By The Staff at AFP
In one of the many ironic twists on the “punishment” the White House has been imposing on the international bankers who exploited the naivety of American workers to trick them into taking out usurious loans, the federal government—and the American workers who pay taxes to finance that government—are going to give the banks $5 billion to pay a $1.5 billion settlement, with the rest of the money going into the bankers’ pockets.
It’s all part of an overall settlement between the Obama administration and a number of banks following a federal lawsuit that sought to assert the rights of American workers against a gang of banksters who robbed them of their homes. This was done in exchange for promises that banks would write down the principals of the homes of men and women who are over their heads in debt, in exchange for a token payment of $2,000 a home, for families who have had their homes wrongfully taken from them.
The federal government will give the banks an additional $20 billion, against which the banks will engage in “principal writedowns,” in which they will reduce the amount of money a borrower owes, in order to allow the homeowner to either sell the house or resume mortgage payments on a lesser amount.
While principal write-downs are the right solution to the crisis, the fact that the banks are not being forced to absorb the losses, and instead are receiving a bailout in exchange for absorbing them, is one of the outrages of the modern capitalist system—in which the exploitative banking elite profit when they make money, but dump their losses on the public when they lose money.
The settlement package is probably not enough to solve the housing crisis, however. The limits on principal write-downs is $20,000—a tiny fraction of the losses many homeowners have taken on their real property, and often not much more than the accumulated interest and fees on the loans—which banks often keep on their books as “principal,” even when they are not.
The banks hyperinflated the value of real estate by taking cheap money from the Federal Reserve and then lending it on exploitative terms, with the belief that, even if the loans went bad, they would be protected and covered by their buddies in the federal government. New homeowners who entered into a market where prices were hyperinflated were forced to buy at those exploitative prices, because no normally priced housing was available, and housing is a basic human need. The result was that millions of Americans were lured into buying homes they couldn’t really afford. When the credit market crashed, they then were forced out of their homes—or forced into a default situation, where their homes were in jeopardy.
Despite his nominal socialist affiliation, President Obama’s administration has been part of the gangster capitalism that has defined banking internationalism. The international bankers steal the proceeds of American labor and then set up controlled movements “opposed” to themselves to make sure no real opposition exists.