Can't Teach An Old Dog New Tricks: Case in Point the Banking Industry

Remember those Trillions of US Dollars that were given to the bail-out the Banks and Investment firms that were in danger of collapsing because of providing, selling and trading of risky investments? Remember how that stimulus was supposed to convince these banks to provide or extend loans to consumers?

Well, the good news is that the banks are extending and providing loans to consumers once again.

The bad news is that these banks are doing so by providing, selling, and trading the same risky investments they did before that got them in dire straights.

Old Banks, New Lending Tricks

That didn't take long. The economy hasn't yet recovered from the implosion of risky investments that led to the worst recession in decades—and already some of the world's biggest banks are peddling a new generation of dicey products to corporations, consumers, and investors.

The lenders stress that the new products give them extra protection against default. But for companies, the opposite may be true. Managers now must deal with two layers of volatility—both short-term interest rates and credit default swaps, whose prices can spike for reasons outside their control.

With the disappearance of Fixed Rate Financing available to even large, secure firms such as UPS, HP and Toyota, the banks are still issuing CDS (Credit Default Swaps) to the tune of 40 Billion (or 70% of the loan market), but doing so with higher fees and interest rates, even for those with the highest credit ratings and secured capital.

Add in APRs of 400% on Short-term Loans and you have predatory practices on the Consumer.

So, not only do they bilk the American Consumer out of their Federal Taxes on top of their regular Fees and Interest Rates, but now they get to continue business as usual under new names, at even higher Fees and Interest Rates than before, despite Usury Laws and other State Laws to prevent predatory lending.