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Financially troubled Metro seeks to borrow $220 million to cover loan

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Metro officials want permission to borrow $220?million to cover a loan coming due in October, as the transit agency continues struggling under restrictions imposed last year after a federal audit found numerous instances of financial mismanagement.

At a time when some Washington-area officials have become increasingly skeptical of the way the Washington Metropolitan Area Transit Authority handles its money, the agency’s chief financial officer plans to ask Metro’s board of directors on Thursday to allow him to seek the short-term loan.

Metro already is juggling several large, short-term loans, borrowed largely to make up for federal grant money that has been slow in arriving. The Federal Transit Administration, which completed the audit in March 2014, has been limiting Metro’s access to grant money until the agency fixes the problems described in the scathing financial report.

Tuesday, D.C. Council Chairman Phil Mendelson (D) called a meeting between Metro board leaders and D.C. Council members in his office to relay concerns about how the transit agency’s financial troubles are being handled. And Wednesday, council member Elissa Silverman (I-At Large) hammered Metro leaders at a public oversight hearing, accusing the board of failing to hold individuals accountable for its financial lapses or to provide a “clear picture” of the agency’s financial state.

“It’s an incredible lack of management for such an important public agency. Yet no one seems to be held accountable for it,” said Silverman, a member of the council’s finance and revenue committee. She also described Metro as an agency “lurching from crisis to crisis.”

A Metro rider is seen through orange construction mesh near an escalator that was being repaired at the L’Enfant Plaza station on Wednesday. (Evelyn Hockstein/For The Washington Post) Metro, which has faced renewed criticism since a deadly smoke incident in a subway tunnel near the L’Enfant Plaza station Jan. 12, is already trying to persuade governments in the District, Maryland and Virginia to commit to providing the cash it needs over the long term to pay for new, safer railcars, as well as other badly needed improvements. If Metro obtains the $220?million loan, it would still need an additional $208?million to cover loans due later this year. It could tap cash reserves, obtain other financing or persuade some of its lenders to extend credit terms. In documents prepared ahead of the Metro board’s meeting Thursday, Metro staff said that despite cash-flow improvements, “pressures remain on the amount and availability of cash in the near term.” Metro’s total short-term debt amounts to $502?million, money that Metro Board Chairman Mortimer Downey said has been used primarily for building projects and improvements. Last month, Wells Fargo renewed an existing $75?million Metro line of credit through March 2016. Metro spokesman Dan Stessel said Wednesday that the transit agency expected to pay off “a significant part” of the remaining debt and was likely to seek credit extensions similar to what it obtained from Wells Fargo on only “a fraction” of the credit. Stessel did not provide specific details of the plan. Metro board leaders have said that they are seeking broad funding solutions within the jurisdictions that subsidize its operations and that it does not plan to increase fares or cut services to cover its costs.A Metro Silver Line train makes it way to Washington, passing another Metro train on a lower rail. (Evelyn Hockstein/For The Washington Post) D.C. Council member Jack Evans (D-Ward 2), who represents the city on the Metro board, said during Wednesday’s hearing that despite his concerns about Metro’s management, the agency needs the cash to expand. “If Metro just stays as it is, it will not fulfill the needs of our region,” said Evans, who led the hearing as chairman of the council’s finance and revenue committee. “We need a larger Metro. We need a Metro that goes more places, that has more cars to carry people.” Silverman, despite her criticism of Metro’s finances, espoused the same sentiments about the transit system’s future growth. But local government officials say they need reassurance that Metro is implementing the FTA’s recommendations to improve the agency’s financial practices before they authorize more funding. Metro’s own audit of its finances for the fiscal year that ended June 30, 2014, is still underway and four months overdue. Acting General Manager Jack Requa told the council hearing Wednesday that the audit was on track for completion in April. “Until there is comfort that the financial management systems and processes are in order, the [chief financial officer] cannot recommend long-term borrowing or additional capital requests beyond safety needs for WMATA,” David Umansky, a spokesman for D.C. Chief Financial Officer Jeffrey S. DeWitt, said later in an e-mail. Umansky said that DeWitt was at Tuesday’s closed meeting between council members and Metro board members, and that “he expressed his continuing concerns about the lack of audited financial statements and the need for WMATA to extend its lines of credit coming due in the upcoming months.” Last March, a federal review painted a troubling picture of the transit agency, questioning Metro’s management of billions of dollars in federal grant money. The review by the Federal Transit Administration found that Metro awarded millions in no-bid contracts, skirted contracting rules and overcharged the government. The problems led FTA to shut down the automatic flow of cash to Metro, instead requiring the agency to manually draw down grant money and comply with grant application procedures. The restrictions are likely to continue through fiscal 2015, according to Metro. Metro Board Chairman Mortimer Downey said Wednesday that even he had been surprised when he read the FTA report. “I take accountability for not knowing it was not done right,” Downey said in response to questions from Silverman. At the behest of members of Congress, the Government Accountability Office has begun its own audit of Metro. Silverman said in an interview after the hearing that Wednesday marked the first time she had heard “a sense of remorse or responsibility” when Downey spoke. But Metro board leaders during the hearing also painted a more positive picture of the agency’s financial recovery.

