Advantages And Disadvantages: Cord Blood Banking

Parents to-be face an interesting dilemma of whether or not to do cord blood banking of their unborn child. There are several advantages to storing umbilical blood of the newborn as it has proven to be life-saving in many cases where the child had life-threatening conditions and there is lot of research still going on. So, the decision to save umbilical blood is not difficult to take. The harder decision is whether to store it in a private cord blood bank or public set up. The implications of this decision are not apparent now but will be borne out only years or decades later.

Here in this discussion we will try to lay thread bare the pros and cons of saving your baby’s umbilical blood with public banks and private banks and tackle all the issues surrounding this delicate subject.

Public Cord Blood Banks – The Advantages

1. When you donate the baby’s umbilical blood to the public banks, it is collected and stored for free. No charge to you.

2. This a free service offered by the government and so the blood donated becomes public property and is offered to whoever needs it and at no cost to that person.

3. As a public entity the bank makes the donated stem cells available to research labs.

4. Any person can request for umbilical blood stored in the public banks for their legitimate use.

5. If you plan on donating the umbilical blood the doctor collecting the blood will not charge for their service.

Disadvantages Of Public Cord Blood Banking

1. Due to the large number of public banking projects supported by the government, it is difficult to the get the right match at the right time.

2. Every citizen is entitled to the donated blood stored in public banks, hence there is no guarantee that you will get the umbilical blood of your baby if and when you need it.

3. The chances of rejection are higher for transplantation done using non-related donors. When you use public banks the chances are high that your body might reject the donated stem cells.

4. Once the umbilical blood is donated it becomes the sole property of the bank. The donor has no rights over it.

5. The banks will decide who will receive the donated stem cells. The bank will not consider any request to store the blood donated by you for your exclusive use.

6. Even with public cord blood banks, to the donor does not pay any money for collection and storage, the end-user will have to pay about $5000 dollars as processing and storage charges. This can be deal-breaker for many, particularly if the insurance companies do not pay for it.

7. Finding perfect matches for transplantation or treatment of rare conditions or genetic diseases is tougher when trying to get it from a public cord bank. This is especially true for minorities.

Advantages Of Cord Blood Banking

1. As you pay for collection and storage of the blood done with a private setup is reserved exclusively for your family’s use.

2. When times comes you don’t have to look for compatible donors as the donated blood is all yours and no one has any claim over it.

3. The risk of rejection from stem cells transplanted using close relative’s donated blood is more acceptable to the body and the risk of rejection is very low.

4. There is higher success rate for transplants done with private umbilical blood donated by close relative compared to public banks.

5. The ownership of donated blood remains with your family.

6. You choose the beneficiary of the donated blood.

Disadvantages Of Private Cord Blood Banking

1. When transplantation is autologous, then donated cord blood is of little use. A related donor’s stem cells are of better value.

2. Collection and storage charges of private banks can be very high and out of reach of many folks.

3. Most insurance will not cover the costs of collection and storage of this blood. Only when there are genetic disorders do insurance companies pay for such storage.

Top 5 Reasons Why Online Banks Make Sense Today

Online banking is one of the services that retail banks, credit unions, and building societies provide their customers with. There are also some banks that are purely online so they have no branches with tellers that you interact with. The growing use of credit cards, debit cards, and other online payment services like PayPal adds to the diverse ways by which people move money around. All this makes people more comfortable with the idea of virtual monetary transactions where they’re not using cash and that opens up opportunities for online banking.

So what are some of the reasons why e-banking is an attractive option for consumers?

  • Cheaper and May Offer Higher Interest Rates on Savings

One of the reasons why some are flocking to virtual banks or direct banks is that these are cheaper. People are getting frustrated with the various fees that banks are charging for their services. Direct banks do not have any branch network and they provide their services thru e-banking. This helps them avoid the overhead costs of maintaining a brick-and-mortar branch so they don’t need to charge so many fees. Many direct banks also offer online savings accounts that provide customers with higher interest rates compared to traditional banks.

  • Convenience

Many traditional banks are now offering online banking services as an added service to their customers. U.S. bank Wells Fargo for example, is offering the Wells Fargo Online service. It’s convenient for customers because they can monitor their accounts and pay bills all from the comfort of their own homes. Check your bank if you can enroll in their online banking service to take advantage of these services.

  • Security

Many may be turned away from online banking by the thought that it is not as safe as transacting with traditional banks. However, traditional banks also keep their customers’ financial information stored online so the risk is basically the same. Taking the same precautions that you take when protecting your other online accounts are just as important or even more important in order for you to protect your online bank information.

  • Extended Operating Hours

How many times have you had to take time off from your lunch break to make a transaction with your bank because you couldn’t drop by your bank after work hours? If you’re tired of rushing to the bank and taking time off from work, then you should consider e-banking. Many online banks operate 24/7 so there’s no need to rush out to your bank to complete a transaction.

  • Ability to Access Credit Card Statements

For credit card holders, banks that provide online banking allow cardholders to get their credit card statement online so there’s no need to wait for it to come in from the mail. The faster you get your statement, the faster you can review it. This paper-less transaction is also great for the environment.

Online banks have many attractive features such as its higher interest rates, lower fees, security, and its many services that make it convenient to complete transactions like deposits, withdrawals, payment of bills and when you need to get your credit card statement. If you’re already comfortable using virtual payment methods like PayPal, then you should consider online banking for its benefits.

What CIOs Can Learn From Bank of America’s Trip Into The Cloud

Just imagine if you were David Rilly, chief technology officer at Bank of America. There you are, in charge of the IT infrastructure for one of the biggest banks around when all of a sudden the IT world starts to undergo yet another one of its transformations. What would you do – stand by and stick with the tried and true solution that you have in place or would you dare to change things up? It turns out that David is willing to make changes, but he’s got to move carefully.

Why Change Now?

Let’s face it, if you were the person with the CIO job at a major American bank, then you would have a lot going on. A modern bank has many different moving parts: commercial banking, loans, investment management, and consumer services. In order to keep everything operating as it should, and to track everything for the regulators, you are going to need to have an extensive IT infrastructure. You didn’t just build this infrastructure overnight, instead you’ve been building it up for years.

