Blame Flies In Risky Mortgage Meltdown

Pressure Rises For Congress To Act As More Homeowners Are Unable To Meet Payments

(CBS/AP)  Charges of blame were flying Thursday for the meltdown of the high-risk mortgage market as pressure mounted for Congress to do something about rising foreclosures among homeowners unable to meet high payments.

Under fire from lawmakers, federal regulators said they lacked full authority to prevent the crisis spawned during the soaring housing boom of 2003-2005.

Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking Committee, laid out what he called a "chronology of regulatory neglect" as banks and other lenders loosened their standards for making riskier mortgage loans during the boom.

"Our nation's financial regulators were supposed to be the cops on the beat, protecting hardworking Americans from unscrupulous financial actors," Dodd said. "Yet they were spectators for far too long."

More than 2 million homeowners could lose their houses in the subprime mortgage meltdown, reports CBS News correspondent Anthony Mason. About 300,000 are already in foreclosure and more than 50 lenders are in serious trouble or have gone belly up.

Many mortgage lenders haven't come under the Federal Reserve's supervision because their primary regulators are state banking authorities. However, Dodd and others maintain, the central bank does have authority under federal law to exert jurisdiction over those companies and broaden lending regulations to cover them.

Some of the biggest companies in the so-called subprime mortgage market were called to account before the banking panel.

The distress in subprime mortgages — higher-priced home loans for people with tarnished credit or low incomes who are considered greater risks — has roiled financial markets and stoked anxiety that it could spill over into the broader economy.

Risky lending practices became so lax that in the past two years 40 percent of first-time home buyers put no money down. Now delinquency rates are soaring, adds Mason.

Company executives said they had tightened their lending practices and eliminated some higher-risk types of mortgages. They urged Congress not to rush in and overreact.

"We take the situation very seriously and we're taking strong steps" to correct problems, testified Brendan McDonagh, the chief executive of HSBC Finance Corp.

With millions of homeowners said to be at risk of losing their homes in coming years, the issue took on an increasingly political complexion Thursday. While a number of politicians, consumer advocates and community activists are clamoring for Congress to act, industry interests and some Republican lawmakers are warning that new restrictions on mortgage lending could choke off credit to those who most need it.

Away from the hearing, Democratic presidential contender Sen. Barack Obama called on Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson to convene a "homeownership preservation summit" bringing together major players for the purpose of stemming the foreclosure tide.

"We cannot sit on the sidelines while increasing numbers of American families face the risk of losing their homes," the Illinois Democrat said in a letter to Bernanke and Paulson.

Dodd, who also is seeking the party's presidential nomination, warned at the hearing that some 2.2 million homeowners could lose their homes in the next few years.

Acknowledged Roger Cole, head of the Federal Reserve's banking supervision division, "I will say that given what we know now, yes, we could have done more sooner."

Under pointed questioning from Dodd, Cole promised to put in motion a process at the central bank that could lead to a broadening of federal rules governing mortgage lending standards.

A patchwork of federal and state regulatory agencies hold jurisdiction over financial companies, putting many subprime mortgage lenders outside of stringent regulation, the regulators said.

Earlier this month, the Fed and the other four federal agencies that regulate banks, thrifts and credit unions called on lenders to exercise caution in making subprime mortgage loans and strictly evaluate borrowers' ability to repay them. The regulators said the guidelines, if formally adopted by the agencies and followed by lending institutions, could result in fewer borrowers qualifying for subprime loans.

Dodd said he wanted to know why it took the regulators more than three years to act "despite evidence that they themselves identified problems in the subprime market."

[bellal-2009]

I hope this isn't a prelude to a bailout. No bailouts. Regulation yes, bailouts no.

[bellal-2009]

Sen. Barack Obama called on Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson to convene a "homeownership preservation summit"


Uh oh, that sounds like a bailout. Let the homeowners AND the lenders go broke they are both at fault.

[j-whitman]

Investigate the White House,, Bush's 'Ownership Society & GOP's mantra of 'Less Regulation' is responsable.

