Archive for November, 2008

CITIBANK – TOO BIG TO FAIL

Like many NRI’s, I am also a customer of CITIBANK. I just want to put out this blog to talk about CITI GROUP and its problems, concerning people who are searching for answers about its bankruptcy and sell off rumors. This day calls for a quick update on this matter.


Economy Struggle


A wild, life threatening roller coaster ride is being played out in the Stock Market all over the world. I did mean life threatening for a reason to make a point. Like a uneven ride dangerous to riders, many people jobs are at stake including 53,000 from CITI Group because of the upheaval in stock market. Blood shed in wall street has been worse these past few weeks. It affected the Main street to large extent. US economy is going thru a real tough time similar to 1929 great depression and witnessing yet another big job loss since 1991, 16 year high. It is bad as it gets and it might get worse as we are approaching the year end.


“The economy is deteriorating tremendously fast,” says Raghuram Rajan, a finance expert at the University of Chicago. “The concern is how much more [risk] is there. This stuff seems unbounded. That’s what the investor is really worried about at this point.”



CITIBANK ISSUES



Being said all about the market, CITI GROUP banking giant is been talks for long time being a major victim of toxic mortgages and bad corporate decisions. Once the biggest U.S. bank, with a market value of $274 billion at the end of 2006, Citigroup has now slipped to No. 5 behind Minneapolis-based U.S. Bancorp. Last week was one of the bad weeks for the 11 year old group which is formed after merger of CITIBANK and Travellers group in 1998.. It has lost so many billions and has around 2 trillions of dollars in bad debt. It already wrote off billions of dollars as bad debt in books for the last few quarters. Even after announcing 10% last April and 20% job cuts next year to tackle the situation, stock plummeted badly as investor concern about bad debt to 70% last friday since this year..


Including a $25 billion capital injection from the U.S. Treasury under the $700 billion Troubled Asset Relief Program, the company has at least $50 billion of capital above the amount required by regulators to qualify as “well capitalized.” according to bloomberg.com. But still, it won’t be able to survive the storm and weather out unless it gets special attention to avoid its bad assets getting on his neck pushing for sell off or bankruptcy. An endorsement by billionaire Saudi investor Prince Alwaleed bin Talal by investing around 7 billions but still that’s not enough to keep the company afloat.


CITI BANKRUPTCY, TOO BIG TO FAIL


There were worries all over world and even rumors about company spinning off certain parts of its assets. Even rumors about a possible sell off, but who can buy this bank giant. It will be like frog eating a snake, bad for both companies whoever end up buying it. If it collapses to announce a bankrupt Chapter 11, that would be big blow to US economy.


US Government which bailed out AIG which was an insurance Giant came for another rescue by announcing a special massive bail out offer on Nov 24, 2008 designed to rescue the company from bankruptcy while giving the government a major say in its operations. It was the largest bailout in history. The Treasury will provide another $20 billion in (Troubled Assistance Relief Program)TARP funds in addition to $25 billion given in October. The Treasury Department, the Federal Reserve and the FDIC will cover 90% of the losses on its $335-billion portfolio after Citigroup absorbs the first $29 billion in losses.In return the bank will give Washington $27 billion of preferred shares and warrants to acquire stock. The government will obtain wide powers over banking operations.


Is my deposits safe?


If I want to say something about CITIGROUP, I like to say CITI GROUP will never go out of business or nobody can buy this big of a financial service company. SO US Government will do all its best to keep this company alive. With that note, all US bank desposits will be covered under FDIC to the max of 250K. Interestingly, there are lot many credit cards offered by CITI compared to Bank deposits directly to consumers. There might not be a direct impact to consumers like other bank failures.



To be cautious, you will be better to split the deposits and have it different banks. Share your comments and thoughts…

IDENTITY THEFT 3 – Credit Cards, A Bitter and Sweet deal

In the Part-1 post, we saw how I was so close in losing the identity by losing the check book through my true story. In the second part, I shared some very famous Internet scams which rocks the web community written by a well known writer to keep you all abrust of the happenings. In this post, I am going to talk about my favorite topic – Credit Cards, how to be nice and play safe with it.


Nowadays, nobody likes to carry even a dollar in their wallet. It is all plastic money that dominates the wallet space. Recently the trend is changing due to credit card debt problems which surmounts to 978 million this year, second to mortgage debt. Many are turning back to greenback cash to safeguard themselves getting lured into their own credit card crisis. But still credit cards are an attractive item around the world among people who can manage and manuver around the loop holes without getting trapped because of its unbeaten promises.


Why Credit card rules?



Credit card is one among the most wanted item by broad range people starting from teens to age old adults. A funny thing about credit card is, you should have a better experience in borrowering money and paying it back (which is translated a good credit history) to borrow even more money. Credit Companies loves to lend you money if you are one of that kind who has good history by sending attractive offers but they except you to fail in a way so they can make money out of you by keeping you in debt. They need a good borrower to lend money and expect a chance to make you bad to make money out of you via interest payments. Isn’t a really tricky business model or what?


