Showing posts with label bankruptcy. Show all posts
Showing posts with label bankruptcy. Show all posts

PostHeaderIcon Money woes threaten the budget of at least 10 US states

11/12/2009 | Posted by mesiamd | Edit Post


It is not enough to know that New York State has its own money trouble. According to the Washington based Pew Center, California together with 9 other states are on the brink of budget disasters. The group’s analysis put lawmakers and governors in these financially troubled states on notice to the looming increase in taxes, employee lay-offs, and slowing of government services. The economy deteriorates in California, Arizona, Florida, Illinois, Michigan, Nevada, New Jersey, Oregon, Rhode Island and Wisconsin.

According to the report, quick action is needed to mitigate a fiscal disaster. Double digit budget deficits are rising with poor business, massive unemployment, and uncontrolled housing slump and foreclosures. The 10 vulnerable states are home to a third of the American population---California, with a huge economy is mentioned as having the highest risk

“California leads the most vulnerable states identified by Pew, which describes it as having poor money-management practices. According to the Legislative Analyst's Office, California has made nearly $60 billion in budget adjustments — in the form of cuts to education and social service programs, temporary tax hikes, one-time gimmicks and stimulus spending — since February as tax revenues plunged.
Many of those fixes aren't expected to last. The state's temporary tax hikes will begin to expire at the end of 2010, while federal stimulus spending will begin to run out a year after that.”--- AP (11/11/09, Lin, J.)

By estimates California will incur a huge deficit hovering at $12.4 billion and $14.4 billion next year. This may be about 17 percent of the state's $84.6 billion general fund budget that is used for daily operation. Governor Arnold Schwarzenegger predicts more budget cuts are in the offing as a corrective measure.

The poor economy is creating undue stress of many Americans. They are learning the hard way to live within their means. The public is realizing that USA can’t buy its way to prosperity (i.e. by extravagant stimulus packages, unbridled borrowing and spending) as what the current government is doing. The country under Pres. Barack Obama may go through extreme financial hardship if his economic planners don’t go slow in their flamboyance and cocky spending. In this financial crisis, the government should have little room for gimmickry and naive manipulation of the economy. (Photo Credit: library.thinkquest.org) =0=

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PostHeaderIcon Worst bank closures: 106 banks shut down in 2009

10/26/2009 | Posted by mesiamd | Edit Post


Clues of More Financial Hardtimes Ahead?

This year’s bank closures are the worst since 1992 during the savings and loan crisis. A total of 106 banks have been shut down by regulators of the Federal Deposit Insurance Corp (FDIC) this year. Because of the closures, it will cost FDIC about 25 billion dollars to shore up the banking system. The cost could reach $100 billion by year 2013. Just this weekend 7 banks have been shut down:

“1. Flagship National Bank, Bradenton, Florida. The FDIC entered into a purchase and assumption agreement with First Federal Bank of Florida, Lake City, Florida, to assume all of the deposits of Flagship National Bank. As of August 31, 2009, Flagship National Bank had total assets of $190 million and total deposits of approximately $175 million. In addition to assuming all of the deposits of the failed bank, First Federal Bank of Florida agreed to purchase essentially all of the assets. Total cost to the FDIC: $59 million.

2. Hillcrest Bank Florida, Naples, Florida, was closed by the Florida Office of Financial Regulation. The FDIC entered into a purchase and assumption agreement with Stonegate Bank, Fort Lauderdale, Florida, to assume all of the deposits of Hillcrest Bank Florida. As of October 1, 2009 , Hillcrest Bank Florida had total assets of $83 million and total deposits of approximately $84 million. Stonegate Bank will pay the FDIC a premium of 0.50 percent to assume all of the deposits of Hillcrest Bank Florida. In addition to assuming all of the deposits of the failed bank, Stonegate Bank agreed to purchase $28 million of the failed bank's assets. The FDIC will retain the remaining assets for later disposition. Total cost to the FDIC: $45 million.

3. Partners Bank, Naples, Florida, was closed by the Office of Thrift Supervision. The FDIC entered into a purchase and assumption agreement with Stonegate Bank, Fort Lauderdale, Florida, to assume all of the deposits of Partners Bank. As of September 30, 2009, Partners Bank had total assets of $65.5 million and total deposits of approximately $64.9 million. Total cost to the FDIC: $28.6 million.

4. American United Bank of Lawrenceville, Georgia, whose deposits will be assumed by Ameris Bank, of Moultrie, Georgia. As of August 11, 2009, American United Bank had total assets of $111 million and total deposits of approximately $101 million. Ameris Bank will pay the FDIC a premium of 1.02 percent to assume all of the deposits of American United Bank. In addition to assuming all of the deposits of the failed bank, Ameris Bank agreed to purchase essentially all of the assets. Total cost to the FDIC: $44 million.

