Write Your Senators to Deny Confirmation of Mnuchin

Posted on January 9, 2017 by Neil Garfield

The stakes could not be higher. Mnuchin’s ascension to the position of Secretary of the Treasury is literally installing a person who will merely respond to the direction of the Wall Street bankers and who will be largely unresponsive to whoever occupies the Oval Office. This is a terrible decision and the resistance to him being confirmed must be intense to have any effect.

Wall Street obvious wants to retain the gifts allowed and perpetuated by Washington politicians in all branches of government. Banks were able to claim ownership of loans in which they had no interest. They received direct payments from the US Treasury to “save” them (from losing their expectancy of further illicit profits). They received more than $3 Trillion from the Federal reserve who “purchased” nonexistent or worthless certificates issued by REMIC Trusts that never existed or owned anything. And of course they received trillions of dollars upon liquidation of homes that were foreclosed without any moral, ethical or legal right, justification or excuse.

Political decisions allowing laws to be broken, fraud on the courts, fraud on consumers, and fraud on the investors were made based not on whether there was a case against the banks, but whether “policy” decisions dictated what should happen to the banks. The wholesale slaughter of the lives of tens of millions of Americans was an acceptable sacrifice in the interest of a completely erroneous perception of national security.

Mnuchin is objectionable not only because he committed those illegal acts and fraud, but because he willingly performed those acts at the behest of Wall Street banks by claiming OneWest ownership of nonexistent or third party loan contracts and then foreclosing on them, producing a windfall for OneWest. If all those loans were actually owned by IndyMac, it would never have collapsed.

This is the same story as the giant Chase fraud where it claimed ownership (not just servicing rights) of hundreds of billions of dollars in loans that were known to be NOT in WAMU’s portfolio in a merger that cost Chase less than zero dollars after receiving a tax refund due WAMU. Do you really think that if Washington Mutual owned loan portfolios valued in the hundreds of billions of dollars that (a) WAMU would have gone bankrupt or (b) that the receiver would have allowed the sale of those assets for zero consideration?

Get a consult! 202-838-6345

https://www.vcita.com/v/lendinglies to schedule CONSULT, leave message or make payments.
 
THIS ARTICLE IS NOT A LEGAL OPINION UPON WHICH YOU CAN RELY IN ANY INDIVIDUAL CASE. HIRE A LAWYER.
—————-
If — and that is a big “if” — the phones and mailboxes and email inbox of your senator fill up with thousands of objections to Steve Mnuchin he won’t be confirmed. Trump nominated him because Wall Street wanted him. Wall Street wanted him because he has been doing their bidding for years. Wall Street got Trump to nominate Mnuchin because they own a large part of Trump’s “empire” — with securitized loans amounting to many hundreds of millions of dollars. If they yank that chain, Trump is done.

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America Is Not Broke

Posted on March 7, 2011 by Neil Garfield

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“For us to admit that we have let a small group of men abscond with and hoard the bulk of the wealth that runs our economy, would mean that we’d have to accept the humiliating acknowledgment that we have indeed surrendered our precious Democracy to the moneyed elite. Wall Street, the banks and the Fortune 500 now run this Republic — and, until this past month, the rest of us have felt completely helpless, unable to find a way to do anything about it.” — Michael Moore

“400 obscenely rich people, most of whom benefited in some way from the multi-trillion dollar taxpayer “bailout” of 2008, now have more loot, stock and property than the assets of 155 million Americans combined. If you can’t bring yourself to call that a financial coup d’état, then you are simply not being honest about what you know in your heart to be true.” — Michael Moore

EDITORIAL ANALYSIS: Michael Moore GETS IT! He understands that what happened was political, not economic. It was theft and a grab for power that worked. And he understands that “we the people” in the preamble of our great  Constitution of the United States of America together with the 9th Amendment to that great instrument of human rights, that we THE PEOPLE have the right to take back both the power and the money.

AND that is because, as Thomas Jefferson said, that when in the course of human events” it becomes necessary for the people to act to break the bonds of governance and reinstate the rule of law, we have the right to do it. And in this great country we have every right and obligation to do it without changing our form of government or even resorting to violent revolution. We need only the will to take the streets because we mean it and to start voting and acting like we are in charge, to give up fear as our prime motivator and replace it with hope.

