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My daughter and I are reading Steinbeck’s “Grapes of Wrath” aloud to each other, and those Depression-era injustices seem so familiar today. That’s why the Occupy movement resonates so deeply: When the federal government goes all-out to rescue errant bankers, and stiffs homeowners, that’s not just bad economics. It’s also wrong.

That is the final paragraph of A Banker Speaks, With Regret, today's terrific New York Times column by Nicholas Kristof.  The banker is James Theckston, who had been a regional vice president for Chase Home Finance in southern Florida.  He is very open about the kind of mortgages being written, where

some account executives earned a commission seven times higher from subprime loans, rather than prime mortgages. So they looked for less savvy borrowers — those with less education, without previous mortgage experience, or without fluent English — and nudged them toward subprime loans.
 They wrote no documentation loans - no income verification for example, with executives looking the other way while people making $20K bought half million dollar houses hoping to quickly flip them.  Why didn't they care?

Please keep reading.

Kristof, in the paragraph just before the one I quoted before the fold, puts it bluntly:  

“The bigwigs of the corporations knew this, but they figured we’re going to make billions out of it, so who cares? The government is going to bail us out. And the problem loans will be out of here, maybe even overseas.”

Let me quote one more paragraph before i comment a bit.  It is about the targets for those subprime loans on which account executives earned 7 times the commissions:  

These less savvy borrowers were disproportionately blacks and Latinos, he said, and they ended up paying a higher rate so that they were more likely to lose their homes. Senior executives seemed aware of this racial mismatch, he recalled, and frantically tried to cover it up.

Someplace along the line America lost its moral compass, or rather, the profit motive was allowed to trump anything else.  Perhaps we can see other periods in American history where this has happened, for example, the Gilded Age of the 1890s until the Progressive Era kicked in.  Although that did not stop the freight train of following greed that led to the Great Depression.  

Absent appropriate sanctions, it makes all the sense for executive to push the envelope -  even if fined it is merely a cost of doing business if the destructive financial shenanigans do not carry criminal sanctions and serious financial consequences for those who perpetrate them, and for those who benefit therefrom - which unfortunately includes far too many in politics on both sides of the political divide (here think of some Dems who in theory have responsibility for oversight of the financial sector - banks, the stock markets, the commodities markets, etc.

The bankers -  or if you prefer, the banksters - knew fully well what they were doing. Goldman Sachs sold trash to its customers then bet against those securities for its own accounts.  Goldman and other organizations lobbied heavily against regulation of derivatives, then the head of Goldman who led that lobbying became the Secretary of the Treasury.  

The game has been rigged.  The tax laws written to benefit those rigging the game.  IT apparently does not matter if the administration is Republican or Democratic, some of the players are the same.

According to what we have heard from Frank Luntz, he is very scared about OWS.  Perhaps the banksters are as well.  The issue of financial corruption, of the distortion of the system, is becoming ever more apparent, ever more accepted.  Now we have banks forced to back off of some fees, or from trying to evict a 103 year old woman from her home.  

Maybe this reads as if I have been smoking a controlled substance.  Maybe you think I am somewhat cynical about Wall Street, yet still too much of an optimist in believing that ordinary people can make a difference.  

If so, then let me end as does Kristof, as I began.  Read those words again, and perhaps you will think the two sides of my attitude are not so crazy?

My daughter and I are reading Steinbeck’s “Grapes of Wrath” aloud to each other, and those Depression-era injustices seem so familiar today. That’s why the Occupy movement resonates so deeply: When the federal government goes all-out to rescue errant bankers, and stiffs homeowners, that’s not just bad economics. It’s also wrong.

Originally posted to teacherken on Thu Dec 01, 2011 at 06:16 PM PST.

Also republished by ClassWarfare Newsletter: WallStreet VS Working Class Global Occupy movement.

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