1: CAST SERVICE HIGHLIGHT

Process Analysis & Redesign
The redesign of key operational activities to increase operating performance, improve service quality and strengthen cost management 

For leading edge organizations, the drive for achieving process excellence is never-ending. Client needs range from minor process improvements, such as tweaking one small process in a high volume operation, to full scope process reengineering and even outsourcing. High performing financial services organizations continually evaluate process redesign opportunities. 

Factors Driving the Need for Reengineering

• New technology installed around 'old' processes
• Desire to optimize new technology implementation
• Increased emphasis on improving the 'customer experience'
• Marginally successful integration of previously acquired processes and technology
• Requirements for improved expense control
• Need to integrate new business lines and products leveraging existing infrastructure
• Need to realign operational capabilities to support new products and services

Why CAST for Process Analysis and Redesign

• Extensive experience in detail process design
• Financial services industry process ‘best practices’ database
• Proven tools to support measurement and monitoring of activities and capacity
• Fact-based approach to quantification of existing practices and the impact of changes
• Proven capacity management tools and techniques
• Demonstrated project management experience
• Industry-specific end-to-end functional expertise in most financial services operations

If you would like additional information, please contact Tom Vleisides at (213) 614-8066 ext. 244 or email tvleisides@castconsultants.com.

2: AMERICAN BANKER - A Three-Step Approach to Repairing the Industry's Image

We are living with a painful disconnect between Wall Street on the one hand and Main Street and Washington on the other. Unfortunately, this disconnect has tarnished the reputation of banking generally and made it harder for the industry to collaborate with the government.

Many "steady Eddie" banking operations have supported their communities and customers for decades, including through this crisis. The popular media tends to cast all financial issues, particularly the negative ones, as "banking" issues. Well-run traditional banks that carefully gauged risk and always put customers first are being lumped together with wild-eyed risk-takers.

Bonus pay is part of the disconnect. Rising unemployment fuels populist sentiment, so it is no surprise that banker bonuses are grabbing headlines. Over the past decade the disparity between top compensation packages and the incomes of even middle-class Americans has become a chasm, particularly in the eyes of the unemployed.

But that isn't the only reason the industry has lost credibility with Main Street. Failed and failing financial organizations drained the FDIC's coffers. The mortgage debacle upended the lives of hundreds of thousands of Americans. The recession has been laid at the feet of the financial industry, and bankers have got to make every effort to restore the industry's reputation. There is no silver bullet to accomplish this, but here are some steps that would help.

First, industry leaders would do well to set up blue-ribbon groups from within the ranks to study the origins of the financial crisis and suggest public policy actions to minimize the likelihood of a repeat. Some industry associations have taken steps and are to be commended.

However, the industry would do well to take this effort up a notch, tying such a study to the goal of long-term health for the industry and the economy and creating meaningful job opportunities. Such a study would be helpful, because the industry has a much better story to tell than is currently being told. After all, systemic crises like the one we are living through are caused not by individual private-sector misdeeds, but by governmental policies or lack of policies. To a critical degree the mortgage crisis, for example, was a failure to regulate mortgage brokers.

Such an industry-led effort could lead to recommendations for improvements in policy approaches that would enhance government debate on a variety of banking issues. While the government means well, it is not well informed about the workings of the private sector. In this regard, it would be useful to read a defense as to why trading activities benefit the economy as a whole, including Main Street. Done properly in the context of a financial institution, trading is not a casino game - it is a useful way for financial institutions to share and mitigate risk. If trading is to continue, the financial services industry should articulate an appropriate role for the activity that takes stock of the public policy implications of gains, losses, and exposures.

A virtue in a democratic society is that we should be able to benefit from a variety of voices. The private sector should be a a voice that is clear, thoughtful and informed by high-level study.

Second, this is a good time to put the pedal to the floor on civic-minded activities for the industry. Particularly where companies are earning sizable profits, long-term shareholder value is enhanced not just by dividends but by efforts on the part of the enterprise to assist those less well off in this crisis. Moreover, as in days past it would be helpful if groups like Social Compact gave proper credit and recognition for those projects that prove especially helpful.

Finally, community and regional banker compensation levels or practices aren't driving the compensation issue. It is centered on headline-grabbing numbers from entities that, fairly or not, are perceived as having benefited from government largess during the crisis and on compensation for traders perceived as one of the causes of the crisis.

Banking trade groups and some industry leaders have done a very respectable job drafting compensation guidelines that make sense, even in advance of government efforts. Several industry leaders have tied their own compensation to the lasting soundness of their enterprises.

Now with pronouncements by the Financial Stability Board and by the Federal Reserve, it is much clearer what government will expect in this area. It would behoove individual institutions that have not already done so to heed these guidelines by tying remuneration to the long-term well-being of the bank, including with the use of claw-back measures where warranted. Banks whose compensation policies no longer reflect the tenor of the times should consider revising the policies.

Now more than ever the private sector has to make its voice heard in the public arena. Though the banking industry's reputation has suffered largely undeserved setbacks, the onus is on the industry to rehabilitate its image. Banking executives can start by articulating convincingly and clearly the ways in which a healthy banking industry is vital to a healthy Main Street - and vice versa.

3: AMERICAN BANKER - Bank Branches: The Changing Nature of Work and Workers

Major economic and social factors today have dramatically impacted the type of work bankers do, as well as the type of employees banks need. From the employee's perspective, we are finding that a large percentage of the labor pool is increasingly loyal to employers that can offer flexibility in time and place of employment, as well as training and personal development. Organizations that put into practice common sense strategies and enable process and analytical technologies are poised to truly optimize the shift in worker and work patterns to remain competitive.

In the recent Harvard Business Review article "How Gen Y & Boomers Will Reshape Your Agenda," two college surveys revealed "remarkable similarities in workplace preferences between Baby Boomers and Generation Y - the oldest and youngest groups of the emerging workforce." Both are seeking flexible work arrangements and value social connections and loyalty to a company. In other words, they value their jobs and the work, not just the money.

Historically, the definition of "flexible" in the banking industry has meant a part-time (short week) workforce. In today's environment, flexible can mean 40 hours a week on evenings and weekends for students, or those wishing to supplement existing and primary commitments with employment. It also can refer to location - providing remote or at-home work options, which for banks could be contact-center overflow.

To migrate to more flexible workforce staffing, line management and human resources executives in banking will need to employ more modern perspectives surrounding the structure and nature of their workforce. Currently, we have the largest available part-time workforce that has existed in more than 20 years.

Managing part-timers and non-traditional full-timers is not an exception, but the rule. Managers need training on how to embrace the flexible and part-time worker to meet the demands of the workplace and expectations of workers. Branch management can more easily and cost effectively schedule resources to meet customer demand and employee preferences by utilizing branch workforce management software strategies, technologies and tools.

Banks also need to alter their development programs to accommodate the schedules of a flexible workforce. As such, they shouldn't hire someone to work evenings and weekends, and then expect them to participate in long-term weekday training courses.

Technology is also changing the way in which consumers interact with their banks.

Customers are migrating from single channel (predominantly the branch), transaction-based interactions to multi-channel, self-service transactions with a need for more personalized relationship support. They are taking advantage of online, mobile, and self-service options for deposits, withdrawals, transfers and bill payment. And they're then turning to their bank branch for more complex banking and financial advice needs.

The teller role is still essential to conducting branch business, but many bankers feel the tasks performed by tellers will become more complex and service-oriented, versus transaction-based.

The transition of moving tellers and sales representatives into multi-functional positions that require them to act in a financial advisory role goes hand in hand with training. This means that bank employees need to be trained across functions and will require advanced skill sets.

