“GE's Immelt warns US recovery slowest in decades - Tacoma News Tribune” plus 4 more |
- GE's Immelt warns US recovery slowest in decades - Tacoma News Tribune
- Eurozone Economic Sentiment Highest In A Year - RTT News
- UK Q2 GDP Decline Revised Up; Annual Fall Biggest Since 1955 - RTT News
- RPT-UPDATE 1-JPMorgan investment banking co-CEO leaves - Forbes
- Anger at overdraft fees gets hotter, bigger and louder - KSDK
| GE's Immelt warns US recovery slowest in decades - Tacoma News Tribune Posted: 29 Sep 2009 05:04 AM PDT General Electric Co. chief executive Jeffrey Immelt warned Tuesday that high unemployment and slower lending will drag on U.S. economic growth, likely resulting in the weakest recovery in decades. "There are reasons to believe that this recovery could look different from ones in the past," Immelt said in a speech in Singapore. "There's not a lot of confidence that it's going to be great." Immelt suggested the world's largest economy could be facing its slowest recovery from a recession since before the 1970s as increased government regulation and bank consolidation pinch off available credit. Joblessness, which reached a 26-year high of 9.7 percent in August, will also weigh on growth by undermining consumer spending, he said. "Easing up money has always been the elixir to keep the economy in recovery mode," Immelt said. "But once you get interest rates to zero percent, you can't go much below that, which is kind of where we are right now." "A lot of the jobs lost in financial services and construction are never coming back." GE, which employs more than 300,000 workers in 100 countries selling everything from microwaves to wind turbines to financial services, is hiring 1,000 salesmen to boost sales in China's west and north, part of the company's strategy to keep revenue in the world's third-largest economy "booming." GE said in July that second quarter profit fell 49 percent from a year earlier to $2.6 billion, led by an 80 percent drop in net income from the GE Capital unit. More than half of the Fairfield, Conn.-based company's revenue comes from outside the U.S. "How the Chinese economy does in the short-term is probably more important than sitting there praying for a robust recovery in the U.S.," he said. "I bet they make it through this crisis and come out stronger." Immelt, 50, said he recently shook up the management of the company's India operations in a bid to spark sales. "We have $3 billion in revenue and we ought to be twice that size," he said. "It's been frustrating to me that we can't be even bigger." GE will likely boost investments in Indonesia while operations in Malaysia and Vietnam have been "successful," Immelt said. "It's probably time to make a bigger statement in Indonesia," he said.  This posting includes an audio/video/photo media file: Download Now | |||
| Eurozone Economic Sentiment Highest In A Year - RTT News Posted: 29 Sep 2009 05:11 AM PDT Eurozone Economic Sentiment Highest In A Year 9/29/2009 8:12 AM ET
Rising for the sixth straight month, the economic sentiment indicator rose to 82.8 in September from 80.8 in August, results of the latest business and consumer survey by the European Commission showed Tuesday. That is the highest reading since September 2008. Economists had forecast the index to log 82.5. "The index is therefore now close to the pre-Lehman-bankruptcy level again," said Commerzbank analyst Christoph Weil. In the coming months, the indicator will continue to edge towards 100, irrespective of how strong the upturn proves to be, the analyst added. Among the sub-indicators of the economic sentiment indicator, a measure for consumer confidence grew more than expected to minus 19 from August's minus 22. The industrial confidence indicator climbed to minus 24 from minus 25. Sentiment indicator for the services sector climbed to minus 9 from minus 11 and that for the construction sector improved to minus 31 from minus 32. The only sector that registered a decline in sentiment was retail trade, where the indicator fell to minus 15 from minus 14 in the previous week. A separate survey from the European Commission showed that the business climate index for Eurozone improved to minus 2.07 in September from August's revised reading of minus 2.18. The report noted that the level of the index remains very low, which suggests that year-on-year growth in industrial production was strongly negative in August. The modest rise in indicator was mainly due to an improving assessment of stocks of finished products, with slightly more optimistic views on production in recent months and production expectations than in the previous month. Recent improvements in economic indicators suggest that the 16-nation economy is likely to recover in the second half of the year. The European Commission said in its interim forecast that the euro area is expected to grow 0.2% in the third quarter after contracting 0.1% in the second quarter. In the final quarter, the economy would be expanding at a slower pace of 0.1%. However, for the full year, it is forecast to contract 4%. Elsewhere on Tuesday, the European Central Bank's governing council member Erkki Liikanen said as long as the output growth in countries remained modest and the output gap continued to grow, the risk of domestically generated inflation remains remote and the inflation outlook would be subdued. "Consequently, there is no need to rush to exit from monetary stimulus", he said in a Bank of Finland press conference. by RTT Staff Writer For comments and feedback: contact editorial@rttnews.com
