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Note To Banks: Be Careful Whom You Crawl Into Bed With, He Might Just Become Your Pimp

November 1, 2009

That's one strong pimp hand. And the banks are about to feel it. They only have themselves to blame.

Millions of consumers have found out the hard way that there is no such thing as a symbiotic relationship with a bank once you’re behind on your payments. The Financial Institution usually turns a deaf ear to the customer’s pleadings and simply rests on the contract: the interest rate gets jacked up, the late fees and over the limit fees snowball,  the credit turns stinky,  and negotiations are not even considered until the account is totally charged off and is turned over to me, your friendly neighborhood bill collector.

I’ll bet you a thousand defaulted customers have wailed a version of the following to me over the last umpteen years:

“They PROMISED me they wouldn’t do this! Why do I have to deal with you?!”

Just remember: When you hop in the sack with someone you don’t know, and were foolish enough to sign a contract with them, sometimes you get what you probably don’t deserve. It hurts, humiliates and in general makes you despondent, but there is nothing you can really do about it that will make you whole again.

Banks do it to people all the time. And Rep. Barney Frank (D-Mass) does it to the banks better than anyone I know.

Just like I don’t feel all that sorry for people who mindlessly run up multiple credit cards, I certainly don’t feel any empathy for the repositories who have suckled up to Barney’s jiggling teats and now find themselves being ordered around by the Massachusetts Madam.

They probably didn’t figure he would be so mean to them when he was cooing into their captive ears at 2 AM.

But now that they’re finding out that he didn’t really love them, and was only giving them lip service (sorry, I can’t help myself,) they’re waking up to the cold light of day in a bad part of town with no shower in sight.

Just listen to this October 29th clip of Barney zestily detailing the punishments he has in store for the financial institutions who have been coaxed into his lair:

Andrea Mitchell of MSNBC is positively enraptured by him, and why not? Pimps know how to hypnotize the harlots who work for them. Then they beat them. Can’t let them get too comfortable, after all.

So if you want to find out what it’s like to become a slave, sign up for one of those platinum or uranium cards or whatever it is the banks are selling these days, and then charge on it and fall behind.

Or go to work as an executive of one of the banks who accepted bailout money. You’ll not only be subjected to lots of Government meddling in your affairs but you’ll probably get your salary cut, to boot.

And then you’ll have to sign a check over to another poor sap of a counting house who is also in Barney’s stable – and didn’t have enough left over after “Mr.” Frank took his cut.

Should have listened to your Mom.

  1. Cas Balicki permalink
    November 1, 2009 5:11 pm

    Barney Frank makes my skin crawl. He is a symbol for everything that is wrong with Washington and politics in general. The government goads the banks into extending unwise credit, and when Fannie and Freddie stop buying the $hit, the banks cover themselves with credit default swaps, yet this is somehow AIG’s fault. Barney Frank is a loathsome liar, who doesn’t deserve the trust of voters, and as far as I can see he’s a perfect hood ornament for the Thelma-and-Louise Democratic clunker headed for the cliff’s edge at breakneck speed. If anyone proves that the Democrats do not deserve the trust of the American people Barney Frank does.

  2. Cas Balicki permalink
    November 1, 2009 5:24 pm

    On the bright side Scozzafava has just endorsed Owens in NY 23. The reason this is good news is that the redefinition of the Republican Party has just begun. This, of course, makes the NY 23 election very important in that Hoffman must win for that redefinition to be affirmed and reinforced for all of congress both Republican and Democrat. It is fundamentally important for the Tea Party movement to fold into the Republican Party, because if this doesn’t happen the only thing that the Tea Partiers will become is spoilers. Once they are absorbed by the GOP the whole party will be moved rightward. It all starts with Hoffman, so any readers resident in NY 23 get out and vote, America hangs in the balance.

  3. howiem permalink
    November 2, 2009 7:39 am

    The bailout money is a symptom, not the problem. The problem was manipulating the rules of the market thus forcing financial institutions to take greater risks or fail to compete. If a company or bank is to compete legally, it must compete within the rules in effect at the time. When four letter words like Barney Frank manipulate the rules, are you saying that the banks should stop competing? Are you saying that the banks should have simply said that they would not loan money at ridiculously low rates to high risk home buyers? If all the financial institutions got together and agreed not to make high risk loans, what about the screams of “collusion to keep the poor from realizing the American dream?” Contracts and markets are a-moral, a-ethial, but the writer is trying to personify and moralize them. ““They PROMISED me they wouldn’t do this! Why do I have to deal with you?!”” Who promised whom what? Was the “promise” in a contract? f so is the one who received the “promise” the one who could not fulfill the terms of the contract? When people, if I may use that word when referring to the Barney Frank’s of this world, make stupid rules that affect the natural rules of a free market, they are the ones who make the false promises, and destroy the economy for everyone.

