Zitat dpa-afx:
"Wiederholt standen vor allem Finanzwerte im Mittelpunkt des Interesses: Im Übernahmekampf um die viertgrößte US-Bank Wachovia steht US-Medien zufolge als Kompromiss eine Zerschlagung des Instituts zur Diskussion. Die beiden Kaufinteressenten Citigroup und Wells Fargo verhandelten über eine Aufteilung der Bank, berichtete das "Wall Street Journal". Citigroup verklagte Wachovia zugleich auf Schadensersatz und Strafzahlungen von insgesamt 60 Milliarden Dollar (44 Mrd Euro), wenn die bereits vor einer Woche verkündete Übernahme scheitern sollte. Die US-Notenbank dringt wegen der prekären Schieflage von Wachovia auf eine rasche Einigung.

Die Citi-Aktien verloren 5,12 Prozent auf 17,41 Dollar und die von Wachovia sanken um 6,92 Prozent auf 5,78 Dollar. Wells Fargo hielten sich dagegen mit minus 2,66 Prozent auf 33,64 Dollar vergleichsweise moderat.

Der Finanzkonzern Bank of America (BoA) stimmte nach der Übernahme des US-Immobilienfinanzierers Countrywide einem Milliardenvergleich zugunsten amerikanischer Hausbesitzer zu. Rund 400.000 in Not geratene Kreditnehmer sollen Erleichterungen von insgesamt mehr als 8,4 Milliarden Dollar erhalten. Die Einigung ist Behörden zufolge der bislang größte Vergleich dieser Art in den USA und soll den Weg für weitere Abkommen mit anderen Banken ebnen. Die BoA-Aktie gab als schwächster Wert im Dow Jones um 6,55 Prozent auf 32,22 Dollar nach. Auch andere Bankenwerte zeigten sich sehr schwach: JPMorgan büßten 4,14 Prozent auf 44,00 Dollar ein und Merrill Lynch verloren 9,26 Prozent auf 24,20 Dollar. ..."

"We know many investors in our stock are quite disappointed with a dividend reduction," CEO Ken Lewis said. "It is not a decision we made lightly. However, we cannot pay out what we have not earned. Our goal is to resume dividend increases from the new level as soon as our earnings performance warrants."

For now, BofA's earnings performance is weak indeed. The bank made 15 cents a share for the latest quarter, down from 82 cents a year earlier and well below the 62-cent Thomson Financial analyst estimate. The bank blamed the shortfall on rising credit costs tied to falling house prices, a consumer spending pullback that resulted in lower debit card revenue and $320 million of writedowns on the preferred shares of Fannie Mae (FNM) and Freddie Mac (FRE), the government-sponsored mortgage giants that were nationalized a month ago in a bid to reduce mortgage rates.

BofA's dividend cut comes just a week after rival Citi (C) set plans to slash its own payout for the second time in a year, in connection with a plan to buy Wachovia (WB) that's now mired in a legal dispute. BofA's move leaves JPMorgan Chase (JPM) as the biggest U.S. bank not to have cut its dividend - and the way the economy and the markets seem to be going, who knows how long even it will resist.

Wall Street Casino Capitalism

It has high roller/big spender/rich getting richer written all over it. 

I love Eugene's blog, please check him out. In particular, check out the ridiculous video by a pre-madonna Bank of America exec.

Oh, one more thing, here's a breakdown of the bailout. Leaves me speechless.

Find the chart here.

Lots more video to explore on the Fortune Most Powerful Women page, including ING (ING) wealth management boss Kathy Murphy, Martha Stewart, and Oppenheimer & Co. bank-industry analyst Meredith Whitney. On Friday, during a panel on the tumultuous financial markets led by my colleague Carol Loomis, Whitney was terrific on the topic of Citigroup (C) and Wells Fargo (WFC) battling to acquire Wachovia (WB). America's most powerful bank analyst -- she's No. 35 on Fortune's Most Powerful Women list and was on Fortune's cover in August -- contends that Citigroup seriously needs Wachovia (or some other consumer bank with a strong deposit base) to stay competitive with JPMorgan Chase (JPM) and Bank of America (BAC) and what would become, with a Wachovia buyout, a mightier Wells. As of this afternoon, Citi had filed suit against both Wachovia and Wells, seeking $60 billion in damages over its deal gone awry. Who could have imagined this even a month ago?

It's difficult to laugh through the pain of all we see happening now, but I have to tell you, Whitney is not only the most powerful analyst on Wall Street today. She's the funniest. On Thursday night at our Most Powerful Women Summit in North San Diego, where our post-dinner activities were bridge with Buffett (Procter & Gamble (PG) group president Melanie Healy won!) and Wii Sports courtesy of Nintendo (NTDO.Y), I hung out in the Four Seasons bar with Whitney and a motley crew of women leaders. Sitting beside me on a sofa, Whitney riffed relentlessly on how she felt "like Jan Brady" in a sea of Marcias: "Look at her," she said, gazing across at one particular glamorous participant of the Fortune powwow. "She's powerful and beautiful. She would have stolen my boyfriend in high school. I know she would have stolen my boyfriend. I can't even look at her..."

For those of you who remember that The Brady Bunch was baby-boomer must-see TV in the 70s, get a load of this coincidence two nights later: On Saturday evening, up in Los Angeles, I was having dinner with Arianna Huffington and her sister, Agape. Who was at the table next to us but Florence Henderson, the original Carol Brady! She looked 38. We Googled her: She's 74. When I shook her hand, Henderson's eyes bulged, and she commanded her husband and daughter and friends: "Shake this woman's hand. It's the best handshake you've ever seen!" Strange.

Carol Burnett was also part of Carol Brady's dinner party. Burnett looks 60. She's actually 75. She acted utterly starstruck meeting Arianna ("I'm soooo glad to see you. I so admire the work you're doing."). When Arianna, the diva of the Huffington Post, introduced the legendary comedienne to me, Burnett burst out , "I love you!" Obviously Burnett believed that I was some celebrity or Nobel Prize winner. Or maybe, just maybe, she's a fan of Postcards. You think?

What is a dollar? What is debt? What is abundance? What is scarcity? Cui Bono?

Zeitgeist: Addendum

[googlevideo=http://video.google.com/videoplay?docid=7065205277695921912]

These steps seem actionable. Anyone down to move their money from/quit their jobs at Chase, Citi and BoA? Anyone down to boycott the military here in Military City, U.S.A., the #1 recruiting battalion in the country?

This film is inspiring, realistic, humorous and weighty. Please, debunk facts in the movie and post here; I'm curious to find out how you react--I know, a 2-hour 'adddendum'?!? Well, just give it a chance, I think you'll like it.

Launching Oct. 10th: http://thezeitgeistmovement.com/

Bear sterns was taken over by JP Morgan

Fannie Mae and Freddie Mac were nationalized

Lehman Bros became bankrupt.

Merryl Lynch taken over by Bank of America for a meagre $50 bn !

With financial institutions falling prey one after another to the global credit crisis, the bailout packages announced by various governments across the globe are inching towards $2 trn mark -- an amount nearly double the size of Indian economy !

The Wall street tremors will have aftershocks the world over, with global markets plummeting to new lows and with liquidity crisis in perspective, the world is facing a severe economic crisis and many are blindly hopeful of a bail-out plan. But .......let me guess what you are thinking.....

Q 1)  what in the world is going on right now?

Q 2 ) why does all this matter to me? and how do I, the Indian citizen stand to be affected by this?

THE WHOLE STORY:

The first signs of the sub-prime crisis was evident in the form of Bear Stearns whose 2 hedge funds collapsed in the mid of June 07 . Sadly , help in the form of $ 100 billion in liquidity courtesy Federal Reserve Bank and European Central Bank didn't do much to solve the prevalent sub-prime crisis as the housing market continued to elevate without increase in interest rates. Then the wall street virtually went on a wild horse ride with one of the prestigious players Lehman brothers posting huge losses and eventually they din't become lucky as the others as both Bank of America and Barclay's refused to save the investment giant. The sole cause- Lehman Bros and Bear Sterns had relatively small balance sheets, they were heavily dependent on the mortgage market and were humungously reliant on the repurchase market (use as a short-term financing tool). The final nail in the coffin of the Lehman Brothers was put as it applied for a bankrupt protection on September 15th, which created a violent storm in the world financial system

AIG which was supposedly a basic insurance company also committed the erraneous speciality of investing in derivatives. Now for non- enthusiasts like some people out there, what are DERIVATIVES? Well, more on that later in this post.

IMPACT ON INDIA:

With many of the top IT companies save HCL having half their revenues from financial and banking segments, no doubt they are going to take a harsh beating, with Infosys already losing $2 bn the past week(Sept end) out of an approximate $10 bn lost by Indian IT companies listed on the US market. Banks may suffer as Lehman Brothers and Merrill Lynch had invested substantially in the formers's stocks.

Supposedly, some of the PSU banks are also said to be affected even though assurances by the FM P.Chidambaram that none of the former are influenced. Well, that remains to be seen.

