"I suppose people want to carry on with their lifestyle but cannot afford the expensive cheeses, fresh cuts of meat or nice fish that they used to be able to afford and now they just take it. This is the first year we have seen a huge rise in theft of these items and we are being told it is for their own consumption rather than to sell on," Neil Matthews, vice-president of Checkpoint Systems told The Times.

Stealing a loaf of bread to feed your family is one thing, but stuffing some artisinal bread, a block of five-year aged gouda and a filet mignon down your trousers? Bollocks.

How the middle class are shoplifting to keep up appearances [Times Online] (Photo: LDRBRS)

TRANSCRIPT: "My name is Kent, and my husband yesterday we got a mailing from Citibank.

They're basically threatening to double the interest rate, or, not threatening, they were doing it. They're saying the only way he could lower it is if we transfered $5,000 in balances from any other card we may have. We have a balance on the card, but we haven't used the card in over a year.

So, basicaly, here, run up more credit. My husband say, this isn't acceptable, and he negotiated with them, and was just kind of hard with them.

They kept saying over and over again, "It's the increasing cost of doing business, it's the increasing cost of doing business." It was their constant refrain. The people were very well trained to stay on their message points.

It was interesting, they were basically saying "here, run up more debt." Obviously that's their business but it's irresponsible for anybody.

And it's just insane. The woman even said, "Well, we can do this." Well, we'll see." : END TRANSCRIPT

So let's get this straight. Bankers have to increase credit card interest rates to "price for risk," which, supposedly, is the increased risk that debtors will default in this economic client. But here, Citi is saying, become a riskier customer by putting more debt on this card, or we'll punish you by doubling your interest rates.

Let's cut the banker bullshit. It's not about credit risk, it's about profit risk. Citi is trying to drive away the least profitable customers, like Kent and her husband who haven't used their card in over a year, and saying that hey, if you're going to stay with us, you're going to have to be more profitable by having more debt for us to make money off of servicing.

Remember the bottom of the contract where it says they can unilaterally change the terms at any time? Well, that time is now.

The good thing is that Kent and her husband can probably reject the change in terms of service and interest rate, freeze the account (it's not like they're using it) and then pay it off or transfer the balance to another card.

Got a tip you want to leave by phone? Call 347-422-6695 and leave us a message.

RELATED: Citibank To Charge Fees On Checking Accounts
(Photo: gruntzooki)

# Bought and converted into high-yield bonds tens of thousands of mortgages from subprime lenders that became the subjects of FBI investigations into whether they'd misled borrowers or exaggerated applicants' incomes to justify making hefty loans.

# Used offshore tax havens to shuffle its mortgage-backed securities to institutions worldwide, including European and Asian banks, often in secret deals run through the Cayman Islands, a British territory in the Caribbean that companies use to bypass U.S. disclosure requirements.

# Has dispatched lawyers across the country to repossess homes from bankrupt or financially struggling individuals, many of whom lacked sufficient credit or income but got subprime mortgages anyway because Wall Street made it easy for them to qualify.

# Was buoyed last fall by key federal bailout decisions, at least two of which involved then-Treasury Secretary Henry Paulson, a former Goldman chief executive whose staff at Treasury included several other Goldman alumni.

Whether this really constitutes fraud depends on who knew what, and when did they know it.

How Goldman secretly bet on the U.S. housing crash [McClatchy] (Photo: C. Barr)

All-Hallow's is when the spirits come out, and come out they did; In the largest banking failure since WaMu, massive commercial lender CIT filed for bankruptcy. 9 US banks were also seized on Friday, bringing the number of banks that failed in 2009 to 115.

I know, I know, but you just need to be patient America. Exorcism is a process.

Nine U.S. banks seized in largest one-day haul [Reuters]
CIT Group Files Bankruptcy, Seeks to Reduce Debt [Bloomberg]
(Photo: peasap)

In a New York Times letter-to-the-editor, Reed writes:

"Re "Volcker's Voice, Often Heeded, Fails to Sell a Bank Strategy" (front page, Oct. 21):

As another older banker and one who has experienced both the pre- and post-Glass-Steagall world, I would agree with Paul A. Volcker (and also Mervyn King, governor of the Bank of England) that some kind of separation between institutions that deal primarily in the capital markets and those involved in more traditional deposit-taking and working-capital finance makes sense.

