Housing Crisis

An Opportunity to Talk About the Foreclosure Crisis

Alan Jenkins — Thu, 19 Jan 2012 19:14:54 -0500

As the Republican presidential candidates debate the moral legitimacy of venture capital strategies, and the Occupy movement continues to challenge evictions, we have an important opportunity to elevate the foreclosure crisis and what must be done to address it.

Fraudclosure: Will State AGs Step Up to Their Moment in History?

Mary Bottari — Wed, 02 Feb 2011 11:11:17 -0500

Rumor has it that the 50 state attorney general investigation into the Fraudclosure scandal is wrapping up. It's time for a backbone check. Will the state attorneys general just ask the big banks and service providers to turn over a chunk of change from seemingly bottomless pockets? (This strategy was pursued by the Security and Exchange Commission (SEC) with little impact). Or will Iowa Attorney General Tom Miller take the lead in wrestling a real settlement out of the banks so that families hammered by unemployment and underemployment can stay in their homes?

Widespread Criminality

Americans know that the big banks and the mortgage service providers got us into this hole by pursuing an array of financial crimes. The SEC settlements alone have revealed a plethora of illegal, predatory and deceptive lending related to mortgages, securities fraud, accounting fraud, insider trading, brokerage fraud, bribery of government officials, criminal conflict of interest, deception of shareholders and investors, and more.

Now the "robo-signing" scandal is pulling back the curtain on Act II of this white collar crime spree -- revealing a new array of financial crimes by the very same institutions: robo-signing, fake witnesses, fake notaries, fake documents, fake attorneys, not to mention plain old theft as servicers rob consumers of hundreds or thousands of dollars in misapplied fees. There are additional crimes related to the way that banks have failed to correctly transfer promissory notes through the system and efforts to mislead and defraud investors. The short story is that many homeowners were foreclosed upon based on falsified documents by a bank who was not the true holder of the mortgage note. This is a crisis not only for individual homeowners, but investors who bought flawed mortgage-backed securities and for the financial system as a whole.

Not a Single Prosecution of a Major Player

Perverse incentives on Wall Street allowed top executives to make more money on flawed loans than boring old 30-year mortgages. Even though there is widespread agreement that Wall Street's endless appetite for high-interest, high-fees loans to fuel the mortgage securitization machine had a causal role in supercharging the housing bubble, not one mortgage servicer provider or big bank CEO has been put in jail. This compares to over 1,000 successful prosecutions of top officers during the Savings and Loan crisis of the late 1980s.

While the SEC has been churning out fines resulting in a long list of "settlements", Wall Street firms are beginning to set aside money and treat these actions merely as the cost of doing business.

There is nothing more instructive than jail time, but the U.S. Department of Justice (DOJ) has been hoodwinked by America's biggest hoodlums, preferring to arrest a string of penny-ante Jersey mobsters than the Mafioso hiding in plain sight at Wall Street and Broadway. The DOJ delights in arresting people like Vinny Carwash" Frogiero, Frank "Meatball" Ballantoni, Anthino "Hootie" Russo. How about Jamie "Pretty Boy" Dimon, Lloyd "Godswork" Blankfein and Vikram "Slumdog" Pandit?

History is Calling

In the history of the financial crisis, state AGs have so far come out looking pretty good. State AGs were the first in the nation to recognize that the predatory lending practices of firms such as Ameriquest and Countrywide were a danger to consumers and to the entire U.S. economy. In 2004, they were radically preempted from taking action against these crimes by Bush-appointed federal regulators at the Office of the Comptroller of the Currency. Now state AGs have another moment to outshine negligent federal prosecutors.

State AGs can take a series of actions that the Feds have failed to take. First of all, they can book the crooks and force top officers to trade pinstripes for jail stripes. Secondly, they can force the banks into settlements with individual homeowners that really take a bite out of their profits, complete with foreclosure redos and damages for harmed homeowners. They can also subject the banks to ongoing independent audits of their foreclosure procedures and they can demand that the banks force principle write downs and other across-the-board measures that will stabilize communities and the economy.

