The banking gears of housing – Bank of America sells mortgage servicing rights on large loan pool to Fannie Mae. 400,000 loans shifted to Fannie Mae with $73 billion in unpaid principal.
Things just seem to get more perplexing with the housing market. Back in August the Wall Street Journal discussed a deal between Fannie Mae and Bank of America. The deal is odd even for the current banking system we have in place. It was reported that Fannie Mae purchased the servicing rights to 400,000 loans for the grand total of $500 million. Why would this be an issue you may ask? Well first, Fannie Mae being a GSE does not specifically service mortgages so buying a pool of loans with unpaid principal of $73 billion seems out of place. It also makes you wonder why a bank that has faced some troubles during the financial crisis would unload so many loans back to the government. This concern clearly does not go unnoticed and a Representative from the housing battered state of California sent a letter to the Federal Housing Finance Agency (FHFA) asking for more details on the deal.
A new gilded age shines on America – 50 million Americans roam the countryside uninsured. 45 million Americans receiving food stamps up by 18 million since the Great Recession began in late 2007.
Much of the country is in psychological denial to the damage being created by the current recession. Some even believe that we are fully in a recovery. Part of this has to do with the way the safety net is designed but also the lack of coverage presented in the media. We have over 45,000,000 Americans on food stamps. It is likely someone you know may be on the food assistance program but you wouldn’t know it because they are issued a debit card that looks like any other credit card. You also have this stubborn notion that any problems that befall a family are completely their fault while big bankers make egregious errors and somehow it is the market that caused their ill fortune. This twisted logic has become more apparent with the economic disaster data released in the recent Census report. 46,200,000 Americans are now considered to be in poverty, over 15 percent of the population. It is no coincidence that this figure aligns with the food stamp data. In essence we have close to 50 million Americans who are one debit card payment away from being in complete financial trauma. What is happening to our country?
The $1 trillion student loan market begins to implode – Department of Education shows two-year default rates at for-profit colleges up to 15 percent. Student loan debt increasing at a rate of $170,000 per minute.
We seem to have entered an era of perpetual and unshakeable financial bubbles and the next ripe bubble to burst is in the student loan market. Student loan debt has become the fastest growing debt sector throughout the economic recession. Growth at for-profit colleges has been incredible and tactics used at these institutions reflects patterns seen with the subprime mortgage operators. They target low income markets and exploit government backed loans and pump them through local area lenders. It is a bubble of mammoth proportions and it is no surprise that data released by the Department of Education only a few days ago reflects a default pattern reminiscent of the subprime crisis. Default rates on student loans at for-profit institutions are absolutely abysmal.  There is no question now that the student loan bubble is now the next market to pop. What will be the consequences of the $1 trillion student loan market contracting?
How Wall Street and the media forgot about the middle class – 10 incredible charts highlighting the problems facing the middle class. China labor costs, debt ratios, Euro-zone finances, and balance sheet disequilibrium.
The mainstream press and ego driven politicians have completely forgotten about the middle class in this country, pretending as if ignoring the cacophony of discontent would simply make it go away. Both parties are simply doing the bidding of the financial upper-crust and that is why you rarely hear about household income being discussed in any television show. Yet as we are seeing with record low consumer sentiment to accompany a broken balance sheet and empty savings accounts, the public can get a dose of reality by simply examining their own life. Are things really better? What Americans should now fully realize is that the bailout schemes were nothing more than a wicked robbery and transfer of wealth from the majority to a slim connected plutocracy. Those who write and advocate for our laws, the politicians, have made sure a national thievery would go unpunished courtesy of campaign contributions. The system is completely broken and the disappearing middle class is merely a consequence of this financial plundering. Since the tech crash, the housing crash, or the energy debacles were completely missed by the media do not expect to have any guidance coming from the paid spokesmen of Wall Street. When did Wall Street and the media decide the middle class was irrelevant?