Skullduggery!: The True Causes of the Financial Crisis

By Ted Krager

Today, in 2012, the country is again just as torn as it has was in the 1970s due once again to Middle East wars, the Great Recession of 2007 - 2012, President Obama's constant and incendiary rhetoric, incessant politicking over race, ObamaCare, divisive dialogue of the haves and have-nots, his infamous campaign gaffe to Joe the Plumber, "spread the wealth around", the "99% vs the Top 1%" (class warfare), "millionaires and billionaires" and his war with big business. So much for "Hope and Change", "Change We Can Believe In" and my favorite "the first post-racial president." To the contrary, the United States of America is as unsettled, divided and angry as I have seen it since the 1960's and the early 1970's. The big questions are easy ones: "Why?" and "What caused this return to the anger and the hostilities of the 60's and 70's?" Since I am part of the baby boom generation and was very much a participant in both the professions of Wall Street and mortgage banking, I am in a unique position to tell you about what I saw and heard up close and personal in the 1960's - 1970's AND about the decade that led up to what culminated in the Great Recession of 2007-2012 that we are still clawing our way out of.

Here are a few things that might surprise you, further discussed in this book:

1. The overwhelming majority of "Greedy Wall Streeters" and "Fat Cat Bankers" are massive and consistent donors to liberal Democrats, even in 2012 in the face of Obama's persistent (and false) accusations of casting them as the "fat cat bankers" and "greedy Wall Streeters" as causing the recession!

2. The senior most executives in these companies pilloried by President Obama, gave upwards of 60% of total donations, over $20M, to Obama's 2008 presidential campaign and his Political Action Committees into 2009.

3. The earliest beginnings of the current Financial Crisis started back in the late 1970's.

4. Some of the names that were catalysts of the Financial Crisis are very well known activists, anarchists, life-long socialists, present and former D.C. politicians and three very well known U.S. presidents.

5. And, just in case you have not done your research or taken the time to trace the trail of bread crumbs back to the source... you need to know the irrefutable reality that: The Subprime Mortgage Crisis = The Financial Crisis of 2007 - 2012

6. From the very beginnings of The Financial Crisis in the fall of 2007, the media referred to this as The Subprime Mortgage Crisis, until they didn't.

• Language: English
• Publisher: AuthorHouse
• Release date: Jun 21, 2012
• ISBN: 9781477220719

Book preview

Skullduggery!

9781477220719.pdf

The True Causes of The Financial Crisis

TED KRAGER

9781477220719.pdf

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© 2012 by Ted Krager. All rights reserved.

No part of this book may be reproduced, stored in a retrieval system, or transmitted by any means without the written permission of the author.

Published by AuthorHouse 06/14/2012

ISBN: 978-1-4772-2069-6 (sc)

ISBN: 978-1-4772-2070-2 (hc)

ISBN: 978-1-4772-2071-9 (e)

Library of Congress Control Number: 2012910941

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Because of the dynamic nature of the Internet, any web addresses or links contained in this book may have changed since publication and may no longer be valid. The views expressed in this work are solely those of the author and do not necessarily reflect the views of the publisher, and the publisher hereby disclaims any responsibility for them.

Contents

Dedication

Introduction

Prologue  Are YOU mad as hell yet?

Foreword  Sabotaging the Global Economy

Chapter 1

Let’s Start at the Very Beginning . . .

a Very Good Place to Start

Chapter 2

The Biggest Financial /

Political Scam in History

Chapter 3

The Amazing Scam of Yield Spread Premiums

Chapter 4

Follow the Bread Crumbs

Back To The Source

Chapter 5

Sex, Drugs and Rock’n’Roll

Chapter 6

Lies, Damn Lies, Cronyism and Hubris

Chapter 7

The Joke the Democrats Proclaimed the Summer of Recovery

Chapter 8

You Will Not Believe What (almost) Came Next . . .

Chapter 9

Uncomfortable Truths

Chapter 10

Barney Frank’s Roll of the Dice

Chapter 11

The Financial Crisis Inquiry Commission (FCIC)

Chapter 12

Wag The Dog

Chapter 13

The Aftermath

Chapter 14

The Inmates Are Still Running

the Asylum!

Chapter 15

The Mortgage Doomsday Machine

Afterword

Epilogue

Acknowledgements

The first / original Stick Figure PowerPoint Presentation is below

Endnotes

Some revealing quotes

"It was not the banks that created the mortgage crisis. It was, plain and simple, Congress who forced everybody (banks, mortgage banks, credit unions, savings and loans) to give every home buyer who was on the cusp . . . they were the ones who pushed Fannie and Freddie to make a bunch of loans that were imprudent . . . they were the ones that pushed the banks to loan to everybody, and now we want to go vilify the banks because it’s one target . . . it’s easy to blame them and Congress certainly isn’t going to blame themselves."

NYC Mayor Michael Bloomberg, November 1, 2011

"The causes of the housing bubble . . . subprime mortgages, adjustable rate mortgages, government-mandated (subprime) loans, etc. are well known."

