Banks Try Fees for Once-Free Services

Checking Isn't Free At More Branches
Source: Wall Street Journal
By ROBIN SIDEL
The nation's largest banks are testing how much their customers are willing to pay for checking-account services that used to be free.

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Bank of America Corp. and J.P. Morgan Chase & Co., the two biggest banks as measured by assets, have begun trying new fees in pilot tests from Hayward, Wis., to Newnan, Ga.

They include an account that charges a $3 monthly fee for debit cards. Another account designed for electronic-only banking charges customers a $12 monthly fee if customers go to a teller for assistance. In the test programs, some bare-bones checking accounts also now carry base fees ranging from $6 to $9 a month.

The new fees, which are limited to accounts for new and prospective customers in the pilot programs, can typically be waived if customers meet certain criteria.

The pilot testing is the latest indication of the push to boost fees as banks scramble to make up billions of dollars of revenue expected to be lost from new federal restrictions on debit cards.

The Federal Reserve in December proposed capping the amount banks can charge merchants for debit transactions at seven to 12 cents, from an average rate of 44 cents. The Fed's proposal could reduce the revenue banks make from such fees, known as interchange, by 57% to $9.8 billion, according to CardHub.com.

Banks are testing the new programs even as they hold out hope for delays or changes to the new law, which is expected to take effect in July. They strongly oppose the measure, which was part of the Dodd-Frank financial-overhaul law enacted last year, saying it will hurt consumers because the banks will be forced to make up lost revenue by raising fees charged to their customers.

Bankers and merchants pressed their case on Thursday in a hearing before a subcommittee of the U.S. House Financial Services Committee.

Also that day, Fed Chairman Ben Bernanke, Fed board member Sarah Bloom Raskin and Federal Deposit Insurance Corp. Chairman Sheila Bair said that small banks could be hurt by the new rules, fueling more speculation that the law could be delayed or changed.

The tests are part of a broad overhaul of the basic checking account that began last year and has intensified in the past few months with the pending debit-card restrictions. Some banks, such as Fifth Third Corp., already have started scrapping the standard free-checking accounts that had been the norm since the 1990s, replacing them with services that carry more fees, as well as assorted ways to avoid them.

Chase, which has launched the tests in some of its smaller markets such as northern Wisconsin and Atlanta, is one of the first banks to explore monthly fees on debit cards.

Until now, debit cards have usually been a free part of a basic checking account. One new account Chase is testing includes a $3 monthly fee if the customer wants a debit card. It is aimed at less-affluent customers who don't keep a lot of money in the bank.

"My anticipation is that we will change these tests over time and might introduce some others," said Charles Scharf, who runs J.P. Morgan's retail operations and describes the law as "a terrible mistake for consumers, small banks and small merchants."

Bank of America this month began testing a series of new accounts throughout Massachusetts, Arizona and Georgia. The bank also is examining different fees with those accounts in different markets. For example, a basic checking account carries a $6 monthly fee in Arizona and Massachusetts, but a $9 fee in Georgia.

Bank of America started training employees for the new accounts in October, a spokeswoman said. The bank plans to roll out the new account structure to existing customers later this year. U.S. Bancorp, which recently warned that it is also planning to overhaul its accounts, this week stopped providing rewards programs to new debit-card customers.

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The pilot tests are mostly confined to the biggest banks, which are better equipped to handle the costly and time-consuming research than smaller institutions.

That doesn't mean, however, that small-town banks will keep offering free services. More than 90% of small institutions expect to start charging customers for services that are now free, according to a survey released this week by the Independent Community Bankers of America.

The survey indicated most small lenders will be forced to impose monthly or annual fees for debit-card use.

Economic Preview: U.S. manufacturers still key to economy

Feb. 20, 2011, 9:00 a.m. EST 
Manufacturing strength is focus of investors
Durable-goods data to yield more clues; how are consumers feeling?

By Jeffry Bartash, MarketWatch

WASHINGTON (MarketWatch) — If the smoldering U.S. economy is going to catch fire, the manufacturing sector is probably going to have to provide the spark.