In addition, there's a growing need to provide advisory services to their branch customers.

Tellers, for example, will not only need training in relationship management as their service role grows, but also in sales process as they begin to take on simple sales transactions.

On the other hand, sales representatives will need in-depth training on relationship management and financial advice counseling. Frequent updates on the latest products and services being offered by the bank will need to be conveyed quickly and in a manner that assures comprehension and competence in the subject.

Fortunately, today there are e-learning tools available that can make the creation and distribution of quick lessons on new product offerings or services for in-branch personnel easily executed and maintained.

In today's changing times, banks will need to evaluate and evolve their branch workforce strategies to meet not only the changing needs and interaction preferences of their customers, but also the flexibility requirements of the available labor pool.

4: AMERICAN BANKER - Banks and Alt-Pay Rivals Are Now Pals

Historically rivals, alternative payment providers and banks are laying down their swords.

While many companies offer online payment tools that do not use credit or debit cards, and are designed to process transactions without direct involvement from banks, executives now say that working with financial companies can help encourage consumers to use their services.

Bankers, meanwhile, are meeting the alternative payment providers halfway. Instead of viewing these companies as foes, banks are accepting that these services appeal to customers who want to shop online but don't want to use cards.

"We do have a meaningful chunk of our client base that either doesn't have the willingness or the ability to use a card online," said Steve Karp, a senior vice president for enterprise payments strategy at SunTrust Banks Inc. "We felt it was our responsibility at the end of the day to provide a product or service that meets those needs — as opposed to letting someone else come in and do it for us."

SunTrust, of Atlanta, has been particularly active in developing an alternative payments strategy, and now offers two noncard services to customers.

Karp said that trying to find new incentives to encourage people to use cards was not an option, since people who choose not to use cards online have often carefully considered their decision and are unlikely to change their minds.

"Cards have been around long enough," he said. "Trying to pound them with more messaging is a product-centric approach, not a client-centric approach."

SunTrust is working with ModaSolutions Corp., which offers the eBillme payment system, and Moneta Corp., in part to research how its customers use each product, and in part to keep those customers within its system for any purchases they make online.

SunTrust has offered both alternative systems for about two months, and Karp said it is too early to tell which one his customers prefer.

He said the Moneta system is comparable to PayPal Inc.'s online payment service, because it allows automated clearing house payments to be sent to merchants directly from a bank account.

Moda's eBillme works through the online bill-pay interface, allowing consumers to set up online merchants as billers for one-time e-commerce transactions.

"We're not at all certain what the right client experience is," Karp said. "Maybe it's not Moneta or eBillme, but a lot of people are clearly saying it's not a card."

Marwan Forzley, the president and chief executive of Moda, of Rye Brook, N.Y., said that while the service can be used without the endorsement of any bank, he has always seen banks as potential allies, and that Moda recently began offering banks an incentive to promote its service.

Moda's bank partners get at least 10 basis points of each transaction made through the system; when the bank's marketing efforts can be linked to a sale, the bank gets up to 1.5% of the transaction.

"The more the bank markets, the higher they see going back to them," Forzley said.

Besides SunTrust, Moda is working with seven other banks in what Forzley described as "offline tests." Offline, banks market eBillme through mailings; though these purchases can be tracked through coupon codes, Forzley said it is easier to track purchases online to ensure the bank is properly compensated. He would not name the banks.

The financial advantage to banks working with eBillme is clear, he said, but for eBillme the benefit is a bit more subtle. After all, its system can easily be used by any online consumer without their banks' consent.

Until recently, merchants were the primary marketers for eBillme, Forzley said. This meant that many times they would be marketing to people who may not use online banking or online bill pay.

When banks market to online banking users, there are fewer barriers. "This is a qualified customer," he said. "These are people that use online bill pay today. … They actually yield higher results than when you market to an unqualified audience."

Moneta, of Atlanta, similarly views banks as its most effective marketing channel, said Guido Sacchi, its CEO. "We believe the best way to enroll customers is through our partner banks."

Moneta announced last week that in March it will offer banks a way to issue instant credit for online purchases, similar to the Bill Me Later service offered by PayPal.

PayPal, a unit of eBay Inc., has also been aggressive in trying to work with banks that once viewed it as rivals. In the early 2000s banks such as Citigroup Inc., BankOne Corp. (now part of JPMorgan Chase & Co.) and Wells Fargo & Co. launched their own online payment systems, but all of them — even Wells' joint venture with eBay — were short-lived, and PayPal now dominates the online transfer market.

Dan Schatt, PayPal's senior director and head of financial innovations, said banks once saw PayPal as a competitor but now realize that perhaps the easiest and fastest way to establish a new payment system is to tap into PayPal's technology.

Because of this, and recent moves by PayPal to make it easier to initiate a PayPal payment from a bank account, "we're seeing significant interest by banks" in working with PayPal today, Schatt said.

PayPal announced last month that it had been working with Fidelity National Information Services Inc. to allow FIS' bank clients to integrate PayPal with their online bill-pay services. Payments that today are sent as paper checks could instead be sent electronically through PayPal.

PayPal is also working with S1 Corp. to allow PayPal payments to be made through S1's mobile banking software.

"The things that have traditionally made banks question whether PayPal would be the right fit" — notably that people had to move money first to a PayPal account but now can initiate transactions directly from their bank accounts — "those sorts of concerns have been completely alleviated," Schatt said.

"There has been an onslaught of banks that are FIS partners and are S1 partners that have been very interested in this offering," he said.

Beth Robertson, the director of payments research at Javelin Strategy and Research, said banks have come to realize that the best payment products may not always come from within their own organizations.

That said, it helps that the payment companies are designing their systems around technology banks already use, she said.

"Some of these ACH-based options like Moneta and eBillme are very naturally, to a certain extent, related to the banking environment," Robertson said.

PayPal's recent moves have put it in the same league as the newer alternatives in this regard, she said. "PayPal had been perceived as a competitor and has worked … on changing that perception. They want to be seen as a partner, not as a competitor, to banks." There has been a cultural shift as well among banks, as they have become more attuned to the differences between online and point-of-sale transactions, Robertson said. "A number of years ago … the market wasn't as mature as it is now in terms of online services, and banks were less aware of how to manage the risk associated with those transactions."

PayPal especially has something very appealing to offer banks — its global reach, she said. "That's something that's very difficult for an individual bank to develop."

The smaller companies as well "are focusing on developing a market in conjunction with banks, not in opposition to banks," Robertson said.

5: AMERICAN BANKER - Big Banks' Newest Foe: Huffington Post

She has yet to cause a run on any of the money-center banks, but political-pundit-turned-digital-entrepreneur Arianna Huffington has lit up the blogosphere with a campaign targeting customers of the largest financial institutions.

Her Move Your Money Project began last week urging consumers to move their deposits from big banks that have feasted on government aid and been the subject of scorn to presumably more responsible community banks.

"For me, the most interesting thing moving into a new year is to encourage people to move from resignation and frustration to action, which is very empowering," Huffington said in an interview Monday. "As I was out with my children over the weekend, at the coffee shop, at the promenade, I had people literally coming up to me saying, 'I'd been thinking about it, I'd been worried as to whether I should do it, and this gave me the courage to do it.' "

No surprise, community bankers are thrilled.

"Community banks are going crazy over it," said Cam Fine, president and CEO of the Independent Community Bankers of America. "I haven't had one banker email me that had something negative to say about it. They just love it."