[Syndicate]

Let it go to hell. Let the banks eat it. Sorry if that seems cold but these people drove the price up on houses to about twice what they were actually worth. A lot of people are going to be mad if they are not already as that $350,000 house slowly loses value. The banks are left with morgages that are more than the house securing them is worth. Glad I didn't buy anything. I've been waiting for the bubble to burst looks like its going to pop big.

[barbaraf4]

How could this possibly happen? Bush keeps assuring us that the economy is just peachie. One of the indicators he frequently quotes is home sales.

What a jerk.

[vancouverboo]

Who are we going to bail out, the greedy banks or the idiot borrowers? Let the banks fail? oh, but they're too important for us to allow to fail, so we will bail them out. That's sharing. The banks get the profits and the taxpayers get the loses. That's capitalism in America.
And how about the borrowers, who wanted to get rich on the housing boom, who lied in their mortgage applications, and who didn't have enough brains to see two years down the road.
Greed and Stupidity.
That's America.

[rohink-2009]

I can't feel too sorry for people that tried to bite off more than they could handle. I agree with bellaL , but it's going to affect us all, not just the greedy lenders and ignorant homeowners that allowed themselves to be sold something that they couldn't afford.

[condumism]

The festering sore of the worthless GOP Congress of 1994-2006 will haunt the USA for generations to come. I do not approve of the USA coming to the aid of any homeowners ready to lose their house due to receiving too much credit from lenders. No bailout for these fools!

[grazinggoat]

Now my friends give back yer house to the mortgage lender. Go live in multi-family dwellings and leave those houses to the bankers, to live in.

The savage hike in homes price combined with the transfer of well paid jobs to India and China resluted in such situation. Artificially fixed interest rates should not be a detrmining factor to you keeping your house or not. A home is a home. You can stay in it without having to furnish it.

Politicians and economist should seriously think of a strategy that housing interest rates should not be influenced by market inflation, and consequent adjustment... this is a necessity good and should be regulated. Consumable goods (furniture, cars, equipments)...could continue to be subject to adjustment by interest rates flutuation.

Not housing. Homes are too sacred to be subject to repossession.

[alphaa10-2009]

barbaraf4 said, "How could this possibly happen? Bush keeps assuring us that the economy is just peachie. One of the indicators he frequently quotes is home sales."
---
jwhitman said, "... Bush's 'Ownership Society & GOP's mantra of 'Less Regulation' is responsable.
---

Less regulation was exactly the climate Grover Norquist and the Bush brainless trust advocated for the American market. Their seemingly blind and foolish worship of the unregulated economy to bring riches to everybody reminds us of Reagan. His era was also known for its greed and excess, and the same braindead mantra, "Less regulation, less regulation".

What these bozos meant was, "Leave us and our banking, oil and arms industry friends alone while we scour the market of all low-hanging fruit. The rest of you exist so we can make money. Trust us-- just... trust us."

And now we learn what liars, con men and brigands this GOP-led herd has turned out to be. Meanwhile, people who have their mortgage rates jacked up on them overnight are out of a home. The last time Americans can remember that happening on large scale was the Depression era.

[zootallures2]

If you lose your house, you can always live in a barracks in Iraq or Afghanastan and fight the war on terror. As a matter of fact, the federal government can buy the houses and re-use the materials for the barracks and military equipment. It will be a great education for the whole family.

[coffeehead-2009]

Those losses were only phase one...
What is the "blame" game on homeowners going to be when it is THEM being ignorant investors...?
It's called capitalism lassiez faire and it is back again and nearly complete - pure ~ economic class distinction. Rich / Poor -
the cycle remains when greed wins.

As production costs fell quickly, wages rose slowly, and prices remained constant, the bulk benefit of the increased productivity went into corporate profits. In fact, from 1923-1929 corporate profits rose 62% and dividends rose 65%10.

