What The Banks Pay Back Of Bailouts Mean To You

[No DUplicitous DUpe]

What The Banks Pay Back Of Bailouts Mean To You
posted with permission from http://sane-ramblings.blogspot.com/2009/12/how-big-banks-to-pay-back-bailouts.html

The big banks are rushing to pay back their massive bailouts. I'll tell you why, where they got the money, what to expect next and how to protect yourself.

Why are they paying back the bailouts? Because the government was starting to restrict massive payouts to their top managements, embarrassing because those banks were hemorrhaging money. But now they're highly profitable.

Where are they getting the money to payoff the bailouts? Through stock and bond offerings. Investors now view these institutions as "too big to fail," and therefore protectorates of the U.S. government. As such, they appear to be safe investments.

Were did their profits suddenly come from? Most of these banks are swimming in cash for they borrow money at near zero rates from the U.S. government and loan it out at premium rates, such as on your credit cards, and pocket the difference.

They also dumped many of their toxic mortgages on to the Fed but charge fees to collect the monthly payments or to throw delinquent borrowers into foreclosure. In addition, they receive special tax benefits to help shield their profits.

What's next? Re-regulation. But not to protect consumers or to cap banker income. It is to sharply restrict competition among giant lenders. It will be sold to the public as the "Consumer Banking Protection Act" or a similar title.

How can you protect yourself? Get involved. Raise your voice. Lenders are spreading around $300 million in lobbying cash to Congress and helping to draft laws favorable to themselves. You don't have to tolerate this.

And there is one more thing. You can do business with smaller community banks. Those not deemed "to big to fail" and who care about you and value your business.

[No DUplicitous DUpe]

1. I like this part....

"They also dumped many of their toxic mortgages on to the Fed but charge fees to collect the monthly payments or to throw delinquent borrowers into foreclosure. In addition, they receive special tax benefits to help shield their profits."

Must be nice.