According to Obama, bankers are fat cats.  I would have to agree to a certain extent when you see the margins many credit card companies make as I wrote about in the Credit Card Caper.  Also, banks are paying extremely low rates on savings accounts as well, thus increasing their profits.

However, when the credit card laws that passed raised the minimum payment a few years ago, the new law helped send more money to the banks which in turns increases their cash positions too.

As consumers, we were pitched doubling minimum payments is to our advantage to get out of debt faster.  As with all sales pitches, doubling payments does get us out of debt faster, but as I just pointed out, by sending more money to the banks; therefore, other motives exist.

Another point on credit cards is credit limits have been reduced.  So as government moves to “protect” the consumer from banks, Washington’s attitude appears to be, “Do as I say, not as I do.”  Instead of paying off debts, the government has just raised its debt ceiling limit another $1.9 trillion!

Obviously, increases in the debt is not just the responsibility of the President, whether it be Obama or George W. or Bill C., the Congress controls the purse strings.  The Presidents submit budgets, and Congress writes the check.

According to TreasuryDirect.org, in six years from September 2000 to September 2006, the debt has increased $2.8 trillion.  In only three years from September 2006 to September 2009, the debt has increased $3.4 trillion dollars.  The reason, I break up the numbers at the fall of 2006 is because the Democrats took over in Congress.  Now, Obama has tried to slip in another $1.9 trillion to raise the debt ceiling limit and it doesn’t look Congress will cut spending, but rather continue to raise taxes.

Sure, we will see cuts in some areas, probably to the services taxpayers actually receive benefit, but the cuts will simply be transferred somewhere else…maybe to fight global warming.  Does $100 billion that Hillary committed sound familiar?

Raising taxes, spending more money, taking over the financial institutions (because of their profits) and wanting to take over healthcare (because of their profits and the demand for medical services), I think the real fat cats are those same people criticizing the private sector while writing the laws at the same time.

With debts rising, I’ll show how to make money by actually using the mega-machines (whether a bank or the goverment) habits and practices to our advantage…more to come later.

In defense of banks to begin the conversation, credit cards are unsecured loans and much more risky for banks than secured loans, such as auto or homes. The riskier the loan the higher the rate and this makes since. Wouldn’t you want more for your money knowing the potential for default is greater if you were loaning money? Credit cards are a convenience for consumers too. Okay, I’ll stop there…

In February, the new credit card laws go into effect. Great, the laws were to protect the consumers, right? After all, interest rates are not supposed to change based on activities such as other cards, etc.

Many rates will still be tied to the Prime rate, which is not really that big of a deal. Prime rates moves close to other indices, such as LIBOR for example, and really do not adjust a big amount in a year’s time. A couple of years may have to pass for the rates to move just a few points.

Right now, rates are very low and realistically can only go up.

Card companies are changing rates to adjustable rates right before the law changes prohibiting them from various activities (except for default of course).

The real caper in the credit card interest rate is the margin. The margin is the amount added to the index, Prime in this case; and the two (index plus margin) together make up the full interest rate. Margins may be 20+%. For example, if prime is at 3.25% and the margin is 24%, the interest rate is 27.25%.

When does price gouging come in to play?

Since taxpayers pay for stimulus packages (without a choice in all of the pork added to the bills), make the next package pay off individual’s credit cards and do something that really benefits people right away.

Insurance is very confusing. I don’t always understand my policy or know what is covered and not covered.

I do know insurance companies make a ton of money. But they also lose money too. My State Farm agent sent a letter with a new offer for life insurance to entice people to get policies. The reason is because interest rates are low and market conditions have caused huge losses for the insurance agencies. (I’ll explain more about interest rates and what they mean in my upcoming book.) Finally, insurance companies do pay out a lot of money too.

Even banks pay out a big amount of money. What banks pay? Listening to the get out of debt pundits, banks are evil. However, according to the Australian Banker’s Association, 46% of their income is paid out in interest and dividends. This is investment income, savings income, retirement accounts, etc.  Insurance companies pay dividends too. Do you own these types of accounts?

Owning and earning money from an insurance company is one thing. Paying premiums and deductibles is another. Big premiums, deductibles and coverage are the insurance companies’ fault regarding healthcare, right?

