Pardon this rant, but what the hell are the bankers thinking? Haven’t they ever watched It’s a Wonderful Life? Don’t they get just how depraved Mr. Potter’s karma is? Not just for him, but in this age of instant global communication and connectivity, hellish for the whole world! It must be cognitive dissonance at work: “I heard about people like me, but I never made the connection” – The Banker’s Lullabye.

This past week I got an unexpected bill from Merrick Bank for their credit card. Strange, since in the last few years I made a vow to only use debit cards (which I will soon be doing away with, having recently learned that Visa has raised the merchant rate 450% over the last few years). I opened the bill up and discovered that going forward I will now be paying a tidy monthly fee for the grand privilege of keeping their card and having them additionally charge me a Shylockish 27.5% annual interest rate. 27.5%! When I called to cancel the card, the “customer service associate” sounded truly shocked that I would object to paying such a small fee for this phenomenal, convenient privilege.

(And another example of how clueless banks really are: they’re all sprinting to the finish line to raise regular rates as fast as they can before the new wimpy national CARD Law goes into effect. Once it does, banks will have to actually notify me of an interest rate increase ahead of time – imagine that – and they won’t be able to raise my interest rate on any current balances retroactively. Oh my word!).

When Did the Banks Go Bad?

I apparently missed the precise moment when America’s banks went bad. I suspect it was shortly after I filed for bankruptcy and had $140,000 in credit card debt dismissed by the courts. It’s not something I have even the smallest bit of regret about. I realized pretty late in the game that my thinking with respect to banks and credit was pretty muddled, that the way I thought of my obligation to the banks was not the same way they thought about their obligation to me. Mine felt like a social and moral obligation, while theirs was simply a business transaction (in light of recent bailouts and bonuses, some would say anti-social and im-moral).

Once I began researching exploitative banking practices – they make billions in profits by charging the poorest people the highest rates of interest! – I found articles like The Mess that Greenspan Made. These researchers asked me to consider my own conditioning and naiveté, until I finally shifted my thinking to match the bank’s. Here’s a key paragraph from one of the reports I found:

Most homeowners choose not to strategically default on their mortgages as a result of two emotional forces: 1) the desire to avoid the shame and guilt of foreclosure; and 2) exaggerated anxiety over foreclosure’s perceived consequences. Moreover, these emotional constraints are actively cultivated by the government, banks and other social control agents in order to encourage homeowners to follow social and moral norms related to honoring their financial obligations – and to ignore market and legal norms under which strategic default might be both viable and the wisest financial decision. Norms governing homeowner behavior stand in sharp contrast to norms governing lenders, who seek to maximize profits or minimize losses irrespective of concerns of morality or social responsibility. This norm asymmetry leads to distributional inequalities in which individual homeowners shoulder a disproportionate burden from the housing collapse.

Learning just how much social control and conscious manipulation goes on all the time in banking, inspired me to the empowered, legal action of filing for bankruptcy. This small shift in the balance of power – a financial Mulligan, if you will – turned out to be genuinely emotionally liberating, not to mention financially freeing. And now, with so many millions of Americans being similarly forced into bankruptcy in the last few years, I’m finding I was simply a bit ahead of the curve is all.

You’ve Got “Jingle Mail

Between 11-15 million homeowners in America, about 25% of all mortgage holders, are currently paying bank loans on houses that are worth less than the amount of their mortgage. That’s a lot like paying a bank $25,000 for a car only worth $15,000. This is not good for self-esteem or for optimal neural development, not to mention, net worth. It’s stressful, and it’s bad stress, the kind that floods the brain with glucocorticoids that impair optimal brain growth and function. This kind of stress makes us not think straight. It literally disconnects neurons in the brain. And now we not only know that stress and anxiety scramble our brains, but even more precisely how it happens: Anxiety and the Brain. And stressed-out parents’ brains inevitably trickle down and results in stressed out, neurally-impaired children’s brains. All thanks to America’s bankers.

But that’s assuming that you are able to afford your underwater mortgage and you’re not fearful of losing your job or income, and not fearful of being unable to pay that mortgage in the future. That scenario is in the Top Ten on the famous Holmes and Rahe Social Readjustment (stress) Rating Scale. Losing a job and being unable to pay the monthly mortgage is very stressful. Fear of not being able to pay it can be even more so, since it’s a dread that can keep you up at night and seriously disrupt sleep, which only adds to the stress.

And so, anything those 15 million underwater American homeowners can do to reduce that stress, from a neuro-developmental perspective, has got to be … best for the children. But don’t count on Clarence’s or the bank’s help with such stress reduction anytime soon.

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