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Monday, December 01, 2008

Bad Loan Circle Jerk

Time for some basic math. We have about 300 million people in this country. There are 535 members of Congress, plus the President and a few hundred highly educated bank and insurance company CEO’s, who are supposed to know what they are doing. But strangely over the past few months, we have dove another $7 trillion in debt, because these folks were incompetent, unconscious or complicit in the biggest heist in history.

Today, the Media is thrashing about for a way to blame Bush for the debacle, but that dog won’t hunt. Yes, he was President for the past 8 years, but the problems really started back in the Carter years, with the Community Reinvestment Act. Well, that notion went over so well that, in time, it morphed into a policy to grant loans to everyone everywhere, as long as the questionable paper would not exceed an acceptable ratio within a bundle of other loans.

Eventually, with the expansion of the real estate boom, throughout the U.S., commissions and fees “trumped” amortized interest, as a revenue stream. Fees and commissions became King when borrowers were returning to the trough over and over to refinance into ballooning equity positions, even though their ability to meet the higher payments did not grow along with the obligations.

The feeding frenzy of borrow, spend, refinance, spend some more, then refinance again never seemed to meet the challenge of the ability to repay. The first bar to hurdle when qualifying for a loan. Loans of $300k and $400k went to borrowers with fixed incomes of less than $2000 per month, which should have been the first litmus test of excessive lending. But NO, the taxpayer was somehow never considered when the ink on loan fraud and bank fraud was being delivered in supertankers. Fannie and Freddie grew into the festering boil, that when burst, would make the DOT.COM bubble look like a fart in your hot tub. Spending and lending went as nuts as the inmates in the Cuckoos Nest.

So, here we are now, swallowing the excesses of a few million irresponsible debtors, and the greed of thousands of mortgage representatives and brokers, who chose to look the other way in qualifying borrowers, not to mention the wholesale negligence of a bureaucracy mandated to oversee such excesses and abuses.

But somehow, the over 290 plus million of us that played by the rules will be shackled with “righting a ship” that less than 10% of us tried to sink.

The silence of the outrage is deafening in our Halls of Justice, Halls of Congress and the Main Stream Media. Instead, the selling of the remedy looks more like a game of Three Card Monte than any retribution against those that got us here. In the pandemonium to make heroes of the upper echelon of government and finance, we have neglected to hold any responsible party’s feet to the fire, insomuch as it would be but a token moral installment to those of us that will ultimately pay for the gross mismanagement and incompetence…. we SO did not deserve.

You see, it was those that got us into this Paul Bunyon Boondoggle that are now crowing that it is THEY who will get us out…..for a few trillion dollars, plus interest. WE HAVE BEEN SO SCREWED.

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