Posted on 11/02/2011 7:43:12 AM PDT by IBD editorial writer
Banks: Using the Guy Fawkes mask emblem of Occupy Wall Street and the "Anonymous" hacker group, leftists are planning a big Nov. 5 to-do to pull their money from big banks and put it into small banks. It's economic idiocy. Led by the likes of MoveOn.org, Arianna Huffington and a supposed Los Angeles art gallery owner named Kristen Christian, the leftist game of "blame the banks" for the acts of Democratic politicians is coming together Friday — Guy Fawkes Day in England — in an extravaganza of events alternately titled "Bank Transfer Day,"
(Excerpt) Read more at news.investors.com ...
Banks are not blameless by any means in this, neither are Republicans by a long shot, but there is no doubt that the primary root causes of this entire mess are:
1.) Liberals in all branches of government and society
2.) Fannie Mae
3.) James Johnson
4.) Derivatives (securitized loans sold as investments)
Liberals implemented this mess beginning with Fannie Mae back in the 30’s. Even though it chugged along under the radar for decades, it was used primarily in a limited type of market, where they provided a mechanism (right or wrong) to allow certain types of more marginal lenders to get loans, which Fannie Mae would purchase from the lender and assume the risk. But it wasn’t a monstrosity, just another government program, most people had only a vague understanding of what it was.
Beginning with the Community Reinvestment act in 1977, liberals in and out of government began pushing legislation under the rubrik of “fairness” to make it easier for unqualified people to get mortgages.
Every step along the way, anyone who threw even the slightest speedbump or raised the most innocuous objection was vilified, branded as a racist and characterized as being against working people.
When James Johnson took over Fannie Mae, this type of activity became codified as policy.
James Johnson saw the company as the cash cow it was for the bureaucrats who ran it, and implemented a strategy that was on the job 24x7 with eyes and ears everywhere. He created Fannie Mae branches in a huge number of cities across America (I think it was between 50 and 100) staffed by like-minded people who served as the canary in the coal mine for any push back. They had armies of powerful lobbyists with lots of important connections.
If any legislator, bank or agency even breathed a trace of opposition or conveyed any interest in rolling back or limiting what was going on at Fannie Mae, they were attacked immediately, unhesitatingly and with the full force of the liberal machine (which is what it was) often within an hour of making a statement or phone call.
In tandem with this iron fist, they would sweeten the pot for legislators to oppose, waffle or simply not vote on various proposals (at all levels of government) by making campaign donations, a lot of them.
There were very few politicians who could withstand both ends, which shows how corrupt they have become, or how effective a smear campaign can be. It is another manifestation of the liberal approach of “You don’t want this because you are against the working man/children/insert race here...”
Even Speaker of the House Gingrich, who was supposed to be for small government and against entities like Fannie Mae, even got up on the podium with James Johnson in 1995 to sing the praises of Fannie Mae and their fulfillment of their manifest to provide mortgage access for minorities and such.
Nobody wants to be branded a racist, and even some people viewed as strong and principled didn’t want to fight that battle.
James Johnson turned Fannie Mae into a fully functioning cash machine for Democrats in full view of everyone. A part of the book I read this morning described how, when a piece of proposed legislation came out that would tie the hands of Fannie Mae in even a small instance, it was countered by a massive email and letter campaign. It turned out that in one focal area, the Fannie Mae office had purchased a list of constituents in an area, made up letters with their names as constituents, and emailed and mailed them to the legislators. When it was discovered (the first nine constiuents who were called about the letters denied ever writing them, knowing anything about them or even agreeing with what they said) Johnson was called in front of a committee where the legislator for those constituents demanded a signed apology be mailed directly to each of his constituents in his district. Johnson not only did not agree to do this, but even caught red handed, came out aggressively and said he would do no such thing, but would send letters to those constituents asking them if they wanted a representative who was against providing the dream of home ownership for minorities (or some wording like that)
Just amazing arrogance, but that is how he ran it, because he was making scads of money there.
He lobbied congress relentlessly to change rules that allowed even more dangerous and shady practices, at each point along the way providing assurances (and getting the rating houses in bed with him to back him up) that these changes would have no deleterious effect.
