Credit Crunch From the Black Lagoon

#326 Credit Crunch From the Black Lagoon

Banks were hit by a credit crunch or meltdown or crisis. It’s like a flying saucer from Mars landed here and disgorged this previously unknown life form.

Or maybe it wandered out from the primordial ooze of the Black Lagoon.

At least that’s the way we’re thinking of it and being told about it.

The big banks were just going about their business, making loans, taking in deposits, issuing credit cards, maybe renting out a safe deposit box or two. Then, along comes this monster from outer space or from the deep. No one was expecting such a monster. No one had even heard of one.

The geneticists were puzzled. So were the astro-biologists. A new creature. Even a new form of being. And nasty. This critter went right for the Scrooge McDuck safes and with mighty jaws devoured some of the largest and most respected banks and brokerages in the world.

Fortunately for Allstate and Geico, they dodged the bullet of destruction that claims from those the credit crunch (maybe it should be written “Credit Crunsh.” Grammarians have yet to decide) hit would have caused.

And where is this monster now? No one knows. The Federal Reserve and the European Central Bankers sprayed like exterminators in a locust plague. But not knowing the creature’s biology, there’s no assurance it’s just flattened on the canvas and not really dead.

So, we think of the Credit Crunch as something not of our own making. But we’re wrong.

It’s time to learn from our friends in the street lending business about how to vet a potential customer. These are the boys who taught us about credit card interest rates, formerly known as vigorish, a term borrowed (at no interest) from the Yiddish word for winnings.

No self respecting loan shark would have tossed a spare nickel at half the people who got the loans that put the rest of everyone in a money cage. And if one did, he would know how to collect.

With banks easing restrictions to anyone with a pulse – even an erratic one, street loans were harder to come by for the last few years than a nice little adjustable rate mortgage from the stickup artists in suits at their desk at Citi or most of its smaller kin.

Can you imagine Gotti or Lansky or Costello or any of those guys putting money into the hands of the people who “qualified” for legal loans from these banks? Not on your life. Or theirs.

If the bank boys had worked for the big boys, they’d be wearing cement shoes beneath the Hudson River.

And the customers? They’re lining up at the major appliance stores. After all, it’s the holiday season and refrigerator cartons suitable for families of three are on sale cheap.

The Credit Crunch from the Black Lagoon shows no mercy.

At least the mob supplies groceries and some rent to the widows.

I'm Wes Richards, my opinions are my own, but you're welcome to them.

(c) 2007 WJR