Thursday, December 29, 2011
The Home Equity Theft Reporter Cases & Articles: Utah Federal Court Rulings On Unqualified BofA Foreclosure Trustee In Conflict
Wednesday, December 28, 2011
Protesters Worldwide Demand An End to Crony Capitalism
People All Over the World Are Rising Up Against Crony Capitalism
The Boston Tea Party in 1773 was largely a protest against crony capitalism.
Remember, it’s not just Western governments which fall prey to crony capitalism. (For example, Egypt’s Mubarak family raked in between U.S. $40 and $70 billion dollars through cronyism.) Indeed, people all over the world are starting to demand an end to crony corruption.
As Reuters global editor at large Chrystia Freeland noted yesterday, the global protests are really protests against crony capitalism:
Across the globe, this was a year when people took to the streets, often overthrowing their leaders in the process. That was true in the Arab world, in Russia, in India, in Western Europe, in the United States and even in China.
The unifying complaint is crony capitalism. That’s a broad term, to be sure, and its bloody Libyan manifestation bears little resemblance to complaints about the Troubled Asset Relief Programin the United States or allegations of corrupt auctions for telecommunications licenses in India. But the notion that the rules of the economic game are rigged to benefit the elites at the expense of the middle class has had remarkable resonance this year around the world and across the political spectrum. Could the failure of the experts to anticipate this anger be connected to the fact that the analysts are usually part of the 1 percent, or at least the 10 percent, at the top?
As for crony capitalism, this slogan of the street is both a challenge for the state and an opportunity. For some regimes, of course, crony capitalism, with a side order of repression, is the only dish on the menu. For them, the trends of 2011 do not bode well.
But most of today’s troubled market democracies don’t need a revolution to sweep away their cronies. What they do need is a new version of capitalism, designed for the 21st century. That is what the world’s protesters, in their different ways, are all asking for. Here’s hoping that 2012 provides some politicians with some answers.
Note: Don’t get confused by the word “capitalism” in the phrase “crony capitalism”. Crony capitalism is not at all free market capitalism. Instead, it is actually the same thing as fascism, communist style socialism, kleptocracy, oligarchy or banana republic style corruption.
Bill Black: What if the SEC investigated Banks the way it is investigating Mutual Funds? « naked capitalism
The Wall Street Journal ran a story yesterday (12/27/11) entitled “SEC Ups Its Game to Identify Rogue Firms.” “Rogue” is an interesting word with a range of definitions. When it is used as an adjective its meaning is: “a playfully mischievous person; scamp.” The trivialization of the most destructive elite frauds is one of the most common forms of what criminologists call “neutralization” of the moral content of wrong doing. Neutralization increases crime.The actual story makes it clear that the criminals that the SEC was identifying were not “rogues.” They were the CEOs of seemingly legitimate firms. The SEC is identifying “accounting control frauds” – the frauds that cause greater financial losses than all other forms of property crime combined. The SEC is not identifying a few rotten apples, but roughly 100 hedge funds likely to have engaged in accounting fraud. The WSJ describes the SEC’s identification system:read the full article by following the link below.
Tuesday, December 27, 2011
The Home Equity Theft Reporter Cases & Articles: Utah AG Files Criminal Theft, Racketeering, Communications Fraud Charges Against Owner Of Loan Modification Ripoff Shop
Interesting story about the continued bank friendly government programs that are really just ways to help the bank image and for politicians to look as though they are doing something. The reality is that the banks and servicers are screwing homeowners and over charging while not applying funds to payments to make people fall further behind. THE BANKS STOP APPLYING FUND TO MORTGAGE IF YOU FALL BEHIND SO THEY CAN SEND YOU NOTICES SAYING YOU ARE FARTHER BEHIND THAN YOU ARE AS THEY HOLD FUNDS IN SUSPENSE EVEN IF IT IS A FULL MONTHS PAYMENT. THEN THEY WILL NOT ACCEPT ANY FUNDS AT THEIR BANKS AND EXPECT IT TO BE SENT OVER NIGHT TO THEIR SERVICE CENTER. CASH IS NOT ACCEPTED AT BANK LOCATIONS.
IS THAT HOW TO HELP HOMEOWNERS OR TO IMPROVE THE SYSTEM. NO IT IS JUST A SCAM TO MAKE MORE MONEY FOR BANKS AND FOR POLITICIANS TO SIT ON THEIR ASS DOING NOTHING.
Given that the
Office of Bank BoosterismOffice of the Comptroller of the Currency is the clear first among the highly competitive ranks of bank-friendly regulators, the fact that the OCC launched a program for borrowers to obtain restitution for financial harm suffered due to foreclosures seemed more than a bit sus.
Gretchen Morgenson does an admirable job of exposing the multiple shortcomings of this OCC program. She quotes Alys Cohen of the National Consumer Law Center, who nails it: “Not only will it not help people, it could easily harm them.”
This is yet another Obama Administration “pretend we are helping ordinary citizens when we are in fact helping the banks” scheme. The most damning tidbit comes late in the article, that borrowers may (I’d assume will) be asked to sign releases that are far broader than the matters under examination. In other words, to get whatever relief the OCC provides, borrowers may unwittingly give up rights worth far more:
For example, participants in line to get remuneration may be asked to give up their rights to defend themselves if they get into financial trouble again.Morgenson’s account depicts several shortcomings. The banks hire “independent” auditors of their practices, and Morgenson identifies two that look compromised (including one flagged by Michael Olenick on this site). And why, pray tell, isn’t the OCC conducting these reviews? Similarly, the review covers only 2009 and 2010, when many subprime borrowers hit the wall earlier. It’s pretty clear that this process, like the bogus Foreclosure Task Force (which reviewed 2800 loan files and did no validation of the data in those files) is designed to give servicers a clean bill of health, with only some problems that will be deemed to be minor and on their way to being remedied.
“This process is not meant to fix the original lending practices, so people need to hang on to their right to challenge the original loan later,” she [Cohen] said.
What is more than a little frustrating is that this regulatory-initiative-as-coverup is SO predictable, yet so few journalists treat these programs with the skepticism and derision they deserve. We can only hope that one of the perverse benefits of the protracted housing recession will be that media and public complacency erodes.
