Banks Closing Credit Cards Without Notice

Yesterday I was livid when I couldn't log onto my Bank of America Mastercard account. When I finally got through to an operator, she said they closed my account. Their reason: a merchant said some cards were "compromised." She refused to tell me which merchant and no one sent me a notice about my account being closed. They just closed it.
They were sending me a new card but I told them to close the account for good. I had intended to do it in a matter of days anyway. Bank of America used to pay me to have a card. I paid the balance off every month and earned cash for points. I'm not their bread and butter. But now, after 10 years, they're charging me a $50 annual fee.

Citibank is closing accounts without warning as well and it looks as though there are no laws against it.

Citi confirmed the basics. The bank said in a statement it "decided to close a limited number of oil partner co-branded MasterCard accounts." That includes not only Shell, but Citgo, ExxonMobil and Phillips 66-Conoco cards.

The close date was Wednesday, and letters were sent out Monday to customers informing them of the change, a Citi spokesman said. The bank would not say how many cards were shut down or how much available credit they represented.

But unlike the bank's move to shut down its Home Depot cards, Citi did not discontinue the sale of these cards altogether. It is still accepting applications, promising rewards like 3 percent cash back on fuel purchases and 1 percent cash back on other spending.

No law, including the Credit CARD Act that has started to take effect, prevents banks from closing down credit accounts without warning. Credit card issuers all maintain the right, typically listed in the fine print on credit card agreements. MSNBC

The Bank Stress Test Results Are In

My bank sent me a cheery little note, telling me all the things it's done for me lately and some of the surprises in store. My bank is on the list of banks that need more capital.
The stress tests divided the banks into two categories, those that need more capital and those that don't. None are at risk of insolvency, according to Timothy Geithner. See the results of the stress tests here. Bailout Sleuth has a good summary here. 
American Express, JP Morgan Chase and MetLife are among the banks that don't need more capital. Bank of America and Wells Fargo need more, according to the stress test results.
What to watch out for as bank customers:

Geithner says banks are going to be able to get back to the business of banking:

Greedy Banker John Thain Who Used a Toilet on Legs Resigns

MSNBC: Former Merrill Lynch chief executive John Thain will resign from Bank of America, effective immediately.

Earlier, Bank of America’s shares fell sharply after a report that executives are meeting to discuss Thain’s future with the company.

A report on CNBC followed news that Merrill, which was about to report a $15.45 billion fourth-quarter loss, decided to move up its year-end bonuses, doling out cash just days before it was officially acquired by Bank of America on Jan. 1.
....

CNBC has also learned that Thain spent $1.22 million redesigning his office — including $35,115 for a "commode on legs" — when he became CEO of Merrill Lynch a year ago. Thain also paid his driver $230,000 for one years work, which included the driver's $85,000 salary and bonus of $18,000, and another $128,000 in over-time pay, documents show. Drivers of top executives are often paid about half that amount.

Such expenses would have followed $12.2 billion of net losses at Merrill in the second half of 2007 as writedowns on mortgages and other toxic debt began to mount. Thain became chief executive in December 2007.

Visit msnbc.com for Breaking News, World News, and News about the Economy

Chicago Sit-In Workers Get Their Pay

It pays to stand up for your rights. Hopefully, other businesses laying off people will take note that people aren't garbage that you can just throw out when you're done. The workers are happy, though it's not much really.

MSNBC: Republic Windows & Doors, union leaders and Bank of America reached the deal Wednesday evening. Each former Republic employee will get eight weeks' salary, all accrued vacation pay and two months' paid health care, said U.S. Rep. Luis Gutierrez, who helped broker the deal. He said it works out to about $7,000 apiece.

"We lost the jobs but we got something," said Lalo Munoz, who worked at the plant for 24 years.

It Was a Bad Bad Day for the U.S.

I avoided watching the news in one sitting, until now. Wow.
Americans ought to be outraged. This financial meltdown all stems from greedy business making risky loans with no oversight. What does that say about our leadership?
How could anyone even glance McCain's way? Just yesterday, his adviser wrote in the Washington Post that everything is fine and dandy. I have a feeling it's a lot worse than anyone's letting on. Not to be a Debbie Downer. Just a hunch.
Somehow, I just can't bring myself to ache for the people making six figures who are now losing their jobs. Join the club.
Which bank is next?
And Galveston Texas? Decimated. What crazy times.
In case you missed the banking woes, here's the rundown.
Here's more.
The folks or folk at electoral-vote have a good explainer:

electoral-vote:For people who don't understand what is going on, here is the story in a nutshell. Decades ago, when you wanted to buy a house you went to local bank and applied for a mortgage. If the mortgage was less than three times your annual income and you had a good credit history, the bank would loan you the money and you would pay them interest and some principal every month for 30 years. Then Wall St. got a bright idea: buy up all the mortgages from the banks, collect a few thousand into a pool called a CDO (Collateralized Debt Obligation) and sell shares in it. The owner of each share would get a pro-rata share of the incoming monthly mortgage payments, analogous to what a bond owner gets.

What happened? It sounded like a great idea and soon all mortgages were sold and repackaged into shares. It didn't take long before the banks realized that they could issue mortgages of five, six, even eight times the buyer's annual income or sell them to people with terrible credit histories. After all, the shaky mortgages would soon be somebody else's headache. That's what happened. Lehman, Merrill, and others bought billions of dollars of mortgages that the homeowners had no hope of ever repaying on schedule and nobody wanted to buy shares in these worthless CDOs, so the brokers got stuck holding the bag with billions in worthless loans.

What are the political consequences of this meltdown? It is a bit early, but here's the expected pattern. Republicans will say that bankruptcies, however unfortunate, are an absolutely essential part of free markets. When managers make stupid decisions, the market punishes them by driving them into bankruptcy. This warns other managers not to be so greedy. Democrats will say that millions of innocent homeowners and small investors are going to lose their homes and life savings due to misbehavior on the part of rapacious and unscrupulous bankers and that it is the job of the government to regulate the entire financial sector to protect ordinary people who don't know the difference between a CD and a CDO.