Death Ray Replaced By The Voice of God (ADS; LRAD)

Dandelion Salad

Strategy Page
December 17, 2007

While U.S. efforts to deploy it’s microwave Active Denial System (which transmits a searchlight sized bean of energy when makes people downrange feel like their skin is on fire) continue to be delayed, another non-lethal system, LRAD (Long Range Acoustic Device) has been quietly deployed to Iraq. And there the story gets a little strange.

LRAD is basically a focused beam of sound. Originally, it was designed to emit a very loud sound. Anyone whose head was touched by this beam, heard a painfully loud sound. Anyone standing next to them heard nothing. But those hit by the beam promptly fled, or fell to the ground in pain. Permanent hearing loss is possible if the beam is kept on a person for several seconds, but given the effect the sound usually has on people (they move, quickly), it is unlikely to happen. LRAD works. It was recently used off Somalia, by a cruise ship, to repel pirates. Some U.S. Navy ships also carry it, but not just to repel attacking suicide bombers, or whatever. No, the system was sold to the navy for a much gentler application. LRAD can also broadcast speech for up to 300 meters. The navy planned to use LRAD to warn ships to get out of the way. This was needed in places like the crowded coastal waters of the northern Persian Gulf, where the navy patrols. Many small fishing and cargo boats ply these waters, and it’s often hard to get the attention of the crews. With LRAD, you just aim it at a member of the crew, and have an interpreter “speak” to the sailor. It was noted that the guy on the receiving end was sometimes terrified, even after he realized it was that large American destroyer that was talking to him. This apparently gave the army guys some ideas, for there are now rumors in Iraq of a devilish American weapon that makes people believe they are hearing voices in their heads.

This made more sense when an American advertising firm recently used an LRAD unit to support a media campaign for a new TV show. LRAD was pointed at a sidewalk in Manhattan, below the billboard featuring the new show. LRAD broadcast a female voice providing teaser lines from the show. The effect was startling, and a bit scary for many who passed through the LRAD beam. It appears that some of the troops in Iraq are using “spoken” (as opposed to “screeching”) LRAD to mess with enemy fighters. Islamic terrorists tend to be superstitious and, of course, very religious. LRAD can put the “word of God” into their heads. If God, in the form of a voice that only you can hear, tells you to surrender, or run away, what are you gonna do?

Meanwhile, the microwave powered ADS, a non-lethal weapon that looks like a radar dish, languishes in politically correct limbo. The ADS “radar dish” projects a “burn ray” that is about four feet in diameter. It is effective in fog, smoke and rain. When pointed at people and turned on, it creates a burning sensation on the skin of its victims, causing them to want to leave the area, or at least greatly distracts them. The microwave weapon has a range of about 500 meters. ADS is carried on a hummer or Stryker, along with a machine-gun and other non-lethal weapons (like LRAD). The proposed ROE (Rules of Engagement) for ADS were that anyone who kept coming after getting hit with microwave was assumed to have evil intent, and could be killed. The microwave is believed to be particularly useful for terrorists who hide in crowds of women and children, using the human shields to get close enough to make an attack. This has been encountered in Somalia and Iraq.

Deployment of ADS has been delayed for years because of concerns about how non-lethal it really is. ADS has been fired, in tests, over 2,500 times. Many of these firings were against human volunteers, and the device performed as predicted, without any permanent damage. But generations of exposure to lurid science fiction descriptions of “death rays” has made the defense bureaucrats anxious over the negative public relations potential if something like ADS was actually used. From a publicity perspective, using more lethal “non-lethal-weapons” is preferable to deploying something safer, but that could be described, however incorrectly, as a “death ray.” In any event, it appears that the cheaper, smaller (about 45 pounds), gentler and more flexible LRAD has taken ADS’s place in the American arsenal. At least for now.

h/t: Conspiracy Archive email

FAIR USE NOTICE: This blog may contain copyrighted material. Such material is made available for educational purposes, to advance understanding of human rights, democracy, scientific, moral, ethical, and social justice issues, etc. This constitutes a ‘fair use’ of any such copyrighted material as provided for in Title 17 U.S.C. section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.


Hear Voices? It May Be an Ad By Andrew Hampp

Hi-tech Torture by Rosemarie Jackowski (ADS) + Pioneering ‘heat wave’ gun may be used in Iraq

Cindy Sheehan Calls on Reyes to Subpoena Pelosi for Role in CIA Torture Tape Destruction

Dandelion Salad

After Downing Street
Dec. 21. 2007

Washington DC — Congressional candidate Cindy Sheehan has called upon Silvester Reyes to subpoena Nancy Pelosi to testify before Congress on her knowledge of the CIA torture tapes. Reyes, head of the House Intelligence Committee has issued subpoenas to acting CIA general counsel John Rizzo and the former head of the National Clandestine Service, Jose Rodriguez, to testify on January 16th.

“Nancy Pelosi knows what is on those tapes. She should be subpoened to testify to the specific use of torture on the tapes. The public deserves to know why the Bush administration and Ms. Pelosi would both be motivated to have the tapes destroyed,” said Sheehan.

Sheehan, who is calling for Congress to impeach the President, has publicly asked Pelosi to come clean on what she knows of the President’s torture policy.

“Ms. Pelosi was present at the CIA briefings. She knows what they are hiding. Mr. Reyes should also call on Ms. Pelosi to testify.”

Reyes was named to his position as head of the committee by Ms. Pelosi.

FAIR USE NOTICE: This blog may contain copyrighted material. Such material is made available for educational purposes, to advance understanding of human rights, democracy, scientific, moral, ethical, and social justice issues, etc. This constitutes a ‘fair use’ of any such copyrighted material as provided for in Title 17 U.S.C. section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.


Congress Subpoenas Ex-CIA Official

The Butcher’s Apron By Mike Whitney

Neither Dennis Kucinich nor Ron Paul are members of the CFR. Add Mike Gravel, too. ~ Lo

Dandelion Salad

By Mike Whitney
12/21/07 “ICH

Every four years the country is swept up in the pomp and pageantry of presidential elections. And every four years loyal Americans flock to the voting booths to select the candidate of their choice. Elections–we are told—are supposed to be the true expression of democratic government. But they aren’t. They’re a sham and most people know it. The balloting creates the illusion of choice where there is none. It’s become a meaningless ritual that has nothing to do with representative government.