Alex J. Pollock, past President and CEO of the Federal Home Loan Bank of Chicago

"A little boy doing cartwheels to get attention and suggested his behavior was churlish theater or . . . desperation" saying that Obama is "out of touch with the American people and still just doesn’t get it" labeling him the disappointer-in-chief banging pots at a bogeyman that doesn’t exist.

Kathleen Parker, a liberal columnist obviously tired of Obama’s antics

Sometimes he lectures America. But he doesn’t buck it up, and he must know in his heart that it’s coming for the keys. To which much of America must be saying: This rube has got to go.

Peggy Noonan on Obama—Wall Street Journal OpEd

Freedom and Equality are sworn and everlasting enemies and when one prevails, the other dies. To check the growth of inequality, liberty must be sacrificed.

Will and Ariel Durant in The Lessons of History

If you are a family making less than $250,000 per year, your taxes will not go up.

Candidate Obama in 2008 (But 18 different taxes did indeed go up on all families.)

What they say about him when he’s not in the room, so to speak, is astonishing.

Mortimer Zuckerman—billionaire entrepreneur who originally supported candidate Obama

I think the responsibility that the Democrats have, may rest more in resisting any efforts by Republicans in the Congress, or by me when I was president, to put some standards in and tighten up a little on Fannie Mae and Freddie Mac.

Bill Clinton, 9-26-2008

I do think I do not want the same kind of focus on safety and soundness that we have in OCC (Office of the Comptroller of the Currency) and OTS (Office of Thrift Supervision). I want to roll the dice a little bit more in this situation towards (Fannie Mae and Freddie Mac) subsidized (subprime mortgage) housing.

Representative Barney Frank—September 25, 2003

I missed the looming disasters at Fannie Mae and Freddie Mac. I was late in seeing it, no question because I was wearing ideological blinders. I was worried Republican lawmakers and the Bush administration were going after Fannie and Freddie for their own ideological reasons and would curtail the lenders’ mission of providing affordable (subprime mortgage) housing.

Barney Frank—Fall 2010

All of us in the industry failed to see the potential for this serious crisis. We all bear responsibility for not recognizing this, and I deeply regret that.

Robert Rubin—Clinton’s Treasury Secretary, at the FCIC hearings in 2010, in a rare admission of guilt on the part of the Clinton subprime mortgage architects

And I’ve got to tell you, for five years, I was part of an effort at the White House to fight this and our biggest opponents on the Hill who blocked this every step of the way were people like Chris Dodd and Barney Frank. And Fannie and Freddie are the $200 billion contagion at the center of this.

September 17, 2008—Karl Rove on Hannity & Colmes

The subprime mortgage market had a special talent for obscuring what needed to be clarified.

Michael Lewis in The Big Short

The reign of indiscretion has been a long time coming. Some say it arrived in the late 1960’s or early 1970’s, when constraints on behavior eased.

Daniel Henninger, Wall Street Journal

What makes a good banker is more than skill. Accountability for the solvency of the institution that he or she owns (would make a good banker). First, remove the government from the business of determining what is or is not risky. Really, the government does not know. Second, increase the personal risk of failure for senior management. For the better part of 100 years, and especially in the past five (years), we have socialized the risks of high finance. All too often, the bankers who take risks don’t themselves bear them. By all means, let the capitalists keep the upside, but let them bear their full share of the downside.

Jim Grant, editor of Grant’s Interest Rate Observer a speech on 3-12-12 to the New York Federal Reserve

We can do better than a government that funds failures while punishing successful enterprises and people with higher taxes, a government that chooses who wins and who loses according to the preferences of politicians, a government that sees its role as dictator vs that of service. The ruling parties of progressive liberals and conservatives in D.C. have so horribly mismanaged our money and violated our collective sense of fairness that citizens have been left wanting freedom from our own government.

Glenn Beck, the keynote speaker at the 2010 CPAC convention

There is no distinctly native American criminal class except Congress.

Mark Twain

I think when you spread the wealth around, it’s good for everybody.

Presidential candidate Barack Obama on October 12, 2008 That Joe the Plumber moment—the chance encounter Joe Wurzelbacher had with Mr. Obama in Ohio on October 12th, 2008, as candidate Obama revealed his heart and his soul. His no longer concealed redistribution of wealth ideology was perhaps manifest clearly for the first time on that day and was captured on video. America, we should have listened.

