The credit losses on this will be very impressive, and there will be a fair bit of lag time as it takes 60+ days for an account to become seriously delinquent.

BAC is begging for a wave of credit card fraud and illegals going wild with the card and then moving on in life (w/ a new 60in plasma TV). Retailers will get sick of this as well, b/c one of the best forms of CC fraud is return fraud to earn gift certificates.

Pure speculation. Some pretty sharp cookies in the credit card industry might have already thought about this scenario. This is logical, but not necessarily practical thinking. I'm just trying to picture those wild illegals schlocking that 60 inch TV in the back of their truck on to the next life. No one will accuse you of trying to be pc, though.  

[quote=planrcoach]The credit card business has some pretty sophisticated players[/quote]



So did Enron.

[quote]

Allreit, you sound like a cranky old person on this one.

[quote=planrcoach] Do you really have a handle on what is going on in
our economy right now? I wonder what is really driving productivity in
the American economy.[/quote]



My thoughts on the outcome of BAC’s move are in my sig.



----



More seriously, people who are in this country illegaly are criminals
as are those who employ them. Weather this is common or not, has
nothing to do with the legality of it.



BAC is aiding this problem. So this is a bad move for that reason alone.



BAC is also exposing themselves to massive credit issues by lending
money to rootless people with unstable income. If these people are
deported, do you think paying their CC bills will be a priority?



Above and beyond the credit risk issue, is the huge opening for
fraudulent transaction’s which will happen. It is just too juicy to go
around opening up checking accounts and passing bad checks. Same thing
with opening up and maxing out CC’s.



Eventually the feds will end this, because these no doc checking accounts/CC’s will have serious issues with money laundering.



So at the very least BAC has tarnished the brand, and proposes going on
an unsound course of action, which creates concerns about management.
Plenty of good reasons to sell and purchase better run banks like NCC
or a bank etf like KBE.

BOA speaks with a forked tongue. They'll allow illegal aliens w/o SS#'s to get credit cards yet the premiers and banking centers can't work with non-resident aliens. We as FA's also have to go through hell with KYC docs to work with a non-resident alien. These bankers are something else. I'm glad I'm out of here soon.

I find the dichotomy in all this interesting, to say the least.



We can’t open an account without a drivers license, social security number,

proof of citizenship, etc., while banks can, in effect, say in virtually any

language, "Put your mark on the dotted line."



Politics aside, I think this is a smart play for B of A. They’re tapping into a

virtually untapped market that is probably much larger than anyone, even in

government, suspects.

unfortunately it is a much larger market, I mean problem, than most people think.

"BAC is begging for a wave of credit card fraud and illegals going wild with the card and then moving on in life"

BAC isn't stupid.  It's not like they're giving large credit lines with no fees and 0% interest.  We're talking about small credit lines with high fees and high interest. 

As I recall, you are a big fan of selling annuites

As I recall, you are an idiot.  I have stated in several posts that annuities make up maybe 10% of my book and that they are only appropriate for some people.

And then, when an otherwise enlightened client

 (what does this mean....you think my clients have some inner Zen enlightenment.  What are they enlightened about???  Deeeeep  thoughts?)

calls up and wants to dump the B of A stock as an apparent emotional reaction to media political correctness pandering (their "illegal") you pander to your client's wishes.

There is nothing pandering about deciding to sell a stock at a high valuation when the company has put itself into the political cross hairs of a very touchy subject in a very volatile and interminable Presidential campaign. A. It is the client's money B. I think they are right. C. There are other bank stocks that are not embroiled in this pandering to illegal activities. There are better investments at this time.

It all just seems to be a bit hypocrytical,

Why, yes it does... You try to open an account at your local bank, ask for a credit card and refuse to give them your Social Security number.  Get back to us when you have accomplished this.

It's not like they're giving large credit lines with no fees and 0% interest.  We're talking about small credit lines with high fees and high interest. 

It doesn't matter that the lines are small and the fees high.  If you can't collect on a high percentage of the fees-not to mention the principal, you still lose.  By this reasoning, if you can't invest a larger amount of money and only plan to do a small dollar cost averaging investment then it isn't a big deal? As we all know those small amounts add up. 

This system of allowing undocumented (unverified) illegal aliens to have access to credit just lends itself to money laundering and fraud. 

Similar to this one

http://www.pbs.org/wgbh/pages/frontline/shows/drugs/special/ us.html

You have hundreds of people using multiple fake identities opening up accounts to get "small" credit cards. These people don't even have to be illegally in the US, just want to take advantage of the open door they have been given. After getting the credit they then can get bigger lines from other easy credit merchandiers (Best Buy, McMahans etc.).  Following me?

