AVERAGE PERSON’S TAX BURDEN UP 50% UNDER LABOUR

The Average tax bill has increased by more than 50% in the past 10
years under Labour.

The Tax Payers Allowance says that the tax burden now stands at the
equivalent of £20,700 per household.

The reports author Mike Denham, a former treasury economist said the
Government had used “every trick in the book to drive up the tax burden”.

“People are increasingly beset by record levels of taxation and growing
service charges, but there has been no improvement in services in
return”, he said.

“We find ourselves paying more and more for less and less.  With rocky
economic times ahead, this rate of taxation simply cannot be
sustained”.

Burdened tax payers can fight back now,

To find out how Click        www.wealthfreedomfighters.com

So the worst is over? part two….

 

The media are really pushing the propaganda that the worst is over in the financial markets both in the Uk and the USA. Despite the mindless rubbish coming out of Downing Street and Washington, DC., millions of us are in deep financial trouble. Every day last week the media cranked up the mantra that Wall Street may be getting more optimistic. Really? Well I want to know why, because the ’stories ‘ below do not make me feel upbeat….

• 1 - May 2, 2008. Linens ‘n Things files for bankruptcy protection – 120 stores to close
  
• 2 - April 30, 2008. Disappearing now: $6 trillion in housing wealth. “A Washington think tank is warning that housing prices are falling at an accelerating level, destroying wealth at a pace that will cost the average homeowner $85,000 in lost wealth this year alone.”
  
• 3 - April 29, 2008. Foreclosures Spike 112% – No End In Sight. “More than 155,000 families have lost their homes to foreclosure this year; one out of every 194 U.S. households received a foreclosure filing.” (This year? We’re only into the first week of May.)
  
• 4 - April 29, 2008. Americans sell personal stuff to make ends meet
  
• 5 - April 29, 2008. More Subprime, Alt-A Mortgages May Head `Underwater’
• 6 - April 28, 2008. U.S. Credit Card Debt Soars to Unprecedented Heights. “Washington — Studies indicate that credit card defaults and related write-offs increased drastically since 2006. Today, lenders write off 33 percent more in credit card debt than they did two years ago.”
  
• 7 - April 22, 2008. The trillion-dollar mortgage time bomb. “Risks are rising that Fannie Mae and Freddie Mac may need a government bailout that could cost far more than previous rescues.”
  
• 8 - Fried in the Financial Sun. This is the derivatives nuke, folks.
  
• 9 - April 21, 2008. From boom to bust: Minnesota’s new ghost towns
  
• 10 - May 1, 2008. Home Depot to close 15 stores, cites poor performance. (This is a direct result of the housing meltdown)
• 11 - Got $4 bux for a cup of coffee at Starbucks? ‘Starbucks Earnings Sink 21%.’ May 1, 2008: Starbucks Cuts Back on Planned U.S. Store Openings
  
• 12 - May 1, 2008 (scroll to the bottom). Deficiency notice from pension plans – steel workers and teamsters. Sinclair is very respected in his field.
  
• 13 - April 8, 2008. Over nine hundred thousand pink slips were issued over the last year.
  
• 14 - April 22, 2008. California Meltdown: Foreclosures up 327% from ‘07 levels – 500 foreclosures per day!
  
• 15 - April 2, 2008. U.S: financial industry sets record for job loss
• 16 - March 21, 2008. American financial refugees flooding into Canada
  
• 17 - February 22, 2008. City officials weigh bankruptcy filing. (This won’t be the last and the solution by city fathers will be to substantially jack your property taxes.)
  
