Whack a banker!

As heard on "Wait, Wait, Don't Tell Me", will we see these pop up in amusement parks?

I'm fairly annoyed that now the banking profession is loathed, when they certainly don't deserve the sole responsibility for the nonsense in the economy. Where's the whack a moron who got an ARM for a house they couldn't afford? I'd play that.

I hear what you're saying. But I've also heard enough predatory lending stories to know that homeowners weren't always on an even playing field. Plus you have the scummy practices that seem to be SOP, like approving a debit card transaction against an account with a negative balance, and then charging an exorbitant fee because it was negative.

So I'd say the banking industry deserves the criticism and then some, even with the abundance of irresponsible consumers out there.

I didn't say they were devoid of responsibility, only that it seems ridiculous to single out one leg in the tripod of failure (high risk lenders, consumer stupidity and blind government deregulation). I just tend to harp on the consumers in particular because they're the vocal ones who don't take responsibility for not getting grade school checkbook balancing.

Oh, no doubt. The financial habits of the average American probably top the list of non-government economic problems.

My impression is the "over-reaching homeowners" mostly lost their homes early on in the process, because they had so little margin for error. The folks losing their homes now are losing them because they no longer have jobs.

That said, ecnomic illiteracy is one of my biggest pet peeves. No one should get a high school diploma without being able to compare two loans in present-value terms.

My issue is that the banks were given 800 billion, give or take, a large part of which was to make credit available to individuals and businesses. Instead, the money was used to purchase other banks and to make the balance sheet look good to run up the stock price.

It's been widely reported that many banks really haven't changed their behaviors that contributed to the crisis we're dealing with now. If they think the government will or should bail them out every time their foolish practices get them into trouble, they're no different than the stereotypical crack addict welfare mom.

Much of the TARP money that was given to banks was given subject to the express conditions that portions of the money be used to buy failing banks. It was window dressing to hide the huge problems with the number and size of failing banks. Fed/treasury poured untold tons of money into the banking system to keep it afloat.

Anyone who expected banks to make a lot of credit available to individuals and businesses doesn't really understand how banks operate. At this point, banks are making loans but only to good companies. They are not taking a lot of risk in lending money. And just like consumers got addicted to cheap and easy credit, so too did businesses.

And there are a lot of folks just waiting for things to go back to the way they were. A lot of consumers are just waiting for someone to tell them its ok to start spending/overspending again. Bank marketing folks want to start getting loans approved again with little critical review (though the credit folks are not there). Government is still providing much of the short sighted policies that helped create the mess we have now.

One of the biggest improvements we could make is better finance/economic education for everyone.

Hey, consider me one if the dweebs who got an arm loan on my first place. I was under-informed and young. All I was told was, get an interest rate below 7% and make sure it's fixed. I asked my mortgage agent 20 times, Is this fixed? He swore to me it was and I signed my contract....only I didnt know it was fixed for only for 5 years. Luckily I was able to refinance (before it adjusted) to a lower fixed rate for thirty years. Others were not so lucky. So I agree that it behoves the prospective homeowner to be educated before they plop down their down-payments and sign their lives away.

Heck, I *still have* an ARM loan. Bought a place I could afford and got a 5/1 ARM at 8.125%, and took a bath on the interest in years 3-5 as the bottom fell out of the mortgage rates. It's been as low as 3.5% and is now at 4.25%. I really need to refinance to somoething fixed, but I really need to do that right before my adjustment month. Trouble is, I just got to the point where I am paying more for principal than for interest and the thought of going back to the beginning of the amortization table makes me want to scream...

More on-topic...this really isn't that different from "Whack a Boy Band" at Hard Rock/Freestyle, is it?

--Dave Althoff, Jr.

Dave, you might be a good candidate for a 15-year fixed.

That's a good idea. If you amortization schedule is such that you are paying more on principal then interest then you are pretty far into your mortgage. Then you would feel the sting of starting all over on a 15yfxd

Brian Noble said:
No one should get a high school diploma without being able to compare two loans in present-value terms.

I agree (took economics as an elective my senior year) but until that kind of stuff shows up on standardized tests (or we get rid of standardized tests) there's little hope of it ever being taught in the classroom. I suspect the predatory lenders like it that way though...

I got sick of banks and their practices a few months ago when all the fallout was going down and ditched my bank for a credit union. There's virtually no difference, other than the fact the credit union is giving me better interest on my accounts and doesn't have the stupid fees my bank had (75 cents for every debit transaction!) I even ditched my BoA credit card, which made me feel dirty every time I paid even a dime in interest to them, and got a card with the credit union.

I believe that banking institutions are more dangerous to our liberties than standing armies.

Thomas Jefferson

RideMan said:

More on-topic...this really isn't that different from "Whack a Boy Band" at Hard Rock/Freestyle, is it?

My first thought too, Dave. Was expecting Tina and/or Gonch to make that comparison (Tina's snowed in badly, Gonch is...probably swamped with Holiday prep).

All things considered...I'd rather Whack-a-banker than the alternative...(back-a-wanker)... ;)

Which is even better than "Wank-a-banker"

The really disgusting thing to me on the banker/lender side in the whole mortgage fiasco was the falsifying of the borrower's information like income. There's a wonderful documentary called House of Cards and the book version "And Then the Roof Caved In" from CNBC's David Faber that has some rather eye-popping interviews and revelations. We watched the documentary in my investments class this semester and couldn't believe some of the things that happened, including stating a $40,000/yr. income for someone with like a $30,000/yr. income and other such shenanigans.

Many banks got away from what had been sound lending practices for hundreds of years: verify income and require a meaningful downpayment. To me, a no-verification loan is really a lie-to-me loan. Looking at a no-verification loan and a verification loan at a reduced interest rate, I would expect that the vast majority of folks taking the higher rate option to be the folks who have lied on their credit application. And some of the games lenders played in terms of credit apps, appraisals, etc. didn't help.

You often see the media/politicians demonizing one group or another in terms of the mortgage meltdown. But there were a long list of causes of the problem including lenders/lending practices. And the lack of understanding of basic finance/economic principles (and the fact that you can't accurately explain the causes in a 30 second sound bite) makes explanations of the meltdown that much harder. But if you are looking to push a given agenda, the lack of understanding/ability to demonize one particular group may be helpful.

This currently normal banking practice now.

Say you have 100.00 in your checking account

you spend the following charges

75.00
10.00
10.00
10.00

You or I would think the last 10.00 will bounce
but it doesn't work that way.

this is how they do it

75.00 + 39.00 because outstanding charges exceed balance
10.00 + 39.00 because now you are overdrawn
10.00 + 39.00 "
10.00 + 39.00 "

So instead of a 39.00 stupid fee
it is a 156.00 ripoff.

They apply the highest amount first to get the maximum
bounce fees.

Not only that if you notice and go into bank and deposit
10.00 it will not be credited until these bounce charges
happen.

Not only that but since your account is a -161.00
deposit of 10.00 = 151.00 + 39.00 because still at a negative balance.
you are now at -190.00 and they had enough to cover your account they just applied so they STEAL the most from you.

Kevin38

Whether or not bankers deserve the castigation they've gotten lately, it's certainly true that banking practices have gotten pretty bad. It's time to tighten the regulations about some of these bald-faced shake-downs.