Journalism in the Public Interest

The Bailout Yearbook: The Stars and the Slackers

With the bailout set to expire this weekend, here are the recipients that have shined—and here are the ones that have flopped.

Workers are seen beneath a Times Square news ticker announcing the congressional bailout bill passage on Oct. 3, 2008, in New York City. (Mario Tama/Getty Images)

After two years and half a trillion dollars, the federal bailout fund is set to expire Oct. 3. After that, the government won't be able to start new programs through the bailout, though it can continue paying money that's already committed.

We've been following every dollar via our Bailout Tracker. But with the end now in sight, we've decided it's time to get a bit nostalgic, take a step back and look at the bailout's recipients and programs that have shined -- and those that have flopped.

First, a Quick Bailout Refresher

In the fall of 2008 as the economy tumbled precipitously, Congress authorized the Treasury Department to spend $700 billion in a financial rescue plan called the Troubled Asset Relief Program. (TARP's spending cap shrank this summer to $475 billion as a result of financial reform.) TARP's largest programs included capital injections into banks, loans to the auto industry, direct support to AIG and the government's foreclosure relief efforts, mainly the mortgage modification program. Shortly after TARP, Congress passed a separate housing bill that authorized the rescue of the quasi-governmental housing giants Fannie Mae and Freddie Mac.

We've been tracking the aid for every recipient -- from local banks to General Motors. By our count, the Treasury has doled out more than $548 billion. Almost half of that -- $238 billion -- has been repaid to the government via interest, dividends, fees or repurchased stock warrants.

Some parts of TARP may be profitable as the government earns money from investments in financial institutions, but over all the program is expected to end up in the red. Because more than half of the funds are still outstanding, the total expense for the bailout remains up for debate. Cost estimates for TARP range from $66 billion (from the Congressional Budget Office) to $127 billion (from the president's Office of Management and Budget).

Now, on to the superlatives. Drumroll, please ...

Most Profitable TARP Bank Investment: Bank of America

Taxpayers have earned nearly $4.6 billion from the bailout of Bank of America, which received and fully repaid $45 billion in TARP funds. Citigroup took the same amount but has paid back only $20 billion. The rest was converted to common stock, which Treasury has been selling off.

Most Expensive Couple: Fannie Mae and Freddie Mac

The costs of TARP will likely be dwarfed by the expense of bailing out the two government-sponsored enterprises that guarantee mortgages, according to the Congressional Budget Office.

In September 2008 in an attempt to stabilize the housing market, the Treasury put Fannie Mae and Freddie Mac under conservatorship, assuming the costs of owning and guaranteeing the mortgages in their portfolio. Since then, the government has dispersed $85 billion to Fannie Mae and $63 billion to Freddie Mac to cover their losses.

Technically the government's investment in the GSEs has no funding cap. The CBO estimates the expense will reach $389 billion over 10 years.

Most Maligned Program: Capital Purchase Program

Public anger has targeted TARP's Capital Purchase Program, which bailed out more than 700 banks. That program, however, will likely be one of the most profitable parts of TARP. To bolster bank balance sheets, Treasury provided capital by buying shares of the banks. As banks pay out dividends, repurchase warrants and repay their loans, the government makes money. Though some banks are struggling to meet their obligations, the program overall should end up making a profit -- but just how much money it will make remains open to debate. Taxpayers are currently $47 billion in the hole on the program, according to the latest TARP report to Congress. Treasury says taxpayers will eventually make $9.8 billion, while the Congressional Budget Office says the program will make $2 billion.

Tardiest Bank: Saigon National Bank

California's Saigon National Bank holds the record for latest dividend payments of its bailout funds, missing seven consecutive quarterly payments -- that's every single payment. Saigon took $1.5 million in government funds, making it one of the smaller players in the Capital Purchase Program, the part of TARP that directly propped up "healthy" banks.

More than 120 banks missed their most recent quarterly payment. Most of those banks were small, like Saigon National.

Priciest Hot Rod: General Motors

The government spent nearly $50 billion to bail out General Motors, primarily to help the auto company restructure under bankruptcy protection. The government now owns 61 percent of the new, post-bankruptcy GM. The company has repaid $7 billion, but to recoup the remaining $43 billion, the government would have to sell GM stock at an average of $133.78 a share, according to the special inspector general for TARP. That's almost $40 a share more than the "old" GM's high, The Wall Street Journal reported. The sales will likely take place over several years and multiple stock offerings, the first of which will be this November.

The Congressional Oversight Panel also slammed the Treasury Department for missing opportunities "to increase accountability and better protect taxpayers" in the rescue of GMAC, the financing arm of GM.

Biggest Underachiever: Making Home Affordable

The Treasury Department set up its marquee foreclosures relief program, Making Home Affordable, as a pay-for-performance model. Under a complicated system of incentive payments, the government spends money only when mortgage servicers permanently modify mortgages. Since there have been few of those, the government has not spent much on the program. Making Home Affordable's maximum allocation is $30.6 billion, but so far less than half a billion has been paid out.

As we recently noted, if the program keeps up its current rate, it will help several hundred thousand fewer homeowners than even the Treasury's modest goals.

Biggest TARP Black Hole: AIG

No company has received more direct support than the insurance giant AIG, which had vast exposure to the problems in the housing market. By the end of 2009, AIG's outstanding balance was $47 billion from the Treasury Department and $81 billion from the New York Fed, according to the CBO.