Wednesday, December 14, 2011
Thursday, December 8, 2011
MORE ON FRAUDULENT PRACTICES OF NEW CENTURY: MERS ASSIGNMENTS CANNOT BE EFFECTIVE AS NEW CENTURY REPUDIATED ITS CONTRACT WITH MERS AS PART OF ITS BANKRUPTCY
You can see that quite possibly we are seeing the uncovering of evidence that may get the country to open its eyes to how extensive the fraud and abuse have been by the banks. It would be nice to have banks held accountable after screwing the entire country for years and for screwing so may hard working Americans out of their retirement. They massive fraud and abuse has been seen as acceptable by the government crooks and the banksters who work in tandem to fleece the hard working people of our country. All of the propaganda efforts by the government to pretend they are doing something is absurd and has been more wasted tax dollars taken by the banks to line their own pockets.
You can see the arrogance factor still in play as Chase CEO brags of how deep their pockets are to fight to allow the banks to continue to commit fraud. This has been the trump card in the past for the TBTF banks. They have always had the deepest pockets and could intimidate anyone in order to keep them from filing fraud charges against them.
The world is finally starting to wake up to the massive, pervasive, nationwide fraud which has been engaged in with impunity by MERS, Deutsche Bank, Wells Fargo, Bank of America, US Bank, and their servicers and “trustees” in their never-ending quest to reap massive profits at the expense of homeowners and damn the consequences. It is no longer homeowners who are seeking relief. Attorneys General are also taking action: the Attorney General of Massachusetts has sued several of the “banksters” for fraudulent mortgage practices; the Attorney General of Delaware has sued MERS for fraudulent practices both in foreclosure and its attempt to avoid recording fees; and yesterday, the Attorneys General of California and Nevada formed a joint task force to pursue foreclosure fraud. It is no longer a situation of simply foreclosure defense: the new wave is grounded in affirmative claims against the banks and their agents for their outright fraudulent conduct all over the United States.
The good news is that the CEO of one of them, that being JPMorgan Chase CEO Jamie Dimon, has publicly announced that JPM has plenty of reserves to defend the lawsuits against it. On behalf of the Attorneys General and private litigants who are going after JPM for its nationalized pattern of fraudulent conduct, we thank you, Jamie, for affirming that JPM is a still a collectible entity.
MORE ON FRAUDULENT PRACTICES OF NEW CENTURY: MERS ASSIGNMENTS CANNOT BE EFFECTIVE AS NEW CENTURY REPUDIATED ITS CONTRACT WITH MERS AS PART OF ITS BANKRUPTCY
Quelle Surprise! Banks Lied About Bailout Funds and Got $13 Billion in Profit from Them « naked capitalism
Sunday, December 4, 2011
People are missing the point of all of the protests and all of the complaints by home owners who have been done wrong by the banks. It is funny that people have become so righteous and are willing to actually let banks work as an enterprise that is criminal from top to bottom. Most people seem to think they are not affected by the bank issues if they are not missing a payment on their home. There is so much more at stake than people realize and the right to proper ownership may be on the verge of disappearing.
From the Wall Street Journal:
GMAC Mortgage, the mortgage lender of Ally Financial Inc., is exiting the vast majority of its lending in Massachusetts a day after the state sued it over its foreclosure practices.Get a load of the sanctimoniousness. Since when do the interests of investors trump the rule of law? In fact, the logic is backwards, since investors are not well protected in a regime where laws are not respected. Does anyone want to invest in, say, Somalia?
The nation’s fifth-largest mortgage originator said it “has taken this action because recent developments have led mortgage lending in Massachusetts to no longer be viable,” ratcheting up the high-stakes mortgage fight there….
GMAC Mortgage will stop purchasing loans from correspondent lenders and wholesale brokers, which makes up the majority of the company’s business. The lender said it was “disappointed” but that “it has an obligation to manage risks and deploy capital in an appropriate manner and in a way that protects the investment of the U.S. taxpayer.”
Reader MBS Guy notes by e-mail:
Ally will stop lending in the state. Now litigation costs are too high in Massachusetts, according to Ally Bank, which is 74% owned by the US Treasury.And get a load of this part by an industry mouthpiece:
This is a bit funny, since the lawsuit involves issues with loans which were originated and, generally foreclosed, in the past. Ally has said that they have fixed all of their robo-signing issues, so it shouldn’t be a problem for newly originated loans.
Given its ownership structure, is this a pissy message to Massachusetts from Ally itself, or from its majority shareholder for tanking the AG Task Force?
“It also sends a signal to Massachusetts and other states that if you make it difficult for lenders to act they will take their business elsewhere,” Mr. [Guy] Cecala of Inside Mortgage Finance said of GMAC’s decision. “There is no law you have to operate in all 50 states.”
Friday, December 2, 2011
Here is the original article from Naked Capitalism and written by Yves Smith: It is a great read as is the chatter to follow from other readers.
Nevada notary Tracy Lawrence, who was due to be sentenced today to up to a year in jail for a single count of misdemeanor fraud, went missing from her sentencing hearing today and was found dead. Per the Associated Press (hat tip reader Scott):
Las Vegas police say it could be weeks before investigators know how 43-year-old Tracy Lawrence died.Her body was found about 11:30 a.m. Monday at her Las Vegas apartment.
Police Sgt. Matt Sanford says there’s no apparent sign of foul play, and coroner toxicology tests could take up to eight weeks.
Lawrence would have faced up to a year in jail and a $2,000 fine earlier Monday for her guilty plea Nov. 17 to one criminal charge of notarizing the signature of a person not in her presence.
KSNV-TV reports ( http://bit.ly/vWSDtv) that Lawrence admitted notarizing tens of thousands of fraudulent documents as part of a wider foreclosure fraud scheme.
Reader Peter W fills in the blank (pun intended) that Lawrence’s document chicanery involved the staff of Lender Processing Services. The version of the story posted at The Fly on the Wall has as its final sentence:
Lawrence had earlier admitted to notarizing “tens of thousands of fraudulent documents” as part of a wider foreclosure fraud scheme involving employees of Lender Processing Services (LPS).As sad as this is for Lawrence’s friend and family, the more the foot soliders of foreclosure abuses start to face real costs, meaning jail time, the harder it will become to perpetrate these sorts of frauds. That is the way the law is supposed to work, after all.
