Thanks Tricia,
You are such a great source of information for everyone who reads this board.

We have our mortgage with WaMu. It's a fixed rate with 7 years left and a fairly low balance compared to the value of the house. It seems totally unfair that WaMu's problems could have an effect on our credit score. Thank goodness we pay off our credit cards every month.

Barbara

We have a mortgage with Countrywide and our checking accounts at WAMU. We just completed the purchase of 2 tri-plexes and had no problem getting credit. Our credit scores were 810. It would have been higher, but I had opened a lot of credit cards just to get the freebies that was being offered. It didn't seem to damage us much though.

The stores each lender has on their lists is proprietary but if you think of it from the eyes of a lender you can pretty well figure out for yourselves the stores that will cause a problem.

Having a zero balance on your CC will not save you from having your line reduced. Then, to add insult to injury (IMO) if your line is reduced...the lender reports to the agencies that they've reduced your credit for cause.

DH & I had a little tussle this weekend over this issue. :)

I also feel it's unfair to penalize somebody who's not delinquent just because they shop at a certain store or have a mortgage with a cratering mortgage lender. I didn't win the tussle. He pointed out a few valid points...reluctantly I had to agree. For instance, if somebody uses their CC at the grocery store it may very well mean they are running short on cash. There's also known stores where people pinching pennies historically shop. Since lending criteria are usually proprietary & they can lend to whoever they wish, or not, as long as no laws are broken...I guess we'll have to live with being "branded". :(

Another example, if you drive a Beemer & usually shop at Saks then suddently start showing up at Wally World every week...well, I concede that's a good clue there's been a change in spending patterns that could mean trouble ahead. I still don't like it though...feels too much like Big Brother's watching for my tastes. (Sigh)

In the article, I'm guessing the problem was his frequent electronic store purchases. They were for his business but all the lender saw was some guy who was likely addicted to toys. Unfair? Sure, but he who has the money makes the rules.

Guess I'll start paying cash for gas. Speaking of gas...my local station is now offering a $.15/ga. discount for cash Monday-Saturday & will no longer accept CCs on Sunday. We're not in Kansas anymore, Toto!

/tricia

I don't use my credit card much, only for purchases where I want to be able to have some re-course, although I had considered starting using it more just to get points, but I think I'll pass on that right now. I still pay it off every month though.

Sounds like some class action law suits coming up. I don't use my CC much, but do use the debit card.

Trying to guess a customer's credit worthiness by tracking purchases is not that reliable, I believe.

I, for example, always use my CC for groceries - In fact, I buy almost everything I consume using my CC because I find cash inconvenient and I don't like the lack of protection from debit cards, which are directly linked to my checking account.
Also, my CC "earns" me star alliance miles...

I don't have any debt (no mortgage, no car loan, no student loans) besides the consumer debt on my CC that I always pay off each month, own my house, two almost new cars and have a 6 figure+ household income. I would be amused, if my (way too high anyway) limit would be reduced because they think I am low on cash because I use the CC at the grocery store LOL!

This was in the Sacremento Bee. As a responsible adult that has always lived within my means and paid every debt on time I am outraged at this. Because of the greed of a few the rest of us will pay for generations. Itd bad enough that we have lost 25% of our 401k and canÂt get any interest on our CDÂs In my grandsons generation folk will be bragging about how they bought a house for half a million and had the principal dropped down, got an interest rate of as low as 3.5%, lived in the house for 20 years and sold it for three quarters of a million. Boy what a great country we live in. Talk about the redistribution of wealth!

This is the guts of what the article in the Sacramento Bee said:

A legal settlement announced Monday by Countrywide parent Bank of America and California Attorney General Jerry Brown promises an $8.4 billion rescue operation to save an estimated 125,000 California borrowers  among 400,000 households nationally  from losing their homes.
Bank of America agreed to freeze and lower interest rates, suspend foreclosures and waive late fees for live-in homeowners who took Countrywide loans from 2004 through 2007. A few who already lost homes also are eligible for some aid. The firm said it will begin reaching out Dec. 1 to borrowers deemed eligible for help.

