LAST 50 YEARS———REPUB————DEMO
PRESIDENCY——————28 YEARS—22 YEARS
JOBS CREATED————24 M————-42M
STOCK MARKET———109%————992%
STOCK PER YEAR———2.7%————11%
GDP GROWTH/YR———-2.7%———- 4.1%
INCOME GROWTH/YR-0.6%————2.2%

I appreciate your analysis. Most people will have difficulty understanding your article, even though, in my opinion, you have taken a topic, deliberately obscured by financial sector and media reporting, and made it understandable.  You might put even more effort into trying to connect common sense with terms like securitization, float, etc.

More importantly, I think you have given me one more reason for thinking that the presidential campaign is defined by what isn’t debated, because both candidates think there is little electoral advantage, and much rhetorical risk, in trying to explain this debacle.

Good effort. Good work.

RICH RICHER- POOR POORER
Census Numbers October 2012
15% of population lived in Poverty
46 million below poverty with family income of $23,210 for a family of four
20% of children live in poverty. 33% of Black and Latino are impoverished.
In 2011, top 5% gained 5.3% in income. Middle saw a decline in income.
Safety nets work.
2.3m kept out of poverty by unemployment insurance
21 Million kept our of poverty by social security
3.9M kept out of poverty by Food Stamps.
Do not help the rich get richer poor get poorer by cutting taxes for rich and cutting proven, effective anti poverty programs As Unemployment Insurance, Supplemental Nutrition Assistance, Earned Income Tax Credit, Social Security and new health care coverage.

Fed Fails to Regulate:  Galloping Inflation vs Galloping Greed
The Federal Reserve Bank, the central bank of the U.S. is out of ammo!  The Bank is responsible for Monetary Policy, which gives the Fed the responsibility as well as the authority to raise and lower interest rates on funds that banks borrow for loans to consumers.  Funds the banks also retain and use as to make proprietary investments for their own portfolios.  The Fed cannot get the rates much lower; and concerns for inflation are irrational at this time.
Raising rates is generally thought to rein in inflation, by increasing the cost of money, and lowering the rate is thought of as stimulating activity by making the cost of money cheaper.
However, today we are experiencing the 2nd worst economy since the Great Depression, and the concern about inflation is an echo from the past - with the housing market in shambles, 20 or more millions of jobs gone, a large percentage of Americans without an ability to be consumers, profitable corporations hoarding profits, $700 trillion derivatives waiting for the right detonator which will unleash a financial plague of Bubonic proportions.  While our badly under informed public seeks reassurances from avoidance and denial.  And our Fed does not enforce existing regulations to prevent the potential nuclear financial meltdown from derivatives “too complex to explain;” therefore, too complex to control?
Congress is crippled by the “New (values based) Republicans” who vote in lockstep against anything for the common good.  Congress is crippled by Republicans clinging to their ignorance of economics and acceptance of implausible Wall Street propaganda like: supply side trickle down, free market lies, the job creator myth; and their hate of government as well as our central bank.  Of course the United States of America must have a central bank!  Although Ron Paul and his libertarian followers disagree spewing forth Austrian economics - economics which Ryan’s Ayn Rand also believed.
The role our central bank plays to regulate and supervise member banks was created by an act of Congress on December 23, 1913. Keep in mind this was during the era of Social Darwinism, and Laissez faire, maximization of profits no matter what the cost to society economics. 
Consider that the Fed is also the most important banking regulatory agency.  So the Fed is responsible for intervening before our banks or economy get out of control.  The Fed also sets margin requirements, which limit the use of credit for purchasing or carrying securities.  But, today proprietary Holding Company Bank investments rely on egregious leverage to contrive profits.
Apparently, no one has set limits for the amount of leverage used in the fabrication of financial products that Bank Holding Companies (BHCs) create, invest in, and even maintain markets for.  Limits are against the Laissez Faire ethic of the survival of the richest crowd – and less leverage would reduce profits (when things go right).

