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Did the Bank Bailout Work?

Did the Bank Bailout Work?

A few months ago, the crumbling global economy was atop the agenda of many G20 leaders. Social unrest, banking sector meltdown, global growth conundrum, and stock market yo-yos were the main discussion topics among the planetary leadership.

Governments the world over addressed the most imperative issue, the banking pandemonium, with massive cash inflows into a sector that hitherto epitomized capitalism at its best (and worst), with a modus operandi more akin to central intervention in communist economies.

The global tab ranges from 4 to 5 trillion US dollars according to the most optimistic estimates, but the overall costs may run higher in the future.

The financial rescue of the ailing banking sector, in principle, was the right course of action and various experts across the political spectrum saw eye to eye on its criticality, including the staunchest free-market theorizers who routinely treat as leftist energumens out of the antediluvian era those who dare buck conventional wisdom regarding the role of government in social economics.

It was flummoxing, however, to observe how lenient authorities were vis-?�-vis banks throughout the bailout process on top of the very favorable terms under which funds were disbursed. Hence, financial institutions that benefited from state largesse were able to quickly use monies received to regain profitability and reimburse their respective governments.

Other parts of the economy didn’t experience so swift a recovery. Unemployment is still high; the mortgage sector is still in a shambles. Banks have been reluctant to lend, creating an underperforming productive sector and a lethargic private consumption. The stock market may be up but, debatably, the “real economy” is still down.

Banks played a crucial role in the current economic malaise but anti-bailout commentators were wrong to vilify them and to affirm that such guilt should have precluded public rescue. Financial intermediaries are an epochal pillar of our post-modern economies and it would have been socio-economically ruinous and politically unpalatable to let them sink.

Admittedly, a majority of banks are today more cash awash and profitable than a year ago albeit some pockets of the industry are still comatose owing to the liquidity hemorrhage that has devastated them since the recession erupted.

Regrettably, nothing has changed. These institutions are resorting again to the erstwhile practices that wrought havoc to the economy in the first place, under the aegis of a regulatory body eerily blind, deaf and tongue-tied.

Banks, evidently, should be encouraged to pursue and make profits as any private concern. But when such a financial quest comes at the expense of an entire system or poses a systemic threat to the productive sector of the economy, the argument in favor of tougher regulation becomes of preeminent import.

Companies need to utilize hedging for exposure control; yet, speculators lately seem to use derivatives to bet against their very benefactors. Although outrageous to vast swaths of the populace, such practices are explicable if one considers that the speculating camp only furthers private interests of elites (their investors) who seldom factor morality into the profitability equation.

Case in point: Greece. The Hellenic government bailed out its banking sector with billions of dollars only to see their country downgraded a few months later because of an perceived default risk.

At this moment, elected officials and central bankers should ponder the following question: did the bailout work? Or, stated differently, did the mammoth cash infusion into banks and the associated supplemental initiatives reach the initial goals?

Seasoned economists and social scientists will grapple amply with issues regarding program effectiveness and efficiency in the future, but prominent experts currently believe the answers to such interrogations are negative. George Mason University economist Peter Boettke posited that bank bailouts have created a “cycle of debt, deficits and government expansion” that in the end “will be economically crippling” to major economies, whereas Barry Ritholtz, famed author of Bailout Nation and CEO of research firm FusionIQ, thinks the rescue programs could have been conducted better.

It can be argued that the initial rescue phase of the bailouts program was effectual in that it helped avert a domestic and global banking hubbub. But, contrary to popular credence, that was the easiest part. The courageous headship of political leaders and regulators cannot be underrated in the process, but it is indisputably far facile for a powerful central bank, like the US Federal Reserve, to make journal entries to the credit of targeted institutions and replenish their corporate coffers via the much celebrated “quantitative easing”.

The Fed, just like other G8 central banks, is in an enviable position because it can create money ‘out of nothing’ by increasing the credit in its own bank account.

Regulation is where actual political bravery need be shown from authorities, and so far the lack of sweeping reforms in the financial sector may obliterate …

Time to Hire a CFO?

