Banks and lending
I have been watching the banks over the past couple of weeks to see if rates will come down. They started to then have inched back up again. With the real estate market in the toilet and the government giving them money, I really don’t understand how rates aren’t at all-time lows and why they aren’t staying there for the time being.
Banks are accepting bailout money and holding onto it. They are also using money to buy more bad loans at pennies on the dollar so they can turn around and sell those assets at a profit and/or go back to the homeowner and offer a smaller mortgage but a mortage much higher than they just bought. Here is the example Bob gave me…a bank, like Citigroup (C), is supposedly buying bad mortgages at pennies (30 Cents) on the dollar. Let’s say C buys a $200,000 mortgage for $60,000. Then they call the homeowner who has the $200,000 and offer him a new mortgage for $150,000. Great deal for the homeowner right? Sounds great to me. How about for Citigroup? They paid $60,000 for a mortgage, then turned around and created a $150,000 mortgage. A $90,000 profit! Not bad with Taxpayer funds they should have been using to lend to the American public, shore up financials, etc.
It’s really amazing to me banks are doing what they are doing. Banks who have not accepted bailout money can do what they want. But the banks who have accepted bailout money just don’t have a moral compass. How do you take money from taxpayers which has been earmarked for lending (which will make the bank money) and use it to try and take advantage of what you helped create? These banks are attempting to hit grand slam home runs with taxpayer money instead of helping main street. Maybe, at the end of the day, our government plan is encouraging this type of behavior. Maybe they are almost putting it in their laps. Hey bank, “Here’s the bailout money and here are some opportunities to make massive amounts of money.” Those of us who are trying to do the right thing under tougher circumstances better just keep our heads down. America is counting on us because those who say they are helping aren’t. It’s just that simple.
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