I learned of this through my interview with Michael Sichenzia.  He said that it is critical to follow up and make sure that your file is being reviewed.  He also said that it is much tougher to go through this process on your own.  His firm assists homeowners with this process and has a good success rate.  I believe that the price for the service is $550.  If you want to talk to Michael about his program and get his assistance in the entire process, he can be reached at 1-866-596-0337.  Although it might be tough to come up with $550, having the peace of mind of letting a professional handle it does make a lot of sense.  If you want to do it on your own, copy and paste the form below, fill it out, and fax to your lender.

 The form can be found here – you can copy and paste the form or duplicate the wording yourself.  It is just a template of the letter Michael uses.  For full disclosure (and Michael does disclose this in all of his work), Michael was convicted for securities and mortgage fraud.  This is a well known fact. Since his release from prison, he has been on a crusade educating people on mortgage fraud and scams.  He has made this his life mission.  In my dealings with him in interviews, I have found nothing that makes me question his integrity.  There are probably more scam artists in the loan modification business than ethical people.  You have to be very careful.

Tags: Bob Brooks, Deceptive Money, Homeowner and Stability Plan, loans, Michael Sichenzia, modified home loan, Mortgage payments, Mortgages, Obama Administration, Prudent Money

Many radio listeners have inquired about the request letter for the Government home loan modification program.  If you send this letter into the bank, by law they have to stop any foreclosure proceedings while they review your application for the Government program.  I finally received the letter.   The blog is written.  It will be proofread tomorrow morning and posted probably no later than 9 am.   Thanks for your patience.

I will be posting information on yesterday’s show on loan modifications as soon as I receive it.  If you are facing foreclosure, you really should listen to yesterday’s show.  It is invaluable information.

Today, I read a disturbing article in the Wall Street Journal. It was talking about advisors who have finally seen the light that buy and hold is not an investment strategy that is always effective.  Now, they are going to start managing accounts and using alternative investments. 

I am very glad that financial advisors are starting to see that traditional asset allocation and buy and hold investing isn’t the “Holy Grail” when it comes to investing.  They have been horrible investment strategies for the past 10 years.  Yes, I believe that managing money is the most effective way of making money in a bear market.  However, if your advisor is all of the sudden changing strategies, you better make sure that he or she knows what they are doing. 

From firsthand experience, money management has a huge learning curve attached to it.  Money management is not at all easy. There is so much that goes into it.  It is a skill that continually develops over time.  In managing money, alternative investments are most commonly used to make money in bear markets.  However, this is not something you cut your teeth on in money management.  

Even the best of the best make mistakes in their money management. However, they learn to make up for those mistakes.  That is only learned through experience. Do you want to be the learning curve? 

I just think about starting back at ground zero and trying to learn to manage money again.  Then I think of trying to learn in the most difficult stock market that we have seen since the Great Depression.  It is very dangerous.  Everyday that we get closer to socialism, the money management game changes.  It is not easy at all.

The bottom line – If you are looking for a new advisor, look for one who has money management experience.  If your current advisor wants to change into a management type strategy, ask lots of questions.  You might be sorry that you didn’t.

Tags: advisors, Bob Brooks, Deceptive Money, financial advisors, loan modifications, money management, Prudent Money, Wall Street Journal

I typically don’t double post blogs.  This is the blog that I wrote on the debt blog today.  I wanted to make sure that you saw this blog in the event that you are considering credit counseling.  These companies are all over the place promising to solve your problems.  BE CAREFUL!!

First, let me say that there are some good credit counselors out there that focus on credit counseling and help people with realistic strategies to get out of debt. They don’t push debt settlement and they don’t promote debt management programs that consolidate everything into one payment.  Then there is the majority of the debt solutions industry.  I write extensively about this in my book Deceptive Money.  I offer a stern warning because these companies can make your situation much worse. 

In fact, the Federal Trade Commission just issued a warning to be careful and offered these guidelines if you are looking to secure the services of a credit counselor. 

