It is no secret that the banking industry is clamming up in the soft economy we live in today. It's not hard for most Americans to point the finger at what or who is responsible for the shift in procedures and the banks willingness to do business with people and businesses. Today, we consumers and businesses encounter a mixed bag of reactions from the banking industry when going about our daily business; whether it's shopping new car rates or going through the mortgage application process, or even making a capital gains purchase for our business. In all these scenarios and numerous other ones, banks have changed the rules.



Some of the most common examples of this can be seen in low or zero percent interest rates on automobile loans contrasting to stringent regulations on first mortgages and home equity loans. Like any business, a bank has a memory and a lot of business is trial and error. Banks tried to be lenient with home loans for a few years and now we're in the biggest housing market crunch in American history. Why? They took too many risks lending money to people they shouldn't have. Not to sound mean, because we've heard the stories and all of them are sad; however, it's not the banks fault that a customer willingly signs on for an adjustable rate mortgage, or sees a rate drop and immediately swings for the fences on his or her first mortgage, only to find out that they'll have to feed their family macaroni and cheese and bologna sandwiches for the next thirty years while eating on patio furniture in their dining room.

Don't laugh! Truth is, they got sick of bologna sandwiches; not the banks fault. The fallout from a lot of this is that banks are scrutinizing every deal that comes across their desks and are forced to walk the line on qualifying criteria for loans. As well, they have been forced to lay off staff and find themselves making increasingly difficult decisions on "the American dream" with little sleep and in a hurry

Automobile industry, same thing; after September eleventh you could take your pick of just about any car or truck you wanted for zero percent financing for up to seventy two months. That was great for a while, but what about in 2005 and 2006, when it came time for those car owners to trade them in? What most Americans were met with is low trade in values due to low used car prices because of the huge inventory of used cars hitting the market all at once. This was not bad for banks; now they could raise rates on used cars because the prices were low and the best play the auto industry had was to lower rates on new cars. Sorry, they already played that card, so now what? Here's an idea, source parts for American cars from China to lower costs, close American factories and bring the new car rate back down to zero percent.

The upside is that business and capital gains loans are accessible and banks are making an attempt to fix the problems created over the last six or seven years from the bottom up. Merchants and small businesses have been affected as well; banks are imposing higher discount rates and fees associated with merchant's credit card processing capabilities to the point that some businesses are turning to merchant service providers to source them banks outside the United States for cheaper, less restrictive credit card processing. In all, we know banks aren't perfect; however, they are taking the right steps today to ensure we have a tomorrow that is better than it was before the banking industry had to tighten up.