February 3rd National Day of Action

National People's Action and other anti-foreclosure groups area calling for a national day of action tomorrow to urge the AGs to do the right thing. But why wait? You can go to BanskterUSA.org to email the lead investigator, Iowa AG Tom Miller, and urge him to do the right thing. You can also join thousands of people across the country by click here to find your AG's phone number so you can ask him or her directly for meaningful action on foreclosure.

If you are struggling with these issues, think about meeting up with your neighbors. "Mortgage Madness Meetups" are being facilitated by Huffington Post. The next worldwide meetup day is February 8th. Finally, if you are trapped in the snow today, check out Dylan Ratigan's excellent series on the housing crisis "No Way to Live" on MSNBC.

Banker-Run Third Way Opposes Foreclosure Moratorium On Banks

Zach Carter — Wed, 20 Oct 2010 12:28:16 -0400

The so-called “centrists” at Third Way Foundation have come out against a national foreclosure moratorium, but like many of Third Way’s policies, there’s nothing centrist about their opposition. Third Way is simply throwing American homeowners under the bus in the service of Wall Street profits. That sellout isn’t surprising when you examine the membership of Third Way’s Board of Trustees. Fully two-thirds of the think tank’s board work in finance, including some of the nation’s largest financial firms: JPMorgan Chase, Morgan Stanley, Fortress Investment Group and other Wall Street titans who stand to lose big bucks in the foreclosure fraud fallout.

Third Way Vice Chairman David Heller is the Global Head of Equity Trading for Goldman Sachs, and sits on the firm’s risk-committee. Goldman Sachs has placed enormous bets on the housing market, and other Third Way board members face similar sraits: William Daley works for JPMorgan Chase—a bank that has already suspended foreclosures in order to sort out its own problems. Derek Kirkland is global co-Head of Morgan Stanley’s Financial Institutions Group, and Michael Novogratz is President of Fortress Investment Group, one of the largest hedge funds in the world.

Daniel Loeb has a spot on the board. Yes, that Daniel Loeb, the whining Wall Street hedge fund manager who infamously complained that President Barack Obama wanted to violate American protections against "nonpunitive taxation, constitutionally guaranteed protections against persecution of the minority and an inexorable right of self-determination"-- because Obama favored raising the capital gains tax. All of these people, and dozens of others on the Third Way board, stand to lose or gain enormous amounts of money from the foreclosure fraud outbreak and the federal response.

Even the author of the memo, Jason Gold, used to work for bailed-out banks First Horizon, Bank of America and Merrill Lynch. All of this information is available on Third Way’s website, but not one word of the think tank’s memo on a foreclosure moratorium mentions any possible conflict of interest, nor are any actual conflicts of interest detailed.

Independent think tanks shouldn’t be promoting policies that their board members stand to financially benefit from without explaining their financial interests. If Jason Gold and Third Way want to oppose a foreclosure moratorium, fine—but they should demonstrate exactly what they have to gain from such a policy in their memo.

Third Way and other centrist groups like to claim they’re staking out political middle ground, when in fact they’re just advocating policies that funnel money to entrenched corporate interests. Wall Street is very good at this game, as evidenced by the fact that 20 of the 30 members of Third Way’s board work for Wall Street. These aren’t policies that create jobs or improve the economy—they’re just giveaways for special interests. As one Democratic policymaker who requested anonymity told me, "Third Way's policy model is an utter catastrophe. They are basically Weimar Democrats."

