Frank Louis
US economy is in shambles, uncontrolled debt runs amuck
By Frank Louis
March 14, 2011

US Economy is in Shambles, Uncontrolled Debt Runs Amuck, Americans Going Bankrupt, Bank of America Chief Decides Mortgage Modifications are Unfair — While Some Who Are Responsible Admit to "Flaws."

Over 11 million people did not just decide to jump off a financial cliff in the same year by buying real estate. It is a nationwide epidemic that is killing the nation, based on kickbacks and carefully contrived "flaws." On one hand, a reported 11 million-plus properties (I think it is probably more) are valueless, worth less than the mortgages on them. Figure an average family of 4 in each house and you have over 44 million people getting kicked out of their homes. WOW!

On the other hand, many state governments and our federal government are broke and over committed financially, facing bankruptcy; worth less than the money owed by them. Several, including Bernanke and Greenspan, admit to "flaws" in their leadership roles. Not crime, just "flaws." They have "flaws" we "over-bought," that is the line we are being fed.

This nation was founded on solid Judeo-Christian principles. The founders looked for scriptural guidance in drafting this nation's founding documents. If you don't believe this, look it up. It is true. They prayed and read Scriptural passages upon which they often meditated before passing legislation. A far cry from how business is done in this, the 21st Century. I don't know, maybe ask Barney Frank, he's a senator, he'll know how important Scripture is to the Finance Committee for example.

Perhaps one of the Scriptures the founders read was Proverbs 15: 27 "He who is greedy for gain troubles his own house." Or Proverbs 15: 25 "The Lord will destroy the house of the proud." Maybe they read Proverbs 16: 18 "Pride goes before destruction." They most likely also pondered First Timothy, 4:1 that warns of people "speaking lies and having their own conscience seared with a hot iron."

The Founders also well knew just how often the Scriptures warned against foolishness being accepted as wisdom. Does anyone, anymore, consider how these passages fully describe today's United States of America? Our rights come from God, and Scripture, not from the government. Don't forget that! Hard to come up with economic models wrought with "flaws" following that advise!

It is a "flawed" mortgage system in which millions of Americans are being forced into foreclosure due to a contrived "housing bubble." They have bankruptcy as their only option if and when they try to sell or actually die at some future date. Say what you will, but this was a form of entrapment. Americans who saved hard earned money and made down payments during these fraudulent times were set up, entrapped, robbed. You are right... no one put a gun to his or her heads. But if the fake values were never created, nobody would have refinanced. Don't think this will destroy this country? Think again! Just think what would happen if over 40 million people who are in families that are getting foreclosed on all showed up at their state houses like what we saw recently (and still) in Wisconsin. 40 million people loosing their homes; all protesting being robbed oft heir life savings. What a voting block!

Americans are being held accountable for buying property at fraudulently created "values" created by creative financing that was obviously "flawed." Millions of Americans are being held to the fire for because the professionals they trusted did not respect their fiduciary responsibilities to their clients demanded by law. They were selling us "flawed" loans and should we want out money back. But we just all lay down. Meanwhile, the earthquake Japan shows us just how frail these systems we create and worship really are.

At the same time, states cannot make good on much of anything they are indebted for either, including pension promises, education promises, trash removal promises... you name it, all promises. Despite what Michael Moore says, many states are broke and cannot meet financial expectations committed to decades ago by other people who, as with today's housing crisis, ignored any thought of long-term consequences.

And while I am at it, Mr. Moore is totally off base, when it comes to his idea that our money is his. Surely you heard his interview where he said how wealth is a limited "national resource" and should be shared equally. Is he for real? Is he a bit "flawed" too? Any money we may have left after all of this "flawed" economics belongs to us. If we worked for it, it is ours. As I have written many times, the housing crisis is just another form of wealth redistribution as in Moore's ideal.

State governments are, as we know, upside-down in value due to what some are now admitting to as a "flawed" system of kickback economics, and nobody sees a trend here? They now have to cut budgets. While governments need to definitely cut budgets, these cuts will just create more havoc as we have created a very large segment of our population reliant on entitlements. Unless overhead is lowered across the board as Bank of America CEO has realized, it is "unfair" to cut one place and not the other. What? Read on.

It is happening in every sector. And the best any financial experts can admit to are "flaws." Even Bernie Madoff was recently quoted in a phone interview with Steve Fishman of the New York Magazine, that he has concern that he may have demonstrated "flawed character" while stealing billions from investors. No, not a crime, nope just a "flaw."

Flawed? In a similar confession, on a Frontline program from about a year ago, Alan Greenspan stated that he "found a flaw" in the economic model he created bringing down the economy as a result. A "flaw?" Not a crime, just a "flaw."

What is the purpose of all of my ranting you ask? Simple. Something occurred to me while researching the ongoing financial catastrophe in Wisconsin. In Wisconsin, as with many other "elsewheres" across our nation, there is not enough money to make good on commitments negotiated by individuals who are now, no longer involved or required to make good on their "flawed" calculations and financial environments they crafted.

