The Politics of Debt

As I pointed out yesterday, the administration is using the current crisis to strengthen Wall Street’s position in the biggest land-grabbing scheme since the XIX Century.
Although it’s hard to analyze what Bush actually wants to do (he only said he was going to do something in the future), there are some inferences than can be drawn from today’s comments.
1. — Urge Congress to pass legislation that would give the Federal Housing Administration more flexibility in assisting mortgage holders with subprime mortgages.
Yesterday I said that Bernanke was using the “emergency” to force legislation, now Bush is throwing his own weight to do the same. “More flexibility” means lowering the standards to create more creative loans (get ready for perpetual leasing options)
2. — Pledge to work with Congress to reform the tax code to help troubled borrowers rework their loans. (yeah, right! He has a track record of cutting taxes for the poor, doesn’t he?)
3. — Call for rigorously enforcing predatory lending laws and strengthening lending practices.
This one is the cherry on the pie. As they create more creative forms of lending, they will restrict access to loans to lower income families by strengthening the lending practices. This is only one more step in providing loans to a select group of people who can then have the former owners of those homes as tenants.

1. This crisis was created by Wall Street by providing loans to people they knew could not pay
2. Wall Street lobbied Congress to modify the bankruptcy law in 2005 to make it more difficult for people in distress to save their homes
3. Wall Street refused to refinance the defaulting loans before they reset knowing that they would receive large chunks of real estate they could transfer to “trusted borrowers” (themselves)
If the same banks that gave the risky loans had refinanced those under the same standards they provided them, nothing would had happened. They set up the American public with the help of Government and Fed officials, and now they are getting ready to go for the jugular.

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Tags: America, bank, bankruptcy law, banks, Bernanke, Bush, Economy, Fed, federal housing administration, government, leasing options, legislation, predatory lending laws, subprime mortgages, United States, Wall Street, xix century