Update: Holy moley, the initial press reports omitted the key fact: it was Lawrence who turned Nevada Attorney General Catherine Cortez Masto on to two mid level LPS employees who face up to 30 years in jail each if found guilty. From MSNBC:
Lawrence came forward earlier this month and blew the whistle on the operation, in which title officers Gary Trafford, 49, of Irvine, Calif., and Geraldine Sheppard, 62, of Santa Ana, Calif. — who worked for a Florida processing company used by most major banks to process repossessions — allegedly forged signatures on tens of thousands of default notices from 2005 to 2008.Our post on this case, which includes the indictment, is here.
Trafford and Sheppard were charged two weeks ago with 606 counts of offering false instruments for recording, false certification on certain instruments and notarization of the signature of a person not in the presence of a notary public. You can read a .pdf version of their indictment here.
Needless to say, this puts a very different complexion on things..
Thursday, November 24, 2011
There is no possible way to say it wasn't an act of fraud without some ridiculous story by the bank. Where did the documentation even come from to foreclose on a property with no mortgage and an owner has no business with JP Morgan? Read the full story here at Naked Capitalism
Federal Judge Refuses to Dismiss Bank Break-In Case Against JP Morgan, Lender Processing Services
Nevertheless, her attorney, Matt Weidner, is appealing this order. Why? Get this: JP Morgan had NO legal relationship to Jacobini at the time of the break ins. It has filed a robo-signed assignment of mortgage that post-dates the break-in. The practical implication is that random financial institutions are being allowed to barge into people’s properties, and the only recourse they have is a slow, costly adjudication.
Let’s hope that Jacobini succeeds in making this sort of abuse costly for JP Morgan. Hitting banks in the wallet may be the only way to get their attention.
German Bund Action Goes Badly; Bank of America CDS Spread Hit New High; EuroSovereign and US Bank Spreads Widen More. Will the Germans Finally Break Glass?
The Financial Times coverage on the failure of the Bund auction is suitably grim:
Vupoint Magic Wand Scanner Flip Pal Portable Scanner NeatDesk and Neatworks Try Neat!
The worst-received bond sale by Germany since the launch of the euro fuelled market fears that the continent’s debt crisis was now affecting Berlin…
The bond auction only managed to raise two-thirds of the amount targeted..
The euro, which has held up relatively well despite the turmoil in the bond markets, suffered one of its biggest one-day falls against the dollar this year, while eurozone government debt was sold off across the board…
But as fear spread across trading floors, Germany started to trade like a risk asset with Bund yields, which have an inverse relationship with prices, rising roughly in line with French, Italian, Spanish and Belgian yields. However yields on short-term German debt went into negative territory, meaning that investors effectively are paying to hold the bills because they see Berlin as a safe haven..
A senior trader at a US bank said: “We are now seeing funds and clients wanting to get out of anything that is denominated in euros and that includes Bunds because they don’t know what will happen to monetary union. It is not helped by the year-end with most banks not prepared to buy anything.”..
The so-called failure also comes against a trend of poor auctions. It was the ninth auction that failed to meet its target this year, according to the German debt agency. However, demand was significantly weaker this time round.
Wednesday, November 23, 2011
Read the Full Article here at Naked Capitalism The Fed Stress Tests While Europe Starts to Burn
From Naked Capitalism
Our headline at odds with the media reports on the newest confidence-bolstering ploy by the Federal Reserve, that of new, improved stress tests for the six banks at the apex of the US financial services industry looting operation: Bank of America, Citi, Goldman, J.P. Morgan, Morgan Stanley and Wells.
There’s a noteworthy gap between the scenarios employed in the 1.0 version, which took place in early 2009, when the banks were told to get more capital or else, and the ones about to be implemented. The current stress scenario is a Eurozone crisis, with unemployment to reach 13% in the US (versus a 2009 stress test peak in the “adverse scenario” of just over 10%), a European GDP contraction of 6.9%, and (supposedly) “market price movements seen during the second half of 2008.”
Per the Financial Times, the benchmark will be whether core “tier one common” equity stays higher than 5 per cent in the face of these projected conditions. Banks that fall short (and everyone sees Bank of America as the likely problem child) may be forced to raise equity. Firms that plan to issue dividends in excess of 30% of net income can expect further scrutiny by the central bank. The Wall Street Journal reports that the subjects are grousing about how badly they are being treated, including that staffers will have to work over the holidays (banks are to submit information by January 9, with the results due in March). Not surprisingly, per the Journal, this is yet another confidence ploy:
The switch to public disclosure [a change from a 2010 version of the exams] is the Fed’s way of demonstrating that the U.S. banking system can withstand any turmoil, said analyst Gerard Cassidy of RBC Capital Markets. The hope is “investors will say, ‘Wow the U.S. banking systems can handle these shocks very well,’” Mr. Cassidy said.
This all sounds well and good, right? We’ll get to the adequacy of these tests in due course, but the reporting conveniently ignores the fact that the Fed has gotten religion appallingly late in the game.
Sunday, November 20, 2011
Taken from Washington's Blog by way of Naked Capitalism
“If Only They Enforced Bank Regulations Like They Do [Zuccotti] Park Rules, We Wouldn’t Be In This Mess”
Zuccotti] Park Rules, We Wouldn’t Be In This Mess”" title="“If Only They Enforced Bank Regulations Like They Do [Zuccotti] Park Rules, We Wouldn’t Be In This Mess”">
The following tweet captures the fact that the laws are only being enforced in favor of the 1% … and against the 99%:
If only they enforced bank regulations like they do [Zuccotti] park rules, we wouldn’t be in this mess.
According to the Supreme Court, money is now speech and corporations are now people. But when real people without money assemble to express their dissatisfaction with the political consequences of this, they’re treated as public nuisances and evicted.
As Salon notes:
If you’re an ordinary citizen, and you get caught on video dousing people with noxious gas like Bologna did, you get summarily locked up. But when you’re an NYPD commanding officer…like Bologna was at the time of his attack, you get essentially a free pass.
