The combination of loose monetary policies supported by the White House that have kept interest rates at rock-bottom levels and tough regulations on capital levels outlined under the Dodd-Frank law won’t allow banks to drum up enough business to survive.

A significant change took place in April of 2011 in the world of Google, Bing and Yahoo search.

• LinkedIn
• Facebook
• Google+
• Twitter
• YouTube
• Pinterest

Most of the big banks are using Social Media daily and have teams of people leading their Social Media Strategies. Twitter seems to be used by most for customer service, reaching out, answering questions. Monitoring what people are saying about their bank and brand.

Yet most of the smaller banks and credit unions say we can’t utilize Social Media because of FINRA. That’s an interesting comment since these big banks have a bigger target on their back them there smaller brethren. How does J.P. Morgan Chase do it? Citi? Wells Fargo? They have a Social Media Policy in place, and a small team of people who play by the rules.

It’s just an excuse to not engage with this new form of communication. In talking to CEO’s the #1 reason seems to be fear. Fear that someone will say something bad about their bank and brand. Got news for you…since the beginning of time people have communicated both good and bad about a business, product or service. Just so happens in Social Media, it spreads faster.

So…I ask this question. If someone says something negative about your bank or brand out in Social Media, how will you respond? Always a long pause. No one has yet to give me a clear answer because they are not out on Social Media Platforms. The financial industry as one industry insider said…late adapters. Maybe some will not adopt at all. It’s costing these banks more than they know, and the big just keep getting bigger, and with all these new regulations squeezing profits, they need to grow, not hunker down.

“Someone once said…If you don’t like change, you’ll like irrelevance even more.” – Anonymous 

In the offline world, customer service functions tend to live in their own expensive silos along with the specific product lines they support.

“I think that’s what frustrates a lot of customers.”  “They’ll call into a company and the first person they speak to will know a first piece of the answer, but then they’ll have to transfer them to get the next piece of the answer.”

But social media, with its cheap, flexible infrastructure, is a natural place to consolidate a brand presence and build a cross-functional customer support staff.

Social media “as a service channel is going to be widely accepted”-and soon.

“Now no one bats an eyelash about sending a business an email if they have a question or need additional information. I think in a few years from now, tweeting a question [to a company] or posting it on Facebook or Google+ is going to be the norm.”

Now’s the time. Jump in… the Water’s Fine in the Social Medial Pool.

Prepare1 conducts a series of workshops, and works with businesses, non-profits, and individuals to succeed with Social Media.

Check out some new upcoming workshops.

• Pinterest for Business Made Easy
• YouTube for Business Made Easy

With the European bank issues, Moody’s Investors Service (MCO) has cut the debt ratings on five large U.S. banks, along with those of 10 other global financial institutions.

• Morgan Stanley (MS) received a two-notch cut
• Bank of America (BAC), which got a one-level cut
• Citigroup (C) received a two-notch cut
• Goldman Sachs (GS) received a two-notch cut
• JPMorgan Chase (JPM), received a two-notch drop.

Other non-U.S. banks that were downgraded include Barclays (BCS), BNP Paribas (BNP), Credit Agricole (ACA), Credit Suisse (CS), Deutsche Bank (DB), HSBC (HBC), Royal Bank of Canada (RY), Royal Bank of Scotland (RBS), Societe Generale (GLE), and UBS (UBS). With Credit Suisse receiving the biggest downgrade of 3 notches.

Moody’s cited the banks’ shrinking growth and dimming profit forecast in explaining the downgrade. The ratings agency also highlighted the firms’ exposure to the capital markets at a time of significant market volatility. “All of the banks affected by today’s actions have significant exposure to the volatility and risk of outsized losses inherent to capital markets activities,” said Moody’s global banking managing director Greg Bauer in a statement.

It’s possible now that this could increase borrowing costs as more trading partners could require more skin in the game.

Many banks and credit unions have been slow to adopt to Social Media. In talking with CEO’s and Branch Managers, the common reason seems to be that we are regulated, and the fear of negative criticism. Unfortunately neither one hold much water. Throughout the course of our history, we’ve had satisfied and unsatisfied customers. These customers have always spread the word to their friends and associates. What has changed…is the platform in allowing you to do this more quickly and effectively.

I ask one simple question for those who are not out on social media. If someone has a negative experience with your company, and they spread this via Social Media, how will you respond?

