investment businesses they were supposed to rate. The continuation of their own very healthy profit growth relied on their willingness to turn a blind eye. Yet the fraudulent behaviour of Wall Street rested on another, even deeper, kind of blindness: the ideological blindness of the regulators. Most important here was the regulator-in-chief, Alan Greenspan, the most enthusiastic derivatives cheerleader, who believed with regard to derivatives (and everything else) that the invisible hand of the market was an infinitely more reliable and intelligent guide than any regulatory action by the state........

It is obvious whose interest all this served. Before the recent crash, the average taxable income of the top 15,000 American income earners was US$30 million; their annual income in total, US$441 billion. In the mid 1970s the wealthiest 1% of Americans owned approximately 20% of national assets. On the eve of the financial collapse they owned some 40%. Very many of these people derived their income and their wealth from the financial sector. In 2008, even after the sector had begun imploding, the executives of the Wall Street corporations that were eventually rescued by taxpayers rewarded themselves with US$18 billion in bonuses. Vast riches had apparently come to be seen by this predatory class as an entitlement.

The full essay here.

How much the Australian Government has borrowed because of the global financail crisis to date is here.

Some trees are more equal than others or Malcolm Turnbull exposed once more

Not for the first time the suspect nature of the Federal Leader of the Opposition Malcolm Turnbulls' commitment to a sustainable environment comes to light.
First his revelation that planting trees across Australia will save all in the face of climate change and then the media rediscovery of the fact that Turnbull actively support forest logging in the Pacific:
JUST as Malcolm Turnbull tries to outsmart Labor on environmental issues, a file of documents has emerged linking the Leader of the Opposition to a mass logging operation in the Solomon Islands.
The tiny island of Vangunu is a speck on the world map; a dot in the Pacific and home to just over 2000 people. It forms part of the collection of thousands of land masses that make up the Solomon Islands.
Once covered in pristine rainforest, the island and the surrounding Marovo Lagoon were the subject of lobbying by the New Zealand government and environmentalists to have it World Heritage-listed in the late 1980s.
Almost two decades later, the island is again being talked about - only this time for different reasons.
The emergence of a carefully-documented file detailing mass logging operations and the ongoing impacts in the region has Vangunu back in the spotlight.
More specifically, the file - obtained by The Sunday Telegraph - records the involvement of Opposition leader Malcolm Turnbull over that time.
Mr Turnbull was the chairman of a company called Axiom Holdings after he and fellow investors purchased a 16.21 per cent stake in the company in 1991.
The company was one of several companies with logging activities in the Solomons.
It was also one of the largest.

One wonders just how long the Coalition king makers are going to tolerate this man, whose diverse financial dealings make him vulnerable to criticism (and sometimes legal action) on so many fronts.

Photograph of Vangunu from Picassa Web Albums

St. George, NAB and other banks to charge 'disloyalty' fees when customers use another bank's ATM machine from 3rd March 2009

Sign Bradbury's petition against increase in bank fees:

Say 'NO' to hidden ATM fees

David Bradbury (Lindsay, Australian Labor Party) Link to this Hansard source

Last week the Governor of the Reserve Bank, Mr Glenn Stevens, appeared before the House of Representatives Standing Committee on Economics and commented on some impending reforms to ATM fees. The RBA, in consultation with the banking sector, has put together a package of reforms that will have an impact on the way people use ATMs. These reforms come into effect from next Tuesday, 3 March. Under the proposed regime, transaction fees will be charged by the owner of the foreign ATM—that is, an ATM operated by a bank other than the customer's bank—to the customer directly.

