THE WORM TURNS: AIG NOW SUING FOR FRAUD BECAUSE THEY CAN’T SUE ON THE LOAN OBLIGATIONS THEY PAID OFF

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary SEE LIVINGLIES LITIGATION SUPPORT AT LUMINAQ.COM

THE FREE HOUSE MYTH EXPOSED: IT IS GOING TO WALL STREET

EDITORIAL NOTE: Following up on my article yesterday about who owns the debt, some clarity is introduced by the filing of what will be a series of lawsuits against the underwriting Wall Street brokerage houses that sold mortgage bonds,  violated the provisions of the documents that created the mortgage bonds, and then declared fictitious losses for themselves alleging that the mortgage pools had failed because the mortgagors (homeowners) weren’t paying their mortgages.

These Wall Street firms were not in the business of lending money, nor have they purchased any homeowner obligation, yet they are the very same source of sham entities that are initiating foreclosure process all over the country and submitting credit bids to acquire bids from hapless homeowners who don’t realize that their debt was paid by AIG and others, courtesy of of the U.S. government.

The payoff of these loan obligations was accomplished by the payoff of the mortgage bond that was sold to unsuspecting investor lenders who thought they were buying into a lending pool wherein virtually all the money they were advancing was going to fund mortgages or buy mortgages. They sure did provide the capital that funded the mortgage, but they were never even given the courtesy of a nod, much disclosure at the table where the homeowner signed papers allegedly describing his loan transaction, but which referred to a transaction with a third party entity that wasn’t lending anything and was simply pretending to be the lender.

Using the money of the investor-lenders these third party firms created by a securitization team, pretended to  be the source of funds and did not disclose to the borrower the true identity of the creditor nor the true terms of the transaction with the investor-lender. And using the promise of non-existent mortgages, these firms managed to convince the institutional investors (pension funds, etc.) to advance trillions of dollars, only part of which was used to fund loans, the rest being used to accrue completely unconscionable fees and yield spread premiums that were caused by violating industry standard underwriting standards for home mortgage loans.

The Wall Street firms managed to obtain insurance contracts from AIG and others in which they paid a very small fee for a very large payoff. In the securitization documents and the contracts with the insurers, they had reserved to themselves the right to declare a pool to have failed or be devalued thus triggering payments on insurance, credit default swaps and other third party sources payable tot he brokerage firm and not the client that had advanced the funds. These contracts specifically excluded subrogation, which means that the insurer or counter-party on the credit default swap was entitled to payment on these obligations but that the insurer or counter-party would not have any right to pursue the homeowner or anyone else to recover on their losses. Thus the obligation was paid to the brokerage firm who is telling investors that they they were NOT the agents of the investors when they received those payments, but telling the courts that they ARE the agents of the investors for purposes of foreclosure.

But in fact, those payments satisfied the underlying obligations and in many cases extinguished them, regardless of whether the homeowner was paying the mortgage payment (to a party or servicer that was in turn not turning over over the proper amount to the loan pool). The AIG suit shows that AIG is seeking damages for fraud, because now they realize that the mortgage bonds were cooked well done and all the way through and were the instruments of fraud against the investors and insurers. And THAT in turn means they are conceding that they neither have nor want subrogation rights and like the investors, they are disclaiming any interest in the underlying loan obligations of homeowners, regardless of whether they are paying SOMEONE a mortgage payment or not.

The bottom line is that Wall Street stepped on a rake in its run for greed. Now the tide is turning and they are moving into the wrong position – one of potential liability in the trillions for the bogus mortgage bonds sold and the trillions they took in “bailout” when they had not lost any money in any mortgage loan transaction. The answer to the question of who owns the debt, while not completely solved is partially solved thus far: it is nobody because the payments made did not include subrogation.

A.I.G. to Sue 2 Firms to Recover Some Losses

By LOUISE STORY

The American International Group, the giant insurer rescued by the federal government during the financial crisis, on Thursday will file the first of what could be a series of lawsuits against Wall Street firms, contending that it was the victim of fraud.

The initial suit, against ICP Asset Management and Moore Capital, will claim that A.I.G. suffered losses insuring mortgage securities created by ICP. The suit says ICP manipulated those securities in a way that benefited itself and Moore Capital, which is not accused of fraud, but harmed A.I.G.

Though the insurer received a hefty bailout, much of that money ultimately flowed to banks. Now, A.I.G. is trying to “recoup potentially billions of dollars from the fraudulent conduct of these defendants and other parties,” according to a copy of the suit obtained by The New York Times.

Because A.I.G. is still largely owned by the government, taxpayers would share in any recovery. A.I.G. informed the Treasury Department of the suit on Wednesday but made the decision to sue on its own, according to a person with knowledge of the litigation. A.I.G. did not notify the Federal Reserve Bank of New York, which orchestrated its $182 billion bailout in 2008, because the company has repaid the Fed and is no longer tightly overseen by that regulator.

As part of the bailout, A.I.G. waived its right to sue banks over most of the mortgage securities that it had insured through complex financial contracts known as derivatives. But the company did not give up its right to sue the managers of those deals — like ICP — nor did it cede rights to sue over $40 billion of mortgage bonds that it had purchased outright from banks. These bonds were responsible for a substantial portion of the company’s losses and were held in a unit that handled securities lending, separate from the derivatives unit.

A.I.G. is preparing several suits against banks, like Bank of America and Goldman Sachs, that created the $40 billion in mortgage bonds, according to the person with knowledge of the litigation, who was not authorized to talk about it publicly. The company says it believes the banks issued misleading statements about the quality of the mortgages within those bonds, the person said.

Mark Herr, a spokesman for A.I.G., declined to comment on the company’s planned cases against big banks — which could be settled before going to court — or the ICP case to be filed on Thursday.

A.I.G.’s suit against ICP mirrors a lawsuit filed by the Securities and Exchange Commission last summer. The commission cited four mortgage securities, including two deals known as Triaxx, that were insured by A.I.G. ICP caused Triaxx to overpay for mortgage bonds to benefit itself and a favored client, the commission said.

ICP has denied the S.E.C.’s allegations in court filings and said that the company acted in good faith, did not make misleading statements and did not intend to defraud its investors. Margaret Keeley, a lawyer for ICP, declined to comment on the S.E.C.’s allegations on Wednesday. Ms. Keeley and ICP have not seen the A.I.G. suit.

The S.E.C. did not identify Moore, a large hedge fund in New York run by Louis Bacon, or accuse it of wrongdoing. Moore benefited from some actions of ICP, however, and should give up its gains, the insurer argues. Two spokesmen for Moore, which was also unaware of A.I.G.’s complaint, declined to comment.

A.I.G. believes other investors made similar profits and plans to sue them as well, once it learns their identities, the person briefed on the litigation said.

ICP may be one of few lawsuits brought by A.I.G. involving its derivatives unit called A.I.G. Financial Products, based in Wilton, Conn. Another derivatives case could be brought against Goldman involving seven of its deals known as Abacus. A.I.G. will have trouble suing over most of its other derivatives deals, because when it canceled those contracts, it signed a legal waiver agreeing to release the banks on the other side of the contracts from any future legal claims related to those contracts.

A.I.G. is said to believe it will be far easier to pursue lawsuits related to the unit that ran its securities lending operation because that unit had bought the bonds outright and did not renegotiate them as part of its 2008 bailout. The unit sought to make profits for A.I.G. by using shares of stock and bonds owned by its life insurance subsidiaries. To do so, A.I.G. lent shares to banks and hedge funds in exchange for cash. Then A.I.G. reinvested much of that cash in mortgage bonds that it believed were safe bets. Like many investors, A.I.G. was surprised when the bonds — called residential-mortgage-backed securities — plummeted in value in 2008.