Think of Dell, Nestle, Domino’s Pizza. They all got blasted by their customers in Social Media, yet none of the companies had a presence in social media.  Those companies got creamed, lost millions of dollars in sales. Michael Dell when it happened, called an immediate weekend meeting of all his top executives. Today, they are a great example of how to conduct Social Media. One of their division sells $7 million dollars worth of computers via their Twitter account.

Other banks and credit unions have been doing social media successfully for the past couple of years. They recognize that the younger demographics they are trying to attract are on Social Media daily. As more and more people have smartphones, more are accessing their financial institutions via their smartphone.

How will you keep up? At what point will it be too late to get in the Social Media Game? The key is to develop a solid social media policy. Here are some tips.

1. All policies need to address what’s in it for the reader/user

What should the reader take away after reading the policy? One of the common themes I kept coming across in introductions to social media policies is the idea that the policy should focus on the things that employees can rather than what they can’t do. For those of us who have experience writing policies, this is a real paradigm shift.

But that’s the spirit of social media — it’s all about leveraging the positive.

2. Who is responsible for conducting Social Media?

Clearly define this persons role in Social Media. Be sure that you monitor what they do, how they are doing it. Have a secondary backup for usernames and passwords. I can’t tell you how many times I work with companies who had an employee leave, and the user name and password went with them, locking them out of ALL their Social Media accounts.

3. What Social Media platforms work best?

Assess what Social Media platforms like Facebook, Twitter, LinkedIn, Blogs, YouTube, and Google+ that your customers are best reached. Then lay out a clear goals/objectives strategy to move forward and monitor. Be very clear about your goals/objectives, but be Flexible about the process to get you there.

4. Respect copyrights and fair use

This should be a no-brainer, but just in case: always give people proper credit for their work, and make sure you have the right to use something with attribution before you publish.

5. Protect confidential & proprietary info

Being transparent doesn’t mean giving out Coca Colas recipe or the recipe for McDonald’s Big Mac special sauce.

“Employers may fail to make employees aware of any obligation they may have to protect confidential or proprietary information.” Transparency doesn’t give employees free rein to share just anything.

Therefore, employees who share confidential or proprietary information do so at the risk of losing their job and possibly even ending up a defendant in a civil lawsuit. At the very least, companies will seriously question the judgment of an employee who shares confidential or proprietary information via social media. It’s a good idea to make sure all of this is clearly laid out in your social media policy.

6. Assess time commitment

Current research shows that it takes at least 1 to 1 1/2 hours per day to make it effective. It is not a silver bullet. Although these platforms are free, the time spent by an employee or employees costs money. In the future, it will be the responsibility of ALL employees to implement Social Media. Zappos the shoe and clothing online company has all 1,000+ employees out on twitter. They are obsessed with Customer Service and it shows in their Social Media efforts across all platforms.

7. Be authentic

Include your name and, when appropriate, your company name and your title. Consumers buy from people that they know and trust, so let people know who you are.

Your thoughts on why banks, credit unions and financial institutions are slow to adopt to Social Media?

Credit Unions have been slower to adopt Social Media Marketing like their mid to small size banks. In this fast paced world in which we find ourselves, consumers are wanting more and faster services. Most small to midsize Credit Unions and Banks are challenged to spend the money and hire the skill set to keep up. Will the pace of change accelerate or slow down? Will it be harder to keep up with the competition if you don’t adapt now?

State of the Credit Union

• The number of Credit Unions dropped by 3.5% from 2010 to 2011.
• From 2007-2011 Credit Unions have declined by over 1000 according to CUNA.
• The number of Credit Unions are fairly even across all asset classes.

• Credit Unions with an asset size greater than $100 Million control 81% of all members.

• Credit Unions with an asset size greater than $100 Million control 87% of all Assets.

• Credit Unions with an asset size greater than $100 Million control 89% of all loans to members.
• Credit Unions with an asset size greater than $100 Million control 87% of all savings by members.The top four banks have asset sizes larger than all the Credit Unions combined.

1. J.P Morgan Chase leads the way with 2.3 Trillion.
2. Bank of America with 2.1 Trillion.
3. Citigroup with 1.9 Trillion.
4. Wells Fargo 1.3 Trillion. 

Rounding out the top 50 in banks is Hancock Holdings with assets of $19 Billion.

There is only 1 Credit Union with an asset size greater than Hancock Holdings. The Navy Federal Credit Union is $39.6 Billion or roughly 4% of Total Credit Union Assets.