No wonder one of the central demands of Occupy Wall Street is to enforce the laws for the 99%.“If Only They Enforced Bank Regulations Like They Do Park Rules, We Wouldn’t Be In This Mess”
Friday, November 18, 2011
Masto is showing true courage as a leader by taking on the establishment of old money and crony capitalism. We can only hope that other AGs will find the fortitude to stand up and do what is right rather act so cheaply.
Masto has been by far the most aggressive AG on the civil side, suing Bank of America for multiple violations of a consent order on mortgage servicing, and even making the dreaded nuclear chain of title claim on foreclosures. It’s no surprise she’s taking the lead on criminal matters. Given that her office basically has no native resources or sector expertise in mortgage backed securities, it does make me wonder just what every other AG in the country and DOJ official is doing now that she’s proved bringing charges for fraud is not in fact impossible.READ the rest here
At this point, Masto has gone further than any other official in terms of restoring some sort of social contract. And that’s saying something. Leadership can come from anywhere, especially when the corruption seems to be everywhere. And with California AG Kamala Harris putting immense pressure on Fannie/Freddie on foreclosures, it suggests the tide is turning on this issue somewhat.
Our essential economic problem is that our economy allocates resources through a mediating system of banks that are broken and/or corrupt. If you look at a chart of the recession, and then the recovery, you’ll notice that business investment perked up, but residential investment did not. The Fed lowered rates, bought Treasury bonds, and bought mortgage backed securities to lower rates for homeowners. But it’s not really working, because the monetary channel is corrupt. This indictment gets to that problem, it alleges tens of thousands of forged documents (or as a friend told me sarcastically, an afternoon’s worth of work for LPS). These documents represent foreclosures, economic loss, and clouded title. The indictments handed down, and the ones to come, show that corrupting our property laws and the basis of our economy is a crime.
Wednesday, November 9, 2011
There seems to be a prevailing denial in the banking and mortgage industry that refuses to see the enormous problems weighing down the housing industry. For whatever reasons, the mortgage and banking complex is continually compelled to "resolve their issues" internally and stone wall any efforts to obtain accountability from the outside world. This closed group mentality is what has lead to the killing of the American Golden Goose that has been the housing market. The rampant fraud and corruption within this trillion dollar cocoon has cost countless individuals and families their meal ticket to a comfortable future. Yves touches on several of the issues confronting the economy and the housing market in the following commentary while detailing many of the tendencies of the industry that have lead to this continual denial of reality.
Yves Smith article from Naked Capitalism after her attendance at the AmeriCatalyst Conference in Washington.
Wednesday, November 9, 2011
Denial in the Mortgage Industrial ComplexThis is Naked Capitalism fundraising week. Over 525 donors have already invested in our efforts to shed light on the dark and seamy corners of finance. Join us and participate via our Tip Jar or read about why we’re doing this fundraiser and other ways to donate, such as by check or another credit card portal, on our kickoff post and one discussing our current target.
I just came back from the AmeriCatalyst conference in Austin, which was a packed two days focused on the state of the housing and securitization market. The panels were very informative, and it was also good to see some of the people I’ve read or heard about, in particular the leading analyst, Laurie Goodman of Amherst Securities. She gave a talk that where she went through a very persuasive (and conservative) analysis that there are 8.3 to 10.3 million more foreclosures baked in given how underwater borrowers are. And she had some striking bits of information. One is if you take out the homes where no one has made a mortgage payment in a year or more, homeownership in the US is 61%. In addition, Judge Annette Rizzo discussed a successful program she had developed in Philadelphia to do remediation. The success rate on modifications that come out of her court is 85% after 18 months.
I had quite a few people come and commend me on my comments. I think the main reason was that the viewpoint presented on this blog, that there are deep seated problems resulting from chain of title issues, and that servicers have engaged in a lot of abuses, was sorely underrepresented. I don’t blame the organizer, Toni Moss, who has an exceptionally well thought out and prepped effort; I think this reflects the nature of who has expertise in this industry. The overwhelming majority of knowledgeable people will be insiders, and whether they can admit it to themselves or not, their first loyalty will be to their meal ticket. Put it another way: why would you have to go outside the industry to find someone (and a blogger to boot) to raise issues that come directly out of recent court decisions and the gridlock in foreclosure courts if you could find people with institutional credentials? (In fairness, there were other skeptics, such as Adam Levitin and Josh Rosner, but that was a minority viewpoint).
But I don’t mean to accuse the panelists or industry defenders of mendacity. Instead, it has much more to do with both loyalty to their industry, and a distressing lack of understanding of the legal issues involved. By happenstance, I’m reading a book by an award-winning academic psychologist, David Tuckett, Minding the Markets, and it includes a good summary on the state of the art on group processes. As W.R. Bion wrote,
I know of no experience that demonstrates more clearly that a basic assumption group experience is active [colloquially known as groupthink] that ‘the dread with which a questioning attitude is regarded’ and particularly towards the group itself.I’ve been in conference in the past where denial was a palpable subtext, in particular, the 2008 Milken conference, which took place the month after Bear Stearns collapsed. There was a whistling in the dark quality to it, but there was also aggressive enforcement of a “ne’er a bad word will be said” policy (see here and here for details).
By contrast, here the hope was to mix it up a bit, yet there was a lot of unanimity. For instance, the six members of one panel were asked where housing prices would be a year from now. One said they’d bottomed, one said they’d bottomed but would bump sideways for a very long time. The others projected very modest declines (with the usual caveat that real estate is local), typically 2%, with the maximum 5%. Given how far housing prices have fallen, it would not seem crazy to expect things not to deteriorate much further. But given the severity of the chain of title mess and the high odds of a European banking crisis, which would wind up impacting the US economy, I found it telling that no one was willing to hedge their views with a consideration of a downside scenario.
