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Wednesday, October 14, 2009

JPMorgan Guilty Of Causing Housing Bubble

This is a piece I wrote and published in but is worthy of republishing here.
A note about  Mike Morgan, a professional investment adviser, Realtor and attorney began a series of ...666 blogs the first of which was

His blogs quickly got media attention as well as the attention of Goldman Sachs themselves who tried to stop Mike from using their name.  An out of court settlement was reached and the David beats Goliath story again made some media headlines.

Mike suffered a heart attach back in May and due to his current health has had to step back from these efforts.  Mike had a group of volunteer - I was one - who contributed articles and other work to the effort of "Waking Up America" to the wrongs that were occurring - a position identical to my forming this blog publication.  To continue Mike's excellent work, I took the lead role and took over all of Mike's ...666 domains and publications.  The effort lives on.

JP Morgan was one of the first to stand up and blame mortgage brokers for the then called "mortgage meltdown" leading us into the worst financial crisis since the Great Depression - a crisis we should be calling The Great Depression II.

John Carney in his article in Clusterstock titled, JP Morgan Blew It On Housing Bubble, Too he tells the story that is all too well known by all mortgage brokers.
The role played by JP Morgan Chase in inflating the mortgage bubble was
not limited to pushing the worst kind of subprime loans on mortgage
brokers. It was also heavily involved in mortgage securitization and
derided fears of a housing bubble as "excessive."

This morning we pointed to an item by New York Times business writer Joe Nocera demonstrating that JP Morgan was pushing low-doc/no-doc loans on mortgage brokers and reprinted an advertisement from 2005 in which JP Morgan promised mortgages to anyone who could sign there name.

JP Morgan was also heavily involved in the other side of the mortgage mess: manic securitization built on the claim that there was no bubble house prices or home building. In the document we reprint below, JP Morgan derides "excessive concerns about housing bubble." Home equity securities are described as "one of the best value opportunities in the fixed income market." Selling these mortgage backed securities created a huge demand for more mortgages, fueling the housing bubble.

So there it is, almost 2 years too late.  But wait!  If they were so heavily involved in creating this economic tsunami then why - WHY - did we bail them out.  Why did we give them $55 billion to buy(?) or shall I say take Bear Stearns and then even more under TARP?  Why? Why? Why?

Bear Stearns was broke and was being accused of a leadership role in the so called "mortgage meltdown" which as we now know led to the GDII.  But we did not bail them out, we got JP Morgan to take them over. 

In a late Sunday evening meeting between JP Morgan, Treasury Secretary Paulson, The New York Federal Reserve Bank (whose president was none other then Tim Geithner) and Ben Bernanke, a plan was hatched or shall I say concocted. 

The Fed (Geithner's NY Fed Bank and Bernanke's Fed) agreed to JP Morgan's condition of The Fed giving them the $55 billion from which they would use $250,000 (that's right - million) to "purchase" (?) bankrupt Bear Stearns.

It is like giving a well known  bank robber the top security guard position at a bank. 

Bear Stearns was thrown to the wolves I believe as a method of laying of blame, eliminating a competitor on Wall Street and enhancing the assets and value of JP Morgan which I further believe was also in financial straights. 

Is it fair to hold the credit analysts at JP Morgan responsible for missing the weakness of the 2005 asset backed deals? The short answer is: yes. After all, the very same bank was promoting no-doc, signature only loans at the very same time. A close look at their own lending practices would have indicated trouble brewing in the mortgage market.

Now JP Morgan shows incredible profits, has the ear of President Obama, still has all of its control on the NY Federal Reserve Bank.  This should become a textbook case for all small businesses that fail - How To Succeed In Failure - with a little help from your government.

It would appear to me that there was and still is criminal wrong doing amongst our illustrious "too big to fail" companies and our Federal Government officials both elected and appointed.

The corruption of this nation is greater then that of any nation in the world past and present yet we allow our young men and women to die for our country's effort in selling our so called democratic way of life to other nations.

This could be viewed as a nation building other nations or more effectively our nation building a worldwide criminal enterprise.  Organized crime at its utmost.
Read the entire here

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