WAKE UP! WALL STREET STILL SUCKING WHAT IS LEFT OUT OF OUR PENSION SYSTEM

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary

WHEN IS THE PUBLIC OUTRAGE GOING TO TRANSCEND PARTY LINES AND IDEOLOGY? WHEN WILL WE BREAK UP THE BANK OLIGOPOLY THAT HAS US IN A DEATH GRIP OF FINANCIAL SLAVERY. WHY DO WE VOTE FOR THESE PEOPLE? AS PJ O’ROURKE SAYS, IT ONLY ENCOURAGES THEM. ARE WE SO SCARED OF THE UNKNOWN THAT WE ACTUALLY PREFER CERTAIN DEATH?

Anyone counting on pension benefits had better watch more closely what is going on and who is pouring money into this mid-term election. If you follow the money, there won’t be any money left for anyone except those 1,000 people or so who control the system and own the legislators through anonymous contributions. The plans afoot are nothing less than draconian — leaving all those who thought they were voting to conserve our resources in finance and to maintain their freedom from government intervention with a result that they cannot conceive will happen — not in our country! Right?

For those of you who missed it, I posted an article and comment recently on the “loaning” of securities to the same investors (pension Funds etc.) who were defrauded out of trillions of dollars when they bought non-existent mortgage backed bonds. Although you can place the blame on Wall Street for a lack of conscience, the fix can only come from proper regulation and the requirement of transparency. It shouldn’t be allowed to hide the probable losses on an investment. In fact, it isn’t allowed. But the culture grew starting in the 1980’s and speeding up in the 19990’s and then went on steroids from 2001 to the present day. In lending the securities, to make it simple, it was a heads “we” win, tails “You” lose situation and the pension funds lost hundreds of millions of dollars again, thus reducing their capacity to fulfill their pension obligations. Needless to say there were losses and the losses were magnified by the bets placed against these investments by the investment banks that sold them in the first place. Sound familiar?

The trading continues in MBS, securities lending, and a multitude of “synthetic” financial products that multiply the effects of these losses. Wall Street has found the ultimate pot of gold — a source of cash that doesn’t have the ability to analyze complex and heterogeneous financial products (which as James Kwak,  baseline Scenario points out corroborating my articles on this very topic three years ago)  makes it impossible to arrive at an objective price or assessment of the security, and because all of them are different makes it impossible to use comparable investments to test the price validity. They combine this hodge-podge mixture into a pot where the rules are, the investment loses value. Since the banker already knows that he can place ‘bets” (implying a non-existent risk) against the investment. So the pension fund loses money, the bank makes a fee for selling it and then a profit on the loss that the pension fund just ate.

October 21, 2010 NY Times Editorial

The Bank Wins …

The Dodd-Frank financial reform law is supposed to correct the problems and abuses that led to the crisis. It could take years to implement. Meanwhile, Wall Street is still engaged in many of the same practices. That was abundantly clear in Louise Story’s article in The Times this week on securities lending, a multitrillion-dollar activity, both before the crash and today.

In a typical securities lending deal, a pension fund, or other institutional investor, lets a bank lend some stocks to another investor, say, a hedge fund. (Investors use borrowed shares to “short” or bet against stocks.) In return, the hedge fund puts up a cash deposit. The pension fund then allows the bank to invest the cash, in presumably safe investments to eke out a little extra return.

Here’s where things can get tricky. If the invested cash turns a profit, the deposit is easily repaid when the shares are returned, and the pension fund and the bank share in the gains. If the invested cash incurs losses, however, the deposit cannot be repaid in full, and the pension fund has to cover the shortfall.

Securities lending gone bad contributed to the implosion of the American International Group in 2008. Separately, Ms. Story reported that clients at JPMorgan Chase — including pension funds of New York State and the City of New Orleans — have ended up owing the bank more than $500 million to cover losses. JPMorgan shielded itself from some of the investments that hurt its clients — pulling out of one investment vehicle before it collapsed while clients with money in the deal lost millions of dollars. It also kept the profits from before the trades went south.

Several pension funds and foundations have brought cases against various banks in state courts, saying they were not warned of the risks and that the banks failed to act in the customers’ best interest. The banks say they acted appropriately and intend to fight the suits.

