If a high-on-crack driver crashed his speeding rental car into your house and killed your spouse, you would be outraged if law enforcers took bribes and gave the driver a pass on a blood test. If the judge then merely fined the killer and ordered you to pay it, you would appeal, wondering what happened to justice. If the government then handed the crack-driver keys to a bigger rental car and presented you with the rental bill, you would certainly protest.
How is it, then, that you have remained largely silent in the face of the same sort of behavior by Wall Street and Washington? Bonus-seeking bankers careened off the right path and ran Ponzi schemes that nearly ruined our economy. Bureaucrats and elected officials bailed them out without demanding consequences. Bankers are revving their engines again.
Bankers Get Bonuses, the USA Gets the Great Recession
Taxpayers are asked to believe that over-borrowing by U.S. consumers created a global financial crisis. This myth aids and abets Wall Street. The economy was nearly destroyed because banks borrowed massively, and they borrowed many multiples more than they could afford. Wall Street pumped the Fed's cheap money through financial meth labs, and deceptive financial vehicles ran over securities laws at top speed.
More than 20% of mortgage loans--including originally sound loans--are underwater, meaning the borrower owes more than the home is worth. Official unemployment numbers hover at around 10%. If you include underemployment, it is around 18%. In depressed areas where the nation's poorest--chiefly minorities--have been hurt the most, unemployment has soared past 30%. For this destitute group, unemployment combined with underemployment exceeds 50%.
As U.S. soldiers fought wars in Iraq and Afghanistan, Wall Street flattened Main Street. Our foreign wars drag on, while the U.S. battles a crippling recession at home.
Global Ponzi Scheme
Fraud by borrowers, fraud on borrowers, and speculation by people who thought home prices would rise forever have all tarnished mortgage lending. Yet this pales compared to the epidemic of predatory lending.
Predatory snipers committed financial murder as deliberately as British soldiers gave smallpox contaminated blankets to Native Americans. Honest homeowners were systematically targeted and actively misled into bad mortgage products. Loans were presented as gifts, but these Trojan horse loans hid destructive risk. "Disclosures" were acts of malice.
When Wall Street packaged these loans and sold deceptive "investments," documents did not specifically disclose that credit ratings were misleading. If you know or should know a car's gas tank will blow up, you cannot use a misleading third-party consumer report as an excuse. Yet bonus-seeking bankers used this sort of excuse to get through a few more highly-paid bonus cycles, before it all fell apart. Only the elite crowd of insiders prospered.*
This was the most massive Ponzi scheme in the history of the global capital markets. U.S. taxpayers became unwilling unsophisticated investors when we bailed out the financial system. We must hold Wall Street accountable for its fraud.
More Bonuses for Bankers, a Deeper Recession for the USA
Banks that contributed to our economic distress are heralded as geniuses at risk management, after taxpayers saved them from ruin. Wall Street escaped prosecution (so far), and Congress gave it a faster and more powerful car.
Paul Volcker suggested reforms, and special interest groups successfully lobbied to make them meaningless. His proposal to limit "proprietary" trading--a small step in the right direction--has been thwarted by banks claiming they engage in high risk trades on behalf of customers. Washington seems to have already forgotten that AIG nearly went bankrupt--and nearly took the entire financial system down with it--because of Wall Street's "customer" trades. Wall Street and AIG insiders grew rich on bonuses based on a myth, and taxpayers funded AIG's $180 billion bailout.
Wall Street now makes most of its "profits" from high-risk trading, and rewards risk with huge bonuses. It has unfettered access to more U.S. taxpayer money than in the history of the United States. Traditional banking suffers; it cannot generate enough revenue to "justify" massive bonuses. Bankers get billions in bonuses based on a myth, and U.S. taxpayers get a deeper recession and more risk.
Reform Starts with the President and Congress
Congress has protected Wall Street and passed on the costs to hard-working taxpayers. "Too-big-to-fail" financial institutions are too big to exist, and it is past time to break them up. They currently enjoy around $13 trillion of taxpayer-funded support, including tens of billions of FDIC debt guarantees for each of the too-big-to-fail banks and more than $2 trillion in nearly zero-cost funding from the Fed.
President Obama has not yet condemned Wall Street's massive fraud, and Congress's bailout methods rewarded Wall Street's malicious mischief. The House just passed a bigger bailout bill that will give too-big-to-fail Wall Street banks access to $4 trillion dollars the next time they crash the economy.
Congress must start again from scratch, and give us real reform. Washington needs to get back in the driver's seat, and voters need to make Congress steer straight this time by calling and writing representatives and senators.
* In a control fraud, only insider agents prosper. The losers are financial institutions' shareholders and debtors, investors, borrowers, and the U.S. taxpayer. Banks covered-up indefensible lending--enabled by complicit rating agencies, "creative" accounting at related mortgage lenders, crooked CDO "managers," venal hedge funds, crony accountants, and captured regulators. They parked the risk on their own balance sheets, on the balance sheets of Fannie Mae or Freddie Mac, in off-shore vehicles, or on unwary investors around the globe. Sometimes banks "transferred" risk with credit derivatives backed by phony securities that harmed "sophisticated" insurers like AIG, Ambac, MBIA, FGIC, and ACA--all of which were either bankrupted or damaged.
Dear Mr. Buffett (2009) is Janet Tavakoli's book on the Ponzi scheme that led to the global financial meltdown.
