Busted: Bankers and The Global Economy

August 27, 2008

Desperate Bankers, Desperate Times

witless regulation

witless regulation

To listen to the tone of regulators and lawmakers, you would think that bankers would be on their best behavior, especially with all the arrests early this summer for mortgage and banking fraud. “Crackdown efforts” are apparently failing as desperate bankers continue to commit banking fraud to keep surviving.

Mortgage Asset Research Institute (MARI), the mortgage information gathering arm of information monger Choicepoint is reporting that mortgage fraud is on the rise despite record lows in the number of loans issued. This makes the situation all the more alarming.

The study found that the number of fraudulent loans issued during the first three months of 2008 skyrocketed 42% compared with the same period in 2007. This is true, even considering a much lower loan rate to consumers.

The credit histories of many applicants are no longer good enough to get approved for mortgages in the declining economy, except through the creativity of brokers and loan officers. An identity theft level of as much as 6 percent is also playing a role in the banking chicanery, as the criminal element gets involved in shady and predatory banking.

witless lawmakers

witless lawmakers

Apparently many bankers haven’t learned a thing. Why bother, especially with idea of massive bailout protection by the Federal Government. The number of arrests for banking fraud hasn’t been huge in the banking community itself and many bankers appear to be escaping the net of the Feds. With that in mind, many bankers are willing to keep up the faith in bad banking.

Despite the press, the reality is that the structure of the banking industry has changed not one whit. Commission and loan volume are still the hallmarks of the mortgage banking industry. Overwhelmed regulatory agencies and legal eagles aren’t making a dent in the huge problem. Apparently, the government isn’t up to the task.

If a private institution like Choicepoint can query and discern the truth behind a continued banking and mortgage debacle, surely a public institution like the Federal Government can move in and close down immoral banking with all the subpoena and legal power at its control. Instead, government regulators show that they don’t have the will to deal with the national blight effectively. Bankers are going to continue to practice what they have learned to depend on. The poison must be rooted out of the system in order for the system to continue. In the meantime, “Wild West Mortgage Banking” is on the rise, with a stupified witless government on hand, unwilling or unable to quickly take corrective action.

August 4, 2008

U.S.: What Banking Fraud Means to Depositors

There have been a number of bank failures and the recent accumulation is increasing in pace. The FDIC sees many bank failures down the road. If you are uncertain why banks should fail, you are at the right place. “Busted: Bankers” highlights corruption and fraud in the global banking industry without the restrictions of mainstream media and politics.

The public word is that regulators are bracing for 100-200 bank failures over the next 12-24 months. If the FDIC is anywhere near right, the United States has what could be considered to be an alarming increase in the number of U.S. commercial bank failures. This debacle, despite props from the Federal Reserve, has been caused by creative banking instruments and outright fraudulent activities in the name of profits for bankers and investors. The resulting contraction of the housing market and credit squeeze on a global basis are of their making, a hefty portion at taxpayer expense.

FDIC insurance is the ultimate standard for protecting the assets of banking depositors in the United States. The FDIC has raised their mandatory banking insurance rates to cover the expected expense of bailout. The government claims that the FDIC has ample resources. While this reality is debatable if several shoes drop at once, the U.S. federal government backs the FDIC. Deposits that meet requirements under the $100,000 account limit are fully protected, as good as the government that backs them.

How do you protect your money and keep that money in a safe bank? To begin, always look for the FDIC logo at your bank branch. If you are using online services or a bank, look for the logo as well. However, don’t assume that the FDIC label is accurate in the name of safety and healthy skepticism.

Simply go to the fdic.gov and locate “bank find“. In this way, you can be certain that the bank that you selected is FDIC insured. The FDIC also has a list of bank rating agencies on its Web site that can evaluate the financial stability of a bank. To get a free evaluation, check out bankrate.com, remembering where your loyalty lies. Banking information is generally set up to secure confidence. The information you are given is designed to that end. However, regardless of bank strength, FDIC insurance will secure compliant deposits. That is what you really need to know about.

As an individual, personal deposits are insured up to $100,000 in an FDIC-insured institution, including savings, checking, certificates of deposit and money market accounts. This assumes that your accounts are non-brokered. When you register with the bank directly, make sure that your deposits are non-brokered and will reside with the institution instead of being handled by a third-party. This will ensure your financial safety.

