The Truth About Banks

Banks and insurance companies are nothing more than legal entities whose sole business model is to completely fuck over consumers in a variety of ways (most of which are undisclosed and shady as hell).  If aliens came down and observed how this country operated, they would assume our Constitution had a provision that stated: ‘Banks and other financial institutions are required to maintain a profit margin of at least 20%.’  It should be a written law, because it seems to be an inalienable right.  God forbid someone suggest anything that would prevent banks from charging you 30% on money that they borrow from the Fed at 0.25%.  Holy shit!  That would be such an unfair burden on these pricks, and of course it would completely stifle growth and limit the movement of capital around the globe.  The entire economy would fall to pieces if such a regulation existed.  And can you imagine the increased costs involved with all the extra paperwork these banks would have to deal with?  Hell, they might have to hire another 7 people!!  Get the fuck out of here…

It may sound like I am over-exaggerating or just being belligerent, but this is the exact line of reasoning these assholes give when anyone attempts to cut into their ridiculous margins.  It goes something like this: “Well in the end, the middle-class and poor will be the ones who suffer by such regulations, because of course we will have to pass these increased regulatory costs onto consumers in the form of higher fees and new account management fees.”  And then, as is always the case, the dickless politicians in Washington will cave into their demands, because nobody wants to increase costs on ordinary middle-income Americans who actually vote.  That would be irresponsible, especially in such troubling economic times, and especially during an election year.

Recently, there actually has been some watered-down regulation on banks since the financial crisis.  And these banks certainly made good on their promise.  I get charged a $35 overdraft fee and then $5/day anytime I accidently exceed the available funds in my checking account.  And almost every account charges an annual fee if you don’t have a shitload of money in it.  Banks are the only institutions that can actually profit from the simple fact that you don’t have a ton of money.  Does this make any fucking sense?

The truth is this: banks really don’t do shit.  A typical bank makes money based on the spread of the yield curve, which is essentially the difference between short-term financing and long-term interest rates.  The Federal Reserve sets the rate at which banks can borrow money short-term (from the Fed itself).  This rate has been 0.25% for the past 3-4 years since the economy collapsed.  So even though it is advertised as a short-term cost of financing, it really has worked as an intermediate-term borrowing cost because it has been that low since 2009, and the Fed has guaranteed it will remain that low until 2013-2014.  Right now, you could have perfect credit, a ton of net worth, and when you go to refinance your home they may give you a 4% rate on a 30 year mortgage.  Most people think this is a great deal, and historically speaking, it is a very good rate.  But keep in mind, these fucks who just offered you a 4% interest rate have been borrowing money at 0.25% for years.  They are booking a 1,500% profit margin on your mortgage, not including all the bullshit fees they throw in at closing (anyone ever ask why the application fee is $400?).  Plug that shit into an excel spreadsheet and do the math yourself if you don’t believe me – 1,500% margin ((4.00-0.25)/0.25)).  How many other businesses make that kind of profit for essentially doing nothing but a credit check and pushing some paper around?  And this is the best-case scenario, considering you have perfect credit and a lot of net worth.  It’s a fucking joke.

God forbid you don’t have a 750 FICO score and a shitload of other assets, because then the banks will really stick it up your ass.  Look at the credit card industry.  The cheapest credit card I could get charges me over 25% APR.  Of course they charge a higher rate to cover the risk of default since my FICO score sucks balls.  So let’s go ahead and look at the margin of safety they provide themselves on such a credit card loan – ((25.00-0.25)/0.25)) = 9,900% profit margin.  That is pretty sweet for an industry that single-handedly caused the entire global financial system to collapse a few years ago.  And the same tax-payers who bailed their asses out are still getting gouged like nothing ever happened.

I live in Wilmington, Delaware, which is the credit card bank capital of the world – primarily because state law allows Delaware companies to annihilate consumers with interest rate policy.  Go to downtown Wilmington and all you will see is big banks.  Look anywhere else within the city limits, and you will see a bunch of poor people shooting each other, over-crowded prisons, and an urban drug problem per capita that completely destroys that of any other major city.  Wilmington is a complete shithole, but yet these fucking credit card banks are printing money because of the state’s ridiculous laws.  All of the elected politicians from Delaware, some of whom I agree with on most issues such as Joe Biden, are patsies for the fucking banks.  You would think these shithead bankers would plow a bunch of their profits into the community and try to revitalize the city.  But no; they are spending their time in Washington D.C., crying like bitches that any changes to their current business model will destroy the economy.  If a fraction of the money they pay their lobbyists was used to strengthen the community, Wilmington, DE would be a fucking utopia.  Instead, if you walk three blocks from virtually anywhere in the city, you will probably get robbed and then shot.  That’s right.  Even if you give your wallet to the asshole who robs you in Wilmington, that asshole will shoot you while you’re walking away.  The street thugs here are just like the banks.

Personally, I’ve decided to give myself a bailout.  I owe a shitload of money in credit card and student loan debt.  So I’ve decided that I’m just not going to pay it.  Fuck these pieces of shit who call themselves bankers.  They have already destroyed my credit, so what else can they do to me?  As far as I know, they can’t throw me in jail.  So when they call me, I usually just tell them to go fuck themselves.  The day they reduce my interest rate to something that gives them less than a 100% profit margin will be the day I pay.  And now since I wrote this post, I will simply refer all collections people to ‘The Noonan World Report’ instead of verbally explaining my position.  This way I can use my debt as a way to plug my website.  Please do the same if you happen to find yourself in a similar situation.

– Kevin

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