How safe is YOUR wallet? Are you protecting yourself from the banks’ “worst practices?”
So widespread and commonplace is 21st-century banking fraud that recent money laundering allegations leveled against Danske Bank Estonia (over $234 BILLION and counting) scarcely register as newsworthy. “Another day… another rip-off. Ho-hum”
But I think we all need to start paying more attention. We should be concerned, very concerned, about each fraudulent act committed by the folks to whom we trust our savings, college and retirement funds, home loans, and a host of other necessary transactions.
Money laundering, rate fixing, bogus securities, data breaches, and outright consumer scamming are part and parcel of today’s banking world. In fact, one bank alone, Wells Fargo, has admitted to defrauding its’ customers out of billions using questionable and sometimes outright illegal methods.
Over 9 million Americans lost their homes during the “Great Recession” of 2007-2010 (which, sadly enough is still going on for many people…) yet the very banks which ignited the crisis were able to get billions in taxpayer-subsidized bailouts. Notes financial blogger and futurist Chris Martenson: “When the dust settled after the Great Financial Crisis, we learned that the big banks had behaved in overtly criminal ways. None of their executives would be held criminally accountable.”
Particularly concerning to me is that instead of learning important lessons from the Great Recession, banks are once again doing all the things that helped fuel that crisis, including investment in iffy securities and just-above-subprime loans. For example, Wells Fargo introduced a 3%, low down payment loan program in 2016 with very relaxed standards for qualifying.
Clever marketing makes this seem like it isn’t nearly as bad as that notorious 0 % “stated income” loans of the mid-2000s. However, when you take a closer look, you discover that people with nearly nothing saved for down payments qualified for lower interest rates provided they attended so-called “financial education” classes. There are currently thousands of these loans on the books, and there’s a genuine danger of future defaults. Such defaults, many economists believe, are likely to trigger another recession.
Even if you are in the early stages of planning for retirement, you should include preparations for an inevitable economic downturn.
One thing you should consider is using an annuity to help cover fixed expenses and ensure you won’t have to downgrade your current lifestyle significantly.
Even during a market upheaval, annuities can help you match retirement income with fixed costs and will enable you to transfer some of the financial risks to the insurance carrier, instead of shouldering it all yourself. Annuities also provide more peace of mind in planning because, unlike other financial vehicles, they have built-in contractual guarantees.
Leveraging the power of an annuity allows you to plan for the unanticipated future fixed costs that everyone and I believe will be even more prevalent in the future.