Requa said the transit agency was “performing to budget with almost $300?million cash on hand, with the ability to make timely payments” to employees and contractors.

Requa described the agency’s success in securing the $75?million credit extension from Wells Fargo. “Financial institutions have confidence in WMATA’s financial capacity,” he said.

Lori Aratani and Robert McCartney contributed to this report.

Abigail Hauslohner covers transportation and development for The Washington Post. Previously, she served as the Post’s Cairo bureau chief.

Paul Duggan covers the Metro system and transportation issues for The Washington Post.

[…]

JPMorgan Chase, Wells Fargo fined $35 million after officers took bribes

NEW YORK Federal and state authorities have ordered Wells Fargo and JPMorgan Chase to pay a combined $35.7 million for taking part in a mortgage kickback scheme.

The Consumer Financial Protection Bureau and the Maryland Attorney General said Thursday that loan officers at both banks took cash payments from a now-defunct title company in exchange for business referrals.

Regulators said more than 100 loan officers at Wells Fargo locations in Maryland and Virginia steered thousands of loans to Genuine Title, which went out of business last year, in exchange for cash.

Todd Cohen, a former Wells Fargo banker, allegedly had Genuine Title make “substantial cash payments” to his girlfriend at the time in order to avoid detection. The bureau has ordered Cohen and his now-wife, Elaine Cohen, to pay a $30,000 penalty.

Regulators said Wells Fargo failed to halt the scheme even though it was facing a federal lawsuit over the illegal activity.

“We have fully cooperated with the CFPB in this matter and have taken strong corrective action, including terminating team members,” Wells Fargo said in a statement.

The wrongdoing was less extensive at JPMorgan Chase. The bureau said at least six loan officers at Chase locations in Maryland, Virginia and New York helped steer 200 loans to Genuine Title. The bank has agreed to pay a total of $900,000 in penalties and compensation.

“We are fully committed to ensuring that our mortgage bankers comply with all legal and regulatory requirements,” Chase said in a statement. “These former employees clearly violated our policies, procedures and training.”

The CFPB said a third bank also took kickbacks from Genuine Title. But the bureau said it did not bring an enforcement action against that bank because it “self-identified” and took steps to correct the illegal action.

“These banks allowed their loan officers to focus on their own illegal financial gain rather than on treating consumers fairly,” said CFPB Director Richard Cordray.

Trademark and Copyright 2015 Cable News Network, Inc., a Time Warner Company. All rights reserved.


Filed in: National/World News

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[…]

Wells Fargo, JPMorgan loan officers took cash kickbacks

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NEW YORK (CNNMoney)

Federal and state authorities have ordered Wells Fargo and JPMorgan Chase to pay a combined $35.7 million for taking part in a mortgage kickback scheme.

The Consumer Financial Protection Bureau and the Maryland Attorney General said Thursday that loan officers at both banks took cash payments from a now-defunct title company in exchange for business referrals.

Regulators said more than 100 loan officers at Wells Fargo (WFC) locations in Maryland and Virginia steered thousands of loans to Genuine Title, which went out of business last year, in exchange for cash.

Related: Bank’s ‘repeated failures’ led to 2,000 foreclosures, feds say

Todd Cohen, a former Wells Fargo banker, allegedly had Genuine Title make “substantial cash payments” to his girlfriend at the time in order to avoid detection. The bureau has ordered Cohen and his now-wife, Elaine Cohen, to pay a $30,000 penalty.

Regulators said Wells Fargo failed to halt the scheme even though it was facing a federal lawsuit over the illegal activity.

“We have fully cooperated with the CFPB in this matter and have taken strong corrective action, including terminating team members,” Wells Fargo said in a statement.

The wrongdoing was less extensive at JPMorgan Chase (JPM). The bureau said at least six loan officers at Chase locations in Maryland, Virginia and New York helped steer 200 loans to Genuine Title. The bank has agreed to pay a total of $900,000 in penalties and compensation.

Related: U.S. Bank refunding $48 million to customers

“We are fully committed to ensuring that our mortgage bankers comply with all legal and regulatory requirements,” Chase said in a statement. “These former employees clearly violated our policies, procedures and training.”

The CFPB said a third bank also took kickbacks from Genuine Title. But the bureau said it did not bring an enforcement action against that bank because it “self-identified” and took steps to correct the illegal action.

“These banks allowed their loan officers to focus on their own illegal financial gain rather than on treating consumers fairly,” said CFPB Director Richard Cordray.

First Published: January 22, 2015: 4:37 PM ET

[…]

Jumbo-loan challenges for retirees

A lifetime of saving and investing can make retirees feel secure, but showing that assets translate into income remains key when qualifying for a jumbo mortgage.

Debt-free retirement has its allure, but with interest rates so low for jumbo mortgages, some retirees are calculating bigger returns if they leave cash invested and borrow to buy their retirement home, says Brad Blackwell, executive vice president of Wells Fargo Home Mortgage. Jumbo mortgages have higher loan limits than government-backed loans, which top at $417,000 in most places but go up to $625,500 in some high-price areas. Average interest rates were 4.11% for the 30-year, fixed-rate jumbo and 3% for a five-year, adjustable-rate jumbo on the week ending Nov. 14, according to HSH.com.

