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I don't often agree with John Carney. I believe that the community reinvestment act had less to do with the housing bubble than the repeal of Glass-Steagall, for example. A few subprime borrowers were nothing compared to banks being able to write swaps "insurance" on bad loans, then hide them with the blessing of Basel 2 off balance.

But Carney has hit the nail on the head in a recent article published on the CNBC webpage. Carney is warning us of the perpetual requirement that Basel 3 plans to impose upon the US taxpayer. I have tried to explain the article on my blog, but I wanted to explore it for the benefit of Seeking Alpha as well.

Carney would likely say that we never needed government loan guarantees for the GSEs. He would likely say that we don't ever need the GSEs. I personally think that the government should hold the choice about the matter. In other words, the government should determine when to allow a loan guarantee and when not to. There are times when these loan guarantees are needed. But to prevent against moral hazard, the government has to have the power to at least threaten to pull the guarantees.

However, I am in agreement with Carney that Basel 3 wants to bake in the loan guarantees and make them permanent. The way that they would do this would be to allow the big TBTF banks to buy massive amounts of GSE securities, and place them as part of the mandatory tier 2 capital. Once the banks were in this position, congress and the taxpayer would no longer have the choice to overturn the guarantees. Once the mortgage bonds were a part of tier two capital, any effort to overturn the guarantees would result in an immediate bank crisis.

It is my view that these shenanigans would result in more ponzi easy money loans, as the government guarantee would erase any fear of making a bad loan. And worse yet, this exposes Basel 3 and the central bankers as the threat to sovereignty. I have been screaming about this attack on national sovereignty by a conspiracy of international bankers for months and even years now. Few listen. If there was any doubt in anyone's mind that the conspiracy of the new economic order was real, they should never have those doubts ever again!

So this brings us to the Tea Party. The Tea Party was formed in Chicago and St Louis on February 22, 2010 in tandem with the February 18 rant by Rick Santelli on CNBC. Santelli ranted, as most of you know, against the borrowers and made it clear that he believed they were losers. The Tea Party picked up on that and sought to continue the "return to values" of responsible borrowing and responsible payback of loans. I have argued that the international bankers both devised and carried out the ponzi housing bubble and crash.

But one wonders if the Tea Party has been duped. We know that the Tea Party supported the banks, rather than the borrowers. The leadership of the movement wanted no regulation for the banks. Rather, the Tea Party blamed government socialism. But with the proof that I have laid out here, clearly, the banks are wanting to be in charge. While the Tea Party divides mainstreet, the bankers laugh and proceed with their plans to create foolproof ways to control sovereign nations through Basel 3.

The Tea Party is playing into the hands of these international bankers. They are, unless something changes,supporting Taxation without Representation, which is at the root of this Basel 3 push. The Tea Party wants to cut mainstreet spending which plays into the hands of the IMF and the international bankers. And one wonders if they realize that taxpayers will be on the hook for bailouts that they cannot ever reject, as Basel 3 intends to make the international financial system, as a whole, too big to ever fail.

Disclosure: no positions

Source: Does the Tea Party Understand the Attack by Basel 3 Against Taxpayer Sovereignty?