Edwin Sumcad

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Edwin Sumcad

More About: Economy - Economics USA

Part I: Memo To Obama -- Stop Predatory Lending Or Engage In Endless Gov’t “Rescue”

My National Writers Syndicate column carries this Memo: President Obama should stop racial predatory lending and redlining otherwise financial rescue repeats forever at the expense of the taxpayers.

Unless the existing policy of predatory lending and reverse redlining to return a political favor to the economically disadvantaged that made history by voting the first African-American president to office is stopped, this so-called "rescue" of the economy will repeat and repeat forever.

I am referring to predatory lending as a traditional politically correct economic policy Obama could hardly escape from; it is resorted to and vigorously promoted by cheap politicians around him. I also take exception to reverse redlining in return as a favor to the massive "poor" who elected Obama president.

In one of my newspaper columns on predatory banking in acquisitive economics, I warned that racial lending and redlining would create a boom for an interment market … in fact right in the dark corner, disaster would lie in ambush.

I didn’t miss: Two years later, we were in a financial jam, and still are to this day.

Today, this urgent memorandum to a congenital politicking President -- based on orthodox economic perspective that neither requires the brain of rocket scientists nor does it need the intellectual snobbery of the Federal Reserve and the superciliousness of Ben Bernanke’s head that Austrian economists with axe to grind love to chop off – is for the public to understand easily like they do the back of their palm the following advisory: Stop race-tainted predatory lending and redlining in the banking system before committing the future of the next generation to a perpetual government rescue of an economy that is spinning downward and eventually ends up down the drain. Ignorant whiners mistake this as a sad phenomenon orchestrated by the Federal Reserve controlled by "thieves" that are running wild!

Predatory lending is greed in the financial and banking system that destroys for gain. I do not need to explain this anomaly in our free enterprise system any further: Every suffering American is experiencing the proof of greed that led to this recessionary economic meltdown. Greed of market players is mistaken as greed of the Federal Reserve run by financial gluttons. When the Fed issues directives in the financial market to regulate greed, it is the Fed that ends up with a black eye.

Redlining is discriminate lending in high-risk areas regardless of whether or not consumers are prime borrowers but for their race are discriminated against or "… refused loans, insurance and or other financial services." The reverse of this redlining policy in return to a promised election favor is what aggravates our financial suffering today.

Don’t get this wrong. Tragically, in my studies more than 90% of the population got this awfully wrong. It’s the other way around. The general public is discriminated against … credits and favors go more to the browbeaten population enclave of the masses politically powerful enough to make even an obscure or a not good enough politician whose birth certificate is held suspect become President of the United States.

Let me explain from a Keynesian economist’s point of view how intricate, nay clever, this mistaken anomalous situation came to exist: Normally massive, predatory sub-prime home mortgages and financial borrowings to prop up businesses would put money into the hands of the consuming public; the Keynesian strategy in resorting to this grandiose economic plan is to increase households’ purchasing power that would create not just a robust but also a hyper economy. A hyper economy is one where the rich gets richer, and the poor … well, that’s not my argument, it’s Obama’s, in his ideological turf.

Since President Bill Clinton’s time, to enfranchise the economically disadvantaged and/or "bailout" the "poor" from their predicament has been a predominantly Liberal populist idea that makes a sucker out of politically correct politicians and the innocent public. It sucks because it is an insidious and powerful inducement to fair-minded Americans to harbor hatred when they start to think and believe that blacks and minorities do not get a square deal or do not enjoy the same social and economic privileges the whites have, because they are being racially discriminated against.

This supposedly "subjugated" segment of the American population is considered a victim of predatory lending and redlining and that government policy should "rescue" their kind from bigotry and prejudice. It eventually drove Fannie Mae/Freddie Mac and similar financial institutions in the world of credit and finance to shed crocodile tears that were more wet and torrential than the salivating mouth of Massachusetts’s Fourth District Congressman Barney Frank who defended the greed-motivated disastrous mortgage and banking operations of lending organizations in behalf and for the benefit of the "subjugated poor".

Considering that this politically correct strategy of "helping the poor" is extremely popular, the more popular it is the more it hides the scandalous tragedy it creates. Frank is reportedly gay and has an amorous relationship with one of the senior executives of Fannie Mae named Herb Moses. In Congress, Frank’s conflict of interest [ Frank is Chairman of the powerful U.S. House Financial Services Committee] was one of the reasons why the home mortgage industry was cannibalized. "As of 2008, Fannie Mae and Freddie Mac owned or guaranteed about half of the U.S.’s $12 trillion mortgage market …" [This Wikipedia figure is in this link I titled: Gay Fortune]

Opportunist politicians like Frank whose honesty has been held not worth a dime or political clowns who were not too frank in their dealings with the general public, are usually over-indulgent in speechifying this fashionable crusade which reminds us of fanatics in white straitjackets, thereby making themselves champions of the cause of the down-trodden to gain support and patronage; it doesn’t really matter if the disastrous effects of their political gimmickry suck the economy down the tube.

For the current background scenario, here’s what we are looking at: Huge financial bailouts are emergency measures that are necessary in a crisis like what we have now. And that should end the argument. But it does not … instead the people’s emotional hang-ups and fear hit the roof!

What makes discerning Americans very angry about this mind-boggling spendathon is not how big is the rip-off when Obama increases taxes to fund the program, but how insidious the villainy of its purpose is hidden behind it. It is this corked anger that will not make this suspicious if not ill-motivated move of the president succeed, more so when his frequent public appearances are merely grandstanding programmed to win a political standing ovation here and abroad.

In other words, Obama’s economic recovery policies should not be a multi-hued chameleon pulsating like fireflies inside a transparent glass just meant to attract the attention of the Media. His brain trusts should have a sparkle of ingenuity to recognize the fact that turning this country into a socialist republic in the guise of helping the poor, is an anathema to free America, known as the leader of top-rated capitalist countries in the world.

We are not just scared but scarred survivors of politically correct maneuvers of politicians that even to our sore eyes we can see where they are coming from. The oddity of the Obama government’s promise "to spread the wealth" is no different from a compulsive wastrel masticating the earnings of hardworking people with income of $250,000 and higher [captive money through IRS]. Pumping this fortune down the stream for economic recovery is a Keynesian theory that is more abused in the political arena than it is badly exploited anywhere else.

In television [History Channel], we watch the hoary-gory killing of those weak jungle strugglers before they were eaten alive for the survival of the fittest; in Washington, D.C. where the jungle of predatory politics never changed, we are witnessing a horde of financial prowlers about to sink their fangs on the neck of their captured prey [the taxpayers] for the kill. #

© Copyright Edwin A. Sumcad. Access FP.com July 16, 2009.

The writer is an award-winning journalist.  Know more about the author by reading his published editorials and feature articles or you may e-mail your comment to ed.superx722@yahoo.com.sg

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