Credit Card Debt, Foreclosures, Unemployment . How did we get here ?

Most Americans today wonder what happened to their lives . What will happen in the future ?

It seems that politicians are more concerned about re-election , the news media is more concerned with Weinergate, Sarah Palin and anything  other than the financial plight of ordiniary Americans. Gas prices are at an all time high when incomes and Unemployment for the middle class is at an all time high.

U.S. Downward Mobility

The destruction of the middle class has accelerated. Housing values have plummeted, and investors earn negative real rates of inflation adjusted returns on “safe” investments like money market funds. Food, fuel, and medical costs have skyrocketed. Essential civil services are underfunded while taxes escalate. The middle class is sinking fast as saved wealth is destroyed and its standard of living erodes.

After being subjected to a national financial crime wave with no meaningful consequences for white collar criminals, the middle class, the core of many cities and communities, is being subjected to a physical crime wave.

The U.S. escalated its debt to fund the ongoing bailout of the banking system. TARP was a small part of it. The Fed now owns over a trillion in suspect assets it bought from banks, and it daily provides them with almost zero cost money so high spreads help them earn their way out of the financial hole in their balance sheets. No one went to jail, and bankers reward themselves with billions in bonuses.

Banks broke their TARP agreement to lend to small and medium sized businesses. They lent to large businesses that outsource a lot of labor. The iPads stolen by Chicago gangs are mostly made in Asia. Banks and their enablers in Washington starved the U.S. of the biggest source of sustainable job growth: capital investment in the United States.

Ongoing Mugging by Wall Street Banks

After the largest bank bailout in world history, we now have a national epidemic of foreclosure fraud. In March, Judge Moshe Jacobius stayed 1,700 foreclosures due to altered documents in Illinois’ Cook County.

A complaint of alleged fraud on the part of Goldman Sachs detailed its close relationships with Countrywide, New Century, and Fremont. The complaint showed Goldman knew of “an accelerating meltdown for subprime lenders such as New Century and Fremont.” Despite known serious loan problems, Goldman continued to securitize the loans and sell them in packages of residential mortgage backed securities. Goldman Sachs Alternative Mortgage Products (GSAMP) was “garbage sold at mythical prices.”

The complaint alleged that Countrywide employees in a Chicago office inflated incomes on 90 percent of reduced documentation loans, also known as “liars’ loans.” One of Countrywide’s mortgage brokerage arms “routinely doubled the amount of the potential borrower’s income … so that borrowers could qualify for loans they could not afford.” The complaint alleged that brokers, not borrowers, engaged in massive fraud to push loans through the system and earn commissions. Illinois Attorney General Lisa Madigan told First Business Morning News: “Countrywide broke the law, homeowners did not.”

Arianna Huffington explained that our elected officials allowed banks to thwart usury laws:

“Every day, Americans, faced with layoffs and tough economic times, are forced to use their credit cards to pay for essentials such as food, housing, and medical care — the costs of which continue to escalate. But, as their debt rises, they find it harder to keep up with their payments. When they don’t, banks, trying to offset losses in other areas, turn around, hike interest rates, and impose all manner of fees and penalties.” Third World America, P. 77.

Even when banks initiated foreclosure fraud, they refuse to bear the costs of delays and bad deals of their own making. After pumping up appraisals and falsifying borrowers’ income on applications, banks are walking away from abandoned homes and sticking taxpayers with the bill to clean up the mess they left behind.

Banks claim that it is mortgage lenders or mortgage servicers who are guilty, but these are bank affiliates and business partners funded by the banks.

Banks supplied the money (via private label phony securitizations) that fueled this problem. Banks engaged in widespread massive mortgage securitization fraud. As underwriters, banks were responsible for doing adequate due diligence on the underlying loans. Banks were responsible for making sure the representations about risk in their financial products were accurate. Instead, the representations were materially misleading.

According to a local study by the Woodstock Institute, the mortgage servicers and trustees most often associated with abandoned properties are Bank of America, Wells Fargo, U.S. Bank, Deutsche Bank, and JPMorgan Chase.

We Need the Mother of All Reforms

Doing nothing ensures a relentless downward slide into financial and social chaos for great swaths of the country. Washington’s political corruption and mismanagement has the same roots as Chicago’s. As Arianna points out, on a national level, we need “the mother of all reforms:

“That is why the first step toward stopping our relentless transformation into Third World America has to be breaking the choke hold that special interest money has on our politicians.” (Third World America, 172)

Money isn’t the only way to sway politicians. One can take away the power politicians try to buy with that money. Among voters, a show of numbers is as effective as money. The middle class needs to make its voice heard in the media and in direct contact with their local and national elected officials. Term limits for Members of Congress should be put in place but Congress will never agree to that , they will not want to lose all the perks and taxpayers money that they get for basically wotking less than six months per year.

On a national level, we need a Constitutional amendment requiring full public financing for political campaigns (for starters). Too many politicians are owned by special interest groups that buy votes, finance campaigns, employ their relatives, or just buy them off. As Arianna explained: “If someone’s going to own the politicians, it might as well be the American people.”

Get help with your debts, credit card debt, Medical and other bills by contacting Mystar Financial Solutions, a Debt Management, Debt Consolidation and Credit Counseling Comany .

317-284-6500    www.mystarcredit.com