http://www.bloomberg.com/apps/news?pid=20601087&sid=awlcvwc.dpdM Wells Fargo Will Raise Credit-Card Rates Ahead of Law By Peter Eichenbaum October 7, 2009 (Bloomberg) -- Wells Fargo & Co. plans to raise interest rates on a majority of credit-card customers by 3 percentage points before federal rules limiting such increases take effect, a company executive said. “This is something we’ve been contemplating for quite a period of time,” Kevin Rhein, group head of card services for the San Francisco-based bank, said today in a telephone interview. “We had just reached the point that we don’t think we can offer credit cards at the current pricing and keep credit flowing.” Wells Fargo began advising customers this week that the change takes effect on Nov. 30. That’s a day before House Financial Services Committee Chairman Barney Frank wants curbs on rates and fees to become effective under the new U.S. credit- card law. The Massachusetts Democrat plans a hearing tomorrow on moving up the date to Dec. 1 from Feb. 22 to head off increases by card issuers. Rhein didn’t comment on whether Frank’s bill had a bearing on the timing of Wells Fargo’s rate increases. The bank is also eliminating over-limit fees, which are imposed when customers exceed their credit lines, he said. Wells Fargo is the eighth-biggest U.S. card lender, Rhein said. The company accepted $25 billion from the government’s bank bailout program. Bank of America Corp., the second-biggest U.S. credit-card lender after JPMorgan Chase & Co., said in Oct. 5 letters to Frank and Senate Banking Committee Chairman Christopher Dodd that the company wouldn’t raise rates and fees on customers in good standing until the effective dates of the Credit Card Accountability Responsibility and Disclosure Act. Federal Law The law, which takes effect in stages, includes provisions that limit rate increases and require lenders to apply payments to higher-rate balances first. Dodd, a Connecticut Democrat, urged competing card issuers to follow the lead of Charlotte, North Carolina-based Bank of America, the biggest U.S. bank by deposits and assets. Aides for Frank and Dodd didn’t respond to requests for comment on Wells Fargo’s decision to raise interest rates. The change doesn’t affect some customers, typically those who signed on within the past year, and others the bank gained from acquiring Wachovia Corp., said spokeswoman Lisa Westermann. Wells Fargo rose 60 cents, or 2.1 percent, to $29.26 at 4:15 p.m. today in New York Stock Exchange composite trading. The shares have fallen 8.3 percent in the past year. April Notifications While Bank of America raised rates on some customers in June, the notifications were sent in April “before we knew the outcome of the final legislation,” spokeswoman Betty Riess said yesterday in an e-mail. Bank of America may raise rates for customers who are late on two or more payments within 12 months, Riess said. JPMorgan, which raised rates and fees and imposed higher minimum monthly payments after President Barack Obama signed the legislation on May 22, intends to comply with the law’s provisions when they become effective, spokeswoman Stephanie Jacobsen said in an e-mail. Capital One Financial Corp., the third-biggest issuer of Visa Inc. credit cards, is in “full compliance” with the law, including provisions scheduled to take effect Feb. 22, spokeswoman Tatiana Stead said in an e-mail. Discover Financial Services customers have been notified of price increases or changes in terms, said Matthew Towson, a spokesman for the Riverwoods, Illinois-based company. Discover has “gone beyond the requirements in some cases including eliminating pay-by-phone fees, over-limit fees and default pricing on existing balances,” he said. To contact the reporter on this story: Peter Eichenbaum in New York at peichenbaum@bloomberg.net *** http://www.huffingtonpost.com/2009/10/05/debtors-revolt-former-ban_n_307088.html Arthur Delaney arthur@huffingtonpost.com Debtors' Revolt: Former Bank Of America Employee Boards The Bandwagon 10-5-09 A former Bank of America employee has joined the fledgling "debtors' revolt" movement. "I was an assistant branch manager for Bank of America for two years," said Ben Frasier, a 27-year-old father of three in Douglas, Ore., in a YouTube video. "I quit my job because of the unscrupulous sales practices that were required to be performed in an effort to meet sales quotas. What I'm telling the world is that Bank of America will stop at nothing to turn an insane profit at your expense." Frasier told the Huffington Post that he made his video after seeing Ann Minch's epic rant, in which the Red Bluff, Calif. woman demanded Bank of America reduce the interest rate on her credit card in September. He's not the only one -- dozens of people have since boarded