Tag: banks
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Avoiding a Japanese Decade-New York Times Edit.
Many points have been left out.
Risk is taken by Banks for large corporations , not for small/individual borrower.If you analyse bad debts , you will find maximum percentage shall be from large/corporate borrowers.Most of the time large corporations are financed based on non economic or financial considerations.
Banks must take reasonable risk in lending to small companies and individuals for it shall generate demand and propel economy.
Cap on income or tax on income beyond a certain ceiling shall prevent social unrest and morally being paid enormous sums as in Banks/corporations is obscene
While lending care also should be taken, whether it be for small or big corporations, in determinig the repayment capacity..
Non Performing Assets should be disposed after 5 years.Story:
Thankfully, 2009 ended better than it began. Economists talk about green shoots of recovery taking hold. Consumer confidence has improved. Equity markets have soared. But for all the progress, the American economy remains extremely vulnerable.To understand those economic risks, it is worth considering Japan’s experience in the 1990s. A bursting housing bubble there sparked a banking crisis that was followed by a decade of economic stagnation.
The Japanese government lacked the resolve to do what was necessary. It failed to fix its banks and stopped its early fiscal stimulus before recovery had taken hold, leaving the economy all too vulnerable to outside shocks, including the Asian currency crisis and the dot-com collapse in 2001. Japan’s annual growth rate — which had averaged 4 percent since 1973 — slowed to less than 1 percent, on average, from 1992 to 2003.
President Obama’s economic advisers have learned from Japan’s experience. But they may not have learned enough. (Certainly Congress has not been paying attention.) If they are not careful, they could end up repeating some of the big mistakes that condemned Japan’s economy to a lost decade.
The green shoots are barely out of the ground and Republicans and conservative Democrats in Congress are already demanding that the administration “do something” to cut the budget gap. We worry that the political drumbeat may be too hard to resist. In 1997, after three years of tepid growth, the Japanese government stopped its stimulus: it raised a consumption tax, ended a temporary income tax cut, increased social security premiums and nipped recovery in the bud.
Japan’s other blunder was its unwillingness to fix its banks. Regulators did not force banks and indebted firms to recognize trillions of yen worth of bad loans. Banks trundled along like zombies, squandering credit to keep insolvent firms on their feet. When the Asian currency crisis hit, many undercapitalized banks toppled over.
The Obama administration has not been quite as forgiving with the banks, but it still has been nowhere near aggressive enough. The regulatory reform meant to curb bankers’ destructive risk-taking is moving at a snail’s pace through Congress. While the Treasury has forced banks to raise capital, many — including some of the largest — remain thinly capitalized and weak.
Banks have been unwilling to sell bad assets and take a loss. They remain stuffed with risky commercial and residential mortgages and consumer debt. Bankers, meanwhile, have made things worse by insisting on paying themselves huge bonuses after profiting so handsomely from the taxpayers’ tolerance and largess.
There are two big problems with that. The bankers’ taste for risk has not been in any way quenched. And the American public is, justifiably, fed up. That means if there is another bank crisis — say when the Federal Reserve takes away the punch bowl of low interest rates — it will be a lot harder to get Congress to approve another bailout, no matter how necessary.
The Obama administration has still done a far better job — up to now — in addressing the crisis than Japan’s governments did. As dismal as 2009 was, it pales when compared with what would have happened without the fiscal stimulus and the Fed’s enormous monetary boost.
The White House is now pushing another mini-stimulus plan for next year. Chances are it will need to do a lot more to push reform and boost the economy. If there is an overarching lesson from Japan’s lost decade, it is that half measures don’t pay.
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US agrees $6m pay cheques for Fannie and Freddie bosses
Disgusting to say the least.
The heads of US mortgage giants Fannie Mae and Freddie Mac may each receive pay packages of up to $6m (£3.7m) for 2009, depending on company performance.
The government has put $111bn of public money into the companies since taking them over and the awards go against moves to curb lavish pay packages.
