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Increasing Signs Of Stress At Citi?
A reader sends in this morsel from Citi, offering to take (and keep quiet about) a 47% loss on a Citi credit card account if only the user will pay before year's end. A few things occur to us on reading this letter:
- If widespread, this would appear to be awfully desperate on Citi's part. Perhaps, combined with the massive spike in APR we've seen elsewhere, things are beginning to slip? Of course, this is mere speculation based on a single anecdotal case but it does make us very curious.
- This is collossolly stupid of Citi. Once word gets out what exactly do they expect the rest of their credit card customers will consider doing?
- The specificity of the balance settlement (53%) sounds suspiciously like someone's model gone viral at Citi. Why this figure exactly?
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How deliquent is the debt? Otherwise, happens all the time.
I've helped a couple friends go this route...take the right tone with the collections agent and you can do better than 47%.
AXP was first to start offering folks to settle at 50% or less around November of last year. For being proactive like that they get to claim declining chargeoff rates and loan loss previsions this quarter and most likely next. All US finance is boned yes, but because AXP was first in doing this they're better off than most CC companies.
C is late to the game and that means they've got a quarter of massive suck ahead at the very least. Either way when AXP was doing it unemployment was 7%. Now C can only dream of how sweet it'd be if they had to collect in a 7% unemployment environment. Tick tick tick...
Hey Steak,
Any suggestions? Tone, route etc
Thanks
**I've only seen these things work with someone who has NOTHING to lose. Any debt they absolve will be counted in taxes as income, and the people that I've known who have done this said they were insolvent on their taxes to avoid paying income tax on the writeoff.**
I helped two of my friends with this and in both instances they had been recieving calls from collections for months. My friend with AMEX actually had them approach him (back in Nov) and the other friend had to steer the collecitons person toward the 50% haircut.
I was actually shocked when my friends told me the tone they had taken with the collections folk. Its not in my nature to flip a shit on anyone or advocate that someone do so, but my friends would be quite mean to the collections folk. Things like "I'm broke, how the fuck am I supposed to pay you...Go fuck yourself <click>...Are you a fucking idiot." Now this wasn't all out the blue, these collections folk were calling for months after non payments. There was an evolution over time from cordial to combative to insulting as both sides pushed the other's buttons. Collections folk are people too, and if you talk to someone enough they'll be easier to negotiate with.
Most folk will offer you pay a small monthly installments in exchange for them to stopping bugging you. It is usually a totally nominal sum and on its face is very appealing. But going that route will eventually lead to them offering a restructuring that is really just a stealth way to get you to agree in a more ironclad way to pay them.
Really it seems the best way is some form of middle eastern haggling, where your first counteroffer is always half of the initial offer. If your counteroffer is refused, cut it in half again. But again, the most important thing to keep in mind is that negotiations with collectors are an evolving process, there is no secret password that will get them to wipe out your debt.
I want bank in bootiful Amerika! Bank in my country, she take always full amount. No jingle-mail, no interest-only loans.
hsbc offered me a 52% discount, and 3 payment terms, when I was 3 months delinquent
If you got that kind of deal for not paying for only 3 months... that's desperation on their part.
Same for me- I offered Citi $5,000 on a $11,000 debt in January. They said no way, pay them $130 per month interest free for a year. I then offered HSBC $ 4,500 on a $ 9,000 debt. They took it. I paid them the money I was going to give Citi. Both accounts were current, I had probable financial problems looming and told them I could not guarantee any payment after July.
Now I am waiting on Citi. Guess what they will get.
now comes the 1099-c.
You beat me to it.
No free lunch. After tax not much of a discount, right?
I thought they put a temporary moratorium on the earned income, after % payoff.
You might be right because they are making up laws faster than Hugo Chavez
Read the back of the 1099-c, if you are insolvent you will "not" have to report charged off amount as income. Pretty simple test, do your liabilities exceed your assets?
Doesn't this create an entire new "business model" that completely avoids any/all taxes??
Meaning, a business couple simply pay someone an extension of credit. Then, after the size gets large enough to show their personal balance sheet insolvent, you "balance" it and go again. As long as your loan balance stays higher than you saving, it would appear you can completely bypass all taxes.
Usually the IRS frowns pretty heavily on related-party debt arrangements that have no effect other than to avoid taxation. Unless you're Ingersoll Rand - then it's cool. But if you did this as an individual you would almost certainly get audited and have to pay penalties.
You mean the 'Reverend' racket is dead?
Ah, the ol' spend down, eh? Max those cards first.
How 'bout getting a part-time job and pay the full amount over time w/interest like you were expected to do. I don't work for these CC companies, I'm just a single dad trying to do the right thing - pay back what I borrowed. There's and old saying that if you owe the bank a $1000.00, you hava a problem if you owe the bank $100,000 they have a problem. Do these banks deserve what they get? - in many ways yes, but I can guarantee you Waterdog that if you owed the mob this money they'd have your balls in a vice, and you'd be paying with you life. Think about it, because when all this is over that's who you're gonna need to see when you need to borrow next time, and that goes for the rest of you overextended losers. Man up and pay your fuckin' bills and quit acting like the govt. When your done paying, vote your local cocksucker or congressman out of office. You'll feel better.
Typically I would agree with you. There was a point of my life I was 50K+ in cc debt but I refused to file BK because I put myself in the mess and woudl figure some way to get out of it. I did get out of the mess thru perseverence and recently just spun off a 250 seat consulting company in Chicago.
My point is that our government and our banking system are supposed to lead by example and the example they are leading, is do a shit job and someone will bail you out.
No one knows this better than Southwest Airlines who was one of the few guys that figured out an Oil hedge. They could have buried everyone in a price war but they were smart enough to know that if they did, UAL & AA would file BK and get their balance sheet clean and then knock THEM out, so they had to just keep them teetering on the brink of BK but not let them fall or it would screw them.. What a sad state of Capitalism when we are forced to keep crap companies solvent.
Personally I think, when this market rolls over, everyone is going to take their own personal bail out to everyone they owe money too, and its hard to blame them. You teach your kids (taxpayers) crap values and you will get it back tenfold, and I think that the kids of this nation are thinking.. well if times are tough... oh well, shove it on someone elses plate. We have learned from the best.
