Provocative Paper on Legality of Securitization

AUTHOR: MICHAEL NWOGUGU, Certified Public Accountant (Maryland, USA); B.Arch. (City College Of New York). MBA (Columbia University). Attended Suffolk Law School (Boston, USA). Address: P. O. Box 170002, Brooklyn, NY 11217, USA. Phone/Fax: 1-718-638- 6270. Email:;

EDITOR’S NOTE: RECOMMENDED READING — Securitization_is_Illegal


  • Whether securitization is legal.

  • Whether securitization causes usury.

  • The standards for usurious loans/forbearance.

  • The specific components of cost-of-capital, for purposes of assessing usury

  • Antitrust liability in securitization transactions.

  • Federal/state RICO liability in securitization transactions.

  • The constitutionality of securitization transactions.

  • The validity of contracts used in effecting securitization transactions.

  • Whether securitization usurps the purposes of the US bankruptcy code.

11 Responses

  1. Very good article on why securitization is illegal.

    One problem — author assumes the Sponsor is the “Originator.” That is , the originator directly removes receivables from it’s balance sheet to an SPV.

    This is not what really happens. Originator sells the whole loans to a Wall Street firm — who is then really the Sponsor. It is the Wall Street firm who removes receivables from balance sheet and sells to subsidiary depositor — not the originator.

    Some securitizations do state this process — many do not.

    Thus, big piece of chain of title is missing.

    Otherwise — much praise to the author.

  2. Frankielee, thank you for the link.

    After reading the doc. it appears that much of it is geared toward the investment / investor side of the spectrum. With that in mind how can we break this all down to the fraud perpetuated on the borrower.

    A lot of good info to incude specific court cases, I guess I need to to read it again, again, again…..and see if if I can apply this to my case.


  3. Leapfrog, of course you’re right, it can’t possibly be done without napalming state’s rights, but if that stands in their way they’ll try, stomping on the constitution all the way.

    I feel our rights slipping away on a daily basis. Remember HR3808, the notary bill which slipped through the house and senate without a peep from anyone? Well the same can be said for HR6162, which has also passed both bodies and is awaiting Obama’s signature. It allows the treasury secretary, in the present case Geithner, who might not be Satan himself but is certainly a highly placed agent, to determine how much gold and silver should be made available to us every year.

    The wording is tough to decipher intent….as one metals expert wrote:

    So what is the difference between “quantities sufficient to meet public demand” and “quantities that the Secretary determines are sufficient to meet public demand”?

    In practice, we shall see if this represents a different standard, but at this point the change in wording makes me uncomfortable. I want the supply of gold and silver bullion coins to be determined by demand in the marketplace, not determined by unspecified criteria established by the Secretary of the Treasury.

    It’s a widely circulated belief/fact that the treasury ships money to JP Morgan, who in turn manipulates the metals markets, especially silver. The treasury can’t handle their fiat currency losing ground, so they break the laws of the land with complete impunity whenever they choose by market flash crashes, destroying smaller traders in an instant, and putting in the real threat of buying long positions.

    Combine that with printaholic Bernanke and we’re screwed coming and going. It’s about time to shake up our so called leaders. Passed time. Our entire system can be summed up as, “government of the bankers, by the bankers, for the bankers.” It’s truly a shame.

  4. E.Tolle: I read that. Very good article. Can’t wait for part deux. I just don’t see how Feds can trump state rights. I’ve read a lot of the arguments & I just don’t see how it can be papered over, unless its at the individual state level. We shall just have to wait and see, but I certainly wouldn’t put ANYTHING past our conniving politicians. Remain vigilant!

  5. L. Randall Wray writes in his recent Huff Post piece:

    The fraudsters have Congress in their back pocket and plan to rush through legislation to validate ex post all of their illegal activity. It is almost a foregone conclusion that Congress will pass a law early next year to legalize everything MERS and the big banks did — lending fraud, recording fraud, tax fraud, securities fraud, and foreclosure fraud.

    There will be no rule of law to protect private property in the United States. Wall Street can claim any property it wants — no proof required. That is what President Bush meant when he proclaimed a new “Ownership Society” — as I wrote back in 2005.

    The plan all along was to put the bottom four deciles of Americans into permanent indebtedness while the top fraction of one percent would transfer ownership of everything to itself. So far, President Obama has stuck with the program — overseeing the greatest wealth transfer in human history.

    If or when the government attempts the legitimization of Mers, that single act IMO will be the defining moment of our era. The time will have come to march on Washington, not just as a demonstration of anger, but in true readiness to wrestle what’s left of our government to the ground, by force if need be, and regain control from the bank cartel and the elite who own them. It will signal a new fight for freedom, and a renewed search for independence all over again.

    It will be the time to show Wall Street and the Hill what the Patriot Act really means….fighting terrorism in the form of bankers who have captured our nation. I for one am pissed off and ready for a fight.

  6. I stumbled across this in my research on MERS & thought it might be of interest to someone:

    “I don’t know that MERS is going to go away because it’s got 60 million mortgages wrapped up in it,” Ousley said. “I can augment it. I can supplement it. I can plug the holes.”


  7. If Julian Assange should take such a massive hit for wikileaks, exposing the lunacy and criminality of our nations actions around the planet, then the Washington Post, the Wall Street Journal, and the NY Times…..CNBC, MSNBC, and Fox, should all be held accountable for treason or at least collusion for not telling the story of the rape and Pillage of the planet by banksters.

    The largest Ponzi scheme in history….and most everyone I meet on a day to day basis have no idea that banker greed, hubris, and insatiable lust for more and more are the cause. They honestly think; that the government is working hard to fix the causes of our malaise, that the Federal Reserve, a branch of the government (NOT), is doing it’s best to “fix” the problem, and that the banks, according to their own commercials, are lending again. Exactly the opposute of the truth.

    These publishers are all guilty of lying on a daily basis about the true underlying causes that destroyed our economy, our jobs, and why we are losing our homes. Hail Julian! Lynch Blankfein! Even if he is doing God’s work.

  8. We’ve been put into heavy debt for a reason. Read the banker’s manifesto. This entire scheme is not an accident by any means.

    Only when we decide to resist their plan, throw off their shackles. will we be able to live, grow, and nurture one another.

    We MUST bring these banks down, whether through civil means i. e. Dodd/Frank, and more than likely failing that, through whatever means it takes. It’s a matter of survival, and it really is as simple as that. Usury = slavery. Securitization is their means. Ours must be to end them. Their demise means our resurrection. There’s simply no other way.

  9. Gary, you can read the paper here:

  10. I am confused too. Can’t figure out how to read it.

  11. Neil, I guess I’m lost here… can I read this paper, do I need to join something?


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