Bank Stress Tests: What do They mean?

Bank Stress Tests: What do They mean?

Blog Date: 3/23/12

Blog Author: Joseph Antony, Business Management Major 


The Federal Reserve conducted a stress test to see if major U.S. banks were adequately equipped in terms of capital to deal with a Depression like economic scenario defined as a 21% drop in housing, 50% decline in stocks, and an unemployment rate of 13%. Banks had to have a minimum 5% Tier 1 common capital ratio in order to pass the test. This was the first stress test conducted by the FED since 2009 in the aftermath of the financial crisis. The results came in on Tuesday, and they are looking good. Eighteen of the nineteen banks which were tested were deemed strong enough to not have a need to raise capital, and 15 of the banks passed the 5% minimum capital ratio test. One noteworthy fact though is that of all the major banks, Citi was only able to score a 4.9% capital ratio which prevented them from raising their dividends to shareholders. Citi, the third largest bank in terms of assets, has shown some vulnerability in contrast to the other major banks such as JP Morgan which has passed their stress test in flying colors. The markets have responded well to this announcement, and coupled with a strong consumer retail report, and a strong report from the FED regarding the economy, many of the indexes had reached multi-year highs on Tuesday.

While many would agree this stress test was a good thing to have conducted, one has to question whether this sort of test is actually effective at preventing future financial calamities such as the one we saw in 2008. In other words, how effective is this stress test at judging a bank’s financial health and how effectively can it judge how a bank will perform in times of turmoil? Some analysts and experts agree while this is a noble gesture, it really doesn’t do much to predict future financial crises. In the end perhaps it is better to have the test than to not have the test but overall this test can only go so far in determining how strong banks really are financially speaking to deal with some sort of future economic catastrophe. 

COURSE OF THE MONTH: Digital Media Marketing

Digital Media Marketing

Blog Date: 2/13/12

Author: Michael Behan, Business Management Major

Want to dive into the digital media aspect of marketing?

Want to create a relationship with real businesses?

Want to become an expert on Social Media websites?

In Digital Media Marketing students gain the knowledge and skills to build and maintain successful, integrated digital media marketing programs. With clients and businesses progressively more shifting their attention from traditional marketing media like television, radio and print ads, to the Internet, iPads, Smart Phones and other digital media, you will learn how to make online media campaigns a fundamental part of marketing plans. This is a fun, interactive course where you will gain internship-like experience working with a real business and get a real feel for how things are being done in the real world.

Redbox throws a haymaker to Netflix

Redbox throws a haymaker to Netflix

Blog Date: 2/9/11

Author: Edwin Ayala,Business Management Major

            Phone company Verizon Communications Inc. is partnering with Redbox to throw blows at Netflix, with Verizon starting a video streaming service with Redbox and its DVD rental kiosks placed all throughout the United States. Verizon and Redbox’s parent company, Coinstar Inc., announced that the service will be national and available to non Verizon customers. The new service will combine Internet delivery of their movies, similar to Netflix’s system. Specific details and pricing of the new service have not been announced yet.

            According to a person briefed on the plan spoke out about the deal, both companies were looking toward a $6 per month offering that would give subscribers one DVD rental from Redbox per month, as well as an unlimited streaming on a certain selection of movies. It is not certain whether that plan has been altered, but sources say that it will most likely be less than the $16 a month minimum Netflix users have to pay for the same DVD and streaming service.

Do you think Verizon and Redbox can knockout Netflix? Leave your thoughts and opinions below. 

Government Makes a Streaming Dam

Government Makes a Streaming Dam

Blog Date: 2/8/11

Author: Edwin Ayala, Business Management Major

Edited by: Louis Lamonte, Accounting/Management Major

     Just days before Superbowl XLVI, U.S. prosecutors have stated that they have seized 16 illegal streaming websites. These websites have streamed live sports and pay-per-view events over the Internet. The man they have charged owns nine of those websites. According to the government, the 16 websites provided links to give viewers easy access to other sites that hosted pirated telecasts from the National Football League, National Basketball Association, National Hockey League, World Wrestling Entertainment Inc ("WWE") and TNA Impact Wrestling. The latter is also broadcast on Viacom Inc's Spike TV.

     These websites are costing advertisers, leagues and broadcasters millions of dollars a year, and some of this cost is passed on to the fans and subscribers. The websites are firstrow.tv, firstrowsports.com, firstrowsports.net, firstrowsports.tv, hq-streams.tv, robplay.tv, soccertvlive.net, sports95.com, sports95.net, sports95.org, sportswwe.net, sportswwe.tv, sportswwe.com, xonesports.tv, youwwe.com and youwwe.net.

Feel free to post and share your thoughts below

Facebook $5 Billion Dollar IPO

Facebook $5 Billion Dollar IPO

Blog Date: 2/8/12

Author: Edwin Ayala , Business Management Major

Edited by: Louis Lamonte, Accounting/Management Major

     Facebook recently filed papers with the SEC for a $5 billion IPO. This would be the biggest tech IPO since Google and analysts are projecting Facebook’s value to be between $80 and $100 billion. The IPO filing was triggered by Facebook’s hitting 500 shareholders, a number at which a company must start releasing financials or go public. Facebook has chosen the latter and shares are expected to begin trading in approximately a month. Analysts expect the money will be used for website advancements. 

     This would be the largest internet IPO in history, surpassing Google’s $1.9 billion launch in 2004. This launch would give Facebook financial dominance in the internet world as it tries to make its service even more widespread, a service that has already hit over 845 million users. This would also deal a big blow to Google, who is also trying to insert itself in the social media world by creating a rival social network called Plus.