The federal government also contributed to the growing gap between the rich and middle-class. Calvin Coolidge's administration (and the conservative-controlled government) favored business, and as a result the wealthy who invested in these businesses. An example of legislation to this purpose is the Revenue Act of 1926, signed by President Coolidge on February 26, 1926, which reduced federal income and inheritance taxes dramatically11. Andrew Mellon, Coolidge's Secretary of the Treasury, was the main force behind these and other tax cuts throughout the 1920's. In effect, he was able to lower federal taxes such that a man with a million-dollar annual income had his federal taxes reduced from $600,000 to $200,00012. Even the Supreme Court played a role in expanding the gap between the socioeconomic classes, the Supreme Court ruled minimum-wage legislation unconstitutional.

[coffeehead-2009]

Gusmorino, Paul A., III. "Main Causes of the Great Depression." Gusmorino World (May 13, 1996). Online. Internet: http://www.gusmorino.com/pag3/great_depression/index.html. TODAY'S DATE.

[rharrin1]

alphaa10 said

Their seemingly blind and foolish worship of the unregulated economy to bring riches to everybody reminds us of Reagan.

It seems everybody has short memories because they keep putting republicans back in office. Then the same old problems arise again.

Remember keep republicans out of office.

[standlee5]

Too many people using housing as an investment tool. They sold the farm, cashed out their retirement savings and bought McMansions thinking they'd make a killing in a year. Sorry folks, you loose. Now lets make sure these folks don't get credit and do it all over again. You either have money sense or you don't. Those that don't never learn.

[gkc99]

Between losing your home and your credit card debt, King George of Neocondom will have you right where he wants you--available for the draft he'll need when he invades Iran.

[clarkssuppor]

This is a normal working of the markets. Let the markets adjust. If people lose a house, it will be very disappointing, but they will figure it out. Look at how our parents came back from WWII with nothing and made it. I have friends that went through bankruptcy and learned a hard lesson, but they are still alive today and better than before. No doom and gloom. People will be a little more saavy with their checkbook now and things will get back on an even keel.

[jimmiema]

Anybody remember the Glass Stiegal Act? After the Depression Roosevelt and congress enacted legislation that regulated the securities markets, the lending markets, the S&Ls.

Anybody remember Reagan? During the Reagan administration we began to dismantle the securities, insurance, S&Ls, utilities markets. Ken Lay was a big fan of deregulating utilities. Anybody remember Ken Lay, a good buddy of George Bush?

Anybody remember George Bush? Many of us increasingly wish we had never heard the name. Bush, chronology of regulatory neglect, gee, I think I'm beginning to wake up. It's morning in America. There are dark clouds of foreboding on the horizon.

[alphaa10-2009]

The Return of Depression-Era Economics-- 3
"Andrew Mellon, Coolidge's Secretary of the Treasury, was the main force behind these and other tax cuts throughout the 1920's. In effect, he was able to lower federal taxes such that a man with a million-dollar annual income had his federal taxes reduced from $600,000 to $200,000. Even the Supreme Court played a role in expanding the gap between the socioeconomic classes. In the 1923 case Adkins v. Children's Hospital, the Supreme Court ruled minimum-wage legislation unconstitutional.
---

My comments--
Today, we see the same pattern of laws and regulators favoring a rich economic class. Yet, the meanest blue-chip CEO today would insist concentrating wealth and power in the hands of a few is simply un-American. America's greatest argument with communism, as an economic system, was the fairer distribution of wealth in this country. To the extent economic opportunity declines, we forfeit our own argument and fall prey to the same economic tyranny of which we accuse the communists.

[alphaa10-2009]

The Return of Depression-Era Economics-- 2
As Gusmorino explains, "... A major reason for this large and growing gap between the rich and the working-class people was the increased manufacturing output throughout this period. From 1923-1929 the average output per worker increased 32% in manufacturing. During that same period of time average wages for manufacturing jobs increased only 8%. Thus wages increased at a rate one fourth as fast as productivity increased. As production costs fell quickly, wages rose slowly, and prices remained constant, the bulk benefit of the increased productivity went into corporate profits. In fact, from 1923-1929 corporate profits rose 62% and dividends rose 65%.

