Posted by Leonard Steinberg on June 29th, 2011

Some banks are being like governments right now: stupid. When banks do not want to lend to highly qualified, super-reliable, well educated, credit worthy clients, we should conclude that we have a MAJOR problem. When these same banks make everything in the application process so  difficult, cumbersome, illogical and painful, they cease being real banks in my opinion.

When banks willfully hire inept appraisors that appraise property stupidly (without a detailed understanding of the market, often citing comparable sales that have little or no bearing on the property at hand) we all lose. The economy loses. The taxpayer loses. Governments lose. Job growth stalls. The process grinds. Transfer tax revenue slows. Income tax revenue slows. Home improvement and renovation stalls. The list goes on.

Another bank stupidity:  Why would banks wait endlessly (in the hopes of a default that would lead to foreclosure?)and not renegotiate the rate of a loan to make the monthly payment manageable for a property owner experiencing difficulty?

When you hear about some banks reliance on excessive punitive fees to create the bulk of their profits, one cannot be surprised at their inability to create smart profits through real banking practices.

Obviously this stupidity does not apply to all banks: there are exceptions. One has to hope that banks that are acting prudently now destroy those banks that are not and rid our society of this dirty, stupid element of society.