What’s your take on the state of the Credit Unions and Banks? What will the end of 2012 look like for Credit Unions and Banks?

• An adverse scenario of 13% unemployment.
• A 50% drop in equity markets.
• 21% decline in housing prices.

Most banks were expected to pass the Federal Reserve’s latest “stress tests,” which measure their ability to withstand another downturn. But that doesn’t mean they’ll make the grade with investing pros.

Four large banks failed the stress test.

Ally

The worst performance came from Ally, formerly the finance arm of General Motors known as GMAC: its tier one ratio fell to just 2.5 percent in the test from the actual 8.0 percent level reported in the third quarter of last year.

Citi

Citigroup — Failed the stress test with 4.9% capital ratio in something of a surprise. Fed rejected the firm’s proposal to increase capital return, which the bank plans to resubmit later in 2012, but did not object to it maintaining its dividend at current levels.

SunTrust

SunTrust Banks — Failed stress test with 4.8% capital ratio.

MetLife

MetLife — Failed the stress test despite 5.1% minimum capital ratio, due to measure of risk-weighted capital. CEO Steven Kandarian said company is “deeply disappointed,” and that the Fed’s bank-based methodology is not a proper gauge of the financial strength of an insurer.

Some of the bigger banks that passed…

Wells Fargo

Wells Fargo –Passed stress test with 6% capital ratio, and added a 10-cent dividend to its previously announced first-quarter payout of 12 cents, an additional 83% that ups the firm’s quarterly dividend to 22 cents per share.

JP Morgan Chase

JPMorgan Chase — Passed stress test with 5.4% capital ratio under stressed scenario, including proposed capital actions through 2013. Increased its dividend 20% to 30 cents per share, from 25 cents, authorized a $15 billion stock buyback.

Topping that list of concerns is the European crisis. The balance sheets of American banks may be healthier than their counterparts on the continent, but they’re still not immune to the troubles there.

It’s not just European debt that investors are worried about, says Rodney Johnson, the president of HS Dent: Banks still aren’t being fully transparent about the value of other assets on their balance sheets. They are not “marking to market,” which means they’re not reporting the current market value of assets like mortgage-backed securities. “If you’re not marking your securities to market, then I don’t know what they’re worth, and I don’t believe you when you tell me what they’re worth,” he says. Johnson doesn’t own any large financial stocks. This applies to the Credit Union Corporates who still have massive exposure to mortgage-backed securities.

Investors may be better off at smaller banks, advisers say. Small banks are not exposed to risk from credit-default swaps.Small banks also have shortcomings, Johnson says. They make a lot of commercial real estate loans, some of which were written with sub-prime-like problematic terms, he says.

Banks and Credit Unions not “Marking to Market”, what is the real value of the asset? Your thoughts?

The CBO has projected that the government deficit for February 2012 will be $229 billion, making the FY2012 deficit already more than half a trillion dollars.  This is the highest monthly budget deficit in history.

• Gas prices highest in history for this time of year.
• Debt highest in history.
• Lowest growth rate.
• Regulations that are choking financial institutions, and small business.
• Freedoms eroding.

What’s your Debt Burden?

The following tables are provided by the Tax Foundation with these assumptions.

Let’s start with the top 1% of taxpayers.

• The top 1% makes $345,000 or more of adjusted gross income in a year.
• The top 1% pay 37% of federal income taxes, so let’s assume they’ll pay 37% of the debt.
• That means that each top filer in the top 1% is responsible for four million dollars of the debt.
• And if we’re going to pay it off in 15 years, with no interest, then we would require $22,000 per month from those taxpayers after they have paid their current tax burden.
• Does anyone think we can raise taxes by $22,000 a month on this group of taxpayers and have them survive that level of confiscation? Of course not. They would be wiped out.
• The top 1%, if you combined all their assets it would be equivalent to $1.5 Trillion dollars. With a deficit now in excess of $15 Trillion, do you see how ludicrous this administration states they need to pay their fair share. You could wipe them out, not to mention their spending, their companies that employ individuals jobs. All for not even 10% of the total debt in this country?

Paying the debt is going to cost real money, and it’s going to have to come out of real pockets. Already the bottom 50% in this country only pay 1% of the tax burden.

Where do we go from here? Is the United States the next Greece?

