Wells Fargo Bank Leads Securitization Attack On Taxpayers

Based upon an article reported in the New York Times, Wells Fargo bank wants the government to guarantee all mortgages and has threatened to make the 30 year mortgage obsolete if the bank doesn't get what it wants. This guarantee of middle class mortgages as well as subprime was discussed in an article in the NY Times dated January 20, 2011.

I have been writing about this subject of securitization and Basel 3 numerous times, but this new assault is the first public practical application of Basel 3 that I have heard of. You can forget about taxpayer rights if loan guarantees are permanently baked in to US law.This is the epitome of taxation without representation for our times!

Essentially, the US has four choices with regard to securitization:

1. Do away with securitization and do away with the 30 year mortgage.

2. Allow securitization for prime mortgages only.

3. Allow securitization and ban all securitization of interest only mortgages.

4. Do what Wells Fargo wants and allow every mortgage to be securitized, with a government guarantee.

As you can see these are quite diverse solutions. So what will happen to mortgages in the future based upon these four outcomes?

1. If we do away with securitization, we will see a massive drop in house prices, but only if the 30 year mortgage goes away. We have the banker threat that it would go away but no proof.

2. If we allow securitization of prime mortgages only, the bubble blown will be smaller, because there are fewer people qualifying. There could be a bubble, but it would likely be because too many prime mortgages become interest only.

3. If we allow securitization but ban interest only mortgages, then we will have more investment stability, and we may not need to guarantee any mortgages. At any rate, the likelihood of a bubble would decrease because you could not go to pay option arms and other toxic loans and prices would self correct.

4. Wells Fargo's idea of securitizing all mortgages with a government guarantee is the very worst outcome. But most Democrats and Republicans want this because it starts up another housing frenzy. This allows for kicking the can down the road and will create a massive moral hazard. It would be better to have no securitization than to have this outcome. This outcome gives banks the incentive to write terrible mortgages, and then rely on government bailouts if they go sour. This is madness and another attack on the stability of housing prices and is a massive assault upon the taxpayer.

Keep track, people, of where this is going, but be advised that it is risky to even get a mortgage right now. If the time comes when your neighbor cannot get a mortgage, your house price will drop like a rock!

But it is my view that Wells Fargo will get their way, as it is the Basel 3 plan, and the US taxpayer will be on the hook for any losses in mortgages. This will give banks a chance to offer easy money loans again, and generate lots of fees and all the rest that goes with trying to push up another bubble. Without a crystal ball I guess we will have to observe the outcome.

This behavior by Wells Fargo is just proof that the banks have been out to get us in collusion with the central banks since Basel 2 in 1998. Basel 2 allowed off balance sheet banking and I have written extensively about it, and now the multinational banks want to permanently cement the taxpayer to their lending schemes. This is so anti American. Never have the banks behaved like this towards mainstreet to the degree that they have done as with this ponzi housing scam that they apparently want to continue indefinitely.

Yet this is the new financial order that we face, which breaks down the sovereignty of nations to steal from their citizens. I have been warning people this is coming for some time, and this proves that the banks were culpable in the first housing ponzi and meltdown, because they got massive bailouts for loans gone sour. They just want to codify this safety net from hell.

I have to ask my readers what was incorrect in the posting I made at Seeking Alpha:

They cannot prosecute Mozilo or any of the investment bankers higher up and then blow another real estate bubble. But they want the bubble.

I posted the link to this article and got big negative feedback. So I posted this response:

I have to ask why 4 people would give me negative feedback for my comment above? There is no reason for securitization other than for easy money. That is the only benefit of securitization, so that investors, not the originators, can be saddled with the risk. And if the investors are guaranteed a government backstop, then the quality of loan is likely to decline even more.

Big finance wants to grow even bigger. They want less spent on the poor and more spent on bailouts for themselves. That is why states are seeking to kill the unions. They want more Republican power, and ultimately more power for big finance. The Democrats actually may have some remorse for allowing big finance to take advantage of the people, of mainstreet. But the Republicans do not have such remorse. There is no conscience there. The American people don't seem to grasp this yet, but maybe someday they will.

1. What is the socialization of losses and the socialization of profits called?

Answer: Communism

2. What is the socialization of losses and the privatization of profits called?

Answer: crony capitalism or corporatism.

Guess what we have now? We have number 2. We have corporatism. So the Tea Party and Glenn Beck are confused about this. They need to be taught the correct answer!

When we allow securitization for all loans with government guarantees for all loans, guess what we have? Corporatism, and you guessed right!

The Tea Party also is confused with regard to the banks. I have had Republicans say that the banks don't want loan guarantees, blah, blah, blah. But clearly, the NY Times article exposes that they very much do want loan guarantees and they are working in a NWO fashion against the taxpayers. I have said before to move your money and I call for it once again. Move it out of these big banks that do not have the interests of the people of the United States at heart.

But wait, now Obama is saying he is putting the economy into overdrive. But didn't we just have overdrive? Didn't overdrive destroy the US economy and attack mainstreet and the taxpayer like no overdrive has ever done before? So just what is the Obama overdrive plan?

Well, he didn't mention housing, which is good, although he did mention builders. But he didn't mention how gasoline is going up either, and it is going up through speculation. He mentioned two way trade with China, a more fair trade policy, and that is good. But we need to see how he talks about housing because overdrive in the US has always meant housing.

If this is code for investors to go out and buy homes, I think we are seeing that. But if housing does not correct in many areas where it should, we will have problems for years to come.