Last-Minute Credit Card Tricks

Published: October 16, 2009

The Credit Card Accountability, Responsibility and Disclosure Act, signed into law in May, gave credit card companies a leisurely timetable — as long as 15 months — to phase out predatory practices used to bleed consumers. Not surprisingly, the companies have exploited this generosity by driving already outrageous interest rates still higher and imposing fees that are pushing struggling families further into debt.

Congress can end this injustice by moving up the deadline, accelerating reform and helping consumers.

Some of the worst (and most common) abuses are now scheduled to be outlawed in February. These include the practice of arbitrarily raising interest rates, penalizing customers when they are late paying a bill unrelated to the credit card — so-called universal default — and charging customers interest on debt that they paid off a month or more earlier.

The banks claimed that they needed the long lead time to rework their computer processing system. Consumer advocates warned that this would invite banks and credit card companies to wring as much as possible out of consumers before the law finally took effect.

They were right.

A forthcoming study from the Pew Charitable Trusts’ Safe Credit Cards Project shows that credit card interests rates — already too high — rose by 20 percent in the first two quarters of this year, even though the cost of lending went down as a result of low federal interest rates. In testimony before Congress earlier this month, one consumer advocate cited case after case of struggling consumers who had seen their credit card rates more than double for no apparent reason, even when they had faithfully paid on time.

A House bill introduced by Representative Carolyn Maloney, a Democrat of New York, and Representative Barney Frank, a Democrat of Massachusetts, would halt this exploitation by making the act effective on Dec. 1. The Senate needs to take the same approach.

Secret Banking Cabal Emerges From AIG Shadows:

Commentary by David Reilly

Jan. 29 (Bloomberg) -- The idea of secret banking cabals that control the country and global economy are a given among conspiracy theorists who stockpile ammo, bottled water and peanut butter. After this week’s congressional hearing into the bailout of American International Group Inc., you have to wonder if those folks are crazy after all.

Wednesday’s hearing described a secretive group deploying billions of dollars to favored banks, operating with little oversight by the public or elected officials.

We’re talking about the Federal Reserve Bank of New York, whose role as the most influential part of the federal-reserve system -- apart from the matter of AIG’s bailout -- deserves further congressional scrutiny.

The New York Fed is in the hot seat for its decision in November 2008 to buy out, for about $30 billion, insurance contracts AIG sold on toxic debt securities to banks, including Goldman Sachs Group Inc., Merrill Lynch & Co., Societe Generale and Deutsche Bank AG, among others. That decision, critics say, amounted to a back-door bailout for the banks, which received 100 cents on the dollar for contracts that would have been worth far less had AIG been allowed to fail.

That move came a few weeks after the Federal Reserve and Treasury Department propped up AIG in the wake of Lehman Brothers Holdings Inc.’s own mid-September bankruptcy filing.

Saving the System

Treasury Secretary Timothy Geithner was head of the New York Fed at the time of the AIG moves. He maintained during Wednesday’s hearing that the New York bank had to buy the insurance contracts, known as credit default swaps, to keep AIG from failing, which would have threatened the financial system.

The hearing before the House Committee on Oversight and Government Reform also focused on what many in Congress believe was the New York Fed’s subsequent attempt to cover up buyout details and who benefited.

By pursuing this line of inquiry, the hearing revealed some of the inner workings of the New York Fed and the outsized role it plays in banking. This insight is especially valuable given that the New York Fed is a quasi-governmental institution that isn’t subject to citizen intrusions such as freedom of information requests, unlike the Federal Reserve.

This impenetrability comes in handy since the bank is the preferred vehicle for many of the Fed’s bailout programs. It’s as though the New York Fed was a black-ops outfit for the nation’s central bank.

Geithner’s Bosses

The New York Fed is one of 12 Federal Reserve Banks that operate under the supervision of the Federal Reserve’s board of governors, chaired by Ben Bernanke. Member-bank presidents are appointed by nine-member boards, who themselves are appointed largely by other bankers.

