US Government, Wall Street Banks Defrauded American People

Starting in 1977 and continuing through several presidential administrations (both democrat and republican), aided by members of Congress, and coupled with large Wall Street banks, the economic crisis and collapse of the US economy resulted in 2008. It started with the Community Reinvestment Act (CRA) of 1977 that was enacted to help borrowers of low and moderate income. It sounds like a great thing to do, but what resulted was corrupt and a disaster. Nine (9) legislative and regulatory changes were made to CRA starting in 1989 that assured making the outcome worse. The entire banking industry turned from bonds that were government / municipal and corporate oriented to those that were private based upon "mortgage backed securities". What could be safer than bundling a bunch of diversified home mortgages together under a bond? And they were given a "Triple A" rating as well as offering high yields! A VP from Salomon Brothers lobbied in Washington to remove legal and tax barriers and succeeded.

The problem is these bundles contained a high number of "sub prime" mortgages of low income people that were in no position to pay. Yet they were encouraged by banks, our government, and members of Congress to buy homes that they couldn't afford. These people were being used, not helped, to build up the mortgage / bond portfolio. They would suffer frustration for not being able to pay and eventual foreclosure and eviction. Not to be outdone our federal government, under government sponsored Freddie Mac, Fannie Mae, and Ginnie Mae home loans began to increase the number of sub prime mortgages to alarming levels, up to 55% in 2007. As a reward the head of Fannie Mae received $90 million in salary and bonuses. When members of Congress responsible for oversight were called before Congressional committees, or spoke to the media, they viciously defended the solvency of these government backed agencies....even attacked those who suggested otherwise.

The Wall Street large banks were riding high, making a ton of money on high yields on these "mortgage backed securities" / bonds and yet no one wanted to look underneath as sub prime mortgages rose from $30 billion in the mid 1990's to a whopping $625 billion in 2005. It was only a matter of time when the whole bottom would fall out and it did in 2007 - 08. The economic crisis that resulted was more than just due to the sub prime mortgages, but this was a prime mover in the crisis of 2008. Yet during and after the collapse Wall Street Banks were giving their executives huge bonuses.

So what was the result that was thrust...not on the banks, not on the federal government, not on members of Congress that helped cause this? It was thrust upon the American people, the taxpayers to bail out the banks! Not only that, the result was $5 trillion lost in pension money, 401K savings, other personal savings, and real estate value as bonds disappeared. In addition 8 million jobs were lost, and 6 million lost their homes. Our national debt has skyrocketed to over $19 trillion a level that all Americans, our children and grandchildren and beyond will be burdened by. A terrible legacy to leave.

Yet not one executive from Wall Street, one member of Congress, one person in our federal administration, one person from the Federal Reserve...has gone to jail for defrauding the American people of over $5 trillion. Yet the same thing is creeping in all over again, Wall Street just changes the name to confuse people. Several large banks began selling something called "bespoke trance opportunity", just another name for CDO's (collateral debt obligation) or mortgage backed securities. Have you noticed ads on television where people are encouraged to apply for home mortgages with no money down? There is also a major push now going on from our federal government to make home loans available to people with weaker credit. Not only have we not learned from the economic collapse of 2008, we are repeating the root causes of it all over again.

The American people need to be more aware of what caused the economic collapse of our country in 2008 AND... to speak up, act, and ensure that it doesn't happen again.