"... The federal government also contributed to the growing gap between the rich and middle-class. Calvin Coolidge's administration (and the conservative-controlled government) favored business, and as a result the wealthy who invested in these businesses. An example of legislation to this purpose is the Revenue Act of 1926, signed by President Coolidge on February 26, 1926, which reduced federal income and inheritance taxes dramatically. (see The Return of Depression-Era Economics-- 3)

[alphaa10-2009]

"The Return of Depression Economics", by economist Paul Krugman, analyzed 1990's economic disasters in Japan and Mexico borne on 1980's-style economic thinking-- speculation, and more speculation atop that. Such unbridled speculation, says Krugman, is the root of two major economic dislocations in the world economy, and misery for hundreds of millions.

Adding to the alarm, Paul Alexander Gusmorino III, in an insightful essay, points to a growing disparity between rich and poor as one major cause of the historic Great American Depression --- http://www.geocities.com/capitolhill/senate/6854/greatdep.html

Recent trends in this country suggest Depression-era thinking has returned to America. Greed, once again, has blinded both Wall Street and the regulators. Our stalled economy teeters on the edge of disastrous reverses.

According to Gusmorino--
"The Great Depression was the worst economic slump ever in U.S. history... Many factors played a role in bringing about the depression; however, the main cause for the Great Depression was the combination of the greatly unequal distribution of wealth throughout the 1920's, and the extensive stock market speculation that took place during the latter part that same decade.
(see The Return of Depression-Era Economics-- 2)

[ubikvalis2]

Gee, we haven't been here before. The procedure is as follows:

1. "free market" Republicans remove as much regulation as possible in an industry.

2. Corporations in said industry go hog wild doing anything and everything to make a buck now that the regulations are gone.

3. Industry goes belly-up due to them doing anything and everything to make a buck without oversight

4. SHOCKED politicians ask "how could this have happened?"

5. Government spends billions bailing out the industry

I guess we're in phase 4.

[tmr3513]

In the coming years 2 million homeowners will lose their homes through fore closer. These houses will be sold at auction at or near their "true" value(not the over inflated value the real estate industry created) to unscrupulous foreign investors from the middle east and Asia who will in turn rent them back to the poor former home owners.So goes the American dream.

[alphaa10-2009]

clarkssuppor said, "This is a normal working of the markets. Let the markets adjust..."
---
Candide has found his Dr. Pangloss again, alive and well in 2007!

Perhaps it would delight clarksuppor to understand-- all in a flash of revelation-- that his own demise, itself, is no misfortune, simply Nature's way of telling him to slow down.

And surely clarksuppor has reasoned with himself that economic misfortunes of others need not concern him. Boom and bust are only "adjustments" in our Great and Wonderful System, and if only we could discipline and "educate" ourselves, we might appreciate its savage, predatory beauty for itself.

Sigh. Unfortunately, only a Darwinian economic elite is worthy of the task, as always. Economic loss and privation are but cosmic retribution to the teeming masses for their unbridled appetites for wealth, comfort and a home to call their own.

[themooniac]

This is the great economy that Bush speaks so often about. Strong economy my a$$. Maybe the Fed should lower interest rates period and the Congress should do their job protecting consumers from predatory lenders. Why are interest rates so high still anyway? Because the banks, oil companies, Halliburton and the super rich owned the Republican fat cat party when they were in power and are the only people that have benefitted from Bush's $hit for brains economic policy.

[cfuchs2]

Now Mr Bush must be very very happy, his billionairs friends are making more and more and more money, while the working people have less money and less income, and now we can't even make a mortgage payment to have at least a decent place to live.
yeah!!!!!!! let's give it up for mr Bush he got what he wanted.
He is probably calling Cheney to ask him how many billions he made today

[feelfree1]

Many people place the primary responsibility for the housing bubble on Sir Alan Greedscam.

Greedscam's interest rate setting policies following 9/11/01, during his tenure at the Fed, fueled the recent housing blitz to begin with, and allowed people to use their homes like a piggy-bank, with an array of refinancing opportunities. Now the pig is empty.

We are left with a crush of foreclosures, and a rapidly growing inventory of unsold homes.

If the U.S. housing bubble suffers a precipitous collapse, which seems likely, many people suggest that economic ripple will be felt around the globe.