Note, I dont necessarily condone this but just trying to state that they created the monster thay are about to unleash on themsleves. Maybe next time they will think and learn but you know they wont.
Ghostdog
Well said.
I got myself into too much debt and have a hard time keeping current. And, I have a four month old daughter.
I often ask mysekf "were the banks, mortgage brokers, appraisers, Realtors and the government all complicit in making me think I was worth more than I was? Of course. In 2007, my house was worth $725K - today, I'm lucky if I can get $500K. I felt wealthy bought "stuff" that I really didn't need with credit cards that came in the mail once a week. Although I never really believed that my house value was increasing by $40K per year, I played along.
I want to screw the banks as much as the next guy. I also have my pride and my dignity and will pay back every dime, with interest. The way I will get back at the backs is to never use a credit card again. In the end, I win.
No, in the end you lose. People will lose faith in this current financial system far before you pay your debts off. The only way you skrew them is by buying physical gold, thus taking it out of circulation, which will lead to paper money/credit finaly being seen for what it truly is...WORTHLESS!
Actually, we have more power to change things outside of voting because we are active participants/accomplices. If everybody decided reserve notes were counterfeit and switched to gold and silver as legal tender, the fed would become irrelevant. The problem is that you expect your government to do things like this for you, probably because you blame them. You will continue to engage in immoral behavior, creating fake money every time you borrow at the expense of those who save, until your government tells you it's no longer okay. Is this really the example you want to set for you child, doing nothing but voting every 2 years? Look in the mirror, see the harm you're helping to create, and do something yourself.
+1
Ha! Ha! Ha! You think youre a man for paying back fake money that is printed out of thin air. Wake up before it is too late, Chump. The system is over, get into the gold life raft before its too late.
Also, it will show up on a credit report as having settled at less than 100%. I forget the official language the credit bureaus use, but it's treated as a detrimental occurrence. Of course, if you're already delinquent enough to get the offer, it may not matter. But you do need to be aware of it, because it will have lasting consequences.
thank you for publishing this piece Marla....very informative.
Or, perhaps they are being pragmatic.
Let's imagine there is $2,000 on the account, but almost half of this is made up with charges and punitive interest as the borrower has been delinquent for a few months, so they have agreed to waive these for prompt payment following a conversation with the borrower. To my mind, that would show a sensible attitude to distressed debtors.
Pragmatic as in they know that they can try to lower their delinquency rate and use the resulting 50% stock pop to offer a $10B secondary.
Or pragmatic as in they think that their rates will get capped by legislation and won't be able to keep up with coming inflation.
I agree with your point. First, I had to prove I had this problem coming at me. Then I had to convince them that all I had for them was the lump sum. My first contact to them was by mail. It took them 60 days to respond by phone. Each conversation lasted 20 minutes. My credit with them was excellent for 10 years. HSBC was very understanding and wished me luck. Citi was less understanding. What I cannot understand about Citi is that I had $5,000 for them and instead they took $130 a month for 12 months. What I proved to Citi has come true. One more thing, Citi would not cancel my account. They said I had been a good customer for so long, we could talk about it 12 months from now. If things do not change quickly, I will not have a phone, much less $130 a month.
Why did you give up your money to either? You should've told both to stuff it and kept the money to live on. Besides, if you've been paying your taxes the past couple of years, you already gave them a bailout. Why don't you take a little bailout for yourself?
I am Chumbawamba.
Excellent advice. Why would anyone put their family at risk just to pay off an unsecured credit card? It's time to take no prisoners in the war on corrupt banks. In Florida it's called a "strategic default" and there's going to be more.
http://www.miamiherald.com/business/real-estate/v-print/story/1298873.html
A "veritable Atlantis of underwater borrowers".
Bwahahaaaaaa!
Right on Chumbawamba. As far as I am concerned, if the credit card assholes want their money back they're going to have to pry it out of my cold dead hands.
This is the pendulum swing of a debt bubble. Lets get the lenders doing their due diligence. Credit tightening hurts but there needs to be sanity in who loans how much to whom.
Has a ring to it, like an AC/DC tune:
who lends to whom, who lent you
I remember when I was a kid back around 1955-1965 there where no credit cards, ZERO. My father bought a brand new 1955 Buick for $2,200.00, paid cash. The only debt he had was the mortgage on a 1,800 sqft Martin Ceral ranch that he paid 9,500.00. Around 1970 there was a guy who owned a body shop and the rumor was that he took out a second mortgage on the house as he was strapped for dough. Well it was the scandal around the coffe houses in town. How could anybody risk their home for a business...
But, laddies and gentlemen that's how it was back then... Man have we progressed,
Exactly. Indiscriminate and excessive fraudulent lending - i.e. banks lending money they don't have by creating it out of thin air - is what has jacked up the prices of everything and which is why you need to go into debt in the first place.
Dingggg!!
Year's end? Looks like they need the money before November 10th (unless you mean the end of the fiscal year).
Doesnt Jim Sinclaire have a count down for a massive dollar devaluation ending around Nov 10?
Wake Up Paper Bugs before its too late!
It appears that a 50 % off sale for unsecured debt is going full steam ahead, mates.
Makes total sense.....until word leaks out beyond this particular perimeter of knowledge.
Stay out of Cessnas, Marla.
is she a fly girl? i didn't know that...:)
I don't know, but FAZ was on fire today.
My final offer is this: nothing...
pepsi up my nose....that was funny!
That movie will still be relevant for a hundred years
Otherwise they package the debt into a very large package of delinquent accounts around the same credit score. Then, they can hopefully sell it for 10 cents on the dollar. So getting half seems like a pretty good deal for them. They must figure once someone hits 3 months, they most likely aren't going to pay up.
Those "un-American" debt buyers won't buy the accounts for whatever Citi decides they are worth. If only the Fed would step in and buy any delinquent account at face value, the banks would really be able to show profits then!
I think there is too much stigma tied to not paying a debt like that just for a small gain. Factor in the fact that it will affect your credit score for many years to come, and even 50 percent haircut might not be worth it. Why stop there? Why not rack up all the credit you can get your hands on and pay possibly 0 percent back?
Your reference to the stigma of not paying off debt is interesting.