Time to Hire a CFO?

You have started your business and its been a struggle, but you have managed to succeed and grow the company. You have resisted adding overhead. You are great at running the company but don’t have the time, desire or expertise to manage the administration of your growing company. It’s time to hire a CFO or Controller.

You are hesitant to take a leap like this since a person like this is very expensive, but you see no other alternative. What are your options?

You likely already have a bookkeeper or maybe two or three, they do a great job; but you realize you need a higher caliber of person you need to take your business to the next level. A qualified Controller of CFO will cost $75K -$100K per year.

I have worked as a Controller and CFO for several businesses ranging in size from $5 Million to $20 Million in annual sales. Even in the largest company I only spend 10 to 20 hours per week on my finance and accounting related tasks. The rest of the time was spent dealing with HR issues for the admin staff, marketing or Operations.

The problem is that most “accountants” are not best suited for operations, marketing or HR. But business owners want to get the most value possible from this highly paid employee. You should consider hiring a part time or contract CFO. This person will come to your office anywhere from several hours a week to a few hours a month depending your needs.

Hire an Office Manager to manage your administrative staff, this is a far better use of you money costing $15 per hour and you will likely get better results. Let your marketing and operations people manage that department, that’s what you hired them for.

When you ask a CFO or Controller to do these jobs you are trying to fit a square peg in a round hole. It makes perfect sense to utilize this person to the fullest extent possible because of their high cost, but why not just hire a CFO when you need one? A CFO’s expertise is best used in finance, so when you have them perform other tasks you are tying up resource that could be better used elsewhere and you are not utilizing that person’s talent most effectively.

If your business has grown to the level that requires a financial manager consider hiring someone with financial management experience to manage that and let your other staff do what they do best. Rather than hire a CFO or Controller consider a Contract Person to do what needs to be done.…

How to Choose an Online Bank

How to Choose an Online Bank

Years ago, finding a legitimate online bank was just about Mission Impossible. Today there are banks that are online only. In addition, some of traditional major banks offer online banking.

In any case, there a lot of options now and a lot of things to figure out before you can choose your bank. For that reason, this article will provide some guidelines on things to watch for when making your choice.

Requirement One – FDIC Insured

There is no reason to play Russian roulette with your money. The only banks you should even consider are banks insured by the U.S. FDIC. It is quite easy to confirm a bank is FDIC insured without even asking the bank. Use the FDIC’s own online application to confirm your bank is covered.

Since only U.S. banks can be insured by FDIC a lot of the guesswork in picking an online bank has just been taken care of for you. You will not be able to take advantage of that 20% interest Nigerian savings account but your money will be safely insured by the FDIC. By the way, the IRS is much happier when your bank is a U.S. bank.

Requirement Two – Competitive Interest Rate

You are looking for an online bank, not shopping for a food processor or any other gift a bank offers for signing up. The only bottom line you should care about is your own. Do some competitive shopping and give serious weight to online bank offerings with the best interest rate.

Requirement Three – No Fees and No Minimums

Why should you pay any type of banking fees? There are FDIC insured banks that provide stellar online account service with no fees. For same reason, there is no reason to be forced to keep a minimum amount on deposit or always in the account.

Requirement Four – 24/7 Customer Support

You may never use the local branch of your online bank but that doesn’t mean you won’t have problems that require a real persons help. You want a bank with 24/7 support because problems never seem to arise during normal business hours. It will be easier to get help or voice a complaint if you know someone is always available.

Requirement Five – Solvency, Performance and Service

There are online services that check the solvency of any bank and rank for high yield performance. If you have access to an online bank that clears both of those hurdles that is great. It also helps if the online bank you choose has collaboration set up with the most popular personal or small business financial software programs.

Requirement Six – Test Drive and Incentives

The best banks will let you open an account and let you check out all the features before making a final commitment. You may end up with several banks meeting the same number of requirements listed above. In that case, it is time to give weight to sign up incentives. Do they reimburse you for ATM fees? Do they let you order checks online at a deep discount? If everything else is equal, then go for the bank that gives you the most extras.

