The Olympics of the Swindles

The Savings and Loan debacle was a mere trial run

The poor are once more the targets of rabid demonization: "Sub-Prime mortgages have caused the current collapse of the Western economic infrastructure." Failure to repay mortgages on small homes sold to working class families is being blamed for the loss of trillions of dollars worldwide. An upside down logic is insisting now that the poorest five percent of the population has the power to smash the global fiscal system.

Talking heads and media editors chatter endlessly without mentioning the role of predator agents, inflated fees and commissions -- and the definition of "credit default swaps." Repeatedly ignored is the simple truth stated by New York Times reporter, David Leonhardt, on page one of the Times' Week In Review section of the Sunday paper, October 12, 2008: "Debt built up, and then laid low, modern Wall Street, where firms borrowed $30 for every $1 they owned."

The best and the brightest -- from Harvard, Yale, Princeton, Wharton, Stanford -- bought and sold ghost assets. Under the cover of a secret calculus and mysterious logarithms they pretended to work and paid themselves monster bonuses. Any reasonable observer of this white-collar orgy must conclude that it was not accidental or spontaneous.

Indeed, the present collapse, which will surely devour more than a trillion taxpayer dollars within the next six months, utilized an earlier model -- the Savings and Loans swindle. Entering Congress in 1983, over the next ten years, I became a spectator watching a bailout drama so thoroughly plotted that there were seldom any close votes and constituents got so little information that mass voter anger was smothered. It was a bi-partisan cover-up implemented in escalating increments and protected by the camouflaging double-speak of Ayn Rand's disciple, the nation's official economic wizard, Alan Greenspan.

Without any participation of Congress it began with the rescue of a big northeastern bank by FDIC Czar Seidman. Millions of taxpayer dollars were provided to cover more than the federally guaranteed deposits. Before this form of fixing was finally finished the monster Arizona financier, friend of John McCain, Charles Keating, acquired billions for the bailout of his bank. In total the Savings and Loans bailout has cost the nation more than a trillion dollars. This well-grounded estimate is the best that can be reported since our superpower government has surrendered to the notion that this debacle was "too big to audit".

An example of further lessons learned from the S&L racket is about to be exhibited as Secretary Paulson's aides commence the sale of the toxic items, the ghost assets. The same fast-buck thugs who have bludgeoned Wall Street into panic will now be recruited to oversee and to execute the rescue mission. As it has been in the case of the overrated and wrongfully praised S&L Resolution Trust Corporation, new million dollar profits will be routed to the partners of the current perpetrators.

A number of wise voices have described the situation bluntly but accurately: "Wall Street wants to privatize the rewards and socialize the risks". In one generation Americans are allowing the same tribe of elite con men to rip us off twice. The present fiscal tsunami is a monster mutation of the S&L seed virus. The Congressional Record will show that only a few congresspersons repeatedly voiced their opposition to the S&L giveaway. As one of the marginalized dissidents I poured some of my frustrations into RAP poetry. On review I find that it is an emotional chronicle illustrating how history sadly repeats itself:

Congressional Record Date - April 19, 1990 - "The S&L Riot"

Congressional Record Date - July 20, 1990 - The S&L RAP

Congressional Record Date - September 13, 1990 - Drug Test After Each S&L Wreck

Congressional Record Date - October 22, 1990 - The Star Gang of Rangers

Congressional Record Date - May 7, 1991 - The FBI Is Living A Lie

Congressional Record Date - November 22, 1991 - The Seventy Billion Dollar Robbery

Congressional Record Date - May 7, 1992 - The Riot at the Mint Up-Dated

The S&L Riot

There's a riot at the mint! But you gotta be a gent To break in here only MBAs You must comprehend their deregulated ways. There's a riot at the mint! Don't just stand there Kick the treasury door down You know the auditors promised That they wouldn't come around. Despite bright daylight they'll take every cent There's a riot at the mint! No cop sirens will wail No nice gents will they jail. There's a riot at the mint! You can't hole up here with a Honda Bring your Lincoln, Cadillac, Mercedes or Rolls Royce. Champagne, Caviar - the very best when they rejoice. Reagan was the host Who gave them the most But there's a new chump now Hurry old boys wherever you are