What this means is that you are currently sitting on a number of older technologies that are being used to run your business. Yesterday’s client/server infrastructure is what most of your major applications were built to use. What this means for you is that a great number of your IT support staff are spending their time keeping both your hardware and your software versions up-to-date.

If you were to take a look inside the data centers that Bank of America is currently operating, you’d discover that the hardware that they are using has been segmented. Right now hardware is typically allocated for each line of business. This approach has led to a great deal of waste and inefficiency in the data center. The mortgage arm of the bank may only need a lot of processing during the main home buying seasons and that capacity will go unused for the rest of the year.

What Bank of America Wants From The Cloud

Bank of America has been carefully watching what has been going on in the rest of the IT industry. As Facebook and Google have opened up new data centers in order to support their growing need for more and more computing capacity, the bank has studied how they have gone about doing this. What Bank of America really wants is a way to grow their IT infrastructure while at the same time lowering their cost of providing it.

The goal that Bank of America has is to create a shared IT infrastructure for all of its different banking units can use. The thinking is that the shared infrastructure will allow the bank to do more computing using less hardware. Bank of America also thinks that they are going to be able to replace their legacy hardware with cheaper computers that are based on the x86 architecture and which run more modern software. This new architecture will allow the bank to re purpose servers when they turn off an application.

One big issue that Bank of America needs to work out is how they are going to be able to prove to their auditors that they are securely handling sensitive data. In their new architecture their data will no longer be located in one place and will instead be spread out over the entire infrastructure. Another goal that the bank has is to make better use of its staff. They currently use one system administrator to manage roughly 300 servers. They want to become more like Facebook which uses one system administrator to manage 20,000 servers.

What All Of This Means For You

The CIO at Bank of America finds himself in a unique position. He has created an IT infrastructure that is serving the bank well. However, the handwriting is on the wall – the world of IT is changing and if the bank wants to keep up, they are going to have to be willing to make some dramatic changes. The goal is to find ways to allow the bank to do more at a lower cost.

The way that the Bank of America’s data center IT infrastructure is currently designed, hardware is allocated to specific bank functions. This does not allow hardware to be shared between different parts of the bank. The bank wants to create a new shared infrastructure that will allow them to better utilize their hardware. They hope to use new, cheaper hardware that will allow them to replace their legacy systems.

The good news is that the bank is moving in the right direction. It is not going to be an easy task to replace their working IT infrastructure with a brand new shared infrastructure. However, if the bank is willing to invest both the time and the money to do this now, then they will be well prepared for whatever happens in the future.

Canadian Banks – The “Big Five Banks”

The “Big Five Canadian Banks” term refers to the top five banking institutions in Canada. These banks are Royal Bank of Canada, Toronto-Dominion Bank, Scotiabank, Canadian Imperial Bank of Commerce, and Bank of Montreal. The big five Canadian banks dominate the Canadian financial markets having a combined market share of over 90%. These banks are in reality international banks with market share in USA, the Caribbean, Latin America, and Asia. They have thousands of employees across Canada and worldwide. You might encounter the “Big Six Banks” term as well, which is the “Big Five Banks” and the National Bank of Canada, which mainly servers customers in Quebec.

RBC Financial Group or simply Royal Bank of Canada is the largest Canadian bank with headquarters in Toronto, Ontario. The bank was founded in 1864, in Halifax, Nova Scotia. Royal Bank has over 70,000 employees worldwide with offices in more than 30 countries and operates 21% of all Canadian ATMs. Royal Bank common shares are listed on Toronto Stock Exchange, Swiss Electronic Stock Exchange and New York Stock Exchange.

Toronto-Dominion Bank (TD Bank Financial Group) is the second major Canadian bank headquartered in Toronto, Ontario. The bank was founded in 1855 in Toronto. TD Bank has over 58,000 employees, serving 14 million customers worldwide. The TD bank Financial Group common shares are listed on Toronto Stock Exchange, New York Stock Exchange and Tokyo Stock Exchange.

Scotiabank previously known as The Bank of Nova Scotia is the Canadian bank with strongest international presence. The bank was founded in 1832 in Halifax, Nova Scotia. Scotiabank does business in over 40 countries, most notably in the Caribbean, Central and Latin Americas, Mexico and Asia. Scotiabank has over 12 million customers offering personal, business and investment banking services. The bank has 57,000 employees worldwide. Scotiabank common shares trade on both Toronto and New York Stock Exchanges.

The Bank of Montreal marketed as BMO Financial Group is Canada’s oldest bank, established in 1817 in Montreal, Quebec. The bank has 35,000 employees and provides a wide range of financial services to its customers in Canada and USA. BMO is listed on Toronto Stock Exchange and New York Stock Exchange.

CIBC (Canadian Imperial Bank of Commerce) was founded in 1867 in Toronto, Ontario. The bank has its headquarters in Toronto, and has over 37,000 employees worldwide, providing a wide range of financial services to over 11 million clients. CIBC is the smallest of the “Big Five” Canadian banks. CIBC is listed on Toronto and New York Stock Exchanges.

The Canadian banking system is well established and developed and Canadian banks are one of the important pillars of the Canadian economy and society. Canadian financial institutions maintain a network of over 7,500 bank branches and over 17,000 ATMs. The top five Canadian banks are all members of the Canadian Banker Association and Canada Deposit Insurance Corporation.

Reclaim Unlawful Bank Charges

Illegal bank charges, Unlawful bank charges, and Unfair bank charges. So you’ve been charged by your bank and you don’t understand why? Here is a practical guide to reclaim illegal bank charges, unlawful bank charges, and plain unfair bank charges.

Currently there is a court case in progress to decide if the bank are making money from illegal bank charges, unlawful bank charges, and unfair bank charges. As banks do not have to repay bank charges at the moment, they are not doing so unless they feel that the illegal bank charges, unlawful bank charges, or unfair bank charges are in fact bank error. Bank Error.

