The Federal Reserve denied the request by Bank of America to increase their dividend. B of A proposed to pay common shareholders seven cents per share per quarter.

Shareholders generally like dividends. My dad went to Wharton and he often took time, when he wasn’t fixing his cars, to talk about investing. He liked dividends. He felt that you could place some trust in a company that could pay a dividend. In fact, one of the first things I (more…)

It is a big problem that Americans are not saving enough, and it ought to be important when people gauge the logic of making unsecured credit available at any price.  

There is an argument out there that has been propogated by advocates of payday lending, buy-here pay-here car lenders, and other high cost credit products. Here is one example, from an interent payday loan broker:

Some of us live from paycheck to paycheck, and when an emergency happens in between, we’re really messed up because we’re broke. It is at these times that a quick payday loan is like a miracle. What if you chip a tooth or suddenly need two new tires? If with insurance, you still need to pay the dentist something, and there’s no tire company that is just going to give you free tires.

 You need money, and you need it quick. Payday advance lenders can have money in your bank account in a few hours at the most. It is so easy to qualify. All you need is a computer with Internet access. There is no faxing here. You sign everything electronically, and the money is yours. There is no need to cash a check because the money is directly deposited into your account. It’s practically like a Christmas present….Take it all in stride even if your money is short. Don’t get all crazy; just relax. A quick payday loan can fix everything.

Except that a payday loan doesn’t fix anything.

Our economy isn’t what it used to be. Even when there are plenty of jobs, many people are just barely getting by. There are too many jobs that only pay $9 per hour. On the cost of living side, the news is even worse. Health care costs continue to go up for everyone. Many families are burdened by the high cost of college tuition. Even though incomes have stagnated, prices for big purchases have not. It costs $25,000 to buy a no-frills midsize American sedan.

The other day, a financial planner laid it out for me. He put it this way:  a successful retirement is one where you don’t have to put yourself at the mercy of the generosity of the government. I couldn’t disagree with his logic, even if his judgment of “success” was a bit dour. I often think of a successful retirement in terms of a long period of of (more…)

Tomorrow is the annual shareholders’ meeting for H&R Block. I will be there, speaking out against the company’s intentions to continue to offer RALs without the debt indicator.

Block is unique in the RAL space, because it has a line of credit with a bank partner that is large enough to satisfy any level of RAL funding that the company seeks to facilitate with its clients.

The Competition

Pacific Capital was forced to cease offering RALs at the end of last year, due to an order from their (more…)

Bank of America might have taken the lead on reducing fees on overdrafts, but that doesn’t mean that they are without their issues.  The nation’s largest bank is still gorging on fee income, and they are still paying most of their income out to their investors.

Bank of America canceled overdraft charges this week for some of the instances when a customer overdraws their account with their debit card.  This is not a small feat, particularly at a time when banks are struggling to remain solvent.

It would be another thing altogether to infer that Bank of America was going to wean itself off of fee income and return to the days of making money by making loans. In 2009, Bank of America recorded non-interest income of more than $62.5 billion. That is quite a lot – indeed, it represents an increase of more than 120 percent from 2008. Bank of America turned on the fee spigot. In 2008, fee income constituted only $28.4 billion. That was consistent with 2007, when fee income was $28.9 billion.  Fee income represents the ways that banks make money outside of charging interest. They make interest on loans.  This includes more than $8.4 billion in service charges on domestic deposits alone.

Rich people aren’t paying those fees.  The bank actually gave money back to its venture capital customers, albeit only $2.5 million. The year before, venture capital customers paid $27 million in fees.  Elsewhere, the rich were still doing fine by Bank of America. BAC paid out $4.8 billion in dividends.  That amounted to 77.5 percent of all dividend income! Oh, wait, that’s pretty much par for the course.  BAC has been paying out most of its income to its investors for years. Nothing changed in 2009.

A lot of people have been concerned about salaries at Bank of America. Funny thing – their lackluster performance in 2009 didn’t seem to influence how well everyone was paid.  The average employee at Bank of America was paid $111,000 in 2009.  In 2008? “Just” $77,000.

Bank of America did decide to stop charging overdraft fees when consumers go into the red on their debit cards. It’s an (more…)

OK, I am going to have to derivate from talking about banks to just weigh in with a brief editorial.

ACORN‘s Bertha Lewis sent out an email 12 minutes ago entitled “Sting the Stinger.” You got the email if you are on one of their mailing lists.  I am on one of their mailing lists, because our organization is a member of a non-profit coalition that includes representatives from the North Carolina division of Acorn.  You could infer that I’m hardly someone with a predisposition against ACORN, or against the progressive causes that they have worked to support for years.

Lewis is out for blood, specifically the blood that would come from the scalp of James O’Keefe.  Young Mr. O’Keefe is in trouble, sitting in a Louisiana jail and perhaps destined for a federal prison.  Seems to me like the Stinger is going to be pretty well stung.

O’Keefe has been arrested on the grounds that he entered federal property for the purposes of committing a felony at Senator Mary Landrieu’s office.

Lewis wants to use that moment to revisit the sting that O’Keefe put on Acorn last fall.  They are arguing that O’Keefe should be prosecuted for videotaping ACORN folks without their consent. Lewis writes:

“he videotaped ACORN folks without their consent…fight back against the corporate paymasters and their attack dogs seeking to disrupt this work by getting CA and MD to investigate James O’Keefe’s allegedly illegal videotapes of ACORN employees.“

Now, I work in policy, so it is hard for me to ignore how this kind of decision, if pursued, could create precedent to stifle investigative reporting. Let’s imagine that it was “against the law to videotape ACORN folks without their consent” (Lewis quote)…Well let’s imagine that the law didn’t hold Acorn to a higher (more…)