Courtesy of Tyler Durden
Now that the Fed is officially targeting a path for the level of nominal gross domestic product, which is essentially the politburo’s chief central planning task, and is just one step away removed what China does constantly by starting with a GDP assumption and trickling it down through the economy, it is only fitting that America, now on the verge of being a fully-blown communist country, is also abrogating property rights, courtesy of the much discussed foreclosure scandal. Dylan Ratigan provides a concise explanation of just how our bankers have managed to bring us to this last descent into central planning hell.
From Dylan Ratigan
Property Rights Gone Wrong
1. The borrowers must be verified by the banks and their agents as qualified.
2. Lenders must fill out paperwork accurately and make sure that when the home’s title changes hands, so does the documentation.
But in the past two decades, a whole lot of the time, that never happened.
For banks and servicers, the motive was money. Banks profited by packaging and selling those toxic home loans. Then they profited again by betting against those same securities. A bet, in essence, that a fraudulent loan wouldn’t be paid back.
But why would politicians allow this?
The simple answer is to stay in office.
Giving people huge government incentives to buy houses made them happier and thus made their politicians more likely to keep their jobs. And at the same time, the financial services sector — the banks making all the money — were donating to their political campaigns.
In 2008, the financial sector was the top donor to both the Democratic and Republican candidates.
So where are all these toxic loans now? We own them! At the Federal Reserve, Fannie Mae, and Freddie Mac.
And the banks and politicians will do whatever it takes to prevent a legitimate foreclosure proceeding…one which would easily reveal the lack of qualifications and bad documentation in the loans sold to the government.
Finally, the last and most important why:
Why isn’t the government dealing with it now?
Simply because it could reveal systematic criminal and civil fraud at the highest levels of America’s banks and in its political corridors.