If you have followed these suggestions, you may rest assured you have done everything possible to find a safe, secure online bank.…

Learning the Basics of Investing in the Stock and Forex Markets

Learning the Basics of Investing in the Stock and Forex Markets

When you are looking to invest, many times your mind wanders to the well known market. However, there are other options available including the Forex market. Forex is basically a 24 hour a day market, whereas the standard stock market opens and closes each day and on the weekends. Forex trading starts on Sunday evenings and ends on Friday afternoon. This allows traders the freedom of trading on their own schedule. There are pros and cons for using and trading on either market.

Many individuals would agree that the Forex market is easier to understand and is not quite as complicated as the regular stock market. The Forex is open to businesses, individuals, financial corporations, general public and to nations all over the world. The object is to make a profit from the falling and rising of currency prices. You will need to invest a great deal of time in learning about different types of foreign currency in order to achieve success in the Forex market. The standard market, on the other hand, is known as a more traditional route to try and create your profit from investing in stocks of certain companies. The upside of the stock market is it is easier for a person with limited knowledge to make a profit. Large amounts of research are not required.

Another major difference between the Forex and the stock market is the fact that when you trade with the stock market you will be charged commissions for your transactions. When you use the Forex market, you will not be paying any commissions on your trades. You will save a significant amount of money by not having to pay commissions and this can help your returns increase.

When you are starting out, you will have to decide what type of market trading will suit your needs and financial goals the best. You may wish to start slow on the regular market and as your confidence grows and you learn more about international currency, move on to Forex trading. Both markets will experience high and low periods. You have to know going in what you can afford to risk.…

Understanding Chattel Mortgages

Understanding Chattel Mortgages

Understanding is crucial if you are interested in an excellent financial solution for your business car financing. Most businesses prefer the chattel mortgage to the traditional secured car loan options.

With a you will discover that you have more choices such as keeping low repayments, including a residual or balloon, and financing the upfront deposit along with the full purchase cost of the vehicle.

How Do Work?

A financial lender will give you a loan which will cover the entire purchase price of the car. Upon the last repayment, you will become the legal owner of the vehicle which is known as the chattel.

Instead of external collateral, the financial lender takes out a mortgage on the vehicle and this is considered as the collateral for the loan. After the contract has been completed, the owner of the car will be given all rights to the vehicle in question.

The Benefits of Using a Chattel Mortgage

There are various benefits of using a compared to other types of financial loans for purchasing a vehicle. Such benefits of taking out a chattel mortgage include the following:

• Tax deductions for business purposes• Fixed interest rates• There is no GST charged on the monthly repayments• There are lower interest rates since the finance is actually secured against the vehicle• You will be aware of all costs in advance rather than surprise fees coming up• You can opt for a flexible contract of anywhere from two to five years

For these benefits, the has become extremely popular. The tax benefits also drive most businesses towards the instead of to other alternative loan options. You can begin researching different options online and speak to lenders who offer these services. You should always compare rates and charges as you are bound to find a deal that is more appropriate for your needs. Finance consultants should be able to answer all of your questions. If they cannot, you may want to consider taking out a with another lender.

Who Should Take Out a Chattel Mortgage?

A is best suited for business owners whose main method of accounting is with cash since they are allowed to claim GST from the business car’s up front price. However, any one who uses their car for business related work can benefit greatly from the use of a chattel mortgage. For this reason it is important to understand chattel mortgages, especially over other alternative car loans.…

Recruitment in Banks – Types Of Jobs In The Banking Sector

Recruitment in Banks – Types Of Jobs In The Banking Sector

The banking sector is one of the fastest growing industries. The banks are growing in terms of products and services to their clients. This growth has led to the banks seeking to recruit new staff to cope with the demand for their banking services. With online banking becoming increasingly popular banks are recruiting both professional bankers as well as information technology experts to meet the growing demand for their services.

