Economy
Related: About this forumBank of America will start charging checking fees.
The Wall Street Journal reported today that BofA is working on sweeping changes that would require many users of basic checking accounts to pay a monthly fee unless they agree to bank online, buy more products or maintain certain balances.
A BofA spokesperson says the fees are being tested in certain markets in order to learn from those tests before we make any final decisions.
Pilot programs in Arizona, Georgia and Massachusetts are experimenting with charging $6 to $9 a month for whats called an Essentials account.
Other account options being tested in those states carry monthly charges of $9, $12, $15 and $25, but give customers opportunities to avoid the payments by maintaining minimum balances, using a credit card or taking a mortgage with Bank of America, according to an internal memo cited by the Journal.
http://www.forbes.com/sites/halahtouryalai/2012/03/01/no-surprise-here-bank-of-america-looks-to-charge-more-fees/
aquamarina
(1,865 posts)dixiegrrrrl
(60,010 posts)Po_d Mainiac
(4,183 posts)dixiegrrrrl
(60,010 posts)BOA bought Merril Lynch around 2008, and now that brokerage is advertising a program aimed at investors with 20,000 min.
I wonder how many people will be stupid enough to trust that brokerage now that banks have proved they can steal and co-mingle customer money.
eridani
(51,907 posts)It's a very bad sign that a bank is in a desperate cash crunch when it tries repeatedly to gouge its customers. David Trainer, an analyst for Market Watch, a WSJ publication, wrote that the new fees are a sign of series trouble at BAC. He writes:
In my opinion, there are four actions taken by financial services that signal the company is headed to serious trouble.
1.Management shake-up and major layoffs - lots of layoffs over the past year
2.Exploiting accounting rules to boost earnings - SFAS 159
3.Drawing down reserves to boost earnings: to the tune of $13.3 billion in 2011 and 2012
4.Bilking customers with new fees: tried it before and trying it again
Why does all of this matter to the rest of America? Because what happens with Bank of America will be an important litmus test going forward for how we deal with any Too-Big-To-Fail behemoth that gets itself into trouble. We've already seen that the recent foreclosure deal was a huge boon to Bank of America - it spared it from the uncertainty of a generation of robosigning suits.
But what happens if Bank of America is still headed for bankruptcy? Helping the bank avoid a few lawsuits is one thing, and allowing it to move its dangerously toxic derivatives portfolio onto the federally-insured side of the company is another. But a full-blown crash of this firm would require a massive bailout. What will the Obama administration do if faced with that dilemma? One way or another, it will be a momentous decision.
dixiegrrrrl
(60,010 posts)the foreclosed houses.
But that is just small piece of the inter-connected domino problem.
All those fantasy priced derivatives, all those counter-parties, and esp. all those pension funds invested in BOA
will be wiped out.
Morgan Stanley is showing signs of trouble too.
http://www.democraticunderground.com/11167341
mbperrin
(7,672 posts)We won't miss 'em a minute.
dixiegrrrrl
(60,010 posts)The problem is, the banks are now also investment companies, or "parts" of the banks are.
Fer instance, BOA owns Merrill Lynch.
And those investment groups hold billions of people's pension money.
Unfortunately, in some cases, folks cannot move their pension money..think Calpers, the huge Cal. pension fund.
So if the banks go crash, so do the pensions.
What needs to happen is :
1. enforce current banking regs
2. Put Glass-Steagall back, which prevent banks becoming investment banks.
We are, in effect, held hostage to the current system of banking and un-enforced regulations.
mbperrin
(7,672 posts)Require them to hold a 100% coverage for those funds. Then let 'em go.
Hotler
(11,425 posts)Ruby the Liberal
(26,219 posts)How many are living off meager savings? 2008 devastated a lot of senior's 401 accounts. Scared, they pulled out and missed the buy opportunity (or even hold) while earning 0.10-0.15% on their CDs (if they are lucky).
There is SIPC, but that only kicks in for firm investments, not investments made through the firm.
mbperrin
(7,672 posts)We bought rental property and earn close to 100% of the purchase price each year gross and about 65% of it net after taxes.
It's useful, active, and gets you away from the money-stealing con guys.
Ruby the Liberal
(26,219 posts)Not many could afford to private-finance their equity, especially with rentals.
Have been wanting to ask you this, as it has come up before - but how are you managing these properties (and a paycheck) without banks? I worked for one of the blood suckers and it seems a fact of life (death, taxes and banks). If this is too personal, disregard, but you have had my attention on this for a while, so thought I would ask the tacticals
mbperrin
(7,672 posts)#1. We worked 20 years in construction and remodeling and are able to do all renovations and repairs ourselves. This helps a lot.
#2. Buy distressed properties that no bank would finance and that would cost the current owners many thousands of dollars to bring to lendable condition.
#3. Have the owner carry the note. Pay nothing down and defer payments for 6 months while you get some unit ready to rent and begin cash flow. Because you're buying as-is, the only fee you'll pay is for the lawyer to draw up the note and file it with the country, in our case, about $425 total.
