 Meredith Whitney, CEO of Meredith Whitney Advisory Group, appeared as a guest on CNBC this morning. A few weeks ago she was on CNBC also, and gave her outlook at that time as well. You can read more about her position then as well as watch a video of her interview from that time here: Meredith Whitney Turns Bearish Again. This morning she made some interesting comments, some of which have been bothering me and I’m sure many other people for quite some time. One of which being that she thinks the government is “out of bullets”. Her main concern that she sees a cause for concern is the lack of credit that is available for consumers. She said consumers are “getting kicked out of the financial system.” I have to agree with her. In my own experience, my Home Equity Line was canceled with my bank, Bank of America within the last 3 months. The letter I received said that it was canceled and my new limit was zero dollars, due to the fact that the value of my home had decreased below my HELOC.
First of all, the value of my home has decreased….. from the peak of the market, not from when I purchased my home, which was when I opened my HELOC. On top of that, I don’t have a mortgage, my home is paid off. So why was my HELOC canceled to zero? As soon as I received the notice I immediately knew it was the banking industry conducting business without any concern for their customers, especially those customers who have made them money over the years. Instead of trying to operate a business with the intention of making money with good customers, they are now blocking the majority of people out completely, good customers and bad. After all, they received money from the government to get them through the hard times, why do they need any more money form good customers? In years past, banks obviously lent money too easily to people at extreme degrees, who shouldn’t have been given loans in the first place. This was one of the, if not the main cause for the economic downturn that we have all been experiencing to date. Now, they are restricting credit to the opposite extreme, cutting off access to credit almost completely to all consumers. Someone needs to tell the banking industry that there is a middle ground, where banks can provide credit to creditworthy customers and operate as a successful business. In other words, there is a middle ground. Instead, they previously had swung too high to the upside and are now swing too far to the downside. It’s a shame they don’t see their mistakes at the expense of the entire economy. Ok, enough of my story, here’s a video from this mornings show with Meredith Whitney on CNBC: Copyright © 2008-2009 Online Stock Trading Guide, LLC  | 
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