Will Rogers, Oklahoma cowboy and national humorist, called Congress “America’s only native criminal class.” In the 1800s Alexis de Tocqueville remarked on the relative inferiority of most American politicians. It has only worsened. A Sierra Vista, Arizona Herald April 29 On Your Mind contributor expressed a legitimate concern on behalf of all taxpayers regarding Puerto Rico’s Super 9 bankruptcy bailout. Taxpayers are being kept in the dark for good reason. Those funneling taxpayer money through bailout back channels are the ones profiting from them.
But to answer OYM’s concern let’s give ourselves a seven question trivia quiz. The answers come from New York Times bestselling author Peter Schweizer’s book Architects of Ruin: How Big Government Liberals Wrecked the Global Economy – and How They Will Do It Again If No One Stops Them:
1.Was the Wall Street investment and home mortgage crises caused by excessively greedy, rich capitalists? No …and Yes. 2. How many times have the three largest Wall Street investment firms been bailed out by American taxpayers in the last fifteen years? Four (Citigroup seven). 3. Would allowing Wall Street investment firms to fail result in an apocalyptic economic collapse for America and the world? No. 4. Does president Obama have the legal authority to fire CEOs of private corporations? No, but he did and intends to fire more recalcitrant conservative CEOs. 5. After the mortgage crisis passed did banks (even those forced to accept TARP funds) line up to repay the loans? Yes. But the Obama administration didn’t want the money back. Government control not repayment was the goal there. 6. How many foreign countries have been bailed out by American taxpayers in the last twenty years? Seven 7. Is another financial and mortgage crisis looming in our near future? Yes, without a doubt and it will be much worse.
The original bailout began in the ‘70s as the Community Reinvestment Act (CRA). Acolytes of Saul Alinsky, author of Rules for Radicals, including sociologists and political activists Richard Cloward and Frances Fox Piven, called for overloading the U.S. public welfare system in order to precipitate a crisis leading to replacement of the welfare system with a national system of a guaranteed annual income and thus an end to poverty. Remember the bailout of New York City? That was caused by Cloward- Piven under the guise of “social justice”. This concept morphed into activist groups staging “bank ins” threatening Cloward-Piven tactics overloading banks with one dollar accounts and accusations of racism if lending criteria wasn’t lowered to reflect “alternative credit qualifications” (like being homeless, inclusion of welfare checks, etc.). Home mortgages became a “Civil Right” based on racial quotas not ability to pay. Banks capitulated to avoid being denied FDIC authorization (responsible for ensuring your money is safe!) to conduct mergers and other investments that would earn interest for investors. Under the Clinton administration CRA quotas were multiplied exponentially – and the lending standards lowered even more- with the Justice Department actively seeking out banks for prosecution in order to gain minority votes in Clinton’s re-election. Thus the birth of “sub-prime” loans under the guise of “corporate citizenship.”
Although Fannie Mae and Freddie Mac are non-government entities (NGEs) per se Wall Street quickly realized the incredible profits to be made buying up sub-prime loans with the understanding that Fannie and Freddie were “wink-and-a nod” backed by the Treasury Department. They knew this because Treasury Secretary Robert Rubin came directly from the board of directors for Goldman-Sachs (Rubin also refused tax payer funding for the ’96 Olympic Model of air defense for Washington, D.C. and New York City. – see The 9/11 Commission Report).
Removing the consequences of ludicrously speculative investing (called “moral hazard”) allowed CitiGroup, J.P. Morgan, Lehman Brothers, etc. to run amok buying sub-prime loans. President Bush tried fecklessly to tighten the financial mania but succumbed to Wall Street lobbyists and their Congress. When the “low credit, bad credit, no credit” crowd began defaulting on their mortgages en masse, the two bubbles burst at the same time. The irony is the crash hurt most those whose activist icons claimed to be helping. Those same CEOs used their profits to buy up more risk-free, speculative loans guaranteed by the Treasury Department. It’s like punishing a spoiled brat by giving him three extra scoops of ice cream.
These spoiled brats quickly realized the exponential profits available using CRA principles on the international scene. When activist-friendly / Wall Street friendly Bill Clinton won the White House the CRA floodgates were opened. If Congress didn’t authorize foreign loans Clinton simply routed the money through the International Monetary Fund (IMF) – setting the precedent for his successor Obama. When the Puerto Rico bailout fails – as all the previous ones have- it will be the taxpayer losing trillions –not billions- from pensions, savings and investments not the Wall Street CEOs who secretly underwrite the loans. They do it by getting taxpayer money loaned to them by the Treasury Department at basement interest rates while charging foreign countries ten times that. When countries default the Treasury Department pays (again) the CEOs the amount of their lost profit. It is financial incest at its’ best perfected by former president Clinton.
Wall Street profligates should go bankrupt and into receivership. Then serious investors will buy up the scraps and ensure their investments are sound by restoring sound credit standards. That is capitalism.
A worse financial crisis is facing American taxpayers for two reasons. President Obama cut his political teeth on “social justice” and “corporate citizenship” economic principles. Those bubble creators under the Clinton administration are the same people Obama appointed to continue the failed economic agenda – only demanding more of the same. For example, Obama wants his Justice Department to “investigate” member-run Credit Unions for compliance with the CRA. Nobel economists know America’s bankruptcy point is 20 trillion. The national debt is now 19 trillion. Let’s “hope” something “changes” – and soon.