The 2008 elections have already been marred by a number of controversies, the worst of which is the report that was published last Friday by Ohio’s top election official, Secretary of State Jennifer Brunner. The report proves that the voting systems that decided the 2004 election in Ohio were rife with “critical security failures”. The election was rigged; pure and simple–stolen by the Bush team and their friends in the establishment media who refuse to report the news. It’s actually funny, in a cynical kind of way. The perpetrators were so cocksure they could pull it off that—according to Democracy Now— “the servers for the computation of the Ohio vote count were in the same basement in Chattanooga, Tennessee that houses servers for the Republican National Committee. The programmers who (worked) for Ken Blackwell, the Republican Secretary of State, were Republicans who did websites for the Bush administration.” (Democracy Now)

What gall. Blackwell’s thugs didn’t even try conceal what they were up to. Why should they care? It’s not like there’s an independent media that’s going to report the details of a stolen election. No way. Blackwell ripped off the election and then thumbed his nose at the public. No investigation. No accountability. No nothing. Just like a banana republic only bigger.

So why do we keep throwing billions of dollars down a black hole just to maintain this pathetic charade that fools no one? Why not just load up the boxcars with pallets of crisp-new hundred dollar bills and ship them off to Crawford where they end up anyway. Let Bush worry about how to distribute the loot. Besides, with Congress’ public approval dithering at 11%; we’d be better off paying them to stay at home and turn the House of Representatives into condos.

This year every one of the leading candidates is a member of the Council on Foreign Relations. Every one of them is a “dual loyalist” with a globalist agenda. Every one of them accepts the new regime of curtailed civil liberties, endless war, and free trade. There’s not a nationalist or a patriot among them. None. They’re all part of the same corporate effluent that washed into Washington on a wave of special interest payola drowning all visible symbols of a once-vital Republic. Romney pontificates about expanding Guantanamo while Clinton boasts about an attack on Iran. Blah, blah, blah. How can anyone listen to this gibberish? There’s not a dime’s worth of difference between any of them. They’re all lacquer-hair phonies who’ve never had an original thought in their lives. Everything they think or say comes off a cue-card or teleprompter that flashes poll-tested, focus-group mumbo-jumbo which they reiterate roboticly. It’s all rubbish.

If a prospective candidate hasn’t sworn his undying allegiance to the cabal of transnational corporations, or taken a blood-oath to defend the doctrine of unfettered self-aggrandizement, or pledged to carry out a bloodthirsty “economy-busting” global crusade; he is quickly banished to the wilderness.

Just look at Ron Paul, who collected $6 million in donations in a matter of hours but still can’t even get his picture in the papers. Why is that?

It’s because he hasn’t sold his soul to the carpetbagging freebooters who run the system. Apart from Kucinich, he’s the only red-blooded, Constitution-toting American in the race. The rest are just bunko-artists and Pharisees.

Everyone knows what’s going on. The whole campaign extravaganza is a pointless farce. Why continue the deception?

We all watched in 2000 while the five loonies on the Supreme Court suspended the hand counting of ballots, overturned the ruling of the Florida Supreme Court, and awarded the election to their own Party’s candidate. How is that any different than Blackwell’s manipulations in Ohio? It’s all the same. In fact, the 5 justices had so little regard for the intelligence of the American people they invoked the 14th amendment—the “equal protection” clause—which had never been used except in cases of racial discrimination. They didn’t care. Who was going to stop them?

Can you imagine, dear reader, the peals of laughter that must have gone up at the right-wing think tanks after that ruling? Hooray for the oligarchy of racketeers! Pass the brandy.

That was a turning point in American history. It showed that the ruling class really doesn’t care what the people think anymore. This is THEIR country and they’ll run it whatever way they want. To hell with democracy.

The reason there’s more coverage of the campaigns this year is simply because the boardroom Mandarins want to restore the illusion that we actually have a choice. We don’t. They pick the candidates and we pull the lever and go home. End of story. The debates are nothing more than a public relations gambit designed to lend a bit of credibility to a system that is rotten to the core. What part of the body-politic has been spared the cancerous ravages of corporate corruption. The Congress? The Executive? The High Court? The media?

Don’t make me laugh. The entire system is marinated in a culture of violence and dishonesty. Nothing is salvageable. It all stinks.

The real difference between the parties is minuscule but significant. The Democrats have become the party of traditional imperialism spearheaded by Brzezinski, Holbrooke, Albright and the other guardians of Empire. These are the master-puppeteers who operate behind the scenes for their well-heeled benefactors. Their focus is mainly on Central Asia; controlling resources from the Caspian Basin, “pacifying” Afghanistan, rallying the EU to a greater role in NATO, and continuing the apocryphal “war on terror” into infinity. It’s the Great Game redux.

The Republican Party has become the party of neoconservatives. Their operational plan is “A Clean Break: A New Strategy for Securing the Realm”. It aligns the US with the foreign policy objectives of Israel’s Likud Party. The focus is balkanizing the Middle East, undermining Arab nationalism, installing US-Israeli client regimes, and controlling the regions prodigious natural resources. It is a straightforward strategy for regional hegemony.

This is the REAL split between the parties, not the meaningless Democrat-Republican labels. Presently, the traditional imperialists have regained the upper-hand as the Bush bandwagon lurches into the ditch. Of course, there is some cross-pollenizing between the two parties; the differences are not absolute. There’s plenty of gray-area and incestuous intermingling, but this is a pretty accurate overview. What’s important is that neither party has any intention of restoring the Bill of Rights, slowing the outsourcing of jobs, or abandoning the war on terror. No way. That is not in their collective interests at all.

When civil liberties are stripped away; elections become pointless. Freedom has nothing to do with pushing a colored-nob on a touch-screen computer every 4 years. Its about containing the power of the state. Doesn’t anyone grasp that? Freedom has become hollow buzzword that’s sprinkled through presidential speeches or used to defend the latest bloody intervention in some foreign country. It’s lost whatever meaning it had. We’ve forgotten that the Bill of Rights doesn’t give us special, superhuman powers. It was designed to be a straitjacket that would restrict the actions of power-hungry politicians and confine them within the law. That’s all it is; a shackle on government. Now, all that’s been lost. The basic rules of the game have changed; the social contract has been repealed. Even the flag, which once embodied the hopes and aspirations of the nation; has been raised over Guantanamo, Abu Ghraib and countless other black sites spread across the planet like grains of sand. What does the world see when they look at that flag now? Do they see a symbol of liberty and justice or the butcher’s apron flapping lazily above some far-flung torture chamber.

Everything has changed. America has lost its way. Casting a ballot for one silver-spoon CFR plutocrat over another accomplishes nothing. That’s not democracy. It’s a fraud.

FAIR USE NOTICE: This blog may contain copyrighted material. Such material is made available for educational purposes, to advance understanding of human rights, democracy, scientific, moral, ethical, and social justice issues, etc. This constitutes a ‘fair use’ of any such copyrighted material as provided for in Title 17 U.S.C. section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.


