Credit Crisis crush regional bank’s results

  • Credit crisis

Lower profit generations are resulting in continuous losses leading to massive credit crisis for six of the largest U.S. regional banks; as a result, a total of 14% of the employees are facing a threat for losing their jobs. Despite their efforts to double their reserves to compensate for the losses they faced on the loan grounds, the net charge-offs have soared to newer heights, quite a few times more than last year resulting in deteriorating credit. However, Mr. Henry Paulson’s (Secretary, U.S. Treasury) steps for infusing capital worth $250 billion (as a part of his $700 billion Troubled Asset Relief Program) into the nation’s banks stays the only hope.

Edward Hemmelgarn (President, Shaker Investments, Cleveland) commented – “This is what happens in a recession, especially one driven by financials and the consumer. Everything always looks gloomiest as banks try to stay ahead of the curve.” But he also added that capitals present with many banks are not as bad as being portrayed.

Those in distress are seeking aid worth anything between $1.1 billion to $3.5 billion, as reported by Andrew Cecere (Chief Financial Officer, U.S. Bancorp). According to him – “Changes with regard to capital availability and tax changes potentially makes a merger transaction financially more attractive.”

  • Effects of recession

The first is definitely a decline in the profit margins. U.S. Bancorp suffered a loss of 32 cents for every share, which is, 47 percent. However, this is on the greener side since investors and depositors are now avoiding the weaker rivals. For others, the profit margins nose-dived between 54% and 80%.

The next effect is definitely a build-up of personal debts due to decreased income that can bring forth other deteriorating effects such as break-ups in families, an increased number of school and college dropouts, an increased number of people going for substance abuse and ofcourse, an economic dependency. The debts surmount mostly through credit cards; with inflation being the other side of recession, expenses may run wild further pressurizing income. As a result, people start exhausting their savings driving them more into the realms of poverty.

  • Profit Fall Analysis

What was a $19 million loss in 2007 jumped to $729 million in 2008 for the Cleveland-based National City, but this excludes the dividend for this year April’s $7 billion rising of capitals. Overall, the shares suffered a loss of 85 cents on each. But the loss of deposits in September because of the market turmoil has been given a positive feedback from the Chief Executive Peter Raskind, who commented things to become the worst before getting better.

For others, net loss went as high as $81 million (i.e. loss of 14 cents from 61 cents for every share) from the $325 million profit last year. KeyCorp, Cleveland; however, reported of a loss of $36 million with probably the least of losses per share amounting to 10 cents from 57 cents. Definitely, it is the result of the most severe financial crisis according to even the most experienced banking veterans.


Can the federal Aid save the financial market?

  • Federal Aids Vs Recession fears & corporate profits

The Federal Reserve of the United States of America, together with the governments of the other countries has pumped in the required amounts of money to hoist the financial flags but the launching of bank rescues was not fully effective in eliminating the fears of recession that are still driving down the commodities and the stocks in the U.S. It’s the poor profits generated by the corporate world that is held responsible for not allowing the faith to get restored once again.

The latest program of Washington for helping the financial markets amounts to $540 billion that has been channelized to set up five special purpose vehicles. This shall enable buying certificates of deposits as well as commercial papers from the mutual funds suffering currently because of investors backing out lately.

Henry Paulson (Treasury Secretary) is supporting the idea of the fiscal stimulus program, which inevitably is a proof of the Bush administration accepting the government’s responsibility to bring the economy up. But shall it cover the trouble spots such as Pakistan, Ukraine and Iceland? Since Japan and France has extended the help to banks; now the intervention of IMF is required to set the balance.

Inter-bank costs for lending have dropped again; this is a tentative signal of a renewed confidence in the financial system. With the Treasury buying off all the mortgage loans, there are high chances of the credits crossing the freezing points. Question remains, in which direction and shall it be enough to buffer the difficult months before the conditions improve? Even a resilient economy is not enough to answer that.

  • Role of the federal reserve banks around the world

Speaking on a global basis, the promise is of $3.3 trillion. This shall guarantee the bank deposits and inter-bank lending to surface once more. Lawrence J. White (Professor, Economics, Stern School of Business, New York University) commented on the issue – “With honesty on bank balance sheets and enough government bucks, private investors will come back in. But Government investment should be structured to ensure the government earns a profit if and when the banks’ shares rise.”

