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“[Nevada Attorney General] Masto didn’t stop there. She also pulled out a bazooka. She accused BofA of failure to properly securitize mortgages, breaking the chain of title and nullifying their standing to foreclose. This is from the amended complaint:

Bank of America misrepresented, both in communications with Nevada consumers and in documents they recorded and filed, that they had authority to foreclose upon consumers’ homes as servicer for the trusts that held these mortgages. Defendants knew (and were on notice) that they had never properly transferred [text redacted] these mortgage to those trusts, failing to deliver properly endorsed or assigned mortgage notes as required by the relevant legal contracts and state law. Because the trusts never became holders of these mortgages, Defendants lacked authority to collect or foreclose on their behalf and never should have represented they could.”

Nevada AG Catherine Cortez Masto Destroys BofA in New Lawsuit

By: David Dayen Wednesday August 31, 2011 6:10 am

Nevada Attorney General Catherine Cortez Masto’s amended complaint in a lawsuit against Bank of America has so many interesting nuances, I think I need a new Internet to catalog them all. But let me start by saying that this complaint is a stick of dynamite to the foreclosure fraud settlement, exposing it as a useless whitewash that won’t deter banks from their criminal practices. Masto joins other skeptical AGs here in not acceding to such a dereliction of duty, and instead she lays out a thorough case of systematic fraud, in this case by Bank of America, at every step of the mortgage process.

First, the background. In October 2008, a group of twelve state Attorneys General, including Nevada, entered into a settlement with Bank of America over predatory lending at the mortgage lender Countrywide, which BofA had purchased in July. In the settlement, BofA promised to modify up to 400,000 mortgages nationwide, at a cost of up to $8.4 billion. This was to include principal reductions as well as refinancing, and all foreclosure operations on the affected loans would be suspended.

If any of this sounds familiar, that’s because it’s the same basic structure for the proposed settlement between all 50 AGs and leading banks over their fraudulent foreclosure operations. The question looming over the entire enterprise was whether the states could ensure vigorous enforcement. There’s a model with this Countrywide settlement in 2008 that we can look to. And apparently no AG but Catherine Cortez Masto has actually investigated whether or not BofA kept their promises. Turns out they haven’t. So Masto is seeking a pullout from the settlement, to pursue prosecution against the bank for multiple deceptive practices.

Allow me to highlight the deceptive practices in question. This is going to be a somewhat long excerpt because I want to add as much detail as possible:

In her filing, Ms. Masto contends that Bank of America raised interest rates on troubled borrowers when modifying their loans even though the bank had promised in the settlement to lower them. The bank also failed to provide loan modifications to qualified homeowners as required under the deal, improperly proceeded with foreclosures even as borrowers’ modification requests were pending and failed to meet the settlement’s 60-day requirement on granting new loan terms, instead allowing months and in some cases more than a year to go by with no resolution, the filing says […]

The complaint says the bank advised credit reporting agencies that consumers were in default when they were not, and contends that Bank of America employees deceived borrowers about why their requests to modify loans were denied. In addition, it says, the bank falsely claimed that the actual owners of loans had refused to allow changes to their mortgages, and it incorrectly claimed that borrowers had failed to make payments on trial loan modifications when in fact they had. Bank of America also misled borrowers, the Nevada attorney general’s filing noted, by offering loan modifications with one set of terms only to come back with a substantially different deal.

Among the more troubling findings in the Nevada complaint is the contention by several Bank of America employees that the company imposed strict limits on the amount of time they could spend on the phone assisting troubled borrowers seeking help with their loans.

One worker said in a deposition cited in the complaint that employees were punished if they spent more than seven minutes or 10 minutes with a customer. Even though these limits allowed almost no time for assistance, Bank of America employees who did not curtail their conversations were reprimanded, this employee said.

This is a portrait of a criminal enterprise, and to anyone who thinks the other mortgage servicers are somehow more chaste than Bank of America, I have some Bank of America stock to sell you.

