Another bailout for Fannie Mae? (Society’s Slideshow)

According to an article on Yahoo! Finance, Fannie Mae has asked the government for almost $4.6 billion after losses equal to this amount in the fourth quarter of 2011. Freddie Mac asked the government for $6 billion in November of last year as well.

The grand total tab for the American taxpayers to bail out these companies comes in at a staggering $150 billion, with no mention from either company about its intentions to repay the money once they get back on their feet.

All those who were in favor of the bank bailout but opposed to the bailout of Chrysler and General Motors can now feel free to open their mouths and insert a foot of their choosing.

I find it to be absolutely disgusting that these companies believe that the American taxpayer should be responsible to bail them out of a tight spot caused by their own bad business practices.

Fannie and Freddie in conjunction with other companies did not have to agree to buy up 90% of homeowner mortgages in the past few years. The fact that they did and it blew up in their face is not the fault of the American taxpayer. We do not control the interest rate, which is at historically low rates, or write adjustable rate mortgages with intentionally confusing language designed to allow banks to keep increasing the interest rates on homeowners until they default.

However, Fannie and Freddie think that it isn’t their fault, either. The difference is that John Q. Taxpayer can’t go to the federal government with an extended palm to make sure they get to hang on to their houses. Small business owners can’t approach the government claiming to be “too big to fail” to save their business from bankruptcy resulting from the economic downturn.

Fannie Mae and Freddie Mac should be treated no differently than any other business in this country that makes poor business decisions. These companies cannot be held to a different standard than the owner of the mom and pop shop on the corner of your local community who was driven out of business by a sluggish economy.

If the owners and top executive officers of these companies are serious about saving them, they should do what any other business owner might do if they were serious about saving their life’s work. They should pony up the dough for more capital investments and institute austerity measures that freeze all bonuses and pay raises until they are once again solvent.

If they do not want to save their company in this manner, then Fannie Mae and Freddie Mac should be dissolved. Their assets should be liquidated, debts repaid, and their workers divided up among the smaller banks who are charged with managing what’s left.

If American continues to dole out cash to banks that can’t behave themselves in the financial markets, the CEOs and other top management of these companies will have no incentive to change their practices. They will continue to attempt to cash in big on the backs of the American taxpayers.

Call your Representatives and Senators and tell them that enough is enough. We the people will no longer stand to absorb the debts of banks that don’t play by the rules, don’t repay the government bailout money, and give their upper management golden parachutes when everything goes wrong. If we don’t this country will go bankrupt at the hands of the 1% who will probably make even more money cashing in on our country’s failure.

Paying to Access Your Own Money! (Society’s Slideshow)

Many people across this nation have some sort of bank account. Some have checking, some have savings, many have both types of accounts. Thanks to banks retaliating to new banking regulations, the average consumer is now going to have to pay to keep their money at a bank. In some cases, they will have to pay to even have access to it.

Citibank has announced that it will charge a $20 monthly fee starting Nov. 1  for its Citi Account unless the customer keeps a $15,000 combined balance in checking, savings and loans or mortgages by Empower Federal Credit Union, up from its previous $6,000 minimum balance. It also charges a variety of fees for debit card usage and account maintenance for lower-level accounts that dip below $1,500.

I would be hard-pressed to name any ten people in my circle of acquaintances who regularly carry a $15,000 balance in their accounts. Very many of them barely even carry a $1,500 balance.

Citibank’s stance on these fees is that it has a right to charge these fees if it is unable to make profits in other areas where they were previously able to make profits. If you don’t like it, they tell you that you are welcome to take your business elsewhere.

Any normal entrepreneur would be bending over backwards to hang on to customers and keep the profits they help the business owner generate coming in. Apparently, Citibank is not your normal entrepreneur. They seem comfortable with telling customers to go elsewhere with their business if they are uncomfortable with their fees.

However, the other banks where people can take their money without being charged to keep it there and have access to it are becoming fewer and farther between. It is becoming somewhat of an industry standard now for large banks to charge fees for customers to protect their assets.

These huge conglomerates are the same banks that smilingly accepted $800 billion from George W. Bush. They turned around and proceeded to pay their CEO’s bonuses that were written into their contracts despite the fact that it could easily be argued they didn’t deserve it based on job performance. They also sent employees on company financed junkets, which means that Joe and Jill Taxpayer actually footed the bill.

Very few new loans were generated, which was one of the intentions of the cash infusion. Very few houses were kept out of foreclosure, another intention of the cash infusion. None of the money has been paid back to this day.

This indicates that these banks believe they do not have to follow the normal rules of a loan: You borrow money, you pay it back with interest. The government is partially to blame for this in that they forgot to specify terms of repayment. This does not excuse the behavior of these banks who managed to convince the nation we were staring straight down the barrel of another Great Depression unless they were paid off. They were “too big to fail.”

Once again, history proves that trickle-down economics does not work. Herbert Hoover tried it during the original Great Depression in the form of the Reconstruction Finance Corporation. It gave over $1 billion in 1932 money (about $1.4 trillion in today’s money) to banks and businesses to give out more loans and hire more people to reverse the effects of Black Tuesday and the following bank failures.