They basically created Ponzi Schemes with our tax dollars that have now come full circle and are due as did the lenders in the housing crisis selling properties to unqualified and straw buyers to bring up real estate prices and create a frenzy. In both examples, these financial wizards got paid up front (in whatever way; kickbacks, commissions, bonuses, etc) at the time of the transaction and now they have nothing more to say. Flawed system? Flaws, flaws, and more flaws. Pretty much everywhere, pretty much everyone is at their wits end with no solutions in sight. No crime, nothing but flaws being admitted to. Still, we are expected to hold the bag and pay our flawed debts.

I see this state government crisis (like in Wisconsin) to be very similar to what caused the housing crisis. In the housing crisis, a bunch of realtors, mortgage brokers, appraisers, mortgage backed securities specialists, credit default gurus, and a mash of other financial con-artists made deals in which they had absolutely no accountability and brought the market down as a result. They got their kickbacks in the form of commissions without as much as one ounce of concern whether these loans were solvent or not. In fact, in research I have read on the subject, I learned that these lending agencies and banks did not keep or want to keep statistics on the number of defaults occurring in these sub-prime mortgages when they could not write enough of them. They had "no need to know" and they didn't want to know. After all, they just made the loans. Nope, just must have been a "flaw" somewhere. That's all.

The same mentality has brought our nation and most states to the same broken point as millions of American homeowners. That is, upside-down and underwater when it comes to financial solvency. Government officials negotiated big money deals with unions and other entities that were not sustainable without a care or concern. As they had no interest in sustainability, they did not care that the money would run out and cause a crisis. They got their kickbacks at the time of the transactions just like real estate and mortgage broker commissions paid at the time of closing, not when the mortgage is fully paid. No accountability in the end in either instance. Another "flaw."

Let's just look at one mortgage giant, Bank of America. It reportedly lost $ 2.2 billion in 2010. I suspect the figures are not all that accurate, but that is just me. However, at the same time the leadership of the bank is loosing money hand over fist, Bank of America Corp. paid $15.2 million in bonuses (kickbacks) to its investment banking chief Thomas K. Montag, for bringing housing down I guess. Chief Executive Officer Brian T. Moynihan received a $9.05 Million bonus (more kickbacks). Of course, these figures are in addition to their salaries, already in the millions each year. Too big to fail? You tell me. We loose a few thousand dollars in a fraudulent real estate investment and we get foreclosed and bankruptcy. Some bonus.

Meanwhile, BAC Chief, Moynihan in a recent announcement has decided that the bank cannot any longer consider modifying mortgages where the property values are now upside down due to falling real estate values (that he helped create). BAC executives recently reported that modifying mortgages is an unacceptable practice because it is "unfair to borrowers who had managed to stay current on their loans." What? So let's just keep foreclosing and bring property values down even further. Yep, as also advised by the Mortgage Bankers Association (who, by the way, defaulted on their very own mortgage), we should just keep paying, tossing money into a bottomless pit. Great idea. You fellows are surely well on your way to even larger bonuses this year I am sure.

Is anyone else seeing a reoccurring picture here?

Moynihan, chief executive of Bank of America who led it in its $2.2 billion loss last year was quoted as saying; "There's a core problem that if you start to help certain people and don't help other people, it's going to be very hard to explain the difference. Our duty is to have a fair modification process."

Since when is a criminal paying back his victim called "help?" You are one of the architects of this current financial crisis, you led your company to record losses and America into an economic crisis, and you are lecturing us on financial principles?

I'll tell you how to choose who to help and who not to help. Rewrite mortgages for people who made down payments or were lied to about their property values and refinanced. They were set up. People who were subjected to "flaws" in the housing market that created the bubble that robbed Americans of trillions of dollars in personal wealth, that's who.

Modify the mortgages of people who invested tens if not hundreds of thousands of their hard earned dollars into a market which was, unbeknown to them, wrought with "flaws" (fraud) in the form of no-doc, no money down, straw buyers, etc that artificially inflated values. These mortgages are truly "flawed," and we want our money back. Reduce our principle amounts to the true values of our property that is most likely less than the money we put down in the first place. Over 11 million people did not just decide to jump off a financial cliff in the same year by buying real estate. Think about it.

Unfortunately for us, we do not get bonuses for our losses, only the financial elite do. Let's also not forget that in 2010 BAC was initially forced to pay $33 million in fines for creative banking processes without any "admission or denial of charges." Oh yeah, then the fine was upped to $150 Million in 2010. "Exotic financing mechanisms," flaws. You know, "flaws." The NY Attorney General at the time, Andrew Como said something about "corporate irresponsibility" and Bank of America and, well... there go those "flaws" again. That must be why they got TARP funds.

I guess I am just a little confused in all of this. To me it seems as though the problems are the same. Be it housing, pension funding, state and local governments facing bankruptcy (along with millions of homeowners) and the like. Fraud is now acceptable and now considered merely a "flaw." Not exactly what the Founders visualized.

© Frank Louis


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Frank Louis

Frank Louis is a print and on-air commentator who offers opinions and solutions on and for the economy, social issues, and the future of this nation. In the Old Testament, Nehemiah 4: 14 instructs us to fight for our houses; something we need to be doing now. Our future generations depend on it!... (more)


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