Duped by the skeezy slimey poors? Or a financial winfall at our expense?
This is one talking point I just can’t stand. Yeah, the Government, in the form of CRA, Freddie and Fannie and Chris Dodd and Barney Frank, and Billiam Clinton, and low income, skeezy, sly and lying home owners wanting 10 times the house they could afford are the main culprits for the fall out of the Major banks.
Our poor Great and Mighty and Magnificent and HUGE, financial overlords were FORCED by the Government they own, to give loans to low income and areas that were in disrepair to hopefully restore the community. They were forced by the Community Reinvestment Act of 1979. A program that had been in place for over 20 years by the time all this crap happened. I feel that highly unlikely.
I was going to go over each point that a person that would defend the banks would bring out. Instead I think I will just tell a little story. I hope you enjoy it.
Forward: also a disclaimer. In no way, shape or form is this story an actual historical documentation of any occurrence of any part of history, and if there happens to be a resemblance or coinciding conditions of actual occurrences( first you would have to admit to it having happened.) are strictly and completely coincidental. This is a work of fiction and exists only in my mind and on this blog, as far as I know. I can not be held responsible for the actions of others. Or at least that is what I have been told.
MONEY! MONEY! MONEY AND MORE MONEY!
Follow the money. Pretty plain and simple, right? You would think so. Who made money off this deal? The homeowner who took out the loan? Nope. They are either paying on a home they can’t afford anymore, or homeless or living somewhere else, and with a terrible blemish on their credit record. Did the Government make money off these deals? Maybe initially from increased sales and property taxes, but now there are pages of delinquent taxes in the paper twice a year. So that is another no. So who made money?
Well there were a couple industries that made money. The real-estate industry for one. Builders. Title co. But mainly it was the banks. How and why would the banks be able to make money doing these kinds of loans? Let’s look at the market before it was allowed to go berserk. They way conservatives say it should be. 20% down for a home and all.
If you have requirements of 20% down for a home loan, and the median price of a home is almost $100,000, how many customers do you think you are going to have? Remember, that is a $20,000 down payment. The median wage for a single individual is around $32,000. How many customers are you going to get for 20% down on a $50,000 house? That is still $10,000.
There was only a certain segment of the population that could afford to use their services, and they still would only use so much. How to expand business when the law says you have to have these onerous, stifling, restrictive regulations that are stifling creativity and ingenuity. HMMMM….. 🙂 Hello, congressman? Could we do lunch sometime?
But why? Why? you say, would those banks ask the Government to loosen regulations on them, so they could loan to people with risky credit? FEES. Commission fees to be more specific. These Great and Mighty and Magnificent and Huge bankers and traders get paid by how many deals they seal. The more customers, the more trading units, the more units, the more to leverage with and the more deals you can make.
The banks made money making the loan. They then bundled good loans with bad, paid off the credit rating agencies and got them graded AAA+ and sold them to Fannie,Freddie, and any other sucker they could get to by them. More MONEY! 🙂 They then bought shorts on those same loans. So when those went bad…. more MONEY! 🙂 The banks own stock shares now plummet. What do the bankers do? Buy back their own stocks! WHAT?!?! The banks are now bailed out by the Government. Guess what? Stock shares skyrocket! He he he ….. LOTS MORE MONEY!!! 🙂 Then the taxpayer had to bail out the insurance company these Great and Mighty and Magnificent and HUGE financial overlords bought insurance to insure those very same shitty financial instruments. Guess what? MORE MONEY! 🙂
Now the Government is giving bankers 0% interest loans through the Federal Reserve Discount lending window. To the tune of over $13 trillion dollars! What ever will they do with all that money? Hey. What say we invest that into Treasury bonds? I mean think of it! To make money off the shitty mortgages, put the responsibility off on the Government, make money betting against those loans, get the Government to bail us out, and then to invest that taxpayer money into Treasury bonds so that the taxpayer will pay us 3% interest on the interest free loan they gave us, so that we can use the interest to pay off the loan and WE get to keep the MONEY! And the houses! BONUS! THOSE TOO?!!!! 🙂 Ohhh, life as a banker is sooo exhausting! It is a lot of mental strain innovating these new financial IGDD’s . (Instruments of Global Deception and Destruction.)
No, couldn’t have been anything like that. Good thing it is a work of fiction. Could you imagine what would happen to a country if policies like that were allowed to continue to exist? 😦
Addendum: For those who think the Republican party is NOT part of the Great and Mighty and Magnificent and HUGE financial overlords court, maybe you should watch them in action yourselves. It is always better to hear it straight from the horses themselves. http://videocafe.crooksandliars.com/heather/jon-stewart-knocks-senate-banking-committe