This is the type of thing that you encounter with these services.  I received an e-mail from a listener and this is what she had to say:

One company has offered a 31 month payback of $396 a month, this including $15 processing fee and $10 monthly fee.  Another company was offering $401 a month for 60 months, with a $50 processing fee and a $35 monthly fee.  As I can already tell, this plan will be 29 months paying for fees.

I was also contacted by Freedom for Life (I want to include the name of this company for obvious reasons). Boy they are nuts.  They want you to voluntarily go delinquent on credit cards for 6-7 months.  Then they will take a set amount from me a month to go towards a settlement that they believe the credit card companies would ask for. 

That is absolutely the worst advice anyone could give. You never voluntarily let credit default.  These people should be held liable for that type of advice.

Incidentally, one of the companies would not even give her a proposal until she committed. So, she has no idea how this company is going to magically make all of this debt go away so quickly.  I will get the chance to look at these proposals and write about the results.  You have to be careful.  These proposals are so far from reality.  I would argue that this is something you can do yourself in most cases.

Tags: Bob Brooks, Credit Card Companies, credit counselors, Deceptive Money, Federal Trade Commission, Fees, Freedom for Life, Prudent Money

Make sure you read the Debt Blog this morning – Budgets Don’t Work…but you still need a system

Does anyone really believe that GM is going to make it?  I realize that everyone wants to be optimistic and hope for the best.  I am just trying to add a little bit of realism to this situation.  Quietly last week, GM took another 2 billion dollars from the coffers of the taxpayers to “tie them over.”  We (you and I) are continuing to fund the operating expenses of GM.  I don’t know about you…I don’t like loaning my money to bad companies.

GM announced on Friday that they are going to discontinue the Pontiac line.  I was very sad to learn the brand that brought us the Great American muscle car, the Trans Am, was going away.  Growing up I had a love affair with the Trans Am.  In college I drove a white 1979 Trans Am with a gold bird on the hood.  Her name was Trigger.  Roy Rogers had his trigger and I had my white Trans Am.  Sorry… I had to take a trip down memory lane. 

This morning GM is trying desperately to restructure their liabilities with bondholders.  They want bondholders to exchange their bonds for GM common stock.  Incidentally, if these heroic measures don’t work, bankruptcy will wipe out the common stock.  Other than being an executive at GM, the other person I wouldn’t want to be right now is a GM bondholder.

The bigger story is that regardless of GM staying in business or going bankrupt or going away all together, we will be on the hook for decades as taxpayers.  Guess who gets to pay for those pension benefits?  The Pension Benefit Guaranty Corporation (PBGC) insures up to $54,000 per year for each of the traditional, defined-benefit pensions of workers whose employers go broke or otherwise come up short.

Well, just like everything else Government-run, that fund is in trouble as well.  Seeing that the Government fund was underfunded, the former director decided to take their investments and invest into riskier investments.  Yes, that individual thought it was a great idea to invest heavily in the stock market in SEPTEMBER 2008.  That was when the stock market was 31% higher. 

The Obama administration needs to make some tough decisions and stop waiting on GM to pull the Hummer out of the ditch.  This is just throwing billions of our taxpayer money down what looks like an endless pit.

Tags: Bob Brooks, bondholder, Debt Blog, Deceptive Money, GM, Obama Administration, pension benefits, Pontiac, Prudent Money, Stock Market, Taxpayer Money, The Pension Benefit Guaranty Corporation, Trigger

Blogger’s note:  I typically don’t post the same blog on the debt blog  and on this blog.  However, you really need to read this and understand what the politicians are doing.  I follow the credit card situation very closely and this is completely ridiculous.

Yes, it was the drama in Washington.  The entire world is a political stage.  The actors were in full character yesterday as the politicians were going to give the credit industry executives a thing or two to think about.  All of the sudden everyone is talking about what we have been writing about for months.  This is really old news. 

President Obama said that he is determined to get a credit card law that eliminates the tricky fine print, sudden rate increases and late fees that give millions of consumers headaches.

