Financial thoughts

Citigroup announced Friday it had struck a deal to sell its Phibro energy trading business to Occidental Petroleum, a move that will likely reduce scrutiny about the compensation of the division’s top trader.

While the New York City-based bank declined to disclose the terms of the deal, Occidental (OXY, Fortune 500) said its net investment would be about $250 million.

There had been speculation in recent weeks that Citigroup (C, Fortune 500) was actively shopping the unit in an effort to deflect any potential political anger over a potential $100 million payday for its star trader Andrew Hall.

Citigroup, as well as other banks that were bailed out by the U.S. government on more than one occasion last year, are currently having pay packages of its top executives and most highly compensated employees reviewed by Kenneth Feinberg, the Obama administration’s so-called "pay czar instant payday loan no telecheck."

Occidental, whose business centers on oil and gas exploration and production, is not subject to government scrutiny over compensation. Still, the energy giant said Friday it would defer "significant portions" of any current or future bonuses generated within Phibro.

Hall and other members of Phibro’s management team will remain with Phibro after the acquisition is completed by the end of the year, Occidental said.

Phibro has been a profit machine for Citigroup recently, even as the bank has been hit by big losses tied to mortgages and other toxic assets. Over the past five years, the division averaged approximately $371 million in pre-tax earnings a year, according to Occidental. 

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Liz Claiborne’s plan to sell its namesake sportswear only at J.C. Penney Co Inc stores and on a television shopping network highlights a new turn in the ongoing rivalry between the mid-tier department store chain and its slightly more upscale rival Macy’s Inc.

The decision Claiborne announced on Thursday to sell its Liz Claiborne and Claiborne brands exclusively at Penney ends a decades-long relationship between the brand, founded in 1976, and Macy’s. But Macy’s said it supported the decision, given the brand’s poor performance in recent years.

The move is good news for all involved, according to analysts and consultants. They said it guarantees revenue and profits for Liz Claiborne, gives Penney more exclusive product, and frees up Macy’s to better differentiate itself as its customer base increasingly overlaps with Penney’s.

“The Liz Claiborne brand has sold poorly in recent years and has continued to decline. As a result we could not justify expanding it at Macy’s,” said Macy’s spokesman Jim Sluzewski.

He said customers have been confused between the various brands carrying the Liz name, such as the Liz Claiborne line at Macy’s, the Liz Claiborne New York line at Bon-Ton Stores Inc and the Liz&Co brand at Penney.

“When customers see the same brand name available in different stores at different quality levels, they tend to be confused,” he said.

An industry executive, who declined to be identified by name, said the confusion would not be so damaging if consumers really saw Macy’s as more upscale no faxing payday loan.

“Their point is that it was damaging to their business to have Penney have it at a lower price. But then again, their argument is, ‘Our shopper doesn’t shop at Penney,’” the executive said. “If that’s the case, how does this get in the way?

“It shows that, in fact, Macy’s and Penney have more retailer-to-retailer interaction with consumers than Macy’s is normally willing to admit,” the executive added.

COMPETITION HEATS UP

Sluzewski said there was nothing new about consumers who shop at Macy’s also shopping at other stores. He stressed that what differentiates Macy’s is better product.

“Of course, consumers today shop in a wide range of stores,” Sluzewski said. “The merchandise in Macy’s is more fashion-oriented and of better quality than lower channels of distribution.”

He cited well-known brands available at Macy’s, including Ralph Lauren, Tommy Hilfiger, Calvin Klein and Kenneth Cole.

While Macy’s has traditionally been positioned as a little higher end than Penney, Kimberly Picciola, senior retail analyst at Morningstar, said the 2005 merger of Macy’s owner Federated Department Stores with May Department Stores broadened the company’s customer base by giving it stores in new markets.

“In those markets where they bought the May stores,” Picciola said, “they probably are competing a little more directly with J.C. Penney.” 

