The circle of broke
Anyone who remembers Disney’s The Lion King can understand the circle of life. Well now, I want to introduce you to the circle of broke, that subset of the circle of life that dictates how the poor stay poor.
Flashback to November, 2008. My wife, a 5 year employee of a major employer, was laid off, replaced by a more streamlined (read, cheaper) crew setup, and much of the work done by computers. Step forward to April, when I was laid off after 4 painful months of watching our workload dwindle to nothing, my check included. My wife managed to get a job paying 50% less. I continued on at school, and continued to look for work. At least my unemployment check, with Obama’s gift of $25 a week, helped. Even as we were knocked off our rear ends, we continued to try and climb forward. My wife found a job paying a little bit more, and we moved closer to comfort.
But as you can guess by now, the circle of broke was among us. Things were going alright. I still hadn’t managed to find a job, but my prospects for good paying internships were looking good. My 4.0 GPA was something to take notice of, and a couple of professors were vetting me as a possible grad school candidate, with the hopes of getting paid to go through the NSF. I was a semi-finalist of a major scholarship that would’ve paid me a decent dime to go to school. Then it all falls apart. I wasn’t selected for the scholarship. I wasn’t selected for UNC Charlotte’s SREU. Boston U canceled their SREU. Other programs said thanks but no thanks. My benefit year ended, and when my benefits resumed, I had taken a 40% cut because it was based on my pathetic excuse for 1st quarter pay in 2009. Nobody was interviewing me. Then a break, I got an interview from a place an hour and a half away.
But money kept growing tighter and tighter. Last week, my home phone, cell phone, internet, and tv were shut off because of being 2 months behind. Turns out that that interview I had, they wanted me, but couldn’t reach me and took someone else. ARG!
Then my wife came home today with some more troubling news. Her boss let go of two more people today, and told her she may be next. Really? I hope he at least is nice enough to provide a Sam’s Club size case of KY for the reaming that will follow.
But that’s life. Welcome to the circle of broke. We forever hold on to hope, but unfortunately hope doesn’t sell the bills. Maybe if I could just be a con artist and learn how to sell false hope.
Bank of America now in the business of home invasions?!
Bank of America Corporate Center - Charlotte, NC
Reading the Wall Street Journal today, an article on the 3rd page caught my eye. Apparently, Bank of America has gotten into the business of home invasions and parrot-napping (NY Daily News).
Angela Iannelli, a 46 year old from the Pittsburgh area, came home to find her door padlocked, her house ransacked, and her 11-year old parrot – Luke – missing. A Bank of America employeed royally screwed up, believed her property to be vacant (it wasn’t, nor was she behind on her payments), and sent a contractor over to install a new lock and “secure” the property. I guess in Pittsburgh, the method of securing a property is to cut the power and water, cut electrical lines inside the house, damage floors, damage furniture, pour anti-freeze into the toilets, and take animals. Maybe the contractor should be lucky it was caught after the fact, because there is a good chance that somebody might have gotten shot.
When Ms. Ianelli returned home, you can imagine what went through her mind. The biggest thing to her was that her parrot was missing. She claims to have stayed with friends until he was returned.
Bad enough that the bank goofed, even worse was the lack of response or helpfulness from the bank when she called. They denied knowing where he parrot was, then eventually was told she could drive the 80 miles to the contractor’s office and retrieve Luke herself.
Needless to say, she is suing the bank for more than $50,000, and she rightfully should. If I had been her, I would’ve wanted to make sure that I received enough to repair all of the damage, pay my lawyer, give myself a little, and, most importantly, had them wipe away my mortgage. Why? Just as we are judged by trustworthiness by the bank (i.e. credit score), we need to have trust in the bank too. Just because they hold the lien doesn’t give them to right to waltz in and out whenever they please, especially when it involves damaging the property.
The bank issued an apology this week after the lawsuit went public. Too little, too late. I’m rooting for you, Ms. Iannelli. Did I mention I have a Bank of America mortgage too?
Is there anything worse than being broke?
I'll sell you my tie
Some people will say so. Most of them aren’t broke so, do their opinions really matter? I mean, I can look at the bright side, I have my family, my health, my house, etc. Ok, well, the health is questionable (large amounts of stress does that to people), stress in the family, and the consistent fear of losing my house and everything.