I have a long time friend . His 30 year old son is going to blow off the mortgage....the strategic default option. This guy makes fairly decent money, current on cards, but is underwater seriously on an 06 home purchase. He's decided to go layaway with the understanding that the recovery expense and time horizon to break even will not justify the expenditure of another dime in payments on the note. The 10-year penalty box of cash and carry is insufficient to sway him.
Maybe he has not thought it out well, but I'd bet he has more than a few pals who are thinking the same way.
The old stigmas in the new normal may be going the way of the dino. sigh !!
There is going to be an entire generation of people whose credit is completely fucked because of things like strategic defaults, etc.
More interestingly, however, I think that credit score companies and banks will have to adjust their scores in order to account for it. There will be way too many ineligible borrowers to the point where in order to lend to people, they will have to become a lot more flexible. The country can't survive if all the people who have foreclosed on their house in the past 2-3 years won't be able to get another house for another 5-7 years. Thus, they will have to lower their standards. Lowering standards to the most common denominator: the American Way at it's finest.
Pfeh. Credit score, who cares. I had a flawless credit history and a nearly 800 FICO score when I hit a brick wall and just decided to stop paying everyone and everything. The credit cards were the first to go. I have no care for a credit history, no desire to maintain a good one, and no plans to take on any more credit, ever. I am currently building my wealth by acquiring items of wealth and necessity, as well as taste and talent. In the future, people will be coming to me to borrow money.
Fuck the credit card companies.
I am Chumbawamba.
Chumbawamba,
What are you rates and do you break knees if payment is not forthcoming?
I am not Chumbawama but wish I were.
I didn't say I would lend out money, only that people would be coming to me to borrow it.
"Neither a lender nor a borrower be." Some smart dude said that. I do what the smart dudes say. Usually.
I am Chumbawamba.
Chumba, acquiring porn and gold, as well as guns and booze is always a good investment
I am not Chumbawamba, but i carry his picture in my wallet
I got his picture too. I WILL NOT OBEY!
Damn I must be doing this all wrong.
I've been spending my money on booze and porn... I should be spending Saudi group's.
That way I get the Halal discount.
We've certainly lowered our standards when it comes to education. The last President was a 'C' student....this current Precedent won't even share his college grades.
Did he even graduate? Let's see his diploma. ;-)
He has a certificate that says he graduated, but nobody has seen a diploma. The diplomas were not required when he was at Columbia.
tell him not to leave the property but stay there even though he is not paying. nothing wrong with free rent, besides the way things are going, (according to that recent as of last week bankruptcy case in new york federal court, southern district), the judges are getting a tad bit cranky with these asshole lenders, or whoever, coming into court with their bogus unsupported claims...you never can tell. if they cannot prove they have standing because they do not have the note, well......you know how it is....there is no debt....
The Credit River Decision
An honest judge rules honestly on money matters.
A Minnesota Trial Court's decision holding the Federal Reserve Act unconstitutional and VOID; holding the National Banking Act unconstitutional and VOID; declaring a mortgage acquired by the First National Bank of Montgomery, Minnesota in the regular course of its business, along with the foreclosure and the sheriff's sale, to be VOID.
This decision, which is legally sound, has the effect of declaring all private mortgages on real and personal property, and all U.S. and State bonds held by the Federal Reserve, National and State Banks to be null and VOID. This amounts to an emancipation of this nation from personal, national and State debt purportedly owed to this banking system. Every True American owes it to himself/herself, to his or her country, and to the people of the world for that matter, to study this decision very carefully and to understand it, for upon it hangs the question of freedom or slavery.
THE MAHONEY CREDIT RIVER DECISION
RE: First National Bank of Montgomery vs. Jerome Daly
IN THE JUSTICE COURT
STATE OF MINNESOTA
COUNTY OF SCOTT
TOWNSHIP OF CREDIT RIVER
JUSTICE MARTIN V. MAHONEY
First National Bank of Montgomery, Plaintiff vs Jerome Daly, DefendantJUDGMENT AND DECREE
The above entitled action came on before the Court and a Jury of 12 on December 7, 1968 at 10:00 am. Plaintiff appeared by its President Lawrence V. Morgan and was represented by its Counsel, R. Mellby. Defendant appeared on his own behalf.
A Jury of Talesmen were called, impaneled and sworn to try the issues in the Case. Lawrence V. Morgan was the only witness called for Plaintiff and Defendant testified as the only witness in his own behalf.
Plaintiff brought this as a Common Law action for the recovery of the possession of Lot 19 Fairview Beach, Scott County, Minn. Plaintiff claimed title to the Real Property in question by foreclosure of a Note and Mortgage Deed dated May 8, 1964 which Plaintiff claimed was in default at the time foreclosure proceedings were started.
Defendant appeared and answered that the Plaintiff created the money and credit upon its own books by bookkeeping entry as the consideration for the Note and Mortgage of May 8, 1964 and alleged failure of the consideration for the Mortgage Deed and alleged that the Sheriff's sale passed no title to plaintiff.
The issues tried to the Jury were whether there was a lawful consideration and whether Defendant had waived his rights to complain about the consideration having paid on the Note for almost 3 years.
Mr. Morgan admitted that all of the money or credit which was used as a consideration was created upon their books, that this was standard banking practice exercised by their bank in combination with the Federal Reserve Bank of Minneapolis, another private Bank, further that he knew of no United States Statute or Law that gave the Plaintiff the authority to do this. Plaintiff further claimed that Defendant by using the ledger book created credit and by paying on the Note and Mortgage waived any right to complain about the Consideration and that the Defendant was estopped from doing so.
At 12:15 on December 7, 1968 the Jury returned a unanimous verdict for the Defendant.
Now therefore, by virtue of the authority vested in me pursuant to the Declaration of Independence, the Northwest Ordinance of 1787, the Constitution of United States and the Constitution and the laws of the State of Minnesota not inconsistent therewith ;
IT IS HEREBY ORDERED, ADJUDGED AND DECREED:
1.That the Plaintiff is not entitled to recover the possession of Lot 19, Fairview Beach, Scott County, Minnesota according to the Plat thereof on file in the Register of Deeds office.
2.That because of failure of a lawful consideration the Note and Mortgage dated May 8, 1964 are null and void.
