After almost a year of initiating the $700 billion Troubled Asset Relief Program (TARP) to rescue the nation’s financial industry, the U.S. Treasury Department said on Thursday that it would auction off stock warrants it acquired from three big banks that received a significant portion of taxpayers’ money and have fully repaid the same. The government is taking this step to free the lenders from the federal bailout program.  The three banks, whose warrants will be sold via auctions over the next month, are JPMorgan Chase (JPM), Capital One Financial (COF) and TCF Financial Corporation (TCB). These three banks, that received a total of $28.9 billion from the TARP, have fully repurchased Treasury's preferred stock investment. The current move to sell their warrants will completely free these banks from government intervention.  The government still holds warrants of 261 banks, out of which only 15 ...

Regulators shut down 2 banks in Florida and 1 in California; U.S. bank failures reach 123 this year.   U.S. regulators on Friday shuttered two more banks in Florida and one in California. Though there are some early signs of economic recovery, bank failures continue unabated. This takes the total number of bank failures to 123, compared to 25 in 2008 and 3 in 2007.  The weak economy continues to weigh heavily on banks with a stream of loan defaults. As the industry has to tolerate bad loans that were made during the credit explosion, the trouble in the banking system goes even deeper, increasing the possibility of more bank failures. However, the regulators are trying to avoid panic by seizing banks slowly. Also, the slow seizing could be a strategy as it is hard to get buyers for so many failed banks.  The failed banks were ...

The U.S. Treasury's pay czar, who oversees compensation for the highest-paid employees at the firms that received U.S. taxpayer assistance, said on Thursday that he is concerned that pay cuts could obstruct the ability of these firms to retain and attract top talent. However, the pay czar would be open to requests to hire new executives at competitive industry rates. The pay czar, Kenneth Feinberg, decides compensation packages for the highest-paid employees at the seven firms that have received substantial support from the Troubled Asset Relief Program (TARP). The pay restrictions were imposed on these firms to enable them to repay government money by controlling excessive pay. The seven firms, whose top 25 earners received an average 50% lower pay last month by the order of the pay czar, are American International Group (AIG), Citigroup (C), Bank of America (BAC), Chrysler Financial, Chrysler Group ...

Regulators shut down 5 more banks in Georgia, Michigan, Minnesota, Missouri and California; tally hits 120 so far this year  U.S. regulators on Friday shuttered five more institutions in Georgia, Michigan, Minnesota, Missouri and California , as the recession continues to take its toll on banks. This takes the total number to 120, compared to 25 in 2008 and 3 in 2007.  As the industry has to tolerate bad loans that were made during the credit explosion, the trouble in the banking system goes even deeper, increasing the possibility of more failures. However, the regulators are trying to avoid panic by seizing banks slowly. Also, the slow pace of seizing could be a strategy as it is hard to get buyers for so many failed banks.  The failed banks were -- Georgia-based United Security Bank of Sparta with total assets of $157 million and total deposits ...

U.S. bank failures continue unabated as U.S. regulators on Friday closed down San Joaquin Bank of Bakersfield, CA. This takes the total number of failed federally insured banks to 99 in 2009, compared to 25 in 2008 and 3 in 2007. As of September 29, San Joaquin Bank, a subsidiary of San Joaquin Bancorp, had about $775 million in assets, $631 million in deposits and 5 branches. The bank had not been included in a previous list of 89 institutions that were undercapitalized as of March 31. But its first quarter amended filing showed that there were additional loan charge-offs and a higher net loss. As of June 30, San Joaquin Bank’s Tier 1 leverage ratio was 4.12% and the total risk-based capital ratio was 6.70%. Though the Tier 1 leverage ratio was above the minimum level of 4% considered adequately capitalized, its total risk-based capital ratio ...

The chairman of the House Oversight and Government Reform panel said on Wednesday that Congress will soon investigate executive compensation at companies that received significant amount of taxpayer funds. The U.S. Treasury's pay czar, Kenneth Feinberg is in charge of deciding compensation packages for the highest-paid employees at all the firms that received bailout money. For seven firms, the situation is critical as these firms received substantial support from the Troubled Asset Relief Program (TARP). The seven firms whose compensation plans will be scrutinized are American International Group (AIG), Citigroup (C), Bank of America (BAC), Chrysler Financial, Chrysler Group LLC, General Motors and GMAC Inc (GJM). The U.S. Treasury Department is pressing bailed out insurer AIG to reduce $198 million in scheduled retention payments after the government missed the opportunity to defend against controversial bonuses to AIG employees last year. However, AIG ...

In the course of the review of the aptness of the richest pay packages proposed by seven financial firms that received $200 billion in government aid, the U.S. pay czar Kenneth Feinberg is planning to cut the annual cash salaries for many of the top executives whose firms accepted bailout funds. As an alternative to paying large cash salaries, the pay czar is planning to shift a large portion of an employee's annual salary to stock that cannot be accessed for several years. The percentage of salary to be diverted to stock is not yet clear, but it could be above 50% in some cases. The stock compensation would be in addition to salaries and cash bonuses. This will be an incentive for the executive to make good long-term decisions about the company. By mid-October this year, Feinberg expects to issue his judgment on compensation packages ...

Pursuant to the overdraft reforms pressed by Congress, Regions Bank, a subsidiary of Regions Financial Corporation (RF) announced changes to its overdraft fee policies. It announced to overhaul the overdraft fees on consumers in case the account is overdrawn by less than $5 dollars. The bank also announced that it has limited the number of overdraft fees to no more than four per day. It would also offer “opt out" ability to customers who prefer that the bank decline or return any transaction on their account, whenever possible, when they are presented against insufficient funds. The bank would also provide customers with a number of overdraft protection options as well as account monitoring services through online, mobile, ATM and telephone banking. The changes will take effect during the first quarter of 2010. The changes follow U.S. congressional leaders' criticism of bank account fees and come ...

US Bank, a subsidiary of Minneapolis-based U.S. Bancorp (USB), has recently announced easing of its overdraft penalties. The bank is modifying its service charge policies for checking accounts which will become effective in the first quarter of 2010. U.S. Bank will eliminate fees when a customer’s account is overdrawn by less than $10, regardless of the number of overdraft transactions that may have occurred. It will also limit the number of overdraft fees to three or fewer per day. Customers will also be permitted to "opt out" of a transaction, if possible, when the charge might overdraft their account. New customers will also be allowed to decide whether to allow the bank to overdraft their accounts if they have insufficient funds for transactions. The bank will also establish an annual cap on the amount of overdraft fees it can assess on a single account. Overdraft ...

Pursuant with the overdraft reforms pressed by Congress, BB&T Corporation (BBT) announced changes to its overdraft fee policies. The company announced on Sept. 28, 2009 to overhaul the overdraft fees on consumers in case the account is overdrawn by less than $5 dollars. The bank also announced that it will limit the number of overdraft fees to no more than four per day. It would also offer “opt out" ability to customers who prefer that the bank decline or return any transaction on their account, whenever possible, when they are presented against insufficient funds. The changes will take effect during the first quarter of 2010. The changes follow U.S. congressional leaders' criticism of bank account fees and come as the banks digest rule changes for credit card fees. The law sharply restricts credit card issuers' ability to raise interest rates on existing balances, to charge certain ...