Simply put, being broke is about one of the worst things that can happen to you. Not because of the lack of money, because it’s true, money doesn’t buy happiness. It’s the fear and anxiety surrounding the future. An unknown future.
For the last year I have been on unemployment, simultaneously looking for work and going to school. I’ve managed to get by, even with all of the income that is no longer coming in (we made roughly 50% less in 2009 than we did in 2008). I was proud of myself, putting us in a position where even with both of us losing jobs and taking substantial cuts in pay, we could still squeak by.
With summer nearing, I began seeing light at the end of the tunnel. I’m a semi-finalist of a major scholarship which would give me a livable stipend (starting at $25,000 a year). I’ve got realistic chances for great internships that would provide decent pay and a wealth of experience. It looked like all of my hard work may be beginning to pay off. All of the restless nights working on school work, studying and forcing myself to understand and apply the concepts, working hard on teams to complete projects and set up conferences. Then yesterday I found out my unemployment benefits are tapped out, a couple of weeks shy of a full year.
Fear, anxiety. How am I going to get by? How am I going to keep paying the bills, keep a roof over our heads, put food on the table. This is where broke is the worst. It isn’t that you aren’t being a man or a woman, doing everything you can to make things right. It’s the lack of any control, knowing you are powerless to fight back.
I’ve applied for my extension, and even though everything appears to be ok, but who knows. I have no power to make them do anything, and now all I can do is hope and wait that that check keeps coming. In the mean time I will keep doing what I do, yet deep down slightly unhinged by the fear.
Mix signals?
Is it just me, or is the economy giving us mixed signals. The Dow Jones has recovered nearly 3000 points from it’s low, yet 84 banks have failed this year as of last week. That averages out to 2.5 bank failures per week. Ouch! There are still signs of things sinking, particularly in commercial real estate. Yet other signs show we are improving. Mix signals? As the only vice presidential candidate we’d wanna see in a centerfold would say, “you betcha!”
However, this is a little bit of silver to an otherwise dreary lining. Our recession is moving through its progressions, which equals progress. Our markets are also clueing us in that the big picture ahead is looking brighter. Just remember that the markets don’t reflect our current reality, but our perceived future. We’re continuing to hit turning points, which is good news for our future.
Unfortunately for us laid off folk, future doesn’t fix the present.
But being laid off does have its advantages. Especially in a recession. This is the perfect time to step back and take stock in our life. Do we like where we were going being we were laid off? Should we change paths? Would furthering my education advance me, or should I look at another career. Some of us may be used to working in industries that routinely lay off and rehire (defense contractors and the like are notorious for this. My friend’s dad has been laid off and rehired between Solectron and General Dynamics for almost two decades, ouch!). Maybe this one stings a little bit more, and makes us realize we need to find something more stable.
So to all my fellow unemployed/underemployed persons, use this as your opportunity to start going in the direction you want to go. Although the “potential employee” pool is larger than normal, we now have the opportunity to make a move and shine. So take advantage,
As for me, I used this as my sign to go ahead and finish school. I was almost done with my associates when I was laid off (I graduated in July), but instead of taking time off before transferring to a 4-year, I took being laid off as my sign to go ahead and get it done with. I’m now in my first semester at UNCC, majoring in Mechanical Engineering and Physics, with a minor in Mathematics. I still have withdrawal pains from the job world, and it is still weird being the “old fart” around campus. yet it has already been challenging and rewarding, and I can now focus on everything a lot more. By the time we’ve mostly recovered from this recession, I will have positioned myself to be a strong candidate for anywhere I want to go.
So use this opportunity wisely, recessions don’t happen everyday.
Russians, clunkers, and hackers
Akula class Russian submarine, like the two that were found off the East U.S. coast
Seems like Russia wants the world to know that it is supposedly back on top of its military game. The U.S. has been tracking two Russian submarines off the east coast of the U.S., hanging around in international waters. That’s comforting to know given that A) I don’t trust Russians and B) I live on the east coast. Of course, I’d be a maniacal conspiracy-theorist to believe that they are out there sitting for me, but it still isn’t comforting. Russia has been showing signs of wanting to reunite its former soviet states, and has been showing that this new “democratic” government – lead by Medvedev, prime minister Putin’s puppet – is still built a lot like it’s former socialist self. I’ll save my evidence for another day though, I’m sure I’ve pissed enough folks off saying I don’t trust Russians.
