Outrageous And Unsound Lending Continues

Outrageous And Unsound Lending Continues

Posted by Karl Denninger

Yes, we’ll lend you more than a declining-value asset is worth – on purpose:

In fact, Wells Fargo is one of the few lenders that will refinance a vehicle for more than its current value. That means access to cash over and above the value of the new cash out refinance auto loan.

Use the available cash however you choose. For example:

  • holiday expenses
  • summer landscaping
  • unplanned medical bills
  • vehicle expenses
  • home maintenance

And the first two examples of the uses for the money you gain by “taking advantage” of this ridiculously unsound practice?  Outright consumption with no lasting value.

Oh, and when should you consider being a debt serf?

A cash out refinance may be right if:

  • you want a lower monthly auto loan payment or rate.
  • you qualify for better terms than when you originally financed your vehicle.
  • your expenses have increased, and you could benefit from a lower monthly payment. (Ed: you’re going broke with your original terms – that is, you can’t afford the car)
  • you rent or have already accessed available equity from your home.  (Ed: you are even more irresponsible and already blew all your money from HELOCing the house to the hilt!)

This is our “responsible and consumer-oriented” banking system on display for everyone to see, as of right now, March 22nd, 2010.

As is clearly displayed we have both learned and changed exactly nothing when it comes to financial institution behavior that severely disadvantages consumers and attempts to reduce them to outright destitution and peonage, all for the purpose of driving non-durable consumption spending beyond one’s ability to afford.

Is the much-vaunted Feral Reserve’s charge to oversee and protect consumers going to get involved in putting a stop to this sort of thing?  How about CONgress? 

Has either put a stop to this sort of nonsense – or even credibly-threatened to do so?

Obviously not.