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Stocks rallied Thursday, with the major indexes flirting with 2009 highs, after Dow component Alcoa posted better-than-expected earnings and a report showed an unexpected drop in jobless claims.

The Dow Jones industrial average (INDU) rose 61 points, or 0.6%. The S&P 500 (SPX) index gained 8 points, or 0.8%, and the Nasdaq composite (COMP) climbed 14 points, or 0.6%.

Stocks ended mixed Wednesday as the previous two-day rally lost steam. Dow component Alcoa (AA, Fortune 500)’s after-the-bell announcement helped revive investors Thursday, starting off the financial reporting period on a positive note.

Stocks steadily moved higher as the session wore on, with the Dow briefly posting triple-digit gains, as 21 of 30 components rose.

"I think the market is clearly moving on expectations of better-than-expected earnings," said Tom Hepner, financial adviser at Ruggie Wealth Management. "But I’m just not sure we’re going to see that. There are still plenty of reasons to think that the market has gotten ahead of the recovery."

A weak dollar, along with rising oil and gold prices, gave a lift to dollar-sensitive multi-nationals such as Dow components 3M (MMM, Fortune 500), GE (GE, Fortune 500) and Johnson & Johnson (JNJ, Fortune 500). The oil rise lifted Chevron (CVX, Fortune 500), Exxon Mobil (XOM, Fortune 500) and other commodity names.

Gold closed at a record $1,056.30 an ounce and hit an electronic trading high of $1,062.70 during the day Thursday.

Market breadth was positive. On the New York Stock Exchange, winners beat losers by nearly three to one on volume of 1.28 billion shares. On the Nasdaq, advancers topped decliners five to four on volume of 2.42 billion shares.

Results: Third-quarter S&P 500 earnings as a whole are expected to decline more than 20% from a year ago, with materials, energy and industrials leading the decline. That means S&P 500 earnings will have slumped for nine straight quarters, the longest streak since earnings tracker Thomson began calculating the numbers.

But separate from the big picture, Wall Streeters are looking to see if individual companies are starting to see any earnings growth, beyond the impact of cost-cutting overnight pay day loans. In the second quarter, more than 70% of companies reported results that topped estimates, due to reducing costs. But few market-moving companies reported sales growth or revenue that topped estimates.

Cost-cutting is expected to continue to drive results this quarter, but topline growth could be improving at least in some sectors, if Alcoa is an indication.

The aluminum maker reported quarterly earnings and revenue that dropped from a year ago, but handily beat estimates. Shares rallied in extended-hours trading and also gained 2% Thursday.

Economy: Around 521,000 Americans filed new claims for unemployment last week versus forecasts for 540,000, the Labor Department reported. The number was the lowest in more than 9 months. Around 554,000 Americans filed unemployment claims in the previous week.

Continuing claims, a measure of those who have been receiving benefits for a week or more, fell to 6.040 million from 6.112 million the previous week.

The Commerce Department said wholesale inventories fell 1.3% in August versus forecasts for a drop of 1%. Inventories fell 1.6% in the previous month.

World markets: Global markets rallied. In Europe, London’s FTSE 100 gained 0.9%, while France’s CAC 40 and Germany’s DAX both gained 1.3%. Asian markets ended higher.

Currency and commodities: The dollar fell versus the euro and yen, extending its recent slide against a basket of currencies.

U.S. light crude oil for November delivery rose $2.12 to settle at $71.69 a barrel on the New York Mercantile Exchange.

COMEX gold for December delivery rose $11.90 to settle at a record $1,056.30 an ounce, the third straight record high for the precious metal.

Bonds: Treasury prices tumbled, raising the yield on the 10-year note to 3.24% from 3.18% late Wednesday. Treasury prices and yields move in opposite directions.  

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AIG Chief Executive Robert Benmosche’s $10.5 million annual pay package has been formally approved by Obama administration pay czar Kenneth Feinberg.

