Posts Tagged 'bailout'

Bank of America pays more bonuses

If you haven’t heard, now that Bank of America has repaid the government for its bailout, its sending plenty of bonuses to its bankers.

The blog 24/7 Wallstreet reports:

Bank of America will also pass out handsome bonuses to its bankers, just a few months after its repaid the government $45 billion in aid that it got to stay in business through the credit crisis. The Wall Street Journal reports that the bonus pool at B of A will be more than $4 billion. Traders will collect an average of $300,000 to $500,000, according to the paper.

The bonuses are a return to 2006 levels, says the New York Times.

So if you’re a Bank of America customer or credit card holder, you’re helping to reward the bankers who played fast and loose with your money.

Member gets her bailout – $500 worth

sherryh500

Congratulations to Sherry H. of Jackson – she’s our “Where’s MY bailout?” cash stimulus winner. Sherry wins $500 for refinancing her 2005 Town & Country van with American 1 back in December.

We thought, with all the stimulus talk, that we would offer members their own bailout package when they refinanced a vehicle with American 1. One lucky member would win $500 cash.

Sherry was that lucky member. Congrats, Sherry!


Credit union bailout? Not so fast.

Two recent articles – one at the Washington Post and another at the Wall Street Journal – leave the impression that credit unions are receiving a bailout from the government, like banks and insurance companies.

But things aren’t always as they seem, and credit unions are not receiving a bailout. In fact, credit unions are doing much better than banks.

The two stories focus on an institution that services credit unions, U.S. Central Corporate Federal Credit Union, an institution that handles financing and transactions for a big group of credit unions. U.S. Central doesn’t service members, like you or your neighbor. It services other credit unions. Think of it as a credit union for credit unions.

But the way the Wall Street Journal and the Washington Post make it sound (with headlines like “U.S. Aid Goes to Credit Unions”), the entire CU industry is in need of a handout. And that’s just not true.

What happened was U.S. Central took a group of credit unions’ money and invested it those mortgage-backed securities we keep hearing about. When those investments went sour, U.S. Central asked for a $1 billion loan (not bailout) from the National Credit Union Administration (NCUA) – the same government agency that insures your deposits at American 1. This isn’t Congress handing money to a financial institution that made bad decisions – as has happened a lot since September. Instead, it’s credit unions stepping in and helping out one of their own institutions.

Does this affect you or your membership at American 1? Not at all. American 1 is doing well financially. In fact, we trust our deposits with the Federal Reserve because of its reliability.

While newspapers seek to build up interest in stories by writing provacative headlines, the WSJ and Post went a bit too far with their misleading headlines.


Chrysler added to ‘Invest in America’ program

Good news – Chrysler is joining GM in the “Invest in America” program that offers Midwestern credit unions discounts on new vehicle purchases. American 1 members can use “Credit Union Member Cash” to purchase a discounted Chrysler or Dodge vehicle, says LoveMyCreditUnion.org:

All eligible current and new credit union members in Michigan, Ohio, Indiana, Illinois, Kentucky, Texas, New Mexico, Oklahoma, Arkansas, Louisiana, Mississippi and Tennessee can receive up to $1,000 in bonus cash incentives, depending on which model you choose. Plus, the Credit Union Member Cash program can be combined with most current incentives to add to your savings!

The discounts extend through June 30, 2009. Since you have to get financed through a local credit union, you can get pre-approved before you head out to shop.

Head to LoveMyCreditUnion.org for more details.

Friday Poll: do you support a Detroit automaker bailout?

News from the New York Times this morning says the chances of a Detroit automaker bailout package are getting slimmer.

Since were here in south-central Michigan are affected by a potential collapse of American automakers, I wonder: do you think the government should use part of the financial bailout package to aid the Big Three?

$250 billion plan revision proposed by President



From Forbes.com, “The Ownership Society”:

In an effort to restore confidence to the ailing financial system, President George W. Bush on Tuesday announced plans to directly inject billions of dollars of capital directly into banks and expand the role of the Federal Deposit Insurance Corporation.