• 18 - February 13, 2008. Bush Administration Hides More Data, Shuts Down Website Tracking U.S. Economic Indicators
  
• 19 - May 2, 2008. Sun Microsystems Inc., Cuts Jobs After Loss
  
• 20 - April 28, 2008. Opec chief warns of $200 a barrel oil price
  
• 21 - April 26, 2008. Consumers Falling Behind Utility Bills

Until these hundreds of thousands of laid-off Americans and home owners who have lost the roof over their heads can find work, they won’t pump money into the economy. Unemployment benefits coffers are being hit hard. Not to worry, though. Last week in a press conference, Bush crowed that the ‘economic stimulus’ checks will boost the economy! He forgot to tell the camera and the factually challenged media too ignorant to ask the right questions, that every one of those ’stimulus’ checks are debt. There is no money in the U.S. Treasury. Congress had to borrow every penny from the privately owned “Federal” Reserve; the staggering interest will double the total “package.”

When you have a full 1/3rd of credit card holders defaulting, what you have are millions of people who have no disposable cash to even make minimal payments. What they have is going to buy food and absolute necessities.

What you see above is killing this economy and that doesn’t include the massive costs the states are and will continue to incur as crime increases, the cost of funding the mobs and our elderly Americans (in the tens of millions) who have no health care, no retirement care set aside and basically depend on the state for their food, housing and medication.

It’s time to get your financial affairs in order. I know it’s not much fun to but it needs to be done. It doesn’t matter what your financial status is,  a simple financial plan to get out of debt, save and crate wealth will save you and your loved ones a lot of misery and will take a huge burden off your shoulders.

Make a financial plan for now, five years from now and retirement. No matter what happens over the next few years, and it’s not going to be pretty on many levels, the patriots of today will prevail no matter how it unfolds. Americans still need to make short and long term plans and goals. Who is going to take care of you when you’re 64, 74? The state, your family or will you plan for care? How about helping your elderly parents?

Social security has to be funded for those who need it, just like Medicare, but these mathematically bankrupt systems must be allowed to die a natural death because no matter how much phony “money” is pumped into them, they’re never going to be solvent. Our future and retirement is our personal responsibility, not mother government.

Savings is the lowest in this country since the artificially created ‘Great Depression.’ I know people want to save, but can’t. How can you when 40% -60% of the fruits of your labor are being confiscated by city, county, state and federal governments, pushing us into poverty via taxes on everything under the sun? It will get worse as the corruption and stupidity continues by incumbents serving in all levels of government. Change will not happen with the same players.

 If you can, make a commitment to put aside something every payday into savings, even if it’s only $25.00. My parents generation and those before them saved. Unfortunately, with all the temptations out there (and the horrendous destruction caused by divorce), most Americans are not looking down the road, spending what they don’t have instead of paying attention to their obligation for the future. As the baby boomer generation is now hitting retirement, too many have nothing left to show and the shock is just now beginning to set in. How long before mother government raises the retirement age to 75 because of the mess they made?

It’s never too late to start, and the best time to start is NOW!

Has the worst of the financial crisis passed?

“Yes,” said the world’s richest man over the weekend. Warren Buffett told his shareholders that the “worst of the credit crisis on Wall Street is over.”

Maybe he’s right. But let’s look at the numbers. In 2006, alone, nearly $7 trillion of new debt was issued worldwide. Maybe double that amount in the entire five-year period – 2002-2007. So far, says Bloomberg, since the beginning of 2007, less than $200 billion has been written off. You can do the math yourself, but to me that means total losses so far probably don’t exceed 1% of the debt sold in the last 5 years.

So far, so good?  The Fed has now cut rates 7 times. And it now takes on its balance sheet – as collateral for loans – the very credits that are likely to go bad…credit card debt, student debt, and even car loans. It has only 200 basis points left, before it gets to zero, and there are approximately $10 trillion (just guessing) worth of credits that still could go bad. If just 5% of them went bust…the loss would be $500 billion. Maybe the doom and gloom is underplayed. Moving bad debt from the people who deserve it to the Bank of All the Americans – the Fed – doesn’t turn the bad credits into good ones. It merely allows everyone to keep doing what they’ve been doing…that is, to keep pretending that everything is all right.

But everything isn’t all right. Far from it. And budding out in our brain is the idea that the situation can’t be fixed…and that a major breakdown may be on its way…

Is America’s Economy Stalling?

