Dear Cramer: The new assessment to refill the FDIC coffers will kill any profit that small banks make. My wife is a community banker and the FDIC wants the equivalent of two years profit in a lump sum assessment. And [FDIC Chairwoman Sheila] Bair says this is the bank's burden to bear…really? Even while we, the taxpayers, are spending trillions to keep the big bank competition on life support? Is there any sanity left in Washington? --Jim
Cramer says: “I regard the FDIC like Social Security. Do I need the Social Security? Do I need to pay into it? Hopefully at that age I will have enough, I won’t need it. But the FDIC, it’s for everybody. And when you went into banking you knew that. And you knew that they could always raise the fees. Sheila Bair…I think she’s fair as fair can be. I wish she were running Treasury. I think she’s doing the right thing. It’s a point that everybody has to bear in the banking business. And it’s always been the way it is. Why should it change now? It’s probably one of the most successful programs in the history of the federal government.”
Dear Jim: In the U.K. the banks are lending on variable mortgage at 100 basis points (1%) over the Bank of England interest rate. A homeowner in the U.K. has seen his variable mortgage rate drop from 6% to 1.5%. Why is this not happening in the US where banks are lending at FED funds plus 500 basis points? The Obama administration should allow/force the US banks to lend at Fed funds plus 100 basis points like in the U.K.. This program will not cost the taxpayer any money and will help all homeowners. Do you agree? --David
Cramer says: “I think that it’s not a realistic proposal. I think that the banks will lose too much money. There has to be some vig, so to speak, for the banks. What I have favored over and over again in this country is that the government should be in the business of issuing mortgages for the next 18 months, giving everybody who wants one, or [needs to] refinance, not just the dead beats, 4%. That will solve the problem. It’s great what the U.K. banks are doing. A lot of them are going to end up being owned by the government, though. I don’t want that to happen here [in the U.S.]”
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