Rep Paul Kanjorski (D-PA) exposes the systemic failure of the financial system

[whistle]

...in a Congressional hearing on Thursday September 27, 2007.

At a Congressional hearing yesterday on the malfeasance of ratings agencies, like Standard and Poor's, in hyping the mortgage securities bubble. Rep. Paul Kanjorski (D-PA) repeatedly noted that the mortgage securities blowout is now a "systemic financial crisis" which threatens American banks with failure like that of Britain's Northern Rock and other European banks. At the hearing supporting Kanjorsky's implied consequences of the financial blowout was witness Prof. Joseph Mason of Drexel University.

Opening the hearing of the Financial Services Committee's Subcommittee on Capital Markets, Kanjorski was heard to say that "...these are unprecedented systemic failures by the ratings agencies, across entire classes of financial products; and I'm concerned now about potential systemic failures in the international financial system."

In response another witness Shaun Mathis, of Miller Mathis investment bank, said that the mortgage bubble collapse was far from over: "Financial markets are in the greatest danger since the Great Depression. There is nothing small or self-limiting about this problem. There will be collapses... of investment firms and banks."

Representative Kanjorski then challenged the witnesses to say whether they could possibly disagree that we are now facing a systemic threat to financial markets and banks. And he specifically asked Prof. Mason, "You say that 10% of U.S. bank assets are based on structured investment vehicles (SIVs), specifically several trillion dollars in CDOs; can these banks survive the collapse of these CDOs? Do they have the capital base to survive that?"

Mason answered, "No, and the FDIC does not have the resources to handle that event either."

Well Congress can by passing legislation like FDR did in 1933 to prevent total collapse of the banking system at that time, he froze the situation until economic affairs could get organized and running again, which they did. That is what is done in a bankruptcy, things are frozen, reorganized and then set running under new terms and conditions. In a panic, the laws of the marketplace will not control the situation, because the consequences would be inhuman to nearly all by a very few of the most powerful, wealthy and priviledged.

That is where the resolution of Pennsylvania Rep. Harold James' HBPA Resolution (with Co-Sponsors)of
Pennsylvania HR 418--the Homeowners and Bank Protection Act introduced earlier on Thursday comes in. It has also taken root in the Michigan legislature and has been circulating at the Congressional Black Caucus Weekend in Washington DC. The following is the text of HR 418 as introduced by Rep. Harold James in the U.S. House on Thursday:

<snip>

LEGISLATIVE REFERENCE BUREAU

HR 418

RESOLUTION

INTRODUCED September 27, 2007

By Rep. Harold James, Seat No. 186

By Rep. Jewell Williams, Seat No. 197

By Rep. John Myers, Seat No. 201

By Rep. Thaddeus Kirkland, Seat No. 159

By Rep. W. Curtis Thomas, Seat No. 181

By Rep. Robert Belfanti, Dist. No. 107

By Rep. Thomas Blackwell, Dist. No. 190

By Rep. Thomas Caltagirone, Dist. No. 127

By Rep. Paul Clymer, Dist. No. 145

By Rep. Angel Cruz, Dist. No. 180

By Rep. Robert Donatucci, Dist. No. 185

By Rep. Robert Freeman, Dist. No. 136

By Rep. Camille George, Dist. No. 74

By Rep. Mauree Gingrich, Dist. No. 101

By Rep. Michael Hanna, Dist No. 76

By Rep. Patrick Harkins, Dist. No. 1

By Rep. Art Hersey, Dist No. 13

By Rep. John Hornaman, Dist. No. 3

By Rep. Babette Josephs, Dist. No. 182

By Rep. Tim Mahoney, Dist No. 51

By Rep. Michael O'Brien, Dist. No. 175

By Rep. Joseph Petrarca, Dist. No. 55

` By Rep. Thomas Petrone, Dist. No. 27

By Rep. Merle Phillips, Dist. No. 108

By Rep. Sean Ramaley, Dist No. 16

By Rep. Harry Readshaw, Dist. No. 36

By Rep. Ken Smith, Dist. No. 112

By Rep. Timothy Solobay, Dist. No. 48

By Rep. Edward Staback, Dist. No. 115

By Rep. Michael Sturla, Dist. No. 96

By Rep. Thomas Tangretti, Dist. No. 57

By Rep. Don Walko, Dist. No. 20

By Rep. Ronald Waters, Dist. No. 191

By Rep. Rosita Youngblood, Dist. No. 198

By Rep. Richard Grucela, Dist. No. 137

By Rep. Cherelle Parker, Dist. No. 200

A RESOLUTION

Memorializing Congress to take emergency action to protect homeowners and banks and enact a Homeowners and Banks Protection Act.

