Chase and Wells Fargo Waiving Some Fees

In a world where bank fees are on the rise, Chase Bank and Wells Fargo are waiving overdraft, late payment and other fees for customers in states impacted by Hurricane Irene (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, Vermont and Virginia). For instance, customers who can no longer get to a Chase ATM might have to use one from another bank.



Nice customer move.

- JSM

Tales of a Homeowner Wanna-Be

Part of my adventure of moving to Miami, Florida to join the faculty at St. Thomas University School of Law involves the purchase of a new home. Yes, I've already written about the beginning of this journey (See Tales of a Prospective Homebuyer). That was back in April! So, what is it really like? Three months later? Well, I am just a week out of closing and don't have an "official," "final" loan approval yet for the mortgage. There was the "first application," the phone interview, the mass of financial documents for the last two years, the changing loan terms, the worry over the home appraising (this is South Florida after all).

Other parts of this adventure? I since discovered that the seller had been behind on taxes and the house was listed for auction, but was just brought current in the last two weeks. There is also a pending issue on a leaking roof that I was told was fixed, but when I had the roof re-inspected found out the broken parts were just glued together! My prospective insurance agent raised the hazard insurance premium by 50% on the spot, even though his quote was only two weeks ago (found new insurance agent!). The new challenge is the documentation on the purchase funds for the mortgage lender, which is very particular.

Seriously, the days of no-documentation loans seem to be past, as far as I can see (See, The Basics: No Doc Mortgages, MSN). So, things are naturally hard out there from a loan perspective. Perhaps they should be . . . The large number of foreclosures and short sales out there also make it difficult for home buyers, even though prices can sometimes be favorable. My limited experience in shopping around for lenders indicates that while mortgage rates might be good (See, Mortgage Rates on 30-Year US Loans Fall to Record), the lenders are being more careful than in the past making it harder to purchase even if you want to in this market. But, with the housing market plunging after the government incentives for home buyers ended in April (See, Pending Home Sales Fell off A Cliff, CNN), one might expect things to be easier on buyers.

In some ways it is easier than back in April. For instance, it was much easier to secure a contract on a home than a couple of months ago. But closing is still difficult. While I have every hope that the home will close on time, my skills as a detail, paper-collecting transactional lawyer have served me well! There is now talk of what "time of day" we might be closing, so the hope is that this homeowner wanna-be will actually be just plain homeowner soon.

-jsm

Citibank's Promise of Free Checking

What does it mean to be free? When many of us open up a new checking account, it is with the intention of doing business with that bank for a period of time. After all, I've not got my online banking set up to send up bill payments. I've ordered printed checks for when I need them. I've got my debit card. It is a hassle to switch banks and have to redo all this. So, it is important that banks disclose account fees at the outset.

So might have believed customers over at Citibank who opened checking accounts advertised as free. Despite the free-hook, Citibank announced that it would begin imposing account fees on these same customers. Apparently about 1 million free accounts were included. The Truth In Savings Act requires banks to disclose account fees. So, free means free. Moreover, one might expect the free status to last for some time. Not surprisingly then, New York Attorney General Andrew Cuomo's office complained about the Citibank fee increase. Today, Citibank announced that free will remain free, putting aside overdraft and other fees, for the time being. (See Citibank to Keep Free Checking).

- JSM

The Politics of Bernanke's Reappointment

The Senate today confirmed Chairmen Bernanke's reappointment to a second term at the Federal Reserve by a vote of 70 to 30 (See Bernanke Confirmed). As concerns abounded about the extent of the Federal Reserve's independence, Senator Schummer commented: “If you don’t like monetary policy when the Fed does it just wait until the politicians get their hands on it.” Well said. Bloomberg did a nice (and short) piece about the politics of the reappointment and the need for the Federal Reserve Chariman to go visiting with the politicians to keep his job.

- JSM

Bankers Without a Clue?

Paul Krugman wrote a nice op ed piece in today's New York Times titled Bankers Without a Clue. Krugman observes disappointingly that the bankers just don't get it. In truth, comments like the financial crisis was just a perfect storm (Goldman Sachs’s Lloyd Blankfein) and that no one could have predicted its coming (Jamie Dimon of JPMorgan Chase & Co.) are pretty unbelievable. I hope that the executives of these large financial insitutions aren't and weren't really that clueless. That said, I agree with Krugman that I don't expect the banks to give much concrete advice on financial reform. The distrust the banks have of regulators (and desire to protect their own pocketbooks) has resulted in many of the banks repaying the TARP funds as soon as possible.