Thanks Al.

[alphaa10-2009]

Powers that Be-- 2
At the end of a long day, said congressman looks at check-writing lobbyists with new eyes. He tells himself, I can't stay in office without money, but these fundraisers are killing me. I have no time for the people who sent me here. Do I choose between Tyson Foods and Mrs. Someone, who lost her son in the war?

Only when federal elections are federally-financed will our congressman start serving his own constituents. Federal support provides a more equal playing field for all ideas-- not just the well-funded and well-advertised. It was Jefferson's belief and hope that good ideas in the public forum would preserve America from the evils of monarchy, class and corrupting power and wealth.

But what did Jefferson know? Today, we see that money has wormed its way into the heart of the country's political system, and will kill it unless more of us demand change. Cataclysmic political change occurs only when Powers that Be ignore the usual indicators.

[alphaa10-2009]

themooniac said, "... Because the banks, oil companies, Halliburton and the super rich owned the Republican fat cat party when they were in power and are the only people that have benefitted from Bush's $hit for brains economic policy."
---

Almost completely right. But many of the Dems have had their hands where they don't belong, as well. To understand how a fresh congressman becomes corrupt, parade a group of lobbyists past his office all day. Enter the congressman, tired from fundraisers and long phone calls trying to promise (but without actually (?) promising) a laundry list of perks and privileges in legislation he works with. (see Powers that Be--2)

[arthurcl1]

The Return of George Bushes Depression-Era Economics--

[bobnjersey]

[Many people place the primary responsibility for the housing bubble on Sir Alan Greedscam.]

as the title of the pieces implies ... there's likely plenty of 'blame' to go around.

consume, consume, consume. it is .. after all ... the american way. but just because someone's handing you the rope ... doesn't mean you should use it.

at the end of the day ... people need to be responsible for their own actions and stop living beyond their means.

[acauble1]

at the end of the day ... people need to be responsible for their own actions and stop living beyond their means.

Posted by bobnjersey at 01:58 AM : Mar 23, 2007


That statement says it all, essentially. However, I have to counter that by saying if the "American Dream" was more reasonably attainable for the middle class, then I'd believe that more people would not have to stretch their budgets to the breaking point just to purchase a home in a decent neighborhood with decent schools and infrastructure.

Sadly, this "great" economy is just not that generous to the majority of Americans. In this case, there is a fine line between personal financial responsibility and how far we are willing to go to give our family the best life we can possibly afford. (Or at least what we 'think' we can afford).

[acauble1]

I've met some of the scummiest *** on the planet, and no surprise... they work in the mortgage industry! These *** will promise the sky and essentially deliver your own coffin that you end up getting into and shutting the lid yourself. Some these people make politicians and used car salesmen seem like the Pope!

We could start keeping them honest if these mortgage lenders/brokers were required (by law) to record every single phone conversation with their customer(s) from the very first one. That way, the statements they make on the phone could be cross referenced with the paperwork, and if there's any discrepancies, the lender/broker would be required (by law) to give the customer/borrower the better deal, lower rate, lower payment, whatever.

It would be great if a mortgage broker was forced to give a client a $500 discount off of a mortgage payment every month for the life of the loan, because they blatantly told the customer some BS just to get them to refinance, (or whatever)!

Sure, it would basically make the mortgage broker... well... BROKER, but after a few lose their licenses, businesses, and livelyhood due to the blatant lies they told, I'd figure the rest in the industry would quickly get the message and change their ways!

That's part of my AMERICAN DREAM!

[totefrosch]

On the outside looking in I can see American news is vanilla ice with a wee bit of lemon.

A lot of people are losing their dream because they don't understand balloon payments.

A politicaan's talk is cheap when it comes to the average citizen. They can get voted into office again, and again, and again just by telling you what you want to hear but don't have the courage to do something.

"The issue today is the same as it has been throughout all history, whether man shall be allowed to govern himself or be ruled by a small elite." --Thomas Jefferson

[rillifane]

"more people would not have to stretch their budgets to the breaking point just to purchase a home."
Posted by acauble1

Well they don't HAVE to stretch their budgets. But they choose to when they insist on buying more home than they really need.