Aside from Russians, wtf is this about clunkers? If you guessed CARS – Cash for Clunkers – then you’d be absolutely right. This geniously little program, which is about to run about $3 billion once Obama signs the latest bill, has done more to stimulate than the $750 billion+ economic bailout/stimulus. They are estimating 750,000 cars sold. Even if half of the buyers were planning on buying anyways (according to economists), that’s still hundreds of thousands of new car buyers out there. That’s billions of dollars worth of new loans flowing into the market place, hundreds of millions if not billions being pulled out of savings to pumped back into the economy. That’s salesmen who finally are getting a decent check, sales managers who have work to do. A definitely positive shot to the economy. So for all you naysayers, complain once you kiss your elbow.
So now what does the 1st part, and this last part, hackers, have in common? Is it that they are both listed using an odd number, or that putting the numbers together makes an unlucky American number (13) ? Well, its true and all, but the meaning is much deeper than that. Russians = hackers. Maybe. At least some who manage to stay away from the Vodka water fountains long enough =)
As I said, it could be. If you haven’t heard, someone or a group of someones led a distributed denial-of-service – DDoS – attack against twitter and some other services yesterday. Turns out that this attack was launched specifically at sites by a man named “George”, including his twitter page, livejournal, and facebook. As of this writing, his Livejournal and Facebook page is still down. But why him? To quote CNN:
His recent posts include: “How Russia was preparing military agression (sic) against Georgia, how they were training soldiers and mobilizing military equipment, what kind of provocations were carried out by the separatists prior to the war.”
“Seems somebody did not like such a chronicle of events,” he [ "George" ] told CNN.
So was it Russians? Was it someone in Georgia who is pro-Russian? Hopefully the world may end up finding out. Given that this dipshit(s) didn’t just take out one page, but knocked out Twitter, numerous groups are now involved with this, including the Georgian government. But I would be more concerned with the hackers that use Twitter.
What this all boils down to is more Russians or pro-Russians afraid of the truth. They should’ve just stuck with the vodka.
Oh, and for one last jab. I just noticed that if you look at Medvedev and Putin side by side, Medvedev looks like 007, while Putin fits the bill for one of his Russian enemy masterminds.
Sorry it’s been soooo long!
I’ve been slacking off here! Sorry I’ve been ignoring this site, but life has been busy. In-laws in town, redoing the backside of my house (unfortunately with little help), and dealing with life in general.
And my god, so much has happened over these last couple of weeks. Michael Jackson dies, his mom aks for temporary custody, his dad puts his foot in his mouth and shows once again what an ass he is, Madoff get’s 150 years in prison, a plane crashed straight down into the indian ocean, with the only survivor a 15 year old who can’t swim. Oh, almost forgot about Billy Mays, my favorite TV commercial pitchman, dying. Then Sarah Palin, a wonderful MILF yet a hapless politician, has announced she’s resigning.
And Michael Jackson. I’ve never been a huge fan, although I did like his stuff. But he did, in many ways, shape our current pop culture. Even though I still thought he was a pedophile, I hated to hear that he passed away. I will say I am shocked with the numerous suicides that have been committed because he died. People get a little too caught up in things. It’s truly amazing that we idolize people who have more issues than we do.
And Joe Jackson. I’m kind of waiting for the bolt of lightning to strike him: I’m surprised the Rev. Al Sharpton would be willing to stand so close! Using his son’s death as an opportunity to market new material. I always heard he was a dick, but man, I think they were being nice calling him that. A monster is a better term. And with Al Sharpton tagging along for his few words, it lowers my stock in him as well, and I didn’t care much for him in the first place.