According to a letter to Treasury’s compensation committee dated Oct. 2, Feinberg said Benmosche’s package, $4 million of which is in stock options, is comparable to that of other CEOs.

Benmosche, who took over the bailed out insurer’s reins in August, will take home $3 million in cash. His "stock salary" will come in equally divisible, bimonthly payments of common shares. Under the terms of his pay deal, he can’t sell those shares until August 2014.

The new AIG CEO will also be eligible for $3.5 million in annual performance bonuses. The bonus will be prorated for 2009. AIG can recover his bonus if he deceives shareholders.

The approval was widely expected, because Feinberg gave a preliminary thumbs-up to the package when it was announced on Aug. 18. For formal approval, AIG had to submit a review of Benmosche’s compensation package from his last job, when he was the CEO of MetLife (MET, Fortune 500). AIG also was asked to compare Benmosche’s pay plan to those of other CEOs at similar companies quick pay day loan.

In his letter to Treasury, Feinberg said he maintains the right to reduce (but not to increase) Benmosche’s bonus based on the CEO’s or the company’s performance.

Feinberg oversees the executive compensation packages of seven bailed-out companies, including AIG, Chrysler, Chrysler Financial, Citigroup (C, Fortune 500), Bank of America (BAC, Fortune 500), General Motors and GMAC. The companies submitted proposed employment contracts for their 25 highest-paid employees on Aug 14, and compensation proposals for the next 75 most compensated employees are due by Oct. 13.

AIG was the first of the seven companies to receive any kind of formal approval. The pay czar is expected to rule on all of the pay plans by the end of the month. That information is due to be made public by Treasury sometime after, although any announcement may not include details of pay packages for individual employees.

Shares of AIG (AIG, Fortune 500) rose 6% by midday Tuesday. 

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Stocks rallied Monday, with the Dow, S&P 500 and Nasdaq all gaining at least 1%, as investors used a two-week selloff as an opportunity to jump back into the market.

A better-than-expected reading on the services sector of the economy and strong demand for Treasury’s first bond auction of the week bolstered the broad-based gains.

The Dow Jones industrial average (INDU) rose 112 points, or 1.2%. The S&P 500 (SPX) index gained 15 points, or 1.5% and the Nasdaq composite (COMP) rose 20 points, or 1%.

Bank stocks led the advance, with Bank of America (BAC, Fortune 500) up 3.8%, JPMorgan Chase (JPM, Fortune 500) up 4.6% and Wells Fargo (WFC, Fortune 500) up 6.9%. The KBW Banking (BKX) index added 3.2%.

A roughly seven-month-long rally hit a roadblock at the end of September, with stocks falling for two straight weeks, and the major gauges losing around 5%. The declines were driven by a series of weaker-than-expected economic reports on housing, manufacturing, consumer confidence and employment.

The weak batch of reports marked a reversal after a period of steadily improving economic news. That raised more worries that the rally has gotten ahead of the recovery. Still, the declines over the last two weeks were pretty minimal, considering the runup that preceded them.

"I think the underlying trend of the market is still positive, despite the last two weeks," said Ted Weisberg, NYSE Floor Trader at Seaport Securities. "You’re seeing that start to reassert itself today."

He said that the last two weeks of the old quarter and first two of the new one are typically something of a Never Never Land for the market, as investors await results and focus 100% on economic news. He said that this was true in the month surrounding the end of the second quarter and start of the third in July and it appears to be true again now.

"The risk, as we’ve seen over the last few weeks, is that the news can be less than terrific, making markets vulnerable," he said. "That’s particularly the case after the kind of rally we’ve seen."

Since bottoming at a 12-year low March 9, the S&P 500 has gained 51.2%, and the Dow has gained 45% as of Monday’s close. After hitting a six-year low, the Nasdaq has gained nearly 61%.

In the third quarter alone, the S&P 500 index and the Dow both jumped 15%, the best quarterly performance in a decade. The Nasdaq jumped 15.7%, its best quarterly performance since 2003.

