When the Criminals Wear Three-Piece Suits

Great news, Readers—only one in four houses in the United States is underwater!

That’s only 13 million mortgages. However, if you count the number of people who have not paid off 20% of the mortgage, the figure goes to 43.6% or 22 million homeowners. (If you don’t have sufficient equity, you can’t sell the house, so you’re essentially stuck with it….)

Look, as a group, bankers have never been easy to love. And when people make stupid decisions about money, the first group they point the finger at are bankers, who tend to make good decisions about money.

And it’s also the case the banker of years past was a different breed. He lived in the community, he knew everyone in town, he knew whose marriage was shaky, whose kid had a major illness, who didn’t have money now but had an elderly uncle who did. All of those things have financial implications. Sure, he answered first to his shareholders—what company doesn’t—but he also answered to his community. And he could be proud: the bank grew the town, funded the businesses that paid the workers who went out and bought food and clothes and a house and a car.

Somehow, that world drifted away. Twenty years ago, I lobbied the bank hard—at one point I was calling Luis, the guy in charge of our putative mortgage, three times a day—to get the mortgage. Luis, punctilious to a fault, wanted to see everything from income tax forms for the previous three years to several months of paystubs to a letter assuring that I was employed and had no disciplinary action taken against me.

Ten years later, I was sitting in front of my computer, blinking in wonder at an advertisement—“YOU qualify for a $700,000 mortgage with no down payment! Instant authorization guaranteed!”

And it was true. People who should NEVER have gotten a mortgage got one, and it was no problem for the bank because they were going to sell the mortgage before the first payment was due, so hey—no problem!

And let’s be clear—everybody knew about this problem. I found out about the impending doom to come while sitting in a Jacuzzi with my brother-in-law. Right—he worked as an assistant / advisor to a congressman, but that’s hardly a miniscule esoteric group.

So the world had changed and banks had merged so much that bankers had lost connection to their community, and if Citibank or JPMorgan failed the entire Western Civilization would be wiped out. Which nearly happened, and the damage, though not cataclysmic, was still huge.

Well, three years ago, Congress passed a law, the Dodd-Frank Wall Street Reform and Consumer Protection Act, which was the most extensive reform of the financial industry since the Great Depression. Dodd-Frank put tighter controls and regulations—all serious and sensible things designed to combat a reoccurrence of the whole mess. And guess what? The New York Times this morning revealed that the banks are back in Washington, and virtually writing legislation that would roll back significant parts of Dodd / Frank.

Here’s the Times on the subject:

In a sign of Wall Street’s resurgent influence in Washington, Citigroup’s recommendations were reflected in more than 70 lines of the House committee’s 85-line bill. Two crucial paragraphs, prepared by Citigroup in conjunction with other Wall Street banks, were copied nearly word for word. (Lawmakers changed two words to make them plural.)

All of this, of course, doesn’t come without a price, which the Times points out, in the paragraph below:

And as its lobbying campaign steps up, the financial industry has doubled its already considerable giving to political causes. The lawmakers who this month supported the bills championed by Wall Street received twice as much in contributions from financial institutions compared with those who opposed them, according to an analysis of campaign finance records performed by MapLight, a nonprofit group.

Of course, some high-minded congressmen had scruples; check this out:

“I won’t dispute for one second the problems of a system that demands immense amount of fund-raisers by its legislators,” said Representative Jim Himes, a third-term Democrat of Connecticut, who supported the recent industry-backed bills and leads the party’s fund-raising effort in the House. A member of the Financial Services Committee and a former banker at Goldman Sachs, he is one of the top recipients of Wall Street donations. “It’s appalling, it’s disgusting, it’s wasteful and it opens the possibility of conflicts of interest and corruption. It’s unfortunately the world we live in.”

Wow—gotta feel sorry for Himes, and what our wicked world has done to him!

Or not—since it seems other people are living in other worlds. The Internet has decided to drift off somewhere so I can’t tell you the number—but there are millions of houses in foreclosure. Oh, and does anybody remember the little scandal of 2010, when the banks were foreclosing on the wrong properties, were robosigning documents, were engaging in various forms of fraud?

Eric Holder, our Secretary of Justice, came out in March saying that some banks were too big to jail. People howled, and he stepped back; an aide told Congress recently that she “didn’t think that he (Holder) meant that.” But what is true is that not one of those guys who got us into this mess has been jailed.

The bastards are back in business. The rest of us are still stunned, still struggling to get back on our feet, still rubbing our eyes and wondering what hit us.

Oh, and the bastards own Congress…..