Be sure to thank the greedy bastiges that consider themselves masters of the universe for the current economic mess that is affecting us all and cause our government to bail them out.
Greed, avarice, usury and other corruptions promoted by a handful of men and women have lead the United States and the rest of the world into a monetary debacle. Most people that have planned and saved for retirement are seeing the savings plummet by thousands of dollars. Yet fools like Angelo Mozilo of Countrywide Mortgage...
... and Alan Greenspan, the former head of the Federal Reserve, Franklin Raines, Treasurer and chief book-cooker at Fannie Mae, David Moffit of Freddie Mac, Maurice “Hank” Greenberg of AIG, who was investigated for fraud in 2000...
...and Martin Sullivan and Roger B Willumstad who both succeeded Greenberg, but apparently didn’t learn any lessons from his misdeeds.
Unfortunately Lehman Brother and Merrill Lynch did not follow basic investor advice to diversify and both got stuck holding too much of their assets in subprime debt.
For the unfamiliar, a subprime mortgage is what all those #$^* # folks that call your home during dinner time to convince you to refinance your home are trying to sell you. You let them know your credit is perhaps somewhat questionable and they say, “No worries. For you such a deal I have.” This is an adjustable rate mortgage. The first year is a mere 3%. They downplay that with points, fees, closing costs it is going to cost you plenty. Then of course it adjusts up to several points above prime each year or perhaps more often. Alan Greenspan thought this was a lovely idea, since it stimulated the economy and created more home ownership. At least until the money dried up.
We’ve been down this road before. In the greater Cincinnati area many folks were duped by the CEO of Lincoln Savings and Loan Charles Keating. This savings and loan associations and others had been deregulated in the early 1980s, allowing them the opportunity to make highly risky investments with their depositors’ money, an opportunity of which Keating took advantage.
Some regulators noted the danger posed by these deregulations and pushed for more oversight, but Congress refused. This may be due, in part, to the Keating Five, five Senators — Dennis DeConcini, Alan Cranston, John Glenn, Don Riegle and John McCain — who had received, for both themselves and for groups they supported, well over $1 million from Keating in the 1980s as favors and political contributions. They later met twice with regulators who were investigating American Continental Corporation, in an attempt to end the investigation. (In 1991, they would be rebuked to various degrees by the Senate Ethics Committee.)
In 1985, Keating hired Alan Greenspan (sound familiar) as an economic consultant, in an unsuccessful effort to convince an oversight agency to exempt Lincoln Savings from certain regulations. Greenspan delivered a favorable report, writing that Lincoln Savings was “a financially strong institution that presents no foreseeable risk to depositors or the government.” (Greenspan produced similar favorable reports on numerous other banks that also failed soon after.)
In 1989, American Continental Corporation, the parent of Lincoln Savings, went bankrupt. More than 21,000 investors, most of them elderly, lost their life savings (in total about $285 million.) This occurred largely because they held securities backed by the parent company rather than deposits in the federally-insured institution — a distinction apparently lost on many if not most depositors until it was too late. The federal government covered almost $3 billion of Lincoln’s losses when it seized the institution. Many creditors were made whole, and the government then attempted to liquidate the seized assets through its Resolution Trust Corporation, often at pennies on the dollar compared to what the property had allegedly been worth and the valuation at which loans against it had been made.
In 1989, Keating was subpoenaed to testify before the House Banking Committee, but refused to answer questions, invoking his right against self-incrimination under the Fifth Amendment to the United States Constitution.
Keating served 4 years in a federal prison and lost most of his holdings, but was allowed to maintain a large ranch in Florida. The rich get richer and the poor get children.
We will come out of this mess. However it is my hope that those who are responsible will be punished.
Yeah! Like that would ever happen.
President Bush held a White House conference this past week to set up a bail out of the nation's financial institutions. The Dems accuse the Republicans of stalling because the Democrats want more coverage of the little guy. The Republicans accuse the Dems of wanting to throw money at everything and want to know where this money is going to come from. The Republicans want the financial institutions to be more transparent and carry more insurance to cover themselves in the event the financial companies and banks get their arses in a sling like this again.
Meanwhile one of the nation's largest consumer deposit banks, Washington Mutual, has a bank run paying out almost $17 billion to frightened west coast depositors in a week. The bank runs out of assets and is taken over by the FDIC and then a tenative purchase agreement is reached by JPMorgan Chase.
It is a scary time in our country. There is plenty of people that should step up and take responsibility, but that ain't going to happen.
You know what? I have plenty of problems. I was hoping that by age 56 I would be debt free. But that is not the way the economy is set up. And I have yet to have anyone offer to bail me out of debt.