Banks to error on time to time, but it is very rare that a illegal bank charge is caused by bank error. However in some cases employees do make mistakes. Let us say for example that you have a packaged account (an account that you pay a monthly charge for, and in return you get stacks of benefits and discounts and services included). If you decide that you no longer want this account and if you are entitled to remove the deal from your account you go into your bank to have this removed. You need to sign something to agree the removal (as banks keep an extensive paper trail as proof of EVERYTHING), and in return you should get a receipt. If for some reason your account doesn’t get changed to a standard account and you continue to get charged, resulting an an un-arranged bank charge, this is classed as bank error. In this instance you need to take your receipt. to the bank and demand a refund. This can’t be refused. Unfortunately as I have just mentioned banks keep evidence of everything done and bank error is uncommon. Reasons for getting bank charges. Guaranteed Card Payment Fee.

Unless you can keep on top of your money, using a debit card can be very dangerous. People believe that if they don’t have the money then the card will be refused. Unfortunately not in every case. Shops and ATMs do not have real time communication with the banks. At times it is impossible to know if there is money in the account. A shop has what is called a floor limit on their card transactions and all transactions under a pre-specified limit will authorize without contacting the bank. on top of that, retailers have the option to hold that payment on their systems for up to 6 months without communicating that information to the bank. So how could the bank possibly know if you have spent the money? It can’t. It is up to you to keep track of how much you have been spending. This also applies to cash machines, however cash machines do generally update much quicker. Paid & Unpaid Referral Fees.

Direct Debits and Standing orders are a major cause of bank charges. If you have a direct debit or standing order that is due out of your account and you do not have the money for it you will get a charge. in some cases the direct debit won’t even get paid to the company so the company will re-request the direct debit and again if you don’t have the cash then you will get charged. Even if you cancel a direct debit with the bank, the company can present the direct debit instruction under another reference number and the money will still be paid (or not as in some cases), resulting in more charges. The banks have little control over this system as there are literally millions of direct debit instructions and it is impossible to review and authorize each one individually. If you are not going to have the money in your account, cancel the direct debit about 3-4 working days before it is due. A little tip on managing direct debits. if you have a direct debit due out on the 10th for example the direct debit will leave the account on the previous working day. i.e. in most cases it will leave on the 9th. However if the 10th happens to fall on a Saturday, Sunday or a Monday, then the direct debit will actually leave the account on the Friday! Learn and understand this phrase “I need to have the money for my direct debit in my account on the last working day before the direct debit is due at the latest”. Say that out loud 3 times. Un-arranged Borrowing Charges.

If you are taken overdrawn at any point in that month then the bank will apply a charge to your account. The charge will leave the account on the last working day of the month. In the banks eyes they say this is to allow you replace the money and find money to cover the charges. They let you know roughly 2 weeks in advance. In reality the charge is applied on the last working day of the month so the customer is then overdrawn on the first working day of the next month and so gets a charge at the end of the next month too (and so on and so fourth). Credit Zones (commonly known as the overdraft).

People will argue with a bank that the charges they have been given are illegal and should not have been applied as they do not have an overdraft facility on the account. Wrong. There are Arranged overdrafts, and Un-arranged overdrafts. The long and short of it is, everyone has the facility and is free to use it. The only difference is the charges. For an arranged overdraft there is no monthly maintenance fee and there is a small monthly rate of interest which is usually around 1.5% per month. For an un-arranged overdraft there is a monthly charge and a higher rate of interest. The bottom line is, you CAN go overdrawn weather you have agreed the facility or not. My advice to you is to arrange the facility if you have the option – would you prefer a direct debit to come out of your arranged overdraft if you do not have the funds for it, or would you prefer it to come out of an un-arranged overdraft and get charged for the luxury? Don’t fight the charge, Address the issue.

When it comes to bank charges, the banks do have you be the short and curlys. You have agreed to accept the charges and you are contractually bound to them. Instead of kicking up a fuss about them you need to grab the bull by the horns and address the issue. Go into your bank and speak to someone about it, but instead of shouting and screaming the odds at the first employee you can get your hands on, ask them for help. At the end of the day branch and call canter employees have not set the rules, they have not applied the charge manually to your account have they? No. So give them a break. These are the people who can advise you best on what to do. They will tell it like it is, and weather or not it is what you want to hear, it is the best way forward. You need to establish exactly how much you are due to be charged and the days that they will be coming out of your accounts. You need to account for that money, and make sure it is there the working day before the charge is due. This is the only way to break the charge cycle. You may not want to pay the charge and fight it, but in the long run you could end up with thousands of pounds worth of debt and a ruined credit file. Remember that the banks are in court waiting for a ruling – let the FSA fight it out with them, not you. Your job is to keep your charges minimal in the event that the courts rule in banks favour. Prevention is better than the cure.

Be smart with your money – avoid the charges in the first place. If you have had problems with card payments – pay in cash. If direct debits are causing you issues – contact the company and ask them to send you a giro. Your local branch can tell you what money you have available, so use the facility. Use online banking to keep a track of your money – it takes 2 minutes to log on to your account online and check how much money is available.

With any luck the courts will rule against the banks and you will be able to reclaim anything you have paid. We will address that issue when it comes about.

Thinking of Starting Up Your Own Bank Or Financial Institution?

Bank Ownership Offshore

Offshore bank ownership solutions include a New Zealand Finance Company, an EU Registered Trust Company, a Panama registered Forex Brokerage, or a Closed End Fund registered in the British Virgin Islands.

Each of these bank ownership solutions can be set up in tax advantaged manner in tax advantaged jurisdictions.

It is possible to set up a tax advantaged banking solution and to be able to offer traditional banking services including the provision of checking and savings accounts, certificates of deposit, trust account services, wire transfer services, credit and debit card services, and trust account services.

The rules and regulations vary front one jurisdiction to another. However, it is perfectly legal to set up an offshore banking solution in any of several jurisdictions world wide, taking advantage of the laws of that country. In general, it is possible to find jurisdictions when one does not to provide the capital reserves required of a traditional bank in the same country.

Not All Offshore Banking Solutions Are the Same

If you are considering banking offshore talk to an offshore expert because not all offshore banking solutions are the same.

