Saturday, December 26, 2009
Saving the Banks
How could I a enthusiastic Capitalist and nonsupporter of the Stimulus Package and Tarp want to have anything to do with saving the banks? Well if we save the banks we save ourselves. America unfortunately rolls on credit and investments. If no one is investing then the supply of rolling credit does not exist. But you say how can we save the banks without using more of our hard earned dollars in some ill conceived bailout in which the dollars never go where they are needed and those that are are frittered away by corporate yuppies. I have a few key common sense solutions to your failing banks that don't involve a Federal Tax payer intervention with Obama corp thug takeovers or questionable acts that would result in the sinking of America or the Dollar.
1. Finish paying back the Obama Thugs and tell them not to let the door hit them in the butt on their way out.
2. Unload half of your credit card business. You heard me right. Half of your business is bad credit you know you will never see paid. The paper work alone is bankrupting you. Take your bad credit calculate the interest already paid. If it is near or over the original loan, cut it off and let the folks know they are clear and they will not be issued another card from you ever. Next based on income, anyone with more debt then what they make in a month will have their account closed as soon as it is paid off. These folks are your future deadbeats. Closd all business credit cards. If a business has to exist on credit cards, it's already headed for failure.
3. Reduce your overall interest rate on all cards to 1 percent above prime. Add that interest on overdue once a month for 6 months. If they do not pay off the balance they will have credit cut off until paid with no additional interest added. If they pay it off in another 6 months they can reestablish credit in 250 dollar incriments as they pay balances off at the end of each month for a year. By the end of a year they can reearn a credit line of no more than 2000 dollars for every income of 30,000.
4. Drop CDs and any other long term investments. Again paper work and the interest rates are just not attractive anymore. And in these tough times and computer driven society with quick decisions made people want their assets liquid.
5. Raise the interest on Savings Accounts to 10 percent. Yes you read me correctly 10 percent. And anyone also opening a checking account can have free checking for 200 checks and no fees for ATM use at the bank. An interest rate of 10 percent is what every small investor is looking for. It's the magic number. These folks will get out of the gambling stock market and other futile investments and start saving money like mad and leaving it there. You will be flush with cash to make smart loans and the ten percent will not be difficult to pay out. There will be revenue to invest in millions of small productive businesses which in general will stimulate the economy and create more jobs for more people to bring their savings back to the banks. It will create a positive cash flow.
6. Get out of other businesses that have nothing to do with banking. Diversity weakens the financial integrity of a business when your attentions are scattered in too many directions. Do one thing well.
7. Invest the bank's assets in the bank and in gold and silver.
8. Accent on customer service and make it a point to get to know your customers. That way when someone asks for a loan you will know if they are good for it.
9. Never loan money beyond a person's capability to pay it back.
10. Never loan to friends. Friends expect favors and this is business.
That's it. Rediscover what banking was designed to be in a community. A bank is a secure place folks can store their money,write notes of payment,cash notes of payment,store valuables in secure boxs and share money for other peoples loans in return for interest and apply for loans for enterprise or large ticket items like, expanding a business,buying real estate,buying transportation. The bank is a consortium of depositors and investors. The bank employees are trusted individuals that are paid to manage this collective and maintain the security of the funds of the depositors. Go back to the basics and do it well.