The plan–part of the $700 billion bailout package passed by Congress last week–will allot $250 billion for purchase of preferred shares in banks of all sizes and states of economic health. Nine banks have already agreed to take cash injections: Bank of America, Citigroup, Wells Fargo, JPMorgan Chase, Morgan Stanley, Goldman Sachs, Bank of New York Mellon, State Street and Merrill Lynch (which is being acquired by Bank of America). Treasury officials would not confirm the amounts that each bank will receive.

Thoughts on this revised bailout plan? Do you think it will help? Let us know in the comments.


NCUA increases Federal Insurance Protection for your account



Good news – credit unions were included in Economic Stabilization Act (H.R. 1424), which increases the insurance coverage for your deposited funds, from $100,000 to $250,000, until December 2009.

This means all the money you have at American 1 is covered up to $250,000 should something happen. With the recent bank failures, the idea is to put everyone’s fears at rest.

As the National Credit Union Administration (NCUA) puts it, members of federally-insured credit unions have never lost a penny of their money.

The new $250k cap is true for FDIC-insured banks, too.

If you have any questions about this stuff, be sure to ask someone at our branch offices.


Financial crisis reading material

Last night the Senate approved the “bailout plan,” and it waits for a vote from the House tomorrow (Friday).

In the meantime, here are some articles on the hoopla surrounding the financial crisis. An informed investor is a smarter investor – and even if you don’t do much investing, this stuff is good to know.

  1. As Credit Crisis Spiraled, Alarm Led to Action: from the New York Times, a great timeline of everything that led up to the current situation.
  2. Washington Post Q&A: Readers ask questions about the situation.
  3. Topical Depression: Bernanke Knows What We Have to Fear: Richard Cohen explores how this crisis compares with the Great Depression.
  4. The Only Thing We Have to Fear Is Fear Itself: from Trent over at The Simple Dollar, telling us all to relax.

How ‘big’ is the $700 billion bailout?



Got this e-mail from a co-worker this morning:

A fact, because it’s not a fun fact, I’ll just call it a fact. This morning on the radio I heard that the $700B bale out put in physical terms, would equal approximately 5.5 Empire State Buildings tall of $100 bill bricks ($100,000 in a brick of 2.5” tall bills).

What’s sad is that all those dollar bill bricks are held together by citizens’ repossessed homes, lost businesses, and bankruptcies.

While Washington tries to figure out what the heck to do, we’ll risk repeating ourselves: we’re doing fine.

During his address last night, President Bush said that small-town banks risk failure, but we’re not in any danger. We had an incredible year last year (8,000 new members in fact), and this year we’re growing almost as much. Our July loan rebate will give back thousands of dollars to our members, and our car sale last weekend kept $1 million in the community.

Credit unions are a safe, smooth-sailing way to do your banking. We weather these turbulent times thanks to the strength of our members and our service-minded philosophy. Plus, we’re backed by the full faith and credit of the United States government thanks to the National Credit Union Administration (NCUA), which insures deposits up to $100,000. Think of the NCUA, much like the FDIC for banks, as a strong umbrella in the storm.

American 1 takes our members’ money seriously. We don‘t gamble with sub-prime mortgages, we invest responsibly, and we give back to our community thanks to the support of you and your friends and family.

So for now, we’ll ride this thing out and see what happens at the other end. But this is no time to panic, no matter how many dollar bill bricks it takes to fix the mess.


How are credit unions doing? Hunky dory, thanks.

Someone wrote into the Washington Post:

Q. What is the impact of the government’s financial rescue plan on credit unions?


A. The impact on credit unions seems quite minimal. These nonprofit cooperatives do not hold many of the investments that are poisoning other financial institutions, so they have weathered the crisis fairly well. Credit unions have kept about 70 percent of their mortgage loans on the books, meaning that they did not sell them off to other institutions, according to the Credit Union National Association. The group said that less than 1 percent of credit union mortgages were in delinquency at the end of the first quarter. Delinquencies on other loans have edged up to 1 percent. “If they’ve got their money in a federally insured credit union, they’re just hunky dory,” CUNA spokesman Patrick Keefe said.

Hear that? Hunky dory!



American 1 Federal Credit Union