And Sarah Palin. Hah! She figured that her lame duck status would just make it “politics as usual.” What a load of crap. Palin said she planned to make a “positive change outside government,” without elaborating. Maybe she’s about to go visit Hugh Hefner, and become the first Governor/almost Vice President centerfold the magazine has ever had. That may be about the only positive change she could make outside of government. And before you feminists start blasting, I have nothing against a woman as governor, vp, president, secretary of state, etc. etc. I have a problem with a woman who lives in Alaska and believes she can see Russia outside of her window being in power. Or someone who has more political flip-flops than my wife owns! How she’s “Drill, baby, drill!” yet has fought hard against the big oil companies, when they are the ones that are needed to make the plans successful. The same Sarah Palin who gave $500 million to a CANADIAN company to do a feasibility study of the proposed new pipeline. That’s 1/2 a billion to a non-American company just to let us know if we should build it. All the while, big oil was running their own studies, at fractions of the cost, and keeping the work for AMERICAN workers. Imagine if she had gotten to be VP?!
As for Madoff, I hope they keep his body there for the full 150 years. When he dies, preserve it, and put it for public display. A warning to anyone else who wants to play his game. We won’t even give you a proper burial till you’ve served your bloody sentence. Son of a bitch.
Well, that’s about it for now. I’m redoing the whole backside of my house (new sheating, rigid foam insulation, fiber cement siding, energy star windows and doors, rebuilding the chimney chase, etc.), so I’m whooped, and not sure when I may get a chance to post some more. But in the words of General Douglas MacAuthor, “I shall return.”
Do our financial advisors always know best?
It never hurts to add up your own numbers
It’s a good question. A couple of jobs back, I had an 401k account. They didn’t match, but they put 3% of my salary into my 401k, regardless of what I put in. So I put in 3%. As the times were good, I watched it grow. It was a measly amount, maybe $3500 at its best time. Gains were totaled in the 20% range, even after 2-3 years of not working for them anymore (no more in).
Then times weren’t so good. I dragged my feet on opening up an IRA and rolling it over, and it cost me. By the time I rolled it over, the account was worth slightly south of $2100. $1,400 hit. And these were invested into very good funds. I had a slight amount in a very aggressive fund, some in a more moderate fund, then 40% in bond and money market funds. I did the safe path, just like they tell you to do.
When I opened up my IRA, I had already gained some experience with the markets before hand. I decided to take “the risk” of using some money, particularly from overtime to start with, and buy some stock. But what to buy?! There are soooooooo many options out there, and even with screeners, you can find hundreds that fit your criteria. So I went with what I knew, and in some ways trusted my gut. Read more
Difficulties of non-traditionals
The real world can be daunting to those who've never been in it.
Some people may not realize this, but being a non-traditional college student may be one of the hardest experiences in someone’s life. And when I refer to non-traditional, I’m referring to that rare breed of student: independent, with a family, a mortgage, a full-time job. Actually, you need not to even include to full-time job. Just consider someone like myself – a husband and a father – those alone being a full-time commitment. Then add in a full-time job, and we’ll sprinkle a full-time education on top. So go ahead and work three full-time jobs, all three requiring a lot out of you, and you will soon get a taste of their life.
The typical traditional student is much younger, still considered a dependent. Many of the permanent concepts of real life, including the real responsibilities, are not yet on the plate. Their school might be paid by family, by scholarships, or through student loans. They may work a part time job – wait staff is probably the number one college job – and the rest of the time is either in class, studying, or hanging out and having fun.
Non-traditionals, not so much. They generally don’t have the option of hanging out and having fun. The concepts of the real world are real to them. The bills are real, the responsibilities are real. The traditional student concept of owing for college “oh, that’s in the future,” doesn’t apply: they see that amount and they KNOW what that costs.
Non-traditional students are a very important mix into the college community too. While the younger students may bring in fresher minds (and bodies), non-traditional students usually bring in a ground sense that is required to survive the real world. They provide a balance to the free-living lifestyle of so many college students.
I’m writing this because I’m a non-traditional student, I understand the difficulties first hand. The stress of waking up early, putting in 40, 50, even 60+ hours a week, dragging myself to class in the evening, doping myself with steady streams of caffeine half the night in order to get my homework done. How to spend so much time away from your family, while doing everything you can to hold it together. I also know how it begins to wear you down, slowly at first, then eventually depleting your energy, yet still fighting on to get it over and done with.