Maybe the most important question regarding the November 2012 presidential election… " . . . if Mitt Romney wins the (GOP) nomination, as seems very likely, I will enthusiastically support his candidacy. For friends who have hesitation on that score, I’d just like to ask you to keep four things in mind:

1.   Justice Antonin Scalia just turned 76

2.   Justice Stephen Breyer turns 74 in August

3.   Justice Anthony Kennedy will be 76 in July

4.   Justice Ruth Bader Ginsburg just turned 79

We wish them all well of course, but the brute fact is that whoever we elect as president in November 2012 is almost certainly going to choose at least one and maybe more new members of the supreme court—in addition to hundreds of other life-tenured federal judges, all of whom will be making momentous decisions about our lives for decades to come. If you don’t think it matters whether the guy making those calls is Mitt Romney or Barack Obama, I think you’re smokin’ something really weird. So, for anybody thinking of not voting because your favorite didn’t get nominated, or writing in a candidate who can’t win, imagine this:

Supreme Court Justice Eric Holder… now—really THINK when you make your choices! Columnist Andrew McCarthy

. . . unpredictable economic policy, massive fiscal stimulus, ballooning debt . . . regulatory uncertainty due to ObamaCare and the Dodd-Frank financial reforms—is the main cause of persistent high unemployment and our feeble recovery from the recession. But in the years immediately preceding the 2008 financial crisis . . . government regulators did not enforce existing rules on risk-taking at banks and other financial institutions, including Fannie Mae and Freddie Mac.

John B. Taylor, professor of economics at Stanford University and a Sr Fellow at the Hoover Institution Quote is adapted from his January 2012 book: First Principles: Five Keys To Restoring America’s Prosperity

The president’s (Obama) policies, his agenda has contributed to the greatest wealth destruction I’ve ever seen by a president.

Jim Cramer, a life-long Democrat

"He promised that he would bring us together . . . he promised that he would not be partisan . . . he promised that he would reach out to the other side, the Republican side. Instead, he and his small little group of people in the White House hunkered down, have not reached out, not compromised, making it impossible for Washington to work. It’s not Republicans who are at fault here; it’s the president, who does not know how to use the leverage of power and his powers of persuasion. He’s the anti-Lyndon Johnson in that he doesn’t know how to get things done. And so he’s been more divisive, more partisan than any president we’ve seen in modern history."

John Klein, veteran journalist / author of the best seller: The Amateur—Barack Obama in the White House

"Over the past 60 years, there have been 11 recessions and 11 recoveries . . . cumulative GDP growth is just 6.8% 11 quarters into this recovery . . . the worst of all 11 . . . . there’s little doubt that $5 trillion in spending . . . was spent poorly and we will get very little future value from it. Billions were spent to reward favored constituencies like government employees and the auto industry. Billions more were spent on training programs that don’t work and unemployment insurance that reduces incentives to actually find work. Little went toward building infrastructure or other assets that will help the nation create wealth over time . . . . the animal spirits so necessary for a true recovery have been dampened by this administration’s policies and rhetoric. Indeed this administration has been overtly hostile to business across the economy except for progressive favorites like electric cars or wind and solar power . . . . meanwhile the president has yet to pass a budget or announce a plan to reign in government spending . . . . the massive costs of all the stimulus have been wasted because of the heavy counterweight put on the economy by the administration’s anti-business and pro-redistribution policies."

Harvey Golub—former CEO and Chairman of American Express, he also serves on the executive committee of the American Enterprise Institute

Your honor, I rest my case.

The closing statement by any attorney in the land who would use the evidence in this book (and there’s so much more out there) when pleading the cases of fraud, corruption, cronyism, misguided ideology and criminal stupidity against the band of activists and progressives in Washington that orchestrated The Subprime Mortgage Crisis aka The Financial Crisis. Apologies notwithstanding, where is the punishment for these people that so blatantly destroyed the economy and the lives of so many people? And in this book, I rest my case on behalf of all Americans.

Ted Krager

"Please . . . no one tell President Obama what comes after a trillion!"

Jay Leno

www.skullduggerybook.com

Dedication

A mere 7% of the population¹ apparently knows the true causes of The Financial Crisis and the people behind it. The 2007-2012 Financial Crisis didn’t happen by chance… it was orchestrated by a band of activists and politicians who see themselves as erudite stewards of what’s best for society—at least all things political and financial. The worst thing about this is that they still walk among us instead of being in jail for what they did to the economies of the world and its citizens.

This book is non-fiction and is dedicated to 5 groups of people:

1.   Those who Are Mad-As-Hell-And-Not-Going-To-Take-It-Anymore!

2.   People who played by the rules and still got screwed by our government’s multiple roles in causing The Financial Crisis.

3.   People who experienced the cliché: My 401k became a 201k and now cannot retire just as retirement age was within reach.

4.   People who lost a job, a business, a home with many memories, friendships, a life you worked very hard for, a marriage or perhaps a loved one that committed suicide because of The Financial Crisis.