The poorest quintile of Americans has significantly more living space than the average European. Anyone who has done a bit of travel knows that Americans have vastly larger homes than their economic counterparts in the industrialized world.

People can live within their means but the CHOOSE not to.

Let it be on their own heads when it all comes crashing down on them.

[Renegade.Rivers]

I am sorry, but I believe that none of you have hit on the real problem here. Back in 1913 a man named Woodrow Wilson, a Democrat, maneuvered through Congress three major pieces of legislation. The first was a lower tariff, the Underwood Act; which had attached a graduated Federal income tax. Then came the passage of the Federal Reserve Act, which provided the Nation with the more elastic money supply it supposedly badly needed. Plain an simple this was a violation of the constitution. Article I, Section 8, Clause 5, of the United States Constitution provides that Congress shall have the power to coin money and regulate the value thereof and of any foreign coins. But that is not the case. The United States government has no power to issue money, control the flow of money, or to even distribute it - that belongs to a private corporation registered in the State of Delaware - the Federal Reserve Bank.

[Renegade.Rivers]

The Federal Reserve System was established by President Woodrow Wilson in 1913. The premise used by President Wilson and his financial advisor's for the establishment of the Federal Reserve System was to "supplant the dictatorship of the private banking institutions" and "to stabilize the inflexibility of national bank note supplies". The previous system of banking was "feudal" in nature, in which private bankers control communities and could issue their own bank notes. They had little regulations concerning reserve assets and loan policies. Banking was a patch-quilt of institutions scattered across the face of the nation with no central policy.

With the advent of the Federal Reserve a new currency was issued - Federal Reserve notes, which at the time were based on the gold standard. The Federal Reserve was to unite and supervise the entire banking system, control the expansion or contraction of currency, and regulate the flow of money to the commercial banks through the establishment of 12 Federal Reserve Banks. The Federal Reserve is controlled by private banking interest and by Presidential appointment - but it is still a private organization and not a government entity.

[Renegade.Rivers]

In 1913, President Wilson's creation of the Federal Reserve System established a three-tier monetary system in the United States - the holders of money (public, government, business and institutions; the commercial banks that borrow from the public and issue loans; and the central bank or Federal Reserve that has a monopoly on the issuing of money. The Federal Reserve is technically owned by the commercial banks.

FEDERAL RESERVE CONTROLS THE MONEY, NOT THE GOVERNMENT

The monetary policy of the United States is the domain of the Federal Reserve Bank and not the government. This process is in direct contradiction of the U.S. Constitution that reposes the responsibility of the monetary system with the Congress of the United States. On April 27, 1936, hearings were held by the House Committee on Banking and Currency. The preamble of the bill - HR 9216 of the Seventy-fourth Congress, states, "The committee had under consideration the bill (HR 92163 to restore to Congress its constitutional power to issue money and regulate the value thereof; to provide monetary income to the people of the United States at a fixed and equitable purchasing power of the dollar, ample at all times to enable the people to buy wanted goods and services at full capacity of the industries and commercial facilities of the United States; to abolish the practice of creating bank deposits by private groups upon fractional reserves, and for other purposes."

[Renegade.Rivers]

The Congress declared, "Whereas the permanent welfare of the people and the protection of the economic life of the Nation are dependent on the establishment of a monetary system wholly subject to the control of Congress that will promote the interests of agriculture and labor, of industry, trade, commerce, and finance for the economic well being of all citizens by the maintenance of an adequate supply of money with a unit of fixed average purchasing power, which will avoid excessive expansion or disastrous contraction." That preamble led to the body of the text. "Section 1. That it is hereby declared to be the policy of Congress to provide such issuances of certificates of national credit as shall be requisite so to increase the purchasing power of the consumers of the United States as to make it conform to the capacity of the industries and people of the United States for the production and delivery of wanted goods and services, which capacity be declared to be the measure of national credit." The Congress attempted to issue non-interest bearing Treasury Notes. A Federal Credit Commission linked to the Secretary of the Treasure was the goal of Congress.