And it surprises me that there are not more financial options out there for non-traditionals. Sure, there are some scholarships out there specifically for non-traditionals, but not too much else. In the FAFSA application, we might be treated as dependant students, but generally, we are treated the same as traditionals. We don’t have parents to help, and we didn’t spend the last 18 years of our lives planning on sending ourselves to college.
It also shocks me, given the number of MBA grads who completed their MBA’s at night, while working full-time. Every one I’ve talked to who went down this path made many points to which I can easily relate. Working full-time while doing it may make you stronger, but after a couple of years it wears you out. Grades drift down towards the end, and we are thankful for just getting through it alive. But for those MBA students, they had the easy option of calling it done.
But what about students like myself. Finishing up at a 2 year, getting ready to begin my 4 year this fall. Hopefully early entry into the graduate program. By the time it is all said and done, I will have been through this for around 8 years. Yet what extra help will I get for this? Minimal at best.
I think it is time we start making some changes for non-traditional students. The government (and society) has incentives to do this too. Let’s take people who were in the workforce earning X dollars, people are productive members of society who already understand the realities of society, and get them a college education. Now you have people earning 2X, 3X, 4X, even 5X, who bring in extremely valuable skill sets not found in the typical college grad. The government gets more taxes; society gains more knowledgeable, productive members. Companies get well trained employees that are naturally more adept at being responsible and is already used to making tough decisions that affect others.
What I suggest is a program specifically for non-traditional students. Students who are independent and receive no financial help from their parents. Students who have families of their own. Students who own their own home or have been long time renters. Students who are working full-time and have a history of working full-time. Why can’t the government subsidize a percentage of their income, provide health insurance benefits, pay for school or mostly pay for school. Not off of standardized numbers. Based upon how much their earn compared to how much they pay out.
Provide these students an opportunity to reduce their working hours, to help even up the playing field with traditional students. Non-traditionals are proud, we take care of ourselves, but we wouldn’t mind the hand up. Can’t we get a break?
CPCC Cashier Scam
Students beware.
A little history. Last spring, I was on financial aid, and taking 3 courses – Calculus 2 (4 credits), Physics 251 (4 credits), and orienteering (1 credit). I was also working on the first project at my last job. When I signed up for the job, I agreed to occasional day trips, but a monthinto the semester, the requirements changed. I was to go to Greensboro (and shortly enough, travel around the country), and to be up there the whole week for quite some time. I wasn’t happy, but I worked with my Calculus and Physics professors, and came to a resolution. Orienteering didn’t matter, it was a weekend class for 2 weeks. My second weekend for the class came after my first few days in Greensboro (anyone who knew me then should remember I had the flu, running a 103 degree fever…).
The next week, I tried the arrangement, but realized the only person I was cheating was myself, so, against my principles, I withdrew. Prior to withdrawing, I spoke with financial aid, and they said I wouldn’t have to pay anything back, which helped seal that fateful decision.
Well, apparently you can’t trust everything your told, even by a college official that specializes in that particular field. After returning from my nationwide tour, installing equipment for the US Trust transition, I registered for a summer course. Unfortunately, I couldn’t register. The system showed I owed the school $819.
So I went up to the school, spoke with financial aid, apparently the person I spoke to forgot some, uh, important stuff. Thanks guy! Then I go to the cashier’s office. I admitted that fine, whatever, I owe the college money. Tried to set up a payment plan, since $819 is a large chunk to swallow, especially when your told that you would owe $819 less! Oh, they would, but they wouldn’t let me register until it was paid. According to the supervisor I dealt with, that was financial aid, not the cashier’s office. Talk about accountability. “You’re a representative of the college.” Yea yea, he was a boneheaded jerk. Sure, I know there are people who try to scam their way through, but given I had never owed the college anything (I always paid my tuition, that was only my second semester on financial aid), and the fact that at the time I had a 3.7 GPA. Ok, whatever, he’s a jerk. I ended up paying for it on my credit card (shooting it back to the limit, but hey, I got my financing), and was told that I owed no more money to the college.
Fast forward a year. Today is May 11th, 2009. I just took my 2 finals today (Calculus 2 and Physics 251, only a year later), and after my first exam, I went to the graduation office. I had some concerns about what showed up on my program evaluation, and I wanted to ensure that I would get to walk Thursday and I would have no issues with getting my degree in July.