Just because Wall Street has TAKEN the money and the power doesn’t mean we are required to let them keep it. The framers of our government meant for us to correct imbalances of power, high crimes, misdemeanors and other criminal acts and to enable people to get fresh starts and to deprive freedom to those who commit sins against our humanity and our society, committing them to imprisonment, fine and forfeiture —- just like any little guy.

Michael Moore
Oscar and Emmy-winning director

 

America Is Not Broke

Speech delivered at Wisconsin Capitol in Madison, March 5, 2011
America is not broke.

Contrary to what those in power would like you to believe so that you’ll give up your pension, cut your wages, and settle for the life your great-grandparents had, America is not broke. Not by a long shot. The country is awash in wealth and cash. It’s just that it’s not in your hands. It has been transferred, in the greatest heist in history, from the workers and consumers to the banks and the portfolios of the uber-rich.

Today just 400 Americans have more wealth than half of all Americans combined.

Let me say that again. 400 obscenely rich people, most of whom benefited in some way from the multi-trillion dollar taxpayer “bailout” of 2008, now have more loot, stock and property than the assets of 155 million Americans combined. If you can’t bring yourself to call that a financial coup d’état, then you are simply not being honest about what you know in your heart to be true.

And I can see why. For us to admit that we have let a small group of men abscond with and hoard the bulk of the wealth that runs our economy, would mean that we’d have to accept the humiliating acknowledgment that we have indeed surrendered our precious Democracy to the moneyed elite. Wall Street, the banks and the Fortune 500 now run this Republic — and, until this past month, the rest of us have felt completely helpless, unable to find a way to do anything about it.

I have nothing more than a high school degree. But back when I was in school, every student had to take one semester of economics in order to graduate. And here’s what I learned: Money doesn’t grow on trees. It grows when we make things. It grows when we have good jobs with good wages that we use to buy the things we need and thus create more jobs. It grows when we provide an outstanding educational system that then grows a new generation of inventers, entrepreneurs, artists, scientists and thinkers who come up with the next great idea for the planet. And that new idea creates new jobs and that creates revenue for the state. But if those who have the most money don’t pay their fair share of taxes, the state can’t function. The schools can’t produce the best and the brightest who will go on to create those jobs. If the wealthy get to keep most of their money, we have seen what they will do with it: recklessly gamble it on crazy Wall Street schemes and crash our economy. The crash they created cost us millions of jobs.  That too caused a reduction in revenue. And the population ended up suffering because they reduced their taxes, reduced our jobs and took wealth out of the system, removing it from circulation.

The nation is not broke, my friends. Wisconsin is not broke. It’s part of the Big Lie. It’s one of the three biggest lies of the decade: America/Wisconsin is broke, Iraq has WMD, the Packers can’t win the Super Bowl without Brett Favre.

The truth is, there’s lots of money to go around. LOTS. It’s just that those in charge have diverted that wealth into a deep well that sits on their well-guarded estates. They know they have committed crimes to make this happen and they know that someday you may want to see some of that money that used to be yours. So they have bought and paid for hundreds of politicians across the country to do their bidding for them. But just in case that doesn’t work, they’ve got their gated communities, and the luxury jet is always fully fueled, the engines running, waiting for that day they hope never comes. To help prevent that day when the people demand their country back, the wealthy have done two very smart things:

1. They control the message. By owning most of the media they have expertly convinced many Americans of few means to buy their version of the American Dream and to vote for their politicians. Their version of the Dream says that you, too, might be rich some day ˆ this is America, where anything can happen if you just apply yourself! They have conveniently provided you with believable examples to show you how a poor boy can become a rich man, how the child of a single mother in Hawaii can become president, how a guy with a high school education can become a successful filmmaker. They will play these stories for you over and over again all day long so that the last thing you will want to do is upset the apple cart — because you — yes, you, too! — might be rich/president/an Oscar-winner some day! The message is clear: keep your head down, your nose to the grindstone, don’t rock the boat and be sure to vote for the party that protects the rich man that you might be some day.