Results on tap: The wave of third-quarter earnings reports due in the week ahead will determine whether the selloff continues or proves to be an entry point for more buyers. Alcoa unofficially begins the third-quarter reporting period Wednesday, as it usually does. The Dow aluminum maker is due to report a quarterly loss versus a profit a year ago, reflecting a weak materials sector.

Overall, S&P 500 profits are expected to have dropped almost 25% from the third quarter of 2008.

On the move: In addition to financials, the Dow’s other big gainers included Boeing (BA, Fortune 500), United Technologies (UTX, Fortune 500), 3M (MMM, Fortune 500), Caterpillar (CAT, Fortune 500), Chevron (CVX, Fortune 500), Exxon Mobil (XOM, Fortune 500) and Hewlett-Packard (HPQ, Fortune 500). Of the 30 Dow components, 25 gained.

Among stock movers, Brocade Communications (BRCD) rallied 18.8% in unusually active trading on reports that it has put itself up for sale. Both Hewlett-Packard and Oracle (ORCL, Fortune 500) were cited as potential buyers, according to the Wall Street Journal.

Economy: The Institute for Supply Management’s services sector index rose to 50.9 in September from 48.4 in August. Economists surveyed by Briefing.com thought it would rise to 50.0.

World markets: Global markets were mixed. In Europe, London’s FTSE 100, France’s CAC 40 and Germany’s DAX all gained around 0.7%. Asian markets were mixed, with the Hong Kong Hang Seng higher and the Japanese Nikkei lower.

Currency and commodities: The dollar tumbled versus the euro and the yen, resuming its recent plunge against a basket of currencies.

U.S. light crude oil for October delivery rose 46 cents to $70.41 a barrel on the New York Mercantile Exchange.

COMEX gold for December delivery rose $13.50 to settle at $1,017.80 an ounce. Gold closed at a record high of $1,020.20 two weeks ago.

Bonds: Treasury prices fell late Monday, with the yield on the 10-year note sticking at 3.22%. Treasury prices and yields move in opposite directions. The government’s sale of $7 billion in 10-year Treasury Inflation Protected Securities (TIPS) saw strong demand, a good sign at the start of a week that brings $78 billion in debt auctions.

Market breadth was positive. On the New York Stock Exchange, winners beat losers five to one on volume of 1.12 billion shares. On the Nasdaq, decliners topped advancers by over two to one on volume of 2.21 billion shares. 

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New orders received by U.S. factories posted their first drop in five months in August, government data showed on Friday, going against Wall Street expectations that they would rise.

Orders fell 0.8% after rising 1.4% in July, which was originally reported as a 1.3% increase, according to the Commerce Department. Analysts polled by Reuters were expecting them to gain by 0.3%. The drop was the first since March, when they fell 1.9%.

Factory orders were also down when compared to August 2008, by 22.5%.

Unfilled orders dropped 0.4% in August. They have now fallen for 11 months in a row, which is the longest streak of consecutive monthly decreases on records dating to 1992, the Commerce Department said.

Inventories fell 0.8%. They have decreased for 12 months in a row, the longest streak since 2002.

Durable goods orders had their steepest drop, of 2.6%, since January, when they fell 7.8%. Orders of durable goods — big ticket items meant to last — were originally reported as declining 2.4% in August. 

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One steady bit of good economic news: Inflation remains near zero. So who would want to pay extra these days to add a dose of inflation protection in their portfolio?

Plenty of people. It turns out sales are hot for Treasury Inflation-Protected Securities, a common hedge against rising prices known by their acronym TIPS.

New money from investors and market gains have boosted total assets in mutual funds investing in TIPS nearly 36 percent so far this year, according to Morningstar Inc.

It’s part of a broader shift by many investors who have been scared away by stocks, despite the market’s hefty rebound from its March low. They’ve been piling into the greater safety of bonds, and TIPS — while not without risk — are about as safe as you can get.
The value of the underlying investment in TIPS rises with inflation, providing an additional layer of protection beyond what Treasury bonds offer.

