Posts Tagged ‘Blair Ball’

President Barack Obama’s re-election will herald in the demise of thousands of smaller banks, analysts say.

The combination of loose monetary policies supported by the White House that have kept interest rates at rock-bottom levels and tough regulations on capital levels outlined under the Dodd-Frank law won’t allow banks to drum up enough business to survive.

Capital requirements have gone up too fast, and rates have gone too low. There’s no way out.”Other analysts agree.“It’s fairly clear that 50 percent of the banks in the U.S. need to be recapitalized,” said Dick Bove, a banking analyst at Rochdale Securities, Fortune added.

  • Emmett Daly, a principal at Sandler O’Neill who specializes in small banks, told an industry conference hosted by Mergermarket recently that the number of banks in the United States would shrink to a few hundred from more than 7,000 today.
  • Dodd-Frank consists of 30,000 pages of rules, who has the capability to understand what all these rules mean?
The Glass-Steagall Act of 1933, which prevented commercial banks and investment banks operating under one roof up until its repeal in 1999, was only 37 pages long.

Bank of all sizes are dealing with increasing regulations in the wake of the financial crisis, especially those outlined under the Dodd-Frank financial reform law. This burden is crushing.
Banks will spend more time worried about compliance and less time lending.


Social Media Footprint - Social Media Coach

A significant change took place in April of 2011 in the world of Google, Bing and Yahoo search.

For the first time the top 3 search engines started to index you and your business based upon you participation in Social Media Platforms. Platforms such as…

Most of the big banks are using Social Media daily and have teams of people leading their Social Media Strategies. Twitter seems to be used by most for customer service, reaching out, answering questions. Monitoring what people are saying about their bank and brand.

Yet most of the smaller banks and credit unions say we can’t utilize Social Media because of FINRA. That’s an interesting comment since these big banks have a bigger target on their back them there smaller brethren. How does J.P. Morgan Chase do it? Citi? Wells Fargo? They have a Social Media Policy in place, and a small team of people who play by the rules.

It’s just an excuse to not engage with this new form of communication. In talking to CEO’s the #1 reason seems to be fear. Fear that someone will say something bad about their bank and brand. Got news for you…since the beginning of time people have communicated both good and bad about a business, product or service. Just so happens in Social Media, it spreads faster.

So…I ask this question. If someone says something negative about your bank or brand out in Social Media, how will you respond? Always a long pause. No one has yet to give me a clear answer because they are not out on Social Media Platforms. The financial industry as one industry insider said…late adapters. Maybe some will not adopt at all. It’s costing these banks more than they know, and the big just keep getting bigger, and with all these new regulations squeezing profits, they need to grow, not hunker down.

“Someone once said…If you don’t like change, you’ll like irrelevance even more.” – Anonymous 

In the offline world, customer service functions tend to live in their own expensive silos along with the specific product lines they support.

“I think that’s what frustrates a lot of customers.”  “They’ll call into a company and the first person they speak to will know a first piece of the answer, but then they’ll have to transfer them to get the next piece of the answer.”

But social media, with its cheap, flexible infrastructure, is a natural place to consolidate a brand presence and build a cross-functional customer support staff.

Social media “as a service channel is going to be widely accepted”-and soon.

“Now no one bats an eyelash about sending a business an email if they have a question or need additional information. I think in a few years from now, tweeting a question [to a company] or posting it on Facebook or Google+ is going to be the norm.”

Now’s the time. Jump in… the Water’s Fine in the Social Medial Pool.

Prepare1 conducts a series of workshops, and works with businesses, non-profits, and individuals to succeed with Social Media.

Check out some new upcoming workshops.

Bank Wealth Plunge

With the European bank issues, Moody’s Investors Service (MCO) has cut the debt ratings on five large U.S. banks, along with those of 10 other global financial institutions.

  • Morgan Stanley (MS) received a two-notch cut
  • Bank of America (BAC), which got a one-level cut
  • Citigroup (C) received a two-notch cut
  • Goldman Sachs (GS) received a two-notch cut
  • JPMorgan Chase (JPM), received a two-notch drop.