Bill Thomas who is Vice Chairman of the Financial Crisis Inquiry Commission has assured us that at least the questions will be asked. Question is, whether any meaningful financial overhaul will come from this?

-jsm

Hooray for the New Overdraft Rules

Yes, its taken a long time. Yes, it has needed urging through proposed legislation in Congress. Yes, it has taken the coordinated efforts of several federal agencies. But, success at last. Yesterday, the Federal Reserve Bank announced final rules amending Regulation E of the Electronic Funds Transfer Act (see press release). As we've complained here before, these overdraft charges amount to about $1.7 billion each year in fees to banks (See FDIC Study, How Your $4 Cup of Coffee). There were a number of touchy issues with the banks pushing back firmly on how the rules would come out. Fortunately, the Federal Reserve seems to have come down firmly on the side of consumers on most of the issues primarily raised by debit card use.

So, here are the highlights:

1. Banks must comply with the Final Rules as of July 1, 2010


2. Banks cannot charge an overdraft fee on ATM and point-of-sale debit card (POS) transactions without the customer affirmatively opting-in to overdraft protection


3. The rules apply to existing and new accounts


4. Banks must offer the same account terms to customers who do not choose overdraft protection for ATM and POS transactions

Three issues remain unresolved by the Final Rules: (i) the size of overdraft fees (often $35 per transaction with no daily limit on the number of transactions charged; (ii) the batch reordering of transactions done by banks to increase the amount of fees generated on transactions by customers who do opt-in; and (iii) debit holds that trigger overdraft fees on transactions such as gasoline, hotels and restaurants. These gaps aside, the progress made by the Federal Reserve on debit cards is substantial.

Remember, banks can still charge the fees on those who have not opted-in until July 2010. So, still use your debit cards with care. As for me, I will not be opting-in, but will await the sales pitch that banks will inevitably make.

- JSM

Dodd Seeks to Freeze Credit Card Rates

In a new move against the credit card interest rates, Senator Christopher Dodd introduced new legislation attempting to freeze credit card rates. It seems that many card companies are attempting to increase rates before the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act goes into effect (see Dodd Bill and Dodd Pushes). The banks argue that the freeze would require them to cut back on lending.

Consumers are justifiably mad about the rate hikes (See Debtors Revolt). The Debtor's Revolt has a new youtube video where she calls Chase Bank for raising her interest rate to 21% and closes the account. While I applaud her "revolt" response to bank's raising rates without good cause to do so, consumers need to be cognizant about the effect that closing accounts has on their credit scores. This is particularly true when it is a longer held account (in the Debtor's Revolt Chase incident, it appears to be a newer account as she mentions an introductory rate). Having received one of these rate increases in the mail myself recently, it reminds us all to read these stock letters from the card companies. While paying off credit card debt has historically been a good thing, the changing strategies of banks raising rates, closing accounts and reducing credit lines may force consumers to be more cautious than ever with card companies (See Suzi Orman, Change in Credit Card Strategy). Let's see if Dodd can plug this hole.

See here for the video:

- JSM

Banks Impose Fees on Those Who Pay Off Credit Cards

Yep, had to know this one was coming. As I watched the Today show this morning, a piece came on about credit card fees (see also MSNBC, USA Today). Not only has the financial crisis resulted in consumers being squeezed by rate hikes (see Consumer Revolt), but banks face new disclosure and other requirements under the Credit Card Holders Bill of Rights Act (see Obama Signs). Banks are also scrambling to head off new debit card rules that will surely curtail fees generated by overdraft charges (see Big Banks Alter and Back to Work on Debit). Citibank and Bank of America are the banks imposing these new fees, for consumers who pay off the balance every month, who don't carry a high enough balance or who keep open lines of credit in the event of emergency. Of course, consumers have to be careful in cutting up cards to avoid these fees as it can negatively affect their credit scores. Although consumers can shop around for banks that are not imposing these fees, one must wonder how quickly other banks will follow suit. While credit unions and smaller banks might still provide low cost cards, those options might not be available to many consumers who've been hit hard by the financial crisis. As always, be careful with your cards and reexamine which ones you really want to keep.