#4. Pick the best unit first, get it ready and rent it. We have our own rental agreement and have a long talk with each applicant about our expectations: pay the rent on time (that's why we don't have a late fee); take care of the property, and get along with your neighbors. We do no credit checks, only a phone call to verify employment. We have no pet deposit, but all animals must be pre-approved (no mastiffs in the one bedroom apartments!). We feel that people who like animals are nicer than those who don't. Our application includes a limited power of attorney that allows us to give a 3 day notice without further procedures to vacate the property. We rent everything month to month, no leases.
#5. The cash flow from rentals must equal at least double all expenses, including taxes and the note payment. If the note must be longer to reduce the payment to increase cash flow, that's fine. We offer 7% interest, and we feel that's a great rate for the seller in this economy.
#6. Emphasize community and looking out for each other. At one small 10 unit complex, one of the retired tenants tends the flower beds. We pay for any supplies, but she volunteers her labor. One of the other renters takes her to her medical appointments, because she has no car and taxis are expensive here. And so on.
Hard numbers? Our first complex, the 10 unit, is a great example.
Note payment: $500 per month.
Rent for each 1 bedroom unit = $500 per month.
Expenses: annual taxes are around $2000. We pay the electricity and water, and that amounts to about $1000 per month. We spend $100 or so per month on maintenance.
Income: $60,000 per year less $2000 for taxes, less $12,000 for utilities, less $1200 for maintenance, or about $44,800 before income taxes, about $40,000 after. That's a 66% net on income, or about 80% on the total purchase price of the complex, $50,000, financed for 20 years for $500 per month.
I collect all rents in person, in cash or money order. I spend about 20 hours a month total on maintenance and tenant visits. It works because it's cooperative. We have had 100% occupancy for the last 7 years there, and haven't had a change in tenants for 6 of those years. One man passed away, creating a vacancy. We have a waiting list of 20 people wanting to get in there.
Repeat this every 2 or 3 years for 3 decades, and you'll find yourself living comfortably working about 40-45 hours a week, mostly collecting cash, drinking some coffee, having a snack while you visit with people you like. Remember: positive cash flow with the rental of the first unit, or it's a no-go. As long as one unit at each property is rented, we can make the payments with that.
This sounds somewhat boastful in review, it's not intended to be. It's supposed to be practical - a good deal is a good deal for everyone - the seller, us, the tenants, If it's not, long-term, it can't work.
Ruby the Liberal
(26,219 posts)And it does not sound boastful at all. Neighbors helping neighbors is phenomenal, and if I could find my mom some dirt to poke around and play in with perennials and the like, maybe I could save her a small fortune in spending out of boredom. She misses gardening more than anything, but is prohibited by a Stalinistic HOA from so much as sweeping the dirt from the sidewalk.
That said, I am not getting how you are doing all of this without banks. None the least of which being title?
mbperrin
(7,672 posts)When the note is paid, a release of lien is executed, just like a bank, and the property is ours clear.
This way, there are no inspections, points, application fees, and the like. The lawyer charges us $425 for all the paperwork, and we usually split that. First payment is deferred 6 months to give us a chance to get positive cash flow. The owner saves a ton of money by not having to repair the property to sell it, which they can sell as-is as the lender.
The ultimate price of the property is less important than the monthly payment, which must be small enough to yield positive cash flow from minimal rents. These properties are all mid-range, neither deluxe nor whoretels. In that way, when the economy is good, we rent to people on the way up, and when things are bad, we catch 'em on the way down.
We have more than 150 tenants under our own management - we have no other managers nor maintenance people, so all tenant requests are dealt with immediately.
We just feel cooperation is far more productive than competition.
Ruby the Liberal
(26,219 posts)So if you are taking these 'as is', are you also doing all of the repairs and maintenance yourself? That was the one biggie that always kept us from looking into rentals.
mbperrin
(7,672 posts)difference in what is doable and not.
Ruby the Liberal
(26,219 posts)So on the banking thing - With that number of properties/tenants, how are you managing without using the banking system?
I can't imagine someone of your savvy using payroll lenders to cash checks/money orders - and it would be even more surprising to find the former owners to all be local enough for cash transactions.
Please don't feel grilled BTW, as that is not my intent. You pose a way of living in this economy that I find fascinating and instructive.
On edit - these are 2 of the 14 or so groups I subscribe to. You may find them of interest:
DIY: http://www.democraticunderground.com/?com=forum&id=1158
Frugal Living: http://www.democraticunderground.com/?com=forum&id=1128
mbperrin
(7,672 posts)It's now 100,000, and I've been here my whole life, including my carpenter career, so we know lots of people and also people who know people.
We take cash or money orders, and I have a deal with a local check-cashing outlet to handle all our money orders for $1 each. On $500 money orders, I find that entirely acceptable.
Thanks for the groups! I'll check them out.
Remind me sometime to tell you how to change a 5 cent item into a steak dinner by spending less than a dollar on it.
Ruby the Liberal
(26,219 posts)mbperrin
(7,672 posts)They obviously cannot make any money loaning money, which is a bank's actual business, so let 'em fail and leave the pieces on the ground. No bailout, no assistance, no parachutes. It would be an important signal to other incompetent robbers.
FDIC will insure depositors, of course, but the bank? Nah.
Demeter
(85,373 posts)Timing is everything