MEDIA ROOTS — Freddie Mac, aka the Federal Home Loan Mortgage Corporation, is one of America’s largest mortgage-insurance companies, chartered in 1970 by the federal government “to provide liquidity, stability and affordability to the U.S. housing market.”  However, the mortgage giant recently invested $5 billion in complex securities that pay when mortgage holders are unable to refinance and take advantage of the current record-low interest rates, effectively betting against U.S. homeowners. 

If Freddie Mac’s declared corporate mission is to make it “easier for consumers to afford a decent house or apartment,” then why is the company profiting from U.S. homeowners’ inability to refinance and reduce interest rates on their mortgages?  These investments constitute a clear conflict of interest, particularly since Freddie Mac also determines which homeowners are eligible to refinance.  Freddie Mac is essentially betting that homeowners will not be approved to refinance at lower interest rates, and meanwhile, creating new regulations, restrictions, and fees to limit eligibility, which a Federal Reserve paper qualified as “difficult to justify.”

Following the subprime mortgage crisis and a taxpayer-funded government bailout of over $200 billion, Freddie Mac, along with fellow GSE Fannie Mae (aka the Federal Home Loan Mortgage Corporation), were taken over by the U.S. Government and placed into conservatorship under the Federal Housing Finance Agency (FHFA) in September 2008, an agency created under Bush.  The FHFA is, therefore, responsible for overseeing and regulating the lenders’ business practices.  However, recent reports of these unsavory transactions by NPR and nonprofit newsroom ProPublica raised the question of whether the FHFA’s interest is to help U.S. homeowners, or simply to ensure the companies’ financial success. 

Indeed, Catherine Austin-Fitts, former Assistant Secretary of Housing and Federal Housing Commissioner, has described collateral fraud in the housing market contributing to the 2007 housing bubble collapse and economic meltdown of 2008:

“It’s funny how few people need to be involved [to enable this level of fraud], particularly when you’re hiding behind the Federal credit.  So, if you’ve got control in the right places at Fannie, Freddie, and FHA, particularly, through the systems.  It’s a surprisingly few people.  What you do need is for everybody in 3,100 [U.S.] Counties involved in real estate to just shut up.  So, for example, you saw appraisers who knew that the appraisals were just, you know, going out of control and made no sense.  And if you had an appraiser who wouldn’t play ball, he’d kind of be dealt with.  So, you had this sort of five to ten percent who objected to the corruption and would try and do something and would be dealt with in a variety of ways.  But what you needed was for everybody to just play along and not ask questions.”

Today, some in Congress are asking a few questions about Fannie and Freddie, but will that be enough to protect the public interest?  Republican Senator, Johnny Isakson, of Georgia said, “We have a situation that’s obviously, at best, unsavory and, at worst, immoral.”  Democrat Senator Barbara Boxer argued, “They’re actually, in my view, turning against their mission.  And I truly blame the regulator here, Mr. DeMarco, because he had to approve this instrument.”  Notably, both stop short of questioning legality.

In response to allegations of conflict of interest, FHFA Director Edward DeMarco responded that the investments, known as inverse floaters, were “in the class of normal business transactions” and he is “completely puzzled at the notion that something immoral went on here.”  FHFA regulators maintain that a “firewall” separates the investment portion of Freddie Mac from the regulatory branch, which creates rules that make it difficult for homeowners to refinance.  The Inspector General of the FHFA is conducting an “open evaluation on capital markets, which encompasses this issue.”  The investments have drawn some scrutiny from members of Congress.  And the Senate is holding a hearing today on Capitol Hill to question Freddie Mac’s investment practices.

The current situation with Freddie Mac’s dubious investments in inverse floaters brings to mind the housing crisis caused by the breakdown of credit default swaps and the mortgage-backed securities they insured, which caused millions in the U.S. to lose their homes through foreclosure, often with rushed robo-signing, through threats and intimidation, particularly in immigrant communities, and without being able to provide appropriate documentation.  For example, Wells Fargo, which profits from private prisons housing entire immigrant families, has been linked with also targeting immigrant families to force them out of their homes and expedite foreclosures.