AIG has not repaid any of the investment nor has it doled out any dividends, but an end may be in sight. Today's news confirmed other recent reports: that AIG has reached an agreement with the government to repay bailout funds, but it must first pay back the Fed before settling up with Treasury, which currently owns 80 percent of the company. Under the repayment arrangement, Treasury will own more than 90 percent of AIG and will sell off those shares over time.

Listen to ProPublica reporters Paul Kiel and Karen Weise discuss the successes and failures of the bailout in the ProPublica podcast.

First Barney Frank insists “a home in every driveway”, resulting in the massive number of Liar Loans that cascaded into the Wall Street meltdown.  Now the same Balarney is asking that mortgage companies “stop working with so-called ‘foreclosure mill’ law firms under investigation for document fraud”.  Fraud in the making; fraud in the unmaking.  Your government at work.

Carol Davidek-Waller

Sep. 30, 2010, 3:29 p.m.

You are mistaken in who is at fault. Of those “liar loans” most were fraudulent loans. Insiders got special treatment. If you were a developer instead of a home owner, you could stuff your pockets and no one checked your credit rating.
Homeowners are victims not perps. The Wall Street Casino is to blame not the government. Private interests brought the economy to its knees.
This government is guilty of neglect. They refuse to prosecute white collar criminals and they are not helping their vicitims.

Michael McCarthy

Sep. 30, 2010, 3:48 p.m.

To be sure Barney Frank along with Fannie and Freddie played their part in the mortgage meltdown, but look to Wall Street and the entire mortgage industry if you’re really interested in finding the culprits.  Fannie and Freddie had automatic underwriting standards in place circumvented by loan officers and borrowers willing to lie about the applicants credit worthiness.  Wall street encouraged poor to outright fraudulent lending for the fees.  Keep in mind it was all about the fees.  Ratings agencies gave tranches of CDO’s filled with subprime mortgages aaa ratings for the fees. Loan officers, underwriters, mortgage bankers and investment bankers who securitized pools of mortgages knowing the danger of failure did so anyway because of the fees involved even to the point of purposely including subprime “liar loans” in these securitizations so they could collect the fees and then bet against the CDO with default swaps(CDS). Fannie and Freddie got into deep trouble not so much by lowering their standards but by purchasing these same CDO’s from Wall Street when their CEO’s decided they weren’t making enough money compared to WS CEOs.

michael kelley

Sep. 30, 2010, 4:14 p.m.

In college I was a financial management major and economics minor with $20,000 in Wall Street and not a care in the world.  Life for me since then has been up and down but getting through the downs made the ups much more rewarding.  I know that all economies are built from the bottom up and not from the top down.  To repair our broken economy we must start at the bottom and work toward the top.  Obama and his advisers made a tragic mistake when they chose to bail out Wall Street Bankers and big industries that were broke because of poor management.  So now Obama and the nation have a huge unemployment problem that continues to get worse because Obama chose to help the big guys and leave the millions of hard working men and women to fend for themselves.  This problem will be with us for a long, long time and cost us much more money then we"ll make off our Wall Street Bailout.  I’m 74 years old and I know that I’ll never see the end of this ignorance and insanity.  ‘Tis truly sad.  Michael Kelley

What ProPublica is doing is fascinating. 

Today, Joshua Green at The Atlantic posted another view of TARP.  He acknowledges that politically TARP is taking a beating while economically “TARP has gotten consistently better. It will cost taxpayers a fraction of that $700 billion, and may end up costing them nothing at all.”

In other words, TARP is controversial, a political football, and one of those desperate measures members of Congress and President Bush felt they had to take as the financial debacle got worse every minute.  I wish they hadn’t (and didn’t have any respect for their politics), but I understand their fears.

So the Fed has doled out money in addition to the $548 billion given out by the Treasury? What is the total of that? How much of that money can the tax payer expect to see back?

michael kelley

Sep. 30, 2010, 5:58 p.m.

To Yoram Gat;  I really don’t understand your comment but I’ll try to answer anyway.  With about 15,OOO,OOO workers unemployed and 18% of the rest of workers underemployed ‘tis easy to understand that it will be years before this mess is cleaned up.  I’m not even going to try to estimate how much this mess will cost the economy and the taxpayers but in time it will be much higher then the cost of the bailout. Figure it out.    Michael Kelley

Amazing, the teabagging/gop conveniently forgets what chimpy bush tried to do. He wanted little or no restrictions on TARP.

If you recall (which I doubt) there were major battles going back and forth over this and lots of compromises made.

We wouldn’t have been in this situation but the gop have this thing about deregulation and even to this day they have a problem with it. They just never learn from their mistakes.

So now President Obama is stuck with cleaning up chimpy bush’s mess, something that has been chimpy’s modus oporandi his entire adult life.

The problem with the teabagging/gop is that they have major memory problems.

michael kelley

Sep. 30, 2010, 7:53 p.m.

Dear Lyris:  For about 70 years I’ve been reading and writing English.  For about 5O of those years I’ve been a writer and I read and write in a very simple and understandable way.  I’ll not even going to try and decipher your gibberish.  Michael Kelley

Thank you ProPublica for keeping a clear record of what is going on. Hopefully enough people will pay attention and figure out who is who is most likely to protect their interest. If they can’t figure it out who to trust, they will live with their mistakes.