The investment banking sector will seek to recruit more financial analysts as opposed to their commercial bank counterparts who will recruit a wider scope of staff. There is demand for financial analysts as investment banks grow their portfolios. These financial analysts will have the basic role of investing the client’s money in various financial instruments to maximize the return on investment. The financial analyst will basically be graduates from the various universities with strong accounting and finance backgrounds. There are growth opportunities for financial analysts, and they can grow from graduate trainees to middle and senior management levels.

Investment banks will also aim at recruiting marketers who can sell the various investment products and services to their clients. The investment banks will recruit persons who can explain their various products and show their clients the benefits accruing from signing up with them. Since investment is usually long term in nature the marketers of investment products need to be persuasive in a bid to grow their bank portfolios.

There are many other different opportunities in the investment banking sectors. The banks recruit Information Technology experts who will support their operations. The world is becoming a global village and investment banks are investing all over the world using the power of the internet. The banks trade in foreign exchange with currencies being traded over the internet, thus the need for information technologists to support the bank operations.

The commercial banks have many different opportunities for employment. The banks will employ graduate trainees in different fields such as marketing, finance, accounting and information technologies. Recruitment in banks will be determined by the various needs in the market place. The banks will employ middle to senior level managers in the various capacities. The demand for various professional skills in the banking sector has grown over time.

The commercial banks may recruit managers for a new or existing branch to head operations in that branch. They may also seek to recruit managers to champion the various products on offer. Managers can also be employed to head departments such as customer care, IT, marketing, operations and finance.

Opportunities are also available for entry level jobs in the banking sector. Opportunities for recruitment in banks for entry level jobs are many, as the banks like to employ and train their own staff as opposed to staffing from outside. The banks will undertake to train the entry level employees with the hope that they will grow their careers to managerial level. Most of the employees who are recruited at entry level will grow their careers to become middle and senior level managers.

There are many opportunities in the banking sector with jobs ranging from entry level to middle and senior management levels. Recruitment in banks is ongoing as the sector grows in terms of products, services and client numbers.…

Understanding Joint Accounts

Understanding Joint Accounts

Joint accounts are particularly beneficial in a situation where the finances of two or more individuals are linked, whether by paying shared rent, mortgages or household bills. As well as being convenient for settling shared outgoings, joint accounts can also be used to save money, whether for a holiday, home improvements or simply for a rainy day.

Joint accounts can be opened for current accounts, savings accounts, personal loans, and mortgages so all of your banking needs can be taken care of through the joint accounts on offer.

A joint account is simply an account opened in the name of two or more people. You may be able to change your existing account into a joint account by adding another person or you might want to open an entirely separate account in the names of all account holders.

Joint accounts are usually flexible enough to suit different circumstances. In some cases all of the account holders will pay their full salaries into the joint account. Other people prefer to budget by making regular transfers from their own personal account into a separate joint account which can then be used to pay shared bills and any other outgoings.

Before opening a joint bank account it is important to make yourself, and all other account holders, aware of the extra responsibilities that come with having shared finances.

Each individual will be able to make cash withdrawals, write cheques and apply for an overdraft without needing the approval of any other account holders so you must be certain that you are fully comfortable sharing this responsibility with others.

All joint account holders are individually responsible for any debts that accrue on the account. Each individual is fully liable for the whole of any overdrawn balance even if only one of you withdrew the money from the joint account so bear this in mind when deciding how to organise your finances.

If you want to close your joint account at a later date or simply want to remove an account holder, you must have everyone’s permission before doing so.

The same applies when opening joint accounts and generally speaking, all account holders need to take a trip into their local branch to provide identification and confirm the finer details.

You may also find that once you obtain a joint account or joint loans, each individual’s finances are linked together for credit scoring purposes so if you don’t want anyone else to affect your credit rating then keep all your financial affairs completely separate.

