Memo to CNN: Consider this as a theme for Black In America 3.
In his recent press conference, after which President Obama would be called to task for lambasting the police in Cambridge Mass for acting "stupidly"-a comment he later withdrew-he also charged that Wall Street knew what they were doing when they made predatory loans. No one called him on that, not even Wall Street.
Here's what he said. "We were on the verge of a complete financial meltdown. And the reason was because Wall Street took extraordinary risks with other people's money. They were peddling loans that they knew could never be paid back."
If this is unfair, no one has stepped up to the plate to deny it, certainly not the relentless right-wing which fell on Obama like a ton of bricks for suggesting that a lone policeman acted improperly by arresting scholar Skip Gates in his own home.
If it was a smear, you would expect an uproar from the Wall Street-Real Estate complex responsible for millions of families losing their homes. After all, this is a mass problem, not a mere incident. Also, a large proportion of those targeted were people of color. Their lives have been handcuffed, not just their wrists. If you are looking for a case of mass racial profiling, look here. A lawsuit in Baltimore produced an internal memo from Wachovia Bank in which loan officers called black customers "Mud People."
Sadly, the explainer in chief did not elaborate, did not remind the country that Wall Street firms made billions of dollars securitizing these loans, then turning them into exotic products with misrepresented values. After financing rip-offs of homebuyers, they ripped off investors by selling infected "bundles."
None of these con-artists have been prosecuted; many have been rewarded. According to economist James Kwak, for banks, "there is no contradiction between fleecing customers and making lots of profits (which is what makes you safe and sound). (a) Originate bad loans; (b) pocket fees; (c) sell bad loans to an investment bank for distribution; (d) repeat. What threatened to bring down banks was the fact that they held on to too much of the risk of those loans, either on their balance sheets or in their off-balance-sheet entities."
These assetless products had no underlying value, and had to be written off leading to massive losses. It was the implosion of these fraudulent "toxic" mortgages that brought down the economy. The FBI cites "an epidemic" of criminality.
The Administration is not going after the people who were "pedaling loans that they knew could never be paid back." They are, instead, proposing a new consumer protection agency to make sure that the slick salesmen who take advantage of a widespread lack of financial literacy can no longer bamboozle the uninformed.
Everyone advocating responsible lending wants new rules with teeth. They support an agency to safeguard consumer rights. Who is against it: almost all the banks that the government has bailed, and all the sleazebags who should be jailed. They are mounting a slick campaign to kill the agency using a pricey PR agency led by Jim Wilkinson, the Bush operative and former Paulson aide who ran the propaganda war for the Iraq war. (You can't make this up!)
And guess who has just joined this backlash against reform? None other than Ben Bernanke, the overlord of the Federal Reserve Bank, an organization, quiet as it's kept, that is actually run by big banks and totally unaccountable to Congress or the people.
The Fed had stood by and none nothing to stop the subprime/subcrime wave, and nothing to stop the millions of foreclosures for years. Now, the Fed is proposing to step in, arguing that the new agency is not needed.
"I'll handle it," says big Ben.
Can he? The New York Times reported: "Consumer groups and lawmakers have blamed the Fed under Mr. Bernanke's predecessor, Alan Greenspan, for not cracking down early on dubious mortgages practices. High-risk mortgages fed the housing boom and led to its collapse.
Mr. Bernanke, who took over the Fed in February 2006, eventually pushed through tougher rules, though some said the changes came too late to ease the mortgage crisis."
I love when the NY Times reports "some said" without citing names or explaining that everyone fighting for the rights of homeowers and predatory lending victims said it, over and over again. The problem: no one was listening, including Bernanke and the New York Times which admitted in a column in the Business section that it were warned in 2000 and then ignored the problem for seven years.
Baseline Scenario, a progressive economic site said of the man insiders call "Helicopter Ben" because of his affinity for spreading lucre from above to financial institutions (whether they need it or not,) "Disregarding his organization's disappointing track record in this regard, he claims that the Fed can handle this issue perfectly well going forward. He thus adds his voice to the cacophony of financial sector lobbyists favoring the status quo.
At the same time, Bernanke and the lobbyists talk about the importance of consumer confidence for the recovery. But how can you expect anyone to have confidence enough to spend and borrow when so many people have been so badly treated by the financial sector in recent years?"
Economist Simon Johnson adds, "The Fed, it seems, just wants to defend its turf." Beyond that, it wants the banking industry to control the whole financial reform process to make sure that all change is contained, co-opted and controlled.
Ben Bernanke is the running to become our economic czar. He is now mounting a campaign for reappointment claiming he stopped a recession from turning into a depression. That is debateable. Some like Eliot Spitzer who knows where the bodies on Wall Street are buried says, "The Fed is a Ponzi scheme, an inside job, it is outrageous, it is time for congress to say enough of this."
The irony: many in the Administration seem to want to give him and the Fed even more power in the misguided belief he is operating in the public interest up in that netherworld above politics.
Bernankeism is now Leninism, Capitalist style, undemocratic centralism by another name. He decides, we support. No checks, no balances. He is our Monetary Mullah, a beneficent avatar of Korea's Kim and Iran's Supreme Leader rolled into one. Genuflection, not accountability, is his order of the day.
The Princeling of Princeton wants us to think he knows best. As wannabe Congressional overseers Ron Paul, on the right, Allen Grayson, in the center, and Dennis Kucinich, on the left, have learned, questions to the bearded one and the elite he reports to, invariably draw mealy-mouthed responses. Demands for disclosure are not welcome and calls are not returned.
The Fed is experiencing an unusually high call volume for the foreseeable future. Don't try again.