But even Fine doesn't expect the campaign will be terribly effective.

"I don't think the Huffington Post article is going to disintermediate the nation's 15 or 20 largest banks from some significant portion of their funding," he said. "I think it will run its course and be another interesting little episode among many during this financial crisis."

By the close of business Monday, the targets — Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. — still seemed to have their funding bases intact.

Still, the campaign has proven popular. It had more fans on Facebook than B of A, Citi and JPMorgan Chase combined.

"The idea is simple: If enough people who have money in one of the big four banks move it into smaller, more local, more traditional community banks, then collectively we, the people, will have taken a big step toward re-rigging the financial system so it becomes again the productive, stable engine for growth it's meant to be," Huffington wrote in a Dec. 29 piece on her Huffington Post Web site with co-author Rob Johnson, who is financial policy director at the Roosevelt Institute. "Consider it a withdrawal tax on the big banks for the negative service they provide by consistently ignoring the public interest."

The campaign's Web site, MoveYourMoney.info, attracted 2.3 million page views and 176,000 unique visitors in its first week. It features a short film equating today's commercial bankers to Jimmy Stewart's George Bailey character in "It's a Wonderful Life" - with the bailed out mega-banks playing the role of the cold-hearted Mr. Potter.

The site also lets visitors look up banks in their zip code with a grade of "B" or better from Institutional Risk Analytics, a research firm that donated the online search widget to the project. Armed with that information, and the realization that Federal Deposit Insurance Corp. protection applies to accounts under $250,000 regardless of the size of the FDIC-insured bank where the accounts reside, customers who are unhappy with the behavior of big banks can vote with their pocketbooks to support smaller institutions that played a comparatively minor role in the buildup to the financial crisis, Huffington said in the interview.

Officials from B of A, Citi and JPMorgan Chase declined to comment on the campaign. Wells spokeswoman Richele Messick acknowledged that consumers are demanding more of their financial institutions, but argued that the firm is up to the challenge.

"We are focused as we always have been on delivering the products, the services and especially the conveniences that contribute to the financial success of our customers, but we certainly know that that means earning their trust," she said, adding that Wells through the third quarter had extended $640 billion of credit since last fall's bailout.

Huffington, herself a former Wells customer, said she has banked for more than a decade now with a firm that was not among the top 19 financial institutions stress-tested by the government last spring. But some of her colleagues on the project are just now cutting ties to the biggest banks and establishing relationships with smaller institutions.

"The point we are making is that these big banks that are perceived to be too-big-to-fail have an unfair advantage," said Huffington, who lives in Los Angeles and declined to publicly name her banking institution out of privacy concerns. "It's really the government picking winners and losers, and a lot of these banks are lobbying to undermine the needed reforms."

The project was the result of a pre-Christmas dinner at which Huffington was discussing the state of the banking industry with Johnson, a former Soros Fund Management and Bankers Trust Co. executive, along with filmmaker Eugene Jarecki and the Huffington Post Investigative Fund's Nick Penniman. Within days, Jarecki had prepared the film, which splices scenes from It's a Wonderful Life with footage from Congressional hearings and other outgrowths of the recent credit crisis. And Huffington and Johnson posted their commentary, in which they introduced MoveYourMoney.info and lambasted the big banks for restricting credit even after receiving bailout funds.

"Meanwhile," they wrote, "America's Main Street community banks - the vast majority of which avoided the banquet of greed and corruption that created the toxic economic swamp we are still fighting to get ourselves out of - are struggling… The government policy of protecting the Too Big and Politically Connected to Fail is badly hurting the small banks, which are having a much harder time competing in the financial marketplace."

Of course, some small banks were quite successful in hurting themselves all on their own, making foolish loans based on overly optimistic assumptions and expanding into businesses and geographic regions in which they had no expertise. But Fine agreed with Huffington that the troubles that spilled over from Wall Street, particularly in the areas of residential and commercial real estate, contributed to the destabilization of smaller institutions.

"The public policies over the last couple of decades led to the creation of these megabanks, and they were so large… that they impacted the economy both nationally and globally," Fine said.

Large banks have long been the target of grass roots campaigns Service Employees International Union devotes part of its Web site to condemning big banks, including tracking their lobbying and compensation practices. Other sites, including stopbankabuse.com and bankofamericasucks.com, have been set up by angry customers who complain of high credit card fees and deceptive practices. Consumer advocate Clark Howard went to war with B of A in 2006 after a customer spent 11 hours in jail for attempting to cash a check he did not realize was fraudulent.

Huffington, who has reached an audience beyond her Web site through a spate of television appearances this week, has a cachet that could prove even more effective.

"This is the dream of every social media marketer, to shoot a concept out to the world and have it turn viral," said Jacob Jegher, a senior banking analyst for Celent.

The MoveYourMoney project plans to add information to its Web site to help supporters persuade state governments and municipalities to pull accounts from big banks. Huffington and her colleagues planned to strategize on that topic during a conference call on Monday afternoon.

But Huffington's group may need to be careful what it wishes for. Some patrons of big banks may be mad enough to walk away as customers, but until the issue of too-big-to-fail is resolved, they are still on the hook for these firms as taxpayers. So a swift exit of deposits from the largest firms may not yet be in anyone's best interest - not that Huffington expects that to happen.

"This is going to be a long-term campaign, and people are going to act at different times," she said.

It would take a big wave of account transfers to make a dent in the funding war chests at the biggest banks, which amassed deposits at a brisk pace in 2009. But smaller banks, which had a banner year on the deposit front as well, are grateful all the same for whatever extra lift Huffington's project provides.

"Community bankers are going crazy over it, in a positive way," the ICBA's Fine said. "I have had emails from all over the country as this thing gets ricocheted around."

6: AMERICAN BANKER - Citi's Retail Path Harder to Gauge With No Dial

Terri Dial's resignation as head of North American consumer banking at Citigroup Inc. answered long-simmering questions about how much longer she would last at the beleaguered company.

But it did little to clear up other key questions hanging over the company, such as what it plans to do with its branch network, and whether it will ever close out the game of musical chairs that seems to redraw the firm's organizational chart every few months.

Manuel Medina-Mora, the Citi Latin America executive who added Dial's responsibilities to his list of duties, declined a request for an interview. The public affairs office was no more forthcoming about Citi's branch strategy than it was during the nearly two years that retail banking was overseen by Dial, who stayed out of the media spotlight and kept whatever ideas she had for the business close to the vest.

There were signs that Citi hopes to channel the strength of its international presence into the North American consumer business, though its plans for doing so remain vague. Citigroup Chief Executive Vikram Pandit praised Medina-Mora for implementing in Latin America what he referred to as Citi's "new model — a global bank for businesses and consumers," although how that would be different from the company's old model was unclear. Citi also announced the establishment of a "Consumer Council" that Medina-Mora will chair. In that role, Medina-Mora, who so far appears to be the council's only member, will work closely with all of Citi's regional CEOs and oversee the firm's global consumer strategy, according to a press release.

But it is in the United States where Medina-Mora will have the most work to do. He will have to integrate the company's consumer offerings and figure out how to maximize a branch network that has a strong foothold in a handful of attractive metropolitan markets, but looks like an also-ran next to the far-reaching operations that have allowed Bank of America Corp., JPMorgan Chase & Co. and Wells Fargo & Co. to practically blanket the country with locations.

"Citigroup is making yet another attempt to build its retail banking business. Hopefully this one will be successful," Rochdale Research analyst Dick Bove wrote in a note to clients.