Ultimately, mortgage companies like Freddie Mac and Fannie Mae essentially granted bad loans, often predatory loans, and bet that borrowers would default.  Now that mortgage interest rates have dropped, Freddie Mac, a government-controlled, taxpayer-owned company, has chosen to deny homeowners lower interest rates, once again putting profits before people, and betting against U.S. homeowners.  If the American Dream is in fact dead, then it’s corporate greed enabled by political corruption that killed it.

Written by Noelle Giambalvo Bortolai for Media Roots

Photo by Flickr user Mike Licht

MEDIA ROOTS — Americans currently suffer from one of history’s most successful propaganda campaigns. We are often distracted, numbed and herded into behaviors, thought patterns and policies that don’t serve our own interests, much less the interests of an endangered democracy.

Too often we are unconsciously manipulated by advertising ploys.  As a result, Americans succumb to the mundane: to mindlessly consume while paying attention to reality television.  Little do we realize how we are being controlled and steered away from actively participating in our democracy.   

Occupy Wall Street fights for the freedom that many of us are too apathetic to protect as we occupy our couches in front of our TV sets.  However, there are cracks appearing in the foundation beneath The Powers That Be, and if we are to seize this as an opportunity to better humanity, it will require adapting to an entirely new mindset. First, however, we must seek to fully understand how we got here.

Jim Quinn of The Burning Platform gives an excellent analysis to some of the complex issues plaguing American society, culture, and politics.

MR

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The Burning Platform — The erroneous notion that Americans have a choice between two political parties that offer distinct and clear opposing policies addressing the major issues facing our country is still perpetuated by politicians and the corporate media. It is untrue, as we have seen the Obama administration employ the same repressive methods instituted by the Bush administration. Military spending rises. Wars of choice proliferate and grow. Obamacare is virtually identical to a plan created by the leading GOP presidential nominee. Further restrictions, regulations and laws are put forth to keep the masses controlled, sedated and fearful. The governing elite and their propagators of misinformation are again formulating a false storyline to convince the easily fooled ignorant public that a sovereign country 7,500 miles from our shores is actually a threat to their lives. While our government has already committed acts of war against Iran (sanctions, assassinations, cyber warfare, and using drones to spy), the public is being worked into a bloodthirsty frenzy of nationalism. Bipartisanship worked so well with Iraq. How could it possibly go wrong with Iran?                      

In the last six months cracks have begun appearing in the fascist façade masquerading as a democratic republic. The rise of the Occupy Movement, increasing pain and discontent among the middle class, a small but vocal irate minority utilizing the internet to organize, inform and spread knowledge, and the growing support among the liberty minded for Ron Paul’s candidacy are the opening salvos in a coming revolution. The volleys being traded between the forces of the American aristocratic elite and the leading forces of this revolution are only the opening shots on par with Bunker Hill. The oligarchs have won the initial skirmishes with the Occupy Movement through their control of superior mercenary fire power and ability to falsify the message and nature of the protestors. The corporate mass media propaganda machine convinced an apathetic, non critical thinking public the protestors were nothing but dirty, lazy, college students looking for government handouts organized and led by George Soros. Journalist Robert Fisk reveals the true nature of the protests and rage:

“And that is the true parallel in the West. The protest movements are indeed against Big Business – a perfectly justified cause – and against “governments”. What they have really divined, however, albeit a bit late in the day, is that they have for decades bought into a fraudulent democracy: they dutifully vote for political parties – which then hand their democratic mandate and people’s power to the banks and the derivative traders and the rating agencies, all three backed up by the slovenly and dishonest coterie of “experts” from America’s top universities and “think tanks”, who maintain the fiction that this is a crisis of globalization rather than a massive financial con trick foisted on the voters.

