Fausta’s Blog

Overextend yourself, live well beyond your means and you shall be rewarded:

U.S. steps up pressure on lenders to modify more mortgages
Treasury threatens public shame and monetary penalties

The Obama administration on Monday promised tougher scrutiny of lenders participating in its marquee foreclosure-prevention effort and threatened to penalize companies that don’t do enough to help struggling homeowners.

Force the lenders to make bad mortages by making the Community Reinvestment Act law, and then force them again,

Under the program, eligible homeowners can have their loans modified to reduce their mortgage payments to 31 percent of their income. To qualify for a permanent modification, borrowers must provide extensive documentation and make three consecutive payments to prove they can afford the new loan.

Give it time and someone in DC will come up with ways to force banks to do some Robin Hood Bankerin.

But hey, why worry? The politicians will do anything to get elected. As Thomas Sowell said,

So long as the taxpayers don’t understand that all this political generosity and compassion are at their expense, Barney Frank is an odds-on favorite to get re-elected.

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There will be no podcast this morning. I have a business appointment that was rescheduled.

It’s not enough that the government imposes confiscatory taxes and funds all sorts of entitlement programs, in Germany a bank manager was taking money from the “rich” clients to give to the “poor”:
German banker admits transferring money from rich to help poorer clients

The 62-year-old branch head of one German bank was hailed as a hero after she confessed to transferring money from rich customers to help her poorer clients. Already, she has been dubbed “Die Robin Hood Bankerin”.

She was given a 22-month suspended sentence after moving more than €7.6m (£6.9m) in 117 transfers between 2003 and 2005. The court in Bonn was told that the employee, who has not been named, took no money for herself.

The judge referred to her stealing as “altruistic behavior”.

Here in the US we get the government to take our money and bailout the banks and financial firms because they are “too big to fail”.

That German judge would be impressed.

Credit Card Industry Aims to Profit From Sterling Payers

Now Congress is moving to limit the penalties on riskier borrowers, who have become a prime source of billions of dollars in fee revenue for the industry. And to make up for lost income, the card companies are going after those people with sterling credit.

Banks are expected to look at reviving annual fees, curtailing cash-back and other rewards programs and charging interest immediately on a purchase instead of allowing a grace period of weeks, according to bank officials and trade groups.

The expectation is, according to a different business,” said Edward L. Yingling, chief executive of the American Bankers Association, that,

“Those that manage their credit well will in some degree subsidize those that have credit problems.”

That’s the equivalent of “soaking the rich” on taxes. Soak the rich, lose the rich.

I’m one of the people who pay their entire credit card balance in full every month.

Here’s what I’ll do if/when credit cards charge interest immediately:

pay cash
Cash. What a concept.

The credit card company that will not charge interest immediately will have a huge opportunity; they will attract the clientele with the best credit. There’s money to be made in that.

Get ready for yet more bailout and spending,
Largest U.S. Banks Need Additional $75B in Equity, According to Stress Tests

The nation’s largest banks collectively need another $75 billion in equity to ride out potential losses due to the recession, according to long awaited government stress tests released this afternoon.

Of course, it’s coming out of taxpayers’ money:

The banks that need more capital have a month to inform the government of how they plan to do so. Their options include selling new common stock and selling off business lines or other assets. If the firms fail to raise the money in six months, they would receive a new injection of money from the government.

One quick question,
Since when are banks supposed to be immune to recessions?