What's Underneath the Label "Toxic Asset"

Can We Get Real for a Moment?

The bankers,  the so-called-experts, the people we hear on television , and the people who write for magazines and newspapers  all talk about the "toxic assets" as if toxic assets were bushels or corn or barrels of oil that were being tossed form one owner to another.   They are not.   

It's your retirement money, and/or your neighbors life saving, and/or the education fund of the kid in the next block that is being peddled.   When the pundits casually talk about a "toxic asset," it doesn't sound like anything personal, but really, what are toxic assets?   Do they grow on trees?   Did they get dup up like coal or drilled for like oil?

 NO!  They were intentionally created by agents of the banks and other lending companies.   These loan peddlers convinced unsuspecting people to sink their hard-earned money into overpriced homes using lending agreements that they, the bankers, knew that the lenders were not qualified for.   

The lenders knew these people would be forced into defaulting on their loans.   The lenders know that many of these people would lose their life savings.   That didn't matter.   What counted was making a profit and looking good on the next quarterly report.   They knew that millions of homes would be seriously damaged or destroyed in the foreclosure process.  That didn't matter either, and it still doesn't.  

And now, millions of people's lives and their life savings are riding on what happens to their homes - the homes that are collectively and euphemistically disguised as "toxic assets."   

These homes are not toxic.  

    It's the so-called-experts, who ignore this truth that are toxic.   

    It's the people we hear on television who ignore this truth that are toxic.   

    It's  the people who write for magazines and newspapers  who ignore this truth that are toxic.   

    The phrase, "toxic asset" is  simply the scapegoat language for disguising greed indifference, arrogance, and self interest.

The homes are not toxic.  

It's the Home Loan Lenders that Are Toxic.   

    If you really want to solve this problem, simply use the bankers attitude on themselves.   Each day throw ten bank executive and their families out on the street, penniless and homeless, with no hope of ever recovering their lives.   The rest of the bankers will very quickly get the message that it's in their own best interest to end the foreclosures of homes.   

    Obviously, violating bank executives is not a realistic approach to solving the nation's financial crisis, but here's an approach that is not only realistic, it's the only approach thus for proposed that will actually work.   It's the only approach that focuses on solving the problem (instead to just treating the symptoms).

How to Create a Public-Service Banking System

What Is a Toxic Asset

A toxic asset is a loan where the lender has defaulted or is about to default on making payments on the loan and where the amount of the loan exceeds the present value of the security asset.    For example, a home owner with a $400,000 loan on his home and a present sales value of $300,000 has a toxic asset.   He or she is faced with losing the thousand of dollars he/her put into purchasing the home.  

If the homeowner defaults on the loan, the bank then has a "toxic asset."  At that point the, the homeowner gets nothing except and eviction notice and the  bankers sell the home for pennies on the dollar.  Everybody Loses!  ^**es8   

Hundreds of thousands, perhaps millions of speculators borrowed money to buy real estate that they intended to sell to others at  higher prices.   When the real estate values  nose dived, these borrowers ended up owing more on the real estate that they owned than the properties would sell for.   When an investors walks away form his/her investment  property, they leave behind a "toxic asset."   They, like the homeowner, lose their investment money, and the  lender is left with has a toxic asset which they process in the manner described above for resident homeowners.    Again. Everybody Loses!  ^**es8   

Fractional reserve borrowing was another critical factor in creating toxic loans.   This is where speculators borrowed money with little or nothing of value to secure the loans and then spent the money buying investments that failed.   When borrowers could not repay their loans, this create a chain reaction of loan defaults and the entire "house of cards" came tumbling down.  The resultant defaulted-on  loans are "toxic assets."