The Dodd-Frank law has directed the Securities and Exchange Commission to write new rules for securities lending, but has given the agency two years to act. The S.E.C. needs to move faster. If it needs more resources, Congress should provide them.

The S.E.C. needs to improve transparency and disclosure in securities lending. It needs to curb all potential conflicts of interest — among banks, brokers and other intermediaries. Done right, such rules could help reform securities lending. They could also begin to alter the norms of bank conduct, aptly described by Ms. Story as “ heads, we win together. Tails, you lose — alone.”

24 Responses

  1. Order the Orange Jump Suits

  2. ANONYMOUS – IMPORTANT

    if the REMIC were to fail, who would get stuck with the tax bill?

    The Depositor ?
    The Trustee ?

    Since the income was already passed through to the certificateholders, my guess is that it wouldn’t be them.

  3. “Bank CEO executed?”
    Well he was a bank CEO so I guess that rules out murder, it must have been suicide. See how crooked these banksters are they’re killing themselves and trying to frame us homeowners. THIS IS A NEW LOW FOR BANKSTERS.

  4. Deb Wynn & neidermeyer:

    The Federal Reserve is privately owned by several big bank and foreigner’s names.

    The 94th congress in 1976 published an ownership graph
    Notice the Bankrupt Lehman Brothers. Who got that pie!

    Halfway down this link is Congress’s .jpg , pages 1 & 2 of the 1976 ownership of the Federal Reserve. Probably not much changed since then.

    http://www.abovetopsecret.com/forum/thread392765/pg1

    Read it carefully, and all of a sudden everything all the players in this mortgage fight makes complete sense.

  5. Hey – didn’t anyone see “RAGTIME” ??- JP Morgan Chase – always “owned” the Federal Reserve – They owned everything.

    And, contrary to certain beliefs here (including me) that MERS ownership is shared by the GSEs and the Banks – just heard yesterday – it is owned by CHASE.

  6. Deb Wynn & neidermeyer:

    The Federal Reserve is privately owned by several big bank and foreigner’s.

    In 1976 the 94th congress published an ownership graph.
    Notice the Bankrupt Lehman Brothers. Who got that pie!

    Halfway down this link is Congress’s .jpg , pages 1 & 2 of the 1976 ownership of the Federal Reserve. Probably not much changed since then.

    http://www.abovetopsecret.com/forum/thread392765/pg1

    Read it carefully, and all of a sudden everything, with all the players in this mortgage fight makes complete sense.

  7. I working on a project and need help finding info on a SunTrust loan (jumbo circa 2006 assigned to MERS) that appears to have been securitized. Has anyone found a way to connect a SunTrust loan number to a CUSIP? SunTrust foreclosed on this one and the (public) record (lack of assignments) makes it look as if it was held.. but I’m not buying that..

    Thanks

    brian_tracy AT cfl.rr.com

  8. Deb Wynn,

    Excellent Question

    The Federal Reserve is neither federal nor a reserve bank , it is a private instution and the membership is officially undisclosed. Their financial dealings with the Federal Gov’t are a state secret.

  9. Who owns the federal reserve?

  10. STATE by STATE EMERGENCY!

    Neil:

    It’s now time for each State’s governor to each declare an immediate executive order to cancel all null bank chain of titles for fraud and nullity, and the resultant foreclosures

    This site’s readers can demand it now, through the media as well.

    If each governor hasn’t done this by Nov 1st, then NOBODY on this site should vote for that incumbent, whether R or D. Throw out ALL incumbents that won’t do the Order – NOW.

    We can remove all governors out whom won’t do their job protecting the people.

    The Feds are still covering it up. Any good governors can still quickly fix it.

    Bill

  11. After the Madoff scandal flew by, it was kinda noticeable that the SEC was just a tad too close to Bernie. It seems that many of our government agencies have friends in the wrong places. Burmese8@yahoo.com

  12. we need to continue pressuring those we vote in office and those appointed to office.

    open letters, certified letters, email and calls.

