Banks emit
A friendly tone;
At least until
You want a loan.

I have here in my hand, as Sen. Joe McCarthy used to say about alleged communist evidence, a bona-fide “Delivery Authorization” from Wachovia Bank (“a Wells Fargo Company”). They’ve already sent two. By simply moving a gold sticker from the top of the sheet to the reply form at the bottom, and entering the last four digits of my Social Security number, I can get my valuable “free” credit report.

Of course I’ll also need to sign on the dotted line. That act will not only rush me my free report but will also commit me to paying $12.99 per month for a further series of updated reports until, more or less, Hell freezes over. The amount will be conveniently deducted from my Wachovia bank account.

Trouble is, I don’t happen to need this service, nor, with only the rarest exceptions, does anybody else. It’s just easier for banks to make money with gimmicks like this than by the messy business of offering loans.

The “free credit report” is by now a familiar sales technique modeled on those slippery publishers who have long used it to sell unwanted subscriptions. Thus banks have dutifully fulfilled the requirements for entering that same elite category of slimy scoundrels.

They started a while back by quietly charging unconscionable interest rates on credit cards, adding confiscatory fees if you were ever late. Then they came up with debit cards so you wouldn’t unknowingly overdraw your account, but quickly proceeded to add an overdraft protection and stick you with usurious rates and fees in case you overdrew anyway. Plus they wouldn’t divulge that you were unknowingly overdrawn until it was too late. From there it was just a small step up to subprime loans, credit default swaps, and all those other murky depository dealings.

In fact, murky dealings are where banks now make much of their money so that they can pay their murky top executives excessive salaries. For example, they don’t really relish timely debt payers like you and me as credit card customers. They prefer folks who struggle to stay even and who regularly fall behind. These are the ones who sink into their clutches. That’s where the profits are.

They also don’t favor savvy homeowners or other borrowers who try to refinance their existing debts at today’s lower interest rates. New loans and mortgages are strongly resisted just now. Banks want you to keep paying at your old inflated rate, if you wouldn’t mind, until current rates ratchet back up. Then they’ll cheerfully offer you a loan. In the meantime, they’ll just hide in their vaults and play the bond market while huckstering credit cards and needless credit reports.

Congress is hammering out the final details of a financial reform package that, among other things, will create a new consumer financial protection agency. Let’s hope it will actually put an end to such Wall Street fraud and abuse.

But the new financial regulations will fall short in other areas. For example, neither the White House nor Congress have supported proposals to break up the “too big too fail” banks.

President Obama seems incapable of appointing officials in top economic posts who have much interest in reining in Wall Street. Treasury Secretary Timothy Geithner, Fed Chair Ben Bernanke, and National Economic Council head Larry Summers are all from the old failed school of banker supremacy.

Suffice it to say, that old school has no great interest in reform. Things are going just swell for them, thank you. Sure, the economy may be in the tank and personal suffering may be near universal, but not on Wall Street. Salaries and bonuses there remain huge and sacrosanct. Massive campaign contributions go to making sure that any new federal or state laws can be readily circumvented, and so far those dollars have been remarkably well spent.

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William A. Collins

OtherWords columnist William A. Collins is a former state representative and a former mayor of Norwalk, Connecticut.

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