Aside from the glaring conflicts-of-interest, Third Way’s argument against a foreclosure moratorium is totally incoherent. None of the points made stand up to even cursory levels of economic scrutiny—it’s the sort of thing you’d expect to see from the Mortgage Bankers Association, not an independent think tank. Third Way claim that a moratorium will scare buyers away from the market and put downward pressure on home prices. It’s a nice talking point, but any sane buyer should already be spooked by the facts that have emerged on bank documentation policies. The moratorium isn’t going to reduce confidence—years of banker abuse already has. Banks skimped on their paperwork to cut costs, and are now resorting to systematic fraud to cover-up very big problems. They’ve charged borrowers illegal fees, foreclosed on the wrong homes, and sold the same mortgage to different investment banks to be packaged into different securities. That kind of behavior scares borrowers. Repairing the damage isn’t nearly as frightening.

Third Way also claims that a moratorium would hurt community banks and credit unions. Hard to see how that’s the case if the moratorium only “forestalls” foreclosures, rather than preventing them, as Third Way claims, but if this is really a huge problem, just exempt credit unions and banks with less than $1 billion in assets from the moratorium. Illusory problem solved.

Third Way also argues that a moratorium is unfair to taxpayers—but taxpayers are likely to be the single largest party defrauded in the documentation scam. Taxpayers own trillions of dollars in mortgage-backed securities through the Federal Reserve, Fannie Mae and Freddie Mac. A moratorium can help us indentify problems and make claims against banks who have acted inappropriately.

This reasoning is not simply divorced from economic reality—it’s internally inconsistent. Third Way says that a foreclosure moratorium would only “forestall” foreclosures, not prevent them—and then turns around and insists that a moratorium would encourage people not to pay their mortgages. If it’s not a permanent solution, no sane borrower is going to stop paying.

Unless it already makes sense for borrowers to stop paying their mortgages. Third Way board member Derek Kirkland is a bigwig at Morgan Stanley. Last year, Morgan Stanley realized that a handful of properties it had purchased in San Francisco were not worth what Morgan Stanley owed on the mortgages. So Morgan Stanley made a rational decision: instead of wasting its money on payments for a devalued property, it walked away from the mortgages. This is called a “strategic default,” and Third Way explicitly comes out against it in their memo. But iff the board members of Third Way are okay with strategic defaults, what right do they have to hold American homeowners to a different standard?

Helping homeowners isn’t part of some radical leftist agenda—it’s a basic prerequisite for economic recovery. When homeowners are burdened with unnecessary, predatory, and even fraudulent debt, they don’t have money to spend on productive economic activities that create jobs. Punishing borrowers for fraud committed by bankers simply doesn’t make sense. A foreclosure moratorium won’t solve all of our problems, but it can help us sort them out so that homeowners who deserve help can be identified, along with bankers who have committed fraud.

Calls to Third Way were not immediately returned.

The Subprime Swindle And The Foreclosure Fraud Cover-Up

Zach Carter — Tue, 12 Oct 2010 17:00:39 -0400

There are plenty of reasons why the foreclosure fraud crisis sweeping the nation's housing market is an economic disaster. Banks are charging borrowers illegal fees, kicking the wrong people out of their homes and even hiring thugs to illegally break into houses. But the fundamental scam is much worse than these shameful acts. Fraud in the foreclosure process conceals a second, more massive fraud: the astonishing levels of mortgage fraud perpetrated by subprime lenders during the housing bubble. These frauds don't just expose big banks to epic losses, they expose bigwig bankers to prison time.

Clearly, we're dealing with a lot of different frauds here. Tomorrow, I'll detail one of the smaller-bore problems with foreclosure fraud: providing cover for illegal fees that lenders charge to troubled borrowers. But today I'll discuss a much different and much bigger scandal. During the housing bubble, banks falsified documents on a massive scale in order to issue as many toxic subprime loans as possible. This was straightforward mortgage fraud, and the current wave of fraud in the foreclosure process is covering it up.

In 2004, the FBI sounded the alarm about an "epidemic" in mortgage fraud. This was right at the beginning of the real subprime explosion—things got much worse as the housing bubble inflated. What's more, according to the FBI, 80 percent of mortgage fraud is committed by lenders.

