US Banks Reporting Phantom Income on $1.4 Trillion Delinquent Mortgages




The point missed by Lenzner is that the income isn’t phantom. It is very real. It just came out of a different hole than the one he is peering down. The Banks booked it this way (1) to hide it (2) to cheat shareholders and (3) to get a tax benefit when they finally  report the “loss” so they get another $400 Billion from the taxpayers in unpaid taxes. What a country! Oh and let’s not forget they were not entitled to any of it from the beginning, through the middle and the present.


Jan. 12 2011 – 8:36 am | 2,309 views | 0 recommendations | 8 comments

The giant US banks have been bailed out again from huge potential writeoffs by loosey-goosey accounting accepted by the accounting profession and the regulators.

They are allowed to accrue interest on non-performing mortgages ” until the actual foreclosure takes place, which on average takes about 16 months.

All the phantom interest that is not actually collected is booked as income until the actual act of foreclosure. As a resullt, many bank financial statements actually look much better than they actually are. At foreclosure all the phantom income comes off gthe books of the banks.

This means that Bank of America, Citigroup, JP Morgan and Wells Fargo, among hundreds of other smaller institutions, can report interest due them, but not paid, on an estimated $1.4 trillion of face value mortgages on the 7 million homes that are in the process of being foreclosed.

Ultimately, these banks face a potential loss of $1 trillion on nonperforming loans, suggests Madeleine Schnapp, director of macro-economic research at Trim-Tabs, an economic consulting firm 24.5% owned by Goldman Sachs.

The potential writeoffs could be even larger should home prices continue to weaken, placing more homes in the nomnperforming category on bank balance sheets.

About 6 million homes are still at risk, according to Schnapp, and at least 10% of them are 25% underwater, meaning their market value is 25% less than the mortgage– but the owners are still paying interest to their banks.

22 Responses

  1. AGENDA 21

    “Effective execution of Agenda 21 will require a profound reorientation of all human society, unlike anything the world has ever experienced a major shift in the priorities of both governments and individuals and an unprecedented redeployment of human and financial resources. This shift will demand that a concern for the environmental consequences of every human action be integrated into individual and collective decision-making at every level.”
    – excerpt, UN Agenda 21

    Agenda 21 – The UN Blueprint for the 21st Century

    As described in my previous article on Sustainable Development, Agenda 21 was the main outcome of the United Nation’s Earth Summit held in Rio de Janeiro in 1992. Agenda 21 outlines, in detail, the UN’s vision for a centrally managed global society. This contract binds governments around the world to the United Nation’s plan for controlling the way we live, eat, learn, move and communicate – all under the noble banner of saving the earth. If fully implemented, Agenda 21 would have the government involved in every aspect of life of every human on earth.

    Agenda 21 spreads it tentacles from Governments, to federal and local authorities, and right down to community groups. Chapter 28 of Agenda 21 specifically calls for each community to formulate its own Local Agenda 21: ”Each local authority should enter into a dialogue with its citizens, local organizations, and private enterprises to formulate ‘a Local Agenda 21.’ Through consultation and consensus-building, local authorities would learn from citizens and from local, civic, community, business and industrial organizations and acquire the information needed for formulating the best strategies.” – Agenda 21, Chapter 28, sec 1.3

    Interestingly, in April 1991, fourteen months before Earth Summit, Prince Charles held a private two day international conference aboard the royal yacht Britannia, moored off the coast of Brazil. His goal was to bring together key international figures in an attempt to achieve a degree of harmony between the various countries that would gather at the Summit. Al Gore was present, along with senior officials from the United Nations and the World Bank.

    At the summit 179 nations officially signed Agenda 21 and many more have followed since. Nearly 12,000 local and federal authorities have legally committed themselves to the Agenda. In practice this means that all their plans and policies must begin with an assessment of how the plan or policy meets the requirements of Agenda 21, and no plans or policies are allowed to contradict any part of the Agenda. Local authorities are audited by UN inspectors and the results of the audits are placed on the UN website. You can see how many local authorities in your country were bound by Agenda 21 in 2001 here. The number has increased significantly since then.

