Thinking about Banks

Lenders are having a harder time putting together loans for purchasing homes.  The craziness of the credit card companies has damaged a lot of credit scores for people.  You see, when the credit card company lowers the limits on what you can borrow, suddenly you have a higher “debt to what you can borrow” ratio and your credit score is going down.  When the same credit card company raises your interest rates, so your payments are higher, you may find it harder to keep up on the payments, and even pay late — drop that credit score some more, and find your rates going higher. 

Somehow over time we have become so dependent on credit scores (as well as credit cards).  If you don’t have any credit cards — you probably won’t have a credit score either.  So you have to get a credit card to establish credit.  The bank issuing that card is going to be making some easy money.  First they charge a fee to every store or company that sells stuff using their credit cards, then they charge the holder of the credit card interest for the “loan” because you used the card.  Then there are often other fees, like annual fees, that get added on, too.  When you think about it, banks rake in money hand over fist with these plastic cards.  Now I understand that they have 9 months before the latest regulations kick in to do as much damage as they can — collect as much money as they can — before the regulations are enforced.  They are even hinting at some punitive measures coming in the future because we dared to want to regulate them — higher fees, harder to get cards, etc.

I keep going back in my mind to the Christmas movie we see every year:  “It’s a Wonderful Life.”  If only we had managed to keep from giving in to the big “Mr. Potter” banks, and had been able to stay true to the small local community banks of “George Bailey”  — a bank where the owners cared about the town, and the people in the town, and had a care for the country, too.  As George said about his father:

But he did help a few people get out of your slums, Mr. Potter, and what’s wrong with that? Why - here, you’re all businessmen here. Doesn’t it make them better citizens? Doesn’t it make them better customers? You - you said - what’d you say a minute ago? They had to wait and save their money before they even ought to think of a decent home. Wait? Wait for what? Until their children grow up and leave them? Until they’re so old and broken down that they… Do you know how long it takes a working man to save five thousand dollars? Just remember this, Mr. Potter, that this rabble you’re talking about… they do most of the working and paying and living and dying in this community. Well, is it too much to have them work and pay and live and die in a couple of decent rooms and a bath? Anyway, my father didn’t think so. People were human beings to him. But to you, a warped, frustrated old man, they’re cattle. Well, in my book he died a much richer man than you’ll ever be.

The big banks of today do see people as “cattle” or at least as ID numbers in the books, and as useful only for profit.  In the movie we get to witness the results of the two different banking styles, and I admit to preferring the Bailey style over the Potter style 100%.  In the Bailey world the bankers know the people who come into their banks asking for a loan.  The bankers know their character, know what they do for a living, know whether or not they are too risky to get a loan.  In the Potter world the bankers don’t know the people at all, and don’t want to know them.  It is all credit scores to them.  It is all a matter of making a profit, and no concern for community, town, or country.  What matters is the bottom line; putting more money into the pockets of investors. 

And today we are seeing the results of giving in to the Mr. Potters of the world.  Sadly, I don’t think that, like George Bailey, we get to wake up and find out it was all just a bad dream.

Tags: card, community, credit, george bailey, lenders, loans, mr. Potter, scores