Wednesday, November 3, 2010
Mr Bernanke, the ANTI -capitalist; betrays his own writings & speeches; and must be stopped; Fed 4.0 should be under SARBOX...
Mr Bernanke wrote in 1991 here with Ms Lown about the 1990s credit crunch; following the...1980s real estate bubble. Tell me, the scale of the 2000 era bubble was not readily observable? The 1980s bubble was like a child's Saturday night bubble bath compared to the ocean of bubbles in the 2000s.
Mr Bernanke's 2003 college textbook, Principles written while he taught at Princeton, exhorts students to see all around them as economic trade offs - one reviewer states "economic naturalists" - incredible. A few rhetorical questions 1) Were there were NO houses in Mr Bernanke's neighborhood that were flipped - while he was there? 2) Mr Bernanke was not aware of any house flipping - anywhere? 3) Mr Bernanke was not aware of the hockey stick spike in house prices - while it was happenin'?
Before he became Fed chairman in Feb 2006 what information did he seek, was he provided or had access to; which did he consider or dismiss? Mr Bernanke himself stated that he first worked at Standford correction Stanford in the late 1970's then THE hotbed for information's impact on all facets of economic decisions....hmmmm but I digress. Then comfortably intellectually conclude that banks (both commercial and investment) could continue orchestrating the mortgage finance lending charade. And in contrast to his consensus style.
Was he unaware of minimum 2,000 X economic leverage upon underlying collateral (the borrower's house), stunningly both on margin and at the margin was building up an untenable, a veritable multi trillion dollar wave of mortgage backed securities whose crest inevitably would, not if, come crashing back down.
2,000 X leverage comes as result of zero down mortgages which equal 100 x leverage for the borrower which then are pooled together by certain investment banks into MBS, some make that many later leveraged 20 (or 30, 40, 50 or more) to $1.
Except Mr Bernanke, to this day refuses to let the wave crash on its creators, he stubbornly persists in floating certain banks in a Federal Reserve district east of the Hudson above the thunderous roar of the tsunami amidst allegations and investigations of wide-spread: failures to produce original "wet ink" notes and deeds, improper foreclosure affidavits, robo - signing, submitting false / fake documents to certain courts, submitting multiple claims upon same property, junior or 2nd lien (HELOC et al) favoritism, questionable initial trust securitizations and re-securitizations; favoring servicers rights over investors - among the grist behind the NY Feds' and PIMCO's sizzling beef with Bank of America.
In sharp contrast to his October 4, 2006 self - titled speech"Will we treat future generations fairly? I won't even dignify the title by making a comment - it would insult readers.
Although the thrust of his comments is laudable, albeit toothless platitudes about entitlements, savings - as they say in Brooklyn - tell me something I don't already know.
It's the choice of words in the title - that reminds me he was not paying close enough attention, rather seems to have dismissed the underlying causes of growth - can you spell cash out refi's? That gets me.
Most GLARINGLY in a 2007 speech Mr Bernanke states "2 channels" excerpted here:
#1 - "The first channel worked through the banking system. As emphasized by the information-theoretic approach to finance, a central function of banks is to screen and monitor borrowers, thereby overcoming information and incentive problems. By developing expertise in gathering relevant information, as well as by maintaining ongoing relationships with customers, banks and similar intermediaries develop "informational capital."
#2 - "The second channel through which financial crises affected the real economy in the 1930s operated through the creditworthiness of borrowers. In general, the availability of collateral facilitates credit extension. The ability of a financially healthy borrower to post collateral reduces the lender's risks and aligns the borrower's incentives with those of the lender."
Mr Bernanke is and was clearly in his own self styled bubble:
1) lets start with "By developing expertise in gathering relevant information"
tell me as late as 2007 he was unaware of the extent of Subprime, No doc, doc lite or Alt A mortgages, so called NINJA loans, then securitization and Wall St Leverage of same; not to mention further derivatives based on same like CDOs and synthetic CDOs?
2) Securitizations, by definition, dislocate banks / originators away from borrowers and nearly prevents his statement "Central function of banks is to screen and monitor borrowers" - huh...you're kidding me right?
3) did Mr Bernanke forget to recall that in April 2006 his Federal Reserve Board announced a MAJOR change to keep track of a certain kind of Commercial Paper - that being Asset Backed Commercial Paper. Was this simply an ode, odor or something to be known as the "ABCP trackers full employment act"?
And that the plethora make that $1T of the new CP varietal was backed by what? All manner of MBS and their dependencies. Is it a surprise - that the emergency CP program and the FDICs hastily arranged $250k deposit guarantee were a necessity?
What was known, knowable, unknown and unknowable by Mr Bernanke at the time? It seems a lot; for which we deserve nothing less than - the whole truth.
Why the FED should be required to be under SARBOX:
As compromise to Ron Paul's proposed full blown FRTA, because the Fed and its underlings didn't see, know or care what the bonused bank examiners (true)- see here were doing from 2003 to 2006 - the Fed MUST certify all its processes have been checked and double checked.
But first a small question for Mr Bernanke, he stated "he failed to see the flaws in the financial system" which led to the so-called financial crisis. This I'm afraid appears too easy a mea culpa; no one is perfect, however, IS it true that no one at the Fed pointed out concerns about about the BUBBLY 'er I mean "flaws" which Bernanke dismissed; therefore did he, himself consciously decide NOT to see a few flaws? And this - flaws are flaws, what about the OBVIOUS rocket that was house prices compared to the past 30 years or better yet past 200 years? These are not flaws - they are right in front of your eyes RUDIMENTARY observations! So I and a few other taxpayers would like the answers.
The Fed will be subject to Section 404 and to make sure they get the point and have a little skin in the game - will be subject to section 304 - the CLAWBACK OF PAYCHECK SECTION; to bad it can't be retroactively applied to the beginning of BB's ovesight.
And the Federal Reserve Act should be amended immediately to delete the office of Fed Chairman; and replace it with a commission. Any further unilateral abuse of power and money must be stopped now.
In sum, Mr Bernanke, appears to be in some state of confusion as he did not and seems can not connect his own dots. This man must be stopped.