    The official opening ceremony was conducted by the Dalai Lama and centered around a Viking long-ship that was constructed to celebrate the summit and sailed to Rio from Norway. The ship was appropriately named Gaia. A huge mural of a beauiful woman holding the earth within her hands adorned the entrance to the summit. Al Gore lead the US delegation where he was joined by 110 Heads of State, and representatives of more than 800 NGO’s.

    Maurice Strong, Club of Rome member, devout Bahai, founder and first Secretary General of UNEP, has been the driving force behind the birth and imposition of Agenda 21. While he chaired the Earth Summit, outside his wife Hanne and 300 followers called the Wisdom-Keepers, continuously beat drums, chanted prayers to Gaia, and trended scared flames in order to “establish and hold the energy field” for the duration of the summit. You can view actual footage of these ceremonies on YouTube. During the opening speech Maurice Strong made the following statements:

    “The concept of national sovereignty has been an immutable, indeed sacred, principle of international relations. It is a principle which will yield only slowly and reluctantly to the new imperatives of global environmental cooperation. It is simply not feasible for sovereignty to be exercised unilaterally by individual nation states, however powerful. The global community must be assured of environmental security.” – Link

    “It is the responsibility of each human being today to choose between the force of darkness and the force of light. We must therefore transform our attitudes, and adopt a renewed respect for the superior laws of Divine Nature.” – Link

    “Current lifestyles and consumption patterns of the affluent middle class – involving high meat intake, use of fossil fuels, appliances, air-conditioning, and suburban housing – are not sustainable. A shift is necessary which will require a vast strengthening of the multilateral system, including the United Nations.” – Link

    Among other things, the agenda called for a Global Biodiversity Assessment of the State of the Earth. Prepared by the UN Environmental Programme (UNEP), this 1140 page document armed UN leaders with the “ecological basis, and moral authority” they needed to validate their global management system. The GBA concludes on page 863 that “the root causes of the loss of biodiversity are embedded in the way societies use resources. This world view is characteristic of large scale societies, heavily dependent on resources brought from considerable distances. It is a world view that is characterized by the denial of sacred attributes in nature, a characteristic that became firmly established about 2000 years ago with the Judeo-Christian-Islamic religious traditions. Eastern cultures with religious traditions such as Buddhism, Jainism and Hinduism did not depart as drastically from the perspective of humans as members of a community of beings including other living and non-living elements.” In other words Christians and Moslems are to blame for the sorry state of the world because their religions do not involve worshipping “sacred nature.”

    Following the Earth Summit Maurice Strong was named Assistant Secretary General of the United Nations, and was appointed to the position of Chief Policy Advisor by Kofi Annan. He was also a member of the UN’s Commission on Global Governance, and the key architect of the Kyoto Protocol. Strong and his wife have also established the Manitou Foundation, providing land in the Colorado to an eclectic mix of religious groups, including the Crestone Mountain Zen Center, the Spiritual Life Institute (a Catholic Carmelite monastery), the Haidakhandi Universal Ashram, the Sri Aurobindo Learning Center, Mangala Shri Bhuti (Tibetan Buddhists), and Karma Thegsum Tashi Gomang (Indian mystics). The Strongs have located their spiritual centre in the Colorado mountains because:”The Strongs learned that since antiquity indigenous peoples had revered this pristine wilderness as a place for conducting their vision quests and receiving shamanic trainings. It is prophesied that the world’s religious traditions would gather here and help move theworld toward globally conscious co-existence and co-creation.”

    So what exactly does Agenda 21 contain? It consists of 115 different and very specific programs designed to facilitate, or to force, the transition to Sustainable Development. The objective, clearly enunciated by the leaders of the Earth Summit, is to bring about a change in the present system of independent nations. The agenda is broken up into 8 ‘programme areas for action’:

    >> Agriculture
    >> Biodiversity and Ecosystem Management
    >> Education
    >> Energy and Housing
    >> Population
    >> Public Health
    >> Resources and recycling
    >> Transportation, Sustainable Economic Development

    As you can see Agenda 21 addresses nearly every aspect of modern life. If you have a spare few days the entire document can be read here. I encourage the reader to at least read the Table of Contents in order to understand the true scope of this ‘blueprint for the 21st century.’ I won’t torture the reader by going into the document in too much depth but I will provide the first six paragraphs so that you can understand the true intent of Agenda 21:

    1.1. Humanity stands at a defining moment in history. We are confronted with a perpetuation of disparities between and within nations, a worsening of poverty, hunger, ill health and illiteracy, and the continuing deterioration of the ecosystems on which we depend for our well-being. However, integration of environment and development concerns and greater attention to them will lead to the fulfilment of basic needs, improved living standards for all, better protected and managed ecosystems and a safer, more prosperous future. No nation can achieve this on its own; but together we can – in a global partnership for sustainable development.