A retiree, like any other borrower, generally must meet a 43% debt-to-income ratio (DTI), mandated by federal mortgage rules. This number reflects the borrower’s percentage of monthly debt payments relative to monthly income.

Retirees who plan ahead can qualify, and lenders have methods to translate investments into eligible income even if a borrower can’t produce a W-2, Mr. Blackwell says.

Today’s typical retiree will receive income from Social Security; distributions from IRAs, 401(k)s, annuities and other retirement accounts; and possibly a pension. Business owners may no longer get a salary but still receive profit shares and/or have significant wealth tied up in an enterprise, and many high-end retirees may draw revenue from commercial real-estate ownership, residential rental properties or other sources, says Tom Wind, executive vice president of home lending at EverBank.

High-net-worth individuals often will argue that they clearly have enough money in assets to pay off a loan at any time, says Bill Banfield, vice president at Quicken Loans. “They may be thinking that they have a big IRA and they could use that to take a distribution to make the loan payments,” he adds. “That’s all good and fine, but we’d like to see that all set up before they apply for the loan.”

The key to qualifying is to demonstrate that a retiree’s assets translate into income via tax returns, bank statements and other documents, he adds. “The lender is going to want to make sure you have receipts for distributions and a schedule for receiving them,” he adds.

Retirees also need to show proof that the payments will continue in the same amounts for at least three years into the future, Mr. Banfield says. If a borrower is an early retiree under 59½ years old, the threshold for taking withdrawals from IRAs without tax penalties, the lender will adjust income estimates accordingly, he adds.

For retirees who don’t want to increase their distributions, another possible option is a nonqualified jumbo mortgage, which offers flexibility on the federal DTI rule, Mr. Wind says. Lenders have to waive liability protection to issue nonqualified mortgages, but some lenders will take that risk with retirees who have substantial invested assets they don’t want to liquidate, he adds.

To calculate an income estimate in such cases, EverBank will assign a conservative earnings rate to the total dollar amount of the assets and amortize the amount to the loan’s term length, Mr. Wind says. Wells Fargo uses a similar method to calculate DTI for nonqualified mortgages for borrowers with multimillions of dollars in assets, Mr. Blackwell says.

The first step for any retiree or person approaching retirement is a financial adviser, Mr. Blackwell says. An adviser can look at a retiree’s overall financial picture and advise whether to pay cash or borrow when buying as home. The adviser can also calculate retirement-account distributions that will help the borrower qualify for a loan, he adds.

Here are some more considerations that retirees may want to weigh when deciding whether to apply for a jumbo mortgage:

• Credit scores. Retirees with a sufficient income stream but lower credit scores still may not qualify for a mortgage or will receive a higher interest rate from a lender.

• Trusts. Retirees who want to buy a home and hold it in a revocable trust as part of their estate plan still have to demonstrate their ability to repay the loan, Mr. Blackwell says. Still, assets in the trust are considered in the ability-to-repay debt calculation, he adds.

• Capital-gains taxes. When deciding whether to cash out investments to buy real estate, remember to calculate not just lost returns but also the potential capital-gains-tax hit, Mr. Banfield says.

Yahoo Finance is answering your money questions on Tumblr! Got a question about your credit score, your student loans, your retirement portfolio, your health insurance, or anything else finance-related? Drop us a line: YFmoneymailbag@yahoo.com.

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ARC Document Solutions Announces Closing of Tender Offer and Replacement of 10.5% Senior Notes With New 6.25% Term B …

WALNUT CREEK, CA–(Marketwired – Dec 20, 2013) – ARC Document Solutions, Inc. (NYSE: ARC) announced today that it has closed its previously disclosed cash tender offer and consent solicitation relating to its outstanding 10.5% Senior Notes due 2016 (the “Notes”), and that it has provided notice for the redemption of all remaining outstanding Notes. The company also announced that it has entered into a new Term Loan Credit Agreement that consists of a term loan facility in the amount of $200 million, the proceeds of which will be used to fund the closing of the tender offer and the subsequent redemption of the Notes. The new term loan facility bears an initial annual interest rate of 6.25% (LIBOR plus 525 basis points with a 1.0% LIBOR floor). The company expects to save more than $7 million in annual cash interest payments relative to the Notes, which equates to approximately nine cents earnings per share.

Pursuant to the terms of the previously disclosed cash tender offer and consent solicitation relating to the Notes, the company has accepted for payment approximately $127.5 million in aggregate principal amount of the Notes that were validly tendered on or prior to the consent payment deadline of 5:00 pm New York Time on December 16, 2013. Holders who tendered such Notes will receive $1,060 per $1,000 in principal amount of the Notes validly tendered, plus accrued and unpaid interest.

The consents received in the consent solicitation exceeded the number needed to approve the proposed amendments to the indenture under which the Notes were issued. The terms of the tender offer and consent solicitation for the Notes are detailed in the company’s Offer to Purchase and Consent Solicitation Statement dated December 3, 2013. Based on the consents received, the company and the trustee under the indenture governing the Notes have entered into a supplemental indenture that eliminates substantially all affirmative and restrictive covenants and certain events of default under the indenture governing the Notes, and provides for a shorter three business day notice period required in connection with an optional redemption.

