Michael Hudson isn't such a great fan of
banking:
In
the 1960s, banks required a 25-30% down payment by the buyer, and
limited the burden of mortgage debt service to only 25% of the
borrower’s income. But interest is now federally guaranteed up to 43% of
the home buyer’s income. And by 2008, banks were making loans no down
payment at all. Finally, loans in the 1960s were self-amortizing over 30
years. Today we have interest-only loans that are never paid off.
So
banks loan much more of the property’s market price. That is why most
of the rental value of land isn’t paid to the homeowner or commercial
landlord any more. It’s paid to the banks as interest.
[...]
The problem with the savings and loan crisis was mainly fraud! The large California S&L’s were run by crooks, topped by Charles Keating. Many were prosecuted for fraud and sent to jail. By the 1980s the
financial sector as a whole had become basically a criminalized sector.
My colleague Bill Black has documented most of that. He was a prosecutor
of the S&L frauds in the 1980s, and wrote a book “The best way to
rob a bank is to own one”. [...] Fraud was the main financial problem, and remains so.
[...]
These were essentially junk mortgages, and once
again it was fraud. Already in 2004 the FBI said that the American
economy was suffering the worst wave of bank fraud in history. Yet there
was no prosecution. Essentially in the United States today, financial
fraud is de-criminalized. No banker has been sent to jail, despite banks
paying hundreds of billions of dollars of fines for financial fraud.
These fines are a small portion of what they took illegally. Such
paymets are merely a cost of doing business. The English language was
expanded to recognize junk loans. Before the financial crash the popular
press was using the word “junk mortgages” and “Ninjas”: “No Income, No
Jobs, no Assets”. So everybody knew that there was fraud, and the
bankers knew they would not go to jail, because Wall Street had become
the main campaign contributer to the leading politicians, especially in
the Democratic party. The Obama Administration came in basically as
representatives of the bank fraudsters. And the fraud continues today.
The crooks have taken over the banking system. It is hard for Europeans
to realize that that this really has happened in America. The banks have
turned into gangsters, which is why already in the 1930s President
Roosevelt coined the word “banksters”.
[...]
Most
of the houses that were foreclosed on have been bought out by hedge
funds for all cash. In the wake of 2008, by 2009 and 2010 hedge funds
were saying “If you have $5,000,000 to invest, we’re going to buy these
houses that are being sold at distress prices. We’re going to buy
foreclosed properties for all cash, because we can make a larger rate of
return simply by renting them out.” So there has been a transfer of
property from homeowners to the financial sector. The rate of
home-ownership in America is dropping.
The
economy itself has not recovered. All economic growth since 2008 has
accrued only to the top 5% of the economy. 95% of the economy has been
shrinking by about 3% per year… and continues to shrink, because the
debts were kept in place. President Obama saved the banks and Wall
Street instead of saving the economy.
Don't get your hopes up about his solutions, though.