The world is full of decent offshore banking solutions and there are a handful of exceptional offshore banking solutions. Why not go with the best and most professional choices?

You should work out the best offshore banking solution in your choice of jurisdictions. Offshore shore banking in tax advantaged jurisdictions can save you money. Offshore banking can be very discrete in an increasingly intrusive world. Offshore banking can be safe and profitable.

An offshore banking solution should save you money, guard your privacy, and protect your assets.

Offshore Banking Solutions: Closed End Funds

One of the many offshore banking/financial institution options is to start and run you own closed end hedge fund. An offshore expert can help you explore the opportunities involved in such an investment and its relevance to your personal needs.

An offshore closed end fund option is in the British Virgin Islands. Such a fund invests pooled assets, charges management fees, and, typically, receives performance fees on profits.

The British Virgin Islands are a tax advantaged jurisdiction for such an institution. Reporting requirements and the attendant overhead are minimal in the British Virgin Islands helping to hold costs down.

Such a fund can engage in investments and trading world wide without excessive reporting requirements to local institutions. This is a tax advantaged location. You can seek advice about the pros and cons of starting a British Virgin Islands registered closed end fund. It is also possible to obtain the technical support required to successfully run a closed end fund in the British Virgin Islands.

A closed end fund can be a very successful undertaking if properly set up and managed in a tax advantaged, low overhead location.

Offshore Banking Solutions: Forex Brokerage

An attractive offshore banking/finance option is to set up a Forex brokerage in the country of Panama. This is a tax advantaged jurisdiction with minimal overhead from reporting requirements in its jurisdiction.

There is a several opportunities offered by setting up a Forex brokerage in the Republic of Panama. If property set up and managed a Forex brokerage in Panama can be a profitable undertaking in a tax advantaged jurisdiction with a low overhead as relates to reporting requirements in Panama.

Panama has an advanced telecommunications infrastructure sufficient to support active trading as done by the brokerage houses and individual traders working out of Panama. The expertise and infrastructure knowledge needed for a successful Forex brokerage business is something the investor will need to bring to the table. You can be provided the advice and council to successfully register and set up business in this offshore location.

You should seek advice about the pros and cons of incorporating in Panama as an offshore corporation. This is a tax advantaged location and if property set up and managed can offer a substantial overhead reduction as relates to local reporting requirements.

Offshore Banking Solutions: Trust Company

An attractive offshore banking/finance solution is a trust company registered in the European Union. You should ask about the advantages of registering the company in the EU while accounts are held and administered in a tax advantaged offshore location. This is traditionally a service of large banks but can be provided from a tax advantaged offshore jurisdiction as an offshore banking solution available to investors.

If properly set up and managed, such a trust company can act as a legal trustee for clients throughout the world. Such a company can be set up with the capability to wire monies worldwide and can offer debit cards for account holders. Talk to an offshore advisor about the opportunities offered by acting as a trustee to a world wide client base using an EU and other offshore solution.

As with all offshore solutions, seek competent, trustworthy council in setting up the business entity. Talk about your goals and business risk tolerance. You will get help to evaluate and set up this or any other offshore banking solution in tax advantage locations with low reporting overhead.

Who Sets Up Offshore Banks and Why?

Banks set up offshore banks as do corporations, groups of companies, and groups of investors. The formation of an offshore can be extremely tax advantaged for the investment, corporate, or banking group. In the right location the cost of business can be significantly less than in the countries of origin of the bank shareholders.

Setting up a bank allows the entities mentioned above to profit from their own banking needs and profit from selling banking services to others. The tax advantages of offshore locations as well as well packaged services such as trust accounts, international credit and debit cards, savings and checking accounts, loan services if well merchandized can attract business and provide a profit over and above the savings that the offshore bank can provide its shareholders.

Seek advise about use of an offshore bank for your business and ownership of your own offshore bank alone or with partners. Talk to an offshore advisor about locations and options in creating your own offshore banking ownership solution.

As with all business ventures good planning, competent council and careful follow through will lead to the best results.

Why a New Zealand Finance Company?

The country of New Zealand allows one to set up a credit union, building society, or finance company as well as a registered bank in its jurisdiction. Why would one choose to form a New Zealand Finance Company?.

Each situation is unique, each jurisdiction, each individual. You will get help with an appraisal of the needs of the investor and the opportunities in the jurisdiction. An opportunity that presents itself in New Zealand is that a New Zealand Finance Company can be set up and managed without the substantial reserves required of a standard bank. Also, such an entity can be set up to reduce paperwork by not requiring the supervision of the New Zealand Federal Reserve Bank.

Despite the ease of operation of this opportunity and potential for a low cost of entry such an entity can offer a full range of banking services to offshore customers, including checking and savings accounts, credit card services, and investment marketing.

In general, the ease of operation and freedom from red tape involved in a New Zealand Finance Company comes with offering services only off clients offshore from New Zealand.

A New Zealand Finance Company might be what you are looking for. A refreshing and low cost alternative to a fully licensed bank.

Banking Software System – Top 3 Features to Look For

With an increased focus in the banking industry to automate exception tracking and manage loan files, many financial institutions find themselves in the difficult position of evaluating the pros and cons of implementing a banking software system. Although there are many variables that a financial institution should consider when looking at banking software systems, evidence suggests there is a common set of features that lead to successful integration. Financial institutions should heed the following suggestions when considering different software solutions.

Take A Look In the Mirror First

Before evaluating the specific features of a banking software system, it is wise to first review your existing internal processes. Current workflow and exception tracking processes are important to take into consideration before seeking out a banking software vendor. By fully documenting and understanding your internal processes, you can put your financial institution in a better position to locate banking software companies that fit your needs.

Once you have roughly documented your existing processes, it is advisable to begin your search for a banking software system provider. The search for bank management software is similar to shopping for any B2B product. Many organizations start by doing a Google search for keywords such as “bank loan document imaging” or “loan file imaging software”. However, to streamline your search efforts, many industry organizations such as the ICBA (Independent Community Bankers Association) offer a convenient search tool, which allows you to drill down into more specific vendor information.