But the biggest undertone was the “borrowers are deadbeats” meme. In the first panel I was one, one of the other speakers went on about borrower fraud in the widely criticized HAMP program. I had trouble containing myself in my response. Each table in the audience had a keyboard that allowed comments and questions to be displayed (both to people at the table and the speakers (a clever way to direct the texting temptation into the conversation). In a later panel I was on, on litigation, there were a lot of “shoot the messenger” remarks (among other things, I was accused of being an anarchist, and it was also interesting to see how some of my remarks were either distorted or misunderstood. For instance, I made a general remark about the use of allonges (a preferred form of fabrication to solve the little problem of failure to conveyu the mortgage notes as required on time), and a written comment charged me with being wrong about Kemp v. Countrywide, when I had just mentioned that case for a different reason). It was pretty clear that the American Securitization Forum party line, that these were mere errors or sloppiness, is widely shared. Too few are willing to accept the point made by Levitin:
To raise the “it’s just paperwork” argument in the context of securitization, however, is unreal. Securitization is all about legal fictions and paperwork. Why on earth would anyone every bother with the complex legal structures of securitization (typically involving two shell entities) other than to take advantage of legal fictions?So it isn’t surprising that a lawyer who represents investors made an impassioned plea for servicers to wake up and smell the coffee, that he’d rather work with them and negotiate a deal, but he was too often left with no other option than to sue. And that means that this battle will continue to play out in the courtroom.
As I’ve noted in other venues, securitization is the legal apotheosis of form over substance, and the basis on which this is legally tolerated is the punctilious observance of formalities. Failure to do so can result in a securitization failing to be bankruptcy remote or to lose its off-balance sheet accounting status or lose its pass-thru tax status, any of which are disasterous. Securitization deals were so heavily lawyered precisely because the paperwork matters. They aren’t like a sale of a used sofa over Craigslist.
The “it’s just paperwork” argument quickly proves too much. Is the borrower’s signature on the loan “just paperwork”? How about a co-signor’s? If it’s just paperwork, why bother to have the borrower or co-signor sign, especially as it can create federal Equal Credit Opportunity Act issues when a spouse is involved.
READ the complete article here at Naked Capitalism
Wednesday, November 2, 2011
Hubris Watch: US Bank CEO Sniffs About Breaking Rules When His Bank Has Huge Trustee Liability « naked capitalism
Tuesday, November 1, 2011
Gretchen Morgenson is ringing alarm bells that a 50 state settlement on the foreclosure fraud issue is on deck, and is spelling out some of the details. There would be some principal write-downs, random cash payouts for those who were foreclosed, and money to buy off nonprofits in the states that work on housing issues (a classic Fannie/Freddie Dem friendly tactic Morgenson and Rosner exposed nicely in their book Reckless Endangerment). The settlement looks vague and stupid, and will probably be executed with the care and competence of HAMP. But let’s put that aside.
What makes these discussions so utterly absurd, so ridiculous, and farcical, is that robo-signing, an abuse the banks have admitted to and clam they’ve ceased, is still going on. The AP reported this in July; mortgage servicers in Nevada have stopped foreclosing because of a law explicitly criminalizing robo-signing. Yes, the banks are asking for a release of claims on acts, or perhaps crimes, that are ongoing. And these abuses are extensive: lying to investors about the quality of the mortgages; violating their own contracts by failing to convey mortgages properly to securitization trusts; charging fees that are impermissible under Federal law and the contracts; making a mess of property records and engaging in deceptive consumer practices through the use of MERS; and engaging in document forgeries and fabrications in foreclosures. All these people trying to give the banks “a settlement” are in fact immunizing banks against acts they are committing and will commit going forward. Only in the future, when a voter complains to his or her state AG, that official will have to explain to that voter that his/her rights have been given away.
The larger problem is that banks mistreat homeowners and abuse property rights, and this is going to continue and worsen until the housing market just dies. During the mortgage servicing process, homeowners complain of poor service, lost records, inconsistent treatment of modifications, and fraud. During the foreclosure process, it’s clear that banks have been falsifying documents and records to foreclose, which allows them to get around fraud in the original securitization process. Without a thorough investigation of the documentation issues at hand, an investigation this settlement precludes, there will be no way to bring back certainty to the mortgage market, ever. The rule of law matters when it comes to property rights. Allowing banks to just take property from homeowners will ultimately cause the death of homeownership. But you don’t believe me. Just look at the housing market.
original story from Naked Capitalism read the rest at the following link. Matt Stoller: Why a Foreclosure Fraud Settlement is a RIDICULOUS Idea
Saturday, October 29, 2011
The government has let the system get out of control by relying on the typical economic theories that live and breath inside of college textbooks but make no sense in reality. The market does not level itself through free market trading or free enterprise. The people who claim that is does are the ones that have the unfair advantage in an unregulated economy. The invisible hand notion is complete bull shit. The market itself will never find its equilibrium if left on its own. The role of government is to level the playing field so the market is constantly level for participants. The idea that government can let the free market offer opportunity to everyone is complete absurd. The fact that money does not spread and trickle down into the economy the way free market pimps say it does is an idea for the simpletons.
The fact that the average stock market trade is held for only 7 seconds and is driven by computer programs should open the eyes of most people. However, those in power love the Status Quo because they continually benefit from the hypnotized masses believing that we are in the Free market economy that will be 100% efficient and provide access to everyone.
In one sense, the assumption that there will eventually move towards equilibrium is typical of the kind of circular arguments of which economists are so fond. Balance is implied in the transactional structures. Balance sheets have to, well, balance; assets must match liabilities. Prices must reflect some sort of balance between supply and demand. That is what a price is. Debts must be repaid from income. And so on. In the artificial rules of finance, equilibrium is implicit. FROM Naked Capitalism
The insurance companies work in this environment where they are allowed to exploit people in order to make billions of dollars in profit and then declare bankruptcy if a natural disaster hits, or deny claims based on certain technical issues of a health care policy. So left unregulated you see oil companies and insurance companies making billions of dollars in profits per quarter. Now is this the free market finding it equalibrium or is it the free market finding its natural balance to be very top heavy?
Well if there is a reason for people to pay $4.00 a gallon for gasoline when oil companies are making record profits I would like to be informed of it. And is it the free market system that is in balance that allows health care companies to profit in the billions as well while paying out millions in bonuses and salaries while denying lifesaving coverage due to preexisting condition? Is it the system that is in natural balance that punishes people for losing their insurance by not allowing them coverage due to preexisting conditions rules that can now be enforced due to a lapse in coverage?
