Saturday, March 17, 2007

“Moral Hazard” is the term Ladies & Gentlemen.

To Protect Sub-prime Borrowers and Nation's Housing Market, NCRC Urges Administration and Congress to Allow FHA to Refinance Loans in Default and Establish a National Rescue Fund

From WRH: This is a repeat of the S&L bailout of the 80s, which was one of the greatest swindles of the American people in history. Under Presidents Reagan and Bush I, the laws were changed that made it easy for S&Ls to invest in high-risk ventures. At the same time, Bush I increased the maximum limit for insured d=savings to $100,000 per account. That set the stage for a huge rip-off of the taxpayers and here is how it worked. Drug criminals. in many cases working for the CIA's Iran-Contra operation, mixed their drug cash in with legitimate proceeds from cash-heavy front companies such as convenience stores, office supply places, and multi-screen cinemas. That cash was deposited in S&L accounts always under the $100,000 limit.

Posted by lvmreader @ 03:18 AM (587 views)
Please complete the required fields.



2 thoughts on ““Moral Hazard” is the term Ladies & Gentlemen.

  • Mike Rivero of WRH writes….
    This is a repeat of the S&L bailout of the 80s, which was one of the greatest swindles of the American people in history. Under Presidents Reagan and Bush I, the laws were changed that made it easy for S&Ls to invest in high-risk ventures. At the same time, Bush I increased the maximum limit for insured d=savings to $100,000 per account. That set the stage for a huge rip-off of the taxpayers and here is how it worked.
    Drug criminals. in many cases working for the CIA’s Iran-Contra operation, mixed their drug cash in with legitimate proceeds from cash-heavy front companies such as convenience stores, office supply places, and multi-screen cinemas. That cash was deposited in S&L accounts always under the $100,000 limit.

    The criminals would then form a new front company, buy some really crappy real-estate and flip it to run the price up. This is what happened with Whitewater, Castle Grande, Flowerwood, etc.

    Then, either with a cooperative appraiser or possibly a compromised officer of the targeted S&L, the front company would borrow out their money using the inflated land as collateral. That money, being the proceeds of a loan, would be tax-free and clean, ready to be spent anywhere in the world.

    The front company would close, the loan would default, and the S&L found itself not only with the bad debt and no place to go to collect it, but a piece of land that was not worth anywhere near what was borrowed on it.

    So, the S&L collapsed. President Bush came in telling stories about widows and orphans, never mentioning that the vast majority of the involved accounts were numbered and brokered,. and the tax[ayers forked over the cash to make good on the S&L’s bad debts.

    And here is the punchline. Those drug criminals, the CIA Iran-Contra folks? They were still on the books for their original deposits, so even though they had already borrowed out their money using the land swindle, they were written a chec for their original deposit all over again.

    It was a heck of a scam. Minus taxes and commissions this scam could turn 10 million in drug money into 18 million in just 6 months with no risk, and all on the backs of the US Taxpayers. Those RTC officials who looked too closely at the books for the defaulted S&Ls had a habit of falling from very tall buildings.

    So, here we go again, only the financial vehicle isn’t S&Ls but mortage lenders. But the game si the same. Invest some money, mortgage land for way more than it is worth through a front company, split with that money, then when the mortage company collapses lobby for a “National Rescue Fund” which will pay out the same money a second time, and all on the backs of the US Taxpayers.

    Fool me once…

    Reply
    Please complete the required fields.



  • Another case of Corruption at it’s highest levels it would seem, so some “Idiot” is irresponsible with there borrowing and then good old US Taxpayer bails them out. President Bush could do something smart for once and tell them to go to hell!!

    Fact of life I invested unwisely when I was in the US and had to return back to the UK but I have almost paid back now all my US Creditors. No bail out for me and there should not be. This stinks about as much as the Common Agricultural Policy, Taxpayers funding Airbus etc etc.

    Thankfully though Brown is maxed out on his Credit Card so here he would have to raise taxes, great vote winner we need to bail out these poor BTL’s after a crash!!!!

    Reply
    Please complete the required fields.



Add a comment

  • Your email address is required so we can verify that the comment is genuine. It will not be posted anywhere on the site, will be stored confidentially by us and never given out to any third party.
  • Please note that any viewpoints published here as comments are user´s views and not the views of HousePriceCrash.co.uk.
  • Please adhere to the Guidelines

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes:

<a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>