October 12th, 2011

It looks as if thousands of former I-Advance customers are getting restitution payments this week.

[Not all former META BANK's customers receive their pay back: PLEASE LOOK AT THEIR INPUT BELOW]

In July, MetaBank announced that it had agreed with the OTS to provide approximately $4.8 million in restitution payments to its former i-advance customers.

The payments are being delivered through direct deposit on to MetaBank-issued prepaid cards.

[Pre-paid cards should be cashed immediately when dealing with META BANK. META BANK has full use of your money while it is still on the PRE-PAID CARD]

The payments stem from a July 15th order from the Office of Thrift Supervision.

“MetaBank is adding funds to your prepaid card account ending in **** in the amount of $****.**.  This amount is intended to fully satisfy the payment owed to you pursuant to an order issued by the Bank’s regulator, the Office of Thrift Supervision, on July 15, 2011.

If we determine that the above-referenced prepaid card account is no longer active, we will send your payment to you by check at the last known address we have for you in our records. [ Then the scam began yet again for these META BANK former customers with this one simple contingency; this would become META BANK's self created loop-hole to get out of having to pay all of the former iAdvance customers who had been scammed.]

If you have any questions about this deposit to your prepaid card, please call our toll free customer service number 866-751-2931. “

Comments on Bank Talk seem to reveal that customers are thrilled, and in some cases surprised, by the arrival of dollars into their accounts. One commenter even asked “how real is this?” Well, “so626″ it is real.

The OTS order said that MetaBank had failed to provide a plan for repeat customers (“recurring use”) of the i-advance product.

The OTS required the bank to stop the program and to provide restitution for some consumers.

The recurring use issue was part of a recent guidance submitted for comment by the Office of the Comptroller of the Currency.

In that guidance, the OCC said that it wanted banks to have a plan in place for consumers that make frequent use of the new deposit advance products. Regions, Wells Fargo, US Bank and Fifth Third have all developed iterations of these products.

The OCC is letting the big banks get away with providing a product that is remarkably similar to the one that the OTS issued a cease-and-desist order against in 2010.[Consumers need to be alert at every turn!!!!]

Other MetaBank News

One of the requirements of the order was that MetaBank could not make any “golden parachute” payment to an executive without giving a 30-day notice to the OTS. The OTS stipulated that a requirement for such a payment would rest upon the compliance by MetaBank of 12 C.F.R. Part 359 and 12 C.F.R. Part 563, Subpart H. These are rules that govern executive pay. Golden parachutes are a name for severance packages given to executives when they depart from the company. With the dissolution of the OTS, MetaBank issued those notices to the OCC and to the Federal Reserve.

In what could be an unrelated event, MetaBank announced that CEO James S. Haahr retired from the Board of Directors on September 30th.[This is an old man who would be of retirement age.]

Filed under: unbanked | Tags: i-advance, MetaBank, OTS, restitution

23 comments

JA

October 12, 2011

I received email saying I will get refund check.. But they do not have my new address…. I have been trying to call the customer service number. But never an answer [ Ah ha....this is typical of META BANK: impossible to get problems resolved by phone and META BANK’s lack of proper record keeping which helps META BANK, but which harms the customer.]

cakes0329

October 14, 2011

Hi JA,

I called IAdvance today, and they did not have my new address but my parents address as my mailing address. They informed me if i wanted my check mailed to my address but i declined. They did inform me that a check was mailed to me on 11/12. As of today, I haven’t received it. They were able to verify my old address email address by my social security number. The only thing is they could not tell me the amount of the check, but they informed me that the letter is confirmation on the amount that i would receive. I dont know if you are calling IAdvance at 866-751-2931. Hope this helps.  [ That is the way one consumer should be trying to help another; this response sounds genuine.]

hihohiho

October 17, 2011

I’ve recieved nothing – no e-mail or direct deposit. I used this service for 1.5 years and paid in full! Why are some getting a refund and others not? Anyway to find out?   [I wish that I had an answer for this question. I would like to hear what happened or happens in this situation.This commenter needs a genuine answer.]

Stephanie

October 18, 2011

Have they given any information out about how they are choosing who is getting the refund? How much did iadvance have to screw you over in order to get a refund?  [This is a very good question. Have we ever seen what the answer is to this question.]

hihohiho

October 19, 2011

Iadvance told me today they were required to use a formula provided by the feds to determine who will be refunded fees. I used the service consistently for 1.5 years and was not considered eligible by their calculations…. My guess is this was based on deposits – and those struggling to pay their balance – not those like me who were trapped and having to re-loan every month. [This is why I still don’t trust META BANK... META BANK has caused so much misery for their customers....Please don’t use META BANK.... all that former customers can do is to advise other potential customers so they will not have to be treated like we were at META BANK.]

Hmussmann

October 24, 2011

I got a check last monday but my bank would not cash the funds right into my account. There is no signatures on the checks. It’s now a week later and i’m still waiting for them to send the funds to my bank. [ META BANK sent out unsigned checks.... What is there within this comment that any potential future customer might find as a “Red Flag” indicating that META BANK has poor internal management practices.]

MSANGIE

October 25, 2011

I received an email that told me the amount I would receive and that it was mailed, but it went to my old address. I was then directed to fax my new info. It took days as they only have 1 fax #.I was informed that I would receive a re-issued check after they receive the original back. Now I cant get any answers,They wont even pull up my account when I call. I have been given nothing but a run around, and I have no one to complain to. [This is very typical of how META BANK has operated ... This is why former customers say that it is frustrating to deal with META BANK. ...  META BANK says they only have one FAX line into the bank, but that they are the biggest provider of PREPAID Bank Cards ... This just doesn’t make sense.]

Kyle

October 26, 2011

Interesting-what started as good news has quickly gone south for me as well. I received an e-mail telling me the amount I would receive. It did not mention where it would be sent, but since I had received marketing info from Metabank, I presumed they did have my correct address. The e-mail also did not mention that I could/should verify my address with them. [ It seems rather typical that META BANK suddenly creates impossible rules for the customers so they can’t get the money that is rightfully theirs. This happened to me too.] After two weeks and no check, I called customer service and learned that 1- my check had been sent to a former address, 2- IAdvance is ‘completely separate from Metabank or Accountnow, which DID have my correct address, and 3- I need to fax my Driver’s license, pay stub, and SS card to the office to have the check sent to my correct address.[ What a big run around!!!]  And yes- that is assuming that the check is returned to them. I am going to find a way to follow up on this- perhaps through the Office of Thrift Supervision- who ordered them to issue refunds. Based on the events of the last two weeks I have the impression they haven’t cleaned up their act in the least.[ It looks like you are right.]