Background of Banking Software System Technology

The term “banking software system” can actually have a lot of different definitions depending upon your community bank’s specific needs. Many systems feature a wide variety of functionality that can range from loan tracking, compliance tracking, bank operations management, and deposit tracking to name a few. Although many of these more advanced features are great for certain banks, other financial institutions may only need a more simplified offering. At a minimum, the following features should be present in any reliable banking software solution.

What To Look For In A Banking Software System

  1. Bank Imaging – Simple, yet dynamic bank document imaging. The bank document imaging software should provide streamlined enterprise-wide scanning and imaging, facilitating cross-departmental economies of scale.
  2. Integrated Loan Portfolio Software – Helps you automate the loan management process from start to finish. More advanced systems may also provide tools that help automate loan application, underwriting, and approval processes as well.
  3. Automated Exception Tracking – Exception management software that eliminates the need for a manual tickler file system.

So What Does It All Mean for My Community Bank?

In summary, following the steps outlined in this article can simplify the process of choosing a banking software system. Although many features likely exist, even the most basic systems should, at a minimum, include bank imaging, integrated loan portfolio software, and automated exception tracking.

Finding The Right Type of Bank for Your Needs

Seventeen years ago, online banking came on the banking scene, attracted a few customers, and now is a vital element of the banking industry.

Today the current economic depression has consumers exploring other choices to traditional banking. For years bank customers walked or drove to their local bank, made deposits and withdrawals, cashed checks, used the ATM, negotiated loans, and talked to the branch manager. Interestingly these same consumers are now seriously considering using both types of banking.

Since there are advantages and disadvantages to both banking methods, how do you find the right bank for you? To make a decision that serves your best interests, you must first look at the advantages and disadvantages of both. Here are a few traditional banking advantages and disadvantages:

Advantages of Traditional Banking

  • You have easy access to and personal contact with the bank manager and other bank personnel.
  • You can write counter checks, purchase bank checks, and deposit checks with a person.
  • You have access to inside bank depositories, and can deposit or withdraw funds day or night all year round.
  • Provide personal loans, mortgages, universal ATM access, and online banking.
  • Federal Deposit Insurance (FDIC) protects your account up to $250,000.
  • You can transfer funds, buy certificates of deposit, and open an IRA account.
  • Online bill paying so that you can easily track your income and expenses.

Disadvantages of Traditional Banking

  • Minimum checking account balance fees.
  • Insufficient funds fees
  • As a rule savings interest rates are lower than those paid by online banks.
  • Higher interest rates on loans
  • Inconvenience since generally open from 9:00 AM to 5:00 PM.
  • Other miscellaneous fees.

Scores of large companies have started offering online options to provide personal financial services to a growing consumer base. By using online capability, these companies achieve the tremendous advantage of lower costs over their traditional competition. They reduce or eliminate bank personnel, leases, rent, buildings, and all the other expenses paid by traditional banks.

Even though convenience is one of the most important advantages of online banking because you can do your banking without leaving home, there are, however, several other important advantages:

Advantages of Online Banking

  • With a computer and internet access, you have worldwide banking readily available.
  • There is no waiting in line, which saves you time and money.
  • Similar to traditional banking it is easy for you to buy certificates of deposit, create IRAs, bill pay, and transfer money.
  • Your bank statements and bills sent to you electronically.
  • 24/7 banking 365 days a year.
  • Full access to many state-of-the art computer money management programs.
  • Pay higher interest rates than traditional banking.
  • No fee checking accounts.
  • Unlimited free online transactions.
  • Federal Deposit Insurance (FDIC) protects your account up to $250,000.
  • Many other special incentives like cheap checks or reward programs.

Disadvantages of Online Banking

  • Do not have branch bank locations.
  • Unable to make cash deposits.
  • Do not have their own ATM machines.
  • Charge high ATM fees to withdraw cash from other banks.
  • Computer problems create slow transaction processing.
  • Possible hacker attacks gain access to your account information.
  • Difficulty changing banks online.
  • Must have an Internet Service Provider.

What’s the right choice for you?

The average person will alter their ideas and actions when they are certain that the change will be in their best interests. No person deliberately plans to make the wrong decision. Take the time to use every available means at your disposal to gain more knowledge about traditional and online banking so that you can find the right bank for you.

Let the Lawsuits Begin – Banks Brace For a Storm of Litigation

In an article in The San Francisco Chronicle in December 2007, attorney Sean Olender suggested that the real reason for the subprime bailout schemes being proposed by the U.S. Treasury Department was not to keep strapped borrowers in their homes so much as to stave off a spate of lawsuits against the banks. The plan then on the table was an interest rate freeze on a limited number of subprime loans. Olender wrote:

“The sole goal of the freeze is to prevent owners of mortgage-backed securities, many of them foreigners, from suing U.S. banks and forcing them to buy back worthless mortgage securities at face value – right now almost 10 times their market worth. The ticking time bomb in the U.S. banking system is not resetting subprime mortgage rates. The real problem is the contractual ability of investors in mortgage bonds to require banks to buy back the loans at face value if there was fraud in the origination process.

“. . . The catastrophic consequences of bond investors forcing originators to buy back loans at face value are beyond the current media discussion. The loans at issue dwarf the capital available at the largest U.S. banks combined, and investor lawsuits would raise stunning liability sufficient to cause even the largest U.S. banks to fail, resulting in massive taxpayer-funded bailouts of Fannie and Freddie, and even FDIC . . . .

“What would be prudent and logical is for the banks that sold this toxic waste to buy it back and for a lot of people to go to prison. If they knew about the fraud, they should have to buy the bonds back.”1

The thought could send a chill through even the most powerful of investment bankers, including Treasury Secretary Henry Paulson himself, who was head of Goldman Sachs during the heyday of toxic subprime paper-writing from 2004 to 2006. Mortgage fraud has not been limited to the representations made to borrowers or on loan documents but is in the design of the banks’ “financial products” themselves. Among other design flaws is that securitized mortgage debt has become so complex that ownership of the underlying security has often been lost in the shuffle; and without a legal owner, there is no one with standing to foreclose. That was the procedural problem prompting Federal District Judge Christopher Boyko to rule in October 2007 that Deutsche Bank did not have standing to foreclose on 14 mortgage loans held in trust for a pool of mortgage-backed securities holders.2 If large numbers of defaulting homeowners were to contest their foreclosures on the ground that the plaintiffs lacked standing to sue, trillions of dollars in mortgage-backed securities (MBS) could be at risk. Irate securities holders might then respond with litigation that could indeed threaten the existence of the banking Goliaths.