There is nothing wrong with profits but the government needs to monitor the system to ensure people are not being exploited by unfair advantages of the large corporations. Or that the system gives simple rules of exclusion to large companies because someone loses their job. There has to be a way for insurance companies to profit and still not have the lame excuse of preexisting conditions just because someone has a lapse in coverage for a few months or a year. It is with in the regulatory power to change the law that doesn't not allow for preexisting exclusions because someone has lost coverage for a short time or even a several months. Why should they be allowed to punish someone for losing their insurance that they had paid for many years, only to lose the benefits they need and then be offered less coverage? It is a shame and it is shameful for the politicians on capital hill to let it go on while they claim they are for the people.
Profit is one thing and profiteering is another. The system is not set up and run by those who benefit from the very lopsided natural unbalance of the markets and unfettered capitalism. The government has failed its people the past 20 plus years. The country is asleep and the media, especially the righteous talk radio bunch, total miss the point of the OWS protests. They "smart" people on radio are not as bright as they claim.
Thursday, October 27, 2011
Original Article can bee seen here at Foreclosure Defense Nationwide
The Appellate Division of the State of New Jersey has reversed a summary judgment which had been entered in favor of Aurora Loan Services, LLC. The opinion cited decisional law that a party must generally “own or control the underlying debt” in order to foreclose, and if the debt is evidenced by a negotiable instrument such as a promissory note, the determination whether a party owns or controls the underlying debt is governed by Article III of the UCC.
The Court found that Aurora was neither a holder of the note nor a person not in possession who is entitled to enforce, and that the Certification of Aurora’s “Vice President” did not state that she personally confirmed that the copies of the note, mortgage, and assignment were copies of originals in Aurora’s files.
More importantly, the Court found that the assignment, signed by a “Vice President” of MERS as nominee for Lehman Brothers, was ineffective first as there was no Certification by this VP or any other representatiive of MERS regarding the VP’s authority to execute the assignment or circumstances of the assignment. The problem with the assignment was further compounded by the fact that Lehman filed for Bankruptcy in 2008, which was before the date of what the Court termed the “purported assignment” in 2009, and the Court thus questioned whether Lehman’s designation of MERS as nominee remained in effect after Lehman filed BK absent ratification of that designation by the BK Trustee.
This same situation is present is many of our cases: the original lender (e.g. Lehman, WaMu, American Home Mortgage, Accredited Home Lenders, and others) files for BK, and the securitized trustee or servicer then purports to foreclose based on a post-BK filing assignment without any evidence that the assignment was permitted by the BK trustee. This opinion is what we believe to be the first which actually addresses this precise issue which relates directly to the threshold issues in any foreclosure of standing, real party in interest, and the “person entitled to enforce” issue under the UCC.
In Missouri, a probate Judge has dismissed a claim by HSBC Bank USA, N.A. as the claimed trustee of a series of Nomura ”Asset-Backed Certificates”, finding that HSBC is not a “person” under either of the Missouri statutes which permit a “person” to make a claim in a probate proceeding. The Motion which precipitated the dismissal characterized HSBC as Trustee for the certificates as “nothing more than a stack of paper”. Apparently the Court agreed, and found that HSBC had no standing to sue.
This decision is important as it relates directly to who can make a claim relating to a mortgage and note. If a particular state statute provides only that a “person” may institute a foreclosure, and the trustee of a series of MBS does not quality as a “person”, then there should be no standing for that trustee to foreclose. Obviously, the individual state statute must be consulted, but this ruling provides a new avenue of attack on securitized “trustees” seeking to make claims.
Tuesday, October 25, 2011
This is excerpt from an article at Think Progress. It relates to the OWS protests and the massive corruption going on in Washington DC. It covers a few of the ways the Large Banks and the Wall Street Elite have taken over the government. We have seen the current Obama Administration continue to hire former Wall Street Execs with ties to Goldman Sachs and JP Morgan along with the appointment of Chairman of GE Jeffrey Immelt. We have seen the increase in Wall Street and money influence on the government and the White House as the economy has gotten worse. The Congress and Obama have rewarded those with failed companies and those who had a hand in setting up the system that was bound to fail and that would allow bankers to pillage the tax payer for billions of dollars while the banksters commit massive acts of fraud. The wait for justice has been too long, we have seen our economy and years of hard work and effort wiped out by government failures and corruption.
As ThinkProgress has previously noted, the 99 Percent Movement has been set off thanks to long-standing economic inequities and and a recession caused primarily by Wall Street’s misdeeds. But Wall Street did not engage in reckless financial behavior — which plunged 64 million people worldwide into extreme poverty — in a vacuum. In order to engage in these practices that brought the world’s economy to its knees, Wall Street had to make sure that the federal government based in Washington, DC would both de-regulate the financial industry (and provide lax oversight) and that Congress and the Federal Reserve would bail out banks with few strings attached if they were in danger of failing. The way the financial industry and big banks won this kid glove treatment from the federal government is by occupying Washington — flooding it with campaign contributions, lobbyists, and its own staffers and executives to occupy key positions of power.
ThinkProgress has assembled a rundown of three ways Wall Street has occupied Washington: 1. Wall Street Occupies Washington With Massive Campaign Contributions: On Nov. 12, 1999 President Bill Clinton signed into law the repeal of the Glass-Steagall Act of 1933, a Depression-era law that created a firewall between commercial and investment banking. Repealing this law was one of the top legislative goals of the financial industry. In the 1998 election cycle, commercial banks spent $18 million on congressional campaign contributions, with 65 percent going to Republicans and 35 percent going to Democrats. Securities and investment firms donated over $40 million. The mega-bank Citibank spent $1,954,191 during that cycle, and it was soon able to merge with Travelers Group as a result of the repeal of banking regulations.
