The $800 trillion fraud?

Four amazing things happened in the week I went on vacation: the Supreme Court upheld the Affordable Care Act, physicists discovered one of the most essential particles for the building of the universe, a bank CEO named  Dimond resigned under pressure over the LIBOR scandal, and my Verizon cable guy actually showed up on time.

Don’t underestimate the impact that LIBOR could have.  First, credit unions use the index to establish interest rates on a wide range of products.  Credit unions, of course, are not unique in using this rate, which is used as the benchmark for an estimated $800 trillion worth of financial instruments.  We don’t know all the facts yet.  But if, as appears likely, Barclays was not alone in manipulating the LIBOR, the liability facing the world’s largest banks could make the settlement with state attorneys general look like small claims court.  As one anonymous chief executive of an international bank told the Economist, “this is the banking industry’s tobacco moment. It’s that big.” For example, if a member paid more on a home equity loan or your credit union received less interest on the loan because banks lied about their borrowing costs, then someone should look into getting their money back.  This is the most blatant example yet of banker disconnect from main street.  Anyone who doesn’t think that we need to better regulate major banking institutions after finding out that they see nothing wrong with price-fixing,  doesn’t believe in capitalism, let alone basic fairness.

Community Banks not doing enough to stimulate the economy?

This is from Reuters this morning:  Community banks “trumpet the small business loans they make because they spur job creation, a big deal in this economy with a 8.2% unemployment rate. But not every community bank is the quintessential hometown lender portrayed in Frank Capra’s “It’s a Wonderful Life”… There are more than 800 Community Banks that…lend less than half of their deposits.”   Camden Fine, President of the Independent Community Bankers of America, and one of the primary opponents on the new business lending expansion for credit unions is quoted as saying “[n]early all Community Banks are privately owned, usually by a single-family.  If the owner is risk-averse, then so is the bank… The FDIC can’t make a bank lend money.  It’s a free country.”

I couldn’t agree more, which is why I believe that credit unions should be free to make small business loans unencumbered by a government-imposed lending cap.  And one more thing:  if so many small community banks are not making loans to begin with, who is the member business lending cap really protecting in the first place?

How I spent my summer vacation

For those of you heading out to Cape Cod for your summer vacation I strongly recommend a visit to the Four Seas Homemade Ice Cream Parlor in Centerville.  It’s some of the best ice cream I’ve ever tasted.  My brother-in-law and his father, who actually lives on the Cape, assures me that their chocolate frappe may be the best concoction since water.

Incidentally, I also got to my first Met game at Citi Field and I have to admit it’s the nicest minor-league ballpark that I’ve ever seen.