Company-specific iPhone apps come in handy

Thanks to a few company-specific iPhone applications, the hand-held device is more helpful then ever before.

When you're managing your money, a few companies have apps that will get the job done. E*TRADE Mobile Pro will assist with trading and investing in the stock market. Chase and Bank of America offer banking apps as well, taking the lead. These apps enable you to locate store branches, pay bills and credit cards, and contact the bank with a touch of a button.

The cost? Free.

Now, the iPhone comes in handy at the scene of a crime. Nationwide Insurance offers Nationwide Mobile free to its customers. This app can be used to report accidents, start claims and find local repair shops. State Farm Insurance was quick to release their 1.0 application, called the State Farm Pocket Agent. Although the first version is light on features, the company makes a point that the app is very easy to use.

Banking fees hit customers hard

The troubled economy has hit the masses. Banks are smacking customers hard with new fees on checking accounts.

Citigroup Inc.'s Citibank is now charging customers $10 for an overdraft protection fee. J.P. Morgan Chase and Co.'s Chase, Bank of America, and Wells Fargo and Co., have upped their ATM transaction fees for non-members to $3. Overdraft fees and bounced-checks will be the most painful to consumers.

Record highs for checking-account fees, ATM surcharges, bounced-check fees and monthly service fees have been hit due to the new implemented changes. Bankrate Inc., a research firm has conducted this study. Mike Moebs, chief executive of Moeb's $ervices Inc., an economic research firm in Chicago, states, "By the end of 2009, you will start to see fairly substantial increases in overdraft fees." This could be as high as $40 per overdraft.

The troubled economy is a major cause, however it is not the only one. Yahoo Finance has alerted us that the Federal Deposit Insurance Corporation has proposed to increase the rates banks pay for deposit insurance, beginning next year. If the proposal goes through, banks will continue raising costs and fees.

So what can you do? Make sure to keep an eye on your spending. Free sites online such as Mint.com, or even pen and paper can save you a lot of money. You can consider moving your account to an online bank, where there will be no fees, and ATM charge reimbursements. Read the fine print, and ask your bank for a copy of the schedule of fees, which banks are required to have.

Herd mentality not smart during dark times

In this financial crisis, it's probably best not to run with the herd.

When times are uncertain, people are wired to follow the crowd and jump on the wagon. Bank of America Corp bought Merrill Lynch & Co Inc., the U.S. government has taken over Fannie Mae and Freddie Mac, Lehman Brothers Holdings Inc. has gone bankrupt, Washington Mutual failed,and a $700 billion dollar U.S. government bailout was rejected.

With this comes fear and limited information. We see individuals abandoning their own logic and banding together to form one opinion.

All of this is biological and comes with evolution. Gregory Berns, a neuroeconomist at Emory University in Atlanta performed an experiment requiring participants to complete simple tasks of assessing simple shapes. The participants were hired actors and real volunteers. The real volunteer went into a (MRI) scanner. The hired actors would answer confidently and incorrectly. The real volunteers began to change their answers to match the actors'.

Berns explains, "The group changes how you see the world in some way. Our brains are really wired to accept the group opinion of the world." The scanner suggested that the brain's "fear center" is dominant when people are uncertain. "When people are presented with a situation where they don't have information or the information is ambiguous, we see activation of the amygdala and insula," Berns explains.

Paul Zak, of the Center for Neuroeconomics Studies at Claremont Graduate University in California says, "We are really hyper-social apes. We learn almost exclusively from each other."

Of the financial crisis, Zak says, "In this case, running with the herd may not make good sense." Zak continues and makes a good point, "I am not a financial genius. I do know that when you see millions of people in the market essentially freaking out, that spills over into your brain and you get this impulse to do what everyone else is doing."

In this financial crisis, Zak is fighting against the herd. He is buying stocks.

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No surprise that Lehman Brothers went belly up

The 158-year-old financial behemoth Lehman Brothers has closed its operations as of today.

With both Barclay's and Bank of America refusing to play the "good Samaritan" and the Federal government throwing their hands up, the inevitable happened. Lehman Brothers filed for a Chapter 11 bankruptcy petition. One of the most respected firms on Wall Street, just went belly up.

But wasn't bankruptcy supposed to happen to non-descript firms run by inexperienced, non-MBA type managers? Definitely not for Lehman Brothers. They are after all managed by smart Harvard and Wharton educated financial gurus who spent years and years perfecting their trade. So how did such a smart group of people end up making, let's call it an "error of judgment?"

The fabled run on Wall Street had to come to an abrupt end when the debt side of their P&L statement showed $60 billion. I wonder what CEO Richard Fuld was thinking? A 30-year-veteran at Lehman (incidentally he had quipped that it was the only company that he has ever worked for) Fuld has been credited with weathering many a financial storm over the past decade; including Asian Stock Crisis, Dot com bust, September 11 (Lehman rose from the ashes of the attack when its headquarters at Three World Financial Centre had been severely damaged due to falling debris) among others.

But in the end--I guess his luck ran out--he could not bring the rabbit out of the hat this time around.

But, it was not like the signs were never there. The share prices of Lehman Brothers have been steadily spiraling southward since February '08, when its share prices reached a high of $66 (canada.com). Last Friday, it was selling for $3.65 (wsj.com), little more than a cheese burger at your local joint. The sub-prime home loan crisis has just consumed its next victim, this time a company with market capitalization of $250 million as of September 15, 2008 (wikipedia.org).

Just when you were trying to soothe your frazzled nerves, comes the next blow. The other darling on Wall Street, Merrill Lynch just got gobbled up by Bank of America. It was an all-stock deal and cost BOA a whopping $50 Billion. This also means BOA will be burdened with all the losses accrued by Merrill Lynch over the years. An interesting observation is, as of Friday's closing the Merrill shares traded at $17.05, so one wonder's why BOA would pay $29 per share when buying them over.

Hope their CEO Kenneth Lewis has a really good reason for that.

The sub-prime mortgage crises has already taken a big toll on the jittery financial market. The domino effect in a way was spear headed by Bear Stearns, soon the Feds set in to stabilize the market by taking over Freddie Mac & Fannie Mae, now its the turn of Lehman Brothers and Merrill Lynch to take the infamous center stage.

There's no telling what more is in store in the coming weeks. Keep your fingers crossed.

--Editorial by George Lazar

CONSUMER WOES: Bank of America nightmare

Chris Hooley lost his wallet and canceled his Bank of America debit card immediately. Canceling his debit card should have let Bank of America know to freeze his account. However, the bank allegedly sat back as an identity thief withdrew $40,000 dollars from Hooley's account in a single day.

According to his blog here, Bank of America didn't even have a clue of what was happening. Hooley only noticed the massive withdrawals after the identity thief was arrested at Best Buy, trying to purchase multiple computers.

Thankfully, Best Buy caught the thief red handed. As the identity thief attempted to use Hooley's card, Best Buy's register system sent an alert to the police. Luckily for Hooley, if a reported lost or stolen card is in use in the system, the police are alerted instantaneously.

Unfortunately, the thief managed to make five transactions with Hooley's account earlier in the day. The first two were deposits. Two checks were written and a large portion of the checks were less cash received, handing the thief a total of $12,500. The last three were withdrawals. One withdrawal was for $26,000 politely handed over from a Bank of America teller. The last was for $12,500, again left unnoticed.

Keep in mind all five transactions occured inside five different Bank of America centers.

Lesson learned? Watch your account activity and watch your wallet at all times ... especially if you have an account with Bank of America.