I believe what Lyris is trying to articulate is that GWB literally gave the cash, no strings attached to AIG and GM.
To quote Obama on the matter: “Now keep in mind the previous administration had been helping them [GM], giving them billions of dollars, and just asking nothing in return,”
Obama found himself in the untenable position of simply abandoning the money or continuing trying to save the economy.
Of certain note: Deregulation IS the obvious cause. Undoing Taft Hartly was the deathblow.
Frank? Where was Frank in 1929 when a previous Republicans administration was in power and it crashed. How about ‘87, the worst loss in our history?
All Frank did was demand housing be made available to lower financial worth citizens while Phil Gramm was setting America up for more deregulating and banks to get in the derivatives game.
These coincidental crashes - that have repeatedly taken place during GOP administrations - destroying the small guys savings, while Goldman types earn record profits are no less suspicious than the magical rise in oil prices - coinciding with a senseless war - where EXXON made far more money trading derivatives than selling oil…artificially causing the price to go sky high at the pump.

Thank You for your insight.

To michael kelley, I’m so sorry that my lesions in my brain sometimes affect the way I type, but I can tell you are a teabagging/gop. Believe me when I tell you than I’m not impressed with you either. Either you are a liar, or have an overly inflated attitude towards yourself.

Thank you Paul for explaining some of what I tried to post.

Jeffery Smith

Oct. 1, 2010, 1:11 p.m.

Did you mention how the bailout is not alone? Much came from the Fed, too. It made undue bonuses possible. And mergers. And minuscule rates (returns) on savings accounts. Yet new and high fees for accounts and credit cards. And no mention of the so-called housing bubble, actually a land-price bubble, made possible by barely any tax on land. Wish this site were a place to go to for the big picture. But thanks for the little picture.

michael kelley

Oct. 1, 2010, 2:16 p.m.

Paul Walker:  The main point I was trying to make is that all economies are built from the bottom up and never from the top down which is like trying to build a roof to a house before you have a foundation.  Obama should have done more to help the little man because to repair a broken economy you must start at the bottom.  My research in economics goes back in history 10,000 to 12,000 years with the advent of farming where began what became our modern economy.  This is what allowed we humans to advance beyond the hunter/gatherer stage because it produced extra food to support a growing population.  I grew up plowing,  planting and milking cows and all that goes with living in the country.  ‘Tis why farming is the world’s most noble profession and the very essence of our civilization and thus our economy.  In the last 100 + years this has all been hijacked by the likes of Bernake, the Fed, a bunch of ignorant politicians and bureaucrats.  Michael Kelley

Jeffery Smith

Oct. 1, 2010, 2:29 p.m.

Interesting back story. Some say the change from hunter/gatherer was not an advance; humans did not regain their h/g stature until this century. For more recent economic history, check out Phil Anderson’s Secrets of Real Estate. Our spending for land - something not requiring labor or capital - is different from our spending for goods and services - which does require our labor and capital. Failing to pay our community for our land is what creates the business cycle, poverty, eco-ploitation, etc.

Karen and all the Propublica Staff: Thanks for researching and being willing to make this info public. As myself and two of my children have all went through foreclosures because of job and income losses, I have done a lot of research myself in to the mess we are in. Of all the bail out mortgage money, most has ended up with the big banks. Actually most of the bailout money ended up at the big banks. The banks, AIG, Toxic assets and Fannie and freddie total (your figures) 343 billion. Study and see where these funds end at. The banks and Goldman Sachs. They don’t go directly but that is where they end at.Furthermore where did the so called subprime mortgages really get started? How did the investment bankers get in on the deal? When you get the answers to these questions and follow the money you will know.

First let me jump into the fray….It was the Bush administration that initiated TARP…Remember the “fear” speech of Hank Paulson?  The fear that if we (the taxpayer) didn’t initiate a bailout of the largest US banks we would face Armageddon.
“Banking” has changed dramatically since the 1970’s when major corporations came to the realization that they could raise their money (sell bonds) themselves instead of hiring out banks or other financial houses to do it for them.  They cut out a very lucrative service that the banks had provided for decades.  Banks turned to other ways to make money…..They “privatized” services that went along with the service of financing bonds for businesses and began issuing fee structures for any and all their services which were a courtesy under the older regime of banking. They also found that over the ensuing years that fees could be more lucrative than anything else, hence all the fees that the gullible public pays just to “enjoy the debt” they are enticed into.
There is much blame to share from the mortgage/real estate brokers, underwriters, title insurance companies, banks, financial houses, investors, rating agencies, corrupt politicians (FROM BOTH MAJOR POLITICAL PARTIES) that were enticed to deregulate, deregulate and deregulate some more.  Deregulation began under President Ford (Utilities); Carter (more utility deregulation); under Reagan it proceeded “on steroids” along with the real beginning of the “crushing of organized labor” to a “wold level playing field” (in order for American corporations to compete on a global level playing field).  Where were the overseers of this financial system?  Where were the ethics committees and risk management departments of the banks and financial houses and of the major mortgage brokers houses?
There is/was enough blame to go around from the sellers of mortgages to the consumer….who was really very naive to believe that “there is still a free lunch.”
Wall Street no longer has any “connection” to Main Street except to render it more “beggar thy neighbor” economics.  HFT (High Frequency Trading) is now the enigma of the trading world along with the “Quants” who are trying to marry a pure science (mathematics) with a behavioral one (Economics)....We, as ordinary citizens have to do a much better job educating ourselves in order to exist in a now global environment that includes the movement of huge amounts of our own capital (tax monies to bail out the rich) to parts of the world we never heard of before.
Deregulation, corrupt political parties, corrupt, greedy business enterprises, no oversight by law (deep deregulation and “starving” the host”) and a very naive public have brought on this mess.
It was predictable as it shows in recent history where so many did predict it.  I personally predicted a major fiasco way back in the early 1990’s but alienated friends and family. 
Obama brought into office major players either directly or as advisors…such as Larry Summers, Rahm Emanuel, Timothy Geithner, Robert Rubin…those who contributed mightily to the disaster.  With friends like these, who’s going to help?
We now have no alternative since the TARP and the major bailouts and no one seemingly “in charge” but to “manage the deconstruction” of our whole economy which means further higher unemployment, expanding underground economy, and probabilities of major market calamities world wide.
It will take years just to stabilize this mess.