More than a year after the last recession ended, the economy still hasn’t seen that spark. Mediocre job growth and a high unemployment rate have kept consumer spending in check, and the caution of consumers has discouraged businesses from increasing investment.
Yet one critical area of the economy that’s perking up is manufacturing. A number of economic indicators have shown steady improvement and the industry added 136,000 jobs last year — the first time manufacturing employment has increased since 1997.

MarketWatch consensus

date	report	Consensus	previous
Feb. 22	Consumer confidence	65.0	65.6
Feb. 23	Existing home sales	5.22 mln	5.28 mln
Feb. 24	Jobless claims	403,000	410,000
Feb. 24	Durable goods orders	2.5%	-2.3%
Feb. 24	New home sales	300,000	329,000
Feb. 25	GDP	3.2%	3.2%
Feb. 25	Consumer sentiment	75.4	75.1

/conga/economy-politics/calendars/preview widget.html 129285

As a result, economists and investors will be paying even closer attention to the monthly report on durable-goods orders, whose latest figures for January will be issued Thursday. Durable goods are items that last at least three years.
“Durable goods is the key indicator next week,” said Kurt Karl, chief economist at Swiss Re. “Another month of good numbers would be a positive sign.”
Also on tap next week are indicators on consumer confidence, home sales and an updated report on U.S. economic growth in the fourth quarter.

Looking behind headlines

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As with many economic reports, the durable-goods survey is prone to seasonal swings and other factors that can temporarily muddy the economic picture.
In January, for example, economists surveyed by MarketWatch project that strong airline orders boosted durable goods by a solid 2.5%, reversing December’s 2.3% decline.
While a good “headline” number can move markets, it’s not viewed as the most important piece of data in the durables report. Economists prefer to look instead at a category called core capital goods.
The core data strips out defense and airline orders because they can jump around month to month. Core data gives a clearer picture of what’s going on with the rest of the nation’s manufacturers whose sales are more evenly distributed.
Core capital orders were strong toward the end of 2010, climbing 3.1% in November and 1.4% in December. Yet the core number is expected to fall in January, perhaps sharply, as it usually does.
What gives? Well, companies often ramp up spending in December before the year runs out if they have any money left in their budgets. Once January rolls around, they’re still planning their capital budgets and they spend more slowly to begin a new fiscal year. More orders tend to be placed in February and March.
Improvements in orders historically tend to signal a strengthening economy. Manufacturers hire more workers, workers spend more money, consumer confidence grows and companies increase investing.
So far such a virtuous economic cycle has been absent during the current recovery, leaving the jobless rate above 9% and keeping consumers anxious.

Consumers and home sales

Consumers slowly seem to be growing more optimistic, however. Retail sales have risen seven straight months and the two widely followed consumer confidence surveys have been on an upward trend, with one hitting a three-year high.
“Consumers are showing more confidence, at least in their spending habits,” Karl said. A surprisingly big increase in either report could give markets a boost.
Several monthly reports on new- and existing-home sales, meanwhile, haven’t had much impact on investors lately. The U.S. housing market remains depressed, and sales are near modern historic lows.
Economist Patrick Newport of IMS Global Insight say these reports are unlikely to excite investors until they start showing several months of improving sales — or a sudden upsurge.
“If you get a really big jump it might move markets,” he said. More likely, Newport added, is a gradual improvement in housing sales through 2011 as hiring increases and the unemployment rate falls.

Jeffry Bartash is a reporter for MarketWatch in Washington.

Common-law couples deserve fair share: court

CBC – Sat, 19 Feb, 2011 12:09 AM EST
Partners in common-law relationships in Canada who separate are entitled to a fair share of assets they contributed to or made possible, the Supreme Court of Canada has ruled.

In deciding two cases unanimously—involving a couple in Vancouver and another in Ottawa — the court applies to common-law couples remedies that are similar to those covering married couples in provincial law.

In the Vancouver case, Margaret Patricia Kerr and Nelson Dennis Baranow, a couple in their late 60s, separated after a common-law relationship lasting more than 25 years.

They both had worked through much of that time, and each had contributed in various ways to their mutual welfare, the court said.

A lower-court ruling awarded Kerr a share of the house they shared, which was in Baranow's name. That was overturned on appeal, on the basis that Kerr was profiting from "unjust enrichment."

