Finance

Finance is the science of funds management. The general areas of finance are business finance, personal finance, and public finance. Finance includes saving money and often includes lending money. The field of finance deals with the concepts of time, money and risk and how they are interrelated. It also deals with how money is spent and budgeted.
Finance works most basically through individuals and business organizations depositing money in a bank. The bank then lends the money out to other individuals or corporations for consumption or investment, and charges interest on the loans.
Loans have become increasingly packaged for resale, meaning that an investor buys the loan (debt) from a bank or directly from a corporation. Bonds are debt sold directly to investors from corporations, while that investor can then hold the debt and collect the interest or sell the debt on a secondary market. Banks are the main facilitators of funding through the provision of credit, although private equity, mutual funds, hedge funds, and other organizations have become important as they invest in various forms of debt. Financial assets, known as investments, are financially managed with careful attention to financial risk management to control financial risk. Financial instruments allow many forms of securitized assets to be traded on securities exchanges such as stock exchanges, including debt such as bonds as well as equity in publicly-traded corporations.^{[dubious – discuss]}
Central banks act as lenders of last resort and control the money supply, which affects the interest rates charged. As money supply increases, interest rates decrease.

http://en.wikipedia.org/wiki/Finance

Bank War

The Bank War is the name given to the controversy over the Second Bank of the United States and the attempts to destroy it by then-president Andrew Jackson. At that time, it was the only nationwide bank and, along with its president Nicholas Biddle, exerted tremendous influence over the nation's financial system. Jackson viewed the Second Bank of the United States as a monopoly since it was a private institution managed by a board of directors, and in 1832 he vetoed the renewal of its charter.

http://en.wikipedia.org/wiki/Bank_War

Core Banking Solutions

Core Banking solutions are banking applications on a platform enabling a phased, strategic approach that lets people improve operations, reduce costs, and prepare for growth. Implementing a modular, component-based enterprise solution ensures strong integration with your existing technologies. An overall service-oriented-architecture (SOA) helps banks reduce the risk that can result from multiple data entries and out-of-date information, increase management approval, and avoid the potential disruption to business caused by replacing entire systems.
Core Banking Solutions is new jargon frequently used in banking circles. The advancement in technology, especially internet and information technology has led to new ways of doing business in banking.

In a shift away from the traditional IT banking system, SAP’s new banking solution combines front and back end functionality, and places more emphasis on customers.

 Traditionally, banking systems focused on the separation of the two main components, which for SAP were Finance and Risk- the back end accounting component, and Core Banking- the front office.

These technologies have cut down time, working simultaneously on different issues and increasing efficiency. The platform where communication technology and information technology are merged to suit core needs of banking is known as Core Banking Solutions. Here computer software is developed to perform core operations of banking like recording of transactions, passbook maintenance, interest calculations on loans and deposits, customer records, balance of payments and withdrawal are done. This software is installed at different branches of bank and then interconnected by means of communication lines like telephones, satellite, internet etc. It allows the user (customers) to operate accounts from any branch if it has installed core banking solutions. This new platform has changed the way banks are working.

Make Sure Your Bank Deposits Are Safe EDIE

StatePoint

The federal government recently has taken extraordinary steps to stabilise and protect the financial markets and the broader economy; there are also steps you can take to make sure your money is insured and protected.   The Federal Deposit Insurance Corporation (FDIC) is promote Americans to visit myFDICinsurance.gov, a Web site that helps individuals learn about the benefits and details of deposit insurance. There you can use "EDIE the Estimator," an online tool that provides customise information about your insured accounts.
In just a few steps, EDIE can help you ascertain whether all the money you have in bank deposit accounts is 100 percent FDIC-insured. If your money is fully insured, you cannot lose a penny  no matter what because your deposits are backed by the full faith and credit of the U.S government.
"For 75 years, no one has ever lost a penny of insured deposits," said FDIC Chairman Sheila Bair, "but as with any type of insurance, depositors are responsible for knowing how FDIC coverage works in order to ensure their money is protected." 
Recent changes in FDIC insurance limits provide temporary new protection above previous $100,000 levels. Through the end of 2009, basic deposit insurance coverage is up to $250,000 per depositor, with separate coverage provided for deposits held in different account ownership categories.
Depositors may qualify for expanded FDIC insurance coverage if they have deposits in different account ownership categories, but if your total deposits at one bank exceed the basic insurance amount, it's extremely important to structure your accounts properly. A husband and wife each potentially could have a combination of individual accounts, Individual Retirement Accounts and joint accounts at one FDIC-insured bank and be fully insured for up to $1.5 million. 
Consumers also may benefit from special, temporary coverage for non-interest bearing checking accounts. Checking accounts at participating institutions that pay no more than 50 basis points currently are fully insured by the FDIC, no matter how much money is in them, until December 31, 2009. While this expanded coverage is intended primarily for businesses, consumers may also deposit funds in eligible checking accounts in participating banks. To learn whether your bank is participating, ask your banker or check online to see if your bank has opted out of this program at www.fdic.gov/tlgp (click "TLGP Opt Out Lists").
The FDIC offers information and tips to help depositors make sure their money is safe:

