Busted: Bankers and The Global Economy

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.

June 10, 2009

Economy: Good Prospects Beyond White Collar Jobs

Voices of reason have long proclaimed that the only key to a decent future is a college education as we trumpet excess, luxury and credit for all. The halls of academia do not suit every temperament, nor can the world operate only through the league of white collar employment and office jobs. Who will take care of the national infrastructure, manufacturing and all those green jobs that the nation has been promised? A sedentary, artery-clogging, boss-centered lifestyle is not a requirement to exist in America. Yet, hundreds of thousands of American youth have been or continue to buy into massive college loans if credit is available. Nearly half of students who start college will drop out before graduating. Our country has been facing major workforce shortages for years, which have been taken up by illegals in many cases. They are the latest attempt by big business and government to create a new subclass of American worker in which to found a new nation.

white-collar-crimeWithout question, the nation has been suffering where jobs are concerned, brought about by nothing less than white collar crime. You can’t really talk about careers since corporates nip millions of so-called careers in the bud every year due to their own self-interest. That reality existed before the recession stripped the nation of what millions of Americans see as their only self-respect: the job.

America has been convinced working a corporate job is the only way to live. The white collar job has been sold as the American stock and trade. The federal government has been very happy with this campaign as corporations and big business are highly complicit with federal law and the collection of taxes. As a result of this nearsighted approach, the American labor force has been selling itself short and has allowed itself to be deluded about the future and personal potential for the future.

We are being told that only by following rules and leadership of big business, the corporate and the academic world, can Americans possibly prosper. Has this proclaimed fact proved to be true? Are you truly being prospered now? Has the nation prospered? Think for yourself. You are your own best friend and are fully capable of supporting yourself if you are willing to think outside the box that the government, big business and corporates have made for you. There is hope. Great personal success can exist outside the cubicle. You are not a slave…at least not per the founding documents of America. ~ E. Manning

May 28, 2009

Investors Afraid of Bailout Involvement

Filed under: banking, economy, government, money — Tags: , , , , , , , , , , , , , — digitaleconomy @ 10:41 am

toxic debtTo cleanse bank balance sheets of distressed loans, other unwanted assets and “reduce the associated market overhang”, the FDIC and Treasury launched the Legacy Loans Program. Now the plan has stalled and is likely to put be on hold, terminated or modified again as stifled feds puzzle over their dilemma.

The Legacy Loans Program as crafted by the Federal Deposit Insurance Corp is part of a $1 trillion Public Private Investment Program announced back in March. This program was theoretically designed to encourage banks to sell securities and loans weighing down balance sheets to willing investors. Many banks, flush with bailout cash, have gained a feeling of stability with previous government bailout and have become less eager to be involved in the Legacy program.

Prospective buyers and sellers are reluctant to be involved in such an endeavor and have voiced their concerns to the FDIC about participating. The majority are fearful that the federal government will change program rules in the ‘middle of the game’. Investors are also fearful of financial backlash from an overall hostile attitude against Wall Street.

Bailout ideas simply don’t seem to be working in the realm of public opinion and scrutiny. Even investors don’t want to be attached to the crooked banking mess that the bankers have created. ~ E. Manning


July 28, 2008

Banking & Lending Standards Threaten Economy

Pollster financial consulting firm Deloitte LLP has discovered that two out of three Americans have finally decided that getting a mortgage is more difficult. This fact creates quite a conundrum for financial authorities that want easy answers. Henry Paulson, U.S. Treasury Secretary correctly believes that without mortgages, there is essentially not a housing market. Paulson wants to jump start the ailing economy through the devastated U.S. housing market. That is why Paulson is so adamant about protecting mortgage cousins, Fannie Mae and Freddie Mac at all costs. They currently guarantee roughly 80% of U.S. mortgages and secure the future in the eyes of conventional wisdom.

In fact, without Fannie and Freddie, the U.S. government has little chance at stopping the bleeding in the mortgage and financial markets unless authorities were to reinvent the wheel. Unfortunately for the economy, bankers are no longer free-wheeling loans, making it tougher all the way around for good customers to buy a home. Why? Bankers are playing by the rules or “stricter standards”, which threatens to upend the entire economic recovery plan by the Treasury and Federal Reserve.

