My post title today comes from economic blogger Karl Denninger, who recently reported on "gotcha" letters that are now sallying forth from embattled Citigroup to raise interest rates on credit card accounts to roughly 30%. Denninger's take on this is that it is a self defeating move on the part of Citigroup, and will cause cardholders to either 1) transfer any balance away from Citigroup instead of accepting this onerous interest rate, or 2) piss off the cardholder so much that they will run their card up to the max and then default. He dismisses the notion that the bank is simply getting out in front of imminent rules changes by this move and instead sees it as a whisper of "imminent systemic trouble," the sort of systemic trouble we saw last fall when credit flows froze up and Paulson was screaming about the end of the world in congress.
Even as President Obama announces a move away from bailout programs for the big banks, the intrepid Mr. K isn't buying it. He sees more pain in the pipeline, and points out actions being taken by banks that seem suicidal--unless they have foreknowledge of something about to occur, which is what Denninger implies. What's up?
I recently deposited a couple of checks at my bank and took a small "less cash" on the deposit. I was quietly handed a note, in fine print, stating that as of Monday, Oct 26, such "less cash" transitions will no longer be possible. The checks have to be deposited and go through a clearing period before the money can be accessed. Apparently the banks smell something in the air and are getting worried about the checks we'll deposit with them from other banks. I'll tell you what they smell, and what Denninger alludes to as well--the odor of insolvency.
They made their bed, of bad securities bets, wild leveraging, insane derivatives exposure, usurious and punitive credit policies, and unfortunately we have to sleep in it now. And they have the gall to brand you and I with their little FICO scores to see how well we all follow their rules. Well, Denninger put out calls to high FICO folks to see if they were also getting slammed with that 30%, take it of leave it, interest rate by Citigroup. They were.
Are we seeing yet another sign that the banks will soon be forced to face up to the truth of their own insolvency--a self-created mess that has wreaked havoc in our economy? Yes, my friends tell me I rant too much about the banks. Mea culpa for taking these issues on in my blogs and articles. Sorry, but they are simply the salient issues of our day. Like most people, I've suffered my own measure of bank inflicted pain in the past but, as Michael Corleone might say, "it's not personal--strictly business" when I write about the shenanigans of the fat men with their cigars. You can read my latest at this link.
So are we headed for more for "imminent systemic trouble?" Of course we are, for truth is truth and, as much as the Fed, Congress, the Treasury Department and the off balance sheet wizards want to think otherwise, the big banks remain insolvent. That fact will manifest. It is indeed inevitable.
Even as President Obama announces a move away from bailout programs for the big banks, the intrepid Mr. K isn't buying it. He sees more pain in the pipeline, and points out actions being taken by banks that seem suicidal--unless they have foreknowledge of something about to occur, which is what Denninger implies. What's up?
I recently deposited a couple of checks at my bank and took a small "less cash" on the deposit. I was quietly handed a note, in fine print, stating that as of Monday, Oct 26, such "less cash" transitions will no longer be possible. The checks have to be deposited and go through a clearing period before the money can be accessed. Apparently the banks smell something in the air and are getting worried about the checks we'll deposit with them from other banks. I'll tell you what they smell, and what Denninger alludes to as well--the odor of insolvency.
They made their bed, of bad securities bets, wild leveraging, insane derivatives exposure, usurious and punitive credit policies, and unfortunately we have to sleep in it now. And they have the gall to brand you and I with their little FICO scores to see how well we all follow their rules. Well, Denninger put out calls to high FICO folks to see if they were also getting slammed with that 30%, take it of leave it, interest rate by Citigroup. They were.
Are we seeing yet another sign that the banks will soon be forced to face up to the truth of their own insolvency--a self-created mess that has wreaked havoc in our economy? Yes, my friends tell me I rant too much about the banks. Mea culpa for taking these issues on in my blogs and articles. Sorry, but they are simply the salient issues of our day. Like most people, I've suffered my own measure of bank inflicted pain in the past but, as Michael Corleone might say, "it's not personal--strictly business" when I write about the shenanigans of the fat men with their cigars. You can read my latest at this link.
So are we headed for more for "imminent systemic trouble?" Of course we are, for truth is truth and, as much as the Fed, Congress, the Treasury Department and the off balance sheet wizards want to think otherwise, the big banks remain insolvent. That fact will manifest. It is indeed inevitable.