America’s economy is in far worse shape than anyone ever suspected:  Thirteen BILLION dollars each month goes to finance the Iraq war:  We are hemorrhaging jobs at a rate approaching 100,000 a MONTH:  Over ten percent of American homeowners now owe more on their mortgage than their home is worth:  This condition has not existed since the great 1929 depression:  Our economy is faltering; and we as Americans are on the brink..,          On March 15, 2008 the U.S. Government had to TRY to bail out Bear-Stearns, one of America’s largest investment banks, with no guarantee its efforts will even succeed.  Not since the great 1929 depression have our banks been in such dire straights.

In March of 2007 Bear Stearn’s stock was selling at $159.00 a share.  One year later, on March 17, 2008, AFTER securing a commitment from the government for a loan so they would be financially able do so, the JPMorgan bank bought the entire Bear Stearns company, building and all,  for just TWO DOLLARS a Share.  (They later implied it was ten dollars)

.What shape is America’s economy in when our fifth largest investment bank  just sold for between two and ten cents on the dollar !!

Less than a month later Citi-Group, America’s largest banking entity, announced that on the heels of its TEN BILLION DOLLAR LOSS in the fourth quarter of 2007, it has suffered an additional FIVE BILLION, ONE HUNDRED MILLION DOLLAR LOSS in the first quarter of 2008, and that in addition to the 4200 recent job cuts, it is cutting 9000 additional jobs for a total of 13,200 job cuts, with more on the way.  Other large banks are in the same situation, making America’s economy alarmingly unstable.

On April 19, 2008 Merrill Lynch & Co., the world’s largest brokerage firm, said it would cut another 3,000 jobs after more than 6.5 BILLION DOLLARS in fresh write-downs pushed it to a loss for the first quarter of this year (its third straight quarterly loss).  Banks and brokerages have racked up nearly 200 BILLION in write-downs to date, with more feared to come.

Delta Airlines also plans to eliminate 2,000 employees; our auto makers are closing plants about as fast as they’re selling cars; and we are still losing jobs faster than the government can keep track of them.

Now, balance all the above,  with hedge fund manager John Paulson, .who, or example, raked in $3 BILLION dollars in earnings for 2007, thereby unabashedly paying himself more than $1.4 million dollars an hour!

Assuming a 40 hour work week, that’s the combined income of over 80,750 average Americans who earn $17.86 an hour !!

That’s enough to completely cover the entire budget of SIX states !!

If you are in a 401K retirement plan, the odds are that half of your employer’s contribution to it is being stolen by the greed parade on Wall Street to line their own pockets while they pump money into America’s businesses which will very promptly be lost to the greed of chief executives, who will in turn allow their corporations just enough cash flow to survive, stealing the rest in the form of bonuses, in the clear absense of any conscience at all.
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Most now realize that all of the above is pure, unabashed, demonic greed and thievery !!

The banks are winning and we, the ordinary people are losing everything, our homes, our savings, our futures.

Stop this now, educate yourself and learn how to get out of this corrupt system with The Ultimate Entrepreneur.
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Is your bank safe?

After Northern Rock and Bear Stearns, I’d hope you’d be able to answer that question correctly. (The answer’s NO, of course!!).

After all I’ve told you about banks, i’d like you to consider the following precepts:

Banks are required to have ‘reserves’ , correct? 

Reserves are ‘assets’ on the bank’s balance sheet and when applying for a license to form a bank the bank holding company needs to have ‘x’ million in reserves (assets) before they can be approved to do business, right?

The primary reason for this is obvious and simple – financial stability.

Now, with that in mind, as the bank grows and gains business prominence we’d expect those reserves to grow with the bank to offset it’s increasing liabilities, correct ? 

In fact, regulatory authorities use formulas for determining financial solvency which incorporate these ‘assets’ in reserve as an essential ingredient.  It only makes sense.

==========

Now, for those of you who ever had accounting 101, you understand that when you take out a loan and deposit the proceeds of that loan onto your balance sheet, that loan amount is ultimately a ‘liability’ and not an ‘asset’, right?  The loan has to be paid back and then as an obligation it is a ‘liability’ on the books.  Are you with me?

