Just when we thought we were safe, Wall Street has struck again.
Our friends in high finance have found a new way of profiting from the depression they have so ably stitched together: They are forming new Limited Liability Company ( LLC ) hedge funds to buy up property tax debt from state and county governments. Many of these funds are owned by the very same banks which received tax-payer money as part of the Toxic Asset Relief Program ( TARP ), or by their subsidiaries, or by the same people who own the banks. These hedge funds then tack on exorbitant fees and demand payment from the delinquent home-owners. When the debtors cannot pay, the funds seize their homes.
Most of these families have miraculously managed to make their mortgage payments, but have not had enough left over for the tax man. Budget-shrunk regional governments, unable to collect revenue from properties in default, have resorted to making sweetheart deals with these cash-rich hedge funds. In some cases, they have given these investors the power to garnish wages. In such circumstances, it is the hedge funds who decide what their fees will be and hence how much money they will extract from debtors. To my knowledge, this is the first time in American history that businesses have been given direct access to workers' paychecks.
Perhaps the most scandalous example of such a fund is Fortress Investment Group, headed by former Fannie Mae chief, Daniel Mudd, son of former newscaster Roger Mudd.
Fannie Mae got its start as a government agency as part of FDR's New Deal. It's function was to be an aftermarket mortgage buyer. When banks had lent all they could under existing law, Fannie Mae would buy the loans from the banks at a discount which would enable the original lender to make more loans. It worked quite well, so well in fact, that it was privatized in the 70s under Bush family protege, Richard Nixon.
As the boss at FM, Mudd made the decision to buy these dubious sub-prime mortgages. It was the presence of these uncollectable loans on their books which brought Fannie to the edge and forced it into Federal receivership. Now the man responsible for this disaster has targeted those fortunate few who succeeded in keeping up to date on their mortgages but are in arrears in their tax payments. The real estate carnage wasn't sufficient for our tormentors on Wall Street, not enough blood was spilled. Laden with out TARP money, they are now hunting down those who survived the original ambush to steal their property from them as well.
And they are now hunting you down. Hyperinflation is coming, if we don't have a cost-of-living allowance, we may soon be unable to pay our bills. I wonder what fees they will charge us...
Don't let this happen. Don't vote for a contract without a COLA.