Friday, March 27, 2009

Refinancing

We are puzzled why Wells Fargo bank isn't interested in refinancing our home loan. We put 25 percent down, we make our monthly payments, fixed at 5.8% and we have asked our mortgage broker to seek a refinancing package at the current lower rates. You'd think securing us a smaller monthly payment would be in Wells Fargo's interest to help keep our loan current in these parlous times. Apparently not, and I had thought that Wells Fargo might be dragging it's heels fearing an inflation upsurge and preferring to hold out for highest dollar return in the face of likely interest rates in the double digits. I expect huge inflation in the near future worse even than that of the early 1980s...Perhaps my view was too narrow.
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The New York Post is reporting that Citi and Bank of America are using bail out monies to buy distressed mortgage securities back from the Federal pool! It's totally crazy and the banks justify it, when caught, saying it increases liquidity in the mortgage pool which is true possibly to some small degree but it not what the stimulus money was for! These banksters are gamblers with a problem. Instead of betting more money at the Alt-A tables and the subprime market they should be using the stimulus money for old fashioned ground up, modest profit interest rates.
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Imagine loaning Uncle Harry X thousand dollars to pay down his gambling debts from a trip to Las Vegas. Imagine Harry books a flight back to Vegas, forgets to pay down his debt and puts your money back on the tables, arguing he will be able to win enough to pay off his debt to the tables and to you and come away with a tidy profit for himself. Nice plan no? Uncle Harry is really grateful for the loan and he has every intention of paying you back. How does that make you feel? Like trusting him? Like it was good use of your savings to bail him out?
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Uncle Obama needs to understand that these financial institutions have systemic problems that can't be solved by trying to "save " them. They need to fail, we need to go back to modest banks with modest goals. Local economies are the way for us to go in the US. The mega corporation model has failed us.

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