    More pressure, we already know they will sell out at the end, no judge out there will rule to end the banking (theft and institutional fraud) system as we know it.

    our optiin is the courts and the media. as you all have realized the press is ill equiped to report on these issues. they have not turned the page yet and actually embraced the single transaction reality of the PYRAMIDIZTION (securitization) scheme.

    If The banks collapse, who will contribute to the politicians and parties coffers?

    if their financiers go to jail, they wh
    would have to assimilate new unproven members to the web of corruption.

    if the banks collapse to to the truth coming out, they would have to rely on the hard working and honest credit unions, and local banks who did not sell their souls to the pyramid scheme.

    are the members of the Tresury Department task force put in place to investigate financial fraud derived of the TARP PROGRAM look into why were funds from taxpayers used to pay lawyer to committ fraud on affidavits and to feloniously recreate a false chain of title?

  13. Thank you Bill Black. That’s the most direct and precise intervention that could possibly have been written. Now, it’s up to we the people to make sure that this directive is followed through to the letter. Complete article is here:

    http://www.huffingtonpost.com/william-k-black/foreclose-on-the-foreclos_b_772434.html?ir=Politics

  14. Fraudsters, Part 1: Put Bank of America in Receivership
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    Read More: Bank Of America , Bank Of America Foreclosures , Foreclosure , Foreclosure Crisis , Foreclosures , Home Foreclosure , Home Foreclosures , Hud , Shaun Donovan , Business News

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    Email Comments 4 After a quick review of its procedures, Bank of America this week announced that it will resume its foreclosures in 23 lucky states next Monday. While the evidence is overwhelming that the entire foreclosure process is riddled with fraud, President Obama refuses to support a national moratorium. Indeed, his spokesmen on the issue told reporters three key things. As the Los Angeles Times reported:

    A government review of botched foreclosure paperwork so far has found that the problems do not pose a “systemic” threat to the financial system, a top Obama administration official said Wednesday.

    Yes, that’s right. HUD reviewed the “paperwork” problem to see whether it threatened the banks — not the homeowners who were the victims of foreclosure fraud. But it got worse, for the second point was how the government would respond to the epidemic of foreclosure fraud.

    The Justice Department is leading an investigation of possible crimes involving mortgage fraud.
    That language was carefully chosen to sound reassuring. But the fact is that despite our pleas the FBI has continued its “partnership” with the Mortgage Bankers Association (MBA). The MBA is the trade association of the “perps.” It created a facially ridiculous definition of “mortgage fraud.” Under that definition the lenders — who led the mortgage frauds — are the victims. The FBI still parrots this long discredited “definition.” That is one of the primary reasons why — in complete contrast to prior financial crises — the Justice Department has not convicted a single senior officer of the large nonprime lenders who directed, committed, and profited enormously from the frauds.

    Note that the Justice Department is not investigating foreclosure fraud. HUD Secretary Donovan’s statement shows why:

    “We will not tolerate business as usual in the mortgage market,” he said. “Where there have been mistakes made or errors, we will hold those entities, those institutions, accountable to stop those processes, review them and fix them as quickly as possible.”
    Note the language: “mistakes”, “errors”, “processes” (following the initial use of “paperwork”). No mention of “fraud”, “felony”, “criminal investigations”, or “prosecutions” for the tens of thousands of felonies that representatives of the entities foreclosing on homes have admitted that they committed. Note that Donovan does not even demand that the felons remedy the harm caused by their past fraudulent foreclosures. Donovan wants them to “fix” “processes” — not repair the harm their frauds caused to their victims.

    The fraudulent CEOs looted with impunity, were left in power, and were granted their fondest wish when Congress, at the behest of the Chamber of Commerce, Chairman Bernanke, and the bankers’ trade associations, successfully extorted the professional Financial Accounting Standards Board (FASB) to turn the accounting rules into a farce. The FASB’s new rules allowed the banks (and the Fed, which has taken over a trillion dollars in toxic mortgages as wholly inadequate collateral) to refuse to recognize hundreds of billions of dollars of losses. This accounting scam produces enormous fictional “income” and “capital” at the banks. The fictional income produces real bonuses to the CEOs that make them even wealthier. The fictional bank capital allows the regulators to evade their statutory duties under the Prompt Corrective Action (PCA) law to close the insolvent and failing banks.