    1.2. This global partnership must build on the premises of General Assembly resolution 44/228 of 22 December 1989, which was adopted when the nations of the world called for the United Nations Conference on Environment and Development, and on the acceptance of the need to take a balanced and integrated approach to environment and development questions.

    1.3. Agenda 21 addresses the pressing problems of today and also aims at preparing the world for the challenges of the next century. It reflects a global consensus and political commitment at the highest level on development and environment cooperation. Its successful implementation is first and foremost the responsibility of Governments. National strategies, plans, policies and processes are crucial in achieving this. International cooperation should support and supplement such national efforts. In this context, the United Nations system has a key role to play. Other international, regional and subregional organizations are also called upon to contribute to this effort. The broadest public participation and the active involvement of the non-governmental organizations and other groups should also be encouraged.

    1.4. The developmental and environmental objectives of Agenda 21 will require a substantial flow of new and additional financial resources to developing countries, in order to cover the incremental costs for the actions they have to undertake to deal with global environmental problems and to accelerate sustainable development. Financial resources are also required for strengthening the capacity of international institutions for the implementation of Agenda 21.

    1.5. In the implementation of the relevant programme areas identified in Agenda 21, special attention should be given to the particular circumstances facing the economies in transition. It must also be recognized that these countries are facing unprecedented challenges in transforming their economies, in some cases in the midst of considerable social and political tension.

    1.6. The programme areas that constitute Agenda 21 are described in terms of the basis for action, objectives, activities and means of implementation. Agenda 21 is a dynamic programme. It will be carried out by the various actors according to the different situations, capacities and priorities of countries and regions in full respect of all the principles contained in the Rio Declaration on Environment and Development. It could evolve over time in the light of changing needs and circumstances. This process marks the beginning of a new global partnership for sustainable development.

    Like many ‘green movement initiatives’ Agenda 21 is a ‘wolf in sheep’s clothing’. As explained in my brief biography I have been actively involved in preparing Agenda 21 action plans and monitoring compliance with environmental permits. All the policies and plans we developed were required to begin with a description of how they met the objectives of Agenda 21 and various other UN agreements, and were audited too determine how they complied with UN requirements. It was these experiences that lead to my research into what was ‘behind it all’ and the subsequent publication of this website.

    Agenda 21 is not an environmental management policy, but an attempt to impose a global centrally planned quasi-government administered by the United Nations. Under Agenda 21 all central government and local authority signatories are required to conform strictly to a common prescribed standard and hence this is just communism resurrected in a new guise. Now that Agenda 21 has gained a stranglehold on global regulatory and planning processes Maurice Strong and his Club of Rome colleagues have moved on to the next phase of the Global Green Agenda.

    In association with fellow CoR member Mikhail Gorbachev, Strong co-chaired the committee responsible for drafting the Earth Charter. Compared to the 2500 pages that make up Agenda 21 and the BGA it is a tiny document – only 4 pages long. But it is of far more significance to the Global Green Agenda. The Earth Charter is a “declaration of fundamental principles for building a just, sustainable, and peaceful global society in the 21st century”. It is the constitution for a New Green Order. You can read about it here.

  2. “I am wondering If the banks have real loss due to non-performing loan (they did not loan the money), banks are obligated to real creditors. Who have actually lost, the banks or investors, or taxpayers and borrowers are duped. How can IRS approve this logic? Somebody, please, explain.”

    I’ll explain it.

    They, the collusion I’m about to describe, own the legislators, who gave them the power, to regulate themselves, for gratuity. In other words they make their own rules, and those rules are wildly profitable; notice the danger in that incentive?