Hardly anyone expects inflation to re-emerge as a big threat anytime soon, so TIPS aren’t necessarily the best short-term investment. But historically low interest rates and the federal government’s growing deficit are expected to drive prices higher, especially once the economy truly gets back on its feet and spending rebounds.

Here are some common questions and answers about TIPS:

How do TIPS work?

Introduced by the government in 1997, TIPS are a type of Treasury bond — investments that are super-safe, provided you believe the government will continue to make good on its credit obligations.

TIPS adjust their yield based on changes in the Consumer Price Index. The principal in TIPS adjusts every six months. The so-called "coupon" rises when inflation grows, and decreases in the less-likely instance of deflation. When the bond matures, you’re paid the adjusted principal or the original principal, whichever is greater. TIPS are sold in maturities of five, 10 and 20 years.

Investors in "nominal" Treasury bonds get a fixed rate of return if they hold the bonds until they mature. For example, 10-year Treasury notes are now yielding about 3.32 percent per year.

On the other hand, 10-year TIPS are yielding 1.55 percent, which doesn’t seem so good, until you consider what havoc inflation might wreak online payday loans. The difference — or "break-even rate" — between those two numbers is 1.77 percentage points. That suggests investors are expecting inflation will average 1.77 percent per year over the next 10 years. So if inflation exceeds that amount and erodes Treasuries’ current 3.32 percent yield, TIPS investors will be glad they paid for the protection.

Inflation had historically averaged 2 to 3 percent until falling to near zero when the market tanked last fall and deflation fears set in.

How have TIPS’ values held up lately?

Inflation and interest rate expectations are constantly changing, which is reflected in the prices traders are willing to pay for TIPS. Lately, TIPS have generally been seen as a good deal. Mutual funds investing in TIPS have returned an average of 8.63 percent so far this year, according to Morningstar. That puts TIPS in the middle of the performance pack among fixed-income fund categories.

How can I buy TIPS?

TIPS are available for purchase from the Treasury at http://www.treasurydirect.gov to avoid brokerage fees. If you’re not sure you can keep the bond until maturity and are nervous about managing your investment over time, you can buy into a mutual fund that focuses on TIPS, or an exchange-traded fund. Like TIPS mutual funds, TIPS ETFs hold baskets of TIPS with varying maturities but can be traded like a stock.

TIPS appear to carry little risk. Is that the case?

Any bond is subject to risk from rising interest rates, and TIPS are no exception. If the Fed boosts interest rates faster than inflation grows, or before inflation sets in, TIPS’ values will erode.

They also can be hit in a falling market, as happened last fall. Many institutional investors had to come up with cash to meet clients’ orders to pull out their money, forcing them to sell their most liquid investments. TIPS often fit the bill, and massive TIPs sales reduced prices. But as seen this year, they’ve bounced back.

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Psst. Did you hear who Microsoft is going to buy next? No? Me neither. But that hasn’t stopped traders from gossiping.

Mergers are starting to make a comeback as the economy and stock market show signs of life. But there is a dark side to the pickup in deals. Takeover rumors with little to no basis in fact have also returned.

Last week, for example, Wall Street and Silicon Valley were awash with the rumor that Microsoft (MSFT, Fortune 500) was in talks to buy video game publisher Electronic Arts (ERTS). Shares of EA spiked as much as 9.6% on the chatter.

A deal for EA wouldn’t have been preposterous. Microsoft, after all, has a big interest in gaming with its Xbox franchise, and EA has been frequently cited as a potential acquisition target in the past few years.

But the takeover talk turned out to be just that: talk. Microsoft spokespeople and executives quickly denied the rumors and EA’s stock took a hit as a result.

The Microsoft-EA "takeover" is just one example of investors getting their hopes up only to have them dashed.