Bankers and mortgage brokers didn't just make reckless loans to borrowers who couldn't afford them. They also illegally falsified documentation in order to push borrowers into loans they could not afford. This was not a con perpetrated by irrational poor people attempting to live beyond their means—it was committed by perfectly rational lenders, who knew they could make a handsome profit by selling these garbage mortgages off to investors.

We know about how these frauds were incentivized at specific lenders thanks to anecdotes collected banks that actually went under during the crisis. When Washington Mutual collapsed in September 2008, it was one of the largest banks on the West Coast, with $350 billion in assets. It wasn't a small-time specialty shop operating off the grid—it was a regulated bank, overseen by the Office of Thrift Supervision, subject to standard consumer protection regulations and federal anti-fraud statutes. Yet the bank engaged in systematic, knowing fraud which its executives allowed to continue unpunished. As Sen. Carl Levin, D-Mich., emphasized in a hearing this April, the company even rewarded some of its employees who committed fraud by promoting them.

Why all the dodgy dealing? Bigger bonuses. During the housing bubble, Washington Mutual CEO Kerry Killinger took home between $11 million and $20 million every year.

This type of mortgage fraud is not the scam that consumer advocates are currently sounding the alarm about. That's a much different fraud. When banks go to foreclose on borrowers, they do not have the documentation necessary to prove they actually own the mortgage. Banks can't document their right to foreclose, so they're fabricating documents, forging signatures and lying to judges to push them through. So how are the two frauds related?

Fraudulent mortgages are, by definition, illegal. Banks that issue them can be sued, and the bankers involved can be tried in court and sent to prison. Bankers very much want to avoid both of these scenarios.

But it's also illegal to package fraudulent loans into securities and sell them to investors—especially if you don't tell investors that the security is full of fraudulent loans. It's securities fraud, and bankers also don't want to lose huge amounts of money on that line of business.

If you're a bank that packages mortgages into securities and sells them to investors, and you know your securities are full of fraudulent loans, you might not want to transfer all the necessary documents detailing the loans. Those documents, after all, would reveal that your securities were completely illegal—and that you are responsible for any losses stemming from them.

For intermediaries like securitizers, fraudulent loans are the best kind of loans—they're literally too good to be true. So long as nobody ever pins the legal liability on you, you can make a lot more money from fraudulent loans than you can make on loans that actually make financial sense. Fraud-packed securities fetched much higher prices than mortgage securities packed full of boring, legal mortgages, and led to much bigger bonuses.

In today's foreclosure fraud scandal, mortgage servicers—the housing industry's debt collectors—don't have the legal documents necessary to move on a foreclosure. They don't have the documents because the banks who created the securities never handed them over. And without those documents, it's far more difficult to prove that the securities and the underlying mortgages are illegal.

So this isn't about "paperwork" or technicalities. This is about preventing the basic fraud at the heart of the financial crisis and the Great Recession from being prosecuted.

That, ultimately, is the big danger for Wall Street, and for the policymakers who have provided economic cover for megabanks. Wall Street banks aren't worried that their mortgage servicing costs may increase while the "track down" paperwork—they're worried that the entire $2.6 trillion mortgage-backed security market is about to land on their doorstep, with punitive damages and prison sentences tacked on.

Apologists for CEOs spent much of the summer complaining about the "uncertainty" that new regulations and tax policies supposedly create for businesses and investors. If potential taxes were an economic problem, just wait to see how financial markets respond to a fresh $2.6 trillion hole in the banking system created by fraud.

Worst of all, U.S. taxpayers own a huge portion of these securities. Fannie Mae and Freddie Mac have enormous portfolios of subprime-mortgage backed securities, and the Federal Reserve purchased large volumes of mortgage securities in order to sustain the housing market as it collapsed. The government has no choice but to deal with this mess, if only to cut its own losses. Whatever the policy the government pursues, Rick Santelli and his friends will be sure to complain about a bailout for "losers," but something has to be done. It's not a question of bleeding hearts, it's a question of basic justice for homeowners, investors and taxpayers.