Bove surmised that Citi wants to stay focused on a limited number of markets and raise its prestige to appeal to a more upscale clientele. That concept was part of the retail banking plan that Dial was sharing internally as recently as late last week, according to a source familiar with the strategy.

It is unclear whether Medina-Mora will stay that course, but he seems to have few alternatives. Expanding the branch network is out of the question given Citi's financial woes. And while several rounds of press reports last year speculated on a possible retreat in some markets, Pandit played down that idea, and the company's branch count hovered just above 1,000 throughout 2009.

"We are in the right places, and while we continuously refine our branch locations, we are not anticipating any dramatic changes to our footprint - despite recent media reports to the contrary," Pandit and Dial wrote in a September memo to employees.

Press reports indicated that Dial's departure was hastened by an illness in her family, but her tenure was fraught with speculation about her ability to have an impact. Bove said that the former Wells Fargo executive, who worked for Lloyds TSB Group PLC before joining Citi in March 2008, likely was constrained by Citi's history of weak investments in technology and retail banking. Her lack of visibility in the media and on Wall Street drove a steady drumbeat of doubts about her role, which seemed to be further complicated by last summer's hiring of Eugene McQuade as CEO of Citibank N.A., the firm's core banking entity.

McQuade, a former FleetBoston Financial executive, was hired to placate regulators concerned about the bench of commercial banking talent at Citi. The company had said his arrival would have no impact on Dial. Six months later, it is still unclear how his role intersects with that of the post now held by Medina-Mora. And now Citi needs to figure out where to place Douglas Peterson, its point-man in Japan, who reportedly is returning to New York now that the firm has sold many of its big Japanese assets.

Medina-Mora has been head of Citi Latin America since 2005, and has spent 35 years between Citi and the Mexican operation it acquired, Grupo Financiero Banamex. Educated in Mexico and at Stanford University, he coordinated the privatization of Banco Nacional de Mexico in 1990 and was president of the Mexican Banking Association from April 2003 to March 2005. He sits on Citi's executive and senior leadership committees.

Like Dial, who retains unspecified duties as a "senior advisor," he will continue to report to Pandit. The North American consumer banking franchise includes 12 million retail banking accounts, 25 million credit cards and $139 billion of deposits. It accounted for more than 8.5% of firm-wide revenue in the third quarter.

7: AMERICAN BANKER - Loosening the Purse Strings

Wall Street may or may not be helping Main Street but it is funneling money to another iconic address: Madison Avenue.

Some of the country's largest banks are ramping up spending on marketing after sharply scaling back advertising and other promotional expenses in the past year. According to Federal Deposit Insurance Corp. call report data, 29 of the 70 U.S. commercial banks with assets of at least $10 billion increased marketing buys in the third quarter. Those 70 spent $2.12 billion, up 10 percent from the prior quarter, though down nearly 16 percent from a year earlier, according to SNL Financial LC.

The rebound shows how some lenders are shifting attention from stanching losses to boosting earnings as the recession eases. Meanwhile some lenders are spending more online, while others are shying away from mass marketing in favor of campaigns aimed at more tightly defined groups - such as broke college students or first-time homebuyers.

"We saw companies cutting back big time, given the financial crisis of a year ago," said Rich Weissman, the president and chief executive of DMA, a financial services marketing consultant in Portland, Ore. "When you're out of the survival mode, and you're now back into thinking about long-term sustainability, you come back to the marketing table and ask yourself: What kind of things should we now be doing?"

The bank units of Wells Fargo & Co. and U.S. Bancorp reported some of the sharpest increases in quarter-to-quarter marketing expenses this fall. Wells went from $71 million to $121 million (70.4 percent), while U.S. Bank spent $105 million, up 64 percent from the prior quarter and more than double from a year earlier. Bank of America, which had the sector's largest third-quarter marketing budget at $282.1 million, was up 9.5 percent from the $257.6 million spent in the second quarter.

Wells and U.S. Bank, along with J.P. Morgan Chase & Co. (which increased spending 10.5 percent to $168 million), are among the healthier banks wanting to steal business from struggling rivals by peddling products like rewards-based credit cards and business-friendly checking accounts. They are also spending more to rebrand branches and run ads in new markets following some high-profile acquisitions.

Jenny Powell, director of corporate marketing for the $266 billion-asset U.S. Bancorp, says the Minneapolis company has viewed the financial meltdown as an opportunity to raise its profile outside of its 24-state retail footprint. In 2009 it ran its first national television ads and placed more spots in mainstream publications, targeting business execs. "It was important to us that businesses looking to borrow money [know] that we're very much open for business," she says.

Some other firms in the $10 billion-plus tier that are on less-sound financial footing, such as Huntington Bancshares Inc. in Columbus, Ohio, are spending more, too. Huntington increased spending from $7.5 million to $8.3 million, seeing a chance to draw attention while rivals pull back on advertising.

With marketing budgets still tight, online or niche campaigns are more popular because they are easier to track than mass-market campaigns. Steve Treppo, a principal at consulting firm Booz & Co. says his clients want more for their marketing buck. As a result, billboards and high-profile stadium-naming rights deals are out. Blogs and viral videos are in.

Weissman says measuring impact was not a big a concern during the boom times. Now, though, banks "are beginning to ask the question: 'Does this add to my bottom line?'" he says. Bankers are saying, "Let's be smarter - let's sell to particular segments that are going to generate the kind of profits we need."

Wells Fargo has a blog called the "Student Loan Down" for college borrowers. Huntington unveiled a new feature on its Web site in November that helps cash-strapped consumers manage holiday spending.

Fifth Third has also had Web-specific campaigns this year aimed at homebuyers and college students. Larry Magnesen, Fifth Third's chief marketing officer, said online ads are preferable because they let the bank track how many people saw its search-engine-related ads, followed links and eventually opened an account. About 8 to 10 percent of Fifth Third's marketing budget was allocated to online expenses in 2009 and is to grow to 15 percent next 2010, Magnesen says.

Fedelina Madrid, vice president of marketing at Berkshire Hills Bancorp in Pittsfield, Mass., says the $2.7 billion-asset company has been doing more online marketing targeting women and young people. Marketing online "costs us less money," she says. "It reaches people on a level that is more personal, and it allows them to tell us what they want and what's important to them."

8: AMERICAN BANKER - Schapiro, Holder, Bair Weigh In on Causes of Crisis

WASHINGTON — One day after hearing from chief executives of the largest institutions, the Financial Crisis Inquiry Commission turned its attention Thursday to policymakers, and how the government can fix the lapses that worsened the financial meltdown.

Though the panel showed a greater willingness to delve into policy issues than it did Wednesday, the hearing still did not offer much perspective on the causes of the crisis.

Commission members grilled Securities and Exchange Commission Chairman Mary Schapiro about her agency's failure to address problems at financial giants it regulated, and they heard an update from Attorney General Eric Holder on efforts to investigate mortgage fraud. Other topics included the need for stronger oversight of derivatives, and the Obama administration's proposed tax for large banks that received bailout money.

Schapiro, who testified alongside Holder and Federal Deposit Insurance Corp. Chairman Sheila Bair, spent much of the hearing under scrutiny. Though she was not running the agency at the time — she took over at the start of the Obama administration — several commissioners noted that the SEC was responsible for supervising Bear Stearns Cos. and Lehman Brothers, whose failures in 2008 were dark chapters in the crisis.

"If you look back at the key events in the crisis, the SEC is essentially missing in action and publicly silent," said Douglas Holtz-Eakin, a member of the commission and a former chief adviser to Sen. John McCain's presidential campaign.

