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Tuesday, September 22, 2009

House of cards getting new wing

Now the Federal Deposit Insurance Corp. is going to borrow from the banks -- the very institutions that it insures -- to try to avoid a taxpayer bailout. That will postpone the inevitable, to be sure.

Comments (6)

Once people understand that big government and big business are one in the same then maybe we can make some reforms.
Big government has become the piggy bank of a few very wealthy individuals at the expense of the taxpayers. All that's needed to enter this exclusive club is to buy off one or more politicians.

Like Sam aDams?

I just wish I had the same access that the FDIC has to the professional appraisals that were required to accompany home loans. There was a systemic violation of 18 USC 1014, making it a crime to overvalue collateral (where FICO score is wholly irrelevant, and default is non-catasrophic). If I had a big stack of appraisals for local property transactions I could digitize them and identify the worst abusers of 18 USC 1014, and thereby abuse of the FDIC, and publicly black list (or boycott) these professionals. The FDIC and federal prosecutors would only need to target 10 to 20 of the worst of the worst from each major metropolitan area to make a clear statement. It is a bigger problem, in terms of dollars, than the recent tabloid news on ACORN. If the collateral was priced right then there would be no FDIC mess resulting from the ballooning appraisals, and the poor would have less debt and less need for debt fixers.

It should be as clearly understood as a law that prohibits the issuance of drivers licenses to people that are blind.

Debt is not liberty but rather the modern substitute for classical slavery (a race neutral economic concept). The lender demands the fruits of the debtor's labor, even if the borrower remains free to move about the country. The returns to lending, in all its forms, along with fancy penalties at the stroke of someone's pen somewhere, has become so much more rewarding than making stuff people want or need that investors abandoned many other opportunities/risks.

Debt peddlers, and their local allies, should be looked upon as slave traders. Home owner equity has dropped from around 60 percent in 1990 to about 20 percent (or less, realistically) today. This could hardly be considered progress, unless one favors the divorce of people from liberty. An Economist might think that Keynesian economics is itself a bankrupt idea in retrospect, or worse, evil by design from the outset.

Yesterday I tried to convince someone not to close on a deal that involves a FDIC insured institution lending them 6 times their gross annual income. I failed. The beat goes on, alternating between staccato and legato.

Um...where do you think the FDIC gets its money from in the first place? Banks pay the FDIC for insurance, just like any other insurance market and that is where the FDICs budget comes from. When payouts increase, premiums go up.

Patrick, you must be really young.

No conflict of interest here.

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