Now with traders possibly selling their stocks in India, Indian rupee stands to decline and hence imports will become costlier, one of the many things that stand to be affected, in line with many of the innumerable crisises that our country has still looming at large.

WHAT IS DERIVATIVES ( In Layman's terms) in this case also know as HEDGING

-->The main use of a derivative is reducing risk for a party.

-->Derivative products derive their existence from actual market indices, hence the name derivatives.

I am not a expert on this, but with a great amount of thanks to my dad( who is pretty good at this stuff), I can put forward a vague idea what this is all about. Now supposing Mr.X  enters into a FUTURES CONTRACT with Mr.Y, say he pays a certain amount of money for a certain commodity from Mr.Y in the future(any fixed amount of time in the future) , now as the market can be totally unpredictable with fluctuating interest rates, such an agreement can reduce risks.

BENEFITS:

1. Mr.X now has an assured supply of commodity in the future at the existent market rates at that time.

2. Mr.Y now has an assured price for his commodity in the future from Mr.X

Something like this.

Now there are many forms of derivatives, one which caused the epicentre here in the sub prime crisis being mortgage-backed security (MBS). For more information on MBS, you can easily refer ... say wikipedia or the article by Mohit Satyanand in Outlook MONEY was pretty awesome.

Now in the present case , since the housing rates didn't shoot up, the investment banks couldn't recover money and the growing housing markets only added to their downfall.. Voila !! this almost does it for a layman's understanding to the current global economic crisis.

Interestingly, Islamic banks are unaffected by the sub prime mortgage crisis; rather many non-Muslims are turning up to Islamic banking as the customers spooked by turmoil in the Western banking system are feeling Islamic banks as a safer haven because they are immune against such crisis due to inherent business ethics within Islamic banking.

There are mainly two important reasons for insulation of Islamic banks under this current credit crisis as compared to the interest based banks and financial institutions. The first is liquidity problem due to inter banks lending in the money markets, merger and resales of debted companies. The second problem is realted to rating of asset values by the credit rating agencies, mortgaed against debt finances under fluctuating price levels in the market. Principally Islamic banks acts as either custodians, advocates or managers for depositors and thus they cannot tarnsfer public deposits to other banks without permission of their depositors. Thus Inter bank liquidity transfer on debt finance basis is not permitted in Islam, which restrains liquidity realted problems in the market. 

Since under Islamic banking, equity finance is not granted by mortgaging assets, but after analyzing the cost and projected yield, the credit / equity finances remains unaffected with changes in assets values. There are so many internal and external factors affecting the asset values of stocks, bonds and securities which are prime components for credit rating system for Interest based lending; so it is not easy task for the banks or even for credit rating agencies to evaluate the exact credit risks. The credit rating under Islamic Finance has nothing to do with fluctuation in asset values; instead it depends on actual business trend. Thus there is no fear of sub prime mortgage under Islamic banking principles; rather it counters the throat cut competition in financial sector to get more credit shares. This principle thus provides stability and insulation in the financial market.

Islamic banking interestingly helps the weaker and even the weakest section of the society through various ultra modern financial products. Under Islamic banking credits through Joint ventures, partnerships and leasing are provided by investors / banks to the borrowers with a condition that financial risk is to be borne by the investors, other risks be borne by borrower / manger of funds. This helps even the poor and vulnerable to get credit at no risk or cost, but definitely requires other credits in terms of strong business proposal, sound projections, rational planning, skilled hands and technical art to attract the financer. Under Islamic finance, comparatively better business proposals succeed in fetching credits while projects with poor economies find it difficult. This helps the economy boost inclusive growth as financial resources are well shared among haves and have nots with shouldering financial risk on financers and other risks on borrowers of funds.

The credit rating under Islamic banking and finance evaluates real term business potential and growth trends, instead of evaluating manipulated asset values which has caused recent damages to the credit market. Thus the regulators and credit rating agencies should now adopt principles of Islamic banking to safeguard the financial sector from any more turmoil.

The Juice:

Facing a lawsuit over deceptive mortgage practices, a Bank of America Corp. subsidiary has agreed to modify tens of thousands of loans to keep people in 11 states from losing their homes, the Illinois attorney general's office said Sunday. Borrowers stuck with Countrywide Financial mortgages that they can't afford could see their interest rates reduced or have the loan principal cut. Some might qualify for having to pay nothing but interest for a decade. Even people who can't afford to keep their homes with such changes will be able to get help moving to a new home. "This is going to provide a tremendous amount of relief," said Illinois Attorney General Lisa Madigan.

As I wrote the other day, one of the key parts of being a successful mortgage lender is smart loan servicing.

Contrary to what many people think, banks are not well served by foreclosures. Banks are in the business of lending money, not wheeling and dealing in real estate. The smart lender is always interested in striking a deal to keep people in their homes if it's at all reasonably possible. This is even more true when borrowers are "upside down" on a mortgage.

With this move, B of A settles a giant lawsuit, is likely to benefit financially (getting paid a little less or a little later is a LOT better than taking massive hits from foreclosures) and heads off some truly punitive measures coming from regulators. Not to mention some very good PR.

Smart lenders are in business for the long haul; and with a long view, B of A will probbly come out of this mess far ahead of many other institutions because of this move. Bravo!

Digging into a bowl of beef stroganoff the day after the bust disappeared — it was eventually returned anonymously — Poulakakos recalled some of the customers who had passed through his doors since he opened his bar, Harry's, 36 years ago.

Ivan Boesky once had a Christmas party there. Michael Milken worked over at 60 Broad. Tom Wolfe immortalized the joint in "The Bonfire of the Vanities." Poulakakos says he even got to know Henry Paulson Jr., the former Goldman Sachs chief executive and now the Treasury secretary.

Poulakakos, 70, has also seen his share of ups and downs on the Street, including the 1987 stock market crash, when Harry's filled up at 4 p.m. and stayed open all night. But the upheaval he's witnessing now — much of Wall Street evaporating in a swift and brutal reordering — is, he said, the worst in decades.

"It's the beginning of the end of the era of infatuation with the free market," said Steve Fraser, author of "Wall Street: America's Dream Palace," and a historian. "It's the end of the era where Wall Street carries high degrees of power and prestige. And it's the end of the era of conspicuous displays of wealth. We are entering a new chapter in our history."

To be sure, living large and flaunting it are unlikely to exit the American stage, infused as they are in the country's mojo. But with Congress having approved a $700 billion banking bailout, historians, economists and pundits are also busily debating the ways in which Wall Street's demise will filter into the popular culture.

It's an era that traces its roots back more than two decades, when suspendered titans first became fodder for books and movies. It's an era when eager young traders wearing khakis and toting laptops became dot-com millionaires overnight. And it is an era that roared into hyperdrive during the credit boom of the last decade, when M.B.A.'s and mathematicians raked in millions by trading and betting on ever more exotic securities.

Over all, the past quarter-century has redefined the notion of wealth. In 1982, the first year of the Forbes 400 list, it took about $159 million in today's dollars to make the list; this year, the minimum price of entry was $1.3 billion.

As finance jockeyed with technology as economic bellwethers, job hunters, fortune seekers and the news media hopped along for the ride. CNBC became must-see TV on trading floors and in hair salons, while people gobbled up stories about private yachts, pricey jets and lavish parties, each one bigger and grander than the last.

Finance made enormous and important strides in these years — new ways to parse risk, more opportunities for businesses and individuals to bankroll dreams — but for the average onlooker the industry seemed to be one endless party.

In 1989, tongues wagged when the 50th birthday celebration for the financier Saul Steinberg featured live models posing as Old Masters paintings. That bash was outdone last year, when Stephen Schwarzman, head of the private equity firm Blackstone, feted guests at a 60th birthday party boasting an estimated price tag of $5 million, video tributes and the singer Rod Stewart.

"The money was big in the '80s, compared to the '50s, '60s and '70s. Now it's stunning," said Oliver Stone, who directed the 1987 film "Wall Street" and is the son of a stockbroker. "I thought the '80s would have been an end to a cycle. I thought there would be a bust. But that's not what happened."

Now, with jobs, fortunes and investment banks lost, a cultural linchpin seems to be slipping away.

"This feels very similar, historically, to 1929 and the emotions that filled the air in the months and years that followed the crash," Fraser said. "There is a sense of extraordinary shock and astonishment, which is followed by a sense of rage, outrage and anger directed at the centers of finance."

A WALL STREET hotshot was in a real-estate quandary, and he wanted Barbara Corcoran to help him sort things out.

The numbers are staggering, but they don't begin to explain the greed and incompetence that created this mess.

It began with a terrible bet that was magnified by reckless borrowing, complex securities, and a vast, unregulated shadow market worth nearly $60 trillion that hid the risks until it was too late to do anything about them.

started out 16 months ago as a mortgage crisis, and then slowly evolved into a credit crisis. Now it's something entirely different and much more serious.

What kind of crisis it is today?

"This is a full-blown financial storm and one that comes around perhaps once every 50 or 100 years. This is the real thing," says Jim Grant, the editor of "Grant's Interest Rate Observer."

