(The) C0MM0N PE0PLES S0URCE for News

December 1, 2007 

The Facts 

Several large banks who made all those teaser rate loans are now complaining about being stuck with a lot of real estate properties. In trying to help the situation, they are offering home owners who fit into a certain category an opportunity to keep the teaser rate payments.  

My View 

Before anyone starts patting these banks on the bank let me suggest that you ponder the true objectives of these banks. Greed was their motive in approving loans that they knew was going to eventually be “bad” loans. But all of them know the federal government (our tax dollars) will bail them out when a borrower defaults on a loan, and sure enough, President Bush has already suggested that. So to defend them by saying they just made some bad investment decisions, which many companies do, would be both wrong and right. Wrong in that they knew interest rates would surely rise resulting in many borrowers being unable to make the increased payments, and right in that they knew the federal government would bail them out.  

I have reported many times on the greed & corruption we are now faced with in our country. We all know that many consumers will make bad purchasing decisions based on what they want instead of what they can afford. That fact is confirmed by the millions of ordinary people who have declared bankruptcy over the past two decades, although a few were the results of uncontrollable circumstances. Therefore, it is the responsibility of businesses, both to themselves and the borrower, to heavily consider this fact when approving loans. I can recall a time when real estate companies would not even submit a loan request if the payment was more than one week’s income of the borrower. That was because they knew banks would not approve a loan under these conditions. These were just good business practices for everyone including the borrower. However, greed on the part of both businesses and consumer’s has replaced these good-sense attitudes.