61 online
Most Popular Choices
Share on Facebook 8 Printer Friendly Page More Sharing
OpEdNews Op Eds    H3'ed 4/13/09

One Wrong Move and the Bank Gets It !

By       (Page 1 of 3 pages)   No comments
Message Stephen Pizzo
Become a Fan
  (12 fans)
And the Bank Gets It !

Remember when GW Bush told us (ad nauseum) how he would “listen to the generals on the ground,” in formulating his actions in Iraq? Remember how well all that worked?

Fast  forward, new administration, same kind of misplaced trust.

President Obama is repeating Bush's mistake by delegating critical tasks to the wrong people. I'm not taling about Iraq here, but closer to home -- the bank bailout. The "generals" Barack Obama says he's listening to in this case are Larry Summers and Treasury Secretary Timothy Geither.

And therein we find the seeds of the same dynamics that enabled Bush fight the wrong war, at the wrong time, in the wrong country with the wrong tactics. Because, you see,  Bush's generals were vested in the only status quo they knew or understood, which is why Generals are so often accused of “fighting the last war.”

Well, ditto Generals Larry Summers and Tim Neither. Their advice has been, and remains, to as quickly as possible recreate the status quo ante for America's financial services industry. After all, it's worked so well – at least for those two guys. Both Summers and Neither prospered mightily from the investment and commercial banking system as we've come to know and loath it. And, since they know they will not be in government forever, they'll be heading back to that industry when this ride is over.

There's a head-banging counter intuitiveness to this which should, by now, be apparent to President Obama. But, like George Bush before him, Obama has decided to follow the advice of some of the very individuals who helped created the problem in the first place.

And, when you hire Willie Sutton and Clyde Barrow to come up with a plan to secure the nation's banking system you get ... well, you get the point.

Anyway, the only reason I mention all that is because I've been watching what the big money center banks that got hundreds of billions of dollars in taxpayer bailouts have been doing with all that money. Or, more to the point, what they are not doing with it, like helping hard-pressed borrowers.

There's a giant disconnect between what Obama says the bailout funds are for and what's really happening outside the Presidential bubble. Just last week, for example,  Obama said that mortgage interest rates were now so low that struggling borrowers should run down to their federally bailed out bank and refinance, thereby lowering their mortgage payments by hundreds of dollars a month.

Sounded good, so  one of my long-time readers from Rochester, Minn. tried doing just that, and here's what he discovered the bank was up to:

Well, I checked out refinancing my 10-year old mortgage yesterday with Wells Fargo (who hasn't sold it yet!) and boy did I get a dose of reality. I can lower my interest rate from 6-3/8 to 4-3/4 and save around $400 dollars in monthly payments.

HOWEVER, the bank rolls the closing costs of $4,500 into the mortgage amount to be refinanced AND  I will have to pay for mortgage insurance since I owe more than 80% of the appraisal value of the house.

All I wanted to do is lower my monthly mortgage payment to keep more cash in my pocket. I was even willing to re-set the mortgage starting at a new 30-year period in order to do this.

So, do I take a chance and pay $450 for the home appraisal that might result in PMI plus pay $4,500 in closing costs to refinance? I don't think so.  So,  I'm just  going to sit on my mortgage and probably see the value of the house go down another 10% or more over the next year.

Where is the government break for those of us who have played by the rules and met our financial obligations over the years?
Happy days are here!?
Jeff in Minnesota

Such a deal, huh? I wonder if Tim or Larry discussed bank fees with Wells Fargo before handing them $25 billion of our money? Apparently not.

Next Page  1  |  2  |  3

(Note: You can view every article as one long page if you sign up as an Advocate Member, or higher).

Rate It | View Ratings

Stephen Pizzo Social Media Pages: Facebook page url on login Profile not filled in       Twitter page url on login Profile not filled in       Linkedin page url on login Profile not filled in       Instagram page url on login Profile not filled in

Stephen Pizzo has been published everywhere from The New York Times to Mother Jones magazine. His book, Inside Job: The Looting of America's Savings and Loans, was nominated for a Pulitzer.

Go To Commenting
The views expressed herein are the sole responsibility of the author and do not necessarily reflect those of this website or its editors.
Writers Guidelines

Contact AuthorContact Author Contact EditorContact Editor Author PageView Authors' Articles
Support OpEdNews

OpEdNews depends upon can't survive without your help.

If you value this article and the work of OpEdNews, please either Donate or Purchase a premium membership.

If you've enjoyed this, sign up for our daily or weekly newsletter to get lots of great progressive content.
Daily Weekly     OpEd News Newsletter
   (Opens new browser window)

Most Popular Articles by this Author:     (View All Most Popular Articles by this Author)

Secrets Kill Too

Dying for Change

What's the Matter With Gaza?

Who You Callin' Un-American?

Worst Clinton Contributor Ever

I Was At the Birth...

To View Comments or Join the Conversation:

Tell A Friend