2. They have created a poison pill that they know you will never want to take. It is their version of mutually assured destruction. And when they threatened to release this weapon of mass economic annihilation in September of 2008, we blinked. As the economy and the stock market went into a tailspin, and the banks were caught conducting a worldwide Ponzi scheme, Wall Street issued this threat: Either hand over trillions of dollars from the American taxpayers or we will crash this economy straight into the ground. Fork it over or it’s Goodbye savings accounts. Goodbye pensions. Goodbye United States Treasury. Goodbye jobs and homes and future. It was friggin’ awesome and it scared the shit out of everyone. “Here! Take our money! We don’t care. We’ll even print more for you! Just take it! But, please, leave our lives alone, PLEASE!”

The executives in the board rooms and hedge funds could not contain their laughter, their glee, and within three months they were writing each other huge bonus checks and marveling at how perfectly they had played a nation full of suckers. Millions lost their jobs anyway, and millions lost their homes. But there was no revolt (see #1).

Until now. On Wisconsin! Never has a Michigander been more happy to share a big, great lake with you! You have aroused the sleeping giant know as the working people of the United States of America. Right now the earth is shaking and the ground is shifting under the feet of those who are in charge. Your message has inspired people in all 50 states and that message is: WE HAVE HAD IT! We reject anyone tells us America is broke and broken. It’s just the opposite! We are rich with talent and ideas and hard work and, yes, love. Love and compassion toward those who have, through no fault of their own, ended up as the least among us. But they still crave what we all crave: Our country back! Our democracy back! Our good name back! The United States of America. NOT the Corporate States of America. The United States of America!

So how do we get this? Well, we do it with a little bit of Egypt here, a little bit of Madison there. And let us pause for a moment and remember that it was a poor man with a fruit stand in Tunisia who gave his life so that the world might focus its attention on how a government run by billionaires for billionaires is an affront to freedom and morality and humanity.

Thank you, Wisconsin. You have made people realize this was our last best chance to grab the final thread of what was left of who we are as Americans. For three weeks you have stood in the cold, slept on the floor, skipped out of town to Illinois — whatever it took, you have done it, and one thing is for certain: Madison is only the beginning. The smug rich have overplayed their hand. They couldn’t have just been content with the money they raided from the treasury. They couldn’t be satiated by simply removing millions of jobs and shipping them overseas to exploit the poor elsewhere. No, they had to have more ˆ something more than all the riches in the world. They had to have our soul. They had to strip us of our dignity. They had to shut us up and shut us down so that we could not even sit at a table with them and bargain about simple things like classroom size or bulletproof vests for everyone on the police force or letting a pilot just get a few extra hours sleep so he or she can do their job — their $19,000 a year job. That’s how much some rookie pilots on commuter airlines make, maybe even the rookie pilots flying people here to Madison. But he’s stopped trying to get better pay. All he asks is that he doesn’t have to sleep in his car between shifts at O’Hare airport. That’s how despicably low we have sunk. The wealthy couldn’t be content with just paying this man $19,000 a year. They wanted to take away his sleep. They wanted to demean and dehumanize him. After all, he’s just another slob.

And that, my friends, is Corporate America’s fatal mistake. But trying to destroy us they have given birth to a movement — a movement that is becoming a massive, nonviolent revolt across the country. We all knew there had to be a breaking point some day, and that point is upon us. Many people in the media don’t understand this. They say they were caught off guard about Egypt, never saw it coming. Now they act surprised and flummoxed about why so many hundreds of thousands have come to Madison over the last three weeks during brutal winter weather. “Why are they all standing out there in the cold? I mean there was that election in November and that was supposed to be that!

“There’s something happening here, and you don’t know what it is, do you…?”

America ain’t broke! The only thing that’s broke is the moral compass of the rulers. And we aim to fix that compass and steer the ship ourselves from now on. Never forget, as long as that Constitution of ours still stands, it’s one person, one vote, and it’s the thing the rich hate most about America — because even though they seem to hold all the money and all the cards, they begrudgingly know this one unshakeable basic fact: There are more of us than there are of them!