How would you feel then, if you found out that your bank never had any ‘assets’ for reserves.  In fact it had no assets in reserve.  It had nothing in terms of cash or assets to offset it’s liabilities (other than clients’ deposits) .

What if you found out that your bank tricked you into thinking that it was safe with plenty of reserves when in fact it had no reserves ?   Would you be screaming to the regulators to have the bank give you your money back and shut the bank down for committing a long list of ‘fraud’ crimes and breach of the public trust ?

Well, you can forget about ever doing that.  I’ll tell you why in a minute.

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Here are the facts regarding the reserves of the US Banking system:
Cash Reserves of US Banks has evaporated
They are operating on ‘borrowed funds’ from the Fed
The total banking reserves went negative in Jan. 2008
It’s getting worse every month
In early April the entire US Banking system reached $100 Trillion in funds borrowed from the Fed to shore up the banks  legal ‘reserve requirements’

The banks are committing blatant fraud against consumers using ‘liabilities’ to substitute for ‘assets’.

See for yourself.  The Federal Reserve has published this for your review.  You will see in the report (link below) with a:

Table: 
AGGREGATE RESERVES OF DEPOSITORY INSTITUTIONS AND THE MONETARY BASEIn this table is a column:  Non-Borrowed ReservesIn ‘Non-Borrowed Reserves’ you’ll see the figure go negative in January and start getting worse each month.    ‘Negative’ non-borrowed reserve is legal speak for ‘borrowed reserves’ See for yourself using the link below …. then tell me how safe you feel with your funds in a US Bank ?! Fed Report on Non-Borrowed Reserves

Once you start getting the idea, you’ll need to start thinking  ‘out of the box’. 

When it hits you…. contact me and join the Ultimate Entrepreneur

Ex IRS Agent Admits: Americans are Slaves!

In a speech delivered to the ‘Truth in Taxation’ hearing in Washington D.C. in February, Sherry Peel Jackson, who was an IRS agent and certified fraud examiner in the Atlanta District for 7 years, delivered the following comments among others:

Internal Revenue Service, Department of Justice, Federal Reserve and politicians have perpetuated this smoke and mirrors – dog and pony show on you the American people for over 88 years.

In my tenure as an IRS agent, I personally saw marriages broken, families torn apart, homes confiscated and businesses destroyed – all while my colleagues and I were out making unjust demands on the American people – without the proper authority.

You have learned that the Constitution of the United States of America has been trampled on and ignored through allowing the privately owned Federal Reserve to create paper currency and charge you 47 million dollars in interest per hour – money coming from the mouths of your children and the college education funds of your grandchildren, all the while the children and grandchildren of the owners of the Federal Reserve will never have to work a day in their lives, and that is wrong, on so many different levels. 

And let me tell you, that as a black woman I am keenly aware of the history of slavery. But do you understand that we are all slaves to this system?

If all Americans were able to keep the money withheld from their paychecks every year, that money would enable them to home school, start their own business and boost the economy, save for college and retirement, even buy that 40 acres and a mule. So, you be the judge

But now the truth about the fraudulent origin and operations of the Federal Reserve System and the Internal Revenue Service have been revealed to the American people.  You can no longer claim ignorance of the truth.

To read her entire speech,  Click Here

As soon as you’re ready for some safe, legal, ‘out of the box’ alternatives ….

Click here…

As Essay by Ron Paul on Bailing Out Banks….

Bailing Out Banks
Ron Paul

There has been a lot of talk in the news recently about the Federal Reserve and the actions it has taken over the past few months. Many media pundits have been bending over backwards to praise the Fed for supposedly restoring stability to the market. This interpretation of the Fed’s actions couldn’t be further from the truth.