WHAT THE DEAL MEANS
Bank of America has agreed to an $8.7 billion settlement to help up to 400,000 Countrywide mortgage holders nationwide. California's share of the settlement is $3.5 billion, expected to help up to 125,000 people. Here's a look at what the plan means for Countrywide borrowers in the state:

 Covers Countrywide subprime and option adjustable rate mortgages made from 2004 through 2007. In some circumstances, it covers borrowers who are defaulting on prime loans and Alt-A loans.

 Offers $3.4 billion for loan modifications. Includes reduced interest payments and, for some borrowers, reducing the value of loan principal to current value of the home.

 Waives $33.6 million in late fees charged by Countrywide.

 Waives $25.6 million in prepayment penalties for borrowers who refinance loans or receive modifications.

 Provides $27.9 million to borrowers who are at least four months behind on payments, or have already lost their homes.

 Provides $25.2 million in payments to borrowers who receive loan modifications, but still lose their homes in the future.

partst,

The Bee article makes me feel sick. I'm hoping you're going to tell me this is limited to people that can prove outright fraud by Countrywide?

jrdlh,

The banks are not using these criteria exclusively. They are adding them to the already existing underwriting process. In your situation, you wouldn't have a problem obtaining credit no matter where you shopped. The criteria are intended as another means of weeding out marginal borrowers.

This morning's futures look terrible. At the burn rate of the past few days, there will be nothing left in the Dow after another 19 days.

This 'Crisis on Main Street' is becoming a self-fulling prophecy. It won't matter whether individuals or local banks played by the rules...everybody's going to pay for the greed of the few. I'm furious about the AIG executives & their little spa get-a-way paid for by us taxpayers. How b@llsy was that?! That $400,000 needs to be reimbursed immediately, those guys all fired, & prosecuted if any actual crimes were committed (if it's not...it should be a crime!). No other resolution is acceptable.

It makes me sad that all banks/bankers are being painted by the same brush even though they've done nothing wrong & never participated in the subprime market & never purchased a mortgage securitization. Today, people are afraid of all banks. Ya can't blame them...but it's still very frustrating. They were punished during the boom because they didn't grow fast enough (by not participating in subprimes) & now are being punished again by just having the word 'bank' after their name. I hope when this is all over that as the 'last man standing' they will be vindicated. There are thousands of banks who are, even today, sound & safe.

While I've been typing the future have improved but are still negative.

/t

Tricia..

I dont know enough about it yet but it looks like anyone who took out a loan with them. But I would hope there would be a public outcry about the one line that jumped out at me "REDUCING THE VALUE OF LOAN PRINCIPAL". That said there is so much public outcry at this point this may go unnoticed.

Ive always thought that if they made Countrywide, and the others, go back and redo the loans for the people in trouble over their creative financing, offer then a 30 year fixed rate of 6%, and if they qualified and could make the payments, we would all have come out better in the end. Sure there would have been some people that wouldnt qualify but most would have.

It still would not have been fair to the rest of us. It would not have helped the readjustment of home values that was needed but if it could have stopped a major portion of forecloses that seems to be at the bottom of this mess. Maybe, just maybe, we would not be in as deep as we are.

I guess what really bother me is it just feels like a slap in the face to all the people who have always been responsible. We are getting slapped in every direction. We have lost 401 money, cant make any money on our savings, the equity in our homes that we paid off has lost value. And I cant decide if I should leave any of the money we have left in the banks or take it out and bury it in the back yard. The paper its printed on may be worthless at this point. Oh and now our credit score may suffer! People have lost trust in just about everything and all this due to greed and the greedy are getting rewarded.

I think next months headlines will be the end to life as we have always known it if they cant fix this and fix it soon. By next month hundred of thousand, maybe millions will be out of a job. Business is hurting, small or large, at this point we are all in this mess together whether we like it or not. DH went to work today and offered to take a 25% reduction in compensation. He is trying to convince his managers that if this is what it will take to keep the business going it is better than closing the doors and having no job at all. But if people cant get credit it will only be a matter of months before the doors will close anyways.

