While many people believe that the credit crunch has been contained, the sad fact is that it has cost a globally $7.7 trillion dollars in stock market value since October. Some even say more than that, speaking of $8.6TN. A reason why we shouldn’t expect the mainstream media to air any interviews of desperate borrowers and investors who supplied the funds to fuel a housing boom turned into bust. If they would they would freeze the markets instantly. It is very bad out there. Truth to be told, the subprime losses already outweigh ‘The Great Depression’. While it may not be very obvious at this stage, Wall Street is bracing for a wave of fury over subprimes.

If you remember well, Greenspan was utterly confident in the housing boom and applauding the so-called new financial instruments, telling us that they helped stabilize the market volatility. Back to present, today Bernanke speaks a different language and warns us that broad economy is worsening…

… The Fed chief told senators the “virtual shutdown” of the market for subprime mortgages given to people with blemished credit histories or low incomes — and a reluctance by skittish lenders to make “jumbo” home loans exceeding $417,000 — have aggravated problems in the housing market. “Further cuts in homebuilding and in related activities are likely,” he said….

Though the Fed chairman insists that there is no recession, just a sluggish growth which will be countered by the the impacts of the Fed’s rate cuts and the $168 billion economic stimulus package of tax rebates…. honestly can you believe that? Who is paying for the banks’ bailout and where do you think this stimulus package actually comes from: the treasury… it is all new DEBTS for the taxpayers!! We are merely delaying our day of reckoning and its ensuing fury tsunami.

What we’re seeing is a repeat of the S&L Crisis. Why? Because those who draft the regulations leave loopholes on purposes that suit their interests. Today they want us to believe that they are rescuing the market while in fact they are covering-up their own losses and underlying scandals. There is a book available for free on the net currently and titled: ‘The Bubble That Broke The world’, the story of a investment craze and easy money that led to the infamous 1929 crash. Nothing has changed and real changes will come when economics 101 will be taught in high school.

The cherry on t cake this week was most likely the speech given by Elliot Spitzer. He pointed to Federal agency that made it all worse for unwary borrowers. He explained:

The administration accomplished this feat through an obscure federal agency called the Office of the Comptroller of the Currency, or OCC. The OCC has been in existence since the Civil War. Its mission is to ensure the fiscal soundness of national banks. For 140 years, the OCC examined the books of national banks to make sure they were balanced, an important but uncontroversial function. But a few years ago, for the first time in its history, the OCC was used as a tool against consumers…. In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions pre-empting all state predatory lending laws, thereby rendering them inoperative against national banks. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government’s actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.

But the unanimous opposition of the 50 states did not deter, or even slow, the Bush administration in its goal of protecting the banks. In fact, when my office opened an investigation in 2005 of possible discrimination in mortgage lending by a number of banks, including national banks, the OCC filed a federal lawsuit to stop the investigation against the national banks.

Throughout our battles with the OCC and the banks, the mantra of the banks and their defenders was that efforts to curb predatory lending would deny access to credit to the very consumers the states were trying to protect. But the curbs we sought on predatory and unfair lending would have in no way jeopardized access to the legitimate credit market for appropriately priced loans. Instead, they would have stopped the scourge of predatory lending practices that have resulted in countless thousands of consumers losing their homes and put our economy in a precarious position…

All this for the love of money?

Greed is a bottomless pit, which exhausts the person in an endless effort to satisfy the need without ever reaching satisfaction. — Erich Fromm 1900-1980, American Psychologist.

So where does it leave us?

Oh yes, the SEC Probes Dozens of Subprime Lenders, teaming with the FBI, the regulator wants to determine whether the crisis is criminal. To know whether we should hold our breath, let’s make a quick reality check… how many people involved in the Enron or the Worldcom cases are in jail today?