The Obama Administration through the Federal Housing Finance Agency (the organization which oversees Fannie Mae and Freddie Mac) is suing 17 of the largest banks in the country for making all of those bad subprime loans which helped spark our current economic problems.
For those of you who read this blog often, keep up on the news, or have read “Republicans and Reincarnation” you’re probably now going through kind of cognitive dissonance that usually only comes from a combination of extreme sleep deprivation, LSD and looking at Salvador Dali paintings in hall of fun house mirrors. I know, I know this makes less than zero sense and I have no explanation… For those of who you who aren’t getting why this is somewhere beyond insane, let me explain.
Back in the 1995 the government expanded Community Reinvestment Act. This has the effect of forcing, yes I said forcing as in they will be fined if they don’t do this, banks to make a trillion dollars worth of subprime loans. You remember subprime loans don’t you? Those are the loans you wouldn’t make if you had a choice to people who you know can’t possibly repay the loans even if they tried. These are the kind of loans a group even comprised of Forrest Gump, Rain Man and Sean Penn* wouldn’t be dumb enough to give out. These are the kind of loans George Bailey wouldn’t give out and if you tried to apply for one he’d tell you to take a hike. In other words everyone knew that if you ever wanted to ever make your money back (screw a profit, you knew you’d never see that) you would never give one of these loans out. Yes, the government forced banks to give these loans out.
The banks at first tried to give out of as few of these loans as possible. After all, why would you try and lose money if your goal is to make money in and profit over the loans.
Several law firms, some in conjunction with such morally upstanding groups as ACORN (you remember ACORN, the organization where every single employee seemed overly eager to help set up the sexual exploitation of underage illegal immigrants….so you know that they really cared about the welfare of people not able to get loans) then sued the banks when they didn’t issue enough loans. All with the support of the government. (Hey, one of the these was Miner, Barnhill & Galland who sued Citibank for not committing suicide fast enough, I mean not issuing enough loans.…three guesses as to which future president named Barrack was working at this real-life Wolfram & Hart at the time).
So the banks gave in. After all if you have the law firms, the government, the media, and every conceivable petty special interest group against you, would you fight in the courts for what you know to be right? The banks didn’t. They probably should have, but I’m not terribly surprised that human beings didn’t choose to fall on their swords. So they take the unethically, but not illogical, point that if we can’t make money in the long term, then I’m at least going to make money for me in the short term. Might not be ethical, but it’s entirely foreseeable given this set of laws and lawsuits.
And the government then made it worse. Because they had pseudo—private-corporations Fannie Mae and Freddie Mac buy and sell a massive amount of these terrible loans on the secondary market. This was like giving money to a drunken sailor. Any idiot should have seen the results would have been even worse (but Barney Frank and Chris Dodd, the geniuses who had oversight over Fannie and Freddie, aren’t just any idiots, no they’re a special class of idiot royalty that can look at 1+1= and realize that the answer isn’t even a number, rather something like “Fish” or “maybe that kid with absolutely no experience whatsoever at anything will be a good president”).
So before we go on let’s recap
The government legalized bad loans
They forced bad loans
They encouraged forcing even more bad loans
And they subsidized making bad loans
With me so far?
So the whole house of cards came falling down during the last years of Bush’s excuse for a presidency. What was that idiot’s answer to the fact that the banks now had billions of dollars of bad loans and losses on their hands, that even thought the banks were trying to make deals with everyone on their loans, most people were just walking away and leaving the banks with the financial lost (trust me if a bank can do anything about it they will not foreclose, they hate to foreclose, foreclosure means they will lose money, so they will do anything they can to make a deal with you so they don’t have to foreclose)? Why Bush’s answer was let’s bail them out. Enter the TARP bill. One of the worst bills I can think of ever being passed under a Republican president (although Prescription drug benefits does rival it in absolute idiocy).
So now, we the tax payers are loaning the banks money so they won’t go under for doing the things we forced them to do.
This would be a story of mere stupidity if it ended here. But this story then takes a turn from stupid and heads straight into surreal.
Why does it take a turn for the surreal? Because the Obama administration start pushing for banks to once again start making sub prime loans. Yeah, cause it only decimated the economy last time…there were a few parts we didn’t manage to destroy.
So to recap
Legalized, forced, encouraged, forced some more, subsidized, and then bailed out when the it came crashing down. Then forced it again.
And that brings us to today. Where we’re suing the banks for participating in the subprime loan market.
We’re suing them for doing what we forced them to do? We’re suing them for doing what we encouraged them to do? We’re suing them for doing what we bailed them out from?
If a cop puts a gun to your head, orders you to douse your house in gasoline, light a match and burn it to the ground, he doesn’t then get to arrest you for arson. Yet somehow we’re suing the banks for doing what Obama just a couple of months ago was forcing them to do.
Catch-22 makes more sense than this.
And why? Most of these banks are not exactly stable at the moment. I would argue that we should have not passed TARP, just let them fall, and let the economy recover as it always does…but you can’t say that the banks need to be bailed out and then sue them. If the situation was so bad they needed a bailout, then it’s equally bad to sue them and put them back into economic instability.
Does Obama want to destroy the banks? Does he think this is a money making scheme that will solve our debt problems? Is he insane? Any answer I come up with doesn’t make sense. Nothing makes sense about this. I could take a book written by James Joyce while on peyote, have it translated into Chinese and back into English, and that would make more sense than this! You have strange. You have insane. You have surreal. And then you have this which is whatever comes after surreal.
What the hell are they smoking in the White House? And will it be covered by the ObamaCare?
I can’t call this socialism, or fascism, or stupid or evil. I can’t even call this insane because I think most schizophrenics would take one look at this and ask “What the fuck are they thinking?” It makes no sense to demand banks do something in May and sue them for it in September.
I only have one more question.
After Obama strong arms a settlement out the banks who will be too gutless to actually fight him on this, will we pass another TARP bill to help them pay that settlement?
*Before you ask I did not mean Sean Penn in “I Am Sam” I meant Sean Penn. Although I do have to give Sean Penn accolades for playing a character with an IQ 20 points higher than his own so convincingly in “I Am Sam”.