Mortgage Foreclosure

Let’s take a closer look. The top 5 banks The signatories to the deal are Bank of America, Citibank, Wells Fargo & Co., JPMorgan Chase and Ally Financial (formerly GMAC), which handle payments on more than half the nation’s outstanding 27 million home loans and therefore have been at the center of the servicing and foreclosure abuses the settlement is supposed to end.

• How much of this will translate into an outlay of cash by the five banks? Not much, if any.

On the surface it would seem that it is a $25 Billion dollar settlement when in fact it is not. The only cold cash the banks are paying is a combined $5 billion, including $1.5 billion to compensate borrowers whose homes were foreclosed on from 2008 through the end of last year, with the rest going to the federal and state governments to pay for regulatory programs.

Even the government acknowledges that a lender typically benefits when ways are found to keep a home out of foreclosure — a lender loses an average $60,000 on every foreclosure, according to figures the federal government disclosed in connection with the settlement announcement. It’s been institutional resistance and legal entanglements, not economics, that have kept more modifications from going forward.

Many of the loans destined to be modified under the settlement aren’t even owned by the banks, but rather by investors — the banks just collect the checks.

• Investors such as pension funds
• 401(k) plans
• Insurance companies and the like

Parties that did not themselves engage in any of the wrongdoing covered by the settlement.” If I’m an investor, how am I with taking this kind of hair cut? This will not sit too well with the investor community.

What about homeowners? They don’t get much, especially in relation to the scale of the housing crisis.

• More than 2 million owners have lost their homes to foreclosure during the last four years.
• This deal will provide 750,000 with a payment of $2,000 each.

Some 11 million homeowners are underwater by about $700 billion combined, or an average of nearly $65,000 each. In a transport of optimism, federal officials are projecting that this deal will help 2 million of them, to the tune of perhaps $20,000 each. By the way, loans owned by the government-sponsored firms Fannie Mae and Freddie Mac aren’t eligible for this relief. Since they own or control the majority of all outstanding mortgages, that’s a rather large black hole.

Remember though, Fannie Mae and Freddie Mac are bleeding money every month, and our owned by the government. They  have paid out huge bonuses even in these tough economic times. Fannie Mae was the fair-haired child of Barney Frank . You may recall in July of 2008 Barney was on record defending Fannie Mae, how strong they were, and how dare anyone question their motives and financial strength. They collapsed less than 4 months from his statements to the public and Congress.

They were the entities that forced the banks into doing Stated Income Loans, No Assets Loans, NINA or No Income, No Asset Loans. While some may point fingers at the banks, Fannie and Freddie were at the forefront pushing these types of mortgages on the banks, and lenders, trying to increase homeownership to individuals who never should have been put into a house to begin with.

The settlement, meanwhile, provides cover for other stealth bailouts. On Thursday, the day of the big parade, the U.S. Office of the Controller of the Currency quietly settled claims against BofA, Wells Fargo, Citibank and JPMorgan Chase related to cease-and-desist orders the agency issued last year over the banks’ crooked mortgage servicing and foreclosure activities.

The agency says it settled those claims for $394 million. The actual figure is zero. That’s because the agency won’t ask for any of the money as long as the banks meet their obligations under the mortgage settlement. This is the kind of fun with math that helped get us into the housing crisis in the first place.

2012 Foreign Debt Maturing

There are three main problems in Europe.

1. Most of the banks are massively insolvent, because they have 30 times their capital invested.
2. The sovereign debt of countries that are going to have trouble paying that debt. If the banks have to mark down the debt to what its real value is – or to what it will soon be – they will be bankrupt on a scale that makes 2008 look like a waltz in the park. If banks can’t make loans, then businesses must cut back, which means fewer jobs, products, and services, which quickly becomes an ugly spiral. If countries must step in and save their banks, then they have to assume some of the losses.
3. The largest problem, and that is massive trade imbalances. Germany exports products to the peripheral European countries, which run trade deficits. A country cannot reduce private-sector leverage, reduce public-sector leverage and deficits (balance its budget), and run a trade deficit all at the same time. That is simple, unavoidable math, based on 400 years of accounting understanding. Ultimately, there must be a trade surplus if leverage and debt are to be reduced.

For most of the past two years, European leaders have tried to deal with the problems as though they were short-term liquidity problems: “If we just find the money to buy some more Greek bonds, then Greece can figure out how to solve its problems and then pay us back. Given enough time, the problem can get solved.”