 Last I checked, someone is giving these people jobs - they, illegal = breaking the law - are not just standing on street corners, sucking up resources. Do you really have a handle on what is going on in our economy right now? I wonder what is really driving productivity in the American economy. I wonder is our unofficial policy is, let "them" in to take the jobs that let some of "us" practice comparative advantage, and focus on more value added tasks to help us compete in a global economy where labor itself is increasingly commoditized - so that we can compete with the developing economies of Southeast Asia and Brazil and China.

I agree.  This is illegal and the criminals are not just the people who are breaking into the country. The employers should be prosecuted too. Actually a lot of them are standing on street corners, or to be more exact in Home Depot parking lots.

If you think that no one is hurt by this on a personal level and that this is actually helping the "economy" you are sadly mistaken. This is not a victimless crime. Let me give you a real life example. Bring it down from broad generalisations to real life..... 

I have a friend who has/had a nice little handyman business.  Carpentry, yard work, minor plumbing, etc.  He was not charging much for his services, just enough to get by. $20.00 - $30.00 an hour plus materials. He made about $45,000 gross a year. His wife had a little part time job to supplement. Lived in a rural area so there are not any large employers. People need to make their own jobs in these areas. Loved his little 3 acre slice of heaven, on which he paid his property taxes and insured his house.  He paid his quarterly taxes, insures his vehicles, had liability insurance, had a bookkeeper to send invoices and keep track of his expenses and deductions for taxes. He was active in the local Chamber of Commerce, Rotary and fund raising activities for his children's elementry school.

Along comes someone who is living under the radar. No SS#, no tax return, no banking account, doesn't own a home, doesn't need to insure his auto and is willing to charge $10.00 an hour for the same service.  Most of my friend's clients stuck with him out of loyalty, but not enough. The greedy people win again.  He had to sell his property and move.  His wife now works full time and the kids are in day care after school. Meanwhile the illegal guy who has no ties to the community and gives nothing back, has now lowered the standard for everyone else who must compete on an un-level field.  The way to compete is, of course, to go underground yourself.  Cash is king!!

The community suffers. The living standards are lowered.  This is happening all over.

There is nothing politically correct or incorrect about wanting to have people obey the law and in objecting to the move by BofA and other companies to cash in (greed) on the illegal activities at the expense of society as a whole.

If you don't agree with me ..fine.  There is no racism involved here as  much as some people want to make it to be so.  I don't care who you are or where you are from. Illegal is illegal. The hypocrisy of there being one set of rules for some and another set of rules for others is what bothers me.

Be sure to tell us how opening that account is going for  you.

 are you brain dead??  Do you understand nothing about economics.

As I recall, you are an idiot. 

Hey, be nice. I know this is an emotional issue for you.

Most of my friend's clients stuck with him out of loyalty, but not enough. The greedy people win again.  He had to sell his property and move.  His wife now works full time and the kids are in day care after school. Meanwhile the illegal guy who has no ties to the community and gives nothing back, has now lowered the standard for everyone else who must compete on an un-level field. 

I am going to try to say this as nicely as possible. First, I am sorry about your friend, and I hear what you are saying about the pain and social upheaval.

Everyone who does not agree with you is not brain dead about economics or living in a bubble. You could influence me better by dropping the name calling tactic in your debate, instead of trying to paint me as being flakey.

From a global economic standpoint, your friend needs to upgrade his skills and education. This is necessary for everyone to compete in the global economy. Your ex- landscaper friend uses gas from the Middle East, tools made in China, coffee from South America, and is competing with laborers in all of those economies. Unfortunately, maybe not your friend, but some folks are also smoking pot and watching TV to see who gets voted off the island and eating twinkies at night instead of improving themselves by taking a class at the Junior college or doing some self study online.

Since when have Americans been entitled to be middle class while performing manual labor? The days of making $35 an hour in the auto plant, or charging that much to provide landscaping services - those days are over, and it is precisely because of YOUR shopping habits and your friends shopping habits.

Have you ever traveled to a developing country? How about your landscaper friend? When you come home, you realize how far ahead of the game you are just when you wake up in the morning.

China has chosen capitalism, and through consumption of her goods, we supported that turn from totalitarian economic behaviour. The political policy in this country is to ensure a stable Mexico and North American economy, the alternative is grim. Competition is the viable reality. We allow Americans to waste oil, but want to control competition in the labor market. That seems pretty silly.

You make some good points. We need a good immigration policy. So that issue has been politicized to the point of inaction so far - probably because we are just now getting to the point where we have enough Mexican souls in this country to keep the economy on track. I thank God we are blessed with this fine neighbor to the south.