One of the issues was that it showed that I had no PE class, yet when I check my transcript on CPCC’s MyCollege, it shows I passed it with an A. I noticed that on her system it showed a status “NP,” and she had to call someone to find out what it meant. Means Non-Payment (which was my guess). But hey! I paid this thing a year ago!
So once again, I trudge up to the cashier’s office. After standing around for about 15 or 20, they finally showed me where, according to their system, I didn’t pay it. Here’s how:
- 11/9/07 - I registered - $526.50+
- 1/2/08 – I bought books, supplies, and a new calculator – $352.22+ , new balance – $878.72+
- 2/7/08 – Federal Pell Grant payment pf $472.00, new balance of $406.72+
- 2/7/08 – NC Community College Grant payment of $337.00, new balance of $69.72+
- 2/7/08 – NC Education Lottery Scholarship payment of $310.00, new balance of $240.28-
- 2/8/08 – Financial Aid Refund of $240.28 dispersed, new balance – $0
- 2/21/08 – Dropped Calculus and Physics, account credited then recharged $526.50, balance still $0
- 3/24/08 – Federal Pell Grant charge-back of $272.00, new balance $272.00+
- 3/24/08 – NC Community College Grant charge-back of $337.00, new balance of $609.00+
- 3/24/09 – NC Education Lottery Scholarship charge-back of $310(including refunded amount), new balance $919.00+
Apparently, this is the amount that I should have been charged for, and had I been charged that at the time of payment, I would have paid it. When you want my money, best to ask me while my wallet is open. However, check out the next bit of, umm, curious accounting that I have yet to understand the purpose:
- 3/25/08 – Account credited $526.50 (price of tuition), new balance $392.50+
- 3/25/08 – Account now charged $426.50 (price of Calculus and Physics), new balance $819.00+
- 5/13/2008 – Payment of $819.00, new balance $0
For some ungodly reason, they dropped my PED class. Why? I don’t know. I had already completed it (0ver a monthbefore), and had a grade associated with it (A, the easiest A ever). That is a financial obligation, yet they arbitrarily didn’t include it. The only thing I can assume is a sick joke, but irregardless, at this point, I will not pay it. If they wanted the money for it, they should’ve asked then. They didn’t. They told me they would not allow me to register if I did not pay my financial obligations to the college, so I paid. I’ve now registered for my 4th straight semester, yet they say I didn’t pay for a completed class,which is a financial obligation.
In fact, from the Students’ Rights and Responsibilities, Code of Conduct, and Disciplinary Procedures section of the CPCC Student Handbook, section V (Sanctions), number 6
At the time I paid the $819, I was informed that all financial obligations are met. Now they say I didn’t pay for a class, which was financial obligation at the time I paid. As I see it, they have forfeited their right to make that claim, given that the policies explicitly state that I would be unable to register for further classes. By the fact that I made payment and have continued my studies at the college, that explicit statement also means that I have no financial obligations with the college (I have already paid the summer tuition, so I owe $0).
So sorry Charlie, don’t come to be and cry about spilled milk. The college (or as that jerk in cashiering would state, “the cashier’s office”) informed me at the time I made that payment that I was paying my financial obligations to the college. So the cashier’s office can now fix their mistake, and eat their $100. Because I will graduate this summer, and I will not pay a financial obligation that was resolved a year ago. Paying an extra $100 then might have hurt, but now it is outrageous, and will not be tolerated. Even if I were still working, I’d still tell them no.
So where’s the scam? Make sure that when making payments to the college, insure that your full payment is covering everything it is intended too. The cashiering department, including the supervisors I have had experience with, will not get you anywhere, even when you have a valid claim. The department cares little of fault, and through experience claims allegiance to any other part of the college.
Tomorrow I am going up there to speak to the supervisor, or the supervisor’s supervisor, or God knows who else. If I have to make an appeal I will. But don’t hold it against me to try and get Action 9 involved. The last thing we need in a bad economy is for public colleges and universities to screw around with their students on financial matters.
I’ll post an update tomorrow with whatever I got out of my meeting.