the bandwagon. "It was all because of Ann Minch that I got rolling on this deal," said Frasier. Frasier, an insurance salesman, said he quit his job with Bank of America two years ago out of disgust. "If you didn't sell so many credit cards, if you weren't successful pushing it down peoples' throats, you got written up," he said. His biggest gripe is his own. In his video, Frasier explains that last fall he and his grandfather took out a $30,000 personal line of credit to fix up a foreclosed property he planned to flip. He thought he'd signed up for an interest rate of 5.1 percent, but on his first statement he discovered his rate had somehow risen to 32 percent. He said he sold the property at a loss and has $23,000 in proceeds he wants to use to pay off the remaining balance on the loan, which he said stands at $28,000 after about $8,000 in payments, with less than $1,500 going to principal. "You're not getting another penny from me until you settle," said Frasier. Frasier said Bank of America told him it would lower his interest rate, but he says he has not yet gotten a response to his settlement offer. A Bank of America spokeswoman told the Huffington Post via email that "we have talked with the customer directly and have gone through his account with him. While we don't share the details of that conversation, we believe we have addressed any concerns." "Our associates talk to millions of customers every day and we work very hard to help them. It is more likely that we can work with them when they call us directly to resolve their issues." Other debtors who've made videos have gotten results. Ann Minch won a reduced interest rate on her credit card. And Darren Bryant of Pensacola, Fla. heard from Bank of America within four hours of posting his video on Monday (but they didn't make him an offer). *** http://www.huffingtonpost.com/2009/10/09/debtors-revolt-bank-of-am_n_315351.html Arthur Delaney arthur@huffingtonpost.com Debtors' Revolt: Bank Of America Cuts Deal With Another YouTuber 10-9-09 Got a gripe with Bank of America? Put it on YouTube. Ben Frasier of Douglas, Ore. said in a YouTube video that he wouldn't make any more payments on a $30,000 personal line of credit unless Bank of America would let him settle up with a lump sum. Bank of America wasn't interested in the offer when Frasier made it over the phone. But after he made his demand publicly, and it received some media attention, Bank of America made an offer that Frasier is happy with. The video-sharing website has become an effective complaint department for angry customers willing to put their faces to a declaration of "debtors revolt!" Ann Minch of Red Bluff, Calif., did it first in September, when she refused to pay a credit card debt unless Bank of America lowered her rate. After her story went viral, Bank of America agreed to her demand. And Darren Bryant of Pensacola, Fla., won attention from the bank within four hours of "going YouTube" after he wasted 20 hours calling the bank to no avail. Another person uploads a "debtors revolt" rant against Bank of America and other big banks almost every day. Frasier said that because of an unexpectedly high interest rate, he paid $8,000 but dented the $30,000 loan's principal by only $1,500. He said in his video that he wanted pay Bank of America $23,000 and call it even. After some negotiation over email, a Bank of America agent made the following offer on Thursday: Based on the new payment amount from you of 15,134.78 and the credits to that account that I stated below, it would leave a remaining balance on the account of roughly $12,215.00. I would then be able to set that amount to a 60 month payoff term and an interest rate of 8.99%. The new payment on that amount for the 60 months would be roughly $260.00. Frasier replied that he would accept the offer as soon as he saw it on paper. He told the Huffington Post he's happy with the deal, though he thought the way he got it was ridiculous. "In terms of YouTube, it was a very effective mode of communicating with them," Frasier told the Huffington Post on Friday. "You have to go someplace unsecure to tell your story where everybody knows pretty much who you are, everybody knows the details. You'd think you could do that on Bank of America's website. It's an incredible website. Unfortunately, you just don't command the attention you do on YouTube." Bank of America did not immediately respond to a request for comment from the Huffington Post, but a spokeswoman previously said, "Our associates talk to millions of customers every day and we work very hard to help them. It is more likely that we can work with them when they call us directly to resolve their issues." *** http://blogs.reuters.com/columns/2009/10/06/the-myth-of-the-man-cession/ Christopher Swann October 6th, 