These future lawsuits will focus on misrepresentations that A.I.G. claims banks made when selling the mortgage bonds. Bank of America has the largest exposure because it acquired Countrywide and Merrill Lynch. Other banks that underwrote bonds in A.I.G.’s securities lending unit and may be sued are Goldman, Morgan Stanley and Bear Stearns, which is now owned by JPMorgan Chase. The banks may try to reach settlements with A.I.G. to avoid going to court.

The law firm representing A.I.G., Quinn Emanuel, has filed other suits involving mortgage bonds on behalf of other insurers. A.I.G.’s suits against banks are likely to mimic those cases, which allege misrepresentations to investors over the quality of loans inside the bonds, the person with knowledge of the matter said.

In an unusual twist, A.I.G. no longer owns the mortgage bonds that will be the subject of the suits. The company sold them to the New York Federal Reserve in 2008 in a deal called “Maiden Lane II.” At the time of that sale, A.I.G. was paid about half of the bonds’ face value — locking in a large loss.

The road map for A.I.G.’s lawsuit against ICP was outlined by the S.E.C. Each case involves two collateralized debt obligations — bundles of mortgage bonds — called Triaxx that were worth $7.7 billion. When ICP created the deals in 2006, it partnered with A.I.G. to insure the performance of the deal. That allowed banks like UBS and Goldman — the largest participants — to buy both positive bets on Triaxx and insurance from A.I.G. in case it failed.

ICP managed lots of funds and other deals. A.I.G. says in its suit that those deals presented conflicts. ICP was supposed to ask A.I.G. for permission before it put new bonds inside Triaxx, the suit says. But as the mortgage market worsened, the suit says, ICP failed to do so on several occasions. In addition, A.I.G. says that ICP used Triaxx to help another one of its funds meet a demand for cash. Furthermore, ICP earned money from Triaxx longer than it should have because it overcharged Triaxx for certain assets, A.I.G. says.

A.I.G. is seeking $350 million in damages from ICP as well as what it calls a “windfall” made by Moore.

31 Responses

  1. American International Group Inc. 10K 12/31/1993

    American International Group, Inc. (“AIG”),
    a Delaware corporation, is a
    holding company which through its
    subsidiaries is primarily engaged in a broad
    range of insurance and insurance-related activities in the United States and abroad.

    AIG’s primary activities include both general and life insurance operations.

    The principal insurance company subsidiaries are American Home Assurance Company
    (“American Home”),
    National Union Fire Insurance Company of
    Pittsburgh, Pa. (“National Union”),
    New Hampshire Insurance Company
    (“New Hampshire”),
    Lexington Insurance Company (“Lexington”), American International
    Underwriters Overseas, Ltd. (“AIUO”),
    American Life Insurance Company
    (“ALICO”), American International Assurance Company, Limited (“AIA”), Nan Shan
    Insurance Company, Ltd. (“Nan Shan”), The Philippine American Life Insurance
    Company (“PHILAM”),
    American International Reinsurance Company, Ltd. and
    United Guaranty Residential Insurance Company.

    Other significant activities are
    financial services and agency and service fee operations. For information on
    AIG’s business segments, see Note 19 of Notes to Financial Statements.

    At December 31, 1993, AIG and its subsidiaries had approximately 33,000 employees

    Subsidiaries: Ex-21:
    http://www.secinfo.com/dsvr4.bkr.b.htm#1stPage
    Large number see link. Can click on each year.

    Filer: America International Group Inc. SC 13G
    Issuer: Americcredit Corp SEC File 5-40781 8/14/00

    EX-99.1 · Identification and Classification of Subsidiary

    Exhibit 1

    IDENTIFICATION AND CLASSIFICATION OF THE SUBSIDIARY WHICH ACQUIRED THE SECURITY
    BEING REPORTED ON BY THE PARENT HOLDING COMPANY.

    American International Group, Inc. — Subsidiary Information

    AIG Global Investment Group, Inc.

    Parent Holding Company or Control Person Pursuant to Rule
    13d-1(b)(1)(ii)(G)

    Category Symbol: HC

    John McStay Investment Counsel, L.P.

    Investment Adviser pursuant to Rule 13d-1(b)(1)(ii)(E)

    Category Symbol: IA

    Page 9 of 10

    —————————————————————-
    “Kathleen E. Shannon” has/had a Signatory interest in the following 41 Registrants:

    American Bankers Insurance Group Inc.
    American International Group Inc.
    Metlife Inc.
    General Motors Financial Company INC
    [Formerly Americcredit Corp]

    ….
    Transatlantic Holdings Inc.
    80 Pine St
    New York, NY 10005 USA
    13-3355897
    Jurisdiction DE
    SEC CIK 862510
    CUSIP/CINS/PPN Issuer# 893521

    SIC Code 6331
    Fire, Marine, and Casualty Insurance
    6351 Surety Insurance 5/13/96

    ——————————————————————

    EXHIBIT 21.1

    TRANSATLANTIC HOLDINGS, INC.
    SUBSIDIARIES OF REGISTRANT

    Transatlantic Reinsurance Company. New York, U.S.A. 100%
    Putnam Reinsurance Company.. New York, U.S.A. 100%*
    Trans Re Zurich.. Zurich, Switzerland 100%*
    Transatlantic Re (Argentina) S.A. Argentina 100%*
    Transatlantic Re (Brasil) Ltda Brazil 100%*

    10K’s are amazing place to learn history of companies who control the United States of America.
    Transatlantic Holdings, Inc. (the ‘Company’) is a holding company
    incorporated in the state of Delaware. Originally formed in 1986 under the name
    PREINCO Holdings, Inc. as a holding company for Putnam Reinsurance Company
    (Putnam), the Company’s name was changed to Transatlantic Holdings, Inc. on
    April 18, 1990 following the acquisition on April 17, 1990 of all of the common
    stock of Transatlantic Reinsurance Company (TRC) in exchange for shares of
    common stock of the Company (the ‘Share Exchange’). Prior to the Share Exchange,
    American International Group, Inc. (AIG) held a direct and indirect interest of
    approximately 25% in the Company and an indirect interest of 49.99% in TRC. As a
    result of the Share Exchange, AIG became the beneficial owner of approximately
    41% of the Company’s outstanding common stock and TRC became a wholly-owned
    subsidiary of the Company. In June 1990, certain stockholders of the Company
    (other than AIG) sold shares of the Company’s common stock in a registered
    public offering, with the result that approximately 35% of the Company’s
    outstanding common stock became publicly owned. Since that date, additional
    shares of the Company’s common stock have become publicly owned as a result of
    sales by such stockholders. During 1998, AIG increased its 49% beneficial
    ownership of the Company’s outstanding common stock to 52% as of year end. As of
    March 11, 1999, AIG’s beneficial ownership interest increased to approximately
    55% as a result of additional share purchases.