5.   People who remember the media first called The Financial Crisis The Subprime Mortgage Crisis. Why? Because the headlines in the Fall of 2007 and into 2008 were all about the implosion of subprime mortgages as the root cause of the meltdown of Lehman Brothers. However, that label was far too close to home for the people who caused this disaster so they directed the sycophant mainstream media to change the headlines to divert our attentions away from subprime mortgages. Indisputably, The Financial Crisis was hoisted onto the economy by progressive activists and policymakers in Washington D.C. Understandably, if you are not an insider from the mortgage industry, Wall Street (and my background is both) or an extremely politically-savvy citizen, odds are you haven’t quite connected all the dots, nor visualized in your mind’s eye all the names and faces of the many guilty parties, then this book is for you! There is even a theory that the end game, the financial meltdown, was all by design… and that the destruction of the U.S. economy was intentional to achieve a brazen, ideological agenda! That brash concept is one of those very dark, I can’t get my head around it contemplations. Therefore, I have provided you with enough particulars around that notion that you can decide for yourself.

If the trail of bread crumbs and the facts detailed in this book do not make you livid and influence your vote on November 6th, 2012, you are part of the problem!

Because I spent my career in mortgage banking and working for one of the biggest Wall Street firms, I am in a very unique position to lay bare the facts about the true causes of The Financial Crisis. I wrote this book to connect all the dots for the ninety nine percent of people not from those two industries. I was immersed for 30+ years in those worlds and the trail of bread crumbs is definitely there… if you know where to look. I have connected all the dots for you if you want to know the truth. The guilty parties are understandably still hard at work, feverishly trying to rewrite history; my mission is to make certain it is written accurately. If you are not familiar with the word projection as it relates to scapegoating, it means accusing others of what you yourself are guilty. There is panicked and ongoing projection from the many guilty parties that caused The Financial Crisis.

The progressive-socialists, Great Society activists, elites and the far-left fanatics in Washington that caused The Financial Crisis are so very, very and indefatigably desperate to obfuscate the truth and deflect the blame for the meltdown. Barack Obama, our supposed first post-racial president, and his cronies use lies, toxic discourse, class warfare, sleight of hand and even race in their quest to turn America into a spread the wealth around / fair share dystopia akin to Europe, where more than sixty percent of the population depend on government for their job, food, healthcare and retirement money. While he isn’t number one or number two on my Top Ten list (Masters of the Meltdown) later in this book, Obama indeed is on the list as he played a critical role in opening the flood gates for the tsunami of subprime mortgage defaults and few people know that.

I graduated from college as part of the lower middle class but worked many years of very long hours to climb into what Obama and his ilk call a 1%-er. I built several businesses along the way but the very successful business I built started from my basement and went from 1995-2007. We employed over 300 people but it was destroyed almost overnight by the imploding economy and the subsequent Financial Crisis. My wife and I bought our fourth home in 1997, qualifying for traditional (prime) underwriting guidelines: 20% down payment, good credit scores, traditional debt-to-income ratios, reserves in the bank and a Fannie Mae loan. We lived in this home for eleven years, raised our children there and have wonderful memories and many photos from that home, one we planned to stay in until we died. Property values in our neighborhood had risen 42% in the eleven years we lived there but then dropped a breathtaking 49% from mid-2007 to late 2008. As a result, we became upside down in our mortgage and eventually lost our home in a short sale (to avoid a foreclosure). In that period, the American dream was ripped away from us through no fault of our own. If you have never had a home taken away from you, it is impossible to comprehend the emotions of holding a child clinging to you tightly and sobbing as you moved out the last piece of furniture and left the home for the last time.

Had the current Financial Crisis of 2007-2012 been caused by the confluence of the historical ebb and flows of economic cycles like most recessions, Americans wouldn’t be so angry and the damage far less. However, this financial crisis was a manufactured one… some even say it was a calculated one. There are a multitude of people, starting in the late 1960’s and through the decades of 1970, 1980 and 1990, that set in motion political and ideologically motivated events that irrefutably caused The Financial Crisis. (I delve briefly in this book into the very dark idea that this whole thing was actually intentional.) Regardless, the same faces and names are easily attached to the miserable state of the current economy—the trail of bread crumbs is there and it is unassailable. Most of the people responsible are still alive. Some still hold offices or positions of extreme influence in the U.S., including Congress and the White House.

I did an online survey in mid-2009 and again in late 2011 to see what the public believes… to see if they know the true causes, the faces and the names of those whose fingerprints are all over The Financial Crisis. In both surveys, only 7% of thousands of respondents knew the true causes of The Financial Crisis!  The American people have therefore largely been hoodwinked into believing a false and ongoing narrative spun by Washington and the media.

This book is therefore dedicated to those who have suffered, through no fault of their own, and to exposing the people, their acts, their deeds and their ideologies that caused the current state of dystopia in the U.S. and the world. It is also dedicated to providing the facts complete with names and dates—not the lies being perpetuated by Washington and the mainstream media, so that the other 93% can know the truth. Peel back the layers and the emperors truly have no clothes.

America will not survive another four years of the Obama administration and his socialist, spread the wealth around acolytes. They are intent on destroying free-markets, capitalism and life as we know it in the United States and they are just getting warmed up. Eight years of this radical agenda will destroy the United States as we have known it for centuries. Thankfully, we have a vote on November 6th, 2012, whereby we can effect the End of An Error.

Introduction

Who is Ted Krager?!