Other non-U.S. banks that were downgraded include Barclays (BCS), BNP Paribas (BNP), Credit Agricole (ACA), Credit Suisse (CS), Deutsche Bank (DB), HSBC (HBC), Royal Bank of Canada (RY), Royal Bank of Scotland (RBS), Societe Generale (GLE), and UBS (UBS). With Credit Suisse receiving the biggest downgrade of 3 notches.

Moody’s cited the banks’ shrinking growth and dimming profit forecast in explaining the downgrade. The ratings agency also highlighted the firms’ exposure to the capital markets at a time of significant market volatility. “All of the banks affected by today’s actions have significant exposure to the volatility and risk of outsized losses inherent to capital markets activities,” said Moody’s global banking managing director Greg Bauer in a statement.

It’s possible now that this could increase borrowing costs as more trading partners could require more skin in the game.

Social Media Marketing

Many banks and credit unions have been slow to adopt to Social Media. In talking with CEO’s and Branch Managers, the common reason seems to be that we are regulated, and the fear of negative criticism. Unfortunately neither one hold much water. Throughout the course of our history, we’ve had satisfied and unsatisfied customers. These customers have always spread the word to their friends and associates. What has changed…is the platform in allowing you to do this more quickly and effectively.

I ask one simple question for those who are not out on social media. If someone has a negative experience with your company, and they spread this via Social Media, how will you respond?

Think of Dell, Nestle, Domino’s Pizza. They all got blasted by their customers in Social Media, yet none of the companies had a presence in social media.  Those companies got creamed, lost millions of dollars in sales. Michael Dell when it happened, called an immediate weekend meeting of all his top executives. Today, they are a great example of how to conduct Social Media. One of their division sells $7 million dollars worth of computers via their Twitter account.

Other banks and credit unions have been doing social media successfully for the past couple of years. They recognize that the younger demographics they are trying to attract are on Social Media daily. As more and more people have smartphones, more are accessing their financial institutions via their smartphone.

How will you keep up? At what point will it be too late to get in the Social Media Game? The key is to develop a solid social media policy. Here are some tips.

1. All policies need to address what’s in it for the reader/user

What should the reader take away after reading the policy? One of the common themes I kept coming across in introductions to social media policies is the idea that the policy should focus on the things that employees can rather than what they can’t do. For those of us who have experience writing policies, this is a real paradigm shift.

But that’s the spirit of social media — it’s all about leveraging the positive.

2. Who is responsible for conducting Social Media?

Clearly define this persons role in Social Media. Be sure that you monitor what they do, how they are doing it. Have a secondary backup for usernames and passwords. I can’t tell you how many times I work with companies who had an employee leave, and the user name and password went with them, locking them out of ALL their Social Media accounts.

3. What Social Media platforms work best?

Assess what Social Media platforms like Facebook, Twitter, LinkedIn, Blogs, YouTube, and Google+ that your customers are best reached. Then lay out a clear goals/objectives strategy to move forward and monitor. Be very clear about your goals/objectives, but be Flexible about the process to get you there.

4. Respect copyrights and fair use

This should be a no-brainer, but just in case: always give people proper credit for their work, and make sure you have the right to use something with attribution before you publish.

5. Protect confidential & proprietary info

Being transparent doesn’t mean giving out Coca Colas recipe or the recipe for McDonald’s Big Mac special sauce.

“Employers may fail to make employees aware of any obligation they may have to protect confidential or proprietary information.” Transparency doesn’t give employees free rein to share just anything.

Therefore, employees who share confidential or proprietary information do so at the risk of losing their job and possibly even ending up a defendant in a civil lawsuit. At the very least, companies will seriously question the judgment of an employee who shares confidential or proprietary information via social media. It’s a good idea to make sure all of this is clearly laid out in your social media policy.