    The Company, through its wholly-owned subsidiaries, TRC, Trans Re Zurich
    (TRZ), acquired by TRC in 1996 (See Note 1 of Notes to Consolidated Financial
    Statements), and Putnam (contributed by the Company to TRC in 1995), offers
    reinsurance capacity for a full range of property and casualty products on a
    treaty and facultative basis, directly and through brokers, to insurance and
    reinsurance companies, in both the domestic and international markets. One or
    both of TRC and Putnam is licensed, accredited, authorized or can serve as a
    reinsurer in 50 states, Puerto Rico, Guam and the District of Columbia in the
    United States. TRC is licensed by the federal government of and seven provinces
    in Canada. TRC is also licensed in Japan, the United Kingdom and the Dominican
    Republic and is registered or authorized as a foreign reinsurer in Peru,
    Colombia, Argentina (where it also maintains a representative office in Buenos
    Aires, Transatlantic Re (Argentina) S.A.), Brazil (where it maintains a
    representative office in Rio de Janeiro, Transatlantic Re (Brasil) Ltda.) Chile,
    Mexico, Ecuador, Guatemala, Venezuela and France. In addition, TRC is licensed
    in the Hong Kong Special Administrative Region, People’s Republic of China, and
    maintains a branch in Hong Kong. Also, TRC is authorized to maintain a
    representative office in Shanghai, People’s Republic of China. TRZ is licensed
    as a reinsurer in Switzerland. TRH’s (Transatlantic Holdings, Inc. and its
    subsidiaries) principal lines of reinsurance include general liability
    (including directors’ and officers’ liability and other professional liability),
    automobile liability (including nonstandard risks), ocean marine and aviation,
    medical malpractice and surety and credit in the casualty lines, and fire and
    allied lines in the property lines. Reinsurance is provided for most major lines
    of insurance on both excess-of-loss and pro rata bases.

    Each of TRC and Putnam is currently rated ‘A++ (Superior)’, the highest
    rating classification, by A.M. Best Company (Best’s) and ‘AA’, the second
    highest major rating classification, by Standard and Poor’s (S&P). TRC is also
    rated Aa1 (‘Excellent’), the second highest rating classification, by Moody’s
    Investors Service (Moody’s) and TRZ is rated ‘A’ by S&P. Best’s, S&P and Moody’s
    are independent industry rating organizations. A publication of Best’s indicates
    that the ‘A++ (Superior)’ rating is assigned to those companies that, in Best’s
    opinion, have, on balance, superior financial strength, operating performance
    and market profile when compared to standards established by Best’s and that
    have a very strong ability to meet their ongoing obligations to policyholders. A
    publication of S&P advises that companies that receive an insurer financial
    strength rating of ‘AA’ have very strong financial security characteristics
    differing only slightly from those rated higher, and that companies that receive
    a rating of ‘A’ have strong financial security characteristics but are somewhat
    more likely to be affected by adverse business conditions than are insurers with
    higher ratings. A publication of Moody’s advises that an insurance financial
    strength rating of Aa1 is assigned to those ranked at the higher end

    http://www.secinfo.com/dsvRa.6kf.htm

  2. http://www.secinfo.com/dsvr4.57Dq.htm#TOC
    American International Group Inc. SC13G AmeriCredit Corp 8/14/00

    American International Group Inc
    (Parent Holding Company)
    70 Pine St, New York NY 10270
    Incorportaed in DE
    IRS 13-2592361
    SEC CID 5272

    AIG Global Investment Group, Inc.
    (Parent Holding Company or Control Person)
    70 Pine Street
    New York, New York 10270

    John McStay Investment Counsel, L.P.
    (Investmenet Advisor)
    5949 Sherry Lane
    Suite 1600
    Dallas, Texas 75225

    (How many thought an American company) ?

    Symbols
    AIG, AFF, AVF, AmIntG CUSIP/CINS/PPN
    Issuer # 026874

    434 Affiliate Relationships including:
    Bear Stearns Companies Inc.,
    Bear Stearns & Co. Inc. NY
    J P Morgan Chase & Co
    [ formerly Chase Manhattan Corp/DE ]

    http://www.secinfo.com/$/SEC/Registrant.asp?CIK=5272&View=Relationships&List=A#Affiliates

    69 Owner ‘Issuer’…
    Including:
    69 “Owner” Relationships where the security “ISSUER” is…)

    American Bankers Insurance Group Inc
    General Motors Financial Company/Inc
    [formerly Americredit Corp]
    Blackstone Group L/P
    21st Century Insurance Group
    [formerly 20th Century Industries]

    Subject Company or Serial Company
    1stTime Last Relationship “Issuer”
    12/27/94 9/28/07 SC 13D 21st Century Insurance Group [ formerly 20th Century Industries ]
    2/7/97 SC 13D Acmat Corp
    4/12/96 8/8/96 SC 13G Acmat Corp
    2/8/05 SC 13G Airgate Pcs Inc
    12/30/96 SC 13D Alcohol Sensors International Ltd
    7/18/94 1/21/97 SC 13D Alexander & Alexander Services Inc
    2/1/07 12/18/07 SC 13G Allied World Assurance Co Holdings/AG [ formerly Allied World Assurance Co Holdings Ltd ]
    1/16/98 3/23/98 SC 13D American Bankers Insurance Group Inc
    1/28/98 3/18/98 DFAN14A American Bankers Insurance Group Inc
    4/12/01 7/26/01 425 American General Corp/TX
    2/16/99 4/7/99 SC 13G American Shared Hospital Services
    2/14/06 SC 13G American Skiing Co/ME [ formerly Asc Holdings Inc ]
    2/13/08 2/16/10 SC 13G Avalon Pharmaceuticals Inc
    12/17/10 3 Blackstone Group L/P
    12/17/10 4 Blackstone Group L/P
    12/17/10 SC 13G Blackstone Group L/P
    8/14/00 SC 13G Bright Horizons Family Solutions Inc
    2/16/99 SC 13G Dairy Mart Convenience Stores Inc
    2/16/99 SC 13G Danskin Inc
    2/13/08 2/16/10 SC 13G eTelecare Global Solutions/Inc
    9/29/08 12/15/08 SC 13D eTelecare Global Solutions/Inc
    8/14/00 SC 13G General Motors Financial Company/Inc [ formerly Americredit Corp ]
    8/25/00 9/8/00 SC 13D HSB Group Inc
    8/18/00 425 HSB Group Inc
    9/7/99 9/10/99 SC 13G Imagex Com Inc
    8/15/06 4 Ipc Holdings Ltd
    4/9/96 8/15/06 SC 13D Ipc Holdings Ltd
    3/23/06 2/16/10 SC 13G iPCS/INC [ formerly Ipcs Inc ]
    9/11/07 10/21/09 4 iPCS/INC [ formerly Ipcs Inc ]
    3/16/06 3 iPCS/INC [ formerly Ipcs Inc ]
    9/7/06 SC 13D Kinder Morgan Kansas/Inc [ formerly Kinder Morgan/Inc ]
    12/11/97 11/24/99 SC 13D Kroll Inc [ formerly Kroll O Gara Co ]
    2/13/02 SC 13G MCG Capital Corp
    11/9/10 3/8/11 SC 13G Metlife Inc
    8/14/00 SC 13G Metris Companies Inc
    2/13/98 6/9/99 SC 13G Mettler Toledo International Inc [ formerly Mettler Toledo International Inc ]
    3/22/04 2/14/06 SC 13G Nes Rentals Holdings Inc
    5/7/01 SC 13G Nitches Inc [ formerly Beebas Creations Inc ]
    12/31/07 1/18/08 4 NovaRay Medical/Inc [ formerly Vision Acquisition I/Inc ]
    1/10/08 SC 13G NovaRay Medical/Inc [ formerly Vision Acquisition I/Inc ]
    12/31/07 3 NovaRay Medical/Inc [ formerly Vision Acquisition I/Inc ]
    4/15/05 2/17/09 SC 13G Oglebay Norton Co/Ohio [ formerly On Minerals Co Inc ]
    4/15/05 3 Oglebay Norton Co/Ohio [ formerly On Minerals Co Inc ]
    10/22/03 SC 13G Palm Inc [ formerly Palmone Inc ]
    2/14/06 SC 13G PCCW Ltd [ formerly Cable & Wireless Hkt Ltd ]
    2/17/09 SC 13G Phosphate Holdings/Inc
    12/8/03 10/6/09 4 Primus Telecommunications Group Inc
    1/10/03 SC 13D Primus Telecommunications Group Inc
    2/14/01 SC 13G Probex Corp [ formerly Conquest Ventures Inc ]
    8/14/00 SC 13G Province Healthcare Co
    2/12/07 2/13/08 SC 13G RAM Holdings Ltd
    6/9/99 2/14/06 SC 13G Riviera Holdings Corp
    2/16/99 SC 13G Rockford Industries Inc
    2/6/04 4 Steinway Musical Instruments Inc [ formerly Selmer Industries Inc ]
    2/16/99 2/6/04 SC 13D Steinway Musical Instruments Inc [ formerly Selmer Industries Inc ]
    8/27/98 SC 13D Sunamerica Inc
    10/22/03 3/25/04 SC 13G Talk America Holdings Inc [ formerly Talk Com ]
    4/14/08 3 Tortoise Energy Infrastructure Corp
    4/1/94 3/10/10 SC 13D Transatlantic Holdings Inc
    6/12/09 4 Transatlantic Holdings Inc
    8/14/00 SC 13G Transmontaigne Inc [ formerly Transmontaigne Oil Co ]
    4/11/05 2/12/07 SC 13G Trico Marine Services Inc
    2/15/00 1/10/06 SC 13D TUTOR PERINI Corp [ formerly Perini Corp ]
    4/28/04 12/28/05 4 TUTOR PERINI Corp [ formerly Perini Corp ]
    9/26/01 SC 13G Warrantech Corp
    3/15/04 3/8/05 4 World Air Holdings/Inc [ formerly World Airways Inc/DE ]
    2/8/05 5 World Air Holdings/Inc [ formerly World Airways Inc/DE ]
    8/30/99 SC 13G World Air Holdings/Inc [ formerly World Airways Inc/DE ]
    9/3/04 6/21/05 SC 13G World Airways Inc

