http://www.huffingtonpost.com/janet-tavakoli/how-to-thwart-the-assa...

"Every day, Americans, faced with layoffs and tough economic times, are forced to use their credit cards to pay for essentials such as food, housing, and medical care -- the costs of which continue to
escalate. But, as their debt rises, they find it harder to keep up with
their payments. When they don't, banks, trying to offset losses in
other areas, turn around, hike interest rates, and impose all manner of
fees and penalties..."
Third World America, (P. 77)

Our mediocre grammar school and high school educational system continues its downward slide. The Great Recession is squeezing school
budgets. We are failing our children, our most important resource of
all.

In 2009, the American Society of Civil Engineers gave the nation's infrastructure a near failing D rating:

"Flip on a light switch, and you are tapping into a seriously overtaxed electrical grid. Go to the sink, and your tap water may be coming to you through pipes built during the Civil War. Take a
drive, and pass over pothole-filled roads and cross-if-you-dare bridges.
The evidence of decay is all around us." (P. 95)

The over-hyped American Recovery and Reinvestment Act of 2009 earmarked only $72 billion of the $787 billion appropriation of taxpayer dollars
to projects to improve the country's infrastructure.

Meanwhile, multi-national corporations avoid taxes, sheltering $700
billion in foreign earnings to end up with a measly $16 billion (2.3%)
tax bill. GM is among those companies, yet it took almost a half
billion dollars in bailout loans. Boeing and KBR Halliburton are among
the defense contractors that avoid taxes, while enjoying government
contracts worth tens of billions.

Banks (not Fannie and Freddie) Crippled the Housing Market

Fannie and Freddie do not make loans. They purchase mortgage loans and
earn fees for guaranteeing payments on the loans. According to the
Mortgage Bankers Association, in 2006, Fannie and Freddie accounted for
33% of total mortgage backed securities issuance. In the first half of
2010, they accounted for around 64% of new issuance. They were forced
to pick up the slack and buy more when Wall Street's private label
securitization Ponzi scheme blew up.

Fannie and Freddie are Wall Street's dumping ground. They would have
had problems on their own, but their problems would not have been close
to their current scale, and they did not create the housing bubble.

Congress twisted arms to make Fannie and Freddie buy more than $300
billion of phony "AAA" rated mortgage-backed securities from banks, not
counting loans that didn't meet their stated requirements. Today Fannie
and Freddie want banks to repurchase tens of billions of these loans,
since they fail to meet representations and warranties, and the banks
are fighting this obligation.

Top subprime lenders included Wells Fargo; Countrywide, purchased by
Bank of America); Washington Mutual, now part of JPMorgan Chase;
CitiMortgage, part of Citigroup; First Franklin (now closed), purchased
by Merrill Lynch, which was purchased by Bank of America; ChaseHome
Finance, JPMorgan Chase; Ownit, partly owned by Merrill Lynch, which was
later purchased by Bank of America; and EMC, part of Bear Stearns,
which was purchased by JPMorgan Chase. Most of the rest depended on
massive loans from Wall Street. Many of these lenders were sued by
states for fraud and paid billions in settlements.

According to Inside Mortgage Finance, the top mortgage backed securities
underwriters during 2005-2006, only two of the subprime abuse years,
included now defunct Lehman Brothers ($106 billion); RBS Greenwich
Capital ($99 billion); Countrywide Securities, which is now part of Bank
of America ($74 billion), Morgan Stanley ($74 billion), Credit Suisse
First Boston ($73 billion); Merrill Lynch ($67 billion), Bear Stearns,
which is now part of JPMorgan Chase ($61 billion), and Goldman Sachs
($53 billion).

The above doesn't even include the credit derivatives, collateralized
debt obligations (CDOs), and structured investment vehicles (SIVs) that
amplified losses. Yet, Arianna notes how America imploded while bankers
soared:

"Someone like [Robert] Rubin is able to wreak destruction, collect an ungodly profit, then go along his merry way, pontificating about how 'markets have an inherent and inevitable tendency -- probably
rooted in human nature -- to go to excess, both on the upside and the
downside.' This from the man who, as Bill Clinton's Treasury secretary,
was vociferous in opposing the regulation of derivatives -- a key
factor in the current economic crisis -- and who lobbied the Treasury
during the Bush years to prevent the downgrading of the credit rating of
Enron -- a debtor of Citigroup." (P. 150)

Robert Rubin operated an economic wrecking-ball from prestigious positions of influence including: former co-chairman of Goldman Sachs,
director of the National Economic Council, former Treasury Secretary
under President Bill Clinton, board member and senior "risk wizard"
counselor at Citigroup, member of the President's Advisory Committee for
Trade Negotiations, and member of the SEC's Oversight and Financial
Services Advisory Committee, unofficial econmic adviser to President
Obama, and co-chairman of the Council on Foreign Relations.

Rubin is just one example of the many bankers, who helped destroy the economy while creating a connected financial oligarchy.

Hide Billions of Losses, Take Bailouts, Collect Billions, Skip Jail

Instead of apologizing for screwing up, the banks demanded the Great
Bailout. At the start of the meltdown, the IMF and the U.S.
administration estimated losses of $2 to $2.5 trillion. Unemployment
and the losses are now shockingly worse. What was merely a recession
escalated into the Great Recession.

How big are the actual losses? No one knows.

After destroying the value of major banks, culprits used their enormous
political influence -- funded with taxpayer dollars -- to get Congress
to force the accounting board to change accounting rules (as of April
2009) so banks don't have to recognize losses until they sell the
assets.

According to William K. Black,
after the much tinier S&L crisis, there were over 1,000 successful
felony prosecutions, several thousand successful enforcement actions,
and roughly 1,000 successful civil actions.

This time Congress gave us the Great Cover-up. Bank officers dodged
jail time and collected billions in bonuses. As one of my South American
friends observes, he's witnessed this third-world corruption before,
and this time it's in English.

Banks Stall the Recovery and Prolong the Great Recession

Unemployment marched upward, delinquencies soared, and banks stalled
foreclosures. The longer banks delay foreclosures and sales, the longer
they can avoid acknowledging losses. Phony accounting and zero cost
funding from taxpayers created an illusion of recovery.

Stalling helps banks while they pressure Congress to bail out failed
mortgages with taxpayer dollars. Instead of working out mortgages with
homeowners, they can wait for a government program to buyout or
subsidize their failing loans. The markets aren't recovering, because
banks own colossal chunks of mystery-meat assets.

It's a black hole of debt. If banks were forced to price these assets
at market values and sell them, the market would clear, and the market
would make a faster recovery. When Japan did this, it stalled its
economy for twenty years, and it still hasn't recovered.

Voters Must Demand the Solution

Voters must demand that Congress uncovers and publicizes facts and
prosecutes the financial system's massive multi-year frauds. This will
mean thousands of felony prosecutions, enforcement actions, and civil
actions.

Congress completely failed in genuine regulation and enforcement. It
must start over on financial reform, regulate derivatives, commodities
trading, update Glass-Steagall, and more. It will have to break-up the
Too Big to Fail financial institutions.

CEOs of our Systemically Dangerous Institutions (SDI's) fail to manage
them, because no one is capable of doing it. Like a morbidly obese junk
food addict, banks won't even get on a scale. Our banks refuse to
properly measure (account for) the problem.

Third World America elegantly summarizes the way forward.
Arianna Huffington names the culprits and gives a roadmap for solutions.
The rest is up to us. We deserve better than a third world economy
divided by ultra-rich on one side and debt-ridden middle class and dirt
poor citizens on the other. Citizens must demand a clean-up of
corruption and a foundation for healthy growth.