Feb 17, 2008

Boycott The Bastards

Another rant brought to you by me. As you know, I am a big advocate for living financially responsibly. I get that many people fall into financial calamity due to divorce, illness or job loss. Most though, do so because they can't say no, when no is the best answer. They want stuff and plenty of it. That said, I hate banks. In fact, I don't recall the last time I was in an actual bank and if I have my way, I will never step into one again. For sure, I will never give a nickel of my business to a bank ever again. What, you might ask, have banks done to incur the wrath of me? Glad you asked. The current subprime housing mess is the fault of the banking industry, who figured out that they could make loans to people whose qualification to borrow was limited to being alive and having showed up. And to make them without risk to themselves. The why of how that works is too long and boring to explain, but believe me when I tell that it's true. This mess hurts you and it hurts me, even if you don't think it does. The housing mess hurts people like me who have saved and invested. It hurts us when businesses close and layoff their employees. It hurts us in a hundred ways. There was a time when banks made loans based on the borrower's ability to repay. That has largely become irrelevant. I guarantee you that I can sign up our dog Lacey for a credit card tomorrow and get her one. That's how stupid it's become. About ten large banks control over 90% of the credit card business in this country. They make loans to people that they know cannot repay in order to make money on over-the-limit and late fees, which is more profitable than collecting interest. There used to be a joke that Sears made so much money off their credit card operations that Sears was not a retailer as much as a bank with some stuff for sale out front. This is what the banks have become. They are not so much in the banking business, but more in the business of collecting fees. It stopped being about responsible lending and repayment a long time ago. Banks have a serious financial interest in payday lending, which is simply a wealth grab from the young and the poor. If you have seen ads for the tax preparers advertising tax refund loans, rest assured that one of the big banks is funding those loans and taking a generous cut of the exorbitant interest rate being charged for them. Years ago I wrote to the president of our local state-run university asking him to stop the practice of banks preying on college students with his approval. His response was that the university needed the money. He endorsed whoring his students for a million bucks kickback. He also assured me that he had instituted a course in responsible money management for incoming freshmen. Guess who wrote the curriculum? A bank. If you use a charge account issued by most retailers you will discover that they are merely a front for a big bank. So anyway, what's my point? If you deal with a bank for checking or savings, I would urge you to close your accounts and sign up with a credit union. If you must borrow money, a credit union will not make you a loan that is bad for you and good for them. If you have bank-issued credit cards cut them up and pay off the balance as soon as possible. Things in this blog represented to be fact, may or may not actually be true. The writer is frequently wrong, sometimes just full of it, but always judgmental and cranky

6 comments:

Squirrel said...

I will have my team of financial advisors look into this credit union thing. This was a good post--esp the part about the college Pres. Students often leave college with huge credit cards debts (from the stack of credit cards they get) in addition to the huge student loan amts. they owe. I know of one student who graduated with a BFA owing well over 100 thou. That's ridiculous.

Steve said...

I'm a member of a credit union. Cutting up the credit cards is almost always good advice, no matter who issues them!

dennis said...

Denis is concerned about his money being insured. The banks have enough FDIC to take care of Dennis's nest egg--Dennis wonders ....Does the credit union have insurance? Also how does an unemployed cat get into a credit union?

Ms. Wollstonecraft said...

A very interesting post, Merle. Good for you for writing a letter to that University president.

Alan Smithee said...

Still with the banks, but they haven't made a dime off me in fees yet.

alphabet soup said...

So where do you keep your money Merle? Under the mattress? I like that joke about Sears – bleak humour you might say. Ah, I’ve read to the end. It’s not under the mattress it’s in a credit union. Great rant Merle; let’s have more of the same!!

Ms Soup