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|User Info||Did BAC Cheat HAMP?; entered at 2012-03-12 12:07:23|
Registered: 2009-02-28 DFW, Tx
Here is a link that is interesting. I was at a meeting 15 years or so ago, where a guy presented a challege in a bankruptcy proceding where he listed a series of cases that specifically prohibited banks from lending their own liabilities. He said the judge refused to rule on the motion because he wasn't going to bring down the American banking system to make a ruling in favor of this motion. I might still have this document. |
Because even knowledgeable people look at banks as lending money and not creating it, this angle is hard to understand by a lot of them. We have seen what happens when their scheme goes bad and clearly it goes bad because they loan money the don't have. It goes beyond over leverage, because over-leverage is probably no more than 2 to 1 capital to liabilities. What a bank does is create credit and at the start, it is nothing more than a credit entry in an account. They don't need any money until the credit leaves the bank, at which time they borrow it or create a new liability with new accounts. The process is 180 degrees of how people think of it. If one bank had all the business, one would see they never did anything but create a liability for themselves when making a loan.
So what is the borrower borrowing? Or what is the bank lending? I have heard it described as the bank is lending a person their own credit. I believe the loan is a created liability of the customer, thus the borrower is borrowing their own liability, something that wouldn't exist unless he signed on a credit contract. Thus the contract itself is the money and the bank, for a fee, makes the debit and credit entries and runs the scheme.
This blog links to this court case.
BTW, the owner of this blog, Charles Hugh Smith, I believe wrote the forward to Karl's Leverage book. Not only do we need to prosecute these guys, but we need to change how banking is done. Money from nothing is a scheme that, if understood by the populace, could bring about a chaotic revolt. These guys aren't rock stars in getting their money or nothing, but instead the operators of a shell game