...Too Big To Fail Chapter 19 Setting This chapter starts with Lloyd Blankfein, CEO of Goldman Sachs (GS), thinking about his company’s future. Stock market is dropping and the regulators still haven’t decided on what, when and how to fix the financial system. Henry “Hank Paulson” the US Treasury Secretary at the time, strongly believes the only way to build confidence in the market place was to have the government pass the Trouble Asset Relief Program (TARP). He had a big task ahead of him because it would be difficult to get lawmakers to agree his plan. Currently Wachovia another well known bank is in crisis. Its two month old CEO, Bob Steel, is trying desperately to broker a deal without government intervention, with either Citibank or Wells Fargo and Company (WFC) to save his bank. In the meantime, investors’ confidence in Morgan Stanley is waning and the company is urgently trying to close a deal with the Japanese company Mitsubishi to get more capital on the books. Companies across the board are trying to become more liquid in the tight credit market. Major Players Hank Paulson is trying his best to reach an agreement with Congress, so he can get TARP passed as quickly as possible. He dislikes politics but knows he has to work with the politicians or his bill would die. His solution to the financial crisis is TARP and working with lawmakers would be the only way to get this done. To get Congress on board, he would also have to work with the chairwoman of the Federal...
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...Hudson Valley BUSINESS JOURNAL March 23, 2009 - 2 7 Banking Goldstein Lieberman & Co. extends lifeline in tough times Goldstein Lieberman & Company LLC has pledged support to area charities for the duration of the recession and is chalalways supported various causes and notfor-profit groups in our community. The partners now have chosen to do so in a more struetured, public way because tbe need is great and all area businesses need to lend a hand. Goldstein Liebennan & Company recently developed a task force— Recession-Expert Accounting Consultant Team (REACT) to guide businesses tbrough the economic downturn. "As we developed successful solutions for struggling businesses, we thought hard about what organizations in tbe not-for-profit sector are now facing," says Goldstein. "We wanted to do sometbing that will make a difference for our not-for-profits and the people who rely upon them," The first check will be awarded to the Committee for Families of War Veterans, an organization in the Hudson Valley region that has grown in response to tbe needs of families of soldiers who have died or have been wounded in these recent conflicts. "I am overwhelmed that a business would make tbis kind of commitment to the community, especially now when so many companies 4re cutting back on charitable donations or cutting them out eompletely," remarks Ray McCarthy a spokesperson for tbe organization that has helped many families in fhe region. Organizations that are registered 501 C can...
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...The credit crisis that shook the world’s financial system, which long ago moved beyond its origins in subprime mortgages, began to accelerate in September, 2008. On September 7, 2008, the US Treasury seized control of mortgage giants Fannie Mae and Freddie Mac and pledged a $200 billion cash injection to help the companies cope with mortgage default losses. Although privately owned, Fannie Mae and Freddie Mac are called Government Sponsored Entities or GSEs. Under the bailout, the two GSEs were placed under a “Conservatorship” status (Agrawal 1) and both continued working as before but their commitments were to be paid with the support of the US Treasury. From September 14 – 22, 2008, we saw the collapse of investment bank giants. An investment bank (i-bank) is nothing like...
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...Introduction The organization that I will be researching is Wachovia Bank. Wachovia is a diversified financial services company that provides a broad range of retail banking and brokerage, asset and wealth management, and corporate and investment banking products and services. They are one of the largest providers of financial services in the United States, with retail and commercial banking operations in 21 states from Connecticut to Florida and west to Texas and California, and nationwide retail brokerage, mortgage lending and auto finance businesses. Its retail brokerage operations under the Wachovia Securities brand name manage client assets through offices nationwide. Globally, clients are served in selected corporate and institutional sectors and through more than 40 international offices. Over the last several years Wachovia has always been in the position of purchasing smaller banks. And with most acquisitions, Wachovia has implemented their policies and procedures without taken into account how this would affect the existing employees of the company that was bought. Now for the first time, in company history, Wachovia finds itself on the other side of the table. I’m currently a Business Analyst at Wachovia. I’ve been with the company for almost 2 years, but I’ve been there long enough to understand and adapt to the culture, their policies & procedures, their implementation of diversity within Wachovia and their community involvement. I currently work with employees...
