Leader Blues

Wednesday, February 25, 2009

TOP STORY >> Bailouts costly, but do not let them fleece us

By GARRICK FELDMAN
Leader editor-in-chief

The federal government could soon take over more failing financial institutions, including the giant Bank of America, which has several branches in the area.

Bank of America is a crippled giant, having lost 90 percent of its value, even after it received $45 billion in federal aid. The U.S. government in effect now owns 66 percent of the bank, but its chances for survival look grim.

The feds will keep pumping more funds into the ailing institution and will probably sell its less-toxic assets after a formal takeover.

Regions, another bank with several branches here, has accepted only — only! — $3.5 billion in bailout money, but that translates into a 69 percent federal- ownership stake.

Citigroup leads the pack with a $42 billion bailout, which means the government owns 40 percent of the rotting corpse.

Whatever the outcome of this financial crisis, you’ll pay for the mistakes of others, and not just with your taxes. In fact, you’ll pay in many different ways, especially if you’re not careful.

Watch out for hidden fees from financial institutions, as well as sudden spikes in interest rates on your credit cards, even if you’ve never missed a payment. Don’t let them pick your wallet and pockets, too. Next, they’ll steal your kids’ piggybank.

Many of you may have opened your credit card bills recently and noticed that the interest rate you’re paying has jumped to 24.49 percent, which is about what payday lenders and mobsters charge their customers.

Some banks are suddenly raising interest rates without warning as a way to cover their losses elsewhere. They’re hoping you’re not paying attention. The big national banks think they can cover their losses by taking advantage of unsuspecting customers who have always paid their bills and would never default on their mortgage.

As a punishment for your good behavior, some banks have doubled and even tripled the interest rate they charge their faithful credit card customers.

You need to call and tell them you’re already bailing them out with your tax dollars, and you’re not paying them any more.

The gang of incompetents who run our largest banks are penalizing their honest customers for the banks’ mistakes.

This scenario is repeating itself across the country: Bailing out financial institutions means that responsible citizens are stuck with huge bills that will remain unpaid for generations.

You’ve been paying your bills and your mortgage, but these floundering banks think they can get away with double-billing you and the government, too.

First the government decided that responsible citizens should pay for the billions in losses the banks suffered from bad mortgages, credit-card defaults and other loans that went sour.

Then the banks figured on recouping some of those losses by fleecing their best customers.

Families across America are asked to save these bankers from drowning. But their credit-worthy borrowers were not the ones who went in over their heads. They were responsible borrowers, yet they’re stuck with the tab.

If they’re going to nationalize the banks, shouldn’t we at least get stock certificates as part owners of those failed financial institutions?

The certificates will make nice wall decorations, even if they’re worthless.

We could pass them on to our grandkids as mementos of these depressed times.