Hmussmann

October 26, 2011

I keep getting the run around as well. Meta bank says you have to talk to i advance and i advance tells you to talk to meta bank. GRRRRR! [ This is the scam META BANK began with and the only one they know; it is the run around that leads to nothing by way of a solution or to problem solving.]

ed

October 27, 2011

Like Kyle above the same situation here. I actually called back 3 days after i faxed the info to see if they had received my change of address and they said yes. Today 10/27 I galled to get status and they said the faxed they received was not readable? I am beginning to think the way they are handling this is some form of stall tactics to buy time while they can appeal to the OTS? [ Stall Tactics!!! In an effort to go back to renegotiate with the OTS....It sure looks like that. META BANK performs in ethically immoral ways over and over again.]

so626

October 27, 2011

i think they are stalling also because they also told me that my information was dark i told them too re copay it and make it lighter i dont understand the problem im going to be calling them everyday unitl i receive my check but other ppl who still have a netspend card already received their money…..   [so626 was told that his/her information was “Dark” ... What language is META BANK using here? This is a “run-around”  created by META BANK, and this is the only way that META BANK has ever behaved in the past. META BANK’s conduct is irresponsible and immoral.]

Tina

October 28, 2011

Has anyone gotten this check and it cleared the bank? [ I would like to know that too. META BANK has continued the internal practices that set this whole situation into place for them in the first place.]

Sam

October 31, 2011

Glad to know I am not the only one going thru this.. I too received an email stating I would be receiving a check only to call 2 weeks later and be told that the address the check was sent to was wrong. [How many wrong addresses can META BANK come up with for an excuse? Actually, I Knew that META BANK had my correct address, but they told me that I hadn’t ever given them my contact information when I opened up the PREPAID TRAVEL CARD. META BANK had mailed one check to me at my address, but then told me that they didn’t have my contact information because I hadn’t given it to them. I had given them all of my contact information, but META BANK was lying to me .... And META BANK is also lying to all of you.] 

I then had to fax a copy of my DL, SS card, and recent utility so that my address could be changed. Funny that I didn’t have to submit to such probing requests when I began using their services. In fact I never had to speak to anyone to initiate any transactions. I didn’t send all the information requested for security concerns, I mean having a copy of ur DL,SS number and address is just too easy to become a victim of ID theft. I have yet to call and follow up, I will today and let u all know the outcome. [META BANK only knows how to scam people. The way that META BANK acts is criminal.]

T L

October 31, 2011

I received a check in the mail, unsure what it was for. I am taking it to the bank today. Hope it goes through. After reading everyone’s comments and researching on the Internet, seems like this money will be stalled. I will write a comment later today on what happens at the bank. [ I would like to hear if TL got her money out of that check]

Danielle

October 31, 2011

Received email also. Thought it was Spam. Called Account Now – who I refuse to deal with anymore because of IAdvance – that said it was true. Those fools have my old addr from 2007.. So stupid.. when MetaBank has my current addr. This is my 4th time faxing them info… Even went to the post off to change of addr to cover bases. Why am I going thru all of this for the trouble they caused? That’s why I don’t do loans anymore — just pay with cash! Horrible co.  [META BANK is stalling in an effort to keep customer’s money, once again. What will stop META BANK from doing this kind of scam over and over again to innocent victims?????]

sihi

November 4, 2011

I really don’t understand why iadvance would send a check to an old address not knowing if you still live there instead of emailing everyone for updated info. I have sent in updated infomation 3 times and have still as of today nov.4th 2011 haven’t received my check and feel as though they are giving me a run around. [ Your suggestion makes sense, but META BANK is playing a game still. META BANK has acted this way toward their customers over and over again which put META BANK in a position to get complaints about how they treat customers. META BANK has never served customers; META BANK has only scammed customers. Apparently, META BANK can’t figure out another way to operate that would be ethical, morally acceptable and decent.]

AJ

November 8, 2011

I received the email about the refund also. The amount was included. I called the # listed and they advised me the check was sent to my old PO Box. They gave me instructions on how to update my addess by faxing in 3 pieces of info. I faxed it in, waited for over 2 weeks and they’ve updated the address but the check hasn’t been returned yet. I was told that if the check doesn’t come back to them by 11/12, they will re-issue a new check to the new address automatically. Until then, I will just wait patiently and see what happens. Thank God I am not pressed for money. Will provide an update when it comes. [ I, for one, will be anxious to hear if META BANK ever gets the money to this former customer too.]

Quincy

November 10, 2011

Sorry to hear so many complaints. i didn’t believe the email received until i noticed a $2800.00 balance in my account 3 days later. It’s true. Maybe give it some time? They may be doing disbursements in phases. Hope you all receive them before the holidays…Keep pursuing them. Don’t give up!

[Wait!!! The money is supposed to be put on the PRE-PAID Card and Quincy’s money back was on his/her PREPAID CARD in three days, but others complain that META BANK is mailing their money to the wrong address although META BANK had their correct email address, and could have asked for the current mailing address. It may be that some customers had closed out their accounts with META BANK, but so far I haven’t seen anything responsible in the way that META BANK has handled this situation.]

Blackdia5204

November 14, 2011

Got my refund on my card. Didn’t even know it was there until I got the email. Want to know how they figured out the refund amount. [ How was the amount figured out and why was it so easy for some former customers to get their money back.]

jackie alvarez

November 15, 2011

how do u know if your getting one?? [ That is a really good question. If you find out why some people got emails and others just had money placed on their cards. If you find out the reason, I would like to know what it is.]

HWoodruff

November 16, 2011

I need to know why only some individuals received a refund and others did not. I happened to be one of them who did not receive a refund. I was very diligent in paying back my iadvance each time and used it very frequently. I feel all should have received some type of percentage in receiving a refund and not some. We were all “taken back” for a brief moment in our financial lives. Who can I contact besides iadvance/metabank as to why I did not receive a refund. I truly want a concrete and accurate answer.[ I have only gotten the run-around from META BANK because that is what META BANK does. You should be given a concrete and accurate answer.]