3.That the Sheriff's sale of the above described premises held on June 26, 1967 is null and void, of no effect.
4.That the Plaintiff has no right title or interest in said premises or lien thereon as is above described.
5.That any provision in the Minnesota Constitution and any Minnesota Statute binding the jurisdiction of this Court is repugnant to the Constitution of the United States and to the Bill of Rights of the Minnesota Constitution and is null and void and that this Court has jurisdiction to render complete Justice in this Cause.
The following memorandum and any supplementary memorandum made and filed by this Court in support of this Judgment is hereby made a part hereof by reference.
BY THE COURT
Dated December 9, 1968
Justice MARTIN V. MAHONEY
Credit River Township
Scott County, Minnesota
There is a good chance that whoever is foreclosing upon him does not have the right papers to pursue such a course of action. Tell him to look into it. He might just be able to live rent free for a long time. Here are a couple of posts by Denninger on this very topic. Interesting indeed:
http://market-ticker.denninger.net/archives/1513-A-Birdie-On-Possible-Foreclosure-Frauds.html
http://market-ticker.denninger.net/archives/1512-The-MERShole-Yawns-Wide.html
They'll package up the debt and sell it as AAA rated.
Doesn't the letter say you will have a zero balance and that will be reported to the credit bureaus as such? I don't know anything about these situations, but it sounds to me that the 3 month delinquency is the issue on your credit but it will appear you then paid the balance to zero...
CIT has already sold much of their debt to BCR LLC.
http://www.bettercreditresources.com/docs/privacy.asp
BCR will not negotiate just harasses. They have a long history of being a old fashion leg breakers. I got wiped out by a five year cancer battle and everyone, including the IRS has classified me as a hardship case, except CIT.
Shittiebank is such a classey operation.
Same deals are currently offered by Chase, and Capital One. Nothing to sing home about.
I think that after 6 months of no payment, the bank is required to write the total amount off. That sure screws up their balance sheet. So they would rather lose half than all of the loan. Probably see more and more people not making any payments so that they can get the offer.
It appears to be a concerted effort to cap or calm the increase in charge offs -- since that number is surpassing the numbers from the GD I wonder what it would look like if you weren't giving people a 50% off sale?
not only that but it messes up your credit(if that is important at this late juncture) for seven years. i believe credit as we have known it since about 1965 is dying now. buying things we don't need with money we don't have is rather passe. we are now slowly devolving to third world status...
I am glad to see others see this slide to third world status. Indeed, the US peaked long ago, much sooner than housing.
First off they lent out units of accounting they didn’t even have, perpetuated by fractional reserve banking. Secondly, these banks were compensated for these loans by selling these debts on the secondary market and were made whole on the supposed money they lent out. They are collecting usery on a debt that is not theirs any more. Third, there is no disclosure of these facts during initial credit exteded out, so the contract is fraudulent. Finally, these SOBs were compensated for their supposed loses by TARP and other bailouts, so they are being compensated twice for debts they don’t hold.
I racked up my Citi account with loads of balance transfers and I have a 763 credit score. FUCK EM. Sure I can service this debt, but I am so sick of being bamboozled. I AM PROTESTING BY NOT PAYING MY MEASELY $20k in unsecured debt and telling them to stick it in their ear hole. I played honestly and was stupid enough to believe others played fair as well.
If I could borrow free money from the Fed, lent out that money 30-100 times over, sell the debt for full compensation, but still collect payments and use those payments to start the process over and over again, while knowing the public will take on any losses I take, I would be a rich man too.
What I am saying is, tell me who the debt holder is and I will gladly pay it back. These unsecured debts were securitized and bundled and sold to other money makers over and over again. The entity collecting said payments is probably fraudulently doing so. They can kiss my enlightened, thinking for myself, gold/silver hoarding, tobacco growing ass.
If I am wrong in my assessment , not my spelling, please let me know.
Good on you!
Debtors Revolt!
I am Chumbawamba.
Did you borrow the money? Did you know the terms when you did? Sounds to me like you just don't want to pay it back.
Sounds to me like you are a bankster.
go back and read the post. i have no problem paying the debt and can service it just fine. i wish, however, to pay back the holder of the debt and citi aint the holder. not only were derivatives connected to cdos, but also car debt, student loans, credit card, and other.
to reiterate, the bank sold the debt and was compensated for the debt on the secondary market. instead of the bank paying the received payment to the holder of the debt, the ones who purchased debt on the secondary market, and not consider those payments as deposits in order to lend out those deposits 30 to 100 times over.
show me the debt holder and i will pay that entity. citi has no right in continuing to take those pay.ments. furthermore, citi never told me they were lending me money they didn't have and that i was creating this debt with just my signature. they have no skin the game and the money is risk free and they never had those funds to lend out in the first place.
now i may be wrong in my assessment. i'm not a banker
solid argument. anyone wishing to break the back of the banks' control over money creation while remaining on moral high ground would be wise to follow this.
We live in a glorious fake paper money system! I really dont understand why all the confussion over these matters. I mean an infinate money supply, with greedy bankers in charge. How could this money printing experiment have gone so horrorbly wrong?
Got Gold Suckas!
You know what even if you have an 800
FICO if you are a day late you get walloped by a 30%
penalty fee. Nice huh? "thank you for banking with us and keeping
over a million in checking and savings with us for over
30 years. (scratches head) look at smaller local bank
balance sheets and financials right now.
You are absolutely 100% right in your assessment and FWIW I FULLY support what you are doing. Even if you have to face some hardship doing this, IMHO, you are doing a service to your nation, sir. You are taking a stand and acting on it as opposed to most people just mouthing bullshit.
Hey enlightened, individual banks do not create money. Think about it. Fractional reserve banking applies to the whole system of banks. Since there are multiple banks, individual banks are held to a reserve ratio. So for every $100 in deposits they can lend out $90. I don't see any money creation in that. If all banks could just create money, none would be insolvent or would need to fail. I am no defender of Banks as most gouging the taxpayers that saved them, but it is a cop out to say the banks created the money that they are lending you. Look at all the capital injections to shore up the balance sheets. Real investors are losing real money.
then i guess i dont understand the "leverage" many talk about. i thought the leverage of 39 to 100 of reserves meant the banks were lending out 30 to 100 times what they had on deposits. according to you i am wrong on this?