    —————————————————————–

    Example of 2007 Stockownership of some of the entities just an example of the disclosures one can find inside the 4/A’s.

    Gem Parallel Fund LP 4/A

    9/20/07
    Primus Telecommunications Gr..Inc
    Merrill Corp-MD/FA
    Aig Global Emerging Markets Fund LLC
    Aig Global Sports & Entertainment Fund LP
    Aig Gsef/L/P
    Aig Capital Partners Inc
    AIG Capital CORP
    American International Group Inc
    AIG Global Asset Management Holdings Corp
    AIG GSEF Investments/LTD
    On 4/A – Stock Ownership

    Explanation of Responses:

    1. Sales were made by AIG Global Emerging Markets Fund, L.L.C. (“AIGGEM”), a Delaware limited liability company, having its principal office at 599 Lexington Avenue, 24th Floor, New York, NY 10022;

    GEM Parallel Fund, L.P. (“GEM Parallel”), a Delaware limited partnership, having its principal office at 599 Lexington Avenue, 24th Floor, New York, NY 10022; and

    AIG Global Sports and Entertainment Fund, L.P. (“AIGGSEF”), a Cayman Islands exempted limited partnership, having its principal office at Ugland House, South Church Street, George Town, Grand Cayman, Cayman Islands

    (AIGGEM, GEM Parallel, and AIGGSEF, collectively, the “Funds”) pursuant to a Rule 10b5-1 plan (“Plan”) adopted on May 21, 2007 and amended on May 31, 2007.

    The adoption of the Plan was reported in the issuer’s Form 8-K filed on May 24, 2007.

    2. Pursuant to the Plan, AIGGSEF sold 300,000 shares on June 20, 2007 at $ 1.03; 100,000 shares on June 21, 2007, at $ 1.0325 and 10,000 shares on June 21, 2007 at $ 1.04, leaving it owning a balance of 7,860,004 shares on June 21, 2007, after such sales. In addition, pursuant to the Plan, GEM Parallel sold 28,800 shares on June 20, 2007 at $ 1.03; 9,600 shares on June 21, 2007, at $ 1.0325 and 960 shares on June 21, 2007 at $ 1.04, leaving it owning a balance of 752,088 shares on June 21, 2007, after such sales.

    In addition, pursuant to the Plan, AIGGEM sold 271,200 shares on June 20, 2007 at $ 1.03; 90,400 shares on June 21, 2007, at $ 1.0325 and 9,040 shares on June 21, 2007 at $ 1.04, leaving it owning a balance of 7,107,916 shares on June 21, 2007, after such sales.

    3. Certain of the Reporting Persons may be deemed to constitute a “group” within the meaning of the Securities Exchange Act of 1934, as amended, and the rules promulgated pursuant thereto.

    Each Reporting Person may be deemed to beneficially own the shares held directly by AIGGEM, GEM Parallel and AIGGSEF. The shares reported herein represent the entire amount of shares held directly by each of AIGGEM, GEM Parallel and AIGGSEF. AIGGEM, GEM Parallel and AIGGSEF each directly holds shares representing less than 10 percent of the Issuer’s common stock.

    4. Each Reporting Person disclaims a pecuniary interest in a portion of the shares reported herein. Each Reporting Person other than AIGGEM, GEM Parallel and AIGGSEF disclaims beneficial ownership of the shares held directly by each of AIGGEM, GEM Parallel and AIGGSEF except to the extent of their respective pecuniary interest, if any, therein. AIGGEM disclaims beneficial ownership of the shares held directly by GEM Parallel and AIGGSEF. GEM Parallel disclaims beneficial ownership of the shares held directly by AIGGEM and AIGGSEF. AIGGSEF disclaims beneficial ownership of the shares held directly by AIGGEM and GEM Parallel. The reporting of the shares as shown herein shall not be deemed in admission of beneficial ownership of all such shares as to any Reporting Person for purposes of Section 16 or for any other purpose.

    5. This Statement of Changes in Beneficial Ownership does not reflect subsequent purchases of shares by certain subsidiaries of American International Group, Inc. that are not Reporting Persons herein, which are described on a separate Statement of Changes in Beneficial Ownership and as to which the Reporting Persons herein, except as otherwise reported in such separate Statement, disclaim beneficial ownership.

    GEM Parallel Fund LP
    175 Water Street, 23rd Floor
    New York, New York 10038

    http://www.secinfo.com/d11MXs.u2y64.htm

  3. Ann,

    Thanks. Unbelievable power.

  4. AZ Rep. Carl Seel Drops Amendment Requiring Pre-Foreclosure Chain of Title, 2 Days After Servicer Grants Him a Principal Reduction
    ———————————————————————
    One thing though… from what Darrell explained to me, Carl Seel must have been in a very good mood the day of his unexpected tardiness, because even though he had been previously turned down twice for his own loan modification, two days before he showed up too late to propose the amendment, Ocwen granted him a PRINCIPAL REDUCTION that reduced his mortgage to $88,000 from roughly $190,000… that’s a reduction of approximately 56% give or take a few points one way or the other.

    Full story at
    http://mandelman.ml-implode.com/2011/04/az-rep-seel-drops-amendment-requiring-pre-foreclosure-chain-of-title-2-days-after-servicer-grants-principal-reduction/

  5. Sorry Carrie, I realized that after I posted.

  6. A West Virginia pension fund sued Bank of America Corp. (BAC), Citigroup Inc. (C)’s Citibank unit and UBS AG (UBSN) claiming they manipulated the London Interbank Offered Rate, or Libor, in violation of U.S. antitrust law.