A good example was a paper in 2002 (Johnson was no longer there, I think it was Raines by then) published by Joseph Stiglitz and Peter Orszag (who would, amazingly after publishing this piece of crap in 2002 become the HEAD of the OMB under Obama!) This paper dealt with risk management at Fannie Mae and Freddie Mac (who had much lower capital cushions than did other financial institutions) and concluded...get this...that the risk of some catastrophic incident or sequence of events requiring a bail-out by the government was between 500,000:1 and 3,000,000:1!!!!!!!!!! Geez, you think they could have made the range any broader??????
Anyway, they concluded that the cost of providing an EXPLICIT government guarantee on $1 Trillion in debt (that was Fannie Mae’s target...a trillion dollars for people who couldn’t afford loans!) was only $2 Million.
Amazing. This dimwit who put out this paper to buttress an effort by liberal dipsticks to throw more gasoline on the fire in 2002 was actually appointed to the HEAD of the Office of Management and Budget under Obama!
And the securitization and bundling of loans allowed this crisis to not only metastisize throughout the entire US economy, but the world economy as well.
Bankers and Wall Street are complicit because, due to changes put in place by liberals, they no longer had to perform that nasty, time consuming and contentious underwriting task to find out who was safe to lend to. Now, they used automated tools that would let a dead cat buy a $250K house, and simply sold those loans to Fannie Mae or other entities who could now tie them all up in nice bundles to sell to investors.
Fannie Mae and the liberals made damn sure the rules were written in such a way that nobody could look inside those bundles before they purchased them to see the nature of the loans, which were all bad.
Wall Street and Bankers, doing what comes naturally to people who encounter a spigot with money flowing out of it, took advantage of it and put their mouths under it.
Gingrich, Bush and other Republicans, went along with it so as not to be villified, and went out of their way to assist. Why go halfway, right? They are complicit as well for not standing up, even though I do give some credit to the Bush administration for trying back in 2003-2004 to bring this issue to light. The OFHEO official in front of Barney Frank and the Banking Committee was essentially raped in public, and that was that.
It was like a perpetual motion money making machine...everyone wins and gets rich.
Not.
“I have trouble thinking of them as criminally fraudulent;..”
This is where your trouble lies.
The base of the fraud was in the MBS market, where the bundling, the lost notes, and the non-assignment of mortgages still proceed to this day. MERS was the foundation of all sorts of fraud. Even now, mortgages are being foreclosed and THEN assigned to a bundle, breaking all kinds of security laws, tax laws and every law in the book including recording laws of all states. The law is NOT being followed and hasn’t been for only God knows how long, at least since 2000.
It is criminal what has been done to the foundational principles of property ownership of this country. Without clear clean records of title assignment, how can there BE ownership of property?
There can’t be. And that is the problem. And the MBS market MADE that problem, and the banks based their bonuses on those profits.
And HOW many OTHER hedge funds are co-mingling clients money?
How many more?
“The banks BOUGHT that government.”
I think of it more as a symbiotic relationship. And even though the government cannot live without money, it has the guns, so ultimately it is in charge. But let’s say you’re right, if the banks bought government, they are no longer banks anymore, or not in any recognizably private business sense. They are government, ostensibly.
Treating it like there’s still a seperation between the two, or like private forces have taken over simple public servants, or whatever, is misleading. It’s what confuses a lot of people into being leftists.
“Why else could Paulson hold up Congress with threats of mayhem IF they DIDN’T pass TARP?”
Firstly, because he honestly believed it. Secondly, what about everyone else who wasn’t Paulson, and had nothing persay to do with the banks? You would warn of mayhem if you believed in the status quo, as most of us, even End the Fed-ers, do. You would if you were a socialist, a moderate Democrat, a liberal Republican, if not conservative (but some of them). Not in such apocalyptic terms, but in some terms.
Our financial system has Mutually Assured Destruction built into it, by design. Too big to fail is wrong, but not necessarily false. Depends how much you’re willing to sacrifice to correct things, and how much worse you predict things will be if you continue the madness. Even people who opposed TARP understand where Paulson was coming from, and how massively unpopular would be sudden widespread austerity.
“Fiscal policy has been out of the hands of government since the FED itself”
Huh? The Fed is the government. Again, it’s statements like this that gives me guarded sympathy for socialists, whom loose talk might have tricked into believing false gods.