President Obama, those rules were already passed last December.  There really is nothing more that can be done.  Of course, that is what the credit card executives told him yesterday as well. 

“He disagreed with that case and believed that more needed to happen,” White House Press Secretary Robert Gibbs said of Obama.  Really, the rules and regulations passed by the federal regulators will do the job and the two proposals floating around in Congress are merely carbon copies.  I think that we have it covered.

So, what is the big deal?  Of course, enter stage right, Senator Dodd had to have a sound bite. 

Senator Dodd wrote a letter asking the Federal Reserve, the Office of Thrift Supervision and the National Credit Union Administration to enforce those rules immediately.  Well, Senator Dodd, there is a problem.  We have the rules ready to go but the credit card companies don’t have to comply until July 2010, giving them ample time to raise rates and do whatever they want.  

Hey, I have an idea!  Senator Dodd, why don’t you write that into the legislation you are trying to pass in Congress?  Make those credit card companies comply immediately.  Oh, wait, I forgot.  You were originally going to do the right thing and give them a short-time period of 3 months and then you changed it to a date sometime in 2010.  Didn’t you say something like the credit card companies didn’t like that and it wasn’t politically feasible? 

Let me be a politician for a day in Washington and I will fix the problem. 

If you are a credit card company, you no longer have the right to raise credit card interest rates for any reason other than a consumer who has been late with a payment of more than 30 days.  This goes into effect retroactively back to January 1, 2009.  For anyone’s rate that has been raised between now and the first of the year, you must reduce that interest rate back down to the original rate. 

Is it me, or is this just the biggest game being played?  Once again, the truth is that the politicians are always going to take care of the hand that feeds them.   However, they have to look like they are serving the American people.  Thus they talk aggressively and take very little action.  We are on our own.

Tags: Bob Brooks, Deceptive Money, federal regulators, Federal Reserve, interest rates, National Credit Union Administration, Office of Thrift Supervision, politicians, President Obama, Prudent Money, Robert Gibbs, rules and regulations, Senator Dodd, Washington, White House Press Secretary

OK, I am having one of those Excedrin days again.  According to a newly released poll, people really do think that President Obama is the Savior of the world.  I don’t know where I have been.  I thought we were deep in a recession that closely resembles what we experienced in the 30’s.  I thought that we were looking at a REAL rate of unemployment close to 20% (and the stated rate from the Government is not correct).  I also thought that we were spending money faster than a college student with his first credit card and an open line of credit.

Yes, this is the opening of an article that I read this morning. 

“For the first time in years, more Americans than not say the country is headed in the right direction, a sign that Barack Obama has used the first 100 days of his presidency to lift the public’s mood and inspire hopes for a brighter future.”

Does socialism really give us a bright future?  Here are the results as stated in this article:

-While there is evidence that people feel more optimistic about the economy, 65 percent said it’s difficult for them and their families to get ahead. More than one-third of Americans know of a family member who has recently lost a job.

-More than 90 percent of Americans consider the economy an important issue, the highest ever in AP polling.

-Nearly 80 percent believe that the rising federal debt will hurt future generations and Obama is getting mixed reviews at best for his handling of the issue.

And yet, the percentage of Americans saying the country is headed in the right direction rose to 48 percent, up from 40 percent in February. Forty-four percent say the nation is on the wrong track.

OK, let me get this right.  90% believe that the economy is the most important issue.  65% of families are struggling.  80% believe that we are destroying our children’s future…yet…people are optimistic about the future?

Can we really take the associated press seriously?  Well, I cannot tell fact from fiction anymore.  I am going to write this off as the AP doing a PR job for the Obama Administration.  If not, it just points to the comment that I made this week about the dumbing down of America.  If people are optimistic, then people are completely in the dark about what is occurring in this country.  That is why you will never get the type of public outcry that will make a difference.  The minority are the only ones not drinking the kool-aid.