While banking fraud has meant plenty as far as creating a troubled economy, as a depositor, you are fully protected with FDIC insurance. The protection is as good as the government protection that is trusted in, which in essence, comes straight out of taxpayer pockets. Bank runs and panic aren’t a necessary part of your reactions.

In the meantime, investing and spending with a certain amount of prudence is importance. If you are involved in large financial transactions, plan ahead without waiting until the last moment. Some depositors with IndyMac put off dealing with large transactions until the last moment, putting a financial kink in meeting their obligations. The problems could have been prevented by securing a cashier’s check a few days ahead instead of at the last minute. A good rule of thumb is to avoid putting off anything that you can do today, especially where your financial life is concerned. ~ E. Manning

August 3, 2008

False Confidence and Tough Times

You’ve probably heard the bad news and are likely to hear more based on underground information that isn’t public yet. Public information isn’t rosy either as otherwise tough line economists are finally admitting a “shallow recession”.

You’ve probably heard that the federal government admitted that 51,000 jobs vanished last month, with just over 1/2 million this year according to statistics. Growth has been reported as slow, but numbers have just been revised for an economic contraction in the last three months of 2007. The popular line is growing that data suggests a recession began late last year. That is really old news. The good news behind the bad news is that once you admit you have a problem, you stop trying to cover up for the problem that you don’t have. In fact, by simply admitting the truth collectively or individually, it is possible to look upward or at least past your situation. That is exactly what the economy really needs, a release from national credit addiction. Business and government need it more than consumers do.

Investment bankers like Goldman Sachs say the entire global economy is slowing, which makes any trade improvement opportunities unsustainable at best for the U.S. economy. Because of that many new opportunities in the U.S. economy are being cut off. Business is also worrying about Christmas sales and is reacting by importing less goods. Looking at the bright side, even if many Americans don’t have a traditional Christmas, we still have each other. The world isn’t over because of a disappointing holiday season except for unwise speculators.

For those businesses that must have an increase in sales, new ways to entice consumers must be discovered to garner what business there is. Otherwise, many businesses will be cutting back and closing stores. This move is expected before Christmas as business continues to contract, but many retailers will try to weather the storm. Panic may ensue, but rest assured that many businesses have simply reaped what they have sown. Let’s face the facts that Americans cannot continue to live on credits cards to finance cheap imported goods to make the business world ever larger profit margins. Inflation also continues to cut into margins on both sides for business. The beast of inflation is no longer reigned in.

Many Americans have decided to get down to brass tacks and quit fooling themselves. Even so, at the end of the year, the likes of Old Navy will still have tons of practically worthless stuff to sell at bargain basement prices in the new year that they paid pennies on the dollar for to manufacture overseas.

Tens of millions of Americans have for years borrowed aggressively against the value of their homes to finance trips to the mall, dinners out, vacations, medical bills and new cars. As housing values continue to fall and artificial financing possibilities wither, the cold reality of real life will finally begin to settle in. Expectations will have to be lowered, at least for now. Wages will have to increase to sustain the economy or prices will have to fall. Since most wages come from the halls of big business, you know that prices will fall.

Confidence is down and for good reason. But confidence is a short-term animal that economists and analysts put too much stock into. Business owners that have some common sense are not stockpiling goods like in days of old. Less stock and less sales mean less tax revenue, which will further hurt the cash that government craves. Confidence will continue to erode for a time and deficit will reign. In six months or more, we may actually know if the stimulus checks were effective in any way or not. Until then, speculation rules. Still, tough times don’t last forever, although getting through is no less difficult. Tough times is also what makes humans grow.

Aside from all the heavy spending, why is America in trouble? Never forget that our friends, the bankers and financiers have dumped the economic cart. Fraud and speculation has worn down the system where a little restraint and sense would have carried the economy a long way. Of course, government guarantees on virtually every financial measure and market don’t work and ultimately create more harm than good by further burdening the economy. We have nationalized banking, mortgage, finance and in some cases, business in general. You can’t take the risk out of business. Human nature mandates abusive practices where there is no risk or reason for accountability.

Happily, we have something to gain from the situation if we are collectively willing to learn from our mistakes and forbid the same behavior in the future. That would be incredible progress that has been slow in coming. Yes, this is a dismal science when times are tough. To some, times are never good enough as we race onward at breakneck speed to meet the rush of bills that are always coming due. That is the life of plenty that America has been sold.