Madison, do not retreat.  We are with you. We will win together.

Follow Michael Moore on Twitter: MMFlint

 

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Mortgage Meltdown: Conservatives do not Conserve and Liberals do not Liberate

Posted on April 13, 2008 by Neil Garfield

The bottom line is that regardless of who steps into the oval office next January, nothing will actually change unless the dynamics of political participation by U.S. Citizens changes. It isn’t enough to vote. It isn’t wise to trust any leader to do the right thing. And it isn’t wise to trust that once a policy or program has been approved it will be ever be executed. It is up to us to hold their feet to the fire and to remain interested despite the constraints and demands of our lives. That fire will burn us and not them if we don’t wake up to this essential obligation of citizenship.

 

Both the Conservative and Liberal seek “assistance” from government, which explains that despite the slogans and speeches, government has grown to mammoth proportions regardless of whether it was dominated by democrats (generically liberal) or republicans  (generically conservative). Both seek access to the Public Treasury for their agendas, which explains why spending increases regardless of who is in power. The conservatives seek to direct the money to the top while the liberals seek to direct the money to the bottom.

 

Our citizens end each month further in debt, with less value in assets, and declining income that even a second or third job won’t cure. This is explains why no fiscal stimulus package, and no bailout will “assist” anyone. The ONLY thing that will save our economy, our sovereignty and our economic and political power here and abroad is a fundamental shift in perception and action directed toward revitalizing our population. 

This starts with taking the stress out of where they are going to live (STOP THE FORECLOSURES AND EVICTIONS) and whether they will have something to eat (10% of our population is already on food stamps). It includes medical care (we pay more for medical care than any other country on the planet, yet we deliver less, die earlier and have a higher infant mortality rate) and education (having slid to third world status) that is meaningful for their participation in society and the world. And it means telling the truth to them without using nice-sounding names of programs that are based in self-interest and potentially evil intent. 

 

 

 

Perhaps more than anyone else the one person the current “Conservative” economic policy can be traced to is Andrew Mellon, who served under the three Republican Presidential administrations as Secretary of the Treasury. The roaring 20’s, having antecedents dating back to the Civil War, and fueled by unbridled greed inspired by Mellon and his group of “leaders” created the events leading up to the Great Depression . Mellon of course made a ton of money in various endeavors, just like the other “robber barons” of his age. He was ardently “conservative” in his economic and political philosophy, or so he thought. 

 

If you asked for a definition of a conservative from Mellon or anyone else who is of like mind it would all boil down to one central idea: that the purpose of government is to “assist” private enterprise in creating jobs and wealth for the country. In fact, conservatives conserve nothing and have no desire to conserve anything, except their own rising wealth and power. Looking after one’s own interests is hardly sufficient for condemnation. Catering to one group (corporate interests, and specifically the largest of them) does nothing to conserve the most precious resource any country posses: the people who are citizens and residents of that country. 

 

The inevitable consequence of the so-called conservative philosophy is to concentrate wealth and power into the hands of an ever smaller number of people who eventually will be so taken with themselves that they will commit acts of outright theft and fraud with the assistance of a government that either passes laws to make such acts legal or which does not enforce the laws that clearly describe those acts as illegal. This is clearly the outcome we have been dealing with repeatedly with the boom and bust cycles wherein the corporate titans wring every last piece of value from the treasury of the of the government, from the citizens of this country and from the governments and citizens of other countries. 

 

And yet “conservatism” masquerades as freedom from government interference when in truth without government, the greatest fouls committed in the economic marketplace could never have succeeded without the active assistance of government including direct subsidies for acts that were and are contrary to the interests of the country — like giving tax breaks to corporations that ship jobs overseas. Like most things in politics it is a lie masquerading as the truth through the mouths of “leaders” who speak with a stright face and a forked tongue. 

 

We have a habit in politics to name things in a way that will distract the public from the real intent of the perpetrators of any particular agenda. We’ll stick with conservatism and liberalism here since that is a current topic of political discourse in this presidential season. 