The supreme court has ordered a new trial in the case, mainly because of the complex financial details involved. Among other things, Kerr suffered a stroke and never moved back into the house.

The Ottawa case involved Michele Vanasse and David Seguin.

In the first four years of their relationship (1993 to 1997), they pursued their careers, she with the Canadian Security Intelligence Service, where she was training to be an intelligence officer, and he with Fastlane Technologies Inc., marketing a network operating system that he had developed.

In March 1997, Vanasse took a leave of absence to move with Seguin to Halifax, to which Fastlane had relocated "for important business reasons," the court said.

Over the next 3½ years, the couple had two children. Vanasse stayed home, while Seguin developed the company. They moved back to Ottawa in 1998. In September 2000, Fastlane was sold, netting Seguin about $11 million. The couple separated in 2005.

Writing for the court, Justice Thomas Cromwell ruled that not only were Vanasse and Seguin engaged in a joint family venture, but "there was a clear link between Vanasse's contribution to it and the accumulation of wealth.

"The unjust enrichment is thus best viewed as Mr. Seguin leaving the relationship with a disproportionate share of the wealth accumulated as a result of their joint efforts."

The court on Friday restored a lower court ruling — which had been overturned on appeal — that gave Vanasse half the value of the wealth Seguin accumulated during the 3½-year period when she was home looking after the children, enabling him to travel and devote more time to the company.

Stephen Grant, a Toronto family lawyer at McCarthy Tetrault, told the Globe and Mail that the rulings help move common-law relationships toward a more equal footing with marriages.

"As long as the property claimant can show a contribution to the asset or the growth of the assets, he or she will be entitled to share by way of a monetary award," Mr. Grant told the Globe and Mail.

China’s Largest Social-Network Site Said to Plan IPO

February 19, 2011, 11:43 AM EST
Source: Bloomberg Business Week
By Serena Saitto and Brian Womack

Feb. 19 (Bloomberg) -- Renren.com, China’s largest social- networking service, is preparing for a U.S. initial public offering of about $500 million this year, according to three people with knowledge of the plan.

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The banks handling the IPO are Morgan Stanley, Deutsche Bank AG and Credit Suisse Group AG, according to the people, who declined to be identified because the matter isn’t public. The offering could come by June, two of the people said.

Renren.com has more than 160 million registered users, according to Analysys International in Beijing. The site could use the IPO proceeds to woo more visitors as it competes with local rivals Tencent Holdings Ltd. and Baidu Inc. in the world’s most populous Internet market. Renren -- a name that means “everyone” in Chinese -- has similar features as Facebook Inc., which is blocked in China.

No U.S. social-networking sites have gone public, even as their popularity and advertising revenue soar. That’s created pent-up demand among investors. LinkedIn Corp., which announced plans last month to raise $175 million in an IPO, could become the first to go public.

At Renren, advertising has more than doubled each year since the site started selling space in 2008, the company said in a statement. The online advertising market will triple to almost $13 billion in China by 2014, estimates Susquehanna International Group LLP.

‘Inside School’

Lillian Wang, a public-relations manager at Renren in Beijing, didn’t immediately return calls to her office and mobile phone seeking comment after working hours.

Pen Pendleton, a spokesman for Morgan Stanley, declined to comment, as did Credit Suisse’s Duncan King. Deutsche Bank’s Scott Helfman didn’t immediately respond to a request for comment.

Renren traces its roots back to 2005, when graduates of Tsinghua University in Beijing founded Xiaonei.com, or “Inside School.” That was the year after Mark Zuckerberg, chief executive officer of Facebook, created his service for fellow Harvard University students.

In 2006, Xiaonei was acquired by closely held Oak Pacific Interactive Corp., which renamed the service Renren in 2009. Softbank Corp., Japan’s fastest-growing mobile-phone carrier, is the biggest shareholder in Beijing-based Oak Pacific.
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Facebook does have some Chinese users, who circumvent censors through so-called virtual private networks, according to data compiled by Socialbakers.com, a site dedicated to analyzing Facebook statistics.