In addition, the company intends today to discharge its remaining obligations under the indenture governing the Notes by causing a notice of redemption to be delivered to holders of the remaining outstanding Notes and depositing funds sufficient to pay and discharge all remaining indebtedness on the remaining outstanding Notes, including accrued and unpaid interest.

As noted above, the company also announced today that it has entered into a new Term Loan Credit Agreement. The Term Loan Credit Agreement consists of a term loan facility in the initial aggregate principal amount of $200 million, the entirety of which was disbursed today in order to pay a portion of the price associated with the purchase of the Notes that were accepted under the tender offer and the subsequent redemption of the remaining outstanding Notes, and to pay associated fees and expenses in connection with the tender offer and redemption.

J.P. Morgan Securities LLC and Wells Fargo Securities, LLC are acting as Dealer Managers for the Tender Offer. Questions concerning the Tender Offer may be directed to either J.P. Morgan Securities LLC at (212) 270-3153 or Wells Fargo Securities, LLC at (866) 309-6316. Wells Fargo Bank, National Association has been appointed to act as the Depositary for the Tender Offer.

This press release does not constitute an offer to sell, or a solicitation of an offer to buy, any security. No offer, solicitation, or sale will be made in any jurisdiction in which such an offer, solicitation, or sale would be unlawful.

About ARC Document Solutions (NYSE: ARC)
ARC Document Solutions is a leading document solutions company serving businesses of all types, with an emphasis on the non-residential segment of the architecture, engineering and construction industries. The company helps customers all over the world reduce costs and increase efficiency in the use of their documents, improve document access and control, and offers a wide variety of ways to print, produce, and store documents. ARC provides its solutions onsite in more than 7,000 of its customers’ offices, offsite in service centers around the world, and digitally in the form of proprietary software and web applications. For more information please visit www.e-arc.com.

Forward-Looking Statements
This press release contains forward-looking statements that are based on current opinions, estimates and assumptions of management regarding future events and the future financial performance of the company. Words such as “expected,” “consider,” “intended,” and similar expressions identify forward-looking statements and all statements other than statements of historical fact, including, but not limited to, any projections regarding earnings, revenues and financial performance of the company, could be deemed forward-looking statements. We caution you that such statements are only predictions and are subject to certain risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. In addition to matters affecting the construction, managed print services, document management or reprographics industries, or the economy generally, factors that could cause actual results to differ from expectations stated in forward-looking statements include, among others, the factors described in the caption entitled “Risk Factors” in ARC Document Solution’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, Quarterly Reports on Form 10-Q, and other periodic filings and prospectuses. The company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

Mergers, Acquisitions & TakeoversInvestment & Company Informationtender offer Contact:

Contact Information:
David Stickney
VP of Investor Relations & Corporate Communications
+1-925-949-5114

[…]

Home equity offers make a comeback, but be careful

The comeback in home values means more people can tap into quick cash through home equity loans to pay for college, credit card debt or even redo a driveway.

Jo and Bronce Click of Dearborn Heights, Mich., took out a $12,000 home equity line of credit about two weeks ago specifically to pay for a driveway that’s estimated to cost about $7,000. She obtained the loan through her credit union at a rate of 5.25 percent — or 200 basis points plus the prime rate, now at 3.25 percent.

“It seemed like the logical option versus using a credit card. The interest rate on a credit card is ridiculous,” said Jo Click, a graphic designer.

The Clicks are on the front end of a rising trend in home equity lending.

Community banks, credit unions and major banks have shown renewed interest in making the loans and offering lines of credit, as home values climb in many markets.

Originations of home equity loans exploded in the second quarter, according to credit reporting agency Experian. Experian reported that $29.4 billion in home equity lines of credit were originated in April, May and June — up from $22.1 billion for 2013’s first three months.

Consumers who want to borrow against the house need to understand that rules have changed and a few more chores are required to qualify for that loan. Lending standards are tighter than the go-go years. Consumers can save money by shopping around for the best rates on the Internet and with local small lenders who may offer even more competitive rates.

The average rate on a home equity loan is 6.14 percent. The average rate on a home equity line of credit is 4.99 percent, according to Bankrate.com.

The trick, as always, is to have enough equity in the house.

Take a home valued at $100,000 with a mortgage of $70,000. The homeowner would have $30,000 in equity, but forget about trying to borrow $25,000 or $30,000. In many cases, the homeowner would only be able to borrow $10,000 through a home equity loan.

Many lenders want the homeowner to retain 20 percent equity in the house even after taking out a home equity loan or line of credit.

“The lender is not lending every last nickel of property value,” said Greg McBride, senior analyst for Bankrate.com.

During the boom, it was possible to borrow 80 percent of the home’s value on the first mortgage and then borrow the other 20 percent on a home equity product. But now it’s going to be hard to borrow more than 80 percent of the value of your home, including on the first mortgage.

Expect some sort of appraisal on the home. The timeframe for obtaining the home equity loan can range from about two weeks to roughly 30 days.

Homeowners generally need a credit score of 720 or higher. They’ll need to verify employment, offer proof of income and shop harder to find a home equity loan for $10,000.

Some lenders no longer offer small home equity loans or lines, either.

Discover Financial Services’ new home equity loans, for example, range from $25,000 to $100,000.

Bank of America’s minimum for a home equity loan is $25,000 as well.

