Great Mortgage Scandal Cover Up

There are now two layers to the sub-prime mortgage scandal that brought down our economy; those who committed the act and those who are covering it up. Why are the culprits not being required to pay compensation to those whose net worth was drastically reduced as a result of the reckless profiteering by Wall Street and large commercial banks?

It is disturbing there was no significant investigation and criminal or civil action against individuals and organizations that contributed to the housing crisis and thus our economic collapse. The fines assessed against some entities are looked at as “a cost of doing business”. Some of the individuals who have been looking the other way held, and presently hold, senior positions in our government. Is there a conspiracy to cover up any wrong doing on the part major banks, wall street firms and their employees? The individuals needing to supply answers include:

Barack Obama
Henry Paulson
Timothy Geithner
Congress
Mitt Romney

Barack Obama: President Obama was not in office as the crisis occurred; however, why has he not aggressively pursued obtaining retribution from the culprits that contributed to this economic crisis? He bailed out Wall Street and big banks while very little was done for main street. Was it because of the significant campaign contributions he received for his 2008 run for president? Below is a chart showing contributions Obama received for his 2008 campaign of almost $3.5 million from Wall Street while only $658 thousand was received in 2012.


In 2008 could it be that Wall Street was hoping to buy his cooperation so he would not aggressively pursue criminal action against them? While during the 2012 election maybe they did not want him to remain in office without worrying about raising funds for his next election.

Certified Public Accountants stress the need to not only avoid a conflict of interest with clients whose books they are auditing; they also try to avoid “the appearance of conflict”. At the very least, the appearance of conflict has not been avoided by President Obama.
There was some legitimacy to not pursuing Wall Street and the banks in 2008 and 2009 in that it would have caused the crisis to worsen. We are past any further eminent danger to the economy. What is the President waiting for? Perhaps he fears that the appearance will be that his hands are also stained. The longer he waits, the more permanent the stain.

Henry Paulson: As the housing crisis was coming to a head, Henry Paulson was the United States Secretary of Treasury and was a leading decision maker as to how to minimize the collapse of our economy as result of the crisis that was brought about by the creation of financial securities backed by sub prime mortgage loans created by wall street. These securities were given a AAA investment grade rating by the rating agencies. These rating agencies received fees from the wall street firms issuing the securities and one has to wonder about this conflict also. If they refused to give the requested rating, perhaps they would never have received the business.

Prior to becoming our Treasury Secretary in July 2006 Mr. Paulson was the CEO of Goldman Sachs, one of the largest issuers of these toxic mortgage securities.

Per Wikipedia, “During the 2007 subprime mortgage crisis, Goldman was able to profit from the collapse in subprime mortgage bonds in the summer of 2007 by short-selling subprime mortgage-backed securities…. The pair, members of Goldman’s structured products group in New York, made a profit of $4 billion by “betting” on a collapse in the sub-prime market, and shorting mortgage-related securities…. The firm initially avoided large subprime write downs, and achieved a net profit due to significant losses on non-prime securitized loans being offset by gains on short mortgage positions. Its sizable profits made during the initial subprime mortgage crisis led the New York Times to proclaim that Goldman Sachs is without peer in the world of finance.”

Our government spent hundreds of billions of dollars bailing out Goldman, other firms on Wall Street and large commercial banks. How could Mr. Paulson be objective when the firm he headed prior to joining the Administration financially benefited from the creation and distribution of these securities? As a result he also benefited financially.

Timothy Geithner: In January 2009 Timothy Geithner became the 75th Treasury Secretary of the United States. Previously he was the president of the New York Fed, which he held since 2003. The question remains whether he became “too close” with the big banks and Wall Street firms during his tenure at the New York Fed. Is he too close to the powers in Wall Street to invoke justice? Most importantly was he too close of an ally to pursue the truth about Henry Paulson’s involvement with mortgage back securities while at Goldman?

Congress: Where has congress been during this time when serious investigations should have been occurring. For the Past four years the Republican Congress has been attacking anything that started with the letter D. If someone from the Detroit Tigers showed up in Washington they would have been accused of being socialists by the Republicans. Why have they done very little to investigate this conflict of interest and not seeking retribution from the culprits. Is it that the Super PACS and other large contributors control this body of government?

Mitt Romney: Why was Wall Street and the banks contributing to Romney instead of Obama in 2012? As conjectured above, perhaps one reason was that they wanted a President who would be hungry for their contributions in 2016. 

