Busted: Bankers and The Global Economy

February 1, 2008

Make Bankers Pay?

Imagine a world that wasn’t threatened by greedy bankers and financial institutions. Imagine a world where financial institutions were actually responsible for what they did and could be held to a standard besides thievery. The repeated occurrences of financial tsunamis is a true indicator that bankers and financial institutions cannot be trusted and shouldn’t be.

brokenbank.jpgThe problem lies in the fact that the finance and banking industry is full of “commissioned salesmen” that have the promise of wealth in front of them every single day if they push more “banking products”. You’ve heard that power corrupts and that absolute power corrupts absolutely. For years, the banking system has been allowed to monitor itself without restraint with the blessing of the current administration. President Bush wanted the “free market” to work and the market certainly has to the embarassment of all. I remember back in 2004 when I heard President Bush glow with pride and confidence in the self-regulation of the finance industry. Remember “Bad Credit? No Problem!” “Zero Percent Down Payment!” just a few years ago? Enter the mortgage broker. Mortgage brokers occupy an unregulated niche of the lending world making a commission for every borrower they refer to a mortgage lender. These brokers became financial drug dealers as they farmed the nation for fresh prospects in a financial meat market.

Then we have world-wise bankers that create investment vehicles out of risky investments to remove the investments from the bank ledgers. Unfortunately, this strategy only conceals the risk for a time. When the money stops flowing, the game is up. Can you imagine having a license to steal and the guarantee that you will be bailed out by the government? There is little incentive for honesty or accountability when you are going to pay for that lack with funding from the Federal Reserve and further increase the national debt.

Wealthy banking chiefs have plundered the country while making millions for themselves as they bend the regulations and laws any way they are able. The fractional reserve that is required for banks is not enough capital to insure liquidity during downturns and reverses in the lending market. The finance industry is no longer interested in the long-term success of any venture, but rather the short-term commissions and profitability. The turnover of employees and managers within the industry virtually insures the worst kind of corruption. The rich commissions made from the “subprime mortgage bubble” have already been made and spent. The banking industry has been caught red-handed once again. What is really being done about it? ~ E. Manning

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2 Comments

  1. While I agree with most of your article, you are dead wrong placing blame at the feet of Mortgage Brokers.

    First of all, you think we operate in an ‘unregulated niche’??? Mortgage origination in the US is one of the most HIGHLY regulated of all financial sectors. As a broker working in the US I deal with it ad nauseum.

    Let me give you a short list of what we must comply with: the Real Estate Settlement Procedures Act (RESPA), the Truth in Lending Act (TILA), the Home Ownership and Equity Protection Act (HOEPA), the Fair Credit Reporting Act (FCRA), the Equal Credit Opportunity Act (ECOA), the Gramm-Leach-Bliley Act(GLBA), and the Federal Trade Commission Act (FTC Act).

    Additionally, we are under the oversight of the Department of Housing and Urban Development (HUD) and the Federal Trade Commission (FTC).

    Try and find that in commercial origination…

    Second, you’re sequence for residential funding is BACKWARDS.

    THere is absolutely nothing i can originate that is not dictated to me by underwriting guidelines set forth from the top down.

    Here’s the order: Easy money on the street, thanks to our ever-expanding M3 and Central Banks, opened the door for new, risky investment vehicles looking to extend credit anywhere it could be found. The secondary market set the level of risk they were willing to accept and dictated this to the banks and other wholesale lending institutions. This in turn was handed down the the little Mortgage Broker out on the front lines as a set of underwriting guidelines.

    We were told: “These are the rules, we will lend money based on these guidelines, now bring them to us.”

    I would say most Brokers aren’t even aware they play a role in this. The drug dealers are the Central Banks – not the loan officer on the street thinking about how he’s going to pay next month’s bills.

    Jason Leach
    Taos Lending Team

    Comment by Tired of Being Blamed... — February 1, 2008 @ 3:38 am

  2. Jason,
    I love your impassioned comment and your special perspective. You spoke one definite truth…”the drug dealers are the Central Banks…” You and I certainly agree on that!
    E.M.

    Comment by Elvis Manning — February 1, 2008 @ 10:55 am


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