Basically 1995 under the Clinton administration. Not only did this start the loaning of money in excess of value, but allowed banks to jump into the securities business. The prime rate was around 7.5%. between 1995 thru 2000.
If you recall you probably received many offers from banks and lending intuitions in your mail to refinance your home at a lower interest rate and could get as much as 130% of appraised value. I myself took advantage three times between 2000 and 2004 , refinanced my home at the time at the lowering interest rates. I advised anyone who would listen to not go for taking money out because most of the loan offers were at the rates offered with a 5 year balloon. I believe most people who took the lending intuitions up on these offers never considered this fact and believed the low interest rates would stay steady. Between 2000 and 2002 interest rates had dropped from about 7.5% to 4% the rates stayed pretty much steady until mid 2004 when these loans were starting to come to the end of their 5 year balloons and then the Prime rate started a steady climb from 2004 thru mid 2006 topping at about 7% the housing / bank crash in 2008. Bailout program of 2009 of the automakers. A whole lot of things fell apart because of the banking industry pulling a fast one at the expense of the average and lower income Americans.. Don’t get me wrong a lot of the useless debt was sold to the European financial intuitions.
On top of all the disaster caused by our banking industry, banks were finally permitted to offer investments in the stock markets.. so together with the falling Federal prime rate that began in 2007 through 2009where it hit bottom we now have another pot doomed to failure.
So now we have banks that can borrow money cheap the offer .01% to their depositors and Oh! By the way, we have these stock and mutual funds you can put you money into to make some money,,, maybe.
So now we have the situation where we as depositors make nothing on money we keep in the us banks, but the banks have full use of our money to make home loans, car loans etc. at 6 to 20%
Banks should not be allowed to pay less or next to nothing to use your money than they would have to pay to any other capital source. At worst case they should have to pay Prime Plus 1 or 2 % by law..
Another idea I had is that our federal government should set up a savings program for people over 65 years of age to deposit their money and earn 6% ..
This aging group has been steering funds into investment and you heard it here first this is another day of reckoning that is on the horizon.. Senior citizens should not have to risk their hard earned savings for retirement in the stock markets. The only people making money coming and going are the brokerage houses and banks.