Grant is one of the country’s foremost experts on credit markets. He says it didn't have to happen, that this disaster was created entirely by Wall Street itself, during a time of relative prosperity. And they did it by placing a trillion dollar bet, with mostly borrowed money, that the riskiest mortgages in the country could be turned into gold-plated investments.

"If you look at how this started with the subprime crisis, it doesn't seem to be a good bet to put your money behind the idea that people with the lowest income and the poorest credit ratings are gonna be able to pay off their mortgages," Kroft points out.

"The idea that you could lend money to someone who couldn't pay it back is not an inherently attractive idea to the layman, right. However, it seemed to fly with people who were making $10 million a year," Grant says.

With its clients clamoring for safe investments with above average return, the big Wall Street investment houses bought up millions of the least dependable mortgages, chopped them up into tiny bits and pieces, and repackaged them as exotic investment securities that hardly anyone could understand.

60 Minutes looked at one of the selling documents of such a security with Frank Partnoy, a former derivatives broker and corporate securities attorney, who now teaches law at the University of San Diego.

"It's hundreds and hundreds of pages of very small print, a lot of detail here," Partnoy explains.

Asked if he thinks anyone ever reads all this fine-print, Partnoy says, "I doubt many people read it."

These complex financial instruments were actually designed by mathematicians and physicists, who used algorithms and computer models to reconstitute the unreliable loans in a way that was supposed to eliminate most of the risk.

"Obviously they turned out to be wrong," Partnoy says.

Asked why, he says, "Because you can't model human behavior with math."

"How much of this catastrophe had to do with the instruments that Wall Street created and chose to buy…and sell?" Kroft asks Jim Grant.

"The instruments themselves are at the heart of this mess," Grant says. "They are complex, in effect, mortgage science projects devised by these Nobel-tracked physicists who came to work on Wall Street for the very purpose of creating complex instruments with all manner of detailed protocols, and who gets paid when and how much. And the complexity of the structures is at the very center of the crisis of credit today."

"People don't know what they're made up of, how they're gonna behave," Kroft remarks.

"Right," Grant replies.

But it didn't stop ratings agencies, like Standard & Poor's and Moody's, from certifying the dodgy securities investment grade, and it didn't stop Wall Street from making billions of dollars selling them to banks, pension funds, and other institutional investors all over the world. But that was just the beginning of the crisis.

What most people outside of Wall Street and Washington don't know is that a lot of people who bought these risky mortgage securities also went out and bought even more arcane investments that Wall Street was peddling called "credit default swaps." And they have turned out to be a much bigger problem.

"I'm old and coming up to retirement," says Jeff Ramer, 64, an attorney who has lived more than half his life in this affluent community. "I'm concerned that the money we put aside for retirement has taken a great hit."

Through the years he has voted for more Republicans than Democrats, he says. But the financial crisis roiling Wall Street has solidified his desire for political change — and his support for Democratic presidential nominee Barack Obama. "It has a bearing for me," Ramer says of the economy.

The meltdown that has caused investment firms to fall, stocks to plunge and the credit markets to slow to a virtual standstill has made the economy the primary concern for many Americans as they prepare to select a new president in barely four weeks.

The tremors on Wall Street and fallout from the $700 billion rescue plan President Bush signed into law last week are felt acutely in this state. It is home to numerous hedge funds, Fortune 500 companies and residents who work in finance and related industries on Wall Street and elsewhere.

Connecticut draws 45% of its income tax revenue from Fairfield County, a finance center next door to New York. Greenwich alone, tucked in the county's southern end, paid more than $598 million in state income taxes in 2006, 12.7% of the statewide total, according to the governor's office.

Though the state has more unaffiliated voters than those who declare themselves Republican or Democrat, polls show Connecticut solidly in Obama's column. In a SurveyUSA poll taken Sept. 24-25 for New York's WABC-TV, 54% of those questioned support Obama, and 38% prefer Republican John McCain.

"The impact of the financial situation here is probably similar to that around the nation," says Ken Dautrich, public policy professor at the University of Connecticut. "(Voters) want change, which of course benefits Obama more than it does McCain."

Connecticut Sen. Joe Lieberman, an independent who was the Democratic vice presidential nominee in 2000, supports McCain. That endorsement has done little to help McCain, Dautrich says.

"I think the feeling is that Lieberman has crossed the line," he says. "He's not looking very independent, so we've seen his popularity drop through the floor as a result of his outright endorsement and speech at the Republican Convention."

The head of Connecticut's Republican Party says the financial crisis may help McCain here by contrasting his economic philosophy with Obama's.

"McCain understands the free market," says Chris Healy, the state party's chairman. "He understands the role government plays in it. He understands the punishing role taxes play in it in tough times. … Is there enough time to make that case? Yes. I think McCain will make it."

Along Greenwich Avenue, known to Greenwich residents simply as "The Avenue," a glistening array of Jaguars and Mercedes Benzes is parked a diamond's toss from the Bentley dealership and other high-end retailers downtown.

Some who work in local shops say business has slowed. Jose Candray, manager of Village Bagels, says tips are smaller and customers are buying their own cream cheese rather than paying a little more to have deli employees layer it on.

Several Greenwich residents say they're not impressed by how either political party handled the partisan tussling over the economic recovery package.

"Both lousy," says Tom Mahr, 50, an investment banker who lives and works in Greenwich.

It didn't make him change his mind about probably voting for McCain in November.

"I'm a believer that less taxes for everybody is good as opposed to less taxes for some," says Mahr, explaining why he prefers McCain. "We run a small company with 40 people worldwide. If taxes go up, it's hard for us."

Ramer says he believes in the free market system, but "I favor the idea of using public money" to promote stability.

Others say the economy is only one issue guiding their decision.

"In the beginning, I thought McCain was a decent sort of candidate in that it wouldn't matter enormously if he won," says Jane Pattison, 71, whose support of Obama has become even more solid in the wake of the turmoil on Wall Street. "I thought they were both good men.

"But lately I've seen great flaws in (McCain): instability, an erratic nature and, of course, the most important thing was his selection of a vice presidential candidate," Alaska Gov. Sarah Palin.

Bob Jermain, an investment banker, also remains an Obama supporter. His lifestyle has changed because of the country's fiscal troubles. "My kids don't need 20 sweaters," says Jermain, 49. "We all bought way more than we needed because we could. Capitalism gone wild."

Many Americans spent an uneasy weekend wondering whether the rescue would help in time — or at all — and trying to figure out where next to cut back as the economic screws tighten.

Would financing come through for the new washing machine? Could the old car hold out another year? Would a nice dinner out bust the budget?

"People are afraid," said Linda Morrow, who owns a shoe and handbag store in a Dallas mall. "People basically don't know what the future will bring. They're afraid to spend. They want to see what the bailout will do. They're waiting till after the election."

In more than two dozen interviews with The Associated Press across the country over the weekend, Americans described those concerns, from tighter personal credit to worries about small businesses to doubts about simply making ends meet.

Matt Watson, a 41-year-old sales manager at a showroom of motorcycles and all-terrain vehicles in Morgantown, W.Va., said his family has cut back on dinners out and is buying more generic products.

The other day, he grabbed a $5 bill off his dresser and headed to a Walgreen's drugstore for milk and bread.

"I could not buy milk and bread for $5," Watson said, shaking his head in disbelief.

Aimee Robinson needs a $200,000 loan soon for her business, which sells eco-friendly furniture in Seattle, and wonders whether the bailout might ease the way. The interest rate on her store's credit card just jumped to 17 percent from 8 percent.

"Everything came to a standstill" this summer, she said. "It hit me really, really bad."

The bailout plan, quickly signed into law by President Bush after it passed the House by a comfortable margin Friday, will buy bad mortgage debt off the books of staggering banks in hopes of shoring up the American financial system.

It was put together during a harrowing three weeks for the U.S. economy that began with the bankruptcy of investment house Lehman Brothers and a government bailout of insurer American International Group.

The damage has seeped into far-flung corners of the economy. At a company called Tortilla Lady in Flagstaff, Ariz., five women make 1,500 to 1,800 dozen tortillas in an average week, some sold in the shop and others to stores.

For the week of Sept. 15, the week Lehman Brothers collapsed and the crisis took hold, production was only about 1,000 dozen.

"Once this really got into the news and people started understanding what Wall Street meant to them, they've become more conscious of their own budget and the limitation of their budget," said Phebe Faus, an owner of Tortilla Lady.

An AP-GfK poll released last week before the House passed the revised bill found Americans divided on whether they supported the bailout. But a solid majority, eight in 10, said they feared the financial crisis would hit them directly. Many said they were conflicted, lamenting that taxpayers had to step in but believing something had to be done to prop up the economy.

Among that type of adherent is Morgan Cavanaugh, owner of a 75-year-old Irish pub that sits a few blocks from Lake Erie in downtown Cleveland. Standing behind the weathered mahogany bar, he said the bailout stinks.

"I don't believe we should let them off the hook," he said. "Either we pay now or we pay later. To me, it's extortion."