STATES LEADING THE CHARGE

MBS investors with the power to bring major lawsuits include state and local governments, which hold substantial portions of their assets in MBS and similar investments. A harbinger of things to come was a complaint filed on February 1, 2008, by the State of Massachusetts against investment bank Merrill Lynch, for fraud and misrepresentation concerning about $14 million worth of subprime securities sold to the city of Springfield. The complaint focused on the sale of “certain esoteric financial instruments known as collateralized debt obligations (CDOs) . . . which were unsuitable for the city and which, within months after the sale, became illiquid and lost almost all of their market value.”3

The previous month, the city of Baltimore sued Wells Fargo Bank for damages from the subprime debacle, alleging that Wells Fargo had intentionally discriminated in selling high-interest mortgages more frequently to blacks than to whites, in violation of federal law.4

Another innovative suit filed in January 2008 was brought by Cleveland Mayor Frank Jackson against 21 major investment banks, for enabling the subprime lending and foreclosure crisis in his city. The suit targeted the investment banks that fed off the mortgage market by buying subprime mortgages from lenders and then “securitizing” them and selling them to investors. City officials said they hoped to recover hundreds of millions of dollars in damages from the banks, including lost taxes from devalued property and money spent demolishing and boarding up thousands of abandoned houses. The defendants included banking giants Deutsche Bank, Goldman Sachs, Merrill Lynch, Wells Fargo, Bank of America and Citigroup. They were charged with creating a “public nuisance” by irresponsibly buying and selling high-interest home loans, causing widespread defaults that depleted the city’s tax base and left neighborhoods in ruins.

“To me, this is no different than organized crime or drugs,” Jackson told the Cleveland newspaper The Plain Dealer. “It has the same effect as drug activity in neighborhoods. It’s a form of organized crime that happens to be legal in many respects.” He added in a videotaped interview, “This lawsuit said, ‘You’re not going to do this to us anymore.'”5

The Plain Dealer also interviewed Ohio Attorney General Marc Dann, who was considering a state lawsuit against some of the same investment banks. “There’s clearly been a wrong done,” he said, “and the source is Wall Street. I’m glad to have some company on my hunt.”

However, a funny thing happened on the way to the courthouse. Like New York Governor Eliot Spitzer, Attorney General Dann wound up resigning from his post in May 2008 after a sexual harassment investigation in his office.6 Before they were forced to resign, both prosecutors were hot on the tail of the banks, attempting to impose liability for the destructive wave of home foreclosures in their jurisdictions.

But the hits keep on coming. In June 2008, California Attorney General Jerry Brown sued Countrywide Financial Corporation, the nation’s largest mortgage lender, for causing thousands of foreclosures by deceptively marketing risky loans to borrowers. Among other things, the 46-page complaint alleged that:

“‘Defendants viewed borrowers as nothing more than the means for producing more loans, originating loans with little or no regard to borrowers’ long-term ability to afford them and to sustain homeownership’ . . .

“The company routinely . . . ‘turned a blind eye’ to deceptive practices by brokers and its own loan agents despite ‘numerous complaints from borrowers claiming that they did not understand their loan terms.’

“. . . Underwriters who confirmed information on mortgage applications were ‘under intense pressure . . . to process 60 to 70 loans per day, making careful consideration of borrowers’ financial circumstances and the suitability of the loan product for them nearly impossible.’

“‘Countrywide’s high-pressure sales environment and compensation system encouraged serial refinancing of Countrywide loans.'”7

Similar suits against Countrywide and its CEO have been filed by the states of Illinois and Florida. These suits seek not only damages but rescission of the loans, creating a potential nightmare for the banks.

AN AVALANCHE OF CLASS ACTIONS?

Massive class action lawsuits by defrauded borrowers may also be in the works. In a 2007 ruling in Wisconsin that is now on appeal, U.S. District Judge Lynn Adelman held that Chevy Chase Bank had violated the Truth in Lending Act by hiding the terms of an adjustable rate loan, and that thousands of other Chevy Chase borrowers could join the plaintiffs in a class action on that ground. According to a June 30, 2008 report in Reuters:

“The judge transformed the case from a run-of-the-mill class action to a potential nightmare for the U.S. banking industry by also finding that the borrowers could force the bank to cancel, or rescind, their loans. That decision was stayed pending an appeal to the 7th U.S. Circuit Court of Appeals, which is expected to rule any day.

“The idea of canceling tainted loans to stem a tide of foreclosures has caught hold in other quarters; a lawsuit filed last week by the Illinois attorney general asks a court to rescind or reform Countrywide Financial mortgages originated under ‘unfair or deceptive practices.’

“. . . The mortgage banking industry already faces pressure from state and federal regulators, who have accused banks of lowering underwriting standards and forcing some borrowers, through fraud, into costly adjustable loans that the banks later bundled and sold as high-interest investment vehicles.”