Credit cards are a different matter, typically having a principal cardholder along with additional cardholders. In most cases only the principal cardholder is responsible for repaying the credit card debt whereas all account holders are fully responsible for debts on joint accounts.…

Banking Interview Questions: You Will Fail If You Don’t Know These 3 Secrets

Banking Interview Questions: You Will Fail If You Don’t Know These 3 Secrets

If you want to be hired for job in banking you have to ace your interview. Yes, your grades at University and your work experience will get you invited to an interview, but it will be your performance during your interview that will determine whether you are hired or not. For the past seven years I have worked as an investment banker and I am currently a Vice President with a Tier 1 investment bank. I have seen hundreds of promising applicants fail in their interview. These promising applicants could have been hired if they had known 3 secrets for answering their banking interview questions. Learn these 3 secrets and you will be one step closer to be hired for your dream job in banking.

Secret 1: Where’s the beef?

The interview process is your chance to share information about your education, background and experience with the interviewer. The goal of sharing that information is to convince the interviewer to hire you. Your success or failure is largely dependent on how well your deliver your responses to questions.

It is possible to answer questions with a simple yes or no. If you do this, the interviewer will never know details about you that might have tipped the interview in your favor. Instead of answering with closed ended answers, use open ended answers. Your answer can provide specific facts or numbers that should generate interest in the interviewer. The interviewer may then ask for more detailed information based on your previous answer which allows you to give more information.

The use of open ended answers allows you to dictate the new question that the interviewer might ask. It also gives you a chance to go into further detail thus piquing the interest of the interviewer. Being able to craft open ended answers takes practice. In my experience almost everyone I have hired is well versed in being able to answer questions with open ended answers that allow them to deliver the beef that gets them hired.

Secret #2: Know the Job

This may sound like an obvious secret but you will be surprised at how many applicants do not have a clear idea of what are the job requirements. The quickest way to be rejected during an interview in banking is to not know what is expected in the job, what skills the company desires and what are the key competencies the company is searching for.

The way to be placed on the pile of rejects it to be thoroughly prepared for the interview. This will require you to do market research on the company and the specific job. Newspaper and magazines can provide a wealth of information. Networking with current employees will allow you to learn firsthand information about the company. There is no excuse for not being prepared for the interview.

Secret #3: Dress appropriately

If you are going for an interview, men should wear a business suit and women should wear a dress or skirt. How you present yourself will be the first impression the interviewer will have of you so make it a positive impression. Business suits should be conservative and be either dark blue or black in color. You never get a second chance at first impression so make your appearances a positive impression.

These 3 secrets are based on my experience working as an investment banker. Use these 3 secrets to get hired and to be able to answer your banking interview questions.…

Careers in Banking

Careers in Banking

If you are planning to start a career in banking, you should have no trouble getting satisfactory employment. Banks and financial institutions play a vital role in the modern society, helping individuals, businesses, and organizations manage their finances more wisely and providing financing for those who are in need of money. As more and more financial transactions are being conducted nowadays, banks and financial institutions are becoming busier, and many of them need to hire more banking professionals to help them manage their increasing workloads. Other than working in banks and financial institutions, banking professionals can also gain employment with loan companies, credit unions, insurance companies, and investment companies. Here are some of the career options that are available to banking majors:

Bank Officer

Bank officers do not only handle financial transactions in a bank; they may also be required to process loans, supervise bank employees, or oversee the operation of a branch. In order to perform their duties well, they need to have a good understanding of their banks’ objectives, as well as the programs and policies that govern different kinds of banking activities. The minimum academic requirement for bank officers is a Bachelor’s degree in banking, finance, or economics, but some banks are willing to accept individuals who have an Associate’s degree in accounting. The salaries of bank officers vary from $40,000 to $150,000 a year, depending on their positions.

Loan Officer

Loan officers are responsible for finding people who are interested in getting loans and helping them apply for the loans. They also have to evaluate the abilities of individuals and businesses to repay their loans and provide advice for borrowers who have trouble securing traditional loans. Some of the places that provide employment for loan officers include banks, financial institutions, loan companies, and credit unions. The minimum educational requirement for loan officers is usually a high school diploma, but commercial loan officer positions may require a Bachelor’s degree in finance or economics. In 2008, the median average salary for loan officers was $54,700.