Much like today, banks provided no new loans, and businesses did not reinvest or hire new workers. The Depression continued to decline to its lowest point until a man of action known by the name of Franklin Delano Roosevelt took office as President of the United States.

The behavior of these large banks is reprehensible at best. At worst it is outright robbery. Too bad none of the CEOs of any of these banks were charged with racketeering or grand theft.

The federal government should have appointed government officials as CEO of many of these banks, much in the way they appointed a CEO for General Motors when it requested bailout money from the government. At least then these pathetic businesses might have done what the government had intended them to with the money.

The economy will never turn around if people are forced to pay any sum of their own money in order to protect it or use it in the way banks are forcing them to pay. They will have less disposable income, buy less products outside of absolute needs, and cause even more unemployment and misery than there already is.

Tell these banks you aren’t going to take it by withdrawing your money from their bank when they start charging fees to use it. Transfer it to a credit union, and when large banks are successful in forcing them to charge fees thereby eliminating potential competition, stick it under your mattress. At least there is still no fee for that.

Putting America Back to Work (Society’s Slideshow)

The current economic crisis has continued on much longer than Barack Obama or any of his contemporaries would like to have seen. The mortgage bubble burst before he was even inaugurated, yet the country was eager to turn to him for answers. His answer was it wasn’t his show yet. When it became his show, he set out to make changes.

Through nearly four years, Obama and our current legislature has grappled with some of the toughest economic times our nation has seen. It has ranged from a nearly bankrupt GM and Chrysler to the current crisis of a 9.1% national average for unemployment and 10.9% unemployment rate for Michigan.

Now that Congress has finished their summer recess, they know that an election is right around the corner. The hottest issue on people’s minds is fixing our broken economy by getting people back to work, which are inextricably linked.

Employers won’t hire new people unless they are making enough money to cover their salary, which requires people to go out and spend money. However, it is very tough to make any but the most necessary purchases when you are on the unemployment rolls, or worse, stuck with no job and unemployment that has run out.

The current approach by Republicans reads a lot like Herbert Hoover’s approach at the beginning of the Great Depression. Hoover, another Republican, coasted into office after two previous Republican presidents who had served during the Roaring Twenties.

At first, Hoover did nothing, believing that government interference would undermine individualism. He believed in volunteerism, thinking that people would simply do the right thing by sustaining current employment rolls and doling out cash to people in need. He did not favor public assistance, believing that it would create an addiction to the system that would take away the will of people to work.

When that didn’t work, he sent all the Mexicans he could manage back to Mexico via the Mexican Repatriation Act. The economy of the nation and the world spiraled out of control, and Hoover finally decided that a whole pile of money and a single public works project would do the trick.

Hoover started work on the Boulder Dam, which would be renamed Hoover Dam after its completion. He also started the Reconstruction Finance Corporation. This entity took $2 billion and gave it in the form of state aid and loans to banks, businesses, and mortgage associations. The idea was that they would take they money and give out more loans, hire more people, and assist people in paying for their houses.

The Reconstruction Finance Corporation was an abysmal failure because banks, businesses, and mortgage associations pocketed the money, paid it back eventually, and did nothing to help the economy in terms of creating new jobs, new loans, and saving people’s homes.

Today, a similar idea is touted as the answer to our economic woes. Give corporations and other businesses tax breaks, and they will use that extra cash to hire more people. Give banks a giant pile of money (say $600 billion) with no terms delineating a repayment schedule or what should be done with the money. Then, sit back, relax, and expect that they’ll do the “right thing” by loaning more money to struggling businesses and helping people in trouble with their mortgages.

If it didn’t work during the Great Depression, why would politicians expect it to work today?

The only thing that will get this economy going is putting people back to work. Franklin Roosevelt knew it in 1932 when he became President of the United States. That’s why he created the Works Progress Administration, the Civilian Conservation Corps, the Tennessee Valley Authority, and a few other alphabet soup groups.

Roosevelt knew then what politicians should know now. Putting money in the hands of regular people means that they will go out and spend it on needs, then wants. Eventually, the money will find its way into the hands of business owners, banks, and mortgage associations. It was termed “pump priming” and it worked.

I propose that a similar solution could work today, sort of a WPA reboot. My version reads like this:

  • Bring all of our troops home.
  • Use the money we would normally be spending in Iraq, Afghanistan and Libya over here for “nation building.”
  • Allow the military to bid for open contracts paid out of this money against private contractors. Military personnel not used for nation building as a member of the military should have no problem getting a job with one of the civilian contractors.
  • Rebuild our crumbling infrastructure and start other public works projects after 90% of roads, bridges, and sewers are fixed.

America can no longer afford to bankroll tax breaks for corporations and the wealthy on the backs of average citizens. The less money 99% of the population has, the worse the economy will get.

Write your State Representatives, Senators, and even the President and tell them you’ve had enough of bankrolling corporate tax breaks. Tell them the only way to build our economy is from the bottom up, not from the top down.