Wells Fargo, one of the major players, said it offers home equity loans with a minimum loan amount of $20,000.

A home equity loan can help consumers with a “life event,” such as taking on a home improvement project or even consolidating higher-cost credit card debt to get out of debt. For any of these loans to work, a homeowner cannot owe more on the house already than the house is worth.

Kelly Kockos, senior vice president and home equity product manager for Wells Fargo, said qualifications for getting a home equity loan are more stringent today than they were in the past. Homeowners need to verify their income and provide documents to validate their financial profile.

Susan Tompor is the personal finance columnist for the Detroit Free Press. She can be reached at ?stomporfreepress.com.

[…]

Are You Getting the Most Bank for Your Buck?

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Banking Smart

If you’re like most people, you’ve probably picked a bank because of its convenient locations, or maybe you got a “special offer” of cash back if you opened an account there. Both compelling reasons, to be sure. But there are plenty of other considerations too; and with more than 10,000 FDIC-insured financial institutions now vying for your money, you can afford to be picky. So it’s worth checking in with yourself regularly to make sure you’re getting all you need from your current bank. (There’s a reason why one in 10 consumers changed banks last year.)

Of course, everyone wants the best service for the lowest fees. But maybe a (relatively) high-interest savings account, or a low-interest loan or credit card is also a top priority. You might be a one-stop-shopping type who wants someplace that offers everything from accounts to credit cards to mortgage loans. Or maybe you’re a high-balance account holder who wants a bank that will reward you for that with red-carpet service. Or you prefer to do your banking online and seek a bank with the best web and mobile services.

No matter what you want, there’s bound to be a bank or credit union that can provide it. But it can take a little research to help you find the right choice. To get you started, we’ve highlighted seven common criteria and how to find the best financial institutions for each.

So, you’re a people person.

If you prefer to do your banking in person and enjoy feeling like a member of the family when you visit your local branch, you might want to go with a regional bank or local credit union, which is a nonprofit organization designed to serve its members. Credit unions typically score higher on customer service than banks and are more likely to have a real person answer the phone when you call with a question. However, big banks typically have more to offer in terms of products and services, ATM access and locations. If you travel frequently, you are probably better off choosing a national bank with branches throughout the country, but if you are someone who tends to stay close to home, you might opt for a more local option that can offer a friendlier and more personalized approach.

Test out a bank’s style by visiting a branch in person and also calling their customer service number. Observe how the representatives greet and interact with you. Did they make you feel special or like you were just a number? The mycreditunion.gov site also provides more information on credit unions and how to find one in your area.

Technology, not tellers please.

Tellers, shmellers. You do most or all of your banking on your laptop, tablet or smartphone, so you prefer a bank with the latest web and mobile technology. Some of the institutions offering the best mobile apps right now include American Express, BBVA Compass, Bank of America, Capital One, City Bank Texas, Mercantile Bank of Michigan, USAA and U.S. Bank, according to a recent report by American Banker, the leading information resource serving the banking community. Among the best features that these apps offer are the ability to easily transfer money between accounts, temporarily turn off cards that are lost or stolen, deposit checks remotely, bump money between phones, and partnerships with PayPal, Mint and other money management entities. The report also highlights a new alternative to traditional banking called Simple that boasts super low fees, convenience–including free access to 50,000 ATMs and photo check deposits–and an innovative budgeting tool (FYI, you need to have an Apple or Android phone and request an invitation to join that can take a few weeks to receive).

You prefer one-stop-shopping for your financial needs.

If you want the Target or Macy’s of banks, then you’ll likely want to lean towards a national bank. Big national banks tend to offer the most comprehensive products and services, including business banking, investments, financial planning, loans, credit and, in some cases annuities and insurance, so that you needn’t go anywhere else for your financial needs. This can be very helpful, especially for young families who might be planning to buy a home, save for their children’s education and retirement, and possibly finance a small business. In addition, the convenience of online banking that big banks offer is a big plus for those with hectic schedules. While the fees, minimums and rates might be higher than those at smaller banks, the one-stop-shopping capability of big banks might be worth it to you. Some of the top U.S. retail banks include Chase, Bank of America, Wells Fargo, PNC, TD Bank, U.S. Bank and Citibank.

To find out how much bank you can get for your buck, make an appointment to meet with a personal banker to learn about their bank’s offerings and incentives for bundled services. However, keep in mind that cheaper and better products might be available at other institutions if you are willing to shop around.

You want the red-carpet treatment.

Most banks will treat you like a queen, provided you have enough money to make it worth their while. Big banks, in particular, work hard to woo wealthy clients with a plethora of “private banking” incentives, just like casinos offer big gamblers the high-roller treatment of comped rooms and other perks. Both want to lure those kind of customers to stay and give them as much money as possible. Some banks, like Wells Fargo and Bank of America, focus on the “mass-affluent market” with investable assets of $250,000 to $1.5 million, while other banks, like Chase and Bank of New York Mellon, target those with $3 million to $10 million.

