WHEN WALL STREET IS THE PROLEM, IS BERNANKE THE ANSWER?
Busting Someone in their Home Is Minor Compared To Ejecting Millions From Theirs
By Danny Schechter
Author of Plunder: Investigating Our Economic Calamity
Memo to CNN: Consider this as a theme for Black In America 3.
In his recent press conference, after which President Obama would be called to task for lambasting the police in Cambridge Mass for acting "stupidly"-a comment he later withdrew-he also charged that Wall Street knew what they were doing when they made predatory loans. No one called him on that, not even Wall Street.
Here's what he said. "We were on the verge of a complete financial meltdown. And the reason was because Wall Street took extraordinary risks with other people's money. They were peddling loans that they knew could never be paid back."
If this is unfair, no one has stepped up to the plate to deny it, certainly not the relentless right-wing which fell on Obama like a ton of bricks for suggesting that a lone policeman acted improperly by arresting scholar Skip Gates in his own home.
If it was a smear, you would expect an uproar from the Wall Street-Real Estate complex responsible for millions of families losing their homes. After all, this is a mass problem, not a mere incident. Also, a large proportion of those targeted were people of color. Their lives have been handcuffed, not just their wrists. If you are looking for a case of mass racial profiling, look here. A law suit in Baltimore produced an internal memo from Wachovia Bank in which loan officers called black customers "Mud People."
Sadly, the explainer in chief did not elaborate, did not remind the country that Wall Street firms made billions of dollars securitizing these loans, then turning them into exotic products with misrepresented values. After financing rip-offs of homebuyers, they ripped off investors by selling infected "bundles."
None of these con-artists have been prosecuted; many have been rewarded.
According to economist James Kwak, for banks, "there is no contradiction between fleecing customers and making lots of profits (which is what makes you safe and sound). (a) Originate bad loans; (b) pocket fees; (c) sell bad loans to an investment bank for distribution; (d) repeat. What threatened to bring down banks was the fact that they held on to too much of the risk of those loans, either on their balance sheets or in their off-balance-sheet entities."
These assetless products had no underlying value, and had to be written off. leading to massive losses. It was the implosion of these fraudulent "toxic" mortgages that brought down the economy. The FBI cites "an epidemic" of criminality.
The Administration is not going after the people who were "pedaling loans that they knew could never be paid back." They are, instead, proposing a new consumer protection agency to make sure that the slick salesmen who take advantage of a widespread lack of financial literacy can no longer bamboozle the uninformed.
Everyone advocating responsible lending wants new rules with teeth. They support an agency to safeguard consumer rights. Who is against it: almost all the banks that the government has bailed, and all the sleazebags who should be jailed. They are mounting a slick campaign to kill the agency using a pricey PR agency led by Jim Wilkinson, the Bush operative and former Paulson aide who ran the propaganda war for the Iraq war. (You can't make this up!)
And guess who has just joined this backlash against reform? None other than Ben Bernanke, the overlord of the Federal Reserve Bank, an organization, quiet as it's kept, that is actually run by big banks and totally unaccountable to Congress or the people.