But Masto didn’t stop there. She also pulled out a bazooka. She accused BofA of failure to properly securitize mortgages, breaking the chain of title and nullifying their standing to foreclose. This is from the amended complaint:

Bank of America misrepresented, both in communications with Nevada consumers and in documents they recorded and filed, that they had authority to foreclose upon consumers’ homes as servicer for the trusts that held these mortgages. Defendants knew (and were on notice) that they had never properly transferred [text redacted] these mortgage to those trusts, failing to deliver properly endorsed or assigned mortgage notes as required by the relevant legal contracts and state law. Because the trusts never became holders of these mortgages, Defendants lacked authority to collect or foreclose on their behalf and never should have represented they could.

We know that Countrywide didn’t convey the mortgage notes properly to the trust, their own officials testified to that in Countrywide v. Kemp (which is quoted in the complaint). Masto joins Eric Schneiderman in blowing the whistle on this corrupt securitization enterprise.

The entire complaint is here. Masto is seeking civil penalties of $5,000 per violation in the complaint, upping that to $12,000 when the violation affected a elderly or disabled person. She also wants restitution costs for wrongful foreclosures and the costs incurred by municipalities and homeowners from unnecessarily vacant foreclosed properties. Given that Nevada has so many foreclosures, the total liability could range higher than the original $8.4 billion settlement, and that’s just for Nevada alone.

So much else to say here. Masto’s lawsuit is as much about the current settlement talks as it is about the 2008 Countrywide settlement. She is saying, in no uncertain terms, that you simply cannot trust the banks to actually abide by settlement terms. As Masto says in the complaint, Bank of America’s “misconduct cut across virtually every aspect of the Defendant’s operations,” and they “materially and almost immediately violated the Consent Judgment” agreed upon in the settlement. At the time, Jerry Brown, then Attorney General of California, said that the settlement would “be closely monitored and enforced in the months ahead.” It clearly wasn’t. BofA didn’t wait for the ink to dry before violating the terms. And Masto has not only the accounts of borrowers to back this up, but also testimony from Bank of America employees.

Knowing this, seeing it fully documented in Nevada, how could there still be any negotiations on a settlement with the same people? The negotiation should be about whether there will be a public or private perp walk for BofA executives.

So why hasn’t any other state done the same basic investigation as Nevada, and sought to pull out of the Countrywide settlement? Arizona actually joined this lawsuit back in 2010, but that was when Democrat Terry Goddard was the AG. Republican Tom Horne became the AG after the 2010 elections, and he’s too busy literally trying to overturn the Voting Rights Act to worry about whether or not his constituents are being systematically ripped off by a bank, I guess. (Horne, by the way, is still on the executive committee of the foreclosure fraud settlement, I assume because he doesn’t want to do an investigation, and that’s the prerequisite, it seems.)

As for the others, let me tell you who one of the leaders on the Countrywide settlement was: a guy named Tom Miller, the Attorney General of Iowa and the leader of the 50-state settlement talks on foreclosure fraud. Here’s what he said at the time.

Miller said the Countrywide agreement’s program of loan modifications to prevent foreclosures is a win for all parties. “Foreclosure is the enemy. Most important, loan modifications can help homeowners avoid foreclosures and keep their homes. Avoiding foreclosures also helps the companies, helps communities and neighborhoods, and helps our overall economy by stabilizing the housing market,” he said.

“This is what we have been looking for. This agreement provides for the kind of systematic and streamlined loan modification program that is critical right now,” Miller said. “I strongly urge other servicers to undertake similar aggressive programs to prevent foreclosures.”

Do you think Tom Miller, who wants a foreclosure fraud settlement in the worst way, is going to bother to check to see if BofA managed to actually give Iowans the loan modifications they promised? Of course not. And he’s likely to bully all the other states in the Countrywide agreement to shut up about how that settlement was basically unenforced, because people would get the message that this new settlement would go the same way.

He must have got to all of them, but not Masto. And she has ruined his best wishes, not to mention the best wishes of Bank of America. They are denying any wrongdoing and still claiming that “the best way to get the housing market going again in every state is a global settlement that addresses these issues fairly, comprehensively and with finality.” Bullshit. The best way to restore the housing market, the rule of law, and faith in the American system is by rounding up criminal enterprises masquerading as banks.

And the investigation that would lead to that will surely happen now. Masto, Schneiderman and colleagues like Beau Biden, Martha Coakley and anyone else who actually takes their job description seriously will ensure that.

