Busted: Bankers and The Global Economy

September 10, 2008

Is U.S. Mortgage Banking a House of Cards?

U.S. Senator Richard Shelby testified that U.S. Treasury officials found Fannie Mae and Freddie Mac were “playing games with their accounting'” to meet reserve requirements. This virtually guaranteed that the federal government would seize control of the government-backed companies once a comprehensive plan was developed. “Once they got someone looking closely at Fannie and Freddie’s books, they realized there just wasn’t adequate capital there.”

Digital Economy has held that accounting games are very common within the banking and mortgage industry. Public proof of this facts regarding predatory loans, highly questionable and illegal actions across the board relating to mortgage loans and instruments. The nation has learned that bankers cannot be trusted and yet little has been done to persuade the industry to stay away from graft and corruption.

What is worse with Fannie and Freddie, nothing is being done to those that falsified information and documentation because those actions are “legal.” In fact, the federal government has changed nothing beyond eliminating the upper crust of management. They still intend to involve themselves in the dangerous business of selling mortgage bond securities without considering previous consequences that has brought the nation to its knees. The unprofessional and dishonest conduct is considered as business as usual.

Fannie Mae and Freddie Mac have been a house of cards for years. Corruption and mismanagement within the organizations has been overlooked and rubber stamped in the name of protecting the economy and reputations. FHFA Director James Lockhart had declared Fannie and Freddie as fit just before the U.S. Treasury hired Morgan Stanley. Morgan Stanley has decided that the accounting tricks were legal, but simply allowed the mortgage twins to overstate their reserves.

Richard Fisher of the Dallas Federal Reserve noted that the capital held by the government-backed institutions was “of poor quality.” Where is the national outrage? When are spineless accountants going to stand up for right instead of creating new ways to cheat the system? Who is responsible and accountable for the corporate abuse of taxpayer money and developing methods that resulted in the unraveling of the economy for the short-term profit of a system of investors and mortgage bankers? Not a soul except for you. You are the taxpayer. You are on the hook, enslaved by the greed, incompetence and spinelessness of the people within “the system.”

This writer came from this culture and because of the abuse and attitudes in the system, retired from it. Instead ivy leaguers and young boss-pleasers without regard for balanced or honest accounting simply follow the rules put out by “mysterious forces.” If 911, overzealous government surveillance and the price of fuel is a national security issue, surely this abuse trumps them all. The tragedy is that you don’t really care. ~ E. Manning

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