Whether or not it shall transform into a reality is debatable, for U.S. stocks though experienced a brief rise, slid back with The Dow Jones Industrial Average closing down 2.5 percent while NASDAQ Composite Index went down by 4 percent more. And the stronger dollar resulted in sending the gold and oil prices about 4 percent lower than the previous counts, while Japanese stocks closed 3.3 percent higher and European shares at around 0.8 percent. Canadian banks have now lowered their rates on prime lending for lowering the funding costs, providing customers lowered rates on an array of loans.

Online accounting: The latest trend

  • Online Accounting Vs Desktop accounting software

Gone are the days when accounting software packages were desktop dependent; this is the age of online bookkeeping. Despite the slow pace compared to other software, online accounting software is making the hard-to-adjust trend catch up gradually.

The primary bar is due to the technical complications online accounting poses. Add to it the wide range (and sometimes unknown) of tax laws varying over the geographical boundaries; compatibility becomes a tricky issue, giving rise to awkward experiences. To have an account, it’s vital that we know a few of them used for online bookkeeping purposes.

Online Accounting

Online Accounting

  • Why choose online Accounting

But the sad news is all these golden offers are failing to get Intuit a clean chit in the field of online accounting; it seems the developers have to rethink its resources for a better market leverage to compete against the traditional accounting software like Freshbooks, Xero and Zoho. These packages are a direct competitor to Quicken; a glance on the features like invoicing, payroll processing or expense tracking and several others shall prove well that an impressive Web 2.0 design stands as their prime forte. What are the advantages? Providing inputs hasn’t been this much a cakewalk formerly.

  • Costs and Benefits

Whether it’s for personal use or for small to medium sized businesses, accounting software vendors like Intuit and MYOB are still ruling the roost; however, their initiatives towards making the web-based accounting software packages also deserve compliments. Out of these two, Intuit, added another name to its online versions of QuickBooks; small business owners may now benefit from the Quicken Online that comes at a competitive price and a 60-day free trial version. Satisfied users can pay as little as $2.99 a month and that too without any advertisements cluttering up the software.

  • Conclusion

Talking about Freshbooks, it is a conglomeration of online invoicing features, time- as well as expense tracking along with a subscription business model resembling that of Basecamp’s. Perhaps this is the reason why 0.4 million users worldwide find it a hot favorite; if the rest of the nifty features are considered (e.g. invoices at-a-glance, Basecamp integration or an application programming interface), it’s indeed a very helpful piece.

Debt Management & Debt Consolidation

Debt management

At its most rudimentary form Debt Management is a step involving three actions:

Knowing the correct amount of debt you have currently.

Stop all the factors that are pushing you further into debt.

Calculate the repayment amounts in a way that it doesn’t affect your financial well-being.

But what’s possible in thoughts are often not in practical life; therefore, there are people who make available funds to clear off the debts a person is currently in. In return, they charge a certain amount of interest which is way down lower than what the individual debts charge. Debt consolidation – in other words – is thus a vital part of the debt management process.

What is Debt consolidation?

Debt consolidation processes multiple payments into one. Thus, it relieves a person from the hassles of remembering multiple repayment debts, but most of all; it eases the burden of paying more in terms of interest. Debt consolidation merges all unpaid debt amounts into a single, monthly payment that can be paid with ease.

Debt consolidation has a direct link with bad credit histories; in the sense, those who mostly apply for debt consolidation are bad scorers on their respective credit reports. This is because clearing off debts increases the credit scores. Therefore, those who are being subjected to:

  • Arrears
  • Zero or very slow payments
  • Bankruptcy
  • County Court judgments/CCJ-s
  • Multiple defaulted payments

May set right their financial health once more by opting for a Debt Consolidation Service. However, now it’s time to have a look at the situations that bring about the need for debt consolidation, with credit card debt being the factor mostly responsible.

What is Credit Card Debt?

Use credit cards thoughtlessly and impulsively; in a couple of months you shall come to know what a credit card debt is. However, if you are not willing to learn the hard way, then the words below shall suffice for your quest.

A person must use his/her credit card(s) according to the monthly income, so that no billings from the lender(s) remain unpaid. But this is often not the case; what most of us think is clearing off a huge amount part by part. What we fail to understand is we also need to pay the interests that grow every month on the unpaid amounts. These all add up to real huge amounts leading to defaulted payments on which late payment fees apply. The accumulated burden, within sometime, multiplies soon to greater magnitudes making it an impossible load to bear. Credit card debt, from this point onwards, starts becoming a much dreaded subject.