Dennis Kucinich: Election Reform + Public Funding of Elections + Corporate Personhood + Open Honest Govt (video)

Ohio Secretary of State confirms 2004 election could have been stolen by Bob Fitrakis & Harvey Wasserman

Turning online popularity into real world votes: how Ron Paul or Dennis Kucinich can win by Daniel N

Dandelion Salad

by Daniel N
December 21, 2007 at 08:53:20

I’m writing today because of the very real threat that Ron Paul’s and Dennis Kucinich’s online popularity will not translate into a real world win in the presidential election. I believe that Paul or Kucinich can win, and the key to victory is simple: We know how to “spam” internet polls and even many straw polls. Of course I use the term “spam” facetiously; we win because we’re driven and organized. We must now use our organizational skills and drive to “spam” the primary elections.

The importance of primary elections may be obvious to the politically savvy, but many people do not even know what primary elections are. Many who know about primaries don’t care enough to participate in them. Voter turnout in primary elections is, sadly, consistently low. In 2004, only 11.4 percent of Democrat voters participated in the primary elections. Consequently, the worst possible Democratic candidate was chosen to go up against Bush. Ask you friends and family members about primary elections, and you’ll be surprised at how many of them don’t really know what primaries are. For some reason, primary elections are the best kept open secret in American politics, even though they’re even more important than the general elections. This is why I’m worried. Powerful people make sure to vote in primaries. Normal people don’t. It won’t be a shock to me if only half of the internet’s rabid Paul and Kucinich supporters bother to participate in the primaries – but this can’t be allowed to happen.


FAIR USE NOTICE: This blog may contain copyrighted material. Such material is made available for educational purposes, to advance understanding of human rights, democracy, scientific, moral, ethical, and social justice issues, etc. This constitutes a ‘fair use’ of any such copyrighted material as provided for in Title 17 U.S.C. section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.


Dennis Kucinich Can Win by Lo

12.20.07 Uncensored News Reports From Across The Middle East (video; over 18 only)

Dandelion Salad

This video may contain images depicting the reality and horror of war and should only be viewed by a mature audience.

Selected Episode

Dec. 20, 2007


For more:
“Clashes in Gaza Resume,” Al Jazeera TV, Qatar
“Sederot Under Rocket Attack,” IBA TV, Israel
“Eid Under Dire Conditions,” Saudi TV, Saudi Arabia
“US Trying to Resolve Presidential Deadlock in Lebanon,” Dubai TV, UAE
“Mass Weddings in Karbala,” Al-Iraqiya TV, Iraq
“Somalia in Crisis,” Al Jazeera English, Qatar
“Ahmadinejad Meets Saudi King,” IRIB2 TV, Iran
Produced for Link TV by Jamal Dajani.

NH: Liz Kucinich Talks Drug Reform With 22-Year-Old MD Patient by Matt Simon

Dandelion Salad

by Matt Simon
Huffington Post
December 21, 2007

Clayton Holton was scheduled to receive a visit from Ohio Congressman Dennis Kucinich Tuesday morning at his residence, the Riverside Rest Home in Dover, NH. At 22, Clayton is the youngest person ever admitted into a retirement home in New Hampshire, and Kucinich wanted to hear his story.

Unfortunately, Kucinich had to race back to Washington to vote against continued funding for the war in Iraq, so his wife Elizabeth came instead. Did Clayton, who suffers from a rare form of muscular dystrophy, mind the substitution?

“She’s beautiful,” he told me on the way back to his room following a lengthy, intimate conversation with Mrs. Kucinich in the cafeteria.

Clayton got his first big taste of the limelight Oct. 6, when he encountered Mitt Romney following an “Ask Mitt Anything” event in Dover. The video was broadcast on CNN and all over the internet.

After explaining his condition and the relief he receives from marijuana, Clayton asked Romney a pointed question: “Will you arrest me and my doctors if I get medical marijuana prescribed to me?”

“I’m not in favor of medical marijuana being legal,” Romney replied, and quickly escaped to shake hands with less instructive voters.


FAIR USE NOTICE: This blog may contain copyrighted material. Such material is made available for educational purposes, to advance understanding of human rights, democracy, scientific, moral, ethical, and social justice issues, etc. This constitutes a ‘fair use’ of any such copyrighted material as provided for in Title 17 U.S.C. section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.

Al Jazeera: Death of the dollar with Paul Craig Roberts (videos)

Dandelion Salad


People & Power – Death of the dollar

Analyst Max Keiser investigates the ill health and possible demise of the dollar.

Added: December 19, 2007

h/t: ICH


Offshoring Interests and Economic Dogmas Are Destroying the US Dollar By Paul Craig Roberts

Maxine & Ted – Don’t Call Us If You Call Us Terrorists! by Linda Milazzo

Dandelion Salad

by Linda Milazzo
Atlantic Free Press
Thursday, 20 December 2007

On October 23rd, Congress voted to stifle Americans’ right to dissent when it passed House Resolution 1955, the “Violent Radicalization and Homegrown Terrorism Prevention Act of 2007,” sponsored by California Congresswoman, Jane Harman. In sanctioning the ambiguous definitions for “homeland terrorism” contained in this bill, Congress equated American participatory democracy to American “homegrown terror.” The First Amendment is under assault:
Continue reading

New Orleans City Hall Protest 12.20.07 + Annie Quimby tasered in New Orleans protest (videos)

Dandelion Salad


Protest at the New Orleans City Hall

December 20, 2007

DISCLAIMER: If you do not approve of strong or offensive language or violence please do not watch the video.

The New Orleans City Council was meeting to vote on the HANO demolition requests Thursday afternoon. Outisde the building, protesters gathered at a metal gate, which they eventually breached.

In this video, local police pepper spray and taser those protesters.

This video can be found here at…

h/t: Punk Voter

Annie Quimby tasered in New Orleans protest



Police Use Stun Guns on Citizens Opposed to Demolition of Houses in New Orleans By Cain Burdeau

New Orleans Police Taser, Pepper Spray Residents Seeking to Block Public Housing Demolition

Truth, Lies, Errors and Bullshit About Iraq and Iran by Walter C. Uhler

Dandelion Salad

by Walter C. Uhler
Posted 20 December 2007

In his thought provoking little book, On Bullshit, Professor of Philosophy Emeritus at Princeton University, Harry G. Frankfurt, cites an exchange between Fania Pascal and the renowned philosopher, Ludwig Wittgenstein: “I had my tonsils out and was in the Evelyn Nursing Home feeling sorry for myself. Wittgenstein called. I croaked: ‘I feel just like a dog that has been run over.’ He was disgusted: ‘You don’t know what a dog that has been run over feels like.” [p. 24]

In Professor Frankfurt’s interpretation, Wittgenstein issued his harsh rejoinder because he believed Fania Pascal’s assertion was bullshit. In Frankfurt’s view, the essence of bullshit is an “indifference to how things really are.”