As Representative Marcy Kaptur told Geithner at the hearing: “A lot of people think that the president of the New York Fed works for the U.S. government. But in fact you work for the private banks that elected you.”

And yet the New York Fed played an integral role in the government’s bailout of banks, often receiving surprisingly free rein to act as it saw fit.

Consider AIG. Let’s take Geithner at his word that a failure to resolve the insurer’s default swaps would have led to financial Armageddon. Given the stakes, you might think Geithner would have coordinated actions with then-Treasury Secretary Henry Paulson. Yet Paulson testified that he wasn’t in the loop.

“I had no involvement at all, in the payment to the counterparties, no involvement whatsoever,” Paulson said.

Bernanke’s Denials

Fed Chairman Bernanke also wasn’t involved. In a written response to questions from Representative Darrell Issa, Bernanke said he “was not directly involved in the negotiations” with AIG’s counterparty banks.

You have to wonder then who really was in charge of our nation’s financial future if AIG posed as grave a threat as Geithner claimed.

Questions about the New York Fed’s accountability grew after Geithner on Nov. 24, 2008, was named by then-President- elect Barack Obama to be Treasury Secretary. Geither said he recused himself from the bank’s day-to-day activities, even though he never actually signed a formal letter of recusal.

That left issues related to disclosures about the deal in the hands of the bank’s lawyers and staff, rather than a top executive. Those staffers didn’t want details of the swaps purchase to become public.

New York Fed staff and outside lawyers from Davis Polk & Wardell edited AIG communications to investors and intervened with the Securities and Exchange Commission to shield details about the buyout transactions, according to a report by Issa.

That the New York Fed, a quasi-governmental body, was able to push around the SEC, an executive-branch agency, deserves a congressional hearing all by itself.

Later, when it became clear information would be disclosed, New York Fed legal group staffer James Bergin e-mailed colleagues saying: “I have to think this train is probably going to leave the station soon and we need to focus our efforts on explaining the story as best we can. There were too many people involved in the deals -- too many counterparties, too many lawyers and advisors, too many people from AIG -- to keep a determined Congress from the information.”

Think of the enormity of that statement. A staffer at a body with little public accountability and that exists to serve bankers is lamenting the inability to keep Congress in the dark.

This belies the culture of secrecy obviously pervasive within the New York Fed. Committee Chairman Edolphus Towns noted during the hearing that the bank initially refused to disclose even the names of other banks that benefited from its actions, arguing this information would somehow harm AIG.

‘Penchant for Secrecy’

“In fact, when the information was finally released, under pressure from Congress, nothing happened,” Towns said. “It had absolutely no effect on AIG’s business or financial condition. But it did have an effect on the credibility of the Federal Reserve, and it called into question the Fed’s penchant for secrecy.”

Now, I’m not saying Congress should be meddling in interest-rate decisions, or micro-managing bank regulation. Nor do I think we should all don tin-foil hats and start ranting about the Trilateral Commission.

Yet when unelected and unaccountable agencies pick banking winners while trying to end-run Congress, even as taxpayers are forced to lend, spend and guarantee about $8 trillion to prop up the financial system, our collective blood should boil.

An Investigator Presses to Uncover Bailout Abuse

January 26, 2010

By MARY WILLIAMS WALSH

Neil M. Barofsky is not a household name like some special investigators of the past — Kenneth Starr during the Clinton administration or Archibald Cox in the Watergate years.

But increasingly, Mr. Barofsky is setting off fireworks on Capitol Hill as he quietly and methodically pieces together the most complete historical record yet of the financial bailout. His reports are careful but not cautious, showing a willingness to stand up to some of the most powerful people and institutions in Washington or on Wall Street.

“Neil is not afraid to just follow things where they lead,” said Anthony S. Barkow, a friend and fellow former prosecutor in the United States attorney’s office for the Southern District of New York. “He is undeterred by having powerful people angry at him for doing what he does.”