The Truth in Lending Act (TILA) is a 1968 federal law designed to protect consumers against lending fraud by requiring clear disclosure of loan terms and costs. It lets consumers seek rescission or termination of a loan and the return of all interest and fees when a lender is found to be in violation. The beauty of the statute, says California bankruptcy attorney Cathy Moran, is that it provides for strict liability: the aggrieved borrowers don’t have to prove they were personally defrauded or misled, or that they had actual damages. Just the fact that the disclosures were defective gives them the right to rescind and deprives the lenders of interest. In Moran’s small sample, at least half of the loans reviewed contained TILA violations.8 If class actions are found to be available for rescission of loans based on fraud in the disclosure process, the result could be a flood of class suits against banks all over the country.9

SHIFTING THE LOSS BACK TO THE BANKS

Rescission may be a remedy available not only for borrowers but for MBS investors. Many loan sale contracts provide by their terms that lenders must take back loans that default unusually quickly or that contain mistakes or fraud. An avalanche of rescissions could be catastrophic for the banks. Banks were moving loans off their books and selling them to investors in order to allow many more loans to be made than would otherwise have been allowed under banking regulations. The banking rules are complex, but for every dollar of shareholder capital a bank has on its balance sheet, it is supposed to be limited to about $10 in loans. The problem for the banks is that when the process is reversed, the 10 to 1 rule can work the other way: taking a dollar of bad debt back on a bank’s books can reduce its lending ability by a factor of 10. As explained in a BBC News story citing Prof. Nouriel Roubini for authority:

“[S]ecuritisation was key to helping banks avoid the regulators’ 10:1 rule. To make their risky loans appear attractive to buyers, banks used complex financial engineering to repackage them so they looked super-safe and paid returns well above what equivalent super-safe investments offered. Banks even found ways to get loans off their balance sheets without selling them at all. They devised bizarre new financial entities – called Special Investment Vehicles or SIVs – in which loans could be held technically and legally off balance sheet, out of sight, and beyond the scope of regulators’ rules. So, once again, SIVs made room on balance sheets for banks to go on lending.

“Banks had got round regulators’ rules by selling off their risky loans, but because so many of the securitised loans were bought by other banks, the losses were still inside the banking system. Loans held in SIVs were technically off banks’ balance sheets, but when the value of the loans inside SIVs started to collapse, the banks which set them up found that they were still responsible for them. So losses from investments which might have appeared outside the scope of the regulators’ 10:1 rule, suddenly started turning up on bank balance sheets. . . . The problem now facing many of the biggest lenders is that when losses appear on banks’ balance sheets, the regulator’s 10:1 rule comes back into play because losses reduce a banks’ shareholder capital. ‘If you have a $200bn loss, that reduced your capital by $200bn, you have to reduce your lending by 10 times as much,’ [Prof. Roubini] explains. ‘So you could have a reduction of total credit to the economy of two trillion dollars.'”10

You could also have some very bankrupt banks. The total equity of the top 100 U.S. banks stood at $800 billion at the end of the third quarter of 2007. Banking losses are currently expected to rise by as much as $450 billion, enough to wipe out more than half of the banks’ capital bases and leave many of them insolvent.11 If debtors were to deluge the courts with viable defenses to their debts and mortgage-backed securities holders were to challenge their securities, the result could be even worse.

PUTTING THE GENIE BACK IN THE BOTTLE

So what would happen if the mega-banks engaging in these irresponsible practices actually went bankrupt? These banks are widely acknowledged to be at fault, but they expect to be bailed out by the Federal Reserve or the taxpayers because they are “too big to fail.” The argument is that if they were allowed to collapse, they would take the economy down with them. That is the fear, but it is not actually true. We do need a ready source of credit, so we need banks; but we don’t need private banks. It is a little-known, well-concealed fact that banks do not lend their own money or even their depositors’ money. They actually create the money they lend; and creating money is properly a public, not a private, function. The Constitution delegates the power to create money to Congress and only to Congress.12 In making loans, banks are merely extending credit; and the proper agency for extending “the full faith and credit of the United States” is the United States itself.

There is more at stake here than just the equitable treatment of injured homeowners and investors in mortgage-backed securities. Banks and investment houses are now squeezing the last drops of blood from the U.S. government’s credit rating, “borrowing” money and unloading worthless paper on the government and the taxpayers. When the dust settles, it will be the banks, investment brokerages and hedge funds for wealthy investors that will be saved. The repossessed will become the dispossessed; and unless your pension fund has invested in politically well-connected hedge funds, you can probably kiss it goodbye, as teachers in Florida already have.

But the banking genie is a creature of the law, and the law can put it back in the bottle. The imminent failure of some very big banks could provide the government with an opportunity to regain control of its finances. More than that, it could provide the funds for tackling otherwise unsolvable problems now threatening to destroy our standard of living and our standing in the world. The only solution that will be more than a temporary fix is to take the power to create money away from private bankers and return it to the people collectively. That is how it should have been all along, and how it was in our early history; but we are so used to banks being private corporations that we have forgotten the public banks of our forebears. The best of the colonial American banking models was developed in Benjamin Franklin’s province of Pennsylvania, where a government-owned bank issued money and lent it to farmers at 5 percent interest. The interest was returned to the government, replacing taxes. During the decades that that system was in operation, the province of Pennsylvania operated without taxes, inflation or debt.

Rather than bailing out bankrupt banks and sending them on their merry way, the Federal Deposit Insurance Corporation (FDIC) needs to take a close look at the banks’ books and put any banks found to be insolvent into receivership. The FDIC (unlike the Federal Reserve) is actually a federal agency, and it has the option of taking a bank’s stock in return for bailing it out, effectively nationalizing it. This is done in Europe with bankrupt banks, and it was done in the United States with Continental Illinois, the country’s fourth largest bank, when it went bankrupt in the 1990s.

A system of truly “national” banks could issue “the full faith and credit of the United States” for public purposes, including funding infrastructure, sustainable energy development and health care.13 Publicly-issued credit could also be used to relieve the subprime crisis. Local governments could use it to buy up mortgages in default, compensating the MBS investors and freeing the real estate for public disposal. The properties could then be rented back to their occupants at reasonable rates, leaving people in their homes without the windfall of acquiring a house without paying for it. A program of lease-purchase might also be instituted. The proceeds would be applied toward repaying the credit advanced to buy the mortgages, balancing the money supply and preventing inflation.

