Just when you thought that the big Wall Street banks couldn't do anything more to tick you off after giving their executives huge bonuses and going back to their risky trading ventures while taking so much government bailout money, they do more things to make any decent person crazy. Did you see the Business Week article that came out on August 5th? If you have high blood pressure, you probably shouldn't check it out, but otherwise you should:
A new trend in business loans is to link credit lines to credit default swaps, those financial weapons of mass destruction that were a major prime mover around the 2008 market collapse. Citibank, JPMorgan and Bank of America are all doing it.
With many states passing laws against the local firms that were doing payday lending, or at least passing usury laws against this outrageous practice that is essentially legalized loan sharking targeting poor people, the big banks are using interstate commerce laws to get into the market. Wells Fargo and U.S. Bancorp are among the loan sharkers expanding into this market.
Morgan Stanley, Smith Barney and UBS are now selling a new kind of highly complex derivative for small investors. Offering attractive rates early on, they can easily turn into massive potential losses down the road. But because of their complexity, it's hard for small investors to understand the potential losses.
Seriously, when do these Wall Street bankers have no shame whatsoever? Sorry, I guess we all know the answer to that question. And since they have none, the federal government needs to come down on these firms like a ton of bricks. Regulate them, prosecute them, and break them up are the only answers to keep these amoral leeches from bringing our fragile economy down again.
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