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| UK Q2 GDP Decline Revised Up; Annual Fall Biggest Since 1955 - RTT News Posted: 29 Sep 2009 05:33 AM PDT UK Q2 GDP Decline Revised Up; Annual Fall Biggest Since 1955 9/29/2009 8:39 AM ET
The latest quarterly national accounts report from the Office for National Statistics showed a 0.6% shrinkage in the economy during the second quarter. This decline was revised up from the preliminary estimate of 0.7%. The statistical agency said the revision is almost entirely due to stronger estimates of construction output than previously forecast. Weaker data on services output led to a downward revision in the first quarter GDP that showed a 2.5% decline. On a yearly basis, GDP declined 5.5% in the second quarter, unchanged from the earlier estimate. The decline was the biggest since records began in 1955. For 2008 as a whole, the GDP growth rate was revised down to 0.6% from 0.7%. Output of the production industries slipped 0.5% quarter-on-quarter compared with a fall of 5.1% in the previous quarter, with manufacturing output falling 0.1%. Construction output was down 0.8% sequentially, revised from a fall of 2.2% in the previous estimate. At the same time, output in the service industries declined 0.6%, following a 1.9% fall in the previous quarter. The ONS revealed an improvement in the household saving ratio during the second quarter. The ratio was 5.6% in the second quarter compared with 3.9% in the previous quarter. According to David Kern, Chief Economist at the British Chambers of Commerce, there are modest signs of improvement in the economy, but the risk of a set back remains significant. He said the Bank of England should address the dangerous weakness in bank lending and urged the government to take measures to curb falls in employment. Elsewhere, central bank data showed the number of loan approvals for house purchase in the UK stood at 52,317 in August, slightly down from a revised 52,404 approved in July. Separately, the ONS said the current account deficit widened sharply to GBP 11.4 billion in the second quarter from GBP 4.1 billion in the first quarter. The current account has been recording deficit in every quarter since the third quarter of 1998. The second quarter deficit was equivalent to minus 3.3% of GDP.
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| RPT-UPDATE 1-JPMorgan investment banking co-CEO leaves - Forbes Posted: 29 Sep 2009 05:54 AM PDT
NEW YORK, Sept 29 (Reuters) - JPMorgan Chase & Co said on Tuesday its co-chief executive of investment banking is leaving, one of several management changes that are part the bank's succession plan. Investment bank co-CEO Bill Winters is leaving, while the other co-CEO, Steve Black, becomes executive chairman of the unit. Jes Staley, head of asset management, becomes CEO of the investment bank, reporting to Black. Mary Callahan Erdoes, chief executive of the private bank, replaces Staley as head of asset management. 'With the credit crisis largely behind us and the economy recovering, the timing was right to begin the succession process,' said Dimon in the statement. (Reporting by Elinor Comlay; Editing by Derek Caney) Keywords: JPMORGAN/ (elinor.comlay@thomsonreuters.com; +1 646 223 6116) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Neither the Subscriber nor Thomson Reuters warrants the completeness or accuracy of the Service or the suitability of the Service as a trading aid and neither accepts any liability for losses howsoever incurred. The content on this site, including news, quotes, data and other information, is provided by Thomson Reuters and its third party content providers for your personal information only, and neither Thomson Reuters nor its third party content providers shall be liable for any errors, inaccuracies or delays in content, or for any actions taken in reliance thereon.  This posting includes an audio/video/photo media file: Download Now | |||
