This is NOT what our forefathers intended! Banks are Mafia Loansharks to the Gov

United States
May 19, 2010 11:11am CST
I saw this story on the net and got immediately pissed off at all banks. I can't even get a credit card limit raised above $500, yet they keep increasing my interest rate because 5th 3rd bank(the stupidest name for a bank,ever)took over the billing for my credit union issued credit card. Take your money out of the banks and sign up at your local credit union, because folks; they will do NOTHING for us little people. Read this: Huge, Ongoing Wall Street Subsidy Allows Banks to Coin Money Every Day at Savers' Expense Posted May 13, 2010 08:27am EDT by Henry Blodget in Investing, Recession, Banking Related: XLF, ^DJI, ^GSPC, GS, JPM, BAC, C The latest quarterly reports from the big Wall Street banks revealed a startling fact: None of the big four banks had a single day in the quarter in which they lost money trading. For the 63 straight trading days in Q1, in other words, Goldman Sachs, JP Morgan, Bank of America, and Citigroup made money trading for their own accounts. Trading, of course, is supposed to be a risky business: You win some, you lose some. That's how traders justify their gargantuan bonuses--their jobs are so risky that they deserve to be paid millions for protecting their firms' precious capital. (Of course, the only thing that happens if traders fail to protect capital is that taxpayers bail out the bank and the traders are paid huge "retention" bonuses to prevent them from leaving to trade somewhere else, but that's a different story). But these days, trading isn't risky at all. In fact, it's safer than walking down the street. Why? Because the US government is lending money to the big banks at near-zero interest rates. And the banks are then turning around and lending that money back to the US government at 3%-4% interest rates, making 3%+ on the spread. What's more, the banks are leveraging this trade, borrowing at least $10 for every $1 of equity capital they have, to increase the size of their bets. Which means the banks can turn relatively small amounts of equity into huge profits--by borrowing from the taxpayer and then lending back to the taxpayer. Why is the US government still lending banks money at near-zero interest rates? Ostensibly, for the same reason that the government bailed out the banks in the first place: So the banks will lend money to small businesses, big businesses, and other participants in the "real economy." But the banks aren't lending money to the real economy: Private sector lending has fallen off a cliff. And one reason private sector lending has fallen off a cliff is that lending money to the private sector is risky. Lending money to the government, meanwhile, is nearly risk-free. So the banks are just lending money back to the government (by scarfing up US Treasuries), collecting a nearly risk-free 3% spread, and then leveraging up this bet 10-15 times. THAT's how the big banks made money 63 days in a row. Importantly, doing this required no special genius: If you had the good fortune of working at a big bank, you would be making money every day, too. And then you'd get to take half of that money home as a bonus! No wonder everyone wants to work on Wall Street. The government's zero-interest-rate policy, in other words, is the biggest Wall Street subsidy yet. So far, it has done little to increase the supply of credit in the real economy. But it has hosed responsible people who lived within their means and are now earning next-to-nothing on their savings. It has also allowed the big Wall Street banks to print money to offset all the dumb bets that brought the financial system to the brink of collapse two years ago. And it has fattened Wall Street bonus pools to record levels again. Related: Here's How to Make the World's Easiest $1 Billion http://finance.yahoo.com/tech-ticker/huge-ongoing-wall-street-subsidy-allows-banks-to-coin-money-every-day-at-savers'-expense-485282.html;_ylt=Ap3FWwAUaLxfxRyVhLWecAFl7ot4;_ylu=X3oDMTFhcjhsY2lmBHBvcwM0BHNlYwNtb3N0UmVjb21tZW5kZWQEc2xrA2h1Z2VvbmdvaW5ndw--?tickers=xlf,%5Edji,%5Egspc,gs,jpm,bac,c
4 responses
@climber7565 (2579)
• United States
21 May 10
Its so difficult anymore to decide where is the best venue. I sure am ruling out credit cards. I say a debit credit card is sufficient. If I have the cash I will buy if not then no sale.
1 person likes this
• United States
21 May 10
smart thinking on ur part!
• United States
22 May 10
I am glad you think so. I know it works :)
@Lakota12 (42794)
• United States
19 May 10
grrrrrrrrrrr I always knew banks are crooked. They dont get enough out of us with normal loans so they do this Isay the big CEOs of the banks should put over half their money back to ua taxpayers. and stop this insanity!!!!!!!!!!!!!!!
1 person likes this
• United States
19 May 10
I agree. Some of the comments on this page that listed the story are asking why this news about how banks make money isn't part of the mainstream news. I'm sure it wasn't featured on foxnews.
@Lakota12 (42794)
• United States
19 May 10
I am sure it wasnt on any media!
@magtibaygom (4865)
• Philippines
20 May 10
Let's not be too judgemental. The beauty and the bad looks of everything always depend on the eye of the beholder. What if you're the owner of the bank, or someone who invested money in stocks or shares of ownership with those banks, what would you feel with those articles and bad publicities?
• United States
20 May 10
Go ahead and believe that guy, Zig Zigler if you want. I saw him quoted in your profile. You sound like an innocent bystander who believes in people acting good all the time. I know you are not American, and maybe you believe all rodes here are paved with gold. That is a true lie. I have helped many people, and somehow, I am still poor. So, Zig Zigler can bit my tuckass. You have to read the article and watch the video on the link. This story is not featured on major news sites or channels or shows. This is not a democratic way of business. In fact, it's completely un-American.
• Philippines
20 May 10
That's global capitalism so how can you resist it? Are you going to let yourself get angry with that giant tidal wave that is sweeping all across the globe? What do you think will happen if your government did not bail out U.S. banks? What will happen if the foreign investors pulled away their remaining money from the U.S.? I understand your activism. I feel what you Americans are feeling right now. Your hatred to this banks. But I am very disappointed how you rate us, Asians. We are watching and observing what's happening in your place. Those mess in your economy and the global economy will not happen in the first place if majority of you there did not abuse the banking system. Just think of your country's subprime lending system. Your banks continued to give loans to people who are really not qualified for loans just to satisfy your demands for more credit line and more borrowing, and more spending! And the end result? The banking system collapsed. About your negative comment on Zig Ziglar's quote? Well, you are free to think all the negatives you want to think about him. But what's wrong with Ziglar's "You can have everything in life you want if you will just help enough other people get what they want"? What's wrong with that? If you have helped many people and you still find yourself poor, that's not Zig Ziglar's fault. Then whose fault it is? Banks'?
@dragon54u (31401)
• United States
19 May 10
When I realized, almost 4 years ago, what banks do to the average person I made it my mission to escape them. The only reason I bank with one at all is that my income is delivered through direct deposit and I'm forced to use a big bank. But...I accepted a Visa from them and I get 2% cash back. In addition, I pay my balance in full every month so they are paying me to use their danged card! I get free checking because of the direct deposit but then move most of my funds to my credit union. I have a savings account at the credit union, none at the big bank. I stiff the bank and give the credit union my money to use. Banks have a place, don't get me wrong. Businesses need them and they do a good job for that segment of society but the average person should "bank" with a credit union whenever possible. Credit unions are also financially healthier than banks!
• United States
19 May 10
Ditto on that Dragon. I do the same thing. I have a direct deposit through Bank of America, but only because my employer uses that bank. I get free checking, and I take all the money come pay day and take it across the street to my credit union. The only bill I pay from it is my monthly student loan bill of $25. I usually keep 5 bucks in there in case I want coffee b/w paychecks.