Auto Industry About to Take a Hit from Subprime Lending Cap

At the time I wrote yesterday's post about the dangerous bubble blowing in new car lending, I hadn't yet seen this article from Wolf Street documenting how the banks that finance auto loans have become so concerned about the perils of subprime lending that Wells Fargo, the nation's largest lender, is slashing its subprime auto lending by nearly two-thirds:

Wells Fargo, which originated $30 billion in auto loans last year, has for the first time put a cap on subprime auto loans, limiting the dollar volume of subprime loan originations to 10% of its total auto loan originations. The New York Times reported that the bank, “according to people briefed on the matter who were not authorized to speak publicly,” has been “increasingly rejecting loans that dealers expected would be approved.”

And Wells Fargo’s subprime cap of 10% of loan volume is setting the tone for the rest of the industry, where the national average has been 27.4%.

Regulators are not only worried about the banks but also about the structured securities auto lending has spawned.

If subprime auto loans go bad in large numbers, as they’re likely to do, the structured securities based on them will take a hit, and investors will get to lick their wounds once again in their chase for yield. Banks and specialized subprime lenders will take a hit too. Megabanks like Wells Fargo might see their earnings get dented, but the amounts aren’t big enough to topple them. Smaller lenders that have specialized in subprime might not be so lucky. But the auto loan subprime bubble, when it implodes, won’t sink the US financial system as a whole; it’s just not big enough.

Yet if these lenders are cutting back on subprime lending in a drastic manner, all heck will break lose in the auto industry.

What what motivated me to write yesterday's post was the glaringly disturbing fact from the seemingly innocuous USA Today article I linked which said that the average amount financed for new car loans had risen by almost $1,000 in just one year. Immediately and without doing any other research, I recognized that such an increase indicated that a dangerous bubble had formed in both new car lending and the new car sales. To see my hypothesis confirmed so quickly by the lending industry itself was really quite remarkable.

I've said this before: it really doesn't take any fancy degrees or insider knowledge to decipher what is really going on in our economy and our society. All it takes is applying a little common sense to the information that is readily available out there. But sadly, common sense is out of fashion these days.


Bonus: This one is way too easy

Average New Car Buyer Pisses Away Over $7,000

I don't watch a lot of television, but when I do it usually isn't very long before I'm bombarded by the inevitable slew of new car commercials. Almost always, these commercials make sure to mention that 0.0% financing is available to "well qualified buyers." That's why it was a bit of a surprise to read the following factoid from an article in USA Today:

Americans' average new-car loan payment hit a record $482 the fourth quarter, and car buyers were paying an average 4.56% for loans, according to researcher Experian Automotive.

I wasn't math major but even I can deduce that with the availability of zero percent financing for most makes and models these days, if the AVERAGE new car buyer is paying that much in interest it means many people are paying a far higher rate than that. These are, of course, subprime buyers with bad credit. Without them, I would gather, the automobile industry would be in deep trouble.

The average interest rate, on the other hand, doesn't seem so bad considering the cost of auto loans historically. I remember being charged 12% on my first car loan back in 1990--I was a recent college graduate who hadn't yet established much of a credit history--and that was not an atypical rate back then. It would also be the LAST car loan I ever took out as I vowed not to ever let a bank fleece me like that again.

Yep 4.56% doesn't seem so bad in comparison, until you consider how much the price of new cars has soared in recent years. Here's USA Today again:

What's more, the Experian report shows that the amount borrowed to buy a new car in the fourth quarter hit a record $28,381, up more than $950 from a year ago and a $582 increase from the previous quarter.

Edmunds.com auto researchers show the average transaction price for a new vehicle in the fourth quarter was $33,352.

That means buyers were making down payments averaging about 15%.

Furthermore:

Experian says the average length of a new-car loan in the fourth quarter rose to an average 66 months.

Using all this data, I pulled out my trusty calculator and determined that if the average amount borrowed to purchase a new car is $28,381, the average interest rate paid is 4.56% and the average loan length is 5.5 years, then the average amount of interest paid on new car loans is a staggering $7,117, or more than 25% of the cost of the vehicle.

That's over seven grand that the average new car purchaser is pissing away by giving it to a bank, even in these times of supposedly wondrous 0.0% financing. So why are people doing it? USA Today again:

"In most parts of the country, vehicles are viewed as a necessity to everyday life, which is why we continue to see consumers willing to take out larger loans as the average price of vehicles continues to rise," said Melinda Zabritski, Experian's senior director of automotive finance.

Given how shitty or completely unavailable public transportation is outside of our major cities, it is true that most Americans cannot get by without access to a car. Where Experian's brain dead mouthpiece gets it wrong is assuming that people have to purchase new cars as opposed to used, or that they have to purchase the more expensive models. In fact, additional data from the very same article shows that used car purchasers are far more likely to buy without financing:

The new-car loan data hits home with most car buyers, because 84% of new vehicle purchases were made with financing. Used, 55.2%.

Which says to me that the average used car purchaser is far smarter with their money than the average new car purchaser.

But the most disturbing factoid in the whole article is the fact that the average amount of new car loans has increased by nearly $1,000 in just the past year. Given that incomes for people outside of the top 10% have been flat for many years, that annual rate of growth cannot be sustainable for very long. Which would indicate that American new car sales will begin to decline at some point in the near future...possibly dramatically.

No wonder most Americans hate math so much.


Bonus: "It's all mixed up," indeed

FirstMerit Bank Cutting 338 Positions, Closing Branches To Save CEO Pay (Ohio)

Here is an interesting tactic that I need to employ more often. First up from Cleveland.com, here is a routine story about mass layoffs in the banking industry:

FirstMerit Corp. is eliminating 338 positions and closing eight Northeast Ohio branches as part of a concerted effort to save money.

The positions are being cut as the Akron-based bank is eliminating all assistant branch manager jobs, increasing teller flexibility, eliminating redundant regional leadership posts and combining retail call support centers.

The moves were outlined by FirstMerit Chairman and CEO Paul Greig at an investor conference in London early Tuesday.

The job cuts are part of an initiative launched last fall to cut costs, and the bank's 2,997 employees were encouraged to make suggestions. About 4,000 ideas were submitted and 341 were used.

All of the cost-cutting measures should save the bank about $15 million the remainder of this year and $30 million next year.

FirstMerit said it's dealing with stricter regulations, low interest rates, a challenging economy and declining branch traffic. The bank, which is the fourth-largest based in Ohio and the 41st largest in the nation, has posted a quarterly profit for 13 straight years and said it wants to maintain that.