Have you ever traveled to a developing country? How about your landscaper friend? When you come home, you realize how far ahead of the game you are just when you wake up in the morning.

Starting from this point, we all have to better our skills if we want to maintain and improve our quality of living, which is indeed happening, if you really see things for what they are.

I am not trying to sound elitist. Lack of economic education in this country is a big problem - in other words, your friend needs to plan ahead if he wants his wife to stay home with the kids and still make a good living. A few years ago, we were worried about the demise of the family farm, now the price of corn looks pretty good.

My point is, this is America's strength - competition and freedom. These are good times right now, in terms of opportunity. Maybe not easy times for most, but having lived in communist China about 25 years ago, I can tell you that the alternative is not very pretty. You wonder why there is no meat for sale in the market, and you hear that the leading cadre got a delivery to his back door last night.

The folks that took a covered wagon out west 150 years ago did not jump off the wagon and start looking for the social services office. As for this forum, I hope there are a few hard nosed capitalists that know what I am talking about.

More seriously, people who are in this country illegaly are criminals as are those who employ them. Weather this is common or not, has nothing to do with the legality of it.

So is smoking pot. Not that I would choose to do either. But when you look at the economics of free choice, there are a lot of parallels. Kind of like voting for the war, but not really being for the war.

BAC is aiding this problem. So this is a bad move for that reason alone.

Agreed, bad PR move. One that points out the power of the media, over rational economics, to the ultimate detriment of the American economy. I'm sure we can agree on this point.

BAC is also exposing themselves to massive credit issues by lending money to rootless people with unstable income. If these people are deported, do you think paying their CC bills will be a priority?

Big assumption on deported. What is these people get to stay in America? Good bet, B of A. That's just one little slice in your asset allocation. Little potential downside, big potential up. For that matter, I like B of A even better now, maybe I'll give them some more business.

Above and beyond the credit risk issue, is the huge opening for fraudulent transaction's which will happen. It is just too juicy to go around opening up checking accounts and passing bad checks. Same thing with opening up and maxing out CC's.

Okay, I'll say it. Is this racial profiling? My Mexican aquaintances are Catholic and God fearing - they have great values. They live in North America, that does not make them good or bad.

My impression is that " these people " have fueled our huge productivity gains, notabley in housing and agriculture, but take that down to staffing restaurants and other service businesses. Turning North American resources around the American economy. If there is a surplus of housing, which there should be in the cycle, that is good for somebody. If this isn't the beginning of a transitional economy (from export lead SE Asia dominance), I don't know what would be amore successful scenario.

The beauty of markets, in my view, is that things are not always what they seem, when you shift your viewpoint a little. Which also makes it hard to add value through portfolios security selection, over time. Which puts us squarely back in the business of educating and giving our clients the big picture, versus being mutual fund jockeys.

Planr, if you want to be Sunny Jim about this, fine by me.



IMHO it is completely obvious that this will end badly, for BAC,
customers, investors, everyone. If you want exposure to banks then
there are hundreds of better, more interesting, more profitable, and better run banks than BAC.



BAC is going to eat alot of bad publicity, and credit losses from doing
this. In fact I doubt this will ever get off the ground b/c of AML
issues. 

You know ALLREIT, ask your doctor about Lunesta. This BAC stuff is keeping

you up at night.

Okay, I'll say it. Is this racial profiling? My Mexican aquaintances are Catholic and God fearing - they have great values. They live in North America, that does not make them good or bad.

Can't you read?  My discussion of this issue clearly states that not only illegals from any source (Mexico, Poland, Russia, Iran wherever)but also people who are legally in this country can exploit this to the detriment of Bank of America and other merchants. 

My objection has nothing to do with Mexicans or Catholics.  My Mexican and Catholic relatives who are legally in this country are not happy with this move either. That is a strawman you are concocting.

My objection and concern has to do with the ILLEGALITY of granting credit to people who are undocumented.  It has to do with the danger to the bottom line of the company(s) that are doing the granting and the effect this will have on the stock as an investment.

And most especially it has to do with the hypocrisy of allowing one group of people (illegal aliens non citizens) to operate by one set of rules that are not allowed to the rest of the population.

By the way how is opening that account at B of A without a social security card coming for you?

Like it or not....people are pissed off and it is going to backfire on the companies that are bending over backward in their greed to twist and break the laws.  As an investment advisor, you should be paying attention to the dynamics that can adversely affect the investments your clients hold.