5. First Dupage Bank, Westmont, Illinois, was closed today by the Illinois Department of Financial & Professional Regulation -- Division of Banking. To protect the depositors, the FDIC entered into a purchase and assumption agreement with First Midwest Bank, Itasca, Illinois, to assume all of the deposits of First Dupage Bank. The sole branch of First Dupage Bank will reopen on Saturday as a branch of First Midwest Bank. As of July 31, 2009, First Dupage Bank had total assets of $279 million and total deposits of approximately $254 million. In addition to assuming all of the deposits of the failed bank, First Midwest Bank agreed to purchase essentially all of the assets. Total cost to the FDIC: $59 million.

6. Riverview Community Bank, Otsego, Minnesota, was closed today by the Minnesota Department of Commerce. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Central Bank, Stillwater, Minnesota, to assume all of the deposits of Riverview Community Bank. As of August 31, 2009, Riverview Community Bank had total assets of $108 million and total deposits of approximately $80 million. In addition to assuming all of the deposits of the failed bank, Central Bank agreed to purchase essentially all of the assets. Total cost to the FDIC: $20 million.

7. Bank of Elmwood, Racine, Wisconsin, was closed today by the Wisconsin Department of Financial Institutions. To protect the depositors, the FDIC entered into a purchase and assumption agreement with Tri City National Bank, Oak Creek, Wisconsin, to assume all of the deposits of Bank of Elmwood. Bank of Elmwood had total assets of $327.4 million and total deposits of approximately $273.2 million. Tri City National Bank did not pay the FDIC a premium for the deposits of Bank of Elmwood. In addition to assuming all of the deposits of the failed bank, Tri City National Bank agreed to purchase essentially all of the assets. Total cost to the FDIC: $101.1 million. “---ConsumersAffairs.com (10/24/09, Bosworth, M.)

Bank officials expect more closures to extend till 2012. Taking the option to close in order to avoid public panic, many smaller banks are hard hit by delinquency in loan payments, falling home values, and worsening unemployment of about 10%.

As a result of bank failures, the insurance fund of the FDIC is in danger of being depleted. Financial analysts believe the projected recovery between 2010 to 2013 will not be as robust as the optimism expressed by the Obama administration. (Photo Credit: Debtfree/ Daniloff) =0=

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PostHeaderIcon After the banks, housing sector & the auto industry, a bailout of newspapers?

9/22/2009 | Posted by mesiamd | Edit Post


After the costly bailouts of banks, the housing sector, and the auto industry Barack Obama is considering another bail out---this time, the ailing newspaper industry. Without much help given to ordinary people, the president is likely to think of helping the newspapers, the machinery that helped him get elected.

The media have worked doubly hard, at the expense of its credibility to prop up Obama, hence, in part, the bias that lead to the newspapers' dramatic slide in readership. In the last election, tabloids highly favored the Democrats over the Republicans. Is it incidental then that Sen. Ben Cardin, a democrat of Md has introduced a bill to help these cash-strapped newspapers?


”Sen. Ben Cardin (D-Md.) has introduced S. 673, the so-called "Newspaper Revitalization Act," that would give outlets tax deals if they were to restructure as 501(c)(3) corporations. That bill has so far attracted one cosponsor, Cardin's Maryland colleague Sen. Barbara Mikulski (D).”---- The Hill (09/20/09, O’ Brien, M.)

Many readers have shunned away buying newspapers nowadays, causing a precipitous decline in their revenue. The explosion of fast communication in the internet has displaced most tabloid readers.

Even if Obama thinks that newspapers are "critical to the health of our democracy," he is concerned where reports, particularly in political blogs are going. The bailout of tabloids is part of a string of government controls that recently include the redesigning of the student aid fund and the revamp of healthcare.

Frustrated and tired of the bailouts which preferentially favor interest groups and political allies, the idea of helping out newsprints on the edge of bankruptcy only give credence to more government interference over people’s lives in a way that many think bends to socialism.

Newspapers have been instrumental in Obama’s glossed over persona and his coming into power as president. Now an instrument of slick propaganda, newspapers in democratic societies must be detached and separate from the government. They employ less people and do marginal help to shore up the economy. (Photo Credit: Photoburst) =0=

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PostHeaderIcon After a “life of splendor” Madoff’s wife is sued to turn in $45 million

7/30/2009 | Posted by mesiamd | Edit Post


A trustee representing the victims of the notorious Ponzi artist Bernie Madoff sued the swindler’s wife Ruth. Irving Pickard, the appointed trustee of U.S. Bankruptcy Court in New York, claimed Madoff’s wife who led a “life of splendor” got $44.8 million in six years prior to her husband’s financial downfall. He wanted the money to be seized for the benefit of the scam victims.