[Renegade.Rivers]

The Commission was to consist of seven commissioners appointed by the President with approval of the U.S. Senate. U.S. citizenship was a prime requirement and they could not have more than four from one political party. It was also made unlawful for anyone to interfere with the commission. The concern of Congress was that banks were issuing loans without the backing of real deposits and that it was controlling money based on the price it attracted on international money markets or by the amount of interest they could charge. The Congress wanted to withdraw from the banks the right to issue credit on fractional reserves, and leave the banks the right to issue credit on account of actual deposits, which means that permanent money will be loaned not bank manufactured money.

[Renegade.Rivers]

"By this bill, Congress resumes its constitutional duty of issuing money and regulating its value, a duty and a right which it has long been abdicated to the private banking system," read the preamble of the bill. The bill would have eliminated the private manufacture of money - a direct contravention of the mandate of the Constitution, which places the right to coin money in the hands of Congress.

PAYING OFF THE NATIONAL DEBT

The bill would have allowed the nation to pay off its national debt and stay out of debt. In one year's time, with this bill, the national debt could have been paid, and without any tax increases, plus it would have allowed for full employment. "Because of the unsound practice of relying on the private manufacturing of monetary credits by private groups, you are preparing to lay heavier taxes on the shrunken income of the people, without hope of balancing the Budget perhaps for years to come," was the testimony of Allen B. Brown, chairman of the New Economic Group. Remember, this testimony is in 1936. "In order to meet the Budget deficits, this administration and the preceding one committed themselves to a program of borrowing, so that now the national debt has doubled with every prospect of further increase.

[Renegade.Rivers]

More than half of this great sum of added debt represents merely book figure which the banks have lent the Government. To pay for their service of writing figures on their books and canceling the Government checks in their clearing system, the Government has engaged to tax the American people. They must pay back the billions of book figures with sweat and labor, with goods and services to which they are now denied access of purchasing power for their families, and they must pay enormous debt charges." Brown said that the bill before Congress would "put a stop to this process of privately manufacturing monetary credit for the use of business out of added government debt."

"The banks manufacture, without borrowing it, the monetary credit which they loan to the Government. For every dollar they themselves contribute to the loaning process, they manufacture 10 credit dollars, and call them their own, although they base the credit dollars on human sweat and labor and productive genus that is not their own." The comments by Brown was a direct slap at the Federal Reserve System - that was only 23 years old, at the time. "The crying fault of our prevailing money system is its impermanence. It fluctuates wildly in volume, because it is debt-money, loans, and subject alternately to the fears and the sanguine expectations and speculative propensities of its private owners who have become the debt-masters of all business."

[Renegade.Rivers]

He added, "We need to be delivered of the curse of a money system that is not owned, as a cash-credit system, by the American people. We want no longer a system that can at any time be canceled out of existence with the dumping of pledged securities and, simultaneously, with the depression and deflation of all the physical and intangible assets of the American people."

The bill would have ended immediately the private monetary credit inflation. The Federal Reserve can create money out of nothing, simply printing it, lending it and printing more. You could have guessed that this bill never became law in 1936 - the banking interest was too powerful.

KENNEDY TRIED TO CHANGE IT

In 1963, President John Kennedy wanted an end to the Federal Reserve System, which had a strangle-hold on the United States and virtually the world. By a simple stroke of the pen, President Kennedy dismissed the Federal Reserve System and ordered the U.S. government to restore its Constitutional-mandate of controlling the money. President Kennedy was dead three weeks later. When President Lyndon Johnson took office, he immediately rescinded Kennedy's order and the Federal Reserve won another round.

[Renegade.Rivers]

Representative Charles A. Lindberg, Sr., the father of the famous aviator, was a member of the Banking and Currency Committee. He opposed the Federal Reserve Act and gave a speech on January 20, 1915. "The system is private, conducted for the sole purpose of obtaining the greatest possible profits from the use of other people's money, and in the interest of the stockholders and those allied with them." Representative Louis T. McFadden, chairman of the Housing Banking and Currency Committee, stated on June 10,1932, "Some people think the Federal Reserve Banks are United States Government institutions. They are not Government institutions. They are private credit monopolies that prey upon the people of the United States for the benefit of themselves and their foreign and domestic swindlers; and rich and predatory money lenders."