Credit card is one of a kind invention by mankind but it can’t escape the ravage of consumer critisim. It has two sides like any other consumer product with both bad and good.



I have many of good points to say listing few below,



1.Avoids carrying cash around

2.Free access to money when in need but comes with fees and charges

3.Usability everywhere in any stores, theatres, theme parks, online stores, online advance bookings etc.,

4.Buy anything from anywhere around the world without local currency

5.Free Auto&Travel Insurance Protection by many cards

6.Help to build good credit history inturns helps to get big things

7.Money back in dollars and gift cards8. Airline miles, Merchandise/Gift points and so much more.

In the bad side though, I don’t have many to complain which are 1.Indulge in shopping spree without any penny in hand,

2.Free access to Money which can drag you into debt

3.Charges and High Interest rates can eat your savings

4.Opportunity to lose identity easily by losing the card


Looks like the number of pros beat the hell out of cons. Most of the disadvantages can be easily overcome by proper money management and cautious credit card handling methods.



Do you really need Credit card?


It depends on each of us unique lifestyle. Everyone needs to evaluate their own situation keeping the good and bad aspects into context and take a decision.


According to my view,

1. a very well managed and organized person can handle credit cards without any trouble and even make money by investing the free money from credit cards.



2. If you are starting out in your career, start out slow but apply one card at time and building your credit history slowly. If the foundation is strong, you can build a very good house on top of and realize your dreams with a good history.



3. If you are kinda of person who never can save or hold the money tight and always go shopping spree, it would be hard one you. You might endup in debt if you cannot pay back your expenses.
 

So it is a really tricky tool which works wonders when it with a person who knows how to handle using knowledge and experience. Otherwise it can get you in trouble and even make your life a disaster.


I have lot more to talk about credit cards like what you need to know before getting one, what are the ways thieves can hijack your identity and what you need to know when your card is stolen. Pretty good stuff coming, so watch out.

IDENTITY THEFT 2 – Aware of Tacky Internet Scams

In the last post, I talked about my lost check book, what are the consequences, what I do to protect my identity and steps to be prevent it happening again. I hope it a helpful information. This week I was planning to take it to another level by posting about Credit card Identify thefts using the training I attended few weeks ago. But I came across a nice article wirtten by Jacquelyn Lynn, a business writer via a newsletter which I subscribed. It is an information packed article with lot of scenorios in some of cases I myself was victim. So I decided to post the article for you all.

Don’t be a Victim – Internet Scams

How dangerous is the internet? You might as well ask: How dangerous is your neighborhood? As in the real world, your risks increase and decrease based on the type of online communities you frequent. And also as in the real world, you never know when a criminal is going to strike because crimes occur even in the best of neighborhoods.

Simply having a computer and an e-mail account makes you potentially vulnerable to internet crime. Your best defense is knowledge and common sense: Know what type of schemes internet criminals are trying to pull off and remember that any deal that sounds too good to be true usually is.



Internet crimes tend to be financial and thieves play on two key emotions: fear and greed. The perpetrator may deliver a threat of some sort—your bank account is going to be frozen, the IRS is going to audit you, or your personal information will be compromised in some way in order to gain access to your financial accounts for theft and/or your identity information for additional ID theft-related fraud. Or the perpetrator could offer you a quick and easy way to make some money, often by doing something that sounds innocent but will usually end up costing you far more than you thought you would make.



Con artists named for their ability to gain the confidence of their victims are often skilled at persuading people to participate in their scams, and they have the same access to the internet as anyone else. Some online scammers will spend months getting to know and building trust with their targets in chat rooms, on dating sites, and in other online venues before putting their scheme into action.



Let’s take a look at some of the current internet crime schemes as identified by the Internet Crime Complaint Center:



Auction Fraud


Auction fraud typically involves the misrepresentation or non-delivery of a product advertised for sale through an online auction site. In one common auction fraud, the seller posts the item as if he resides in the United States, then responds to the “winner” (buyer) with an e-mail stating that he is out of the country for some reason and requests that payment be wired directly to him via Western Union, MoneyGram, or bank-to-bank wire transfer. Using those sources makes the money virtually unrecoverable and leaves the victim with no recourse. For more details on auction fraud and how to avoid it, visit
www.eBay.com and www.paypal.com.


Counterfeit Cashier’s Check



This scam targets individuals who use internet classified ads to sell merchandise or vehicles as well as landlords who advertise their rental properties online. Typically, an interested party outside the United States contacts the advertiser and agrees to make the purchase or rent the property. To make the payment, the “buyer” explains that someone owes him money and he will have that individual send a cashier’s check in the amount owed to the seller. The amount of the cashier’s check will be significantly more than the purchase and the seller is asked to deposit the check and wire the excess funds to the buyer or an associate of the buyer.



