Posted 6 years ago on Dec. 6, 2011, 12:22 p.m. EST by SLW
This content is user submitted and not an official statement
Every dime of profit from these loans must be refunded to the ultimate principals, the U.S. taxpayers. From an agency theory perspective, government is supposed to protect principals from the unethical and greedy actions of agents. Sadly, a government bought and paid for by corporate interests will not do the job. The current situation is like bond ratings agencies being paid by bond issuers. The Supreme Court decision to allow unlimited corporate funding of political interests as "freedom of speech" is destroying our system of government and along with it the global financial system. Occupy Wall St. should be Occupy Washington...corporate funding of political interests should not exist. For example, the Commodities Futures Modification Act of 2000, which allowed ownership of credit default swaps on uninsurable interests, had only four no votes in congress. Congress essentially allowed you to buy fire insurance on my house. Since you have no ownership of my house, the only way you make money is if it burns down. Bank runs, with their "first out stays whole" dynamic, are financial fires; once started almost impossible to put out. Thus, congress was paid off to allow financial institutions to sell massively negatively skewed derivatives (put options) on bank credits to investors with every incentive to start and perpetuate runs. If congress is beholden only to individual voters, this kind of legislation NEVER passes. It is time to put the blame and the fix where it belongs. Wall Street financiers are agents and government is supposed to protect the ultimate principals (U.S. taxpayers) from them. Until individual interests are represented in Washington, you can expect this repeatedly.