Big Finance's Pathology Compels the Logic of Socialized Banking

A Washington state supreme court finding against improper foreclosures is just the latest instance of banks' malfeasance

by Richard Wolff

 

A long string of socially costly misdeeds by major private US banks have been exposed since the current crisis hit in 2007. The latest concerns an obscure enterprise named Mortgage Electronic Registration Systems, or Mers.

Founded in 1995, this private company in Virginia never employed more than 50 people full-time. Big private banks (Bank of America, JP Morgan Chase, etc) and housing finance companies, like Fannie Mae and Freddie Mac, founded Mers in order to speed the processing of mortgages into mortgage-backed securities (MBS). Investors were willing to buy these new securities (bundles of Americans' mortgages). Most importantly, US financial institutions wanted the huge profits from producing and trading MBS.