Stephanie

November 16, 2011

I received my check in the amount of 127.50 and it cleared my bank weeks ago. I didn’t have any trouble with it. [Two people named “Stephanie”???? Or did Stephanie who wrote in October get her situation resolved with META BANK??? I think that this is a second Stephanie. This “Stephanie” offers no insight into how she got money and the others didn’t. We are all happy for this “Stephanie” but no one else’s situation has been resolved.]

Daniel

November 23, 2011

I am to receive a refund. iAdvance had the address wrong the first time, faxed required documentation for address change, address change was accepted.

Why, after two weeks, have they not reissued the check. Isn’t it funny, when you owe a bank money, they take your money from your account immediately, but when a bank owes you money, you have to hop through all these ridiculous hoops. Just for some interest, why is the interest ALWAYS in their favor? The OTS should have forced them to pay interest on this illegally obtained money. I bet they would pay out immediately, if they had to pay this interest. iAdvance, JUST ran the batch process and get these checks sent out, I would bet that it would take no more than 2 hours to run the batch and print the checks. You already have a bad name, why make it worse. MAIL THE CHECKS OUT.

[I experienced a similar situation as Daniel. META BANK set up all the rules for how they operate and there aren’t a lot of people enforcing proper behavior by banks from the outside, it seems. This is why consumers must follow up with their elected officials and any and all other potential resources to get this kind of banking practice, such as META BANK practices their business, changed because META BANK doesn’t seem to have any internal moral compass to be able to self-regulate in morally acceptable ways for the greater community. META BANK is only dedicated to making a profit and not to improving customer service. META BANK lied to me so they could hold onto my money for an extended period of time which gave them an interest free loan from me. ... META BANK is a scam.]

http://banktalk.org/2011/10/12/metabank-distributes-refunds-to-i-advance-customers/

DEBIT CARDS and CREDIT CARDS – not good for consumers trying to get out of debt.

SUPERMARKETS

by GET HUMAN

by lostroyal - 1 year ago

“unauthorized direct deposit with no acess to account, no card. nothing. they have commited fraud what do i do about that?who can i report this to?”

• Overall Quality 1/5

   

• Communication 1/5

   

• Waited
  15 mins

  by jaeide - 1 year ago

  “Didn’t have to wait long”

  • Overall Quality

     

  • Communication

     

  • Waited
    2 mins
    +++++++++++
    This information is inadequate to explain why that customer believes that META BANK provides good customer service based on one phone call. On the other hand, the report above indicates a fifteen minute wait. No other details are given. The customer complaints just before that also indicated a fifteen minute, the exact same time as the second complaint. The wait for what? What was said? Why the problem  wasn’t resolved is not discussed.
    I believe that this is a form of publicity trying to market yet another service that is unwanted and unnecessary given the link that is provided at this site.
    Bottom Line:
    META BANK needs to be controlled since they have not shown respect for their customer base.
    META BANK seeks out clients who do not have to provide a credit history.
    META BANK is a sub-prime lender bank.
    META BANK makes up all of their own rules, in their favor.
    
    
    
    
    The GET HUMAN website looks suspicious
    Find other places to seek solutions because as a consumer this is your right

Will META BANK also take us along with them on this path of self-destruction?

Not if consumers can help it.

However, consumers are left asking themselves if anybody is doing any real thinking about the future within META BANK since everything META BANK does seems to be the same old same old that hasn’t worked before …. Well The META BANK CEO’s are getting rich

But is that good for the American people? America is losing their middle class at a rapid rate. What will America be like when all of the middle class is gone?

Does META BANK care? There is every indiction that when the US  economy fails completely that META BANK will have used up all of their potential market and customer base. Is META BANK pulling down the US Economy?

Is META BANK simply in the throes of dying out at this time and fighting tooth and nail in the only way it knows how to grab any bit of the market share?

At what moral cost is META BANK operating within our society?

The vast numbers of customer complaints indicate that META BANK is operating with their eyes closed to reality…. and that META BANK lacks compassion for the human condition…. so their services do nothing to improve our society.

It is perhaps best if we pray for a miracle…..

Given the current economic situation, it will best serve us as consumers, if we can warn other consumers about banks or corporate entities where we have been unduly taken advantage  of, especially when that abuse has been found in more than one instance.

Simply noting the problems we have encountered to alert other consumers so they do not have to experience the same misfortune that we did may be one of the first ways that we can fight back.

If you can alert us to places you have found problems that will be helpful.

This is a blog for consumers, by consumers.

What we cannot do is to give advice about getting yet more debt and loans. This site wasn’t established for that purpose. This site was established to seek solutions and consumer protections where there haven’t been any in the past.

Great effort has been done to seek input about other consumers who were scammed in the same way that I was so that we will have a collection of consumers experiences with the NETWORK BRANDED PREPAID (BANK) CARDS.

I found that the NBPCA has an active and well funded non-profit organization established for the purpose of hiring Rupli Lobbyists in DC to advocate for legislation that would allow these cards to become ubiquitous and pervasive through out the world. However, it is banks like META BANK who have sent their officials to be the founders of the NETWORK BRANDED PREPAID CARD ASSOCIATION. (Documented elsewhere on this blog) In this way, META BANK and the NETWORK BRANDED PREPAID CARD ASSOCIATION are able to channel great amounts of money to pay for lobbyists that might other wise never have happened.

META BANK is a sub-prime lender bank that seeks to serve the “Underserved” in the banking community. Sometimes META BANK calls these people the “UNDERBANKED”, but this is misleading. METABANK seeks out people who have a “Bad Credit History” to give them these PREPAID BANK CARDS. To get the cards, the consumer doesn’t need to present any documents to prove that they are credit worthy.