Another reason could be related to Romney’s refusal to show the details of his 2009 and 2008 tax returns. . He did a lot of business with Goldman Sachs when he was running Bain Capital. It would have been natural for Goldman to recommend to Romney that he invest in these high yield, highly rated mortgage backed securities issued by Goldman. It would also be natural, although, illegal, for Goldman to inform Romney early that these investments were about to be downgraded and he should get out of them. If this were true, the transactions would have showed on Romney’s tax returns and it would have been scandalous.

Therefore, if Romney became President, the chances of Goldman ever being prosecuted would be greatly reduced.

We the people deserve answers and retribution. It is important that their be full disclosure as to why the instigators of the sub prime loan debacle have not been required to make retribution.

What Debates Failed To Debate

It is interesting that the debate and the rest of the campaign talked very little of the following issues.

1. Are many banks too big to fail and should we consider breaking them up?
2. Is the Supreme Court decision in Citizens United OK, or should it be repealed?
3. Should anti-trust legislation be implemented to break up monopolies and oligopolies?
4. Do free markets need an umpire as ascribed by Milton Friedman: “But we cannot rely on custom or conscious alone to interpret and enforce the rules; we need an umpire. These then are the basic role of government in a free society; to provide a means where we can modify rules, to mediate differences among us on the meaning of rules, and to enforce compliance with the rules on the part of those few who otherwise would not play the game.”
5. Should the health care law be amended to bust up the oligopolies in the insurance industry?
6. What is more important to our long term survival; education or military?
7. Should there be no tax increases on the super wealthy?
8. Do you believe Goldman Sachs should not be prosecuted for their involvement in the mortgage sub-prime fiasco?
9. How should we fix income disparity.

It is like the media agreed not to address these issues. In fairness to the print media they did discuss some of these items; however, the debates were almost void of these items.

Ghost In Romney Tax returns

It is puzzling why Romney refused to release his tax returns beyond 2010 and 2011. One would think the grief he put up with by not releasing an additional three years of returns is greater than anything showing up on the returns. I had an epiphany where the above rationale would not be accurate.

Romney had a close relationship with Goldman Sachs while heading up Bain. Goldman was involved in the subprime housing boom and bust over the last decade bringing down the economy. They profited by creating subprime loans, bribing credit rating agencies such as S&P and Moody’s to give an investment grade rating on the securities, securitizing the loans and selling them at huge profits. Then, when the economy collapsed Goldman was bailed out by the government while the consumer got nothing.

Per Opensecrets.org Goldman employees contributed more than $990,000 to Romney’s bid for the presidency. Since Romney was a big client of Goldman it would be natural to recommend Romney buy these high yielding, highly rated investments. When the subprime business was collapsing it would also be natural for Goldman to tip off Romney that he should be unloading these securities. This would have occurred in 2008 and 2009 and show up on his tax returns.

I have no idea whether this is true because I have not seen Romney’s tax returns. However, if it is true this would be a valid reason for Romney being so adamant about not releasing earlier tax returns. His hands would be dirtied by the housing crisis and he could be accused, along with Goldman, of insider trading.

Romney Lies About Chrysler

This is why Romney does not deserve to be President. How can you trust him? How will other countries be able to trust him? How can other Republicans trust him. I voted for a Republican for President in every election , except one, since 1968. Romney is not Reagan. Per the New York Times on October 29, 2012

“Mr. Romney incorrectly told a rally in Defiance, Ohio, late last week outright that Jeep was considering moving its production to China. (Jeep is discussing increasing production in China for sales within China; it is not moving jobs out of Ohio or the United States, or building cars in China for export to the United States.)

It is a high-risk strategy: Jeep’s corporate parent, Chrysler, had already released a scathing statement calling suggestions that Jeep was moving American jobs to China “fantasies” and “extravagant”; news media outlets here and nationally have called the Romney campaign’s statements — initially based on a poorly worded quotation from Chrysler in a news article that was misinterpreted by blogs — misleading.”

How can Mitt Romney, who is religious and a devout family man, justify saying things that are in conflict with other statements made in his recent past?

I had a business client that Mitt Romney gives me cause to remember. He was a real estate investor and a shrewd negotiator who would look for an opportunity to renege on an agreement, whether verbal or in writing, in order to pay a little less or make a little more on a transaction. I saw him do this on a number of transactions and in fact he tried to do it with me by attempting to have me accept a lower fee than what was agreed too. I did get paid as agreed, but it was a struggle.

At the same time he was very religious and a devout family man. Every time we drove up to a property near Flint, Michigan, to make an inspection, we would go past a large picture of Jesus and he would start praying and kissing the crucifix on the rosary that he had… More