Wednesday, July 2, 2008


Posted By on 07.02.08 at 09:16 PM

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"The question is did Northern Trust give Obama preferential treatment because he was a newly minted celebrity senator? After reading the story the answer seems to be: Who knows?"

Why, who might know? Let's ask someone with basic math skills and an Internet connection!

"So Obama's rate was 30 basis points better than the average. However, the amount of the loan and the nature of the property are not the only factors that determine a mortgage rate. Another major consideration is the creditworthiness of the borrower. According to current rate quotes from, a borrower with very good credit can expect a mortgage rate about 30 basis points better than someone with pretty good credit, and a borrower with excellent credit can expect about a 50 basis point discount." [Also: n.b.]

Well, he probably has a better credit record than John McCain. (Update: I totally forgot that McCain's at least $100K in the hole and is paying 25.99% on one card that has $10-15K on it. Hell, I've got better credit.) Still: what could Northern Trust have gotten out of giving a wealthy author/senator and his well-employed wife a good rate on a loan? What sneaky things might they have been up to?

"Obama spokesman Ben LaBolt said the rate was adjusted to account for a competing offer from another lender and other factors. 'The Obamas have since had as much as $3 million invested through Northern Trust,' he said in a statement." 

It's complicated but I think I understand:

If you offer someone a lot of stuff (in this case, a big loan) for a better ratio of stuff to cost (in this case, a big loan vs. interest), they will buy more stuff from you, and you will make up for the reduced margins by selling more stuff. Tricky!

Next week: the Obamas get a gallon of mayonnaise for only eight dollars! What is this Costco account? What does he owe them?


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