Wall Street

What's that you say, Mr. Wall Street Banker?

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I’m feeling more hopeful today despite bizarro-freak news that does not appear to be fake, only stupid. The great white hope, our president, is possibly a Putin “asset,” which in economic terms means he is owned. In today’s politics the thing that makes this sleazy is the alleged owner is a foreign billionaire, not an American one.

 So why am I hopeful? Business Insider has focused on the House committee assignment of Alexandria Ocasio-Cortez. She’s the woman who yesterday walked to the Senate to hand-deliver a letter to Senate Majority Leader Mitch McConnell, urging him to bring bills he’s sitting on to the Senate floor for a vote. Why isn’t the Senate doing its job, and keeping government open? And who passed a law that says “essential” government workers must work for no pay?

 It’s rare for a House member to do such a bold thing. But no, that’s not the best news. House Speaker Nancy Pelosi has placed this daring woman on the elite House Committee on Financial Services. Years ago, it used to be called the banking committee, and traditionally sat only elite white guy “assets,” who had rich white guy owners on Wall Street. It’s no wonder the media focuses on Ocasio-Cortez—she’s so fearless and beautiful. But the news is better than that.

 Rep. Maxine Waters is chair of that committee now. She’s served her time and learned the Wall Street players; she’s the first woman chair, and the first African American. I counted the sixteen members of the committee she just announced and found other formidable newcomers like Rep. Rashida Tiabi of Michigan, and tough veterans like Tulsi Gabbard of Hawaii. All told they’re a majority female, another first.

 There are 540 mostly-male billionaires in the US and nearly 15 million millionaires, half of them multi-millionaires. The rest of us tend to come up short because the American political system for the past 40 years has enabled 1 percent of our population to hoard 40 percent of our national wealth and its assets, and the top 20 percent, fully 90 percent. That’ll buy a lot of politicians.

 That means the rest of us have to split the remaining 10 percent of our wealth. Picture it this way: Jeff Bezos gets 40 front row seats in a 100-seat theater for the “show” of our American life. His slightly less rich friend reserves 50 more seats for himself and his 9 guy friends. As a result, 80 people like you and me will have to share the remaining ten seats. The median chair-reservation is about $60,000 a year in income, enough for one butt-cheek. But the bottom 20 of us own nothing but debt. Go sit in that hole in the floor.

 About 49 million people in 19 million households are now below the poverty line, in the hole, on average with around $18,000 a year per household. A bunch of these are women and children. But when women no longer are tokens, they’re harder to silence. The new House Financial Services Committee might just put their pretty little heads together to call out billionaire owners of political assets—and make some real change in who gets a decent seat.

 —Rickey Gard Diamond

Nevertheless, She Persisted—

The Sung family is at the center of this stirring film that reveals much about the American banking system, and way too much about American justice. The fiesty Sung sisters run the savings bank founded by their father, competently serving a neighborhood of immigrant Chinese. When they catch and report an employee’s fraudulent loans, they soon find themselves being investigated; it becomes apparent to many that their whole community is being scapegoated. Wait until you see their chain gang arrest!

In fact, their Abacus Federal Savings Bank was the only U.S. bank indicted for mortgage fraud related to the 2008 financial crisis. The film asks why this tiny bank—2,651st largest in the country when it was brought to trial—had to fight to save its reputation, while the biggest bankers on Wall Street that brought us the 2008 meltdown never were charged with any wrongdoing. 

The Sung family’s answering courage marks them as true American underdogs, our favorite kind of heroes. Directed by filmmaker icon Steve James (Hoop Dreams, Life Itself, The Interrupters), Abacus aired on Frontline in Sept. 2017, (where you can still stream it) and just was nominated for a “best documentary” Oscar for 2018.

James told a Frontline interviewer that the story has relevance today, “given that no justice was ever brought….Not only were the big banks not prosecuted coming out of that crisis, they were not regulated in a way to ensure that we’re not going to have more of these problems.” We agree with James and Oscar, and highly recommend it in the spirit of "Nevertheless, she persisted!"

Whose Asset? Whose Debt?

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You and I think of our loans as debts or a minus. But banks consider them an asset, a plus—as in money in the bank. The bank or creditor has gotten you to sign on the dotted line. You have promised to repay the borrowed money, plus more, with extra charges called interest added in. Whether mortgages, car loans, or student loans, these interest charges are paid upfront, with the principal, or money owed, barely touched. In that way, loans are worth a lot to the loaner

So here is something to keep you up at night. Wall Street has begun securitizing student loans, a phenomenon they have newly named SLABS (Student Loan Asset-Backed Securities). Ellen Brown has been writing about this extensively, and if you want the wonky details, read her at Common Dreams. https://tinyurl.com/y877wemWhy should you care? Do you remember the 2008 mortgage crisis that led to a global financial meltdown? Back then, Wall Street had securitized the nation’s mortgages to re-sell to investors. To securitize means to take an asset, like a bank’s mortgage loans, and through “financial engineering,” as Investopedia puts it, https://tinyurl.com/y7yskx78, transform those into a more liquid and fast-traded “asset-backed security.” An even bigger global Wall Street bank then sells them to big-time investors.

This financial re-engineering first began in the 1990s, hailed by Washington.Wall Street made so much new money that everyone tried to cash in on the nations’ bank assets, namely US  citizens’ debts. Real estate prices soared! Loans were easy! You remember what happened then? Fraud, subprime liar loans, and a huge crash, which citizens then bailed out with their taxes, rescuing the biggest banks, instead of letting them fail from their fraud and bad judgement.

So now with student debt liabilities amounting to $1.7 trillion for 44 million borrowers (the 2016 student average was over $37,000 each), says Forbes, ( https://tinyurl.com/y73pr83u )—are we seeing another crash in the making?  College tuitions, so necessary for any kind of survivable future,  may create assets and soaring numbers for Wall Street. But thinking of this unprecedented burden on an entire generation as an “asset” accrues only to the wealthiest few. For the many who face an indebted future of laying golden eggs for the SLABS omelet, their goose is already feeling cooked.  

Look for #unscrewed student debt stories in future.