Come and milk the golden cow Push the RTC to give more milk Wrap your rotten bankruptcy in priceless silk There's a riot at the mint! You must comprehend their deregulated ways. No loot for anybody but MBAs. There's a riot at the mint! Don't you wish you were a gent? Thoroughbreds race to the scene All of their riders are mean. When our mint is picked clean Hear these haughty hogs all scream That there's no free lunch. Only this plump bunch Deserves a national free lunch There's a riot at the mint! None of these gents plan to repent This rape is obscene These gents are real mean Keep your children inside Teach them true national pride. There's a riot at the mint! There's a riot at the mint!

Americans must immediately wake up! Massive, unmitigated, targeted, indignation is needed to stop the Wall Street pillaging. Send a mandate to every congressperson: "You should not vote to increase the national debt except for school construction, bridge and road building, and revenue-sharing with the states and localities. Dollars for the people!"

Comments

[pkscottx]

Oh yea, all aided and abbeted by deregulation, which was by and large a bi-partisan effort, but a Republican mantra.

[pkscottx]

Spot on!

i just love the way this multi trillion dollar mess has been laid at the feet of the sub-prime borrower. With a smug nod and a wink because we all know who "they" are.

I guess you can fool the economically illiterate with this drival. The Fed held interest too low for too long and lowered ratio of available cash to liabilities for banks. The derivatives were an unregulated market of opaque instruments that had ZERO underlying assets. In ten years they rose to STAGGERING AMOUNTS. Some credible estimates put them at $1.125 Quadrillion dollars (multiples of the annual GDP of the entire freaking planet.) Risk was SERIOUSLY under rated, even as peole who forsaw the danger and were screaming it from the rooftops were marginalized as nut jobs.

The levels of leveraged used were so insane that as little as a 2% loss could be a total wipe out.

IF the risks had not been under rated, the cash reservs of the banks kept strong, and leverage had been maintained at sane levels, the banking system would have been able to sustain the current sub-prime losses. Of course they wouldn't have made all those nice gooey piles of cash and bonuses.

[WoodyThomas]

I remember when Reagan signed the Garn-St. Germain Act that de-regulated the S & L industry he said "We've hit the jackpot". How many times have we, the government and Wall Street, been conned by economic genius. E.g. Michael Milkin, Charles Keating, and lately Kenny Boy Lay. My new mantra has been F the poor. I've tried to get a proposal/movement started and hope we can have success here. I've foreclosed on many poor people with Farmers Home Administration. It's not something I'm proud of but in the capitalist society we live in and worship, the adage "No pay-No stay" is a part of life. From this I hope to change the financial system with adherance to the temple of the market. Here goes: Allow a homeowner (not investor) to buy his mortgage at the market price plus a nickel or dime to offset costs and increase the return to the investor. New Century sold $170m of mortgages for $58m or $.35/$1.00­; Lehman Bros. sold their mortgages for $.22/$1.00­. Imagine what could happen with the homeowner buying back his mortgage. The relief would be widespread; the investor would get a little more back; the community would be more stable; the new lender, as most people don't have the money to buy it outright, would have a secure loan; and the debt to income ratio would become close if not in balance. Let the market rule for everyone not the rich.

[larry278]

Listen closely to this man, he know of what he speaks/writes.

[benjaminblue]

True to form, the Republican enablers are attempting to blame the current financial mess on the poor people, who were greedy, or on the Democrats.

They cannot acknowledge the truth, that Saint Ronald Reagan's vigorous launch of trickle-down economics, deregulation and encouragement of greedy fat cats in and out of government, were responsible for the S&L scandal, the enormous income disparity and the present situation.

Of course, Mr. Bush's inane policies, including the decimation of government agencies and the foolish, costly vanity wars in Iraq and Syria have also contributed to today's economic conditions.

Let's retroactively impeach Reagan and Bush 43 (and Bush 41) when we retake our country. Or at least let's purge their policies, and the self-serving politicos of both parties who stole our country's wealth and worth in their pursuit of individual riches.