Five banks have repaid millions of dollars they received from the government’s $700 billion financial bailout pot, the Obama administration said Thursday.

The Treasury Department, which oversees the bailout program, said the banks returned a total of $353 million.

The banks are: Iberiabank Corp. of Lafayette, La.; Bank of Marin Bancorp of Novato, Calif.; Old National Bancorp. of Evansville, Ind.; Signature Bank of New York; and Centra Financial Holdings Inc. of Morgantown, W.Va.

They were the first banks to repay the government, wanting to escape the increasingly tough restrictions placed on participants in the rescue program.

In addition to the $353 million, the banks paid the government a total of $5.4 million in dividends, Treasury Department spokesman Andrew Williams said.

The program was enacted in early October after the financial crisis — the worst since the 1930s — intensified. The goal of the program was to inject capital in banks so that they would be in a better position to boost lending, a crucial ingredient to any economic recovery. Nearly $200 billion has been injected into banks thus far.

The five banks have 15 days to buy back warrants from the government. If they don’t, the government will sell them to private investors, Williams said.

Imagine how you might feel if you had entrusted all of your hard earned savings into a high-stakes investment, just to find out later that you had lost it all and had been taken advantage of! Well, that is exactly the sort of thing that often happens with a Ponzi scheme! But what exactly is a ponzi scheme and how can you avoid being duped by this dishonest business practice?

The Ponzi Scheme Definition:

A Ponzi scheme is a fraudulent investment operation that pays returns to investors from their own money or money paid by later investors rather than from actual earned revenue. The scheme is named after Charles Ponzi, who became famous for using this technique in the 1920s. He paid investors 50% interest on short-term investments with money from new investors. All the while, spending a good part of the incoming funds for personal purposes.

Ponzi did not invent the scheme, but his operation took in so much money that it was the first to become known throughout the United States. Years later, Ponzi Schemes are illegal but continue to operate on the “rob-Peter-to-pay-Paul” principle, as money from new investors is used to pay off the previous investors in a continuous and destructive cycle until the whole scheme eventually falls apart.

What to look for and how to avoid a Ponzi Scheme:
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1- Ponzi Schemes are frauds and scams which often involve large sums of money and dishonest behaviour. If you notice anything about a person or business that seems misleading or deceitful, beware!
2- Be sure to analyze the risks and not just the rewards. Prepare for failure if the investment appears to be high-risk. Never invest all of your money and have a plan b! Be especially cautious if the business downplays or denies any risk!
3- Watch out for hype and stick with what you know. If the so-called business is unwilling to provide you with the information you need, steer clear. Stick with what you know. A reputable business will have nothing to hide!
4- Avoid the “rob Peter to pay Paul” situations. This is unacceptable and will always end with someone losing their money and the demise of the fraudulent business.
5- Always do your homework and research. Look for an honest and reputable online company that will provide you with all the necessary information and tools you need for peace of mind. Where you will be guided with the proper mentoring for financial freedom and success!

President Barack Obama pressed Congress Monday night to urgently approve a massive economic recovery bill, using the first prime-time news conference of his presidency to warn that a failure to act “could turn a crisis into a catastrophe.”

With the nation falling deeper into a long and painful recession, Obama defended his program against Republican criticism that it is loaded with pork-barrel spending and will not create jobs.

“The plan is not perfect,” the president said, addressing the nation from the East Room of the White House. “No plan is. I can’t tell you for sure that everything in this plan will work exactly as we hope, but I can tell you with complete confidence that a failure to act will only deepen this crisis as well as the pain felt by millions of Americans.”

When the stimulus bill passed the House, not a single Republican voted for it. On Monday an $838 billion version of the legislation cleared a crucial test vote in the Senate by a 61-36 margin, with all but three Republican senators opposing it.

Obama said the federal government was the only power that could save the nation at a time of crisis, with huge spending outlays and tax cuts that he contended could save or create up to 4 million jobs.

“At this particular moment, with the private sector so weakened by this recession, the federal government is the only entity left with the resources to jolt our economy back to life,” Obama said.
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Rejecting criticism, he said that 90 percent of the jobs created by the plan would be in the private sector, rebuilding crumbling roads, bridges and other aging infrastructure.

“The plan that ultimately emerges from Congress must be big enough and bold enough to meet the size of the economic challenge we face right now,” Obama said.

Again and again, he stressed that the economy is in dire straits.

“This is not your ordinary, run of the mill recession,” he said. Obama said the United States aims to avoid the kind of economic pain that Japan endured in the 1990s — the “lost decade” when that nation showed no economic growth.

“My bottom line is to make sure that we are saving or creating 4 million jobs,” he said, and that homeowners facing foreclosure receive some relief.

While Obama stressed the economy in the opening minutes of the news conference, he also faced questions on foreign policy, and was asked how his administration would deal with Iran, a nation accused by the United States of supporting terrorism and pursuing nuclear weapons.

The president said his administration was reviewing its policy toward Iran “looking at places where we can have constructive dialogue.” He also said it was time for Iran to change its behavior.