* Find out whether your bank is insured by using the FDIC's Bank Find at www.FDIC.gov/bankfind or by calling toll-free 1-877-ASK-FDIC.
* When you open a deposit account at an FDIC-insured bank, your account has automatic deposit insurance coverage with no additional action on your part.
* Separate FDIC insurance coverage is provided for deposits you have at different FDIC-insured banks.
* Confirm whether your deposits are within insurance limits by using EDIE the Estimator at myFDICinsurance.gov or by calling 1-877-ASK-FDIC.
* You will receive motivate access to your insured deposits in the event your bank fails.
* Insured banks are required to tell you when a financial product it offers is not spread by FDIC insurance.
"Despite the credit crisis and challenges facing banks, the bulk of the U.S. banking industry is healthy and remains well capitalise," said Bair. "The FDIC stands ready to meet our sacred commitment to depositors to protect their money."

Why Your Bank Is Broke

Paul Havard talks on his cell phone inside a Citibank branch in New York on Jan. 16, 2009

JB Reed / Bloomberg News / Landov

Even without doing the math, you probably get that the government's financial-rescue effort is failing. The signs are hard to miss. Your friend in finance got pink-slipped. A house sale down the street fell through because the buyer couldn't get a mortgage. A local bank is closing a nearby branch or maybe shutting down altogether.
But do the math, and you can begin to understand how really botched this bailout has been. Since October, the government has deposited $165 billion into the accounts of the nation's eight largest banks. Yet those same financial firms are now worth $418 billion less than they were four months ago, and the Congressional Budget Office estimates that the government's preferred shares are worth at least $20 billion less. In Wall Street terms, that's throwing good money after bad. All told, the government's annualized rate of return on its investment in the nation's largest banks is -1,096%. That's well beyond Bernie Madoff territory; he topped out at a mere -100%. (See pictures of the demise of Bernie Madoff.)
So how could $438 billion — $418 billion of their money and $20 billion of ours — go poof, just like that? Here's the easiest explanation: our banking system has sprung a leak.
Financial firms are built on capital. They take in a dollar, borrow against it and then lend out $3, $4 or $9. Or $30. In the past few years, executives have been using thinner and thinner capital — acquisitions and questionable off-balance-sheet arrangements — to build their money pails. In good times, the more of those cheap sources of capital you use, the more profitable your bank will be.
For the past few decades, banks have been piling up risk, making more and more loans based on less and less capital. Years of economic growth, shallow recessions and record-low default rates lulled bankers into thinking that the future would resemble the immediate past, at least as far as risk went. Turns out it didn't. All it was going to take was a worse-than-average recession — and it looks as though we've got one — and many banks, including a number of the biggest ones, were bound to fail. The shockingly poor lending standards — housekeepers being approved for million-dollar mortgages — have only hastened their demise. "This crisis needs to be understood as something that has developed over the past decade," says Joseph Mason, a finance professor at Louisiana State University's E.J. Ourso College of Business. "This isn't just one black swan. It's a bunch of black swans that have hung out for a while and created a giant problem." (Read George W. Bush's top 10 economic mistakes.)
There's little hope that the type of shares the government is buying in banks as part of the Troubled Asset Relief Program (TARP) will plug the hole in the banking system's bucket. Paul Miller, an analyst at FBR Capital Markets who has written a number of reports on the capital issues of banks, says the only way to solve the problem is for the government to stop buying preferred shares and start taking direct ownership stakes. Of course, the issue with that approach is that the problem at the banks is so large, Uncle Sam may end up owning a good portion of the banking sector. Few seem to want nationalization. Unfortunately, that could be the only way out.

Standard Chartered overhauls board

Standard Chartered, the international bank, overhauled its board today and promised to separate its risk and audit committees next year in an attempt to "improve corporate governance", as demanded by the Walker report on banking, published last month.
The bank, one of those most severely exposed to the Dubai financial crisis, has appointed three new non-executive directors, Dr Han Seung-Soo, a former prime minister of South Korea, Simon Lowth, chief financial officer of AstraZeneca, the pharmaceutical company, and Richard Delbridge, a dyed-in-the-wool banker who previously held roles with HSBC, Natwest, and Midland Bank.
Standard Chartered signalled the start of a fresh approach to risk as Gareth Bullock, the group executive director responsible for risk, decided to retire after a 13-year career in the bank.
Richard Meddings, group finance director, takes over responsibility for risk at an executive level.
The bank said that its chief risk officer, Richard Goulding, would report to both Mr Meddings and the board's risk committee.
John Peace, chairman of Standard Chartered, said "Strong corporate governance is essential for delivering sustainable shareholder value ... I am pleased to say that these changes are in line with the Walker Report recommendations."
The bank confirmed the appointment of Rudy Markham as senior independent director and Jaspal Bindra, Standard Chartered's Asian chief executive, as the group executive director, keeping his responsibilities for the Asian market.
Mr Peace said: "We are adding significant financial and banking experience to the board, as well as increasing its diversity to include members with special insight from our key Asian markets."
Standard Chartered also said that it would "significantly enhance" its sustainability and responsibility committee to review risks to the bank's reputation and brand, culture and values and "ethical and social legitimacy" and whether it treated its customers fairly.