This, in conjunction with more demanding capital requirements, would go a long way toward building a more robust financial sector.

John S. Reed
New York, Oct. 21, 2009

It's a bit of an ironic epistle considering Glass-Steagall's dissipation made possible the merger between Citicorp and Citibank with Travelers Group, combining commercial banking with investment banking and insurance, and facilitating the sub-prime bubble and eventual collapse.

To be fair, Reed was ousted in a boardroom coup before the really bad stuff started to happen, as he would have been an impediment to it, but he's still invited the vampire into the house.

For more on Glass-Steagall's role in ushering in the Great Recession, check out our post "Blame The Subprime Meltdown On The Repeal Of Glass-Steagall."

Volcker's Advice [NYT via The New RepublicStash]

(Click to embiggen)

Sure home sales have picked up the past few months, but is it sustainable, or mainly people trying to get in before the new homebuyer tax credit expires in November?

One disturbing indicator of how the mortgage market is still messed up: The 7-month program to refinance underwater homes has only reached 3% of eligible borrowers.

And even after refinancing, some of these homeowners still owe more than their house is worth, as banks refuse to refi at the real market price for fear of realizing the loss on their books. Some of those who re-fied are already in foreclosure.

Consumers are more stressed than ever to make their mortgage payments. With hundreds of thousands of Option-ARM mortgages resetting this month, high unemployment, strapped bank accounts and cut credit lines, the housing crisis is far from over.

US foreclosures' flurry of activity [USFST]
(Big Graphic: GDS Digital)
PREVIOUSLY: Newsflash: The Next Tsunami Of Aggressively Irresponsible Loans Didn't Magically Disappear
Monthly Mortgage Rate Resets, 2007-2016

In an interview with Stanford Magazine, Born recalls a lunch date she had with Greenspan:

Well, Brooksley, I guess you and I will never agree about fraud," Born, in a recent interview, remembers Greenspan saying.

"What is there not to agree on?" Born says she replied.

"Well, you probably will always believe there should be laws against fraud, and I don't think there is any need for a law against fraud," she recalls. Greenspan, Born says, believed the market would take care of itself.

Prophet and Loss [Stanford Magazine]

Lewis Resigns After Betting Bank of America on America When America Broke
RELATED: Frontline Examines The Bank Of America/ Merrill Lynch Merger (Photo: CBS)

Collection ammounts where the original debt was under $100 will be totally disregarded, MarketWatch reports. Back in Feb we reported that they would still be taken into account but only matter less. Also, FICO'08 has been rolled out to all three credit bureaus since last month. Before it was only being tested at one and there was some disagreement over whether all the bureaus would accept it.

However, Freddie Mac and Fannie Mae haven't adopted FICO '08 yet. So if you're getting a traditional conforming mortgage backed by one of them, lenders are still going to judge you under the old FICO system.

No matter what flavor of FICO gets applied to you, you can do better at the credit score game by paying your bills on time, maintaining low debt to income ratios, high available credit to debt ratios, keeping old credit cards open, and disputing erroneous items from your credit report.

New credit scoring model may boost some borrowers' scores [MarketWatch]
PREVIOUSLY: 6 Ways Your Credit Score Changes Thursday

...mortgages will stay cheap, provided you have the stellar credit needed to get one, and savings accounts will continue to generate low, but safe, returns. They also said rates will stay low for an "extended period." Growth may be picking up, but unemployment remains high. August home sales fell, too, for the first time in four months. It seems the slog to economic recovery will be anything but short.

Fed Signals Growth Return Not Enough to End Stimulus [Bloomberg] (Photo: frankieleon)

Among them:

• Home prices always go up. (Nope)
• Assets price themselves perfectly according to available information. (Unless there's more many to be made another way)
• Individuals are foolish but the market is rational. (But what if the market is completely made of fools?)