Here's the Today show piece:

- JSM

Bernanke Speaks on "After the Fall"

This week Ben Bernanke spoke in Chatham, Massachusetts on the role of the Federal Reserve after the crisis (See Bernanke Speech). Bernanke took the opportunity to observe the difference that a year makes in world finances, but urged (again) that with the crisis "abating" Congress must still act to prevent a future crisis of this severity.

We have seen numerous instances when weaknesses and gaps in the regulatory structure itself contributed to the crisis, many of which can only be addressed by statutory change. Notably, to promote financial stability and to address the extremely serious problem posed by firms perceived as "too big to fail," legislative action is needed to create new mechanisms for oversight of the financial system as a whole; to ensure that all systemically important financial firms are subject to effective consolidated supervision; and to establish procedures for winding down a failing, systemically critical institution without seriously damaging the financial system and the economy.

Bernanke went on to comment on a number of actions the Federal Reserve has taken and also to to take up the issue of consumer protection. Bernanke observed that "effective consumer protection promotes healthy competition in the financial marketplace, supports sound lending practices, and increases confidence in the financial system as a whole." Bernanke commented on the Fed's efforts using consumer testing to help determine when consumers understand financial products and communications from financial institutions. The Fed has used consumer testing in the debate involving debit cards, for instance. While no final regulations are yet in place for debit cards, the consumer testing tool may turn out to help the Fed tackle issues surrounding clarity of disclosures.

Bernanke has been hammering on the topic of needed regulatory changes for some time now. Let's hope that Congress is listening.

- JSM

Consumer Revolts Over Increased Credit Card Fees

I liked this story about a woman who took on Bank of America after they increased her credit card rate to 30% after she was late on one payment in 2008 and a second in 2009. After she launched a widely distributed youtube video, Bank of America agreed to reduce her rate to 12.99%. It is a shame that consumers have to go to such lengths to get a favorable bank response. Here are the videos before and after the renegotiation:

- JSM

Islamic Banking Surges

ASSETS held by the world's 100 biggest Islamic banks grew 66 per cent in 2008 from the previous year despite the financial turmoil that clobbered mainstream lenders, a report said on Friday. The top 100 Islamic banks held assets totalling US$580 billion (S$836 billion) last year, up from US$350 billion in 2007, according to an annual report by The Asian Banker, a magazine for financial professionals.

A financial storm sparked by a crisis in the US housing market swept across the world late last year. Its impact spilled over into the general economy and sent several countries into recession. Prominent US investment bank Lehman Brothers collapsed into bankruptcy, while several other major Western banks suffered massive losses.

'Despite the financial turmoil in late 2008 that crippled so many large Western institutions, Islamic banks have continued to grow in prominence and size,' the magazine said in a press statement. Emmanuel Daniel, the magazine's president and chief executive, added: 'Islamic finance has seen an incredible surge in popularity, based on stronger regulatory regimes and a better international understanding of its dynamics.'

Bank Stress Test Skit on SNL

In case you missed it:

- JSM

Geithner on Face the Nation

Today, Treasury Secretary Timothy Geithner appeared on CBS' Face the Nation in an interview with Bob Schieffer. Schieffer had plenty of questions for Geithner, including whether the government was trying to force General Motors into a managed bankruptcy. Interestingly, Geithner did not deny it, but focused on the place that a strong General Motors will hold when it is stronger. When asked about whether the government was giving the banking executives a pass, while being harder on the auto industry execs (as we've suggested here, see Wagoner Steps Down) Geithner responded that the government has changed leadership in some companies such as AIG. Geithner said that banks needing "exceptional" assistance might also find themselves with changes in leadership as well.

Geithner was pretty coy about what "exceptional" assistance might be, perhaps for good reason. Certainly, removal of GM's Wagoner is unprecedented, but these are unusual times. Yet, removal of company management is a drastic step with ramifications in the markets. Geithner was wise to not suggest that the government will in fact affect management, even if that ultimately happens. It certainly seems advisable to leave the door open on this issue as the stress testing of banks is just beginning. In the event that banks (perhaps CitiGroup and Bank of America) still require exceptional assistance, management changes might follow. Traditional lenders and creditors do affect management and management decisions. The government, in this case, is operating less like the government as regulator and more as the government as lender and stabilizer. Will we see more management changes?

