Tuesday, May 05, 2009

Feds Continue To Penalize Banks
Which Only Make Loans To Responsible Borrowers

Maybe it's because President OBAMA is too busy running General Motors, figuring out what kind of cars we may buy, and determining what kind of light bulbs are acceptable to notice something so perverse and stupid it would blow any rational mind.

Believe it or not, the federal government is STILL penalizing financially-healthy banks for insisting that borrowers be credit-worthy! Let me explain.

The Massachusetts-based East Bridgewater Savings Bank has weathered the financial storms of late without major loan delinquencies and a $135 million cash reserve. And their reward for operating at a profit and not granting mortgages to people who cannot afford the payments? Running into trouble with regulators.

The Boston Business Journal reports the bank has been penalized by federal bureaucrats with a "need to improve" rating under the Community Reinvestment Act! The bank has gotten into hot water (meaning they have been given a lower rating by the Federal Deposit Insurance Corporation) for not making loans to sub-prime borrowers.

I brought this anecdote to your attention in case you know someone who blames the private sector for the chaos in the U.S. financial system. It now appears some of the same federal policies which helped bring ruination to big U.S. banks - and ultimately the financial system itself - are still being applied to smaller banks across the nation.

Best Regards,
Lee Bellinger's , Publisher Independent Living

Note from Lucy: Is it me, or does it seem like the government doesn't want us to get better? Come on guys, let's fix the problem.....


At 11:25 AM, Blogger Fred said...

The whole banking and insurance thing turns my stomach. At this point, I'm tired of hearing "too big to fail." Let the bad ones disappear from the landscape (think AIG) and the healthy ones will do just fine. Our capitalist system has become perverse...we're rewarding failure.

At 3:52 PM, Blogger T. F. Stern said...


It's not the capitalist system which has become perverse, it's the government manipulation of what once was the capitalist system which has become perverse. If government were to leave the system alone the system would right itself.

At 4:48 PM, Blogger Sherpa said...

Just for clarification, do you TF believe that the FDIC should exist? Because a pure free market would have no regulation, and therefore no FDIC.
FDIC does a few good things, even if this is a bone headed move, wouldn't you agree? I mean, people losing all of their savings in the Great Depression? That might be kind of lousy, don't you think?

At 5:35 PM, Blogger T. F. Stern said...

Governmental interference in capitalism happens on many levels, perhaps the one referred to in this particular case would have to do with the mortgage/banking industry being forced to loan money to those folks who wouldn’t qualify for a hamburger loan; but because of government strong arm tactics the sub-prime mess took down an entire system. Those banks which refuse to violate the laws of common sense, those who refuse to commit banking suicide and are able to manage their share holders money properly are being strong armed by our government; hardly constitutional now is it?

Maybe I’m talking about government intervention which gives taxpayer money to airlines, railroads and other privately owned endeavors to the extent that they are permanently on the dole. Maybe I should go back to the taxpayer money used to pay farmers not to grow crops or to the bio-fuel industry to make it possible for them to compete with those nasty oil companies, or the wind turbine energy industry or the…that list gets longer every day.

Perhaps I should include the decision years ago to stop backing the Dollar with some form of valued substance such as gold or silver. Our Dollar, if you hadn’t noticed, has become weak in the world market for a variety of reasons; our government pumping valueless money into the banking system only serves to devalue it further. We soon will have really neat looking wall paper because it won’t be worth the paper it’s printed on.

Perhaps I’m not too thrilled with the idea of Cap and Trade penalties on the industrial base in order to push forth the environmental agenda, an agenda built on fictitious data intended to mislead and distort the global climate change phenomenon into a crisis in order to impose governmental regulations which further destroy capitalism. Oil and coal are cheap and efficient and by penalizing the use of these abundant resources the economy would rebound quickly because investors would recognize profitability from putting hard earned money into companies which now are being driven into the ground by our own government all because some grey salamander might be in danger.

Is that what your question really was intended to cover or are you hung up simply with the FDIC?

At 6:35 PM, Blogger Granny Annie said...

This is definitely one of those things that is BEYOND ridiculous!

At 6:58 PM, Blogger Marla said...

I just can't let my self worry about all of the governments problems. I just put my trust in God and leave it at that!

At 7:42 PM, Blogger Fred said...

TF: Thanks for making my words clearer. I couldn't agree more.

At 8:12 PM, Blogger Renie Burghardt said...

Great explanation, TF! Thank you!

At 9:06 AM, Blogger SusieQ said...

Is there no way for these banks to take the government to court? Surely there are some laws the govt. has broken here.

At 8:33 PM, Blogger Ralph said...

I recently was in a conversation where someone said, "Pretty soon if you want to buy a car you'll have to do it at Obama Motors." Yes, I laughed until I realized it is quite possibly true.

At 6:46 AM, Blogger Cliff said...

You are correct, I'm pretty sure the design is not for prosperity. It's called trickle up poverty.

At 11:12 AM, Blogger Big Dave T said...

I like Cliff's description--it's trickle up poverty. Eventually we'll be bankrupt as a nation. The Obama administration is really strong-arming businesses, financial and otherwise, into doing its will.

At 2:27 PM, Blogger LZ Blogger said...

Let's face it... the government IS the problem! ~ jb///

At 4:04 PM, Blogger Oh great One said...


At 1:16 PM, Blogger Jamie Dawn said...

I am conservative in my thinking, so whenever national government gets bigger, I get worried. I did not like the overspending that Bush and the Congress allowed during his terms. It was wrong. Bush promoted and signed the first bailout which was also wrong, and McCain and Obama were on board with that too. I believe they all were wrong.
Too big to fail, my rear end! Badly managed companies SHOULD fail, and better managed ones should take their place.
Banks should deny loans to anyone whom they feel probably cannot make the payments. That's just good business. Being forced or strong armed into making risky loans is a practice that never should have been implemented. Those who implemented it share the blame for this mess. This was going on under Clinton and Bush, and it should have been stopped. No one made a big deal over it, and someone in government should have shouted it from the rooftops. It's not enough to quietly be against something like this. We need leaders who will take firm stands and proclaim them loudly. I'm tired of wussy leaders!
I read the previous comments and enjoyed reading opinions on this matter.


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