Claudia

I don't care if they have to re-amortize the loans into 40 to 50 year loans, but they better not reduce the principal. Like Claudia said, that would be a slap in the face to every homeowner who put their own hard earned money down on a house and took out a responsible loan that they could afford to repay. Am I going to get a rebate because my home is worth less than it was 2 years ago?

The best example of this housing mess is what happened in my family this last year. My parents built a house up here in the mountains for weekend use way back in 1962. My dad being a contractor built it and it was a pay as you go build. We all used that house for years. When my parents retired up here they live in that house while they built another house. I lived in it when we were building our house as did my sister. The house sat empty for some time and finally dad decided to rent it out. That worked out kinda ok but he, we, still had to go in and clean, paint replace things every time someone moved. Dad ask if any one cared if he just sold it. We were all sick of the headache of it so he sold it about a year before the housing boom . He found a very nice older widow who lived on a teachers pension and didnt have much money saved. He only ask for $1000.00 down, carried the mortgage, and gave her a rate of 6%. She was happy and didnt have any problem making the mortgage payments. He was happy that he helped someone get into a house. Plus at the time 6% was about the only rate he could get on a CD. Move forward almost 10 years and I get a call from my dad telling me she is refinancing and paying off the mortgage. Thats fine so I help him figure the payoff and fax it to you guessed it Countrywide. They, Countrywide, send dad the loan documents to look over and we find out that she now has some kind of mortgage that the way I figured it she would owe more money after the first five years than she is borrowing. Plus she is paying off almost $20,000.00 in credit card debt and taking a little over $50,000.00 in equity. Her payment only went up a little and she told my dad she planned on doing some traveling and refinancing again in a couple of years.

So now with the Bank of America plan she could get the principal cut back to just about what it was when she bought from my dad, housing values have dropped back to pretty much what they were when she bought it from him, she can get a new mortgage at a 3.5% rate and her payment will be lower that she was paying my dad. Plus she gets to keep the over $70,000.00 she got with the refinance. I know she went to Hawaii last spring and she has a new car but I guess I should be happy for her.

This is why I am so p#%%#@ off at this whole mess. I have seen firsthand how it works.

19 days left? That puts Zero Day on November 5th (or 6th if the NYSE is closed on election day).

I grew up reading "after the bomb" science fiction books, and books about civilizations that used to be mighty, but fell back to the stone age after some calamity. It is so eerie to sit here and watch everything self destruct in slow motion.

DH and I just returned from a 10 day vacation in neighboring states. I insisted (calmly) on taking lots of cash with us because I did not trust that the credit cards would still be working if Congress ran into trouble with the bailout. DH got very angry at me and said I was hysterical. You can imagine how well THAT word went over with me! After the fur and feathers settled, I did get $1200 cash to take with us. About halfway through the vacation DH admitted that it may have been a good idea - when the House voted down the rescue package. I almost insisted that we change our plans and go no further than "one tankful of gas" away so that we could get home if things got bad. We ended up spending our last half of the vacation only one tank away, but for other reasons. DH was seeing things differently by then!

We moved into a larger house in the fall of 2005, after I had worked for a year at a higher paying job that allowed us to handle a larger mortgage - and after DH's 90 year-old father moved in with us and I lost my craft room. We got the old house up for sale March 1, 2006 and followed the falling prices down. We never had an offer. We did not know we should have dropped price further and faster. We ended up signing a lease-to-own contract on the house on August 1, 2007 and have had a nice nurse and her son making rent payments to us that almost cover the cost of owning the house. So far, we are fine, since we can afford both homes even without the rent. We have paid off the credit card used to fix the old house up for selling. We will have the new furnace for the new house paid off in a few months. (If you don't have a CO alarm, GET ONE - IT CAN SAVE YOUR LIVES!)

