Tuesday, February 26, 2013

He who has the gold....needs to be watched carefully

Just kidding.  Not really.

If there was an Academy Award for "Most Despicable Way To Screw The Public" it would have to go to the big mega-banks.  This was in the weekend newspaper:

The FDIC and the Consumer Financial Protection Bureau are investigating the big banks for their role in helping the internet payday lenders rip off consumers.  The big banks don't loan money directly to ignorant/desperate borrowers (too much bad press), but they do enable the offshore-based payday loan sharks to withdraw money directly from borrowers accounts, even in those states (15 of them) where payday loans are illegal.

So what's in it for the banks?  People desperate enough to go to payday lenders generally have next-to-nothing in their bank accounts at any given time.  So the payday lenders withdraw money from borrowers accounts whenever they find a few dollars there, which means many of the customer's other checks are likely to bounce later.  

That triggers overdraft fees, bringing in hundreds of millions of dollars (soon billions as the internet payday lenders expand) to the banks.  Cha-Ching!

Even when consumers instruct their banks to NOT allow further withdrawals from their accounts (which by law they can do), the banks often take months before they begin following their customer's orders, charging their fees in the interim.

These payday lenders are being pursued by state attorney's generals for charging 500-1,500% interest, so they're moving away from their traditional brick-and-mortar storefronts to places such as Grenada, Belize, Malta, and the West Indies where they operate online out of reach of regulators, plus they get "lawsuit protection and tax reduction."  Nice folks, huh?  And the banks play an instrumental role in this ripoff.  Without their complicity the whole scam is pretty much straitjacketed.

Yeah, yeah, I know....nobody puts a gun to people's head and makes them borrow from these crooks.  And nobody makes addicts buy drugs from pushers, either.  Some people are just desperate, ignorant, easy marks.  These people aren't being served, they're being preyed upon.

And this very minute the banks are lobbying feverishly, asking us to trust them and relax the regulations that keep them in line.  They say they can "self regulate".

So big banks....you want us to trust you?  Then quit pulling crap stunts like this.



  1. Scott, you are always beating up the big banks!

    What you don't understand...what you fail to comprehend...what you can not get through your thick scull is that these banks...ah...hell you are spot on this time.


    1. The banks definitely have a role to play in our economy. They're vital, and I know they can conduct business in a way that serves both the public and their shareholders. They did it for centuries. But when all the firewalls between banks and investment banks and brokerages, etc were let down, they got greedy and got into all kinds of things that are outside the normal scope of banking. They became whores....anything for a buck.

      Understand, I'm not talking about ALL banks (not the little First National Bank of Boogerville doen on the corner) or ALL bankers. Most are just doing their jobs. It's the suits in the Ivory Tower who are calling the shots and directing all the shennanigans who IMO need to be taken out and shot. And until they SHOW us they can be trusted, I don't trust them. And I'm not feelin' the love when I read stuff like this.


  2. Thinking banks can self-regulate is like thinking a wolf in the middle of a flock of sheep can be trusted not to devour all those sheep. It ain't gonna happen.

  3. "These people aren't being served, they're being preyed upon." That is exactly right. Sigh.

  4. I think it might be best for me to withdraw all of my money and hide it in a coffee can under my house. The worms down there will probably give me as much interest as I'm getting from the banks.

  5. How can they charge desperate people 500% interest and give me 1/2% interest on my savings account... grrr.