So far, Mr. Barofsky has accused the former Treasury secretary, Henry M. Paulson Jr., of misleading the public about the health of the nation’s biggest banks during the crisis of 2008. He has been investigating the taxpayer-subsidized shotgun wedding of Merrill Lynch to Bank of America. He has named a group of bonus recipients at the American International Group who promised to return $45 million to their government-owned employer last year, then coughed up less than half of it.

On Wednesday, Mr. Barofsky will be one of several top officials to answer questions before a Congressional panel on how the government handled the bailout of A.I.G. Mr. Barofsky will cite contradictions in the Treasury’s public statements about the bailout, according to an excerpt from his written testimony obtained by The New York Times.

The Treasury issued a statement this month that “taxpayers will be made whole” on certain investments in A.I.G., but its own analysis has estimated that the Treasury will lose $30 billion on the same investments, according to the prepared testimony.

Mr. Barofsky will also announce that he has opened an investigation into possible misconduct in the New York Fed’s efforts to limit A.I.G.’s disclosures about the bailout in filings with the Securities and Exchange Commission.

If there turns out to be a crime in any aspect of the bailout, Mr. Barofsky is not the one who will lay it out before a jury — he does not have the mandate.

“He’s more like the F.B.I. than the Department of Justice,” said Mr. Barkow, the former prosecutor. “He can’t control when his cases are going to be brought.”

Officially, he is not categorized as a special prosecutor; his job is a narrower one, auditing the disbursement of money under the Troubled Asset Relief Program. He goes by the ungainly title of special inspector general for the TARP, or Sigtarp.

But in an interview in his new quarters in Washington — a building on L Street, a vast improvement over the mildewed Treasury basement where he started out — Mr. Barofsky likened his job to “building a case for a trial.”

“You want to pursue every lead, every bit of evidence, everything to persuade the jury,” he said.

In this case the jury is the public, who suspect they have poured trillions of dollars down a black hole.

“Taxpayers really want to know,” Mr. Barofsky said. “I think too often in Washington, people underestimate how interested the public is.”

There are, in fact, several other panels charged with reviewing and monitoring the bailout. But Mr. Barofsky is the only one backed by federal agents who carry guns and badges and, if necessary, can break the locks off file cabinets.

Those added powers, and an attitude honed during eight years of fighting white-collar criminals and Colombian drug lords as an assistant United States attorney — he still has the knife from a foiled attempt on his life in a field outside Bogota — are propelling Mr. Barofsky over barriers that have slowed the others.

Not long after his nomination was confirmed at the end of 2008, he beat back an effort by the Treasury to have his office put under supervision of the secretary.

He also forced the Treasury to let him obtain a statement, under oath, from every recipient bank about how it used the taxpayers’ money.

“We were told we were playing politics,” he said of that battle over several months with the Treasury, which said the recipients should be required to disclose only their lending activity. “That it was a meaningless exercise. At least three times, we were told we should consider it closed.”

Mr. Barofsky’s report on the uses of government money found that some institutions had applied it to projects that directly contradicted the Congressional intent for the program.

The public seems pleased that someone is standing up to the banks and the officials who bailed them out. A Web site that Mr. Barofsky set up for tips has received about 30 million hits, he said. And Congress expanded his powers last year.

He made his most recent waves in November, when he issued the results of an eight-month audit of how tens of billions of dollars, sent by the government to a teetering A.I.G., wound up at a group of big banks in the United States and Europe.

The audit was requested by Representative Elijah Cummings, a Democrat of Maryland, who rounded up 26 other Democrats to sign his letter in March 2009. But by the time it was finished, it was pounced on by a no-holds-barred Republican, Darrell Issa of California, who called it “extremely useful in laying the foundation for our investigation.”

The report describes how the Federal Reserve Bank of New York sealed its own fate in September 2008, when it tried unsuccessfully to put together a private bank loan for A.I.G., then in the throes of a terrifying worldwide run on the bank.