20 Responses

  1. Everything that Ms. Masto is accusing this bank of I can back up from my own case with them. Racketeering, mail fraud, embezzlement, unjust enrichment, detrimental reliance, and a whole slew of other charges.
    My credit is ruined. My husband’s credit is ruined. Misapplied payments. Monies never making it to an actual “lender”. A Mortgage Schedule that reads like pulp fiction. No Mortgage Loan Purchase Agreement. A loan that never made it to the intended trust. A direct act that is the perfect admission of guilt regarding a loan modification that was never formally set in place, but now it magically IS 2 years later…I got it all and then some. This is by far the absolute WORST bank ever…and I’ve got my champagne chilling for the day this sucker goes down gurgling!
    I am glad to see a few of the AG’s in the USA not backing down from this bank and others. I know our own AG here in AL is slow to the plate on these issues. He has received a nice, lengthy complaint from me and just poo-poo’d the complaint out of existence.
    Let’s see some more of these types of lawsuits being filed. I’m happy to see this. Want more!!!

  2. When people bring up the Countrywide AG settlement that former CA AG Jerry Brown ramrodded, they keep forgetting that Kamala Harris basically had a carbon-copy of that ‘deal’ already awaiting her when she took office. That later setlement was to settle the pending actions against the top officers with Countrywide.

    Why Jerry Brown’s staff had even bothered to make the effort with the ’round two’ mystified me.

    His office and staff had completely REFUSED to do ANYTHING to enforce the first version. His staff even resisted identifying who the contact point was within Countrywide who was SUPPOSEDLY reporting on compliance with the settlement to the CA AG’s office. Strangely, that same person was supposed to be the person who was to provide information on compliance to non-CA residents who were covered by the settlement.

    The members of the call center at the time of the first visitation of the Jerry Brown travesty later claimed that “ALL THOSE AG MODS CANCELED”. The internal party line was ‘canceled’ when the LEGAL term was ‘BREACHED BY BofA’.

    BofA and CW went through the motions with well over 50,000 of these mods by 3/31/09. BofA just kept USING these ‘mods’ to set people up for foreclosure instead of doing anything to help the borrowers.

  3. Please call your AG and tell them they should stand behind the views of the NV AG

  4. To: Kenneth S. Taylor

    Re: The criminal acts are so malicious and deplorable . .. nothing less than criminal prosecutions . . .all documents for all the fraudulent attestation . . phony fake documents. .. .Judge Tom Parker is so corrupt . . . the Ninth District Court of Appeals Order agreed Judge lied

    Comments –

    My Friend –
    You do have guts.

    I do not recommend sending this kind of a letter to the FBI. Period. Ever! the US AG / DOJ is bad enough. That is who you probably meant to deliver it too.

    N.G or any lawyers want to jump in and explain?

  5. My husband and I are currently fighting these monsters in Federal Court WITHOUT an attorney. Not an easy task I might add. We filed a lawsuit ourselves against Bank of America in December 2010. We are RIGHTFULLY accusing them of racketeering and therefore allege that they have violated RICO. Acording to our pleading, they should be found liable for wire fraud, mail fraud, embezzlement, theft and obtruction of justice. Here is our press release:

    If you would like more information about Bank of America’s racketeering practices please read here: “Bank of America is a Racketeering Enterprise” Please read my article here:

    Let’s do our part and hold this financial institution and others responsible for racketeering and breaking the law. Please sign this petition: “The President of the United States: Hold Bank of America Accountable Under RICO Laws”

    Racketeering is running rampant at Bank of America and no one is going to prison. For years under RICO, racketeering crimes have served a hefty price that includes freezing the criminal’s assets, large fines and prison time but so far, these banks are getting off scot-free.

    These criminals need prison and nothing less. Let them whine all they want after they have fraudulently made huge amounts of money off of the backs of helpless homeowners.

  6. Mario Kenny call the United States Comptrollers of they regulate the banks behavior, then sue them afterwards, or they will say they cant get invovled idenity theft is easy to prove . here is my F.B.I. letter to them September 2, 2011

    Kenneth S. Taylor
    8610 Hadden Road
    Twinsburg Ohio 44087

    Federal Bureau of Investigation
    121 S Main St, Akron Ohio 44308 -1415

    Dear Honorable F.B.I. Agents, Intake Officers and Staff,

    I implore you open and investigate the following criminal acts and other matters stated below supported by proof and evidence enclosed:
    The criminal acts are so malicious and deplorable that the damage done to victims the homeowners can never be repaired we ask for nothing less than criminal prosecutions this agency must check the licensing boards of all notaries that appear in any and all documents for all the fraudulent attestation to all these phony fake documents.