     Facebook is looking to list its stock under the ticker symbol “FB” on the New York Stock Exchange or the Nasdaq Stock Market. According to the filing, Zuckerburg will have final say on how 57% of his stocks votes. He has also set up two classes of stock that will ensure that he keeps control as Wall Street exerts pressure on his new company. Many of his employees will soon become millionaires as well as they have bought shares at lower prices than are liked to be valued. Facebook employed over 3000 people in 2011. 

Feel free to post any comments below and share your thoughts. 

New CEO Reinvents JC Penney

New CEO Reinvents JC Penney

Blog Date: 2/1/12

Blog Author: Saniya Khan, Accounting and Finance

The retail store JC Penney is planning a huge revamping of stores starting February 1^st.  Some of the upcoming changes include a new logo that evokes an image of the American flag as well as a simpler way of pricing merchandise, eliminating complicated coupons and sale promotions.  All merchandise will be divided into a three tier system:  everyday prices, monthly specials, and clearance; and stores will be offering new boutique style areas that highlight a specific brand the company is working with, for example H&M and Sephora.

This new marketing campaign is headed by the company’s new chief executive, Ron Johnson, who previously was in charge of Apple’s retail strategy, and its new president, Michael Francis, who was the former chief marketing officer for Target.  The company plans on holding twelve simple sales events a year rather than the close to 600 promotions they held this past year in an effort to simply their pricing strategy for consumers and to cut back on promotional costs from over $1 billion required to advertising all the sales they held now down to spending $80 million per planned promotion.

In other cases, when a company wants to completely change their image and marketing strategy, it can take up to a year to figure out the kinks and predict potential problem areas before making the change public across stores, however, Johnson is moving fast.  With initial changes rolling out the first day of February and plans to have a new layout of the retail stores by having around 100 or so boutique-style stores-within-stores and a central service center called the “town square” by the next four years, he is wasting no time.  The goal is to increase traffic flow and profits by providing the best prices year-round for customers while saving the company money, but will this new strategy really work?  Do consumers prefer simple once-a-month sales over the excitement of a “one-day only” sale or coupons they can use anytime to save even more?  Johnson has only been with the company since the fall, but his plans are moving quickly.  Now it is up to consumers to react to these changes.

Never eat more than you can lift." ~Miss Piggy

Never eat more than you can lift." ~Miss Piggy

Blog Date: 1/23/12

Blog Author: Saniya Khan, Accounting and Finance

If you're in business, there will come a time when it becomes necessary to talk work outside the office in the form of a business dinner, breakfast, or lunch. Maybe you're one of the lucky ones who have been making deals since your diaper days about nap time and can't wait to get down to business. But maybe you're a little more on the shy side and the thought of making small talk while eating and remembering to mind your manners and fitting in something about your company is a bit more daunting. Not to worry, your business days don't need to be over just yet. Conversing is an art. Business doesn't need to be uptight and impersonal. And an invitation to share a meal is the perfect way to become more familiar with the other person.

But how? I just recently read Don Gabor's "Talking with Confidence for the Painfully Shy" and I'd like to go through five basic rules of business dining, as adapted from that book:

1. Know your business purpose. Are you discussing a new marketing plan or using this meeting to gather information for a sales presentation? Always keep this purpose in mind.

2. Balance talking with listening. Talking about yourself and sharing the information you have to contribute to the purpose of the meeting is very important. But people like to talk about themselves too, so remember to listen.

3. Know when to have small talk and when to transition into business mode. Often the meal will start out with small talk and, depending on the length of meeting, the focus will eventually shift to your business purpose. But how do you bridge your conversation without sounding forceful or being abrupt? This brings us to the next point.

4. Bridge smoothly from small talk to your business topic. Tactfully changing the focus from everyday musings to the main idea is important. Gracefully steer across several conversations to your business topic by taking key phrases from the conversation and relating them to your own business purpose.

5. Eat and converse at calm rates. Pace yourself moderately regarding your meal and your conversation. Don't speak so fast that no one can understand what you are saying, but don't bore the person to sleep either. You can gauge yourself by eating at the same pace as your dining companion.

Now the basics are covered, but depending on the time of day the meal is chosen to be shared, how conversation should proceed will vary.

The Breakfast Meeting: These power breakfast meetings are shorter than lunching and dining, lasting only around 45 minutes total, so adjust accordingly. Small talk can lead up to ordering and pouring the first cup of coffee. After a couple of minutes, once you are sure your partner is actually awake and alert, shift gears to the business topic you want to discuss, and take it away.

The Business Lunch: Lunch time offers a break from the office and a chance to interact with the rest of the world and will usually last from about an hour to an hour and a half. More time for small talk and socializing is available so take advantage of forming a personal connection. Remembering to bridge the conversation after sufficient family vacations and hot topics have been discussed, you can then proceed to your main topic of conversation.

The Dinner Meet-up: Similar to the lunch meeting, time to socialize is available before food arrives. Creating a relaxed and comfortable environment is important, so avoid topics like politics, sex, and religion. Before narrowing in on your main topic, or if you are done discussing business before the meal ends, inquire about general business practices and the philosophy of your partner and what his "big picture" is for his company and how he goes about managing his people. Gaining this insight can also lead to more in-depth conversations which forms a better rapport.

Now that a nice meal has been shared and business has been taken care of, it's time to part ways. As the recipient of a nice meal, be sure to thank them. But instead of ending the meeting abruptly, opt to letting your meal partner know that you will be sending him a recap of the main points that were discussed and what conclusions had been reached to close the deal. End on some light conversation, and you have just concluded a successful business meal meet-up. And now that you have gained this experience, the next business lunch won't seem as daunting!

Adapted from Don Gabor's Talking with Confidence for the Painfully Shy