Busted: Bankers and The Global Economy

January 27, 2011

U.S. Mortgage Crisis Tensions Build

A commission was appointed to look into misconduct regarding the national mortgage and banking crisis, signed into being by President Obama on May 20, 2009. The 10-member panel is after any person that may have violated the laws of the United States in relation to the crisis. The scuttlebutt is that a number of financial industry figures and corporations have been found lacking and are being referred for prosecution. All of this portends to make quite a bit of news in the near future.

The media has been working hard at divining any sources of information. The New York Times claims to have obtained a copy of a 576-page report, concluding that the financial disaster was avoidable while laying blame on federal regulators for the failure to act on knowledge of shoddy mortgage lending and reckless risk taking. Keep in mind that at least some of these shoddy practices continue behind the scenes, building on a proliferating number of foreclosures in the United States.

The idea that politicians hope to project is that the financial crisis is being resolved. The truth is that the national financial crisis is just getting underway.

December 2, 2010

Federal Reserve Expects to Strip Americans of Mortgage Right

Even as residents of the United States are losing their homes in record numbers, the Federal Reserve wants to put the burden on homeowners by stopping their ability to cease foreclosures, including the ability to escape predatory home loans with onerous terms. So goes the Fed’s proposal to amend a 42-year-old provision of the federal Truth in Lending Act. This has raised the ire of labor, civil rights and consumer advocacy groups along with a slew of foreclosure defense attorneys.

For the first time in a while, scuttlebutt exists about stripping some of the power being lavished the Federal Reserve and instead, allowing this aspect of law to be handled by the new Consumer Financial Protection Bureau, which begins its work next year.

Since 1968, the Truth in Lending Act has given homeowners the right to rescind illegal loans for up to three years after the transaction was completed if the buyer wasn’t provided with proper disclosures at the time of closing. During the financial crisis, the Federal Reserve continued to expand its own authority through 21,000 transactions that lend tens of billions of dollars to Goldman Sachs and other giants of Wall Street, as well as British, German and French banks, including other big businesses and smaller banks from Puerto Rico through the United States. The Republicans are now trying to use this as political capital, mandated by many newly elected members of Congress that campaigned on platforms to rein in the Federal Reserve’s freedom to act independently of Congress.

October 1, 2010

B of A delays foreclosures in 23 states

Filed under: banking, business, corporatism, economy — Tags: , , — digitaleconomy @ 12:03 am

Bank of America says it will delay foreclosures in 23 states as it examines whether it rushed the foreclosure process for thousands of homeowners without reading the documents.

Bank of America is not yet able to estimate how many homeowners cases will be affected, a spokesman for the nation’s largest bank says.

A bank official acknowledged in a legal proceeding in February that she signed up to 8,000 foreclosure documents a month and typically didn’t read them. The Associated Press obtained the document Friday.

The executive’s admission adds the nation’s largest bank to a growing list of mortgage companies whose employees signed documents in foreclosure cases without verifying the information in them.

July 26, 2010

Plague of Home Foreclosures in U.S. Continues

The miraculous recovery that has been proffered by the Banking Elite hasn’t happened. Central Bankers and Wall Street profiteers believed that they could continue to operate with wild speculation while reaping the results and encouraging more of the same. The financial wizards have not proved their financial literacy. Their speculative downfall started with bundling speculative instruments tied to U.S. housing debt that never should have happened to begin with. Hundreds of thousands, maybe millions, of Americans bought homes that never really qualified. The hot market was bolstered until the superheated financial bubble burst, leaving a worldwide recession based on what amounts to Wall Street gambling on highly leveraged contracts that have bankrupted the system. The reality is that the problem isn’t with foreclosures themselves, but with the bundled securities and expected profits that are tied to the failing mortgages. No doubt, these securities have been packaged and sold dozens of times even though they are worth nothing now.

More than three years into a U.S. housing crisis that started a worldwide recession, home foreclosures continue to further the devaluation of the U.S. economy. The waves of foreclosures no longer come from sub-prime loans that have defaulted. Foreclosures come from formerly respectable borrowers that have lost their jobs in an impoverished and drained economy that no functions to support a nation of hard-working Americans, but functions only to serve the Banking Elite.

In the first half of 2010, more than 1.6 million U.S. properties are in the midst of foreclosure filings, which include bank repossessions, default notices and auction sale notices. This is an 8 percent increase from the first half of 2009 which puts the United States on target to reach 3 million filings this year. These numbers show the fragile state of housing and real estate investment, which has been decimated. Government programs have been ineffective at stopping the national hemorrhage. Little has changed except that more Americans are living in rentals, with friends and family, in tents or on the streets, depending on their financial fortunes.

