Fed’s Reduction of Interest Rate

It’s time Americans face reality. President Bush and the Congress do not care about the average American. The big cut in interest rates is a windfall for the banks to fatten their wallets. Banks now pay Uncle Sam 3 1/2% for money. We pay 17%-plus on credit cards and are told not to expect this rate to go down. Why? Because the banks are losing money due to defaults.

Privately, bankers say they were already making a 12% profit margin before this rate cut. They just package the credit card loans into $500-million blocks and sell them back to the public as 7 1/2% credit card-backed bonds. Then they do it again.

We’re told mortgage rates might drop 0.25% to 0.5%. Why not 1%? If banks are paying rates as low as in 1964, why can’t I get a home loan at 7% like my parents did in 1966?

DANIEL NAGY

Los Angeles