Two chickens in every pot, a Ford in the garage and every man a king

McMansion… pretty clearly...

Caught Moyers last night, with William Greider on the big fraud.… of which sub prime is a part. At least Greider has the sense to call it out as Fraud and Usury.

Just some snips from their conversation, which was the second half hour of the show… the first half hour an overview of Slavic Village in Cleveland, caught in the sub prime tsunami.

RICK KARR: There’s a cancer eating away at a neighborhood in Cleveland called Slavic Village: On block after block, homes sit empty, boarded up, stripped bare. But things were different just a few years ago.

BARBARA ANDERSON: There was a time when each and every one of the houses on the neighborhood was up and standing, and looking pristine. The yards were well manicured. You could hear laughter. You could hear neighbors calling out to each other from across the street. At that time, there were a lot of gardens in the backyards, and people were very proud of their gardens, and they would pick the tomatoes, or they’d pick the peppers, and they would share it with neighbors. You would see people sitting on porches, reading newspapers and laughing and talking, listening to their music.

RICK KARR: But that was before the sub-prime mortgage crisis started to destroy Slavic Village in the first half of the decade. Since then, longtime resident

BARBARA ANDERSON: says there have been more than half a dozen foreclosures just on her block. This house went after the man who owned it was admitted to a nursing home .and his wife couldn’t keep up the payments. There used to be a home on this empty lot until it was foreclosed, condemned and leveled. And the family that lived here came home one day to find that a Sheriff’s bailiff had put their possessions out on the street after their bank foreclosed. Anderson, who runs a community organization that’s trying to fight the neighborhood’s decline, says it’s like a horror story.

BARBARA ANDERSON: You could almost see the fangs, just gouging the actual lifeblood out of the neighborhood as more and more houses became boarded up, and more and more houses became to be stripped. So, the house now next door to it, the house on the other side of it, and now those houses began to eat away at other houses. So, each time it looked like one house had actually infected the house next door to it, and it had taken on that same Dracula kind of look. And it was infecting even more houses.

RICK KARR: That infection spread to more than a thousand houses in the neighborhood. At one point last year, there were more foreclosures in Slavic Village’s zip code than in any other in the country.

Honestly it reminds me of the crack cocaine epidemic: Domestic war on the citizenry, by other means.

BTW, Cleveland is one city that filed suit:

RICK KARR: So the City of Cleveland filed a lawsuit earlier this year to recover some of that money and hold Wall Street responsible for the foreclosure crisis. The suit targets twenty-one investment banks and mortgage companies that have foreclosed on thousands of Cleveland homes including Deutsche Bank, which has filed more than four thousand seven hundred and fifty foreclosure actions. Wells Fargo, with more than four thousand and Countrywide and HSBC, which have filed about thirteen hundred each. Cleveland didn’t file suit against these banks because they made the loans in the first place, but rather because they allegedly created the environment that led to a lot of bad loans.

MAYOR JACKSON: Without them, this would not have happened. But for their actions, this would have not occurred.

RICK KARR: Banks were making a lot of money buying and selling mortgages whether the loans were sound or not. The more loans, the more money. So, the suit says, “in order … to keep pace with Wall Street’s burgeoning demand” for new mortgages, the banks pushed for lower lending standards until, “Even borrowers unlikely to meet their obligations [got] loans”. Jackson says the banks had to know that Cleveland would end up paying the price for what they were doing.

On to Greider:

WILLIAM GREIDER: To make the story overly crude, Congress repealed the law against usury. It was done in 1980 by a Democratic Congress, Democratic President. And, of course, the Republicans all piled on and voted for it. And that was the first stroke, only the first of many, in which they stripped away the regulatory laws from the financial system and from banking.

And that allowed the free market modernized gimmicks of one kind or another, all these things we’re now reading about, to flourish. And that’s where we are. I mean, the gatekeepers said to the banking industry and to the financial industry, “We don’t think federal control or regulation is good for you, so we’re, therefore, liberating you to do your own thing.”

BILL MOYERS: So why did they do that in 1980? I mean, there was, of course, the rise of the backlash to regulation from 40 years of Democratic rule-

WILLIAM GREIDER: The-

BILL MOYERS: -there was the rise, the arrival of the conservatives with their free market ideology.

WILLIAM GREIDER: Right, right.

BILL MOYERS: What was the issue?

WILLIAM GREIDER: Well, the driver then, and it was a powerful driver, was inflation. And through the ’70s, for lots of reasons inflation, which tends to undermine the value of financial wealth and money, was out of control. The Federal Reserve had lost control of it, not entirely its fault. But that set up a political climate that said the government is not working and that wasn’t wrong at the moment. Let’s get the government out of the way.

And that was very appealing as framed by Ronald Reagan and other conservatives. But I think it’s fair to say most Democrats yielded to it against whatever their original instincts were because of political necessity. And then the third dimension, maybe the most important, was that you had this very powerful industrial sector, that is banking and finance, that wanted and had pushed for years to get out from under the regulatory controls, limits on interest rates, the law against usury, the merger of commercial banks with investment banks, which had been prohibited in the New Deal because it caused the disaster of 1929.

I can go on and on. But you see the pattern. And the point I keep trying to make to people is that history learned the hard way that you do need prudential controls on industries like banking ’cause they’re so central to everybody’s well being.

hmmm. We have so lacked for bi partisanship… Isn’t there someone running on that fiction? I do believe he played basketball earlier to day in Kuwait, en route to Afghanistan. The other war theatre, soon to hot up.

WILLIAM GREIDER: -it’s a wildly grotesque transaction where the public guarantees the life of these firms, and there isn’t any effort that we know of to say, “And in return, you’re going to behave in the following ways for the next ten years or maybe forever. We’ll pass a law later that spells that out more clearly, but this is our starting demand.” And I suppose they would say, “Well, we don’t have time to do that. This is a crisis, blah, blah, blah.” I don’t buy that. I think that’s a way to avoid those questions is not even mention them.

BILL MOYERS: You have been writing for a long time now that America’s moving toward a corporate state. If we become one, can we exercise the self-correcting faculty that prevents us from hitting the iceberg out there?

WILLIAM GREIDER: One of the reasons I think politics is going to change fairly dramatically is that the Federal Reserve, accompanied by the Treasury Department and I think will be accompanied by the Congress, has crossed a very dangerous line in their bailout. They have essentially said, “We will put money on the table, taxpayers’ money on the table, for any financial institution or business that is too big to fail.” That is, if it fails, it’ll send dangerous ripples through the economy.

And we’ve got a list now of maybe 30, 40, depending on how you count them, that we will be there to save you. I regard that as profoundly dangerous for the American Republic because once you cross that line and you have this special club that’s privileged, that has benefits from government that nobody else can get, where do you stop it?

I mean, if I were running a big manufacturing company, I would have quickly run out and buy a subsidiary that’s a bank or a financial firm that looks like a bank. And I would then try to get myself on that list. Who wouldn’t? What’s going on right now it’s gotten a little attention – the union SEIU is fighting it, is these private equity firms, which are huge money pots of investors that take over and change corporations and come away with huge profits. The private equity firms are trying to buy into the banks and financial firms.

BILL MOYERS: And what would that mean?

WILLIAM GREIDER: That would mean that this private unregulated equity fund would be participating behind the door, so to speak, in the management of our regulated banks. But it would also, in a pinch, if it’s big enough, maybe have a tap into that federal guarantee that if you’re too big to fail, we’ll be there for you.

Well, not too tough to read there is much joy to come. Maybe elected members of congress could just take the cash and stay home. Let their corporate masters detail a management contingent to sit in those chairs.

What would be different?