Financial Analyst

Financial analysts study investment options and provide advice for investors. They can work for banks, mutual fund companies, securities firms, or insurance companies. Most financial analysts have at least a Bachelor’s degree in finance, business, accounting, or statistics, but those who wish to advance quickly in their careers will pursue a Master’s degree in business administration. The average earnings of financial analysts are $84,780 a year.

Corporate Treasurer

Corporate treasurers manage financial products to enhance business development. Their duties include managing their companies’ inflow and outflow of cash and capital, making investments, managing risks, and establishing and analyzing financial management policies. The academic requirement for corporate treasurer positions is at least a Bachelor’s degree in finance, business management, economics, or audit. The annual salaries of corporate treasurers vary greatly, from $37,340 to $139,278. Other career options that banking majors can pursue include branch manager, benefits officer, cash manager, commercial banker, commercial credit analyst, financial controller, cost estimator, credit analyst, financial planner, financial consultant, investor relations officer, management consultant, mortgage banker, and trust officer.…

M&A Jobs – Focus on Asian Markets

M&A Jobs – Focus on Asian Markets

The rapid growth in M&A in Asia is creating a boom in M&A jobs. M&A is picking up nicely in North America too. However, in the initial stages of the rebound, some fresh recruits may find it difficult to compete with more experienced candidates. The press is full of reports of investment Bankers being hired back by former employers and competitors. If you find yourself being elbowed out of domestic M&A jobs, why not spend a summer, or longer, gaining global M&A experience in Asia?

Asia is getting most of the credit for the 39 percent increase in merger and acquisition deal flow in the first quarter of 2010 versus the same period a year ago. During this time, M&A activity increased 20 percent in Asia, according to the IntraLinks Deal Flow Indicator. Over the same period, North American and Latin America were up four and two percent, respectively. Most of the Asian deal activity has come from energy, mining and utilities. Telecoms and media also are heating up. There is lots of M&A work to go around.

There are two ways to work the Asian M&A jobs play.

Relocate to Asia

Vast opportunity is in front of you, if you are willing to move to Asia. There are many junior positions to be filled in large investment banks. Ongoing expansion in M&A boutique banks and advisory services is another growth market. Local specialists are valued and part of almost every deal.

Market Your Asian Assets at Home

The second way to participate in the Asian boom is to be an Asian specialist located in the Western market. These positions are often filled by those with Asian experience, typically a native of one of the Asian countries with fluency in one or two foreign languages. However, there are many Western bankers with some Asian experience who also can get these positions.

How to get in the door

A referral in the Asian market is the ticket. Tap your contacts – e.g. your Chinese friend from college whose uncle heads corporate banking for XYZ Bank in Hong Kong…

Gain Asian experience at home: Standard Chartered and HSBC are known to have deep reach into Asia and routinely transfer staff around the globe. Today, all of the bulge bracket banks have major presences in Asia and regularly do office transfers.

Who`s Hiring?

Everyone! Here is just a snapshot of recent announcements.

CitiGroup: It is widely reported that CitiGroup is looking to hire 200 new recruits in Singapore, as well as staff in Hong Kong, China, India and other Asian markets

Bank of America is seeking to hire 30 people in corporate banking in Japan. BusinessWeek reports that these are senior and junior lending and cash management positions.

HSBC is hiring 300 people in Hong Kong in wealth management.

Nomura plans to hire 15% to 20% more people in its global banking business as part of its plans to become a top M&A advisor, according to .

Bulge Bracket Shuffle

One way to find where the M&A job opportunities are is to monitor senior-level hires. Based on the number of senior hires reported by the Financial Times in Investment Banks in India, it is evident that there will be a lot of hiring in the ranks in India.

Tap on many doors in Asia. Most major investment banks are adding M&A staff to respond to the growing market demand.…