The bank has 206 branches and is closing eight of them in the Cleveland-Akron area and is converting a ninth one to drive-up service only. The moves will occur in August.

Just for fun, I Googled "FirstMerit Chairman and CEO Paul Greig" and "Compensation." Wanna know what I found? This little tidbit from back in 2010 on executive pay for the year 2009, also from Cleveland.com:

Company: FirstMerit Corp
Headquarters: Akron
Business: Banking

Chairman, President and CEO Paul Greig: $5,907,300
Change from previous year: +22 percent
Greig received a salary of $731,088; a bonus of $250,000; stock awards of $1,599,992; non-equity incentive plan compensation of $113,246; a change in pension value and non-qualified deferred compensation earnings of $2,833,715; and other compensation of $379,259.

OTHER KEY EXECUTIVES

Terrence Bichsel: $1,346,660
Executive vice president and chief financial officer

William Richgels: $1,134,980
Executive vice president and chief operating officer

Kenneth Dorsett: $939,256
Executive vice president, wealth management services

David Goodall: $618,960
Executive vice president, commercial banking

You read that right, the top five executives at this bank were hauling in nearly 2/3rds of the total cost savings expected this year from laying off 338 employees. It would seem unlikely that the employees FirstMerit were encouraged to be completely honest when Greig put them through the hell of making recommendations to eliminate their own jobs, because the very first recommendation obviously should have been: cut you own fucking pay, asshole. What's even sadder is that second story was sitting right there in the newspaper's own archives, yet they didn't think that Greig and the other executives' insanely high pay was at all relevant to the story.

The Exiled: Failing Up With Citigroup's Dick Parsons

Mark Ames, editor-in-chief of The Exiled and all around journalistic rabble rouser, just came out with a blistering story recounting the sordid career of former Citigroup Chairman Dick Parsons. Parsons my not be as well known as such other Wall Street jackals as Lloyd Blankfein and and Jamie Dimon, but after reading Ames's account, I think you will agree he is every bit as bad if not worse. And as you can see by the picture above, Parsons has a lot of friends in high places.

Last month, shareholders finally rebelled against Citigroup, the worst of the Too Big To Fail bailout disasters, by filing a lawsuit against outgoing chairman Dick Parsons and handful of executives for stuffing their pockets while running the bank into the ground.

Anyone familiar with Dick Parsons’ past could have told you his term as Citigroup’s chairman would end like this: Shareholder lawsuits, executive pay scandals, and corporate failure on a colossal scale. It’s the Dick Parsons Management Style. In each of the three companies Parsons was appointed to lead, they all failed spectacularly, and somehow Parsons and a handful of top executives always walked away from the yellow-tape crime scenes unscathed.

This past April, for his final act as Citigroup’s chairman, Dick Parsons made sure that Citi’s top executives were handsomely rewarded for their failures. He arranged a pay package for CEO Vikram Pandit amounting to $53 million despite the fact that Citi’s stock plummeted 44% last year, and has woefully underperformed other bank stocks even by their low standards. Citigroup, as you might recall, got the largest bailout of any banking institution, larger than BofA’s– $50 billion in direct funds, and over $300 billion more in “stopgap” federal guarantees on the worthless garbage in Citi’s “assets” portfolio. Those are just the most obvious bailouts Citi received—this doesn’t take into account the flood of free cash, the murky mortgage-backed securities buyback programs, the accounting rules changes that allowed banks like Citi to decide how much their assets “should be worth” as opposed to what they’re really worth on their beloved free-market, and so on…

So just as Dick Parsons stepped down as Citigroup chairman last month, shareholders finally rebelled, suing Parsons, CEO Pandit and a handful of executives for corporate plunder.

Again, with Parsons, it’s the same story every time: Three executive jobs, three disasters, each worse than the previous one.

Before Citigroup, Parsons headed AOL Time Warner, where he helped pull off what is widely considered the single worst business deal in corporate American history: a fraud-rife merger that wiped out $200 billion in shareholder value, ruined employees, retirees and investors, sparked numerous criminal investigations and dozens of lawsuits, and yet somehow managed to enrich a tiny handful of executives—including Dick Parsons—to the tune of hundreds of millions of dollars.

Why would the government agree to name the AOL Time Warner failure Dick Parsons, Chairman of Citigroup in January 2009, just as the world’s largest banking institution was taking the biggest bailout packages, and just as its legal ownership was taken over by the American public?

It’s a basic question that goes to the heart of Dick Parsons’ rise to the top. It’s a question that should have been put to AOL Time Warner when he was thrust to the top of that firm, considering the giant S&L failure Parsons oversaw before moving over to AOL Time Warner.

From the late 1980s through the mid-1990s, Parsons served as a top executive and then chairman of Dime Savings, the Northeast’s poster child for savings & loan criminal fraud. Dime was Parsons’ first executive job—and Dime turned out to be the New England region’s closest equivalent to Charles Keating’s Lincoln Savings, a giant criminal fraud mill with victims ranging from gullible low-income home buyers to entire regional economies laid waste to fraud-pumped housing bubble.

At least in the S&L crisis of the late 80s and early 90s, some people went to jail—and Dime’s affiliates in the New England states sent scores of fraudsters to prison. Those investigations led to Dime’s New York headquarters where Dick Parsons was, but for some strange reason, even with a federal judge openly demanding criminal charges for Dime’s senior executives, in the end, Parsons and the others got away with it.

Read the rest here.

Bank Of America To Lay Off An Additional 2,000

Try not to get too choked up when reading the snippet for this report today from the Wall Street Journal:

Amid the banking industry's relentless belt-tightening, even Bank of America Corp.'s moneymakers aren't safe.

The Charlotte, N.C., company is planning about 2,000 staff cuts in its investment banking, commercial banking and non-U.S. wealth-management units, said people familiar with the situation. Those operations were vastly expanded with Bank of America's 2009 purchase of Merrill Lynch & Co.

Usually, I have have plenty of empathy for the people who lose their jobs after these announcements, but I'll make an exception in this case. Had the federal government not bailed out this hideous company back in 2008, and let them fail as they should have, these people would have been out of a job already. But here is the most delicious part of this story:

The reductions are significant because of whom they target: the high-earning employees whose efforts helped Merrill Lynch account for the bulk of Bank of America's profit since the financial crisis.

They say there is no honor among thieves. I guess they're right.