If we are smart, we have other things that we can manage to do during the recovery besides continue to hurt others and the already ailing economy. Sitting still and taking stock may be the wisest move imaginable. We can trim back spending and expectations while looking for a new approach to life in America. Remembering who you really are is more important than false confidence.

While all of this is happening, the digital economy is really ready to take off in a big way with the next upturn. The powers behind the scenes, including the central bankers aren’t hurting. They continue to make it big during good times and bad. ~ E. Manning

July 21, 2008

FDIC: Let the Innocent Cast the First Stone

Back in 2001, FDIC employees supervising day-to-day operations of failed bank Superior FSB funded more more than $550 million in subprime loans. According to a recent lawsuit by Beal Bank, who eventually purchased Superior FSB, a significant portion of 5,315 subprime mortgages are non-performing. The FDIC has even bought back 247 of the original loans, priming the pump for their blame. The problem is that the FDIC made the decision to continue to operate the failed bank under the banking monikker, churning out an additional 6,700 subprime loans.

Based on the FDIC’s own report, at least 19% of the loans are fully fraudulent or “contained significant (more…)

July 17, 2008

IndyMac, FDIC Guarantees and Brokered Deposits

The FBI has been on the trail of the subprime mortgage debacle since February of 2007, whether you have heard about that truth or not. They have been ferreting behind the scenes to find the fraud that has tainted the lives of Americans and the global economy. IndyMac is the latest big chunk of fraud that is under investigation, even as the bank folded last week. The FBI is currently examining 21 corporate targets for fraud, IndyMac being one of them. Otherwise, the FBI and the FDIC are keeping details hushed.

Surely, you know the game by now. Denials of trouble are ALWAYS (more…)

June 10, 2008

What are the Feds Doing with Stimulus Money?

President Bush signed the Economic Stimulus Act of 2008 back on February 13, calling his stimulus idea a “booster shot” for the American economy. At the signing ceremony, Bush stated, “The bill I’m signing today is large enough to have an impact, amounting to more than $152 billion this year, or about 1 percent of the GDP (gross domestic product).”

At that time, the government mandated that checks be issued to qualified citizens through May. The process has dragged on through June. Some Americans have not received their promised stimulus payments through the Internal Revenue Service.

Barack Obama is circling the country in a two-week campaign. He is proposing that lawmakers should inject another $50 billion immediately into the sluggish U.S. economy. Mr. Obama noted the largest monthly increase in the unemployment rate in over 20 years. He intends to use his position in the Senate to generate a movement for “another round of fiscal stimulus, an immediate $50 billion to help those who’ve been hit hardest by this economic downturn.”

Mr. Obama supports the expansion and extension of unemployment benefits, as well as a second round of tax rebate checks. “Relief can’t wait until the next president takes office.”

Federal unemployment benefits for people out of work are usually limited to 26 weeks. A movement of Democrats wants to add another 13 weeks plus an additional 13 weeks in states with unemployment of 6% or more. President Bush has previously been against extending unemployment benefits, preferring to bail out imprudent banks and mortgagers.

On June 6, the Treasury Department reported that it has sent out nearly 67 million in stimulus payments worth approximately $57 billion. Now the important question comes to mind. The stimulus package was advertised as a $152 billion stimulus. Where is the remaining $95 billion stipulated by the first stimulus plan?

Now, we are talking about a new stimulus plan as if the first stimulus plan is complete. Where did the money go? What is Washington up to? Is the stimulus a straw dog of sorts? Has economic stimulus become mere hype?

Comments? Make your comments here!

May 19, 2008

Mortgage Vultures and Congress

In a recent hearing on mortgage servicing, Senators probed Countrywide Mortgage on exactly how mortgage servicers make their profits. Servicers earn revenue through a fee that is a percentage of the mortgage, float income from interest on temporarily-held funds, and through retained fees like late charges and other fees paid by borrowers.

Senator Charles Schumer described the addition of these fees as “piling on”. Mr. Schumer is convinced that a “vulture mentality” is developing among mortgage servicers as defaults rise. Senator Schumer called Steve Bailey of Countrywide to task for attempting to deny that mortgage servicers profit everyday from delinquent homeowners, even when borrowers and loan holders might benefit if the family retained its home, rather than struggle to pay an avalanche of default costs. (more…)

« Newer PostsOlder Posts »

Create a free website or blog at WordPress.com.