    Judge Tom Parker is so corrupt he has defied the Ninth District Court of Appeals Order in which they agreed Judge lied about hearing Defendants counterclaimed they reverse and remanded case back to trial court and has thus far Tom Parker refused to follow mandate and wont set a trial date, he issued a summary judgment without a single witness , and without a signed affidavit with no affiants name on it that has to be a criminal act as he never look at the final decree order ,it against the law to sign without knowing the information your signing the affidavit had no name on it.
    Judge Tom Parker , Attorney Kevin L. Williams and Robin Wilson have given false and material declarations to the trial court violating federal laws under 18 U.S.C.1623 which is a both a criminal and civil act of conspiracy and a crime which carries fines of 100 thousand dollars and or 5 years in prison , they have lied to courts and use the same lies against defendants( Kenneth S. Taylor and Alycia A. Taylor Driggins) in an attempt to take their real property ,without perfecting a lien, selling and transferring, assigning property of Option One the original lenders years later after they were out of business and company was defunct, and did use identity theft, and stole homeowners identity as parties are guilty of transferring homeowners private information by United States Postal service , U.S. Mail via Electronic Mail creating False data and accounting, and payment receipts by use of computer via internet and are guilty of Mail and Wire fraud by forwarding private information to other parties without their permission such as their social security numbers names addresses, work history, credit reports, bank statements ect. but not limited to such, trying to evict them unlawfully from a home which they have owned and resided for 23 years by using forgery of Kevin L. Williams name and signature on order of sale as someone tried to force sheriffs sale by signing order with initial only ( K W) using pretender lenders, robo signers, strawman , foreclosure mills , defunct trust, and trustees, fraudulent appraisal , and 14 forgeries of attorney Kevin L. Williams name, fabrication, of surrogate signings , misreprentation, fake and counterfeit Allonge Notes and negotiable instrumentalities. [Whoever, with intent to defraud, falsely makes, forges, counterfeits, or alters any obligation or other security of the United States, shall be fined under this title or imprisoned not more than 20 years, or both. (18USC 471)] and fake notaries, fake affidavits, fake title insurance written by Manley Deas Kochaski LLC on national known Chicago Title Papers without their knowledge , using their in house title company Allondian Title located in the same office in Columbus Ohio, 18 U.S.C. § 514 : US Code – Section 514: Fictitious obligations, this has to be one of the worst cases of fraud before the FBI in its long distinguished history.