Most banks will release the funds on a cashier’s check immediately or within a day or two. Many consumers believe this means the check is valid, but it can take up to several weeks for a bank to determine that a cashier’s check is counterfeit. When that happens, the bank will hold the person who deposited the check responsible for the full amount of the check. A victim of this scam has lost the merchandise sold, the amount of money he wired to the buyer,and probably bank fees for the returned check.


Employment/Business Opportunities


A common scam in this category is when bogus foreign-based companies recruit U.S. residents on employment-search websites for work-at-home employment opportunities. These positions often involve reselling or reshipping merchandise to destinations outside the U.S. Prospective employees are required to provide personal information as well as copies of their identification, such as a driver’s license, birth certificate, or Social Security card (which puts them at risk of being victims of identity theft).

The employees that are “hired” by the bogus company are told that their salary will be paid by a U.S. company that is a creditor of their new employer because the employer does not have any banking set up in the U.S. When the employee is paid, the amount of the check is significantly more than what is due. The employee is told to deposit the check and wire the excess payment to the employer’s bank overseas. When the check is later found to be fraudulent, the victim is in the same situation as victims of counterfeit cashier’s checks.



Escrow Services


Fraud Legitimate escrow services play an important role in protecting buyer and sellers in online transactions. However, scammers have been known to create phony escrow sites to which buyer victims send money and receive nothing in return or from which sellers wait for payment after shipping merchandise payment that never comes. If you use an escrow service, be sure it’s one you know and that you can verify its legitimacy.


Internet Extortion


Internet extortion involves such activities as hacking into and controlling various industry databases, promising to release control back to the company in exchange for money. The perpetrator may threaten to compromise the information in the database unless a payment is made.


Investment Fraud



Investment fraud is an offer using false or fraudulent claims to solicit investments or loans, or providing for the purchase, use, or trade of forged or counterfeit securities.



Lottery Fraud


A common lottery scheme involves sending an e-mail advising the recipient that he has won a lottery and provides instructions on how to collect the winnings. Typically the “winner” is asked to pay an initial fee ranging from $1,000 to $5,000 and often requests for additional payments follow, but the “winner” never receives the promised jackpot.



Nigerian Letter


This common scam involves an e-mail from individuals representing themselves as Nigerian or other foreign government officials, or as victims of foreign government political situations. They offer the recipient the “opportunity” to share in a percentage of millions of dollars in exchange for assistance in placing large sums of money in overseas bank accounts. The letters go into great detail about the situation, which may include the death of a loved one, political persecution, or other sympathy-grabbing story. The recipient is solicited for money to pay taxes, bribes, and legal fees, as well as for personal information, such as bank name and account numbers. The scammer promises to reimburse the victim for the expenses as soon as the funds are out of his or her country. Of course, the money is never repaid and the victim is also at risk of additional theft by having provided bank account information.


Phishing/Spoofing


Spoofing generally refers to e-mail which is forged to appear as though it was sent by someone other than the actual source. Phishing, often utilized in conjunction with a spoofed e-mail, is sending an e-mail that falsely claims to be an established legitimate business or government agency in an attempt to dupe an unsuspecting recipient into divulging personal, sensitive information such as passwords, credit card numbers, and bank account information. Phishing e-mails typically direct the user to a fake website set up for fraudulent purposes.



Reshipping



The reshipping scheme requires individuals in the United States, who sometimes are coconspirators and other times are unwitting accomplices, to receive packages at their residence and repackage the merchandise for shipment, usually abroad. Typically this merchandise was purchased with fraudulent credit cards and the scam unravels when the defrauded merchants begin to contact the reshipper. Reshippers are often recruited through employment offers and in online chat rooms. As part of the employment application process, the victim is required to divulge personal information such as Social Security number and date of birth, which is then
used to obtain credit in the victim’s name.



Third Party Receiver of Funds


In a work-at-home scheme, a scammer in a foreign country solicits assistance from U.S. citizens. The scammer claims to be posting internet auctions but can’t receive the payments from the auctions directly due to being outside the U.S. and recruits the victim to act as a third party receiver of funds—funds that come from still other victims who think they are making a legitimate online purchase but who never receive their merchandise. The third party receiver of funds receives the money and wires it to the scammer. The scam typically comes to light when the victims complain about not receiving their merchandise.



Many online scams are obvious, but there are plenty of very sophisticated and creative criminals working on the internet. Your best strategy is to be suspicious—remember, it’s not paranoia if they’re really out to get you. Insist on verifying the legitimacy of every online transaction with an unfamiliar entity and never give out personal information unless you initiated the contact and are certain of the authenticity of the site or individual you’re dealing with.


Writted by Jacquelyn Lynn (
www.jacquelynlynn.com) is a business writer, speaker, and author of The Entrepreneur’s Almanac. Reprocduced the same newsletter creding the author.

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