2009 The myth of the man-cession Sometimes it’s hard to be a man. The current recession is a case in point. Men account for three quarters of the 7 million U.S. job losses. That has led to talk of a “man-cession.” With male unemployment rampant, women are on the cusp of a historic breakthrough –before the end of the year, women are likely to form a majority of salaried U.S. workers for the first time. The novelty of the man-cession has been overstated, however. Delve deeper, and men have not been doing so badly by historic standards. Nor have women been making great breakthroughs. First, recessions are almost always man-cessions. In 2001, the most recent downturn, women accounted for just 14 percent of job losses, U.S. government figures show. The picture was even clearer in the recession of the early 1990s. Of the 1.2 million positions that disappeared, females accounted for just 22,000 — slightly less than 2 percent. Nor can this be explained by the fact that there were fewer women working. Even in the early 1990s women accounted for 47 percent of the workforce. The reason that men are more sensitive — to recessions at least — is that they are overrepresented in highly cyclical sectors. Nine out of 10 workers in construction, and seven out of 10 in manufacturing, are male. These sectors generally take the biggest tumble when the economy declines. Women, meanwhile, dominate the most cosseted portions of the economy: healthcare, education and government. Despite this, the current downturn has been no cakewalk for women. While women have been better at clinging onto their jobs, they have not done so well holding onto their salaries. According to the U.S. Census Bureau, women in full-time work saw their annual earnings fall at twice the pace of men in the early stages of the recession — losing almost 2 percent last year. The news actually gets worse for women. Most measures of employment and salary suggest the gender revolution has stalled. The gulf between male and female salaries, which narrowed dramatically in the last 25 years, has started to widen again. In 2005 women on average earned 81 percent as much as men. By the end of last year, this was slipping back to 79.9 percent. Much of this is accounted for by shorter working hours and choice of industry. Even taking this into account, however, academics like Shelley Correll at Stanford University have shown that there is still a “motherhood penalty” built into the workforce. Correll calculates that mothers who work just as hard as male counterparts earn about 5 percent less per child. Progress on the desegregation of the workforce and attitudes to gender roles have not advanced since the mid-1990s. This is despite the fact that women are now outpacing men academically — earning 58 percent of bachelor’s degrees and 60 percent of master’s. Since superior academic performance doesn’t seem to be narrowing the gap, we need a renewed drive by government and companies to root out discrimination and create a more family-friendly work place. Although the United States has excellent anti-discrimination laws, enforcement is woefully underfunded. Another necessary but more expensive step would be greater provision of childcare. Increasing the length of the school day, lowering the starting age and reducing school vacations would all help — as could more generous paternity leave. Larger employers should be encouraged to expand the provision of workplace nurseries — a reliable way of attracting highly skilled mothers. As the slide in manufacturing and production tails off, male workers can expect some relief. The problems of many women in the workforce are far more ingrained and harder to deal with. Man-cession aside, it’s still a man’s world. *** http://www.nytimes.com/reuters/2009/10/07/business/business-uk-usa-budget.html U.S. Budget Deficit Estimate $1.4 Trillion October 7, 2009 WASHINGTON (Reuters) - The U.S. government spent a record $1.4 trillion (876.9 billion pounds) more than it collected in the fiscal year ended September 30, congressional analysts said on Wednesday, in their final estimate before the official numbers are issued. Bank bailouts, stimulus spending and declining tax revenues due to a deep recession led the government to post a deficit that amounts to 9.9 percent of the U.S. Gross Domestic Product for the 2009 fiscal year, the Congressional Budget Office said. The Treasury Department will report the actual deficit later this month. The deficit for fiscal 2008 was $459 billion. The $1.4 trillion estimate is less than the budget office's estimate of $1.58 trillion issued in August, but the discrepancy arises from differences in calculating the costs of bailing out mortgage giants Fannie Mae and Freddie Mac, not any sudden change in economic conditions, CBO said. The