Watch CBS Videos Online

— JSM

The Power of the Sequel: TARP II

Christine Hurt over at The Conglomerate recently gave a thumbs up to Race to Witch Mountain (See Family Fun Blogging: Race to Witch Mountain). And who doesn't like a good sequel? I've not seen it myself, but with three little kids in my house, it is sure to be in my future (from Christine's post, the movie may frighten the younger ones). Admittedly, I am old enough to remember the two original Witch Mountain films, so the nostalgia of the whole thing will get me to the theaters.

Speaking of sequels . . . the U.S. Treasury today announced plans to purchase toxic assets off the balance sheets of banks. Haven't we been here before (see $700 Billion Mystery)? This time the focus is on a public-private program aimed to remove about $1trillion off the balance sheets with the government financing the purchases by private parties using about $100 billion of the remaining TARP monies. Like Race to Witch Mountain, details are sketchy. Happily, though, the markets responded well today at least, particularly shares of Citigroup Inc. and Bank of America Corp. Open issues, of course, include commitments from the banks to sell and buyers to purchase.

Others, including former Secretary of Treasury James Baker, are still urging that a non-sequel, original plan is needed here, in the form of a temporary bank nationalization (See Jason Kilborn's Banks Extending Crisis Pt. II). Surely, whether some of the troubled banks will be solid after removing toxic assets and whether management will make better decisions are debatable.

Larry Summers commented:

“We’re not managing to markets in the short run,” he said. “We don’t panic when markets go down and we don’t become euphoric when markets go up.”

But is Summers correct? It is easy to be happy with the government initiatives when they bear fruit and impatient when they do not. We've already been down the road of an alphabet soup of bank programs. The public is troubled by the loss of wealth across the country. The end game of a long term market fix is correct, but that does not mean that short term fluctuations do not matter. But more about TARP II.

If purchasing troubled assets is such a good idea, they why did the Bush administration abandon it? Why a sequel here? The success of TARP II will depend on pricing of the toxic assets. If the government doesn't offer enough sweeteners, the banks won't sell and buyers will not buy. And, why should they? Government handouts without accountability come now on a regular basis. Like Jason Kilborn, I find little to persuade me that banks are able to make the difficult sacrifices toward recovery. That is, these same banks that are in financial difficulty may prefer to hold onto these assets. Not that the banks believe the government will let them go into bankruptcy. If these banks don't think the government is offering them enough money to clean up their balance sheets, they won't do it. They don't believe they will go into bankruptcy, as we've all been convinced they are too big to fail. Instead, they may wait for yet better deals from the government. The banks may not yet believe that they need to take the hit to their financial statements.

I remember late last year the outrage over auto executives flying private jets to ask Congress for bailout monies. Congress' stern response to the auto industry seemed well placed. The message being, if you want government bailout monies then an element of frugality is in order. The current hullabaloo over the AIG bonus/retention payments (See Jim Chen's Best and the Brightest!) sends the clear message that some of the banks/executives have not yet gotten the frugality message.

My biggest concern with TARP II is simply that it will not succeed if the banks that need it haven't realized that we operate in a new marketplace. At least, David Trone, an analyst at Fox-Pitt Kelton Cochran Waller in New York, claims the private investors will now shun government programs as the bonus scandal has led to a “deep distrust” of the government and may cause a "massive brain drain" for those in the banking industry. Trone commented:

“Barring a miraculous reversal of this fear and distrust, we believe the toxic asset programs, as well as the existing TALF, will fail to reach the levels of activity necessary to unclog the system, heal the country’s financial system and improve credit availability . . . .”

Either the banks need the toxic assets off their balance sheets or they don't. Quite simply, the government is not obliged to keep offering new menus of bailouts. The banks that don't need TARP II should not participate. Those that need the assets off their balance sheets should find a way to make it work. After that time, the government should evaluate the health of banks and simply nationalize those that failed to take responsibility to clean up their balance sheets. While I have been known to see many a movie sequel with enthusiasm, I, for one, do not want to see a TARP III.

— JSM

Bernanke Testifies on Federal Reserve Programs

Ben Bernanke, Federal Reserve Chairman, testified today before the House Financial Services Committee about the Federal Reserve's emergency assistance to the financial markets. Stressing the difficulties to policy makers around the world, Bernanke warned in his opening statement that "[a]lthough the provision of ample liquidity by the central bank to financial institutions is a time-tested approach to reducing financial strains, it is no panacea." Bernanke also fielded questions on the appropriate role of the Federal Reserve and whether it has too much power. Specifically, the Committee questioned the lack of oversight on transactions entered into by the Federal Reserve.