“This is the moment when the greatest amount of leverage to negotiate exists,” said Mr. Barofsky.

But instead of negotiating from a position of strength, the New York Fed poured $85 billion of its own money into A.I.G., on hard-nosed terms that Goldman Sachs and JPMorgan Chase had planned to charge before they got cold feet. Much of the Fed’s money was gone within minutes — and so was the Fed’s leverage, or any real chance of getting the money back.

“I don’t want to play Monday morning quarterback, but there are other things that could have happened,” Mr. Barofsky said. He said the Fed could have achieved better results if it had behaved more like a regulator and less like a creditor.

Mr. Issa, the ranking Republican on the House Oversight Committee, recently asked to see the original documents that Mr. Barofsky had collected while conducting that audit. Mr. Barofsky politely declined, saying that to gain the Fed’s cooperation, he had promised not to give out its documents without its permission.

Left empty-handed, Mr. Issa suddenly found himself on rare common ground with the Oversight Committee’s Democratic chairman, Edolphus Towns of New York. Mr. Towns took Mr. Issa’s cue and subpoenaed the Fed documents, and also called the Wednesday hearing, where the Treasury secretary, Timothy Geithner, will answer questions, as will Mr. Barofsky, among others. Mr. Paulson may also appear but has not confirmed.

Congressional staff members have been circulating e-mail messages showing close interactions between A.I.G. and the New York Fed in deciding how much information should be made public.

Mr. Barofsky said that as a lifelong Democrat, he was caught off-guard by his selection by President George W. Bush. He was three years into a complicated criminal case, and moving to Washington would disrupt his plans for a January wedding and honeymoon in Costa Rica.

His boss, the United States attorney, persuaded him with what he called “the God-and-country speech,” Mr. Barofsky said. The honeymoon was postponed until May.

When he arrived in Washington, he said he was shocked to find how much money was flying out the door, with so few controls.

In one conference call, he said, he asked what safeguards would be built into a new program to help investors buy banks’ impaired assets.

“They said, ‘Rating agencies and investor due diligence,’ and my jaw just dropped,” he said. “They said, ‘Yes, the ratings agencies will not be embarrassed again.’ I can’t tell you how often I heard the phrase, ‘reputational risk.’ ‘Oh, the banks wouldn’t do that.’ This is trying to shame the shameless.”

The Fed and Treasury have grown more receptive to his ideas, he said. And his office has also grown. It now has a branch in New York, and there are plans for two more in California.

“We’re following the TARP crimes,” he said.

The Biggest Financial Deception of the Decade

Jeff Clark,
Editor, Casey's Gold & Resource Report
Jan 7, 2010

Enron? Bear Stearns? Bernie Madoff? They're all big stories about big losses and have hurt a lot of employees and investors. But none come close to getting my vote for the decade's most dastardly deception...

First came Enron, with $65.5 billion in assets, going belly-up and becoming the largest bankruptcy in U.S. history at that time. Chairman Kenneth Lay said that Enron's decision to file bankruptcy would "stabilize the company," but over the next five years the company was completely liquidated. The stock went from a high of $84.63 in December 2000 to a whopping 26¢ one year later.

And what had we been told by the media? Fortune magazine dubbed Enron "America's Most Innovative Company" for six consecutive years. A well-intentioned friend wanted to give me a gift subscription to the magazine for Christmas; I choked on my cocktail and luckily he assumed my drink was too strong. In the end, you can thank Enron for bringing us the Sarbanes-Oxley Act of 2002, a ghastly financial reporting regulation for which compliance is grossly expensive, and - stop the presses! - hasn't prevented similar repeats.

Next came WorldCom filing for bankruptcy in 2002, their assets of $103.9 billion dwarfing Enron's. "We will use this time under reorganization to regain our financial health and focus, while operating with the highest integrity," assured CEO John Sidgmore. Was his eggnog spiked? Today, WorldCom stock certificates have been spotted as doilies under pancake house coffee mugs signifying it's decaf.