Bonus: "Don't cry no tears around me"

Ha-Ha! Law Firm Sues Wells Fargo After Falling For Nigerian Wire Fraud Scam

This story really made my day. Here is the Minneapolis-St.Paul Business Journal with the details:

An Edina law firm that lost nearly $400,000 in a Nigerian wire-fraud scam is claiming that Wells Fargo, which handled the fund transfers, should cover its losses.

The Star Tribune reports on the lawsuit by Milavetz, Gallop & Milavetz, which three years ago received an e-mail from someone purporting to be a Korean woman who needed the firm's help to collect a settlement. You can probably see where this is going: When the dust settled, Milavetz, Gallop & Milavetz was a lot poorer. It has parallels — down to the account numbers involved — to a investigation into a Nigerian fraud ring that targeted law firms; two people have been indicted in that investigation.

In his suit, Robert Milavetz argues that Wells Fargo & Co. should have recognized the red flags involved — a counterfeit check used in the scam had the bank's address spelled wrong, he claims. The suit also says the bank told the firm the check had cleared, only to later say it hadn't, really — but the firm had already wired the money away by that point. Wells Fargo said it will defend itself in the case.

Gee, you hardly know who to root for in this case. I guess the best outcome would be a long, drawn out court case that costs both concerns a shit pot load of money.


Bonus: What the heck, how about a song from an album that was actually recorded in Lagos

Senior Citizens Have $36 Billion In Outstanding Student Loans

This is a good companion piece to the post I made yesterday about CNN being in denial that there may be a crisis in the student loan industry. It's bad enough that many young adults are carry huge education-related debt burdens, but now it also appears that student loans are going to follow some people right into the grave. Here is Yahoo News with the story:

New research from the New York Fed shows Americans 60 years and older owe a collective $36.5 billion in outstanding student loans. More than 10 percent of these indebted seniors are delinquent on their loans, which means they may field calls from persistent debt collectors and be forced to offer up parts of their Social Security checks to satisfy their decades-old debts, the Washington Post reports.

Most people with student loans are under 40, but because this type of loan cannot be discharged in bankruptcy, the debt can follow a person around for life. The average amount due from all student loan borrowers is $23,300, according to the New York Fed's data, while the median amount is $12,800. On average, college graduates make significantly more over their lifetimes than high school graduates and face a lower unemployment rate. But college costs have skyrocketed over the past 30 years, and the potential payoff of a college education varies widely, depending on which subject a person majors in and the value and reputation of the college.

Notice how that last bit almost perfectly mirrors the propaganda put forth in the CNN story? It almost like the media collaborates in the lies it tells the public. Who would have ever thought?


Bonus: "Old man, look at my life...I'm a lot like you were (or maybe are now)"

Media Denial Porn: CNN Says "There Is No Student Loan Crisis"

Great news, America! Just because the total value of student loans recently topped (cue Dr. Evil) One TREEEEELION Dollars, and the rate of student loan defaults has been skyrocketing, there is no student loan "crisis." So says CNN, the so-called, "Worldwide Leader in News," which back around 2005 or so was, like the rest of the mainstream media, just as confident that there was no so-called "housing bubble." Here is the story in all of its denialist glory:

Total student loan debt has topped $1 trillion ... but there's no need to panic.

Most borrowers have a reasonable amount of debt, and the total balance is not likely to cause major damage to the economy like the mortgage crisis did, experts say.

Wow, I am so relieved that the "experts" have chimed in. Because the "experts" the mainstream media consults about the issues it chooses to report are ALWAYS right. It is perfectly evident by just how fantastic the economy has been preforming in recent years, how cheap energy prices have remained and also how swimmingly that whole Iraq War thing they were cheerleading for turned out. Damn, I might as well just end this article right here.

"I don't think it's a bubble," said Mark Kantrowitz, publisher of Finaid.org, a financial aid website. "Most students who graduate college are able to repay their loans."

So exactly which orifice did you pull THAT factoid from, Mr. Kantrowitz? Yes, it is technically true that the vast majority of student loans are not in default. But it is also true that the majority of student loans were issued to those who completed their educations before the financial crisis hit and got into the job market before the doors slammed shut. In fact, your idiotic statement is directly contradicted by the very next paragraph in the article:

This is not to say that there aren't problems with student loans, which now exceed the amount of credit card debt and auto loans. Students are taking on more debt, on average, and more than a quarter of borrowers are behind on their payments. And a hefty debt load could delay recent graduates' purchase of a home or starting a business.

Given how few high paying jobs are now being created during the "recovery," that sure sounds like a building crisis to me. Kind of like the housing bubble circa 2006 when the first signs of distress started to appear.

But all the talk of a crisis or bubble in the student loan industry is exaggerated, experts say.

Damn, there they are again. Those nebulous "experts." Gotta love those guys.

Nevertheless:

What's raising red flags is that the default rates on federal loans are climbing. They hit 8.8% in 2009, nearly double the rate five years earlier, according to the most recent Department of Education figures.

This jump is being fueled in particular by for-profit colleges, which have default rates of 15%, prompting federal officials to put in new rules. Now, schools with excessive default rates can lose their eligibility for the federal loan program.

Still, heavy debt loads can make it tough for young adults to establish themselves, especially these days. The Great Recession has made it tougher for young adults to find a job.

The unemployment rate for those age 16 to 24 with bachelor's degrees stood at 8.1% in February, up from 4.6% four years earlier. Many others find themselves underemployed.

"Having a lot of student debt can make a person's life very difficult," said Lauren Asher, president of the Project on Student Debt.

It is really hard not to get the feeling that CNN decided what the editorial slant on this article was going to be before they even conducted any interviews. So ultimately, what is the reasoning for claiming that that there is not student loan crisis?

But workers with bachelor's degrees earn about $650,000 more over their lifetime than their peers who only have high school diplomas, a recent Pew Research Center analysis found.

"It's an economic investment," said Sarah Turner, professor of economic and education at the University of Virginia, Charlottesville. "It's not going to work for everyone, but on average, it has a high return."

Kantrowitz expects defaults to climb for another year, before starting to decline. That's because the economy is slowly strengthening and unemployment rates are coming down.

"The defaults are not unexpected, considering the aftermath of the downturn," he said.

Ah-ha! There it is! The tired old "business-as-usual" argument that says things will get better just because they have always gotten better before, spewed forth by a university professor who has every economic incentive in the world to deny that there is a student loan crisis. There is also no consideration given to the fact that the era of cheap oil-fueled economic growth is over and that we have entered a new paradigm of permanent economic contraction.

It's incredible how CNN allows blind faith to override all of the various facts presented right in in their own article. Since this is what passes for "journalism" in America these days, no wonder so few people out there truly understand our real predicament.