The current market crisis began because of Federal Reserve monetary policy during the early 2000s in which the Fed lowered the interest rate to a below-market rate. The artificially low rates led to overinvestment in housing and other malinvestments. When the first indications of market trouble began back in August of 2007, instead of holding back and allowing bad decision-makers to suffer the consequences of their actions, the Federal Reserve took aggressive, inflationary action to ensure that large Wall Street firms would not lose money. It began by lowering the discount rates, the rates of interest charged to banks who borrow directly from the Fed, and lengthening the terms of such loans. This eliminated much of the stigma from discount window borrowing and enabled troubled banks to come to the Fed directly for funding, pay only a slightly higher interest rate but also secure these loans for a period longer than just overnight.

After the massive increase in discount window lending proved to be ineffective, the Fed became more and more creative with its funding arrangements. It has since created the Term Auction Facility (TAF), the Primary Dealer Credit Facility (PDCF), and the Term Securities Lending Facility (TSLF). The upshot of all of these new programs is that through auctions of securities or through deposits of collateral, the Fed is pushing hundreds of billions of dollars of funding into the financial system in a misguided attempt to shore up the stability of the system.

The PDCF in particular is a departure from the established pattern of Fed intervention because it targets the primary dealers, the largest investment banks who purchase government securities directly from the New York Fed. These banks have never before been allowed to borrow from the Fed, but thanks to the Fed Board of Governors, these investment banks can now receive loans from the Fed in exchange for securities which will in all likelihood soon lose much of their value.

The net effect of all this new funding has been to pump hundreds of billions of dollars into the financial system and bail out banks whose poor decision making should have caused them to go out of business. Instead of being forced to learn their lesson, these poor-performing banks are being rewarded for their financial mismanagement, and the ultimate cost of this bailout will fall on the American taxpayers. Already this new money flowing into the system is spurring talk of the next speculative bubble, possibly this time in commodities.

Worst of all, the Treasury Department has recently proposed that the Federal Reserve, which was responsible for the housing bubble and subprime crisis in the first place, be rewarded for all its intervention by being turned into a super-regulator. The Treasury foresees the Fed as the guarantor of market stability, with oversight over any financial institution that could pose a threat to the financial system. Rewarding poor performing financial institutions is bad enough, but rewarding the institution that enabled the current economic crisis is unconscionable.

Dr. Ron Paul
Project Freedom

Congressman Ron Paul of Texas enjoys a national reputation as the premier advocate for liberty in politics today. Dr. Paul is the leading spokesman in Washington for limited constitutional government, low taxes, free markets, and a return to sound monetary policies based on commodity-backed currency. He is known among both his colleagues in Congress and his constituents for his consistent voting record in the House of Representatives: Dr. Paul never votes for legislation unless the proposed measure is expressly authorized by the Constitution. In the words of former Treasury Secretary William Simon, Dr. Paul is the “one exception to the Gang of 535″ on Capitol Hill.

Copyright © 2006-2008 Dr. Ron Paul

So what’s the Fed been doing to rescue the American economy?

The Fed’s Open Market Committee wields so much power, according to Robert Reich, former US secretary of labor, it should be classed the “fourth branch of government.” Forget about Congress, the White House, the courts; the Fed holds “more power over your daily life than your congressman and Senator, maybe even your president,” Reich writes in his blog.

In short, the Federal Reserve “can do amazing things…” Things like:

• “Decide one big bank, JP Morgan, is going to take over another, Bear Stearns, backed by $29 billion of taxpayer money…
• “Expose taxpayers to hundreds of billions of dollars of potential losses without a single appropriation hearing, as it did when it allowed Wall Street’s major investment banks to exchange tainted mortgage-backed securities for nice clean loans from the Treasury…
• “Deciding the threat of recession is bigger than inflation, so it’s been lowering interest rates.”

This last super-heroic ability, notes Reich – now professor of public policy at Berkeley -”has made the Dollar drop further and faster, which means you’re paying more for gas and food.

In the past ten or so years US and UK households have suffered double-digit growth in the cost of living each year.

The US Dollar, along with the Pound Sterling, still lost half its value for consumers and savers between 1981 and today.

So what’s the Fed doing to rescue the American economy? Well, I would suggest it’s not trying to rescue our dollar but kill it off!