How to get out of Debt?

You may either file for a bankruptcy (the escapist’s way for debt management) or go for a debt management program (the sane people’s choice), but opting the first recommendation is also going to give your credit report(s) a 7-year long stigma. So it’s the sane people’s choice that’s left. Sane in the sense, the step shall not only clear the credit card debt peacefully but shall also implement certain habits in the debtor to prevent running him/her into similar debts in future.

So the first step is to get into some constructive shopping. That translates to finding out a financial planner or advisor who can restructure your way to financial freedom and well-being.

Role of a Bookkeeper for Debt Management

A debt manager or Bookkeeping service not only provides the necessary advice but also keeps a sharp watch on how well they are followed. The advices, if followed properly, set the best course for expenditure against a person’s monthly income. Therefore, to find out if an accountant certified for running Debt Management Services is good or not, you must:

· Hold open, face-to-face discussion(s) to see if he can reinforce your credibility to the creditors.

· Find out if he can devise any custom Payment Plans

And if you think you can read from a DIY guidebook and get into action, always remember that a debt management professional has learnt the ways of Credit Card Debt Consolidation through his experiences besides earning the certification from the state. He can devise ways and make sure you walk on them. Or just think it the other way, had a D.I.Y. book on debt management been that good, why would you fall into such a situation?

Corporate Accountants Flourish

According to a report by the Conference Board the most common way of handling third pary corporate ethics & compliances issues is to follow a code of conduct and practice that governs the way in which the third party is handled by the company’s own employees.

The measure also made companies who outsource Accounting services to CPA and Accountants adopt to procedures resulting in flourishing ethical cultures and developed audit committee charters, besides influencing various control procedures and processes used by the companies for issuing information to all those who are interested and not directly linked to the company.

To bring maximum effectiveness to their new roles, the business accounting services members got started on becoming less timid; just performing a service function is no more the only answer, now it is all about reporting on and protecting the assets of public shareholders as well.

  • Accountants gets a fat pay hike

In return, the business accounting services firms’ members have received a pay hike between 10 percent and 25 percent and the names include such top shots as Deloitte & Touche, Ernst & Young, KPMG and PWC. Though a shortage in the numbers of experienced, efficient accountants is a cause as well, but mid-level audit professionals, famous for giving the corporations the proverbial greatest bang for their buck seems to be a stronger point.

But is this a golden handcuff introduced to back up an increased demand for auditors, corporate accountants and the management accountants? In that case, the situation resembles the Y2K crisis; high-tech proficiency attracted big bucks then. And this could be the beginning of a storm that is just gathering up now; in that case, the institutions shall be pouring out more and more of corporate and management accountants for the established business accounting services providers even then when many shall be found jobless. But trends take time to die; let’s prepare for the Y2K of accounting.

Accounting firms – The best place to be

In an era when businesses have earned the title of global on their own virtue, it’s the practice of outsourcing that has made a number of them soar sky high. It’s the internal processes of organizations that has brought about the chances to most of the accounting firms to extend their services on a world-wide basis; accounting services providers, keen upon easing up their customers’ concerns form today the base of outsourcing all the core functions related to an organization’s financial domain.

However, no business is a business if it lacks the required manpower. But statistics claim that certain businesses, comparatively newer, are in a dearth of skilled people who can handle the tasks efficiently. Outsourced accounting services are such a field, the huge deficiency of talents being the good news.

The scene in the offshore market is still better (or worse; it depends from whose perspective you are looking into it); irrespective of the place being Asia or Europe, fact remains that the majority of the top accounting firms are failing or barely becoming successful in meeting the demand for professionals in the financial domain.

Among the top accounting firms that people consider the best places for launching a career, it is Deloitte & Touché, Ernst & Young and Pricewaterhouse Coopers that rule the roost. The shortage in accounting services (talent-wise) is thus making the job market look good for accounting services professionals. Those who are proficient may take this as one of those lasting trends, but then again, it depends on what accounting services you specialize.

10 top accounting firms in US






New York, NY



New York, NY


Ernst & Young

New York, NY



New York, NY


Grant Thornton

Chicago, IL


Moss Adams

Seattle, WA


BDO Seidman

Chicago, IL


McGladrey & Pullen/RSM McGladrey

Bloomington, MN


Plante & Moran

Southfield, MI


Crowe Chizek and Company

South Bend, IN

List of Ten top accounting firms in US