The McCarran – Ferguson Act of 1945 actually exempts insurance companies from anti-trust. Therefore, regulations and limited access (accesses known as competition) is at the hands and pens of the ones who write the laws.

Maybe the insurance companies lobbied the lawmakers, just like realtors do, but the lawmakers still sign the bills.

(By the way, yes realtors get involved in laws too. You don’t think all of the banking laws are to protect the banks and consumers do you? Get a copy of my soon to be released book to see more aspects of the financial world revealed.)

As I’ve mentioned in my post “Access To Capital“, whether it be companies involved in banking, insurance, oil, “green technology” and global warming, the politicians may say one thing, but pass laws that say something else.

In June of this year in Cairo, Obama said he wanted to create an exchange program to help Muslims come to America and for Americans go to Muslim countries to learn.

According to Reuters, yesterday, Hillary Clinton followed up supporting the programs in entrepreneurship, etc. in these countries as well.

Here are a few points to consider.

To begin, aren’t many of the Arab nations oil rich countries?

“Aid” –  isn’t that generally in the form of giving money, not a loan to be repaid? Who pays for this? The American taxpayers.

Bailouts for companies such as GM came from taxpayer dollars only to have the company go into bankruptcy and come out in about a month. Yet, shareholder lost when the value went to $0 and taxpayers will pay for this and other companies as well.

Next, Obama and the SBA want greater access to capital for small business.

What does access mean? Loans – not bailouts, grants or free money, but loans.  Higher loan amounts and guarantees.  Loans from the Treasury to community banks to lend.

The SBA guarantees loans to banks that borrowers could not obtain elsewhere. Therefore, the loans generally do not fit within guidelines of the bank’s practices or the borrowers may be more risky. Who picks up the tab when the SBA has to purchase the loans from the banks when the loan goes bad? Taxpayers.

Programs exist, paid by taxpayers, such as Small Business Development Centers, to assist entrepreneurs and existing small businesses.  The good news for taxpayers is that the idea is for these centers to help companies create jobs and capital formation.  This is a local benefit for the taxpayers, not overseas aid.

I would much rather “aid” and money stay at home for a while helping local and small businesses first.  Therefore, why not loan money to the other countries and use those profits to aid domestic companies instead of having the US taxpayers pay for everything, everywhere?

Citi Bank leads the lists in lobbying for financial reform. In yesterday’s video, the Consumer Financial Protection Agency passed the House panel. However, the twist was aimed at products not companies. So, does this mean the banks win? Are the consumers really getting protected? (Check out the video.)

Baron Nathan Mayer Rothschild (banking family dynasty in the 1700-1800′s) said, “I care not what puppet is placed on the throne of England to rule the Empire, … The man that controls Britain’s money supply controls the British Empire. And I control the money supply.”

In the following video, Obama doesn’t like status quo or business as usual. This seems pretty obvious. He doesn’t want to be the puppet. Therefore, he wants “fundamental changes” in America.

We can see this everyday in Obama’s actions. Socialism.

Obama wants to take over the banking industry, the automotive industry, the communications industry – just ask FoxNews and the new internet ruling, healthcare, etc. He is controlling payroll in the private sector.

But isn’t it business as usual at the White House too? Tax & spend. There is nothing different here, only it’s much more extreme now. Also, he continues the onslaught against people making money and business. “Maximize the profits at the expense of consumers.” Isn’t Obama lobbying to the American public against business?

Where would consumers get a job if the company didn’t make a profit? How do people earn money in their 401(k)’s and IRA without profits?

Earlier this year, George Stephanopoulos mentions that Obama wants control how TARP money is used. Andrew Taylor, writer for the Associated Press, mentions that Bush gave up an extraordinary amount of power to Obama.

In reality isn’t it business as usual, but with a twist.

First of all, who rights the laws?  Whether it be consumer protection or not, the irony is the banks lobby and politicians write the laws.  Then in front of the camera, business gets the blame.

The profits appear to be headed to Washington (as if it weren’t already profitable to be there in the first place) instead of private America and the consumers will get an even bigger expense, not just financially.

Sources:

Sweetness & Light

ABC News

Liberty Tree