From ft: How banks will get customers to cover a round of big losses
By Daniel at 12 October, 2009, 1:07 pm
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
I would encourage you to read the whole article.
By John Dizard
Published: October 10 2009 03:00
”
…
There are going to be much larger write-offs and reserves taken at all the big banks, with the peak in reported bad news probably coming next year. However, the taxpayer will not be asked for more capital, and the Federal Reserve and Treasury will gradually dismantle the temporary support structures, just as they say.
How is this possible? Because the public will pay through usury, not taxation. There is a big difference, of course. Usury is less visible, and you cannot effectively vote against it.
Blood will flow, but it will do so not as a catastrophic bath for the banks, but as a gradual transfusion to them from their customers.
…
In the end, though, the losses on the credit bubble have to be paid for, and Congress and the administration know that.
As one New York commercial real estate banker explained to me: “We’re going to pay for the losses by screwing our solvent customers. I just today rolled over a CRE [commercial real estate] loan with a good customer. The spread went from 60 basis points over Libor to 400.
“He couldn’t argue with us; after all, where else could he go? All of us are using the same loan pricing formulas, which for the good customer give you a spread of 300 to 400 over.”
That is for the commercial loans. Credit card rates for middle-income customers have risen by several hundred basis points, before new rate increase restrictions come into effect.
…
”
http://www.ft.com/cms/s/0/b4f0c408-b534-11de-8b17-00144feab49a.html
--------------------------------------------------------------------------------------
--------------------------------------------------------------------------------------
No comments yet.