The Tip of the Iceberg

Americans are living in debt. That is no surprise to anyone, or shouldn’t be at least. For years now American consumers have been taking on more and more debt while simultaneously saving less and less. This is obviously a toxic mixture, but who is to blame? The consumer? The greedy banking industry? The government turning a blind eye? Or some combination of all three?

According to an anonymous banking executive who sent an e-mail to The New York Times, the main culprit is the banking industry, with the government coming in a close second.

“Today, we are bailing out the banks because of their greedy and deceptive lending practices in the mortgage industry. But this is just the tip of the iceberg,” the anonymous banker wrote in an e-mail.

Indeed Americans owe $10.54 trillion in mortgages. The average American family owes roughly $117,951 while saving a mere $392 per year. As a matter of fact, in the 1970s Americans saved over 10 percent of their income. Last year, average savings rates fell below 1 percent - the lowest point since the Great Depression. Saving less than $400 per year is certainly not the way to build a nest egg for the future, but it only gets worse.

“I received a catalog today from Casual Living and in big bold print on the front page, it said “BUY NOW, PAY NOTHING”. Then in significantly smaller print underneath, it said, (until April). That mantra has been sung throughout the credit markets over the last 10 years. The banks wave a carrot in front of the consumer and reel them in and encourage them to go deeper and deeper into debt,” the banker further wrote.

Non-mortgage consumer debt for American consumers is $2.58 trillion. Americans have been marketed cheap and easy access to credit for so long that they no longer know how to say no. They are constantly bombarded with pre-approved credit card offers, promises of zero percent annual percentage rates and loans with no down payments. It doesn’t even matter that we truly can’t afford it.

“The banks reel in the consumer, charge interest rates higher than those charged by the mob, increase lines without the consumer asking and without their consent, and lure them into overextending. And we can count on the banks to act surprised when they aren’t paid back. Shame on them,” the e-mail stated.

The average family owns 13 credit cards, owing an average of $8,400 on those cards and paying $950 in credit card interest each year. Last year, Americans made over $1.5 trillion in credit card purchases. America’s obsession with plastic will come back to haunt it in the end. According to the banker, with so many Americans overextending themselves on credit, it is only a matter of time before the banking industry is looking for another handout, due to greed on their part, the naivety of consumers and the inaction of the government.

“I’ve been reviewing many of the banks annual reports over the last month and there is no question that the default rates are on the rise. If Congress doesn’t act today, the bankers will have their hats in their hand before we know it, and doing another tap dance before the Senate Banking Committee, and asking to be bailed out once again with our tax dollars. Sad, but true,” the e-mail stated.

Click here to contact your Representative in Congress.

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