Where is the personal accountability?

I am assuming that everyone posting and reading this site is intelligent and considers themselves capable of understanding complex issues, or they would not have sought out a site like this one.

Again, where is the personal accountability?

Leaving aside the childish pet names for either President involved as it makes adult conversation challenging, lets look at some of your positions that completely absolve personal greed backed by a rock solid belief in the entitlement of certain goods, a concept that drove this mess.

Paul Walker
All Frank did was demand housing be made available to lower financial worth citizens

In laymans terms, give loans to people who otherwise would not rate them because their financial houses were not in order. Encourage banks to do this by offering to back the loans with government mortgage buying entities.

How on earth can anyone in their right mind not see the problems that financially engineering a mortgage to accomodate this directive would produce.

And here begins the root of the problem. The idea that these lower income (read POOR) people need government assistance or intervention to be successful.

If that is not regulation then I must be mistaken on the definition

hence all the fees that the gullible public pays just to “enjoy the debt” they are enticed into.
There is much blame to share from the mortgage/real estate brokers, underwriters, title insurance companies, banks, financial houses, investors, rating agencies, corrupt politicians

Here we are again, the poor ‘gullible’ public. Is the assumption that someone who is incapable of understanding what they are getting into, is then not responsible for the financial responsibility that their signature represents?

You go on to spread blame across any and every entity that is not the individual home owner. Basically it would appear that the homeowner is not capable of any responsibility for their action in your view.

In that case why in the hell would it be appropriate to sell that person a 6 figure note on any kind of real property? Since the average home owner is clearly incapable of understanding what they are signing, I mean.

We wouldn’t have been in this situation but the gop have this thing about deregulation and even to this day they have a problem with it.

Even with the deregulation, the mortgages could not have been made unless there were buyers.

Just like the ‘War on Drugs’, if there is not a drop in demand, supply cannot be regulated away.

This gets down to my point.

The people who got themselve into the loans that seemed to good to be true are at fault, if not wholly then at least partially. I cannot count the number of driveways filled with luxury cars I saw mid decade, in neighborhoods that had no business owning them.

The personal excess this whole mania enabled cannot only be pinned on the industries involved. That is like saying the drug user at the end of the chain is not responsible for driving drug traffic.

Without demand there is no supply.

For those of you who purchased and were burned, honestly consider what you did. I guarantee deep down in some recess of your mind you damn well know you were getting a deal that was too good to be true.

It is time to start looking neighbors in the face and calling them out for their actions instead of turning a blind eye, and playing the woe is me evil government, party, or institution.

A lack of personal accountability got us into this mess, and reganing that personal accountability will get us out.

Logan, I can agree that some of the mortgages should have never been made. Who was there selling those mortgages and if you will research enough you will find that they were pushed by wall street. What is owed to fannie and Freddie (the loans) has an entirely different effect than the money that has been given to the bankers and money mongers of wall street. Yes there is blame all the way around. Home ownership is a big part of the American dream. How many hard working people (not subprime mortgages) have lost all they were accumilating. How many manufactoring jobs have disappeared in the last 10 years, 5 years for that matter. Thhe area where I live has been in recession for 10 years and depression the last 5 years. You can’t deney that the crooked bankers and shister of wall street don’t know what they are doing. Yes there are a lot of working peole who believe what these crooks and shister tell them. Most of all the mortgages foreclosurers are brought on by two things. 1. Job loss. 2. The cost of living for the necessities of life. Mainly because of energy cost.


Of course there were people pushing weird financial products. That was the only way to get some of those owners into loans in the first place, loans on already overpriced property.

‘Bankers’ and ‘Wall Street’ would not push these loans unless they felt secure that there risk was covered, which it was by Freddie and Fannie, from the 98 directive to make home ownership available to minorities, who for whatever reason were financially risky propositions. Freddie and Fannie acted as hedges for Wall street to continue pushing creative loans.

These lower income families, who are often acclimatized to government assistance, of course would take advantage of these offers over the years.

10 years after that directive is when it all came to a head. Both administrations were at fault, all three if you want to get technical.

You state that there is a difference in the money give to Fannie and Freddie vice Wall street.

I disagree.

The money Fannie and Freddie use to back and purchase mortgages basically free up capital from Wall Street to make further loans. There is a direcect relationship.

The policies operated by Fannie and Freddie (to encourage minority and low income home ownership) directly encouraged Wall Street to make poor risk decisions in the mortgage market against the back drop of government subsidized mitigation of risk.

You say home ownership is the American Dream. I agree that it is a driving force to some peoples lives. The trait that made America great is that people were willing to work for their dreams, not that they elected people to legislate their dreams into reality.

Manufacturing jobs were lost due to free trade agreements (gov’t regulations), and the naive arrogance that only Americans can work hard (read national Unions).

Your continued use of emotionally charged verbage (crooked bankers, shysters of Wall Street) does not explain or give any depth to your point.

Of course Wall Street knows how to make money, that is their job. They play by the rules set forth by Governmnet intervention into the free market, in point, the directive to Freddie and Fannie to purchase loans made to minorities and lower income as encouragement to financial institutions to lend to them.