The banks and the rating agencies have become the dictators of the West. Like the Mubaraks and Ben Alis, the banks believed – and still believe – they are owners of their countries. The elections which give them power have – through the gutlessness and collusion of governments – become as false as the polls to which the Arabs were forced to troop decade after decade to anoint their own national property owners. Goldman Sachs and the Royal Bank of Scotland became the Mubaraks and Ben Alis of the US and the UK, each gobbling up the people’s wealth in bogus rewards and bonuses for their vicious bosses on a scale infinitely more rapacious than their greedy Arab dictator-brothers could imagine.” – Robert Fisk, Bankers are the Dictators of the West

The mounting desperation of the oligarchs is palpable. They have circled the wagons as one of their leaders – Jon Corzine – was caught stealing $1.2 billion directly from the accounts of his customers after making reckless bets that went wrong and bankrupted his firm. The Department of Homeland Security coordinated brutality unleashed upon peaceful protestors in cities across America opened the eyes of more people to the approach of an increasingly oppressive state. The media lapdogs have come out in force with an organized smear campaign designed to derail the presidential campaign of Ron Paul, the only candidate talking about real change and a real downsizing of the American empire. Ron Paul’s platform of liberty, freedom, non-interventionism, sound money, and a government not controlled by bankers and corporate interests is anathema to the ruling elite of both parties. A vote for one of the hand selected candidates offered by the moneyed interests is simply a vote for the special interest status quo. As our economic system becomes more saturated with debt by the day a tipping point approaches.

Read more about the great American deception.

© 2012 The Burning Platform

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Photo by flickr user AZRainman

MEDIA ROOTS — Doug McKenty of KZYX interviews economist John Perkins, author of Confessions of an Economic Hitman, The Secret History of the American Empire, and Hoodwinked about the politics of economic hitmen, predatory capitalism, banksters, and much more.  Perkins also discusses his experiences with the Peace Corps, indigenous consciousness, socioeconomic solutions, and why the 99% are Occupying.

MR

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MEDIA ROOTS — Some view democracy as something we’re losing with the two-party dictatorship shredding the U.S. Constitution under a post-9/11 pretext of national security, as transnational corporations assert their will over sovereign states.  Others assert democracy is a good idea yet to be realised, given the Electoral College has always been a ruling-class fail-safe against true democracy.  Post-OWS, we recall the days of the robber barons, cyclic, like today’s fascist banksters.

In a recent article, economist Dr. Michael Hudson offers a long view over millennia of humanity’s struggle for society free of tyranny and oligarchy.  History, indeed, repeats itself until the masses educate one another and advance toward collective liberation.  Inequality may be one of the fundamental pillars of injustice.  But debt is its bedrock.

“Nearly all leading Syndicalists agree with the Anarchists that a free society can exist only through voluntary association, and that its ultimate success will depend upon the intellectual and moral development of the workers who will supplant the wage system with a new social arrangement, based on solidarity and economic well-being for all.  That is Syndicalism, in theory and practice.” —Emma Goldman, February 1913.

Messina

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MICHAEL HUDSON — Book V of Aristotle’s Politics describes the eternal transition of oligarchies making themselves into hereditary aristocracies – which end up being overthrown by tyrants or develop internal rivalries as some families decide to “take the multitude into their camp” and usher in democracy, within which an oligarchy emerges once again, followed by aristocracy, democracy, and so on throughout history.

Debt has been the main dynamic driving these shifts – always with new twists and turns. It polarizes wealth to create a creditor class, whose oligarchic rule is ended as new leaders (“tyrants” to Aristotle) win popular support by cancelling the debts and redistributing property or taking its usufruct for the state.

Since the Renaissance, however, bankers have shifted their political support to democracies. This did not reflect egalitarian or liberal political convictions as such, but rather a desire for better security for their loans. As James Steuart explained in 1767, royal borrowings remained private affairs rather than truly public debts [1]. For a sovereign’s debts to become binding upon the entire nation, elected representatives had to enact the taxes to pay their interest charges.

