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FOMC - Why are lending rates so low?

Lending rates are at an all-time low for the US. The FOMC is the mortgage arm of the Federal Reserve bank, a private lender with inside information as to the plans of the interest-rate setting bank. So what's the plan?

Source: TheTip, 2002-10-22

Candidate: The FED

Have you seen messages offering you incredible financing deals lately? More than usual? Ever ask yourself why money is suddenly free? The answer is - desperation.

The Federal Reserve Bank is a privately owned and controlled by bank, primarily controlled by the Federal Bank of New York which in turn is controlled by Chase and Citibank. These are the same peole who in turn own some of the big names you know from the consumer debt world - MBNA, etc.

But why are these credit card groups, mortgage lenders and others turning to consumers and offering them low-interest rates when they used to get 19%? Bad corporate Debt.

The FED announced a downgrade in the quality of corporate debt this year (see our article on the side) because of all the corporate malfeasance, accounting scandals and straight-out fraud. This means that their primary source of interest, the corporations, are becoming less and less likely to be able to pay their debts. So in order to secure income on their interest, they're turning to the people, taking on what used to be considered impossible personal and real-estate loans in order to switch their risk from corporate to personal debt.

And then what happens, when the risk has been sufficient shifted and the billions in corporate bonds have been moved to personal debt? Then the interest rates go back up! The FED already announced twice that the interest rates are at an all-time-low, and that they are likely to go up in the near term. But because of political pressure and economic problems in the stock market, they don't want to stir the waters until their money is out of the bond and stock market and into personal debt.

So when you see marketing messages like "0% down, 0% interest for 1 year" read the fine print. And if you insist on getting debt, now is the time to haggle - ask for fixed rates!!!

And when you see messages like this - remember who you will have breathing down your neck for the next 30 years:

BECOME AN INVESTOR NOW!!! BUY DUPLEX OR 4 PLEX PROPERTIES... MAKE MONEY ON TOP OF THE MORTGAGE!!!! RATES ARE LOW ENOUGH FOR ZERO DOWN 100% FINANCING WITH OUR PROGRAM!!!!!!

WE HAVE SPECTACULAR HOME OR COMMERCIAL LOANS, REFINANCE RATES AND MANY PROGRAMS FOR YOU!!! WE OFFER LOAN APPROVALS TO BORROWERS THAT HAVE OTHER THAN A PERFECT SITUATION....... NEED 95% LTV? BAD CREDIT? NO INCOME VERIFICATION?
IF YOU WERE DENIED BY SOMEONE ELSE, OR YOU WOULD LIKE THE BEST DEAL THAT A LENDER CAN OFFER, THEN SEND US AN EMAL, WE CAN HAVE YOU PRE-QUALIFIED SAME DAY AND EVEN CLOSE ESCROW WITHIN 2 WEEKS IN SOME CASES.
WE HAVE MANY CURRENT PROGRAMS TO SUITE ALL YOUR NEEDS, EVEN IF YOU ALREADY REFINANCED AND ARE DISSATISFIED WITH YOUR RATE OR MORTGAGE PAYMENT...
WE HAVE INTEREST ONLY LOANS THAT WILL CUT YOUR MORTGAGE WAY WAY WAY DOWN, WE ALSO DO "NO DOCUMENT" LOANS FOR THOSE WHO DO NOT HAVE PROOF OF ANYTHING... INCLUDING INCOME... ITS ALL POSSIBLE...

The current members of the FOMC are:

Current Members of the FOMC
Members
Alan Greenspan, Board of Governors, Chairman
William J. McDonough, New York, Vice Chairman

Ben S. Bernanke, Board of Governors
Susan Schmidt Bies, Board of Governors
Roger W. Ferguson, Jr., Board of Governors
Edward M. Gramlich, Board of Governors
Jerry L. Jordan, Cleveland
Donald L. Kohn, Board of Governors
Robert D. McTeer, Jr., Dallas
Mark W. Olson, Board of Governors
Anthony M. Santomero, Philadelphia
Gary H. Stern, Minneapolis


Alternate Members
J. Alfred Broaddus, Jr., Richmond
Jack Guynn, Atlanta
Michael H. Moskow, Chicago
Robert T. Parry, San Francisco
Jamie B. Stewart, Jr., First Vice President, New York


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User Originated Comments:

From: James P
2004-02-25 00:00:00
the hole in this theory - when the corporate bond
debt is completely dried up, corporations will
have no money and will be laying people off.
simultaneously, the personal debt build-up is
continuing despite the highest personal bancruptcy
rate in history. bad news is a'comin.
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