Re: Refinancing:BEWARE!!

We had a 15 plus year relationship with one of the nation's largest banks (let's just call them Skank of Amerika) because they had bought the bank who had bought the local bank where we originally opened our accounts. Knowing that our line was coming up for renewal in May I started asking them if everything would be OK and business as usual when it came time for renewal. I asked this the moment I had our corporate tax return in hand and sent to them in late February.

"Oh, of course everything will be fine," I was assured. "Why you're one of our best customers. We'll just have to go through some formalities when it comes time to renew."

Not being the sit back and wait type, I began to shop around for a new bank... just in case.

Jump ahead to a month before the line comes due and lo and behold the "private banking" officer who had been in charge of our account calls to say that the Skank was being re-organized and that her job had been eliminated. "But don't worry. I'm sure someone will be contacting you... (say it with me) REAL SOON."

Two weeks to go before the line would expire and come due in its entirety, a telemarketing clerk from the Skank called to say that they were FedEx-ing me renewal papers and would need them back quickly to prevent any "interruptions in service." What I had to wait for the papers to learn was that our prime plus a quarter of a percent rate was being raised to prime plus one and a half to two percent (variable at their option) and that there was now an annual fee of $500 -- for the favor they were granting us of having the line of credit.

I called the "clerk" and asked how it was that I had been told for months everything would be fine, only for this to suddenly be sprung on me. Her answer was something along the lines of "We have had to change our policies for some of the riskier parts of our loan portfolio..." and basically "that's the deal, take it or leave it." Being as polite as I could I pointed out our history with the Skank, never having missed a payment, bounced a check, or having any problems whatsoever for 15 years in addition to having a pretty healthy tax return and accounting firm-prepared annual statement. "Well, be that as it may, that's still our new policy."

"Do you read any financial publications," I asked the clerk. "Why?" she asked. "Because I've been reading where one of us lost over 120 BILLION last year and IT WASN'T US!" That was literally followed by 20 or more seconds of silence. Then "Well, the rates and the fees are still our new policy with small businesses."

I changed banks within days. Now the rate on our line is three quarters of a percent over prime and the annual fee is $100. Not the deal we had, but far better than the one offered by the Skank with a gun to my head.

Lines are a good thing to have when you want to be able to stay current with your own vendors and not live hand to mouth in down times. So if we're a healthy business why have I been carrying and slowly paying down a large balance on our line of credit?Funny you should ask. It's because the investment arm of a large New England-based bank a few years back had bought one of our clients and, after a year of operating them, determined that it would be better for the bank to put the company into bankruptcy, thereby stiffing the company's vendors and letting them "liquidate" the company's healthy pension fund. That put us into a $120,000 hole, for which we were able to offset some what we owed to others on behalf of this client by dipping deeply into our line of credit. And here's the truly amusing part (he typed, gritting his teeth) the New England bank was later bought by the Skank so we were, in essence, screwed by our own bank -- the same one who held the sizable balance on the note.

Like I said, I changed banks but I have little trust in the financial sector. 2008 has shown most of them to be pond scum.