Long-term rates have continued a modest retreat from the December highs, 10-year Treasurys to 3.67 percent, mortgages sliding toward 5 percent.

Further improvement depends on Fed Reserve and Treasury policy regarding 1) their desire to get the Fed out of the MBS-buying business, 2) the embalmed state of Fannie and Freddie, 3) private markets closed to mortgages, and 4) the slowly collapsing theory that housing and the economy are in self-sustaining recovery. A financial-market accident somewhere would do the trick, too.

Long-term rates have continued a modest retreat from the December highs, 10-year Treasurys to 3.67 percent, mortgages sliding toward 5 percent.

Further improvement depends on Fed Reserve and Treasury policy regarding 1) their desire to get the Fed out of the mortgage-backed-securities-buying business, 2) the embalmed state of Fannie and Freddie, 3) private markets closed to mortgages, and 4) the slowly collapsing theory that housing and the economy are in self-sustaining recovery. A financial-market accident somewhere would do the trick, too.

New economic data are weak. The National Federation of Independent Business small-business survey declined broadly in December; consumer credit continued its freefall, off $17 billion in November, triple the forecast drop; and December retail sales, which were expected to rise, instead fell 0.3 percent.

My wife, Bronx-born, high-risk labor and delivery registered nurse, given to the brisk speech of her workplace, is as non-political as I am a news junkie. Perhaps once a month she has something to say about that world. Something … firm.

"These bankers and their bonuses are disgusting."

I began to explain the private-partnership history of investment banks, their very low salaries, and end-of-year divvying-up the pot into bonuses — commissions, really.

Dinner and tranquility seemed a better idea. However, getting a close-hand load of citizen anger helped me over the gulf between the days of dignified partnerships (a few remain: Lazard Frères, Warburg Pincus, Brown Brothers Harriman, the Rothschilds — none connected to this disaster) and modern, giant, public-company looters.

Four top bankers this week faced the Financial Crisis Inquiry Commission and its barrage of puffballs. Be damned glad it was not a half-dozen of my wife’s co-workers, practiced at deflating physicians. The FCIC panelists are too ignorant of Wall Street to grill the bankers on details.

Worse, the panel has no clue that investment-bank CEOs tend not to debate, appear incapable of losing self-control, and may answer smiling, earnest and expertly evasive at any length until you go away.

Unless and until you play hardball. …CONTINUED

Lloyd Blankfein, Goldman Sachs is more important than its stockholders, right? Unlike your old partnership, living on its wits, your stockholders have given to you immense amounts of capital, but you keep the profits? Are you more important than your customers? Is Goldman more important than the United States?

You did pay back the Troubled Assets Relief Program (TARP) money that you say you didn’t need. But in the panic, to save yourselves, you scurried to become a bank — your liabilities guaranteed by U.S. citizens. Do you not have a higher duty to these people?

How about a duty not to hurt them? Since you accepted their guarantee, protection from a fatal "run," have you installed any ethical standard by which your apparent avarice comes second to what is good for the country? How about responsibility for the effects of your operations on other firms and the financial system itself? If AIG was unwise in guaranteeing your bad deals, crashes and takes the system with it, are your hands are clean?

In the great debt binge from 2000-06, the nation’s stock of home loans doubled from $5 trillion to $10 trillion. The toxic-mortgage fraction alone, in asset-backed securities, exploded from $350 billion to $2.1 trillion. At least half will be a dead loss, just as a similar amount of collateralized debt obligations, structured investment vehicles, collateralized loan obligations and such.

All four of you … "gentlemen," and your peers not here: You alone invented all of these deals. You pushed them hard, and lost money only if you were late to quit.

So if you are here today to claim that you didn’t understand the harm you were doing, then I believe you are too dangerous to keep your jobs or ever again to work on Wall Street. Or you may confess that you did understand, but the money was too good, the deals too rich. If so, you may have to explain that to a judge.

Take your pick.

Lou Barnes is a mortgage broker and nationally syndicated columnist based in Boulder, Colo. He can be reached at lbarnes@pmglending.com.

***

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