BANKING - March 26, 2009

Barack Obama behaves as though he believes that the only way to put money in the hands of those who will lend it to consumers like those who want to buy houses and cars is to pour huge amounts of it into the pockets of those who have stolen billions from the US taxpayers. In fact that is plainly not the case, except that the US Treasury seems to be in the hands of the pirates. As I read the papers, US is covered by small banks and credit unions who are on sound ground, have not participated in the mortgage scam and who have customers eager to borrow money to buy such things as homes and cars, and there are banks that would be glad to borrow money from the Treasury at the tiny rates that are available to the banksters. For example, borrowing money from US at 1% and lending it to reliable customers at 6% should be attractive for those bankers who know their prospective lenders and can make a good guess at who would be able to pay it back. The papers say there are plenty of credit-worthy customers who just can’t get the money.

So I say the hell with the pirates. US should go closer to the grass roots and turn our backs on those who made the trouble. The small banks would carry some of the risk of non-payment, but who knows the local territory better? Builders could get foreclosed properties cheaply at auction sales, clean them up and sell them at a reasonable rate, and the banks could provide the mortgages. Car dealers could have the money to lend to customers. In a similar vein, US could lend money at about 6% to pay off the consumer loans of those who are now paying usurious rates, providing they would surrender their credit cards. That would clear a lot of decks in a hurry and put the money back in the hands of the People.