The proper way to legislate financial assistance to lower income people (aka socialism, or wealth redistribution….. laymans terms, take money out of tax coffers and give it to someone based on their socio-econpomic status) would have to been from the start call Freddie and Fannie governmnet run mortagage companies from the get go, instead of playing pretend all these years as their mortgae purchasing grew and grew.

I mean they used the growing balance of risky loans on their balance sheets as illustration of success for god’s sake.

ie,sarcastic obviously, ‘Look how well the program is doing we now have purchased over 90 billion in risky home loans thereby enabling the American dream to many’.

Fannie and Freddie are examples of what happens when legislating morale decisions in the arena of finance.

You say that there are many people who believe what the ‘crooks and shysters’ as you call them say. Funny that those people you are defending would never have even been in the conversation in the first place without the government encouraging the financial sector to figure out how to cratively justify there entry into the home market in the first place.

On your premise for the reasons of foreclosure, I would also add that mortage balances in excess of what the individual could traditionally afford contibute, as well multiple refinaces to finance a better lifestyle, whether that is to send their kids to college or to buy a new car.

Americans are greedy and excessive, except they will not view itr as such, as long as it couched in the terms of being their rightful ‘dream’.

The governmnet should not be blowing smoke up peoples backsides with the nonsense of everyone deserves a home. Every young football kid wants to play in the NFL. That is a dream, not a realiy or a priviledge.

Logan, I agree with what you say about fannie and Freddie guarteening the loans. What is the value of the property that they now hold title to? What is the value of property that the big banks now hold title to? If it wasn’t for wall street bankers wanting to know everyday exactly what they are worth. Would we have mark to market accounting? No we wouldn’t. They wanted it when President Reagan was in office but didn’t get it then. They also couldn’t stay out of what Fannie and Freedie were getting and had to get their part of the money that would go to Fannie and Freedie. I do blame the government just as much as wall street. Wall street wanted and the government let them have what they wanted. Who was in control of congressand the senate at this time?

Logan, If you want to start sending me 55% of your household income and see what happens with you then you may start to understand the place so many working people are in. It is easy to make judgments about other people until you have to walk in their shoes. Some are lucky to have an easy life and some are not and both of them are usually not by their own actions.

michael kelley

Oct. 2, 2010, 8:44 p.m.

By nature of my education and upbringing I’ve always been a problem solver.  Anyone who has ignored the lessons of history are doomed to commit the same mistakes made by our ancestors because we have not learned how those ancient mistakes,  today, affect the whole of civilization. 

To solve these myriad problems you people CARP about who is to blame for the problems yet you offer no real solutions to humanity’s problems which have put civilization on the fast track to perdition. 

The present situation that is destroying our civilization has existed for millennia and the study of that knowledge will yield the answers to humanity’s seemingly endless problems because these same problems have always confronted civilizations, ad infinitum. 

Long ago I learned to deal with the essence of a thing in order to fully understand that thing.  Everything, good or bad, has an essence which is that thing that is ESSENTIAL to the existence of that
and all things.

The greatest problem facing civilization is that we’ve chosen to ignore the lessons of history thereby rendering ourselves ignorant of the real solutions to our problems.

Michael Kelley

Michael Kelley, I appreciate your comments. My comments are not meant to try and place blame. I have research this for 7 years now and I’m only trying to get people to see what has and iis still happening to our country. I know what has happened in my own family and what we have gone through. Blame doesn’t get anyone anywhere but if people don’t know or care to get the facts of what has happened it will never be corrected. There is no way to solve problems until you know what the real facts of what has caused the problem. The one lesson that is forgotten the most is the fact that those that deny GOD will perish. This is true for individuals, countries and civilizations. Jesus Christ is the only true answer as He knows all.

I will restate my basic premise:  There is enough blame to go around for the present economic crisis.
And, I can always agree with one writer who states that, “....if we don’t learn the lessons of history”  we will repeat the same mistakes over and over again albeit in modified forms.
Those who do some research will know that in the early 1990’s Citi was sued (and again later before 2000) for direct fraudulent mortgage merchandising to the public.  Their own internal legal department head stated in deposition that, “....what we did was unlawful.”
Citi was fined millions of dollars; but, that is the price of “doing business” in the so-called “free market.”
Citi did not learn from it’s mistakes and went on to do more damage in this latest mess.
We have rules for all the games that we play, football, basketball, soccer, Olympics etc., and on and on and on…We also have referees so that the “game” is fairly played.  We raise our young to respect those games as healthy adjuncts to our good lives and to respect the rules of the game.
But, when we address the so-called “free market” we’re supposed to forget the game and the referee and the rules.  We want to have a “free hand” to do what we wish.
NAFTA wasn’t “deregulation” or “regulation.”  It was specifically set up so that global (read: Dominant American corporations) business could exploit and carry on the “crushing of organized labor” across the hemisphere because in a economically globalized world a principle factor is an attempt to organize labor so that there can be a level playing field for individuals to balance the enormous power of global corporations to roam the world, along with all that “hot capital” devastating gains made by hard working people everywhere.
We need rules to the game we play.  There is no such thing as a “free market” in my opinion.  Ever since the first “handshake” between two individuals in time immemorial promising to honor a “contract” the rest has been “protectionism” for business.  It’s who you know and who you support politically that counts for business.  And the hard working people take up the rear.
Remember the Crash of 2000?  Well, when did we recover from that fiasco?  Never.
So where did the money have to come from so that business, and Wall Street could continue to garner billions in profits (ie, banks, financial houses, energy, etc.)?  It came for “Bubble Greenspan” and the FED…..millions of American workers lost their jobs; 15M officially since 2000…those were good paying American Middle Class Jobs…..gone…gone….gone…..  Relaxed government rules on mortgages, expanded participation of Fannie/Freddie so as to relieve banks of pressure for reserves, lessening of the rules of trading like the final destruction of Glass/Steagal which opened the door to fraud, loose money, and the further destruction of any way for a retrenchment for further hopeful progress in our economy post 2000 crash. 
The public has a huge responsibility to educate themselves about the so called “free market”.  Alas so much of the public would much rather use the easy credit (which was opened up so that consumerism which was over 70% of our economy) would hopefully make up for the lack of manufacturing investment in this country. 
Hard working Americans (and others around the world) are being crushed by fraud, money gangsterism, political corruption, and lets not forget the two trillion dollars (unfunded) wasted in the senseless wars in the Middle East and Afghanistan.
Even Alan Greenspan admitted in a Senate hearing that he was “wrong” on his assessment on how “free markets” would act react to his policies.  And he was in charge of the FED for decades…another political Randite hack that lived in his own “bubble”.
I enjoy this discussion.  I too have been researching for my own book…’s a fascinating, but economically tragic story.  It will take more than a generation to realize what has and is happening to this great country. 
History; that’s where it’s at.