As you all have said, we have been totally responsible. We made bad decisions and paid for them and not complained. We know that the nurse will never get a mortgage (foreclosure a year and a half ago) and we are resigned to owning two houses into the distant future. We are even bleeding heart liberals who are all for the little guy getting ahead. But if others get their financial fixes BECAUSE they were not responsible, while we continue to pay our mortgages on time every month, I will not be happy. We were just as much victims of the crash as they were. Our rent-to-own contract is hardly worth anything right now, since she will never qualify for a mortgage and it would be cheaper for her to walk away and leave us the $6000 in "down payment" money we have been collecting as part of her rent every month. She can lose that $6000 and still come out ahead buying the house at the lower comparable price someday in the future. But since we were responsible and only bought houses small enough to qualify for the "Smaller Homes" forum on THS, we will not get the bail out that less responsible people will get.

It seems to me that WaMu was the first company our local bank sold our mortgage to after we closed on the refi about five years ago. Does that qualify me as eligible? And how many people in my same boat will figure out that defaulting on their mortgage is the BETTER financial decision to make? And how many decisions like that will it take for the economy to totally tank?

Now if they had only dropped the bomb on us instead - THAT is something this former adolescent sci-fi freak would know how to deal with! Radiation is a whole lot more concrete than this "loss of trust in the market."

It makes me sad that all banks/bankers are being painted by the same brush even though they've done nothing wrong & never participated in the subprime market & never purchased a mortgage securitization. Today, people are afraid of all banks. Ya can't blame them...but it's still very frustrating. They were punished during the boom because they didn't grow fast enough (by not participating in subprimes) & now are being punished again by just having the word 'bank' after their name. I hope when this is all over that as the 'last man standing' they will be vindicated. There are thousands of banks who are, even today, sound & safe."

I hope your right about the thousands of banks that are supposed to be sound & safe. Its hard to tell who is really 'safe' when the FDIC can't/won't tell us who might fail next for fear of a bank run.

I have a Citi card, but have been trying to use my credit union card more often instead. I'm soured on giving Citi with my business after all the games they played with their books that now require giving THEM a bailout.

Isn't it ironic how they can negatively affect a good customers credit rating even though they are the ones who screwed up?

dreamgarden: "I'm soured on giving Citi with my business after all the games they played with their books that now require giving THEM a bailout.'

More of a reason to sour on Citi:

Excerpts from article:

The Wells Fargo deal is better for shareholders, employees and taxpayers. If Citigroup is desperate for deposits, it should go find another bank to buy....

......Citigroup is right to walk away -- even if it has to be paid to do so -- and go find something else to buy.
Wells Fargo (WFC, Fortune 500) wants to buy all of Wachovia for about $15.7 billion, or $7 a share. Citigroup (C, Fortune 500) announced four days before Wells swooped in with its bid that it planned to buy just the banking assets of Wachovia for about $2.2 billion, or $1 a share.
Do the math. $7 or $1? Which is the better deal for Wachovia shareholders? Hmm......

.......But most importantly, the Wells deal puts no taxpayer money at risk. None. Wells agreed to take on all the potential losses from Wachovia's troubled loan portfolio......

.........So let's do the math again. Wells puts zero taxpayer dollars at risk. Citi's deal potentially leaves the FDIC holding the bag on $280 billion in losses. What's the better deal? Hmmm.
As one of this column's loyal readers, Jay Black, put it in an email to me, "This whole thing with Citi and Wells fighting over Wachovia is ridiculous. Citi will cost the [government] money and Wells will not. That's a no-brainer to me."

........Instead, the FDIC said last week that it is standing by the Citi deal but is also "reviewing all proposals...to pursue a resolution that serves the public interest."
But when would cutting a bank into pieces and potentially putting taxpayer money at risk be in the public interest..........

.......Citi has more options. If Wells Fargo now is willing to pay nearly $16 billion for all of Wachovia and not ask the FDIC for any help, then what's the problem? It's time for Citi to now go back to the drawing board and start shopping for something else."

Is Citi one of the banks being bailed out?

Not yet...but they have lost billions...layed off quite a few people, took away everyone's Blackberrys, cut back almost all travel, eliminated color copies, is now selling its back office ops to Tata (a company in India)...need I go on?

They are probably not far from needing a bailout as well..

Dreamgarden,

"Its hard to tell who is really 'safe' when the FDIC can't/won't tell us who might fail next for fear of a bank run."