Facebook, the world’s biggest social-networking site, will start reporting financial results by April 2012, even if it doesn’t go public, according to a document sent to prospective investors. The company would be forced to make disclosures because it expects to have at least 500 shareholders by the end of this year, a threshold that makes reporting results necessary under U.S. Securities and Exchange Commission rules, a person who reviewed the document said last month.

--With assistance by Mark Lee in Hong Kong. Editors: Nick Turner, Nathaniel Espino.

Putting young people to work

New measures will help young people join the job market
By Owain Johnston-Barnes
Published Feb 19, 2011
Government promised new measures to help give young Bermudians a leg up in the job market.

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Minister of Economy, Trade and Industry Kim Wilson announced new initiatives including a one-stop career centre and enhancements to a government website to make it a go-to site for job hunters.

And, during the Budget statement yesterday, Premier Paula Cox promised to establish incentives to encourage companies to create entry-level positions for young Bermudians.

“To meet the labour challenge, the Government is exploring incentives to benefit the ‘job makers’ individuals who are proposing or already demonstrating a significant presence in Bermuda, are employing Bermudians and creating entry-level employment opportunities for young Bermudians,” she said.

Further details of the plan have not yet been released however the renewed focus on youth received employer support.

Chamber of Commerce president Stephen Todd said: “I think it’s a very good initiative to suggest moving in that direction. I think we all believe that young people deserve an opportunity like this.

“I hope that what they put forward is a partnership between Government, the National Training Board, the private sector and perhaps Bermuda College.”

He said the abundance of young applicants at the Hospitality Job fair on Thursday indicated that there are a number of young Bermudians who are looking to enter the job market.

“We all now know that there are a lot of young people who are looking for work, and it is in the best interest of the country to support them,” Mr Todd said.

“These young people are our future wage earners, they will be the ones paying the taxes in the future.”

Martin Law of the Bermuda Employers’ Council said: “This is an important element. Young person unemployment is a critical issue, and attention focused on that has got to be good news.”
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During a press conference held yesterday afternoon, Sen Wilson announced other initiatives aimed to help young people break into the job market, including modifications to careers.gov.bm.

“This website will be similar to monster.com,” Ms Wilson said. “Employers and job seekers will use this site to interact seamlessly and students will have access to the kind of information that will help direct their choices when deciding what to study.”

Michael Fahy of the Bermuda Democratic Alliance praised the effort, saying: “I like the initiative to give easier access to job seekers through this website.

“That’s a really good use of technology. It’s what young people use to look for employment, so that’s great. In terms of giving college students developmental opportunities, that’s great to encourage skills.”

Ms Wilson also announced modifications to the Labour and Training summer student programme. This summer 100 college students will be given professional development opportunities.

In the past, the programme was also open to high school students looking for summer jobs.

Useful websites:
www.gov.bm, www.plp.bm
www.bda.bm
www.bermudacommerce.com
www.bec.bm.

Obama's Budget and Its Discontents

Source: Bloomberg Business Week
To Republican free-market purists, Obama's 2012 budget priorities smack of Keynesian interventionism
By Mike Dorning
President Barack Obama's first two budgets were reflexive, emergency-care responses—spending and more spending on stimulus, bailouts, and jobless benefits—to an historic economic bust. He did what he says he had to do. With the budget Obama sent to Congress on Feb. 14, his third, he's grasping hold of the country's fiscal levers to shape the U.S. economy according to his vision for the early decades of the 21st century. In other words: He's doing what he wants to.

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The President's budget is informed by his belief that government has a strategic role to play in guiding the economy. That means in some cases picking winners and losers and directing capital to individual industries and technologies that have a shot at delivering jobs and economic prosperity. His Republican opponents believe it's better to let private investors keep more of their money, so they can allocate capital to where they think they'll get the highest returns.

So this year's budget debate in many ways harks back to the 1930s intellectual rumble between academic economists John Maynard Keynes and Friedrich Hayek. Democrats take their cues from Keynes, the Depression-era British economist who championed government intervention to correct economic imbalances. Republicans hew to Hayek and his free-market Austrian School of Economics, which views government intrusion into an economy as counterproductive at best, outright socialist at worst.

