The online version of the New York Times has a series on the impact the current economic downturn is having on ordinary Americans. Interviewed for the series are a young couple, a middle age woman, and an elderly woman, all of whom are at risk of losing their homes because of debt.The villains in the piece are the banks and other financial institutions, which make obscene profits off the misery of ordinary people.
According to the article, unlike in the past, banks don’t hold loans on their books. They package the loans and sell them to investors generating large fees. In the past it was critical to lenders to be repaid. Now getting paid is less important than the fees the loans produce.
Home buyers are charged 50 percent more in junk fees. To buy a home, mortgage lenders charge junk fees such as $75 for emails and $100 for document preparation, and $70 for courier services, inflating the cost to homebuyers an average of $700.
Fees also play an especially strong role in the credit card market. Although interest rates may have fallen to the single digits, credit card companies charge even those with good credit around 19 percent in interest. Average late fees have almost tripled since 1994 and charges for exceeding credit limits has more than doubled.
These changes net the financial institutions billions. This unchecked greed on the part of the financial institutions coupled with weak job growth is causing untold misery for millions of Americans.