META BANK says that their debit/prepaid bank cards when attached to a checking account into which the customer has all of their paycheck deposited and if the customer uses the card card a lot, frequently that this is the way to improve their credit history or credit rating. This is basically a false promise for several reasons. META BANK has in this circumstance full control of the customer’s income and META BANK has been unscrupulous in how they have managed these accounts for previous customers. Once the customer has given full control of their account to  META BANK, that customer is then at the mercy of META BANK. The customer needs to have control of their own money and financial assets. Given the fact that META BANK has repeatedly scammed other customers by keeping their money from them and basically forcing the customer to incur additional fees which they hadn’t anticipated, META BANK has not “acted as a friend” to the consumer customer. The rules get changed at anytime per the fine print and when they change it has always been in META BANK’s best interests, but to the disadvantage of the customer consumer. META BANK sets up all the banking rules themselves and in making this contract the customer consumer has to take it or leave it.  Given META BANK’s track history, customers would be best served to simply not deal with META BANK.

This isn’t so easy though. META BANK uses many different names under which they operate. META BANK advertises to potential partner companies that they are the largest PREPAID BANK CARD Processing Bank in the USA. If this is true, then we may be dealing with META BANK without knowing it.

META BANK gets the partner companies to promote their PREPAID BANK CARD for them so we may believe that we are dealing with the partner company when in fact we are really dealing with META BANK.

In advertising to the partner company, META BANK notes that they have all of the collectors in place for this business relationship. This means that from the start META BANK anticipates acting more like a collection agency than the traditional banks we may have once known. META BANK often speaks of customer loyalty. When a customer consumer hears the term “Customer Loyalty” we may assume that it is because of having received very good service, but by their actions, META BANK means that they have found ways to force customer consumers to keep using a service that may not be to their genuine economic advantage.

I am advocating that consumers open up savings accounts in a local bank where they can actually walk in the door and talk to a real person free of charge.

META BANK has charged their customer consumers money for phoning them.

Many people say that they can’t access their money once they put their money onto such a card. In recent years, META BANK has been attending seminars and conferences to promote these cards to other banks and financial entities. META BANK is training others to follow their pattern when we, as customer consumers, need a completely different system that doesn’t keep us in debt.

META BANK’s primary goal is to make money for themselves, but the way they choose to do business has repeatedly been “unfriendly to the customer consumer” (This is documented elsewhere on this blog)

If you have already decided to use one of these PREPAID BANK CARDS anyway, you have that right.

I have found META BANK’s publicity to be misleading so I cannot promote their services to customer consumers.

Once in debt, more debt should not be incurred to pay off the first debt. As difficult as this may seem, this is exactly the situation that META BANK wants you to be in, a constant state of debt which has attached to it huge interest fees. It is the huge interest fees that makes using the card so desirable for META BANK.

Regarding the gift cards, those prepaid gift cards, many times fees are attached to the card. The other benefit for the bank and the partner company is that they hold onto your money until you remember to use the card. This is a period of time in which the bank and partner company hold onto the customer consumer’s money . In this case, many consumers have complained that they cannot access their own money, have unexpected fees that add further economic problems … This isn’t then the gift that the giver has intended nor the economic circumstances that we as consumers had signed on for. The time has come for consumers to align with each other, to share helpful information that leads to solutions.

When you sign up for a META BANK PREPAID CARD, especially when it is attached to a checking account at META BANK into which your paycheck is directly deposited, you give up all control of your own money to META BANK.

This may not be your intention, as a consumer, but that is META BANK’s intention.

META BANK takes away all of your personal control over your cash money.

Please avoid using META BANK. META BANK has not been able to resolve other people’s financial problems. META BANK has only added further problems onto what a person may already have who seeks out a bank that doesn’t care if you have a good credit history.

May what happened to me never happen to another person again by using META BANK.

META BANK isn’t consumer friendly.

 The New York Times

TIMES TOPICS:

Financial Regulatory Reform

Updated: Sept. 20, 2011

The near-collapse of the world financial system in the fall of 2008 and the global credit crisis that followed gave rise to widespread calls for changes in the regulatory system. A year and a half later, in July 2010, Congress passed a bill expanding the federal government’s role in the markets, reflecting a renewed mistrust of financial markets after decades in which Washington stood back from Wall Street with wide-eyed admiration.

In its broad outlines, the bill resembled the sweeping reform legislation President Obama had proposed in June 2009.  Its progress was marked by fierce industry lobbying and partisan battles, as almost all Republicans voted against the measure. In the year since its passage, the stock market is up, banking profits have grown and institutions that invest on behalf of average Americans are praising the tougher stance in Washington.

Dodd-Frank aims to rein in abusive lending practices and high-risk bets on complex derivative securities that nearly drove the banking system off a cliff. It creates a bureau to protect consumers from financial fraud, cuts fees banks charge for debit-card use, and sets up a means for the government to better supervise the nation’s largest financial institutions to avoid expensive and catastrophic failures. And it calls public exchanges on which derivatives and other complex financial instruments are traded.

But there remain signs that the tightened regulatory measures could still be undone, creating uncertainty about whether the actions that have helped to stabilize Wall Street will be in place when the next crisis hits. Two dozen bills in Congress seek to dismantle parts of the Dodd-Frank Act. Business groups have argued that too many new regulations could snuff out the start of an economic recovery. And Republican candidates for president have used the law as a symbol of government overreach that is killing jobs.

Since Republicans took control of the House in the 2010 midterm elections, they and the financial industry have stepped up their efforts to rein in the new law, which itself left hundreds of important decisions to be worked out in one of the most complex rule-making processes ever undertaken by the government.

By September 2011, only a small portion of the law has taken hold. Of the up to 400 regulations called for in the act, only about a quarter had even been written, much less approved.

Key targets of the bill’s opponents include reining in the powers of the Consumer Financial Protection Bureau, reconsidering limits on debit card fees and restricting the budgets and growth of the S.E.C. and the Commodity Futures Trading Commission. And some of the most powerful players in the derivatives market — which is closely controlled by just a small group of banks — argued that the government should allow a slow pace of changes for rewriting derivatives contracts.

Senate Republicans are refusing to consider nominations for posts at several financial regulatory agencies. Lawmakers have taken aim at agencies for budget cuts. Administration officials say that banking and business lobbyists have spent more than $50 million in 2011 to try to change the law, most of which has still not taken effect because regulators have not finished drawing up the new rules.