Bonus: "Everybody knows these are rock hard times...I gotta make it through...these are rock hard times"

Atlantic Wire: Don't Hate Bankers Because They're Rich--Or When They Stab Cab Drivers

It's no wonder that America is in the mess its in when you consider that lapdog-to-power publication like The Atlantic is what passes for a "liberal media," these days. I realize that is not exactly breaking news to anyone in the reality based community, but the horrid rag, or at least its Atlantic Wire online news feed, demonstrated yet again where it really stands in an article about the Morgan Stanley banker who allegedly stabbed a cab driver in a dispute over a fare. In "Why We Love to Hate Masters of the Universe," Senior Writer Wall Street Sycophant Jen Doll, who actually used to write for the Village Voice no less, admonishes her readers not to hate the little rich bastard just because he is rich:

In the annals of crime, there is a place reserved for the banker—a special sort of banker, mind you, not just the guy who offers you free checking with your savings account, presuming you keep a certain balance, at Chase. You probably never see this esteemed creature, unless he deigns to be seen, or unless you frequent his gilded circles (in fact, he may look a lot like everyone else, but don't let that terrify you; he smells your fear). He is the one who lives in a million-dollar abode on Park Avenue, or in "the wealthy enclave of Darien." He may be the owner of a "sweeping curved staircase, perfectly plumped chintz pillows, backyard swimming pool, and a Ferrari in the garage." He has so much when some have so little, so much in material goods but also in the currency of power, that when he crosses the rules by which we expect him to conduct himself—after all, he is civilized, or must be, with so much in liquid assets—we recoil back in horror only briefly before we jump in to censure, releasing a sigh that demonstrates our resignation that of course this person could not have had all that and been a decent human being, too. Of course. And there is some joy in that resignation, because we are struggling, because of the economy, because of the haves and have-nots, because of the 99 percent, just because.

Take the case of William Bryan Jennings, a man who could not have been more unfortunately named and now faces an unfortunate reality. Not that there's anything unfortunate about being the head of fixed income for North America at Morgan Stanley, or owning a $2.7 million mansion in Darien, Conn., or being able to send your children to a prestigious private school or afford a $204 cab ride home from Manhattan when you've had too much to drink at your holiday party and can't locate the town car that's been ordered for you. What is unfortunate is fighting with your cab driver over the fare once you're home, refusing to pay that cab fare, shouting racial slurs, and then, in failing to get your way, stabbing that cab driver, who, in perfectly cinematic contrast, lives in a ground-floor apartment in Astoria near the railroad tracks "in the shadow of the Triborough Bridge."

These are things that Jennings has allegedly done. He pleaded not guilty to the charges on March 9; he has denied using racial slurs and claims, according to his lawyer, who says Jennings thought he was being abducted. If convicted he could face 11 years in prison. As a direct consequence of his actions that night in December, he's been placed on leave, and according to rumors he may never get his job back. The next court date, a pre-trial hearing, is scheduled for April 12. But whether he's proven guilty or not, Jennings is now a member of the bad banker club.

He follows in footsteps like those of Rajat Rajaratnum, billionaire and in 2009 the 236th richest American, the Galleon Group's former hedge fund manager and founder—who was found guilty of allegations of insider trading and sentenced to 11 years in prison in October 2011. Or those of Rajat Gupta, formerly of Goldman Sachs and McKinsey & Company, whose trial over "passing along corporate secrets to Rajaratnam" will soon begin (Gupta is a man who in his own estimation still wasn't rich enough). Going further back, there's Martha Stewart, not a banker herself but certainly a member of a certain coterie of power players, convicted of insider trading and sent to jail back in 2004. Fictionally, we have Wall Street top bond salesman Sherman McCoy, done in by his own greed and selfishness (with the help of the media) in The Bonfire of the Vanities, or the case of Wall Street's Gordon Gekko, who believes above all else that greed is good.

There is a sense that these figures, the "masters of the universe," dubbed so without our explicit agreement (even as we are complicit in their successes) are somehow more evil than your garden variety criminal, someone without wealth and power and private schools and sisal rugs at his fingertips. This is good for us, because we can hate them more, without any sort of liberal guilt associated. The bigger and badder the persona, the better. Which is why, when the news came out about Jennings, we slapped our foreheads and thought, "Shoulda known, not another one!" in an almost gleeful (though rueful) fashion while feeling just terrible for his alleged victim.

Interestingly, however, Jennings doesn't quite fit our stereotype. As Conlin and Francescani write, "In the world capital of ego-driven alphas, Jennings didn't come off as one. He was polite and well-liked, according to Morgan Stanley colleagues. He also was a 'Morgan monk,' utterly devoted to the firm and his job, with little personal life outside work." If Jennings hadn't been a banker and instead was, maybe, an inebriated mid-level ad exec on his way home from a Christmas party who got into a tiff with a cab driver, would we react the same way? Maybe...but probably not. With great power comes greater responsibility, so we expect our masters of the universe to behave appropriately. But if we're being honest, we don't really want them to behave properly, not only because it makes for interesting news, but because, well, schadenfreude. We want them to be bad so we feel better about ourselves.

So when Greg Smith, the hero-or-anti-hero or in any case now famous writer of the "Why I'm Leaving Goldman Sachs" op-ed in the New York Times, tells us how bad his coworkers are, calling their clients "muppets," taking advantage of the poorer or weaker or stupider, generally reveling in their toxic environment -- we eat that up and ask for more. We want to hate those corporate bigwigs making all the money and crushing the little people and complaining about how poor they are on Urban Baby. When it turns out they're human...good or decent people who've worked hard but messed up...that becomes less easy, or certainly less pleasant, to swallow along with the lump of jealousy that burns in our throat.

But back to the case of Jennings. There is dispute over what actually happened in the cab that night, and we may never know exactly what occurred. We do know things escalated to the degree in which a pen knife was taken from a briefcase, and a cab driver was left bleeding and in need of six stitches. We know that later Jennings went on vacation with his family, to Florida, but that at the end of February, he turned himself in to cops. And all that is probably enough for him to go down in the banker hall of villainy, regardless of the outcome of the trial. It's easy to hate bankers, because not only are they rich, and richer than we are, but also, most of us don't actually understand what they do. What we do understand, and what people have understood since the beginning of time, is that watching the mighty fall is far more amusing than watching those further down in the rungs of power remain exactly where they are.

