By Moe Bedard
Of course we all already know that Bank of America, Wells Fargo, Citi and other lending giants have received trillions in bailout aid and now, because they’re willing to modify loans based on Federal guidelines they’ll get another nice chunk of change…$2.66 Billion according to the Treasury.
Perhaps this should be another “I’m Mad as Hell and I’m Not Going to Take it Anymore!” moment. And why not? This bank received billions already because they were suffering from the problems associated with the economy. Here’s the question we should be asking ourselves: Why should taxpayers be giving this bank another $2.66 billion in aid for following a government plan after they have received so much aid already? Shouldn’t this bank be responsible to follow government guidelines in exchange for the aid they’ve received already? Apparently, our representatives feel it’s necessary to pay more money to banks to help out the folks on Main Street.
I know I’ve written on this subject multiple times, namely that incentives to do modifications are a good thing. It’s like a carrot and stick philosophy: if you give banks a carrot (money) attached to a stick (government guidelines for loan modifications) they’ll eventually do what they are asked. While this kind of motivation works in the immediate sense I think we should also consider the long term implications of this type of monetary policy.
If we continue to bail out banks, auto manufacturers, financial services firms and insurance companies without much oversight and without fundamentally changing the way business is done within these firms then I’d expect aid without limitations in the future if I was the CEO of any multinational firm headquartered in the United States.
It’s time we looked at the carrot and stick philosophy a bit closer. Perhaps we should change this philosophy to “speak softly and carry a big stick.”
From Reuters:
The U.S. Treasury Department said on Tuesday that Bank of America (BAC.N) could receive up to $2.66 billion in incentives for modifying mortgages under an Obama administration housing rescue program.
The amount, disclosed in a transaction report by the Treasury’s Troubled Asset Relief Program, includes $798.9 million for Bank of America N.A. and $1.864 billion for Countrywide Home Loans Servicing LP, which Bank of America acquired last year.
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I just wish they would stop giving the banks money. They aren’t using it what it was intended for. They are using the money to buy out their competition and this will result in higher fees with less competition.
The Government should use this money as a tax credit for small business that create new jobs. This will stimulate local economies.
Stop giving banks more money already!
Wells Fargo and American Servicing are NOT helping homeowners modify their loans, instead they are telling homeowners to foreclose or short sale.
There are currently 3 million homes foreclosed, these statistics do not lie. The banks rather see homes foreclosed, abandom, vandalize then to work with the homeowner, of course many banks will say that the customer does not qualify, this is far from the truth, I met every criteria and was not approved, when i asked why, their response was that the investor did not want to modify and that the bank cannot go against the investors decision.
Long story short….i was told Foreclose and go into bankcruptcy, what good advice!!!!! from these banks, goes to show, consumers need to know who they are dealing with.
Unless the Government steps in, this tale of banks modifying loans an order for you to save your home, is pure MYTH.