Thursday, October 08, 2009

A Look At The Federal Government's Role In Predatory Banking

It's rather ironic that the Federal government wants to build a new consumer protection agency given the last administration thwarted efforts by state consumer protection agencies from stopping predatory banking. It sickens me when I read how many blame homeowners equally in this crisis. It's the same argument that it's somehow our fault that health care insurance companies are predatory. Now how again is a consumer, often with limited educational resources, able to compete against a multi-billion dollar corporation with endless financial resources and hundreds of lawyers on call whose sole purpose is to challenge the consumer's very legitimacy.

The University of North Carolina's Center for Community Capital just published phase one of its findings in the role the Federal government played in perpetuating predatory lending by stopping states from enforcing their own anti-predatory regulations.

It obviously makes sense to remove any consumer protection role from the Federal Reserve until and unless we get full transparency and accountability into that organization but wouldn't a better policy decision be to get the Federal government out of the state's business given this report highlights a root cause as being that very point? While we are at it, let's overturn the 1994 interstate banking law yielding more regulatory control to the Federal government. We can do that by shutting down these mega banks as a first step in anti-predatory regulations. Another of President Clinton's policy decisions that helped create this mess was the destruction of previously enacted regulation with his signing of a bill destroying much of our interstate banking laws. This jump started the trend of mergers between banks where companies like Goldman Sachs minted billions in fees driving these mergers. Another proof point that President Clinton did more to harm the American people and our economy than just about any other President in history via half a dozen key decisions. It wasn't just the overturning of Glass Steagall. Far from it.

I thought it was interesting the Center for Community Capital's web site had a link to The Economist. So I obviously clicked on it. In that link The Economist lays out an argument that home ownership isn't for everyone with some really smart-sounding reasons why this is so. An example the article includes "Moreover, if public policy aims to create wealth, there are other ways of doing it. People could invest their savings in the stockmarket and rent their homes, for example." Ahem. Need I say more? The Economist just doesn't get it across a multitude of topics. It too has fallen from grace over the last decade just many other media sources.

I wonder how Thomas Jefferson would respond to this article were he alive today? Owning a house, contrary to the savant who penned that sentence above is not about investment. Of course, neither is the stock market of the last fifteen years. Thomas Jefferson wanted to give every single Virginian their own property. He even drafted a constitutional provision to do so. That's right. Give it to them. The government. Why? Because Jefferson and many other founding fathers believed the right to property is foundational to human autonomy and dignity. Jefferson believed human beings and society could not flourish without property. And he thought government could provide a role in providing it. Guess what? He was right. Today in an America, where the underprivileged struggle so substantially against the tyranny of the few, how about we take another look at the Constitution and property rights? A Jeffersonian look. A democratic look. How about we give every single American their own home. And for those who don't have one, they receive one. And we do it by taking the property rights from the banksters getting trillions in taxpayer bailouts and pass it to Americans. And because the Constitution does not provide for any ability of government to regulate property, let's replace property taxes with some other vehicle so no one ever has a right to take anyone's home from them. Ever.

Wha..but..wha.....I could almost imagine the cries. Communism. Socialism. Revolution. Too many people confuse capitalism with democracy. And confuse democratic ideals with socialism. Frankly, because they are brainwashed by an economic system they serve without thought. By a beholden media and by elitists who control the microphone. There is great irony in the fact that many who supposedly espouse Jeffersonian ideals now compare President Obama to Hitler. I wonder what would they would actually compare Jefferson to were he alive today? I suppose they would call him worse. I have a better idea. How about we call him uniquely American.
posted by TimingLogic at 10:12 AM