Thus, whereas people who tell the truth and people who lie are similarly concerned about the facts – in order to either expose or deny them – the bullshitter ‘is neither on the side of the true nor on the side of the false. His eye is not on the facts at all, as the eyes of the honest man and the liar are, except insofar as they may be pertinent to his interest in getting away with what he says. He does not care whether the things he says describe reality correctly. He just picks them out, or makes them up, to suit his purpose.” [p. 56] Consequently, “bullshit is a greater enemy of the truth than lies are.” [p. 61]

Using this definition, Bill O’Reilly, Rush Limbaugh, Ann Coulter and Michael Savage qualify as world-class bullshitters. And so are the neoconservatives, whose ideological obsession with using U.S. military power, in order to extend liberty and democracy around the world, reeks with “indifference to how things really are” in such places as Iraq, Iran and Palestine.

Did President Bush and Vice President Cheney really care whether their assertions about Iraq’s weapons of mass destruction and ties to al Qaeda described reality correctly? When, in the summer of 2002, Cheney exerted pressure on intelligence officials to withdraw their doubts about the ties between Iraq and al Qaeda, was it because he was searching for the truth or because he was determined to have his views ratified?

And if Mr. Cheney was interested in the truth, why didn’t he request a National Intelligence estimate (NIE) on Iraq? Why was it left to congressional Democrats to request such an NIE in September 2002? Granted, NIEs are rarely definitive, but they almost always yield more intelligence about a country than any single individual can possess. More to the point, NIEs are much more concerned with the true and the false than are bullshit politicians.

Take, for example, the November 2007 NIE on Iran’s nuclear program. New evidence provided by a senior official in the Iranian Ministry of Defense (who had defected to Turkey in February 2007) caused the intelligence community to reevaluate and then revise its earlier conclusion – reported in the NIE of 2005 — that Iran was determined to develop nuclear weapons. The new intelligence allowed the intelligence community to judge with “high confidence that in the fall of 2003, Tehran halted its nuclear weapons program.” Thus, “Tehran’s decision to halt its nuclear weapons program suggests it is less determined to develop nuclear weapons than we have been judging since 2005.” [National Intelligence Estimate, “Iran: Nuclear Intentions and Capabilities,” Nov. 2007]

It now appears likely that President Bush “knew about that intelligence as early as February or March 2007” [Gareth Porter, “Did Bush Get New Iran Intel Last Winter?”, Dec. 18, 2007]. Yet, on 6 August 2007 our Bullshitter-in-Chief falsely asserted: “After all, this is a government that has proclaimed its desire to build a nuclear weapon.” And in October 2007, Bullshitter Bush asserted, “a nuclear-armed Iran might lead to World War III.” [“A Blow To Bush’s Tehran Policy, Washington Post, Dec. 4, 2007]

Such bullshit is reminiscent of the crap Bush was flinging in mid-2003, when questions began to be raised about the weapons of mass destruction NOWHERE TO BE FOUND in Iraq. Remember when the Bullshitter told reporters in mid-July 2003: “We gave him [Saddam] a chance to allow the inspectors in, and he wouldn’t let them in.” (In fact, Saddam did let the inspectors in.)

Remember, the Bullshitter-in-Chief’s interview with ABC’s Diane Sawyer in December 2003? When Ms. Sawyer pressed Bush about justifying a war to the American public by stating “as a hard fact, that there were weapons of mass destruction as opposed to the possibility that he [Saddam] could move to acquire those weapons,” the Bullshitter responded: “So what’s the difference?” Perhaps, this is the appropriate time to reiterate what Professor Frankfurt calls the essence of bullshit: An “indifference to how things really are.”

The news media also propagates bullshit. Simply recall the so-called “reporting” about Iraq by Judith Miller of the New York Times; reporting that proved to be little more than stenography dictated by two incorrigible bullshitters, neocon Richard Perle and Ahmad Chalabi.

Or consider the recent column written by Kevin Ferris of the Philadelphia Inquirer (see In that column, Ferris “gushes like a child and waxes euphoric about the ‘passion and enthusiasm’ of President Bush – as if Bush has ever been anything but passionate and enthusiastic, even as he has subjected the United States and the world to the most evil and error prone presidency in U.S. history.” Like so many Americans, Ferris not only believes that Bush is sincere, but also that sincerity trumps objective reality – which has been a disaster.

But, “sincerity” itself, as Professor Frankfurt tells us, is just more bullshit. “As conscious beings, we exist only in response to other things, and we cannot know ourselves without knowing them. Moreover, there is nothing in theory, and certainly nothing in experience, to support the extraordinary judgment that it is the truth about himself that is the easiest for a person to know. Facts about ourselves are not particularly solid and resistant to skeptical dissolution. Our natures are, indeed, elusively insubstantial – notoriously less stable and less inherent than the natures of other things. And insofar as this is the case, sincerity itself is bullshit.” [pp. 66-67]

Finally, I suspect that Charles Gibson has been flinging bullshit about the success of the “surge” on ABC’s World News. Except for a December 16th report about the British handing over control of Basra to the Iraqis — which contained a quote by Anthony Cordesman that “the British are putting a good face on what essentially is a very serious political and military defeat” and the observation by Terry McCarthy that “Britain’s non-confrontational policy in Basra left the Iraqi security forces simply unable to control the Shiite militias, who are making millions of dollars from oil smuggling” – Gibson has paid more attention to the short-term tactical successes of the surge than he has to the long-term strategic failures looming on the horizon.

First, the surge is going to end – probably before achieving its stated goal of providing a relative calm conducive to political reconciliation. Today we have relative calm in Iraq, but almost no reconciliation at the national level. Second, are the Sunnis, who we’ve have funded to fight al Qaeda, eventually going to turn their guns back on us? Or, as Douglas McGregor recently put it, “Is the Great Awakening inside the Sunni Arab community the road to Iraq’s stability, or just a pause for Sunni rearmament and reorganization.”

Mr. Gibson might have also assessed the tactical success of the surge in the context of increased Iranian influence in southern Iraq, in the context of Muqtada al-Sadr’s order to the Mahdi Army to stand down for six months (which ends in February), or even in the context of the increasing tension between Turkey and the Kurds in northern Iraq. He might have assessed the tactical success of the surge against the immense violence, death and destruction that the U.S. unleashed in Iraq since March 2003.

Similarly, Mr. Gibson might even have assessed the tactical success of the surge in the context of the number of close air support sorties that dropped a “major munition” on Iraq in 2007. According to Anthony Cordesman, the number increased from 285 in 2004, 404 in 2005, and 229 in 2006, to 1,119 in 2007 (Nearly five times higher than in 2006 as of 5 December).” Finally, he might have assessed the tactical success of the surge in the context of focus group analyses conducted by the U.S. military last month. As Karen DeYoung of the Washington Post reports on December 19th, “Iraqis of all sectarian and ethnic groups believe that the U.S. military invasion is the primary root of the violent differences among them, and see the departure of ‘occupying forces’ as the key to national reconciliation.”