6. Assess time commitment

Current research shows that it takes at least 1 to 1 1/2 hours per day to make it effective. It is not a silver bullet. Although these platforms are free, the time spent by an employee or employees costs money. In the future, it will be the responsibility of ALL employees to implement Social Media. Zappos the shoe and clothing online company has all 1,000+ employees out on twitter. They are obsessed with Customer Service and it shows in their Social Media efforts across all platforms.

7. Be authentic

Include your name and, when appropriate, your company name and your title. Consumers buy from people that they know and trust, so let people know who you are.

Your thoughts on why banks, credit unions and financial institutions are slow to adopt to Social Media?

With all the negative press in the past few years about banks by this administration, one would wonder why Credit Unions haven’t grown more. Is it because banks do a better job of marketing, and providing a wider array of products and services? Typically the Credit Unions with asset size greater than $100 Million act more like banks. Maybe that explains their size and greater percentage’s of market share in key metrics versus their smaller Credit Union brethren.

Credit Unions have been slower to adopt Social Media Marketing like their mid to small size banks. In this fast paced world in which we find ourselves, consumers are wanting more and faster services. Most small to midsize Credit Unions and Banks are challenged to spend the money and hire the skill set to keep up. Will the pace of change accelerate or slow down? Will it be harder to keep up with the competition if you don’t adapt now?

State of the Credit Union

  • The number of Credit Unions dropped by 3.5% from 2010 to 2011.
  • From 2007-2011 Credit Unions have declined by over 1000 according to CUNA.
  • The number of Credit Unions are fairly even across all asset classes.

Number of Credit Unions by Asset Size 2011

  • Credit Unions with an asset size greater than $100 Million control 81% of all members.

Credit Union Memberships versus Asset Size 2011

  • Credit Unions with an asset size greater than $100 Million control 87% of all Assets.

Credit Unions Total Assets by Size 2011

  • Credit Unions with an asset size greater than $100 Million control 89% of all loans to members.
  • Total Loans by Credit Unions by Asset Size 2011Credit Unions with an asset size greater than $100 Million control 87% of all savings by members.Total Savings of Credit Unions by Size 2011The top four banks have asset sizes larger than all the Credit Unions combined.
  1. J.P Morgan Chase leads the way with 2.3 Trillion.
  2. Bank of America with 2.1 Trillion.
  3. Citigroup with 1.9 Trillion.
  4. Wells Fargo 1.3 Trillion. 

Rounding out the top 50 in banks is Hancock Holdings with assets of $19 Billion.

There is only 1 Credit Union with an asset size greater than Hancock Holdings. The Navy Federal Credit Union is $39.6 Billion or roughly 4% of Total Credit Union Assets.

What’s your take on the state of the Credit Unions and Banks? What will the end of 2012 look like for Credit Unions and Banks?

February was not kind to Obama and his administration. His spending continues to set records.


The CBO has projected that the government deficit for February 2012 will be $229 billion, making the FY2012 deficit already more than half a trillion dollars.  This is the highest monthly budget deficit in history.

  • Gas prices highest in history for this time of year.
  • Debt highest in history.
  • Lowest growth rate.
  • Regulations that are choking financial institutions, and small business.
  • Freedoms eroding.

What’s your Debt Burden?

The following tables are provided by the Tax Foundation with these assumptions.

Let’s start with the top 1% of taxpayers.

  • The top 1% makes $345,000 or more of adjusted gross income in a year.
  • The top 1% pay 37% of federal income taxes, so let’s assume they’ll pay 37% of the debt.
  • That means that each top filer in the top 1% is responsible for four million dollars of the debt.
  • And if we’re going to pay it off in 15 years, with no interest, then we would require $22,000 per month from those taxpayers after they have paid their current tax burden.
  • Does anyone think we can raise taxes by $22,000 a month on this group of taxpayers and have them survive that level of confiscation? Of course not. They would be wiped out.
  • The top 1%, if you combined all their assets it would be equivalent to $1.5 Trillion dollars. With a deficit now in excess of $15 Trillion, do you see how ludicrous this administration states they need to pay their fair share. You could wipe them out, not to mention their spending, their companies that employ individuals jobs. All for not even 10% of the total debt in this country?