BZZZZZZZZZZZZT!
"Of course, [banks] do not really pay out loans from the money they receive as deposits. If they did this, no additional money would be created. What they do when they make loans is to accept promissory notes in exchange for credits to the borrowers' transaction accounts. Loans (assets) and deposits (liabilities) both rise [by the same amount]."
- Modern Money Mechanics, Chicago Federal Reserve
"[W]hen a bank makes a loan, it simply adds to the borrower's deposit account in the bank by the amount of the loan. The money is not taken from anyone else's deposit; it was not previously paid in to the bank by anyone. It's new money, created by the bank for the use of the borrower."
- Robert B. Anderson, Secretary of the Treasury under Eisenhower, in an interview reported in the August 31, 1959 issue of U.S. News and World Report
this right here is the core of the issue imho.
everything else discussed are simply symptoms.
the most important thing to do is to educate as many people as possible as to how "money" is created in the current system.
it is the central fallacy prohibiting true meaningful reform.
Sorry, you are wrong. If you have $100 on deposit you can lend out $1000. Get it now?
Umm...not really. Banks are operating on practically ZERO reserve requirements these days (google it). So basically they can create any amount of money out of thin air and lend it.
It was around a 10% reserve so the 100 in would be 900 to the unsuspecting half wit,,,hummmmmmm I mean customer,,,Come right this way Miss Magilicutty and fill out your paperwork...
Real investors are losing money because they dont understand the Paper Ponzi System we live under. What are Derivitives up to nowadays, like:
$1,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000
Got Gold Sucka!
Ponzi Zombie bashing is so easy, you guys really just dont get it! Ha! Ha!
I feel like Wallstreetpro on Youtube!
To be more precise I believe it's around 650 trillion or $650,000,000,000.000.00 or 10x the total GDP of planet earth. If it where all public debt, we could have a jubilee.. However a good % is private, so going forward,,who the fuck knows.
Your "In-Flight Missile Mechanic"
Psalm 37:21 (NIV)
21 The wicked borrow and do not repay,
but the righteous give generously;
Ah, but who is more wicked? And where did the wickedness start? From whence did it come? The whole system, propagated by the Whore of Babylon, is a usuarious vicious circle. What came first - the chicken or the egg?
@Anon 111599 Do not twist the WORD. You are a blue-eyed devil banksta. The Bible is clear that debts SHALL be forgiven every seven years and it is a sin to charge interest.
Deuteronomy 15:1 At the end of every seven years thou shall make a release. 2. And this is the manner of the release: Every creditor that lendeth ought unto his neighbor shall release it: he shall not exact it of his neighbour,...
Ezekiel 17:13 Hath given forth upon usury, and hath taken increase: shall he then live? he shall not live: he hath done all these abonimations; he shall surely die...
hey there, how was your tobacco crop this year? what plant genus are you growing? experimented growing a couple flowering tobacco plants of my own this year. they're still goin strong in late october in NYC.
So the smartest people are the ones who run up a balance, get a couple months late and then get a 50% discount and no real aftereffects...
Was our financial system designed to reward fraud? As someone who pays their bills I'm feeling like a real sucker right now.
Me too. Saw the crisis coming and paid off my house, student loans, and all my cards. Felt good. HA! I'm a dumb ass too bro.
ditto - same boat as you are. Who knew the rules would be changed in the middle of the game.
I'm mad dammit, I didn't spend beyond my means so I could live a lavish ridiculous lifestyle and now I'm one of the ones who has to pay for all these absurd mistakes. You make your bed, now you lie in it, it's not my responsibility nor is it my tax dollars responsibility. Where's the equity in this for those who didn't act like idiots? Where's the failure for those who did?
I'm pissed!
Not now, but at some point in the future, there will be consolation in the fact that you didn't fuck yourself over.
A bunch of people seem think that bankers will play forgive and forget about ditched debt. Think again. It will be a foot on the jugular for years.
i agree. with them it is never over. you have to see them for what they are. and you have to fight them, like they fight you.
Hahaha, for those who don't have guns, maybe.
At any rate, at that same some point in the future, bankers will be too afraid to show themselves in public or make any noises that might give away their position. So, I wouldn't worry.
You have The Chumbawamba guarantee on that.
I am Chumbawamba.
Get over yourself.
HAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHAHA.
I am Chumbawamba.
well good for you. student loans are murder. some of these youngsters are getting out of college, already snowed under with student loan debt, which cannot be eliminated by any method other than payment of the loan....plus not only that, but now they get out of school, they owe all this money,and now they can't find jobs....
50% off a card balance? Big Deal.
Try defaulting on your mortgage and staying in the house, rent free, for two years. Plenty of folks doing that.
This discounts are just a tricks, an attempt to collect some money as soon as possible. But, of course, they newer forget ones debt and their interest. They will get it later.
All banks do this routinely. In fact, that's a bad deal. They should hold out a little longer and they can settle for 25-35%, depending on how good they are at haggling.
I suspect 53% represents the underlying principal, the rest being accrued interest and multiple fees. I would counter-offer with: sue me, biiitches.
All's fair in love and war and dealing with the banksters.
I have no mortgage or car payments and it doesn't matter if my almost perfect credit score went to "0". I have a 40K charge card credit line I've paid in full each month for twenty years. Why shouldn't I charge up to the 40K and stop paying. At some point they let me off for 20K?
My conscience wouldn't bother me, I'd simply be getting my money back from the stocks I shorted that said bank bought with my taxes!
When they call for a payment say "I took out this huge cash advance to short your common. I waiting till you go broke to cover so you'll just have to wait asshole. "
"eh, your using our money to short our stock. "
"No, I'm using my money that I paid in taxes that bailed your ass out".
Click.
Just remember, there is no such thing as "moral hazard".
Now Citi & BOA are going to add Annual Fees? Ha!
http://wcbstv.com/consumer/credit.card.fees.2.1272124.html
You should absolutely feel no guilt, it's simply being a good businessman.
Do you think Goldman felt "guilt" by making use of our money with reckless abandon? Nope. They're being good businessmen, they tell themselves.
If I had a mortgage, I would totally default on it and negotiate a better deal. That's just being a good businessman in this day and age.