“My expectation is in the coming months we will be looking for openings that can be created where we can be sitting across the table face to face,” Obama said.

He said that Iran must understand that funding terrorist organizations and pursuing nuclear weapons are unacceptable.

On the economy, Obama took a swipe at Republicans for criticizing the stimulus bill as wasteful. He pointed out that he inherited the current economic crisis and a doubling of the national debt from eight years of the Bush administration.

Yet, he also acknowledged that some components of the bill would not create jobs, as GOP critics have complained. While such spending plans might be worthy, he said, “those programs should be out of this.”

Obama spoke a day before his administration was to announce new policies to rescue the ailing financial industry. A major goal of that program is to persuade hedge funds, insurance companies and private equity firms to buy into some of U.S. banks’ riskiest investments.

“The credit crisis is real and it’s not over,” Obama said. He faulted the way the first $350 billion of the $700 billion bailout program was spent. “We didn’t get as big of a bang for the buck as we should have,” he said.

He said the government would work with banks to take bad debts off of their books so they will start making loans again. He said his goal was to restore market confidence.

Obama said he did not know whether more bailout money would be needed and, if so, how much that might be.

“Absolute Truth” well science maintains there is there is no such thing like that, but from the current global financial crisis it is evident that there is no absolute free market. Truth is always relative, just like freedom.

It is important to look for positive points to find a way out of the financial crisis, apart from philosophic controversy.

All countries, whether separately or collectively, are working hard to contain the crisis, or at least to reduce losses, despite the gloomy picture of the global economy and the pessimistic atmosphere blanketing the entire world.

Although it is difficult to speak about positive points while the entire world is facing such a crisis, there must be some positive aspects.

The first of these positive effects is that the financial crisis ushers in an end to the domination of the sole magnate in international financial relations, which was a major cause of the crisis.

Wall Street was the world’s most powerful investment house, just a few months ago, where investments used to pour from the East and the West. Now Wall Street means bankruptcy, and investors in fear of losing their money do their best to avoid it.

At present, there are regions in Europe and Asia, including the Gulf region, emerging as hubs of huge investments, which will bring about more stability to the world financial system. This shift is important for restructuring international relations in the post-crisis stage.
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The second positive result of the financial crisis revolves around redrafting laws and rules that regulate global financial institutions, especially the International Monetary Fund (IMF), World Bank (WB), and the World Trade Organization (WTO) whose membership could not have been possible without a green light from Wall Street.

The previous rules governing economic relations were appropriate for the post-Second World War era and during the Cold War, but are no longer suitable for the globalization age and the emergence of new and influential economic powers on the map of international relations.

For instance, in China, foreign currency reserve reached $1.9 trillion at a time the US budget deficit amounted to $1 trillion, in addition to the progress achieved by Europe in the light of its single currency.

The third positive point is related to the change in the world investment map and the opportunities to be provided by the emerging investment hubs, which offer guarantees and opportunities for world capitals.

This potential change will coincide with restructuring of commercial relations, which will be done through the WTO that will allow specialization on the basis of the production priorities of each country.

This will offer middle east countries rare opportunities to take advantage of the possible outcomes of this crisis.

Fourth, the next global financial and banking system will be strictly regulated and supervised by applying the measures of control, transparency and global governance.

The last of the positive effects of the crisis would be the absence of giant financial institutions, which dominated stock markets in the world for long decades.
This in turn would allow new institutions to emerge and take over, which lays the foundation for a new sharing system in international financial and economic work.

In short, a bad situation may sometimes have good effects, and what is required now is to draw lessons from this crisis and the subsequent losses suffered by most countries.

As the growing number of foreclosures and the value of stock portfolios hit bottom, news reports from the US of the financial fallout are growing increasingly dire.

Layoffs, foreclosures, cutbacks – there are plenty of grim economic stats out there this holiday season. Here’s perhaps the grimmest one of all: Calls to National Suicide Prevention Lifeline hotline have soared by as much as 60 per cent over the past year.

Mental health experts say the sour economy has turned what usually manifests as seasonal blues into a full-blown crisis. The fear of losing one’s job and pressures caused by a downturn in business, demotion or pension plan cutbacks can be bad for mental health and therefore increase suicide risk.

“Fear is the No. 1 emotion we’re hearing. People are feeling hopeless and helpless because of the economic crisis, and many feel that things aren’t going to get better. Now many of the calls are from people who have lost their home, or their job, or who still have a job but can’t meet the cost of living.”

A 90-year-old woman in Ohio shot herself while being served an eviction notice. A 45-year-old businessman in Los Angeles murdered five members of his family before turning the gun on himself, saying in a suicide note that he had done so because of his troubling financial situation.

While these stories put a human face on the toll the financial crisis has taken, the Director General of the World Health Organization this may only be the tip of the iceberg. As people struggle to cope with losing their homes or livelihoods, she said, “It should not come as a surprise if we continue to see more stresses, more suicides and more mental disorders.”
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To those who can recall the stories of bankers jumping out of windows across New York at the beginning of the Great Depression in 1929, the correlation between a financial crisis and an increase in suicide seems quite real.

