20 Billion Dollar Loan

Posted by: Gene M. | Dec 19,2007


So you think you’ve got credit problems?  You’re not the only one: banks where you might hold a credit card also have credit problems as well.  They just took up the Fed’s offervv for a loan of 20 billion dollars to help with the credit crunch.  Banks are complaining that the loan’s interest rate is too high.  That made me laugh.  What goes around comes around.  

But you’ll probably wipe your tears of laughter when you read the amount of the interest rate on the loan: 4.65.  Yep, banks are complaining about a 4.65% APR when all of us out here in credit crunch world are slogging through an average interest rate of 20%.  They were hoping that the loan would be at least .30% lower.  Nitpickers, they are.  Of course, I jest because a matter of percentage points on a billion dollar loan is going to outweigh even a 20% loan on your measly $10,000 outstanding debt.  Still, it makes me smile to see banks complaining about the very thing that they inflict on all us consumers.  

To be more serious for a moment, these emergency loans are extremely important, for as that article says, “The smooth flow of credit is the economy’s life blood.”  Without an investment of capital into the credit industry, we could be looking at a credit crunch turning into a credit earthquake.  Problems with credit virtually guarantee that we’re going to have to face a recession in 08, so any measures to offset a downturn in the economy should be met with some relief.  

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