The Fed’s mandate is “to promote sustainable growth, high levels of employment, stability of prices to help preserve the purchasing power of the dollar and moderate long-term interest rates.”  Again, this is a function of Monetary Policy with the fundamental role of controlling inflation, which can create havoc with economic stability. 

Because the Fed is in charge of supervising banks, it has a fundamental responsibility for examining banks to make certain they practice sound banking standards – which should mean monitoring leverage, risks and debt levels to be certain banks remain solvent with an appropriate amount of liquidity. As banks have become super huge and incredibly complex, the job of supervising enormous Bank Holding Companies has evidently gotten out of control.

Section 2124.01 “Risk Focused Supervision Framework for Large Banking organizations…” reaffirms the definition of the Responsible Reserve Bank (RRB) and
specifies RRB responsibilities for conducting inter-district inspection and supervision inspection activities for a banking organization.”

If you read some of this stuff (it’s online) you will have some awareness of how appallingly complex it is to monitor such complexities. You will also learn that banks finance customer’s Commodity Purchase and Forward Sales (CPFS in the manual) and Commodity Derivative Activities.  There are numerous examples of BHC’s speculating in highly leveraged, risky activities. These activities (the creation of vast leverage without any foundational value) flourished and developed a life of their own after the deregulation and financial consolidation which led to the development of financial holding companies (BHCs). Deregulation, additionally, allowed commercial banking, insurance, investment banking and a plethora of other financial activities to be conducted under the same umbrella.

IM-2210-1. Communications with the Public About Collateralized Mortgage Obligations (CMOs) – (a) General Considerations, ... (3) Safety Claims - A communication should not overstate the relative safety ... (5) Simplicity Claims - CMOs are complex securities and require full, fair and clear disclosure in order to be understood by the investor. So if any security is too complex to explain it seems that it would be illegal (unlawful) to sell it.

During the past few months I have spoken with leading officers at the Cleveland Bank.  Presumably smart economists who should be concerned for the public good; yet not one was aware of (or would admit knowledge of) regulations which “outlaw” securities that cannot be explained well enough to be understood. 

All contended that:  the examiners know the regulations.  Which apparently means - the leaders have passed off the responsibility for intervention to examiners to decide when regulations have been violated.  So not one of the “brilliant” PhD economists, who seem well-intentioned, has any knowledge of the Fed’s significant regulations that I addressed in specific emails (and in my new book - How We Got Swindled by Wall Street Godfathers, Greed & Financial Darwinism) outlining my concerns.  And these concerns had to be, and were, explicitly explained in a letter – to justify my request for a meeting prior to being granted a one hour interview with one of the top officers who, I was informed, was, “in charge of establishing policy.”

The Cleveland Fed Bank’s Chief Policy Officer began our conversation by noting that he had read my book, and then said: “you do not have a high regard for economists, do you!”  I responded:  “it depends on whether the economist was a cheerleader for deregulating greed who promoted supply side, unfettered deregulated free market misrepresentations like Greenspan and the Chicago School thirty years ago.”  I did point out that I do respect   economists who subscribe to the economic theories that got us out of the Great Depression, who understand the critical need to keep sociopathic greed in a cage. But, again, not the ones who supported the tear-down of Graham-Leach-Bliley which killed Glass-Steagall, and the equally important 1956 Bank Holding Company Act which restricted the size of BHCs. 

At the end of my allotted hour the Chief Policy Officer claimed he did not understand the import of why I wanted an interview and also contended he was unaware of the regulations in question (mentioned here and specifically in my interview request letter to the President of the Cleveland Bank.  So he, “could not (did not and would not) answer my (fundamental) question.”  Which was simply:  “Does the Fed have a policy to enforce significant regulations regarding the issuance of securities too complex to explain?