First of all, I love how Jen Doll (speaking of unfortunately named) condescendingly presumes to know what all of her readers were feeling when they heard about Banker William Bryan Jennings's run in with the cab driver. Apparently, she and her editors at The Atlantic who green lighted this tripe assume that we are all a bunch of easily enraged troglodytes, ready to form a lynch mob and string poor, put upon Banker Jennings up from the nearest tree. The really neat trick here is the attempt to make you feel guilty about not feeling liberal guilt about hating him.

Sorry, but I do hate the fucker and I don't apologize for it. I'm supposed to take this asshole's banker buddies at their word about what a great guy he supposedly is? Or be at all concerned that this incident might cost him his high flying job, which is after all to rape and pillage the planet's resources and fuck over people who actually work for a living? Excuse me, but I'd rather extend my empathy to the cab driver who got stabbed, thank you very much, because he is, you know, the actual victim here.

But beyond just looking down her nose at the unwashed, stupid masses who read The Atlantic Wire and let their lack of liberal guilt run amok (and who are obviously too dumb to know when they've been insulted), I really must ask why Ms. Doll felt compelled to write an article sticking up for Banker Jennings in the first place. The defendant has by all appearances plenty of fucking money and can afford to buy a conga line's worth of the absolute best defense attorneys available. He hardly has to worry about being railroaded by the American justice system, the way, oh, say the cab driver might have been had the roles in this case been reversed.

I guess what makes me so angry about this craptastic turd of an article is that I grew up reading the columns of the late, great Chicago newspaper columnist Mike Royko. For the better part of four decades, Royko used his daily column, when he wasn't busy shining the spotlight on the Windy City's bountiful municipal corruption, to stick up for the little guy against whatever forces, be they bureaucratic, corporate or even gangster, that might be attempting to stomp on him. Royko brilliantly used the power of press to right many wrongs in that very cold-hearted and unfeeling city, and working class Chicagoans in particular loved him for it. The idea that a writer with a media platform would use that platform to defend one of our overlords after he viciously assaulted one of the little people must surely have Royko spinning in his grave. Banker Jennings will get his fair trial, a much fairer trial than you or I would ever be able to afford were we in his shoes. He doesn't need some hack writer kissing his ass on top of it.

It would be one thing if this tired old "don't hate the rich just because they are rich" mantra that is used to justify all sorts of bad acts perpetrated by the corporate and Wall Street elites was being spewed forth by a conservative propaganda sheet like the American Spectator. It's something else again when it comes from a publication dutifully read by good little liberals everywhere. I guess Ms. Doll has to the have the evil of Wall Street bankers rubbed right in her face so she might understand a little better why they are so justifiably hated even when they aren't outwardly Gordon Gekko caricatures and why they don't need the likes of her sticking up for them.

Here's hoping that some right wing billionaire soon makes a hostile takeover bid of The Atlantic, and when he seizes control he immediately fires the entire staff. Sitting on the unemployment line still might not enlighten the dimwitted likes of Jen Doll, but I would love nothing better than to see her feeling bad so that I can feel better about myself.


Bonus: A song from a guy who gets who the enemy is

The Bastards Always Win

The late great author and blogger Joe Bageant had a very simple phrase to describe the Wall Street, banking and business elites who really run this country: The Bastards. Normally, The Bastards make an effort to disguise their naked wealth grabs with some kind of flimsy, business school approved smokescreen. Then there is The Bastard who is the CEO of Fifth Third Bank. First, lets take a look at this layoff notice that appeared Thursday in the Business Courier of Greater Cincinnati:

Fifth Third Bancorp conducted a round of job cuts impacting fewer than 200 employees across the company.

Downtown-based Fifth Third made the moves over the past 10 days, company spokeswoman Debra DeCourcy said. They occurred across its 12-state footprint.

The layoffs totaled “far less than 1 percent of our 22,000 employee population,” DeCourcy said.
That would put the total well below 220. She didn’t provide other details of the layoff.

Hmmm...that doesn't sound so bad. What was the official justification for the move?

DeCourcy explained the moves last week in an email responding to questions about rumored layoffs at Fifth Third:

“Our philosophy is to continually manage the deployment of staff and make adjustments where needed based on a variety of issues, including business demand, workload or technological advances,” she wrote in the email. “While we have had to reduce staff from time to time, this philosophy has enabled us to keep those numbers small relative to the overall size of our workforce of approximately 22,000 employees.”

Fifth Third and other banks have been cutting expenses lately to battle declining revenue. Fifth Third’s expenses rose 5 percent in the fourth quarter while revenue fell 6 percent. Several analysts said the bank, like many others in the industry, had already started to cut expenses and would need to do more trimming of costs.

All right, some typical Corporate FlackSpeak there, but nothing too extreme. Looks like they had to adjust to changing business conditions, right?

But wait, let's back up a week or so to an article from the very same publication, which appeared on February 28th of this very year:

Fifth Third Bancorp paid CEO Kevin Kabat $7.1 million in 2011, giving him a 49 percent compensation increase.

Kabat made $4.8 million in 2010, which represented an 8 percent pay cut from the prior year, according to figures reported in Fifth Third’s newly released proxy statement. Pay figures exclude a change in pension value and nonqualified deferred compensation earnings, even though the company has to report those figures to shareholders.

You can try to spin these two stories any way you want, but there is no other conclusion you can reach other than The Bastard CEO ordered the firing of over 200 of his employees so his bank could afford to give The Bastard a nice fat pay increase. I'll admit I never attended business school, but maybe some MBA out there could explain what possible justification there is for giving a CEO a 49% pay raise during a year when revenues declined by 6%. Good luck putting lipstick on that very ugly pig.

But wait, it gets worse:

Kabat can thank the bank’s repayment early last year of $3.4 billion it borrowed through the U.S. Treasury’s Troubled Asset Relief Program for part of the increase. That got the downtown-based banking company out from under federal restrictions on executive pay and allowed its executives to again qualify for bonuses and additional long-term incentive pay.

Kabat’s salary actually fell by almost half, to $1.6 million, last year, according to the proxy statement. That’s because the company halted its phantom stock program last year after it paid back TARP. Those phantom stock awards counted as salary. But his stock awards rose by two-thirds, to $2.6 million. He also received $1.8 million in stock appreciation rights, which Fifth Third couldn’t pay last year due to TARP. And he received incentive pay of $855,000 that was pro-rated to pick up where the phantom stock program left off.

Once Fifth Third paid back TARP, the compensation committee returned its pay structure to a mix of salary, bonus and long-term incentives “that is more consistent with its long-term approach and compensation philosophy,” said company spokeswoman Debra DeCourcy.

