In a prepared speech before the Senate Banking Committee this morning and in front of Federal Reserve Chairman Ben Bernanke, Senator Jim Bunning (R - Kentucky) had this to say about the Federal Reserve this morning:

"I'm deeply concerned about what the Fed has done is the last year and in the last decade. Chairman Greenspan's easy money in the late '90s, and then following the tech bust inflated the housing bubble and created the mess we are in today. Chairman Bernanke's easy money in the last year has undermined the dollar and sent oil to a new high every day and an almost doubling since the rate cuts started.

The Fed is asking for more power but the Fed has proven that they can not be trusted with the power they have. They get it wrong, do not use it, or stretch it farther than it was supposed to go in the first place. As I said a moment ago, their monetary policy is the leading cause of the mess we are in. As regulators, it took until yesterday to use the power we gave them in 1994 to regulate all mortgage lenders and then they stretched their authority by buying $29 billion worth of Bear Stearns so J.P. Morgan could buy Bear Stearns at a deep discount. (***Coincidentally, J.P. Morgan (the man) founded the Federal Reserve in 1913 along with his other U.S. and international banking associates - SEE VIDEO #1 in this site's "Videos" section).

Now the Fed wants to be a systemic risk regulator, but the Fed is a systemic risk. Giving the Fed more power is like giving a neighborhood kid who broke a window playing baseball on the street a bigger bat and thinking that will fix the problem".

*** The Federal Reserve is a PRIVATE entity controlled by powerful banking and corporate interests. We did not elect these people, and yet they control our money supply and our overall economy.

With the recent takeover of IndyMac Bank by the FDIC, I expect many more takeovers of small, mid-sized, and large well known banks. You need to make sure that you have enough cash on hand if your local bank ends up "freezing" all of their customers' bank accounts until the FDIC decides to step in and cover losses.

It can take a long period of time for the FDIC to eventually pay out money to bank customers who lost money. Regardless of whether you think that I may be "nuts" or a "fatalist", please make sure you protect your cash reserves anyway possible. Please visit www.bankimplode.com as well as www.mortgageimplode.com for the some of the most current updates on the status of the financial markets and the solvency of various banks.

The Credit Crisis is much more severe than most people realize. The financial meltdowns may be more severe than even the Great Depression. Protect your money now!!!

Will the U.S. Treasury "guarantee" the $5 to $7 Trillion dollars of mortgage loans held by both Fannie and Freddie? These quasi-private secondary markets control anywhere between 50% to 70% of the existing residential mortgages in the U.S. at present. 

As the number of non-performing mortgage loans escalate, the number of foreclosures escalate. Currently, the U.S. Treasury ONLY guarantees a $2.25 BILLION piece for both Fannie and Freddie. This is less than 1/10th of 1% of the total oustanding mortgage guarantees. 

These mortgage investments were supposedly "backed by the full faith and credit of the U.S. goverment" with an "implied" guarantee. However, the government only truly explicitly guarantees less than 1/10th of 1% for both Fannie Mae and Freddie Mac. Stock investors may be hurt drastically by a government bailout. This is getting serious as the Credit Crisis continues to cause financial markets to unwind even more at an exponential rate.

Fannie Mae & Freddie Mac, the two largest secondary market investors of mortgage loans in the U.S., may now be close to insolvency according to several sources. As both Fannie & Freddie currently own anywhere between 50% and 70% of the mortgage loans nationwide, this may be a serious blow to the housing market and world economy. 

Initially, Fannie and Freddie were set up as government entities many years ago. Over 30 years ago, they were both privatized with an "implied backing" by the U.S. government to cover any of their potential losses. Today, options presented to potentially change ownership of these secondary market investors include transferring the ownership to the U.S. Treasury or to the privately held (and misnamed) "Federal" Reserve. 

Indy Mac Mortgage, the Pasadena based lender, officially shut down their mortgage lending division earlier this week. IndyMac was one of the most flexible, creative, conforming and jumbo lenders in the U.S. for many years.

IndyMac was originally created as a REIT (Real Estate Investment Trust). One of IndyMac's original founders was Angelo Mozilo (the former CEO of Countrywide). IndyMac provided many of the jumbo loan products (both owner and non-owner occupied) in California and elsewhere. The closing of IndyMac will definitely have a negative impact on homeowners in California.