Mr. Obama’s pick for director of the Consumer Financial Protection Bureau, a centerpiece of the Dodd-Frank Act, is Richard Cordray, a former Ohio attorney general. Mr. Cordray was hired as the bureau’s director of enforcement by Elizabeth Warren, a Harvard law professor and bankruptcy expert whom Mr. Obama credited with giving him the idea for the agency.

While Ms. Warren has been working since September to prepare the agency for its July 21 opening, Republicans made clear that they did not want her appointed to a permanent position. A group of 44 Republican senators vowed they would not let any nomination come to a floor vote unless significant changes were made in the structure, power and scope of the consumer agency.

It is not yet clear that the forces fighting to preserve all the elements of Dodd-Frank will, in fact, win out. It is also not clear that Mr. Cordray will be confirmed by the Senate.

Background

The Dodd-Frank Act, which was signed into law by Mr. Obama on July 21, 2010, was hailed as marking the end of more than a generation in which the prevailing posture of Washington toward the financial industry was largely one of hands-off cheering, evidenced by steady deregulation. While the measure did not fully restore the toughest restrictions imposed after the Great Depression, it was meant to be a clear turning point, highlighting a new distrust of Wall Street, fear of the increasing complexity of technology-driven markets, and renewed reliance on government to protect the little guy.

The bill expanded federal banking and securities regulation from its focus on banks and public markets, subjecting a wider range of financial companies to government oversight, and imposing regulation for the first time on “black markets” like the enormous trade in credit derivatives.

It created a council of federal regulators, led by the Treasury secretary, to coordinate the detection of risks to the financial system, and it provides new powers to constrain and even dismantle troubled companies.

It also created a powerful new regulator, appointed by the president, to protect consumers of financial products, which will be housed in the Federal Reserve. The choice of a director for the consumer protection bureau became the first battleground of the post-passage struggle. Mr. Obama appointed Elizabeth Warren, a Harvard bankruptcy expert who had proposed the agency, to be its head, but in acting capacity, after it became clear that Republicans would block a confirmation vote. In 2011, Senate Republicans went further, saying they would allow no vote on any director until the bureau’s independence had been reduced.

The law also imposed new regulations on derivatives, the complex financial instruments credited with amplifying the credit crunch. Most trading will be required to take place through open marketplaces and banks would have to segregate or spin off their derivative-trading wings, although some exceptions were created in the final round of deal-making during the conference committee.

The final measure also included the so-called Volcker rule, which the banks had fought almost as strongly as the derivative restrictions. The rule, named for Paul A. Volcker, the former Federal Reserve chairman who proposed the measure in early 2010, restricts the ability of banks whose deposits are federally insured from trading for their own benefit, although not as strictly as Mr. Volcker had suggested.

Passage of the Bill

The House first passed a bill in December 2009. In May 2010, after months of wrangling, the Senate passed a broadly similar bill with four Republicans joining all but two Democrats in support. It took a month for the House and Senate to work out the differences. The House gave final passage on June 30, by a vote of 237 to 192, with all but three Republicans in opposition.

In the Senate, three Republicans — Olympia J. Snowe and Susan Collins of Maine and Scott Brown of Massachusetts — supported the bill, giving the Democrats the votes they needed to overcome a Republican filibuster and pass the bill on July 15 by a tally of 60 to 39. One Democrat, Russ Feingold of Wisconsin, opposed the measure, saying it did not go far enough.that they still wanted tougher policing of Wall Street. The bill was also criticized by liberal economists who said it did not go far enough.

Winning final passage was complicated for Democrats by the death of  Senator Robert C. Byrd of West Virginia after the conference agreement was reached. To hang on to the votes of moderate Republicans they dropped a tax on big banks and hedge funds that was meant to pay for the cost of the bill, estimated at $20 billion over five years. The tax was replaced by a plan to redirect $11 billion in funds repaid from the federal bank bailout, and changes to F.D.I.C. rules that would raise more revenue.

Shifting Responsibilities for Regulators

Part of Mr. Obama’s proposal was a provision to give the Federal Reserve greater supervisory authority over large financial institutions whose problems pose potential risks to the economic system. The suggestion drew fire from Republicans and from existing regulators whose role would be diminished, as well as from liberal critics who pointed out that the Fed had failed to head off the collapse of 2008..

The bill drafted by Senator Christopher J. Dodd, the chairman of the Senate Banking Committee, sought to restrict the Fed’s authority to about 35 bank holding companies, each with $50 billion or more in assets, which would put about 4,900 smaller bank holding companies and 850 state-chartered banks that are members of the Fed system under the control of the F.D.I.C. But the provision was stripped from the bill during floor debate, by a vote of 90 to 9, in a big victory for the Fed.

The bill would enshrine Washington’s role in policing Wall Street by creating a nine-member council, led by the Treasury secretary, to detect systemic risks to the markets and placing the Federal Reserve in charge of all of the nation’s largest and most interconnected financial institutions. The bill includes a provision intended to curb Wall Street’s influence over the Federal Reserve Bank of New York. Its president would be appointed by the president of the United States, not by a board that includes representatives of member banks.

Consumer Protection Agency

The bill passed by the House on Dec. 11, 2009 in a 223 to 202 vote would have created an agency to protect consumers from abusive lending practices, set rules for the trading of some of the sophisticated financial instruments that fueled the crisis, and take steps to reduce the threat that the failure of one or two huge banks or investment firms could topple the entire economy.

The Senate bill made the Consumer Protection Agency a branch of the Fed. The final bill does, too, but with provisions meant to preserve its independence, such as having its director be appointed directly by the president.

The agency is expected to push for measures like requiring lenders to provide plain-English disclosures, price comparisons with alternative products and clear tripwires before fees are assessed.

Derivatives

The chairwoman of the Senate Agriculture Committee, Blanche Lincoln of Arkansas, introduced a bill in April 2010 that would take a similar approach to clearinghouses and end-user exemptions. The bill would also require most derivatives to be traded on an open exchange.

Currently, the only way to trade many derivatives is to call up various dealers and ask for the price at which they are willing to buy or sell. The securities dealer profits from the difference between the prices at which it buys from one party and sells to another. Investors rarely, if ever, see details on the other side of the trade. Wall Street has signaled that it can live with a clearinghouse approach, but it is strongly opposed to exchange trading of derivatives, which would introduce price competition and lower the profits.