In other words, The Bastard's cushy CEO gig wouldn't even exist if taxpayers hadn't bailed out his asshole bank. And just how much of a pathetic toadie is company spokeswoman Debra DeCourcy? I got news for you, Ms. DeCourcy, you may think you have a great gig being the mouthpiece for The Bastard, but if the day should come when your salary is the one standing between him and his unjustifiable millions in compensation, you'll quickly find your ass out on the unemployment line as well. Because the first rule of business in modern day America is: The Bastards ALWAYS win.


Bonus: These are the kinds of Heartless Bastards I prefer. Play it, James

Student Loan Delinquency Hits $85 Billion

As I've said before on this blog, sometimes I hate being right. I've asserted a number of times that predatory student loans are another massive financial bubble just waiting to pop, and now here comes the confirmation from Bloomberg:

About $85 billion in U.S. student loan debt, or 10 percent of the outstanding balance, was delinquent in the third quarter of 2011.

Of the 37 million borrowers who have student-loan balances, 14 percent, or about 5.4 million people, have at least one past due student-loan account, according to a report posted today on the Federal Reserve Bank of New York’s website.

As many as 47 percent of student-loan borrowers “appear to be in deferral or forbearance,” and didn’t have to make payments as of the third quarter, according to the report. The district bank reported last week that debt from educational loans in the fourth quarter was $867 billion, higher than credit-card debt, according to a survey of consumer credit. Special attention should be paid to these student-loan delinquencies compared with other household debt, the authors wrote.

“Some special accounting used for student loans, not applicable to other types of consumer debt, makes it likely that the delinquency rates for student loans are understated,” wrote the economists, Meta Brown, Andrew Haughwout, Donghoon Lee, Maricar Mabutas and Wilbert van der Klaauw.

Note the two portions of this report I highlighted in bold, both of which indicate that the problem is far worse than the headline figure. Nearly half of the loans are held by people who are going to college right now or have just graduated, who have not yet discovered or are just now discovering how bleak their prospects of finding a good job are even with that degree the placed themselves deeply in debt to obtain. Secondly, accounting gimmicks are also likely helping to hide the extent of the problem, just like in the mortgage industry.

The big question is just how long it will take before students and their parents finally begin to realize that there has been a sea change in the economy and that a college degree is no longer a ticket to the American dream of middle class respectability. Blind faith is ll that is holding up this whole creaking edifice, but then again you could also say that about the economy at large.


Bonus: They say you gotta have faith...but you should never have Blind Faith

Bank Of America Will Freeze Employee Pension Plans

Bad news for Bank of America employees. Here is CNN Money with the details:

Bank of America announced plans Thursday to freeze pension plans, effective in July, and increase its 401(k) contributions instead.

Eligible employees will keep the pension benefits that they've earned to date but will not receive additional benefits, Bank of America (BAC, Fortune 500) spokesman Scott Silvestri said.

The company will instead begin making an additional 2-3% annual contribution to employees' 401(k) accounts, on top of the existing program that matches employee contributions up to 5%.

"Making these changes simplifies our offerings, gives employees control in managing their retirement savings and ensures our retirement benefits remain competitive," Silvestri said in an email.

U.S. companies are increasingly moving away from traditional pensions and toward 401(k) plans in an effort to save costs and minimize funding uncertainty. Last week, General Motors announced that it had shifted its senior salaried workers away from a traditional pension plan to a 401(k) plan.

Of course, this is yet another reason why the Federal Reserve has been so desperate to pump up the stock market. It would be far less palatable for companies to be able to dump their pension plans and go to a 401(k) only system if the DOW were still bouncing around near its March 2009 lows. It also creates a condition where unless the stock market continues to rise robustly forever and ever, the employees will be facing poverty and destitution after they retire, assuming the economy does not crash long before then.


Bonus: Better hope you die before you get old

Credit Suisse To Lay Off 109 Workers In New York

Okay, normally I do try to be sympathetic to people who are losing their jobs because of the economy. But I have to admit that right now I'm playing the world's smallest violin after reading this story from Huffington Post Business:

Wall Street keeps shrinking.

Credit Suisse will begin laying off employees in New York the second week of March, according to a company filing with the New York State Department of Labor and an item on the website Dealbreaker on Friday.

But...but...but, I thought we were in a rip roaring bull market. How can Wall Street be SHRINKING? Tell me more.

The fresh layoffs at Credit Suisse -– which is Switzerland’s second-largest investment bank behind UBS -- comes amid a broader contraction among Wall Street banks, as top dealmakers at Goldman Sachs begin to make an exit, and as other financial institutions shrink departments (such as proprietary trading) that brought in considerable amounts of money during the boom years.

Zero Hedge has been reporting repeatedly how all through this recent amazing market levitation that volume has been at an unprecedented low. I guess these investment banks don't need a huge staff to just borrow money from the central banks at zero percent interest and pump it into the stock market. Turn the volume up on that fiddle for me, will ya?


Bonus: Tell me this scene doesn't resonate even more today than it did 20 years ago. Mr. Pink could have been an investment banker. World's smallest violin, indeed

Big Banks Charging Unemployed Debit Card Fees For Unemployment Benefits

This story really belongs in the, You Have GOT To Be Fucking KIDDING Me, category. The very same banks whose financial shenanigans crashed the economy and created massive unemployment are now being allowed to charge debit card fees on the unemployment benefits of the unfortunate souls who lost their jobs thanks to their perfidy. Here is the Worcester Telegram & Gazette with the details:

Rhonda Taylor had never been on unemployment until she was laid off from her information technology job in 2008. When she received the debit card she’d use to access her unemployment benefits from the state, she assumed it worked like any other bank card.

But after a month using the card, the North Providence resident noticed she was being charged a fee every time she checked her balance at an ATM. Every time she used her PIN to make a purchase. Every time she tried to withdraw cash. A dollar here, $1.50 there. The fees added up. Twenty dollars a month matters, she said, when you’re unemployed and relying on the state.

The fees come from JPMorgan Chase, which the state selected in 2007 to operate Rhode Island’s debit card system. The state Senate voted last week to ask Gov. Lincoln Chafee to review the fees.

“Why is my state part of a system that charges the unemployed a fee for an out-of-state bank?” Taylor asked. “Why is money that’s supposed to go to the unemployed going to a Wall Street bank?”

Like most states, Rhode Island contracts with a bank to provide unemployment benefits through a debit card. JPMorgan Chase agreed to operate the system at no cost to the state — if it could charge fees to those receiving unemployment benefits.