    The inflated asset values allow the Fed and the administration to ignore the Fed’s massive loss exposure and allow Treasury to spread propaganda claiming that TARP resolved all the problems — at virtually no cost. Donovan claims that we have held the elite frauds accountable — but we have done the opposite. We have made the CEOs of the largest financial firms — typically already among the 500 wealthiest Americans — even wealthier. We have rewarded fraud, incompetence, and venality by our most powerful elites.

    If the government does not hold the fraudulent CEOs responsible, who is supposed to stop the epidemic of elite financial fraud? The Obama administration’s answer is the fraudulent CEOs themselves, at a time of their choosing. You can’t make this stuff up.

    But ultimately resolving the problems is not the government’s responsibility, said Michael Barr, assistant Treasury secretary for financial institutions.

    “Fundamentally, this is up to the banks and the servicers to fix,” he said. “They can fix it as fast as they feel like.”

    So who is Michael Barr and why is saying things on behalf of the Obama administration that make it appear to be a wholly-owned subsidiary of the fraudulent lenders and servicers? He’s a Robert Rubin protégé and he’s the senior Treasury official for banking policy.

    We have a different policy view. We believe that only the government can stop fraud from growing to catastrophic levels and that among the government’s highest responsibilities is to provide the regulatory “cops on the beat” with the competence, resources, courage, and integrity to take on our most elite frauds. We believe that anything less is a travesty that causes tens of millions of Americans to be defrauded and poses a grave threat to our economy and democracy.

    Prompt Corrective Action

    First, it is time to stop the foreclosures until the banks and servicers adopt corrective steps, certified as adequate by FDIC, that will prevent all future foreclosure fraud. They must also adopt plans to remedy the injuries their foreclosure frauds have already caused, and assist the FBI, Department of Justice, and legal ethics officials investigations of their officers’ and attorneys’ frauds and ethical violations.

    Second, it is time to place the financial institutions that committed widespread fraud in receivership. We should remove the senior leadership of the banks and replace them with experienced bankers with a reputation for integrity and competence, i.e., the honest officers that quit or were fired because they refused to engage in fraud. We should prioritize the receiverships to deal with the worst known “control frauds” among the “systemically dangerous institutions” (SDIs). The SDIs’ frauds and fraudulent leaders endanger the global economy.

    We propose Bank of America for the first receivership. In the last few weeks, the SEC has obtained a large (albeit grossly inadequate) settlement of its civil fraud charges against the former senior leaders of Countrywide. (Bank of America acquired Countrywide and is responsible for its frauds.) Fannie and Freddie’s investigations — with their findings reviewed by their regulator, the Federal Housing Finance Agency (FHFA) — have identified many billions of dollars of fraudulent loans originated by Countrywide that were sold fraudulently to Fannie and Freddie through false representations and warranties. The Fed, BlackRock, and Pimco’s investigations have identified many billions of dollars of fraudulent loans provided by Countrywide under false reps and warranties. Ambac’s investigation found that 97% of the Countrywide loans reviewed by Ambac were had false reps and warranties. Countrywide also engaged in widespread foreclosure fraud. This is not surprising, for every aspect of Countrywide’s nonprime mortgage operations that has been examined by a truly independent body has found widespread fraud — in loan origination, loan sales, appraisals, and foreclosures. Fraud begets fraud. Lenders that are control frauds create criminogenic environments that produce “echo” epidemics of control fraud in other professions and industries.

    We have been amazed that, as one financially sophisticated entity after another found widespread fraud by Countrywide in the entire gamut of its operations, the administration, the industry, and the financial media act as if this is acceptable. Countrywide made hundreds of thousands of fraudulent loans. It fraudulently sold hundreds of thousands of loans through false reps and warranties. It fraudulently foreclosed on large numbers of loans. It victimized hundreds of thousands of people and hundreds of financial institutions, causing hundreds of billions of dollars of losses. It has defrauded more people, at a greater cost, than any entity in history.