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...market to plummet. | [pic] TABLE OF CONTENTS Introduction………………………………………………..………… The History…………………………………………………………… Causes………………………………………………………………. The Run Up………………………………………………………… Lehman Brothers………………………………………………… Bank of America…………………………………………………… Fallout……………………………………………………………… Conclusion………………………………………………………… INTRODUCTION In 2007, the United States was in the midst of the largest mortgage and financial crisis since the Great Depression. The impact of the financial collapse caused many Americans to lose their homes and their jobs. Across the country, mortgage delinquencies and foreclosures have hit an all-time recorded high, with 11% of loans currently two or more payments behind. Complicating matters, 24% of borrowers are “underwater,” having mortgage balances greater than the values of their homes. The lack of financial management caused two large investment banks and the largest insurance firm in the world to cripple the Dow Jones Industrial Average by nearly 30% within 2-3 weeks. The financial collapse did not just affect home owners, but many financial firms were now facing imminent bankruptcy including Morgan Stanley, Goldman Sachs, Citigroup, Wachovia and more. Many different combinations of deals and mergers were suggested, but the crisis advanced. Morgan Stanley eventually sold a 21% equity stake to Mitsubishi UFJ for $9 billion, which was paid as the largest check ever written. The people of the...
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...institution has knowledge that: (a) they are conducted by or on behalf of the same person; and, (b) they result in cash received or disbursed by the financial institution of more than $10,000. (31 CFR 103.22) 2. FinCEN Form 105 Report of International Transportation of Currency or Monetary Instruments (CMIR): Each person (including a bank) who physically transports, mails or ships, or causes to be physically transported, mailed, shipped or received, currency, traveler’s checks, and certain other monetary instruments in an aggregate amount exceeding $10,000 into or out of the United States must file a CMIR. 3. Department of the Treasury Form 90-22.1 Report of Foreign Bank and Financial Accounts (FBAR): Each person (including a bank) subject to the jurisdiction of the United States having an interest in, signature or other authority over, one or more bank, securities, or other financial accounts in a foreign country must file an FBAR if the aggregate value of such accounts at any point in a calendar year exceeds $10,000. (31 CFR 103.24) 4. Treasury Department Form 90-22.47 and OCC Form 8010-9, 8010-1 Suspicious Activity Report (SAR): Banks must file a SAR for any suspicious transaction relevant to a possible violation of law or regulation. (31 CFR 103.18 − formerly 31 CFR...
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...for issuing loans was “originate and hold.” Banks would take short-term deposits and other sources of funds and use them to fund longer term loans to businesses and consumers. Banks would hold these loans to maturity and have an incentive to screen and monitor the borrower’s activities even after a loan was made. This model exposed the banks to potential liquidity, interest rate, and credit risk. In order to avoid these risks, commercial banks shifted to “originate and distribute.” An underwriting model in which loans were originated and quickly sold. This innovative way removed the risk from the balance sheet of financial institutions and shifted the risk to other parts of the financial system. The FI’s were not exposed to the risks of old-fashioned banking, and had little incentive to monitor the activities of borrowers to whom they loaned to. They lowered credit quality cut-off points, offered low rates on adjustable rate mortgages (ARM). Under the old-fashioned issuing of mortgages, FI’s would’ve never pursued low credit quality borrowers for fear of default. Asset securitization and loan syndication allowed banks to retain little or no part of the loans, which meant little or no part of the default risk that they originated. They were ignoring long term credit risk concerns altogether. While the old-fashioned way exposed the banks to risks, the innovative way not only exposed the banks, but also exposed the entire world to...