By giving taxpayers this voice in government, the Dutch and British democracies provided creditors with much safer claims for payment than did kings and princes whose debts died with them. But the recent debt protests from Iceland to Greece and Spain suggest that creditors are shifting their support away from democracies. They are demanding fiscal austerity and even privatization sell-offs.

This is turning international finance into a new mode of warfare. Its objective is the same as military conquest in times past: to appropriate land and mineral resources, communal infrastructure and extract tribute. In response, democracies are demanding referendums over whether to pay creditors by selling off the public domain and raising taxes to impose unemployment, falling wages and economic depression. The alternative is to write down debts or even annul them, and to re-assert regulatory control over the financial sector.

Read more about Democracy and Debt.

© 2011 Michael Hudson

Photo by flickr user Kevin Dooley

MEDIA ROOTS — The private, unaccountable, Federal Reserve operates above the law, as it dictates monetary policy.  That’s enough to spur Ron Paul followers into calling for an end to the Fed.  Now, if you shared in the justified rage of thousands of Occupy encampments across the nation, protesting, ‘Banks got bailed out, We got sold out,’ at the thought of hundreds of billions going to Wall Street in the name of trickle-down economics salvation, then imagine the rage at the news Bloomberg recently released.  Bloomberg has obtained thousands of pages of Federal Reserve documents under a Freedom of Information Act request revealing the Fed quietly funnelled trillions to Wall Street back in 2008 as Congress debated awarding banks those begrudged billions in bailouts.

If Ron Paul’s followers are misguided in their calls to ‘End the Fed,’ they are on the right track in pointing to the absurdity of having the U.S. central bank, the Federal Reserve System, privately run by unelected technocrats representing the 1%.  If the scale of the U.S. economy necessitates a central bank, at the very least, it must be publicly controlled.  As Thom Hartmann writes for Truthout, we need state banks a la North Dakota and the U.S. Treasury must “either buy the Fed from the for-profit banks that own it, or simply nationalize it.”  Meanwhile the token reformer in the Democrat Party, Kucinich, has called for something billed The Need Act.

This $7.7 Trillion dollar revelation is striking, as we are witnessing a breakdown of our capitalist economic system and of our political process.  The Occupy Movement and the journalists trying to cover it have witnessed the shredding of the U.S. Constitution and the First Amendment.  This type of story, financial coup d’état, should be a national scandal and take centre stage, as we approach 2012 with the U.S. Presidential Election underway, not rumours of personal foibles. 

Messina

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TRUTHOUT — Do you know who Elizabeth Duke is? How about Donald Kohn or Kevin Warsh? No? Well – you should. Because while Congress was debating back in 2008 whether or not to bailout banksters with a $700 billion blank check – these guys and girls were just doing it. They were funneling $7.7 trillion to Wall Street under the table – without one constituent phone call – without worrying about one election – without having to give one explanation.

They were able to do that because they’re members of the Federal Reserve Board of Governors – a group of people who are not voted into office, but have the power to completely dictate monetary policy in America. They are not politicians – they’re technocrats – they’re bankers and financial experts. Technocrats aren’t interested in democracy – it takes too long, and often the interests of the majority of voters don’t quite line up with the interests of the minority of bankers and foreign investors. Or – to put it in today’s terms – the interests of the 99% rarely line up with the interests of the 1%. That’s why – back in 2008 – the technocrats at the Fed weren’t interested in waiting for Congress – with all of its open debate and constituent services – to bail out the banks – they just went ahead and did it themselves. According to documents obtained by Bloomberg News – in 2009 – the Fed dished out $7.7 trillion in no-strings-attached, super-low interest loans to Wall Street’s biggest players.

That’s $7.7 trillion!

