While New York Governor Eliot Spitzer was paying an 'escort' $4,300 in a hotel room in Washington, just down the road, George Bush's new Federal Reserve Board Chairman, Ben Bernanke, was secretly handing over $200 billion in a tryst with mortgage bank industry speculators.
Both acts were wanton, wicked and lewd. But there's a BIG difference. The Governor was using his own checkbook. Bush's man Bernanke was using ours.
This week, Bernanke's Fed, for the first time in its history, loaned a selected coterie of banks one-fifth of a trillion dollars to guarantee these banks' mortgage-backed junk bonds. The deluge of public loot was an eye-popping windfall to the very banking predators who have brought two million families to the brink of foreclosure.
Up until Wednesday, there was one single, lonely politician who stood in the way of this creepy little assignation at the bankers' bordello: Eliot Spitzer.
Who are they kidding? Spitzer's lynching and the bankers' enriching are intimately tied.
How? Follow the money.
The press has swallowed Wall Street's line that millions of US families are about to lose their homes because they bought homes they couldn't afford or took loans too big for their wallets. Ba-LON-ey. That's blaming the victim.
Here's what happened. Since the Bush regime came to power, a new species of loan became the norm, the 'sub-prime' mortgage and its variants including loans with teeny "introductory" interest rates. From out of nowhere, a company called 'Countrywide' became America's top mortgage lender, accounting for one in five home loans, a large chunk of these 'sub-prime.'
Here's how it worked: The Grinning Family, with US average household income, gets a $200,000 mortgage at 4% for two years. Their $955 monthly payment is 25% of their income. No problem. Their banker promises them a new mortgage, again at the cheap rate, in two years. But in two years, the promise ain't worth a can of spam and the Grinnings are told to scram - because their house is now worth less than the mortgage. Now, the mortgage hits 9% or $1,609 plus fees to recover the "discount" they had for two years. Suddenly, payments equal 42% to 50% of pre-tax income. The Grinnings move into their Toyota.
Now, what kind of American is 'sub-prime.' Guess. No peeking. Here's a hint: 73% of HIGH INCOME Black and Hispanic borrowers were given sub-prime loans versus 17% of similar-income Whites. Dark-skinned borrowers aren't stupid – they had no choice. They were 'steered' as it's called in the mortgage sharking business.
'Steering,' sub-prime loans with usurious kickers, fake inducements to over-borrow, called 'fraudulent conveyance' or 'predatory lending' under US law, were almost completely forbidden in the olden days (Clinton Administration and earlier) by federal regulators and state laws as nothing more than fancy loan-sharking.
But when the Bush regime took over, Countrywide and its banking brethren were told to party hearty – it was OK now to steer'm, fake'm, charge'm and take'm.
But there was this annoying party-pooper. The Attorney General of New York, Eliot Spitzer, who sued these guys to a fare-thee-well. Or tried to.
Read it here.
Nicole Belle, writing in Crooks and Liars, notes that
The whole Bear Stearns bail out is hilarious when you consider how horrified these 'free market' proponents are at the thought of say, socialized medicine, but barely bat an eye at socialized banking. Privatize profits and nationalize losses, anyone? Meanwhile, decades of Republican economic strategy has brought us to a recession, if not teetering on the edge of a depression (The similarities in the economy of the 1920s and today are there for the finding). What will be telling is what kind of bonuses will be handed out to Bear Stearns executives in light of this massive failure of management. [Go here for linkage.]
And on both related and unrelated notes, you might want to read this column by Glenn Greenwald.
Who cares if Eliot Spitzer hires prostitutes?
Regarding all of the breathless moralizing from all sides over the "reprehensible," outrageous crimes of Eliot Spitzer: are there actually many people left who care if an adult who isn't their spouse hires prostitutes? Are there really people left who think that doing so should be a crime, that adults who hire other consenting adults for sex should be convicted and go to prison?
Just as was true for moral crusaders David Vitter and Larry Craig, there is unquestionably a healthy chunk of hypocrisy in Spitzer's case, given that, as Attorney General, he previously prosecuted -- quite aggressively and publicly -- several citizens for the "crime" of operating an adult prostitution business. That hypocrisy precludes me from having any real personal sympathy for Spitzer, and no reasonable person could defend him from charges of rank hypocrisy. And he should be treated no differently -- no better and no worse -- than the average citizen whom law enforcement catches hiring prostitutes.
But how can his alleged behavior -- paying another adult roughly $1,000 per hour to travel from New York to Washington to meet him for sex -- possibly justify resignation, let alone criminal prosecution, conviction and imprisonment? Independent of the issue of his hypocrisy -- which is an issue meriting attention and political criticism but not criminal prosecution -- what possible business is it of anyone's, let alone the state's, what he or anyone else does in their private lives with other consenting adults?
Read it here.
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