To him it's also necessary: The same day, he was talking on his cell phone to a man who has been trying to buy a suburban bar from Cavanaugh but has not been able to secure a loan.

"It passed," Cavanaugh told the man just after the House vote Friday. "Let's work something out." He said the man planned to try for the loan again and said the prospects were "looking up."

As for business at the bar: Cavanaugh has lowered his drink prices for his customers, a crowd heavy with bankers and brokers. He calls the special the Bankers' Booze Bailout Fund.

Tight credit remains at the heart of the crisis. In a financial climate of fear and mistrust, banks are charging one another much higher rates to borrow money, and they are snapping their wallets shut to Americans.

The bailout package may get the gears of lending moving again, but it hasn't happened yet.

Last year, Pennsylvania auto dealer Bill Rosado's customers had no trouble arranging financing for the cars and trucks they bought. Banks were lined up to provide cash even for people with a risky credit history.

Those days are gone. A customer with decent credit who might have been approved for 100 percent financing not long ago is lucky to get a loan at all today, and even then the interest rate is almost guaranteed to be higher.

"The people with horrible credit, I can justify saying, 'No more," Rosado said. "But this is affecting people whose credit isn't that bad. People with 650 credit scores are being turned down."

The rescue was aimed in part at restoring confidence in the financial markets. As the crisis worsened, stocks took a huge hit, and Americans seeing their stock funds and retirement savings sapped are more reluctant to spend money.

"A lot of people who come here are wealthy people, and they've lost a lot of money in stocks," said Jaime Galvan, who manages a car wash in Long Beach, Calif. "Most of the people, they're concerned. They don't want to spend."

And a turnaround is no guarantee. President Bush has warned it will take "some time" for the full effects of the bailout bill to take hold in an economy that had a world of trouble even before the banking crisis.

In the meantime, Americans are left find ways to cut back even further.

In Dallas, sales assistant Yvonna Vaughan downgraded from Newport cigarettes to less expensive Kools and wonders whether she'll be smoking generics before long.

In Denver, secretary Bernice Adolf pays close attention to the sales at her grocery store and makes spaghetti at home with her husband on Friday night instead of their usual dinners out.

"We're trying to save wherever we can," she said. "I don't think the bailout is going to last too long."

At Zeitoun, a Mediterranean restaurant not far from the Miami airport, owner Samira Marino has noticed everyone is ordering water and more people are sharing meals.

Mike Belo of Columbia, S.C., hasn't put off any major purchases — yet. But he's keeping an eye on his business as a property insurance agent, which has dipped as new home sales have slowed.

"It's hard to get a handle on it," he said of the bailout. "I'm not in favor of bailing out a bank, but I guess if it's the No. 1 bank that offers the money ... we're in a no-win situation, really."

"If I go under," he said, "no one's going to bail me out."

Let me be the first to say this, cause I haven’t noticed anyone else pointing it out yet.  The terrorists won.  Go figure.  Let’s step back a few years to September 11, 2001.  If you’ll recall, almost everyone who predicts such things was claiming that the terrorists who flew the planes into the World Trade Center towers and the Pentagon were doing it, for a large part, in an attempt to destabilize the United States economy.  What they did instead was rally Americans to stand beside each other and re-created the sense of community that many citizens had lost.  In fact, due to Americans coming together, the economy actually rose significantly.  Yes, the stock market fell, predictably, but it recovered a lot faster than such events in the past and things seemed very rosy for the American public and the American dream.

Flash-forward seven years and the economy is doing just what the terrorists hoped it would, crumbling under the weight of Capitalist greed.  You see, regardless of which political side you stand on, it’s hard to deny that there is one thing that got us into this mess – greed.  From the family who wants to buy a home larger than they can afford, to the mortgage broker who gets them that mortgage, knowing they’ll probably end up in the hole, but happy with his commission check, to the banks who approved such loans, looking for larger paydays, to government regulators and so-called watchdogs who turned a blind eye to such practices, to Fannie Mae and Freddie Mac who bought the mortgages, knowing that they probably weren’t good investments, but assuring the investing public, that mortgage-based securities were the safest non-insured investments.

And now, we have an $811-Billion bailout package, approved by Congress and the President.  And no, I didn’t misquote that – pull out your calculator and do the math.  For that matter, who needs the bailout?  JP Morgan Chase had the wherewithal to purchase Washington Mutual, Citi grabbed Wachovia (or did they?) and Bank of America picked up Merrill Lynch and Countrywide.

Personally, I am of the opinion that this nation could use a revisit to the Great Depression reality check.  This bailout is not going to help in the long run, just delay things again a little more.  And if our legislators and Chief of State want to really help, they’d send the American public the money, in the form of individually-coded vouchers that they could only utilize to pay their mortgage or rent.  That way, the banks get bailed out, people get to keep their homes, and the economy has a chance of gently recovering.  Trust me, in the long run, the 11% interest they’ll charge the banks for the bailout cash won’t scratch the surface of the long-term effects of this action.

You may be wondering how even the Republicans can support this bailout.  The answer is easy.  You see, we don’t have a true Capitalist society here in the United States anymore.  We haven’t since – guess when – that’s right, the 1930’s, when our esteemed government tried to fix the last Great Depression.

You remember, when Congress and FDR passed “The New Deal” – various legislations creating Welfare, Medicare, Medicaid, Social Security, the FDIC, extending mortgages past seven year terms, the Agricultural Adjustment Act (which pays farmers NOT to grow crops), and most importantly, the Banking Act of 1933 (the second Glass-Steagall Act), which paved the way for the elimination of the Gold Standard.

For the uninitiated, the Gold Standard states that gold is the standard of value for a country’s currency.  In other words, a hundred dollar bill could be redeemed for $100 worth of gold.  You may recall your grandparents talking about gold certificates or silver certificates – those are currency, which, by definition, still fall under the gold standard.  What is most important about the Gold Standard is that it defined the value of our money by “hard currency.”  Without that definition, our money is barely worth the paper it is printed on – as many folks are now learning.  Nixon sealed the deal back in August of 1971, completely eliminating the gold standard, which has not been used by any country since then.  Instead, we use a Fiat money system, which means that our money is intrinsically useless; it is merely a medium of exchange.

From FDR's own inaugural speech,

Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men.

True they have tried, but their efforts have been cast in the pattern of an outworn tradition. Faced by failure of credit they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading tearfully for restored confidence. They know only the rules of a generation of self-seekers. They have no vision, and when there is no vision the people perish.

...there must be an end to a conduct in banking and in business which too often has given to a sacred trust the likeness of callous and selfish wrongdoing. Small wonder that confidence languishes, for it thrives only on honesty, on honor, on the sacredness of obligations, on faithful protection, on unselfish performance; without them it cannot live.

There must be a strict supervision of all banking and credits and investments. There must be an end to speculation with other people’s money. And there must be provision for an adequate but sound currency..."

So all we have to fear is fear itself?  Did I mention how much it cost the US government to finance the various aspects of Roosevelt’s New Deal?  Somewhere between $10 and $20-Billion, over a nine year period, ending with World War II.  Yes, that’s right, just in 1936 alone, the cost was $9-BILLION!  $9-Billion, in 1936! Taxes went up, up, up, needless to say.  Do I need mention that almost all of the programs FDR initiated that still exist today are already Billions of dollars in arrears?  Now we’ve initiated a single bank bailout program that will INITIALLY cost nearly 80-times the total payout for FDR’s programs over a 10-year period.  Hey, maybe we can get Germany to try and take over the world again.

In all seriousness, have we learned nothing from our grandparent’s generation who lived through this mess back in the 30’s?  Apparently not, since we’re on track to fall once more into the well.  Now, there were some really great things that came out of FDR’s reign in the White House.  For one, labor unions and other workforce reforms were put into place that are still in effect which have had a positive effect on our economy – although I would suggest that many of the labor unions have run their course at this point.

But back to the United States economic policies – since FDR’s New Deal, American capitalism has actually been a form of Socialized Capitalism.  Adam Smith would be rolling in his grave.  Again, this was not necessarily a bad thing, as it did help American workers get back on their feet and curtailed industrialist greed, at least temporarily.  In fact, John Maynard Keynes predicted that if the reforms were carried on to their logical conclusion, that we would be working shorter hours and earning more money in just a few decades.

Unfortunately, his theories did not fully anticipate the government's attempts to siphon-off man hours to help fight the 1950’s Cold War with Russia.  Or the continued movement of women into the workforce that began in 1950 and rose significantly through the 70’s and 80’s.  Not to mention the fact that there is some evidence to suggest that longer working hours leads to sustained inflation, which leads to longer working hours, which leads to – well, you see my point.

So now that we have Socialized Capitalism, where we routinely bail out individuals – to a point where we need some sweeping reforms of the welfare and unemployment programs – so why not bail out corporate America when it gets greedy and overreaching?