    The Carpenters Pension Fund of West Virginia filed a complaint in federal court in Manhattan yesterday claiming the banks and a group of unnamed co-conspirators deliberately understated their borrowing costs to depress Libor, lowering their interest expenses on products tied to the rate.

    The pension fund seeks to represent a class of all clients of the banks that invested in Libor-based products between 2006 and 2009. The suit seeks unspecified damages, which may be tripled under antitrust law.

    “About $350 trillion worth of financial products globally reference Libor, and the lower Libor rates during the relevant period robbed lenders of significant amounts of interest income,” the pension fund claimed in its complaint.

    “We believe the suit is without merit,” said Danielle Romero-Apsilos, a spokeswoman for New York-based Citigroup.

    Lawrence Grayson, a spokesman for Charlotte, North Carolina-based Bank of America, had no immediate comment on the suit. Torie Pennington von Alt, a spokeswoman for Zurich-based UBS, didn’t immediately return a voice-mail message seeking comment on the suit.

    On April 15, three European asset-management firms sued a group of banks including Bank of America, Citibank, JPMorgan Chase & Co. and Barclays Bank Plc, claiming they manipulated Libor.

    U.S. and U.K. officials are cooperating in a probe of possible Libor manipulation, a person close to the investigation said last month.

    The case is Carpenters Pension Fund of West Virginia v. Bank of America, 11-CV-2883, U.S. District Court, Southern District of New York (Manhattan).

    To contact the reporter on this story: Bob Van Voris in New York federal court at rvanvoris@bloomberg.net.

  7. Hey, cubed2k—that wasn’t me, that was “Pat”!

    Anyway, yes, I have ONLY been in “survival mode” and “fight mode” for the last year and a half…a husband, 2 kids, 2 dogs, a cat and a rabbit…credit shot, not much income, but working hard to make some…any way we can.

    Thank heaven for this site—don’t feel so alone in the wilderness of fraud hell!

  8. Bank of America Corp. (BAC) was accused by a top official at the Iowa attorney general’s office of engaging in a divide-and-conquer strategy by undermining support for the settlement of a nationwide probe into foreclosure practices, a person familiar with the matter said.

    The bank tried to get attorneys general to break away from those supporting the proposed accord, Iowa Assistant Attorney General Patrick Madigan said during a recent conference call, according to the person. A second person familiar with the settlement talks said the bank sought to sow dissent among the states, eight of which have publicly criticized the proposal’s terms. Both people asked not to be identified because the talks are private. Madigan declined to comment.

    “We have held face to face negotiating sessions and our negotiations continue,” Iowa Attorney General Tom Miller, a Democrat who leads the 50-state effort, said in a statement. “We believe all the banks are negotiating in good faith.”

    Madigan, who was giving an update to state officials, said the largest U.S. lender by assets was taking a “divide-and- conquer” approach in a bid to disrupt negotiations, according to the person on the call. Jumana Bauwens, a spokeswoman for the Charlotte, North Carolina-based bank, declined to comment.

    State and federal agencies including the Justice Department last month submitted a 27-page settlement proposal, or term- sheet, to five mortgage servicers, including Bank of America. The document was offered to start negotiations with banks as part of the 50-state investigation.

    Six-Month Probe

    The six-month probe was triggered by claims of faulty foreclosure practices following the housing collapse, which state officials said may violate their laws. The people said Madigan’s comments were made on a call that took place within the past two months, after the term sheet was made public.

    Since the settlement proposal was circulated in early March, at least eight Republican attorneys general have assailed its terms as overreaching. They specifically oppose a proposal that would require the servicers to pay for reducing mortgage balances owed by borrowers.

    In addition to Bank of America, the other banks negotiating with state and federal officials are JPMorgan Chase & Co. (JPM), Wells Fargo & Co. (WFC), Citigroup Inc. (C) and Ally Financial Inc. They control more than half of the mortgage servicing market, Miller has said.

    Geoff Greenwood, Miller’s spokesman, said state attorneys general would begin talks with other mortgage servicing companies after reaching a final agreement with the five banks.

    “We will start looking at servicers beyond the largest five after we finish this phase of our effort,” he said.

    Principal Reductions

    As of last week, the states had yet to approach banks with a proposed dollar amount that would fund principal reductions for borrowers, Greenwood said at the time.

    Oklahoma Attorney General Scott Pruitt, a Republican, said last week he may negotiate an alternative accord with the banks if the national settlement turns out to be “inconsistent with our conviction.”

    Pruitt said in a letter to Miller last month that forcing lenders to reduce mortgage balances would take away incentives for banks to loan money and “destroy an already devastated housing market.”

    Besides Oklahoma, state attorneys general who have criticized the proposal to reduce principal balances are Florida, Texas, South Carolina, Virginia, Alabama, Nebraska and Georgia.

    Four of them said in a letter to Miller that principal reduction constitutes a “moral hazard.”

    No Overt Requests

    Lauren Kane, a spokeswoman for Georgia Attorney General Sam Olens, said in an e-mailed statement that “no one has asked” Olens to oppose the settlement proposal. One bank, which Kane declined to identify, discussed with her office a recent settlement with federal regulators over foreclosure practices, she said.

    “We have been in contact with numerous industry representatives on the local and national level, who have voiced their concerns throughout the process,” said Diane Clay, a spokeswoman for Pruitt, in an e-mailed statement.

    Adam Piper, a spokesman for South Carolina Attorney General Alan Wilson, said “two banking representatives shared research” with his office and “pointed out some concerns with certain provisions.” While not identifying the banks, he added that they didn’t ask Wilson to oppose a potential accord.

    In their talks so far, the states agreed on some terms while failing to reach an accord on monetary payments by lenders, a person familiar with the talks said this month.

    Mortgage Servicers

    In March, mortgage servicers agreed with U.S. banking regulators to a series of reforms, including conducting a review of loans that went into foreclosure in 2009 and 2010 and improving procedures for modifying loans and seizing homes.

    The 50 states and the Justice Department seek to set requirements for how banks service loans and conduct home foreclosures.

    Any state agreement with banks on principal reductions will depend on the size of the writedowns, the incentives for the servicers built into the settlement and other details which continue to be sorted out, said the person, who declined to be identified because the talks are confidential.

    Another person familiar with the talks said last week that a final agreement could take as long as four months to reach.

    Pruitt said his plan could be a model for other states.

    On April 26, Jennifer Meale, a spokeswoman for Florida Attorney General Pam Bondi, said Bondi “looks forward to reviewing” Oklahoma’s plan. Yesterday, Meale said Bondi hasn’t been urged by the banks to oppose the term sheet.

    “We have had general discussions with banks about how the matter might be resolved,” Meale said in an e-mailed statement.

    To contact the reporter on this story: David McLaughlin in New York at dmclaughlin9@bloomberg.net.

    To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

  9. Carrie,

    ” This is a terrible way to live but I am taking care of my home and living one day at a time. it beats leaving it vacant and pulling down the neighborhood with another foreclosure.”

    A. Yes it’s terrible way to live but so what.

    B. taking care of your home? Just do minimum.

    C. Save your money. Get busy creating more money, and save it god damn it. Sell your useless shit on ebay or whatever. Have a garage sale.

    D. The number one command given to life, and that includes humans, plants, fishes, dogs, cats, all life, the NO.1 command is to survive. Does morals, ethics, reason, etc come above this command? Answer- NO, NO, NO, NO. So survive.

    E. Who cares about your neighbors and what they think. Hold your head up high and say I’m gonna fight UNTIL they evict me. And have fun beating the system for as long as you can.

    F. The stupid people working for these organizations don’t know what we know. So, educate them or get mad at them, whatever, doesn’t matter, you worried about hurting somebodies feelings, screw that viewpoint. The viewpoint you want is to be effective.