    What it boils down to, is today, you have a multi-layered government of cash-gasmic “green” prostitutes, who were easily persuaded to help build this mechanism, for the last 10 and 20 years, which everyone is just now catching on too, too late… LOL.


    They led these political and financial “American Icons” with the “golden carrot” of self-gain now, equaling expense of the whole later.

    You do not have a real government (in case you have not figured that out yet), you have a collection of corporate controlled puppets, who live on prestige, power, and profit delusion, by brainwash (they will find, it is no security in the end, just a burden, and a blood guilt; a nasty addiction).

    The “corporation” is the “project manager”, the “contactors” are the politicians, and other necessary “legal gear lubers”, and gallows builders, the national bank is the duped, also prostituted layer of “last resort point of scapegoat”, the global elite banking and financial repository is the owner, and world ruler elect,) self-elected, mind you, LOL)

    That’s a doomsday scenario your 10 year old daughter can see is bad bad bad, but the politicians, and our national leaders? Blind as addiction to greed and power, and illusion can blind a grown man. As obviuos as the sun in the summer sky.

  3. Ironically, people will open their eyes, just as the power goes out, LOL, not

    The danger is in the irony. Take frugal, hard working average people, investing their nest egg into a financial structure created by jet setting hedonists, and in the end what do you get? An obvious screw job.

    Even if that ratio of decent hard working people to jaded materialistic addicts is lopsided in favor of the decent normal folks, the consumptive addictions of the materialistic core, and it’s per capita consumption ratio is also lopsided the opposite direction. You have politicians, elitists and wannabees, and the pinnacle jetsetters, who consume as much as 1000’s of the normal folk’s average volume of reources.

    So what does that equal?
    By nature of what addiction is, additive expansion, into mechanisms of perpetual loss, ironically, it equals loss on a grand scale squander, corruption, legal entanglement for profit, etc.

    This, extended over the same time period which the decent folks delayed gratification to arrive at, institutionalized, worshipped, and all around us, but none the less “adding” up to something, or should we say “subtracting” up to something.

    We actually encourage the predator who will consume us. LOL, irony in action real-time, obvious in the glaring mathematic and philosophic basics of it all.

    It’s almost as if the one system “breed” (bank greed hybridized), enhancing behavior in the mass cow, to pour resources into a convenient central location (the bank), was architected by the controllers of that location; obviously (what profit system is created to enrich another at the expense of the originator? Not one. Sacrifice is not known to them, unless it’s the sacrifice of others, for their gain overall).

    If it’s done, like this one, blatantly growing thorns around us, in broad daylight, is that technically a conspiracy? LOL No – 200 years ago, in private? Yes.

    It’s the danger of unrestrained power in a few, and profitable devices deployed, which finance themselves and self-generate proportional to the degradation it eventually leaves behind as a by product.

    This equals overall loss, even if it’s stored up for a huge, society wide crash, self-replicating globally, like a Richter scale 10.00007.

    This is so obvious, Karl Marx or John Lennon, or anyone, could get the gist of it at 7 or 8 years of age with the right teacher. It’s elementary school, to the basic concept of what we have built, easy to see, when you remove your shades and see it for what it really is, LOL.

    Another technique is, get of your hands and knees of piss ant scale focus, such as many blogs, and political philosophy mazes of limited focus, climb the mountain of far off realities, and see the abstract cues, that point to another overall picture.

    Then you will, with some effort and study, see what’s up. Delusion, simply goes no where, it’s hypothesis is put through truth’s grinder, LOL.

    Economic and Financial hell awaits! For all, top to bottom. It’s what we get for encouraging greed as a publicly esteemed virtue, and pride as self-sacrificing humility to shower with the glory of desiring the same.

    Summary: Reject it, whose oyster is it really? LOL

  4. I am wondering If the banks have real loss due to non-performing loan (they did not loan the money), banks are obligated to real creditors. Who have actually lost, the banks or investors, or taxpayers and borrowers are duped. How can IRS approve this logic? Somebody, please, explain.

  5. Ian,

    Yes — and how many corporations are partially organized outside the US—- so that they pay little federal income taxes?? Many big names in that boat.

