Tag Archives: Investment banks

Key to Ending The Alice In Wonderland Tumble Down This Economic Rabbit (Rat) Hole!

“A Pale Green Mermaid Blog”

 

Confidence… thrives on honesty, on honor, on the sacredness of obligations, on faithful protection and on unselfish performance. Without them it cannot live.
Franklin D. Roosevelt

 

The anger from the public reflects the lack of cash for the bottom 2/3 of the market, banks are hoarding the bailout money refusing to lend and the servicers (who work for the banks) are overall refusing to refinance the mountain of  mortgages caught up in the credit swap/ subprime mortgage financial crisis.

If we keep bailing out the banks and they continue to be zombie banks – not lending to the public, all that will be left standing will be a bunch of banks with no one to lend to.

 

1. One answer is the Obama plan to open a government bank that will start lending to the public and let the banks that are not financially viable go into bankruptcy and restructure.  No further bailouts.

2. the other answer is to force the “servicers” ( people who are the middle person between the investors and the mortgage owners – who got involved in the predatory  loan productsto refinance and take the loss for the mortgages that are in crisis,

they could use a standard of offering a 5% mortgage and payments of 1/3 the owners yearly salary.  All who could meet that standard would get a refinance.

Peace and good luck to us all!

 

 

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The Chicken Or The Egg Which Came First? The “Toxic Assets” or the “New Investment Instruments ” Who Should Be Blamed?

“A Pale Green Mermaid Blog”

 

I could be wrong,  but as far as I can see  from what I have read and heard ,

it is the so called “New Instruments ” ( investment products that were sold to the public by banks) that are the problem,

because they have produced the ever popular “Toxic Assets ” which no one wants to buy,

Now the toxic assets are investment products that are no longer producing  income

now why aren’t they producing income?  because the new investment products used for collateral, mortgages,

but they sold mortgages to people using predatory lending practices as used by credit cards, these practices we are all familiar with, one mistake and your payments balloon  and there are fines and fees all over the place.

then they stuffed all these  mortgages, sometimes 200 , into the  new investment products

 

1.these investment products were not regulated by the Bush administration, they ignored rules on the books at the time, and also loosened existing lending practices .

2. A ponzi like scheme was produced where everything worked so long as the banks could keep selling the products to investors.( and with the lax lending regulations it was endless)

3. when the housing bubble broke, as the banks knew it would, the scheme fell apart

4. as home owners started missing payment their fees and monthly payments skyrocketed

 

but instead of refinancing the mortgages at a lower rate that the owners could afford the banks refused and are still refusing to accept the lower income from the new instruments, they would prefer to be bailed out by the government .

The big investment banks created the faulty investment products and should take the hit for selling the public risky investments.

 

they should start refinancing the mortgages for all who can afford to pay 1/3 of their income in monthly payments, so owners can retain their houses. ( this will slow if not stop the downward spiral we are in)

Currently the large investment banks are refusing to lend or refinance except in a few circumstances.

The chicken or the egg? I think it is the chicken i.e. the NEW BANKING INSTRUMENTS that caused the problem – these practices should be outlawed.

 

Saving the homes of our fellow citizens is the first step in what will be a long process… a commentator on NPR said there are not millions of theses toxic assets but trillions!

 

As Sheila Bear said  “it’s the mortgages stupid.”

 

Let’s hope for some Peace and economic justice.

 

Note: Sheila Bear , F.D.I.C .Chairman

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Dust Bowl Economics Revisited: Where was Bush When the Winds Began Blowing?

“A Pale Green Mermaid Blog”

In the  1930’s and 40’s during the ‘great” depression as opposed to the “lousy “depression we are in now (I decided to name it since most people still refer to it as still a recession: WAKE UP, IT IS A DEPRESSION) there was an area of the country they called the dust bowl because the land had dried up and the ensuing winds and dust drove farming families out from their homes,  it was partly caused by bad government policies and land speculators..Sound familiar.

It appears to me that the same thing is happening now but it is the swirl of foreclosures not dust driving the population out on to the street.

About a year ago houses in my neighborhood started dropping like flies, for sale signs popping up all over the place and now  – the jobs are disappearing,  in a downward spiral. 

This isn’t a bunch of greedy people borrowing money they can’t pay back , they were sold

refinancing packages similar to predatory lending practices that the credit card companies are allowed to use, except this time you lose your house if you miss a payment. 

Currently:

One in 10 homeowners are not given the opportunity to refinance their mortgage loan if they get into trouble.

1 in 6 houses across the country are in some state of foreclosure.

The economic engine of this country ( the bottom 2/3 of the population) is being starved by the fat cat policies of the Bush administration (which are still in place) who gave a big fat cat check of 350 billion not million, BILLION to the investment banks and they in turn were suppose to start lending to us, the skinny cats.

They did not.   

If that 350 BILLION, not million had been given to the skinny cats it would already be circulating in the economy because we , the skinny cats, have to spend it to survive.

So a possible solution…

(Skinny cat, bubble up economic policies need to be the chant of the day.)

 

 1.  Put in place a moratorium on all foreclosures for 6-12 months.  (In that time refinance all the mortgages that can be refinanced, at a lower affordable rate .  The problem the big banks are having is with the so called “toxic” loans, if the loans are no longer ” toxic ” and are paying a return, albeit a lower rate , the need to prop up the banks should lessen)

2.  Put Some TARP money into the  small banks so they can lend immediately. ( they are lending even now because they were not involved in the mortgage bundling schemes that the larger banks made money off of.)

3.  Rescind the Bush tax cuts for the top 2 percent and give those tax cuts to the bottom 2/3 of the economy.  (IE. the economic engine – the skinny cats! we know how to spend it and invest it)

We need to do this now , not in a month, now…

So skinny cats unite, let us raise our voices up to the big whigs in the congress and tell them the time  to move was YESTERDAY – at least we have Obama on our team now…

so call congress and create some skinny cat peace of mind!

TEAM SKINNY CAT… GO!!!     Obama, Obama, Obama Obaaaaaama!

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