Written by thomas kitrell   

A relevant factor to the fraudulent real estate escalation and subsequent collapse was the “bank pressured” participation of the investment rating companies such as Moody’s, Fitch, and Standard & Poor’s. They quite willingly gave AAA ratings, (investment grade) to the banks stealthily bundled mortgage backed debt vehicles, which in reality were nothing more than risky junk; (a few good loans mixed in with largely sub-prime loans of high default likelihood). Without these three conspirators working at the top, along side the banks, enabling banks to pass junk off as investment grade, the scheme that drove the real estate market up, up, and away, would most certainly have stalled out early in the greed chain, and long before real damage was inflicted to the country.

With the rating companies essential complicity at the top, the game was on. Once on, there were no shortages of real estate investors. Everyone jumped on the train, and it was not just sub-prime home buyers as the government initially intended to help. There were real estate agents who recognized the early investment opportunity as house prices began to rise month by month who were buying and flipping houses, doctors, lawyers, plumbers, janitors were all jumping on board the rising house market; even neighbors were buying the house next door, all flipping houses in two to six months, often making little or no improvements to the homes. Everyone it seemed was now in the real estate game. And soon, investors were pouring in from over seas. There was nothing produced… just easy money at the cost of inflation.

The original fuse was lit by government’s attempt at social engineering, placing unrealistic demands upon prime bank lenders, as well as the Fannie May’s and Freddie Macs, pressuring them to set aside the time honored wisdom of proper credit verification to ensure the borrower’s ability to repay the loan. But once lenders had their bundling scheme worked out for unloading endless numbers of risky loans as AAA investments, they seized the opportunity to exploit the government dream of a home for everyone, tossing conventional wisdom to the wind, and under the cloak of compassion, and with the blessings of the federal government, began making loans to whoever wanted a home.


Much of the protection put in place after the depression era to prevent financial and other lending institutions from over-leveraging (most notably the Glass-Steagall Act enacted June 16th 1933, creating the FDIC, designed to control risky speculation) was dismantled by recent government administrations. Primarily under the Clinton administration, though subsequent administrations continued to participate; all under pressure by Goldman Sachs to “unburden” the creative advancement of progressive banking products, which in turn, would bring in large revenues for government.

However, the many blindfolded participants that made up the greed train, would quickly have run out of steam had it not been for Moody’s, Fitch, and Standard & Poor’s and their full complicity at the top, conspiring with the lenders, to create a false market outlet for their worthless junk bundling scam. The name for such schemes is fraud. A classic pyramid scheme designed for quick personal enrichment, made the easy way, and promoted through the classic lure of big commissions. It was seen very clearly by those at the top, as a scheme destined for eventual collapse, taking the nation down as well.
They cared little; they would eventually make money on the collapse, too, by shorting the market as it imploded, which drove stocks down at a faster pace, and later by riding the market on the way back up. That is precisely how many of the banks paid back their government bailout loans so early. Because no restrictions or requirements were stipulated regarding how banks must utilize these hastily rendered bailout monies, (your money and mine) initially intended, in large part, to be loaned out to stimulate business, (helping you and me), instead, the banks purchased bottomed-out stocks beaten down during the collapse, (your stocks and mine, which many of us, out of necessity, had to sell at the bottom). Shortly after, the banks road these stocks back up and quickly sold them to repay the government, early, so they would not remain under government’s control, which stifled bonuses. This all done with our money! This tactic produced nothing, created no jobs, (other than for Wall Street), and we the people, were left holding the empty bag. Bravo… well done!