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...Th Fi ncial Cris he inan sis: 2007 2 7-2009 gar N g A. Norton, Jr. Illin nois Sta Uni ate iversity y Cover page im mage ©2010 Pho otoDisc, Inc. Copyright © 2010 by John Wiley & Sons, Inc W c. All rights rese erved. No part of thi publication ma be reproduced stored in a ret is ay d, trieval system or transmitted r in any form o by any means, electronic, mec or , chanical, photoco opying, recordin scanning ng, or otherwise, except as permi itted under Sections 107 or 108 o the 1976 Unit States of ted Copyright Ac without either the prior writte permission of the Publisher, o authorization t ct, r en f or through payment of th appropriate pe he er-copy fee to th Copyright Cle he earance Center, I Inc., 222 Rosewo Drive, ood Danvers, MA 01923, website www.copyright A e t.com. Requests to the Publisher for permission should be r addressed to t Permissions Department, Joh Wiley & Son Inc., 111 Rive Street, Hobok NJ 07030the hn ns, er ken, 5774, (201)74 48-6011, fax (20 01)748-6008, we ebsite http://www w.wiley.com/go/ /permissions. To order book or for custom service, pleas call 1(800)-CA ks mer se ALL-WILEY (2 225-5945). Printed in the United States of America. e o ISBN 978- 0-470-56516-2 The Financial Crisis: 2007-2009 Objectives Understand the major influences that led to the 2007 2009 Financial Crises Describe the role that agency cost issues played in the financing of mortgages to developing...
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...lost their homes due to inappropriate foreclosures that large banks and other lenders had created. In the online article, "Homes, Not Tents", a San Francisco neighborhood named Bernal Heights had occupants come together in solidarity to protest against the banks for lending predatory loans and subprime loans with high interests rates and high risk, which lead to the foreclosure homes in this area; this was known as the Occupy Bernal movement which took place in 2011. In the article, "Enginnering an Islamic Future" by Bill Maurer, we see an Islamic Banking system that differs from the U.S. capitalistic system. From an Islamic Banking perspective, the issues that would arise with this foreclosure crisis include unethical issues, issues of deregulation of the subprime loans, and the loss of the American dream and their identity to those who lost their homes in Bernal Heights. First, the groundwork of the Islamic Banking is that it is ethical, meaning that it takes the well being of their people into consideration. In Bernal Heights, the large banks, such as Well Fargo and Wachovia, became the primary lenders of money through subprime loans. Subprime loans are loans that are given to people who do not meet the requirements for a prime loans. These banks were constantly making loan contracts with individuals who they knew were not going to be able to pay back their interests with their current income. So basically, these banks were lending for their own self interests to make a profit...
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...Does leadership exist in management? In order to find this out you need to look at management as a whole and leadership as a whole. Leadership is defined as, the position of function of a leader, a person who guides or directs a group. Another common meaning is the process that involves attempts to influence other people in obtaining organizational goals. Given these definitions, you can see that leadership can be anywhere. A person doesn’t need to hold a certain position in a company or organization to be considered a leader; it’s not a job title. There are several types of leadership, laissez-faire, autocratic (authoritarian), participative (democratic), transactional, and transformational. Laissez-faire leadership, when translated, means leave do or hands off. This form of leadership allows subordinates more freedoms to complete their tasks. The employees make decisions instead of the managers. Autocratic or authoritarian leadership is a type of leadership where a leader acts as the dictator. All decision will come from the leader with little to no input from subordinates. Autocratic leadership is highly effective. These leaders are highly motivated, knowledgeable, and feel fulfilled when they achieve something on their own. Participative or democratic leadership involves cooperation by all members of a group or team to get things done. This type of leadership allows leaders to work closer and together with their subordinates. Advantages of participative leadership are...
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...Do Bank Mergers Create Shareholder Value? An Event Study Analysis Varini Sharma Introduction to Econometrics December 17, 2009 Professor Gary Krueger Macalester College I. Introduction Since the 1980s, the U.S. banking industry has experienced a large increase in the level of mergers and acquisitions. Between 1980 and 1998, approximately 8,000 bank mergers occurred, involving about $2.4 trillion in acquired assets that can be attributed to deregulation in the1980s and the removal of legal restrictions on intrastate and interstate banking (Rhoades, 2000). One basis for these mergers is the assumption that such consolidations lead to improvements in efficiency and profits amassed through increased market power, economies of scale, reduced earnings volatility, diversification, and other financial and operational synergies. While proponents of bank mergers argue that these gains are substantial, Coase (1937) tells us that tradeoffs exist between economies of scale (size) and ability to manage. In addition to the significant increase in mergers we have witnessed the collapse of countless financial institutions in the past 3 years due to bad lending practices. While the Coase theory applies to firms in general, how well does it apply to financial institutions? Additionally, has the increased size of financial institutions contributed to the financial crisis of 2008? This paper investigates the economic role of bank mergers in creating shareholder...