This isn’t new news.  Larry Burkett predicted this back in 1991, in his classic, but now out of print book, The Coming Economic Earthquake.  The book includes a chapter that gives a fictionalized account of how things might play out in 1999, if Larry was right.  What’s scary is how very un-fictional much of his story sounds now.  Economic Journalists Neil Howe and Phillip Longman pointed out back in 1992 that government spending for entitlements was out of control and if not curtailed would eventually result in disaster.  Meanwhile Pastor Gary Keesee may have wished his latest book, Fixing the Money Thing, wherein he explains a number of the concept his Forward Financial Group have used to help people out of debt, had come out a few weeks later (or maybe a few months earlier).  In the early chapters, he lays the groundwork of what is happening in the country and also has vision of the future, which turns out to be a little more conservative, but still a horribly scary picture of what our next few months may look like.

And in the end, the terrorists have won.  No matter how this eventually plays out, they’ve proven that Americans are greedy, capitalist fiends.  What’s more, we’ve also managed to prove that our grand system of capitalism is a fraudulent, failed beast – after all, if it really worked, we’d let these banks flounder and recover on their own.  And neither candidate is willing to say which of their programs they may have to eliminate to help pay for this bailout.  My guess is, regardless of who gets elected, we aren’t going to see another personalized economic stimulus package, but rather, higher taxes across the board, for everything from income to foreign goods (tariffs) to telecommunications to tobacco and alcohol and sales – anything to help “stimulate” the economy by saving some bank CEOs’ butts.  The same banks that now charge fees for everything from using the ATM, to cashing a check, to talking to a teller or processing a payment over the phone or Internet.

The worst part is, the American people, as far as I can tell, are largely against the bailout, but the politicians, by and large, ignored literally thousands of calls to the switchboard – not by some artificial grassroots organizations, but from hundreds of actual citizens, taking an interest in the government, trying to let our elected officials know how they thought the bailout should be handled.  They were, unfortunately ignored.  Now, while I’m not usually one to jump on the bandwagon – I usually lean towards the idea that there may have been information that elected officials were privy to that the public is not – I think in this case, Congress and the President should have listened to the people.  And just in case you wondered, here are links to which people voted for and against the bailout – in the House and the Senate.  You might want to take that into account when you head to the polls later this year.

I wish I had more answers to offer, but I don’t, other than to offer a couple of words of wisdom from God’s Word, spoken to the Israelites, “What other nation is so great as to have their gods near them the way the LORD our God is near us whenever we pray to him?  …Only be careful, and watch yourselves closely so that you do not forget the things your eyes have seen or let them slip from your heart as long as you live. Teach them to your children and to their children after them.  Remember the day… if from there you seek the LORD your God, you will find him if you look for him with all your heart and with all your soul.  When you are in distress and all these things have happened to you, then in later days you will return to the LORD your God and obey him.  For the LORD your God is a merciful God; he will not abandon or destroy you or forget the covenant with your forefathers, which he confirmed to them by oath.” (Deuteronomy 4: 7, 9, 29-31)

And, “if my people, who are called by my name, will humble themselves and pray and seek my face and turn from their wicked ways, then will I hear from heaven and will forgive their sin and will heal their land.  Now my eyes will be open and my ears attentive to the prayers offered in this place.” (2 Chronicles 7:14-15)

ACORN Housing provides mortgage loan counseling, first-time homebuyer classes, and helps clients obtain affordable mortgages through unique lending partnerships. They even set up their own lending institution as a non-profit mortgage brokerage with CitiMortgage, Bank of America, First American Title Insurance Company, and Fannie Mae to help low- and moderate-income families find safe, affordable mortgages.

This is one of the community organizing groups into which the Democrats tried to funnel billions of dollars in the first draft designed to capture the 700 billion pound gorilla. Read this and understand why that little treat was considered nearly criminal by even the casual observers.

First. Obama claimed he has no ties to “a group he did some legal work for” back in 1995. Let’s look into that claim.

ACORN, which receives partial taxpayer funding, used those funds to conduct solicitations for contributions to and raised over $800,000 for Obama in Philadelphia alone.

Where does ACORN, the political group get this money? In 2006 Project Vote hired ACORN and CSI as its highest paid contractors, paying ACORN $4,649,037 and CSI $779,016. It has also been well documented that money flows to them from various sources including from the federally chartered non-profit ACORN Housing Corporation, as you will see below.

Now, on to the article.
--------------------------------------------------------------------------------

The Community Reinvestment Act (CRA), with a smattering of Obama and ACORN thrown in to the mix assisted in the creation of the subprime housing saga. The saga led to the governmental take over of Fannie Mae and Freddie Mac.

Obama tries to omit Fannie Mae and Freddie Mac, confuses them and turns grey while discussing the bailout. Obama “obviously” has no idea who Fannie Mae and Freddie Mac are but I digress.

There is still more from another group, Consumer Rights League (CRL), who appeared as supporting evidence in an earlier NoQuarter story, Obama’s Acorn: A Leftist Social Reform Group. Part II who has done extensive research on the ACORN Housing Corporation. Consumer Right’s League’s research is chronicled in the following paper, ACORN’s Hypocritical House of Cards: How One “Community” Group Helped the Housing Crisis Harm Taxpayers, it is a must read to understand ACORN and the housing bubble.

Mr. James Terry recently appeared on Fox News discussing the fact that ACORN will benefit from the current bailout bill. ACORN did not respond to calls from Fox News. Mr. James Terry:

From their report:

This report focuses on the troubling record of the Association of Community Organizations for Reform Now (ACORN) and its tax-exempt offshoot, the ACORN Housing Corporation (AHC). The ACORN/AHC version of consumer advocacy has consisted of a three-decade assault on free enterprise and a history of extracting resources from financial lenders seeking abatement of ACORN’s public relations assaults. Specifically, this report examines ACORN’s impact on the housing problem. Documents provided by internal whistleblowers, cross-checked with public records and recorded events, expose hypocritical lending recommendations tied to ACORN Housing Corporation’s agreements with major banks—agreements that end up harming consumers. Media reports, combined with information provided by former ACORN employees, show that:

• ACORN leveraged the Community Reinvestment Act in order to
attack lenders’ reputations and secure financial resources for itself;
it has also endorsed loans offered by companies that fund ACORN
operations
• ACORN’s decades of lobbying and publicity seeking have contributed
to the current housing crisis by lowering lending standards
• Despite raking in a troubling 40 percent of its revenue from taxpayers
over the last three years, ACORN Housing Corporation’s actions
range from controversial to borderline illegal (This summer when Bush signed the current housing bill into law, he effectively gave ACORN and ACORN Housing Corporation a portion of upwards of $600 million dollars. There is no firewall between ACORN and AHC so the money for housing also supports the the political arm….Project Vote. Read more on that here from the Wall Street Journal.)
• AHC has worked to obtain mortgages for undocumented
workers
• AHC relies on undocumented income, “under the table” money
that may not be reported to the Internal Revenue Service
• ACORN’s “financial justice” operations attack lenders for “exotic”
loans, but AHC has recommended ten-year interest-only
loans (which deny equity to the buyer) and reverse mortgages
(which can be detrimental to senior citizens)
• AHC may have violated federal law by failing to maintain a
proper distinction between its tax-exempt housing work and
the aggressive political activities of ACORN

More About ACORN and ACORN Housing Corporation from CRL’s report:

To understand the current subprime credit mess is to glimpse a world in which a politically active organization with a non-profit housing arm reaps millions of dollars through “rent seeking” or manipulation of favorable laws. ACORN and its non-profit housing arm have taken in millions of taxpayer and corporate dollars by abusing a three-decade-old law intended to help the poor obtain housing. For decades, the activist organization known as ACORN has grabbed headlines—and cash—by attacking mortgage lenders in the name of citizens’ rights. Considerably less attention has been paid to the amount of taxpayer money that funds ACORN Housing Corporation (AHC) and to the financial rewards ACORN has amassed

The troubling thing about ACORN,

it does not claim federal tax exemption, therefore it is free to engage in politics and is not required to disclose details of its vast and varied financial operations. Their membership includes more than 350,000 families, in more than half dozen countries.

According to CRL’s report, ACORN has a business model that is repeated over and over again, each time targeting a different company or financial institution. Here is that model:

Issues—–>Target—–>Direct Actions—–>Victory——>Partnership—–>$$$$ For Organizing

This information is provided by Former ACORN Organizer and University of Georgia Professor Fred Brooks.

CRL really did their homework and was able to retrieve information on the funding ACORN receives from financial institutions through whistleblowers (former employees) and public records. Some of the whistleblowers provided CRL with internal e-mails. Here are some of those figures:

In addition to the millions of taxpayer dollars AHC has taken in, one of
the organization’s tax returns shows private donations of more than $4 million
from major banks.6 Whistleblower documents covering AHC’s revenue
sources from July 1, 2004 through June 31, 2005 included:

• ACORN (Citibank Partnership)………………………….$127,500
• ACORN (Citibank Partnership)………………………….$240,000
• ACORN (Freddie Mac)……………………………………….$35,000
• Ameriquest Mortgage…………………………………………$130,000
• Fannie Mae (for Broadband)…………………………………$20,000
• Fannie Mae FYE 2005–2006………………………………$100,000
• JP Morgan Chase 2005–2006…………………………..$1,000,000
• Bank of America 2005–2006……………………………$1,390,000
• Washington Mutual…………………………………………..$175,000
• M & T Bank…………………………………………………….$150,000
• United Way (American Dream)……………………………..$15,000

Why should banks pay without a fight? Banks according to CRL, “look at it as a cost of doing business, according to Sol Stern in "ACORN’s Nutty Regime for Cities" in the City Journal.” It seems that ACORN forces banks to see it as doing business….according to an internal statement that CRL retrieved.