But Charles Gibson has failed to provide such context and, thus, might be suspected of bullshitting his viewers about the surge. Such suspicions are strengthened when his words of December 14th are considered: “Overseas this has been a remarkable day in Iraq. Our Baghdad bureau says there were no reports of any major outbreaks of violence anywhere in the country today. This is the first time we can recall this happening since the insurgency began.”

Consider that, on that “remarkable day,” “at least 25 Iraqis were killed or found dead and eight more were wounded,” that “in nearby Mansouriat Al-Muqdadiyah, three gunmen were killed and two villagers were wounded during a clash,” that “near the Syrian border in Anbar province, a suicide bomber wounded six policemen during an attack on their station” and that “Iraqi forces killed 14 suspects and detained 30 others during security operations.” [Margaret Griffis,, Dec. 14, 2007]. Unless one is inclined to bullshit about the success of the surge, like Charles Gibson, any one of these events would be considered a “major outbreak of violence,” were they to occur in the United States.

Walter C. Uhler is an independent scholar and freelance writer whose work has been published in numerous publications, including The Nation, the Bulletin of the Atomic Scientists, the Journal of Military History, the Moscow Times and the San Francisco Chronicle. He also is President of the Russian-American International Studies Association (RAISA).

FAIR USE NOTICE: This blog may contain copyrighted material. Such material is made available for educational purposes, to advance understanding of human rights, democracy, scientific, moral, ethical, and social justice issues, etc. This constitutes a ‘fair use’ of any such copyrighted material as provided for in Title 17 U.S.C. section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. If you wish to use copyrighted material from this site for purposes of your own that go beyond ‘fair use’, you must obtain permission from the copyright owner.

The Conservative Origins of the Sub-Prime Mortgage Crisis by John Atlas & Peter Dreier

Dandelion Salad

by John Atlas and Peter Dreier
The American Prospect
Wednesday, December 19, 2007

Everything you ever wanted to know about the mortgage meltdown but were afraid to ask.

Hardly a day goes by without a news story about the accelerating number of foreclosures, an economic tsunami that is causing chaos in the housing and stock markets, the banking industry, and the global money markets, not to mention upending families and neighborhoods. Business leaders, activist groups, and Democratic presidential candidates are calling for our government to do something before the situation declines even further. The problem is worsening in every part of the country, but two early primary states — Florida and Nevada — are among the hardest hit.

The crescendo of criticism recently pushed President George W. Bush to announce a plan to freeze interest rates for up to five years for some homeowners who purchased homes with high-risk adjustable rate mortgages (ARMs) that are scheduled to be “reset” at higher rates, in many cases, by hundreds of dollars a month.

The Republican candidates for president generally supported the Bush plan but were reluctant to call for further regulations to protect borrowers. Some pundits, including former Texas Rep. Dick Armey, a right-wing Republican who now runs a conservative think tank, FreedomWorks, suggested that the Bush plan violated the president’s oft-spoken zeal for allowing the “free market” to work. The media fell for Bush’s media spin, describing it as a interest rate “freeze” and an “agreement” hammered out with lenders and investors. But in fact the Bush plan involves no mandates or legislation, just a voluntary agreement by lenders that lacks the force of law. There’s absolutely no requirement that would force banks or investors to share the pain or be part of the solution. It isn’t even clear if investors in mortgage-backed securities will allow the lenders to reset the rates. They may even file suit to halt the freeze.

Consumer activists, and the Democratic candidates, pointed out that the plan excludes most sub-prime borrowers, including those who are in the deepest trouble and are delinquent on their mortgage payments and facing foreclosure. Of the perhaps 2 million adjustable-rate mortgages that are expected to reset through the end of 2009, only 240,000 of them — 12 percent — would be covered by Bush’s proposal, according to Barclays Capital, as reported in The New York Times. The Center for Responsible Lending, a nonprofit group, estimates that only 145,000 households will qualify for the rate freeze. Most borrowers will be on their own to negotiate with their lenders on a case-by-case basis. Many families who persuade banks to temporarily freeze their rates still won’t be able to afford to make the payments, and will face foreclosure.

“It’s very disappointing,” said Michael Shea, executive director of ACORN Housing, a national group that provides homeownership counseling for low-income consumers. “Wall Street has made billions and now they’re hardly paying anything at all” for their role in the sub-prime crisis.

Make no mistake — it is a crisis. Since 1998, more than 7 million borrowers bought homes with sub-prime loans. One million of those homeowners have already defaulted on their loans The crisis is likely to get worse. Financial analysts predict that at least a quarter of these people — over 2 million families — will default and face the financial pain and psychological grief of losing their homes over the next few years.

Bush, who once touted his administration’s goal as creating an “ownership society,” may now go down in history as the president on whose watch ownership declined. The nation’s homeownership rate has fallen during the last two years and will plummet further next year. Moreover, Bush’s unwillingness to take bold steps to regulate lenders, brokers, and investors will guarantee that the next president will inherit a much bigger mortgage mess.

To many Americans, the crisis seems too complex to comprehend. To understand it, we need to know: What is the problem? Who benefited? Who got hurt? Who is to blame? Who should we help? What should be done? Although the immediate cause is the widespread use of sub-prime mortgages, the root cause is a decades old failure of government to adequately regulate the banking industry.

What Is Sub-Prime Lending?

Sub-prime lending is a fancy financial term for high-interest loans to people who would otherwise be considered too risky for a conventional loan. These include middle-class families who have accumulated too much debt and low-income working families who want to buy a home in the inflated housing market. To cover their risk, lenders charge such borrowers higher-than-conventional interest rates. Or they make “adjustable rate” loans, which offer low initial interest rates that jump sharply after a few years. Only a decade ago, sub-prime loans were rare. But starting in the mid-1990s, sub-prime lending began surging; these loans comprised 8.6 percent of all mortgages in 2001, soaring to 20.1 percent by 2006. Since 2004, more than 90 percent of the sub-prime mortgages came with exploding adjustable rates.

With interest rates low, housing prices on a steady rise, and practically no government regulation, mortgage finance companies devised high-interest, high-fee schemes to entice families to take out loans that traditional savings banks would not make. Many of the lenders were legitimate operations providing a market for credit-risky people. But there also were huge corporations, such as Household Finance, that sought extraordinary profits through unsavory means, called predatory loans. Not subject to government regulation, they bent the rules, lowering normal banking standards.

Mortgage brokers, the street hustlers of the lending world, often used mail solicitations and ads that shouted, “Bad Credit? No Problem!” “Zero Percent Down Payment!” to find people who were closed out of homeownership, or homeowners who could be talked into refinancing. They seduced millions of people into signing on the dotted line. Although sub-prime lending has been concentrated in minority and low-income urban areas, it has spread to the middle-class suburbs.