In 2008 and 2009, I wrote two books:

Dirty Little Secrets of the Mortgage Industry and

Scams, Shams & Flim-Flams of the Mortgage Industry

Google either of those titles plus my name and you will find some background but the titles of those books should tell you that I have been railing against and trying to expose the bad practices, frauds and scams of the mortgage industry (for four years now).

Skullduggery!, however, is my first novel. The titles of these three books plus the broad strokes of my professional bio (in Chapter 1) should be an insight into why you should consider assessing The True Causes of The Great Recession of 2007-2012 through my eyes.

I WAS THERE—caught right in the middle of the imploding economy and pretty much lost everything, including my business. Almost twenty years of hard work… gone so fast it took my breath away. In my first two books, I taught people how to spot the pervasive but hidden abuses in the mortgage industry, buried in miniscule point sizes in the mountains of paperwork you have to sign to apply for and close on a mortgage loan to buy a home. (See Chapter 3 on the Amazing Scam of Yield Spread Premiums.) Thousands of people who applied the insider secrets I taught them in those books wrote me about the thousands of dollars they saved when they bought (or refinanced) a home with a mortgage, just by knowing the right questions and forms to ask for.

I would wager that only a tiny fraction of the population have heard of Professor Howell Jackson of Harvard University. He did a multi-year, forensic study of mortgages and presented his findings to the Senate Banking Committee on January 8th, 2002.

The Senate Banking Committee members in January 2002 were:

*These five people have honorable mentions in this book about key roles they played in causing the continuing Great Recession of 2007-2012. (Corzine was a Wall Street guy that was CEO of MF Global when $1.6 billion of customers’ money went missing just days before the company folded.)

This crucial meeting of the Senate Banking Committee was titled:

Hearing on Predatory Mortgage Lending Practices: Abusive Uses of Yield Spread Premiums.

9:30AM—Tuesday, January 8th, 2002

Read the critically important notes from this hearing at this URL:

http://banking.senate.gov/02_01hrg/010802/jackson.htm

One conclusion of Professor Jackson’s study was that less sophisticated mortgage borrowers were taken advantage of more often than others. He also concluded that those less sophisticated borrowers were largely Hispanics and African Americans. So ask yourself this question: If the progressives forced the banking and mortgage banking industries into an aggressive Affordable Housing agenda using the Community Reinvestment Act, ostensibly because minorities were being declined more often for racial reasons than whites, and then they learned that the very people they said they were trying to help were indeed being victimized by predatory practices, wouldn’t you think those same progressives would have stopped the madness? If not, then what was their true agenda under the CRA?

Professor Jackson’s study also proved that the banking and mortgage banking industries were gouging these same people with excessive fees that were in fact illegal under the Real Estate Settlement Procedures Act. Instead of reacting the way one might think, the committee in fact buried Professor’s Jackson’s study and his report, allowing the subprime mortgage industry to grow exponentially from 2002-2007, culminating in the Financial Crisis of 2007-2012. As befuddling as that may be, it begs the question… Why? In Washington, the cliche follow the money usually takes you to the answer. So, does it surprise anyone that the three industries that contributed the most to the 21 members of this committee were: real estate; banking; securities / investments (Wall Street). All three industries were making fortunes off the housing / real estate boom, mortgage boom and fancy new investments called MBS (Mortgage Backed Securities), CDO’s (Collateralized Debt Obligations), CMO’s (Collateralized Mortgage Obligations) and CDS’s (credit default swaps). (All of these are explained later in the book.) Follow the money indeed when it comes to shaking your head and wondering aloud why this madness that was egregiously ripping off home buyers was not shut down immediately. (That would have avoided the Financial Crisis by the way because as much as 75% of subprime mortgages were originated from 2002-2007. Oh, what a tangled web we weave!)

A word to the wise—this book is an insider’s anthology of the who, when, where, what and why that caused The Financial Crisis. In a manner, it is like a history book but there is far too much information to put in this book therefore you must do some homework if you want the entire picture. In some cases, critical information is on videos and / or other important documents. So, as you read this book, where I have provided URL’s, please take the time to go there and read the information or watch the videos. (I know that is a pain in the ass, but if you want to understand the mindset of the people that caused the Financial Crisis, you truly need to see / read the information and videos at links I have provided. Videos are amazingly powerful when you can see and hear people say things in years past that they wish they could take back!) I stated earlier that probably 93% of the population is unaware of the true causes of The Financial Crisis. Part of the reason for that is that this is complicated and very few people took the time to read, learn and understand all the jargon that surfaced as subprime mortgages—the obvious fuel for the Financial Crisis—was etched across every newspaper, the internet and heard on radio and TV stations for several years from 2008-2011. If you do not take the time to do this now, you will stay in the 93% group, ignorant of the true causes. On November 6th, 2012, you will want to cast your ballot as an informed citizen, armed with awareness of all the people and the ideologies that caused The Financial Crisis. You could just take my word for all of this but I far prefer that you do your homework as well and that is why I have provided the sources for you to see and read all of this for yourself. This book, for probably a very large majority of readers, is intended to provide you with all the information and / or links to that information, so that you elevate yourself into that 7% group and can make voting decisions accordingly. So far (April 2012), progressives in Congress have not allowed drafting of new legislation to address the true causes of the Financial Crisis. Therefore, we need to educate ourselves and elect new people who can see the clear solutions to never allowing another Financial Crisis caused by progressives’ ideological manipulations of our free market economy.