 

If you asked for a definition of a liberal a/k/a progressive from anyone on that side of the spectrum it would boil down to one central point: that everyone in the country, especially the poor and disenfranchised should receive the assistance of government in seeking a better life.

 

So both the Conservative and Liberal seek “assistance” from government, which explains that despite the slogans and speeches, government has grown to mammoth proportions regardless of whether it was dominated by democrats (generically liberal) or republicans  (generically conservative). Both seek access to the Public Treasury for their agendas, which explains why spending increases regardless of who is in power. 

 

Differences do emerge however. As to conservation of resources (especially our people) conservatives treat our resources as infinite and relatively unimportant, relying upon technology to make up the difference when we run out of something. They completely miss the point that when you run your people into the ground, you have the figurative equivalent of an army that is too exhausted to fight. The battle and the war will be lost if you press forward in that condition. 

 

This is at least an adequate description of the vast majority of the American public — they are exhausted, beleaguered, and demoralized. It is not hard to see how innovation, education, the dollar itself, and the financial markets are in a near state of collapse. Led by trickle down enthusiasts, we have depleted our human resources to the point where we have nowhere to go and the rest of the world knows it. 

 

Our citizens end each month further in debt, with less value in assets, less relevant knowledge that is valued in the marketplace, and declining income that even a second or third job won’t cure. This is explains why no fiscal stimulus package, and no bailout will “assist” anyone — except the usual culprits at the top. 

 

The ONLY thing that will save our economy, our sovereignty and our economic and political power here and abroad is a fundamental shift in perception and action directed toward revitalizing our population. 

 

The Liberal  also treats our resources (natural and human) as infinite but differs in that they identify such resources as important. A nice step, but useless without positively pursuing policies that (as an actual result) conserve and revitalize our people, our economy and our societal fabric. Like their conservative cousins they tend to rely on slogans and speeches rather than accountability and results.

 

The rather obvious conclusion is that we must seek a new political route. It appears as though the American public has been awakened to this need but has been so misinformed and denied access to the truth that they cannot identify by themselves which policies hold the most promise for relieving the ever-worsening conditions in this country and around the world. The voters have been bombarded by interesting but unimportant facts and theories and slogans and speeches. We are seduced into voting against our own interests by exchanging one “leader” for another without knowing that both subscribe to the same dogma and both are seeking to further their own self aggrandizement of power and wealth.

 

In that sense, while the words could have been different, Obama correctly identified the problem with certain voters. They have been abandoned, lied to, and defrauded by promises that were never intended to be kept. They are angry and bitter about their loss of jobs, wealth, and prospects. When voters get angry they seek change, but rarely get it. Obama’s “small town” remarks were extremely uncomfortable for a lot of people to hear, but they were true. 

 

Whether you are a supporter of Obama, Clinton or McCain, if you want change, you are going to have to work for it from the ground up. If you rely on the person onstage to cure your ills because they will “fight” for you, they are telling you they have no intent to win — but they would very much like to create the illusion that they are trying to do something for you. They are not and they won’t unless you insist on it. Obama at least, as been courageous enough to speak the truth and to pursue a nuance in politics that I don’t think we have seen since Kennedy or Lincoln. Most people, even the ones that support him, get it at a gut level but really do not understand the dynamics involved. There is no way to say that without sounding condescending. 

 

The bottom line is that regardless of who steps into the oval office next January, nothing will actually change unless the dynamics of political participation by U.S. Citizens changes. It isn’t enough to vote. It isn’t wise to trust any leader to do the right thing. And it isn’t wise to trust that once a policy or program has been approved it will be ever be executed. It is up to us to hold their feet to the fire and to remain interested despite the constraints and demands of our lives. That fire will burn us and not them if we don’t wake up to this essential obligation of citizenship.

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MORTGAGE MELTDOWN: BRINGING DOWN THE FED?