Axelrod Is Wrong: Obama Must Protect American Families From Wall Street Fraud

Zach Carter — Mon, 11 Oct 2010 13:32:56 -0400

If senior White House adviser David Axelrod’s comments this weekend are any indication, the Obama administration is woefully misreading the foreclosure fraud crisis currently gripping the U.S. economy. Axelrod refused to commit the administration to a national moratorium on foreclosures, and mischaracterized a massive, systematic fraud perpetrated by Wall Street banks as a set of unfortunate “mistakes.” This is not a minor scandal and it will not simply go away. President Barack Obama needs to stand up for the middle class and protect our economy from Wall Street theft. If he doesn’t, the economic and political price will be devastating.

The full transcript of Axelrod’s appearance on CBS’ Face the Nation with Bob Shieffer is here, but here are his key comments, emphasis mine:

“It’s bad for the housing market and it’s bad for these institutions which is why they’re scrambling now to-- to go back through and-- and-- and through their documentation for all of this as they should. The President was concerned enough to veto a bill that came to him last Thursday, that would have unintentionally made it perhaps easier to make mistakes. . . . I’m not sure about a national moratorium because there are, in fact, valid foreclosures that-- that-- that probably should go forward. And where the documentation and paperwork is-- is proper, but we are working closely with these institutions to make sure that they expedite the process of going back and reconstructing these and throwing out those that don’t work . . . . Our hope is that this moves rapidly and that this gets unwound very, very quickly.”

Let’s straighten some facts out first. Lenders aren’t just making “mistakes”—they’re fabricating documents, forging signatures and lying to judges in order to illegally throw people out of their homes and slap them with thousands of dollars in illegal fees. Consumer advocates were not worried that the bill Obama vetoed on Friday would make it easier for lenders to make “mistakes”—they were worried it would make it harder to expose rampant, systematic fraud committed by Wall Street banks against American families.

Nor is this a problem that can be resolved quickly. Banks are resorting to fraud for a reason—they don’t have the documents that prove they have the right to foreclose. It’s not like JPMorgan Chase or GMAC need to dig through a filing cabinet to find the right form—the form doesn’t exist. Banks willfully, knowingly destroyed key documentation in order to cut costs and boost bonuses. Other banks that bundled these mortgages into complex securities didn’t ask for this documentation for the same reasons.

This creates legal liabilities for the banks that can push them into failure. A lot of these securities were packed with fraudulent mortgages—loans where banks falsified borrower information in order to push them into predatory loans. Investors who bought these mortgages have been trying to force banks to repurchase the fraudulent loans. But now that banks cannot even document which loans they own, the entire fraudulent mortgage securitization framework may land on the banks’ doorstep. If that happens, we’re going to see some very big banks go under.

What does all this mean for borrowers? We’ve already seen plenty of cases in which banks are foreclosing on the wrong homes—kicking out borrowers who haven’t missed any payments, or borrowers who are working with the bank on receiving a loan modification to keep them in their homes. But even for borrowers who have stopped paying their mortgages, the fraud process creates serious dangers. Banks charge all kinds of fees on borrowers when they foreclose—fees that often amount to thousands of dollars. The current wave of fraud is enabling an onslaught of grotesque, illegal fees. When you create new documents and forge signatures, you can claim people agreed to ridiculous things they never agreed to, tell ridiculous lies about the house being foreclosed on, and generate thousands of dollars in improper fees.

In other words, banks and their lawyers are breaking the law to steal from borrowers facing financial hardship. This impropriety may create losses so big that megabanks are going to fail. Smart political leaders need to get out there right now and prove that they are backing American families, not Wall Street elites. A foreclosure moratorium is the first step, the second is a major new initiative to reduce mortgage debt to a level that borrowers can afford—that prevents foreclosures and keeps this mess from spiraling into a financial calamity. The mortgage market needs to reflect economic reality, not inflated banker dreams.