Professor Jackson’s study was done on about 3,000 mortgages nationwide in the late 1990’s. In his report, among many startling things Professor Jackson found was that about 85%-90% of all mortgage loans had hidden fees in them, paid by the borrower(s). And… that these fees amounted to about 75% of the total costs that borrowers paid for a mortgage loan! Think about that… turning the statistics inside out, what Professor Jackson’s statistics showed is that only 15% of borrowers did NOT have hidden fees but the 85%-90% that did amounted to an implicit annual interest rate of up to 114% and that mortgage brokers keep about 75% of those hidden fees collected, clearly and egregiously violating usury laws in all 50 states! Meaning? Homebuyers were already being amazingly ripped off and the mortgage industry was already corrupt before the biggest onslaught of even more amazing abuses were effected with the biggest wave of subprime mortgages! A large number of Senators and Representatives in Congress knew about the pervasive scam of these significant and hidden fees, known in the industry as Yield Spread Premiums (YSP) or Service Release Premiums (SRP). Yet Congress did NOTHING to protect consumers even though the scam, routinely practiced by the majority of mortgage loan officers, was illegal under RESPA, the Real Estate Settlement Procedures Act, the governing laws over all people who were in the banking and mortgage banking industry. In fact, certain members of Congress did everything in their power to hide and protect the abuses they were keenly aware of! Why? Because the banking industry paid them handsomely with Political Action Committee (PAC) donations. They were paid to look the other way and to keep the music playing for the banks’ astonishingly profitable mortgage divisions.

The story around Professor Jackson’s study gets much worse. The study was done on mortgage loans originated before the period of 2002-2007. The timing of this hearing (January 2002) and the six years afterwards is critical! Why are those six years important? Because… estimates are that as much as 75% of the subprime mortgage loans were piled on in those last six years of the mortgage and housing bubble. And… because the abuses of subprime borrowers was FAR worse than the abuse of prime borrowers on which Professor Jackson did his research. And yes, many in Congress knew about these even larger abuses as well!

After 30 years in Congress, Chris Dodd announced in January 2010 that he would not seek reelection in November 2010 and he resigned from Congress after the 2010 elections. He left for the greener pastures of being the mouthpiece (spokesperson-lobbyist) for Hollywood’s political interests. His parting contribution to our economy was as co-author of the now infamous Dodd-Frank Financial Reform bill, passed hurriedly and literally in the middle of the night, using parliamentary / procedural trickery, with Representative Barney Frank, avoiding a vote in Congress they knew they could not win. (President Obama signed this bill on July 21st, 2010. The significant controversy around the particularly rapid signing of this bill is discussed in detail in Chapter 6.)

It is more than interesting to note that The Financial Crisis Inquiry Commission (FCIC) was formed by President Obama on May 20, 2009. The stated directive for this Commission was to study, determine and report the true causes of The Financial Crisis. However, the 2,300 page Dodd-Frank bill was passed in the middle of the night six months before the FCIC submitted its 576 page report! The obvious question: If President Obama had actually wanted to include solutions in Dodd-Frank for the true causes of The Financial Crisis, to make sure it could never happen again, why didn’t he require Senator Chris Dodd and Representative Barney Frank to wait for the FCIC report before finalizing Dodd-Frank, a behemoth, landmark piece of legislation? The myriad truths and answers to that question are a dark insight into the ideologies and hidden agendas of the very people who caused The Financial Crisis. (There is much more on the FCIC and its controversial Chairman, the very progressive Phil Angelides, in Chapter 3.)

Back to Chris Dodd—after passing Dodd-Frank, a landmark piece of legislation, why would he suddenly resign from a liberal, adoring Congress just as Democrats were getting warmed up under Obama? (I’ll give you four reasons below.)

"How do I love thee, let me count the ways. Sonnet 43 verse by Elizabeth Barrett Browning… it just seems appropriate here to express the warm and fuzzy" respect Mr. Dodd has for American citizens.

#1—He wasn’t very popular after hastily cramming Dodd-Frank down the throats of the entire financial industry in the face of several business leaders and financial scholars telling he and his buddy Barney Frank that the bill did NOT address the true causes of the Financial Crisis. Attitude? I’m Chevy Chase and you’re not. (A reference to a skit routinely used by Chevy Chase as a newscaster on Saturday Night Live in the 1970’s, in which Chevy Chase proclaimed he was special at the beginning of each newscast. Substitute this analogy and you get the picture: I’m Christopher Dodd and you’re not!)