Tyco, Adelphia, Peregrine Systems it's a crowded field around this time. But their stories of fraud and greed and mismanagement get boring after awhile. Just watch the closing credits from the movie Fun with Dick and Jane and you'll see what I mean.

Bear Stearns set us all up for the Big Meltdown of 2008. It was B.S. (no, I mean Bear Stearns) that pioneered the asset-backed securities markets, and we all know how that turned out. Later we learned that as losses mounted in 2006 and 2007, the company was actually adding to its exposure of mortgage-backed assets, gearing itself up to 35:1. With net equity of $11.1 billion supporting $395 billion in assets, B.S. carried more leverage than a streetwalker's push-up bra.

And during it all, Bear Stearns was recognized as the "Most Admired" securities firm in a survey by Fortune magazine (there's that Lower Manhattan tabloid darling again). Frequent sightings of company executives on country club fairways assured the public that all was well. And CEO Alan Schwartz told us there was "no liquidity crisis for the firm" and insisted he "had the numbers to back it up." His company was sold four days later to JPMorgan Chase at $10 per share, a 92% loss from its $133.20 high. Perhaps his numbers were prepared by ex-Arthur Andersen employees.

Lehman Brothers, the 158-year-old investment bank, was next and still today holds the title as the largest bankruptcy in U.S. history. L.B. succumbed to 2007's Word of the Year, "subprime," and its $600 billion in assets all went poof! In just the first half of 2008, before the meltdown, Lehman's stock slid 73%.

And what did CEO Dick Fuld tell us in April of that year? "I will hurt the shorts, and that is my goal." He must have been referring to the attire of his tennis club buddies, because the ones who actually got hurt were numerous other banks, money market funds, institutions, hedge funds, REITs, brokers, private and public trusts, foundations, government agencies, foreign governments, employees, and investors.

Moving on to the largest U.S. government bailout recipient by far, AIG's troubles spawned my favorite placard of the decade: seen outside their Manhattan offices stood a sign that simply read, "Jump!" Maybe its creator heard what I did from AIG's financial products head Joseph Cassano: "It is hard for us, without being flippant, to even see a scenario within any kind of realm of reason that would see us losing one dollar in any of these [credit default swap] transactions."

He must have substituted his prescription eyewear with those giant New Year's Eve glasses, because the government sunk $180 billion into the company and it still had to be split up and the assets sold to the highest bidder. I'm sure that his non-flippant comment had nothing to do with him making CNN's "Ten Most Wanted Culprits" list in 2008.

GM, with $91 billion in assets, filed for bankruptcy in the summer of 2009 and is now largely owned by the U.S. and Canadian governments (i.e., taxpayers). The $19.4 billion in federal help wasn't enough to keep the nation's largest automaker out of bankruptcy. But don't despair: the government is pouring another $30 billion into GM to fund "reorganization operations."

GM shares? Bye-bye. For 83 years GM had been a member of the prestigious 30 Dow Industrial stocks. It managed to survive the Great Depression but not this decade's Greater Depression. Yet chairman Ed Whitacre had insisted, "I remain more convinced than ever that our company is on the right path and that we will continue to be a leader in offering the worldwide buying public the highest quality, highest value cars and trucks." I wonder what he thinks now that the stock is named "Motors Liquidation," trades only on the pink sheets, and sells for about 50¢?

Topping off our list is the infamous Bernie Made-off (er, Madoff), who scammed $65 billion over 20 years from unsuspecting institutions and wealthy investors. But don't be too upset, because the number is probably half that amount. Hey, the alleged size of the losses comes from his own ledger book, and should we really trust his balance sheet? Dubbed the largest Ponzi scheme ever, I beg to disagree, as you're about to see...

By now you are probably wondering... what's bigger than all these? He's covered the major frauds and scams of the past decade - what could possibly be left?