These "foreclosed" homes were paid off several times over by investor pools as well as with TARP money and are not even owned by those who are currently foreclosing them, and yet borrowers go bankrupt to save homes .Borrowers spend savings and use up pensions to try to save their homes due to escalating payments.
For every foreclosure "pretender lenders"..that is banks and mortgage companies that do not own your home get paid millions of dollars in insurance. This gives them no incentive to modify mortgages
when they can collect insurance on homes they do not own. Why hasn't anyone done an expose on this?
we won't ask "what did you know, & when did you know it" when you were working at GS,
THis EXCELLENT
PBS "The Warning" show oultines Rubins, Summers, Greenspan, & the WHOLE GS/JPM crowd were RUNNING ROUGHSHOD over ANYONE in their "Deregulation" path, from at least 1998 on.
http://www.pbs.org/wgbh/pages/frontline/warning/
Speaking of, that excellent PBS video shows BROOKSLEY BORNE _LEADING_ THE FIGHT to RESTRAIN those INSANE "derivatives" and deregulated "securities" follies.
ELIZABETH WARREN is ALSO a LEADER in the FIGHT to restrain the ROYALIST (extort the peons, er, "subjects") , loot, pillage, & plunder tendencies of the Rubin/Summers/Greenspan/Bernanke (and now Emanuel, Geithner, Gensler, Lieberman, et al) crew.... and NPR host ____ ___ tried to BULLDOZE over Ms. Warren, in the same manner that Rubin, Summers, & GS bulldozed over Brooksley Borne a decade earlier.
< NPR's ___ ____ Assaults our defender, Elizabeth Warren >
http://www.correntewire.com/nprs_adam_davidson_assaults_our_defender_elizabeth_warren
(audio link there)
The PREMEDITATED DEPRADATIONS of "Neo-Liberal" economics practiced by Rubin, Greenspan, et al discussed by Prof. Michael Hudson here -
http://dandelionsalad.wordpress.com/2010/02/09/michael-hudson-obamas-republican-class-war-presidency/
and over at www.SOLARI.com, Catherine Austin Fitts explains the even more dire nature of the "Neo-Liberal" crew (if Prof. Hudson's exposition isn't dire enough.)
Great going to the four women who are LEADING the fight to educate the American public about the criminal hijacking of our financial system.
You know what we should do? We should decide to elect all independent candidates in November. That way, we won't need to understand any issues. The Independent label will do the work for us. All the bad guys will go away and all the good guys will look out for tax payers, home owners and children.
We need a nation of informed, bold questioning people to get us out of this mess, and despite my cynicism, your message resonates deeply with me.
5) Religion. If you are not at the top of any of these categories then consider the probability of you being able to change anything. I realize this is cynical, and it is uncomfortable to come to the conclusion, as in my personal case, that I’m not going to change anything (99.999998% sure or 1 chance in 617,408 which is actually better odds than winning a state lottery with a single ticket).
It must be after five o'clock somewhere.
Don't despair lizr, I'll probably be back tomorrow with a completely different (i.E. positive) view.
Shared on my facebook page.
Now if we could just get this across to EVERY AMERICAN!
Wall Street will not be held accountable, because again, Congress is not on our side. Lobbyists are pouring millions of dollars into making sure that meaningful reform isn't passed, Wall Street big shots threaten that the market will crash (or more honestly, crashed by them) if meaningful reform is passed, and the same people who drove us off a cliff 2 years ago are now driving the new bus the taxpayers bought.
Short of the entire nation as a united group taking radical action, I really can't see how anyone thinks the American people have the power to do anything. Congress holding someone accountable on Wall Street would mean they would have to stop accepting their pay offs to look the other way, and they themselves would come under scrutiny for being complicit, as well. Even the Justice Department is no longer about Justice, it is about cronyism. You can write letters to your Senators, to your Representatives, to the President and whoever else you like, but ultimately, it's a waste of energy.
Wall Street and Washington are above the law and they know it.
spreading this word widely is.
the answers will come if we keep asking the right questions..
What other questions do we ask? Are we following the Constitution? No. We spy on our own citizens and have left the door wide open to corporate espio.n.age, insider trading and blac.kma.il on everyone in the public eye. We look the other way when laws that suit us are violated, and because of reason number one, no one can back it up without being afraid they will be prosecuted for who knows what. Our justice system has been weakened to the point that law is a matter of opinion and who is pressured to or not to enforce it.
"nearly"? watch and learn, no 'nearly' about it. IT IS DESTROYED! time will show that
I worked in a large Corp for 24 1/2 years. When the raises dropped we were told " at least you have a job". When our benefit contributions were raised yet again "at least you are LUCKY to have a job". When our bonuses became non-existent " we were damn lucky to still have a place to work".
I'm no longer lucky. I was let go due to needs of the business even though they showed a profit in the billions.
Nothing is going to change until we do. Think- would we as citizens be walking the streets if we did the s$$t our elected leaders do whith our money?
On the other hand I would be LUCKY to have a job in prison......
We have to stop sitting back doing nothing while being pickpocketed by our elected "protectors of our rights"
I feel a little better.
the last resort of Scoundrels.
They can blame the victims all they want while they collect their PR fees on the backs of the homeless and jobless but people are seeing through their bunk.
They are fighting to stay out of jail and are spending billions to do so... our billions.
CDS insurance without reserves that AIG sold to GS and that TARP money rescued,
Are Fraud, pure and Simple.
Obama ignores this at our country's peril.