Another Reason to Love Randi Rhodes

If progressive/liberal radio was a form of martial arts, Rachel Maddow would be Jet Li. And Randi Rhodes would be Jackie Chan. They both can kick ass, but they have different methods.

I've mentioned Rachel before, so it's Rhodes' turn. Here is how she broke own the financial mess yesterday:

People STILL believe the housing crisis was caused by people who bought houses they couldn’t afford. NOT TRUE. If mortgage rates don’t reset, if interest rates were instead lowered, if the number of years on the loan were extended, the numbers of foreclosures would shrink not grow. Banks do NOT care about saving the loans from default because banks cooked up a plan so they’d never have to pay for them even if the homeowner defaulted. THAT’S WHAT CAUSED THE CRISIS.

The Foreclosure crisis was caused by banks that made loans and did not secure them in case of default. They took risk but decided NOT to cover the risk they took. Instead they decided to sell the risk to investmen t banks. But investment banks wouldn’t buy crap right? So the banks hired bond-rating agencies to rate these “securitized mortgages” “AAA:” even though they were utterly worthless. Worthless not just because the interest rates on the loans were going to reset making them totally unaffordable for borrowers, but really really worthless because these “securities” were nothing more than shredded pieces of paper that were scattered into many “baskets” and sold.

To understand what banks did, just imagine making this recipe:

Take one whole prime mortgage and one subprime mortgage – Shred in a food processor into very fine pieces

Mix both kinds of mortgages in a large mixing bowl

Empty the contents of the bowl into smaller bowls and serve

That’s what the banks cooked up. So no one knows which mortgage shreds they have and which shreds you have and on and on. Like making coleslaw…but imagine the last line of the recipie says:

Remove only the pieces of subprime loans and set aside WHAT? Yep, that’s what has to happen to those mortgages if the investment banks and insurance companies who bought those “bowls” are going to be able to figure out which shreds are in which bowl they bought. They can do it…but it would be so much easier just to go to the owner of the mortgage and deal directly with them!!

She also talked about how all the financial insiders knew that CitiCorp was the bank that needed rescuing the most, but BushCo. decided to use their plight as an excuse to give all the banks cash (what; they didn't want the average American to know which bank stinks?). In short, banks that didn't need the cash, banks that might have needed the cash and banks that desperately needed the cash got cash.

Despite what anyone tries to say to justify this, the fact of the matter is Henry Paulson doesn't either doesn't know what he's doing, or he's actually following a plan that, like others before it, has nothing to do with helping the average American.

Remember this the next time some Congresscritter screams about the costs of universal health care or raising the minimum age.