When billionaire investor Warren Buffett speaks, people listen. And his silence over the Wells Fargo scandal has upset a lot of people. His firm, Berkshire Hathaway, has a lot of money invested in the bank, and experts expected Buffett to be quick with a comment about the company’s corruption, distancing himself from the company immediately. This didn’t happen though until very recently. In his comments, he decried the actions of the company as wrong and criticized the incentive program as immoral. However, the bigger issue for Buffett was that good people made foolish decisions. Most notable of these was former CEO John Stumpf, who resigned in October of this year. According to Buffett’s comments to CNN, Stumpf made a big mistake, and then when it was discovered, he didn’t correct it. … Read more
According to the U.S. Federal Reserve, there are 31 major banks, and all 31 of them passed a stress test this week. The test was designed to gauge whether or not the banking industry was still on pace to rebuild in a healthy manner after the financial crisis of a few years ago. In the past, not all banks have passed, but this year, they all did. Last year, for example, Zions Bancorp did not clear the minimum threshold of 5 percent, but this year, they came in at 5.1 percent in model test runs. The tests included a housing market price drop of 25 percent and a stock market drop of 60 percent, and the weakest bank of the 31 still passed the test.
It’s encouraging news for the banking industry in particular, and the financial industry as a whole. It indicates that the economy is actually quite strong right now, and that there is still a lot of room for upward motion all over the markets.
There’s more to it than this, though. Passing this test was just the first stage, and if the banks pass a second set of tests, they may get permission to start with the increasing of shareholder payouts, including dividend payments. … Read more
Negative interest rates are just a hypothetical in the U.S. right now, but it could be a reality in the future, especially if the economy keeps improving. Right now, those trying to save their money have a difficult time if they stay out of the stock market; banks pay next to nothing for savings account rates, usually around 0.04 to 0.05 percent interest per year. It could get worse, though, especially for those with smaller savings. It could get to the point where banks actually charge you an interest rate to hold your money for you with the purpose of trying to drive more money into alternative savings methods like CDs, money market accounts, mutual funds, and retirement accounts.
Who knows if this will ever happen here. It is worthy of consideration as the Fed has been open about the fact that it is ready to end the seven year stretch of interest rates near zero. Job growth has been great, and the economy is in one of the best states it has ever been in. It’s not likely to happen in the near future, but it is something that could be a possibility in the future.
If it does happen, the best course of action is to get your money out of your savings accounts and into something that will actually help you to grow your money. Savings are nice because they provide you with easy access to your cash, but there are better places to put it if this were to occur. … Read more