  4. Joseph White permalink
    November 2, 2009 8:35 am

    I agree with howiem, and I’d go one step further. If DC really wanted to put an end to financial problems, they’d pass a law that makes it illegal to speculate on the futures, and make it illegal to monitize debt, or even make it illegal to fractionalize debt.
    All these weird accounting schemes make my teeth itch. If the government really cared, they stop giving the Federal Reserve carte blanche and would turn the money creation back over to the congress and the printing back to the treasury.

    • Cas Balicki permalink
      November 2, 2009 8:48 am

      Monitorizing debt, which I take to mean selling an anticipated cashflow for its equivalent present value, and futures trading are the life blood of a financial market. It appears that you, Joseph White, do not understand why these types of transactions are necessary nor how important they are to finance. Had you done some research into these types of transactions you would not have written the above.

      • Joseph White permalink
        November 2, 2009 9:02 am

        Monitizing debt: Taking debt (IE unpayed credit card debt, unpaid home loans, etc.) and converting it into bonds that are sold to China, Japan, etc.

        This isn’t about creating new money based on goods and services, it’s taking debt and trying to sell it to create new funds.

        If Monitizing debt is such a win-win scenario, then why is China and Japan refusing to buy anymore of this bogus money? What is the dollar being replaced by other currencies as a reserve currency?

        It’s because monitized debt and our dollar are becoming worthless.

        I have done my research and it’s even been stated by the Fed and Treasury, as to what monitized debt is.

        Monitized debt is not, selling an anticipated cashflow for its equivalent present value. That’s called an annuity, or even better, a share of stock.

        Debt is money owed, and most debt will never be collected. Credit card companies charge off billions of dollars for people who won’t pay their bills. Mortgage companies write off billions of dollars for people who couldn’t have paid their mortgage even if they wanted to. That debt was wrapped in bogus bonds and sold to China and Japan, and other countries, and if it was ever called in, there would be no way to pay it all.

        • Cas Balicki permalink
          November 2, 2009 10:39 am

          You’re confusing government involvement and budgetary deficits with market transactions. If you want to argue that massive budgetary deficits are unsustainable, I would agree. But you are arguing that basic market transactions are the cause, and that is where I do not agree.

          The problem with the measurement of money supply, which you allude to, is precisely the difficulty of measuring that money supply. It is no longer M1. As for nations such as China, the reason they do not want more U.S. debt is because they see the massive inflation that is coming thanks to the U.S. government’s social and spending ambitions. It appears the Chinese are not as socialist as the Obama administration when it comes to their reserve of dollars.

          As for whether debt is an annuity or not, it depends on whether you are the debtor of creditor. To the creditor debt is, indeed, an annuity that can and often is factored, which is an old word for cashing out at present value, or what the market might refer to as monitizing (which I take to mean the buying up of debt obligations by some entity).

          Now, the reason government monitization involves the issuance of bonds is because in order to monetize debt someone must be paid its present value equivalent. The problem with Fanny Mae and Freddie Mac was that in monitizing massive amounts of mortgage debt they simply paid too much for it. In brutal financial terms, they overpaid for the traunches they bought, because they were incompetent. To their peril, the markets and lenders came to rely on this incompetence and therefore saw no reason to curtail their profligate lending.

          When the financial institutions saw Fanny and Freddy shut down their buying they were in panic given that they knew the state of their own lending. Desperate banks started taking cover by means of the credit default swaps (CDS). When the mortgages turned bad there was an immediate and unmanageable call on the markets to make good on instruments such as CDSs, which—surprise, surprise–precipitated the financial crisis by putting the banks off-side of reserve requirements. When banks are thus caught out they not only freeze new lending, but begin to call in demand loans to get their balance sheets in order and as a result the economy implodes. The roots of this crisis, by the way, go back to the Community Reinvestment Act passed by the Carter administration.

  5. Joseph White permalink
    November 2, 2009 9:03 am

    Oh, and I forgot…Government debt, (at last count 1tril a year and rising.) is also being monetized and sold as bonds.