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...firms and executives, and of personal governance by individuals. After peaking in the United States in 2006, the global housing bubble collapsed. On the national level, home prices in the United States have dropped by almost 40% according to the Case-Schiller Home Price Index from 2006 peak to mid-2009. Securities with risk exposure to housing market plummeted, causing great damage to financial institutions across the globe. Stock markets all over the world suffered large drops in 2008 and early 2009 as questions arose regarding the solvency of major financial institutions and liquidity in the credit markets dried up. Worldwide growth slowed with the tightened credit markets and declines in international trade. Governments, central banks, and international organizations...
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...Case Studies of Cybercrime and Its Impact on Marketing Activity and Shareholder Value Katherine T. Smith Department of Marketing Texas A&M University 4112 TAMU College Station, TX 77843-4112 Tel: 979-845-1062 Fax: 979-862-2811 Email: Ksmith@mays.tamu.edu L. Murphy Smith, CPA* Mays Business School Texas A&M University 4353 TAMU College Station, TX 77843-4353 Phone: 979-845-3108 Fax: 979-845-0028 Email: Lmsmith@tamu.edu Jacob L. Smith Grace Bible Church College Station, TX 77845 JacobSmith@grace-bible.org *Corresponding author Forthcoming in Academy of Marketing Studies Journal Electronic copy available at: http://ssrn.com/abstract=1724815 CASE STUDIES OF CYBERCRIME AND ITS IMPACT ON MARKETING ACTIVITY AND SHAREHOLDER VALUE Katherine T. Smith, Texas A&M University L. Murphy Smith, Texas A&M University Jacob L. Smith, Grace Bible Church ABSTRACT Cybercrime, also called e-crime, costs publicly traded companies billions of dollars annually in stolen assets and lost business. Cybercrime can totally disrupt a company’s marketing activities. Further, when a company falls prey to cyber criminals, this may cause customers to worry about the security of their business transactions with the company. As a result, a company can lose future business if it is perceived to be vulnerable to cybercrime. Such vulnerability can lead to a decrease in the market value of the company, due to legitimate concerns of financial analysts, investors, and creditors. This study examines...
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... e. European Laws & Resolutions....................11 IX. Conclusion.......................................12 Introduction The financial crisis of 2007-2008 is considered to be the worst financial crisis since the Great Depression in 1929. Not only were some of the largest firms in the world threatened but also, the normal lives of everyday people faced great challenges as the entire financial market and banking industry was damaged. The prevention of the folding of these firms was backed with bailouts from national governments and banks. The crisis was the cause of business declines, foreclosures on homes, evictions, and lengthened unemployment. This event did not just end in 2008; it led to the 2008 through 2012 global recession and played a significant role in the European sovereign-debt crisis. Throughout this document, I will talk about the cause and effects of the crisis, what the national government and banks did to resolve the problem, and conclude with my...
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...in its original business for longer than 150 years. It has always strived to help its customer achieve financial success by provides banking, insurance, and mortgage finance, just to name a few. In addition, it has always contributed to communities across the North America and internationally. We intend to demonstrate how Wells Fargo is promoting waste with its current policies and have mapped out a plan to get them back on track and more profitable. History: The company's history goes back to 1852, when Henry Wells and William Fargo created Wells, Fargo & Company in New York City during the West’s gold rush. They provided banking and express services to Golf Rush pioneers. Banking services included buying gold, and selling paper bank drafts. Express services, on the other hand, consisted of the rapid delivery of gold, mail and valuables from1852 to 1918. Wells Fargo used back then stagecoaches, steamships, the Pony Express, and railroads to deliver customers’ business. In 1860s, the firm earned a reputation for trustworthiness by dealing rapidly and responsibly with customers’ money. It earned everlasting fame with the overland stagecoach line by meeting the demand for rapid delivery, from the coast to the mountains; Stagecoaches rolled over 3,000 miles of territory night and day at a pace from 5 to 12 miles an hour. Since then, Wells Fargo has been linked with the six-horse Concord Coach rolling across the vast plains, high mountains, and scorching deserts of the West...
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