Lobbyists drive legislation while Congress remains asleep
Yet Washington’s influential K Street is also to blame. It’s the home of the US’s most powerful lobbyists and it forms part of the revolving door between government and big banks and corporations.
The controversial Interstate Notarization Act of 2010 quietly and unanimously passed the Senate with little public debate—although it was certainly discussed behind the closed doors of K Street lobbying firms. The bill would have bailed out big banks and corporations while allowing foreclosures to continue, even when the legitimacy of those foreclosures have been disputed because of fraudulent or incorrect notarizations.
Homeowners facing foreclosure also denounced K Street lobbyists and the damage they have done to American families in a protest on May 17, 2010, drawing thousands to the streets for a “sit-in on K Street.”
“Of course, they’re [banks] moving as swift as they can to take back as many properties as possible. But, now with Foreclosure-Gate we’re seeing there’s ramped fraud and ramped mistakes in the whole process,” said Hemminger.
He said the last decade of increases in real estate prices and the market meltdown was a Wall Street engineered collapse.
“The banks were as guilty of flipping their mortgages as people were of flipping houses,” Hemminger said. “The enemy in this, I would say it’s the Federal Reserve because they injected too much liquidity into the economy and it came up in real estate, but Wall Street took full advantage of that.”
He added, “We haven’t begun to see the crash in real estate.”
Hemminger explained that the crisis will soon move from a sub-prime crisis to a wider spread collapse in real estate prices, which will impact the heart of middle class America.
“You’re guna hit a critical point where people just say, this isn’t worth it, I give up. And you know what, those properties are guna go back to the banks, they’re not going to be worth what they lended out on them. What’s gunna happen? The government is gunna come in and bail it out through the tax dollars, through the tax payers. But, that’s the question right now; can the US government handle a second mortgage real estate meltdown? I don’t know,” said Hemminger. “This may be a societal collapse we’re looking at.”
“Some powerful interest were there kind of trying to sheppard it along,” he said.
He explained that Wall Street would like greater flexibility, something regulations hinder. Thus, they utilize lobbyist to influence Congress.
Politicians do not have the information and knowledge of how the financial system works. Thus, working with banking insiders and lobbyists in a necessity to some degree, he added.
Wall Street lobbying is cheap, he said. The money spent to get the ear of the most powerful members of congress is pocket change on Wall Street collectively.
“It’s almost an embarrassment how cheap it is to get access to the Congress,” said Weisenthal.
Payment for Wall Street executives has increased, and may continue to do so, even though it is expected to be a season of more layoffs.
Weisenthal explained that in the financial world there is a desire and battle for talent. Those who are talented are getting paid for their talent, if they don’t get paid what they want, they simply go elsewhere.
“Thankfully President Obama really understands what the bill meant and the implications that it would have had on homeowners,” said Zaky.
She said the bill could have devastated the foreclosure crisis even more than it has already, eliding to large scale future implications on the market.
“In the midst of such a major foreclosure crisis when people are losing their homes left and right you have a bill that could devastate that even more than the occurrence already is,” she added. “The fact that banks are so, the lobby is so strong in favor of banks despite the fact that homeowners are losing their homes everyday is really scary.”
Zaky explained that Americans blame bankers, Wall Street and the government for the ongoing crisis; citing faulty practices, including those which came to light under the foreclosure-gate scandal, and the failure of the government to regulate the industry properly.