Andrew Cuomo is a traitor.

I hate it when people throw that word around, its lost so much of its meaning. But in this case, its entirely true.

I've said it before and been accused of yelling it in the office. Now is not the time to try and achieve political gains, especially when you don't know what you are talking about. Any politician who uses the current crisis in the mortgage industry as a way to make a name for themselves or play political leapfrog over rivals is evil. There are good people facing serious hurdles paying their bills. There are hard working Americans, who have never missed a payment, suddenly facing lates on their credit report and the potential for foreclosure. There are countless workers in the mortgage, construction, and real estate industries facing smaller paychecks or unemployment. And these things spread.

Now is not the time to "pile on".

New York Attorney General Andrew Cuomo is coming out with both barrels against Fannie Mae, Freddie Mac, Washington Mutual, and the mortgage industry in general. And he's doing it with press releases and political maneuvering. You think there was a "credit crunch" going on now? Wait until Fannie, Freddie, WAMU, or some other large national outfit just decides to stop lending. That's what has already happened in the subprime market and with some smaller prime players. Just wait until the big boys in the conforming market follow suit. And you think getting a loan was hard now and foreclosures were bad.... if this kind of thing continues, you haven't seen anything yet.

The always animated Jim Cramer is right to use his platform to go after Cuomo. I saw him do it on tv last night, and he's continuing the drumbeat today. Cramer calls him a communist... I think he's even worse than that.

Politicians in Washington and around the country are coming up with new laws and regulations that will supposedly fix the mortgage industry. They are eliminating variable products, yield spread, stated loans, and other alternatives that helps consumers and their advisors structure a deal to make the purchase of a home a viable option. When the options left aren't attractive or feasible for the consumers out there who are trying to get out of a rental or trying to keep a home... they will have no where to go. Consumer confidence will continue to go down. Ownership rates will continue to go down. Credit scores will continue to go down. Other industries will be affected as people can't afford what they once could, or can't make minimum payments for what they now have. Prices and values will continue to fall. The only things that will increase will be the foreclosure rate and unemployment.

This is serious business, and a serious problem facing our country. While many in the media and elsewhere would rather discuss Rosie O'Donnell's job prospects or whether or not J-Lo is pregnant... our country is on the brink of a recession. And anyone who uses the backs of hardworking Americans facing tough times as a way to catapult into greater political capital is a traitor. Our country and its people come first. Don't sacrifice them and us... don't make the situation worse just because you think your political prospects will become better.

You want to make the situation better? Leave it alone. How many times can I say it... Lender's don't want to foreclose on a home. It is a zero-sum game at best. Changes need to be made, but they need to be made by the people who understand how this works... Washington, North Carolina and other state legislatures, and politicians around the country have proven they don't. The market can't work this out with the threat of lawsuits, increased regulation, and political posturing. The threat of bad debt is bad enough.

Keep meddling around and everyone will take their ball and go home... where do you think that will leave homeowners or the economy?

Bank of America's Fine Print

Today I received a relatively thick envelope from Bank of America, as I'm sure many other people have or soon will. The terms of my BofA Credit Card (formerly an MBNA Credit Card) are changing at the start of next year, and Bank of America was notifying me of the changes as required by law.

Most people probably throw this stuff in the circular file or stick it in a drawer. If they are smart, at least they shred it (that's what my wife does) but very few actually read the 6pt legalese type. Not me. Like an archaeologist trying to translate ancient hieroglyphics, I study every letter of financial disclosures looking for a "Gotcha".

And there it was.

If you have watched the news lately, you know that chaos in the mortgage market and a so-called "credit crunch" has precipitated calls for a reduction in the Prime Rate. Most people don't doubt that Prime is going to drop, they just question how soon it is going to drop, and by how much. And that is why the new terms and conditions on my BofA struck me as interesting.

Adjustable interest rates are always based on some index (often Prime) plus (or minus) a margin. My Bank of America account is no different and is based, in part on the Prime Rate. To be more specific, in the past the interest rate on my account in a given month was based on what the Prime rate was at the end of the previous month. This is how the variable interest rates on credit cards, personal loans, and home equity lines of credit are almost always calculated.

Until now. Just as the Prime Rate is expected to drop, Bank of America wants to hold onto my money a little longer. Instead of basing my interest rate on the Prime rate at the end of the preceding month, the interest rate will now be based on the highest prime rate over the past three months. In effect, if Prime drops, my interest rate will not drop until nearly 4 months later. Meaning that I am effectively paying an increased interest rate anytime Prime drops for a period of no less than 3 months. Interesting.

I don't suppose its that big of a deal... just one more way the little guy is getting squeezed and the big corporation can find a way to charge you more that will be lost in the semantics. Considering I blame the big credit card companies, in part, on the reported foreclosure crisis currently before the country... this shouldn't be a surprise. More on that another time.

If you find new terms from a credit card company in your mailbox in the near future, you might want to pay close attention. You too might find a defacto interest rate increase hidden among the 6pt type.