Check it out

How Did Economists Get It So Wrong? [NYTM] (Photo: ΠΑΣΟΚ)

-Standard APR is going from fixed rate 11.99% to Prime Rate plus 11.99%. Rate as of Aug 1, 15.24% (this is applies to new purchases AND ALL BALANCES PREVIOUS)
-APR for Cash Advances will be 21.99% plus prime.
-APR for Late Payment will be 23.99% plus prime.
-Late fees for less than $250 will be $19, greater than $39.

Here's the AMEX letter:

Like all companies large and small, our pricing has to be responsive to the business and economic environment. As a result, we have found it necessary to increase rates and fees on some of our products. Below are the principal changes to your account:

o We are changing your APR on purchases from a fixed rate to a variable rate. (Prime Rate plus 11.99% = 15.24%)
o We are raising the APR on cash advances. (Prime Rate plus 21.99% = 25.24%)
o We are raising the APR on any balances that have a penalty rate. (Prime Rate plus 23.99% = 27.24%)
o We are increasing the late fee.

Reader Neil is miffed:

For a company whose stock price has doubled in the last six months and who has paid back its TARP money, this sure seems more like pure greed than any response to market conditions. Either that or they want to sneak some crap in before new regulations kick in. Anyway, since I have been a loyal customer for nine years, I think it may be time to do my own adjustment and bolt them. At least then their short-term shenanigans would result in them losing a long-term profitable customer.

So is Brian:

I have an AMEX Blue card and it's always been my go card because it had a fixed interest rate of 7.9% on all purchases; not the best but it beats most. Earlier this year I got a letter from AMEX stating that due to a "hard economic environment" they were raising everyone's interest rates by 3%. So my fixed 7.9% became my fixed 10.9%. It is no longer my go to card and I was looking into what my best options were to transfer and close out the account, but I was taking my sweet time about it. [Then] I just got a new letter in this week from AMEX... So in short, my AMEX Blue account went from a fixed 7.9% to a fixed 10.9% to a variable 15.24% this year, and at no time was I ever late on a payment or was ever assess a penalty. As you can imagine I'm no longer taking my time and weighing my options and I'm going to transfer my account this week.

Adam can deal with the rate hike, he just doesn't like they're tying his hands:

Just yesterday I got a notice in the mail stating they are raising my APR by 5% (applies to existing balance and new purchases) and was curious that no where on this notice does it mention the ability to opt-out. I did a Google search on this topic and was surprised to learn that the option to opt-out is a just privilege, one awarded by many credit card companies, but not American Express. A call and email to customer service confirmed this....I shouldn't have any problem financially with this rate hike, but the prospect of future changes and not having any options at all doesn't sit well with me.

The letter they sent also notifies customers that the card is dropping overlimit fees. As we previously reported, AMEX is dropping overlimit fees because it's too expensive to get everyone's permission for them, a requirement of the new CARD act. Tying the rate increase to the fees getting dropped is in line with the credit card companies moaning, "We will have to make up our ill-gotten gains somewhere!" in response to the consumer protections initiated by recent credit card reform.

PREVIOUSLY: AmEx, Discover Ditch Overlimit Fees
(Photo: www.samwilkinson.org)

AndYaDontStop, who took the photo used in this post, writes:

The other bitch in this whole thing is that the government has put $1 billion into this program, which when divided mathematically into the average rebate and the number of dealers participating nationwide, gives each dealer about 12 vouchers to use. We had, at one time, 80-100 people on our list of interested customers. Can you say clusterf***?

Guess a billion doesn't buy you much these days. It's kind of like the Denny's free grand slam fiasco all over again. When will people realize that giving away money and free stuff will always be much more popular than expected when you do it in a 10% unemployment economy?

RELATED: Brakes put on 'cash for clunkers' plan [USAToday]
PREVIOUSLY: Cash For Clunkers Runs Dry In 4 Days

(Photo: AndYaDontStop)

They look at at six major indicators: consumer confidence, durable goods, existing home sales, interest-rate spread, jobless claims and retail sales. An X means they're still crap. A check means thumbs up. The greener the bar, the less crappy. If at least three of these get checkmarks, then the recession is over. Breakdowns tell you what the indicator is, why it matters, and what to watch.

A useful tool for cutting through the swirl of data and hype, updated frequently and always accessible at kiplinger.com/businessresource/recovery.

