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We are bailing out the banks right now. What is happening is that the banks took over the S&Ls and other simular lenders who failed in the first place for what reason?

Bad Real Estate loans! Thus we are seeing a repeat of the problem from the S&L crisis because the core problem was never fixed. Remember that the S&Ls failures which popped up in 1985 and became serious in 1986 with  loans which created a moral hazard to the America and the economy. Sound familiar?  S&Ls went through a 5 year period where the Banks started buying up the paper and the accounts of S&Ls with the last S&L takeover happened in 1991. The problem if anyone wants to go back and look it up was the S&Ls had all their capital tied up in morgage loans that were tied to variable rate interest rates. Back in those days, people simply walked away from their homes and the S&Ls held notes and foreclosures for better than 70% of homes for sale.

Go look it up! Its obvious that Congress or the SEC or the FED did not bother looking at history. President Carter also by the way removed the regulation preventing financial institutions who gave out loans from the ability to buy the property which they held the note on. President Carter created the situation which we are still struggling with today!  Like I said, Go look it up! Even Wiki as bad as it is, will repeat what I have been saying for a good 2 years and definately since I the first week I signed on RBA.

If the core problem is not fixed in why the crisis happened in the first place, then it will repeat again and again and again. We are simply seeing a repeat of the cause of the S&Ls failures but this time with main stream banks and other lending institutions which bought out the S&Ls in the first place. The banks took a look at the S&L model and liked what they saw.  They saw a way to boost profits through the roof with the idea if they should go under, the FED will simply bail them out!

The core problem is not loose guides in who gets loans in general. The loosening of the regs to get more people able to get loans only delayed this problem for about 9 to 10 years. So all this bluster in Washington D.C. is just that. Putting more regulations on who can qualify for a loan will not stop the problem. Because the qualifications for morgage loans where 100 times more strict back in the 1980s than today. So it was not about who got a loan in general. However, there is always some people who are bad risks. I am not referring to those people. Most of the people who are losing their homes are losing them for one reason only. Profit of the banks and lenders.

If congress does not fix the core problem we will see this problem creep back up in about 5 to 10 years down the road.

So what is the core of the problem which is killing the banks and Wall Street specifically today? 

Banks are controling the Real Estate Market as speculation. The problem or core is that when Banks control too much of the housing market their capital is used up in addition to them having the power of using morgages as a speculation tool to foreclose on more valuable property rather than allow lenders to redo the notes or institute other means of repayment that had worked for more than 300 years by banks going back to the founding of Lloyds of London who was the first real lending bank to the common people in a commercial way.

So to avoid a bank collapse back in the late 1990s they loosened up the regs on who could get loans so that Banks could sell the properties that they held. Thus banks were saying in 1993 that the regs were too tough on the middle class and it was causing an economic slow down. Sound Familar again?

Since the S&L pyriamid scheme of real estate speculation developed in the late 1970s early 1980s banks no longer are interested in base interest on real estate loans. Banks are more interested in gaining the property from borrowers. Thus why Banks allowed the variable rates to go through the roof when they could have kept those rates the same or move them lower since those rates are not regulated by the FED. The rates increased with the sole purpose of making it impossible for even the people with good credit to lose their property.

So you have banks right now who have most of their capital tied up in real estate. In several of the larger banks they have opened up in bank real estate offices to streamline this process to cut out the middlemen of the standard real estate industry.

Look at how much capital would be freed up if Banks were not allowed to buy back property that they seized in a forclosure but are forced to sell that property to the highest bidder for cash money.

Thus to fix this problem and right the real estate problem and fix this section of the economy, Banks or any institution which gives out real estate loans should be prevented from buying property which they have foreclosed on. Thus removing the current problem of banks or other institutions from engaging in speculative efforts to force people out of their homes to make a profit.

This is because Banks see homes in many places as a method of getting a high rate of return greater than the value of the original loan of the note. Thus Banks are not interested in redoing the notes. Banks instead are more interested in gaining the property so that they can put it on the market to sell especially when the market was rising as it was doing over the last decade. Thus home prices were being artificially inflated by the market manipulation of the banks who also controlled the notes and majority of the real estate market.

So until this is addressed where banks should not have the power to give out a note, foreclose on the note as well as be able to gain the property of the note holder you can have banks engaging in dishonest or fraduelent efforts to give some people a loan with the expressed purpose of taking that property away from them down the road.

By removing the banks from ability to own property which they controlled the note, it will make the banks make better judgements on lending and it will forever prevent the banks from using up their capital in real estate to the point that Banks own all the property and no one can get a loan because the banks used up the capital they had to loan.

The only way to fix this problem is very simple. Make banks sell the property to the highest bidder that they took from borrowers through foreclosure before a bailout is done! Secondly, prevent banks from having the power of making the note, foreclosing on the note and buying the property on the note.

This will prevent banks from giving loans with the purpose of stealing it from the person through immoral means to gain the property so they can resell that property for a profit.

That is what is killing the US economy in conjunction with extremely high business taxes and failures to address import export problems which are killing America one job at a time!