By Kevin Mooney — Property owners and small business owners are under assault from the Federal Deposit Insurance Corporation (FDIC), which is operating in collusion with Wall Street hedge fund operatives, free market activists have warned.
Here is how the take down works.
When the FDIC steps in to close a bank, Wall Street hedge funds can foreclose on anyone unfortunate enough to have a loan with the bank and seize property, even if the borrower has fulfilled payment obligations.
“Using the unlimited legal budget funded by the FDIC, these FDIC partners aggressively litigate borrowers, attempt to force them into bankruptcy, obtain judgments, further pursue those judgments against personal assets and savings and generally attempt to ruin all borrowers and guarantors, unless they pay the loans off or gain an un-appealable court decision in the borrower’s favor,” Chuck Cushman, president of the American Land Rights Association, explained. “The FDIC is aggressively participating in attacking U.S. citizens while destroying thousands of small businesses and hundreds of thousands of jobs. In the process, the FDIC is continuing to damage the economic infrastructure of hundreds of communities.”
The FDIC policy could potentially destroy thousands of small businesses and undermine, job creation, he added. Average Americans at a severe disadvantage because Wall Street hedge funds can use the court system to outspend borrowers with legal fees and drive them into bankruptcy.
Under existing policy, the loss-protection for banks is provided for by the FDIC and the Public-Private Investment Program (PPIP). These PPIPs exist in the form of partnerships with Wall Street hedge fund money men. They include publicly-traded hedge fund companies such as Lennar, Multibank Rialto, Colony, Kingston, Starwood and Roundpoint.
Moustafa Mokhemar, of Johns Creek, Georgia, described the FDIC’s perfidy in testimony before his state’s House Financial Services Committee earlier this summer. He lost out when the FDIC seized the Community Bank of Loganville, where he maintained loans. The FDIC sold loans from the bank to a joint venture/partnership with Rialto Capital, Lennar Homes, Multibank and the FDIC. Rialto Capital and Multibank are subsidiaries of Lennar Homes.
“In my opinion, the partnership between FDIC and Rialto/Lennar/Multibank is resulting in the bankruptcy of an unprecedented number of `smaller’ homebuilders and developers across America,” he said. “Dimishing the number of small, local homebuilders/developers reduces the competition for Lennar Homes, a $3 billion dollar company and one of America’s largest homebuilders and — not coincidentally — Rialto’s parent company.”
Cushman has called for congressional intervention to halt the assault on private assets. For starters, policy makers should cut off funding to the FDIC fund for the PPIPs. Any judgments that have been awarded to the FDIC partners should also be vacated.
“The FDIC is working against the creation of jobs and is holding back the economic recovery,” he said. “This policy is clearly inconsistent with the Obama Administration’s stated effort of creating jobs.”
Kevin Mooney is a contributing editor to Americans for Limited Government. You can follow Kevin on Twitter at @KevinMooneyDC.