We say one thing, then do another
Ken Lewis, CEO of Bank of America
Read an interesting article on the Dow Jones Newswire today. Of all of the criticism that Ken Lewis, CEO and former Chairman of the Board at Bank of America, has received, he got a bit of praise from an unexpected source: Barney Frank. Rep Frank commended Ken Lewis’ bold move to forge ahead with Merrill Lynch, and in doing so saving the markets from another fatal blow.
Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, said Lewis needs to get credit for acting in the broader public interest by going through with the deal.
“People say ‘What’s the matter with these financial executives? Why are they only thinking of their own narrow interest? What about the public interest?’” Frank said. “That’s what Ken did. It ought to be acknowledged.”
Now the shareholders seem to have a different thought, being upset that the public interest prevailed over the interest of the shareholders. Yet as a shareholder, you should also recognize that the public interest is YOUR interest too. And if we want to get technical, the people of the United States, by proxy of the United States Government, have a vested interest as well.
Unfortunately, shareholders look at the world via tunnel vision. Sure, they realize that things are happening, but their only concerns are their shares. I can understand that, I am defensive over my money too. While it is understandable, sometimes we need to take a step back and look at the larger picture. Merrill was perilously close to failing, and probably would’ve declared bankruptcy at the same time as Lehman Brothers. Lehman dying was bad enough, imagine the shockwave of Merrill went too. I highly doubt that the pain would’ve only been doubled; instead, I think we would be looking at EXPONENTIALLY worse issues. In other words, not an outcome we wanted to consider. To oversimplify it, things would’ve gotten much worse for all players involved.
But what would’ve happened if the Merrill deal wasn’t approved? Merrill, just reeling off of its $15 billion loss, would’ve been toast. Since September, Merrill was on life support, and if the bank had pulled the plug, I fear the markets would’ve gone into another painfully fast spiral. Bank of America would’ve been hurt too in the process, so don’t believe otherwise.
Instead, Ken Lewis and upper management did some questionable things, but ensured the deal went through. A large portion of Bank of America’s 1st quarter profits are a direct result of Merrill Lynch, and as the transition and cost cutting measures continue, I believe we will quickly see even more gains related to Merrill. Ken Lewis helped to avoid further disruptions in the market by snatching up Merrill, and provided the best value for the shareholders by getting Merrill before its reputation was marred with bankruptcy. You don’t hear the names Lehman Brothers or Bear Sterns doing business anymore, because those names are worthless. Merrill Lynch does have a longstanding reputation and incredible brand recognition, which is going to prove to be additional value down the road.
I was reading my latest issue of Conde Nast Portfolio, and in it they had a list of the Best 20 and Worst 20 CEO’s of all-time. Names like Henry Ford, Lee Iacocca, Warren Buffett, Steve Jobs, Bill Gates, John D. Rockafella, and Andrew Carnegie fit in the best, while names like Fuld (former CEO of Lehman), Lay (former CEO of Enron), and Pandit (CEO, Citigroup) filled up the worst 20. So what defined a great CEO over an average one? Most were defined by their innovations, but many were defined by their ability to make tough choices regardless of criticism during difficult times. Its easy to make decisions when things are going good. But when the economy is crumbling all around, and everyone is looking for a decision to be made, those who made those tough decisions and made them work, those were the guys who earned their right to be called a best CEO. I think Ken Lewis has done an outstanding job leading Bank of America, especially during these murky times. Only time will prove this, but I honestly believe that he has equipped the shareholders with the best tools to get through this recession, and to emerge a much more powerful, and valuable, investment on the other side.
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Times Business & Tech- After Housing Bubble, the Dark Side of Homeowner Dreams September 8, 2010
- Mark Hurd: Who Will Hire the Ousted Hewlett-Packard CEO? September 8, 2010
- The Oil Rig Blues: Working on a Platform September 8, 2010
- Toyota: New Car-Safety Issue Hits Company After Recalls September 8, 2010
- Seeking Alpha Financial News
- Many Are Still Underestimating the Damage That Can Be Done By Ireland’s Bank Troubles September 8, 2010
- Do European Banks Present a Buying Opportunity Yet? September 8, 2010
- A Greek Lawsuit Against Goldman Sachs? September 8, 2010
- The Second Wave of Europe's Banking Crisis Is Crystallizing September 8, 2010