government took in $2.1 trillion in fiscal 2009, a 16.6 percent drop from the previous year as the recession led to sharp declines in individual and corporate income taxes, CBO said. On the other half of the ledger, outlays increased 17.8 percent to $3.5 trillion, CBO said. Among the most expensive items were $154 billion for bailouts under the Troubled Asset Relief Program, $91 billion for the Fannie and Freddie bailouts, and $100 billion under the massive stimulus package approved in February. Excluding items in the stimulus package, spending for unemployment benefits more than doubled to $120 billion, CBO said. One bright spot: the government's interest payments on its debt actually decreased 23 percent to $199 billion thanks to lower interest rates, CBO said. (Reporting by Andy Sullivan, editing by Philip Barbara) *** http://online.wsj.com/article/SB10001424052748703746604574462111444795076.html OCTOBER 8, 2009 GM Expected to Seal Hummer Sale By NORIHIKO SHIROUZU BEIJING – General Motors Co. is expected to seal a deal as early as Friday to sell its Hummer unit to China's Tengzhong Heavy Industrial Machinery Co. for $150 million, according to people close to the talks—a high-profile acquisition China's central government could still balk at because of Hummer's reputation for gas-guzzling excess. Tengzhong Chief Executive Yang Yi has flown to Detroit, where Hummer has headquarters, this week and is likely to be on hand to announce the deal with GM, according to these people. They said the deal would allow Tengzhong, based in the western Chinese city of Chengdu in Sichuan province, to take over the Hummer brand and acquire the technology to produce its products: two hulking SUVs called H2 and H3. The people said Tengzhong-owned Hummer would remain a U.S.-headquartered brand with manufacturing capability, although there is a possibility a Hummer factory will be built in China down the road to make the brand, currently focused on North America, a more global brand. The people said Tengzhong would retain Hummer's current management, led by CEO Jim Taylor, and take over core members of the brand's engineering team. Write to Norihiko Shirouzu at norihiko.shirouzu@wsj.com *** http://www.cnbc.com/id/33236976 Oil at $200, Stocks Can Keep Rallying: Jim Rogers Friday, 9 Oct 2009 Reuters Investor Jim Rogers, a prominent commodities bull, said Thursday the U.S. government bond market will be the next bubble to burst due to unsustainable borrowing, and agricultural commodities and precious metals are among his favorite investment picks. Rogers also said stock markets could head for a pullback following a strong rally. "It's overdue for a correction. Certainly, it would not be surprising if there were a correction after a straight-up move for six months," Rogers told Reuters Television in an interview. He was not "selling the market short," and the equities market could keep rising for a long period of time, Rogers said. After the Reuters interview, Rogers said at a seminar hosted by ETF Securities that the bull market in U.S. Treasurys has come to an end. "The next bubble that I see developing is in the United States government bond market. It is inconceivable to me that anybody would lend money to the U.S. government for 30 years in U.S. dollars at 3 to 6 percent interest rate," he said. "So, somewhere along the line, this bubble is going to pop. If any of you own bonds, I'd be terribly worried, I would think about getting out of the bond." Hot Commodities Rogers said agricultural products, precious metals and oil remained among his favorite commodity picks. "I know that inventories of agricultural products are the lowest they have been in decades. We have shortages of everything developing in agriculture," he said. He said sugar, which recently hit a 28-1/2-year high, could go much higher in the next decade. Among precious metals, Rogers said palladium and silver looked more attractive due to cheaper prices, but he would buy gold in the long term because the metal has historically been regarded as a real asset. Rogers said he was certain crude oil could trade as high as $200 per barrel over the course of the bull market because of depletion. Rogers, who resides in Singapore, had co-founded the Quantum Fund with George Soros in 1970. The fund, since closed, returned 4,200 percent over the next decade, compared with a 50 percent gain in the S&P 500 index. Asked about his investment philosophy, Rogers warned against chasing hot markets and venturing into unfamiliar assets. "Investors should only invest in things that they know a lot about..., and that's how you are going to get through all of these and survive. Even though that means just putting your money in the bank," he said."It's better to earn 1 percent a year than to lose 1 percent a year."