Dudley Financial Blog

Fed Expanding Review of Regional Banks’ Commercial Loans Portfolio

2009-10-04T23:19:00.000-07:00

Fed Expanding Review of Regional Banks’ Commercial Loans Portfolio

http://www.marketwatch.com/story/bank-regulators-eye-commercial-loan-problems-2009-09-16

The Federal Reserve is increasingly worried about the health of the regional banks having assets less than $100 billion and has expanded a review of the commercial loans portfolios of these banks. These portfolios have already started to deteriorate and the largest losses in the segment are yet to occur, the fed officials believe. The Fed along with the help of the other regulators plans to review the various categories such as hotels, construction and retail of commercial loans and identify the potential losses. A recent report by the Congressional Oversight Panel overseeing the US government’s $700 billion TARP has also warned against the threat imposed by the commercial loans and the residential mortgages to smaller public banks. The regulators expect many more bank failures in the future and are trying to identify them through this review of their asset portfolios.

Credit Card Industry Faces New Rules

2009-09-21T22:19:00.000-07:00

Credit Card Industry Faces New Rules

http://www.washingtonpost.com/wp-dyn/content/article/2009/08/17/AR2009081702636.html

The first phase of the credit card legislation signed by US President Barrack Obama is expected to be applicable from this week. The rules will force the credit card issuers to provide their customers with more time to pay their bills and before raising the interest rates. From this week credit card firms need to give a notice of 45 days to their customers before raising interest rate. The customers on their part can choose to pay the amount owed by them at the original rate but will not be able to use the card for any further transactions. The credit card issuers will now have to mail the bill 21 days before the due date instead of the current 14 days. The firms also have the right to increase the minimum amount due as a percentage of the total balance to double the present value. These provisions are expected to make life tough for the credit card firms whose performance has already been impacted by the rising number of delinquencies.

How Many Clunkers Traded In?

2009-09-07T00:19:00.000-07:00

How Many Clunkers Traded In?

http://www.msnbc.msn.com/id/32567404/ns/business-autos/

The Cash for Clunkers program sold close to 700,000 cars, thus lifting July sales on an annualized basis to 11.2 million; the first time that the annualized rate has moved over 10 million in 2009. What did this program achieve? For a month it looked like the good, old days were back in the automobile industry. Dealerships which were practically closed reopened, and factories brought back laid off staff. Dealers hired extra staff to complete the paperwork and customers went home with a brand new car.

Can this momentum be sustained? It is hard to say. Are the consumers happy? Research data is beginning to show that many are not sure if it was a wise thing to trade in a fully paid car for a new financed one. The next few months will tell us, whether this program achieved long term success.

CFTC Set To Impose Limits On Energy Markets

2009-08-24T00:10:00.000-07:00

CFTC Set To Impose Limits On Energy Markets

http://online.wsj.com/article/SB124948893085708197.html

The Commodities Future Trading Commission is all set to announce limits aimed at restricting speculation in the energy markets. The regulator has sought the opinion of several industry players and most of them have favored imposition of position limits in one or the other form. Speculators or the funds who generally do not take physical delivery of a commodity have been blamed for the volatile prices in the recent years. The CFTC believes that position limits can be the remedy and is all set to announce the draft rules very soon. The New York Mercantile Exchange currently sets position limits but only some days before the expiry of a contract, but also grants exemptions to several companies. The CFTC may, however, find it difficult to unilaterally withdraw the hedge exemptions already in place.

Grab That Deal

2009-08-12T23:36:00.000-07:00

Grab That Deal

http://www.msnbc.msn.com/id/32186320/ns/business-the_drivers_seat/

These are times to reach out and grab a good deal. From houses at record discounts to the “cash for clunkers” program for vehicles, there is a good deal lurking around every corner.
The “cash for clunkers” program offers a buyer a rebate when he or she turns in his or her old vehicle for a new fuel efficient vehicle. This program is already boosting vehicle sales. The success of this program can have manifold benefits. It will get old, large fuel guzzling cars off the roads, replaced by smaller more fuel efficient and greener vehicles. It will of course translate in to increased sales for auto companies, though margins may continue to remain low. At this point, we just need things to start selling, and “cash for clunkers” is a good way to start!

