Banking, Securities and Scam Abatement

Home Mortgage Lending

You would have thought, after the 2008 Meltdown that laws would have changed to not allow mortgage lenders to slice up, package and sell their mortgages to investors.  You also would have thought that laws would change to repeal the Community Reinvestment Act and HUD Rules, so that lenders were not subject to lawsuits for not giving loans to unqualified borrowers, or laws to ban insurance policies on risky investments (hedge funds), or laws restoring the Glass Steagall Banking Act.   None of that happened.  Dodd-Frank codified bailouts.  Some of this was attempted, but the efforts got buried.

It makes perfect sense for States to pass a Banking law that restricts home mortgage lending to banks that are registered to operate in the State and not allow these banks to sell the mortgages to any other investment institutions, ever.  At the same time, the State could nullify the Community Reinvestment Act and HUD Rules and any other laws that would conflict with this reform. The bigger banks should not be given any advantages over the smaller banks. Commercial banks already handle business loans and should be included for the home mortgage market. 

Private investment dollars would need to be invested in these banks to fund the purchase of mortgages from Fannie Mae and Freddie Mac but they should be free to buy the mortgages they believe will be safe to buy and leave Fannie and Freddie with the bad ones.

Bankers would have the incentive to work with reliable borrowers and should be allowed to do that unmolested by State or Federal laws

The U.S. Constitution does not include home mortgage lending in the enumerated powers for a reason.

Bond Sales

Bonds sales need to be reduced by limiting the State borrowing limit for cities, counties, school districts and other entities and educating voters that bonds cost double; you repay the principle, interest and fees and pay double for what you get.  There are very few good reasons for government to sell bonds.   A good limit is city and county assets.  Most cities and counties own assets that can be found in their annual CAFR (Consolidated Audited Financial Report).  Most have assets that are about 400% of their annual revenue or more. 

This should reduce the amount of Muni Bond sales, so banks would have more to lend in the home mortgage market.

Credit Cards

Credit Cards appear to be handled well by the big mega-banks. They could keep doing that. As for their double digit interest rates, let them be subject to the price/demand curve with no special political favors.

Stocks

Brokerage services should be looked at to see if any laws need to change, but so far, it looks like any financial institution can do this. Money managers like Bernie Madoff need to be audited, so these folks might need to be watched.

This looks like a good start for dismantling our NAZI government to reconvert it back into a Free Market government.

Norb Leahy, Dunwoody GA Tea Party Leader