| Anger at overdraft fees gets hotter, bigger and louder - KSDK Posted: 29 Sep 2009 05:04 AM PDT By Kathy Chu, USA TODAY Controversial bank account fees, which have fattened banks' bottom lines at the expense of vulnerable consumers, are rapidly becoming a black eye for the industry. Under siege are the fees charged to consumers who spend more than they have in their accounts, whether by check, debit card or at the ATM. Last week, four of the nation's largest banks said they would scale back some of their overdraft policies. Their efforts, while meaningful, have failed to appease lawmakers, including powerful Senate Banking Committee Chair Chris Dodd, D-Conn., who is preparing legislation to crack down on what he calls a pattern of "abusive" practices. At first glance, banks' practices seem reasonable enough: Overdraw your account, and the bank will cover the transaction - for a fee. The problem is, most banks don't ask consumers if they want their transactions automatically paid. In recent years, as banks realized how lucrative these fees can be, they've made it easier for consumers to overdraw their accounts, to the tune of $36.7 billion in revenue last year, USA TODAY research has found. Banks have done this by covering debit card transactions as small as $1 and charging a fee as high as $35. Some also charge fees before consumers overdraw by deducting a purchase when it's made, instead of when it clears. And they've processed transactions from highest to lowest dollar amount - which empties consumers' accounts quicker and triggers more overdrafts. Ironically, the changes banks have made to their overdraft policies are only fueling calls to reform the entire industry. Overdraft coverage can be less regulated and cost more than other high-cost (and equally criticized) options, including payday loans, in an estimated $70 billion short-term credit market. On average, consumers will pay a fee of $26.68 every time they overdraw their account, according to data from Moebs Services, an economic research firm. That means that if consumers overdraw by $100, they'd pay an annual percentage rate (APR) of 696%, if the credit is paid back in two weeks, according to a USA TODAY analysis. This compares with an APR of 450% on a $100 payday loan with an average fee of $17.25. "When consumers (overdraw) recurrently, it is a credit product, and they're paying eye-popping rates," says Sheila Bair, Federal Deposit Insurance Corp. chair, who is pushing for banks to get consumers' permission before covering overdrafts, for a fee, and to disclose APRs. Banks have long said that customers appreciate automatic overdraft coverage and that this service helps consumers avoid the embarrassment of a declined transaction. But they're now acknowledging these fees can push consumers into distress. Starting next year, Chase won't pay debit card overdrafts and charge a fee without consumers' consent. Bank of America is reducing the maximum number of daily overdraft fees consumers could be hit with, from 10 to four, and letting customers opt out of this coverage. "We've seen that the overdraft fees have become a bigger problem for customers," says Brian Moynihan, president of BofA's consumer and small-business banking group. Tam Tran, 36, of Columbia, Md., has paid BofA more than $5,000 in overdraft fees in the past year. In 18 years with the bank, Tran says he's never had problems managing his money. But when his father went into the hospital, overdraft fees piled up for small-dollar debit card items. He repeatedly asked the bank not to approve transactions he didn't have money for and to stop clearing them from high to low dollar amount, but BofA kept doing so. The bank said it approved his transactions because he had been a "good customer," he says. Tran says the bank's recent changes are "just a little cork in a major hole." BofA has "set up a policy to capitalize to the point that the rapid accumulation of fees prevents a customer from ever rebounding," Tran says. "Charging that many fees in a matter of months ... should be illegal." BofA says it has a "long history of helping customers manage their finances." After USA TODAY contacted BofA, it refunded Tran $1,260. Tran says he takes responsibility for his mistakes, but BofA needs to take responsibility for its "bad policies." 'Trapped in debt' Through the years, banks' high overdraft fees have become marketing fodder for payday lenders. On its website, Advance America, one of the nation's largest payday lenders, says its loans - which carry a fee of $12.50 to $22 per $100 borrowed - can be cheaper than bank overdrafts. This marketing, coming from an industry that has long been criticized itself for steep fees that could push consumers into unmanageable debt, speaks to the challenge banks have in repairing their image. G. Michael Flores, founder of Bretton Woods consulting firm, says younger consumers with low to moderate income are the ones using both payday loans and bank overdraft coverage. "We've been saying it for a long time, that (with) virtually any comparison of the cost of what we do and the cost of a (bank automatic overdraft), the payday product is much cheaper," says Billy Webster, board chair of Advance America. The smaller the overdraft, the higher the APR. On a median debit card overdraft of $20, in which the lender charges a fee of $27, the APR translates to 3,520%, if the credit is paid back in two weeks, says a 2008 FDIC report. Payday loans, meanwhile, carry an APR of 391% to 449%, assuming a $15 to $17.25 fee per $100 borrowed. Yet, payday loans can cost more than overdraft fees on large-dollar transactions. For instance, if a consumer overdraws by $200, they'd pay the same $27 fee (a 348% APR), but if they borrowed the same amount from a payday lender, they'd have to pay an average $34.50 fee (a 450% APR), Moebs