Unemployment! The Root Cause of All Problems

2009-07-28T22:41:00.000-07:00

Unemployment! The Root Cause of All Problems

http://news.yahoo.com/s/ap/20090716/ap_on_re_us/us_foreclosure_crisis_unemployment

Unrelenting unemployment numbers continue to take their toll. Foreclosures on homes continue to rise as job losses show no sign of ebbing. Unemployment rate which was at 9.6% in June is expected to rise further and well into 2010.
The housing segment has gone past the sub prime crisis which saw the initial wave of foreclosures. What we are seeing today is more of the traditional foreclosures. People are not able to pay as they have lost their jobs. The Obama administration has been working relentlessly to stop this trend. This March they launched an effort to help people refinance their mortgages. This has however not achieved much success.
With such a large bank of foreclosed properties available in the market, prices for homes continue to remain low. One man’s loss can however be another man’s gain! If you are looking to buy a home, the time is now!

Government To Extend Help To Those `Underwater’

2009-07-12T23:39:00.001-07:00

Government To Extend Help To Those `Underwater’
http://www.usatoday.com/money/economy/housing/2009-07-01-govnt-foreclosures_N.htmhttp://www.usatoday.com/money/economy/housing/2009-07-01-govnt-foreclosures_N.htm/2009-07-01-govnt-foreclosures_N.htm
Being ‘Underwater’ incidentally refers to owing more on one’s house loan than the actual market worth of the house. Many Americans have found themselves in this position in the recent months with little option but to give up the dream homes and in the process incur a huge financial loss. However, help appears to be at hand for these hapless people in the form of Government loan restructuring programs.
While this move will not completely stave off foreclosures, it will definitely provide some relief in the form of lower interest rates. The housing market is showing some signs of stabilizing and this is the best time for the government to launch programs and schemes to motivate people to purchase or just hang onto their homes.

Business Owners Rue Tight Credit

2009-06-28T22:24:00.000-07:00

Business Owners Rue Tight Credit
http://www.latimes.com/business/la-fi-smallbiz23-2009jun23,0,3542374.story
Many small businesses depend on business credit cards to run! They use plastic cash to make purchases of stock and to manage their monthly cash flow. With the credit card companies tightening their belts, the businesses lament that they are being made to pay higher interest and are unable to open new cards, or that they are finding their existing ones getting cancelled. More that 100,000 small businesses claim that they have been adversely affected with the tightening of credit.
Companies like OfficeMax Inc. and Advanta Corp. are just a few of the small-business credit cards that have cancelled their credit programs. How many more companies will go their way is yet to be seen!

US Dollar Preferred As Main Reserve Currency

2009-06-14T23:29:00.001-07:00

US Dollar Preferred As Main Reserve Currency

http://www.reuters.com/article/newsOne/idUSTRE55124S20090602

Both the United States and China believe that the US dollar will remain the main reserve currency for a long time to come, US Treasury Secretary Timothy Geithner has said. The comment comes after Chinese Central Bank Governor Zhou Xiaochuan floated the idea of replacing the dollar as the world’s main reserve currency with IMF’s unit of account under the Special Drawing Right or SDR. Wrapping up two days of talks with Chinese officials, Geithner said China was concerned about the US economy’s outlook and the progress on the reforms front. Several Chinese officials have expressed concern regarding the ballooning of the US budget deficit and its impact on inflation and China’s holding of US debt. The Federal Reserve is extremely capable of handling the situation and maintaining the inflation levels, Geithner says.

US Banks Raise Billions

2009-06-01T05:54:00.000-07:00

US Banks Raise Billions

http://www.nytimes.com/2009/05/21/business/economy/21geithner.html?hp

Following the revelation of the results of the stress tests conducted on the US banks, several banks have taken steps to shore up their balance sheets and raised $56 billion. The bailout efforts by the US government have started yielding results and the next phase of the financial rescue efforts is to be initiated soon. Although the US economy appears to be healing, it is still too early to say that the time has come for the Obama government to make an exit, US Treasury Secretary Timothy Geithner says. Of the $56 billion raised by the country’s banks in recent weeks, $48 billion was raised by the 10 banks asked to shore up their capital following the results of the stress tests.

Lenders Willing To Crack Short Sale Deals

2009-05-18T00:55:00.000-07:00

Lenders Willing To Crack Short Sale Deals

http://www.nytimes.com/2009/05/17/realestate/17mort.html?ref=economy

Mortgage lenders are more open to short sale deals than they were before. So, if you have been thinking of foreclosure, consider a short sale instead. Unlike foreclosure, short sale will not affect your credit report. You get to pay off your debts by selling the property at market price. Even if the market price is less than the amount you owe to the lender, they will accept a short sale. It is also known as ‘offer in compromise’.