Bob Graham, the former Democratic senator from Florida, asked Schapiro whether "there are any peculiar structural issues with the SEC that deserve specific attention as part of the general consideration of regulatory change."

Schapiro rejected the notion that her agency is fundamentally flawed. She said other agencies have the advantage of not needing to ask lawmakers for funding when they want to initiate something new. For example, the FDIC's revenue comes from deposit insurance premiums levied on banks.

"One area where we have less independence than our fellow financial regulators is that we are subject to an appropriations process in Congress and through the president's budget, while the other financial regulators are self-funded," she said.

Holder, meanwhile, touted the Justice Department's investigations of mortgage fraud. The Federal Bureau of Investigation is currently probing 2,800 cases, he said, a 400% increase in the past five years. He acknowledged that much of the department's effort has been focused on national security since the 2001 terror attacks but said the administration plans to pay more attention to fraud enforcement.

"In our budget for 2010, we have made combating white-collar crime a real priority, and the budget request that's been passed by Congress and signed by the president provides nearly $50 million in program increases to the department to pursue white-collar crime, including both financial and mortgage fraud," Holder said.

Other commission members used the hearing to press for policy changes they champion. Brooksley Born, the former chairwoman of the Commodity Futures Trading Commission who called attention to the dangers posed by derivatives, asked Bair whether this market "still poses a systemic risk" and whether "any regulatory reform is needed."

Bair was quick to embrace the question. "This should be a high priority for Congress, and there's only so much regulators can do until that legislation is enacted," she said.

Keith Hennessey, a panel member and former senior economic adviser to President Bush, used his opportunity to question Bair as a chance to telegraph concerns about the Obama administration's plans for a bank tax. Critics have charged that the administration's plan focuses on banking companies, though several other large companies, such as the government-sponsored enterprises and automakers, benefited from government assistance.

"There are significant large financial institutions...who we clearly have evidence posed systemic risk but are exempt from the new tax," Hennessey said. "Does that concern you at all?"

Bair dodged the question. "I have not seen the administration's proposal," she said.

9: AMERICAN BANKER - Success Story

It didn't take long for consumers in Spain to start flock to BBVA's white-label offering of a personal financial management tool - and to become an exhibit in the case for PFM as a major new appendage, if not the backbone, for online banking.

In just under a year, BBVA signed more than 400,000 users to its free Tu Cuentas ("you count") service, which is built on a California-based provider's new PFM tool for banks. The provider, Strands, also has its moneyStrands product in beta use by Dutch financial giant ING.

BBVA joins a growing group of banks aggressively pursuing PFM that also includes Citibank - which is reportedly developing a site with Microsoft. "PFM's critically important - it's a vision of the future of online banking," says Emmett Higdon, a senior analyst at Forrester Research, who says that about 50 percent of the banks he speaks with are interested in PFM. That's a dramatic expansion from the early days of 2006 when Bank of America first used its Yodlee-powered MyPortfolio account aggregation service to deliver PFM.

"Banks have a lot of data that they throw at customers. What appeals to users is the simplicity of [PFM] services," says Higdon. Vendors are responding in kind, with moneyStrands joining a field that includes Yodlee, Wesabe and Geezeo. The private-label PFM competition among vendors will soon expand with Mint.com, a widely used consumer solution, which will be fashioned into a new online banking system add-on by new owner Intuit. Intuit's Digital Insight, powered by Quicken, already offers FinanceWorks, an online PFM tool for banks to offer consumer and small-business clients.

BBVA's Tu Cuentas, currently available in Spain but slated for international expansion, includes graphical representation of the customers' financial health, breaks down income and expenses - and charts the evolution of these data points over time to give consumers a view of whether they have done better or worse than planned in a given span. The product also categorizes transactions and allows consumers to use personal tags if desired as a guide to make financial decisions. Consumers can also be compared to similar peer users to put their own financial profile into context.

Additionally, an alert feature allows consumers to configure their own financial alerts - which can be combined with budget goals - and BBVA Tu Cuentas will notify consumers when they cross over predefined limits. Tu Cuentas also offers an automatic selection of personalized suggestions such as tips to inform customers before they make spending choices, a short list of most-liked products matching each customer spending patterns, financial products and services that may better address customer needs and relevant facts and aggregate stats based on community behavior. Future development includes greater use of third-party data to allow users to browse properties for sale or rent, including maps, different traits for properties - presented next to mortgage offers on the site.

The service was a fast success for the $783 billion-asset bank. Besides rapid enrollment, the bank found that user time spent on the bank's site doubled.

Banks are turning to these white-label products, says Atakan Cetinsoy, vice president of personal finance products for Strands, because they are maturing quickly, and consumers are demanding them. "People want new ways to understand their finances," he says. "They want to do something more than what they are used to doing."

Peter Glyman, co-founder of Geezeo, says his firm has recently received interest from community banks and credit unions - including Stanford University's credit union, which went live earlier this fall with a PFM service integrated with Geezeo's online platform. He adds Geezeo has also built a cross-marketing platform for institutions - a bank that wants to offer a home equity line of credit in a targeted fashion, for example, will have access to consumers with a specific profile. "There's a lot more value in consumers seeing how they're doing on expenses," he says.

10: AMERICAN BANKER - Thank Payments Innovation a Bundle

Like a specialist working with a primary care doctor, US Bank takes a tag-team approach to bundling commercial lending with payments and processing automation.

"The commercial lending group will bring us in to demonstrate our capabilities to the provider," says Ralph Bernstein, svp of healthcare payment solutions at US Bank, who says his combination of lockbox and payment technology with treasury management and other services keyed a recent client win.

Not surprising. An increasing number of banks are finding that delivering a bundle of traditional financial services with treasury management and IT is the newest way to compete for healthcare provider customers as payments messaging automation becomes a commodity.

Red Gillen, a senior analyst at Celent, recently finished a study that found paper-to-electronic processing of EOBs-a staple of healthcare payments automation-is becoming commoditized; side-by-side analysis found many vendors essentially offer the same EOB paper-to-electronic conversion functionality.

"And in the Senate [healthcare reform bill], there's language that calls for the healthcare industry to standardize electronic messaging formats," Gillen says. This would force insurers to use the same electronic remittance procedures, which would further commoditized the technology, since the four or five systems payers use to handle different formats would be unnecessary. Beyond IT projects by payers and insurers to update claims systems, the legislation should make remittance efficient and standard.

But as one product becomes commoditized, another innovation emerges. Banks are finding new traction with revenue cycle management (RCM). Managing revenue is harder now because HSAs and other self-directed payment plans make managing the timing and amount of payments tough for providers. About five percent of healthcare payments came from patients about three years ago; a percentage that will hit about 20 percent in the next couple of years, says Stuart Hanson, vp of healthcare solutions at Fifth Third Bank.

"The more we can do to help the accounts receivable and revenue cycle process, the better it is on a number of fronts," he says. "More providers are looking to their banks and solution providers to provide back-end systems and accounting systems. That's opened a lot of doors for clients that are very comfortable with the old way."

Fifth Third, whose healthcare RCM technology includes the bank's RevLink product, plans to use technology to speed payment negotiation and, in a reverse play, as a springboard to providing traditional financing to providers. Hanson says, "We have extensive credit relationships with providers, so with these providers [RCM] is a great place to enter [for an expanded relationship]."

At US Bank, Bernstein's unit provides a Web-based payment tool that facilitates up-front collection of patient payables; integrates data with patient account systems; and offers other functions such as eligibility, estimation, one-time payment, payment plans and patient financing. Patients also have access to their accounts, and can view statements, pay bills and update insurance information online. These services are pitched along with the bank's commercial lending group, which writes lines of credit and works with hospitals on bond issues, and/or the bank's treasury management group-which works with hospitals on lockbox needs.