The U.S. government and banking profiteers built a house of cards on the idea that the cost of housing would always rise and that the profits would never cease. After massive bailouts, they are still stuck without a financial course to chart and exploit, beyond tapping government bailouts. The Federal Reserve holds trillions in useless notes and obligations in the hope that someday they will be worth more than the paper they are printed on. The economy continues to spiral downward despite limited attempts by big money multinationals to bolster the market.

Corporate multinationals and banking bigshots aren’t here as charities. They demand to make money for shareholders. For decades they have profited from U.S. tax law and from the backs of manufacturing slaves in the third-world. Now they seek to hold the bottom line and to keep their organizations alive. Now they are cannibalizing inept governments to sustain themselves. Stagnation is preferable to loss as the United States becomes the new third-world in their great plan to level the national playing field through globalization. Welcome to the brave new world of globalism, where everyone is equal except for the corporate oligarchy.

It isn’t pretty, but is pretty much as advertised.

March 13, 2009

Can the Economic Crisis Be Resolved?

nauseating crisis

nauseating crisis

Bankers have been treated like bad rich kids with every need met so that Daddy Government isn’t so embarrassed. This was the public relations idea that hasn’t worked. As a result of this public relations nightmare, the federal government has continued to overextend itself in the name of security and confidence as the instrument of last choice. Oh really?

As a result of this mindset, the Treasury has run amok in a virtual panic through the system looking for toxic debts and tried to figure out the crisis using the best brainpower that is available with banking debt so complex as to make you give up. That is what Hank Paulson did. Banks continue to snivel about their needs within the broken system that they created.

What’s worse, the world of top-notch education and best brainpower available coupled with self interest has brought the nation, albeit, the world to its’ knees with only excuses for any hope of redemption. Paulson couldn’t find all the debt or deal with the tentacles of the impossible situation.  Timothy Geithner still isn’t thinking outside the box of rules he is used to. Paulson’s terminal frustration and Geithner’s government-man thinking don’t have to be. They have been beholden to the system. There is a solution.

This solution is much the same as the raw deal handed out to homeowners in do-it-yourself mortgage crisis that continues to beleaguer the nation of taxpaying American citizens. The nation is threatened, say those of superior intellect,  because ‘undereducated Americans’ can’t seem to get it together. Bankers and servicers have done little or nothing to stem the tide of foreclosures because there is little self-interest in doing so in the short-term. The short-term is the measuring stick of capitalism today.

Since bankers and their ilk are so highly educated with plenty of basic internal resources, the Federal Government needs to install a new idea that involves do-it-yourself capitalism. This do-it-yourself system takes the burden from Daddy Government’s hands and puts the responsibility squarely on the shoulders of those that spawned the crisis. Daddy Government isn’t going to be involved any more beyond the cleaning up by the FDIC, but Daddy is going to supply the credit tools necessary to do the job.

banking-hourglassUncle Hank couldn’t find all the toxic debt which ultimately ended the bailout that the nation had intended. However, in the world of banking capitalism,  rest assured that if you have toxic debt, you know it. Banks are hiding toxic debt based on their own fear and trepidation, the ultimate public relations nightmare.

Enter Ben Bernanke’s Federal Reserve, the answer to all liquidity. Set up yet another credit window, this time wholly financed by the Federal Government. This doesn’t mean that the other tools used by the Fed aren’t financed by the taxpayer and the federal government, but I digress.

In this case, the suffering banker knows of his liquidity issues and always has. This time, instead of expecting the Treasury Secretary to come to the rescue, the bankers are to cash out their toxic debt at a preassigned value as presented to the Fed. Think cheap. Think bargain basement. The Fed, using credit guaranteed by the American taxpayer (of course) will issue monetary credits to the bank in exchange for ownership of the toxic debts in a nationwide fire sale of sorts. The toxic debts are and most likely, forever will, be worth virtually nothing.  They will be removed from the system and these flawed toxic debts will never be sold again. We will plan to eat the cost. The responsibility is on the bankers which is exactly where it should be. To make life good, everything will be publicly anonymous to save the possibility of embarassment.

In exchange for this generosity and real bailout by government, these banks will guarantee in blood that all monies received for such bailout will be used to fund loans to taxpayers and small businesses with relaxed terms that generally creditworthy citizens and business in today’s economic climate can meet. In other words, stable income is required, but no more endless profiteering and nitpicking that banks love to keep their credit out of the system. For large bank holding companies that hold toxic debt and cannot directly assist in rebuilding the economy and improving liquidity to the economy, there will be no further bailout.