A shift in the attitude of lenders is what was needed to process short sale transactions. With mortgage executives co-operating on short sales, it is a good time to settle debts without leaving a mark on your credit score.

Tea Parties! What’s The Fuss About?

2009-04-28T00:19:00.000-07:00

Tea Parties! What’s The Fuss About?

http://news.yahoo.com/s/nm/us_obama_tax;_ylt=AlPjFTjc0tzVaJDMsB3MLKRH2ocA;_ylu=X3oDMTJma2dqbTQ5BGFzc2V0A25tLzIwMDkwNDE1L3VzX29iYW1hX3RheARjcG9zAzEEcG9zAzEEc2VjA3luX3RvcF9zdG9yaWVzBHNsawNvYmFtYXZvd3N0b3I-

America witnessed protests in a number of states on Tax Day, April 15 in the form of ‘Tea Party’ rallies and protests, inspired by the original Boston Tea Party protests. Some of those attending were even dressed in the 18th century costumes. So what were they protesting against?

Typically, the common man is a silent witness to the money he has paid as taxes that are used for causes he does want to support. One would believe that these protests were a means for the average taxpayer to vent his frustration at the bailouts given using taxpayers money to financial behemoths, which in their aggressive search for profits were responsible for the start of the current crisis in the first place.

Ford Shows The Way

2009-04-13T00:48:00.001-07:00

Ford Shows The Way
http://online.wsj.com/article/BT-CO-20090406-708248.html
Ford Motor Co. has announced that it has closed a deal which will reduce its debt by $9.9 billion. It has managed to reduce its interest cost by about $500 million annually and has also worked out a deal with its unions to restructure the company’s commitments to the union run health care plan.
What can we then learn from Ford? I would say that the determination of the company in not going to the government for aid and its resolution that it will fix its problems on its own is admirable. The company has also managed to wrangle a better deal from its creditors than what GM has been able to get so far. Way to go Ford!

Indonesia’s Growth Slows Down

2009-03-01T21:01:00.000-08:00

Indonesia’s Growth Slows Down

http://www.bloomberg.com/apps/news?pid=20601068&sid=arwaPpQyrlV0&refer=economy

Indonesia’s economy has been expanding at a very slow rate as the world recession has affected demand. It reduced prices of the nation’s rubber, palm oil and electronics exports. The biggest economy of South East Asia grew at a less-than-expected 5.2 percent in the fourth quarter from last year.

Japan’s economy, which is Indonesia’s biggest overseas market, has gone down. Bank of Indonesia may be pressurized to add to three interest-rate cuts in the past three months as the government expects exports to rise at the slowest pace in the past nine years. The central bank needs to lower its policy rate in order to encourage economy growth because if this trend carries on, then there will definitely be negative growth in the third quarter.

Hurry Up Guys

2009-02-15T21:51:00.000-08:00

Hurry Up Guys

http://www.reuters.com/article/marketsNews/idUSN0753529920090207?rpc=77

President Barack Obama is asking the Senate to hurry and pass the Stimulus plan. He also expressed his gladness that some moderate senators have agreed to compromise. The Plan has been culled as demanded by the Republicans and the finished ‘product’ is all set to be ready by Feb 16.
‘Please, oh please, no more delay this time round.’ Precious time has been already wasted in debating on the plan and the patience of the people is running out. We want our same old America. We want our lives back. If this Stimulus plan faces more hassles, we would be facing a catastrophe, maybe even larger than the Great Depression.

Don’t Ignore The IRS Even If You Are Without A Job

2009-02-03T03:39:00.000-08:00

Don’t Ignore The IRS Even If You Are Without A Job

http://www.msnbc.msn.com/id/28641556/

If you thought that after losing your job, and facing the threat of foreclosure on your home, you life just couldn’t be a bigger mess, you are wrong! The tax man can still come calling!

But by filing your return, you can get a refund within a few weeks. Not many people know that if they have their jobs, they are a tax liability. On the other hand, those who have lost their jobs are eligible for a higher refund as their tax liability is no longer high. Joblessness also makes them eligible for a number of credits such as the Earned Income Credit, education credits and the Recovery Rebate Credit.

Considering all this, I think everybody had better file their tax return and get a refund. Every penny counts right now!