In October 2008, with the economy allegedly perched on the precipice of an absolute meltdown, a number of banks got a bailout from the American taxpayer under TARP (Troubled Asset Relief Program). In order to pass it through the House, it was sold as government intervention by picking up toxic assets (bad mortgages) to keep financial institutions from collapsing and taking the entire world economy down with them. One of the provisions included to get passage through the Democratic-controlled House allowed the Treasury Secretary to “facilitate loan modifications to prevent avoidable foreclosures.”
In the great compromise that involved our tax dollars, a deal was made. We as taxpayers would allow our money to be loaned to banks to stave off the bread lines of the Great Depression and in return, the government would help homeowners avoid foreclosure by working with those same banks to modify loans. At the time, it sounded like the only solution, or at least that’s the way then-Treasury Secretary Hank Paulson presented it.
Granted, greed is what got us into this mess to begin with. Let’s flash back to Florida in 2006. Based on an over-valued housing market, people were buying second and third homes solely on the belief that the housing bubble would never pop. The economy in Central Florida was going nuts back then and even at my company which wasn’t even a part of the housing boom, money was flowing like crazy.
But like the banking industry, our perceived wealth was based on a deck of corrupt cards that would eventually come crashing down in the following years. In the same way Bank of America, Countrywide and others were paying huge bonuses to push through mortgages regardless of the credit worthiness of the borrower — we were paid with tidy bonuses and perks like limo rides to steak houses and amusement parks. Our job was to keep customer accounts on the books no matter what the cost, regardless of whether or not they were profitable. Often, these “customers” were scamming the company for millions of dollars in equipment and services monthly and we were instructed not to say anything because our stockholders would possibly revolt.
Fast forward to 2008 and one of the very first banks to get a multi-billion dollar lifeline was, you guessed it, Bank of America. We as taxpayers gave them a massive loan with no strings attached and no guarantee of repayment. In return, they were supposed to help struggling homeowners who were underwater on their mortgages and together, we’d sort out those past few years of speculation. After all, we’re all Americans and we’re in this together, right?
Not so fast. It just came to light that even though we upheld our end of the deal by bailing out the banks, not only did they renege on it, they were blatantly screwing us on their end all along! In sworn statements made by Bank of America whistle-blowers, it came to light that Bank of America was actively rewarding employees to find ways to not help mortgage holders. In fact, they were giving out bonuses to employees who put homeowners into foreclosures, just like we were rewarded to look the other way or even assist in the fraud that afflicted my former employer, Sprint.
For the record, I never went along with it. In 2007 and then again in 2009, I blew the whistle and subsequently ended my career chances with a report which was sent to executive management. Within days I was advised that I had made myself a persona non grata at Sprint and every attempt to transfer to another position within the company was subsequently blocked.
As for Bank of America, this scandal is far worse. This isn’t about a company allowing itself to be ripped off in order to not upset stockholders. This is a situation in which we as taxpayers opened our wallets (it is our money, not the government’s money) and gave them a loan with the understanding that those of us who were in debt would catch a break. Not only did they not uphold their end of the deal, they stabbed many of us in the back.
I am proposing that going forward, any loan to a business from the government come with a contract and strict set of conditions. If that company fails to live up to their side of the bargain, then they immediately forfeit their company to the government to be sold and pieced out to other members of their industry.
If you’re wondering how to keep this from happening again in the future, there’s two things we have to do. First is to end unlimited corporate spending through Citizens United. The second step is to end “too big to fail” and demand accountability through the previously mentioned contract. If we cannot demand this accountability through our government and financial institutions, then we deserve nothing less than the mess we’ve found ourselves in.
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