We got word this week that Moody’s – the credit rating service – downgraded the five biggest banks in the US and almost a dozen European banks. Unlike Standard & Poor’s, Moody’s is still regarded as a credible source for investment information, so what does this mean for the everyday consumer? It means consumers need to take control of their money…

Over the last couple of years, consumers have been at war with the banking industry. Retail banks… investment banks… all banks. First, consumers got mislead into accepting loans and mortgages that weren’t in their best interests. Then, when the fallout came and put consumers in jeopardy, the big banks opted to absolve themselves of responsibility.

Consumer spending is 70% of our economy. So, the government bailed them out in the hopes that they’d get back to creating viable options to induce consumers. But, instead, the banks took the position, “Uncertainty means we need to be cautious.” This is bank-speak for, NOBODY’S GETTING ANY LOANS, MORTGAGES, CREDIT CARDS, ETC…

The conservative/Republican agenda is the following: Companies are in business to make money and as a product of making money they’re able to create more jobs and offer more favorable products. The problem with this approach is that, they never feel like they’re making enough money, so, they constantly defer adding more jobs.

The banking industry proved that to us. They got a bail out from the federal government for the purpose of mitigating their mortgage losses and continuing to find ways to pay that forward to consumers. However, the banks decided – after they took the money – they needed to continue being cautious and NOT extend the benefit to consumers. So consumers still can’t get a loan at a bank which means they have to remain cautious which perpetuates the weak economy.

So, in theory, its a great plan – Let private industry manage and grow themselves without government intervention and the trickle-down will correct the economy. But, we actually need private industry to do that. They’re happy to have BIG government step in when they need money, but, want them to butt out when they don’t. I believe this is called hypocrisy…

Here’s a fact: President Obama recently said, “The private sector is doing fine.” If you’ve ever worked in corporate america for a major, multi-national corporation, you knew what he meant. If a corporation is only making one billion dollars instead of 10 billion dollars in profits, BUSINESS IS BAD!

So, the net-net of this downgrade is that Bank of America, J. P. Morgan Chase, Citigroup, Goldman Sachs and Morgan Stanley are just not doing a very good job of managing their business. It means consumers need to exercise their options like credit unions and community banks until they find one that will treat them the most equitable.

And be discriminating. I recently went to a TD Bank – A big bank – and was treated with great courtesy and soon thereafter went to The Bank of Georgetown – A community bank – and was first ignored and then treated rudely. In another instance, I was offered a lower rate on a car loan by a big bank than by a credit union.

Unfortunately, there’s no sure thing in consumer or investment banking. Smaller isn’t always better. Shop around – even for your primary financial institution where you keep the bulk of your assets. Make them win your business and if they don’t, move on to the next option.

The tables have to turn or the big banks will continue to take care of themselves to the detriment of consumers. Moody’s downgrade is the first step in letting them know, they need to do better.

A standing ovation for Moody’s…