There's also potential for vendors such as Emdeon, InstaMed and others that focus on automating healthcare records processing to partner with banks (Fifth Third and US Bank did not disclose tech partners). Emdeon is looking to form partnerships with banks to allow banks to provide end-to-end automated payments processing, which would help with tasks such as matching the dollar amounts of payments and remittance statements.

"A bank doesn't want another bank to be able to do that for a healthcare provider, because that bank can get a foot in the door for that client," says Tom Turi, svp, financial services for Emdeon.

Firms that provide collections technology, such as InstaMed, hope reducing chargeoffs can be another lure. It offers clearinghouse services, payments estimations, transaction processing, claims submission, return mail capabilities and online mail options as a means to aid healthcare patient collections.

11: AMERICAN BANKER - The Other Underbanked

When Sue Rexford opens a small-business banking account for her new venture - Bodhi Tree Therapeutic Massage - she will be looking for a financial institution that can provide two things: convenience and low fees. "Those are the key factors," says Rexford, a licensed massage therapist who opened Bodhi Tree in South Orange, N.J., in September.

As a small-business owner, Rexford's concerns are pretty typical. Industry experts and analysts say that branch proximity and attractive account rates and fees are among the top concerns cited by small-business owners looking to open new bank accounts.

But Rexford is atypical for a self-employed entrepreneur in planning to open a business banking account at all. Among the nearly 26 million small firms in the United States, about two-thirds don't have business-bank accounts, according to a Javelin Strategy & Research report released last year.

The bulk of these firms tend to be "overlooked and underserved" by most banks, according to the report examining the underbanked business segment.

Small companies usually "hide in the consumer banking platforms," according to Javelin, a Pleasanton, Calif.-based consulting firm. That means they pay lower account maintenance fees now, but likely won't get specialized services they'll need as they grow, including payroll/invoice management, remote deposit capture, corporate cards and specialized commercial lending.

"Banks need to refine their strategies so that they are recognizing this market and helping small businesses," says Mary Monahan, a managing partner and research director of Javelin.

By successfully marketing to and serving this untapped banking segment, she adds, financial institutions can generate more revenue, while helping these firms better compete in their markets.

Bank of America Corp. is using social networking to reach out to underbanked small businesses. The Charlotte banking company sponsors a Web site called "Small Business Online Community" which it launched in October 2007 as a free forum where small business owners can network and find services from a base of established users, regardless of whether they are bank customers.

"We felt like it was important that small business owners feel like they have opportunities to collaborate with each other and don't feel like they're being sold stuff," says John Durrant, senior vice president of small business banking at the company.

The site, which currently has over 50,000 registered users, contacts posters "only if they request it," according to Durrant.

A recent post from "samuelsr," which asked if it's possible to display tweets on his firm's Web site through Twitter, received four responses within about a month. Another from "snccigars" titled "Opening a Cigar Store...any ideas!" generated more traffic - 21 replies in about three months.

The site also offers free online Web seminars as well as articles ranging from advice on how to update a business plan to whether a startup should use cash or credit for the bulk of its own purchasing.

When it comes to more traditional banking products, BofA started offering small business customers its "Business Fundamentals" package in late 2008, which Durrant says includes a standard business demand deposit account that's free if the owner also uses a debit card at least once a month. "Business Fundamentals was one way we decided to go after encouraging customers to move from a check-based payment system to online," he adds. (The package also offers free 24/7 business online banking services.)

Pushing small business into more debit and credit-card transactions is also a smart move, according recent research by Aite Group LLC.

"Small businesses have long fallen into a middle ground between retail and commercial banking," says Judson Murchie, analyst with the Boston consulting firm and author of a report issued in late November focusing on the growth opportunities in the small-business credit card marketplace.

"While small businesses often mimic the personal banking habits of their owners, much of their payment behavior reflects their nature as a business, resulting in high check volumes," he says. The increasing conversion of small business check use to other payment vehicles is one of several reasons small business credit cards are primed for growth, according to Murchie.

For example, if small business credit card spending increased from its current 4 percent market share to 14 percent, Aite Group estimates that interchange revenues from small business credit card usage would increase more than 300 percent, to over $10 billion a year.

Of the nearly $5 trillion small businesses spend as a segment annually, only about 4 percent of that amount is charged on a small business credit card, according to the Aite Group report, "Small Business Credit Cards: An Opportunity for All."

Capital One Financial Corp., already well-known as a consumer credit card powerhouse, sees opportunity in the underbanked small business marketplace. "I think there is a mass-market, small business segment," says Bob Kottler, executive vice president of Capital One Small Business, on firms with under five employees and $250,000 in annual revenues.

In an effort to encourage these firms to open small business accounts, the McClean Va.-company in May began allowing customers to combine their business checking account and credit card rewards with those earned on their personal Capital One accounts.

He notes Capital One also has found it's important to offer streamlined online banking to the mass-market end of small businesses that resemble the company's consumer offerings. "We offer a very similar online banking experience both for their personal business and their small business," he said. "Then as they grow and need more sophisticated products, we'll migrate them up to a place where they can get that."

Kottler says the reason underbanked small business owners may hide in the consumer banking platforms is that they are afraid that they'll get lost in a big bank's business banking division.

"It's fascinating to me the amount of marketing we need to do to convince our small business customers that they're important to us," he says.

Other banks appear to have noticed the same. TD Bank has doubled its advertising targeting small-business owners in the last year, says Jay DesMarteau, the bank's small business sales and distribution strategy manager. He declined to reveal any specific ad spending figures, but did say that the bank currently has between 30,000 to 40,000 small firms using its free BusinessDirect online banking services and expects that number to double in the next 12 months.

TD also provides incentives to employees who route customers into business accounts and offers a dedicated relationship manager to every small business customer.

"The need really has to be there," says DesMarteau. "The small business is going to need those services and the only thing you can do is make them aware of that."

12: ANNOUNCEMENTS - Brian Moynihan Announces Bank of America Management Team

Brian Moynihan, chief executive officer and president of Bank of America Corporation, today announced the company's most senior management team.

"The leadership, judgment, diverse backgrounds, and experience of this team are just what we need to execute on the best business model in our industry," Moynihan said. "Together, we will focus on serving our customers and clients, returning our company to profitability for our shareholders, and ensuring our 300,000 outstanding fellow associates have all they need to help our company succeed."

LINK TO FULL ARTICLE: http://www.prnewswire.com/news-releases/brian-moynihan-announces-bank-of-america-management-team-81262997.html

13: BANKINSURANCE.COM - Are Bank Executives In A Funk?

NEWS IN BRIEF - JANUARY 4 - 10, 2010

Deposit growth and consumer savings rates at U.S. commercial banks, credit unions and savings banks are up compared to mid-2009, but 46% of bank executives say their overall profitability has declined, according to The BAI and Finacle Bank Executive Index compiled by the Chicago, IL-based Bank Administration Institute (BAI) and Finacle.  While 12% of bankers responding to a BAI/Finacle survey said the Troubled Asset Relief Program (TARP) positively impacted their banks, 87% said the hike in FDIC insurance to cover $250,000 in deposits had a positive effect.  A strong majority of bank executives (87%) said innovations that improve customer relationships and services, including new products and new channels, would promote earnings, but only 26% said they had set out a strategy to develop or promote such innovation.  A mere 11% of bankers said they understand consumers’ financial needs today better than they did six months ago; 25% thought they would have a better understanding next year; but 75% said they expected their understanding of consumers’ financial goals next year would be the same as it is today, according to the BAI and Finacle.

