Wednesday, June 10, 2009

Paying Back TARP Money - the banks or the customers

I don’t mean to start your day with listening to griping, but . . .

In listening to the news yesterday, I understand than many of the major banks are looking to pay back their TARP loans. Many are happy to pay it back so that they no longer have to submit to the Federal Governments guidelines associated with accepting the money (I translate this as the executive would like a pay raise). The commentator noted that the loans are being paid back much more quickly than expected and touted that they are being paid back with interest. The commentator continued with a visual showing all the “extra” money that the Federal Government was getting back from the banks. Does anyone realize that the money is not from the banks alone? Banks do not have money trees either. They make money from their customers. Remember the post about my frustration with the interest rate going up to 28% on my credit card for no apparent reason. So really the people paying back the loans that they were forced to make are same people (taxpayers) who are customers of these banks. BTW, the banks were charged 5% according to the news story – the person at the bank that I talked to had explained that they had to raise my rate to cover what they owed the government. The difference between these rates reminds me of a childhood game – one for you, two for me; two for you, three for me; 5% for me, 28% for you.

Mattresses are starting to look very good even if they aren’t very realistic in this day and age.

PS. This same bank which raised my rate to 28% and which I chose to “opt out” and hold the rate at 14% just sent me a 0% credit card offer. Couldn’t we have just left the old card where it was instead of playing these games?

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