"All of us felt the suction from Wall Street. One day you
would get an email saying, 'We will buy no-doc loans at 95%
loan-to-value,' and an old-timer like me had never seen
one," says Mr. Barnes. "It wasn't long before the no-doc
emails said 100%."
Original source URL:
http://countercurrents.org/schechter110807.htm
Subprime Or Subcrime? Time To Investigate And Prosecute
By Danny Schechter
11 August, 2007
MediaChannel.org
There comes a time when the frame of a news story changes. It happened in Iraq
when the "war for Iraqi freedom" became seen as a bloody occupation, not a
beneficent liberation. It is happening as the war on terror is increasingly
perceived a war of error and when voting problems are reframed as electoral
fraud.
And it will happen in the economic arena too, when we see the "subprime" credit
crunch for what it is: a sub-crime ponzi scheme in which millions of people are
losing their homes because of criminal and fraudulent tactics used by financial
institutions that pose as respectable players in a highly rigged casino-like
market system.
Suddenly, after years of denial and inattention, the press has discovered what
they call "the credit crisis." Vague words like "woes" are still being used to
mask a financial calamity that some analysts are already calling an apocalypse
as lenders go under and the Stock Market melts down.
A French bank froze billions Thursday saying, ""The complete evaporation of
liquidity in certain market segments of the U.S. securitization market has made
it impossible to value certain assets." Translation from the French: We are all
in deep shit.
On Thursday morning, President Bush was asked about this at a press conference.
He blamed borrowers for not understanding the documents they signed. But if you
have ever tried to read the documents banks prepare for mortgage closings, you
will know that they are written by risk-minimizing lawyers and are too long and
dense to be understood. (Later in the day, the market reacted to Bush's upbeat
assessment with the Dow plunging 387 points.)
The financial insiders who watched were more than skeptical. Here are some
quotes from a discussion on the Mi-implode Web site. One of the discussants
calls our fearless leader, "President Pumpkinhead:"
Why'd president pumpkinhead have a news conference in the morning? Probably
hoping no one would see it and he wouldn't have to lie to as many people.
Another described what he was watching with more than disbelief:
"He's being hit with a lot of questions on mortgages, credit crisis, and the
economy ... and of course the economy is 'in for a soft landing,' he's been
assured by the treasury that 'there is plenty of liquidity,' yadda-yadda-yadda.
But he is stumbling over his words more then usual, not making eye contact, not
finishing his sentences ... and when he wonders a bit, he quickly goes back on
script. It is very odd to watch, to say the least."
"Odd?" Not for him, but, of course, there is more than one man to hold
accountable. This is a deeper structural problem that implicates a whole
industry and the process of "financialization" it promotes. This crisis is an
example of what goes around comes around as the companies that suspended their
usual "standards" and "rules" and self-styled "due diligence" knowingly sucked
money out of people with poor credit records and who now find their own
companies imploding and collapsing worldwide. Many of the victims are people of
color. They were targeted by predators.
Underscore that this was done deliberately, with forethought and malice, a well
orchestrated plan to create armies of "suckers" and steal -- yes, I said it --
their monies to leverage even bigger deals. Their greed had no limits, until the
scheme collapsed.
Behind it all were the so-called "Masters of the Universe," the wise men of Wall
Street who worked behind the scenes to turn mortgage brokers and small lenders
into part of what will one day be seen as a criminal network worthy of
prosecution under the RICO conspiracy laws used against the mob and drug
dealers. Read this account from the Wall Street Journal:
Lou Barnes, co-owner of a small Colorado mortgage bank called Boulder West Inc.,
has been in the mortgage business since the late 1970s. For most of that time, a
borrower had to fully document his income. Lenders offered the first
no-documentation loans in the mid-1990s, but for no more than 70% of the value
of the house being purchased. A few years back, he says, that began to change as
Wall Street investment banks and wholesalers demanded ever more mortgages from
even the least creditworthy -- or "subprime" -- customers.
"All of us felt the suction from Wall Street. One day you would get an email
saying, 'We will buy no-doc loans at 95% loan-to-value,' and an old-timer like
me had never seen one," says Mr. Barnes. "It wasn't long before the no-doc
emails said 100%."
You don't read many accounts like this of businessmen bashing Wall Street in the
business press. Could it all have been stopped? Of course, if there were real
regulators and rules protecting consumers and the public interest. And if there
were a social movement that championed economic justice.
And also, if there were investigative journalists like the ones who just wrote a
series on the "debacle" of the "debt bomb" in the Journal -- but after the
collapse, not before. And what do they admit now? That this is not just a
subprime problem but far more serious and global.
They note that "credit problems once seen as isolated to a few subprime mortgage
lenders are beginning to propagate across markets and borders in unpredicted
ways and degrees. A system designed to distribute and absorb risk might,
instead, have bred it by making it so easy for investors to buy complex
securities they didn't fully understand. And the interconnectedness of markets
could mean that a sudden change in sentiment by investors in all sorts of
markets could destabilize the financial system and hurt economic growth."
Will the rest of the media follow up and explain what is really going on?
This is very serious, but far too many progressives, activists and politicians
alike haven't spoken out about the crime behind this rolling scandal. We should
be calling for major debt reform in America like Bono advocates for Africa. We
should demand criminal penalties for the profiteers who started out to enrich
themselves and seem to have ended up destroying the very system they misused. We
should press the Congress to use its subpoena power to investigate the corporate
criminals and their government enablers.
When they propose a bailout, we should demand a "jailout." The Washington Post
reports that the US has started a bailout "pumping more than $150 billion into
the financial system to keep it operating smoothly." Where is this money coming
from? Not from the military budget you can be sure.
Blogger Carolyn Baker writes that we all must become more engaged with these
issues saying she is "aware of the role of economic issues -- perhaps more than
militarism, health care, education, politics, or any other institution, in the
dead-ahead demise of empire.
"I also notice that few in the left-liberal end of the political spectrum have a
firm grasp on economic issues which I suspect comes from a fundamental
polarization between activism and financial intelligence," she writes.
Reviewing conservative author Michael Panzer's book, Financial Armageddon, she
criticizes his analysis as limited, and by extension, the left's avoidance of
these issues as well.
"What is most disturbing to me," she writes, "about the book is what appears to
be a total lack of perception regarding the role of fraud, theft, and malicious
intent in the American and global financial train wreck which has been
exacerbating over recent decades."
Indeed! What are we going to do about this? How about starting with becoming
more aware?
____________________
Kindly forward this newsletter to your friends and encourage them tojoin this
mailing list. http://www.countercurrents.org/subscribe.htm . And also a
reminder, August is Countercurrents popularisation month. Just visit this url
and do what you can. http://countercurrents.org/poster.htm
--
--------------------------------------------------------
Posting archives: http://cyberjournal.org/show_archives/?lists=newslog
Escaping the Matrix website: http://escapingthematrix.org/
cyberjournal website: http://cyberjournal.org
Community Democracy Framework:
http://cyberjournal.org/DemocracyFramework.html
Moderator: •••@••.••• (comments welcome)