Earlier this week, The New York Post reported that hedge fund wunderkind John Paulson, who made gobs of money last year shorting financial stocks and is now sifting through the rubble for bargains, was pushing to merge troubled small business lender CIT Group (CIT, Fortune 500) with OneWestBank, the failed mortgage lender previously known as IndyMac. Paulson’s firm is an investor in CIT’s debt and was part of a group that bought IndyMac from the FDIC this year.

Shares of CIT unsurprisingly shot up on the "news." But this chatter also turned out to be untrue. Reuters later reported from an unnamed source that talk of an IndyMac-CIT merger was "just wrong."

CIT’s stock promptly sunk, plunging 45% Wednesday. It now appears that the company is considering a prepackaged bankruptcy. Ouch.

But neither of those bogus M&A stories can hold a candle to the curious case of big screen move theater operator IMAX.

On Wednesday morning, a press release began to float around the Internet saying that IMAX (IMAX) had agreed to be purchased by Walt Disney (DIS, Fortune 500) for $1.5 billion, a handsome premium.

IMAX’s stock rose more than 7% Tuesday and was up about 6% in pre-market trading Wednesday. So it seems that some investors believed the reports. But upon further inspection, there were some things that didn’t make sense.

While Disney does have an agreement with IMAX where several Disney films will be shown in IMAX theaters, an outright purchase of the company would not really fit Disney’s strategy. Plus, Disney just announced a few weeks ago that it was spending $4 billion to buy comic book publisher Marvel Entertainment.

Well guess what? The IMAX press release turned out to be a fake — and a bad one at that. It was a classic cut and paste job, with mentions of the Marvel deal scattered throughout.

Still, IMAX felt compelled to issue its own legitimate press release shortly after the market opened Wednesday to point out that it had not been acquired and was not in discussions to be bought by Disney lowest fee payday loans. IMAX’s stock was flat Wednesday but fell nearly 2% Thursday morning.

And pranksters struck again later Thursday. Shares of Local.com (LOCM), a relatively small fish in the world of online search, shot up 8% Thursday, with most of the gains coming in the last hour and a half of trading.

Apparently, the reason for the stock’s surge was a press release saying that the company had been acquired by Microsoft. Local.com put out a real press release Thursday night to say that this was not true. The stock fell more than 5% Friday morning.

Of course, not every fake merger will be a case of someone acting fraudulently and making something up out of thin air as was the case with the IMAX and Local.com rumors.

Is it possible that Microsoft and EA held talks about a deal at some point? Sure. But that’s not the same thing as having a signed merger agreement that’s going to be imminently announced. Just look at all the hullabaloo Thursday about Comcast and NBC Universal.

According to a story that surfaced Wednesday evening on TheWrap, a Web site focusing on the entertainment business, Comcast is in advanced discussions to purchase NBC Universal from General Electric for $35 billion.

Considering that the cable giant made a bold, unsolicited $54 billion takeover for Disney back in 2004, it’s not entirely shocking that Comcast would be interested in NBC Universal.

But a Comcast spokeswoman denied this later Wednesday night, saying that "the report that Comcast has a deal to purchase NBC Universal is inaccurate."

Other reports suggest that Comcast (CMCSA, Fortune 500) is trying to purchase a stake in NBC Universal, not the whole thing. And the Comcast spokeswoman simply said that Comcast does not have a deal to purchase NBC Universal. So there probably is something to the notion that Comcast and GE (GE, Fortune 500) are talking. It just doesn’t seem as if Comcast is about to ink a deal to buy all of NBC Universal.

There will probably be many more stories and rumors of takeovers that are at best slightly off the mark, and at worst just flat-out wrong. It comes with the territory now that companies are showing a willingness to make deals again.

It just goes to show that investors need to be wary of believing everything they read and hear, lest they get burned.

Talkback: Should Comcast buy NBC? Share your comments below.

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The first two funds involved in the government’s plan to purchase toxic assets have raised about $1.13 billion, the U.S. Treasury Department said Wednesday.

