John Feehery: Speaking Engagements

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Headache

Posted on October 3, 2008

 


 


            Talk about a headache.


           


            I am glad that Congress passed the bank rescue bill, because I have my house on the market, and the only way that it gets sold is if the credit market unfreezes.


 


            So, I have a selfish reason to want to get this thing done. 


 


            But I understand why people in the middle of the country didn’t want to give the banks any help. 


 


We have all seen the ad campaigns from financial institutions that promise the moon, all for a very low rate.


 


But then, when consumers got the cards, their promised interest rate goes out to the window. 


 


Does anybody else hate those stupid Capitol One commercials?


 


These banks have gotten into the business of loan-sharking, and frankly, it is unseemly.


 


They send credit card applications to high school and college students, to people with less than stellar credit and sometimes to the family pet.


 


They send these applications with tons of fine print.  The fine print often says that they reserve the right to jack up the interest rates to exorbitant heights.  Sometimes the rates go as high as 36 percent.


 


Those are rates that make the local mob-affiliated loan shark competitive.


 


And it is all in the fine print.


 


The credit binge brought great confusion to the marketplace.


 


On some occasions, consumers pay 200 to 300 percent more for their televisions or their cars, money they don’t have for products they don’t need.


 


That money all flowed to the banks, and up to the CEO’s and in small measure to the shareholders.


 


Everybody got rich, like it was one big party.  Consumers got their big-screen televisions, CEO’s got their bonuses, shareholders got their dividends, and politicians got their campaign contributions.  Everybody got something, until everybody started to wake up. 


 


And then the hangover hit, and it hit hard.


 


This bailout is like a super-aspirin.  It might cure our headache.  Not sure if it will cure our bigger problems, but it will cure out headache, and that is a start.


 


The American people understand that the party is over.  That is why Sarah Palin’s comments last night about people taking more responsibility for their spending was so powerful.


 


But they also blame the bartender – the banks – for over serving them.   They believe that the institutions that made this credit so easy, so seductive, and so unaffordable, deserve some blame too.  And on that point, they are exactly right.


 


I am glad this bill has been signed into law, because it will help cure our financial headache.  It won’t completely cure our economy, but it is a start.