Paying the debt is going to cost real money, and it’s going to have to come out of real pockets. Already the bottom 50% in this country only pay 1% of the tax burden.

Tax Burden

Tax Burden

Tax Burden

Where do we go from here? Is the United States the next Greece?

Attorney Generals in 49 out of 50 states voted for this mortgage settlement. All sounds good on the surface, politicians and banks are coming forth and declaring victory.

Mortgage Forclosure

Mortgage Foreclosure

Let’s take a closer look. The top 5 banks The signatories to the deal are Bank of America, Citibank, Wells Fargo & Co., JPMorgan Chase and Ally Financial (formerly GMAC), which handle payments on more than half the nation’s outstanding 27 million home loans and therefore have been at the center of the servicing and foreclosure abuses the settlement is supposed to end.

  • How much of this will translate into an outlay of cash by the five banks? Not much, if any.

On the surface it would seem that it is a $25 Billion dollar settlement when in fact it is not. The only cold cash the banks are paying is a combined $5 billion, including $1.5 billion to compensate borrowers whose homes were foreclosed on from 2008 through the end of last year, with the rest going to the federal and state governments to pay for regulatory programs.

Even the government acknowledges that a lender typically benefits when ways are found to keep a home out of foreclosure — a lender loses an average $60,000 on every foreclosure, according to figures the federal government disclosed in connection with the settlement announcement. It’s been institutional resistance and legal entanglements, not economics, that have kept more modifications from going forward.

Many of the loans destined to be modified under the settlement aren’t even owned by the banks, but rather by investors — the banks just collect the checks.

  • Investors such as pension funds
  • 401(k) plans
  • Insurance companies and the like

Parties that did not themselves engage in any of the wrongdoing covered by the settlement.” If I’m an investor, how am I with taking this kind of hair cut? This will not sit too well with the investor community.

What about homeowners? They don’t get much, especially in relation to the scale of the housing crisis.

  • More than 2 million owners have lost their homes to foreclosure during the last four years.
  • This deal will provide 750,000 with a payment of $2,000 each.

Some 11 million homeowners are underwater by about $700 billion combined, or an average of nearly $65,000 each. In a transport of optimism, federal officials are projecting that this deal will help 2 million of them, to the tune of perhaps $20,000 each. By the way, loans owned by the government-sponsored firms Fannie Mae and Freddie Mac aren’t eligible for this relief. Since they own or control the majority of all outstanding mortgages, that’s a rather large black hole.

Remember though, Fannie Mae and Freddie Mac are bleeding money every month, and our owned by the government. They  have paid out huge bonuses even in these tough economic times. Fannie Mae was the fair-haired child of Barney Frank . You may recall in July of 2008 Barney was on record defending Fannie Mae, how strong they were, and how dare anyone question their motives and financial strength. They collapsed less than 4 months from his statements to the public and Congress.

They were the entities that forced the banks into doing Stated Income Loans, No Assets Loans, NINA or No Income, No Asset Loans. While some may point fingers at the banks, Fannie and Freddie were at the forefront pushing these types of mortgages on the banks, and lenders, trying to increase homeownership to individuals who never should have been put into a house to begin with.

The settlement, meanwhile, provides cover for other stealth bailouts. On Thursday, the day of the big parade, the U.S. Office of the Controller of the Currency quietly settled claims against BofA, Wells Fargo, Citibank and JPMorgan Chase related to cease-and-desist orders the agency issued last year over the banks’ crooked mortgage servicing and foreclosure activities.

The agency says it settled those claims for $394 million. The actual figure is zero. That’s because the agency won’t ask for any of the money as long as the banks meet their obligations under the mortgage settlement. This is the kind of fun with math that helped get us into the housing crisis in the first place.