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Author Topic: Big banks damaging 'mainstream'  (Read 2132 times)
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WhiskeyGirl
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« on: February 27, 2009, 02:26:28 PM »

Why isn't the Obama Administration supporting programs that work?  Like the many sound banking firms?  How many of these big banks offshored customer service, IT, and other back office jobs?  When will the U.S. government invest in America?  Does it make sense to offshore our financial future?

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Salvatore Marranca is outraged.

The Southern Tier banker says his little Cattaraugus County Bank and thousands of other small U.S. banks are being punished for what a few big institutions did.

“Mainstream banks, which is what the 5,000 banks like us call ourselves, continue to be pummeled for the sins of Wall Street,” Marranca said.

“It’s very frustrating when we have to pay for the bad things other people are doing. We didn’t cause today’s problems and are willing to be part of a solution, but don’t penalize us in the process,” he said.

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This year, Cattaraugus County Bank already has budgeted $100,000 more for insurance premiums than the $40,000 to $50,000 it paid in 2008, Marranca said. But on top of that, the FDIC is expected to impose a one-time special assessment that could cost the bank as much as $26,000 in the second quarter.

This is like malpractice insurance for doctors...the good ones are punished by the losses of the bad doctors...it makes it harder for the good ones to stay in business.  From my reading over the years, the bad ones seem to keep practicing, and the damage continues...

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Though the higher mandated costs are not expected to affect Cattaraugus County Bank’s lending ability, Marranca said “they will mean less money to make capital improvements and for growth, less money to spend on either higher deposit returns or lower loan rates - less money to flow into capital.

It will affect smaller banks ability to prosper.  Probably eliminate some or bring them into the Citi collective...

http://www.bizjournals.com/buffalo/stories/2009/02/23/daily57.html

Is this the future of small business in America? 

my opinions

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All my posts are just my humble opinions.  Please take with a grain of salt.  Smile

It doesn't do any good to hate anyone,
they'll end up in your family anyway...
WhiskeyGirl
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« Reply #1 on: February 27, 2009, 03:02:27 PM »

I don't have a lot of faith in the 'stress tests' - just seems like such a foolish game.  And the point of the exercise is exactly what!!!

Anyone remember the game "Operation"?
 

Quote
Operation is a battery-operated game of physical skill that tests players' hand-eye co-ordination. Made by Milton Bradley, it has been in production since 1965, the year in which the game was invented by John Spinello.

http://en.wikipedia.org/wiki/Operation_(game)

The 'stress test' - is that like playing Operation without the bones, the tweezers, and battery?

my opinions and concerns

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All my posts are just my humble opinions.  Please take with a grain of salt.  Smile

It doesn't do any good to hate anyone,
they'll end up in your family anyway...
A's Fever
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« Reply #2 on: February 27, 2009, 07:07:38 PM »

Why isn't the Obama Administration supporting programs that work?  Like the many sound banking firms?  How many of these big banks offshored customer service, IT, and other back office jobs?  When will the U.S. government invest in America?  Does it make sense to offshore our financial future?

Quote
Salvatore Marranca is outraged.

The Southern Tier banker says his little Cattaraugus County Bank and thousands of other small U.S. banks are being punished for what a few big institutions did.

“Mainstream banks, which is what the 5,000 banks like us call ourselves, continue to be pummeled for the sins of Wall Street,” Marranca said.

“It’s very frustrating when we have to pay for the bad things other people are doing. We didn’t cause today’s problems and are willing to be part of a solution, but don’t penalize us in the process,” he said.

Quote
This year, Cattaraugus County Bank already has budgeted $100,000 more for insurance premiums than the $40,000 to $50,000 it paid in 2008, Marranca said. But on top of that, the FDIC is expected to impose a one-time special assessment that could cost the bank as much as $26,000 in the second quarter.

This is like malpractice insurance for doctors...the good ones are punished by the losses of the bad doctors...it makes it harder for the good ones to stay in business.  From my reading over the years, the bad ones seem to keep practicing, and the damage continues...

Quote
Though the higher mandated costs are not expected to affect Cattaraugus County Bank’s lending ability, Marranca said “they will mean less money to make capital improvements and for growth, less money to spend on either higher deposit returns or lower loan rates - less money to flow into capital.

It will affect smaller banks ability to prosper.  Probably eliminate some or bring them into the Citi collective...

http://www.bizjournals.com/buffalo/stories/2009/02/23/daily57.html

Is this the future of small business in America? 

my opinions



All insurance works like that!  You may be the best driver, but you are still subsidizing those that are accident prone!

Not sure what the article about the FDIC insurance has to do with back office operations moving offshore, but just wanted to comment on that.  When B of A was headquartered in San Francisco it had huge operations in the city, and I believe Wells Fargo still does.  B of A still maintains large IT facility near here (an East Bay suburb of SF) that has been in the news lately because of lay offs.  For those companies that have significant offshore operations such as Citi it would make sense that they have a lot of operations overseas.  Not defending, just thinking out loud.
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A's Fever
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« Reply #3 on: February 27, 2009, 07:28:00 PM »

I don't have a lot of faith in the 'stress tests' - just seems like such a foolish game.  And the point of the exercise is exactly what!!!