Sierra, Thanks for doing your research and having some facts to post. My main objective for being on the net is to try to get people to search for the truth and facts as to what is happening to our great country. I am very thankful for the sited that will let me post on them. I have only a high school education but have been through much in my 71 years. I don’t say things just because it is what I think or believe without printed matter and usually more than one source when I say or post something.Thanks again Sierra and keep the info coming. Don’t be afraid to say the facts you find as you do the research.

You are inferring that I have led a privileged and easy life by your choice of words, attempting to discount my ideas as coming from a life of ease and plenty.

I grew up in a single parent home with a mother of two who was over 50 percent disabled that never once took government assistance. I used to buy the weekly food for both of us using 25 dollars a week.

I attempted to do the college thing until I left in disgust at the quality of teaching in college and joined the service.

Over the last three years over 90 percent of my personal salary, while yes over 6 figures, has gone directly to support two small business people in the manufacturing sector in California.

I lost a job the beginning of this year and had to live in a van all summer before securing more work.

Accepting government assistance not once entered my mind, because of my belief that such free money from other tax payers is a debilitating social disease, destructive to everything that made this country great.

Sending you 55 percent of my income is nonsense. even the highest tax bracket is right around 35 percent plus 10 percent income tax from California, making it 45 percent.

On top of that you are proving my point. I absolutely agree the government should take less tax and stop giving other peoples money away to strangers.

We as a country need to start learning and caring about our neighbors and communities and resisting the urge to accept government assistance. If you want to help other people, it should be a personal act, directly person to person and not mediated by a government that not everyone agrees with, regardless of who is in office.

You continue to mention blame being shared and not getting anywhere, and yet you continue to fail to mention the actual home buyers.


Loans cannot be made without their signatures.

Without personal accountability there is no solution.

Please, please, please, refrain from emotional pet names for the personalities in question.

It makes it incredibly challenging to digest the rest of your post, regardless of the fact that I absolutely agree with a large portion of it.

You mention the rules are how the game is played. I think the part you are missing is the reality that actually happens in any game, and the difference between sport and real life.

In any confined arena of sport with know boundaries and controls, rules work fine.

In a life and death confrontation, rules do not determine anything at the moment of crisis.

Lets take boxing; while you may be the best boxer in the world, if you are drinking and get into a bar fight, the rules you are used are the end all, be all. While the training you do in the ring may help the situation, someone might just decide to take a barstool or a beer bottle and blindside you.

In the same way the free market is like the bar. The rules that we come up with for the market are like boxing.

The street smart people who watch the boxing in the bar run side bets on the outcomes of the fight, maybe they bribe the one figher to take a dive, blah blah blah.

We can talk about rules all day long but then the free market will enter.

Essentially there is a market that our government creates and regulates, and then there is the real world free market, which is driven by the individual interests of all parties involved, outside of the game.

IE the whole shadow banking system basically creating its own currency out of derivative auctions as a way to facilitate the needs of the actual free market.

Once we acknowledge the reality of a truly free market and stop trying to regulate it into a corner, we will begin to make progess.

This is why I am harping on personal accountability.

If you do not understand what you are signing and sign it anyway, how are you any different than the politician who signs the bill without reading it because the party line dictates it.

You aren’t. You are exactly the same.

To separate personal accountability is to ignore the root of the whole problem, inside and outside the government.

Logan, I’ve not said one word about anyone taking or wanting government handouts.I’ve never said anything about the government providing anything to anyone. I worked 18hour days for over 20 years to get what I had and then have a crooked banker try to take it away and you say no one but me has any responsibility to correct things like this. There is no way I as an individual can correct things like this. A society without rules and regulations will self destruct and end in anarchy. I believe in the days of the old west they Hung horse thieves. What is the difference in a horse thief and a property thief? None, a thief is a thief. Why does government protect them?

Because you personally were swindled by believing what what someone was selling you without educating yourself on the subject is not a reason to decry the free market. It is a reason to reflect on your ability to judge character, and in this case it would appear from your sentiments that you judged wrongly, and paid the price of believing someones word without verifying the reality.

While this is unfortunate and frustrating it does not absolve you of the decision you made. You could have educated yourself before trusting whoever was selling whatever product that bit your hindside.

Without your consent, your money and hard work would never have been risked.

While many will say that I am being harsh and unreasonable, this is the root of the problem.

