Wednesday, January 27, 2010

Atlas Chronicles: Feds Loot Charter Bank

Until recently, our small state-regulated banks and small local banks under federal regulation have been left alone by the Feds. But last week the looting of the wealth of New Mexico for the sake of political expediency began. This is happening in communities and states across the United States. The looting of our communities has begun.

On Friday, the Office of Thrift Supervision (OTS) closed Charter Bank, a closely-held conservative local bank that was in the business of lending money to New Mexicans and their businesses for the purchase of homes and commercial real estate. They then forced the sale of the remaining assets to a vulture "capitalist" from Texas, a company that has no interest in making conservative loans to New Mexicans interested in owning their own homes. The looting began because the OTS, a bureaucratic agency in fear of its own survival, is imposing standards based on conditions at the big banks--the ones on the government dole--to small banks who couldn't get government "help" if they tried. They are imposing standards required by the disaster that, through the Community Reinvestment Act, and the looting of Fannie Mae and Freddie Mac, the federal government itself created.

Charter Bank was not "too big to fail," and the owners knew it. They also understood that by doing their business honorable and conservatively, they kept the trust of their customers and brought wealth and stability to New Mexico. At the time Charter was forced to close, their commercial loans not being paid on time amounted to about 0.33% of their total loans. (Note: this is late payments, not foreclosures). These are numbers that speak to the careful underwriting that Charter clearly did to make sure the loans they made were good ones. These are numbers that many of the bail-out banks could only dream of having.

How then did OTS close Charter Bank? Through an assault by devaluing Charter's holdings on paper. Like it has for many small and conservative banks, OTS decided based on national trends that have little relevance to the situation on the ground in New Mexico, that some of Charter's commercial customers might not be able to continue paying down their loans. They therefore forced Charter to reduce on paper the value of those loans. (This is like Pre-Crime in The Minority Report, a short story by Phillip K. Dick. The Pre-Crime Division would arrest and imprison innocent citizens because they might commit a crime in the future). This creative bookkeeping reduced Chater's capital holdings on paper, bringing it below the federally mandated amount, and presto-chango, Charter went from being on solid footing to being a "failing bank" by sleight of hand.

The OTS did this for political reasons. It has been fashionable in DC for a long time to blame all of the financial problems of this country on businessmen and capitalism. Like the medieval rulers of Europe, and the ruling families of corrupt middle-eastern kingdoms, American politicians have found it expedient to divert the attention of the population away from their own tyrannical machinations and corrupt policy by blaming the bankers. The OTS failed to stop the melt-down of the big national lenders because other government agencies had forced on them policies (like the Community Reinvestment Act) that could only end in failure. And the big lenders and investors played along, sucking at the government teat, in order acquire unreal profits at the expense of future stability. And when reality finally came crashing in on them, they all screamed that they were too big to fail, and received bailouts that will impoverish the next generation of productive Americans. And bookkeeping sleight-of hand continues at that level, as AIG payed back their bail-out with money printed by the Office of Treasury and sold to the Fed. So now, with their future existance in doubt, the OTS is trying to look busy by rushing to close the barn doors on small, local banks that never were in danger to begin with. The horses, already long gone, did not come from those barns.

Charter Bank did not engage in the illusory lending practices that created the real-estate bubble and the painful burst that the people in this country are now enduring. Charter Bank did not participate in subprime lending. And Albuquerque's housing market remains relatively stable, as the housing prices were not much over-inflated, and the slow-down in housing sales, a reaction to changes in conditions elsewhere, has already begun to recover. OTS made this decision by the fiat of a bureaucrat far away, based on conditions in places like Las Vegas and the State of Florida.

But OTS doesn't care that they have destroyed the personal wealth of a strong, responsible banking family in New Mexico by the stroke of a pen. They certainly don't care that they have replaced a strong conservative engine of wealth for New Mexico with a vulture "capitalist" from Texas, who also will not care about local needs. His business is to feed off of what remains from failed banks and his business model will not likely benefit New Mexico, where the wealth he and the OTS looted at the stroke of the pen originated.

It is time for our local sheriffs to make sure there are actual court-produced leans on homes and businesses, before allowing any federal agencies to invade homes and close businesses in our counties. It is time for the States to assert the 10th amendment, and nullify any action by the federal government that would move wealth away from the local economy and to the bureaucrats in Washington, that "Great City". We must stop these unelected people from looting us by regulatory strokes of the pen before we find ourselves paupers and slaves in the land our fathers and mothers built.

Prior to our marriage, the Engineering Geek and I both had financed our first homes through Charter. Both of us knew the Charter Bank owners, the Wertheims, members of the Jewish community here, and benefactors of the larger community in many ways beyond their business.
After our marriage, we also financed the loan portion of our first home together there. And when we paid off that loan and the home we now own outtright, Charter Bank has succeeded in producing another satisfied customer, and had contributed to more wealth in our economy. They did with good sense, and provided excellent and courteous customer service.

Like many in the community, we were shocked at the destruction that the Feds had wrought right here in little "Cow-town" USA. One letter written to the editor of the Albuquerque Journal today stated:

"When armed men enter a bank and take everything away from the owners, it is bank robbery. What do we do when the bank robber is the federal government? . . . I refuse to do business with thieves!" (Vickie Averhoff, Letters to the Editor: Breaking the Bank. The Albuquerque Journal, Wednesday January 29, 2010, p. A9).

Likewise, the Engineering Geek and I will not entrust one more dime of our money to the vultures who looted Charter Bank, and are sucking the wealth out of our community.

And this begs the question. This type of thievery by government regulation is going on in every area where the federal government has usurped its Constitutionally limited powers. All of us who choose not to do business with thieves must begin to look carefully at how to stop supporting a federal government gone rogue, that lies, cheats and steals for the momentary benefit of a small number of politicians cum-potentates. This will not be an easy task. It will require courage and it will exact a price upon all of us, because the piper for this dance of destruction will have to be paid. If not by us, than it will be paid by the toil and loss of freedom of our children and grandchildren.

If you are a patriot; if you a just a person who gives a damn about the people being destroyed in your community; if you want to preserve your birthright to Life, Liberty and Property: Read the Articles of Freedom. Sign this Pledge:

"In full view of the Creator as my Witness, I hereby pledge my signature, and vow to join a goodly number of millions of Americans to hold our elected and appointed officials accountable for all of their violations, with the firm reminder that each one of them has sworn an Oath (or Affirmation) to Preserve, Protect and Defend the Constitution for the United States of America. In seeking to hold them accountable, I shall hold myself accountable to do the same.

"We, undersigned renounce and condemn the INITIATION of Force, and will pursue all lawful and Constitutional means to fulfill our duty." (Articles of Freedom, Christmas Eve "Miracle" Edition).

Together, we can stop doing business with thieves.
Before they rob us blind.

1 comment:

Beth said...

Thank you for this clear, principled description of the events surrounding the Charter Bank. More attention needs to be brought to such instances abusive government power. I recommend you send a copy to local papers, and to each of your state and national legislators.
I don't think it will hurt, and maybe if enough of us do this, someone will have to start paying attention.