If you manage to qualify for private banking, you can count on concierge-style service for banking chores like opening and managing different checking and savings accounts as well as for comprehensive financial services including retirement and estate planning, wealth management, and business succession planning (if applicable). You can also expect higher rates on interest-bearing accounts and CDs and expedited service on loan and credit applications. Plus, there is typically more flexibility when it comes to negotiating bank fees, interest rates and closing costs for mortgages, lines of credit and other loans. Even if you don’t have $250,000 yet to invest, if you have at least $10,000 to put into a checking or savings account or can maintain a minimum monthly balance, you can usually qualify for better rates and waived fees. Bankrate’s checking section will let you compare current bank account deals.

You want a budget-minded bank.

If you’re struggling with debt or have a fluctuating bank balance, you probably want to find a bank with low fees and account minimums. Many banks tease consumers with ads for “free checking,” only to surprise them with the fact that they need to meet certain requirements to avoid fees. According to WalletHub’s 2013 Checking Account Transparency Report, the average checking account has around 30 different fees associated with it! For example, banks commonly require a minimum balance of $1,500 to qualify for free checking and customers who fall below this balance are charged a service fee. Overdraft fees are another major source of recurring income for banks in addition to other fees related to deposits, withdrawals, check-writing, direct deposit, online banking and paper statements.

You would think that bigger banks with more resources and larger scale would tend to charge lower fees than smaller banks, but in fact the opposite is true. Local credit unions typically offer better deals for the average consumer than other banks. Internet banks, which benefit from lower overhead expenses, also tend to be more budget-friendly than their brick-and-mortar counterparts. When shopping around, make sure you’re clear on all of the potential fees and restrictions, some of which may be well hidden on a bank’s website. Check out Top 10 Reviews’s online-only bank reviews, which ranks the top banks by several criteria.

You want a low-interest loan.

When you’re in the market for a loan–whether it’s to buy a home, a car or finance a business–shopping around is important. Some banks try to lure borrowers with various incentives while others want to avoid unnecessary risk by making it harder than ever to get approved (especially since 2008).

In general, smaller local banks and credit unions offer better rates and less stringent application requirements for loans. They also offer the added benefit of more personal service, reducing the chances of application information getting lost or miscommunicated, which is most common with Internet banks (though their rates are competitive too). The catch is that sometimes not all types of loans are available. Bigger banks are more likely to offer a wider variety of financing services and can offer a lot of savings if you have stellar credit (like 740+) and other assets invested with them.

When it comes to small business lending, the total number of bank loans fell more than 10 percent from June 2007 to June 2011, according to FDIC data. However, while big banks have sharply cut their small business lending, community banks have really stepped up. Since 2007, small-business loan volume at small banks grew by $17 billion as of June 2011. According to the Small Business Administration (SBA), some of the top most active small business lenders as of mid-2013 include Wells Fargo, Live Oak Banking Company, U.S. Bank, JPMorgan Chase, and Huntington National Bank. Bankrate.com allows you to search for and compare rates for most loans. Before signing anything, make sure you also research your potential lender’s credit rating through Bankrate’s “Safe & Sound” system.

You want your bank to do good.

What happens to your money once you put it in the bank? That’s a good question. The answer is usually murky and unsatisfying, involving complex investing strategies for big profits that help pad the wallets of bank execs. If that idea makes you uncomfortable, you might be interested in putting your money to work helping needy communities instead. These more karma-minded organizations are called Community Development Financial Institutions (CDFIs). The first CDFIs emerged as private organizations aiding federal efforts to alleviate poverty and racial discrimination in the 1960s and 70s, such as South Shore Bank in Chicago and the Santa Cruz Community Credit Union. Today, there are over 1,000 CDFIs in the U.S., thanks to funding from the government agency CDFI Fund and private investors.

There are six types of CDFIs, but for personal banking, look for Community Development Banks and Credit Unions. Besides the usual banking services, these CDFI options also offer a way for you to focus your money in a specific loan fund that provides you with a return on your investment and allows you to directly support communities across America that otherwise would not have access to traditional sources of financing. To find a CDFI bank or credit union in your area, you can try searching the CDFI Fund’s database. You can also find community banks that may not have necessarily applied for CDFI status from the federal government by searching here.

You want the best return. Period.

Granted, with interest rates still relatively low these days, it is nearly impossible to find a bank savings account return over 1.00 percent. However, if your primary banking goal is to earn as much interest as possible on your savings, then you probably want to go with an Internet bank that can trade a better return for low overhead expenses. Charles Schwab Bank, FBNO Direct and Capital One 360 offer interest-earning checking accounts with no minimum balance requirement and no monthly fee. In terms of savings accounts, SmartyPig, GE Capital Bank, Ally Bank and EverBank are currently offering the best deals. SmartyPig is an FDIC-insured Internet bank where you can set up and track savings goals and–get this–be rewarded for reaching them! SmartyPig account holders who meet their targets can (but don’t have to) use those funds to purchase gift cards that provide a cash-back reward of up to 14 percent. The reward can be deposited into a new savings account or added back onto the card. Now that’s a competitive return! Ally Bank by far leads the pack in terms of CD rates, but if you prefer the idea of banking in person, a community bank or credit union will likely offer better rates and lower fees than national banks. The exception is for higher net worth customers who have enough investable assets to entice the big banks to offer rate and fee deals to lure them as investors. Check Bankrate.com to search for the best checking and savings accounts, and CD deals.