In many cases, JPMorgan Chase charges fees that traditional bank cards don’t have. There’s a $1.50 fee if a user withdraws cash more than once per benefit deposit, plus a fee of up to $3 for using a non-network ATM to withdraw funds. A 50-cent fee every time the user checks the balance. A dollar fee for denied transactions and a 25-cent fee for debit purchases that require a PIN.

“Anything you do you pay a fee; it’s how Morgan is making their money on it,” said Sen. William Walaska, a Warwick Democrat who is pushing for more information on the fees. “These people can’t afford these fees — obviously — because they’re unemployed. But the state pretty much says, ‘We don’t want this to cost us any money, so banks, you figure out how to make money.’ ”

JPMorgan Chase won’t say how much it collects in fees or whether it would be open to reducing them. Spokeswoman Jessica Francisco said the company doesn’t publicly discuss its fee policies.

More than 40 states use bank cards to disburse unemployment benefits and almost all charge some fees. A report last year by the National Consumer Law Center compared systems and determined that Rhode Island “has one of the more problematic fee structures.”

So we bail the fuckers out with taxpayer money and then we turn around let them prey on the jobless. At the very least, these parasites should be providing the debit cards for free. Are there ANY public officials left in this fucking country who have not been completely bought and paid for by the big banks and Wall Street? Anywhere? Can someone please alert me to an example?

And yes, I am using the word "parasites" to describe them as a deliberate fuck you to any Randian conservative assholes who might be inclined to use the term instead against the unemployed. For contrary to their twisted worldview, it is the big banks that are the OPs (Original Parasites). President Andrew Jackson knew it, which is why he issued his famous veto of the charter of the Second Bank of the United States back in 1832. Too bad that in our post-Citizens United dystopia, in which psychopathic billionaires can donate as much money as they want to boils on humanity's ass like Mitt Romney, Newt Gingrich, Rick Santorum and, yes, President Hopey-Changey, no one with Old Hickory's sensibilities stands any chance of getting elected to major public office ever again.


Bonus: "The planet Earth from way up there is beautiful and blue...and floating softly in a rainbow. But when you touch down things look different here"

Sterling Savings Bank (Washington State) Lays Off 160 Employees

Back during the height of financial crash, I used to host a regular Friday afternoon/evening thread on the old Life After the Oil Crash forum called Bank EATED Fridays in which I and other readers would place friendly bets on how many financial institutions the Federal Deposit Insurance Corporation was going to shut down and take over heading into that weekend. The closings always happened on Friday nights to minimize publicity and thus the resulting harm to public confidence in the banking system, and there were almost always multiple closings every week.

I stopped hosting that regular discussion after LATOC went off the air, mostly because the games being played in the financial system were having the intended side effect of slowing the number of bank failures. If I was still playing that game, however, I think I'd be placing a bet on seeing the Sterling Savings Bank on the FDIC's EATED list in the near future. Here is NWCN.com with the details:

Sterling Savings Bank laid off scores of employees around the Northwest this week.
The Spokane-based bank gave pink slips to 160 employees. Bank leaders said that is six percent of their workforce.

“Given the challenging interest rate environment and the uncertain economic outlook, Sterling must position itself for continued success, including lowering its operating expenses,” CEO of Sterling Financial Corporation Greg Seibly said. “Sterling has fewer assets today than it did just a few years ago and, although this has been a difficult decision, the bank needs to appropriately reflect that reality.”

The layoffs started on Wednesday and spanned across five states.

Managers cut positions at all levels to lower operating costs.

"The bank needs to appropriately reflect...reality." Hmmm...maybe someone should tell that to Bank of America, Wells Fargo, Citigroup and all of the other "Too Big To Fail" parasites.


Bonus: When people can't earn interest on their money, they have no incentive to save it for later

Ha-Ha! Struggling Bank of America May Liquidate All of Its Real Estate Holdings

Here's a story to warm the hearts of anyone who despises America's big banks for all of the damage they have wrought upon our economy. The Atlantic Wire has the details:

A week after news broke that Bank of America Plaza in Atlanta was facing foreclosure, the financial giant is thinking about selling almost all of its real estate. "We are currently reviewing all of our properties across our portfolio, with the exception of Bank of America Corporate Center in Charlotte and Bank of America Tower at One Bryant Park," a spokeswoman told Bloomberg on Friday. It's all a part of chief executive Brian Moynihan's process of "reevaluating the bank’s real estate needs as he eliminates at least 30,000 positions and seeks to trim as much as $8 billion in annual expenses."

Turns out it's pretty expensive to rip off your customers, help cause a recession and then have to pay America back through SEC settlements.

I couldn't have said it better myself.


Bonus: Dedicated to Bank of America

Newly Released Transcripts Reveal the Federal Reserve's Incompetence

More than four years into the start of The Long Emergency, one astonishing aspect of the crisis is that so many people still retain their faith in the system and that their so-called "leaders" are wise and all knowing and will do the right thing and see us through to a glorious economic recovery. Even though there are overwhelming indicators that the government and banking officials charged with running the economy are incompetent dolts whose groupthink is so pervasive that they are unable to see what is right in front of their eyes, most people still believe and put their trust in them. I guess in a way we should be thankful for that, because an overwhelming loss of that faith would no doubt cause a nearly instantaneous economic collapse.

Up until now, however, those few of us who actually understand what has been going on have only been able to speculate about the incompetence of our economic stewards, particularly at the Federal Reserve. What we lacked was hard evidence of just how the disastrous decisions leading up to the crisis were being made. Thanks to a New York Times story printed on Thursday, however, the true story of the Fed's utter cluelessness is now out there for all to read:

As the housing bubble entered its waning hours in 2006, top Federal Reserve officials marveled at the desperate antics of home builders seeking to lure buyers.
The officials laughed about the cars that builders were offering as signing bonuses, and about efforts to make empty homes look occupied. They joked about one builder who said that inventory was “rising through the roof.”

But the officials, meeting every six weeks to discuss the health of the nation’s economy, gave little credence to the possibility that the faltering housing market would weigh on the broader economy, according to transcripts that the Fed released Thursday. Instead they continued to tell one another throughout 2006 that the greatest danger was inflation — the possibility that the economy would grow too fast.

“We think the fundamentals of the expansion going forward still look good,” Timothy F. Geithner, then president of the Federal Reserve Bank of New York, told his colleagues when they gathered in Washington in December 2006.