Anyone remember the game "Operation"?
 

Quote
Operation is a battery-operated game of physical skill that tests players' hand-eye co-ordination. Made by Milton Bradley, it has been in production since 1965, the year in which the game was invented by John Spinello.

http://en.wikipedia.org/wiki/Operation_(game)

The 'stress test' - is that like playing Operation without the bones, the tweezers, and battery?

my opinions and concerns



I have also been suspicious of the stress test - wondering if it was merely an exercise in stalling while working out a detailed plan.  But on further reflection it seems to me that the government needs to know - on its own terms by its own definition - what the state of these banks is, so that they can better estimate  how much exactly the banks will  need and in what form.  If they don't do these tests then they are at the mercy of the bank examiners, and we know what that's worth, and the former gov't agency examiners, who haven't exactly been on the ball either.  The stress test also will eliminate apples and oranges comparisons between banks since everything has to be done/analyzed in a uniform manner. 

It also seems prudent to test the bank against worsening economic conditions and is a standard lending practice.  When I was a lender we would do that type of analysis on companies, where we would assume reduced revenues or lower margins or profits, and then see if the company could still meet the liquidity or capital ratios we were imposing.

When your doctor sends you to a specialist, the specialist may accept your recent blood work or xray, but she is likely to order additional tests as well to make her own diagnosis.  I see it like that, but of course just guessing.
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WhiskeyGirl
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« Reply #4 on: February 28, 2009, 10:40:59 PM »

There are a number of insurance companies that only do business in the US that have outsourced their IT, customer service, claims and other departments. 

Quote
Service providers — including captive multinational firms such as Citibank, Dell, HSBC, and Intel, and globally known third-party providers such as Accenture, eTelecare, and, most recently, Infosys — have been tapping into Philippine labor pools to build O&O facilities in the Philippines.

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This has attracted the back-office finance and accounting functions of many global names, including AIG, Chevron, JP Morgan Chase, and P&G. Similarly, the Philippines has nearly 290,000 engineers (more than that of Germany, Malaysia, and the UK combined), 100,000 medical doctors and 340,000 nurses (nearly as many as the UK in both professions), whose skills have been leveraged in various BPO activities, such as life sciences, engineering, and IT.

http://www.bpap.org/bpap/index.asp?key_sectors

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The Indian offshore outsourcing industry has been rocked by the revelation that call centre workers in Pune have been arrested for allegedly looting $350,000 from the accounts of Citibank's US customers.

The three staff are former employees at Indian business process outsourcing (BPO) firm Mphasis, which runs call centre services for Citibank's US customers in Bangalore and Pune. Nine other gang members were also arrested.

http://www.silicon.com/research/specialreports/offshoring/0,3800003026,39129426,00.htm

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FRAMINGHAM, 5 OCTOBER 2008 - The ongoing credit crisis is a concern for everyone in nearly every industry-fear of lost jobs, foreclosed homes and bankrupt businesses. But those lost jobs are likely to further bolster the booming offshore outsourcing market-so the experts predicted.

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"It is naive to say an economic slowdown is good because cost-cutting will lead to higher offshoring. This is no longer a recession, it is fundamental restructuring of financial services that is taking place," says McCarthy.


http://www.mis-asia.com/technology_centre/it_services/offshore-outsourcing-what-role-will-recession-play

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Bangalore: When chaos over the work permits in the U.S. and stiff measures on H1B visa allocation after the transformation in the country's administration become major concerns for IT exporters all over the world, Indian IT biggies will be looking the developments much closer than others as they have received the maximum number of H1B visas last year. Majority of such visas were for sending employees to serve customers such as Citibank, GE and Bank of America, reported The Economic Times.

comment-
Quote
1: @Richard

you Americans deserve this...we will take away all ur jobs and these laws can't
stop this...the whole world has to suffer coz of this mess created by you stupid
people who spend $200,000 on education and then also can't compete with
us...Ask ur President to stop giving aid to pakistan
Posted by: Bobby - 27 Feb, 2009

Quote
: Umm Objective view - Scrapping the H1 B Visa option is not the best way to go
about finding a solution. The reason H1B is there in the first place is because
there are a lack of skilled workers in the states. Stopping this program will
only "hurt US companies and make non-US companies more competitive. Besides
there are other Visa avenues which can be used so this move will not help
americans get more jobs.
Instead the focus of the visa should be modified and a cap put for each company
so that more companies can compete for the visa's.
Posted by: james - 26 Feb, 2009

http://www.siliconindia.com/shownews/Indian_IT_biggies_got_maximum_H1B_visas-nid-52986.html/1/1
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All my posts are just my humble opinions.  Please take with a grain of salt.  Smile

It doesn't do any good to hate anyone,
they'll end up in your family anyway...
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