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Customers aren’t too fond of banks but investors may be

By Dian Vujovich

It’s real easy to dislike banks these days. For openers, these financial institutions have made it financially challenging to use many of their services. Limited, if not totally gone, are the days when the banker at the corner personally knew you and your family and consequently had a say in the kind and amount of business conducted. That’s too bad too because without a good customer/banker relationship our individual and business growth gets horribly stymied.


Many with stellar credit ratings can’t get a mortgage even when they’ve ample cash for a down payment. People are grossing about the ridiculous levels of fees on everything from overdraft ones to those tacked on when there’s not enough money kept in an account, etc., etc. Worse yet might be the fees involved when someone decides to close their account and leave a bank altogether.


I’m not sure if it’s the banks that have stolen a page from the airlines playbook and gone fee crazy or the other way around. All I know is banks pretty much stink when it comes to doing quality-conscious business with their customers.


According to Mybudget360.com,  $29.5 billion was charged in overdraft fees last year. That’s a big slap on the customer’s hands and a dandy addition to a bank’s coffer. Then again, when it comes to borrowing money, the Fed Funds rate (the interest rate institutions charge one another to lend balances overnight) has been close to 0 since 2009 while the average interest rate customers pay to use their bank credit cards is 15 percent.


Even with mortgage rates at historic lows, in the neighborhood of 3.8 percent, few banks are lending meaning few individuals are able to purchase new or used homes.  Without a vibrant real estate market, the kibosh gets put on everything from employing people within all aspects of the new home business along with those involved in the secondary home market. That includes those who renovate them or sell home furnishings, appliances, lawn maintenance services etc., etc.


We all know that banks have plenty of moola but instead of loaning it out to get America growing again, many are preferring not to while still electing to take investment risks with the money depositors have entrusted to them. All of which adds up to a ridiculous situation. Especially when growing our economy is something the U.S. is in desperate need of.


On the other hand, which is a hand that seems to be carrying way too much clout these days, there are the investing opportunities in the banking and financial arena.


On Friday, (6/8/12) the four most active banking stocks by volume wereBank of America (BAC); JPMorganChase (JPM); Wells Fargo (WFC); and Citigroup (C). All closed below their 52-week highs.


As of 10 a.m. this morning, all four were trading higher.


Bottom line: While there are still risks involved within the banking and financial arena, there are opportunities.


That said, profits to be gained are one thing but not everything. Better to have a growing economy than a stagnant one. Better to have banks lending than hoarding. Better to keep your customers happy than your shareholders. Shareholders ruling is akin to the fox guarding the henhouse.

To read more articles, please visit the column archive.

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