Bank of America Gets Bailout, but Will Consumers?

March 24, 2009— -- In one room in Capitol Hill today, lawmakers were discussing plans to help clear American banks of the enormous debt on their balance sheets. But in another room, lawmakers were hearing from individual Americans drowning in debt of their own -- with no plan in sight for a bailout.

There is no danger that the debt carried by Douglas Corey, a 44-year-old single father from Rhode Island, is going to cripple the American economy the way toxic assets have at America's premier financial institutions.

But for Corey, that same credit that Treasury Secretary Tim Geithner and Fed Chairman Ben Bernanke want to get flowing is a big part of his own economic problems. And nobody is talking about cleansing anything from his books.

Geithner and Bernanke told Congress Tuesday about the new Obama administration plan to "cleanse bank balance sheets of troubled legacy loans and reduce the overhang of uncertainty associated with these assets," which should make it possible for banks to float more credit into the economy.

Geithner and Bernanke repeated, as they have many times this year, that propping up the banking industry and insurance giant AIG getting credit flowing were imperative to guarding the U.S. economy from even deeper doldrums.

Corey received much credit from banks over the years. But when he fell on hard times, Bank of America, which has received $45 billion in taxpayer funds to keep credit flowing, doubled his interest rate.

"Senators, I find myself in the same circumstances that many parents are facing today: few job prospects, a stack of bills and the challenge of facing off against financial goliaths. There are many of us in the middle class -- the unemployed -- who may have overstepped our budgets, but although we struggle to make our payments, we make them," Corey told a Senate subcommittee.

It all started with a mistake. Corey, who was carrying thousands of dollars in debt but would not disclose the exact amount, had had a Bank of America credit card for six years and couldn't remember missing a payment. But he was on vacation and inadvertently sent less than the minimum payment in August 2008. The next month he paid the "minimum payment" listed amount on his bill instead of the "pay this" amount. There was $125 between the two amounts listed.