The following is a blog swap post from LaTisha D Styles at Financial Success for Young Adults, where she writes about investing and money management. Check out the my pet peeve – Supersize Me over at her site today!
If there’s one thing I can’t stand, it’s greedy banks. I understand that banks help the flow of commerce and make the exchange of goods and services easier. I know that they are instrumental to our economic system. Trust me, I was a Finance major. I get it. But I hate the fact that these middlemen get greedier and greedier each day. I have three main reasons why I strongly dislike them.
- They Caused the Global Recession
- They Want to Profit From Your Tax Dollars
- They Exploit Their Customers
Yes they did. Credit default swaps were largely the cause of the financial freeze up. Guess who creates, buys and sells most credit default swaps? That’s right, banks. J.P. Morgan & Co. is credited with creating the modern credit default swap back in 1994. In September, the Lehman Brothers bankruptcy triggered CDS payments to the buyers of credit default swaps referenced against Lehman Brothers. In the same month, AIG needed your tax dollars because they over sold CDS protection without hedging. They basically went ‘all in’ and when they wanted out, the taxpayers covered them. The banks took excessive risks with their portfolios and we are paying the price.
I would place equal blame on the regulators who gave the money away with no strings attached. In an article from the NY Times, an executive of JP. Morgan Chase explained that they had no intention of using the bailout funds to stimulate the economy in the form of loans to businesses. Rather, they would be using it as an emergency cash fund to buy other banks.“Twenty-five billion dollars is obviously going to help the folks who are struggling more than Chase,” he began. “What we do think it will help us do is perhaps be a little bit more active on the acquisition side or opportunistic side for some banks who are still struggling. And I would not assume that we are done on the acquisition side just because of the Washington Mutual and Bear Stearns mergers. I think there are going to be some great opportunities for us to grow in this environment, and I think we have an opportunity to use that $25 billion in that way and obviously depending on whether recession turns into depression or what happens in the future, you know, we have that as a backstop.”
Shameless. They even get to profit from short sales created by the mortgage fallout.
Chase wants to eliminate debit card purchases over a certain amount. I read this article the first time over at Consumerism Commentary and I was shocked to say the least. Chase Bank is considering declining debit card purchases over either $50 or $100 dollars. Some people thought it was just a way for Chase to test the possible backlash from implementing this decision, but either way it’s ridiculous. Why should a bank, who’s primary purpose is to take deposits and make loans, restrict access to your funds? Once again, shameless.
The best way to fight back against the banks is to get rid of your consumer debt. When banks lose this stream of income they will have to look for newer non-regulated ways to exploit their customers.
What about you? What is your pet peeve about banks?
retirebyforty> The banks are so smug about the bail out. They are not even thankful for all our tax dollars and then they pay their executives so much bonuses. It’s ridiculous, the government should have built in way more restrictions with the bailout funds.
photo credit – flickr Carrie Sloan