To quote my favorite sleuth, Hercule Poirot, "When all the facts are laid before me, the solution becomes inevitable."

Here are a few clues

Federal Reserve Chairman Ben Bernanke said on July 16, 2008, that Fannie Mae and Freddie Mac are "adequately capitalized" and "in no danger of failing." Then-Secretary Treasurer Henry Paulson declared on August 10, 2008, "We have no plans to insert money into either of those two institutions."

• Both Fannie and Freddie were nationalized 28 days later, on September 8, 2008.
  
  Ben Bernanke claimed on February 28, 2008, "Among the largest banks, the capital ratios remain good and I don't expect any serious problems of that sort among the large, internationally active banks..." Henry Paulson added on July 20, 2008, that "It's a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable situation."
  .
• Since the recession started in December, 2008, 144 banks have failed.
  
  Paulson informed us on April 20, 2007, that "All the signs I look at show the housing market is at or near the bottom."
  .
• The number of foreclosures skyrocketed shortly thereafter and will now any day surpass those during the Great Depression.
  
  Ben Bernanke announced on June 20, 2007, that "[The sub prime fallout] will not affect the economy overall."
  .
• Less than one year later, the stock market crashed, losing 53% of its value, and is still down 25% despite one of the biggest bounces in history.
  
  Those in charge of our country's finances not only failed to see the crises developing and then bungled the handling of the recovery, they've deliberately misled us about what they're doing to our currency. In spite of emphatic promises, flowery speeches, pat-on-the-back assurances, and continual reassurances, here's what they've actually done to the dollar:
  .
  • Since September 1, 2008, the monetary base has ballooned from $908 billion to $2.0 trillion. The current monetary base is now equal to bailing out General Motors 23 times.
    .
  • Bailout funds in 2008 and 2009 total $8.1 trillion. That's almost 78 WorldComs. It's over 123 Enrons.
    .
  • U.S. debt has risen sharply, from $6.2 trillion in 2002 to $12.1 trillion today. That's over $39,000 per citizen.
    .
  • David Walker, the comptroller general of the Government Accountability Office from 1998-2008, warned that the U.S. is on the hook for $60 trillion in unfunded liabilities. Independent analysts peg the figure at near twice that. Whatever the number, it is incomprehensibly large. The only way we will meet these liabilities is to print the money and inflate them away.

We're bailing out corporations that should fail, making financial promises we can't keep, and adding layers of debt we can't possibly repay. And the real killer is, if we don't have the cash, we just print it. It is, by any reasonable account, the "blunder that will plunder" the next several generations. It is changing America permanently, and the problems will persist long after you and I are laid to rest.

Bottom line: after all the bailout programs, housing initiatives, rescue efforts, stimulus schemes, bank takeovers, wars, unemployment benefit extensions, and numerous other promises, the biggest financial deception of the decade is what the U.S. government is doing to the dollar. Nothing else even comes close.

This reckless activity has spooked our foreign creditors, weakened our global standing, diluted our currency, is punishing savers and retirees, and ultimately sets us up for a level of inflation this country has never seen before.

Yet, what is the guardian of our economy and money telling us now?

"Will the Federal Reserve's actions to combat the crisis lead to higher inflation down the road? The answer is no; the Federal Reserve is committed to keeping inflation low and will be able to do so. In the near term, elevated unemployment and stable inflation expectations should keep inflation subdued, and indeed, inflation could move lower from here." (Ben Bernanke, December 7, 2009).

This is pure rubbish. If inflation could be controlled by just thinking stable inflation thoughts, then Ben should be able to grow a full head of hair by just thinking scalp follicle thoughts. This is so ridiculous, it's insulting.

Government actions make a mockery of their words; what they say and what they do are diametrically opposed. It's clear that inflation is not a question of if, but when.

Any level-headed individual has to conclude that there will be a steady - and likely accelerating - decline in the dollar's purchasing power. It's inevitable.

