Holiday for the People

In this season of peace on earth and good will towards men, how about some forgiveness, like mortgage reductions for citizens? The banks were forgiven with no questions asked, yet citizens who paid to forgive receive no such mortgage debt forgiveness themselves.

Neither the banks nor the Obama administration are willing to reduce underwater mortgages as a solution to the housing crisis. “The government has been sheltering banks from facing the hard truth about their condition. They may be valuing mortgages or mortgage bonds at say, 85 cents on the dollar, when the true market value, industry experts say, is closer to 25 or 30 cents. …if many of the loans aren’t ever going to be repaid, then the assets now claimed by the bank are imaginary.”

Real people aren’t having imaginary difficulties being underwater. Modification of mortgages along with interest reduction would greatly boost the economy.

As housing prices continue to decrease, it increases the number of mortgages under water. This flood of bad debt has to be reduced or the economy will not recover.

The current financial system is such a wicked web of deceit and moral degeneration that modifying mortgages would mean “The banks would have to report reduced capital…” and “This could threaten the solvency of some of the very large banks-those that have exaggerated their financial condition, as many market analysts and shareholders suspect.”

Let’s have a bank holiday in this holiday season. As former banker Rob Johnson said, “These institutions are so intertwined they are a system. You can’t deal with one bank alone; you have to deal with the system. You call a month long bank holiday for the twenty largest banks, and that holds everything in place while the regulators mark down the assets and see how everybody’s losses will affect everyone else.

“Then you wipe out stockholders, wipe out management, possibly some of the unsecured debt. Mortgages would be refinanced based on real value. Once everybody has taken their hit and you’ve wiped out existing stockholders, then the government comes in and properly, transparently recapitalizes all of them. As these new institutions gain a footing, eventually they can be sold back to the private market.” “This is rough stuff, but the nation could get a fresh start and a new, more honest banking system out of the hard knocks.”

The people cannot be the victims three times here; once by the banks betting against itself with our houses and savings at risk; second by the government bailing out the banks with our tax dollars “no questions asked,” and now the third hit by the banks who are responsible for the whole mess to begin with, refusing to adjust the house value which they manipulated to be over priced in the first place.

Let’s face it, if America wants to be considered the ‘best’ country in the world, the country that all others strive to emulate, then it should start by being honest and truthful with it’s constituents. Otherwise, we become just like the other failed countries where its politicians and bankers have sucked the life out of it’s population, some of the very countries where we’ve sent our military might to depose those in power, to change it to where the government serves the people. The bankers and their politician minions at their beck and call have no reason to believe that it can’t happen here as well.

Note-All quotes are from the article in The Nation magazine-”Debt Jubilee, American Style” by William Greider.

Is the Messenger Transparent?

Senator Kay Bailey Hutchinson doesn’t want to enforce the Consumer Financial Protection Board due to concerns over the agency’s transparency and the dictatorial power of the agency’s director, stating, “we are so worried about the overkill in this. We have prudential regulators in the banking and lending industries now. That has been cleaned up. We have the comptroller. We have the Fed. We have the FDIC. Another layer of bureaucracy is going to cost consumers more, and it's not going to be more protective.”

Bloomberg News reporter Bob Ivry who wrote the story on the Fed’s lending trillions to banks said,-“What we're really taking a look at is what happened afterwards and the secrecy that surrounded the loans that they made during this time. They kept that -- they kept the details of the lending from the folks at Treasury who put together TARP. And they -- and nobody that we spoke with, the senators or congressmembers, knew anything about the details of the Fed lending when they were debating and ultimately passed the Dodd-Frank legislation.”

The Federal Reserve was operating in secrecy and with no oversight but now the Senator and her colleagues are worried about the CFPB. The Bloomberg new report also found “ that banks had potentially profited from the emergency lending programs by some $13 billion dollars and the Fed had spared them a measure of scrutiny that might have led to stricter reforms on the industry.”

Even if this legislation is tepid, Senator Hutchinson is sending the message only consumer protection agencies need scrutiny and reforms, but it’s OK for the central bank and all the other banks to operate in secrecy with no oversight.

Always blaming the people

The Founding Fathers believed a central bank was needed as a means of paying debts and to provide lending for economic growth. Machiavelli said man cannot resist that to which nature inclines. And yet, we commoners; the ’unclean masses’ are supposed to curtail our instincts and cut back on the necessities of life, while the fraudulent bankers who caused this rape of the economy are blameless. After all they’re in the business of making a profit, so who could blame them? Edmund Burke said “I do not know the method of drawing up an indictment against a whole people”.

Now the indictment is against whole peoples of the world because they retire too early, they charged too much on their credit cards or they bought houses they couldn’t afford. There’s too much debt and only austerity cuts can rescue the world.

But why is there an explosion of world wide debt? William Greider writes in the Nation magazine: “The austerity class ignored the massive housing and credit bubble, which more than any single factor contributed to the explosion of debt worldwide.”

Bank mathematicians and engineers and lawyers were the ones getting “creative” with the housing debt and turning home loans into mind boggling equations, which is what got us into this mess. But the solutions are easy, just blame the masses, cut workers and their pensions, while we bail out the crooks, cut their taxes, and guarantee them their fraudulent profit with our tax dollars. That’ll solve the debt crisis.