The first part of the plan would be enough, but the second part of this plan is sheer genius, but not for greedy capitalist bankers.

In the second phase of the plan, bankers will be required from a certain date in the immediate future to update cash holdings for their fractional reserve. Instead of being able to loan out 90% of cash holdings, they will be required to hold on to 20% their holdings without loaning them out. This will allow an extra margin of security since the traditional 10% hasn’t worked to keep banks solvent. The reality is this, like it or not: the fractional reserve of 10% is part of what got bankers into this mess with toxic debt. The idea of easy money is what fueled the crisis. Money is no longer going to be so free and easy for bankers. They will be living on less and making more loans or cease operation and sell off their accounts. An uncooperative greedy banker is the worst sort of animal. It is time to remedy that problem with a little less manufacturing of money. 80% of new loans out of thin air fueled from deposits and downpayments will be enough. Bankers will now be keeping 20% on reserve instead of the traditional 10% moving forward. Of course, this will involve keeping two set of books, one for old loans at the traditional old rate and another for continued business, but bankers are good at keeping books. Will bankers buy the idea? There won’t be any choice if they want to survive. What is best is that no nationalization will be required, an action that renders zero benefit to the taxpayer. ~ E. Manning

February 9, 2009

Mortgage Bailout on the Way?

obama-mortgage-fingerprintsRemember the mock outrage of so many politicians last year as the U.S. economic national debt ceiling approached $10 trillion? Last October, when we heard about a $700 billion bailout of the financial system, it seemed like all the money in the world as a manner of speaking. Never mind the debt ceiling since President Obama doesn’t recognize national debt as an issue. Since then, the collective “we” in this country have managed to spend another $10 trillion without accomplishing a thing beyond buying preferred shares in certain banks. The year isn’t over yet (it’s only February 9th) and more economic stimulus is probably on the plate as job losses continue.

How has the nation lost its’ way? A lack of common agreement regarding simple principles and a common vision for the future that makes sense reveals the true crisis. Deceptive flawed thinking among lawmakers portends a real problem for the future as far as the common American is concerned.  Disagreement and strife is the real standard that lawmakers hold to. There has been no presidential honeymoon that this writer can see. We have forgotten what stewardship really is. Hope isn’t on the plate where elected lawmakers are concerned. A divided house cannot stand indefinitely. Perhaps President Obama needs to campaign to the American people to grip some sort of vision….but I digress from this mental exercise.

Another couple of trillion dollars would pay off every residential mortgage in the country and Americans would be home free…literally. What foreclosure crisis? Every American with a home would have a piece of America to call their own without a bank involved. Think of the quick national stimulus  the nation would enjoy as everyone spent their house payment on disposable income and new vehicles, the current blight of lack in the current economy.

The fact remains that the national foreclosure crisis is always on the back burner, yet is blamed as the basis for the nation’s economic demise. Naturally, lawmakers can’t support any kind of quick national housing stimulus that I sarcastically penned because of the $40 trillion plus in potential interest  income that scandalous bankers would never receive because of early prepayment before the term. Any bailout like that won’t happen because it takes power away from the system. Taking money away from bankers would be far too simple while firing and imprisoning financial thieves is too difficult and embarrassing.  Real economic stimulus is far too simple when it comes down to rewarding honest income producing activities. Instead, politics simply gives bankers more money as if that will really solve the problem as they complain about esoteric banking derivatives that nobody knows how to fix. Let Timothy Geithner have a go at this bailout.  Based on what has been discussed, the nation is still looking at investment shell games that are no better than what bolstered the economic crisis to begin with on Wall Street. That is the financial literacy that the Federal Reserve and Wall Street know. ‘Democrats’ deserve a chance to repair the system and they will have that chance.

Can you imagine a retired economist presenting such ideas and speaking in such a way? Remember, it is always about money and authority, but then it always comes back to money and the status quo. That’s all about authority too. ~ E. Manning

January 15, 2009

Housing Correction Undermined by Foreclosures

Rapidly rising unemployment and a shortage of mortgage credit to new buyers is seen driving future declines in prices. Another factor that is being largely ignored should have government policy makers shaking in their economic boots.

housing-correctionUnemployment is going to soar in the course of this year and it’s going to increase into the first quarter or even into the second quarter of 2010. The housing market is going to see a tough year through 2010. A commonly overlooked factor is the continuation of rising foreclosures. Continued foreclosures and lack of government response will make economic matters worse by undermining the housing market and the pricing correction underway. The latest theory is that bailout of the foreclosure crisis is essential to avoid continued contraction and freefalling housing prices. They aren’t half wrong. ~ E. Manning

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