ACORN does have a historical place in the current home crisis. Here is more on that, ACORN:

…has become both a leading beneficiary and an important advocate of the Community Reinvestment Act (CRA). Three decades ago politicians, spurred by activist groups, found that banks were engaging in “redlining” refusing loans in areas with high concentrations of individuals with low credit scores. Legislators passed a bill that gave community groups significant sway over bank mergers based on the banks’ record of lending to minorities and the poor. The fact that poor credit put such borrowers at higher risk for default was deemed irrelevant. ACORN and AHC have taken advantage of that 1977 bill and have aggressively argued— since at least 1991—for its continuation. Given ACORN’s reliance on AHC to funnel federal funds for “mortgage counseling,” such support is hardly surprising.

It is important that we understand the Community Reinvestment Act, its passage and who it was passed under.

The Community Reinvestment Act or (CRA) was passed in 1977 under President Jimmy Carter. Take the time to watch the following video. It explains Obama, his advisers, foreclosures, the Community Reinvestment Act of 1977 and their connections to the subprime mortgage loans:

The CRA’s purpose is:

to encourage depository institutions to help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods, consistent with safe and sound banking operations. It was enacted by the Congress in 1977 (12 U.S.C. 2901) and is implemented by Regulations 12 CFR parts 25, 228, 345, and 563e. (See Regulation).

Furthermore there are reports that must be checked periodically:

The CRA requires that each insured depository institution’s record in helping meet the credit needs of its entire community be evaluated periodically. That record is taken into account in considering an institution’s application for deposit facilities, including mergers and acquisitions. (See CRA Ratings) CRA examinations (see Exam Schedules) are conducted by the federal agencies that are responsible for supervising depository institutions: the Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), and the Office of Thrift Supervision (OTS).

According to Thomas J. DiLorenzo in The Government-Created Subprime Mortgage Meltdown,

The original lobbyists for the CRA were the hardcore leftists who supported the Carter administration and were often rewarded for their support with government grants and programs like the CRA that they benefited from. These included various “neighborhood organizations,” as they like to call themselves, such as “ACORN” (Association of Community Organizations for Reform Now). These organizations claim that over $1 trillion in CRA loans have been made, although no one seems to know the magnitude with much certainty. A U.S. Senate Banking Committee staffer told me about ten years ago that at least $100 billion in such loans had been made in the first twenty years of the Act.

DiLorenzo explains the Catch-22 that these “community” banks find themselves in as a result of this 30 year old law:

Banks have been placed in a Catch 22 situation by the CRA: If they comply, they know they will have to suffer from more loan defaults. If they don’t comply, they face financial penalties and, worse yet, their business plans for mergers, branch expansions, etc. can be blocked by CRA protesters, which can cost a large corporation like Bank of America billions of dollars. Like most businesses, they have largely buckled under and have surrendered to their bureaucratic masters.

Consequently, banks in every community in America have been forced to hold a portfolio of bad loans, euphemistically referred to as “subprime” loans. In order to compensate themselves for the added risk of extending these loans, many lenders have increased the lending fees associated with mortgage loans. This is simply an indirect way of doing what banks always do – and what they must do to remain solvent: charging effectively higher rates of interest on riskier loans.

DiLorenzo has more to say on this “predatory lending”:

Then groups like ACORN call these loans discriminatory forcing the banks into making loans that they ultimately have no protection from. Thus, if one browses the ACORN web site, one can read of their boasts of having “predatory lending laws” passed in numerous states which outlaw such fees, prohibiting banks from protecting themselves from the added risk involved in making forced loans to “subprime” borrowers.

Of course it doesn’t end there. Banks are constantly threatened with fines if they do not comply with the requirements of the CRA. See how the Democrats have been forcing the issue lately. Investors.com wrote about this very subject:

Only, the risk-taking was her idea (Rep. Nancy Pelosi) — and the idea of all the other Democrats, along with a handful of Republicans, who over the past 30 years have demonized lenders as racist and passed regulation after regulation pressuring them to make more loans to unqualified borrowers in the name of diversity.

They were the ones who screamed — “REDLINING!” — and sent banks scurrying for cover in low-income neighborhoods, where they have been forced to lower long-held industry standards for judging creditworthiness to make the subprime loans.

If they don’t comply, they are threatened with stiff penalties under the Community Reinvestment Act, or CRA, a law that forces banks to make home loans to people with poor credit risks.

Banks are required to keep up good ratings or mergers and other transactions can be blocked by the federal government. The CRA grew enormous during the Clinton era, with the many amendments that were added raising the amount of home loans to otherwise unqualified low-income borrowers. There were other problems associated with these amendments. This is exactly where Obama and ACORN enter the scene.

In February 2008, in The New York Post, economics professor Stan Liebowitz of the University of Texas at Dallas suggested:

At the crisis’ core are loans that were made with virtually nonexistent underwriting standards—no verification of income or assets; little consideration of the applicant’s ability to make payments; no down payment … From the current hand-wringing, you’d think that the banks came up with the idea of looser underwriting standards on their own, with regulators just asleep on the job. In fact, it was the regulators who relaxed these standards—at the behest of community groups and “progressive” political forces.

Liebowitz further pointed to ACORN’s role in the current housing “crisis” and to current advertisements ighlighting its role in procuring loans without using credit scores, 100-percent financed loans, and acceptance of undocumented income.

ACORN was responsible for issuing mortgages via CRA with little or no paperwork. They were also known as NINJAs….It stands for No Income, No Job, No Assets. These loans were still available in February of this year.

More from a New York Times, 1992 article, Fading Red Line; A special report; New Hope in Inner Cities: Banks Offering Mortgages:

ACORN’s longtime housing leader, Michael Shea, admitted that banks would not have adopted ultimately harmful policies “if there was no community pressure and the law,” but
that those factors made “a lot of bankers see it’s in their self-interest.”

That self interest— ACORN’s and modern banks’—made possible the extension of cheap credit to risky borrowers and has led directly to the modern subprime mess. It’s important to note, as the Times did, that in this campaign there were “many such voices. But by far the loudest belongs to Acorn…”

Of course not all financing for ACORN comes from financial institutions, a good deal of their financing comes from the American taxpayer in the form of grants and contracts because AHC is tax exempt. And CRL says this how AHC’s finances breakdown:

Two out of every five dollars AHC takes in come from taxpayer coffers.

Since so much money they raise comes from taxpayers, don’t you think ACORN should be doing good works? They may have some good work in the past, in recent years, not all of their works have been helpful to their clients or good use of taxpayer money. Here are some things they have been doing:

• Poor service to some of its vulnerable clients

• Potential staff lapses allowing HUD fraud

• Controversial collaborations assisting undocumented
workers in obtaining mortgages

• Assistance to borrowers using “under the table”
undocumented income in loan applications

• Ironic (if not hypocritical) recommendations
for exotic loans

• Possible violations of federal law through
failure to maintain a distinction between
the activities of AHC and those of the very
political ACORN

Consumer Rights League has received many internal e-mails via whistleblowers as I said earlier. CRL has more information about ACORN’s questionable loan documentation. CRL discusses that more:

Of specific concern is ACORN’s agreement to provide letters of “undocumented income” to Bank of America.According to a 2005 internal ACORN e-mail, that bank “pays ¼ of $1,300,000 each quarter.”Another pre-2007 ACORN document instructs its staff:

Undocumented income is a feature that allows ACORN Housing counselors to capture the applicant(s) total household income. Primarily observed in minority and immigrant communities, this type of income is not reported to the IRS and is also known as under-the-table.

As we can see ACORN and ACORN Housing Corporation are both quite closely connected. Not only are they connected to each other but pretty closely related to the current housing crisis. In light of the Washington Mutual collapse and the federal government taking over Freddie Mac and Frannie Mae, it is important to note that ACORN had their fingers in those “honey pots” too. One more mortgage company that ACORN played business with that went down was Ameriquest Mortgage highlighted in the following article, "Latest Ameriquest Speculation: Citigroup, Morgan Stanley".

I am left with three questions. How many more financial institutions will suffer at ACORN’s hand? How many companies will be bailed out that are in bed with ACORN? And how much money will ACORN receive in the form of funds from the bailout? See more on the bailout, "ACORN-NUTS!"- at TheCorner at National Review Online (NRO).