Wall Street bankers were stunned by the most aggressive portion of Ms. Lincoln’s bill, one that was opposed even by the Obama administration. That proposal would essentially ban banks from being dealers in swaps or other derivatives by taking away their access to federal deposit insurance and their ability to borrow from the Federal Reserve if they kept those businesses.

Banks made that provision their top target in conference negotiations, but the measure appeared to help Mrs. Lincoln win a tough primary fight, and it stayed in the bill, although the rules were loosened somewhat in the final agreement.

The Volcker Rule

The “Volcker rule” or “Volcker plan,” a measure named for Paul A. Volcker, the former Federal Reserve chairman who proposed it, would restrict the ability of banks whose deposits are federally insured from trading for their own benefit.

In January 2010, President Obama proposed that the Volcker rule be a part of the general financial regulatory reform push. Big losses by banks in the trading of financial securities, especially mortgage-backed assets, precipitated the credit crisis in 2008 and the federal bailout.

The measure’s aim is to keep highflying traders and other gamblers inside of banks from getting their hands on or putting at risk the old-fashioned savings of average depositors. A main element to the plan would bar banks from making proprietary trades – using their own money to place directional market bets that are unrelated to serving customers. Another change would prevent institutions from investing their own money in hedge funds or private equity operations.

The ban on proprietary trading was one of the less contentious points of debate for members of Congress, who tended to agree that banks should not be allowed to use a guarantee of government deposit insurance- indirectly financed by taxpayers- to provide themselves with cheap capital that they then use for risky trading activities.

Banks and some members of Congress argued that the proposed definitions are too vague. But even the bank lobbyists have said that proprietary trading accounts for only a small fraction of their revenue- from an estimated 10 percent at Goldman Sachs to half that for big commercial banks.

Banks managed to wrangle limited exceptions to the rule that would allow them to continue some investing and trading activity. The agreement limits banks’ investments in hedge funds or private equity funds to no more than 3 percent of a fund’s capital; those investments could also total no more than 3 percent of a bank’s tangible equity.

Too Big to Fail

The bill authorizes regulators to impose restrictions on large, troubled financial companies, and creates a process for the government to liquidate failing companies at no cost to taxpayers, which is similar to the F.D.I.C. process for liquidating failed banks. Regulators would have considerable leeway to impose restrictions on the largest financial companies, which could give smaller banks competitive advantages.

Republicans have vowed to undo this part of the bill, saying it would create an expectation among investors that they would be bailed out. It would be better, they argue, to leave the process to the bankruptcy courts.

http://topics.nytimes.com/topics/reference/timestopics/subjects/c/credit_crisis/financial_regulatory_reform/index.html

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Slipping Backward on Swaps

By GRETCHEN MORGENSON

Published: November 26, 2011

WALL STREET loves to do business in the shadows. Sunshine, after all, is bad for profits.

So it is perhaps unsurprising that players in the derivatives market want to thwart one of the worthier aims of the Dodd-Frank financial regulation: to bring transparency to the huge market for instruments known as swaps. Now some in Congress, on both sides of the aisle, are trying to block that goal, too.

Dodd-Frank focused on adding transparency to derivatives in a couple of ways. The area now under fire involves its directive that the Commodity Futures Trading Commission create rules to “promote pre-trade price transparency in the swaps market.”

The idea is that customers should get a clear picture of prices. Right now, many swaps are traded one-on-one, over the telephone. The price is usually whatever the dealer says it is.

When markets are opaque, the risks grow that problematic positions, like those that felled the American International Group in 2008, might once again create financial turmoil and spread through the system. Dodd-Frank sensibly asked that market participants provide trade and position details to regulators so this arena could be monitored better.

That mission has pretty much been accomplished. But a lack of transparency in the market as it relates to swaps customers hasn’t been addressed. And it is here that many on Wall Street, as well as some in Congress, are pushing back.

Opacity hurts customers because they can’t see a wide array of prices. But dealers can — so they have an edge that plumps up their profits. One estimate from the Swaps and Derivatives Market Association puts transaction costs in the swap markets at $50 billion annually. These costs would decline by $15 billion a year, the group recently estimated, if pricing were transparent.

The C.F.T.C. is trying to get there. Dodd-Frank requires it to oversee so-called swap execution facilities that will trade or process derivatives transactions. Late last year, in the interest of price transparency, the commission proposed that entities applying to be S.E.F.’s must agree to provide market participants with the ability to post prices on “a centralized electronic screen” that is widely accessible. One-to-one dealings by phone would no longer be allowed.

Those on Wall Street who favor the status quo are upset, and have found some sympathy in Washington.

Representative Scott Garrett , a New Jersey Republican, has teamed up with Representative Carolyn B. Maloney, a New York Democrat, to introduce the Swap Execution Facility Clarification Act. It would bar the Securities and Exchange Commission and the C.F.T.C. from requiring swap execution facilities to have a minimum number of participants or mandating displays of prices. Both mechanisms promote transparency.

Mr. Garrett said the bill directed regulators “to provide market participants with the flexibility” they need to obtain price discovery. This means maintaining the old system that can keep prices in the shadows.

On Nov. 15, a House subcommittee approved the bill by a voice vote.

Because Mr. Garrett opposed Dodd-Frank, his efforts to stop the proposed rule are not surprising. But Ms. Maloney supported Dodd-Frank, so I wondered why she had lent her name to the bill.

In an interview last Wednesday, Ms. Maloney said she had heard concerns about the C.F.T.C. rule from financial firms in her district. “I just felt like that Congress intended multiple competing trade execution platforms and that included voice,” she said. “If you say you can’t have any voice, aren’t you limiting the modes of trade execution?” She also said she was concerned about job losses on Wall Street.

Testifying in the House on Oct. 14 as a representative of the Wholesale Market Brokers Association was Shawn Bernardo, a senior managing director at Tullett Prebon, an institutional brokerage firm. Mr. Bernardo articulated the argument against screen-based trading that would show multiple bids and offers to swaps customers.

“Congress made clear in Dodd-Frank that S.E.F.’s may conduct business using, quote, ‘any means of interstate commerce,’ ” he said. That includes methods that don’t require a centralized pricing platform, he said.