The sub-prime lenders didn’t hold on to these loans. Instead, they sold them — and the risk — to investment banks and investors who considered these high interest rate, sub-prime loans a goldmine. By 2007, the sub-prime business had become a $1.5 trillion global market for investors seeking high returns.

The whole scheme worked as long as borrowers made their monthly mortgage payments. When borrowers couldn’t or wouldn’t keep up the payments on these high-interest loans, what looked like a bonanza for everyone turned into a national foreclosure crisis and an international credit crisis. For millions of families, the American Dream of homeownership has become a nightmare.

The mortgage meltdown has serious ripple effects. Foreclosed houses become vacant, deteriorate into eyesores, and detract from the neatness and feeling of well-being in neighborhoods. Vacant houses also attract crime and make it more difficult for neighbors to purchase homeowners’ insurance.

In neighborhoods with several foreclosed homes, property values, and thus local property-tax revenues, plummet, making it harder for cities to provide good schools, police protection, and other services. According to a new report by the U.S. Conference of Mayors, the weak housing market and the large inventory of unsold homes will likely reduce home values by $1.2 trillion next year. About half of that amount is due to the sharp increase in foreclosures.

Who Benefited and Who Got Hurt?

Mortgage brokers, who occupy an unregulated niche of the lending world, made a commission for every borrower they handed over to a mortgage lender. These brokers are like the drug dealers on the street corner. They are the smallest link in a lending chain that includes some of the largest and most respectable Wall Street firms.

Large mortgage finance companies and banks made big bucks on sub-prime loans. Last year, 10 lenders — Countywide, New Century, Option One, Fremont, Washington Mutual, First Franklin, RFC, Lehman Brothers, WMC Mortgage, and Ameriquest — accounted for 59 percent of all sub-prime loans, totaling $284 billion.

Wall Street investment firms set up special investment units, bought the sub-prime mortgages from the lenders, bundled them into “mortgage-backed securities,” and for a fat fee sold them to wealthy investors around the world. According to The New York Times, China’s second-largest bank, Bank of China Ltd, held almost $9.7 billion of securities backed by U.S. sub-prime loans. These investors, who bought the collateralized securities, were happy as long as they got paid their higher interest on the bonds or other investments.

With the bottom falling out of the sub-prime market, more than 80 mortgage companies went under in the past six months. Major Wall Street firms took billion-dollar losses as the crisis ripped into foreign money markets, from London to Shanghai. Lehman Brothers underwrote $51.8 billion in securities backed by sub-prime loans in 2006 alone; as of September, 20 percent of those loans were in default, the Times reported. Similarly, about one-fifth of the sub-prime loans packaged by Morgan Stanley, Barclays, Merrill Lynch, Bear Stearns, Goldman Sachs, Deutsche Bank, Credit Suisse, RBS, Countrywide, JP Morgan, and Citigroup are 60 or more days delinquent, in foreclosure, or involve homes that have already been repossessed.

The executives and officers of some mortgage finance companies cashed out before the market crashed. The poster boy is Angelo Mozilo, the CEO of Countrywide Financial, the largest sub-prime lender. He made more than $270 million in profits selling stocks and options from 2004 to the beginning of 2007. And the three founders of New Century Financial, the second largest sub-prime lender, together realized $40 million in stock-sale profits between 2004 and 2006. Paul Krugman reported in The New York Times that last year the chief executives of Merrill-Lynch and Citigroup were paid $48 million and $25.6 million, respectively.

The hardest hit are the innocent borrowers of sub-prime loans. Many of them are working- and middle-class families who fell victim to the country’s economic squeeze, a hardship not of their own doing but a symptom of the Bush years. They faced layoffs, stagnant wages, and rising costs of home heating, gasoline, utilities, food, and child care. For those without health insurance, one serious medical problem wiped out their savings. At a time when soaring housing prices were out of whack with the rest of the economy, sub-prime loans were the only way they could purchase a home. But when they could no longer keep up their mortgage payments, they had no safety net. They began skipping their monthly mortgage payments, especially after the adjustable-rate mortgages kicked in with higher interest rates, as high as a 30 percent spike for some borrowers.

Lenders sent letters threatening to take their homes in foreclosure if they didn’t pay up. But for millions of families, the harsh warnings didn’t matter. They couldn’t refinance out of high-interest adjustable-rate mortgages because the value of their home had dropped below the outstanding mortgage or because they just didn’t have the money. And they couldn’t tap into a government aid program for at-risk homeowners facing foreclosure because none existed.

Those who deserve our greatest sympathy are the victims of predatory lending, a segment of the sub-prime market that involves deceptive practices by lenders, as well as unconscionable high fees and interest rates, sometimes running well over 22 percent. Predatory lenders range from sleazy operators in the financial netherworld to mainstream financial institutions like Household Finance. These lenders typically have salespeople who hound vulnerable families for months, soliciting and encouraging them to take out a loan to buy a house or refinance. Borrowers are charged hidden high fees, labeled with confusing terms like “discount points,” suggesting that the fees will lower the interest rates, which they don’t.

Predatory loans sometimes involve a conspiracy between loan agents and unscrupulous home-improvement contractors, as well as appraisers who inflate the value of a house so that families will borrow more than the houses are really worth. Predatory mortgages often include last-minute, hidden second mortgages. Using bait-and-switch tactics, predatory lenders tout low interest rates in ads targeting the elderly and residents of low-income, working-class, and minority neighborhoods, without explaining the actual interest rates or that adjustable-rate mortgages mean that the rates will increase.

Borrowers are enticed with deals that require them to pay little or nothing down. The unscrupulous lenders approve borrowers for loans even if they’ve recently been bankrupt or don’t have sufficient income to keep up the payments. These lenders don’t document an applicant’s ability to pay back a loan. They often just accept the borrower’s word about his income and expenses. “You could be dead and get a loan,” a mortgage broker told Holden Lewis of, a leading Web source for financial rate information.

Predatory lenders turn lending logic on its head. Instead of cautiously making loans to people who can repay them, they get their money by lending to people who are unable to repay. The loans are structured to guarantee failure. Predatory lenders get borrowers to agree to an adjustable-rate mortgage without explaining how it works, including the big bump in rates with a few years after taking out the loan. Borrowers suckered by predatory lenders often wind up having a monthly mortgage payment that is more than half their income. A predatory loan is often for more than the value of the house. The victims of predatory loans frequently don’t realize they’ve been snookered until they’re about to lose their homes.

Not all sub-prime borrowers are innocent victims. Some were speculators themselves, seeking to profit from the real estate housing bubble, and had their eyes wide open. They expected to rent their houses or quickly “flip” them to another buyer in a rising housing market. Others were simply living dangerously above their means, taking on too much debt and occupying houses that, by any reasonable standard, they couldn’t really afford. These borrowers should live with the consequences of their behavior, not be rewarded with any help.

Where Do We Go from Here?