Things like paying off your debt and "honoring" it is a notion from the 1940s. It doesn't apply in today's day-and-age. Companies routinely do things to negotiate with their creditors or people they do business, why can't we? We would be fools not to, why should Goldman and Wall Street play by one set of rules, and us by another set of more restrictive rules?
This is the kind of ideas why Americans has so many problems .
I know this is a very common viewpoint on modern standards of business, but if any rational person steps back and looks at it for a second, they'll realize that it's the "reasoning" of a sociopath. (No, I'm not calling you a sociopath.)
We are currently experiencing the result of a whole industry adopting this sociopathic approach, not to mention various industries buying Congressmen/women/things in very blunt and disgusting ways. Does anyone really think it is a good approach, all things considered?
The reality is that we as taxpayers are being eaten alive by businesses like Goldman that take us for everything they can legally do. Corporations are doing things that people would be considered completely unethical for doing, but no one bats an eye because it's expected.
Well, guess what, we need to start behaving that way too. If the Goldmans of the world are going to eat us for every cent we have, we should play by their rules too. For us to handicap ourselves by this ridiculous notion of "ethics" or "the right thing to do" and have to deal with the consequences of corporations acting against us without following those same rules means we will be taken for every red cent we have.
Look at what corporations like Wamu or Countrywide have done to people who have mortgages through them. What about that story about some bank (the name escapes me) that refused to accept a payment from someone they borrowed money for, so that they could foreclose on the house?
THIS is sociopathic. This is what we are up against. If we don't play by the same rules, WE WILL LOSE EVERY SINGLE FUCKING TIME.
We need to do what they would do as a business person and protect ourselves, or try to get every single advantage that we can get for ourselves, because that is what they would do.
If that means walking away from the mortgage on an underwaterhouse, or not paying our credit card bills because we know they will come crawling to us to pay us 40 cents on the dollar, we should do it. Isn't that EXACTLY what CIT is doing to their creditors, by playing brinksmanship and trying to get a better deal, when other people are saying bankruptcy would get creditors 80-90 cents on the dollar?
If it's good enough for CIT, it should be good enough for us.
Screw 40 cents on the dollar! ZERO! Don't give them a fucking penny! Not even a piece of shit copper clad zinc one. Everybody gets a bailout!
I am Chumbawamba.
This attitude common on the board of dismissing debts of credit cards that you all incurred by choice is reaching somewhat higher than I care to contemplate, "going forward".
As an employer I helped out a wayward employee- crack and dissolution. I paid off 20k+ of his credit cards at half in 2007. I strongly advised him to chuck the HSBC first and seconds, but not before getting copies of the loan agreements.
I am stuck with his worthless paper note that promises to pay me the dough that I spent on trying to get him out of the fix that he chose.
Long before the credit morass came onto the first screen of the whiners here I advised my employees where this was headed. The prudent ones did the prudent thing, the losers did their thing. The losers whine about how they should stiff the credit cards and the banksters, but that was what they had in mind all along.
As for myself, I prepared for this by working hard to pay off mortgage, and never carried a credit card balance past thirty days. The ones that I preached to found me to be a stick in the mud. I don't care about your personal values that allow you to stiff someone else with your unpaid bills that you voluntarily contracted by use of your card.
Spare some of us the rationalizations on your debt skipping.
It is definitely getting thick in here.
The point of the post was the increasing desperation showing through at Citi. (This is not the only example). It is unfortunate that outrage has extended so far that "fuck the bankers, stop paying the bills" has become a common cry, and that any post dealing with credit cards triggers this response.
If you'd really like to get upset, get pissed at the populist idiots who so badly mispriced risk over the last 15-20 years, convinced that all you had to do was turn down the dial on interest payments by law and everything would be ok, such that everyone now has to pay for it.
Threaten overdraft fees after permitting years of abuse because you killed interest rates whenever they wanted to rise and because wall street got you elected so you had to throw them some bone, and NOW you want to complain when banks crank APR? Get real.
Get off the crack of handouts. That goes for all of you. From you socialized cost bankers right down to you cheap-credit sluts. Otherwise the only difference between you and the crook you are pointing at is which side of the ripping-off you are on this week.
I agree with your sentiment, hell, I want you to be right, I live as if you are right, but it looks like the the rule of law and the concept of "fair" isn't working just now. Tell us, how do you propose we stop this? I mean the lack of transparency, TARP and other bailouts, monetizing debt, forcing debt on the taxpayer we did not ask for. We have lost the reins of power (history suggests we may never have had them). We cannot afford access to the apparatus. We cannot get the rules changed because those changes clash with the self interests of those we would charge with changing them. You know all this, better than me probably.
I am debt free, but I am sympathetic to the helplessness I see being expressed on this board.
Would you steal from a Nazi to help a Jew escape a death camp? I would, with joy. You may say something like "things are not that bad yet." How bad does it get before you decide it is war? During war, the rules change because the invaders changed them. We have been taken over from within. Trust is gone.
Using your frame, how do we get socialist hands out of everyones' pockets? How do we stop all the stealing? How do we regain trust?
Or is it just too late to ask those questions?
What is the point of ZeroHedge?
Ms,
start doing a small thing:
Use cash!
If you have money in the bank, take it out and keep it in a safe place.
That is perfectly legal and if it becomes common it has the potential to change the banks. They will have to offer a useful service.
Time to beat down some Nazi bankers, and help Americans excape from the debt camps!
@Marla You fail to grasp that our entire economic system is rigged by the big banks. It is unfair. The large banks take ridiculous risks and fail and they get propped up by the Fed, i.e. the citizens. I say finem respice. Everyone else fails and it's capitalism -- chapter 7 and lose everything. The large banks have stolen our future. They should be put out of business. They deserve nothing. They did it to themselves. Finem respice.
