Big banks on Wall Street had been left unchecked for too long and the introduction of sub-prime lending tactics sealed the fate of U.S. financial stability. A culture of smoke-and-mirrors misleading consumers, coupled with a dire lack of regulatory oversight allowed big banks to run rampant. Years of bad banking tactics caught up with the U.S. economy in 2008, resulting in the worst economic recession seen in the country since the “Great Depression” of the 1930s. The effects were devastating.

The Effect

The fall-out left the country reeling. As Wall Street’s house-of-cards collapsed, consumers and legislatures were left scrambling to figure out what happened. Businesses folded, people lost jobs and housing, investments were liquidated and stocks bottomed out. As the dust began to settle and the economy eventually showed signs of re-righting itself, legislators gave the accountable parties a stern talking to and, for their part, big banks promised to change. And it seemed that way for a while…

Business as Usual for Big Banks

The recent scandal involving Wells Fargo’s accounts fraud has demanded a refreshed scrutiny of big banking ethics and practices and what we are finding is troubling. It seems that no lesson has been learned at all and big banks continue to be a breeding ground for greed and deceit. Wells Fargo is just the latest of the nation’s largest banks cultivating a pervasive, toxic culture. A report in Reuters shows that recently, in addition to illegal financial practices, banks also use coercion and bribery as regular means of business.

Broken Promises

Clearly, big banks have not learned the harsh lessons of the 2008 financial crisis. They continue to take advantage of consumers by taking money out of people’s pockets to line their own. Don’t be intimidated or mislead by big banks. If you believe that you have been victimized by big banking tactics or have suffered a financial loss at the hands of investment banks, contact Savage Villoch, PLLC today and get the tools to fight back.

The Federal Reserve has decided to leave interest rates alone for the foreseeable future, according to a report from Reuters. Despite the fact that a target rate-hike was announced last December, the Fed has deferred any increases as part of a long-term plan to reignite the U.S. economy. President of the Minneapolis Federal Reserve, Neel Kashkari, stated that “the U.S. economy has room to grow before it overheats”. Economists have been speculating when the Fed will introduce a new rate increase as recent figures show the economy on a steady, upward growth. National unemployment is currently at 4.9 percent, which many economists agree is a sign of a stabilized economy. They also say that soft inflation rates are beginning to show signs of hardening. The Fed plans to keep interest rates unchanged as a cushion against a possible slowing global economy and in the event of any destabilizing events in the global market.

Aren’t low interest rates a good thing?

Yes and no. Low interest rates encourage consumers to borrow and invest back into the economy. They also insulate an economy against unforeseen financial events. Low interest rates make investing safer, but they limit returns on investments due to such a low annual accumulation of interest. Long-term investments, like bonds, bear incredibly low yields. Low interest rates also push up inflation rates, or the cost of goods and services.

Further Economic Cushioning

On a related note, Reuters reports that Federal Reserve Chair Janet Yellen announced this week that the Fed is considering a change to their annual stress tests, or how the overall economy and U.S. securities will fare in the event of a global financial crisis. Without going into specific commentary on the state of the U.S. economy, the Fed char described a more “risk-sensitive, firm-specific buffer”.