  6. Hey, UsedCarGuy: Who owns the Cayman Islands? Which country owns the Cayman Islands? I need to look this up. Lots of offshore accounts and maybe some of the ones the Swiss do not want to touch anymore. I seem to recall in the recent past, the IRS/US going after accounts in Switzerland for tax evaders and, even, accounts from Nazi Germany that stole from the Jews in WWII. I think I am correct, but somebody else has any input, please feel free.

    The whole offshore bank account thing smells and has for a while.

  7. LOL!!! @ the A Man.

    “THE A MAN, on January 13, 2011 at 7:57 am said:

    I am not gonna side Republican Democrats but when I saw John Beoehner Cry and Read the Constitution.I knew things were gonna get worse.

    Just like the Slave in the South knew that when his master started quoting from the Bible things were gonna get worse.

    They do it so that they can sleep at night.”

  8. usedkarguy-i was in the cayman islands in 95. At the time, Cayman islands was ranked #6 in global bank assets. About 26000 peope live there. Downtown,the bank area is Elizabethan Square. The banks put brass plaques on the building and inside on the few doors in the main building. They then share a common receptionist(s)and use common office space as if it was their own. There were 465 “banks” located in one building. Only on paper. Just like our MBS trusts. On the bright side,I went to an all-you-can-eat lobster tail restaurant and ate 7 complete lobster dinners. People were starting to look,point and whisper, I succumbed to peer pressure, and stopped eating. This is most of what I remember about the Caymans,

  9. so now that we know all this garbage eventually went through the hands of (C) and GS, and it all ends up in the Cayman Islands, why don’t we declare war on the Cayman Islands?

  10. Banks stop accruing interest when they deem the loan “non-collectible” — if in foreclosure — then it was deemed non-collectible. Not only is interest reasonably not collectible — full principal is likely not collectible given under-water mortgages.

    Although banks should stop accruing due to IRS regulations — distressed debt buyers can continue to accrue interest.
    May be some confusion here.

  11. I know I am repeating myself, but as long as we put up with it, it will continue unabated. Where is Wikileaks by the bye? Isn’t it time for another revelation of greed, crime and infamy about the banks? Hey, almost half of January has gone by, where is the big bank revelation?

    The Federal Reserve is going to keep going also if we don’t do something about it. We need to work together and forget about the game of left and right. Remember, divided you fall and together we will prevail.

  12. I just have to address the statement “loosey-goosey accounting accepted by the accounting profession”.

    I know not all accountants are perfect, but I have to tell you that the most shocking thing I saw in the profession is when Congress essentially told the Financial Accounting Standards Board in the spring of 2009? that they WOULD suspend the mark-to-market rule for valuing assets. If they did not, Congress threatened to take over the governance of the FASB.

    It is the suspension of mark-to-market that creates the real lie on the balance sheets.

  13. And The Fed Is Gifting Primary Dealers With A Monthly Commission Fee Of Over $5 Billion

  14. I am not gonna side Republican Democrats but when I saw John Beoehner Cry and Read the Constitution.I knew things were gonna get worse.

    Just like the Slave in the South knew that when his master started quoting from the Bible things were gonna get worse.

    They do it so that they can sleep at night.

  15. 2010 Foreclosure record 1.04 million


  16. Or better yet Hang’ em in the town square.

  17. Municipalities should Seize Banks Assets, Go Bankrupt and live off income from banks assets. High rises hotels all their real estate. Put Dimond and friends in jail (Guantanamo)


  18. I’m there. I’d feel a whole lot better if the entire country would be with me.

  19. Our government si so corrupt it could give Haitis government a run for their money. And just think; the American People voted for some of these scoundrels. America is screwed pure and simple. Do we have any one left in this country who is not a greedy liar? Is any of this stuff ever going to result in any jail time for these guys? We all certainly need to be brave but we are anything but free. God bless america we are going to need it! Debi

  20. I have a question:

    Does an entity that has filed for bankruptcy have to report of all transactions that took place 90 days prior to their filing?

  21. This is sick already

  22. Why doesn’t everybody in this country stop paying their mortgage? Let them try to foreclose on the entire country.

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