I just picked up yesterday, over 500k in cash from one of those pissed of people.  They drove over 150 miles to the nearest B of A branch so they could withdraw their funds in person and be able to express their feelings.  I expect to get more in the future.

Okay, I'll say it. Is this racial profiling? My Mexican aquaintances are Catholic and God fearing - they have great values. They live in North America, that does not make them good or bad.

Can't you read?  My discussion of this issue clearly states that not only illegals from any source (Mexico, Poland, Russia, Iran wherever)but also people who are legally in this country can exploit this to the detriment of Bank of America and other merchants. 

 My comment was in response to Allreit, not you. Re read what was said.

Like it or not....people are pissed off and it is going to backfire on the companies that are bending over backward in their greed to twist and break the laws.  As an investment advisor, you should be paying attention to the dynamics that can adversely affect the investments your clients hold.

I just picked up yesterday, over 500k in cash from one of those pissed of people.  They drove over 150 miles to the nearest B of A branch so they could withdraw their funds in person and be able to express their feelings.  I expect to get more in the future.

My prediction is that this will be a lousy client for you. Better put them in that guaranteed annuity, just don't get sued over the surrender charge when they get pissed off over the next big thing.

As an investment advisor, you should be paying attention to the dynamics that can adversely affect the investments your clients hold.

Agreed. This is my attempt to be diligent.

Just becauses some people are pissed off, you still have to think for yourself. Allreit, I think Seth would agree with that. " Sunny Jim ? "

And most especially it has to do with the hypocrisy of allowing one group of people (illegal aliens non citizens) to operate by one set of rules that are not allowed to the rest of the population.

Glad you mentioned this, as it is what really torques my motor. Maybe we should elect Lou Dobbs for chief economist, as " it will all end badly", anyway.

You want to talk about hypocracy? It would take about three days for Americans to "round up" all of the "illegals" in this country, if we had the political will. It is the official policy of this country to do what we are doing - Donkeys and Elephants have their own reason for this policy.

Then you have the media pundit, exploiting the likes of your hot headed new client. And you have:

As an investment advisor, you should be paying attention to the dynamics that can adversely affect the investments your clients hold - Bank of America.

Instead of being hypocritical, they are trying to serve reality and be good stewards of shareholder capital.

But the net result seems to be economic ignorance. Micro logic projected onto the macre reality. Thus, " things will end badly?".

What? Where did you get that obscure Seth Klarman quote - being a value investor in the style of Warren Buffet, this makes no sense.

The final economic perversion is to devolve into emotion ( I do understand this is an emotional issue) and a sort of liberal snobbery (Sunny Jim) that is not the sum of the reality of our own national economic policy of wanting to have an open border.

Logically, does it not seem a little silly to think that we could not solve this "problem" in three days? So your are really just angry at the politicians.

By extension, the Social Security number arguement does not addd up. Last I checked, that was important on the tax side, not the spending side. Who are you to tell the B of A how to make money?

My prediction is that this will be a lousy client for you. Better put them in that guaranteed annuity, just don't get sued over the surrender charge when they get pissed off over the next big thing.

You really can't read, can you? 

I have already stated my position on annuities.  You can try to distort that anyway you want to.

Sorry to disappoint you. Most of my clients have been with me for well over 10 years and my average account size is in the mid to high 6 figure range. This is why I have time to fart around on this forum.  I'm adding this new money to the rest of their portfolio.

national economic policy of wanting to have an open border

Says you.  I suggest you ask the people of this country how they feel about open borders.

You really can't read, can you? 

I have already stated my position on annuities.  You can try to distort that anyway you want to.

Not a personal attack on you.  My point is, guaranteed principal for someone who will panic about something else. You said they were moving the money from a bank - this suggests a conservative or in inexperienced investor, relevant to my whole point here about economic ignorance in general.  Interesting that you assume I am trying to distort things to make you look bad. I am sure you are very successful and ethical, and will do the right thing for the client  I respect you. I don't take pleasure in trying to build myself up at the expense of others.  

national economic policy of wanting to have an open border

Says you.  I suggest you ask the people of this country how they feel about open borders.

This is the real issue. Obviously, in Washington, a mixed bag. Republicans want to help the small business person and farmer in a transitional (from manufacturing) economy. Democrats want the perceived future support of an increasing Latino population.

Do you really think that the open border is hopeless from a technology or civil service point of view?

[quote=skeedaddy2]You know ALLREIT, ask your doctor about Lunesta. This BAC stuff is keeping

you up at night. [/quote]



I’ve been getting attacks of migranes at night.

Maybe BAC will securitize the illegals’ credit card portfolios as junk bonds and pass the risk on to investors. 

Good idea.