The great masses don't quite understand it yet, but they will. There will be no escape from the cold, hard slap in the face citizens will receive when a high level of inflation arrives. And when it does, it will make a mockery of any opposing viewpoint.

So the question before you is simple: Will you be a prepared survivor for what lies ahead, despite what our government leaders tell us, or will you be a complacent victim of the biggest financial deception of the decade?

For me, there's only one solution. Don't kid yourself into thinking a man-made asset will protect your purchasing power. This is the time to be overweight gold and silver. I advise letting them serve their purpose for you.

Learn the best ways to buy and hold gold and silver, and the stocks that will help you outpace the inflation that's right around the corner. Give Casey's Gold and Resource Report a risk-free try and learn how to escape with your assets intact. For $39 a year, it's a no-brainer. Click here for more.

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Jan 6, 2010
Casey Archives

GA Increases Fines

By Ariel Hart

The Atlanta Journal-Constitution

9:26 a.m. Monday, December 28, 2009

To those who feel the need to speed: Be warned. For the fastest of fast drivers, it’s about to get really expensive.

Going 85 miles per hour or more on most Georgia roads -- including interstates -- will cost a speeder an additional $200, when a new "super-speeder" law takes effect on Friday. On two-lane roads, meaning one lane each way, the extra fine kicks in at 75 mph.

That’s on top of whatever ticket the speeder gets for going over the speed limit.

“It’s a lifesaving law,” said Bob Dallas, director of the Governor’s Office of Highway Safety, noting that speeding makes death or severe injury much more likely when an accident happens.

The original speeding ticket may not tell the offender about the additional state fine, Dallas said. First, the driver will get the local ticket as usual. Then, the state will send a letter notifying the speeder of the $200 fine, which must be paid within 90 days of the letter's date.

“The goal here is to prevent the worst of the worst speeding in the state of Georgia,” Dallas said. “At some point we just have to put an end to the super-speeders and using our roadways as a racetrack. And this is what this law is designed to do.”

Drivers who don’t pay will have their licenses suspended.

The original ticket is no joke either. Local fines -- which range depending on where tickets are issued and the driver's speed -- are commonly well over $100.

In McIntosh County on Georgia's coast, going 34 mph over the speed limit will cost you $1,355, according to the county court clerk’s office. That’s before the new state fine.

At least one local official, Sheriff J. Tyson Stephens of Emanuel County, has called the $200 state fine little more than a tax that will impose an out-of-kilter burden on the working poor.

Dallas said he knew of no other state with a similar law, though some states had tried variations, such as higher fines on problem roads.

The law intended money collected from the fines to fund trauma services, but where it's actually spent will be up to the state Legislature.

RockBridge Commercial Bank closed by regulators

By Péralte C. Paul

The Atlanta Journal-Constitution

7:35 p.m. Friday, December 18, 2009

State regulators shut down RockBridge Commercial Bank Friday, three years after it was founded with a record amount of capital for a start-up bank in Georgia.

RockBridge becomes the 25th lending institution in the state to close its doors in the wake of the financial crisis.

But unlike many other shuttered banks, RockBridge is not being acquired. The Federal Deposit Insurance Corporation, which was appointed receiver and tried to find another institution to take over RockBridge's operations, could not.

"The FDIC was unable to find another financial institution to take over the banking operations of RockBridge Commercial Bank," the FDIC said in a statement.

The agency said checks will be mailed Monday to retail depositors for their insured funds.

RockBridge reported having $294 million in total assets and $291.7 million in deposits at the end of September.

Customers with brokered deposits will have those funds wired back to their brokers when they give the FDIC the needed paperwork to show the accounts don't exceed insurance limits.

Kathryn L. Knudson, an attorney at Bryan Cave, the law firm representing RockBridge, declined comment Friday but provided a portion of a statement that RockBridge's board of directors sent to its shareholders:

"It has not been a secret that all banks in our area have been affected by what is generally described as the worst economic downturn since in America since the Great Depression," the statement said. "When economic growth in Atlanta abruptly stopped and became a contracting environment, too many of our customers found themselves unable to meet the interes and prinicpal obligations on their loans and alternative sources of collateral proved insufficient to make up the shortfall. . . .

