Shameless

Saturday, October 11, 2008
So today I get the following from Wells Fargo

Fed Drops Rates Again
Take Advantage of Lower Home Equity Rates

So the Fed lowers the rates and it's an excuse to dun up more debt among consumers. And don't tell me the folks who borrow on their house are good credit risks. There might be occasional good reasons, medical expenses and such, but I'm inclined to regard someone wanting such a loan as a bad indicator. And aren't there better things for Wells Fargo to invest in? And aren't home equity loans the main exposure of Wells Fargo to the housing bubble? But what do I know, maybe I'm just old fashioned.

3 comments:

Seneca the Younger said...

Well, making loans is what banks do, Chuck. At least someone who gets a home equity loan has equity; they're not underwater.

chuck said...

I researched Wells Fargo a bit because they are my bank. They shut down their subprime operation in early 2007, IIRC, and their major house price related risk was home equity loans. And it isn't clear to me that housing is a good investment now. So let me ask, is making *bad* loans what banks do? And do you feel any confidence that they are making good investments? The banks have our money one way or the other and we are on the hook for their good judgement, of which there doesn't seem to be a vast surplus.

In any case the rate drop was to facilitate *bank* borrowing and interbank loans. So maybe the email was just another misleading come on, but I'm damned tired of all the folks sending me mail month after month urging me to go into debt. Then when the bottom drops out we have to spend money to bail out folks who have built their sand castle empires on top of those same damn loans.

MeaninglessHotAir said...

I agree with you Chuck. Banks may have the legal right to take advantage of foolish consumers, but it is immoral. Home equity loans should be used only in emergencies. In recent years they seem to have become a standard, socially acceptable part of the culture, and that's a step in the wrong direction. "Neither a borrower nor a lender be."