WHEREAS, The onrushing financial crisis involving home mortgages, debt instruments of all types and the banking system of the United States threatens to set off an economic collapse worse than the Great Depression of the 1930s; and

WHEREAS, Millions of Americans are faced with foreclosures and loss of their homes over the coming months; and

WHEREAS, The hedge funds which spread this financial collapse among markets worldwide, by dominating speculation in all those markets, are now going bankrupt and demanding government bailout of their securities and derivatives, and the nominal value of the derivatives based on mortgages alone is the size of the combined GDP of the nations of the world; and

WHEREAS, This financial crisis threatens the integrity of both Federal and State chartered banks, as typified by the run on deposits of Countrywide Financial Corporation in California on August 16, which could wipe out the life savings of too many American people and drastically undermine the economic stability of our states and cities; and

WHEREAS, Under similar circumstances in the 1930s, President Franklin D. Roosevelt successfully intervened to protect banks and homeowners, addressing Congress with a ``declaration of national policy'' on April 13, 1933, which stated ``that the broad interests of the Nation require that special safeguards should be thrown around home ownership as a guarantee of social and economic stability, and that to protect homeowners from inequitable enforced liquidation in a time of general distress is a proper concern of the Government''; therefore be it

RESOLVED, That the House of Representatives of the Commonwealth of Pennsylvania call upon Congress to take emergency action to protect homeowners and banks by enacting a Homeowners and Banks Protection Act specifically to:

Establish a federal agency to place Federal and State chartered banks under protection, freezing all existing home mortgages for a period of time, adjusting mortgage values to fair prices, restructuring existing mortgages at appropriate interest rates and writing off speculative debt obligations of mortgage-backed securities, financial derivatives and other forms of financial pyramid schemes that have brought the banking system to the point of bankruptcy.

Declare a moratorium on all home foreclosures for the duration of the transitional period, allowing families to retain their homes. Monthly payments, the equivalent of `rental payments,'' shall be made to designated banks, which can use the funds as collateral for normal lending practices, thus recapitalizing the banking system. These affordable monthly payments will be factored into new mortgages, reflecting the orderly deflating of the housing bubble, the establishment of appropriate property valuations and reduced fixed mortgage interest rates. While this may take several years to achieve, in the interim period no homeowner shall be evicted from his or her property, and the Federal and State chartered banks shall be protected so that they can resume their traditional functions, serving local communities and facilitating credit for investment in productive entities.

Authorize governors of several states to assume the administrative responsibilities for implementing the program, including the ``rental'' assessments to designated banks, with the Federal Government providing the necessary credits and guarantees to assure the successful transition;

And be it further

RESOLVED, That a copy of this resolution be transmitted to the President of the United States and to each member of the Pennsylvania Congressional delegation for immediate action.

--END--

Meanwhile in Europe the financial slavemasters have ordered the slaves to open the floodgates of more cash following the U.S. example to of course bail out the Hedge Fund speculators.

Deutsche Bank has published a paper "forecasting" that the European Central Bank (ECB) will cut the discount rate by a half-point in the first six months of 2008, according to Italy's Il Sole 24 Ore.

Thus, Deutsche Bank follows earlier similar "forecasts" by the Royal Bank of Scotland and Bear Stearns. The ECB has kept interest rates at 4% in one policy turn already, neglecting previous concerns about inflation for the purpose of saving the hedge funds. Now, the turn will be complete, and the ECB will open the flood gates in Europe as the Fed did in the United States.

The ECB is composed by the central banks of the Eurozone (the countries whose currency is the euro), and is officially "independent." In reality, all those central banks are, in turn, owned and controlled by private banks. Thus, when the Deutsche Bank speaks, it speaks as one of the largest ECB shareholders, in the name of the other shareholders, or of a significant faction in the board. As for the Royal Bank of Scotland, the first to forecast a shift in ECB policy, it represents the oligarchy which dictates policy to Deutsche Bank and their like. So, the slaveowners tell their "independent" slave: open the flood gates!

How is that for the Invivible Hand and free market forces doing the greastest good for the greatest number!

[Mojorabbit]

1. Is this for real? n/t

[whistle]

2. Yes