CRL has a very interesting conclusion to their research. I will let CRL conclude my article for me. Here is their conclusion:

ACORN’s long history of abusing the public’s trust seems to have continued through the housing bubble. Its advocacy for loose credit continued through the housing bubble. Its advocacy for loose credit played a role in the current subprime mess. Its advocacy of exotic loans calls into question the wisdom of giving taxpayer money to the organization. And its record of inappropriate ties between a non-profit that receives government funding and a political organization may violate federal laws. Congressional leaders should be wary of donating hard-earned tax dollars to a group with this sordid record. At a minimum, a Congressional investigation is warranted.

This article is republished with NancyA's permission from NoQuarter.

Today is a gloomy rainy day in Stratford, CT.  There isn't  too much going.  But if you know me, you know that I'm always searching and praying for wisdom.  I've been up since 3am thinking of ways to help you create wealth for your  family.  I believe that nothing beats the self directed IRA.  I also believe 100% in Equity Trust Company as a true vehicle to build tax free wealth.  Aren't you tired of getting headaches worrying about the stock market?

I've been out of it since the Qualcom frenzy back in the late 90's.  Today I don't worry about the stockmarket anymore.  My passive income is set up with real estate, tax liens(which are government back), and my training classes.  My job these days are to provide you with top quality information on how to make you wealthy.  I will soon put a book out on how to quit your job in less than 2 years, and never look back.

Today is a lite Sunday.

Come back tomorrow as I reveal my latest no money down real estate deal that will net  about $50,000 tax free with my self directed IRA at Equity Trust Company.

Don't be afraid to email me with any questions you may have at  cljones2008@gmail.com

ATTENTION INVESTORS!!!!!!

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until next time,

keep God 1st, Invest in people

CL Jones

I went to an ACORN Housing committee meeting that was attended by some local city council officials. ACORN is the non profit which works for economic justice in housing and health. ACORN has been denigrated in the past by Rush Limbaugh, Bill O' Reilly, and other radio talk show hosts who support McCain and the republican party.

Earlier in the week, I had been asked to join ACORN in efforts to shut down a housing auction. Before this I had no idea what an ACORN was. The auctioneer was so freaked out by the shouting ACORN protesters, that she got on the phone to her superiors and was screaming, "what do I do, they have the press here for god's sake!" There were about fifteen protesters with home made signs which read, "SAVE MY HOUSE" and "PLEASE HELP". There was not a lot of variation from that theme. The protesters and I chanted, "the people, united will never be defeated". The police and security guards, the by standers and the real estate investors were all watching us, mostly because there were two news stations which were there with their tv cameras and reporters holding up microphones. 

The city employed auctioneer decided to lie to the public and the press, saying that there was no auction. Then, when we, the ACORN crowd, followed by the press were all walking away from the courthouse where foreclosure auctions take place, the auctioneer suddenly started auctioning off our client's house! When she saw that we saw what she was doing, she said in a quite voice, "house #2765346 going, going, gone" in one hurried breathy whisper, so fast that we barely had time to blink. Then she told us to all leave.

We were stunned. That she, a city employee, had been lying after all her protests that she was telling the truth! We had gone back and forth for about an hour, "that house is not being auctioned today", "yes, it is", "no, it's not", "yes it is". "Oh. Well, you don't have a number." Then, "you are at the wrong place."

This city employee had the power to decide which house was auctioned or not auctioned, depending on whatever the hell she wanted to do. By not letting any one bid on it, she had prevented any auction to occur at all. It was so spineless, she was cowed into going which ever way the wind blew, about something as fundamental as a person's home.

We ACORNettes had wanted to stop the foreclosure sale of this client's house, but we didn't know it was going to all come down to something as truly arbitrary as, say, this lass's Pepsi break. If we had not turned around, what would have happened to this guy's home? If we had said 'x' instead of 'y'? It was scary. This was a young man's home. A man with a young wife and two small children.

We were all happy and baffled, but feeling really mighty. We had stuck it to the man, we weren't sure exactly how, but we were quite sure that we had. We'd come to save a home and we had, for now, at least. That was my job interview.

I WAS OFFERED A JOB WORKING FOR ACORN

I was offered the position of community organizer. I was hired to help very, very, poor people navigate through the bureaucracy of the health care system, private and public. I would be tasked to raise public awareness of health care reform issues, the pros and cons. There are a lot of people who don't understand the health care platforms of their local politicians beyond the vague talking points about socialism and taxes. No one knows who to trust. Part of my job would be to help people learn about the politics of health care reform and to motivate people to make information based votes, rather than trickle down talking point votes. The theory is that people who understand the issues, will vote in their best interests, which is at political odds with the health insurance company's financial survival. 

The lopsided politics of the people's interests being on one side, with lobbying groups, politicians and wealthy corporations (whose fiduciary duty is to make a profit and not much else) on the other, is why I believe groups like ACORN are an important part of a democracy. And the media is mistrusted by many folk who want to understand what is going on but find it impossible to distinguish between the truth and the propaganda. In theory, this job sounded really great and important.

My clients would be homeless veterans. Veterans make up between 23-30% of the homeless in America, while making up 10% of the overall population, according to the Vietnam Veterans of America, a non profit advocacy group founded in 1978 with the moto, 'never again will a generation of veterans abandon another'. I would be working for veterans with PTSD just wanting to learn what basic community resources are available to them, but wanting to know that day, rather than waiting for some under funded, over worked federal employee to return their multiple voice mails. I would work with families who may have foster kids with medical needs. Or the retired couple on social security who, after working two jobs all their lives, and pay their taxes are now unable to get an annual medical check up without an act of legislation.

It's easy to get all caught up in the fervor of trying to help really desperate, needy people.  But, I know nothing about health other than I have it. Also, it looked like I'd be doing grueling, horrible work, going door to door and trying to talk to people about health like a bible salesman or a Seventh Day Adventist. It's too hot in Arizona to go door to door. I'd be working 12 hours a day, 7 days a week, for 26k before taxes. As noble and critical as the job sounded, my ability to be noble is sorely hampered by my addiction to a basic standard of living. I'm a single mom and working every night would mean a lot less time with my child. I'm sure many people would do a very good job for ACORN in exchange for dire poverty.

Working for ACORN sounded demoralizing and just plain wrong. Was that the main qualification to this job? A willingness to starve for the priviledge of helping improve low income people's health? Was that even legal? Was Taco Bell hiring bleeding heart, liberal, college grads? 

I was not the only person offered a job. Another guy was hired to organize with me. He was a really nice guy in a Macintosh's and Target not Wal Mart demographic way. I liked him immediately. We both had studied revolution at in state schools. "I worked on the Amnesty International Dar fur campaign." he said. "Me too! Did you know what's her face?" 

"Yeah, we worked on the anti sweatshop thing together."

"OMG! I hate sweat shops too!"

WORKING AS A COMMUNITY ORGAINZER SUCKS

I already hated my job and decided to quit a few hours after I was hired. I hate health. When I explained to the director that I didn't want the position, she begged me to stay. I made a deal.

I wanted to work in the low income housing department. "Could I work part time, weekends, nights, days, 7 days a week for $8.50 an hour?" the director asked in a please don't laugh self conscious way. Yeah, riiight.  

Out of love of foreclosures, I showed up for my first day at work, to be told that I wasn't going to be getting paid, that this was a mandatory volunteer meeting. Huh? I was already on guard, wondering if this ACORN group was some pyramid scheme or cult. Was I going to be asked to buy something?

A few hours into the community meeting which I had volunteered to work my ass off for, I came to believe that all my suspicions were unwarranted. I wasn't asked to buy anything. I was asked to sell. 

I was supposed to sell membership to ACORN. Like $15.00 a month membership. And I was supposed to sell it to people facing foreclosure. In exchange for getting on a mailing list. A free tee shirt and all the free crayons needed to make picketing signs. The worst part? To get a membership, one needs to first give ACORN the right to take money directly from your bank account. Every month. Having gone through a similar agreement with Microsoft and Yahoo for online services, I am wary of such set ups. While they may make collecting money a breeze for the company, for the consumer, it's a huge hassle. 

WHAT EVER HAPPENED TO BUYING 6 MUSIC ALBUMS FOR 1¢ 

I had a really hard time getting these same companies to forget my account information after I canceled my services. It's like the Columbia house scheme back in the day, where you could buy 6 records for 1¢ and then after a month  and every month after that, Columbia would sent you more records. You could sent them back, but if you kept them, they would charge you. This scheme targeted teenagers, who don't have money and are not great at the whole get now, pay later thing due to the whole action/reaction parts of their brains being underdeveloped at this age. 

The way Columbia made money was legal, but the way they profited was by gambling that the teenager would not get around to sending the records back every month. Therefore, through default, wither they wanted the records or not, they now owed Columbia money due to their own laziness. If the teenager tried to cancel, there would be a few month delay, which Columbia would charge you for. Once any American reached their late teens, they had been scammed a few times already and would look at these offers for 6 records for 1¢ and not be willing to part with that penny for no amount of records. Because, even though it was a great deal for the music and bargain lover in us all, no matter what you did, cancel, send the records back, you always somehow ended up losing. Period. 