Between 2008 and 2010, when new financial regulations were being written following the financial crisis, the finance, insurance, and real estate industries spent $317 million in federal campaign contributions, with $73 million of that coming from Political Action Committees (PACs). The hold of campaign contributions is starkly bipartisan. As Sen. Jim Webb (D-VA) explained to Real Clear Politics in an interview last year, he couldn’t get a vote on a windfall profits tax on bonuses at bailed out banks due to campaign contributors. “I couldn’t even get a vote,” Webb explained. “And it wasn’t because of the Republicans. I mean they obviously weren’t going to vote for it. But I got so much froth from Democrats saying that any vote like that was going to screw up fundraising.” 2. Wall Street Occupies Washington With Its Lobbyists: One way to control what Washington lawmakers do is to give them access to exclusive funding streams that allow them to finance their campaigns. But yet another is to control the stream of information. From the deregulatory period of 1998 to 2009, the financial sector spent $3.3 billion on lobbyists. In 2007, the financial industry employed 2,996 separate lobbyists, five for every member of Congress.
READ THE REST HEREDuring the debate over financial reform last year, the industry flooded the nation’s capital with its own lobbyists. On just one issue — regulating derivatives — financial industry lobbyists outnumbered consumer group lobbyists and other pro-reform advocates by 11 to 1. In fact, by 2010, the industry had hired a whopping 1,600 former federal employees as lobbyists. Included among these lobbyists were high-ranking former public leaders like former Democratic House Majority Leader Dick Gephardt (MO) and Kenneth Duberstein, Ronald Reagan’s chief of staff. Much of this lobbying is done through elite K Street firms that specialize in hiring government insiders. Yet there are also bank-funded front groups like the Chamber of Commerce that deploy lobbyists on behalf of the big banks. 3. Wall Street Literally Occupies Washington By Placing Its Staff In Government Positions: Shortly after Clinton signed into law the repeal of the firewall between commercial and investment banking, his Treasury Secretary and Goldman Sachs alumni Robert Rubin left the government to work for newly-formed Citigroup — whose merger was only possible thanks to the policies Rubin championed and enacted. His compensation at Citigroup topped $15 million, not including stock options.
Sunday, October 23, 2011
Where is the New Blood in Congress? What about the Elections? Same old Same old in Washington. Bill Black tells the story.
This article gets to the heart of the matter regarding how the massive failures by government have derailed the capitalist system and allowed pillaging of bankers who bought off all politicians to create a completely anti regulatory environment. The lie that regulation is the biggest job killer is always told to allow the oligarchs to gain billions in profits with fraudulent behavior. We are being let down by the government. We don't need socialism or communism to ruin the country, because the so called "capitalists" are doing the job. What blows me away is that how easily the masses have fallen for this book of lies. Those at the top want to eliminate competition. It is not the OWS protesters who want to eliminate competition, they just want a reasonable shot at making a good living. The oligarchs, elites and banksters want to squash all competition. Why is it better to be wealthy and try to eliminate the free market than it is to be middle class and just want to have a legitimate form of Capitalism? This is what all the talk radio voices are saying as well as the politicians. We are accepting the elimination of competition because it benefits the upper levels of society. They are monopolizes opportunity and our government has done nothing.
Article from Bill Black posted originally on New Economic Perspectives and Naked Capitalism.
Bill Black: The Anti-Regulators Are the Job Killers
By Bill Black, Associate Professor of Economics and Law at the University of Missouri-Kansas City, a former senior financial regulator, and the author of The Best Way to Rob a Bank is to Own One. Cross posted from New Economic Perspectives.
The new mantra of the Republican Party is the old mantra – regulation is a “job killer.” It is certainly possible to have regulations kill jobs, and when I was a financial regulator I was a leader in cutting away many dumb requirements. We have just experienced the epic ability of the anti-regulators to kill well over ten million jobs. Why then is there not a single word from the new House leadership about investigations to determine how the anti-regulators did their damage? Why is there no plan to investigate the fields in which inadequate regulation most endangers jobs? While we’re at it, why not investigate the areas in which inadequate regulation allows firms to maim and kill. This column addresses only financial regulation.
Deregulation, desupervision, and de facto decriminalization (the three “des”) created the criminogenic environment that drove the modern U.S. financial crises. The three “des” were essential to create the epidemics of accounting control fraud that hyper-inflated the bubble that triggered the Great Recession. “Job killing” is a combination of two factors – increased job losses and decreased job creation. I’ll focus solely on private sector jobs – but the recession has also been devastating in terms of the loss of state and local governmental jobs.
From 1996-2000, for example, annual private sector gross job increases rose from roughly 14 million to 16 million while annual private sector gross job losses increased from 12 to 13 million. The annual net job increases in those years, therefore, rose from two million to three million. Over that five year period, the net increase in private sector jobs was over 10 million. One common rule of thumb is that the economy needs to produce an annual net increase of about 1.5 million jobs to employ new entrants to our workforce, so the growth rate in this era was large enough to make the unemployment and poverty rates fall significantly.
The Great Recession (which officially began in the third quarter of 2007) shows why the anti-regulators are the premier job killers in America. Annual private sector gross job losses rose from roughly 12.5 to a peak of 16 million and gross private sector job gains fell from approximately 13 to 10 million. As late as March 2010, after the official end of the Great Recession, the annualized net job loss in the private sector was approximately three million (that job loss has now turned around, but the increases are far too small). Again, we need net gains of roughly 1.5 million jobs to accommodate new workers, so the total net job losses plus the loss of essential job growth was well over 10 million during the Great Recession. These numbers, again, do not include the large job losses of state and local government workers, the dramatic rise in underemployment, the sharp rise in far longer-term unemployment, and the salary/wage (and job satisfaction) losses that many workers had to take to find a new, typically inferior, job after they lost their job. It also ignores the rise in poverty, particularly the scandalous increase in children living in poverty.
The Great Recession was triggered by the collapse of the real estate bubble epidemic of mortgage fraud by lenders that hyper-inflated that bubble. That epidemic could not have happened without the appointment of anti-regulators to key leadership positions. The epidemic of mortgage fraud was centered in loans that the lending industry (behind closed doors) referred to as “liar’s” loans – so any regulatory leader who was not an anti-regulatory ideologue would (as we did in 1990-1990 during the first wave of liar’s loans in California) have ordered banks not to make these pervasively fraudulent loans. One of the problems was the existence of a “regulatory black hole” – most of the nonprime loans were made by lenders not regulated by the federal government. That black hole, however, conceals two broader federal anti-regulatory problems. The federal regulators actively made the black hole more severe by preempting state efforts to protect the public from predatory and fraudulent loans. Greenspan and Bernanke are particularly culpable. In addition to joining the jihad state regulation, the Fed had unique federal regulatory authority under HOEPA (enacted in 1994) to fill the black hole and regulate any housing lender (authority that Bernanke finally used, after liar’s loans had ended, in response to Congressional criticism). The Fed also had direct evidence of the frauds and abuses in nonprime lending because Congress mandated that the Fed hold hearings on predatory lending.