Bank of America’s TARP Move Helps Shed Stigma

Less than a year after grasping two multibillion-dollar bailouts from Washington, a resurgent Bank of America announced on Wednesday that it would repay all of its federal aid, underscoring the banking industry’s swift recovery from the gravest financial crisis since the Depression.
Despite continuing problems with its loans to struggling homeowners and consumers, Bank of America plans to return the $45 billion in aid that it received at the height of the financial panic — a step that, only months ago, would have been almost unimaginable, Louis Story writes in The New York Times.
But like many other big banks, Bank of America is once again making money, in large part through Wall Street businesses like trading stocks and bonds, rather than by making loans. Its recovery, while many ordinary Americans are still struggling, is an important milestone in the government’s yearlong effort to stabilize the nation’s financial industry.
The Obama administration has begun talks with lawmakers about using unspent money from the financial bailout program to help offset the costs of spending to create jobs.
For Bank of America and its beleaguered leader, Kenneth D. Lewis, the turnabout is particularly sweet. Mr. Lewis was driven first from his role as chairman and then from his post as chief executive after the bank’s controversial takeover of Merrill Lynch last year. Now, with only weeks remaining in his tenure, he has managed to extricate Bank of America — not long ago regarded as one of the nation’s most troubled big banks — from Washington’s grip.
Wednesday’s announcement followed months of heated negotiations between the bank’s board members, executives and federal regulators. It is a particularly delicate time for Bank of America, which has struggled to find a replacement for Mr. Lewis. By paying back the money that it received under the Troubled Asset Relief Program, or TARP, Bank of America will free itself from exceptional federal oversight of its executives’ pay — a thorny issue in recruiting a new chief executive.
Indeed, Bank of America’s board has been riven by dissent over just who should lead the bank into its post-bailout period. Several potential candidates have said they were not interested in the job, in part because of the bank’s federal bailouts and the strings attached to them.
But by paying back its rescue funds, Bank of America will shed much of the stigma associated with financial companies that received not one but two federal bailouts. Its repayment will leave Citigroup and GMAC standing alone as the only giant banks that have received such extraordinary aid, although other banks big and small have yet to repay single bailouts.
Bank of America will repay part of its relief funds by selling $18.8 billion in stock that is expected to be converted into common stock, a move that will further dilute its existing shares even as it strengthens the bank’s financial footing.
But most of the money will come from money that Bank of America has generated in recent months with its wagers in the financial markets. After its acquisition of Merrill — a takeover that was once panned but now appears to be paying off — Bank of America has taken greater risks to compete with Wall Street giants like Goldman Sachs and JPMorgan Chase.
The bank said it would put $26.2 billion of its cash toward repaying its bailout and would also sell off $4 billion in assets.
Mr. Lewis was criticized for paying too much for Merrill Lynch, whose gaping losses prompted Bank of America to seek a second lifeline from Washington. The events surrounding the takeover, and the government’s role in it, remain highly controversial. Some shareholders contend that Bank of America failed to disclose adequately the risks associated with the deal, which remains under state and federal scrutiny.
A Treasury Department spokesman said the bank’s repayment represented a major step in removing the government from the banking sector.
“As banks replace Treasury investments with private capital, confidence in the financial system increases, taxpayers are made whole, and government’s unprecedented involvement in the private sector lessens,” said Andrew Williams, a spokesman for the Treasury.
The months-long struggle between the bank and regulators focused on the amount of capital that Bank of America would have to raise to repay the bailout funds. Regulators are pushing major banks to increase their common equity, and the decision about Bank of America’s financial makeup raises questions about whether regulators will demand increases at other banks like Wells Fargo.
Now Bank of America’s board will focus on appointing Mr. Lewis’s successor, a process that began in October when he surprised even close associates by saying he would retire early. The board plans to meet in Charlotte early next week and hopes to interview a few of the final candidates.
Once the bailout money is repaid, the bank will no longer have to consult with the Treasury’s special master of compensation about what it awards its new chief executive, or any other employee. That may open doors for outside candidates for the job who were wary of accepting a job under the government’s thumb.
Bank of America executives have insisted for months that the bank’s underlying businesses were far stronger than those of some other banks and that the Merrill merger would pay off quickly. Indeed, Merrill’s businesses have improved this year as Wall Street’s traditional business of trading and deal making picked up. At the same time, Bank of America’s core consumer lending units suffered greater losses as the economy weakened.
The bank’s negotiations with the government were led by Greg Curl, who took over as its chief risk officer in June. Mr. Curl negotiated the bank’s merger with Merrill last year, and he has been considered a potential successor to Mr. Lewis.