How Wall Street Gutted Our Schools and Cities

Thousands of vacant houses in Baltimore's most
blighted neighborhoods should be opportunities
for job training and employment for hundreds of
young adults wanting to change their lives. (photo:
Open Door Baltimore)

[Yes,  again,  but this time in simpler,  clearer language]

By Pam Martens, AlterNet

21 July 12

  
The complex machinations that pitted county treasurers against the deceptive wizards of Wall Street.

all Street banks have hollowed out our communities with fraudulently sold mortgages and illegal foreclosures and settled the crimes for pennies on the dollar. They've set back property records to the early 1900s, skipping the recording of deeds in county registry offices and using their own front called MERS. They lobbied to kill fixed pension plans and then shaved a decade of growth off our 401(K)s with exorbitant fees, rigged research and trading for the house.

When much of Wall Street collapsed in 2008 as a direct result of their corrupt business model, their pals in Washington used the public purse to resuscitate the same corrupt financial model - allowing even greater depositor concentration at JPMorgan and Bank of America through acquisitions of crippled firms.

And now, Wall Street may get away with the biggest heist of the public purse in the history of the world. You know it's an unprecedented crime when the conservative Economist magazine sums up the situation with a one word headline: "Banksters."

It has been widely reported that Libor, the interest rate benchmark that was rigged by a banking cartel, impacted $10 trillion in consumer loans. Libor stands for London Interbank Offered Rate and is supposed to be a reliable reflection of the rate at which banks are lending to each other. Based on the average of that rate, after highs and lows are discarded, the Libor index is used as a key index for setting loan rates around the world, including adjustable rate mortgages, credit card payments and student loans here in the U.S.

But what's missing from the debate are the most diabolical parts of the scam: how a rigged Libor rate was used to defraud municipalities across America, inflate bank stock prices, and potentially rig futures markets around the world. All while the top U.S. bank regulator dealt with the problem by fiddling with a memo to the Bank of England.

Libor is also one of the leading interest rate benchmarks used to create payment terms on interest rate swaps. Wall Street has convinced Congress that it needs those derivatives to hedge its balance sheet. But look at these statistics. According to the Office of the Comptroller of the Currency, as of March 31, 2012, U.S. banks held $183.7 trillion in interest rate contracts but just four firms represent 93% of total derivative holdings: JPMorgan Chase, Citibank, Bank of America and Goldman Sachs.

As of March 31, 2012, there were 7,307 FDIC insured banks in the U.S. according to the FDIC. All of those banks, including the four above, have a total of $13.4 trillion in assets. Why would four banks need to hedge to the tune of 13 times all assets held in all 7,307 banks in the U.S.?

The answer is that most swaps are not being used as a hedge. They are being used as a money-making racket for Wall Street.   READ MORE

BofA Initiates New Loan Sharking Program - Excuse Me, Rate Hikes - For Small Business

Posted: 03 Jan 2012 07:00 AM PST

Remember when we floated banks all that money so they could lend to small businesses, and instead they used it to pay bonuses and shore up their profits? Ah, good times! Now Bank of America has decided to jack up small business owners by boosting their interest rates to payday-loan-type levels in order to build their "core" business:

Bank of America Corp., under pressure to raise capital and cut risks, is severing lines of credit to some small-business owners who have used them to stay afloat.

The Charlotte, N.C., bank is demanding that these customers pay off their credit line balances all at once instead of making monthly payments. If they can't pay in full, they are being offered new repayment plans for as long as five years, but with far higher interest rates than their original credit lines had.

Business owners complain that BofA's credit squeeze is abrupt and could strain their small companies and even put them out of business. The credit cutoff is coming at a time when the California economy can't seem to catch a break, and bucks what the financial industry says is a new trend of easing standards on business loans.  READ MORE

8 Things You Should Know About the New Lawsuit Against the Banks That Torpedoed the Economy

The FHFA filed lawsuits last Friday alleging nearly $200 billion in fraud by the nation's biggest banks. Could this be the beginning of accountability for the banksters?
September 6, 2011

It was Friday afternoon, near market closing time, when the Federal Housing Finance Agency filed lawsuits against 17 big banks for their role in the subprime mortgage crisis that created, in turn, the financial crisis we're still struggling with today.

The suits accuse the banks of fraud, of lying to the federal government and to investors about the quality of the securities they were making by cranking out more and more subprime loans. The charge allows the FHFA to ask for punitive damages as well as actual damages. The amount of the suits is not yet known, but they allege nearly $200 billion in fraudulent securities were sold just to Fannie Mae and Freddie Mac, the government-backed (and now, post-bailout, basically government-owned) mortgage lenders.

The news was big, yet it was dropped in the Friday news-dump hole before a holiday weekend, probably to try to mitigate its impact on stock prices. (Markets also take a day off for Labor Day, though one has to doubt they thank workers for the rest.) Otherwise, you'd think they would have broken the news in a big way on a day when people might actually be paying attention.
READ MORE