Please don't take this as an insult. I don't mean it that way. But, it's easy to tell if a bank has practiced soundess & safety. Learn how to read a corporate financial statement. All of the bank's filing are easily available at several websites. Think about it...Americans place their life savings in an institution without understanding that institution's business plan. If the business plan is so complicated you can't comprehend it then choose another bank! Americans need to increase their financial understanding. Don't rely on somebody else to tell you whether your money is safe, or not.

I'm a banker & I can't understand BAC's or Citi's financial statements. So, the answer is easy. I bank at institutions where I CAN understand the statements! I don't shop for the cheapest checking account, the cheapest loan rates, the lowest fees, open the longest hours, etc.

I shop banks for quality!

Americans give more thought into chosing a new suit than they do where they put their life savings. Who's fault is that??

/tricia

I just re-read my post & believe there's an implication that there might be something wrong with either BAC or Citi. I have NO IDEA! I can't understand their statements. I used those institutions as examples of large, complicated business plans. I bank at institutions that are pretty simple...they take in deposits & make loans balancing risk in the process.

Learning how to read a financial statement is not difficult. If you can do a home budget you can understand a bank's "budget". Learn the industry standards & apply them to the statements.

People will sleep better at night if they know what their bank is doing with their money.

/t

"eliminated color copies"

Penny wise, pound foolish?

Am I glad, I don't do business with that bank.

"Learn the industry standards & apply them to the statements. "

OK, I'm game! Where do I start? I have absolutely no idea who to trust on "the industry standards" of banking. Is there a book? Web site? Online course?

Do these standards apply equally to credit unions?

susanjn,

Good for you! Yes, yes, there's lots of places to start learning. Here's just one website to get you started.

Credit unions - basically, yes; but with a few diferences

1.) There are more restrictions on credit unions' investments (my, that's sounding good right now, huh?);

2.) With credit unions there will be less emphasis on the Balance Sheet for Return on Equity & Return on Assets but both should still be positive. Remember, excess earnings go back to members thru higher interest on deposits & lower interest on loans. (ROA of 1% is very good);

3.) Credit unions are Not-For-Profit...very different than a For Profit commercial bank. So, you'll not see any provisions for either Federal or State taxes on the credit unions' financials.

There's probably a few other differences I'll think of as soon as I hit "Submit" but that'll get you started.

If you'd like a book recommendation...give me a shout out & I'll get right back to you either via email or here.

/tricia

This is a good place to repeat why credit unions don't pay taxes. I've done this before so for those of you who've already read it...sorry but I think it's important since we're in the middle of an election cycle & taxes are on everybody's minds...especially corporate.

It goes back to St. Mary's Bank ("La Caisse Populaire, Ste-Marie" (The Peoples Bank), Manchester, New Hampshire circa 1910('ish). There was discrimination of French Canadians by local commercial banks & immigrants were basically red-lined. So, St. Mary's Bank (credit union) was established to serve the immigrant community. They are the first credit union in the country.

Credit unions are Not-For-Profit, democratic, financial cooperatives, owned by their members.

Credit unions Boards of Directors serve as unpaid volunteers, elected by members.

Credit unions, with limitations on who they can serve and restrictions on products and services, also have a social mission to provide service to people of modest means as part of their member base. The industry motto is, "Serve The Underserved".

Credit unions were created to provide financial services in a democratic, Not-For-Profit, cooperative manner with member ownership and control. Those characteristics are the foundation of the tax exemption. Early in the history of credit unions, the U.S. attorney general declared state-chartered credit unions exempt from federal income taxes because they were "organized and operated for mutual purposes without profits".

In the 1930s, legislators passed a law to exempt federally chartered credit unions from federal income tax for the same reason. Today, legislators continue to maintain that status because credit unions, while growing and changing, still operate in this unique way.

Credit unions Boards of Directors serve as unpaid volunteers, elected by members. Credit unions return all excess income to members, in the form of higher deposit rates, lower loan rates, and lower fees. Credit unions dont need to create profits to pay stockholders, as do banks.

The amounts banks pay stockholders dwarf their tax bills: Over the past five years, theyve paid almost $100 billion more to stockholders than in taxes.