What should government do to address this crisis? Public officials need to distinguish legitimate sub-prime lenders from the scam artists who engage in predatory lending. Likewise, the people facing foreclosure need to be treated differently depending on whether they failed to exercise personal responsibility or were victims of predatory practices. Banks and other lenders and investors who speculated in mortgage-backed debt must shoulder some of the blame for this debacle.

Government needs to help the victims of predatory lenders who are at risk of losing their homes, but it must also adopt preventative measures to stop the crisis from getting worse and prevent it from happening again. Congress should enact legislation to protect victims of predatory loans from foreclosure. The victims should have a right to a nonprofit loan counselor or lawyer who can help them renegotiate the loan or sue banks, including big Wall Street firms, for violations of state and federal consumer protection laws. Indeed, Congress should require lenders to restructure predatory loans and provide more funding to nonprofit groups that help homeowners renegotiate loans.

One of these groups, ACORN, a national network of community organizations, has been pressuring Citigroup to restructure loans rather than foreclose on low-income consumers. ACORN wants lenders to agree to 30-year, fixed-rate, affordable modifications to existing loans so borrowers can avoid interest rate increases that come with adjustable-rate mortgages. ACORN has also urged lenders to impose a moratorium on foreclosures, which some Democratic candidates have supported.

Another group, the National Community Reinvestment Coalition, has a foreclosure prevention program that has saved thousands of homeowners from losing their homes by pressuring lenders to change adjustable-rate mortgages into fixed-rate loans. “This is not a homeowner bailout,” said John Taylor, group’s president. “This is a bailout for failed regulatory oversight. Infectious greed and malfeasance by lending institutions is the overwhelming culprit, not consumer misbehavior.”

And UNITE HERE, the garment and hotel workers’ union, has launched a campaign against Countrywide Financial, the nation’s largest sub-prime lender, calling on consumers to boycott the bank until it guarantees it won’t foreclose on borrowers who have fallen behind on adjustable-rate loans.

These activist groups have made some headway, but without a federal mandate they have to rely on protest and other threats to get banks to cooperate. They support a bill sponsored by Rep. Brad Miller, a North Carolina Democrat, and Rep. Loretta Sanchez, a California Democrat, that would allow bankruptcy judges to amend the terms of home mortgages. Under current law, the terms of a mortgage on a yacht or a vacation home can be adjusted during bankruptcy, but not primary residences. “This makes no sense,” said Eric Stein of the Center for Responsible Lending, testifying before the House Judiciary Subcommittee on Commercial and Administrative Law. Advocates say that the Miller-Sanchez bill could help as many as 600,000 homeowners avoid foreclosure, but the Mortgage Bankers Association is fighting the legislation.

Looking forward, we need the federal government to be a lending-industry watchdog, not a lapdog. Step one is to stop predatory lending. The Mortgage Reform and Anti-Predatory Lending Act of 2007, passed by the U.S. House of Representatives in November, contains some useful provisions. It requires lenders to verify all applicants’ income and document that borrowers have a reasonable ability to pay — not just at the initial interest rate, but any future hike in the rate. It puts private mortgage companies and mortgage brokers under the umbrella of federal lending regulations, requiring them to be registered and licensed, just like stockbrokers and insurance brokers. It would also allow a borrower to modify an illegal loan, before being forced into foreclosure. And it allows states to pursue cases against fraud, misrepresentation, false advertising, and civil-rights abuses. Under the bill, wronged borrowers could seek some redress from the original lender, even if they’re not in danger of losing their homes.

But, under pressure from the banking lobby, Congress gutted some of the better parts of the bill. The Mortgage Bankers Association and the American Banking Association lobbyists persuaded the House to allow lenders to continue the insidious practice of paying an increased fee to brokers for steering borrowers into higher cost sub-prime mortgages. It also bars borrowers whose predatory loans have been sold on Wall Street from suing investors for relief until the homeowners are facing foreclosure. In effect, it forces borrowers into foreclosure as a condition for asserting their rights.

Under the bill, in other words, victims of predatory loans have almost no ability to pursue claims against investment banks and other investors. Wall Street and the big players in the mortgage market won’t be held accountable for buying abusive loans. Borrowers who were ripped off should be encouraged, not discouraged to sue Wall Street firms in state court for relief from mortgages that they never had a realistic chance of repaying.

A sweeping bill introduced last week by Sen. Chris Dodd, chairman of the Senate Banking Committee, closes many of the loopholes in the House bill by adding more consumer protections and industry penalties. The Homeownership Preservation and Protection Act of 2007 makes Wall Street and other investors liable for illegal practices of mortgage brokers and lenders. Unlike current law, which puts the burden on the borrower to identify the broker or lender who made the original deal, Dodd’s bill allows the borrower to sue the current mortgage holder. The Dodd bill would prohibit lenders from steering borrowers towards more expensive loans than they would otherwise qualify for, and from influencing an appraisal’s value of a house. It requires that lenders confirm that a borrower can afford to pay an adjustable rate mortgage after the rate jumps, and that loans provide a “net tangible benefit” to the borrower. It also prohibits prepayment penalties on sub-prime loans.

But to prevent the current crisis from getting worse — and to avoid future crises — Congress needs to take much bolder action to rein in abusive mortgage lending. Congress should simply outlaw adjustable-rate mortgages, which basically ask borrowers to treat their home mortgages like stocks, just like Bush wants to turn Social Security into individual accounts that people can invest, and risk losing their retirement savings.

Congress should also ban private lenders and brokers from issuing sub-prime loans of any kind. Instead, the focus should be on strengthening nonprofit lending institutions to serve the credit needs of high-risk borrowers. Like the old savings-and-loan (S&L) companies, these nonprofit lenders are highly regulated and devoted entirely to helping people purchase homes with transparent, stable loans.

Nonprofit lenders actually do better than their for-profit counterparts. One such lender, Neighborhood Housing Services of America (NHS), a federally charted nonprofit group with chapters in every American urban area, makes 90 percent of its loans to low and moderate income home buyers — the so-called “risky borrowers” who only qualify for sub-prime loans in the private market. About 54 percent of NHS’ borrowers are minority households. As of June 30, 2007, it has made some 3,000 loans totaling $205 million to these borrowers who otherwise would have been forced into the private sub-prime market. These NHS borrowers don’t have the same mortgage problems as sub-prime borrowers in private sector. In fact, NHS’ delinquency rate is only 3.34 percent — well below the national rate of 14.5 percent for sub-prime loans in the private sector. The same is true for foreclosures. Only one half of one percent of NHS loans went into foreclosure during the second quarter of 2007, one fifth the foreclosure rate (2.45 percent) among private lenders.

NHS succeeds for two reasons. It has an effective mortgage education program carried out by its own loan counselors. It requires every borrower to participate in its counseling program before and after a loan is made. Moreover, and importantly, NHS makes no adjustable interest rates loans.