“until THEY take back giving the people of this nation sound money”
I personally don’t think the government needs to give us sound money, though I admit it is a practice from time immemorial. We don’t need sound lugnuts nor sound iPhones, either. The market can handle it, and better.
“Fiscal policy has been out of the hands of government since the FED itself”
By the way, you mean monetary policy. The elected government still controls fiscal policy, and, actually, could curb the Fed’s power simply by not running a debt, as that is one of its major excuses to print money.
The FED is a private bank.
“I personally don’t think the government needs to give us sound money,...”
It is in the Constitution. It is what the Founding Father WROTE to be for this nation. NO central banks. They KNEW what they do to a country.
Your stand does not sound conservative to me. It is not founded on the Constitution.
Curb the FED? Congress can UNDO the FED. Congress GAVE the FED THEIR POWER TO COIN MONEY. It says on our money, “Federal Reserve Note.” It is not US money, it is Federal Reserve money.
Congress gave up their power to coin sound money for this nation and they NEED to take it back. End the FED.
Your last paragraph in that post would fix a LOT of things.
See my post at #21...I think we are in agreement.
I lay the blame primarily at the people who encouraged banks and lenders to forgo sound underwriting practices, and lend money on the basis of “need” rather than a solid business basis of “risk”.
And those people are liberals.
Thank you.
It has been the growing socialism that is destroying this nation. Anything else that points to other things is just a distraction from the real issues.
“Curb the FED? Congress can UNDO the FED. Congress GAVE the FED THEIR POWER TO COIN MONEY.”
Jeez, calm down the caps, would you? I’m all for abolishing the Fed. My point was that you were wrong to impute fiscal power to the Fed, when it happens to be one big area in which the non-Fed government could control Fed policy, if it so chose.
About the caps.
I used to be in graphic arts. The idea of caps = shouting is aneathma to me. I use type to make a point, not shout. Who ever came up with that silly idea has set back to the stone age the abilitiy to use type to make a point.
So, I was NOT shouting at you. I some times like to use caps to emphasize what I am saying, bothering with hmtl takes too long on a busy posing day.
“The FED is a private bank”
No, it is a federally chartered banking cartel with a monopoly on the issuance of legal tender and a chairman appointed by the president and confirmed by the Senate, which sends most of its profits directly into the Treasury. It is our central bank, and is no more private than the army is a private security force.
“It says on our money, ‘Federal Reserve Note.’ It is not US money, it is Federal Reserve money.”
Have you ever wondered why we accept it? Because we have to by law, as you may have noticed by reading more than what you quoted. It is legal tender, and therefore government money.
One could argue that, however, to pretend that monetary policy does not effect fiscal policy is a bit much.
Dittos your #5. Exactly. The two parties made the mess and now they are at each other for it. yay.
It is not always accepted. Look at Louisiana. And there are ancedotal comments here and there about US Embassy’s not taking $100 dollar bills for payment.
The dollar is losing value, and the monetary policy of the FED is to devalue it even more.
Those are facts that will cause more pain to the people of this country.
“The idea of caps = shouting”
Granted, I do hear shouting in my head when I hear them, but that’s not the problem. The problem is also not that it’s ugly, though it is. It’s that you should be able to make a point without emphasizing every other word. Be it italicized, underlined, asterixed, bolded, colored, or whatever, it’d still be annoying.
“Who ever came up with that silly idea has set back to the stone age the abilitiy to use type to make a point.”
No they haven’t. I should think the one who can’t find another way to alternate type than to keep using the same technique over and over and over would be more in the stone age.
“I some times like to use caps to emphasize what I am saying”
Sometimes would be fine. Basically as many emphasized words as normal words (I didn’t count, but I’m sure it’s close enough) in a post is overkill.
“One could argue that, however, to pretend that monetary policy does not effect fiscal policy is a bit much.”
I wouldn’t argue they’re divorced. One influences the other. But they are yet distinguishable, and I’m sure monetary was the proper term.
Hopefully, more and more people will come to realize that.
Thank you.
“It is not always accepted”
Oh, boy. We’re gonna argue about this now? I suppose prisons don’t belong to the government, either, because sometimes people escape.
“The dollar is losing value, and the monetary policy of the FED is to devalue it even more.”
Absolutely.
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