Paulson pads nine lucky banks with tax bucks
Wake up and good morning. I've heard of Teacher's Favorites but this is getting ridiculous. The Treasury Department, in its Bailouts 'R Us mode these days, has long wanted to invest big taxpayer $$ in some lucky banks to nationalize -- I mean recapitalize -- them and help get the rusted gears of the credit/lending system cranking again. At last, we're hearing who the Lucky Nine will be. The Bush administration will invest about $125-billion in Citigroup Inc. (which is slowly being absorbed by Middle East money), Goldman Sachs Group Inc. (that's the firm formerly run by Treasury Secretary Hank Paulson, by the way), along with Wells Fargo & Co. (they just bought troubled Wachovia, so what handy timing!), JPMorgan Chase & Co. (just a coincidence, I'm sure, that it just acquired struggling Washington Mutual), Bank of America Corp. (which just bought Merrill Lynch), Merrill Lynch & Co. (which just sold itself to BofA, so is that double-dipping?), Morgan Stanley (which just sold 21 percent of itself to Japan's Mitsubishi UFJ Financial Group Inc.), State Street Corp. and Bank of New York Mellon Corp. (these last two are big back-office and bank transaction processors, so they may be handy in his bailout mess). Bloomberg News has more on this event.
Now not all of the banks involved are reportedly happy with the move, but agreed to the federal investment under pressure. But you have to wonder: How do other banks, big and small, feel about not being invited to Treasury's free-cash party? And what do U.S. citizens think about their tax money being funneled into some of the very financial giants that helped create this financial mess we're in? Let's see your comments below.
Well, it was bound to happen. Like kids in a candy shop-- this time with a credit card -- we're starting to see debt collectors showing too much irrational exuberance in pursuing our debt-bloated society and too many debt-relief businesses not living up to their promises. The Florida attorney general's office has received more than 1,400 complaints about debt-settlement and other debt-relief companies this year through early October, compared with fewer than 890 for all of last year. Now Attorney General Bill McCollum plans a push for licensing requirements and to strengthen other rules governing the industry. The issue gets some air time in a Wall Street Journal story today with plenty of focus on -- where else? -- Florida. Here's one WSJ example:
Wally Bowman, a part-time security guard in Miamisburg, Ohio, had roughly $15,000 in credit-card debt when he signed up with a "debt settlement" firm last year. The company said it could resolve his debts for far less than the amount he owed and advised the 63-year-old to stop making payments to his creditors, according to Bowman who said he paid hundreds of dollars in up-front fees and made regular monthly payments of $249 to Hess Kennedy of Coral Springs, Fla. But the firm never settled any of his debts, he says. By the time he dropped out of the program this summer, Bowman says his debt had ballooned to about $20,000 due to interest and late fees, and creditors were threatening to garnish his wages. Finally, he filed for bankruptcy last month. "I wish I had done that to begin with," Mr. Bowman says. "I'd have been much better off."
The St. Petersburg Times recently tried to contact a Tampa debt collection firm named Howell & Associates Inc. It has been sued by the West Virginia Attorney General's Office for allegedly illegally threatening state residents in an effort to collect debts that sometimes didn't exist. Here's the story. We called and emailed Howell & Associates CEO Gregory Wells, who is named as a defendant in the lawsuit, for a comment but received no response. Here's come consumer advice straight from our state attorney general's office on how to protect yourself from excessive debt collection and related efforts.
Finally, who's gearing up to make a mint in this emerging federal rescue complex? Law firms. Read about what some Tampa Bay firms are doing so far in my latest column in the St. Petersburg Times.
-- Robert Trigaux, Times Business Columnist