Recently, the Federal Reserve has been allocating $40 million each month to help lower mortgage rates, according to the Washington Post. With this money, the U.S. government is hoping that the banks will grant loans at lower rates to boost the housing market. It’s a great plan… unless the banks decided not to modify the loan rates and keep most of the money for itself anyway, which is exactly what they’re doing, despite already making record profits as of late.
For crying out loud! It seems like nearly every day we learn of new reasons to despise the big banks, and yet we continue to do business with them anyway. Here are 6 reasons we need to abandon all trust in the banks.
1. They flat out admit it: they’re only interested in profit
In the aforementioned article, Wells Fargo CFO Timothy Sloan is quoted as saying that banks don’t make decisions based on whether they will help people but “from a profit standpoint… we run the business based on profitability.” Since that’s the case, why does the government keep aiding the banks rather than the people? When we give them massive financial incentives in the hope that they will pass those along to the consumers and they pad their pockets with the money instead, it’s time to quit trying to negotiate with them and hope they do the right thing eventually.
2. They are responsible for a ton of shady foreclosures
We already know they actively aren’t doing the ethical thing. Five of the country’s largest banks have been fingered for extravagantly fraudulent foreclosure practices. Though the banks largely get away with essentially stealing homes from American families, even when they are subject to punishments, the resulting reforms are minor and the fines pale in comparison to the profits that were earned through the illegal practices. It’s hardly the discouragement necessary to convince banks to act any differently.
3.They’re in bed with lawmakers
The government may not wield the authority to control the banks as reason #1 points out, but the banks certainly have the finances to control the government. What do you think they’re spending some of those immense profits on? Creating Super PACs to support candidates who will eliminate regulation on banks? Check. Using federal bailout money toward lobbyists to convince politicians to not hold banks accountable for that same bailout money? Again, check. Funding efforts to disenfranchise the poor by heading some states’ voter ID movements? Yes, that too.
4. They award their CEOs with gigantic bonuses and salaries
As for the rest of the profits? They’re being pocketed by the bank executives. How many times do we have to hear about bankers receiving bonuses and golden parachutes after successfully crashing either the company or the economy? Thanks for the awesome leadership, feel free to take a few hundred million dollars on your way out. Even this week, Vikram Pandit, CEO of Citigroup – a bank which lost 88% of its worth under Pandit’s tutelage – walked away with $260 million upon resigning. Choosing to spend money that way when a company is in the red sure has me seeing red.
5. They take their money overseas
All that money is NOT going is to its employees. Or, well, not American ones anyway. After laying off 30,000 employees last year, Bank of America announced it will be adding more employees to its operation… overseas. It’s cheaper to hire people outside of America, after all. Don’t let the patriotic name fool you: Bank of America’s money will all end up offshore one way or another.
6. They just don’t care
Perhaps the biggest reason to lose faith is the utter lack of remorse. Even after crashing the country, big banks continue with their shady practices and make no apologies. US Bank President Richard Davis admit, “Everybody’s breaking the rules, blah blah blah… get over it.” Get over it? There’s no reason to forgive or forget when the bank execs are saying through their words and actions that they won’t be changing anytime soon.
Fool us once, shame on the banks. Fool us repeatedly while we continue to do business with them anyway, shame on us. It won’t be easy to undo the government’s inappropriately intimate relationship with the banks, but we can start by doing our part to make the banks no longer too big to fail. Before we’re compelled to bail out the banks again, it’s time that we bail out on the banks altogether. Making the switch to a credit union is not only easy, but it will restore your peace of mind.