Well dear Marla, in railing against those advocating willful default you are forgetting one little factoid - the banks do not - I repeat DO NOT - have the money they "lend" in any way, shape or form. They just create it out of thin air! - and it can't even be called fractional reserve lending anymore because the reserve requirements are ZERO for all practical purposes right now. What they are doing is fraudulently increasing the money stock and thereby appropriating society's purchasing power in the form of principal and interest. There is another word that can be used to describe this - theft. If I were to start "lending" in this manner tomorrow and start charging interest on it, I'd be put in jail immediately - so if this is illegal and unethical for me why is it OK for the banks? The emperor is naked Marla. Just because a government in cahoots with the criminals does not stop the fraud (and in fact endorses it) doesn't mean it's not one. If they were lending someone else'e money, sure I'd have an issue with defaulting on that but they aren't and I don't. Our entire lending/financial system is a complete and utter fraud, and willful default is one peaceful way to stop it. Hit them criminals where it hurts the most.
+1
Burn the Paper Ponzi to the ground!
your point is critical to the discussion and cannot
be dismissed out of hand as a technicality.
namely the creation of credit seems to be done
ex-nihilo but in fact is a special godly privilege
given to banksters to extend credit from social
capital...
so while it appears that credit is created out of
nothing it is actually a loan created against the
large faceless capital pool which banksters can
tap at will - kind of loaing against gdp....
when loans are repaid the capital
pool increases and when defaulted it shrinks...
but who gave the banksters the right to this
pool? no one with any legal claim to its assets...and
thus it is simply a racket between a drug
pusher and his addict...calling on moral
scruples in such a case is absured if not
more evil than the evil being denounced...
why should banksters be allowed to earn interest
on the social capital pool yet the providers of
that capital get zip? this is the fallacy of both
central banking and fractional reserve as well as
of socialism....
transfer of property was mediated through social
assets and therein lies the rub....
it's a mob racket....all have become immoral
through its machinery but the source was the pusher
no one complains when it "works" but when it
implodes, oh well, that's the mechanism of the
social capital pool....
so one side stops stealing only to let the other
side continue....as a system that is also immoral....
Thanks for the refocus Marla. And 'Anan' your observation "a racket between a drug pusher and his addict" is the best image I can think of for the situation. Who do we blame for the problem? We're addicts and blame our drug dealer!
The arguments about needing to default had me considering defaulting on my own mortage for a moment. They were that good! But, I recommend Ghandi's approach instead "Be the change you want to see in this World." Pay off your consumer debt, and take the Alcoholics Anonymous approach, a day at a time and never ever use ever again. Ever, for the rest of your life - Period. No touchy! Cash for every consumer realted purchase (including cars YES!) now and forever. "Imagine all the people ..." (Credit to John Lennon)
If more than a few take this approach what do you think would happen to most of our financial services industry? Like drug dealers they would need to find honest work, or starve.
Umm...not really when "the drug" has been made mandatory consumption. Why are we drug addicts? Think about it. Why do you need to go into debt in the first place? It is because issuance of indiscriminate and excessive fraudulent credit has bid up the price of everything you need for a decent living. Need a car? Go into debt. Need a house? Go into debt. Need a college education? Go into debt. A medical emergency perhaps? Go into debt. Moreover, your wages do not keep up with the costs of these things because those closest to the money spigots get first dibs at the money created and the purchasing power associated with it since things have not been yet bid up. By the time the money percolates down to your wages, things have skyrocketed in prices. This is the shabby SCAM that all of us think of as the "monetary system" today.
The drug annology is way off folks. A drug dealer has to create drugs from a source of finite material, and put work and time into the drug's production. Electonic Fiat Money is created from nothing. Hence, the bankers are worse then drug dealers.
I smell a psychological paradigm shift happening towards our glorious fake money system and paper masters!
Got Gold Suckas!
That's a good point! When they lend you money, they actually just commit an update of some field in database, and for them your money is just a data on disks, but when you will pay them back it will be not a bits of data, but mere cash or its equivalent of your effort and time.
The concept of "morality" when it comes to finances is completely misplaced, much like the concept of "loyalty" when it comes to employment. People were "loyal" to their employers when their employers were loyal to their employees. Once businesses started deciding that loyalty was a sign of weakness, and they needed to maximize their profits, it created the "free agent" mentality of the 21st century. Now, you would be stupid to be overly loyal to your employer who will lay you off if your branch isn't profitable "enough". The simple fact you are profitable doesn't matter, they will shut you down regardless of how long you have worked there, regardless of the effects that will have on your family, etc. It's a business decision, sorry. The concept of morality is complete misplaced here.
Same thing goes for finances now. It used to be that people paid their dues because that's just how things were. Wall Street, again, changed this concept. Now, it is a business decision to decide whether or not to pay your debt. If it is strategically more beneficial to default on your debt and go into negotiations with your creditors to figure out a different solution, so be it. Businesses regularly swap debt for equity, renegotiate better terms on their debt, or they go chapter 7 and have their creditors pick over their dead bodies for a fraction of the debt. These are terms of the contract in which the money was lent out.
Why should we hold ourselves to a higher and more disadvantageous standard, ie. "pay your debts at all costs". That is simply stupid in today's world, and it is applying a set of standards that simply don't exist anymore. We have learned time and time again that everything should be a business decision. The option to not pay our debt should be open to us, and if we decide to pursue this course of action, we should follow whatever contractual obligations we have, plain and simple. If that means we declare bankruptcy to erase our debt, just like GM, Chrysler, CIT, etc, then so be it. That is the risk that lenders made by lending to us. Why should we live in a world where banks can screw us over by having the option to fuck us, and we don't have the same protection mechanism ourselves?
Each of the points you make here place blame on someone else for justification for you to live and act like them.
If we try hard enough we can justify just about anything can't we?
As more choose this road then there can be no contracts, no law, no civilization. Be careful what you wish for ... take another look at the last 3000 years of history.
Yeah, lets look at 3000 years of history shall we. Back then we lived by the Golden rule! Those that got the Gold make the rules!
Wake up Ponzi Zombie!
Fake paper/electronic money is for suckers!
Wrong. The remedies are fully spelled out by the contract. I can default on my mortgage and the bank can take my home. Those are the terms of the contract. I can default on my credit card debt, and they can trash my credit rating, or perhaps sue me, unless I declare bankruptcy. Those are the terms of the contract. Contract law is very well maintained.
Righteous.
I am Chumbawamba.
While I don't some of the radical ideas proffered here
I understand the anger when banks create money only
to shore up their own balance sheets with it to save
themselves, while absolutely screwing even their best
customers. This equals expanding the $ supply with 0
velocity. That is why there is a big protest at the
bankers mtg. in Chicago. Anyway even if I felt like it
my wife would never allow me not paying my bills.