The Consumerist
101 Truman Ave
Yonkers, NY 10703

70 Pine St,
New York, NY 10005

Dear AIG:

Congratulations! You are the 2009 grand champion in The Consumerist's Worst Company in America contest. In NCAA-style ladder vote-off, you bested 15 other contenders. Comcast, Ticketmaster, Walmart, Citibank, Chrysler, Target, Peanut Corporation of America, HP, T-Mobile, Best Buy, Timewarner Cable, Apple, Verizon, Sprint, Home Depot, AT&T, Chase, Sears, General Motors, United Airlines, US Airways, Capital One, DirecTV and Bank of America, they all lay quivering in your wake, much like our 401(k)s.

In anointing you supreme victor, Consumerist readers cited such achievements of yours as "wrecking the whole economy," and "costing the American tax payer untold billions," and noted both your "greed" and "chutzpah." Considering how influential AIG has been in the events of the past year, I can think of no one more deserving than you to receive our prestigious Worst Company in America Award, the Golden Poo. Please consider displaying it in your booth at your next secret tradeshow.

On behalf of the entire staff at and readers of Consumerist.com, I salute you.

Sincerely,

Ben Popken
Co-Executive Editor
The Consumerist

The Recession Wrecks Friendships [Double x] (Photo: jessicajbeck)

I confess. I did a bad thing. I worked for Countrywide Home Loans for about 2 years, shortly before the "mortgage meltdown." Countrywide is guilty of all charges and then some!

I can tell of several of instances where a customer would be qualified for a loan because their credit score and other factors based on the written product description, however, when I went in to put their (this only happened to African-Americans) – they were not qualified for the loan product and had to be referred to Countrywide's subprime mortgage company Full Spectrum. Full Spectrum offered higher rates and fees. I got wise day and started not imputing the race so the computer could give me "approval."

Most of my troubles with Countrywide began when I was told I needed put customers in more exotic products such as the "No Income-No Ratio (NINA)," "Stated Income-Stated Assets (SISA)," any ARM product or the classic "Pay Option ARM" (where you have a choice of 4 payments).

Countrywide offered incentives for putting customers in those types of products. My customers needed stability on their loan and didn't need to refinance every two to three years stripping them of their equity (provided they had any). I didn't agree with their policies so my tenure was short-lived.

I tried several times to contact the confessor but they never responded to my requests for an interview so we could get more details. Perhaps Baltimore and the NAACP should also be looking into Countrywide's lending practices.

In other news, if you're a minority and you want your loan approved, don't fill out your race on the app.

PREVIOUSLY: Countrywide Made Racist Sub-Prime Loans?

Unamused, Massachussetts U.S. District Court Judge William Young upheld $275,000 in sanctions against Ameriquest and its lawyers (PDF). This quote from the bankruptcy judge speaks volumes: "It is worth repeating as a warning to lenders and servicers that the rules of this Court apply to them."

Much of the financial services industry apparently forgot, in the heady years of a booming economy, that they had to play by the rules. But they do. Paperwork and proof matter, especially when it comes to taking a home. Just because Ameriquest and its ilk have been securitizing—essentially a convoluted sale supposed to allow investors to shoulder profit and loss—their loans for years, that does not mean their intentions will hold up in a federal court.

Judge Young resorted to an Oscar Wilde quotation and a Thomas Nast cartoon to express his disgust at the conduct of Ameriquest and its lawyers, who apparently thought otherwise. As it turned out, Ameriquests's law firm had already tried to foreclose the loan—for Wells Fargo, and Ameriquest had given away all its important right in the securitization.

This ought to be a forceful reminder to the lending industry of why it matters who can produce the note.

$275,000 Sanctions in Mortgage Shell Game [Consumer Law & Policy Blog]

Sam Glover is a consumer rights lawyer, enemy of shady debt collectors, previous Consumerist contributor, and writes the Caveat Emptor blog. His column appears the first Monday of every month on Consumerist.

...with 60-day delinquincies predicted at 65-75%. "Loan modifications hold clear value for many homeowners provided the modified payments are sustainable, but more often than not, reducing the home payments to an affordable level may not be enough to rescue borrowers who are overextended on other credit and expenses," said Diane Pendley, a managing director at Fitch.