Tags: Bob Brooks, Deceptive Money, economy, federal debt, Obama Administration, President Obama, Prudent Money, socialism

The hallmark of this administration is to say one thing and slowly and methodically do another.  President Obama stated that he was against nationalization of the banking system.  However, nationalization is occurring.  Unfortunately, the American people don’t see it.  Nationalization is when the Government takes control of an industry.  They are aiming for the biggest prize, which will be the first step towards true socialism, the banking system.

No, I am not a conspiracy theorist.  I am just watching the administration and what they are doing.   The good thing about the politicians is that old politics are out the door.  They are practicing new politics.  The old way was to do things behind your back. The new way of doing things is politics right in front of you.  It is so very obvious.  Let’s look at the three things they are currently doing.

1)  The Obama Administration does not want banks to pay back TARP money – Ask any banking executive who has taken a loan from Big Brother, and they will tell you that they want out.  Goldman Sachs and JP Morgan can pay back the money.  Secretary Treasurer Geithner says no.   He says that there might be hurdles for the banking system yet to clear. Well, Geithner, if that is the case, then loan them the money back.  As taxpayers we want to be paid back.  The real reason is that the Government loses control without the TARP money. With the banks having the TARP money, they retain a degree of control. Of course they do not want them to pay back the money.

2)  The Government is stress testing the largest banks and then releasing the data – This plan is just about as ridiculous as the first point.  First, the FDIC stress tests the banks on a monthly basis.  There is no need for the Government to do so.   Second, even if they think that is necessary, releasing the information of how weak or strong banks are is very risky and could further damage confidence.  The real reason I believe is that they can use the “results” of the bank stress tests to say that nationalization might be needed.  They can point out that things are worse than they thought and the Government might need to step in. 

3)  The Government wants the banks to convert bail-out loans to common stock – Now the Obama Administration says that they have found a way to stop spending taxpayer money.  With this new idea, they will use common stock instead.  This gives the Government control and ownership over the banks through the use of common stocks.  The real reason is that they are using a multi-prong attack on the system to take it over. 

Maybe I am very misguided and I hope that I am. I hope that readers can come back and say I was completely wrong and need my head examined.  It all adds up and doesn’t make sense.  Yes, America, our Government is taking us down the road to socialism.  Nationalization of the banking system is one of the first big moves and the healthcare system will be the next.

So, are we ready to stand up for our rights yet?  Realize that the majority of America sees no problems here.  It is going to take way more than a handful of tea parties to stop this process.

Tags: Banking System, Big brother, Bob Brooks, Deceptive Money, FDIC, Goldman Sacha, Government, JP Morgan, Nationalization, President Obama, Prudent Money, Secretary Treasurer Geithner, socialism, Stress Testing, TARP money

I was listening to a speaker talk about how God wants us all to live abundantly.  It wasn’t long before the message quickly switched to money.  Now the message was that God wants us to be prosperous.  Of course, you can guess what was coming next.  The remaining message had undertones of “give money and God will reward you financially.”  

There is no question that God promises us a life full of abundance.  It comes down to how you define abundance.  The challenge that I have with the prosperity gospel is the lack of qualification of the message.  The message is that you give and God will financially reward you.  He will bless you abundantly.  Some even go as far as saying your debt will go away and your financial problems will disappear.  

It is spoken as an absolute.  Stronger absolutes such as the promise of financial prosperity can motivate people to give something to a ministry.  There is something in it for them.   The motivations for giving can start to become clouded when the message veers from God will bless you to how God will bless you.

Yes, God will bless you abundantly for giving in all forms.  Keep in mind that there are many different ways to be blessed and being blessed financially is only one of them.  We lose the message the moment we start defining how we think that we should be blessed.  As I have always said, God will bless you for giving. He chooses how you will be blessed.   

If you were in the spirit of giving as Paul describes below, it wouldn’t matter.

 ⁶Remember this: Whoever sows sparingly will also reap sparingly, and whoever sows generously will also reap generously. ⁷Each man should give what he has decided in his heart to give, not reluctantly or under compulsion, for God loves a cheerful giver. ⁸And God is able to make all grace abound to you, so that in all things at all times, having all that you need, you will abound in every good work.  

