The Columbian, a newspaper in Vancouver, Washington, has an excellent narrative account of the downfall of the Bank of Clark County.

The story reveals how a number of factors led the FDIC to close the bank.  There was more than one factor in play, and the scenario shows how it is not just foreclosures that are leading to a higher frequency of bank closures this year.

There was also a conscious decision to accept risk.  The Bank of Clark County wanted to get in on the boom in real estate development.  It sought out the opportunity to be the lender on a number of development (more…)

Commodes are interesting.  Commodes are important for bankers.  If you are going to lead a large bank through a credit crisis, you probably want a good commode.  Some of the smartest guys on Wall Street like fancy commodes.  Here is a nice commode, an “English Breakfast Commode,’ from 1772.  I am not sure if it helps you identify a bad loan.

The kind of commode John Thain can appreciate

Now that John Thain won’t have access to his $35,000 commode, he’ll have to find one for his “home office.”

More About Commodes

There are times when nothing else will do.  You just need a commode. Now, some people will argue that one commode (like John Thain’s) is different than some other commode.  And then again, some will say that a commode is a commode.

Tell you what: Wal-Mart has a nice bariatric steel commode.  It can be bought and delivered for just $77.68.  It will hold up to 850 pounds.

American Home Products has a stainless steel commode for just $54.  That’s a lot of savings!

Some people have pointed out that John Thain’s commode isn’t like the one at Wal-Mart.  I would have to agree.  John’s is a lot better.  It actually has a lot of functionality that you can’t get from one of these bariatric steel jobs.  You can wash your hands in it!

Now that’s good.  I suppose John is washing his hands of a whole lot these days.

Alternatively, John Thain could get himself a new commode that has a more rustic, open air of feeling.  Something that helps him get in tune with the feelings of the taxpayers, who are going to take the bath on the losses.

Remember, that the deal that BAC worked on the merger with MER said that BAC would only take the first $10 billion in losses.  Then, after that, the next $90 billion in losses are taken by either the Treasury Department or the Federal Reserve.  So, it looks like Ken Lewis is made because that $15.5 billion pretty much exhausts all of the $10 billion that he stood to lose.  But now, each additional dollar in losses is coming off of the taxpayer.

Here is a commode for the American taxpayer, after he is done paying the losses on these loans.  Maybe Ken Lewis can put some of those Merrill loans in it, too.

Taxpayer Commode

Yesterday’s news that Merrill Lynch executive John Thain is out at BAC is, well, yesterday’s news.  Ken Lewis wanted Thain out, presumbably because he was upset about that undisclosed $15.5 billion in losses.  He might also been angry about the $1.2 million office, with the $35,000 commode.  We will never know for sure, because it was a meeting behind closed doors. 

There was some pretty clear information available that Merrill Lynch was full of toxic assets.  One is that the firm’s Salt Lake City unit, Merrill Lynch Bank, had a Texas Ratio of 93.  Any bank that has a Texas ratio of 100 is pretty much expected to fail, according to historical trends.  The Texas Ratio was (more…)

Ken Lewis is angry, and John Thain is on the way out at Bank of America.  Not much makes sense in banking these days, but this is a decision that should sit well with the frustrated shareholders at BAC.  Will those shareholders be satisfied with Thain’s job?  Henry Blodgett suggests that the board needs to ask for Ken Lewis’ job next.  After all, Lewis signed off on the deal. Ultimately, when $15 billion in additional losses appeared on (more…)

Volunteer Income Tax Assistance sites will soon be up and open for business.  This is a great program, although it is one that is generally under-utilized.  Filers with simple returns (generally though without a lot of deductions) can get their returns done for free.  There are income exclusions.  If you make more that $42,000 per year, then you are probably not qualified to go to a VITA. 

The VITAs compete with the paid preparers.  The paid preparers have one competitive advantage, and then they also have some marketing skills.  The advantage that they bring to the table, and I concede that it is a questionable one, is their ability to generate returns more promptly.  VITA centers use electronic filing, but you have to wait ten days.  Paid preparers used refund anticipation loans to get people their refunds in a day or so. 

The cost of these RALs are high.  Normally, getting a RAL will cost between $50 and $200.  That saps a significant portion of your return.

CRA-NC is leading the RAL effort in Durham.  To address the marketing problem, we are rolling out a lot of promotional content.  This includes:

• robocalls to all employees and families with students in the Durham public schools
• bus placards
• public service ads on radio and television
• television shows on the channel four and channel 8
• fliers to all children in the Durham Public Schools (DPS)
• media outreach, including a January 30th date with Rep. David Price, Rep. Paul Luebke, and Mayor Bill Bell.

CRA-NC developed the new PSAs.  You can see them here, at EITC Carolinas.