Other leaders have figured this out. If Obama refuses to stand up for the middle class, he’ll be hanging many embattled Democratic members of Congress out to dry, politically undercutting them on an issue of household financial security in the middle of a brutal recession. Swing-state Democrats like Senate Majority Leader Harry Reid, D-Nevada, Rep. Debbie Wasserman-Schultz, D-Fla., and Rep. Alan Grayson, D-Fla., Rep. John Conyers, D-Mich., and Carolyn Kirkpatrick, D-Mich., have already endorsed foreclosure moratoriums. Attorneys general in Connecticut, Massachusetts, Illinois, California, Iowa, Texas, and Ohio have either imposed state-wide moratoriums or investigations into foreclosure fraud, and Ohio is already suing GMAC. Why does the president want to kneecap members of his own party?

What’s more, Axelrod’s comments put the White House on the same side as Republican Whip Eric Cantor, R-Va., a Wall Street crony who voted to bailout the big banks with no strings attached, but refused to support Wall Street reform. For his services, Wall Street rewarded Cantor with $2.1 million in campaign contributions for the 2010 elections. Here’s what Cantor said on Fox News Sunday:

“If you impose a moratorium on foreclosures, what you're telling people and institutions that lend money is they do not have the protection to take the risk they need to, to extend credit so people can get a mortgage . . . . You're going to shut down the housing industry if that's the case . . . . People have to take responsibility for themselves.”

Cantor’s reasoning is, of course, complete nonsense. People do need to take responsibility for themselves, which is why the government has a responsibility to stop banks from systematically defrauding borrowers on an epic scale. But note Cantor’s positioning on the issue. He claims that if the government does anything to help troubled borrowers, that assistance will cause a financial catastrophe. It's a phony story that completely ignores the financial catastrophe already brewing, one created by massive Wall Street fraud, not the government's big, bleeding heart. Cantor is peddling a monstrous lie, but if Obama doesn’t push-back against it, he will politically hamstring any opportunity to fend off the economic fallout from this mess, and leave troubled borrowers at the mercy of Wall Street predators.

Will Wall Street's Foreclosure Fraud Save Troubled Borrowers?

Zach Carter — Mon, 27 Sep 2010 13:42:48 -0400

I'll have plenty to say about the escalating foreclosure fraud scandal later this week. For now: This is a big, big deal. It isn't a clerical error, it's an aggressive attempt to slap borrowers with thousands of dollars in illegal fees for the luxury of being foreclosed on. And what's more, this absurd, shady business was priced into the entire mortgage securitization scheme from the get-go. Banks have been fudging their documentation for years in order to cut costs and score higher profits from securitization—the business model has relied on this corner-cutting since day one of the housing boom.

The good news is that borrowers can use this epic fraud to defend themselves. If a bank can't prove that it has the right to foreclose on a borrower by showing the proper documentation to a judge, then it doesn't have the right to foreclose. This is a tremendous opportunity for neighborhood advocates. Make them pony up the docs, it might just save your home. The problem isn't restricted to GMAC—foreclosure counselors and attorneys talk about the issue of forged or destroyed documentation all the time, and we already know that JPMorgan Chase and Countrywide (now Bank of America) have major documentation problems. Including GMAC, that's three of the biggest players in every aspect of the mortgage market.

If courts actually follow the law here, we get the best of both worlds—big losses for Wall Street on their predatory loans, and borrowers who get to stay in their homes (mortgage-free, at that). The only question is whether these mortgage losses prove so severe that Wall Street banks come back begging to the government for another bailout. If so, it's an opportunity to do what should have been done in 2008—break up these financial monsters into smaller creatures that don't require bailouts when they fail.

