Obama’s Landmark Initiative

A year ago, most of the banking industry was knocking on the doors of the federal government for a bailout to allow them stay afloat. As we know, the government obliged, pumping in billions of dollars of taxpayer money into these banks. Things seem to be on the up and up, and banks are looking to return bailout funds, Obama has pressured them to be better lending facilities for people looking to borrow money against homes or businesses.

Are Banks Stronger Now?

Wall Street and banks got immediately in line to weep and beg for Momma to rescue them from the mess they caused. The government obliged, but asked that banks help return the favor, and take steps to ameliorate the damage to the economy. Banks have been repaying the money that the government had provided out of taxpayers’ money, with the latest among these to do so being Citigroup and Wells Fargo. Citigroup’s announcement was they were ready to give $ 20 billion back to government set a series of meetings in motion, which led to the present situation.

Banks’ Strong Commitment

The President has sought assurances from these banks that they would look to serve the interests of the very people from whose money they had been bailed out. This got the ball rolling. Bank of America has announced that it will increase lending to small business and homeowners by $ 5 billion over the next year, which will make people much happier knowing that their applications for borrowing money may be approved. Banks have also told the President they would look at applications that had been turned down during the last year. Better times are surely ahead for people with applications that had been denied, as well as for those who are ready to apply for a loan.

Lending Practices Tightened

Banks have assured the President that they would look to revive the economy, thereby keeping the commitment they made. Some banks have suggested plans for an improvement in unemployment figures, which are currently hovering at 10 percent, by looking to hire more people as well as extending their loan portfolios. However, they have also stated that they would look at lending practices and be more stringent with the requirements than they were a few years ago. They do this to make sure they are avoiding non-performing assets, such as what happened with the foreclosure fiasco. Banks are willing to lend to borrowers who qualify for the loans, but not without several procedures designed to keep them from needing another bailout.

Credit checks will be used without exception, as well as requiring more documentation to be provided. Difficult as this will be for some people to borrow money, it will keep bankers satisfied about the kind of loans they make, and it will keep in check the number of defaults that banks had to face prior to the bailout coming into play. Consumers that actually meet the stricter qualifications can borrow money from banks at reasonable rates, if all goes well.

This entry was posted on Sunday, December 27th, 2009 at 3:11 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.