And It All Started with Deregulation

There was a time, not too long ago, when Washington did regulate banks. The Depression triggered the creation of government bank regulations and agencies, such as the Federal Deposit Insurance Corporation, the Federal Home Loan Bank System, Homeowners Loan Corporation, Fannie Mae, and the Federal Housing Administration, to protect consumers and expand homeownership. After World War II, until the late 1970s, the system work. The savings-and-loan industry was highly regulated by the federal government, with a mission to take people’s deposits and then provide loans for the sole purpose of helping people buy homes to live in. Washington insured those loans through the FDIC, provided mortgage discounts through FHA and the Veterans Administration, created a secondary mortgage market to guarantee a steady flow of capital, and required S&Ls to make predictable 30-year fixed loans. The result was a steady increase in homeownership and few foreclosures.

In the 1970s, when community groups discovered that lenders and the FHA were engaged in systematic racial discrimination against minority consumers and neighborhoods — a practice called “redlining” — they mobilized and got Congress, led by Wisconsin Senator William Proxmire, to adopt the Community Reinvestment Act and the Home Mortgage Disclosure Act, which together have significantly reduced racial disparities in lending.

But by the early 1980s, the lending industry used its political clout to push back against government regulation. In 1980, Congress adopted the Depository Institutions Deregulatory and Monetary Control Act, which eliminated interest-rate caps and made sub-prime lending more feasible for lenders. The S&Ls balked at constraints on their ability to compete with conventional banks engaged in commercial lending. They got Congress — Democrats and Republicans alike — to change the rules, allowing S&Ls to begin a decade-long orgy of real estate speculation, mismanagement, and fraud. The poster child for this era was Charles Keating, who used his political connections and donations to turn a small Arizona S&L into a major real estate speculator, snaring five Senators (the so-called “Keating Five,” including John McCain) into his web of corruption.

The deregulation of banking led to merger mania, with banks and S&Ls gobbling each other up and making loans to finance shopping malls, golf courses, office buildings, and condo projects that had no financial logic other than a quick-buck profit. When the dust settled in the late 1980s, hundreds of S&Ls and banks had gone under, billions of dollars of commercial loans were useless, and the federal government was left to bail out the depositors whose money the speculators had put at risk.
The stable neighborhood S&L soon became a thing of the past. Banks, insurance companies, credit card firms and other money-lenders were now part of a giant “financial services” industry, while Washington walked away from its responsibility to protect consumers with rules, regulations, and enforcement. Meanwhile, starting with Reagan, the federal government slashed funding for low-income housing, and allowed the FHA, once a key player helping working-class families purchase a home, to drift into irrelevancy.

Into this vacuum stepped banks, mortgage lenders, and scam artists, looking for ways to make big profits from consumers desperate for the American Dream of homeownership. They invented new “loan products” that put borrowers at risk. Thus was born the sub-prime market.

At the heart of the crisis are the conservative free market ideologists whose views increasingly influenced American politics since the 1980s, and who still dominate the Bush administration. They believe that government is always the problem, never the solution, and that regulation of private business is always bad. Lenders and brokers who fell outside of federal regulations made most of the sub-prime and predatory loans.

In 2000, Edward M. Gramlich, a Federal Reserve Board member, repeatedly warned about sub-prime mortgages and predatory lending, which he said “jeopardize the twin American dreams of owning a home and building wealth.” He tried to get chairman Alan Greenspan to crack down on irrational sub-prime lending by increasing oversight, but his warnings fell on deaf ears, including those in Congress.

As Rep. Barney Frank wrote recently in The Boston Globe, the surge of sub-prime lending was a sort of “natural experiment” testing the theories of those who favor radical deregulation of financial markets. And the lessons, Frank said, are clear: “To the extent that the system did work, it is because of prudential regulation and oversight. Where it was absent, the result was tragedy.”

Some political observers believe that the American mood is shifting, finally recognizing that the frenzy of deregulation that began in the 1980s has triggered economic chaos and declining living standards. If they needed proof, the foreclosure crisis is exhibit number one.

Those who profited handsomely from the sub-prime market and predatory lending, the mortgage bankers and brokers, are working overtime to protect their profits by lobbying in state capitals and in Washington, DC to keep government off their backs. The banking industry, of course, has repeatedly warned that any restrictions on their behavior will close needy people out of the home-buying market. Its lobbyists insisted that the Bush plan be completely voluntary.

This isn’t surprising, considering who was at the negotiating table when the Bush administration, led by Treasury Secretary Henry Paulson, forged the plan. The key players were the mortgage service companies (who collect the homeowner’s monthly payments, or foreclose when they fall behind) and groups representing investors holding the mortgages, dominated by Wall Street banks. The Bush plan reflected both groups’ calculation that — for some loans — they would do better temporarily freezing interest rates than foreclosing. Groups who represent consumers — ACORN, the National Community Reinvestment Coalition, the Greenlining Institute, Neighborhood Housing Services, and the Center for Responsible Lending — were not invited to the negotiation.

The best hope for real reform rests with a Democratic Party victory in November. And after an electoral win, it will require that Democrats make sure that these consumer groups are key participants in shaping legislation.

And wouldn’t it be nice to hear the next president tell the American people that, “the era of unregulated so-called free-market banking greed and sleaze is over”?

John Atlas is president of the National Housing Institute (NHI), a nonprofit research and policy center that sponsors Shelterforce magazine. Peter Dreier is professor of politics and director of the Urban & Environmental Policy program at Occidental College in Los Angeles, and an National Housing Institute board member.

© 2007 The American Prospect, Inc.

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Oystar: I fought the Lloyds (music video)

Dandelion Salad

Updated: March 21, 2008 added brief video below


Featuring Martin Lewis the Money Saving Expert from – this is the music video to the bank charges anthem.

“I fought the Lloyds” is the story of what happened when Dan Oystar tried to get his bank charges back – money which had been unlawfully removed from his account by Lloyds TSB.

If you want the banks to give everyone back their money – help us pile on the pressure by simply texting the word ‘bankers’ to 82822.

With the support of the MoneySaving we’ve managed to get thousands of people to join the revolt against the banks. This song is part of an organised campaign to embarrass the banks into treating their customers a bit better.

Since the OFT test case was announced, the banks have notched up another 1 billion pounds worth of illegal charges! It’s time for this to stop…

So please text ‘bankers’ to 82822 now!

(The cost of the single download is 50p. We’re not making any money out of this – so please check out our page, listen to our other songs, leave some comments and tell your mates…)

Added: 23 November 2007

h/t: Coreluminus

On Myspace:



Updated: March 21, 2008

Newsnight – I Fought The Lloyds

I Fought the Lloyds is a protest song about bank charges that charted in January at number 25 in the UK. This video shows the end of the song being played on Newsnight, and introduced by Jeremy Paxman.