Some officials, including Susan Bies, a Fed governor, suggested that a housing downturn actually could bolster the economy by redirecting money to other kinds of investments.

And there was general acclaim for Alan Greenspan, who stepped down as chairman at the beginning of the year, for presiding over one of the longest economic expansions in the nation’s history. Mr. Geithner suggested that Mr. Greenspan’s greatness still was not fully appreciated, an opinion now held by a much smaller number of people.

Meanwhile, by the end of 2006, the economy already was shrinking by at least one important measure, total income. And by the end of the next year, the Fed had started its desperate struggle to prevent the collapse of the financial system and to avert the onset of what could have been the nation’s first full-fledged depression in about 70 years.

The transcripts of the 2006 meetings, released after a standard five-year delay, clearly show some of the nation’s pre-eminent economic minds did not fully understand the basic mechanics of the economy that they were charged with shepherding. The problem was not a lack of information; it was a lack of comprehension, born in part of their deep confidence in economic forecasting models that turned out to be broken.

“It’s embarrassing for the Fed,” said Justin Wolfers, an economics professor at the University of Pennsylvania. “You see an awareness that the housing market is starting to crumble, and you see a lack of awareness of the connection between the housing market and financial markets.”

“It’s also embarrassing for economics,” he continued. “My strong guess is that if we had a transcript of any other economist, there would be at least as much fodder.”

The whole article is quite lengthy and worth reading in its entirety. What's truly amazing is how the mantra was repeated after the 2008 market crash that "nobody could have predicted" that the housing market would be a catalyst for tanking the entire economy. Which was complete and utter bullshit. There were plenty of voices predicting what would happen, they just weren't allowed to be heard in those Federal Reserve meetings.

Even more amazing is how none of these people who completely blew the most important call of their professional lives have suffered any negative career consequences as a result. Geithner, who comes off as particularly clueless in this article, was of course subsequently installed by President Hopey-Changey as his Treasury Secretary. That's how it works in America these days. "Accountability" is only a word that applies to the little people. The movers and shakers have nothing to fear in that regard, no matter how badly they fuck up.

So today, these same feckless SOBs are still running the economy, and the vast majority of the population still retain their faith in them. But you have to wonder how much longer that can possibly remain the case.


Bonus: So when did Alicia Silverstone join the Federal Reserve?

PNC Bank Buys Out RBC, Lays Off 600 in North Carolina

image: Tarrytown Mall in Rocky Mount, North Carolina

More games that banksters play are about to cost the Tar Heel State a large number of layoffs, particularly in the city of Rocky Mount. Here is WRAL.com with the details:

More than 600 RBC Bank employees in North Carolina will lose their jobs following the bank's takeover by PNC Financial Services Group, according to a notice filed Friday with the state Department of Commerce.

PNC said in the notice that 425 jobs in Rocky Mount and 196 in Raleigh would be eliminated once its $3.45 billion acquisition of Raleigh-based RBC is complete in March. The layoffs will begin March 16.

Pretty routine stuff, except that the article also goes on at length about the recent economic devastation wrought upon Rocky Mount:

The layoffs are the latest economic blow to Rocky Mount, which has the highest unemployment rate of any North Carolina metro area, at 12.7 percent in November.

Once dubbed the City on the Rise, many residents now refer to Rocky Mount as "the City on the Decline."

"I have a lot of friends who have lost their jobs," resident Tammy Turner said.

Some local leaders expressed concern that the situation could get worse before it gets better.

Sears recently announced it would close its Rocky Mount store by summer, and Old Navy will close as well. Torpedo Specialty Wire laid off 17 employees this week, almost one-third of its local workforce.

City Councilman Andre Knight said he has heard that the U.S. Postal Service plans to move a distribution operation from Rocky Mount to Raleigh.

"It's pretty devastating on our community," Knight said of the business closings.

Standing in front of a defunct textile mill, he points to former cotton and tobacco operations nearby. "It's like big dinosaurs that are left here – empty buildings," he said.

This is what a slow motion economic collapse looks like. Rocky Mount is now well into a downward spiral that, thanks to peak oil and the end of real economic growth, is not going stop. The only question is how quickly the descent is going to be.

The Money Tree is Out of Money, Declares Bankruptcy

As reported this past week by the Atlanta Journal Constitution, the Money Tree is declaring bankruptcy, shutting down half of its locations and presumably throwing all of the workers at those locations onto the unemployment line. Just in time for Christmas.

The Money Tree Inc., a Georgia-based provider of small consumer loans, and several of its subsidiaries have filed for bankruptcy protection, citing the economy and customers’ inability to repay loans.

The Bainbridge-based lender, which filed for Chapter 11 protection in Alabama on Friday, said it would restructure its business and close half of its 92 locations across the Southeast.

The company has 28 locations in Georgia, including branches in Buford, Conyers and Forest Park, according to its website.

The Money Tree was founded in 1987 and expanded into Alabama, Florida and Louisiana in the 1990s. Hurricane Katrina and the economic downturn that began in 2007 were significant setbacks for the lender, the company said in its bankruptcy filings.

You'd think it would be pretty hard to spin this announcement positively, but damn if Money Tree's president didn't try:

Bradley Bellville, the company’s president, said in a news release that the filing was made with “great regret.”

“However, this filing allows The Money Tree to enhance its short-term liquidity while we confront this historically difficult environment for our business,” he said.

Bellville did not immediately return a call requesting comment.

I'll bet he didn't. And a big "bah, humbug" to you too, sir.


Bonus: Here is a completely inappropriate song dedication to Money Tree President Bradley Bellville

Citigroup Cutting 4,500 Jobs

I would enjoy this headline more if I knew it was the fat cats losing their jobs rather than the workerbees. Unfortunately, you know darn well it never works out that way.

Citigroup, the third-largest U.S. bank by assets, said it will trim 4,500 jobs and take a $400 million fourth-quarter charge related to the lay-offs. New York-based Citigroup had about 267,000 employees at the end of the third quarter.

Financial firms worldwide have cut more than 200,000 jobs this year, up from about 58,000 last year and 174,000 in 2009, according to data compiled by Bloomberg.

Amid slack trading and investment banking revenue, Citi along with many of its rivals, is looking to lower expenses, but the 4,500 layoffs are well above the 3,000 previously thought Citi would engage in.

But, but, but...I thought recovery was just around the corner. how can that be if even the big banks are laying people off? Apparently, Citigroup and all of the rest of them think they can get away with saying: who you gonna believe, me or your lying eyes?


Bonus: What the heck, I haven't heard this song in awhile