But the regulator which decided the pay levels said the awards were 40% lower than before the government bailout.
The sums involved reflected the need to attract and retain talent, it argued.
http://news.bbc.co.uk/2/hi/americas/8430383.stm -
7-Eleven Hack From Russia Led to ATM Looting in New York
Flashback, early 2008: Citibank officials are witnessing a huge spike in fraudulent withdrawals from New York area ATMs — $180,000 is stolen from cash machines on the Upper East Side in just three days. After a stakeout, police arrest one man walking out of a bank with thousands of dollars in cash and 12 reprogrammed cards. A lucky traffic stop catches two more plunderers who’d driven in from Michigan. Another pair are arrested after trying to mug an undercover FBI agent on the street for a magstripe encoder. In the end, there are 10 arrests and at least $2 million dollars stolen.
The wellspring of the dramatic megaheist turns out to be more prosaic than imagined: It started with a breach of the public website of America’s most famous convenience store chain: 7-Eleven.com.
In his most-recent plea agreement, filed in court Monday, confessed hacker Albert Gonzalez admitted conspiring in the 7-Eleven breach and fingered two Russian associates as the direct culprits. The Russians are identified as “Hacker 1″ and “Hacker 2″ in Gonzalez’s plea agreement, and as “Grigg” and “Annex” in an earlier document inadvertently made public by his attorney.
The Russians, evidently using an SQL injection vulnerability, “gained unauthorized access to 7-Eleven, Inc.’s servers through 7-Eleven’s public-facing internet site, and then leveraged that access into servers supporting ATM terminals located in 7-Eleven stores,” the plea agreement reads. “This access caused 7-Eleven, Inc., on or about November 9, 2007, to disable its public-facing internet site to disable the unauthorized access.”
At the time, there were 5,500 Citibank-branded ATMs at 7-Eleven stores around the country. According to SEC documents, 7-Eleven ran its own transaction-processing server to handle 2,000 of them: advanced models called Vcom machines, manufactured by NCR. The 7-Eleven Vcoms support special functions like bill payment, check cashing and money-order purchases. For two weeks in September 2007, anyone who typed a PIN in one of these was exposed.
Court records from the New York–area Citibank cases show how that single breach from Russia trickled over the internet and down to the streets of New York.
The first break in the case had its roots in a Jan. 30, 2008, traffic stop. Westchester County police pulled a car over for speeding on the Saw Mill River Parkway in Dobbs Ferry, New York. The driver, 21-year-old Nue Quni, was driving on a suspended license, so the officers decided to have the vehicle impounded. While they waited for the tow truck, they conducted a routine “inventory search” of the car.
Inside, police found $3,000 in cash, a laptop computer, a magstripe writer — which is used to reprogram cards — and 102 blank, white plastic cards. They also recovered receipts showing cash withdrawals from ATMs in Manhattan and the Bronx, and more showing wire transfers.
Facing federal access-device-fraud charges, the passenger in the car, 22-year-old Luma Bitti, began cooperating with the FBI. She explained that she was hired over the internet in December 2007 to program cards with the stolen information, then withdraw money from ATMs and wire it to other people. With Bitti’s consent, an FBI agent took over her IM and e-mail accounts, and began corresponding with the person who hired her.
Citibank ATM plunderer Yuriy Ryabinin is shown in a 2003 photo taken at a ham-radio convention.
The FBI arranged in April 2008 to meet the man in Manhattan, supposedly to provide him with a magstripe writer. An FBI agent, still posing as a fraudster, showed up at the meeting with a magstripe writer in hand.But the man, who is identified in one court record by the initials “DK”, double-crossed the undercover agent, and sent two proxies in his place: 21-year-old Andrey Baranets and one Aleksandr Desevoh, according to an FBI affidavit. When the agent refused to hand over the magstripe writer, Desevoh took a swing at the agent, who ducked the blow and ran away.