They have now arrived at the understanding that it this not a short-term problem. Rather, it’s a solvency problem of the various governments, which of course creates a solvency problem for their banks. They are now addressing the problem of solvency and providing capital until such time as certain countries can get their budgets under control and the bond market sees fit to provide the capital they need.

Greece runs a trade deficit of about 10% of GDP. Until they can stop that bleeding, they cannot get their government and private budgets under control. It is not simply a matter of cutting budgets or raising taxes. Indeed, their economy will continue to shrink, making it more difficult buy foreign goods without increasing their own production of goods and services. It is a vicious spiral. And that same spiral will spin up to take in all of Europe. Again, more on that later, as we consider what their choices are.

But for now, let’s start with my contention that if you do not solve all three problems you do not solve the real problem. Greece cannot “stand on its own” without a change in its cost of production relative to Northern Europe. Neither can Portugal, et al., unless Germany either changes how it exports and consumes more, or Germany is willing to fund Greek (and Portuguese and Italian and…) debt, so those countries can continue to run large deficits.

The eurozone debt crisis returned with a vengeance on Friday as Standard & Poor’s, the credit rating agency, downgraded France and Austria – two of the currency zone’s six triple A rated countries – as well as seven nations not in that top tier, among them Italy and Spain.

S&P, under political fire since it announced a review or eurozone debt in December, gave 14 of 16 countries – including France, Italy and Spain – a negative outlook, which it said meant a one-in-three chance for each country of a further downgrade this year or next.

The agency downgraded France and Austria by one notch to double A plus, while it cut Italy Spain and Portugal by two notches. Portugal has now been relegated to “junk” status by the three main rating agencies following similar actions by Moody’s in July and Fitch in November. Ireland held its rating.

The agency’s move prompted an immediate political backlash.

Earlier, financial markets slid as news of the downgrade leaked and investors sold the euro, eurozone equities and sovereign bonds, especially from Italy and Spain – the latter move pushing down yields for German Bunds and US Treasuries, held to be havens.

The downgrades came in lockstep with new problems for the eurozone on other fronts – debt-restructuring talks between Greece and holders of its debt broke down over how large bondholders’ losses should be, raising the spectre of a Greek default in March.

The downgrades – announced after US markets closed on Friday – come after the S&P in December warned the six triple A nations and nine others in the eurozone that it had put their creditworthiness on review as a result of the debt crisis and the worsening economic outlook.

Cyprus, also downgraded on Friday night, was already on review, and Greece not under consideration.

Ahead of the statement confirming the downgrades, the euro fell more than 1 per cent to a 17-month low against the dollar and early gains on European stock markets were erased.

Sovereign bond markets were also rattled, with Italy and Spain’s borrowing costs creeping up again after several days of sharp drops. France’s 10-year bond yields edged up, to 3.05 per cent, while Germany’s 10-year bond saw its yield drop to 1.75 per cent as investors returned to safer assets.

There are 40 elections in 2012. Everybody is going to do their best to get us through the elections. Governments will continue to print money, propping up economies all over the world. Will it work this time? Will it postpone the crisis in 2012 and push it into 2012?

Your thoughts?

The total of the U.S. debt load is now $15.2 trillion, more than the annual value in goods and services of the country’s economy. Now exceeding 100% of the US Economy.

US Debt % to GDP

Although the specific figure is difficult to pinpoint, the benchmark was likely reached at some point in the last few days, USA Today first reported Monday.

• In layman’s terms, it means the world’s largest economy now collectively owes more than its entire annual output is worth.

The total value of all the goods and services that the U.S. produces sits at $15.17 trillion. That figure is growing at a 4.4 per cent annual pace at the moment, not enough to keep up with the increase in America’s debt load which is growing at a 10% clip.

“It’s a bit like saying your debt is as high as your family’s annual salary,” said Ian Nakamoto, research director with MacDougall MacDougall & MacTier in Toronto. “It’s a pretty symbolic moment.”

• America’s national debt has reached a worrying milestone – it is now as big as the whole of its economy.

Steve Bell of the Bipartisan Policy Center, which has proposed cutting nearly $6 trillion over ten years, said: ‘The 100 per cent mark means that your entire debt is as big as everything you’re producing in your country. Clearly, that can’t continue.’

President Obama’s 2012 budget shows the debt

passing $26 trillion ten years from now.

Among advanced economies, only Iceland, Greece, Ireland, Italy, Japan and Portugal have debts larger than their economies.