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Lydia Fisher

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The Financial Thriller Continues... What Do the Numbers 753, 20, 138, 130 and 35 Tell Us?

Posted: 08/25/11 05:09 PM ET

Americans owe $753 billion more on their mortgages than their homes are worth.

This has real life impact on the ground. The other day I chatted with someone who relayed that half of the condos in their building are in foreclosure. Theirs is now worth half of what they paid for it. We're talking hopes and dreams here.

On top of the dizzy $753 billion, remember "toxic assets" -- sketchy illiquid bundled mortgages? Illiquid, as their values had so fallen that nobody wanted them. A few trillion of toxic assets were moved from bank balance sheets to the U.S. government balance sheet during the height of the crisis. With the purpose of freeing up bank balance sheets so that banks could start lending.

Next on the table -- the proposed big bank settlement for alleged fraud and wrongdoing in the bank foreclosure crisis. Contrast the proposed $20 billion settlement against the $753 billion in underwater mortgages.

The settlement may, in essence, make it difficult to further investigate. A group of States Attorneys oppose settling until the investigations are allowed to run their course. Notably, New York State's Attorney General was kicked off the Investigative Committee. He was not going along with the proposed bank settlement.

Now in 2010, $138 billion in Wall Street bonuses were paid while taxpayers keep Fannie Mae, Freddie Mac and the banking system functioning (near zero interest rates, the QE programs...). Fannie Mae and Freddie Mac alone received more than $130 billion in taxpayer bailouts since 2008, yet the top six executives of the mortgage giants were paid 35 million in those two short years.

Now I don't know about you, but I'm scratchin' my head here.

An article a few years back noted that what banks "paid out is probably gone for good... unless actual wrongdoing is uncovered at the banks -- and so far prosecutors have not disclosed any..."

Note that this was in the midst of all the brouhaha about banker irresponsibility.

What happened?

Then, the headline last week, "SEC Accused of Destroying Files," (9,000 documents "relating to inquiries of Wall Street banks and hedge funds"). A recent article describes it as a "cover-up" for Wall Street.

In the midst of it all, "earthquake puts crack in Washington monument."

The ongoing financial saga is morphing into a financial thriller.

Makes one wonder. Revolutions have erupted around the globe. The information revolution has allowed citizens on our shores to keep each other informed, calling "a spade a spade." The pamphlets of days gone by have been given lift and dissemination through social media and other channels of communication.

Maybe the "silver lining" in this financial crisis is that the "dirty laundry is coming out in the wash" -- worldwide. Take the affairs "across the pond." For years European countries have had rather "incestuous" relationships owning each other's debts. We're all too familiar by now with the rather cozy relationships between Washington and Wall Street, Washington and special interests, and the list goes on. History has shown us that repeat performances occur if the same perpetrators remain entrenched. Unless, of course, there's a change of heart or a restructuring of the system with built-in accountability.

The perpetrators of the financial crisis have sewn seeds of destruction -- indebtedness, homelessness, joblessness, underemployment, shattered dreams, disruption of lives... Toxic assets and even those derivatives or bets (in the hundreds of trillions) are like throwing a virus or toxicity into a river that poisons lives for years to come.

How does one contain a virus in a river? Can one even do that? Any effort may seem haphazard. It just replicates, spreads into all the tributaries. One can try putting up a dam, but it seeps through.

Perhaps, the most critical question to ask, from the chambers of Washington, to the edifices of Wall Street, to board rooms, executive suites, special interest groups, in our homes and in the moment before we shut our eyes at night...

"Ask not what your country can do for you; ask what you can do for your country...."

These are beautiful words, all too familiar to many of us -- spoken by President John F. Kennedy at his Inaugural Address, January 20, 1961.

Many citizens are asking those who had a hand in creating this financial thriller...

How does it end, or does it?