Services says. Michael Moebs, the founder of Moebs Services, cautions that "at the low end of any loan amount, we're going to see very high APRs." He also points out that payday loans and overdraft coverage can cost less than the alternative. Average bounced-check fees charged by the merchant and bank total $53.62, he says. Richard Hunt, president of the Consumer Bankers Association, says payday loans and overdrafts are a "day and night comparison." The first may cater to less creditworthy consumers, he says, while the other is a "service" to those who make a mistake. Research released in 2007 by Marc Fusaro, then an assistant economics professor at East Carolina University in Greenville, N.C., finds that 79% of consumers who overdraw bank accounts do so by mistake. The other 21% are overdrawing because they need credit. Advocates say consumers who need short-term credit should consider borrowing from family or finding cheaper alternatives, such as a line of credit. Those who use payday loans or overdraw risk getting mired in debt, they note. "Both industries are completely dependent on borrowers trapped in debt to generate most of their revenue," says Eric Halperin, director of the Center for Responsible Lending's Washington office. Many borrowers can't pay back the payday loan with a single paycheck, but lenders still debit their bank account for the total due, possibly triggering bounced checks or overdrafts, says Jean Ann Fox of the Consumer Federation of America. The FDIC is working to find affordable alternatives to payday loans and overdrafts. A small-dollar loan program launched in 2008 has shown that "banks can provide lower-cost loans in a way that is profitable and more responsible," Bair says. The problem is that banks may be reluctant to "cannibalize" on their overdraft fee income with lower-cost loans, Bair wrote in a 2005 report when she taught at the University of Massachusetts-Amherst. Probity Financial Services of Austin is offering an alternative to high overdraft fees: It's partnering with a small bank to offer a checking account that, for a $19.95 monthly fee, allows consumers to overdraw by as much as $500, but won't charge them a fee each time they do so. Bank changes 'fall well short' Fusaro's research feeds a frenzied debate about whether overdraft coverage should be regulated as loans and subject to an APR, similar to what's imposed on payday loans. Even though banking regulators have acknowledged that overdraft coverage is a form of credit, Fusaro believes it would be "misguided" to regulate them as loans. Nevertheless, consumer advocates are clamoring for tighter restrictions on payday loans and overdrafts, such as a 36% interest rate cap. They also want banks to disclose APRs on overdraft products so consumers can compare their options. Halperin says that banks' recent changes to their overdraft policies, while an improvement, "fall well short of providing full protection for consumers." Rep. Carolyn Maloney, D-N.Y., sponsored a bill she believes will give all bank customers "strong and consistent protections from deceptive overdraft policies." It would require banks to get consumers' permission to pay an overdraft, and charge a fee, and clear transactions in chronological order. The Federal Reserve, which has been criticized for not curtailing banks' lending practices during the boom, is also under pressure to crack down on industry overdraft practices. The Fed has said it plans to issue a rule by the end of the year. If the Obama administration has its way, though, it would reform lending through the creation of a Consumer Financial Protection Agency, which would have the power to regulate credit products such as overdraft coverage and payday loans. This agency is needed, says Elizabeth Warren, a Harvard law professor, because with financial products, "where it's possible to change the agreements by including an extra piece of paper stuffed in a bill, the industry will constantly reshape the terms." "When Congress outlaws one practice, the industry just moves to a practice that accomplishes the same thing," adds Warren, who chairs the Congressional Oversight Panel, created by Congress last year to study how financial institutions' actions affect the economy. "It's like hammering fence posts in an open field: It's easy to get around them." Banks have already found ways to minimize the impact of credit card reform passed earlier this year by Congress. Even before the ink was dry on the law, banks raised rates for a broad spectrum of new and existing credit card borrowers. In the first two quarters of 2009, the lowest advertised credit card rates rose by 20%, even as banks' funding costs declined, Pew Charitable Trusts says. Tran feels it's not enough for banks to do "damage control" by changing some overdraft policies. Regulators, he says, have to address a systemic problem where banks will charge unsuspecting consumers as many overdraft fees as possible. Banks, he says, have "gone too far." USA TODAY  This posting includes an audio/video/photo media file: Download Now |
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