Commercial banks have been lobbying hard for years to remove credit unions' tax exempt status. Commercial banks say that because credit unions may now offer services similar to banks it's not an even playing field.

/tricia

dreamgarden-"Its hard to tell who is really 'safe' when the FDIC can't/won't tell us who might fail next for fear of a bank run."

triciae-"Please don't take this as an insult. I don't mean it that way. But, it's easy to tell if a bank has practiced soundess & safety. Learn how to read a corporate financial statement. I'm a banker & I can't understand BAC's or Citi's financial statements. So, the answer is easy. I bank at institutions where I CAN understand the statements!"

No insult taken. I do find it surprising though that as a banker, even YOU can't understand BAC's or Citi's financial statements. How does this bode for those of us who don't have your background/expertise in financials?

As for learning how to read corporate financial statements. I really don't want to have to spend that much time trying to determine if my bank is solvent (and going to remain that way), anymore than I want to have to get a pilots license before I get on the plane.

People shouldn't have to work this hard to get this kind of info from their financial institutions. The whole crux of the sub-prime debacle stemmed from 'creative' (deceptive) accounting practices (CDO's, SIV's, etc) that even our government can't figure out.

Here is an interesting article I read in the Christian Science Monitor that touches on the subject. Thanks for posting the information about credit unions. Very helpful.

Financial firms need 'nutrition labels'
By David Peck
Oct 10, 2008

"Is my money safe?" That's question No. 1 for many Americans today. And it goes to the moral heart of the global financial crisis: lack of trust.

But some of this trust can be restored simply and inexpensively. My idea? What the Food and Drug Administration (FDA) did for food-product labeling must be done for financial institutions. This, more than the over-reactive overregulation that's sure to come, is an important step to restoring the public's trust in financial firms once the dust settles.

Thanks to FDA guidelines, whether we're buying vanilla yogurt or meat lasagna, we can look at the label and know what we're getting. How much fat? How much sugar? How many calories?

These questions are answered before we ever buy. We may choose to ignore them for a Ben & Jerry's binge, but that's our own business. We don't need to be nutritionists to make an informed decision.

When you put your money in a bank, brokerage firm, insurance company, or other financial institution, do you know between their own internal policies and the regulatory requirements how much, for example, of your dollar the firm is holding in reserve for available cash and to cover sour debts? Is it 10 cents? 30 cents? If this information were available to you in a simple way when choosing where to put your hard-earned money, wouldn't that be appealing?

As a former senior executive at a brokerage firm with responsibility at the time for $21 billion in assets, I had to sit through frequent meetings to discuss our standing versus the regulatory capital requirements for brokerage firms, and I can tell you we boiled it down to a simple number that everyone in the room economics expert or not could understand.

All I'm asking is that something like this be made simple and accessible to potential and actual customers ... to you. I challenge all financial institutions to be the first to do this.....

Links that might be useful:
www.csmonitor.com/2008/1010/p09s03-coop.html

Ditch your bank for a credit unionarticles.moneycentral.msn.com/Banking/BetterBanking/DitchYourBankForACreditUnion.aspx?page=all

"He pointed out a few valid points...reluctantly I had to agree. For instance, if somebody uses their CC at the grocery store it may very well mean they are running short on cash. There's also known stores where people pinching pennies historically shop."

Now wait just a dang minute... if the credit card companies actually cared about consumers, would they continue to maintain a business relationship with these shady retailers? If they can identify a particular retailer as being a credit risk to the consumer, they should no longer let that retailer carry their card.

Guess we can't have that - might be fair, or something.

News flash: the banks are not on your side.

mfbenson,

There is nothing "shady" about these businesses. It is not a bank's job to "care" about a consumer. They are not caregivers nor babysitters. The retailer is not a "credit risk" to the consumer or lender. It is the consumer's behavior that represents risk to the lender.

Banks are under no obligation to lend money to anybody. If people don't like a particular lending institution's underwriting criteria it's very easy to avoid...don't borrower. First people complained that banks lent too freely. Now, it seems some are trying to say that banks are unfairly limiting borrowing. Which way is it?

"Fair"? What does that mean?