Now that the party is over, bankers are typically demanding a (more…)

June 5, 2008

U.S. Banking Pressures Continue Unabated

Uncertainties in today’s economic environment continue to pose significant challenges for the banking industry, households and bank regulators. Banks continue to experience increased pressure on earnings resulting from a deterioration in credit quality noted first in higher-risk nontraditional mortgage loans and now evident in other sectors. Construction and development loans have continued to deteriorate in quality and threaten to destabilize lending.

Many American citizens know that economic life is tough. The FDIC recognizes that economic weakness combined with rising food and energy costs have increased risks to banking because of the suffering consumer/home buyer. The FDIC anticipates a rise in the number of problem institutions over the next few quarters, but so far the number of under-capitalized institutions remains well below levels seen during previous economic downturns.

This news is not entirely surprising considering that the Federal Reserve put a new floor into the banking system with banking auctions (TAF) and with the rescue of Wall Street. The actions of Federal Reserve have allowed the beleaguered U.S. banking system to tread water, but little more so far. As a result, bank failures have been very limited.

Because of difficulties arising from problems in the housing sector, financial markets and the overall economy, the FDIC fears that the insurance fund could suffer losses that are significantly high than projections. Bankers have cleverly learned to mask many of their debts with an increasingly complex system. For example, brokered deposits are a recent complexity in recent bank failures that have cost the FDIC dearly in the effort to maintain consumer confidence.

The FDIC has re-evaluated the banking system in the last year in order to restructure risk and the cost of required insurance to banks. Problem banks are many and the FDIC is zealously protecting the banking community from public knowledge and individual scrutiny.

Interestingly, the FDIC has admitted to developing projections of expected failures and is hiring new staff to coordinate with those projections. Like other government agencies, they expect to hire private contractors and the perils that third-party hiring brings to the mix. In the face of significant risks from economic conditions, the fallout from recent unsustainable mortgage lending practices and disruptions in the credit/capital markets, the FDIC insists that most banks are well capitalized.

On a similar note, the Federal Reserve Board announced approval of Bank of America Corporation to acquire Countrywide Financial Corporation and some non-banking subsidiaries. The Federal Reserve has admitted that it is still learning about the increased complexity in financial products and markets.

Reflecting deterioration in the mortgage industry, nonperforming assets more than doubled over the past year from $37 billion to $81 billion. This number is notoriously small considering the huge wealth within the industry and yet threatens to destabilize the country by the admission of many experts. The shows the severity of the bad management and gambles for profitability of the last 8 years or so.

The Federal Reserve admits that they and bankers have failed dismally at determining actual risk. They claim that lessons have been learned, but have failed to gain a complete understanding of what the actual breakdowns are and how to deal successfully with the result.

With all the finger-pointing, could outright graft and fraud be so outrageous that it looks like ignorance? Could this scenario be the real answer for U.S. bankers, Wall Street and their institutions? As Bugs Bunny often said, “Eh-h, could be doc.”

May 14, 2008

Home Today, Gone Tomorrow

Apparently Sheila Bair, noble FDIC chief, likes to engage in wishful thinking like the Federal Reserve. The difference is that Ms. Bair isn’t getting much respect or cooperation. Let’s face the facts: she doesn’t have much cash behind what she says.

She stressed the need for consumers to contact counseling groups and lenders to make an effort to prevent foreclosures. At a recent foreclosure prevention event she attended in California, Bair emphasized that policymakers need to better address the plight of home buying consumers. “I think we miss the human side of how this is impacting borrowers,” Bair said, criticizing efforts by some policymakers to cast troubled borrowers as investors or speculators. (more…)

May 13, 2008

Housing Crisis Over?

If the Wall Street Journal says it, it must be true! The brilliant economist and author Cyril Moulle-Berteaux declares that “most people forget that the current housing bust is nearly three years old.” He bases the supposition on evaluation of latest trends.

He’s right that affordability ultimately created the mortgage bust. How high can real estate prices go while undergoing the intense misuse and abuse of the banking community? Affordability was created by “false affordability” through unsound practices. You cannot finance the world in a never-ending upward spiral.

The doctor of Wall Street declared that “the boom made housing unaffordable for many American families, especially first-time home buyers.” The fact is that abusive and overextended lending practices lead to (more…)

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