Monday, February 23, 2009

Eff The Banks !

Proverbs 22:7
"The Rich rules over the poor,
and the borrower is the slave of the lender."

In filing for Chapter 11 bankruptcy protection yesterday, Brian Tierney has failed to turn around the fortunes of the Philadelphia Inquirer and the Philadelphia Daily News. It seems that many newspapers are having trouble competing with other mediums for advertising dollars. Maybe we should give the publishing companies huge stimulus packages too.

Or is it that their old business models are flawed and outdated? Maybe some institutions need to go the way of the telegram.

I hate to be skeptical - but this latest bailout of the banks won't work either. Why? Well, there are many reasons - among them, the propping up the old banking system would just be flushing money down the drains of institutions that have outlived their usefulness (in their current form).

Who owns your mortgage? Tough question - but more than likely, the answer isn't 'your bank'. In most mortgages, there are several layers of ownership. You owe your bank, your bank owes a bigger bank, that bank owes some type of REIT (http://money.howstuffworks.com/personal-finance/real-estate/reit.htm ), and that REIT owes a larger foreign investor. Between each of these layers is a money manager, broker or firm who packages these loans into instruments to maximize banking profits. Add to all this the fact that each level charges the next highest level a fee in order to make a profit. So your $250k loan is floating around somewhere out there with a false $750k value. Is this your fault? Nope, the banks are just effed-up.

How did we give Citibank a $70 bn loan and the company now has a market cap of about $40 bn? How did we give Bank of America a $45 bn loan, and the company is now even worse off with a market cap of about $19 bn? The Layering Effect is the problem - and as long as this Layer Effect exists (and is subsidized by the Government (them) and paid for by tax payers (US)) we will never be out of debt. (This is why I favor giving the TARP money to Credit Unions - the ownership is local and the systems are more accurate and nimble.)

Leviticus 19:10 "And thou shalt not glean thy vineyard, neither shalt thou gather every grape of thy vineyard: thou shalt leave them for the poor and stranger..."

But the problems with the Housing Crisis are mostly due to the banks - not the borrowers. How? Take a look "Ethical Lenders" and their track record ( http://www.slate.com/id/2204583/pagenum/2 ) of being paid at a rate that is close to 98%... by the same "High Risk" borrowers. That these lenders are known as "Ethical" seems to imply that something is UNethical about the other banks. These Ethical Lenders provide the same types of people with good loans... and still make a profit!

If I robbed a bank... and while trying to escape, people stampeded and killed other people... I would be charged with some type of manslaughter. People like Madoff and Stanford should be charged with manslaughter charges as well. They should be given ten years in a maximum security prison for each dealth that resulted from their crimes. Let enough of these big time criminals learn to toss a few salads - that would be REAL banking reform.

4 comments:

  1. What is it called entrapment? Entrapment is the act of a law enforcement agent inducing a person to commit an offense which the person would otherwise have been unlikely to commit. This is what the American Public is trying to claim but it's really all these people lost. C'mon for someone to blame the banks is just as crazy as someone claiming entrapment. People want to say the banks deceived people but they know they were getting over. People knew they were getting houses they couldn't afford but they said uck it lets see how far we can go. How many people were flipping houses getting rich? People got caught up in the free drinks and titties of Vegas oops I mean money in housing.

    The banks are who they say they are! They are there to make money if they can in any way because that's their job. Now bailing them out shows you what this country values. People are indeed slaves to the banks so who do you save the slaves or the Masters?

    D.FreeMan
    www.reachfolk.com

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  2. @ FreeMan - Oh, I knew you'd use a legal reference.
    But let's use Diminished Capacity defense instead.

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  3. Okay, what does "toss a few salads" mean?

    No eye-rolling. I really don't know.

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  4. I agree that those who cause financial harm and or ruin to others should absolutely be treated as serious offenders.

    I live in AZ. We had an illustrious governor who bilked investors out of retirement savings and pensions and all he got was time to open the Scottsdale Culinary School! Why didn't he do hard time and be forced to pay for some of that money?

    Except the one time the judge forced Keating to wait in the LA County lockup w/the other thugs, these rich murderers get off scot free or they turn themselves in to the countryclub/prison.

    It will never change unless one of the black presidents (Parsons, Chenault) run off w/money, they'll be in Rikers faster than I can order a number 7 from McD's.

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