Critical Issue: Banning CDO's from the market

I've said this before (here), and will continue to keep discussing this. (because it's my blog!)

We need an ABSOLUTE ban on all financial objects that are bundled (like CDO's) to OTHER objects.

Example:

• We need to ban CDO's that are/were based on sub-prime mortgages.
• We need to ban CDO's that are/were based on consumer based products like:

1. Credit Card debt.
2. Consumer loans (car and other loans)
3. Education (college/student) loans.

Review of the 6 top reasons we need to outlaw Collateralized debt obligations are as follows:

1. In the old days, when the Bailey Building & Loan Association made a loan, they DIDN'T try and sell it. They KEPT the loan ON their books, and the neighbor who had the loan or mortgage payed them DIRECTLY. They didn't have to have ANOTHER company SERVICE the loan.
2. CDO's in today's market have absolutely NO value. They cannot be traded, they are currenly what we call "toxic debt" (See great article from TWO years ago HERE!)
3. SELLING the mortgage (debt) does NOT make more money available for the bank. This is not real life. In real life, (today) NO Loans are being made, because banks are now what I call "chicken-S*it
4. CDO's are toxic. Attempting to take the risk from a loan, and apportion it to 100 different investors is nice. However, too little too late. I repeat, CDO's are toxic, and will NEVER be a worthwhile asset to ANY financial institution EVER again. I will also predict that ANY bank that ever purchases CDOs from ANY institution will need to have the brains of its board of directors scanned for metal from bullet fragments.
5. The days of "Greed Season" are over for Wall Street. Wall Street Bonuses got inflated because some 'genius' figured out how to "SCAM" the market, creating (for his company, and himself {his bonus}) a WIN-WIN scenario, where the ONLY loser (today) is US, the taxpayer.
6. The most important reason to ban CDO's? We now OWN the banks. We now need to EXERT FINANCIAL CONTROLS that will bring the market place BACK to a safer time, like when the Bailey Building & Loan Association made loans to their community.

We must ensure that the BANKS are RE-REGULATED. the Glass-Stengal repeal of 1999 and other similar "SLIME" last minute financial regulations MUST be undone.

We must also ensure the dirty "STINKY" political fireball launched by (now former) Senator Phil Gramm, in the last minutes of his 'duty' in the senate is FINALLY undone.


Again to review:
*No new CDO's.
*Existing CDO's must be settled NOW, not in 25 years.
*We must ensure that these large companies (like American Express, Citicorp, JPMorgan/Chase
are ALL broken up into smaller divisions, that (heaven forbid!! might even COMPETE against each other.
*We need to re-teach banks that they will loan people money, and get property in return, that they can hold (or resell to another bank). They cannot make illogical and illliquid theoretical property from something that doesnt exist.

Mark in NJ