    Currently there is a fraudulent lawsuit and judgment against them, (Kenneth S. Taylor Alycia A. Taylor), filed by Plaintiffs attorney (Kevin L. Williams of Manley Deas Kochalski LLC. Located in Columbus Ohio, P. O. Box 165028, 43216-5028 for DEUTSCHE BANK NATIONAL TRUST COMPANY AS TRUSTEE FOR CERTIFICATEHOLDERS OF SOUNDVIEW HOME LOAN TRUST 2006-OPT2 ASSETS-BACKED CERTIFICATES, SERIES 2006- OPT2 , who have never proved they had standing to file the lawsuit and has told courts the note is lost missing or stolen and assignment was submitted to court after lawsuit was filed , and produced after allege transfer of property , a fake assignment fraudulent sham , defective, false , and misleading , document which was deemed as such by the United States District Court Judge Sara Lioi on November 8, 2007 See Exhibit ( D) enclosed , that assignment was robo signed and fake and forgery provided to courts used as evidence in courts by and though Kevin L. Williams and Manley Deas Kochalski LLC. As is every document before the court in this case. The fake, forgery, robo, signed , documents have been used to commit civil and criminal conspiracy , mail fraud, forgery, identity thief, nothing is original or authentic its all falsely made by crime lab LPS. And was not produced until the courts needed it to foreclose, the attorney just orders any documents the court needed from the crime lab LPS, Docx, this is a nationally well known fact , the attorney’s just order fake documents from this crime lab and did not get the phony documents and affidavits unless the court required them and the documents don’t reflect the actual transactions that occurred the attorney Kevin L. Williams willingly and knowingly produced and provided Ohio courts both Federal and state with fraudulent documents , which are more fully describe in documents enclosed in this package. Moreover Kevin L. Williams and his law firm has conspired and filed 14 variations of his signatures on sworn legal important documents with state and federal courts in a elaborate scheme to unlawfully take the Taylor’s real property, the signatures contain no power of attorney , the law firm is a national known Foreclosure Mill, That uses robo signatures from foreclosure Counsel of Manley Deas Kochalski and Kevin L. Williams , Thompson Hine and Robin Wilson who violated the following rules regulations statues, an treaties of OHIO and U.S.FEDERAL LAW TITLE 18, 18 U.S.C. § 1343 CHAPTER 6 WIRE FRAUD, MAIL FRAUD; Regulation Z Sec. 226.1 Authority, purpose, coverage, organization, enforcement and liability. Complaints to Akron Bar Associations, Cleveland Bar Associations , Columbus ,Bar Association , and The Supreme Court of Ohio Disciplinary Counsel all yieldeied the same results an occasional admittance of unlawfully practice, but the Bar Associations all stated it was a widely accepted practice for attorney’s to forge, use forge signatures , allow others in office to forge their names, allow some unknown people in there office to sign someone else name to a legal court document especially given the fact this attorney has never made a single appearance to court in 4 years, and has not been able to be reached by phone in 4 years the Akron Bar Association attorneys says Kevin L. Williams does not have to answer my phone call, and can allow other to try to mimic his signatures as long as he has given them permission to do so , this is violation of federal laws that govern forgery , for some one to forge attorney Kevin L. Williams signature on documents to sale the Taylors home in a sheriffs sale is illegal, corruption, criminal conspiracy, and the Bar Associations said this was legal and found no wrongdoing , See Exhibit (H) correspondence from various Bar Associations in Akron, Cleveland, and Columbus who and said attorney’s can break the law and forge each other signatures. For the sake of convenience, Essential saying Kevin L. Williams is above the law. We believe these are jail able offenses crimes of forgery and violates the law and treaties of the United States and carry prison sentences the absolute proof is included the records and complete letters are available in Bar Association files the foreclosure Counsel of Manley Deas Kochalski and Kevin L. Williams , Thompson Hine and Robin Wilson violated the following rules regulations statues, an treaties of OHIO and U.S.FEDERAL LAW TITLE 18, 18 U.S.C. § 1343 CHAPTER 6 WIRE FRAUD, MAIL FRAUD; Regulation Z Sec. 226.1 Authority, purpose, coverage, organization, enforcement and liability.

    The judge Tom Parker while case was in state court conspired with the plaintiff’s attorney Robin Wilson of Thompson Hine LLP in a joint effort to destroy defendants counterclaim. The judge directed her to draft a false and misleading statement in a previous Final decree of foreclosure. Robin Wilson did so knowingly and willingly by inserting false claims of judge that he had considered defendants counterclaim is his motion granting plaintiff summary judgment which is void because of fraud of the courts and judge a lying officer of the court… Robin Wilson drafted and sent a letter dated September 28,2009 to Judge confirming the act of conspiracy and her participation as such. The letter states per verbatim “Enclosed, in response to your telephone request, is a revised Judgment Entry and Decree in Foreclosure so as to include Defendants’ Counterclaim and Plaintiffs’ Reply to Counterclaim”. Signed by Robin Wilson. See Exhibit (A). These representations were false and defendants knew the falsity of these statements at the time they were made. The judge never once mentioned defendants counterclaim, prior to this directive, nor is there any evidence the judge has reviewed the counterclaim. This was a wicked scheme perpetrated against defendants specifically, strategically and systematically, the judge lied in effort to deprive defendants of their rights to homeownership. Judge and Robin Wilson have given false and material declarations to the trial court violating federal laws under 18 U.S.C.1623 which is a both a criminal and civil act of conspiracy against defendants. Moreover COURT OF APPEALS NINTH JUDICIAL DISTRICT C. A. NO. 25281 agreed with the plaintiffs that judge erred essentially confirmed he lied and reversed and remanded case back to trial court. Judge Tom Parker is an Officer of the court THIS VOIDS STATE COURT FINDING OF SUMMARY JUDGMENT, ITS NULL AND VOID FOREVER.

