SavvySugar

Have We Seen the Worst of the Financial Industry's Problems?

SavvySugar — Tue, 25 Nov 2008 04:30:11 -0800

Another week, another bank bailout. The most recent recipient of government aid is Citigroup, and the government's bailout package includes a $20 billion investment in the company and a $306 billion guarantee of risky assets.

Monday's market close was met with cheers as investor enthusiasm sent the market soaring, reflecting a general investor bet that the worst of the financial industry's problems may be over. Do you think we've seen the worst?

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Citigroup Surrenders to Wells Fargo in Wachovia Battle

SavvySugar — Fri, 10 Oct 2008 04:00:40 -0700

Citigroup waved a white flag late Thursday as it bowed out of the battle with Wells Fargo over which bank would buy ailing Wachovia. Early last week, Wells Fargo had backed out of talks as the federal government brokered a deal that arranged for Citigroup to pay $2.2 billion for Wachovia’s banking operations and $12 billion in stock to the FDIC. Later in the week, after the deal with Citi had been agreed upon, Wells Fargo came back and offered $15 billion in stock to buy all of Wachovia.

With Citi now out of the picture it seems likely Wachovia and Wells Fargo will join forces, though the drama isn't over. Citigroup has sued Wells Fargo for $60 billion in "compensatory and punitive damages." According to The New York Times, both banks were attracted to Wachovia for its retail banking operations "widely regarded as among the best in the business."

Wachovia customers, are you worried that the quality in service will deteriorate with a Wells Fargo merger?

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How Your Zero-Balance Credit Card Could Cost You

SavvySugar — Thu, 29 Oct 2009 12:00:59 -0700

Think you’re avoiding extra fees by being savvy and paying off your credit cards in full every month? Maybe not any more. Some companies, including Bank of America and Citigroup, may start charging credit card holders for not using their cards enough. Good habits like paying off your balance in full, not using your card for a few months, or even not spending quite enough every month could all earn you extra fees.

Credit card companies have just a few short months before new regulations go into effect, and they appear to be getting desperate. Card holders have seen everything from higher interest rates to new annual fees over the past few months, as companies scramble to stay ahead of the restrictions that'll go into effect in February.

If you start seeing these fees, you do, of course, have options. You can call the company and complain (although there’s no guarantee they’ll listen; remember the Debtor’s Revolt woman?), move to another company that doesn’t charge these fees, or cancel your cards altogether. What do you think of these proposed fees? What will you do if your credit card starts charging them?

The Customer Service Halls of Shame and Fame

SavvySugar — Thu, 11 Jun 2009 08:30:26 -0700

Nobody wants a customer service experience that leaves you swearing under your breath, but these situations aren't exactly avoidable. MSN Money knows how important customer service is to consumers and conducts an annual survey that measures customer satisfaction.

It's named 10 companies that need a lot of improvement in the customer service department and 10 that would be good examples to the companies in the Hall of Shame. It's apparent from the rankings that banks in general could step it up.

Customer Service Hall of Shame

Citigroup
Bank of America
Abercrombie and Fitch
Qwest
HSBC
Time Warner Cable
Capital One
Sprint
Comcast
AOL

To see the companies that offer a happier customer experience, read more.
Customer Service Hall of Fame

Southwest Airlines
Costco
Apple
Whole Foods
Publix
Nordstrom
Amazon
Netflix
Trader Joe's
USAA

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Banks Play Tug-of-War Over Wachovia

SavvySugar — Mon, 06 Oct 2008 04:00:41 -0700

Scooping up troubled banks is the new thing to do for financial institutions that have managed to keep themselves above water, and things are getting competitive out there. Failing Wachovia was the apple of Citigroup's eye until Wells Fargo tried to swoop on its courting efforts. The game of tug-of-war is an important one, as banks compete to see who will survive the economic crisis and come out in a stronger position than when it started.

Early last week, Citigroup agreed to pay $2.2 billion for Wachovia's banking operations in a deal brokered by the FDIC and then Wells Fargo agreed to pay $14.8 billion on Friday. Citi's deal tumbled with Wells Fargo's trumping offer, so Citi took the issue to a New York court and over the weekend a judge temporarily blocked the Wells Fargo deal from going through. A hearing is scheduled for later this week.

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CEOs on the Spot For Mortgage Crisis

SavvySugar — Mon, 10 Mar 2008 11:34:36 -0700

An overstated gap between the rich and poor is nothing new in this country, but some of the guys on the high end of the spectrum have been putting in some time in the courtroom instead of in the office. The CEO of Countrywide and former CEOs of Merrill Lynch and Citigroup - three of the biggest banks involved with the subprime mortgage crisis - testified in front of the House Committee on Oversight and Government Reform. According to ABC News, these three CEOs received over $460 million in compensation in just five years, while in the second half of 2007 Countrywide lost $1.6 billion, Merrill Lynch lost $10.3 billion, and Citigroup lost $9.8 billion.

The sentiments of congressional members wondering how these executives made this much money, while so many Americans were losing their homes, were wrapped up in a nutshell by California Democrat Henry Waxman: "There seem to be two different economic realities operating in our country today. And the rules of compensation in one world are completely different from those in the other. Most Americans live in a world where economic security is precarious and there are real economic consequences for failure. But our nation's top executives seem to live by a different set of rules."

Waxman shared another striking fact about the disparity of our times: "In 1980, chief executives in the United States were paid 40 times what the average worker made. They now make 600 times the average worker's salary."

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A Look Ahead: Shallower Bank Bonus Pools

SavvySugar — Thu, 25 Sep 2008 14:00:11 -0700

Wall Streeters used to the unfathomably generous bonuses of years past will likely be facing lighter stockings (OK, direct deposits) this year. Goldman Sachs and Morgan Stanley employees are now employed by bank holding companies with payment structures closer to traditional commercial banks rather than investment banks, meaning Goldman's 2007 $12.1 billion bonus pool will be shallower in 2008.

The bonuses may be scaled down from past years, but employees will still receive bonuses bigger than what most of us outside the financial world will ever see. Goldman's bonus payouts last year averaged about $400,000 per person, while Citigroup paid its investment banking employees bonuses of about $100,000 per person. If Goldman employees are rewarded with a fraction of what they were accustomed to, it's not a bad chunk of change. Still, there's concern that New York's economy will suffer because of reduced spending on everything from housing to entertainment.

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