"While Madoff's crimes have left many investors impoverished and some charities decimated, Mrs. Madoff remains a person of substantial means. The inequity between Mrs. Madoff's continuing financial advantages and the economic distress of Madoff's customers compels the trustee to bring this action."----CNNMoneey.com (07/29/09, Smith, A.)

After federal authorities seized the assets of Bernie Madoff, his wife who was not charged of a crime, was left with $2.5 million. Her swindler-husband who pleaded guilty of bilking his trusting clients in a decades-long $65 billion pyramid scheme is serving a sentence of 150 years in the Butner Federal Correctional Institution in North Carolina. The huge financial fraud left thousands of investors in financial ruin.

The money involve in this Madoff crime reminds us that America has become dishonest and extravagant in its spending. There are many US citizens who live a high life way beyond their means at the expense of others. They are not used to simple living. It augurs badly on their adaptability in the face of financial hardship.

One can just point to the billions and trillions being spent by the government that many cannot fully understand. With mismanagement and lack of accountability, it is likely to compromise the financial future of taxpayers and the next generation.

The budget deficit of the country is at an alltime high that even China is starting to question USA's ability to pay. The extravagant spending of the Obama administration doesn't match his rhetoric of belt-tightening and cost-cutting---his campaign promise during the election. There is a time when America is thought to be too big to fail, but in times of economic crisis, even the strong can slump down on his knees. (Photo Credit: NY Post) =0=


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PostHeaderIcon California inches close to bankruptcy

6/16/2009 | Posted by mesiamd | Edit Post


Affected by the biggest recession gripping the country, the state of California has failed to come up with a budget, bringing the golden state near financial insolvency. The state is spending like crazy more than it can generate income. Government revenue is down by 27%. Business has been slow forcing companies to down-size or stop operation.

If no budget is agreed upon, the state is expected to run out of money by the end of July.

“It will run out of cash within weeks if it does not balance its books, leaving it little option but to postpone a variety of payments, according to State Controller John Chiang, who estimated last week that California was "less than 50 days away from a meltdown of state government."---Reuters (06/15/09, Christie, J; Gevirtz, L.)

California's income has dwindled with rising joblessness rate of 11% and unchecked housing crisis making it hard to close the budget gap of about $24 billion. One option is to cut spending --- the curtailment of entitlements and welfare programs including health insurance.

Budget cuts may be needed by putting teachers, firefighters and police officers out of work and stopping medical-care services. More taxes could be levelled on the residents to generate income. Unlike in the past, Californians are learning to live within their means just lilke Americans across the country. (Photo Credit: Jose Antonio Galloso) =0=

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PostHeaderIcon US Debt: runaway spending in Obama’s ambitious recovery plan worries Americans

6/01/2009 | Posted by mesiamd | Edit Post


“President Obama's ambitious plans to cut middle-class taxes, overhaul health care and expand access to college would require massive borrowing over the next decade, leaving the nation mired far deeper in debt than the White House previously estimated...

Tax collections, meanwhile, would lag well behind spending, producing huge annual budget deficits that would force the nation to borrow nearly $9.3 trillion over the next decade -- $2.3 trillion more than the president predicted when he unveiled his budget request just one month ago.” ----Washington Post (05/21/09, Montgomery, L)

To give the public a picture of what is to come, among high-profile company failures, on Monday, June 1, 2009, General Motors (GM,) the world’s largest automaker is poised to file bankruptcy (Chapter 11) in a US court in spite of the earlier bail-out extended by the government.

By placing the governmment stakes on the faltering giant car manufacturing company, the Obama administration is putting huge burden on the tax-payers. There are $20 billion dollars in federal assistance so far given by the Treasury in exchange for about 60% controlling stakes of the company. In addition to the $20 billion dollars, Obama plans to tell the Americans that an additional $30 billion is needed to see GM go through bankruptcy reorganization.

American taxpayers don't know if their money is being used wisely by their leaders. No one knows how the automaker can bring back the business to its old glory. Customers are uncertain, worried, and mad---something that corporate America haven't seen before. There will be more than 1,000 dealerships and plants that will be closed. About 20,000 workers in the car industry will be laid off as a result of the bankruptcy.

According to the U.S. National Debt Clock, the outstanding outstanding public debt as of June 1, 2009 is: $ 11,323,565,316,132.15. With the estimated population of the United States to be 306,284,942, each citizen's debt burden is pegged at about $36,970.69. How can Americans pay these?

The average US citizen may not fully realize that excessive borrowing and spending will likely mortgage the future of the children of the next generation. As cautious citizens have warned, the richest nation on earth may end up dirt poor earlier than predicted. The alarm is met with avoidance and silent dread by those who hear about it, especially those who think that Obama is the answer to their money problems..(Photo credit: Debtfree:Danilov) =0

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