It will only continue to get worse. What will it take for our politicians and government to understand that the securities fraud committed by Wall Street and their associates have created joblessness, homelessness, foreclosure and eviction that has affected families across the country? How can we continue to ignore the enormous wrongs?
Judge Rakoff was right when he told the Securities and Exchange Commission that their deal with Citigroup Global Markets, Inc. was not transparent enough and stated,
“[T]he Supreme Court has repeatedly made clear, however, that a court cannot grant the extraordinary remedy of injunctive relief without considering the public interest.”
The public interest has been sorely damaged by the fraud committed by the Wall Street banks and a slap on the wrist and a cheap fine is not going to change or deter their immoral behavior. The depth of the disaster the fraudulent behavior has caused reaches epidemic proportions because it flatten a major sector of our economy: housing, construction, construction manufacturing and labor. On top of that it destroyed the pension and retirement funds (including corporate 401ks) that caused the downsizing and layoff of personnel in corporate America. This was not a simple scam – this was an elaborate Ponzi scheme that went unnoticed and unregulated for years until it failed.
The following must-see 60 Minutes segments, Scott Pelley further highlights the deteriorating economic conditions across the United States. This is so pervasive that it hits every town across the country from Maine to Hawaii. We can no longer afford to ignore the collateral damage to American families and their children.
Click here to watch the 60 Minutes video.
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There are millions of Americans right now that are struggling to keep a roof over their heads. Inevitably, as things get worse, many more will join those who have already been forced to abandon their old lifestyles to live in short-term low cost motels, homeless shelters, tent cities or in their cars. To be sure, some of those living on the streets made mistakes and poor decisions that have brought them where they are today. Others, however, are the collateral damage from a government run amok and the decades long unfettered sociopathic thievery of law abiding hard working Americans.
“Guess what? It’s getting worse.”
Those were words that CBS News producer Nicole Young didn’t expect to hear about poverty in central Florida. After all, last year Nicole worked with Scott Pelley on a “60 Minutes” piece about families in that region who had lost their jobs, lost their homes, and moved into highway motels. Click here to watch the 60 Minutes Overtime story. It takes a few moments for it to load.
How much worse could it get? Well, Nicole learned from a school social worker that many of those families had run through their savings. Those motels were now unaffordable, and so some parents and their kids were living in their cars.
The economy is not growing because the housing market is still unstable. Investors are not willing to come back to the securitization market as long as Wall Street is unregulated and allowed to commit frauds and destroy lives with no meaningful penalties. A fine of a few million dollars to someone who stole TRILLION$ is worthless. America can no longer afford to put up with lazy, paid off politicians that are afraid to rock the boat. The securitization and derivatives scheme got out-of-hand and unsupervised created massive fraud.
These derivatives are the root of the credit crunch. Why? Unlike all other property paper, derivatives are not required by law to be recorded, continually tracked and tied to the assets they represent. Nobody knows precisely how many there are, where they are, and who is finally accountable for them. Thus, there is widespread fear that potential borrowers and recipients of capital with too many nonperforming derivatives will be unable to repay their loans. As trust in property paper breaks down it sets off a chain reaction, paralyzing credit and investment, which shrinks transactions and leads to a catastrophic drop in employment and in the value of everyone’s property. Let’s face it – when the derivative figures reached $600 Trillion plus – they’ve gotten a little carried away. Even at $62 Trillion – it’s a bit much.
Judge Rakoff’s parting words rang like the liberty bell: “Finally, in any case like this that touches on the transparency of financial markets whose gyrations have so depressed our economy and debilitated our lives, there is an overriding public interest in knowing the truth. In much of the world, propaganda reigns, and truth is confined to secretive, fearful whispers. Even in our nation, apologists for suppressing or obscuring the truth may always be found. But the S.E.C., of all agencies, has a duty, inherent in its statutory mission, to see that the truth emerges; and if fails to do so, this Court must not, in the name of deference or convenience, grant judicial enforcement to the agency’s contrivances.”
Liberty Bell – “Proclaim LIBERTY throughout all the land unto all the inhabitants thereof.”
In other words, if you are going to use public tax dollars to investigate, catch and prosecute the crooks – then make them admit their wrongdoings before you structure a deal. American taxpayers have lost their jobs, their homes, their savings deserve to know its not their fault. The bankster propaganda wanted the perception to be that the borrowers caused the collapse of the economy – and NOTHING could be farther from the truth. It’s almost as bad as saying people bought houses they could not afford. Stupid, stupid statements.
People bought homes while they were employed and their credit was stellar! They were sold inflated appraisals that were secondary to the use of the borrower “credit analysis and willingness to pay” scheme. When the investors began to sue the banks for their fraudulent activities, credit dried up for the banks, corporations realized they had lost their pension and retirement funds – and the layoff began. People lost their jobs and then lost their homes – due to an unprecedented catastrophe. A financial force majeure.
But most borrowers didn’t buy what they couldn’t afford – they were unwittingly sold fraudulent inflated appraisals and a 70-year history where banks had been allowed to continue to inflate the housing market (pay fines for fraud and not go to jail). At the time borrowers were employed and could afford the homes. 70 years of increasing values suddenly came to an end – Kaboom! If you knew it was going to end this way you’d have nothing in Wall Street – then or now.
There are solutions – but it takes strong, smart, determined leadership.
This summer Brazil took measures to regulate derivatives. “The securities commission will gain greater powers to regulate derivatives trading, while companies will be obliged to be more transparent,” said Finance Minister Guido Mantega at a news conference, following release of new rules.
Under the new rules, Brazil’s securities commission will oblige all participants in that market to register their transactions in an effort to create greater transparency. The new rules target derivatives trading for the first time, in line with Brazilian government suggestions in recent years at international forums. Among the new rules is a 1% financial transactions tax on investors with short-dollar positions. Mantega called such positions “speculative.” Mantega added that, under the new rules, the government could raise the tax to as much as 25% at any time. “For now, the rate is set at 1%,” he said.
The new rules also include a provision that will charge a 6% financial transactions tax on companies that pay off short-term loans ahead of schedule. The 6% tax on loans of two years or less was put in place earlier this year. Mantega said the new rule was simply “closing a loophole regarding short-term loans.” The commission could also set limits on the volume per investor of short-dollar positions. This is testicular fortitude.
America too, must stabilize the markets. We need housing to recover and while it may not be at the spectacular growth is was 8-10 years ago – it certainly needs to be revived. There is an entire generation of construction labor that will be trying to retire over the next 20 years and like government workers, unions and 401k beneficiaries – Wall Street has wiped them out. If Brazil can set structure to their finance and regulate derivatives there is no reason that the United States can’t perform the same task.
Those politicians that are unwilling to support the recovery need to be replaced.
Recover America – Keep Americans in Their Homes and Regulate Wall Street.