    Bank of America chose to purchase Countrywide at a point when it — and its senior leaders — were infamous. Bank of America made some of these Countrywide leaders its senior leaders. Yet, Bank of America is not treated as a criminal entity. President Obama, Attorney General Eric Holder, Donovan, and Barr cannot even bring themselves to use the “f” word — fraud. They substitute euphemisms designed to trivialize elite criminality. The administration officials do not call for Bank of America to be the subject of a criminal investigation. They do not demand that Fannie, Freddie, Ambac, the FHFA, and Pimco file criminal referrals about Countrywide’s frauds. They do not demand that Fannie, Freddie, and the Fed refuse to purchase or take as collateral any mortgage instrument from Bank of America. No one at the Harvard Club in New York moves to kick Bank of America’s officers out of their club! The financial media treats Bank of America as if it were a legitimate bank rather than a “vector” spreading the mortgage fraud epidemic throughout much of the Western world.

    For the sake of our (and the global) economy, our democracy, and our souls this willingness to allow elite control frauds to loot with impunity must end immediately. The control frauds must be taken down and their officers removed promptly. Receivership is the way to begin to reclaim our souls, our economy, and our democracy and Bank of America has the track record that makes it a good place to start. It is sufficiently large and powerful that its receivership will send the credible signal that America is restoring the rule of law and that even the most elite frauds will be held accountable.

    Next we need to remove the rest of the “too big to fail” institutions — we call them systemically dangerous institutions, or SDIs — to reduce the global systemic risks that they pose. We are rolling the dice with disaster every day. The SDIs are inefficient, so shrinking them will reduce risk and increase efficiency. We need to follow three types of policies with respect to SDIs.

    1.They cannot grow larger and compound the systemic risk they pose.
    2.They must create an enforceable plan to shrink to a level and functions such that they no longer pose a systemic risk within five years.
    3.Until they shrink to the point that they no longer pose systemic risks they must be regulated with far greater intensity than other banks. In particular, control fraud poses so severe a risk of triggering another global financial crisis that there must be no regulatory tolerance for control frauds at the SDIs. One of the best ways to reduce their risks is to mandate that high levels of executive compensation be paid only after sustained and superior performance (at least five years), and with “claw back” provisions if compensation was obtained by fraudulent reported income or seriously inadequate loss reserves.
    Appointing a receiver for an SDI will be a major undertaking for the FDIC, but it is also well within its capabilities. Contrary to the scare mongering about “nationalizing” banks, receivers are used to returning failed banks to private ownership. Receiverships are managed by experienced bankers with records of competence and integrity rather than the dread “bureaucrats.” We appointed roughly a thousand receivers during the S&L and banking crises of the 1980s and early 1990s under Presidents Reagan and Bush.

    Here is how it works. A receiver is appointed on Friday. The bank opens for business as normal (from the bank’s customers’ perspective) on Monday. The checks clear, the ATMs work, and the branches all open. The receiver’s managers direct the business operations, find the true facts about the bank’s operations, senior managers, and financial condition, recognize the real losses, and make the appropriate referrals to the FBI and the SEC so that the frauds can be investigated and prosecuted.

    The receiver is also a well-proven device for splitting up banks that are too large and incoherent by selling units of the business to different bidders who most value the operations.

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  15. “….some $2 trillion of the $6 trillion in U.S. mortgages and home-equity loans that were securitized during the height of the bubble, from 2005 through 2007, are likely to go into default. The report says the housing bust will ultimately cause losses of $1.1 trillion on those bonds.”

    The biggest problem with TBTF banks and our senate, which is the best that money can buy, is that all of us, the mere citizenry underneath them, are viewd as a problem, something that needs to get pushed through the system so that their balance sheets will improve.

    But what happens to us, the mere citizens? An additional 11 million face foreclosure by this fraud you call securitization. That’s 1 in 5 people with a mortgage. When you’ve flushed us all through your system, will that make all of your financial dealings complete? Will your books finally look good again? Oh of course, I forgot. There’s still a more pension funds that need cleaning out. Make sure you get it all.