A person with depression can blame their depression on whatever has been in the news recently, so some might begin to say that they are depressed because of the financial crisis. But the financial crisis isn’t necessarily the basis for the illness in the first place.

Indeed, one study conducted by the WHO on Suicidal Behavior showed that a majority of suicides and suicide attempts committed by men were done so by those who were considered “economically active” (i.e. employed). That same study showed little annual change in numbers of suicides from 1989 to 2002, despite great economic changes after the fall of the Iron Curtain.

“Simply because the financial crisis exists doesn’t mean we can assume a higher number of cases of depressed persons. It’s more complicated than that.”

The global automotive depression has finally reached all the way to the top — to Japan’s Toyota Motor Corporation, which on Monday said it now expects to lose money in its automotive operations. This will be the first such loss in 70 years.

Toyota, like its Japanese counterparts, has been staggered by the yen’s stunning appreciation against the U.S. dollar — which makes Japanese exports more expensive overseas — as well as plunging vehicle sales in North America and other major export markets.

For the fiscal year that ends March 31, Toyota still expects to eke out a modest profit of $555 million, which looks pretty good in comparison to the billions of dollars of losses incurred already this year by Detroit’s beleaguered automakers.

But the world’s largest vehicle manufacturer by sales volume and market value said it now expects to post a fiscal-year operating loss of nearly $1.7 billion, a dramatic turnaround from the $13.9 billion operating profit Toyota had forecast earlier this year and revised operating profit of $6.7 billion that it released in November. Media reports in Japan said it would be the first operating loss since just after the firm was founded in 1937.

Executives also said total revenues for the fiscal year now are expected to fall about 18 percent, to around $239 billion, revised downward from the earlier projection of $256 billion.
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The company is facing a crisis of critical proportions after basking in eight consecutive years of record profits. In fiscal 2008, which ended last March 31, Toyota posted an operating profit of $25.3 billion and a group net profit of $19.1 billion.

In announcing the automaker’s second downward financial revision in six weeks, a clearly shaken Toyota President Katsuaki Watanabe said: “It’s a kind of emergency that we’ve never experienced before…. It’s not yet possible to tell where the market’s bottom will be.”

Watanabe also dramatically lowered the company’s vehicle sales forecast. For calendar-year 2008, Toyota now expects that global group sales, including those of Daihatsu and Hino, will drop more than 4 percent, to 8.96 million vehicles, from 9.37 million in 2007. Before the current crunch, Toyota earlier this year had forecast that sales would climb to 9.85 million units in 2008.

At the company’s year-end press conference, Toyota said it is taking a wide variety of measures to slash operating costs, from canceling directors’ bonuses to unplugging the electric hand dryers at the company’s Nagoya headquarters. Toyota last week said it is delaying construction on the new Prius assembly plant in Mississippi.

We know that there will always be swindlers in the world, particularly when money is at stake. What is surprising in the Madoff case is the magnitude and durability of the confidence game and the wealth and importance of many of the investors who went along for the ride, based largely on personal trust.

Madoff will go down in history along with Charles Ponzi, who gave his name to these pyramid schemes in the 1920’s. Ponzi may have been the first, but Madoff was the biggest. Look up Charles Ponzi in Wikipedia.

The US financial regulatory body will launch an in-house investigation into why it failed to detect Bernard Madoff’s massive alleged fraud, despite almost a decade of warning signs.

“The Securities and Exchange Commission, a once-proud agency with an impressive history as Wall Street’s top cop finds itself increasingly conducting autopsies of leading financial institutions after failing, in the first instance, to perform adequate biopsies.

The issue arises as to whether investors in such a fund should be insured in any way, not against losses resulting from market activity (those are business risks), but from losses through embezzlement, for example, if someone stealing the corpus of their fund, or if there is no fund.

Securities and Exchange Commission chairman Christopher Cox said the SEC “has learned that credible and specific allegations regarding Mr Madoff’s financial wrongdoing, going back to at least 1999, were repeatedly brought to the attention of SEC staff”.
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“But (they) were never recommended to the Commission for action,” Cox said in a statement on Tuesday.

Madoff, 70, is the alleged mastermind of a $US50 billion ($A71.9 billion) fraud that is shaking financial institutions worldwide.

“I am gravely concerned by the apparent multiple failures over at least a decade to thoroughly investigate these allegations,” Cox said.

“A consequence of the failure to seek a formal order of investigation from the Commission is that subpoena power was not used to obtain information, but rather staff relied upon information voluntarily produced by Mr Madoff and his firm.”

Cox said he had “directed a full and immediate review of the past allegations regarding Mr Madoff and his firm and the reasons they were not found credible, to be led by the SEC’s Inspector General”.

Madoff is free on a $US10 million ($A14.4 million) bond, but will be in court on Tuesday to establish whether he has met bail conditions set after his arrest last week.