    We now and at last pray by the grace and mercy of almighty God, and ask that this High Federal Bureau of Investigations intervene and look into these matters asap.

    Respectfully, Submitted By,
    Kenneth S. Taylor


    Ps. Exhibit (H) is page (2) two of a two page letter by Heather M. Zirke the Assistance Counsel of Akron Bar Association who says forgery of another signature 14 times is legal and accepted practice in law. Page one is missing just ask her to send you copy of the original letter in which she defended and justified these forgeries of Kevin L. Williams signature.

    Also a letter from Cleveland Bar Association that says other lawyer’s in his office may forge legal documents by signing Kevin L. Williams name as though they are him to unlawful order of sale.

    All other documents are self explanatory , and are excerpts from trial documents from United States Sixth Circuit Appeals Court and the original Complaint filed against these parties in federal District Court the evidence is overwhelming and compelling in which judges had a sworn duty to report under 18USC (4) and have themselves committed Felonies for not reporting to F.B. I.

  7. @The A Man
    happened today and I think that they do this to keep liquidity in the bank, most people will not stand up to the bank, but I am thinking I will stand up. I am very tired now

  8. Mario Kenny was the incident with BOA recent? If so what are you doing banking with the Devil? I dont understand?

    Hope things straighten out for you

    I have heard of many similar incidents.

  9. I haven’t read all this, but as a Nevada resident, I have to tell you I’m thrilled.
    Many people think of Nevada as a gambling mecca and Vegas as sin city.
    Our case law is heinously scant. Based on the two recent decisions in the NV SC (which cases were taken sua sponte by the NV SC from the appeals court) and now this action by our AG, I have a glimmer of hope that our politicians care about our citizenry. Prior to the involvement of our SC, the DC judges were walking all over homeowners with one ruling after another in favor of the banksters. Maybe that’s going to change.

  10. This is how the financial crisis ends … Europe and their EURO self destruct , the US remains the banker to the world by default ,, BAC , WFC , JPM , GS and all the other rats pay up to the extent possible , are liquidated and along with them the hundreds of trillions of dollars worth of private agreements with counterparties die. The regionals/super-regionals and local banks take up the slack. The icing on the cake would be to simply start a precedent where these swaps are classified as illegal, re-institute GLASS-STEAGALL and after a period resume life in a new freer America with real regulation of the banking and investment system to insure a level playing field. Hopefully without a Federal Reserve…

    If we get that our children may be better off than we were.

  11. E.Tolle…your first sentence gave me quite the chuckle…

  12. I read the complaint–it is verbatim what I could write about my own situation! I agree with previous NH res, I wish Maine would join with Nevada–I just emailed the AGs office with a link to the complaint and asked that they join in the suit and while I was at it, to bail from the 50 less NY settlement–for what it’s worth anyway!

  13. There’s nothing I’d rather do on a late summer day than sit beside the bed of the dying BAC, listening closely for its death gurgle.

    The following shows how Treasury is perfectly adept at lying through their collective teeth, one day to the south, the next to the north. It depends upon which way the political winds are blowing. These people are ALL pathological liars, serving their masters by preserving the interests of the financial cabal at any cost, even when it exposes their motives, and especially when it involves throwing commoners under the bus.

    This is from October 28, 2010. The man with the sac here is Damon Silvers, the director of policy and special counsel for the AFL-CIO, and a member of this board, the congressional oversight panel. I know, congressional should be capitalized….I can no longer bring myself to do that. They’re scum, each and every one, selling out the people for their private gain. Every single one of them MUST be voted out. There is simply no alternative. They’ve clearly chosen which side they want to represent, and it doesn’t involve anyone from Main Street. From Firedoglake:

    The Treasury Department’s representative, Phyllis Caldwell, seemed more concerned about getting foreclosures secured than anything else. She talked about how uncertainty could lead to lower home prices and a delayed recovery. (Keep in mind that Treasury has said HAMP helped the housing market by delaying repossessions. So some days it’s one, the next day it’s the other.) However, she insisted that the risks to the banking system were “slim.”