Built on a financial mirage……Nevada’s been betting on the Fed’s creation of easy money!

Something for Nothing – Courtesy of the Federal Reserve
Doug French

Nevada’s been betting on the Fed’s creation of easy money!

Las Vegas is a city built on the dream of getting something for nothing. But not only the tourists seek Lady Luck.

Casinos, small businesses and governments have all planned and expanded, counting on the dream of easy money – namely, more money and expanded credit for everyone, courtesy of the Federal Reserve.

During the past decade, “Americans could reap without planting,” financial author Bill Bonner writes. “They could consume without earning. They could invest without saving, and spend as much as they wanted without running out of money. They were the world’s luckiest people – they had the world’s reserve currency … and access to the whole world’s credit.”

With The Maestro, Alan Greenspan, at its controls, the Fed, America’s central bank, wildly created money out of thin air. The M-2 money supply (currency, demand deposits, money market funds, savings accounts and small time deposits) rose from just under $5 trillion to just over $6.7 trillion from January of 2001 to January 2006. Then Greenspan handed the reins of the Fed over to Ben Bernanke, who proceeded to create another $1 trillion more. The amount of money created just since the beginning of 2001 – $2.7 trillion – was the total M-2 money supply just two decades ago, in late 1986!

This furious monetary pumping – labeled “Operation Enduring Bubble” by investor and financial commentator William Fleckenstein – was a reaction to the tech stock crash of 2000 and the Y2K scare, and served to produce the housing bubble that is now busting.

With the Fed providing high-powered monetary punch, Americans were ready to party. Though they hadn’t saved any money, their houses were increasing in value everyday. So it was time to borrow some money and let the good times roll in Vegas. Gaming wins in Clark County climbed from $7.6 billion in 2001 to nearly $10.9 billion last year. Total employment increased by over 200,000 jobs in the same time period, and annual visitor volume increased from 35 million to over 39 million.

No wonder new resort projects totaling more than 4.7 million square feet of new convention space and 38,127 new hotel rooms are scheduled for construction between now and the end of 2010. Over $30 billion in bets on the Strip are riding on assumptions that Americans will not only maintain their pace of partying during the stock and housing bubbles, but that even more people will join in.

However, it’s not just private business that ramped up during the Greenspan/Bernanke bubbles. Nevada’s state government general fund budget is projected to be $3.5 billion in 2009, a near-doubling from 2003’s $1.8 billion. Local municipalities have also beefed up, as the city of Las Vegas budget more than doubled from 2001 to 2008, and Clark County and the city of Henderson nearly doubled.

Unfortunately, this explosion in development on the Strip and in local government was based not on sound economic fundamentals, but on an economic chimera created by the Fed. “The ‘boom,’ then, is actually a period of wasteful misinvestment,” economist Murray Rothbard wrote in America’s Great Depression. “It is the time when errors are made, due to bank credit’s tampering with the free market.”

What Rothbard was describing, as have other Austrian-school economists, was the business cycle – when “businessmen are misled by bank credit inflation to invest too much in higher-order capital goods,” like land, plant and equipment.

What follows is a bust – a recession or depression – where these wasteful investment errors are liquidated. As Rothbard explains that some investments will be totally abandoned, he mentions something Nevadans are very familiar with: Western ghost towns.

The cleansing of these malinvestments is now well underway, starting with the housing market. David Rosenberg of Merrill Lynch contends that the five-plus-year consumer spending binge is over, and that a long consumer de-leveraging process is underway.

Now, instead of casinos adding the jobs they once projected, Strip properties are shedding unneeded workers. State tax receipts have fallen nearly $1 billion short of the budget levels state lawmakers presumed last year, and rumors circulate that local government employers may soon be handing out pink slips. And while a lack of financing has stopped some projected resort properties, on the Strip construction continues around the clock. The anticipation is that once the new building is completed, the tourists will still come – and will spend generously.

As all gamblers know, bucking the house odds is no way, in the long run, to get rich. It’s the same with the printing of money and creation of easy credit: They won’t produce prosperity.

