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high-cost mortgages. These mortgages usually required zero-down, and had a very low starting rate of interest under an ARM (adjustable rate mortgage), to get these marginal home buyers in the door. (Center for Responsive Politics.)

As predatory lending became an epidemic, fabricated data was used to inflate home values. At the same time, a false/high level of income was reported for most buyers, so it would appear that they provide debt service even after mortgage interest rates dramatically increased. These "junk" mortgages were then quickly "bundled" and sold as good investments. Many banks, worldwide, now hold many millions of dollars worth of such "junk" securities. Now that most bankers now know the true value of this "junk," they will not loan money to other banks holding a high percentage of these "junk" securities. Lending between banks has now become "frozen" because of this problem. The $700 billion bailout "package," recently approved by Congress with an extra $110 billion in "pork," is being used to buy these "junk" securities to try to get banks lending to each other once again.

Financial industry lobbyists and Wall Street proceeded with the "financial rape" of the public in 2000. These lobbyists again used "political payola" to get Congress to approve The U.S. Commodity Futures Moderinization Act of 2000, and that act unleashed the derivatives industry. The expanded derivatives product, approved by this legislation, created a combination of insurance, gambling, and high stakes bookmaking to make "junk" securities attractive. Warren Buffet said "derivatives are now a ticking-time-bomb." (Futures Modernization Act of 2000.)

Many cities and states became aware of the above financial problems, and soon passed anti-predatory lending laws. President George W. Bush then ordered the Controller of the Currency to take legal action to "block" such laws. It seems that President Bush also owed a debt for campaign contributions received from lobbyists for the financial industry. Moreover, Bush had appointed some of these lobbyists to "key" positions in several federal agencies. This financial sector lobbists had influence from the inside, as well as the outside. (Public records for Presidential Appointments.) Without any shadow of doubt, lobbying by the financial sector did contribute to the meltdown on Wall Street.

Learn more about this author, David Nuttle.
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