II Corinthians 9: 6-8

None of what Paul writes refers to “specific” blessings.  He doesn’t write that God will make your debt go away or solve all of your financial problems.  Of course, God could choose to do so.  Paul writes that each one of us should decide to give what is from the heart (between you and God) not reluctantly or under compulsion. Unfortunately the methodology of many ministries today is to raise money.  

The promise of financial prosperity as a result of giving is not necessary to motivate people to give.  When you reach people and speak to their heart, coercion is not necessary.  People give out of the desire to give and to be in a relationship with God not because they needed the blessing defined ahead of time.  Unfortunately, so many of these ministries don’t trust that to be the case.     

Tags: abundant, Bob Brooks, Compulsion, Deceptive Money, Financial Prosperity, Giving, God, II Corinthians 9: 6-8, message, ministries, Paul, Prudent Money

Over the weekend, I received an e-mail from a listener in Japan.  He listens to Prudent Money via the daily podcasts.  He was asking me about an investment trading strategy that he had some success using.  He asked me if it were a zero sum game if he was making money while everyone else lost. 

My answer to him was that whenever someone loses money, there is someone who makes money.  When the market was going down last year, there was someone making money.  With any investment trade, you have a winner and a loser.  You just need to have a strategy.  What most investors think of as a strategy might really end up being a disaster.  This listener has gone out and learned an investment strategy.  Buying and holding and doing nothing is a strategy.  However, it is not a good one considering this particular environment.

When I speak of this particular environment, I am talking about the new environment which is a permanent change.  I truly believe that we will never go back to the old days (pre-2008) when it comes to investing.  If I am correct in my thinking, those who do not adapt to this new environment could be in for some real heartache.

Well, consider the environment and tell me how this enormous amount of debt is going to go away and things get back to normal.  Also consider that the Federal Government seems to be set on continuing to add to the debt on a daily basis with more and more government spending.  The following excerpt is from Michael Panzner’s blog Financial Armageddon.

Even under the best of economic circumstances, tax season is a tense time for American households. The number of hours we collectively spend working on our returns is probably a lot more than government agencies claim.

The burden in financial terms is even greater: A recent independent survey found that the average American’s total federal, state and local tax bill roughly equals his or her entire earnings from January 1 up until right before tax day.

Now imagine that tax bill doubling over time.

In recent years, the federal government has spent more money than it takes in at an increasing rate. Total federal debt almost doubled during President George W. Bush’s administration and, as much as we needed some stimulus spending to boost the economy, the nonpartisan Congressional Budget Office now estimates total debt levels could almost double again over the next eight years based on the budget recently outlined by President Obama.

Regardless of what politicians tell you, any additional accumulations of debt are, absent dramatic reductions in the size and role of government, basically deferred tax increases. Remember the old saw? “You can pay me now or you can pay me later, with interest.”

To help put things in perspective, the Peterson Foundation calculated the federal government accumulated $56.4 trillion in total liabilities and unfunded promises for Medicare and Social Security as of September 30, 2008. The numbers used to calculate this figure come directly from the audited financial statements of the U.S. government.

If $56.4 trillion in financial commitments is too big a number to digest, think of it as $483,000 per American household, or $184,000 for every man, woman and child in the country.

So, this is the environment that we are dealt and it is full of risk.  Investors need to learn a strategy or have someone manage money that understands the concept of strategy and investing versus buying and holding.

Market Update

As I wrote last week, my indicators are sending a warning sign right now.  The markets are having a very tough time this morning (at the time of writing).  This is the worst morning opening that we have encountered in a while.  It is important to look for a change of character in the market.  This is pre-mature and purely on gut feeling.  I think that we are seeing a change of character right now. The bear might be back.  