Many modified mortgages will default again, Fitch Ratings projects [LAT] (Scan: SyndProd)

[Bloomberg] [StreetInsider]

Bankruptcy Sleuths Find Cash in Trader Receipts for Lap Dancers [Bloomberg] (Photo: ClevelandSGS)

More Banks Will Need Capital [WSJ]

Shadow banking [Marketplace]

The real unemployment rate? Try 15.6% [MSN Money] (Photo: Lisa Pisa)

My friend recently went to Banana Republic and while she was checking out her Banana Republic credit card was declined. She called me after speaking to a BR store credit card rep on the phone because the rep told her that "BR has been lowering ALL credit card limits in light of the current economic crisis. Customers are welcome to call back to ask that their limit be raised in 3-6 months." This is rather normal, however, they lowered her credit limit from $1000 to $100. I'd say 80% of their items cost more than $100? She pays her bills on time and doesn't carry a balance. I checked my card and they haven't lowered the limit yet. This policy of lowering the limits across the board is ridiculous.

Stinks. Soon we'll have to back to this antiquated method called "paying in cash." I just hope we're not too rusty. Maybe the government can sponsor some retraining classes?

"The new Banana Republic card, for those of you who can't get $100 together, and really like Banana Republic socks."

(Photo: yoshiffles)

The public-private partnership [Marketplace]

WHAT THEY SAID: "We are undertaking an unprecedented and concerted fiscal expansion, which will save or create millions of jobs which would otherwise have been destroyed, and that will, by the end of next year, amount to $5 trillion, raise output by 4 percent and accelerate the transition to a green economy."

WHAT THEY MEANT: The words in the communique were strong but in reality the major countries did not pledge any additional efforts on government spending or tax cuts to boost their own economies.

Somehow doesn't have quite the same ring, does it? [AP] (Photo: mugley)

Collateral calls [Marketplace]

From: [redacted]
Sent: Saturday, March 07, 2009 6:38 PM
Subject: REPLY ME

My Name is Mr. [redacted] but my origin is from Republic of Congo. I have an inherited fund I want to invest in a business in your country with a help of a local. I don't know about what business but I found it wise to invest the funds in your country with your collaboration with me.

Ever since I move to Dubai due to the problem in my country, I have not been able to invest the funds in Dubai due to security reasons. Now I am seeking foreign assistance to transfer the funds in your country based on the news of their development.

If you can assist, I am willing to give you 10% of the funds that is US$3.5Million. You will understand that my entire life and future depend on this money and I shall be very grateful if you can assist me. The major thing I demand from you is the absolute assurance that the funds will be safe and you will not sit on it when it is transferred into your account.

I will be willing to coming to your country once everything has been done and the funds are in your bank to discuss on lucrative investment in your country.

I hope to hear from you so that we might get to talk better on this issue. Please do give me your contact information in order for me to call you ASAP.

If this email offends your moral value, do accept my apology.

Hope to hear from you soon.

Best Regards,

[redacted]

Terrific vetting process.

Letters Of Madoff Victims (PDF)
Wow, I Needed That [Talking Points Memo]

Geithner Relies on Investors for $1 Trillion Plan [Bloomberg] (Photo: {Guerrilla Futures | Jason Tester})

I'm not sure this list was entirely comprehensive. Feel free to add your additional suggestions to AIG employees in the comments.

AIG Corporate Security's Tips for Surviving an Angry Mob [Gawker]

American capitalism's in crisis, and the public has lost confidence in banks, money managers and business reporters - even the Treasury Department. Friday, on To the Point, If the smartest guys in the room aren't reliable, who do you trust with your money? Will the US become a nation of online traders?

To The Point is on many NPR-affiliate stations or you can listen online here by clicking the "Live" button.

What do you think? Has the financial crisis lead you to become a more self-directed investor, or made you even more interested in the advice of a financial planner?

The Great Recession and the Erosion of Trust [To The Point]

Bees move into foreclosed home in Port St. Lucie [TCPalm]

Scenes from the recession [Boston] (Thanks to Keith!)