Thursday, June 21, 2012

Bankers Take Welfare, Let America Rot

Whether the bankers who so crippled the American economy end up being punished for their irresponsibility or not, the harm they caused is worsening, not improving, and we are setting ourselves up for a real collapse the next time around. Perhaps the key battle won by those of the super-rich who survived 2008 was the decision by Washington to "save the system" by saving the bankers at the expense of throwing away the victimized homeowners, leaving unanswered the question, "Why would bankers holding millions of mortgages want all that property in foreclosure and rotting away?"

[Details on Class War Page]
It will be up to the courts (if democracy wins) or historians (if the banks win) to judge whether the officials in charge of the largest financial institutions in the U.S. have, over the last decade, been criminals or just idiots. The fact is they accepted millions of dollars of mortgages so risky that it trashed the whole financial system. The job of bankers is, at its core, to assess risk, and they failed to do their jobs. Then Washington rewarded the...criminals? idiots?...well, let's be polite and just call them the "perps"...while turning its back on the victims.

One of the most egregious examples is the corporate socialist scheme of loaning Government funds at below market rates to the banks while denying such loans to homeowners facing foreclosure. (Remember the obvious: saving those homeowners meant saving the homes...which were owned by the banks! Helping corporations may not help any actual human except the CEO; helping people helps everyone...and every corporation.) Apparently, Jamie Dimon and his very small circle of good buddies at Goldman Sachs, Citibank, Bank of America, and Wells Fargo, etc. [for the list of culprits, see The Warmonger Report] felt that they could not compete on equal terms (i.e., paying equal rates for loans) with the average American homeowner. No socialism for individuals! No Sir! That would be un-American. If a man can't pay his mortgage, then he deserves to sleep in the gutter. But a banker earning $25M a year, well, now, anyone can see, that's a different thing altogether. You don't expect Jamie Dimon to play on a level playing field with the likes of you, do ya? Huh, do yah?

The evidence of this closely guarded secret policy of corporate socialism has been emerging slowly:
The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing.
The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates....
Add up guarantees and lending limits, and the Fed had committed $7.77 trillion as of March 2009 to rescuing the financial system, more than half the value of everything produced in the U.S. that year. [Bloomberg 11/28/11]
How the banks managed this cute trick is no mystery any more. As Senator Bernie Sanders of Vt. noted:
At a time when small businesses could not get affordable loans to create jobs, the Fed was providing trillions in secret loans to some of the largest banks and corporations in America that were well represented on the boards of the Federal Reserve Banks. [As quoted by Abby Ziment, "Naming Names: Jamie Dimon Is Not Alone," in Common Dreams 6/15/12].
As Zimet points out, "the bankers bailed out themselves." 
In the event, 3.6 M homes were foreclosed [RealtyTrac via Bloomberg], and the banks that happened, after all the corporate welfare, to survive are using a good chunk of those welfare payments to "persuade" Washington to continue looking the other way. Many of those homes are at this moment sitting rotting in my own town - with the banks refusing to take care of them yet insisting on trying to sell them for far more than they are now worth, as they steadily fall apart.

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