Have you heard the funny saying, "Some people are alive only because it's against the law to shoot them"? I think they were referring to bankers.
Back during the Great Depression thousands of banks went broke, with depositors losing their life savings in the collapse. The misery was unimaginable. To restore confidence in the banking system, FDR/Congress did things like create the FDIC (to insure that even if banks go broke in the future, the depositors will still get their money back), and passed the Glass-Steagall Act. This separated the commercial banks (like the First National Bank of Gooberville) from the investment banks (think Shark Tank in a 3-piece suit).
Commercial banks were regulated, only allowed to loan to solid, credit-worthy borrowers, usually for things like homes or cars or small businesses. These were usually to locals, and the borrowers were well known to the banks. It was safe, but not all that lucrative for the bankers. Investment banks could gamble big on just about anything, but with their higher risks (they weren't covered by FDIC insurance) came much higher rewards, too. This separation worked well, but by the 1980's the banks were wanting to be unshackled, and finally, after intense lobbying, Glass-Steagall was repealed in 1999, and off to the casino they went.
They began an intense home loan campaign, and they had many well-qualified takers. But after a while all the well-qualified borrowers who wanted a home had a home, so the banks lowered their standards and kept throwing out money. Not long after, they ran out of even marginally-qualified borrowers, so they just kept loaning to anyone who could fog a mirror.
If borrowers couldn't afford to make payments based on a 6% interest rate, they gave them a 2% loan....for 4 years, then it skyrocketed to make up for the early-years rate-break. The banks frankly didn't care if the loans were paid back or not, as they had devised a way to pass along the risk to investors downstream. They took all their loans, sliced them and diced them, and repackaged them as "derivatives". These were essentially packages of 10,000 little pieces of 10,000 separate home loans.
Problem was, the investors they sold them to (often employee pension funds, etc) couldn't easily figure out which homes they had an interest in or who owed them, which is exactly what the banks were hoping for. The banks LOVE working in the dark! The senior banksters made literally $$$BILLIONS of dollars for themselves personally with this fraudulent scam!
By 2008 the House of Cards collapsed, and investors worldwide were holding worthless paper. But....haha....the banks were, too! They still had BILLIONS in their loan portfolios waiting to be sliced and diced, but the collapse happened before they could get them all out the door. Oops!
Here's where it gets personal for me: In their typical bureaucratic knee-jerk over-reaction, the banking regulators pretty much told banks to say "NO" to any real estate loans. Unless the borrower was solid gold and had a HUGE down payment...NO! This applied coast-to-coast, regardless of whether an area participated in the fraud or not. WTF?
Many in my industry were forced to close their doors, losing everything. (We managed to stay afloat because over the years we had developed nice relationships with many affluent professionals who didn't need any bank financing.) Plumbers who might once have had 20 employees could then only afford to keep 3 or 4. The same with electricians, insulation and drywall contractors, etc. It was to them like Armageddon. Then it spread to our neighbors who might have needed to sell their homes for whatever reason, but couldn't because there was little mortgage financing available. They were all defaulting on their homes and cars left and right, EVEN THOUGH THEY HAD NOTHING AT ALL TO DO WITH THE BANKSTER'S FRAUD!
Meanwhile, while millions of middle-class families were being devastated, the guilty bankers still had their ranches in Montana, their estates in the Hampton's, and their penthouse apartments on Fifth Ave. They still vacationed in Europe, still bought Bentley's, still had their hundreds of millions of dollars hidden away from possible angry plaintiffs. AND NOT ONE EVER WENT TO PRISON! Their lives didn't suffer one twit!
And they're still at it today. They still put together fraudulent deals, pricing in a few hundred million bucks to cover the fines they know the Feds will slap on them....not bad considering the few $$$BILLION they scammed in the process!
I truly believe a day of reckoning is coming. At some point in time fed up middle class Joe's and Jane's will invade the Ivory Towers and haul these well-scrubbed criminals off in chains. And there will be rejoicing in the streets. :)
* Not all bankers are Banksters. The little guys and gals at the local corner bank are NOT who I'm speaking of here. I'm talking about the BIG BANKS....B of A, JP Morgan Chase, Wells Fargo, Citibank, Goldman Sachs, Capital One, Morgan Stanley, etc.