Wall Street Thieves Find New Ways To Steal

MidWeek (Hawaii) - - Front Page - THE LOW­DOWN Jim Hightower

The s e l f - de­scri bed “Ge­niuses of Wall Street” are be­ing stupid. Again.

I n 2007, t hei r s t upid schemes and frauds crashed our econ­omy, de­stroy­ing mid­dle- class jobs, wealth and op­por­tu­ni­ties. Far from get­ting pun­ish­ment, howev were bailed out by t heir Wash­ing­ton en­ablers — so the moral les­son they learned was clear: Stupid pays!

Sure enough, only a decade later, here they come again. Rather than in­vest­ing Amer­ica’s cap­i­tal i n real busi­nesses to gen­er­ate grass­roots jobs and shared pros­per­ity, Wall Street is si­phon­ing bil­lions of in­vest­ment dol­lars into spec­u­la­tive non se­cu­ri­ties “se­cured” only by rick­ety bun­dles of sub­prime auto loans.

Car dealers, e a ger t o goose up sales, have been hawk­ing new ve­hi­cles t o lower- in­come peo­ple, of­fer­ing quick credit ap­proval. Banks — ea­ger to hook more peo­ple on monthly car pay­ments — have been ap­prov­ing these sub­prime car loans with­out ver­i­fy­ing the buyer’s abil­ity to pay. Then, a Wall Street bank’s in­vest­ment house buys up thou­sands of these iffy in­di­vid­ual loans, bun­dles them into mul­ti­mil­lion- dol­lar “debt se­cu­ri­ties,” and sells them to wealthy global spec­u­la­tors. Last year alone, banks sold $ 26 bil­lion worth of these ex­plo­sive bun­dles of car loans.

This is just an­other pa­per-shuf­fling con game, a re­peat of Wall Street’s sub- prime mort­gage scam a decade ago. It gen­er­ates fast, easy money at the start for su­per­rich spec­u­la­tors and greedy banksters — but as more and more low-in­come buy­ers are un­able to make their car pay­ments, de­faults - cial bub­ble pops.

Wa s t i n g A m e r i c a ’ s much- needed i nvest­ment cap­i­tal on a preda­tory lend­ing scheme that in­ten­tion­ally puts peo­ple in cars they can’t af­ford with loans they can’t re­pay is not only stupid, but im­moral — and it’s killing our real econ­omy. Why are we let­ting elite Wall Street loan sharks do this to us?

These same prac­tices of bundling and re-sell­ing were the cause of the 2007 crash in the hous­ing mar­ket that led to mil­lions of Amer­i­can fam­i­lies los­ing their homes. But, 10 years later, where did all those houses go?

Com­mu­niti e s a c r o s s the coun­try have re­cently found out that Wall Streeters them­selves — from for­mer-Gold­man Sachs in­vest­ment bankers to real es­tate in­vest­ment trusts — rushed out to scoop up thou­sands of those fore­closed prop­er­ties, usu­ally grab­bing them at bar­gain-base­ment prices when they were auc­tioned off on court­house steps in Atlanta, Mi­ami, Phoenix, Dal­las, Chicago, Las Ve­gas and other metro ar­eas with hard-hit work­ing-class sub­urbs. The i nvest­ment con­sor­tiums have deep, deep pock­ets and can eas­ily out­bid lo­cal buy­ers to take pos­ses­sion of the ma­jor­ity of the sin­gle-fam­ily homes be­ing sold off in many of those distressed places.

Why are they buy­ing? To turn the homes into rental prop­er­ties and be­come the dom­i­nant sub­ur­ban land­lord, con­trol­ling the lo­cal mar­ket and con­stantly jack­ing up rents. For ex­am­ple, The Wall Street Jour­nal found that in Nashville’s sub­urb of Spring Hill, just four of these preda­tory hous­ing giants own 700 houses — giv­ing this oli­gop­oly of ab­sen­tee i nvestors own­er­ship of three-fourths of all rental houses in town. One of these bulk buy­ers is an arm of Black­stone, the world’s largest pri­vate equi out­fit that was spun out of the hous­ing spec­u­la­tion depart­ment of Gold­man Sachs, and an­other is a bil­lion­aire whose in­vestors in­clude the Alaska State oil fund.

Not only do rents jump dra­mat­i­cally when s uch out­fits seize a mar­ket, but the Wall Street land­lords are in­tent on im­pos­ing “a new way” on the U.S. hous­ing mar­ket. They’re push­ing a cul­tural shift in which home- own­er­ship is no longer part of the Amer­i­can Dream and ten­ants are taught to ac­cept an­nual rent in­creases as the price of hav­ing a home.

So, the banksters crash the econ­omy, you lose in- come and your home, they buy your house at auc­tion, then they rent it to you at an ever-in­creas­ing price. The “new way” is the same old story of the rich rob­bing the rest of us.

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