Trying to tame a deregulated banking system that was allowed by the previous administration to make deals no one could refuse will require more than a war of wills. The first infusion of government funding resulted in little more than the banks responding like mafia bosses saying, “forget about it, we’ll continue to do it our way.” Nothing changed, except for them increasing the interest rates on credit cards and lowering credit card limits. Everyone assumed the big banking bosses would give a little back by opening up credit markets and helping the very same people who will be paying for their bailout. Instead, they rewarded themselves with lavish bonuses and expensive vacations.
President Obama’s new stimulus package addresses this problem and much more. The banking bosses must limit the compensation packages to its top officers and loosen its purse strings for consumers to borrow at affordable rates. If they don’t, they risk losing the lifeline that was extended to them and having to pay it all back. Only time will tell.
It will be interesting to see how the banks react to President Obama’s plan to help homeowners still struggling to make their house payments. Even thought they were allowed to “wet their lips” from the first infusion of government bailout funds, the banking bosses did nothing to assist homeowners. They don’t even bother to do anything about the homes they are about to foreclose upon. Many of these homes are advertised as short sales, but there is nothing short about the process. In most cases, short sales may take as long as six months to a year to close escrow. You would think the banks would want to recoup some its losses and replenish its coffers. Why should they? Especially when they are being fed intravenously with tax payer dollars.