Which means that the next Vegas boom, almost certainly, is a long way off.

Surprise, surprise, the US loan industry fights new regulations that would stop them making abusive loans!

The mortgage industry, facing the prospect of tougher regulations for its central role in the housing crisis, has begun an intensive campaign to fight back. Now, as these rules are being created by the FED, I don’t expect them to be that tough, but our friends in the mortgage lending industry are happy with the status quo in their industry, ie. No Rules!

So, despite protests from consumer groups that have complained that the proposed rules are not strong enough, the industry’s criticism has already prompted the Fed to consider narrowing the scope of the plan so it applies to fewer loans.

Four months ago, the Fed proposed the new standards on exotic mortgages and high-cost loans for people with weak credit. The Fed’s proposals came after it was criticized sharply for failing to adequately supervise the lending industry, after all the Fed has its own authority under housing and lending laws to set and adopt mortgage standards.

The Fed’s plan would not cover existing mortgages but would apply only to new ones. It would force mortgage companies to show that customers can realistically afford their mortgages. It would require lenders to disclose the hidden fees often rolled into interest payments. And it would prohibit certain types of advertising considered misleading. Wow, no wonder those guys are mad!

Earlier this month, just as the comment period was about to close, the Fed was deluged with more than 5,000 comments, mostly from lenders who said the proposals could affect loans that have not presented problems. Some bankers and brokers also said the rules would discourage them from lending to some creditworthy borrowers.

The plan was criticized in separate filings by three of the industry’s most influential trade groups — the American Bankers Association, the Mortgage Bankers Association and the Independent Community Bankers of America. Because they don’t want to have to disclose how much they make on hidden fees, don’t want to stop misleading advertising and who cares if the borrower can afford the loan, right?

Let’s look at the Fed’s record on regulation…….

Before this year, the Fed had applied an extra set of protection from abusive lending practices to a subset of subprime borrowers under the Home Ownership Equity Protection Act of 1994. The Fed has applied the law to fewer than 1 percent of all mortgages — those with interest rates at least eight percentage points above prevailing rates on Treasury securities.

I think it’s fair to say that the Fed’s lax oversight helped enable lending companies to reap enormous profits by providing millions of unsuitable and abusive loans to homeowners who often did not fully understand the terms or appreciate their risk.

As of January, the most recent month of available data, about a quarter of all subprime adjustable mortgages were delinquent, twice the level of the same period last year. Lenders began foreclosure proceedings on about 190,000 of these mortgages in the last three months of 2007.

The new rules would apply extra protection to any mortgage with an interest rate three percentage points above Treasury rates. Officials said that they would cover all subprime loans, which accounted for about a quarter of all mortgages last year as well as many exotic mortgages known in the industry as “Alt-A”.

Many mortgage brokers and bankers complain that the lower threshold would unnecessarily include many borrowers who are not at risk from abusive practices.

“There are a lot of community banks that have shied away from these loans because nobody wants to be a higher-priced lender,” said Karen Thomas, a lobbyist for the Independent Community Bankers. “With the trigger being set so low, it is encroaching on traditional, common sense mortgages. Our fear is it will result in less credit availability, which is not what we need in an already tight credit market.”

However, consumer groups say that the proposed rules are already weak and that efforts to further weaken them would render them all but useless.

“The Fed has accurately diagnosed that this is a brain tumor and responded by prescribing an aspirin,” said Kathleen E. Keest, a former state regulator who is now a senior policy counsel at the Center for Responsible Lending, a group supporting home ownership.

“In the industry, there is a fair amount of denial. They just don’t get it. There is a calamity within the industry, and they don’t have a new script yet, so they rely on the old script, which is that regulation will raise costs.”

But as the Fed is effectively the parent company for the banks that created and delivered these abhorrent abusive loans, do we really think they’re going to crack down on their supply? after all, the banks are still freely making their money and any fears of bank bankruptcy are allayed by the Fed buying them out with government backed money creation. win – win for the banks. You lose all ways!