In his 2012 blueprint, Obama picks out the comparative advantages the nation should build up to compete globally. Chief among them is education: K-12 programs would get almost 7 percent more. Clean-energy technologies (electric vehicles, especially) get a Presidential thumbs up. So do high-speed rail and broadband Internet. Oil and gas companies, which stand to lose billions in subsidies, do not.

Of course, Obama's budget is a political as well as an economic document. With independent voters concerned about the size of the deficit, his budget would gradually reduce this year's shortfall from a projected record of $1.6 trillion, or 10.9 percent of the economy, to $607 billion in 2015. That's considered sustainable because, at 3.2 percent of gross domestic product, it will bring the growth of the national debt down to the economy's long-term growth rate. To get there, Obama must persuade Republicans to agree to $1.1 trillion in tax increases over the next decade, including $807 billion from rolling back Bush-era estate and income tax cuts for the wealthy.

While that may be optimistic, Obama is less rosy with his economic assumptions. He assumes jobless rates will average 9.3 percent this year and not drop below 6 percent until 2015. He also assumes the economy will grow at a modest 2.7 percent this year and build to 4.4 percent by 2013 before slowing slightly to 3.8 percent in 2015. Inflation is expected to remain tame at 1.3 percent this year and not to exceed 2.1 percent for the next decade.

Republicans consider the deficit a prime culprit for the lackluster economy. House Budget Committee Chairman Paul Ryan (R-Wis.) argues for $61 billion in spending cuts over the final seven months of the current fiscal year as the best way to boost growth. "Continued uncertainty about our economic future is hindering job creation today," Ryan said at a Feb. 9 House Budget Committee hearing. "The explosive growth in our federal debt is by far the biggest source of this uncertainty."

The idea that a government should live within its means resonates with much of the American public, after many families had to make sacrifices during the recession. While the financial crisis may have cast doubt on the wisdom of markets, persistent high unemployment and a record budget deficit have undermined confidence in the government's capacity to deliver prosperity. In a Bloomberg National Poll in October, 51 percent of respondents said Obama's stimulus either weakened the economy or made no difference.

To win back independents and executives, Obama, along with emphasizing education, would boost spending on transportation so manufacturers can move goods more quickly and cheaply. There's also a $1 billion expansion of health research that would assist biotechnology and pharmaceutical companies. "Now that we're out of the depths of the crisis," Obama said at a Feb. 15 news conference, "we have to look at these long-term problems and these medium-term problems in a much more urgent and a much more serious way."

At the moment, the White House and Republican budget sparring is confined to domestic discretionary programs, or about 12 percent of overall spending. The rest is for defense, interest on the national debt, and entitlement programs such as Social Security and Medicare. Obama and Senate Republican Leader Mitch McConnell of Kentucky on Feb. 15 signaled they would be open to negotiations to put entitlement programs on a sounder footing. A bipartisan group of six senators, including four who were on the President's deficit reduction commission, also has been exploring turning that panel's recommendations into legislation.

Over the coming months it will be clear that the White House and the GOP have deep differences, ranging from how fast to bring down the deficit to which domestic programs to cut. Some of these differences will come to a head soon. The temporary resolution funding the government expires on Mar. 4. Soon after, the government will reach its legal debt limit, requiring Congress to prevent a default. In each case, Republicans, especially newly elected Tea Party members, are hoping to use the occasions as leverage to reopen the debate on the appropriate size and scope of government. When they do, Keynes and Hayek, both now long deceased, will be there in spirit.

The bottom line: The 2012 budget debate could be a prelude to a bigger confrontation—or a grand bargain—over entitlements and the tax code.

Dorning is a reporter for Bloomberg News.

Auto review: 2011 Buick Regal CXL turbo

Car maker has a hit with U.S.-badged version of Opel Signia
Feb. 19, 2011
Source: Market Watch
By Ron Amadon

DAMASCUS, Md. (MarketWatch) – To use a sports analogy, Buicks were long aimed at the baseball team’s treasurer, who sat in the luxury box. But when it came to athletic ability, they struck out in T-ball.

Then one day a 20-year-old with the same name joined the club in spring training and clocked one 425 feet to dead center on his first at-bat. He followed with two more hits and a great catch.

Players on both teams were left wondering, “Who is this guy?”

