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ThoughtsOnline

Monday, September 21, 2009


It has a nice pop to it, but writing that Congress looking into the fees banks charge borrowers is "the latest sign that the financial crisis is shifting the balance of power from banks toward borrowers" signifies a complete ignorance of reality.

Repeat after me: the balance of power will ALWAYS be with those who have the money... for the simple reason that people with money won't lend if they think the balance of power has shifted to borrowers. And the fact that banks and credit card firms are still lending indicates that they don't think that any such shift has taken place.

Granted, banks may not have as much power as they have previously had, that they have had some restrictions placed on what they can do and when they can do it... they may now have, to arbitrarily pick a number, only 80% of the power they used to have. For example, instead of immediately being able to foreclose on a house, they have to jump through some hoops, or instead of immediately being able to raise the interest rate lenders now have to wait some prescribed time.... but who in their right mind would consider this a shift in power to the borrower? Yes, I would rather be a borrower with some protection than no protection, but in no way would I consider myself to have the upper hand.

Granted, this shift - down to 80% from whatever level it used to be - is technically a shift towards the borrower. And thus, this shift may be what the reporters are referring to.. but my guess is that they weren't, that they do think that borrowers somehow now have the upper hand when it comes to dealing with banks.