    Who gives a flying yahoo about your neighbors or anybody else. Doesn’t matter, YOU survive, not them, the banks, the servicers. Doesn’t matter. What matters is your survival since their money=credit=debt is all BS. So, don’t take it seriously. It’s ok to get mad, but keep your wits about you.

  10. Interesting Proposal

  11. Carrie,

    I am in a non-judicial, I tried the loan modification route and was turned down, my steady self employed income of 20 years took a beating, I notified the mortgage company ( I mean servicer/ debt buyer) right away and I begged for help while I look for a new position which I now have a year and a half to late!

    The servicer would not budge no modification possible! I filed Chapter 7 and continued to pay my mortgage trying to do the right thing even liquidated my 401 K and all my savings.

    Then they started refusing payments that was two years ago. I have been treated for panic attacks and fear due to this mess. I can’t tell you what to do but I have stayed in my home and fighting with what I have learned here on this web site and the help a good attorney. This is a terrible way to live but I am taking care of my home and living one day at a time. it beats leaving it vacant and pulling down the neighborhood with another foreclosure. Problem is I could pay for this house if I could just find out who I owe. in the mean time they will need to meet me in court if they want this house or drag me out by my hair.
    Never thought I would want to own a gun but now I am not so sure!!

    MAD AS HELL!

    STAY….FIGHT if not you who will?

  12. Carla, You have to live somewhere….

  13. A Must Read!!!!!!!!

    http://www.huffingtonpost.com/rj-eskow/why-we-regulate—and-why_b_854175.html

    A Must Read!
    Regulatory agencies exist to protect the public, not the corporations they regulate.

    The head of the Office of Comptroller of the Currency doesn’t seem to understand that. But that’s not why John Walsh needs to resign.

    The OCC was created to stabilize the economy, make it easier to conduct trade, and protect people’s savings. It didn’t do that. In fact, it ignored the warnings raised by others. But that’s not why John Walsh needs to resign.

    His agency failed to anticipate the foreclosure crisis, and it overlooked bank criminality. Later John Walsh misled a Senate panel — and the general public — about the size of the problem.

    And even after being forced to clarify those misleading statements, Mr. Walsh keeps on repeating them. Whether by intent or ineptitude, he continues to misinform the public.

    And that’s why John Walsh needs to resign.
    The Interview
    John Walsh keeps using deceptive language in order to minimize bank fraud.

    This week he told the Financial Times that there were “a small number of cases where we felt there should have been a stop” to foreclosures. A “small number” — that’s the same phrase he used in testifying before a Senate panel.

    Under pressure, he eventually conceded that there were probably “tens of thousands” of them, even by his own limited definition. But he didn’t explain that to the readers of the Financial Times when he used the same misleading phrase again.

    Walsh also says that the problem of bank foreclosure fraud “came to light at the end of September… through some court proceedings.” That’s completely false.

    Court filings on the topic have been public since 2009. (See US Bank vs. Ibanez, etc.) What’s more, eagle-eyed observers had been finding evidence of fraudulent foreclosure activity as far back as 2003 (we’ll make some more information available on that score shortly).

    Walsh’s video interview is a slow-motion train wreck. He compares bank criminality to speeding — “as with speeding, if there’s a violation of law there will be penalties.” He announces unspecified penalties, but promises they’ll be less severe “if we find that not a lot of homeowners were injured” — which is exactly the “finding” he’s been jury-rigging the numbers in order to achieve.

    ( He also says that “subprime underwriting that was done within the national banks was done properly.” Interesting.)
    Walsh makes it clear that he’s more interested in closing this case than he is in justice, or in preventing future crimes. We need to “complete the process,” he says, to “draw a line and get the industry to move on.”

    People talk of “regulatory capture,” that process where an agency becomes a servant of the industry it regulates.
    John Walsh is the Patty Hearst, the “Tania,” of regulatory capture.

    Yves Smith has more information on the OCC and Walsh, and asks: “What do we call the OCC? The Office of Capital Corruption? The Office of Criminal Capitulation?” Before we change its name, though, let’s change its leader.

    How did it come to this?

    Wildcat Banks and Dollars in Every Color
    Regulators exist to protect the public, and John Walsh’s agency, the Office of the Comptroller of the Currency, exists to ensure that we have an honest and reliable currency and banking system.

    Back in the nineteenth century, “wildcat banks” were springing up everywhere, issuing unreliable dollars that other banks often didn’t recognize at full value. Some estimates say that by 1860 there may have been as many as 10,000 different bank notes in circulation.

    The federal government needed to stabilize the nation’s finances and establish a reliable national currency. (It needed to borrow money for the Civil War, too.) So it issued green dollars (“greenbacks”), and gave them its full guarantee.

    The OCC was formed to make sure that banks were reliable and were handling the new currency properly. A dollar needed to be worth a dollar everywhere. (Some Libertarians want to go back to multiple currencies, but that’s a topic for another day.)

    In a way, the OCC made the Sears catalog possible — and it helped make a national economy possible, too. It wasn’t formed “of the banks, by the banks, and for the banks.” The OCC was created to protect people’s savings, and to encourage commerce.
    Enter John Walsh

    John Walsh became the OCC’s chief of staff in 2005, the same year that the OCC issued a regulation prohibiting states from regulating national banks. That regulation was finally overthrown by the Supreme Court in 2009, but the OCC tied the states’ hands as the system collapsed.

    Mr. Walsh joined the OCC when John Dugan, a former bank lobbyist and political apparatchik, was in charge. (Dugan consistently made statements that served his industry’s interests rather than the public’s and displayed an appalling ignorance of his business — or hoped for it from his listeners).

    Walsh became acting head when Dugan’s term ended in 2010, and he’s been there ever since.

    Walsh’s OCC recently took control of the Office of Thrift Supervision, too, and the OTC’s recent history of disgrace and failure was thoroughly documented in the Levin/Coburn Report on the financial crisis.

    There were two important priorities for the head of the OCC when Mr. Walsh took the job: restore the public trust and confidence shattered by his predecessor, and ensure that similar regulatory breakdowns could never happen again. Walsh has failed at both assignments.

    America’s Least Wanted: Covering Up
    Of course, he’s not that John Walsh, the America’s Most Wanted guy. Unlike his namesake, this John Walsh doesn’t seem to want to catch wrongdoers. Instead of pursuing criminals and exposing them to public scrutiny, this John Walsh exposed his agency to public embarrassment by attempting to do the opposite.

    Mr. Walsh told a Senate panel that “our work identified a small number of foreclosure sales that should not have proceeded [emphasis mine].” But his “small number” comment was only put in context afterwards, through an OCC spokesman who explained when pressed that the agency had only examined 2,800 foreclosures.

    That’s less than three-tenth of one percent of the foreclosures underway at the time. So how could it have found a large number?
    Walsh later conceded that the actual number of wrongful foreclosures might be “in the tens of thousands.” And even that number’s artificially small, since Walsh insists on a narrow and unreasonable definition of wrongful bank behavior.

    As Reuters thoroughly documented, both Walsh’s methods and his statements were suspect. Since his testimony was widely reported, but the clarifications were not, Walsh managed to leave a permanently misleading impression with the American public.
    The Sales Pitch

    Said Walsh: “If there is any reassurance here, and there is sadly very little, it is that borrowers subject to foreclosure in our sample were indeed seriously delinquent.”

    But why were they delinquent? In many cases people fell behind on their loans because predatory banks and loan servicers hit them with unfair, undeserved fines and additional fees.

    Sometimes lenders forced a loan into delinquency with fraudulent fees, then justified a foreclosure because the borrower was behind on payments. Walsh has made this cynical industry argument his own.