BankInsurance.com News in Brief' is provided each Thursday courtesy of Michael White Associates @ www.BankInsurance.com.

14: BANKINSURANCE.COM - Regulators Issue Interest Rate Risk Advisory

NEWS IN BRIEF - JANUARY 11-17, 2010

The Federal Reserve Board of Governors (Fed), the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA), the Office of the Comptroller of the Currency (OCC), the Office of Thrift Supervision (OTS) and the Federal Financial Institutions Examination Council (FFIEC) State Liaison Committee have issued an Interest Rate Risk Advisory.  The advisory clarifies existing interest rate risk (IRR) guidance, describes IRR management techniques used by effective risk managers and reiterates the importance of effective corporate governance, policies, procedures, stress testing, risk measuring and monitoring systems related to depository institutions’ IRR exposures.  The regulators emphasize that they expect depository institutions to use processes and systems commensurate with their companies’ complexity, business model, risk profile and scope of operations.  To read the IRR Advisory, click here.

BankInsurance.com News in Brief' is provided each Thursday courtesy of Michael White Associates @ www.BankInsurance.com.

15: BANKINSURANCE.COM - Wells Fargo Completes Prudential Financial Brokerage Buyout

NEWS IN BRIEF - JANUARY 4 - 10, 2010

San Francisco-based, $1.2 trillion Wells Fargo & Co. has completed its $4.5 billion cash purchase of Newark, NJ-based Prudential Financial’s interest in the former Wachovia Securities Financial Holdings, now Wells Fargo Advisors.  Additionally, Wells Fargo paid Prudential $418.4 million in principal and interest on a subordinated promissory note that Wachovia had issued when forming the joint venture with Prudential.

BankInsurance.com News in Brief' is provided each Thursday courtesy of Michael White Associates @ www.BankInsurance.com.

16: BANKINSURANCE.COM - You Can't Judge a Bank by its Size

NEWS IN BRIEF - JANUARY 4 - 10, 2010

A bank’s asset size does not reflect its safety, soundness, diversification of risk and performance, according to Community Bank Advantages Challenge Historical Assumptions, an A.M. Best study based on Federal Deposit Insurance Corporation data.  Banks with over $5 billion in assets are generally market and transaction-based and tend to take on more leverage and complex risk exposure than smaller banks, assuming such product-concentrated risks as subprime mortgages.  In return, these large banks saw their median total charge offs climb from less than 0.5% of average total loans in December 2007, to 2% in September 2009, while their provisions for loan losses rose from about 0.15% of average total loans to about 4% during the same period.  Not surprisingly, the median return on average equity for banks with over $5 billion in assets dropped from just over 8% in December 2007 to about 3.5% in September 2009.

In contrast to market and transaction-based large banks, banks with under $5 billion in assets (community banks) are generally relationship-based and draw strength from focusing on their local communities and limiting risk.  Their Tier 1 risk-based capital and tangible common equity reveal that they are better capitalized than larger banks and less susceptible to downswings in banking cycles, according to the report.  The median total charge offs for these banks rose from about 0.35% of average total loans in December 2007 to about 1.5% in September 2009, while provisions for loan losses grew from under 0.25% to about 5.5% during the same period.  The median return on equity for community banks showed a more gradual decline than that posted by larger banks, decreasing from 8% in December 2007 to 5% in September 2009, the report shows.  To access Community Bank Advantages Challenge Historical Assumptions, click here.

BankInsurance.com News in Brief' is provided each Thursday courtesy of Michael White Associates @ www.BankInsurance.com.

17: MISCELLANEOUS - Bank of America Merrill Creates Retirement Adviser Program

Merrill rolls out plan for retirement referrals * Will involve 500 financial advisers initially * Aimed at luring more bank clients to advisory force

Brokerage giant MerrillLynch wants to recruit more of Bank of America Corp's (BAC.N) corporate and investment banking customers for its retirement planning business, according to a memo obtained by Reuters.

Initially 500 Merrill investment advisers will court retirement plan business from the bank's investment and commercial bank units under three teams created by retirement and philanthropic services head Andy Sieg.

LINK TO FULL ARTICLE: http://eresearch.fidelity.com/eresearch/evaluate/news/basicNewsStory.jhtml?symbols=BAC&storyid=200912161216RTRSNEWSCOMBINED_N1649946_1&provider=RTRSNEWS&product=COMBINED&sb=1

18: MISCELLANEOUS - Consumer Demand, Bank Response Lift PFM's Profile

Once a luxury, personal financial management tools are fast becoming a necessity.

Consumers and banks alike are driving the transformation, bankers and vendors say. Consumers — particularly younger ones who may never have touched a check register — are increasingly expecting a more interactive online presentation of their finances. And banks find that PFM provides vital data — a more complete view of a person's financial life — that can help them cross-sell.

In the past banks would get such insights when people went to branches to ask about new products. Today most consumers do their research online, said Alex Sion, the vice president of digital strategy and financial services for Sapient Corp., a provider of marketing technology.

LINK TO FULL ARTICLE: http://www.financial-planning.com/news/PFM-WellsFargo-PNC-2665241-1.html

19: MISCELLANEOUS - Obama Plans to Raise as Much as $120 Billion from Bank Fees

President Barack Obama plans to impose a fee on banks expected to raise about $120 billion in order to help recoup losses from the Troubled Asset Relief Program, according to an administration official.

The White House hasn’t settled on the final structure of the fee and how to target the big banks that have returned to profitability, said the official, who request anonymity.

The plan is to have revenue from the fee dedicated to deficit reduction and to cover the amount that the Treasury Department estimates it will lose from TARP, which is $120 billion. Details will be contained in the fiscal 2011 budget that Obama will submit to Congress next month, the official said.

20: MISCELLANEOUS - Six Important Tax Saving Tips for 2010

WOODLAND HILLS, Calif.--(BUSINESS WIRE)--Financial expert Mark Kennedy says there are things people can do now to protect and grow their financial assets before tax day on April 15th.

Kennedy, a registered investment advisor, is president of Kennedy Financial & Insurance Services and Kennedy Wealth Management, LLC. He also hosted the Los Angeles radio show, "Retire In Style" on KRLA AM 870 which advised retirees and those nearing retirement on how to cut their taxes and achieve a financially successful and secure retirement in today's uncertain economic environment.

Kennedy’s Six Top Tax Saving Tips for 2010:

1.     People need to take advantage of the new 2010 ROTH IRA rollover rules to avoid having the Government take as much as 35% of their IRA value from their family when they die. They could be in for huge taxes if this is not done!

2.   The Estate Tax is in unsettled territory and is temporarily repealed for 2010. But watch out, says Kennedy!…75,000 average Americans inheriting estates in 2010 that were not large enough for the Estate Tax, must take measures to avoid being hit with huge capital gains taxes for the first time since 1913!

3.   Existing homeowners who sold a home recently, (but have lived in it for five out of the last eight years, and purchased another home after Nov 6, 2009), can take advantage of the government’s new $6,500 Existing Home Buyer Tax Credit for 2010. Many existing homeowners are unaware of the Existing Home Buyer Tax Credit!

4.   First time homebuyers buying a home after January 1, 2009 and before April 1, 2010 should take advantage of the government’s $8,000 tax credit.

5.   People with jobs should contribute the maximum to a 401k, $16,500 for people under 50 years of age and $22,000 for people over 50 years of age.