#2—alleged bribery charges:

http://betanews.com/2012/01/24/mpaa-chief-chris-dodd-fights-off-allegations-of-bribery/

#3—alleged receipt of preferential treatment on several sweetheart mortgage loans from Countrywide that saved him thousands of dollars: A Senate ethics committee investigation had been announced so he hightailed it to Hollywood.

http://online.wsj.com/article/SB123128800174259195.html

#4—a real estate deal in Ireland with a crooked, convicted inside-trading and stock-swindler sweetheart of a guy, Edward Downe, Jr., pardoned by Bill Clinton in his last few days as President:

http://online.wsj.com/article/SB123681364667801647.html

So, why would the head of the Senate Banking Committee (Paul Sarbanes, D-MD) and the committee itself, have buried the very damaging conclusions of Professor Howell Jackson’s study that was presented to his committee? After all, that study proved that the banks and mortgage banks were shamelessly ripping off the home buying public way before the flagrant abuses of the subprime mortgage boondoggle were hitting their stride! I can’t figure out for the life of me why Senator Dodd would leave Washington, can you?

Readers—brace yourself, we’re just getting started. The biggest transfer of wealth from Main Street to Wall Street ever perpetrated on the American public was the Subprime Mortgage Crisis. Don’t let the name change from Subprime Mortgage Crisis to Financial Crisis fool you. It was orchestrated misdirection designed to get you to look at the other hand, not the one the magicians are intently using to try to rewrite history and deflect blame away from their very dirty hands. The real life story of Skullduggery! The TRUE Causes of The Financial Crisis gets so much better from here…

Prologue

Are you mad as hell and not going

to take it anymore?

•   What are the TRUE causes of The Financial Crisis?

•   Who are the people responsible for the mortgage meltdown?

•   Why do Treasury Secretary Timothy Geithner and three Presidents have amnesia?

•   Why did Barney Frank and Chris Dodd resign from Congress soon after hurriedly passing Dodd-Frank, the most sweeping financial reform bill in history that almost 100% neglected to address the TRUE causes of The Financial Crisis?

•   Who was the lawyer that in 1994 filed the very first lawsuit, using race as leverage against a bank, even though the home buyer was declined for a mortgage loan because of her bad credit?

•   Did you know that this first lawsuit, based on false racial discrimination, was an epiphany for far-left activists / progressives and their Affordable Housing agenda? It inspired them to force, through activism, the banks abandonment of sane (prime) underwriting guidelines. This lawsuit therefore paved the way for The Subprime Mortgage Crisis that destroyed economies around the world.

•   Can you name the president responsible for signing an Act that provided the basic framework that eventually pressured banks into making (subprime) loans that violated the guidelines of Fannie Mae and Freddie Mac?

•   Did you know this Act forced banks to make loans to people with bad credit, no down payment, inconsistent income, poor job history, zero savings for reserves and that had a high statistical probability of never being able to pay for that mortgage?

•   Did you know that banks initially refused to make these insane (subprime) loans for years because they knew it was bad business?

•   Do you know which president put a gun to the heads of the banks… literally forcing them to make subprime loans to people they knew would not be able to repay those loans?

•   Did you know that same president then imposed ever-increasing subprime loan quotas on the banks and threatened them with severe penalties if they didn’t meet those quotas?

•   Did you know that same president then had his Attorney General issue a warning that if they didn’t play ball, there would be hell to pay?

•   Are you under the impression that it was Wall Street, the big banks and the Bush administration that caused The Financial Crisis? After all, this is the false narrative that the guiltiest parties have been screaming to the media and the public for four years.

•   Do you know about a 64 page white paper report titled: Who’s Holding The Bag? that outed some very questionable practices by the credit ratings agencies, their holding companies and senior officers and that it too was buried?

•   Do you know the details about a Harvard Professor, Howell Jackson, and his research study that was very damaging to the people behind the subprime mortgage meltdown and that it was buried before it could be made public?

•   Why was all of this information hidden from the public? Do you suppose that the true guilty parties do not want the truth to come out?

•   Did you notice that the sycophant mainstream media changed the headlines from calling this the Subprime Mortgage Crisis in 2008 to calling it the Financial Crisis as a strategy to deflect your anger away from the true source of the meltdown—subprime mortgages—and onto greedy Wall Streeters and the fat cat bankers and the Bush Administration?

In a courtroom scene in the 1992 movie A Few Good Men, Tom Cruise—playing a lawyer, screams at Jack Nicholson—playing a Marine Colonel: I want the truth! Nicholson screams back at Cruise You can’t handle the truth."

I think the American people want the truth, can indeed handle the truth! and are owed the truth. However, you will not get the truth from Washington or the main stream media! If the truth does not come out, if historians do not get this one right, not only are there people who want this to happen again, but the guilty parties already brazenly tried to do it again, will keep trying until they either succeed or are not re-elected! (This story of their second attempt is a jaw dropping episode in this book. I list all 60 politicians who were amazingly intent on enacting Verse II of The Subprime Mortgage Crisis while they thought no one was looking and before the dust had even settled… an unbelievable story!)