R.I.P. (Rest in Peace) IndyMac. You were one of the best mortgage lenders over the past few decades.

The "Federal" Reserve is about as "federal" as Federal Express. The Federal Reserve is a private institution run by domestic and international banking monopolies. These people control our daily lives, and yet 99% of Americans believe that the Federal Reserve is a government entity.

Please watch videos #1 and #2 in our "Videos" section here on the website for more information. There are many theories (true or not) in regard to the "Federal" Reserve's influence in past credit and economic crises including the Bank Panic of 1907 (coincidentially 100 years prior to the current Credit Crisis of 2007), the Great Depression, the Savings and Loan Bust (6,000 S & L's wiped out partly due to the "Federal" Reserve increasing the Prime Rate to as high as 21.5% in 1981), and other periods of time.

A "credit crisis" eventually causes the U.S. government to borrow more debt from the privately controlled "Federal" Reserve. In addition, many financial institutions are bankrupted which further consolidates the banking system into the hands of a few. These few banking conglomerants usually have an ownership interest in the "Federal" Reserve. 

Los Angeles area foreclosures increased 400% between the 1st and 2nd quarter of this year. It is mind boggling that foreclosures could increase that significantly in just a few months in the L.A. region. The total dollar amount of forelosured Los Angeles area loans in the 2nd quarter alone was over $5 Billion.

What I am hearing over and over from my various bank sources is that the true number of non-performing mortgage loans in Los Angeles and the rest of California is much larger than the reported foreclosure numbers. Many lenders are not recording their Notice of Defaults in a timely manner to officially start the foreclosure process as many banks are already overwhelmed with the 2,000+ new foreclosures PER DAY in California. In addition, lenders are concerned about filing more foreclosures as they may be driving down the home asset values (their collateral for the bank loans) even more. 

The more depressed home values become in California now and down the road (35% median drop in prices within the past year), then the increased likelihood that other homeowners may walk away from their homes due to the negative equity. This becomes what is known as a "vicous downward cycle" or a "negative feedback loop".

According to the FDIC, $45.4 Billion of outstanding U.S. construction loans were delinquent in the 1st quarter of this year. The total amount of open construction loans nationally was almost $632 Billion. The 2nd quarter just ended on June 30th so the latest quarterly construction numbers will be released soon. Many analysts are predicting a significant percentage and dollar amount increase for the 2nd quarter.

A recent study concluded that possibly 1 in 3 U.S. Banks currently have construction loan portfolios that far exceed their total risk-based capital. This study may show us that many small, mid-sized, and large national banks may be on the verge of insolvency if their contruction and real estate loan portfolios continue to become non-performing loans for them. Let's see if the soon to be released 2nd quarter numbers show us how difficult it may be for many of our banks to continue to keep their doors open for business.

California has experienced much larger percentage and dollar amount losses over the past year or two than any other state. The four main states that are being hit the hardest with price reductions are California, Nevada, Arizona, and Florida. However, the median priced home in California has been much higher than these three other "bubble" states as well as the rest of the nation.

According to data released by the California Association of Realtors (CAR) and Dataquick, listed below are the median percentage and dollar amount losses for various California counties between May '07 and May '08 (not for the faint of heart):

County/Region            % Loss        Dollar Amount Loss

Santa Barbara Co.     - 55.40%            - $496,861
Monterey Co.             - 55.22%            - $441,500
Sacramento               - 40.87%            - $353,470
Riverside/San Bern  - 37.94%            - $157,510
Los Angeles               - 31.49%            - $194,070
Orange Co.                - 29.89%            - $223,370
San Diego                  - 28.24%            - $175,770

** Statewide, California averaged a 35.61% median price drop in just that same one year time period (May '07 - May '08), and an average dollar amount loss per home of $212,800. Please note that most of these value losses only really happened between August '07 (the official start of the Credit Crisis) and May '08 (a 9 month time period).

The median price of an existing single family residence in California fell 35.3% within a one year time period (May '07 through May '08), according to the California Association of Realtors (CAR). 

In May '07, the median priced existing home was $594,530. In May '08, the median price fell to $384,840. Most of these price losses happened between August '07 (the official start of the Credit Crisis) and May '08 (a 9 month time period). 

The monthly losses have been accelerating in recent months as well. Between April '08 and May '08, the median price dropped the largest amount (4.7%) in a one month time period.