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Wal Mart Mortgages?



Wal Mart Mortgages?

Would you go for a mortgage offered by Wal Mart? Turns out, many of us would. Even though the perceived risk of a big U.S. bank failure has receded in recent years, many of us still don’t trust them and a new study may be underway to provide us with the answers of whether our trust is slowly rebuilding because of new financial laws or maybe because the economy is looking better (according to some). That in itself suggests an accurate result could be impossible because so many still don’t see an improving economy. This could be why we’re more willing to trust the company we buy our dishwashing detergent from with our most expensive investments.

One Third

In fact, according to another study recently completed, one in three U.S. consumers would consider a Wal-Mart mortgage. Are banks concerned? If they’re not, they should be. Already in the UK grocery stores are offering legal services at significant savings from traditional solicitors; there’s no reason why that same formula couldn’t translate in the U.S. The study shows consumers are more willing to consider “alternatives” as more of us are becoming focused on value, price, customer service and more importantly, trust.

Doug Hautop, lending practice lead at the Carlisle & Gallagher Consulting Group, conducted the survey and said, “There is a real threat from new entrants,” Hautop said. The September study’s results were based on online responses from 618 U.S. consumers. Already non-banking entities, including Quicken Loans, have begun gaining in the mortgage sector. Banks are bulky, a bit slower and haven’t recovered from the beating they’ve taken as a result of the new financial laws, the robo-mortgage scandal and a host of other fees and fines. Not only that, but many of these banks have also been hit with other massive fees for credit card policies. CFPB, this year alone, has garnered huge fees from American Express, Bank One and Discover. Clearly, the rules have changed for these massive financial entities. They’re just a bit more resistant to fall into line and that hesitation may cost them even more.

New Rules, New Patterns

Meanwhile, studies using measures of market risk reveal

that the size of the too-big-to-fail problem has fallen over the past couple of years but remains large,

said Narayana Kocherlakota, president of the Minneapolis Federal Reserve Bank,. He also said new rules that require more capital could also play a role in the patterns of today’s big banks. The possibility of a government bailout has passed, too and as a result, these banks are required to build blueprints for their exit plans should they become insolvent.

All of this financial talk could be playing a role in consumers’ decision making processes, as well. Regardless of how they see Wal Mart in terms of its monopoly-like sense, the bottom line is it’s human nature to go with what you know and who you trust. People trust Wal Mart. Big banks and their eccentric CEOs? Not so much.

I like my Bank of America credit card. My mortgage does not say Bank of America, though. I can’t imagine that it ever will, either.

said one woman who was asked to weigh in.

Getting the government to to adopt strict policies is challenging, even as Congress continues to insist it’s working on long term solutions.

The public can only hold Congress and its delegates responsible for achieving this mandate if there are quantitative measures of the size of the too-big-to-fail problem,

said Kocherlakota.

Banks Golden – For Now

Here’s what it boils down to. Right now, banks are still golden; a bit weary from the wear and tear, but in the current financial environment, it’s the best we have. If they don’t go back to the basics; if they don’t remember who ensures those bottom lines for them, they’re going to find themselves in very difficult situations of having to choose from the worse of any number of evils – none of which will bode well for the financial sector.

In the past year, banks such as Bank of America and Wells Fargo, have benefited from surging consumer demand to refinance their mortgages at low interest rates. That won’t last though. In fact, before 2013 is up, it’s believed those refinances will be finished. Banks are going to have to find a way to rebuild their customers’ trust, offer new and more affordable products and find ways to keep new mortgages out of any other sector than the banking sector.

Are they up for the challenge? Who knows. Let’s face it, their track record over the past four years has been anything but predictable. The ill-advised temper tantrums and showdowns with Congress don’t bode well in terms of public image. Wal Mart and anyone else for that matter has a golden opportunity to enter the market. Whether they will remains to be seen, but you can be sure there are a group of banking head honchos who are watching their every move and sweating it out.

Would you consider a Wal Mart mortgage? Has your trust in big banks began to improve over the past year? Let us know your thoughts – you and your opinions are what drive these studies, after all. We want to hear from you.

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