That is exactly what is going on at Buick. The days of the vinyl-covered roofs, ultra-soft ride and single-digit gas mileage are over. The change is so profound, one wonders if the sales team might have been helped if General Motors /quotes/comstock/13*!gm/quotes/nls/gm (GM 36.51, +0.14, +0.38%) had chucked the Buick name for something else.

Of course, this car does have another identity. In Europe, it is the Opel Signia and was originally supposed to be a Saturn in the U.S. But that sun has now set.

I was as skeptical as anyone about the new Buick and its readiness to compete with the auto world’s major leaguers. After a week behind the wheel of a top of-the-line CXL Turbo I would say the car is more than ready. Is it ready to beat them? No, not quite yet.

But the brand has now produced a car that can be fun to drive on back roads, has good power, is more than comfortable for long drives and is just big enough to stuff two adults into its rear seats. Taller folks might feel their heads brush the headliner.

Let’s start in the power department. The Russelsheim, Germany-made Regal has a turbocharged 220 horsepower in-line four that kicks out 258 lb-ft of torque at 2,000 rpm. It was tied to an Asian-made six speed automatic that also allows the driver to manually shift, but only with the center console mounted lever. No paddles are offered, a rather strange omission. The redline comes up at 6,350 rpm.

On the highway, that’s more than enough power to get you out of the ramp and up to speed quickly on the interstate. But on back country, twisty roads, there was a slight hesitation to build up speed coming out of a turn. Here’s is where a twin-clutch manual really shines. However, the automatic is the only tranny offered. Look for a zero-to-60 time of about 7.5 seconds.

Handling was well above what I would expect. Some of that was helped by the P245/40R Goodyear tires mounted on optional 19-inch aluminum wheels. A little less body lean and a little more feedback through the steering wheel would be nice, but you still can have some fun here. There are four-wheel disc brakes all around, with MacPherson struts up front and a four-link independent suspension to the rear. Suffice to say that this all works light-years better than the last Regal I drove, which was softer than Charmin, suspension-wise.

Inside, GM has infused the car with luxury touches. While there was hard plastic,it didn’t look cheap. The ventilation system quickly warmed the car on icy mornings, and the heated leather seating was more than welcome. I did have to dig out the manual to set up my favorite stations on the audio system.

The “Premium 9” audio system was more than adequate, with separate steering wheel-based controls. The test car’s audio system had only single-slot CD/DVD player.

Around town, the car was a delight to drive. I felt it was just the right size for doing errands and parking, at some 190 inches long and 73 inches wide. The EPA says owners should expect 18-28 miles per gallon, and I got 20 combined on the button.

There was some road noise on less-than-smooth pavement, along with a little wind noise at higher speeds, but nothing all that intrusive. Cup holders were mounted a bit too far to the rear for people with longer arms.

With rear-mounted airbags, a power sunroof, high-intensity discharge headlamps and other options, the test car would go out the door for $34,435. That is up from a CXL base of $28,745.

It’s breathtaking to consider how far Buick has come with the turbo Regal compared to its cars of old. A tweak here and there, especially in weight reduction, and the Regal is set to compete in big-league ball.

But that brings the maker to another, bigger barrier — finding a way to get younger buyers into Buick showrooms.
Hubcaps
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While sales rebounded in November, the much-talked-about Tata Motors Ltd. /quotes/comstock/13*!ttm/quotes/nls/ttm (TTM 26.40, -0.67, -2.48%) Nano has been a sales flop in its native India. The roughly $2,000 microcar has been beset by production problems.

You probably have seen the gang at “Top Gear” rave about Italy’s Pagani supercar. Now it’s apparently coming to the states. Pagani says it will offer one model, a 700-horsepower Huayra — estimated cost $1.1 million — but it needs a dealer network first.

I like the Chrysler 200 “Imported From Detroit” tag.

And here is proof that you can’t keep a good man down. The Detroit News says “Maximum” Bob Lutz is returning to General Motors in some sort of advisory role. Anyone who loves the industry has got to love that news.

Vehicles tested in this column are on loan from the manufacturers through local dealers.

Ron Amadon writes about cars for MarketWatch from Washington.