    Walsh comes across like a smooth salesman for the banks and mortgage companies he’s supposed to regulate. As his video interview with the Financial Times demonstrates,
    Walsh even uses the industry’s slick phraseology (“improper” instead of “illegal,” for example) to describe massive, systematic, serial fraud by banks and loan servicers.

    Even Financial Times reporter Tom Braithwaite succumbs, describing thousands of fraudulent documents with the industry-honed phrase “shoddy paperwork.”

    Walsh has also suggested that $20 billion would be an unfairly high amount to levy on the banks, given the scale of their wrongdoing.

    Actually, it’s extraordinarily low. We’ve laid out our argument in more detail elsewhere, but the U.S. housing market has lost ten trillion dollars in value — and homeowners have been left holding the bag.

    Homeowners didn’t choose the appraisers, write the loan contracts, or hire PR firms to convince the public that homes were a fail-safe investment. Yet homeowners, not banks, are paying the price.

    Time to resign
    John Walsh doesn’t seem to understand his agency’s mission.
    His organization missed the warning signs for the last crisis, and now he’s papering over a pattern of criminality by the institutions he supervises.

    He’s “back-dating” foreclosure fraud, claiming it only surfaced last September.
    That’s either because he intended to mislead his audience, or because he lacks a fundamental understanding of the most urgent matter before his agency.

    He used slippery language to persuade some senators that only a “small number” of foreclosures were improper, was forced to concede it was a misleading statement, and then used the same language again.

    He either did that despite the fact that it misled people once before, or because it misled people once before.
    Whatever his reasons, it’s time for John Walsh to resign.

  14. Carol Asbury, Esq. Say it aint so?

    ud.org/2011/04/28/4closurefraud-org-attorney-carol-asbury-indicted-by-doj-fbi-irs-fdle-and-secret-service/

    if she is proven guilty

    Two wrongs dont make a right

  15. One thing that you can bet on for sure with the Wall Street crowd, if there’s a possibility for a lawsuit for profits, a clawback, even the slightest chance of recovery of funds and these greedy bastards will be all over it like a cheap suit, even if they wear Armani.

    And this is exactly why they won’t survive. They’ll eat their young if it satiates even short term. Their incessant need for ever more plunder will be their undoing, it’s simply not sustainable.

    As Neil has pointed out succinctly, over 600 trillion dollars of fabricated out of thin air, worth-less money has to come crashing down at some point. However, this may prove to be the undoing of all. All for the sake of more and more wealth. Death by hubris and consumption. Pigs.

  16. dan-o. I called every bond insurer I could find, nobody acknowledged to being the insurer. They didn’t want to talk about it.

  17. uprootedone,

    Do you have a link to what you posted?

  18. how do homeowners find out who insured the mortgage pool their mortgage was allegedly in to see if it was paid off?

  19. Desperate times call for desperate measures…
    Our income is minuscule at this point, so I’m sure we qualify for C 7.
    My kids grew up in this house, and for a million reasons, we don’t want to leave.
    I fought like HELL to get a “loan mod”, and am now in a “trial payment plan”—just a way for them to see how much they can squeeze out of us…
    IndyMac is a debt collector, so I’m paying a debt collector on an essentially “phantom loan” that has been paid off—which is what I’m gathering from this site…
    So, my question now is, do I keep paying a debt collector, or do I let them try to foreclose and fight it in court, or do I file for BK right now—which I had been putting off anyway—, and see what I can do with that?
    I talked to an attorney last week, and he said he can’t do anything for me until there is some “precedent making” decision in the California courts regarding this mess.
    So, I’m in a weird limbo, wondering if I should put my second “trial payment” in the mail today…to a debt collector.

  20. uprootedone

    This is true !

    Homeowners didn’t choose the appraisers, write the loan contracts, or hire PR firms to convince the public that homes were a fail-safe purchase. Yet homeowners, not banks, are paying the price.

    I just counted the number of home in my neighborhood pocket last night. The total count, 82 homes. Most loans were originated in the name of the builder’s Mortgage company that was nothing but a joint venture between the builder and Wells Fargo. As to date, there 76 homes either foreclosed or in foreclosure. There are 6 original homeowners left living in the neighborhood. I addition 33 appraisals were collected. All 33 ordered by Wells Fargo, all were the same pictures and comps. Only the numbers were fudged. All were produced by the same appraiser. Someone needs to go to jail and it won’t be me !

  21. Just like you have been saying….Follow the money!

  22. I am starting to find this dirt very amusing. Hopefully the story is not just white wash to appease the general public. Great postings and comments on this web site. I may have lost $ 250,000 but I have gain an education. Never trust Wall Street and your government again.

  23. The post “Terrifying Facts About The State of The US Economy- The Socio-Economic Catastrophe ”
    is from http://www.mattweidnerlaw.com/blog

  24. Terrifying Facts About The State of The US Economy- The Socio-Economic Catastrophe
    ————————————————————

    More Americans than ever in our country’s history are utterly dependent upon government handouts for basic survival. This stunning fact collides head on with an equally disturbing fact, the US Government pays out more each year in benefits than we are taking in in tax revenue.

    Most disturbing however is the fact that MILLIONS OF JOBS, THE JOBS THAT ARE ABSOLUTELY NECESSARY TO HELP PLUG THE HOLES IN THIS SINKING SHIP ARE NOWHERE TO BE FOUND.

    THE JOBS DO NOT EXIST NOW AND THE INDUSTRY NEEDED TO CREATE THESE JOBS IS GONE!

    See Below:

    While wages and other job-related income fell by a record $206 billion last year to $7.84 trillion, transfer payments from the government such as unemployment checks and Social Security burgeoned by $231 billion to $2.1 trillion. Meanwhile, the amount of taxes that individual Americans paid plummeted by $325 billion to $2.1 trillion as a result of middle-class tax cuts and because nearly 6 million people were thrown out of work and are no longer paying payroll taxes.

    The Washington Times
    http://www.washingtontimes.com/news/2010/mar/01/americans-reliance-on-government-at-all-time-high/?page=1

  25. what regulators could we sue in our lawsuits of the pretend lenders…if it was a bank for example…could we sue the FDIC for lack of proper oversight or other? any other entities we could add that have a direct dealing with the banks…and loaned them money through the discount windows etc.

  26. @dny: I read that too and it sounded great – but what about the whitewashing? Today’s market ticker and today’s naked capitalism both have stories on the REMIC fraud – in case you haven’t seen them yet.

    @uprootedone: Great comment! Lots of good stuff in there. Thanks.

  27. A Must Read!

    Regulatory agencies exist to protect the public, not the corporations they regulate. The head of the Office of Comptroller of the Currency doesn’t seem to understand that. But that’s not why John Walsh needs to resign.

    The OCC was created to stabilize the economy, make it easier to conduct trade, and protect people’s savings. It didn’t do that. In fact, it ignored the warnings raised by others. But that’s not why John Walsh needs to resign.

    His agency failed to anticipate the foreclosure crisis, and it overlooked bank criminality. Later John Walsh misled a Senate panel — and the general public — about the size of the problem. And even after being forced to clarify those misleading statements, Mr. Walsh keeps on repeating them. Whether by intent or ineptitude, he continues to misinform the public.

    And that’s why John Walsh needs to resign.

    The Interview

    John Walsh keeps using deceptive language in order to minimize bank fraud.

    This week he told the Financial Times that there were “a small number of cases where we felt there should have been a stop” to foreclosures. A “small number” — that’s the same phrase he used in testifying before a Senate panel.