The two men gave chase through the streets of Manhattan, before they were grabbed by other FBI agents who’d been watching the scene. In pleading guilty last February, Desevoh said DK had told him to “take this device using force.”
Federal prosecutors in New York had by then charged three more people in the ATM-cashing conspiracy, including 32-year-old Ukrainian immigrant Yuriy Ryabinin, aka Yuriy Rakushchynets, and 30-year-old Ivan Biltse.
In addition to looting Citibank accounts, Ryabinin had participated in a global cybercrime feeding frenzy that tore into four specific iWire prepaid MasterCard accounts, issued by St. Louis–based First Bank, in the fall of 2007. On Sept. 30 and Oct. 1 — just two days — the iWire accounts were hit with more than 9,000 actual and attempted withdrawals from ATM machines around the world, resulting in $5 million in losses.
At the time of the ATM capers, FBI and U.S. Secret Service agents had been investigating Ryabinin for his activities on Eastern European carder forums. Ryabinin used the same ICQ chat account to conduct criminal business, and to participate in amateur-radio websites. The feds compared photos of Ryabinin from some of the ham sites to video captured by New York ATM cameras in the Citibank and iWire withdrawals, and determined it was the same man — right down to the tan jacket with dark-blue trim.
When they raided Ryabinin’s home, agents found his computer logged into a carding forum. They also found a magstripe writer and $800,000 in cash — including $690,000 in garbage bags, shopping bags and boxes stashed in the bedroom closet. Another $99,000 in cash turned up in one of the safe-deposit boxes rented by Ryabinin and his wife, Olena. Biltse was also found with $800,000 in cash.
Ryabinin’s wife told investigators that she witnessed her husband “leave the couple’s house with bundles of credit cards in rubber bands and return with large sums of cash,” a Secret Service affidavit (.pdf) reads.
Two of the ATM scammers arrested by the FBI filled in the bureau on the details of the operation, explaining how, beginning in December 2007, they began working with a ringleader in Russia, who provided them with ATM account numbers and PINs. The deal was straightforward: They’d use the information to encode fraudulent ATM cards and withdraw cash, sending 70 percent of the take to the Russian and keeping 25 percent for themselves. Another 5 percent went for expenses.
The duo initially used Western Union money transfers to get cash to their boss in Russia, according to an FBI affidavit. Later, they exploited a relationship with 30-year-old Ilya Boruch, an “exchanger” for the site WebMoney, a PayPal-like internet-payment system.
Exchangers are normally legitimate businesspeople who swap cash for WebMoney’s internet currency. But according to the feds, Boruch had gone bad and become a money-laundering service for the Citibank ATM heists, transferring hundreds of thousands of dollars to the ringleader in Russia, without reporting the transactions to the government, as required by U.S. law.
Through his business, Bidding Expert, Boruch allegedly funneled as much as $80,000 to $100,000 a week on behalf of the two fraudsters, who delivered the cash to Boruch in person, sometimes by tossing envelopes into an open window in his car.
One of the FBI informants, identified as co-conspirator 1, or CC-1, in court documents, held this instant-message exchange with Boruch on Jan. 10, 2008, according to the FBI. (Punctuation is added).
CC-1: Need more wm [WebMoney] …
Boruch: How much?
CC-1: 60 [$60,000]
Boruch: Wow. OK. Listen, is everything OK?
CC-1: So far. Why?
Boruch: Well, you need so much wm! It’s just kinda strange
CC-1: We’re working
Boruch: OK. Drop it off all in 100s …
CC-1: When can the wm be ready?
Boruch: Don’t know
CC-1: Approximately
Boruch: If you pay an additional 0.5 percent then it’ll be ready tomorrow
CC-1: And if not?
Boruch: Then I don’t know. I can buy it from my people, but they’re expensive
Boruch was charged last year with conspiracy to launder money.
