ShoreBank Blog
The ShoreBank Blog is your place to find ShoreBank news, new product information, and our insight into the banking world.
Posts Tagged ‘financial crisis’
Tuesday, October 14th, 2008
Hello everyone! I don’t know about you, but I’ve lost some sleep over the last few weeks watching the markets go on their wild ride. What a time! I have read news reports and listened carefully to the explanations of what is happening and why, and I have to confess: I’m just not smart enough to understand all of these exotic investments. Where did all the money really go?
The one thing I haven’t lost sleep over is my IRA account at ShoreBank. That money is still there earning interest and safely insured by the FDIC. And I completely understand where it’s invested. ShoreBank is a community development and conservation bank, so deposits in ShoreBank help to fund loans to real people in real neighborhoods. 
Let us take a closer look at one of the growing lines of business at ShoreBank: single family mortgages. We make affordable, fixed rate, 30 year mortgages to people who want to buy or refinance a house to live in. They want to pay us back and, for the most part, they do. We turn down borrowers when we think they do not have enough income to afford the house or the loan they want. We carefully check incomes and credit scores but also meet with every borrower to gain an understanding of how they handle their money. Do they pay their utility bills and rent on time? Do they have extra income like child support that we can document? If they had unexpected medical bills to pay and got a little behind on their bills, we look at how they handled that situation. This is what our founder Ron Grzywinski calls “good old fashioned banking.” It’s clear. It’s safe. It helps people, and I am really glad that my IRA is part of the deposit base that makes this lending possible.
My money is safely FDIC insured, earning interest and will be there when I need it. That is what I call a good deal!
Tags: community development, FDIC, financial crisis, green banking, IRA, ShoreBank, triple bottom line
Posted in Banking Industry | No Comments »
Wednesday, October 1st, 2008
There are no trees in Iceland. Oh, alright, there used to be trees. The Icelanders cut them all down, causing the topsoil to erode, and now they won’t grow back. Still, the Icelanders are fine folks, all 320,000 of them. In 2007, the United Nations Human Development Index ranked the island nation the most developed county in the word. (We ranked 12th.)
That’s interesting (or maybe not), but what does it have to do with the price of tea in China? Well, the financial crisis has not spared Western Europe, and Iceland is looking like the leader of the pack. The Finance Ministry announced today that the country’s economy will shrink next year for the first time since 1992 and the budget deficit will be the biggest since 1994. Inflation is running at 14%, and the value of the Icelandic krona fell 10% versus the euro this week. On September 29th the government bought three-quarters of the country’s third largest bank, which could not get any other funding.
Island hopping to Ireland, we find the government guaranteeing payment on nearly all €400 billion of the country’s bank deposits and other debts. The French, Belgian, and Luxembourgian governments joined hands to stave off a default by the world’s largest lender to local governments, Dexia SA. This followed an earlier injection of €11.2 billion into Fortis by Belgium, the Netherlands, and, once again, plucky little Luxembourg. Fortis is a huge financial services firm that does just about everything for just about everybody. The Brits nationalized a big mortgage lender, Bradford & Bingley PLC, and Germany pumped €35 billion into Hypo Real Estate Holdings AG, the nation’s second biggest commercial property lender. And that’s just this week.
But what about China? A friend of mine has a theory. He thinks the Chinese slowed their purchases of Fannie Mae and Freddie Mac bonds last month not out of fear, but to test our system. China has a much bigger investment in the US, mainly in the form of US Treasury securities, than it does even in tea. The Chinese want to see how resilient we are. But also, they want to flex their financial muscles. China has enough capital to play Warren Buffett’s game many times over. Instead the Chinese are sitting on the sidelines. Perhaps they find it all amusing. A kind of payback for the Opium Wars.
Tags: community development, economic predictors, financial crisis, green banking, Iceland Economy, ShoreBank, triple bottom line
Posted in Banking Industry | 4 Comments »
Friday, September 5th, 2008
Hi, I’m ShoreBank Economist David Oser. In this blog, we’ll be talking every couple of weeks about high finance and low finance. We’ll poke through mounds of dreary economic statistics for glittering nuggets of real information. We’ll visit Wall Street, be the proverbial fly on the wall in corporate board rooms, and, sometimes, stroll down the Main Street in good old Anytown USA.
I’ve been saying “we,” because I hope this blog will become a dialogue with you, dear Readers. I suppose I like talking to myself as much as the next man, but this blo
g space will be a lot more fun (for me, anyway) with a bit of lively repartee. No topics are off-limits, as long as they have at least some tentative connection to economics or finance.
Let’s jump right in with a quick look at personal income and spending. The Bureau of Economic Analysis says that Americans’ personal income was $90 billion less in July than it was in June. A big reason is that the tax rebate train has left the station. The Government doled out $2 billion in April, $48 billion in May, $28 billion in June, and $14 billion in July. That’s $92 billion in all, but that was then. Now we’re back to living on our paychecks again, or, for 3.4 million Americans, unemployment checks.
You may have wondered just how the average family—you know, the one with 2.1 kids and three-quarters of a dog—divides its income. Well, we spend about 10% on what the Government calls “durable goods,” things meant to last three years or more like cars, sofas, and stoves. We spend 30% on non-durables, with about half of that going to food. Most of the rest pays for services, with housing (15%) and medical care (17%) absorbing the majority.
We spend a lot on gasoline too, but maybe not as much as you think. In July, we pumped 4.5% of our income, $51 billion, into our gas tanks. That percentage is more than twice what it was a few years ago, but still below the peak of 5.3% reached in the energy crisis days of the 1970s and ‘80s. And speaking of small favors, the average price of a gallon of regular slumped to $3.90 on July 31 from $4.11 on the 15th. I know it’s hard to remember back that far, but the gallon price broke through $3.50 for the first time ever way back in April of ’08.
Who knows, maybe those glory days will come back.
Tags: community development, economic predictors, financial crisis, green banking, ShoreBank, triple bottom line
Posted in Banking Industry | 2 Comments »