"Banks are not on your side." Again, what does that mean? Lending is not a team sport.

/tricia

"It is not a bank's job to "care" about a consumer."

Mr. Potter from Its A Wonderful Life couldn't have said it better.

""Fair"? What does that mean?"

If you have ask, you wouldn't understand.

"Lending is not a team sport."

Try doing it with no consumers.

mfbenson,

Ahem. I keep repeating this but guess I need to say it again. Not ALL banks are involved in this business we're seeing on the news everyday. Thousands continue about their daily activities just as they've always done...slow, steady, conversative, & safely. Remember the old banker adjective "stodgy"? Many still fit that description perfectly. Their customers do not come to them for handholding nor caregiving. They come to the bank for a business relationship. Both sides review the deal & both decide for themselves if it fits their needs. Most all business contracts are weighted more on one side than the other...few are 50/50...even joint ventures or direct partnerships. The word, "Fair", IMO with regards to lending is that the lender provides all of the terms upfront & honestly. It is up to the customer to read the contract & understand their part of the relationship.

I fully support severe punishment for any financial institution that has behaved in a fraudulent or deceiving manner. That's what I'd call "unfair". But adjusting credit lines doesn't fall into that category. Lenders have the right to exercise technical defaults just as firmly as debt service defaults. It's not the banks fault if people never read those contracts provided with a new CC.

/tricia

Thanks, Tricia. There's a lot to read there. I've gone through some of it now, and will continue.

Also, thanks for the credit union info. I knew why they didn't pay taxes as a not-for-profit, but didn't know the history.

mfbenson-If tricia says "It is not a bank's job to "care" about a consumer.", then you ought to take her word for it. After all, she is a banker!

Here is what she had to say in the Household finances forum/A Tale of Two Widows thread after I mentioned a link one could use to look up how safe one's bank might be. She said:

"I'm sure your banker was curious about where you'd obtained this so-called "B" rating. Your banker probably found it amusing since he/she knows that their regulatory rating is confidential."

I and my banker didn't find it 'amusing'. If anything, he found it depressing that I might be considering moving some of my money elsewhere if he couldn't explain why his bank didn't have a more favorable rating.

She then corrected me about how the REAL rating info is only available to 'insiders'.
"You'll not be able to find out an institution's CAMEL rating unless you are executive management at the institution. They are not in the public domain.
The regulators did not give "very favorable ratings to those who are now deeply embroiled in this sub-prime soup." The regulators do not give the public ANY bank ratings. The reasons are obvious...sometimes, an institution may be experiencing a short-term concern that lowers their CAMEL & if the regulators were to publish that information it could cause a run on the bank needlessly. There are many considerations in a CAMEL rating including temporary situations that can easily be rectified by the institution."

Could cause a run on the bank needlessly? People might take our money out! God forbid!

Wouldn't you think that the person/CUSTOMER who is entrusting THEIR money to these institutions should be the FIRST to know if their bank is on shaky ground? Regardless of whether the 'problems' are temporary or longstanding?

The message I keep getting from the banking industry is not one of very much respect.

Is it any wonder why investors, depositors are tiring of this game and moving their money to credit unions or putting it in treasuries? Your right, mfbenson. I'd love to see how they would run their banks if all the people take their money out!

A link that might be useful:

Definition of CAMEL
www.bankersonline.com/articles/bhv02n10/bhv02n10a4.html

"The word, "Fair", IMO with regards to lending is that the lender provides all of the terms upfront & honestly"

Does that include telling me which retailers I should not shop at to avoid a reduction in my credit line?

It is fair play to reduce my credit line if I do something that is spelled out in the credit agreement - e.g, miss a payment, exceed the credit line, bounce a check, but for a bank to leave its customers guessing as to where it is safe to shop, especially when all they are trying to do is shop frugally (and thus be more able to NOT default) doesn't stay within any bounds of fairness. Your initial concerns you spoke up about with your DH were right. Go with your gut.

"mfbenson-If tricia says "It is not a bank's job to "care" about a consumer.", then you ought to take her word for it. After all, she is a banker!"

Yeah. Another possibility is that I know more than I let on.