Bad times are big times for bank heists. How do we fix the economy?

By | January 31, 2009

Times are tough – this we already know.

Millions of people are out of work, and millions more are inching dangerously close to the edge of the cliff as they juggle dwindling finances and mounting debt.

So some figure, why not rob a bank?

FBI officials say they’ve noticed an alarming rise in the number of local bank robberies – some committed by thieves who just want to pay their bills.

Since the start of the year, 29 banks have been robbed in eastern Pennsylvania and three counties in New Jersey, a 30 percent increase over last year, the FBI said. Twelve banks have been held up in Philadelphia alone.

Some of the suspects appear to be tried-and-true street thugs and drug addicts who flash a gun or a threatening note to get a quick score.

Others, though, have clean backgrounds and motives that might resonate with average folks.

2nd robber with gun at Third Federal“For the past couple of years, most of the note-job bandits were pathetic drug addicts. Now, we’re just seeing guys who lost their jobs and need to pay their bills,” said Special Agent Bastian Freund, a bank robbery coordinator for the FBI’s Philadelphia Division.

Freund said three ’09 bank robbery suspects who have been arrested by FBI agents confessed to pulling the heists because they “couldn’t find work and had families to support. That doesn’t make it right, but it’s a different type of person than we’re used to seeing.”

William Glass has been charged by Philadelphia Police with using a threatening note to rob a Philadelphia Federal Credit Union, on 13th Street near Montgomery Avenue, in North Philadelphia, on Jan. 2.

Freund said that Glass told investigators he just wanted to pay his gas bill.

Similar trends are echoing across the country. …

via Bad times are big times for bank heists | Philadelphia Daily News | 01/30/2009.

I don’t really understand the economy or how to generate jobs.

Here is a simple explanation of the housing market problem:

For people who don’t understand what is going on, here is the story in a nutshell. Decades ago, when you wanted to buy a house you went to local bank and applied for a mortgage. If the mortgage was less than three times your annual income and you had a good credit history, the bank would loan you the money and you would pay them interest and some principal every month for 30 years. Then Wall St. got a bright idea: buy up all the mortgages from the banks, collect a few thousand into a pool called a CDO (Collateralized Debt Obligation) and sell shares in it. The owner of each share would get a pro-rata share of the incoming monthly mortgage payments, analogous to what a bond owner gets.

What happened? It sounded like a great idea and soon all mortgages were sold and repackaged into shares. It didn’t take long before the banks realized that they could issue mortgages of five, six, even eight times the buyer’s annual income or sell them to people with terrible credit histories. After all, the shaky mortgages would soon be somebody else’s headache. That’s what happened. Lehman, Merrill, and others bought billions of dollars of mortgages that the homeowners had no hope of ever repaying on schedule and nobody wanted to buy shares in these worthless CDOs, so the brokers got stuck holding the bag with billions in worthless loans. – ask

That’s just a small part of the story, of course. How do we fix things starting from where we are now?

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