Wall Street firms want to keep providing prices to customers one-to-one. The S.E.C., which governs credit default swaps on single-name issuers, allows the practice. But those markets trade by appointment, compared with most swaps markets, which are overseen by the C.F.T.C.

While many on Wall Street have objected to the C.F.T.C.’s proposed rule, swaps customers like it. The Industrial Energy Consumers of America, a group of manufacturers with combined annual sales of $800 billion, calls transparency in the swaps market “critical.” In a letter to the C.F.T.C. last May, the group urged the commission to be “vigilant in ensuring that swap execution facilities provide an open and competitive marketplace for discovering prices.”

Better Markets, a nonprofit organization that promotes the public interest in financial markets, has also praised the C.F.T.C.’s proposed rule. “It is painfully obvious that the financial crisis, which brought us to the brink of international economic collapse, was in large part the result of a ‘shadow’ or nontransparent financial market,” Dennis M. Kelleher, the chief executive of Better Markets, wrote in a comment letter. “The Dodd-Frank act requires that ‘business as usual’ must change.”

Not if Wall Street can help it. And it is throwing money at Washington to ensure that its views are heard.

IN an interview last week, Gary Gensler, the C.F.T.C. chairman, said he hoped to get the rule through early next year.

“Economists for decades have shown that transparency lowers margins, leads to greater liquidity and more competition in the marketplace,” Mr. Gensler said. “Tens of thousands of companies that use these products, and their customers, the American public, can benefit from more competition in the pricing of these contracts. Transparent pricing is also a critical feature of lowering the risk at the banks, and at the derivatives clearinghouses as well.”

But unenlightened investors can be mighty profitable. As Ferdinand Pecora, the Depression-era prosecutor, is supposed to have said of the events leading to the Wall Street crash of 1929: Pitch darkness was among the bankers’ stoutest allies.

A version of this article appeared in print on November 27, 2011, on page BU1 of the New York edition with the headline: Slipping Backward On Swaps.

Related

Times Topics: Derivatives | Gretchen Morgenson

http://www.nytimes.com/2011/11/27/business/slipping-backward-on-transparency-for-swaps.html?_r=1&ref=financialregulatoryreform

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Voices That Dominate Wall Street Take a Meeker Tone on Capitol Hill

By SEWELL CHAN

Published: January 13, 2010

WASHINGTON — Summoned to Capitol Hill to explain their companies’ roles in the worst economic downturn since the Depression, leaders of four big Wall Street banks offered a largely clinical take on the financial crisis on Wednesday, pointing to lapses in risk management and government regulation but offering little sense of the turmoil’s human toll.

Bankers in Their Own Words

BUSINESS

CNBC: Lloyd Blankfein Q&A

Financial Crisis Inquiry Commission Hearing

Testifying to the Financial Crisis Inquiry Commission, the body established by Congress to determine the causes of the Wall Street debacle, Lloyd C. Blankfein, the chairman and chief executive of Goldman Sachs, drew most of the fire.

Mr. Blankfein parried repeated questions over his bank’s extraordinary profits and salaries. At one point, when he likened aspects of the financial crisis to a “hurricane” and similar acts of God, the commission’s chairman, Phil Angelides, a Democrat and former California state treasurer, cut in to say, “Acts of God, we’ll exempt. These were acts of men and women.”

Mr. Angelides and the other commission members challenged the bankers on executive pay and reckless underwriting and trading, often in withering terms.

Like Mr. Blankfein, the other bankers — Jamie Dimon of JPMorgan Chase, John J. Mack of Morgan Stanley and Brian T. Moynihan of Bank of America — offered measured support for tougher financial regulations that would include raising banks’ capital reserve requirements and reducing the danger of systemwide risk.

The House last month adopted a broad overhaul that would give the government new powers to break up huge companies, create a new consumer financial protection agency and tighten oversight of derivates trading. The Senate has yet to vote on the measure.

With scores of cameras trained on them, the four bank chiefs were sworn in under oath, and then spoke in details so technical that they were numbing at times. None apologized, though some expressed sentiments close to contrition.

Mr. Blankfein, who in the past has said that Goldman should apologize, on Wednesday only hinted at regret. Goldman “got caught up in and participated and therefore contributed to elements of froth in the market,” he said.

Regulators are investigating whether Goldman Sachs and other Wall Street firms deliberately packaged troubled mortgages and passed the bonds off as sound investments even while Goldman and the other banks bet against those bonds, a point on which Mr. Angelides pressed Mr. Blankfein.

“I do think that the behavior is improper,” Mr. Blankfein said, adding, “We regret the consequence that people lost money in it.”

And when Mr. Blankfein said that buyers of mortgage-backed securities were primarily professional investors, Mr. Angelides interrupted to point out that those investors were “representing pension funds who have the life savings of police officers, teachers.”

Mr. Dimon said there had been regulatory deficiencies, but added, “I blame the management teams 100 percent, and fault no one else.”

Reflecting on the volatility that has rocked the markets, he recalled, “My daughter called me from school one day and said, ‘Dad, what’s a financial crisis?’ And, without trying to be funny, I said, ‘This type of thing happens every five to seven years.’ And she said, ‘Why is everyone so surprised?’ ”

One commission member, Byron S. Georgiou, a lawyer, said that no one involved in underwriting exotic securities — investment bankers, lawyers, accountants and rating agencies — was accountable for the risk. The outcome might have been different, he said, if the participants had been made to “eat their own cooking.”

Mr. Mack embraced the analogy. “We did eat our own cooking — and we choked on it,” he said.

The four banks represented at Wednesday’s hearing have mostly returned money they received through the Troubled Asset Relief Program, the 2008 effort that pumped capital into banks in an effort to spur lending. Officials from two of the biggest beneficiaries of that bailout, Citigroup and the American International Group, are expected to face the commission soon.

While Mr. Blankfein acknowledged that “government action was critical” in limiting the problems, Mr. Angelides told him: “I’m troubled by your inability to accept the probability or certainty that your firm would not have made it through the storm but for the vast array of federal assistance.”

Mr. Angelides, deploring the lack of accountability for the crisis, said: “Maybe this is like the ‘Murder on the Orient Express’: everyone did it.”

The commission, which has to deliver a report to President Obama and Congress by Dec. 15, is to hear on Thursday from Eric H. Holder Jr., the attorney general; Sheila C. Bair, chairwoman of the Federal Deposit Insurance Corporation; and Mary L. Schapiro, chairwoman of the Securities and Exchange Commission.