Readers, buckle up. There are so many sinister and ideological underpinnings behind the scenes that if you can imagine some menacing music in the background and a few guys (and girls) with long mustaches and black robes running around laughing menacingly, you will have the proper mindset and images as you continue reading this novel. But make no mistake—this is not some mythical melodrama. Rather, this is a true story and it is as real and as dark as it gets. Do you realize how very, very close America came to going down the toilet? Most people don’t if only because they aren’t as connected on a daily basis with business, politics, Wall Street and the biggest money center banks that do business globally. And… ask yourself this question: If you were one of those progressives that orchestrated this Financial Crisis, would you want your name and face recorded in history as one of the Architects of The Financial Crisis? Didn’t think so. That’s why even today we still have theater at its grandest level playing out in the press and on television and in Congress. When the truth, the whole truth and nothing but the truth becomes known, it could and should have an effect on how voters show their dissatisfaction in November 2012. Buckle up because it’s going to get bumpy.

The TRUE causes of The Financial Crisis won’t or can’t be told other than by a few people like me who were there—behind closed doors and in meetings where we were witness to much of the abuses by politicians that caused The Subprime Mortgage Crisis. I was right in the middle of the mortgage meltdown and lost a company I built from my basement. We employed 320 people, operated in 39 states as a mortgage banker and never did subprime loans because I never believed in them. The reasons I don’t believe in them are now all around us and are known as foreclosures. (Yes, many people with prime mortgages also lost their jobs in the meltdown and subsequently their homes as well. But, the contagion started with subprime mortgages.) In addition to being an owner of a mortgage company, I was privileged to serve for four years on the board of my state’s mortgage association, one year as president and one as immediate past-president. Additionally, I served on the board of another industry trade group called the Real Estate Services Providers Council (RESPRO) for two years. Because of being on those boards, I was in Washington D.C. three to four times per year in even more meetings (some of them closed-door) and sat on more mortgage industry panels than I can count. You might say that in retrospect, putting all the pieces together, I should have seen the meltdown coming. I beat myself up with that thought even to this day. I was too close to the forest to see the trees but now I am naming the guilty parties and telling all.

I am indeed Mad As Hell and I Am Not Going To Take it Anymore! Enough. The zealots who caused this should be castigated for their crimes against the U.S. economic system and its citizens. This was the biggest transfer of wealth in history from Main Street to Wall Street. Let the guilty parties be judged as the MasterMinds of The Financial Crisis and let historians record their proper place in the annals of history as some of the worst people on the planet. Vote them out of Washington D.C. on November 6th, 2012 and let the healing begin. Never again should Americans allow corrupt, social engineers to hold public office and use political correctness to push their own misguided agendas.

If you are with me on this . . . if you want to put correct faces on The Financial Crisis and know who to vote OUT of office on November 6th, 2012 then read this book and spread the word. All the names, dates, Acts, coercion, gun-to-the-head tactics and so much more are in this book. It is critical that the factual juggernaut of history record all the names and faces of the individuals who wrought The Financial Crisis upon the U.S. and global economies before the November 2012 elections. Knowledge is power and YOU (all of us) must not forget!

We cannot afford to forget the lessons of the crisis and the damage it caused to millions of Americans. Amnesia is what causes financial crises.

Timothy Geithner, Secretary of the Treasury in a WSJ OpEd in March 2012.

How very ironic that Mr. Geithner, who cheated on his taxes and who played a significant role in causing the meltdown, would write that piece for the Wall Street Journal. It was a total subterfuge that pretends he had nothing to do with it. Most of us would agree that it would be smart for us to pay heed to We cannot forget the lessons of the crisis and the damage it caused to millions of Americans. And we absolutely must not forget those whose fingerprints are all over this Mr. Geithner! I’m going to give you a hint about who Mr. Geithner really is and where his training came from (details follow in the book). He is one of many protégés of Robert Rubin. Rubin was Chairman of CitiGroup in 1977, co-Chairman of Goldman Sachs from 1990-1992, Bill Clinton’s Secretary of the Treasury from 1995-1999 and re-wrote the charters of Fannie Mae and Freddie Mac allowing them to buy subprime loans for the very first time. Rubin was instrumental in repealing the Glass-Steagal Act in 1999, which opened the flood gates for banks to enter the very fatal world of originating subprime mortgages with depositors’ money in checking and savings accounts, etc. Robert Rubin, Timothy Geithner and others to be named in the book are front and center in responsibility for causing The Financial Crisis! Three U.S. Presidents, all of them bleeding heart progressives, are also in my Top 10 list of Architects of the Meltdown and their roles in The Subprime Mortgage Crisis are chronicled in great detail. And Robert Rubin is definitely also in that Top 10 list.

On November 6th, 2012, voters should show all the guilty parties what