Thursday, November 24, 2011

Federal Judge Refuses to Dismiss Bank Break-In Case Against JP Morgan, Lender Processing Services

This story is a must read for anyone questioning validity of claims regarding fraudulent activity by the major banks.  You can see this case clearly reveals major failures by the bank do its due diligence and to not forge documents.  The case here reveals that Jp Morgan chase had broken into a woman's home what not only did not have a mortgage but had no relationship with the bank whatsoever.  How could this happen TWICE  no less?  Did the documents claiming the bank had any right to the property appear out of think air?  I don't think so!  It seems impossible to make the case that there is not rampant fraud occurring throughout the banking system if a bank can create enough legal paperwork to make a claim against a property that had no mortgage and with which the bank had no relationship with the home owner. 

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?

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:

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.

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Wednesday, November 23, 2011

MBS Litigation Update: Why BofA Will Lose the Loss Causation Argument and Wish It Had Settled with MBIA | The Subprime Shakeout

MBS Litigation Update: Why BofA Will Lose the Loss Causation Argument and Wish It Had Settled with MBIA | The Subprime Shakeout

Fed Stress tests for real or another mockery?

From Naked Capitalism

The Fed Stress Tests While Europe Starts to Burn

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.

Read the Full Article here at Naked Capitalism The Fed Stress Tests While Europe Starts to Burn

naked capitalism naked capitalism

Sunday, November 20, 2011

“If Only They Enforced Bank Regulations Like They Do Park Rules, We Wouldn’t Be In This Mess”

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”

Occupy Wall St vs REAL Criminals “If Only They Enforced Bank Regulations Like They Do [<span class=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

Nevada AG trying to restore trust and faith in government single handedly.

 Here is a portion of an article posted today on Naked Capitalism detailing the steps Nevada AG Catherine Cortez Masto has taken to try and hold the major banks accountable for their rampant practice of fraud and their explicit role in the housing crisis.  It is amazing that only one AG has figured out a way to bring fraud charges against anyone of the banks or their major players.  It is as if Masto is the only AG that is not in the bank pocket so to speak and who is not willing to let the banks get away with raping and pillaging the public.  Everyone one else from the White House to the entire Congress have been willing to turn a blind eye to the facts and to fail to protect the interests of the American people.  Masto should be commended for her courage and dedication to seeking the truth when all others were bought off.  The other politicians have acted in their own self interest with little regard for what has truly gone on in financing industry. 

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.
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.
READ the rest here

Wednesday, November 9, 2011

Mortgage Industrial Complex collective Denial of problems in Mortgage and Housing Industries

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 Complex

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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?
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.
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.

READ the complete article here at Naked Capitalism

Wednesday, November 2, 2011

Bernanke says savers should be ok with low rates for benefit of public good.

Bernanke claims low interest rates are good for savers too! Wow this is too much. There is something wrong with this picture. Now the American Public is supposed to suck it up again and believe it is for the greater good......???? I have heard stupid things from the government before but this is tops. The economy fizzles and the banks have taken over policy and Bernanke comes out with this statement. He either is getting pressured to say these things or he is lost with no idea what is going on in the economy. By Rex Nutting Very low interest rates are hurting the returns that savers count on, Fed Chairman Ben Bernanke acknowledges. But he says that savers should realize that these low rates are for "the greater good" -- the health of the U.S. economy. He says savers won't ever receive decent returns on their savings until the economy is doing better, because the best investments are investments that are made in an economy that's growing.

Hubris Watch: US Bank CEO Sniffs About Breaking Rules When His Bank Has Huge Trustee Liability « naked capitalism

Interesting comments on banking rules and whether the banks should be required to follow them. So far we have seen that the same rules do not apply to the banks as it does for any other criminal enterprise. Yves Smith points out in her following article that the only criminals that get prosecuted are those that steel from the rich. IE Bernie Madoff. It was short order to have him put in jail while the bankers, guilty of similar fraud, are allowed to continue to collect huge bonuses. The little guy is left to carry the weight of the financial meltdown and our government stands by as politicians put their hands out for donations from the Too big to fail banks. Us Bank CEO in Minneapolis
Davis’ apparent lone comment on the public ire against the banks was dismissive: “‘Everybody’s breaking the rules, blah blah blah,” Davis said at one point, mocking the general sentiment behind the public outrage before admonishing them to “Get over it.” Davis’ arrogance no doubt seems justified, since only rulebreakers who aren’t in the corporate elite club, like Bernie Madoff, have been brought to justice. And he stole from rich people, which made him a prime target. By contrast, US Bank on Davis’ watch, is a recidivist rulebreaker, but he clearly regards that as a matter of no import. (Davis was US Bank’s president starting in October 2004, was promoted to CEO in December 2006, and became chairman in December 2007). US Bank is one of the four biggest securitization trustees, along with Bank of New York, Deutsche Bank, and Wells Fargo. That, sports fans, means his bank has massive liability on mortgage backed securitizations. We discussed this issue recently as far as Bank of New York is concerned. The same logic applies to US Bank: Hubris Watch: US Bank CEO Sniffs About Breaking Rules When His Bank Has Huge Trustee Liability « naked capitalism

Tuesday, November 1, 2011

Matt Stoller: Why a Foreclosure Fraud Settlement is a RIDICULOUS Idea

By Matt Stoller, the former Senior Policy Advisor to Rep. Alan Grayson and a fellow at the Roosevelt Institute. You can reach him at stoller (at) or follow him on Twitter at @matthewstoller.
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