  6. howiem permalink
    November 2, 2009 9:30 am

    Joseph White, I understand what you are saying, are you sure that you really want more and more government regulation? After all a market is merely a price setting mechanism. A free market is not arbitrary, i.e., I have a product to sell. If I cannot sell it at the price I want, I can lower the price. If I sell it at the new price, that becomes the right price, since both buyer and seller agree to that price. However, when the government gets involved and starts regulating, it changes the market conditions indefinitely. When a law is made today, that law must be obeyed tomorrow. But if the market conditions change tomorrow (and they are in a constant state of change), that regulation might and often does, become restrictive, so that a product I sold yesterday at the “right” price cannot be sold at that price. My costs will have gone up because of the regulation, and because the costs of potential buyers have gone up, either the buyer has to be willing to pay the higher price, or I will be out of business, unless I can cut my costs, like laying off employees, buying less from my suppliers (thus putting them at a higher risk). We could get away from monetizing debt by having a standard, like we once had the gold standard. Then governments could not spend thin-air money. Unfortunately that takes responsible government officials who understand that the money they are spending is not theirs. We haven’t seen many of these lately from either side of the aisle. I don’t agree on rules forbidding speculation, because we make every personal decision as well as business decisions based on speculation. Even if one calls it legalized gambling, which it is, risk is all about the unknown future, and we all speculate constantly. None of us can be 100% certain what is going to happen in the future, even an instant from the time a decision is made. Governments have shown time and again that they are incapable of correctly predicting the future. We would all like to feel secure that we are making a forecast of our lives and business that cannot go wrong, but that is unrealistic. There are too many factors affecting everything we do. Economic forecasting models use thousands of variable factors to make their predictions. The key word here is ‘variable’. Yet the economic forecasts are only sometimes reliable in the short term, and only provided there are no major events that upset the forecasts. There are always ongoing events that affect each of us in different ways, sometimes unnoticeable, sometimes hitting us between the eyes, and hard. I think a sumup is that every law is a restriction, some are necessary for the preservation of peace and security, but aside from those, the individual should be left free to pursue his own destiny.

  7. "gunner" permalink
    November 2, 2009 10:46 am

    mr. nampion,
    you’ve described exactly why, after two experiences with credit cards i cut mine up, paid up the accounts and now only use pre-paid, one use “gift cards” and now that my mortgage is paid off i am extremely reluctant to borrow money from banks, finding means to pay cash without borrowing. everything i own is mine. i’ve never even had a car loan, if its parked on my property i own it free and clear. no bank, no finance company, no bill collector and no repros. that means that i do not have some of the fancy toys some folks sweat to pay for on credit but i do not miss them. as above, whats mine is mine and nobody can take it from me for unpaid debt.

  8. November 2, 2009 11:38 am

    Hey, Gunner, I did the same, but I still have a mortgage, purchased in 2007 before all the sub primes hit…of course I sold my house up north right around that time, and no one would buy it for over a year…if you want to learn how to sell low and buy high, I’m your guy.

    We all make dumb financial decisions, but we are all adult, too, and have the ability to learn from our mistakes. Even though my house is upside down now, it won’t always be, and the last place I want to turn is the Gov’t – I’ll keep making the payments and hopefully it will be better down the road.

    By the way: One of the funniest moments in the Barney video is where he acts like the “sub-prime crusader” – he assures Andrea that he is going to make sure risky mortgages get mitigated, because he wants to protect our markets.

    Spoken by the biggest villian in the mortgage debacle – the one who more than any other forced the banks to loan to people with no jobs, no money, and no prospects.

    Lyin’ just seems to come natural to him.


  9. Mike Begunga permalink
    November 2, 2009 11:58 am

    What differences the people in power make; why don’t Americans get it? Does anyone remember AT&T or Microsoft anti-trust suits? Forget monopoly, these companies are so large and have so much buying power that nobody without a Gates bankroll could ever consider playing ball… and it would be at a loss for a while mind you. Could you imagine opening a corner grocery market designed to compete with a Super Wal-Mart?

    Anyway my point… let them fail; someone will fill the hole left. If GM went down, I know someone with the moola would love to step up and acquire the truck division, Japan can’t get it right. I don’t know about you but my kids bust up anything I buy for them, now the things they save for and invest their own money on, those items are in pristine condition. Let someone invest their hard earned money to fix the problem, employ some people along the way, and maybe we won’t have to endure a Pontiac Aztec again. LET THEM FAIL… I know I’m dreaming.

  10. John Davidson permalink
    November 2, 2009 1:59 pm

    Barney Franck has no idea about politics or financial endeavors, but he does know how to procreate, I think.


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