    Under pressure, he eventually conceded that there were probably “tens of thousands” of them, even by his own limited definition. But he didn’t explain that to the readers of the Financial Times when he used the same misleading phrase again.

    Walsh also says that the problem of bank foreclosure fraud “came to light at the end of September… through some court proceedings.” That’s completely false.

    Court filings on the topic have been public since 2009. (See US Bank vs. Ibanez, etc.) What’s more, eagle-eyed observers had been finding evidence of fraudulent foreclosure activity as far back as 2003 (we’ll make some more information available on that score shortly).

    Walsh’s video interview is a slow-motion train wreck. He compares bank criminality to speeding — “as with speeding, if there’s a violation of law there will be penalties.” He announces unspecified penalties, but promises they’ll be less severe “if we find that not a lot of homeowners were injured” — which is exactly the “finding” he’s been jury-rigging the numbers in order to achieve.

    ( He also says that “subprime underwriting that was done within the national banks was done properly.” Interesting.)

    Walsh makes it clear that he’s more interested in closing this case than he is in justice, or in preventing future crimes. We need to “complete the process,” he says, to “draw a line and get the industry to move on.”

    People talk of “regulatory capture,” that process where an agency becomes a servant of the industry it regulates.

    John Walsh is the Patty Hearst, the “Tania,” of regulatory capture. Yves Smith has more information on the OCC and Walsh, and asks: “What do we call the OCC? The Office of Capital Corruption? The Office of Criminal Capitulation?” Before we change its name, though, let’s change its leader.

    How did it come to this?

    Wildcat Banks and Dollars in Every Color

    Regulators exist to protect the public, and John Walsh’s agency, the Office of the Comptroller of the Currency, exists to ensure that we have an honest and reliable currency and banking system.

    Back in the nineteenth century, “wildcat banks” were springing up everywhere, issuing unreliable dollars that other banks often didn’t recognize at full value. Some estimates say that by 1860 there may have been as many as 10,000 different bank notes in circulation.

    The federal government needed to stabilize the nation’s finances and establish a reliable national currency. (It needed to borrow money for the Civil War, too.) So it issued green dollars (“greenbacks”), and gave them its full guarantee.

    The OCC was formed to make sure that banks were reliable and were handling the new currency properly. A dollar needed to be worth a dollar everywhere. (Some Libertarians want to go back to multiple currencies, but that’s a topic for another day.)

    In a way, the OCC made the Sears catalog possible — and it helped make a national economy possible, too. It wasn’t formed “of the banks, by the banks, and for the banks.” The OCC was created to protect people’s savings, and to encourage commerce.

    Enter John Walsh

    John Walsh became the OCC’s chief of staff in 2005, the same year that the OCC issued a regulation prohibiting states from regulating national banks. That regulation was finally overthrown by the Supreme Court in 2009, but the OCC tied the states’ hands as the system collapsed.

    Mr. Walsh joined the OCC when John Dugan, a former bank lobbyist and political apparatchik, was in charge. (Dugan consistently made statements that served his industry’s interests rather than the public’s and displayed an appalling ignorance of his business — or hoped for it from his listeners).

    Walsh became acting head when Dugan’s term ended in 2010, and he’s been there ever since.

    Walsh’s OCC recently took control of the Office of Thrift Supervision, too, and the OTC’s recent history of disgrace and failure was thoroughly documented in the Levin/Coburn Report on the financial crisis.

    There were two important priorities for the head of the OCC when Mr. Walsh took the job: restore the public trust and confidence shattered by his predecessor, and ensure that similar regulatory breakdowns could never happen again. Walsh has failed at both assignments.

    America’s Least Wanted: Covering Up

    Of course, he’s not that John Walsh, the America’s Most Wanted guy. Unlike his namesake, this John Walsh doesn’t seem to want to catch wrongdoers. Instead of pursuing criminals and exposing them to public scrutiny, this John Walsh exposed his agency to public embarrassment by attempting to do the opposite.

    Mr. Walsh told a Senate panel that “our work identified a small number of foreclosure sales that should not have proceeded [emphasis mine].” But his “small number” comment was only put in context afterwards, through an OCC spokesman who explained when pressed that the agency had only examined 2,800 foreclosures.

    That’s less than three-tenth of one percent of the foreclosures underway at the time. So how could it have found a large number?

    Walsh later conceded that the actual number of wrongful foreclosures might be “in the tens of thousands.” And even that number’s artificially small, since Walsh insists on a narrow and unreasonable definition of wrongful bank behavior.

    As Reuters thoroughly documented, both Walsh’s methods and his statements were suspect. Since his testimony was widely reported, but the clarifications were not, Walsh managed to leave a permanently misleading impression with the American public.

    The Sales Pitch

    Said Walsh: “If there is any reassurance here, and there is sadly very little, it is that borrowers subject to foreclosure in our sample were indeed seriously delinquent.”

    But why were they delinquent? In many cases people fell behind on their loans because predatory banks and loan servicers hit them with unfair, undeserved fines and additional fees.

    Sometimes lenders forced a loan into delinquency with fraudulent fees, then justified a foreclosure because the borrower was behind on payments. Walsh has made this cynical industry argument his own.

    Walsh comes across like a smooth salesman for the banks and mortgage companies he’s supposed to regulate. As his video interview with the Financial Times demonstrates,

    Walsh even uses the industry’s slick phraseology (“improper” instead of “illegal,” for example) to describe massive, systematic, serial fraud by banks and loan servicers.

    Even Financial Times reporter Tom Braithwaite succumbs, describing thousands of fraudulent documents with the industry-honed phrase “shoddy paperwork.”

    Walsh has also suggested that $20 billion would be an unfairly high amount to levy on the banks, given the scale of their wrongdoing.

    Actually, it’s extraordinarily low. We’ve laid out our argument in more detail elsewhere, but the U.S. housing market has lost ten trillion dollars in value — and homeowners have been left holding the bag.

    Homeowners didn’t choose the appraisers, write the loan contracts, or hire PR firms to convince the public that homes were a fail-safe investment. Yet homeowners, not banks, are paying the price.

    Time to resign

    John Walsh doesn’t seem to understand his agency’s mission.

    His organization missed the warning signs for the last crisis, and now he’s papering over a pattern of criminality by the institutions he supervises.

    He’s “back-dating” foreclosure fraud, claiming it only surfaced last September.

    That’s either because he intended to mislead his audience, or because he lacks a fundamental understanding of the most urgent matter before his agency.

    He used slippery language to persuade some senators that only a “small number” of foreclosures were improper, was forced to concede it was a misleading statement, and then used the same language again.

    He either did that despite the fact that it misled people once before, or because it misled people once before.

    Whatever his reasons, it’s time for John Walsh to resign.

  28. Thumbs up to the editorial comment! The one fact that you can glean from this mess is that under no circumstances does any bank want to reveal where the funds they came the seller came from. They do not want to have to prove the transaction of either the origination or subsequent assignments. The will let their any foreclosure case fail before they give up the real flow of funds.

  29. And don’t forget THIS, from Reuters yesterday:

    (Reuters) – The Internal Revenue Service has launched a review of the tax-exempt status of a widely-held form of mortgage-backed securities called REMICs.

    The IRS confirmed to Reuters that the review comes in response to mounting evidence that banks violated tax requirements by mishandling the transfer of mortgages to REMICs, short for Real Estate Mortgage Conduits.

    Should the IRS find reason to take tough action, the financial impact could be enormous. REMIC investments are held by pension funds, in individual retirement plans such as 401(k)s and by state and local government entities.

    http://www.reuters.com/article/2011/04/27/us-usa-mbs-taxes-idUSTRE73Q7UX20110427

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