6.   People with sizeable stock portfolios and real estate holdings can use charitable contribution strategies to legally avoid paying any income taxes on gains on the sale of appreciated stocks or real estate. Many people are unaware that these strategies exist that will allow them to sell their portfolios tax free!

21: MISCELLANEOUS - Wells Fargo Sets Up Mortgage-Modification Workshop ...

... for Struggling Borrowers

Behind long white curtains at the Baltimore Convention Center on Monday, Wells Fargo loan specialists huddled with distressed homeowners. There, Kerry Pollock found help with his mortgage after a two-hour drive from Manassas.

Pollock fell behind on his payments last year after being unemployed for more than two months while waiting to start work on a government contract. The lapse threatened his security clearance, which allows him to train Army soldiers on electronic warfare, and forced him to dip into his retirement accounts to pay bills.

Wells Fargo agreed to lower Pollock's payments by about $200 a month and extend the terms of the mortgage by a few months to make up for the delinquent amounts.

About 600 borrowers from Baltimore and the Washington region have signed up to come in for help so far, but the company hopes to attract up to 2,000.

Wells Fargo and other large lenders are under pressure from the Treasury Department to help more distressed homeowners under the government program called Making Home Affordable. Wells Fargo has helped 30 percent of its distressed borrowers enter the government program, according to Treasury data.

The event also comes as Wells Fargo faces a continuing legal battle with Baltimore officials. The city, with one of the highest foreclosure rates in Maryland, sued the lender in 2008, alleging that it had targeted minority communities with risky loans that left neighborhoods devastated by foreclosure. A district judge dismissed the suit, saying it was too broad, but Baltimore officials have said they will file an amended complaint soon.

22: PERSONNEL CHANGES - Citigroup Replaces Head of Consumer Banking

Citigroup announced on Monday that it would replace the head of its consumer banking business — the most troubled part of its financial empire — as the company braces for fresh troubles with home mortgages and credit cards this year.The executive, Teresa A. Dial, stepped down after a controversial 18 month tenure, during which she struggled to turn around the division and win the confidence of Citigroup’s chairman and chief executive, Vikram S. Pandit.

Ms. Dial, who will stay on as a senior advisor, will be replaced by Manuel Medina-Mora, who runs Citigroup’s business in Latin America and will assume responsibility for consumer banking in North America as well.

LINK TO FULL ARTICLE: http://www.nytimes.com/2010/01/12/business/12citi.html

23: PERSONNEL CHANGES - Roger Crandall to Become CEO of MassMutual on January 1

Roger W. Crandall will become Chief Executive Officer of Massachusetts Mutual Life Insurance Company (MassMutual) on January 1, 2010, completing the transition in leadership previously announced by the company in June.

Mr. Crandall, who has been President and Chief Operating Officer, will retain the title of President. He succeeds Stuart H. Reese, who will serve as Non-Executive Chairman of the Board of Directors.

LINK TO FULL ARTICLE: http://www.prnewswire.com/news-releases/roger-crandall-to-become-ceo-of-massmutual-on-january-1-80338257.html

24: PRODUCT - ABA Offers Reverse Mortgage Program with MetLife Home Loans

The American Bankers Association will offer its member banks a reverse mortgage program through MetLife Home Loans, a division of MetLife Bank, N.A. 

Under the program, MetLife Home Loans will provide ABA member banks a streamlined broker/correspondent approval and on-boarding process, access to proprietary MetLife research and educational materials about and for the mature market, complete product education, and dedicated account management.

LINK TO FULL ARTICLE: http://www.aba.com/Pressrss/010710ReverseMortgage.htm

25: REPORT - Retirement Strategies of Education Women over 50 ...

... Less Affected by Economic Downturn, Survey Finds

The Transition Network 2009 Survey - 66% Report Plans Unchanged

NEW YORK--(BUSINESS WIRE)--The Transition Network's 2009 member survey reveals that a large percentage of its membership - women over 50 with at least a Bachelor's degree - have not changed their spending or their retirement strategies despite the recent economic downturn.

“I may have to live at a reduced lifestyle.”

.This is surprising in the face of so much bad economic news the past year. Over 80 % of the women in the The Transition Network (TTN) survey are between ages 56 and 70, and 92.3 % have a college degree of bachelors level or above. Only 22.9 % reported returning to work or delaying retirement because of the down economy, and only 11 % reported changing their spending habits even though they are not returning to work.

Also surprising, these women overwhelmingly (41.4%) chose to retire or took advantage of early retirement packages, followed by 23.4 % who are still employed in their primary careers and 22.5 % who “(c)hose a new role for personal/lifestyle changes.” Only 12.8 % were downsized or transferred to a less desirable position.

Eighty-two (82) % report that social security will be “a significant part” of their retirement income, with pensions, 401(k)s, and IRAs playing “a significant part” for about 55 percent each. “Other investments” account for 66.3 % of their retirement income, with only 10.7 % reporting real estate as one of them. Forty-four (44) % are “confident I will be able to maintain my current lifestyle,” but an almost equal amount report that “I may have to live at a reduced lifestyle.”

The Transition Network (TTN) is a national organization of women over 50 and has chapters in nine U.S. locations, including New York, Washington, DC, Central Ohio, Chicago, Connecticut, Houston, Long Island, NY, Philadelphia, San Francisco Bay Area. Half of TTN’s membership responded to the survey, with the largest numbers of respondents from New York and Washington, DC.

In this time of debate over health insurance reform, nearly 94 percent of TTN members report being in “excellent” or “good” health, with 97 % having a regular physician. And 89.2 percent are “very” or “moderately” confident that their “health insurance will be adequate.”

26: REPORT - Sluggish Recovery Most Likely ...

...2010 Global Macroeconomic Scenario

London, 11 January 2010 -- Moody's Investors Service continues to believe that a sluggish recovery is the most likely global macro-economic scenario for 2010. In its 2010 update of its report series entitled "Moody's Global Macroeconomic Risk Scenarios", Moody's says that it does not expect the global economy to rebound strongly in 2010, but rather to return to trend growth rates, with persistent unemployment and budget deficits.

This is in line with the "hook"-shaped recovery scenario which Moody's introduced in May 2009 and which assumed that the crisis will leave enduring scars and that many economies will not return to their previous output paths.

According to Moody's new report, the sluggish recovery will be characterized by a lack of homogeneity in the economic rebound across different regions. "In most advanced economies, the recovery will be fragile because of numerous headwinds -- especially those related to the expected challenges in sovereign risk in 2010," says Pierre Cailleteau, Managing Director of Moody's Global Sovereign Risk Group.

Indeed, Moody's new Macroeconomic Scenarios report should be read in conjunction with its recently published "Sovereign Risk: Review 2009 & Outlook 2010" (December 2009) as Moody's economic outlook is closely intertwined with its outlook for sovereign risk.

Another factor is that the combination of lower levels of activity -- given the significant output losses -- and diminished trend growth in many regions will have an important impact on credit. "The world has more or less tacitly opted for financial stability at the expense of economic vitality -- and this will make the absorption of large public debts more challenging," explains Mr. Cailleteau.

Moody's report also identifies at least three downside risks -- albeit of varying probability -- to its hook-shaped global rebound scenario. The first is that of governments and central banks exiting high-stimulus policies in a disorderly fashion, leading to an abrupt increase in long-term interest rates and/or sharp currency realignments. The second is that financial institutions are unable to rebuild capital buffers at a sufficient speed to withstand the remaining economic and financial threats. The third and least probable downside risk is that of an unexpected decline in China's growth dynamic.

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