Javier C. Hernandez contributed reporting from New York.

Related

DealBook Column: Wall St. Ethos Under Scrutiny at Hearing (January 14, 2010)

Few Burns for Four Bankers on the Hot Seat (January 14, 2010)

For Bankers, Saying ‘Sorry’ Has Its Perils (January 13, 2010)

Times Topics: Financial Crisis Inquiry Commission

http://www.nytimes.com/2010/01/14/business/14panel.html

ECONOMIC VIEW

Dear Ben: It’s Time for Your Volcker Moment

By CHRISTINA D. ROMER

Published: October 29, 2011

…Mr. Volcker faced a similar problem in October 1979. Each small rise in interest rates was a major battle. Committing to an overarching goal yielded more forceful action and less dissension within the Fed. Agreeing to a nominal G.D.P. target would do much the same today.

For evidence that adopting the new target could help fix the economy, look at the 1930s. Though President Franklin D. Roosevelt didn’t talk in terms of targeting nominal G.D.P., he spoke of getting prices and incomes back to their pre-Depression levels.

Academic studies suggest that this commitment played an important role in bringing about recovery.

President Roosevelt backed up his statements. He suspended the gold standard and let the dollar depreciate. He got Congress to pass New Deal spending legislation and had the Treasury monetize a large gold inflow. The result was an end to deflationary expectations , leading to the most impressive swing the country has ever seen from horrible contraction to rapid growth.

Would nominal G.D.P. targeting work as well today? There would likely be unexpected developments, just as there were in the Volcker period. But the new target would have a better chance of meaningfully reducing unemployment than any other monetary policy under discussion.

Because it directly reflects the Fed’s two central concerns — price stability and real economic performance — nominal G.D.P. is a simple and sensible target for long after the economy recovers. This is very different from Mr. Volcker’s money target, which was abandoned after only a few years because of instability in the relationship between money growth and the Fed’s ultimate objectives.

Desperate times call for bold measures. Paul Volcker understood this in 1979. Franklin D. Roosevelt understood it in 1933. This is Ben Bernanke’s moment. He needs to seize it.

Christina D. Romer is an economics professor at the University of California, Berkeley, and was the chairwoman of President Obama’s Council of Economic Advisers.

http://www.nytimes.com/2011/10/30/business/economy/ben-bernanke-needs-a-volcker-moment.html?_r=1

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by Michelle Singletary

WASHINGTON — As you are thinking about what to get the people on your holiday shopping list, consider giving something special to those caring for an elderly relative or friend.

A lot of them are making enormous sacrifices.

About one in six people who have a full- or part-time job say that they have to care for an elderly or disabled family member, relative or friend, according to Gallup research sponsored by Pfizer and ReACT (or Respect a Caregiver’s Time) — a coalition of corporations and organizations trying to address challenges faced by employee caregivers. The research found that workers are forced to miss an average of 6.6 days per year because of caregiving responsibilities.

Amy Goyer, a family expert for AARP who is the primary caregiver for her elderly parents, recently wrote a wonderful blog about her holiday gift list that I’m sure speaks for a lot of people in the same situation.

“The gifts caregivers most want are not big-ticket items,” Goyer says.

“They are the things that soothe our souls, give us a smile and make us feel less alone. This is an important and challenging time in our lives and we often have no idea how long it will continue.”

The majority of caregivers participating in the Gallup poll said they have been providing care for three years or more.

So what could you give a caregiver? Here are just a few things on Goyer’s list:

Listen.

As my pastor often says, God gave us two ears and one mouth for a reason. Often caregivers just want to vent or sound out a decision they have to make. “If you feel like you don’t know how to help the caregiver in your life,” says Goyer, “remember that sometimes just listening is indeed helping.”

Offer encouragement.

Goyer writes: “I’m constantly questioning and trying to do things better! But what about the positives? What about the things I’m doing right?” I so identify with that plea. I’ve been the caregiver for several relatives and it’s frustrating to get critical remarks that outweigh the number of times someone says you’re doing a good job, especially when the people with lots of opinions and criticism aren’t helping very much with the care-giving.

Help out.

Here’s something people often say that Goyer believes isn’t very helpful: “Let me know if there is anything I can do to help.” People who are busy caring for others often don’t have the energy to list all the things they need help with doing. Or they may be too proud to ask for help. Be specific in what help you can offer.

Now that you know what a caregiver might need, here are some suggestions from me on how to make those wishes tangible for the holidays:

Create a gift certificate that gives the caregiver six 20-minute venting sessions.

When redeemed, you just listen to whatever he or she needs to talk about. Money Management International, a credit-counseling agency, has a site where you can personalize a holiday gift certificate. You can choose from five different backgrounds and you just type in what the bearer of the gift certificate will receive. Go to www.regiftable.com and click on the link for “Gift Certificates.”

Find funny and encouraging greeting cards and every month send a card to the caregiver. Or set up a schedule to send a monthly e-card. 

You can find free e-cards at www.yahoo.americangreetings.com, www.smilebox.com, www.123greetings.com and www.hallmark.com. If you want access to premium cards, you may have to sign up for a subscription. And Goyer says don’t get offended if the person doesn’t have a chance to acknowledge the card.

Use the personalized gift certificate to volunteer for a regular household task.

Gallup found that caregivers spend a lot of their time on tasks such as

• going shopping,
• doing laundry and
• providing transportation.

Caregivers also have to take care of a lot of administrative-type responsibilities such as

• researching care services,
• coordinating physician visits and
• managing financial matters.

Give a gift certificate that offers to do a specific task such as cooking a meal.

Buy a caregiver a gift certificate to a spa.

Spafinder.com will help you find a spa facility in your area. (This gift might need to come with an offer to sit with the elderly relative while the person gets the spa treatment.)

For more gift-giving ideas read, Goyer’s blog. Go to www.aarp.org and search for “A Caregiver’s Christmas Wish List.”

This holiday, help bring some peace and joy to the caregivers you know.

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Readers can write to Michelle Singletary care of The Washington Post,

1150 15th St., N.W., Washington, D.C. 20071.

Her email address is singletarym@washpost.com.