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Why Are Cash Advance Payday Loans Still Legal? | Short Term Loans

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Check cashing services – the hated underbelly of America’s personal finance system. Even Republican governments hate the ururious business so much that at one time, they tried more than once to shut it down. For instance, when the first President Bush was in power, he tried to bring in legislation that would make the distribution of all government benefits through government debit cards possible so that poor people would have immediate access to their money. But those good intentions were waylaid by technology. Today, the check cashing services have been replaced by businesses that deal in cash advance payday loans. In many cases, they live alongside of their new avatar.

How do these businesses take advantage of people, you ask? To begin with, they charge unconscionably high interest rates. And then as happened with swish marketing, they take money right out of your account without your knowledge. To get a payday loan, you have to fill out a form to give the lender authority to debit your account when you pay arrives. This is of course, a terrible idea, but there is nothing legally wrong with it. When you apply for your payday loan though, you are directed to a page where you have a few free offers and one paid offer. If you happen to miss the fact that one of the offers costs money, you’re out $55.

Exactly how high do the interest rates go on these cash advance payday loans, you ask? Many of them go up to 500%. If you are wondering how much that works out in real dollar terms, that would be something like paying $100 in interest a year on a $500 payday loan. Certainly, that’s not enough to send someone to the poor house. What they don’t tell you is, they count on you rolling your loan over to the next month and doing this repeatedly. They get most of their profits from people like this. This is enough to bleed anyone white.

Payday loans or so egregious for the interest rates they charge, many states like New York for instance, ban them altogether. When the Pentagon saw that there were so many serviceman who got ripped off every month by these people, they made it against the law for anyone to make cash advance payday loans to service personnel. But there is no federal law against doing this with civilians.

What do the big banks and other lending institutions think of these businesses that gave lending a bad name? Banks like Well Fargo are neck deep in the payday lending themselves; they’re the ones who bankroll the operations of the smalltime payday lenders. If only people could learn to manage their resources well enough that they didn’t need payday loans.

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Big banks provide cash for payday loans

Fast cash is a few clicks away for Minnesotans at the popular CashNetUSA website, where a two-week loan for $100 carries an annual percentage rate of about 390 percent.

To many critics, the terms are outrageous and usurious. But they are typical in the world of high-cost short-term consumer loans, or payday lending, and legal in Minnesota.

In fact, the business is supported by some of the nation’s largest commercial banks. A syndicate including Wells Fargo & Co. and Minneapolis-based U.S. Bancorp provides CashNetUSA’s parent $330 million in financing, government documents show.

Commercial banks, including Wells Fargo in San Francisco and U.S. Bank, are a significant source of capital for the country’s $48 billion payday loan industry, extending more than $1 billion to companies such as CashNetUSA parent Cash America, Dollar Financial and First Cash Financial, according to research by Adam Rust, research director of Reinvestment Partners, a nonprofit consumer advocacy group in North Carolina.

The financing relationship is largely invisible to the public, although bank regulators are well aware of it, as are consumer advocates who view payday lenders as predatory and have criticized banks for helping fuel a controversial industry. Federal regulators moved in recent weeks to tighten their oversight of the payday loan industry, but the underlying financing of the industry has gotten less scrutiny.

“What I hear less about is how it actually works, what makes it possible for payday lending to exist,” said Rust, who writes the blog Bank Talk. “It could not exist on the scale that it exists right now if not for Wall Street investments. I just think it’s the other end of the story.”

The banks argue they’re just doing business.

In a prepared response, Wells Fargo said that the lending is a small percentage of the bank’s commercial loan portfolio, and that it exercises “strict due diligence” to ensure its customers “do business in a responsible way and meet the highest standards.”

“We put our payday lending customers through this process regularly, as often as every three months and at least annually,” Wells Fargo spokeswoman Peggy Gunn said. “In fact, we put our payday lender and check cashing clients through an additional level of scrutiny — a separate, distinct compliance and credit process that includes on-site visits in most cases and a review of their business practices.”

U.S. Bank said the money service companies it deals with have to meet the bank’s strict underwriting standards. It’s diligent in reviewing them to make sure they comply with regulations, a bank spokesman said.

Fort Worth, Texas-based Cash America International Inc. declined to comment.

Via term loans and lines of credits, commercial banks provide low-cost capital to payday lenders, typically charging about 4 percent to 5 percent, said Robert Ramsey, senior analyst at FBR Capital Markets & Co. who covers publicly traded payday companies.

Payday lenders in turn can use the money to lend to consumers at triple-digit rates. They also use it for such things as acquisitions and financing periods of rapid growth.

“It’s the primary source of debt and financing that the companies use,” Ramsey said.

The “credit facilities,” as they are called, are buried in Securities and Exchange Commission documents of publicly traded payday lenders and the terms are subject to frequent changes.

If publicly held pawnshops, rent-to-own retailers, buy here-pay here lenders, tax preparers offering refund anticipation loans and debt collectors are added in, the banks have extended more than $4.5 billion in lines of credit and term loans to fringe consumer finance companies, according to Rust, who is working on a report about the financing.

Wells Fargo is the leading provider, according to Rust’s research.