To provide greater transparency in relation to these fees, the fee will be displayed on the screen during the transaction—allowing the customer to cancel the transaction if they do not wish to proceed and pay the fee. This relatively simple reform is intended to make ATM fees more transparent and promote competition between financial institutions and ATM operators by allowing customers to identify and choose to use the cheapest ATMs. Underpinning these reforms is the abolition of the interchange fee. Under the existing arrangements, each time a customer uses an ATM that is not operated by their own bank their bank is charged an interchange fee by the ATM operator, and that fee is generally passed on to the customer through a transaction fee. Depending on the bank, these fees could range from 50c to $2 per transaction. Now that the customer will be required to pay the ATM fee directly to the foreign ATM operator under the new rules, there is no longer any real cost to the customer's bank and therefore no justification for a customer's bank to impose any transaction fee upon the customer for using the foreign ATM. The only possible argument for the imposition of a fee is to recoup the cost of processing the transaction.

Mr Stevens estimates that any such administrative cost would be 'at most 10c and quite possibly a lot less'. If these new arrangements are designed to ensure better disclosure of ATM fees then this simply will not be achieved if the customer's own bank continues to levy a fee, which will not be disclosed at the point of the transaction, on their customer for using a foreign ATM. The only way that customers will be able to have any faith that these new arrangements will lead to a better disclosure of ATM fees is if banks and other institutions do not impose transaction fees upon their own customers for using ATMs not operated by them.

However, I understand that some institutions are planning to continue to charge customers a fee. These fees have been described as 'disloyalty fees'. I think most customers would find the notion of a fee for 'disloyalty' just a little bit rich coming from their bank. To my knowledge, only the Commonwealth Bank and Citibank have announced that they will not charge their customers a disloyalty fee for using a foreign ATM. I congratulate these two institutions for doing the right thing by their customers. I am concerned that other institutions have foreshadowed an additional foreign ATM transaction fee, which will mean that customers will be slugged twice every time they use a foreign ATM. The National Australia Bank say that they will charge a 50c fee every time a customer uses a foreign ATM, on top of the fee the customer will directly pay to the operator of the ATM. There is no justification for these 'disloyalty fees'. The costs to the banks of processing these transactions are negligible, yet some have seen this as an opportunity to profiteer.

While banks in other countries have been collapsing and governments spend billions or even trillions of dollars to recapitalise and bail out their banks, four of our banks are among the only 18 banks in the world to have a AA credit rating. This is unquestionably a good thing. Ensuring our banks have strong balance sheets and return profits in these difficult times is critical to the overall health of our economy. It is, however, reprehensible that banks and other financial institutions propose to slug customers a fee for using a foreign ATM when the bank is not bearing any real cost, especially when many of these institutions have been the beneficiaries of significant government support in the form of bank guarantees.

I know many people in my electorate—and, no doubt, right around the country—are very angry. That is why I am launching an online petition on my website, www.davidbradbury.com.au, where people can sign on and register their opposition to being hit with these unfair bank fees. I will keep those people who sign my petition updated with further information on the charges that institutions choose to impose from next week. I call on the banks to do the right thing and drop these absurd and unfair fees.

{From Open Australia 26/02/09}

Greed no longer rules in the corridors of power?

I've watched with growing amazement as governments all around the world have thrown money at financial institutions and industry with almost reckless abandon as everyone tries to stop the economic haemorrhaging.
I thanked my lucky stars that (with the exception of the ABC childcare debacle) money wasn't going directly to corporation bailouts here in Australia.

When the Yanks began to put together their latest stimulus package I thought that some sanity might be returning, for President Obama was making a lot of noise about stopping these big corporations spending some of that enormous pile of taxpayer funding on their own salary packages and bonuses.

At first it seemed that my optimism was premature and greed was still stalking the corridors of power and board rooms across America because it appeared that the move to cap these often multi-million dollar payouts is in trouble.
"Congressional efforts to impose stringent restrictions on executive compensation appeared to be evaporating yesterday as House and Senate negotiators worked to fine-tune the compromise stimulus bill."
Another day brought other news however and the U.S. Congress has gone even further than the conditions suggested by Obama as it applies the cap retrospectively.
"The bill, which President Obama is expected to sign into law next week, limits bonuses for executives at all financial institutions receiving government funds to no more than a third of their annual compensation. The bonuses must be paid in company stock that can be redeemed only when the government investment has been repaid. With the measure, lawmakers seek to address public outrage over extravagant Wall Street paydays even as taxpayers bail out the industry."

