Livinglies's Weblog

1. The United States is experiencing the worst man-made economic disaster in all of human history — the misuse, abuse and overuse of financial products that are sold to consumers as debt.
2. Since 2000, more than 20 million people have been wrongfully displaced from their homes by parties invoking foreclosure laws, millions more lost jobs, and millions more suffered loss of economic opportunity, status and income as investment banks now masquerading as commercial banks continue to rake in huge amounts of revenue — sharing none of it with the investors who put up all the money or the borrowers who put up then lives, their signature, their credit reputation and their homes.
3. On any given day, more than 1,000 families lose their homesteads to a revenue scheme that is falsely presented as restitution of unpaid debt. Starting in 2008 the figure was triple that number. The amount of revenue is close to one quadrillion dollars or about 15 times all the government sponsored money in the world. In 1983 the shadow banking market was zero. It didn’t exist. Now it is estimated by most economists to be in excess of $1,000,000,000,000,000.00.
4. The loss of homes and jobs and income has caused a long-term surge in stress-related illnesses and death and unwanted lifestyle changes.
5. Through artful persuasion and advertising Americans have become addicted to debt and led to believe that it is an adequate substitute for wages, as long as the cash is available. The result has been skyrocketing debt that is not viable — i.e., there is no way it can be repaid. But the investment banks that spawned this era found a way to make money from originating and acquiring loans that will fail. They labelled this process “securitization.” Their labels like the rest of their statements and advertising and lobbying on the subject were all false. Borrowers were consistently lulled into a false sense fo security as offers of refinancing their debt came fast and furious.
6. While the U.S. Congress has enacted many laws to encourage and require responsibility of lenders to comply with clear and concise disclosures of the terms of the loan, and to require lenders to assume responsibility for viability of the loan and appraisals of collateral, the banks have used “securitization” to avoid liability for breaches of statutory duty that were intended and known to the banks who actually used complex financial instruments to bet against the same loans that they are originating and acquiring. The havoc caused by bank practices starting in the 1990’s was not only completely foreseeable, it was foreseen — and the banks profited from it every step of the way.
7. On average, at a minimum, investment banks took in more than $12 for every dollar of principal loaned under the banner or claims of “securitization” or “sales into the secondary market.”
8. While most banks offered traditional loans with traditional risks, the investment banks created an environment where they could underbid literally any other offer to loan money because they were producing enough revenue from every loan originated or acquired to even offer compensation to borrowers for executing loan documents.
9. Hence various types of loans that were “too good to be true” emerged and from a base of 5 variables in institutional loans came a plethoras of loan products peeking at over 450 different types of loans, most of which were not understood even by the PhD analysts employed by the federal reserve.
10. Consumers who sought to borrow never stood a chance.
11. And consumers who were not seeking to borrow also never stood a chance. They were enticed to borrow by long strings of broken promises all of which were kept to oral communication and never reduced to writing.
12. This trend continues with currently secret plans to offer financial incentives to investors and borrowers that are counterintuitive — i.e., borrowers are paid to execute loan documents receiving money or credits against their loan account on a continual basis and investors get a higher rate of return than any loan in any portfolio. Still the banks will make money by converting investor money to investment bank assets. The investment by investors becomes profit to the investment bank. The loan to borrowers is merely a cost of doing business.
13. Small banks don’t stand a chance either. They can’t pay borrowers to borrow.

Filed under: foreclosure |