That’s more than half of the total value of EVERYTHING – every single thing produced in America – that same year. $7.7 TRILLION out the door – with no one bothering to inform the electorate about it until now. And since they were super-low interest loans – banks made enormous profits off of them. Six of the nation’s biggest banks – like Morgan Stanley and Bank of America – pocketed a not-too-shabby $13 billion in undisclosed profits, thanks to the deal with the technocrats at the Fed. So today – thanks to a decision made by technocrats, and not politicians – the too-big-to-fail banks are even bigger, and Wall Street has raked in more profits in just the last 30 months then they did in the entire eight years leading up to the 2008 financial crisis.

I guess the economic crisis that brought banksters to the ledge ended up being pretty lucrative for them in the long run. But the bigger picture is this: can our democracy survive future financial crises? As the world descends into financial turmoil on fears that the Eurozone may collapse, it’s the technocrats who are taking power – replacing elected officials.

The clearest example of this is what happened in Greece a few weeks ago. In order to preserve the euro – keep financial markets steady and ensure that foreign investors get what’s theirs – the technocrats at the International Monetary Fund and the European Central Bank demanded that Greece take a bailout. Knowing that a bailout would mean more layoffs – higher taxes and less benefits for the Greek people – Greek Prime Minister George Papandreou wanted to hold a national referendum on whether or not to take the bailout, just like Iceland had done a year earlier. He wanted the people – through democracy – to determine their own fate. But that never happened.

Just floating the idea cost Papandreou his job – he was forced out of office and replaced by a technocrat, Lucas Papademos, who just so happened to be the former vice president of the European Central Bank. Probably because when the Icelandic people were asked in a national referendum if they should take austerity cuts to bail out their banksters, they said, overwhelmingly, “No, let the banks fail.” But with a technocrat in charge, there will be no vote – a bailout will be shoved down the throat of the Greek people, and so, too, will painful austerity – anything to keep the banksters happy.

[Conservative] New York Times op-ed columnist Ross Douthat laid out this new reality of technocrat control in a recent article in which he wrote, “For the inhabitants of Italy and Greece, who have just watched democratically elected governments toppled by pressure from financiers, European Union bureaucrats, and foreign heads of state, it evokes the cold reality of 21st-century politics. Democracy may be nice in theory, but in a time of crisis it’s the technocrats who really get to call the shots. National sovereignty is a pretty concept, but the survival of the European common currency comes first.”

All signs indicate that we’ll be confronted with this problem once again in America – as another financial crisis, be it caused by Europe or some other bubble like student debt or housing, seems like a foregone conclusion at this point. And when it hits the fan – and the American people tell Congress no way in hell will they sign off on another bailout of Wall Street – then the technocrats at the Fed will takeover and our democracy will be irrelevant – just like it was in 2008 and 2009. That’s why we, the people, need to take back control of the Fed, and why the people of Europe need to take back control of their central banks and global financial institutions.

Only when the Federal Reserve becomes an instrument of the people to calm the mood swings of the market – and not a piggy bank for transnational banking corporations – can we really protect ourselves from a technocratic takeover in the future. And the way to do it is pretty straightforward – it was Alexander Hamilton’s idea back in the George Washington administration. Have the central bank owned by the US government and run by the Treasury Department, so all the profits from banking go directly into the Treasury and you and I pay less in taxes while the banksters on Wall Street can find a job at Wal-Mart.

The good people of North Dakota did just this, back in 1919, established something very much like this – the Bank of North Dakota – and it’s kept the state in the black, and kept its farmers, manufacturers and students protected from the predations of New York banksters for nearly a century. It’s time for every state to charter their own state bank, just like North Dakota did, and for the Treasury Department to either buy the Fed from the for-profit banks that own it, or simply nationalize it.

Only when we get control of our money out of the hands of sociopathic banksters will our democracy begin to function for the people instead of just for the banksters.

This work by Truthout is licensed under a Creative Commons Attribution-Noncommercial 3.0 United States License.

Photos by flickr user Late Night Task Force (synopsis) and flickr user Mike Licht, NotionsCapitol.com (above)