The question of the appropriate limits on Federal Reserve power is a fair one. How much restrictions should be imposed on the Federal Reserve in its position as a central bank to intervene in a financial crisis? The Federal Reserve might wield power responsibly, but that does not mean the power should be without limit. The lack of accountability and oversight for specific Federal Reserve decisions is a valid point, but it is hard to argue that the Federal Reserve operates with complete autonomy either. Bernanke does get to testify about decisions made (albeit after the fact). Bernanke did stress the efforts that the Federal Reserve is taking to keep Congress and the public involved in its decisions and programs.

Further, the Treasury provided funding for some of the extraordinary measures the Federal Reserve has undertaken. The increase in the balance sheet of the Fed has not occurred without the involvement of the Treasury. As such, the Federal Reserve must act in concert with the Treasury Department in order to accomplish significant new programs. The Federal Reserve's autonomy is certainly large for the new programs it administers, but it still must act within the program limitations. Moreover, other measures, such as announcing interest rates, are expected from the Federal Reserve without congressional intervention in its role as the central bank.

It is easy to see why Congress would be uncomfortable with the Federal Reserve having a great deal of autonomy. But, it is a central bank. On the whole, a certain amount of autonomy appears appropriate for the Federal Reserve in this capacity. Will we eventually arrive at a point where the role is too great? Perhaps.

— JSM

Alan Greenspan Testimony: Was the Market Listening?

Alan Greenspan testified in front of the House Oversight and Reform Committee today, saying the current credit crisis is a rare event, a once in a century credit tsunami. Although Greenspan said to expect layoffs and unemployment, he seemed to think that this too shall pass. Happily, the market went up 172 points today. Was this a result of Greenspan's words? Here is his testimony:

Greenspan attributes the failure to properly price the mortgage based securities as causing most of the trouble here. Basically, the risk models were wrong, so capital requirements were too low. Greenspan believes that whatever regulatory changes are made may ultimately seem minimal when compared to the changes in the marketplace landscape after having sufferred through the credit crisis.

While I agreed with much of Greenspan's observations, he lost me on this last point. History has a way of showing that greed, fraud and excess of various types persist despite calamity. Alexander Hamilton wrote in 1792 after the "first" stock market crash which was trigged when William Duer, the Assistant Secretary of the Treasury under Hamilton, used inside information to speculate on bank stocks:

Tis time, there must be a line of separation between honest Men & knaves, between respectable Stockholders and dealers in the funds, and mere unprincipled Gamblers.

After panic insued due to the actions of speculators, Hamilton intervened to make sure that the panic did not bring down sound banks. That was 1792.

We are still working toward Hamilton's line of separation in 2008. While I have the utmost respect for Greenspan, we seem not to learn our lesson. The risky models to which Greenspan referred have been met by government intervention saving the day and hoping to avoid a deeper financial calamity. If anything, history has a way of repeating itself.

— JSM

The Federal Reserve's Money Market Investor Funding Facility

The Federal Reserve seems to have an endless supply of new programs to roll out these days in its attempt to further ease credit markets (particularly short term). Of course, we already have:

1. the Commercial Paper Funding Facility (CPFF), which on October 27, 2008 will begin funding purchases of highly rated, U.S.-dollar denominated, three-month, unsecured and asset-backed commercial paper issued by U.S. issuers, and


2. the Asset Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (AMLF), announced on September 19, 2008, which extends loans to banking organizations to purchase asset backed commercial paper from money market mutual funds.

Now, we also have the Money Market Investor Funding Facility (MMIFF), also rolling out on October 27, 2008! The AMLF, CPFF and the MMIFF are all intended to ease credit by making sure that there is liquidity in the short term debt markets. Yet, each program is targeted at a limited slice of short term debt. The MMIFF will be a Fed credit facility provided to certain private sector "special purpose vehicles" (PSPVs). The PSPVs can purchase eligible money market instrument. The Fed's term sheet provides for purchase of certificates of deposit, bank notes and commercial paper with a materity of ninety days or less. Purchases will be made using asset backed commercial paper or funding from the MMIFF. This program is intended to be short-term, with a termination date of April 30, 2009.