"Ultimately, these losses used up so much of our capital, that we fell below regulatory threshholds and were no longer permitted by regulators to operate independently."

The bank opened in Sandy Springs after raising $36 million -- a then-record for a Georgia start-up bank -- from investors including some of metro Atlanta's top business leaders, including Home Depot co-founder Bernie Marcus and Charles Ackerman, founder of commercial real estate firm Ackerman & Co.

As the economy soured, so did RockBridge's portfolio, which, like many troubled institutions, was heavily tied to real estate development.

As it sought regulatory approval and wooed investors, RockBridge officials had said they planned to focus on lending to small and medium sized companies. But the bank focused real estate-related lending, which was booming at the time.

Real estate loans account for 72 percent of RockBridge's $211.7 million portfolio, regulatory filings show, compared with 20 percent in commercial loans to businesses.

More than one-third of RockBridge's real estate loans are in the deepest stages of delinquency.

In an earlier interview with The Atlanta Journal-Constitution, RockBridge's former chief financial officer, Rollo Ingram, said he warned top management they were taking on too much risk by concentrating on on real estate.

"I commented to the board on a number of occasions of the danger," Ingram said in that interview, "but nobody seemed to listen."

Find this article at:

http://www.ajc.com/business/rockbridge-commercial-bank-closed-246571.html

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Food Stamps Go to a Record 37.2 Million, USDA Says

By Alan Bjerga

Dec. 8 (Bloomberg) -- A record 37.2 million people, or about one out of every eight Americans, received food stamps in September, as the recession drove a surging jobless rate, according to a government report.

Recipients of the subsidy for retail-food purchases climbed 18 percent from a year earlier, according to a statement posted today on the U.S. Department of Agriculture’s Web site. Participation has set records for 10 straight months.

The government boosted food aid as unemployment soared, heading to a 26-year high of 10.2 percent in October. The jobless rate cooled to 10 percent last month, the Labor Department said on Dec. 4.

“We’ve been working to get that money out the door” to families that need assistance, Deputy Agriculture Secretary Kathleen Merrigan said last week in an interview.

Nevada had the biggest increase in food-stamp participation rates from a year earlier, surging 54 percent, followed by a 46.5 percent jump in Utah, according to the USDA. Texas had the most recipients at 3.1 million, followed by California with 2.9 million and New York with 2.6 million.

Recipients increased in every state and the District of Columbia, except Louisiana. Because of a sharp rise after Hurricanes Ike and Gustav in 2008, the number of people in Louisiana getting food stamps fell 65 percent in September from a year earlier. Gains of more than 30 percent from 2008 were reported in 18 states.

35 Million Budgeted

About 35 million people are expected to receive food stamps each month through the Supplemental Nutrition Assistance Program in the fiscal year that began Oct. 1, according to the budget that President Barack Obama sent to Congress in May.

“In this economic time, SNAP has been essential,” Merrigan said. The participation rate of state residents who are eligible for food stamps varies widely, the USDA said last month in a report based on 2007 data.

In Missouri, about 100 percent who were eligible that year took advantage of the program, the highest rate in the nation, followed by residents of Maine and Michigan, at 91 percent and 89 percent, respectively, the USDA said. Wyoming’s participation rate of 47 percent was the lowest in fiscal 2007, followed by California and Idaho at 48 percent and 50 percent, according to the study.

Nationwide, participation in the food-stamp program was 66 percent of those eligible for the aid in 2007, the USDA said. The department has budgeted for a rate of 68 percent in the current 2010 fiscal year.

“We know of a lot of people who are SNAP-eligible who are not participating in the program,” Merrigan said. “We are working with states to improve participation.”

To contact the reporter on this story: Alan Bjerga in Washington at abjerga@bloomberg.net.