Personal accountability.

You live with the decisions you make, good or bad.

If you choose to risk some of your hardwork stored up in the form of stocks or money based on someones recommendation, that is your choice. They may try and convince you if you are on the fence, but you are choosing to be in the conversation in the first place, and you are ultimately choosing the course of action that you are then blaming someone else for.

This is wrong. The government should not be responsible for your failed desire to better your financial position.

To all those reading this, please do not confuse my posts with personal attacks.

It really sucks when someone that you have put faith and expectation into fails you.

But they are not responsible for the faith you invest in them.

Until we get to the point where people acknowledge responsibility for their actions, in the above case it would read something like ‘I trusted the wrong advice’, we will continue to perpetuate the current breakdown of our system.

‘Crooked bankers’ being the epithet of choice, cannot access your money unless you give them permission.

They cannot thieve your money unless your personal need to better your position opens the door.

Logan, You need to open your thick skull and realize you don’t know what You are talking about. I didn’t sign papers giving the bank any rights to everything I owned. I mortgaged a home on a small polt of land. I know what I mortgaged to them as I provided the legel description. After you close the deal. They can switch the legal to everything (my ranch) all of it. They were even claming land and homes of my 2 daughters. If I had died before this came to light. Who would they went after to get their money? My daughters.They have the laws on their side. as long as they are willing to correct it and say they’re sorry ( after fighting them for 6months) there isn’t anything you can do. I lost the sale of it when I had it sold. We had built a new home on ajoining land. Then we had a 55% reduction on our income so they foreclosed. Wouldn’t never even talk about any modification. They got a good chunk above what they would have gotten by letting me keep the property, Thanks to the government. So don’t think I’m standing up for the government.What did this do to my ability to help my children and grandchildren? I had done my planning to be able to help my children and grand children. I’m having to watch my kids and grandkids go through the same thing I did when I was their age. Two of my children have lost their jobs and homes and there isn’t any way they can pay for their kids college and nothing for the kids to work and pay their own way. You simply are ignorant to what is happening to a lot of people in this country.

Michael Kelly, I my not have much formal education but I do have the ability to think for myself as I’m sure you do. I may have to use a dictionary but I can analize what is written. I certainly know enough not to listen to politicans, especially at election time.

To all poster and readers: What is the difference if someone is paying $800.00 a month for rent or paying $800.00 a month mortgage payment. What did the amount of the down payment have to do with them making the monthly payments?  It has nothing to do with their ability to make or not be able to make the monthly payments. What happens that causes people to not be able to make their payments? Usually it is one of three things, first, the coust of necessities for living 2. Medical problems or total disability and 3. Job loss and loss of income. If you will look at the last 10 years, cost of living and job loss have been enormous. The devaluation of property has kept any of these from being able to help themselves.

How does “too big to fail” enter into a free market system?  Seems like failure should be an equal opportunity for anyone participating.

How long has it been since we have had a free market syatem? I agree it should be equal opportunity to all. It seems funny to me that there wasn’t much said about the bailouts until it came to GM. that’s when the republicans really started to holler. Which of the bailouts effected the most working people.

Did we ever have one?  If it isn’t free market, what is it?

Ron, Too big to fail came into play whae it was going to effect the politican’s money, Both their investments and their handouts from the bankers.

Does anyone know how much of the bailout money has ended up with the politicans? Over 700 institutions have recieved funds so it is very hard to trace just how much has and will flow back to the politicans by the 2012 election.

Lets all stop and study for a monment. Wasn’t the loans that were backed by fannie and Freddie (so called subprime) the only ones that the taxpayers had responsibility to back up. Then: How did over 700 lending institutions get in on the handouts? The so call subprime loans were only a small percentage of all loans(mortgages). How much of the problem came from FHA. How come you don’t hear the same hollering about the FHA as you have the subprime loans? How many of the wealthest in our country have an FHA backed loan? It is very easy to blame the weakest in our society for all our problems. How many of the politicans, in all the parties have FHA backed loans?

Hard to believe that institutions that didn’t have enough money to run their business have enough money to make political contributions.  Politician votes to take money from taxpayer, gives money to institution, institution gives money back to politician as donation, politician votes in institutions best interest at expense of citizens.  Somehow I don’t think this is what the founding fathers that everyone seems to always be referring to had in mind.

Ron, Neither do I. Neither do I believe our founding fathers had any idea of anything that resembles the wall street we have today. Our founding fathers had morals about themselves and their fellow countrymen and their well being. We maintained this for a long time but that is not the position we are in today. How many people today even know who their neighbors are? Let alone care about their well being. I can remember when it was very difficult to give people anything. Most people today want to earn what they get.

I have a question: The CBO says that Fannie and Freddie are estimated to cost 389 billion over the next 10 years. If this is so, are Fannie and Freddie still buying the so called toxic assets? If so Why are they? Nothing more than a way for the politicans to hand taxpayers money to the banks. Or does the CBO know that our economy is going to continue on this downward spiral?

