The Biggest Mortgage Fraud in History: Paulson Plan

Image via Wikipedia

GlobalResearch.ca

...according to a September 22, 2008, article by Elizabeth Williamson in the Wall Street Journal entitled, "Banks Rush to Shape Rescue Plan":

Lobbyists and financial-services executives are working deep connections within the administration to ensure as many institutions as possible benefit from a $700 billion federal mechanism to buy distressed assets, then sell them off in better times. In a particularly controversial move, they also oppose proposals by Democrats in Congress to provide mortgage reductions for homeowners facing bankruptcy. Bankers say such a move would raise rates for mortgage seekers, as banks factor in the possibility that a loan would be restructured in court.

The article quoted a bank industry lobbyist: "How you publicly oppose loan modifications and bankruptcy law while at the same time advocating a huge taxpayer bailout is beyond me. Pigs get fat and hogs get slaughtered."
The committee never addressed the issue of why the bankers would oppose homeowner relief. Could it be that they actually favor foreclosures? Could it be that a situation where millions of foreclosed homes across America can be bought today for dimes on the dollar is somehow to their advantage? Or to the advantage of other investors who are now working the U.S. foreclosure markets, such as foreign sovereign equity funds? These questions did not come up at the Banking Committee's hearing, though they should have.
Nor did anyone talk about why the housing bubble arose in the first place, though the fact is that the Bush administration and Federal Reserve combined to generate it to get the nation out of the 2000-2001 recession. At the time, Bush needed money and could not afford the continued decline of federal tax revenues. He needed the money to pay for his tax cuts for the rich enacted in March 2001 and for his wars in the Middle East, which started with the invasion of Afghanistan immediately after the 9/11 attacks.
Nor did the committee address the fact that fixing the failed economic system will not repair an economy where consumer purchasing power has been devastated over the last generation by continued export of the nation's manufacturing job base to other countries. The one senator who even touched on this point was Tim Johnson, who said "We need sustainable economic growth."
But no one asked how this was possible with a recession on its way. Indeed, the "R" word was never mentioned, though Bernanke said several times that the Paulson plan would help as "the economy recovers."
Obviously a real solution would involve not only homeowner relief and taxpayer guarantees for a controlled bailout, but also rebuilding the U.S. economy. But no one wanted to talk about that today. Maybe it's because this latest piece of "mortgage fraud" is designed mainly to keep the economy afloat until the presidential election, because a collapse would drag down John McCain and the Republicans with it. And heaven forbid that anything should ever be proposed that would threaten the stranglehold the banking industry has over every man, woman, and child in America .
Richard C. Cook is a former U.S. federal government analyst, whose career included service with the U.S. Civil Service Commission, the Food and Drug Administration, the Carter White House, NASA, and the U.S. Treasury Department. His articles on economics, politics, and space policy have appeared in numerous websites and print magazines. His book on monetary reform, entitled We Hold These Truths: The Hope of Monetary Reform, will soon be published. He is the author of Challenger Revealed: An Insider's Account of How the Reagan Administration Caused the Greatest Tragedy of the Space Age, called by one reviewer, "the most important spaceflight book of the last twenty years." His website is www.richardccook.com. Comments or requests to be added to his mailing list may be sent to EconomicSanity@gmail.com.

Related articles by Zemanta

• U.S. money czars on hot seat
• FBI investigating firms at center of meltdown
• Fed plows $30 billion in foreign money markets
• In Bailout Furor, Wall St. Pay Becomes Target for Congress
• The Decline of American Power, Part 216
• Robert Scheer: A Fox to Protect the Henhouse?