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Bankster Wells Fargo To Muscle Bigger Share Of The Payday Loan …

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It’s Over For The Little Guy As Wells Fargo Begins Squeezing Out The Locals And Charging $225%-300% APR

“Ask a brother who’s been downsized if he’s getting any deal. Oh, a brother can work in fast food if he can’t invent computer games but what we used to call America, that’s going down the drain. How’s a young man gonna meet his financial responsibilities workin’ at motherfuckin’ Burger King? He ain’t! Or ask a white boy bustin’ ass til they put him in his grave. He ain’t gotta be a black boy to be livin’ like a slave.” -JW Bulworth

The new look Wells Fargo CEO John Stumpf is aiming for

Wells Fargo announced earlier this week it was expanding it’s lending into a shady area of lending that was once reserved for street level junior mafiosos, pimps and hustlers that prey on the working poor and elderly in America’s ghettos and they are not alone. Although their rates are 200% higher than the local street corner pimp of loanshark, the loanshark won’t be able to compete against a behemoth like Wells Fargo. U.S. Bank, Regions Bank, Fifth Third Bank, Bank of Oklahoma have also announced they will be expanding their presence in the payday loan market as well.

Yes, I’m talking about high interest and unregulated payday loans marketed under various names, Wells Fargo calls it, “Direct Deposit Advance”, U.S. Bank calls it “Checking Account Advance”, Regions Bank calls it, “Direct Deposit Advance”, Fifth Third Bank calls it, “Early Access”, Bank of Oklahoma calls it “Fast Loan SM” and Guaranty Bank calls it “Easy Advance”.

If you haven’t heard of a payday loan or a payday advance loans consider yourself fortunate. They work just like just like you see on the Sopranos or in the Godfather movies.

Let’s say you have a job working at Taco Bell for minimum wage you’re living on Social Security and your car breaks down. You need a way to get your kids to school and get to work for the next 2 weeks until you get your next pay check and get your car fixed. This where a payday loan comes in handy. You walk into one of their offices, write a post dated check made out in the amount of what you will owe them in two weeks for the principal owed plus any fees or interest along with proof of employment, then slip it through the slip in the bullet proof glass to the person on the other side and they give you cold hard cash.

The big drawback is the whopping usury interest rates of between 225% to 300% that these companies charge. Payday lenders market their loans as “open-ended loans” like credit cards but in really they are “close-ended” loans meaning that the loan has a start and completion date. Lenders disguise their loans as open-ended so they can skirt around the Truth-In-Lending Act. Their borderline illegal collection attempts when it comes to pay up which includes threatening people with criminal prosecution or sending people to their homes. These mafia style collection attempts have become so problematic that 15 states have banned Payday loans all together.

Thanks to the Great Recession and a morally bankrupt political system in Washington D.C. that has brought Americans stealth inflation and draconian pay cuts, pay day loans have not only become a necessity to the millions of elderly or working poor in America but for the millions of Americans who are living paycheck to paycheck.

The Center for Responsible Lending posted an interesting investigation on their website that says, “Research has shown that payday lending often leads to negative financial outcomes for borrowers. These include difficulty paying other bills, difficulty staying in their home or apartment, trouble obtaining health care, increased risk of credit card default, loss of checking accounts, and bankruptcy.”

The study also points to Wells Fargo’s practices,

“After six consecutive months with loans, a borrower will typically have paid hundreds of dollars in fees and still effectively owe the original principal on the loan — a deep hole from which to recover,” the study says. “As currently structured, banks’ cooling-off periods allow borrowers to become mired in a significant, destructive cycle of debt before the cooling-off period is triggered.”

America’s pensioners and working poor are not the only ones being victimized by by these legalized loan sharks. Active military personnel were also getting financially anal raped so bad by these loan sharks who were side stepping protections in the Military Lending Act that in 2006 the Department of Defense had to intervene out of concerns for national security and national readiness.

Although, other major banks have not been directly involved with Payday lending, they have profited quite handsomely from it. JP Morgan Chase was even willing to openly violate New York statute that bans Payday lenders in order profit from it. According to the New York Times,

“While JPMorgan Chase never directly made the loans, the bank, along with other major banks, is a critical link for the payday lenders. The banks allow the lenders to automatically withdraw payments from borrowers’ bank accounts, even in states like New York where the loans are illegal. The withdrawals often continue unabated, even after customers plead with the banks to stop the payments, according to interviews with consumer lawyers, banking regulators and lawmakers.”

Since 2007, Payday lending has become a $107 Billion industry. Industry trade groups like the Financial Service Centers of America have been able to use their financial clout to pressure spineless members of Congress to weaken portions of the Dodd-Frank Act to minimize any exposure Payday lenders may have to enforcement actions taken by the Consumer Financial Protection Bureau that was formed under the Dodd-Frank.

Distraught Wells Fargo customer after dealing with Wells Fargo customer service.

Wells Fargo will fit right in with the low life piranha that make up Payday lenders. Their Home Finance division has mastered the art of driving their customers to suicide. If they can’t manipulate you into redecorating the walls of your bedroom with the inside of your brain, then they’ll cause you so much stress that you keel over from a heart attack while fighting them even when they know they’re wrong.

Wells Fargo also has a lot of experience conning money out of poor people in America’s ghettos. All you have to do is ask the African-American leaders of Baltimore like the BBC did back in 2009.

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