Tags: "Financial Armageddon" blog, bear market, Bob Brooks, Congressional Budget Office, Debt, Deceptive Money, Investment, Market Update, Michael Panzner, President Geroge W. Bush, Prudent Money, Strategy, The Peterson Foundation

Is Obama’s bail-out plan for homeowners helping?  It is tough to keep up with all of the bail-out programs.  As a refresher, this plan was put together to provide incentives to homeowners and to banks for modifying loans.  In this blog, you can read all of the details.

It is really up to the banks to participate and apparently banks are giving the Obama plan a real “thumbs down”. Now keep in mind that many of the main banks postponed the foreclosure process to help homeowners in distress.  The latest foreclosure numbers show a 24% increase in the first quarter of this year.  From March’08 to March ‘09, there was an increase of 46%.  It doesn’t sound like the homeowner is getting the bail-out.

On my stock market outlook blog, I wrote about some statistics in John Mauldin’s newsletter.  John Mauldin writes that there are reportedly 600,000 repossessed homes held by banks that are not even accounted for in the statistics.  There are numerous reasons why this is the case.  Banks don’t want to take the losses.   

Then there is the other challenge with Obama’s plan.  Banks do not have the capacity to handle all of the people who want to modify their loans.  Apparently homeowners are staying on the line for an hour at a time and getting transferred from one line to another and never reaching a live person.  Meanwhile foreclosures are continuing to escalate and homeowners feel defeated.

Tags: Bob Brooks, Deceptive Money, Foreclosure, Homeowners, John Mauldin, loans, modifying loans, President Obama, Prudent Money

Now, taxpayers who owe taxes get to deal with the debt collection department of IRS.  Owing money to the IRS is much like owing money to a payday lender.  If you have a big tax debt, it can take forever to pay it back due to the outrageous interest and penalty charges.  It is no different than the exorbitant interest rates charged by payday lenders. 

What about the rest of us?  Well, one of the many major initiatives that Obama is undertaking includes overhauling the tax code.  We already know that anyone with an income less than $250,000 will not get their tax “brackets” increased.  However, what about the rise in other forms of taxes?  How can the government accomplish that?  They do it by tinkering with the tax code.  The raising of taxes for ALL Americans is being done under the radar.  Most Americans will feel the pain of an increase in taxes and never know what has happened to them.  

The bottom line is that an increase in tax revenue is the only thing that is going to pay for this irresponsible spending in Washington.  We are going to be paying for more than just AIG bonus plans.  We are going to pay for everything.  You just cannot spend your way out of a financial crisis.

Tags: 401(k), Bob Brooks, Deceptive Money, financial crisis, interest charges, IRS, President Obama, Prudent Money, Retirement account, Tax Bill, tax brackets, Tax Code, tax revenue, taxes, taxpayers

When I see marketing information that is not altogether true, I always want to point it out on the blog.  I have written about this in the past.  However, I think it is worth addressing again.   In the world of investing, the mutual fund industry desperately wants you to believe that buy and hold investing is not dead and that it is still a very viable investment strategy.  I would argue that buy and hold investing has its place during some time periods.  However, it is not always appropriate in all types of markets. 

As of today, the S&P 500 is at the same level it was in May of 1997.  For anyone who has bought and held over the past 12 years, that strategy has probably been a disaster. 

In an e-mail to advisors today, one mutual fund company tells its advisors what to say in order to comfort investors during this horrific bear market.   They make several points. First, you have to accept that over the long-term the market goes through bull and bear markets.  This is a part of life.  Of course, what they don’t say is that investors typically make money in bull markets and give it all back in the really bad bear markets.  They also don’t differentiate between normal bear markets and the kinds of bear markets that make history (like this one and the one in the 1930’s).

Then they make the most misleading point.  “Besides, there are more good years than bad years in the stock market over time.”  OK, on the surface that would make anyone feel better. That is something very easy to show on a stock market chart.  It could be a real source of comfort.  However, there is a very valid reason why there are more good years than bad years.

