Interesting column about how banks are refusing to lend to small businesses with perfect credit ratings.
Three years ago, the federal government used tens of billions in taxpayer dollars to save the banking system. Now, at this dire economic moment, the country needs the banks to return the favor. Pushing the country’s banks to act more like Sterling Savings Bank, and less like JPMorgan Chase, is something that the president might want to put on his jobs agenda.And how about pressuring banks to let people with stellar credit ratings refinance their mortgages to a lower rate? I contacted my lender to ask about refinancing and was told "no" because my mortgage had to be less than 75% of the total value of my house, or something like that. It didn't matter that I have a perfect credit rating, or that my place is worth a good deal more than my mortgage (in a town, DC, where property values are actually going up). No, the bank is going to insist that I pay more in my monthly mortgage payments, rather than less, because they're afraid I might not be able to pay at all.
Now think about that for a moment. They're going to make me pay MORE each month, instead of LESS, because somehow if I owed less each month that would put me at greater risk of not paying at all.
Uh, no. Kind of the contrary. Owing less each month would put more money in my pocket, which would not only make it easier to pay the mortgage, it would give me more disposable income to spread around the rest of the economy.
It's absurd that I can't refinance. And I'm sure lots of others are in the same situation I am. These are the kind of sensible things the government can and should be addressing. And for whatever reason, they're not.
