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Fraud Is Illegal Unless You're A Banker

Recounting the last few years in Southern Nevada is a grim tale of Capitalism run amok. Consider the following: Nevada has the highest foreclosure rate in the nation, with one foreclosure for every 177 homes as of December 2011. How did we get here? The story has been told by numerous commentators, of which I recommend this article and particularly this one.

In summary, however, the story goes like this: Bankers and Financiers on Wall Street spent the last two decades and untold mountains of treasure unleashing an army of lobbyist (read greedy and amoral attorneys, which accounts for 99% of the bar) upon an equally large army of spineless (and equally amoral) politicians and their lackeys in an effort to influence them, with a shameless appeal to their greed and vanity, to repeal federal laws that regulated the banking industry.

See, back during the roaring 1920's an equally greedy and amoral gaggle of bankers and financiers gambled their way into the greatest economic depression that ever was. The Great Depression, as it has come to be known, plunged the United States, and particularly Europe, into a dark age of tyranny and repression as the masses and their demagogues sought alternatives to a capitalist economic system that seemed unworkable, or at least thoroughly discredited. The result was Hitler, Mussolini and Stalin and the millions of corpses they produced. Out of the rubble of World War II and through skillful leadership and, most importantly, wise laws, the United States emerged a powerhouse and Capitalism was redeemed.

The wisest of the laws enacted during the Great Depression was the Banking Act of 1933, known as the Glass–Steagall Act. That act introduced the separation of bank types according to their business (commercial and investment banking), and it founded the Federal Deposit Insurance Corporation (FDIC) for insuring bank deposits. The reason this law was enacted was because it was apparent to anyone who knew anything about banking and finance that mixing banks that hold deposits with banks that need money to speculate was a recipe for disaster and invited fraud and malfeasance.

Fast forward to the close of the 20th Century and you find a concerted effort by economists, academics, bankers and financiers to repeal the Glass-Steagall Act and allow commercial banks to act as investment banks, and vice versa. The result? In 1999 Glass-Steagall was repealed and by 2008, after the largest housing bubble in the history of the world popped, the world was again plunged into a global depression and Nevada earned the distinction of having the highest foreclosure rate in the country. What happened?

The banker's fraud goes like this. First, you find a consumer that can't afford the home he wants to purchase. Then, you lend that consumer the money to purchase the home, no money down, no questions asked. Next, you make sure the terms are so onerous that the consumer, now a proud new homeowner, can't possibly make his payments. After you lend the money to that homeowner for his home, you sell the mortgage to an investor swearing to the gullible and equally greedy investor that the security is solid. Finally, and here's the kicker, you place a bet with an insurance company that that homeowner will default on his loan. So, in essence, bankers devised a scheme whereby they profited from home foreclosures through predatory lending and deceitful business practices; in short, through blatant and outright fraud. Under Glass-Steagall such conduct was expressly prohibited.

But the story doesn't end there. Do those bankers suffer for their sins? It wouldn't be America if they did. Because what the bankers did next was shamelessly call on their army of lobbyist and friends in Government to bail them out of the mess they made, to the tune of over $700,000,000,000.00. The bankers literally drove a Brinks truck up to the United States Treasury and drove off with the mother-load, no questions asked, no strings attached. And to date, none of the bastards have been charged with a single crime nor has a single homeowner been bailed out of his predicament by that same government.

If this tale doesn't convince the reader that law is in thrall to wealth and power then nothing will. However, if you're reading this and some banker fucked you out of your home, give us a call, we'll be happy to sue the bastard 'till he's standing at the end of the unemployment line.