Invesco Ltd. and Trust Company of the West, or TCW, are the first of the so-called Public-Private Investment Funds to raise the necessary capital to launch the program.

Treasury said it expects the seven other funds will complete their initial closings throughout October.

The launch of the program comes nearly a year after the U.S. Congress authorized a $700 billion fund to cleanse banks’ balance sheets of toxic assets. Officials shifted away from that idea and switched its focus to directly injecting capital in the banks.

The Public-Private Investment Program, or PPIP, has been dramatically scaled back as banks have proven that they can raise capital in the private markets without first unloading troubled assets, many of them tied to bad mortgages. 

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"You are evil, thieving bastards."

That’s just one of the scathing comments from Ann Minch, a disgruntled Bank of America (BAC, Fortune 500) customer who says in a YouTube video that the bank "jacked up my interest rate to a whopping 30% APR."

Her rant went viral, and Minch says the bank scaled her rate back to its original 12.99%. Citing customer privacy, a Bank of America spokeswoman said she could not comment on individual accounts but confirmed "we did … reach a mutually agreeable resolution based on additional information that we reviewed."

The video, titled "Debtor’s Revolt Begins Now!," has been streamed about 350,000 times and earned a five-star user rating since it was posted on Sept. 8.

In the video, Minch claims she wasn’t over her credit limit and hasn’t been late with payments, despite the fact that she doesn’t have a full-time job.

She says she tried to negotiate with Bank of America, where she has been a customer for 14 years, "but they weren’t willing to negotiate anything."

"I could get a better rate from a loan shark," she adds.

Betty Riess, the Bank of America spokeswoman, said customers receive advance notice of rate hikes and can choose to pay off their balance at the current rate to close out the account.

True to her YouTube handle, Rockerchic4God, Minch sports fiery red hair and kohl-rimmed eyes that glare into the camera for the duration of the 4-1/2 minute video.

"You have reaped ungodly profits in your behemoth casino scams, then lost, only to turn around and usurp the wealth of this great nation by the outright rape and pillage of middle-class Americans whose sweat and toil built it," she says.

Calling the bailout "the biggest rip off in the history of the world," Minch lays out her terms: If Bank of America refuses to reinstate her previous, lower interest rate and monthly payments, she won’t pay "one more red cent on your 30%."

Minch tells her viewers that she is "willing to sacrifice [my credit score] in order to take a stand for what’s right," and she calls on them to join her in an "American debtors’ revolution."

"Stick that in your bailout pipe and smoke it," she says, smirking.

A response

Minch attracted a lot of media attention, and word of her crusade apparently got through to one of Bank of America’s top brass. In a follow-up video posted Sept. 19 Minch says Jeff Crawford, the bank’s senior vice president of existing customer credit services, called her to discuss her concerns.

He told her that she had two late payments, which was why her rate was hiked, and he tried to convince her to agree on a 16.99% interest rate.

Minch replied that Bank of America is receiving "money from the Fed at 0% interest … 12.99% is a more-than-generous profit margin." Crawford agreed to that original rate, although Minch says her most recent online statement shows a 23.99% APR.

Still, the credit-card crusader is significantly more subdued in her follow-up video, in which she updated viewers about her predicament and noted that Crawford "was very polite."

But Rockerchic4God isn’t completely mollified. She’s launching a Web site at DebtorsRevoltNow.com, and says her next project is "a tax revolt."

"That won’t involve anybody having to go to jail for not paying their taxes," she says. "There’s a way around that, so stay tuned."

Minch’s original video has spawned more than 5,000 comments — some praising her, others condemning her "revolt." One detractor, billb0313, writes: "Banks need a bailout b/c people like Ann defaulted on their unsecured loans left and right."

Other posters are in Minch’s corner. "You’re not alone," writes tommosm. "[My] Chase is at 33% … I’m paying more in finance charges than the minimum payment."

What do you think? Tell us by posting your own comment below. 

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