The final known arrests in New York came on May 8 of last year. Citibank noticed that a large number of the fraudulent withdrawals were coming through its 65th Street branch, prompting them to put the location under surveillance. When the Citibank official staking out the spot got a call alerting him to a theft in progress, he crossed the street to peer through the vestibule glass, and watched as a man in a baseball cap, jeans and a sports coat put a thick envelope into a briefcase and moved from one ATM to the next.
The official flagged down two nearby NYPD officers who’d already been briefed on the fraud, and the cops arrested 28-year-old Aleksandar Aleksiev. With his consent, they searched his bag and found six ATM-deposit envelopes stuffed with cash, and 12 blank cards with stickers on them and a different PIN code written on each.
http://www.wired.com/threatlevel/2009/12/seven-eleven/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed:+wired/index+(Wired:+Index+3+(Top+Stories+2)) -
Regulator decides on bank overdraft charges test case
It is time Govt. initiate action against Banks.For banks peccadilloes, please refer under banks in this site.
The Office of Fair Trading (OFT) will say later if it is going to continue its test case against banks over the fairness of their overdraft charges.
It follows the banks’ successful appeal on the issue to the Supreme Court.
It ruled last month that the OFT could not use a part of the unfair consumer contract regulations to decide if bank charges are fair.
At stake is the ability of banks to levy charges amounting to £2.6bn each year on their overdrawn customers.
The announcement, the OFT’s first detailed response to the Supreme Court judgement, is expected at 0700 GMT.
Martin Lewis, whose website Moneysavingexpert.com has played a leading role in the campaign against bank charges, urged the OFT to continue pursuing legal action.
“We know the OFT thinks charges are unfair, because it provisionally said so,” said Mr Lewis.
“If the OFT pulls out, it’ll be a terrible day for justice.
“The banks’ deep pockets, filled to a great extent with taxpayers’ money, have priced out many consumers from fighting unjust charges,” he added.
Supreme Court ruling
The banks and the OFT first agreed to stage a legal test case in July 2007, to decide if the OFT had the powers to rule on the fairness of bank charges.If the OFT is not going to act as the consumer champion, who is?
Marc Gander, CAG
A consumer campaign on the issue had led to hundreds of thousands of complaints which threatened to swamp the UK legal system.
But after the High Court and Appeal Court sided with the OFT, the Supreme Court turned the tables.
The five judges did not rule on the issue of fairness itself.
They decided that the parts of the 1999 Unfair Terms in Consumer Contract Regulations (UTCCR) that the OFT was trying to invoke did not, in fact, give it the powers it thought it had.
The judges said that overdraft charges were part of the price that customers agreed to pay for the package of services their banks provided, and as such were excluded from the scope of the regulations.
What next?
The OFT has a number of options. It can:
• publish its investigation into the actual fairness of bank charges, which it has been conducting since March 2007
• find other laws or regulations with which to attack bank charges
• ask the Competition Commission to launch an enquiry into overdraft fees on the grounds that they reflect a lack of competition in the banking industry
• throw in the towel and admit it does not have any power to challenge bank fees at all
• ask the government to change the law to give it increased legal powers
• encourage disgruntled consumers to use the proposed new laws in the Financial Services Bill which will give groups of customers the right to bring court actions against financial institutions
• ask the FSA under its new fairness rules to investigate the way banks charge overdrawn customers.
The government has already told the banking industry to devise a fairer way of charging overdrawn customers in the future.
This may bring no encouragement to the more than one million people who feel they have been overcharged in the past and who have demanded refunds.
Their previously frozen complaints are now either being considered by their banks, or where legal action was started, may soon be decided by county court judges.
“We have here an industry whose business model is predicated on the failure of up to 30% of its clients to repay their overdrafts,” said Marc Gander of the Consumer Action Group (CAG).
“If the OFT is not going to act as the consumer champion, who is?”
http://news.bbc.co.uk/2/hi/business/8424859.stm
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