Perhaps Sol Trujillo may decide to stay with Telstra after all - he now milks a more productive cow Downunder.

More grief for 'Truffles' Turnbull

Last Sunday morning during the ABC Insiders program Chris Uhlmann referred to 'Truffles' Turnbull as having "strapped himself to the tracks in front of the gravy train", because of his somewhat silly threat to block the Rudd Government second stimulus package in Parliament when it was obvious to everyone that he couldn't possiblely mount the numbers on this one (indeed it passed through the House Of Reps and is on its way to a Senate vote in the next few days).

But Mal has other PR worries as well this week:
"Federal Opposition Leader Malcolm Turnbull says he is not the only politician to receive campaign funds from a controversial American billionaire.
Mr Turnbull received $76,000 from Fortress Investment Group director Peter Briger, to help fund the campaign for the Sydney seat of Wentworth, The Sun-Herald has reported.
Mr Turnbull previously held shares in the company associated with predatory lending practices in the United States, but offloaded them in 2007.
When asked if he would re-pay the money, Mr Turnbull told Network Ten: "You could well ask that same question of President (Barack) Obama and Secretary of State Hillary Clinton because Peter Briger was a prominent supporter and donor to both their campaigns."
According to The Sun-Herald, Fortress is referred to as a "vulture company" because it preys on vulnerable businesses and debtors and picks over financial carcasses....."

This is not the first time Peter Briger has donated to the Libs - in 2007 he gave $51, 000 to the Liberal Party in NSW, but nothing to the other major parties.
And, guess what, Mal me old china?
Yep, you appear to be the only Aussie pollie to directly get money from this Yankee billionnaire and former Goldman Sachs shareholder (along with yourself).

In February 2007 The Street.com said of Briger and other Fortress directors/shareholders (and presumably Malcolm Turnbull):
"When it comes to hedge fund company Fortress Investments(FIG Quote - Cramer on FIG - Stock Picks), one thing's for sure: Chief executive Wesley Edens and the other principals didn't get where they are today by leaving money on the table.
Fortress went public two weeks ago and doubled in price on the first day. But what investors may not realize is that the five principals pretty much stripped the company clean just before the IPO.
I don't mean they cleaned up the balance sheet. I mean they cleaned out the vault. Page five of the prospectus shows they withdrew $446.9 million from the company in "cash distributions" last year.
Plus another $409 million in January.
They collected a further $888 million on Jan. 17 by selling a small stake to Japanese bank Nomura(NMR Quote - Cramer on NMR - Stock Picks).
Oh yes, and they pocketed a further $22.8 million in the final weeks before this month's IPO.
A table buried on page 94 of the prospectus shows the remarkable facts. Between January 2005 and this month's IPO, the five principals of Fortress -- Edens, Peter Briger, Robert Kauffman, Randal Nardone and Michael Novogratz -- cashed out $1.04 billion. "That does not include the Nomura transaction," adds company spokeswoman Lilly Donohue.
Total withdrawn in the two years before they took it public: $1.9 billion. Most of that was in the final few months.
This isn't just every penny that the company earned over that period -- it's a lot more. By the time the owners opened the doors to the investing public this month, the company wasn't just out of cash -- it had negative book value. Liabilities actually exceeded assets by $507 million........"

Fortress Investment Group key executives as of 6 February 2009.

Global finacial crisis provokes some nervous laughter on the NSW North Coast

A North Coast blogger has sprung Lehman Brothers, one of the major investment banks hit hard by the global financial crisis, actually trawling the Internet for mention of 21 economic models explained by cows.
Local wags are asking if this is where international banks and bankers are going for inspiration in the search for a solution to their woes.
I'm wondering if Rudd and Swan should be worried!