LOCAL AND PRIVATE SOLUTIONS

While we are waiting for the federal government to act, there are also private and local possibilities for relieving the subprime crisis. Chris Cook is a British strategic market consultant and the former Compliance Director for the International Petroleum Exchange. He recommends getting all the parties to settle by forming a pool constituted as an LLC (limited liability company), in a partnership framework that brings together occupiers and financiers as co-owners under a neutral custodian. The original owners would pay an affordable rental, and the resulting pool of rentals would be “unitized” (divided into unit interests, similar to a REIT or real estate investment trust). Among other advantages over the usual mortgage-backed security, there would be no loans at interest, since the property would be owned outright by the LLC. Eliminating interest substantially reduces costs. The former owners would be able to occupy the property at an affordable rental, with the option to buy an equity stake in it. For the banks, the advantage would be that they would be able to find investors again, since the risk would have been taken out of the investment by insuring full occupancy at affordable rates; and for the investors, the advantage would be a secure investment with a dependable return.14

Carolyn Betts is an Ohio attorney who served in Washington as issuer’s counsel for MBS trusts formed by various federal governmental entities, and represented Resolution Trust Corporation in its auction of defaulted commercial mortgage loans during the last real estate crisis. She proposes a squeeze play by the states, in the style of that brought against the tobacco companies by a consortium of state attorneys general in the 1990s. She notes that at the end of 2007, at least 20% of the funds held by the Ohio Public Employees’ Retirement System (PERS) were in mortgage backed securities and similar investments. That makes Ohio public money a major investor in these mortgage-related securities. Ohio governments have an interest in not having homes foreclosed upon, since foreclosures destroy local real estate markets, contribute to lower tax revenues and losses on PERS investments, and cause a strain on state and local affordable housing systems. A coordinated series of actions brought by state attorneys general could eliminate the culpable banker middlemen and return the properties to local ownership and control.

Andrew Jackson reportedly told Congress in 1829, “If the American people only understood the rank injustice of our money and banking system, there would be a revolution before morning.” A wave of private actions, class actions and government lawsuits aimed at redressing injurious banking practices could spark a revolution in banking, returning the power to advance “the full faith and credit of the United States” to the United States, and returning community assets to local ownership and control.

1 Sean Olender, “Mortgage Meltdown,” San Francisco Chronicle (December 9, 2007).

2 See Ellen Brown, “The Subprime Trump Card,” webofdebt.com/articles, June 26, 2008.

3 Greg Morcroft, “Massachusetts Charges Merrill with Fraud,” MarketWatch (February 1, 2008).

4 Henry Gomez, Tom Ott, “Cleveland Sues 21 Banks Over Subprime Mess,” The Plain Dealer (Cleveland, January 11, 2008).

5 Ibid.

6 Marc Dann Resigns as Attorney General,” NBC24 (May 14, 2008).

7 E. Scott Reckard, “California Atty. Gen. Jerry Brown Sues Countrywide,” Los Angeles Times (June 26, 2008).

8 Cathy Moran, “And the Truth (in Lending) Shall Set You Free,” mortgagelawnetwork.com (June 11, 2008).

9 Gina Keating, “Mortgage Ruling Could Shock U.S. Banking Industry,” Reuters (June 30, 2008).

10 Michael Robinson, “City of Debt Shows US Housing Woe,” BBC News (December 30, 2007).

11 “Is the Latest Liquidity Crunch in Remission?”, NakedCapitalism(March 26, 2008).

12 See E. Brown, “Dollar Deception: How Banks Secretly Create Money,” webofdebt.com/articles (July 3, 2007).

13 For more on this funding solution and why it would not inflate prices, see E. Brown, “Waking Up on a Minnesota Bridge: How to Solve the Infrastructure Crisis Without Selling Off Our National Assets,” ibid. (August 4, 2007).

14 Chris Cook, “Peak Credit and a Flight to Simplicity,” Asia Times (April 3, 2008).

Advantages of Using Banking Services

Aside from keeping our money safe at banks, many of us are ignorant to the many services that banks can offer. The basic function of these financial establishments is to safe guard the money of their customers; provide services such as borrowing and loaning money on various different schemes and providing easy payment of bills through the internet or banking cards. Entrusting money with banks can give people a sense of security as they would have better control over the financials as well as the money would be safe from theft. With banks, money can be dealt with more securely as for example when receiving your pay, you do not have to deal with hard cash but instead most companies just transfer their employees pay into their bank accounts. This reduces the risk of mishandling the money or theft.

Many banks in today’s date also offer their customers with online banking. This form of banking has gained much popularity in the past few years as they make everyday transactions much more convenient. As technology progress, more and more advanced gadgets are being produced. Banks have merged their online banking service with these technological gadgets. Paying bills, transferring funds or making payments for your purchases was never this easy. You can carry out all these tasks by simply using your mobile phone. Online banking can save precious time for people as one would not have to go all the way down to an ATM to make payments for bills or transfer funds. However, several security threats come with online banking as your bank account can be manipulated if a hacker is able to break into your account. To prevent this sort of events from happenings, banks have several measures in places. Aside from the regular pin that you would be required to log in, some banks make use of another gadget that would generate a code for you to key in when you are logging in to your account. As long as the device is in your hands, you can be assured that only you can log in. However, you need to be careful as to where you place this device.

If you are the sort of person who likes to go cashless, you can apply for various ATM, Debit or Credit cards that banks offer. You can use these cards to make payments for your purchases at the grocery store, a retail outlet or even the internet. To prevent any unauthorized access to your card, banks require the owner of a card to either key in a pin or provide legit signature when making purchases. Banks are continuously on their toes to ensure that the financial safety of their customers is not at risk. Banks also offer their customers loans for various purposes. One can get a loan for almost anything in a bank. They also have lower interest rates on their loans as compared to other financial institutions.

If you are opening a new bank account, you may want to consider what type of account it is that you want. The three most common and popular accounts in most banks are the checking account, savings account and the money market account. Checking accounts serve the purpose of performing daily transactions that customers may need. Saving accounts are the accounts that are used by most people. These accounts are very beneficial for customers who wish to save. Money in these accounts would earn interest, which in other words means that the bank pays you to save money with them. Money market accounts are similar to saving accounts, the only difference being that they require the customer to deposit a higher amount, in return gaining higher interest rate as compared to the savings account.

With the recent developments in technology and banks, customers can now bank from the comfort of their home without having to be worried about their money. Banks offer several advantages to their customers and one should not use it for basic purposes but take advantage of the services that banks provide their customers with.