Posted on April 9, 2008 by Neil Garfield

IN THIS STORY FROM THE WALL STREET JOURNAL, IT IS CLEAR THAT FLOUNDERING FEDERAL POLICY-MAKERS ARE AVOIDING THE ESSENTIAL ISSUE — WE HAVE TRILLIONS OF “DOLLARS” OF DERIVATIVES OUT THERE THAT ARE HUGELY OVERVALUED BECAUSE OF FRAUDULENT APPRAISALS SUPPORTING THE APPEARANCE OF A RISING HOUSING MARKET. And now many other securities and loan arrangements are endangered that have at least a passing involvement or basis in those faulty derivatives. 

The mere thought of the Fed issuing more of the derivatives that caused this crisis is sending central bankers into their back rooms wringing their hands. We are leading the world to the final conclusion that we cannot be trusted with money.

I have said many times in this post that there is not enough money in the world to bail this thing out. The answer is “none of the above” in terms of the options the Fed is looking at. The bottom line is that houses and therefore mortgages were inflated beyond supportable fair market values. Thus the CMOs, the derivative market as a whole, the auction market and everyone else who holds an interest in these mortgages are dealing with over-valuation. 

Our current regulatory system and FASB accounting policies have not anticipated this condition and thus we have no mechanism in place to effectively deal with the problem. The solution posed by Barney Frank is actually the answer — provide an opportunity to mark down these mortgages for the purposes of the borrowers payments, along with an opportunity for everyone to share the upside when the recovery begins. If we don’t do that we won’t see recovery for 10-20 years. If we adopt his plan, the recovery can start immediately. The Fed is rearranging deck chairs on the Titanic here. Neither they nor anyone else can cover the impact on the $500 trillion derivative market out there. 

The fact that other central bankers are looking at alternatives validates our premise here that the dollar is not merely going to take a hit like it did before Volcker stepped in, it is headed toward extinction unless we act responsibly. We have undermined the governments of many countries around the world by allowing Wall Street to run wild. We couldn’t have done more harm to them if we had attacked them militarily. They can and must respond to protect their nations. Our arrogance is not going to stop them from disengaging from U.S> policy and economics. Only humility and responsible action will restore confidence in our economy and our currency. 

Go to http://www.wsj.com and see this article and others examining current conditions.

 
The Wall Street Journal  
April 9, 2008
 
   
Fed Weighs Its Options in Easing Crunch
By GREG IP
April 9, 2008; Page A3

WASHINGTON — The Federal Reserve is considering contingency plans for expanding its lending power in the event its recent steps to unfreeze credit markets fail.

Among the options: Having the Treasury borrow more money than it needs to fund the government and leave the proceeds on deposit at the Fed; issuing debt under the Fed’s name rather than the Treasury’s; and asking Congress for immediate authority for the Fed to pay interest on commercial-bank reserves instead of waiting until a previously enacted law permits it in 2011.

•  The Issue: The Fed has sold or committed a lot of its Treasury portfolio to support markets. Some worry it will soon run out of room to do more.
•  The News: The Fed is considering several contingency plans for getting more lending capacity so that won’t happen.
•  The Bottom Line: The Fed has lots of firepower left before it has to turn to these contingencies.

No moves are imminent because the Fed still has plenty of balance sheet room for additional lending now. The internal discussions are part of a continuing effort at the Fed, similar to what is under way at foreign central banks, to determine its options if the credit crunch becomes even more severe. Fed officials believe the availability of such options largely eliminates the risk of exhausting its stockpile of Treasury bonds and thus losing its ability to backstop the financial system, as some on Wall Street fear.

British and Swiss central banks also are contemplating contingency plans. For now, the European Central Bank is reluctant to consider options that require substantial modifications of its standard tools.

The Fed, like any central bank, could print unlimited amounts of money, but that would push short-term interest rates lower than it believes would be wise. The contingency planning seeks ways to relieve strains in credit markets and restore liquidity without pushing down rates.

The Fed is reluctant to heed calls from some Wall Street participants and foreign officials for the Fed to directly purchase mortgage-backed securities to help a market that still is not functioning normally.

Before the credit crunch began in August, the Fed had $790 billion in Treasury securities on its balance sheet, about 87% of its total assets. Since then, it has sold or lent about $300 billion. In their place, the Fed has made loans to banks and securities firms to assist them in financing holdings of mortgage-backed and other securities. Some on Wall Street say the potential for further declines in Fed treasury holdings could leave it out of ammunition.