All of this should go to show the commitment of the Federal Reserve to backing up the short term credit markets. All of this might seem a collection of fancy programs. Ben Bernanke (I think correctly) is worried that any further problems with short term will cause more mischief in the markets if not attended to by the Federal Reserve. With company earnings reports for the third quarter being sluggish for many companies, problems with the short term credit that companies depend on would only make matters worse. Score 3 for the Fed on short term credit. And, if it doesn't do the trick here by April, the Fed left open the window to extend programs.

Bernanke is also calling for more stimulus programs. We'll see if they too are innovative. They very well may have to be in order for our economy to recover more quickly. Bernanke has been short on details about programs that might help, but expect wider based programs to be in the mix. Although Bernanke is not yet saying we are in a recession, the outlook is not rosy.

— JSM

President Bush Speech on Economy October 10, 2008

This morning President Bush again addressed the country in an effort to shore up confidence in our failing markets. President Bush outlines the steps that the government is taking to turning around the crisis. Bush identified the "fundamental problem" as being the housing market decline, which caused banks holding mortgage assets to suffer serious losses. Without understating the problems that the housing decline has created, I am cautious to place too much emphasis on a simplified version of our economic problems. Even if the root of the financial crisis is in the housing market, it is difficult to clearly cast blame in one direction (see Greed is Good).

We might speculate why, after action of the Federal Reserve, Department of Treasury, Securities and Exchange Commission, the FDIC the markets have not responded. And, after all, there have also been the speeches by Ben Bernanke (see Oct. 7 Remarks), Henry Paulson and President Bush on the economy. These speechmakers have intended their words to have a positive effect on the markets.

Yet, perhaps there is not confidence in the market due to a lack of confidence in the policy-makers to take appropriate action. This would include a broad public concern that the system will reward (or at least not punish) wrong-doers in this crisis. Lisa Fairfax, over at the Conglomerate discussed this problem in the context of AIG yesterday. It is no wonder that there is public concern that the Federal Reserve will bailout AIG, but no one will hold management accountable. I agree with Lisa's suggestion that the lack of confidence in our government to hold companies responsible for their share of the blame has contributed to a stalling of confidence in the markets. In order for the actions of the Federal Reserve, the Department of Treasury and others to have their desired effect on market confidence, it would seem that we might need more confidence in those same actors. At least, for now, that seems to be lacking.

— JSM

Top Ten Ways to Make the Financial Crisis More Fun

The market dropped yet again today. At 4:00 p.m. today we were down to 8579. Ouch. The credit markets don't seem to be budging, despite the Federal Reserve's efforts.

Letterman's Top Ten Ways to Make the Financial Crisis More Fun might make you laugh for a moment, though.

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— JSM

Greed is good . . . well maybe not always

Greed. I am reminded during this financial crisis of the movie Wall Street and Gordon Gecko's famous scene where he observes that "greed is good."

.

Well, I don't think Michael Douglas was talking about our current financial crisis. And, in that scene, Gordon Gecko also makes a number of other important observations about companies and about the United States economy as a whole. He also accuses company officials of creating a establishment that rewards the "survival of the unfittest" and contrasts that with his philosophy that you must "do it right or get eliminated."

All of this raises the issues of who really is to blame here. That is, who is unfit and should be eliminated. Christine Hurt over at the Conglomerate explained that this is really a hard question to answer, not one that lends itself readily to soundbites and that there may not even be any "bad guys" after all. Or, the villain of my War of Wealth variety simply does not exist. I found this video:

This guy seems to blame all of this mess on the Republicans, particularly President Bush and Senator John McCain.

I, like Christine Hurt, do not think it is that easy to throw a large net over this one and just put folks in jail. Of course, that was until I found out that the AIG executives apparently spent $440,000 to stay at the St. Regis Resort in California after the government lent it money to bail out the company. Although those in attendance did not apparently include the particular executives from the AIG divisions that are in trouble, it seems like a lot of money for any executives to spend during an economic crisis. Reckless, but I am not sure illegal. Perhaps someone will get fired over the resort extravaganza, but jail? Doesn't seem likely. Well, apparently there are indications that some AIG executives might have hid the full extent of the financial problems from its auditors as the losses mounted. Now, we are onto something that might lead to jail time.

— JSM