For the past thirty years, the Fed (and the public including Congress) has been far more concerned with galloping inflation, and letting markets self-correct which is a function of Laissez-faire economic theory, than with intervention.  The Fed’s memory is MIA (missing in action) of how it let banks become huge and left markets alone in the 20s which lead to the Great Depression.  Further, the Fed has suffered from a severe case of macular degeneration regarding its inability to see the all the galloping greed or consider the danger of mega bank holding companies - which require Fed approval to exist - i.e., before Goldman Sachs could become a Bank Holding Company and qualify as a bank to get trillions from the Fed.

The Fed allows Banks to issue complex “proprietary” investments.  Banks say they are using their funds to do this, and the media often repeats this lie, when the fact is the money Banks call their own comes from the Fed (with almost no interest).  All the Fed’s money comes from our US Treasury, so the funds the banks use are really our funds!

Additionally, all the structured instruments like Swaps, CMOs, CDOs, as well as the too complex to explain derivatives (which have no foundational value) used for hedging risk (which is unexplainable) or just to bet on are the weapons of mass financial destruction that Goldman geniuses contrive for fees to feed their sociopathic greed. 
It is empirically obvious - from this Depression, the proliferation of egregious leverage, $700 trillion derivatives without foundational value that are too complex to explain, and from the stonewall response to my one hour sanctioned meeting - that the Fed does not have a policy or any resolve to enforce significant regulations designed to protect us and our economy from exactly what has happened and will again. 

So there is no mandate for enforcement.  And the Fed is not asleep at the switch - it is simply just not doing its job.

Posted on http://www.the5thestate.net

“The odd twist is that the Federal Reserve is a victim here, too. Despite its move to buy mortgage-backed securities in its latest round of extraordinary measures to lower interest rates, it can nudge them only so far because of the dysfunctional, noncompetitive market.”

At bottom and after clearing all the jargon and technical details of securitization in the housing market, it’s hard to view the creator of our depression as a “victim.”  They, not the greedy banks and their stockholders - institutional and individual, are the problem.

Is this what we saved it for?

Yes.  Yes, it is.

Eliot Spitzer led the State Attorneys General in trying to sue the banks while the crisis was in its early stages, to be blocked by the OCC at a time when nobody had heard of it.

He warned us of this in a Washington Post opinion piece a couple of weeks before he became known to the world more widely as an ugly escort’s client…for which charges were dropped for lack of evidence.

Months later, the banks threw a tantrum demanding that we give them trillions of dollars in bailouts (plus whatever the Federal Reserve had already given them) or else they would collapse the economy to the point where martial law was the only answer, as Marcy Kaptur put it on the House floor.

So I don’t even know why there’s a question.  Every step of the way, Washington has told us that they’re giving our money to the banks to help them make more money off us.

I am a Dutch investigate journalist working for Dutch Public Television. I made last month a program on this specific subject.
conclusion: There is no competion on the Dutch mortgage market. Consumers pay too much. And the Dutch mortgage market is relative huge. More that 60 biljon Euro!

See the Englisch translation

http://zembla.vara.nl/aflevering-item.3009.0.html?&tx;_ttnews[tt_news]=73688&cHash=fe92bd93c120a5e182e58559a0cf12c8

Jos -

This is an international problem, perhaps, caused by Wall Street Flu - which spread from Manhattan and triggered the sociopathic greed syndrome that was deregulated world wide.  The only way to inoculate against this strain of Flu is to separate banks from their investment side, and put them back in the money and banking business, with reduced profits, geometrically less leverage and far more stability.  You would like my new book, which will make sense anywhere there are greedy banks run by narcissistic sociopaths.  it is on Amazon Kindle so is easy for you to get. http://www.howwegotswindled.com

The Fed should have forced banks to give ALL mortgages a 1-month payment holiday, writing everyone’s debt down. Many of the debtors would make the payment anyway, so the note holders wouldn’t feel any actual pain until the last months of the note.