I’m assuming Al that you’re referring to the TARP…the enormous $700B+ that was given to the major banks, financial houses, mortgage lenders, AIG, etc initially by the previous administration when you refer to how so many got into line for the handouts.  It is/was inevitable that so many institutions were in line to get money because of the “trickle down/up” of the system. As the mortgages fail(ed) more and more institutions would become “responsible” along the line of movement from one entity to the other, finally resting on the doorstep of the political system that has already historically endorsed the, “privatize the profits and socialize the costs.”  Mortgage lenders/brokers banks, et al, for many years have “handed off” their mortgage paper by securitization; “bundling” many mortgages into one large security and selling them off to investors and mortgage servicers.  This has been done for many years if not decades.  It’s just that this time because of the very large push for reviving the economy from the crash of 2000, loss of so many jobs, so much money was “poured” into real estate and housing by easy FED money. With the loss of so many good manufacturing jobs what part of the economy was ready to fill the roll of quarterly profits for Wall Street?
After the initial crushing of the real subprime market beginning somewhere around 2005 the defaults spread to the next level of funding that has provided money for decades, FHA.  Fannie and Freddie regulations were relaxed during the crisis to give institutions more room to maneuver since they were being squeezed by reserve requirements.  That is the roll of Fannie/Freddie.  More of the “more qualified” home buyers go with FHA for many reasons to long to state here, but with the escalation of the loss of good paying jobs, defaults in more substantially based mortgages and larger ones did their “dance with the devil” and went into the pit of defaults.  That’s what is happening now, today….too many lost jobs and no money to pay the mortgage, etc. 
If you follow the housing/business news you will find that there are many, many large mortgages that are coming due, Option ARM’s that can have an initial 3-5-7 year very low payments and then will escalate by lots of dollars.  During good times they may make some sense (not to me) to buyers with little down payments for large houses, but with very good jobs and an escalating housing market. Many of these loans are coming due right now and will come due in 2011 which will further, in my opinion depress the markets because they are already defaulting by the thousands.
Look at the mess as a “fungus” that is spreading because so much very risky paper has been pedaled wrapped in more risky paper, wrapped in good paper.  The “bad paper” (securities) has “infected” the good and spread all around the world by gullible investors not wanting to take the time to read a two thousand page prospectus originating from a rating agency that already rated the CDO (Collateralized Debt Obligation) AAA…but that AAA rating was hiding all the potentially explosive paper by obfuscation and reputation.  (Which is a whole other story)
Again, I want to emphasize that in the final analysis it is/was outright greed that permeated the whole process.
When the psychopathology of greed enters, intelligence is trumped, whether it is greed by the buyer or the seller it’s all the same. In a financial economy such as ours it is road to disaster.
Hence, the rules of the game. 
The referees.
The players that are an informed group.
Then if things go wrong, the “cleaner-uppers”, the taxpayers.

If manufacturing went to real estate which has now collapsed, any ideas what is next?  Disaster for everyone, including the banks?  Why does the market seem to be so happy as of late?

Thanks Sierra for some sensible comments. Have you done any research on mark to market accounting? I know this is one important part of the downfall of our economy.

Ron, The money mongers of wall street don’t want the little people to realize how bad they have been had. They want to let us down easy. Even though it’s all the way to the bottom of the barrel. I read some of the best investment advisors and they are going very cautiously with this economy. There are a lot of good honest people who work in investments and on wall street. Just that some bad apples rot the whole barrel.


In you personal situation, if that is the case, that someone changed the wording on a document to read something other than what you signed, it should be as straightforward as producing your copy of the original agreement, and pointing out the descrepancies.

In either case I would guess that your situation is not the norm.

If it is the norm, where the agents you are dealing with have a history of changing documentation to seize homes, I am absolutely positive someone from the staff from ProPublica would be very interested in large scale fraud as something newsworthy to report on.

Irregardless you opened the door to the circumstance by seeking out a mortgage. You cannot deny that had you not gone through with it, you would not be in the current situation.

Is that harsh? Absolutely. It is also the truth.

The point I was trying to make about the ‘free market’ is that it is always there, irregardless of what our individual government is doing. The rules that are made by our government to attempt to make our financial markets harness free market principles do create ‘a’ market, but it is not a ‘free’ market, they are not the actual free market. They are a game inside the market.

The free market in its purest form is the totality of interaction between various government regulated markets and unregulated black markets, and every other barter market in between.

Basically the interaction between peoples personal needs, wants, etc expressed in the form of trade, barter, purchase.

We preach free market principles and yet do not follow them.

I agree with you 100 percent that ‘too big to fail’ is a political term to commandeer capital for failed fiscal policy, and the proper course of action would have been to let them fail.

I agree 100 percent that the government should have treated Freddie and Fannie as private entities without the implicit backing of the governmnet , as they were chartered, and let them fail.

On the Founding Fathers take on the market, there was one who fully understood the scope of what we are dealing with and spent his entire career setting the foundation of it.

Alexander Hamilton believed that the only constant a market could rely on was the self interest of each entity. People will default to self interest every time.

The only rules the government should strictly enforce are those of individual property, so that people keep what they earn.

This encourages production and growth.

This is regulated by contract law, and has at its root personal accountability. If it is in the contract it is there in written word. Both parties get copies.

We are a Republic rooted in the Greek and Roman legal traditions.

The more politicians preach ‘Democracy’ to the masses, aka the ‘mob’ as referenced by the founding fathers when they built the Constitution, the closer we get to direct democracy, which does not work.

The Classic Greeks fell to internal rot, Rome fell to internal rot.

We will fall to internal rot.

Internal rot in this case is the weak in our society voting the labor of the rich into their own pocket, through the election of politicians that pander to them.


Very well put

But how does something like fraud fit into a true free market?  Couldn’t a person be personally responsible and still be taken advantage of by someone who had information or withheld information necessary to make an informed opinion or take a certain action?  I am not sure it is possible to check out every single thing that is necessary to get along now a days.

This article is part of an ongoing investigation:
Eye on the Bailout

Eye on the Bailout

As big banks return their TARP money, Fannie Mae and Freddie Mac continue to be a drain.

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