FOREIGN BANKERS OWN MAJORITY OF FEDERAL RESERVE

More that half the shareholdings in the Federal Reserve Bank arc controlled by large New York City banks, including National City Bank, National Bank of Commerce, First National Bank, Chase National Bank, and Marine National Bank. When Rockefeller's National City Bank merged with J.P. Morgan's First National Bank in 1955, the Rockefeller group owned 22 percent of the shares of the Federal Reserve Bank of New York, which in turn holds the majority of shares in the Federal Reserve System - 53 percent. But who really owns what? Here arc the top controllers of the Federal Reserve Bank.

[Renegade.Rivers]

1. Rothchild banks of London and Berlin.
2. Lazard Brothers Banks of Paris.
3. Israel Moses Seif Banks of Italy.
4. Warburg Bank of Hamburg and Amsterdam.
5. Lehman Brothers Bank of New York.
6. Kuhn, Loeb bank of New York.
7. Chase Manhattan Bank of New York, which controls all of the other 11 Federal Reserve Banks.
8. Goldman, Sachs Bank of New York.
This ownership combination has been challenged by the Federal Reserve Bank, but a study of Standards and Poors will verify the ownerships. This means that the controlling interest of our national monetary system is foreign. In 1797, John Adams wrote to Thomas Jefferson, "All the perplexities, confusion and distress in America arise, not from defects of the Constitution or Confederation; not from any want of honor or virtue, as much as downright ignorance of the nature of coin, credit and circulation." In simple terms, the United States Government borrows money from the Federal Reserve Bank with interest.

[Renegade.Rivers]

Here is how it works: The Government wants $1 billion. The Federal Reserve prints $1 billion - based upon no hard asset - and lends it to the Government at a high interest rate. The bank did not have the original money, it created it and made a bookkeeping entry - like you writing yourself a check without funds and cashing it. The Federal Reserve controls the flow of money, making it tight and creating unemployment or printing more than actually exists and creates inflation. It is, in essence, a paper corporation, which controls the entire economic well-being of the nation.

[Renegade.Rivers]

CONCLUSION

No Congress, no President has been strong enough to stand up to the foreign-controlled Federal Reserve Bank. Yet there is a catch - one that President Kennedy recognized before he was slain - the original deal in 1913 creating the Federal Reserve Bank had a simple back out clause. The investors loaned the United States Government $1 billion. And the back out clause allows the United States to buy out the system for that $1 billion. If the Federal Reserve Bank were demolished and the Congress of the United States took control of the currency, as required in the Constitution, the National Debt would virtually end overnight, and the need for more taxes and even the income tax, itself. Thomas Jefferson was concise in his early warning to the American nation, "If the American people ever allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered."

Copyright FreeAmerica and Harry V. Martin, 1995

[Renegade.Rivers]

I am sorry that this took up so much space, but I hope you will read it all, because though written over 10 years ago, it points to exactly what is happening today, with the mortgage problems we now find ourselves in.

Have a good day! If you can.

RenRivers

[djermano1]

Thanks RenRivers, that was a good comment. And I couldn't agree more. The banks are the trouble, with their profit motive from high interest rates, and then when Politicians work together to lower the rates, to make themselves look like the good guys, they increase the number of approved loans to make up the difference from the default of money gained from the higher interest levels. They are such crooks.

Actually I am happy about this. I have known this for a long time...I am nearly 50 years old never been able to buy a house since on theis earth, knowing very well the trap I would be in if I went along with their ignorance.

America is a selfish greedy corrupt institution and with War its constant diet of nutrition, it won't be long for the whole shabam to....well I guess 911 tells it.

[djermano1]

Really retards control the world. They start lying wars, killing thousands of innocent people, and they support the Federal Reserve who in my analysis really pumps out counterfiet money. I laugh when see the US government wage sanctions against N. Korea for counterfieting. Who are they trying to kid?