Did I want to be a part of that? Could I even make it though my first sales pitch with a straight face or would I feel so bad for these people that I'd go broke giving them discounts on memberships out of my own pocket? Did I really want to sit in an office with a line out the door of people who wanted to tell me they were broke and have nothing better to say to them but, "I'm poor too, let's swap spam recipes?"

WHY DO MINORITIES GET LOANS THEY CAN'T PAY OFF?

I was able to talk to many of the hundred or so people who attended the ACORN housing committee meeting by which I had infiltrating working undercover as a ACORN staff. Indentured servitude in action. The main thing I noticed while briefly working for ACORN was that JP Morgan/Chase/Washington Mutual and Bank of America were the main lenders of these really crappy home loans. The other thing I noticed was that no one spoke English. They were all from Africa or Latin America.

In fact, the meeting was more interactive than any community meeting I have ever attended. The meeting came to a halt when some lady stood up and shouted that she no English. There was a really awkward pause. Luckily, there were some bilingual people in the audience, and soon we had a panel of translators who stood at the front, next to our local city council man and they all took turns speaking.

There were a bunch of people clutching their closing papers in overstuffed title company binders. The papers that I looked at were clearly in violation of many ethical and legal statuettes. For one thing, these people were non English speaking, and the contracts were all in English. Not good. Who were the ones translating for the clients? Their English speaking real estate agents!! Real estate agents, by law in Arizona, are not able to give any legal advice to their clients, and yet here were all these really horrible death papers, signed, notarized, sealed, and recorded.  Really sad, lame.

How is that okay? To target a group of people because of their race, and then take advantage of them? That's called predatory lending. Illegal. I really doubt these people jumped the fence that George never built and then demanded that someone, please take thousand dollars of theirs in commission cause they were wanting to buy a big house as soon as they took a shower and wash all the desert grime off their travel weary illegal asses. 

TRUST NO ONE, BELIEVE NOTHING

I talked to one man who I would say was represented every single person I talked to, with an interpreter when needed. Let's name him something to disguise his ethnicity, Sam. Sam works legally in construction as a framer. He makes about $2,000 a month according to his tax records. He bought a house, was current on all his bills, mortgage, car, utilities. He even had all his receipts. He also had proof of making an additional few hundred a month making jewelry.  He bought a house for $160,000, with 1 % down, or $1,600. His mortgage was with a 5% interest, not bad. Before taxes and insurance, it came to about $900. After two years, his mortgage would 'adjust'. It would rise from 5% to 10% . Now his mortgage payments would be $1430 a month. In 5 years, his mortgage would rise to 12% making his payment $1666 a month. 

His real estate agent, who he had met when she had come knocking on his door, had told him that if he paid all his bills every month and kept his income the same and his debts down, he could refinance in a couple years so that he would not have to pay the extra 10% interest. He worked hard, paid his bills, stayed out of debt and even kept all his records. But when he went to refinance, no one would give him a new loan and if he couldn't refinance he wouldn't be able to afford his own home anymore and he would lose all the equity he had built up over the two years and may even have to sell his house and still owe the bank because the value on his house had dropped.

Why had he done this? A very nice lady, with a very reputable real estate agent, had promised him that he could buy a house. She introduced him to her mortgage broker who gave him a loan on a house he fell in love with. The mortgage broker and agent reassured him that he would have to keep his payments paid and refinance in two years. They also told him that this was a very safe thing to do, so safe in fact that they named examples of success stories for over two hours. Everyone seemed to be doing it, this was how it was done. He had never bought a house before, and he trusted these people and believed the stories that they had told him. But when he went to refinance in two years like they had told him, the mortgage company was no longer there and his real estate agent was no longer with the agency. And he could not get another loan.

The real estate agent, for a few hours of cajoling and really hard selling, had made $4,800 gross. She probably paid 10% of that to the broker, $480 for his half a days work. Another 10% for her fees to her broker and agent. Not bad. How many closings a day were agents doing two years ago? Many.

I did call the real estate agency that the Sam's agent worked for. They did not have a comment. I also emailed several real estate agents that work there and have not heard back from them.

What could Sam do? He could sell and still owe money to the bank and have no home. He'd lose his investment. He could sue but that would take years and cost money. He would not be able to refinance and he would not be able to pay the increased mortgage payments. I wanted to vomit. I felt sick to my stomach. I didn't want to tell him the truth. That if he were not such an easy target, he could have qualified for a conventional loan on a house he could afford. What is the lesson? Trust no one. No one. Assume everyone is trying to take advantage of you. 

COMMIES AND ACORN

The director was giving me a ride back from the American Legion's hall where the forced labor/community meeting/scam o rama was held. She brushed aside a few empty Starbucks paper coffee cups from the passenger seat so I could sit down. I had never ridden in one of those really cute, new, vw convertible bugs with flower stickers on the back before. I asked her how she got involved in ACORN. She had joined the communist party when visiting Austria in her college jr. year abroad and one thing had led to another. I told her I had learned to ski in Austria. I couldn't help myself. Clichés sometimes have a life of their own, and why else did I learn to ski in Austria if not for this very purpose? 

I also told her, that there were a bunch of really active communist in Tucson. Not a total lie. There are like ten and they are all really gung ho, bearded and always wanted to mate. 

Since we were confiding, and maybe because I seem so competent, she told me that she was going to Phoenix in the a.m. to talk to a bunch of the ACORN financial people. It seemed, she said, that ACORN had been a party to some sort of financial hooligans and now were at risk of losing some legitimate big funder. I seemed impolite to press for more details. She seemed really tired and over worked, which she was. It was 9:00pm and she had been working since 7:00a.m. I reassured her that non profits get into finance problems all the time, not to worry. I wasn't really sure if that were true, it just seemed like a plausible thing to say.  She agreed. It was all routine lameness about something that someone had done years ago that was now being dealt with. Like an audit type of thing. I wondered to myself if I would quit now, like tonight. Or wait until the morning. 

THE PROBLEM WITH THE POOR

I never showed up for my second day of work. 

I had already worked for Americorp, when I was too young to know better. I didn't need the sequel. I did get something for my two days of  'working' for ACORN. A feeling that something was not quite copacetic in the not for profit world. I felt ACORN was as shameless as Wal Mart, both assuming that jobs are needed so badly that they can drive wages lower and lower and ask more and more. I would be peddling and selling poverty issues to the poor, for $8.50 an hour. If ACORN really cared about economic justice, it seems they would start with paying a living wage, hourly or by salary, whichever is greater to their employees. After working as a social worker for many years, the novelty of working in a sweat shop to fight poverty has worn thin.

BARAK OBAMA IS A HERO FOR HIS COMMUNITY ORGANIZING WORK

I have a compassion for community workers, the same kind of compassion that I have when I remember the days when I waited tables and decide to leave a bigger tip than I can afford. I realize how hard core Barak Obama is for being a community organizer. A graduate of Harvard law school, Obama could have worked anywhere, for any amount of money. Literally anywhere! That had to be such a humbling experience, to know you could be making a lot of money like all the other guys who graduated in your class but with worse grades. To know you could have the 'good life'. An easier life. A more secure life, full of well deserved grandeur and privilege. But to willingly pass all the shiny black SUV BMWs, and the men with their women in their dresses and diamonds that cost more than a really nice house. To say, thanks but no thanks. I'd rather eat tuna fish from a can and take the bus. I mean, I had been given the chance to be poor! To help people!

My enthusiasm for poverty lasted a day. To be a community organizer takes something I have not much of, a willingness to sacrifice my own comfort for the hope that what I am doing will make someone else's life a little better. All hope is based on risk. Hope is a gamble. And community organizers don't often get to know if their gamble paid off. They don't get the instant gratification that the stock broker or corporate lawyer gets. The sort of success that you can count at the end of the month by your bank account's status. Many times, any discernible improvement to a community will not be quantifiable until a whole generation later. 

A community organizer gets the privilege of malnutrition and scraping by on the hope that the hour spent with the newly widowed woman, who is dealing with the inability to pay the mortgage, will assist and comfort her just enough to get by another day. It's a gamble, to have faith that you may see her again some day and to hope that if you do, she will be smiling. Not out of gratitude for the hand you had the humanity to give, but out of the genuine, reciprocating nature derived from the pleasure of simply flourishing in the presence of true kindness. 

A person does not graduate from Harvard, at the top of their class, with hundreds of thousands of dollars in student loans, to be community organizer. As imperfect as the community or the organization, the only reason why a person would become a community organizer after graduating with staggering student loans from Harvard, is if they believed, like I did, that fighting for the injustice of homeless veterans was noble and important. More important than money. That helping people devastated by Hurricane Katrina or dying of AIDS is more important than money. That an end to starvation in America and the right of every American, rich or poor, to a quality education is more important than all the money in the world. That money does not buy dignity,  truth, or freedom. I did the community organizing until I was forced out by the reality of my financial responsibilities. No one in America can afford to be a community organizer forever.

GOP HATERS: PATRIOTIC OR JUST DON'T GIVE A SH*T ABOUT YOU? 

It is so sad to be asked to sacrifice so much in order to help improve the lives of others and then get attacked at the GOP convention for