Soon I won't have anymore though that process is painful.
This attitude common on the board of dismissing debts of credit cards that you all incurred by choice is reaching somewhat higher than I care to contemplate, "going forward".
Nonsense. I did play by the rules. I always paid off my debt. I believed in maintaining a strong credit record so that I could have capital for my business pursuits when needed. For a while it worked, and I was able to get myself going with various loans.
However, what I didn't anticipate, and what I didn't know was happening at the very time I was taking on debt, was that the banks and the government were actively destroying the economy with their policies.
I never took on debt I didn't need. I didn't take out a HELOC, even though I could have to the tune of half a million dollars or more at the peak. I didn't put all my spending onmy credit cards. I used my debit account always by default. It was only when times got rough that I utilized the credit cards, and then only sparingly, and I tried to pay down my balances as time went on.
I worked hard, earned money, paid my debts, and tried to live a decent life. However, other entities far more powerful than I were acting irresponsibly and putting the entire economy at risk for default. When it happened, it made my life harder. I had to work harder for less money. Bills started to pile up. In order to keep up, the credit cards were employed more often. Balances started to build. Interest rates started to climb. It became a trap.
So there comes a point when you wake up and realize you are purposely being directed into a master-slave relationship with your creditors. It becomes blatantly obvious when these same creditors, unable to manage their own checking account, go whining to the government for a bailout, and not only do they get it but there are no strings attached. And so they use this as a cudgel with which to keep you down. Keep you mired in debt, misery, anguish, dread, loathing. An indebted, miserable, anguished, dreadful and loathful citizen is an easier one to control. The weak ones come to be at your mercy, and will do anything for you if you show them some leniency.
But for those of us who are intelligent, who step back and look at the greater scheme of things and start to understand what is really happening, we see the fraud. We see the lies. We see the utter depravity of it all. And we realize, well before others, that the rules of the game have changed, and if you continue playing by the old ones you WILL be crushed under the unforgiving, unappeasable, unrelenting burden of debt into which you were engineered.
Congratulations for repaying your debts in full. Your honesty and conforming sense of morality will perhaps give you solace as the government increases your tax burden in order that bankers much less responsible than you can continue to live a life of luxury and largesse, all funded by your labor.
I am Chumbawamba.
+1000
Well said chumbawamba.
+100000000
Burn The FED Ponzi Scheme To The Ground!
Such an insight! Now, please, try to realize that those things happens everywhere around the world, and now it is just your time came. (not your personally, it is mere a historical event.)
You mean like the banks who stuck the taxpayer with their gambling losses?
Like someone has already mentioned in here - if the banks can show me the person I owe it to I'd be more than happy to pay them everything. I am NOT advocating defaulting on money owed to someone or not paying your regular bills like utility, rent etc. or not paying someone for services rendered (no - creating money out of thin air is NOT a service). This action is directed primarily against the banks part of the federal reserve banking cartel.
CIT and Citi are 2 different lending institutions.
Squid steaks are mighty tasty. Served with Bankster bloodwine.
Invite a banksta to dinner.
it's not sociopathic AT ALL.
It is RATIONAL.
After all, why should an individual voluntarily live under a moral code decided by others when those "others" use that moral code to supress the masses and enrich themselves?
My Lenochka says that psychopathy is perfectly rational. This is also the best critique of Objectivism that I have seen.
Well said!!
if you think that this is new you need a new
clue phone....when i was in school way back
in the day my accounting professors clearly
instructed us that debt discharge was a business
issue without a moral component....and this was
at the school regarded at the time as having the
number 1 accounting school in the nation...
companies tighten and loosen credit standards in
order to find maximum profitability....
when i raised the moral and moral hazard issue
i was dismissed as a trogladyte....this is busines
baby....debt and credit losses are business and
amoral matters...
i don't believe in personal theft but demanding
that people adhere to one set of contract
standards while businesses have another is immoral
also - i.e. tyranny....
socialized debt is fundamentally sociopathic
and immoral....it was fostered and created by
the banksters who pushed it on their users....
both elements are immoral in my view and getting
huffy about it is like calling the whore calling
the slut immoral...
Goldman? What about GM, or Chrysler, or any other company that files Ch 11.
It is fine for a company to default and/or renegotiate their debt, but when a person does it, there is a moral issue?
Right.
Brilliantly stated!!!
Was listening to Dave Ramsey this morning, and a caller mentioned that they were being hassled by a collection agency acting on behalf of citi demanding payment of a 10-year old bogus debt (she claimed it was due to an identity theft incident).
More evidence of a "surge" in an attempt to pretty up the bottom line...
doubt it was citi at all...it was a jackass collection company that was probably a second buyer of receiveables....
yep that is called the zombie debt collector and she thought it was over with. .....not necessarily...its like i said the other day. there are only two ways to get rid of debt. either pay it/and or settle it, or discharge it in bankruptcy....
having spent about 10 years in the cc industry, i can tell you this has been going on for some time. they have models based on historical payment rates, based on risk scores (combinations of internal scores, FICO, and others), migration in scores, other debt/credit bureau attributes, etc. so they have a decent idea of what the natural recovery rate would be (although i'm sure the quality of these is changing). there really isn't enough information to make a judgment about the degree of desperation (or poor decision making) going on at citi based on what is presented here. would need a more complete picture of this borrowers financial picture and the state of this particular account. as previous poster said, quite a bit is likely fees and interest. i think citi is a shitbox waiting to topple, but in this case, don't think this is indicative of something one way or another...
on a tangential note - it will be very interesting to see how all of these lenders that achieved a ton of expense reduction through automated stategies driven by scores (FICO being a major one) will continue to do business when the performance of a given FICO 650 now vs what it was 2 years ago is likely to be very different... a delinquency on a mortgage used to be an easy deal killer - and scores reflected it - but now that would exclude a ton of the population... i'm not sure anyone has a good handle on risk on the consumer side, at least not those relying on automation/score-driven strategies.
Guess borrowers and lenders will, like, have to know each other or something! I could see new legislation that you have to own a loan for a certain amount of time before you can sell it to someone else.