The reality is simply that you need more good years to compensate for the damage done by the bad years.  For instance, it took only 17 months for this bear market to erase almost 13 years of growth in the S&P 500.  In the 1929 bear market, it took 22 years to come back from a loss produced in 33 months.   

Although an interesting statistic, it is not one that should give any buy and hold investor comfort.

Tags: Bob Brooks, buy and hold investing, Deceptive Money, Prudent Money

So, what is the newest frontier of debt collecting?  Well, it happens to be collecting from the dearly departed. Yes, debt collecting from families who have just lost a loved one.  Now, let’s start with the legal obligations of debts from someone who is now deceased.  A debt is still owed regardless of whether someone is still living or has passed away.

However, the only way a debt collector can collect that debt is by going after the deceased’s estate.  The surviving family only has an obligation for the debt to the extent that there is available money they would receive through inheritance.

If there is no estate, the surviving family has no legal obligation to make that payment.  

What if there is no estate?  What do the debt collectors do at that point?  Well, there are two approaches.  One approach is good old debt collector harassment through the form of guilt and playing on emotions.  The second approach, as described in a New York Times article, is “empathic active listening.”

At one debt collection firm, they put their new hires through a 3-week training program to teach them to approach the surviving spouse or family member with a mix of the “comforting air of a funeral director and the nonjudgmental tones of a friend.”

If you ask me, this is the lowest form of debt collecting.  If there is no estate, the family should be left alone.

Tags: Bob Brooks, Debt, Debt Collecting, Deceptive Money, Prudent Money

Bank of America announced last week that they would be raising rates on roughly 4 million credit card holders due to the rising delinquencies and tough economic times.  I don’t know who gets picked for the rate increase.  However, I am sure that they have some type of formula that they have designed to pick accounts that will benefit the bank.

Bank of America was the poster child for credit card debt.  They were handing out credit like it was candy.  That was occurring up until probably about 4 months ago.  They especially encourage credit card holders to move money over to them and to hold a balance.  Now they want to penalize those who carry a balance and pay on time.

So, this is where this rubs me the wrong way.  If it were not for you and me, Bank of America might not even exist.  No one really knows in the secret world of the good ol’ boy club how much money Bank of America has taken from the taxpayers.  I suspect that Bank of America has taken an enormous amount.  After all, they have a ton of liability as well as the consequences of buying Merrill Lynch and Countrywide.  Both of those deals had to be a favor to the Government.  Neither deal made any sense for Bank of America.  I am sure that Hank Paulson was doing the old “you take care of me and I will take care of you” deal with Ken Lewis.  So, I would suspect that you and I are really on the hook for billions.

At the same time, Congress wants to crack down on the practices of any company that takes money from the federal Government.  They also want to get rid of credit card abuse.  They especially want to prevent banks and credit card companies from raising rates for any reason like Bank of America is doing.  The federal regulators have already passed laws that would ban this practice.  However, those laws don’t go in effect until July 2010.

So, should Bank of America, who is the recipient of billions of taxpayer dollars, be allowed to raise rates when this practice has already been defined as abusive by the federal Government?  The federal regulators already told credit card companies that they want them to adhere to the new laws even though they don’t have to until July 2010.  Well, I guess everyone in Washington is going to turn their backs as Bank of America socks it to about 4 million people.  Wasn’t it Congress that wanted to ban all of those abusive credit card practices? 

Here are some words from the Honorable Christopher Dodd.

“This is the moment for credit-card reform,” Sen. Dodd said. “We cannot recover if we allow practices to continue that drive so many families deeper and deeper into debt.” 

Well, Politician Dodd, you guys are certainly doing your job.  It would be very easy to say enough is enough and not allow banks and financial services who are taking taxpayer money to continue practicing abusive tactics.  By doing nothing, you are going to allow 4 million families to have their debt costs rise in the coming months.  

What are your thoughts?

Tags: Bank of America, Bob Brooks, Christopher Dodd, Congress, credit card debt, Deceptive Money, federal government, federal regulators, Hank Paulson, interest rate, Ken Lewis, Prudent Money, taxpayers