Today's bankers are vilified because they were one of the greedy cogs in the economic mess and because they still have not stepped up and said their Mea Culpa. We don't like people who don't fess up to their faults and ask for forgiveness. Just ask Tiger Woods.
The public and government sentiment on the extreme lack of gratitude by today's bankers is understandable. We saved their miserable skins by loaning them tens of billions of dollars and expected them to be appreciative of that magnanimous generosity. Many of the CEOs and executives would today be wandering the streets, unemployable, begging for scraps and enduring horrible economic times if it were not for our largess,
We expected them to change when we loaned them the money. I think we wanted them to drop to their knees and hug us and proclaim their undying gratitude. We thought that if we saved them from extinction they would loan money to those that needed it, re-worked the awful mortgages they saddled people with and cleaned out those that were individually responsible for creating the mess in the first place. Instead what the banks did was tighten their monetary policy at a time that people needed it the most, increased credit card rates, foreclosed on the home mortgages rather than reworking them, paid back the government loans without sending a bread and butter note and gave themselves huge bonuses as a way of congratulating themselves that they were fine fellows all.
To say that the public wouldn't mind taking the TARP repayment and building a new prison to hold these people in perpetuity is probably an understatement.
The government, who loaned our money with little restriction except for repayment, is so angry at the lack of contrition and business as usual that they have threatened bankers with a soggy noodle slap against the wrist as punishment by meting out a bank tax. This tax, which would be passed onto the consumer, is expected to be about $90 billion, or what these banks earn per quarter. It is obvious that the banks will only turn around and pass whatever penalty onto their customers. Bankers will not miss a bonus, paycheck or perk because the government hands out a retribution tax. Our government doesn't get it.
If our government, which isn't very bright when it tries to do something good, wanted to put restrictions on the loans to the banks they should have written them into the contracts in the beginning just as the banks do when someone borrows from them. And what banks do when someone defaults on one of their loans? They take the customer to court, add interest penalties and other egregious charges, and finally send the sheriff or hired goons to take whatever someone owns to satisfy the debt. Plus they make a mark in their credit file so everyone can see making it more difficult to get credit. That's how big banks treat their bad customers. They don't bail them out they punish them.
Still we do business with these people instead of going to our neighborhood credit unions, shopping for best rate credit cards and treating big banks in the same manner as they have become accustomed to treating us. But, because I understand people will continue to go to big banks and do business no matter how badly they are treated I still like certain big bank stocks at certain levels.
It is the old fable of the frog and the scorpion and when the frog does the scorpion a favor the scorpion rewards the frog by stinging it to death. When asked why the scorpion simply says it is what it does. And so it is with big banks.
If you want more information on what banks I am buying or anything contained in this blog e mail me at pstanley@westminsterfinancial.com or call 877 783 7080.
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