Yves Smith quotes a mortgage banker who assumes that Congress will simply legislate this problem away for Wall Street. Don't count on it. Nobody-- not even the most subservient Wall Street sycophant in the Republican Party—is eager to bailout Wall Street again, particularly to spare megabanks the costs of explicit, documented fraud.

The trick, of course, is making sure that the courts actually follow the law.

One in Four US Home Mortgages Under Water

Robert Borosage — Wed, 24 Feb 2010 12:48:22 -0500

Nearly one in four homes with mortgages are under water as of 4th quarter of 2009. In Nevada, a staggering 70% of all mortgaged properties are under water. No wonder Harry Reid is in trouble. They've got to blame someone.

How Mortgage Lending Became An 'American Casino'

Isaiah J. Poole — Tue, 28 Jul 2009 11:09:54 -0400

The roots of the mortgage crisis, and its devastating effects on communities, are explored by Andrew Cockburn, who co-produced with his wife, Leslie, the documentary "American Casino." The documentary details the fraudulent and unethical practices committed by the nation's top financial institutions that have led to record numbers of foreclosures, especially in people of color communities.

Cockburn in this interview says it is critical for Congress to pass a consumer financial protection bill to prevent the practices that led to the current crisis.

"American Casino" will debut in Chicago August 14. Americans for Financial Reform, a coalition that includes the Campaign for America's Future, plans to use the documentary as a teaching and mobilization tool to promote changes in the mortgage lending industry.

The U.S. Chamber of Commerce: Threat To Capitalism

Eric Lotke — Thu, 11 Jun 2009 10:42:23 -0400

The U.S. Chamber of Commerce launched yesterday “a sweeping national advocacy campaign … to defend and advance America’s free enterprise values in the face of rapid government growth and attacks by anti-business activists.”

The Chamber of Commerce doesn’t get it. They aren’t defending capitalism and free enterprise. They are all but destroying it.

Free-market fundamentalists don’t understand that capitalism is a system. It has rules, boundaries and obligations. When those rules are broken, the system falters.

• It’s not football without lines to mark touchdowns and out of bounds.
• It’s not basketball without a referee to call the fouls.

This is more than just a sports metaphor. Capitalism won’t work unless a negotiated price and promise to pay $100 is followed by payment of $100. And someone needs to enforce those rules. Otherwise it's not capitalism. It’s robbery.

These rules operate at every level.

• My AAA bond valued at $100 million actually needs to be worth $100 million, and it needs AAA assurance of quality — not conflicts of interest where companies issuing securities pay the agencies for their ratings.

• My “mortgage-backed security” needs to be backed by an actual buyer with an actual stake in real property — not bankers whose interest is in transaction fees from bundling, re-bundling and sales.

• My tomato should be free of salmonella, my toys should not have illegal levels of lead-based paint, and my pet food should not be infused with toxic melamine.

If nobody enforces those rules, the system starts to break down. That’s what’s happening now.

A generation ago, free-market ideologues decided that markets could police themselves and regulate themselves. They said history had finally invented something that was truly-self correcting. So they took the police off the beat and slandered as socialism every effort to enforce rules or enforce the reliability of promises.

Look at the result. Now we need to save capitalism from itself.

“We’re launching this campaign,” declared Thomas Donahue, President and CEO of the U.S. Chamber of Commerce, “because those who make or influence economic policy must understand that a productive, competitive private sector is not something they can take for granted.”

That’s precisely the point. A productive, efficient private sector is not something we can “take for granted.” It is something we need to fight for.

We need to fight against anti-competitive monopolies, fight against regulatory agencies captured by the industry they are supposed to regulate, and fight against industry groups that break the rules in the name of freedom.

Freedom isn’t free. The crisis interventions of recent months were needed to save capitalism from itself. The Chamber of Commerce got exactly what it wanted these last few years. We need to stop them before they kill again.

Bankruptcy Law Key To Obama's Foreclosure Fight

OurFuture.org Staff — Fri, 20 Feb 2009 10:35:38 -0500