The S&L debacle, the Enron era frauds, and the current crisis were all driven by accounting control fraud. The three “des” are critical factors in creating the criminogenic environments that drive these epidemics of accounting control fraud. The regulators are the “cops on the beat” when it comes to stopping accounting control fraud. If they are made ineffective by the three “des” then cheaters gain a competitive advantage over honest firms. This makes markets perverse and causes recurrent crises.
From roughly 1999 to the present, three administrations have displayed hostility to vigorous regulation and have appointed regulatory leaders largely on the basis of their opposition to vigorous regulation. When these administrations occasionally blundered and appointed, or inherited, regulatory leaders that believed in regulating the administration attacked the regulators. In the financial regulatory sphere, recent examples include Arthur Levitt and William Donaldson (SEC), Brooksley Born (CFTC), and Sheila Bair (FDIC). Similarly, the bankers used Congress to extort the Financial Accounting Standards Board (FASB) into trashing the accounting rules so that the banks no longer had to recognize their losses. The twin purposes of that bit of successful thuggery were to evade the mandate of the Prompt Corrective Action (PCA) law and to allow banks to pretend that they were solvent and profitable so that they could continue to pay enormous bonuses to their senior officials based on the fictional “income” and “net worth” produced by the scam accounting. (Not recognizing one’s losses increases dollar-for-dollar reported, but fictional, net worth and gross income.) When members of Congress (mostly Democrats) sought to intimidate us into not taking enforcement actions against the fraudulent S&Ls we blew the whistle. Congress investigated Speaker Wright and the “Keating Five” in response. I testified in both investigations. Why is the new House leadership announcing its intent to give a free pass to the accounting control frauds, their political patrons, and the anti-regulators that created the criminogenic environment that hyper-inflated the financial bubble that triggered the Great Recession and caused such a loss of integrity? The anti-regulators subverted the rule of law and allowed elite frauds to loot with impunity. Why isn’t the new House leadership investigating that disgrace as one of their top priorities? Why is the new House leadership so eager to repeat the job killing mistakes of taking the regulatory cops off their beat?
The following top economists and financial experts believe that the economy cannot recover unless the big, insolvent banks are broken up in an orderly fashion:
- Nobel prize-winning economist, Joseph Stiglitz
- Nobel prize-winning economist, Ed Prescott
- Former chairman of the Federal Reserve, Alan Greenspan
- Former chairman of the Federal Reserve, Paul Volcker
- Former Secretary of Labor Robert Reich
- Dean and professor of finance and economics at Columbia Business School, and chairman of the Council of Economic Advisers under President George W. Bush, R. Glenn Hubbard
- Former 20-year President of the Federal Reserve Bank of Kansas City, who was today nominated to be FDIC Vice Chair Thomas Hoenig (and see this)
- President of the Federal Reserve Bank of St. Louis, Thomas Bullard
- Deputy Treasury Secretary, Neal S. Wolin
- The President of the Independent Community Bankers of America, a Washington-based trade group with about 5,000 members, Camden R. Fine
- The head of the FDIC, Sheila Bair
- The head of the Bank of England, Mervyn King
- The leading monetary economist and co-author with Milton Friedman of the leading treatise on the Great Depression, Anna Schwartz
- Economics professor and senior regulator during the S & L crisis, William K. Black
- Leading British economist, John Kay
- Economics professor, Nouriel Roubini
- Economist, Marc Faber
- Professor of entrepreneurship and finance at the Chicago Booth School of Business, Luigi Zingales
- Economics professor, Thomas F. Cooley
- Economist Dean Baker
- Economist Arnold Kling
- Former investment banker, Philip Augar
- Chairman of the Commons Treasury, John McFall
Even the Bank of International Settlements – the “Central Banks’ Central Bank” – has slammed too big to fail. As summarized by the Financial Times:
The report was particularly scathing in its assessment of governments’ attempts to clean up their banks. “The reluctance of officials to quickly clean up the banks, many of which are now owned in large part by governments, may well delay recovery,” it said, adding that government interventions had ingrained the belief that some banks were too big or too interconnected to fail.And as I noted in December 2008, the big banks are the major reason why sovereign debt has become a crisis:
This was dangerous because it reinforced the risks of moral hazard which might lead to an even bigger financial crisis in future.
BIS points out in a new report that the bank rescue packages have transferred significant risks onto government balance sheets, which is reflected in the corresponding widening of sovereign credit default swaps:Similarly, a study of 124 banking crises by the International Monetary Fund found that propping banks which are only pretending to be solvent hurts the economy:
The scope and magnitude of the bank rescue packages also meant that significant risks had been transferred onto government balance sheets. This was particularly apparent in the market for CDS referencing sovereigns involved either in large individual bank rescues or in broad-based support packages for the financial sector, including the United States. While such CDS were thinly traded prior to the announced rescue packages, spreads widened suddenly on increased demand for credit protection, while corresponding financial sector spreads tightened.In other words, by assuming huge portions of the risk from banks trading in toxic derivatives, and by spending trillions that they don’t have, central banks have put their countries at risk from default.
Existing empirical research has shown that providing assistance to banks and their borrowers can be counterproductive, resulting in increased losses to banks, which often abuse forbearance to take unproductive risks at government expense. The typical result of forbearance is a deeper hole in the net worth of banks, crippling tax burdens to finance bank bailouts, and even more severe credit supply contraction and economic decline than would have occurred in the absence of forbearance.
Cross-country analysis to date also shows that accommodative policy measures (such as substantial liquidity support, explicit government guarantee on financial institutions’ liabilities and forbearance from prudential regulations) tend to be fiscally costly and that these particular policies do not necessarily accelerate the speed of economic recovery.
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