    There’s such a division between the haves, THEM, and the have-nots, the rest of us. A warning, take it for what it’s worth….don’t try to continue to push these fraudulent cases through, or there will be hell to pay. Since you folks on the hill are completely cut off from your constituency, let me give you a word about what’s going on out here in America, just outside of your offices on K street. It’s not pretty, and we the people are watching, waiting, but the patience is running thin. The feeling on the streets of America is palpable. It’s in your face. We the people will not sit by and allow your graft and greed to continue like it’s business as usual. There will be a day of reckoning. And the clock would appear to be ticking faster these days.

    “No person shall be deprived of life, liberty, or property, without due process of law…..”

    “If the bank losses turn out to be steeper than JPMorgan and most other analysts expect, taxpayers may be asked to inject more capital into the financial institutions.”

    Yeah, you guys go ahead and give that a try, give it your best shot. But believe this, it will only happen over my dead body. To take the taxpayers money and give it to these crooks is an act of treason in my book. And treason is an impeachable offense for each and every one of you holding power.

    “No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law; and a regular Statement and Account of the Receipts and Expenditures of all public Money shall be published from time to time.”

    Tell us Sec. Geithner, what exactly did you do with $2 trillion of our hard earned dollars? Who exactly did you give it to, and under what authority? Why did you pay your friends 100 cents on the dollar for their garbage, when you were holding a royal flush, and they had jack deuce?

    We need a major house cleaning. The so-called supreme court as well. Sweep them all out of town on a rail. Every last one.

  16. 75 Ways That The Government And The Financial Elite Will Be Sucking Even More Of The Life Blood Out Of The American People In 2011

    http://foreclosureblues.wordpress.com/2010/10/22/75-ways-that-the-government-and-the-financial-elite-will-be-sucking-even-more-of-the-life-blood-out-of-the-american-people-in-2011/

  17. Neil:

    You’re completely right that neither ‘party’ will save us. That is a long past a foolish distraction, and NONE of America should be falling for it anymore.

    The reason we always ‘vote for these people’ is that they don’t have “None of the Above” on the ballot.

    People are left voting for the lesser of evils, Bank lobbyist #1(R), or Bank lobbyist #2! (D).

    Although we should vote to protest, we should never deceive ourselves any election is going to change anything.

    The moral hazard of the cascade of government and bank cover-ups is beyond fixing at this point, and we all know it.

    Restudy the Bill of Rights and Declaration. We will be needing them soon to re-build our country.

  18. Beware of Attorneys General Bearing Gifts, Foreclosure Crisis Edition I (Florida)

    http://www.nakedcapitalism.com/2010/10/beware-of-attorneys-general-bearing-gifts-foreclosure-crisis-edition-i-florida.html

  19. THE KING IS NAKED

    THE KING IS NAKED.
    THE SO CALLED BANKS ARE REALLY SHELLS OR BROKERS THEY HAVE NOTHING IN THE TRUST POOLS.

    WHAT WOULD HAPPEN IF THEIR WAS A RUN FOR THE MONEY BY DEPOSITORS? THEY DONT HAVE THE MONEY TO COVER THAT EITHER.

  20. YOU PEOPLE DON’T GET IT. I’VE BEEN SAYING THIS FOR GOD KNOWS HOW LONG, NOBODY LISTENS. AT THE END OF IT ALL EVERYONE INCLUDING THOSE IN GOVERNMENT POSITIONS WILL BE BROKE, UNEMPLOYED AND HOMELESS. NEIL YOU COULD HAVE SEEN THIS ALONG TIME AGO AND SAID SOMETHING ABOUT (YOU STILL COULD), BUT THUS FAR YOU HAVE FAILED AND CONTINUE TO IGNORE IT. YOUR NOT GOING TO GET MUCH OF ANYWHERE READING AND POSTING MAINSTREAM PUBLICATIONS AND ARTICLES, WE HAVE TO PULL TOGETHER AND DO THE WORK OURSELVES. BUT I FEAR IT MAY BE FAR TOO LATE.

  21. PONZI SCHEME. AND EVERYBODY IS GRABBING FOR THE SHORT TERM MONEY.

  22. doesn’t sound familiar. brokers were required to post t-bills of at least 105% of the securities being loaned, and they had to maintain that margin daily. i know this from personal experience on the securities lending side.

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