[Chart]

The Fed holds assets to manage the nation’s money supply and influence the federal-funds rate, which banks charge each other on overnight loans. When the Fed buys Treasurys or makes loans directly to banks, it supplies financial institutions with cash; in effect, it prints money. The cash ends up as currency in circulation or in banks’ reserve accounts at the Fed.

Since reserves earn no interest, banks lend cash that exceeds their required minimum. That puts downward pressure on the federal funds rate, currently targeted by the Fed at 2.25%. The Fed could purchase securities and make loans almost without limit, expanding its balance sheet. That would cause excess reserves to skyrocket and the federal funds rate to fall to zero. The Fed would contemplate such “quantitative easing” only in dire circumstances. The Bank of Japan took this step this decade after years of economic stagnation.

Weighing the Possibilities

So the Fed is seeking ways to expand its balance sheet without causing the federal funds rate to drop. The likeliest option, one the Fed and Treasury have discussed, is for the Treasury to issue more debt than it needs to fund government operations. The extra cash would be left on deposit at the Fed, where it would be separate from bank reserves on deposit and thus would have no impact on interest rates. The Fed would use the cash to purchase an offsetting amount of Treasurys in the open market; for legal reasons, it generally cannot buy them directly from Treasury.

Treasury’s principal constraint is the statutory limit debt. Treasury debt was $453 billion below the limit Monday. In the past, Congress always has responded to administration requests to raise the limit, sometimes only after political theatrics.

Fed officials also are investigating the feasibility of the Fed issuing its own debt and using the proceeds to purchase other assets or make loans. It has never done so; the legality is unclear. Some foreign central banks, such as the Bank of Japan, do so.

Another possibility is seeking congressional approval to pay interest on banks’ reserves immediately instead of waiting until a 2006 law permits that in 2011. If the Fed paid, say, 2% interest on reserves, banks would have no incentive to lend out excess reserves once the federal funds rate fell to that level.

Congress put off the effective date because paying interest on reserves reduces the Fed profits that are turned over to the Treasury each year, widening the budget deficit. Although preliminary explorations suggest Congress would be open to accelerating the date, the Fed is leery of depending on action by Congress.

The Fed is inclined to use any additional maneuvering room to lend through its existing and recently expanded avenues. Officials are reluctant to buy mortgage-backed securities directly. They worry that such purchases would hurt the market for MBS that the Fed is not permitted to buy: those backed by jumbo and subprime and alt-A mortgages, which are under the greatest strain.

Moreover, the Fed is not operationally equipped to hold MBS and would probably have to outsource their management. Such holdings wouldn’t help avert foreclosures much, since the Fed would have little control over the mortgages that comprise MBS.

Write to Greg Ip at greg.ip@wsj.com1

  URL for this article:
http://online.wsj.com/article/SB120768896446099091.html
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Mortgage Meltdown: New Treasury Blueprint for Greater Disaster

Posted on March 30, 2008 by Neil Garfield

You can argue all you want on paper with equations and philosophical arguments, but a simple human fact remains true — if people do not feel any moral sense of accountability they will not act in accordance with a reasonable standard of good character. Without character the entire society, and of course the economy, goes down the crapper. The U.S. Treasury plan is not merely “more of the same” it seeks to institutionalize all that is bad and wrong with our society and our economy. Some immediate thoughts about the reports on the new plan to be unveiled on Monday by Secretary Paulson:

  • There is being nothing being reported that indicates the plan seeks to help out anyone now: soften the meltdown, slow the foreclosures, stop the evictions, restore confidence in the financial markets, restore consumer confidence, restore balance sheets, increase liquidity without enlarging the money supply, reverse the slide of the dollar, or reverse the rising tide of inflation. It is all about future bubbles and busts which may or may not look like the one we have, the one before (.com bubble), or the one that is in process (foreign exchange and commodities).
  • There is nothing being reported that indicates the plan seeks to increase transparency for the public so that they are well-informed and educated about “new” financial products whose design is to create confusion through complexity and profit through back-doors that undermine the American Citizen, U.S. Economy, and U.S. foreign policy.
  • There is nothing being reported that indicates the plan seeks to enhance the fundamentals of our economic system, which is currently based upon profligate consumer spending, pressures to increase consumer debt, and steering citizens away from savings. It is interesting that the very same people who “ideologically” plead for less government and more personal responsibility are lining up behind a plan that institutionalizes to an even greater extent all the economic forces that prohibit or inhibit the ability to provide fro their own security and prosperity.
  • There is nothing being reported that the plan is willing to even address the current disparity of wealth, the current trend toward a deepening divide between a few people who have wealth and the rest who don’t. It is interesting that the very same people who plead for a free market economy line up behind a plan that would allow precedent to stand on socializing losses and expenses for big business, thus undermining entrepreneurship and innovation (the hall mark of all prior economic progress in the United States). 
  • While these people tell us that windfall profits are part of the game that will even out in the end, they give us plans that prevent leveling the playing field by covering losses with access to tax dollars, covering expenses by shifting the risk onto public programs, and covering deception by legalizing slight of hand reporting in which both the methods of business and the financial results are completely misstated (that would be “lying”) or even reversed converting actual losses to the company and damage to the society into reported profits, higher per share earnings, higher price earnings ratios, higher stock prices, and “benefits” of bringing new products and services to the downtrodden members of our society (like tricking them into signing papers to “buy” a house) enabling the lender to sell the paper at a profit without regard to the quality of the paper, thus tricking investors, undermining pensions, social services etc.)
  • What is being reported is more centralization of highly complex political and economic subjects into the hands even fewer people of dubious talent, leadership, training, education or creativity —thus decreasing the pool of available talent and decreasing the discourse on economic policies all contrary to the basic constitutional premise of checks and balances, division of power, prevention of tyranny and promoting policies for the health, wealth, safety, security, and benefit of United States citizens.
  • Centralization of banking and deregulation of banking has produced a boondoggle of problems that will take decades to reverse. There is no doubt that the Federal Reserve should have greater control over any process that creates “money” in the marketplace so that monetary policy will mean something. But it is the Federal reserve itself that needs re-structuring to provide for greater transparency, more checks and balances, and greater de-centralization of decision-making. The open-market committee is simply not set up to deal with today’s marketplace, today’s money, the prospect of a declining dollar and the possibility of a rising Euro in the United States. 
  • Centralization of banking has led to the flow of money away from where it is deposited into places that have no relationship to the depositors. Loans are made in foreign countries from deposits made in Springfield, Illinois. The depositors are deprived of the economic benefit of having that money loaned or invested in their locale, thus improving liquidity and growth prospects for those depositors and all the citizens of their town or city. With no safety net, the slightest ripple can and does cause blight to replace what were once vibrant or at least promising communities.
  • Centralization of banking has led to indexing of loans as the exclusive basis on which to grant them — replacing the old fashioned relationship of person to person. This has resulted in hyperventilating the prospects for fraudulent lending by lenders, the entire CMO/CDO market, and fraudulent borrowing by borrowers. JP Morgan was asked at a senate hearing 100 years ago what was the primary criteria, the essential quality for granting credit; his answer was that it was “character,”(not balance sheets, income statements or track record) which is exactly what is not part of the equation now with the total reliance on FICO scores, other computer algorythms etc. 
  • By removing “Character” from the equation we removed accountability. You can argue all you want on paper with equations and philosophical arguments, but a simple human fact remains true — if people do not feel any moral sense of accountability they will not act in accordance with a reasonable standard of good character. Without character the entire society, and of course the economy, goes down the crapper. The U.S.Treasury plan is not merely “more of the same” it seeks to institutionalize all that is bad and wrong with our society and our economy.

Filed under: bubble, Bush, CDO, community banks, CORRUPTION, credit unions, currency, education, Eviction, foreclosure, foreign relations, GTC | Honor, inflation, interest rates, Investor, Mortgage, Obama, politics | Tagged: , , , , , , , , | Leave a comment »

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