Greenspan Calls Fraud

"There are two fundamental reforms we need - to get adequate capital and, two, to get far higher levels of enforcements of statutes of fraud statutes, existing ones. I'm not even talking about new ones. Things were being done which were certainly illegal and fairly criminal in certain cases. Fraud, fraud is a fact. Fraud creates very considerable instability in competitive markets. If you cannot trust your counterparties, it won't work. And indeed, we saw that it didn't." Alan Greenspan Nov. 9, 2010

Via Karl Denninger Alan Greenspan: The Banks Robbed You

As many of us are saying... (e.g. Social Security)

More after the break.

Alan Greenspan admitting that the financial calamities were fueled by fraud rising to a criminal level is highly significant. He should know. He played a central role in the financial calamities as Fed Chairman.

Greenspan was a big booster of the housing bubble.

Quotes from The Money Party to Citizens - Drop Dead! Feb 11, 2008

"...Federal Reserve Chairman Arthur Greenspan, endorsed the housing bubble in no uncertain terms. In 2004, Greenspan told a credit union association crowd that "the refinancing phenomenon" had been supportive for the economy and that the use of home equity "helped cushion" declining stock prices. Then Greenspan showed his supposed genius with this advice to home buyers and owners:

"American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage. To the degree that households are driven by fears of payment shocks but are willing to manage their own interest rate risks, the traditional fixed-rate mortgage may be an expensive method of financing a home." Understanding household debt obligations, Federal Reserve Board, Feb. 23, 2004

The message was clear. Get an ARM!

This dominated the economy, created illusions of wealth, and helped fuel the stock market, just as Greenspan suggested in 2004.

This housing "boom" turned bubble had a crushing impact on the economy. One analyst noted, that "By 2005, this bubble had been creating fifty percent of all economic growth in the U.S." That growth is gone and now we're looking at people losing their homes just as massive layoffs are planned and implemented.

And in 2007, there were credible stories about the FBI investigating just what they should have investigated. What did Greenspan do back then to encourage the fraud investigation? What powers worked to make sure that nothing happened as a result of these investigations. Here's

"The FBI is investigating every level of the conspiracy that it believes perpetuated the housing boom and ultimately resulted in millions of Americans losing their houses, investment banks losing billions of dollars and the chief executives of Citigroup, Merrill Lynch, Bear Stearns and UBS resigning." TimesOnline Jan. 31, 2007

Is it important that Greenspan made this statement. Yes it is. But it would have been much more important and a great service to the country had he not fueled the housing bubble against very good advice going back to 2001.

This statement is like the quote people love to use from President Eisenhower as he left the White House on the dangers of the "military industrial complex" dominating our political life. Just as someone should have said to President Eisenhower, Why didn't you do anything about this when your were president? the question for Greenspan is:

Mr. Greenspan, where were you and what were you doing when all of this was going on?

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Comments

Me vs. Bank of America

I've thrown down the gauntlet to BOA by informing them that they will be getting no more payments from me on a mortgage contract that was never valid, and was part of a well-planned conspiracy to create, and then deflate, the housing bubble, making obscene amounts of money while the market was on the way up, and even more money (through credit default swaps) while the market crashes. It's the biggest financial fraud in history, transferring even more wealth from working people to the "vampire squid" at the top, in Matt Taibbi's all-too-appropriate phrase.

As a Pennsylvania resident, I took our Attorney General (and Governor-elect) at his word when he invited Pennsylvanians to inform him of consumer fraud. I got my answer by phone this afternoon, informing me that none of the "shortcuts" taken by banks in sucking up our blood were illegal under PA. law. It looks like I'll have to concentrate on violations of Federal laws by the "banksters" to prevail in court and save my house. I've posted, and will continue to update, the ongoing story on my blog at www.AreWeBozos.blogspot.com.

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Jay,

Good luck to you in this fight. The response that you got form the AG's office is about right, in some cases at lease. They talk a good fight but rarely show up when it's time to mix it up.

Where's The Note? Shock and Awe for Big Banks

I wrote this for EP a few days ago.  It's got a helpful section at the end with a listing of articles and other materials on ForeclosureGate. 

Keep us posted.

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Greenspan late advice

Gee, now the horse has left the barn, the bubble has burst, and his party lost the White House Greenspun says lock the door and calls for fraud investigation? The money is stolen and the thievery worked brilliantly. How is it going to be fixed when it was the SEC itself in the Madoff case, the banks in concert all of them involved in the mortgage bubble by backing the fly by night originators and blind ratings agencies, and now the banks are unable to do anything about documents in the foreclosure scandal?

The HAMP is hopeless, the banks want it to fail because their model included foreclosing and making a windfall on the foreclosed properties ASAP. Only the economy tanking has hurt the speculative runup and dented their profits.

The spread between the near zero rate and what they charge nowadays for best customers, let alone the rest is obscene.

We would be better off with a near zero national mortgage rate not for favorite banks of the Fed but for owner occupied residences. Not 5 million, 10 million foreclosures like we are getting. And this Administration is allowing to happen.

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