Ann Minch has a question for Chase Bank after it raised the interest rate on her credit card to 21.24 percent.... "Are you stupid? Chase Bank, are you stupid?"
One of the things to come out of this recession that has surprised me the most is the stunning arrogance of the financial services industry. As the industry has imploded- largely because of their own greed and arrogance- there's been a concerted effort to shift the burden of the consequences from Wall Street onto Main Street. How many of us have seen interest rates on our credit cards jacked up to 20%? 25%? Or perhaps even higher? How many of us realized that we're playing a game in which the rules can and will be changed to our detriment whenever a financial institution deems it necessary and appropriate? Yes, buried deep in the microscopic language of most cardholder agreements is language that essentially says that a financial institution can do what they want, however they want, whenever they want...all while continuing to hold cardholders responsible for their accumulated debt. The game stays the same for the customer, but rules can and do frequently change to benefit the bank...and yet consumers have largely remained silent.
A few days ago, I got an email from Chase labeled "Important changes to your online legal agreements". No, I was never consulted, nor was I ever warned. My bank simply unilaterally decided to change the terms of my agreement with them. How is it that when a consumer signs an agreement, he or she is bound by those terms...and yet the financial institution has the perfect right to change the agreement whenever it happens to suit them?
For some reason, we've stood by mutely while the financial services industry has invented new and ever-more-creative ways to take advantage of their customers. It's as if the MBAs at the top of the food chain decided to use the airline industry as their business model. Whether it's the proliferation of ticky-tack fees or the dismissive customer service or the attitude that the customer is the problem, we as consumers have allowed this state of affairs to develop. Instead of banding together to demand fairness and equity in the manner in which we're dealt with, we've become so addicted to credit that, like your average meth addict, we'll do and accept virtually anything to enjoy continued and uninterrupted access to easy money.
The same applies to mortgages. By signing on the dotted line, we essentially give a bank the right to do whatever it determines is in its best interest. Somewhere along the line, it seems that banks lost sight of the fact that their customers are people, and their role is to serve their customers, not vice versa. Now an estimated 15 million mortgages are underwater, and few banks seem to care. While they have no problem holding mortgagors to the agreed upon terms, you can bet that if the cards weren't stacked in their favor they'd be looking to bail at the first available opportunity.
Now there's at least the beginning of a movement on the horizon. A professor at the University of Arizona is suggesting that mortgagors walk away from their underwater mortgages. Even better, he's suggesting that mortgagors walk away with a clear conscience. If banks are going to hold borrowers to an uneven relationship that breaks to their advantage, shouldn't they have to suffer the consequences of that failed relationship? No, I'm not advocating the willy-nilly ignorance of contractual obligations simply because they're inconvenient...but how is an underwater mortgage ultimately in a bank's interest? If a mortgagor is put in a position of hopelessness and powerlessness, how does that serve the interest of a bank or financial institution?
Until and unless banks and other financial institutions introduce a degree of humanity into the equation, they risk creating a situation in which borrowers may well revolt. If enough people default, eventually the bank's bottom line will suffer as well. Sound business practice, as well as simple human decency, would seem to dictate focusing on the human aspect of the current financial crisis. Then again, "banks" and "humanity" aren't words you'll often find being used in the same sentence.
WE DESERVE BETTER.