    While banks and mortgage servicers are bracing for a wave of lawsuits over flawed paperwork, Ms. Caldwell said the government believed the overall risks to the financial system were slim.
    “We’re very closely monitoring any litigation risk to see if there is any systemic threat, but at this point, there’s no indication that there is,” she testified.

    This is where Silvers took direct aim. Silvers used the $47 billion repurchase claim against Bank of America by, among others, the Federal Reserve Bank of New York, as his lead example.
    “I’m concerned about Treasury making representations categorically that you don’t see a systemic risk,” Silvers told Treasury’s chief homeownership officer. “And let me walk you through exactly why.”
    “That letter asks for $47 billion of mortgages — of mortgage- backed securities to be repurchased at par,” Silvers went on. “Do you know what those mortgages are currently carried at … the market value of those bonds today?”

    Caldwell declined to comment.

    Silvers continued:

    “OK, fine. Let me tell you what the Fed says they’re worth. The Fed tells us they’re worth 50 cents on the dollar. So if the Fed’s request to Bank of America is honored, right, Bank of America, assuming they are carrying these bonds, assuming when they buy them back they mark them to market, Bank of America will take a $23 billion loss.

    “The Federal Reserve further informs us that there is nothing particularly unique about that particular set of mortgage-backed securities — meaning they have not been chosen…because they’re particularly bad. They believe they are of a common quality with the rest of Bank of America’s underwritten mortgage-backed securities. There are $2 trillion [worth] of Bank of America’s underwritten mortgage-backed securities.

    “Five such deals — five such requests, if honored to Bank of America…will amount to more than the current market capitalization of Bank of America, which is $115 billion.

    “Now do you wish to retract your statement that there is no systemic risk in this situation? And the word is ‘risk’ — not ‘certainty’ — but ‘risk’? And I would urge you to do so, because these things can be embarrassing later.”

    Caldwell replied that the review was ongoing and in the early stages, but Silvers was incredulous. He asked, reiterating his scenario above, “Is Bank of America not systemically significant?” After Caldwell continued that there was some risk, but no evidence of a major systemic risk, Silvers concluded, “I hope that … if the Treasury comes back to us and is discussing whether or not we need to deploy further public funds to rescue Bank of America, or such other institutions as might be affected by these events, that we get a similar kind of indifference to their fate after it’s too late.”

    The other panel members, even the Republicans, were pretty good as well, but Silvers struck to the heart of it. Treasury’s head is completely in the sand on this one. And yet, we can expect that, if the worst is realized, they’ll come back with a “hoocoodanode” and a request for some money in a satchel. Katherine Porter of the University of Iowa was completely comfortable in saying that “perhaps virtually all” securitized loans made at the height of the housing bubble were seriously flawed, either in improper mortgage note assignment, improper underwriting standards or improper servicing. Perhaps virtually all.

    “We are faced with a choice here,” Silvers closed. “We can either have a rational resolution to the foreclosure crisis or we can preserve the capital structure of the banks. We can’t do both.”


    Back to present day, Chris Whalen just wrote that BAC is facing tens if not hundreds of billions in unliquidated claims relating to past RMBS issuance. Add to that the possibility that they may also face federal securities fraud and rescission claims with respect to hundreds of billions in face amount RMBS originated by BAC’s Countrywide Financial, Merrill Lynch and Bank of America. That is above and beyond some $100 billion in 1933 Act securities fraud claims pending against BAC and its affiliates already underway.

    According to Whalen, they appear not to be adequately capitalized. And BAC is trading down roughly ½ of where it was when the above conversation between the congressional oversight panel and Treasury took place. It’s about time to get Treasury back into the hot seat to ask them how they think things are going. Rah rah rat bastards. How long can you keep the cheering up? Don’t even bother asking for TARP II. You’ll get REV II in its stead.

  14. I only wish the NH AG would get involved the way Masto has. The country is suffering at the hands of these scumbag bankers…..

  15. I opened an account with BOA and was not in default of the account in no way as a matter of fact the account had sufficient money to call it a lot of money, the bank closed the account and failed to give me the money back, I went to the bank and in a very brisk manner I demanded my money, the bank called the police, six officers responded, they expressed intention to arrest me, for disturbing the peace and for being loud, that other clients could hear, the bank managers disclosed to the officers who were present, vital details about my balance in the account at the bank and other personal history about my private dealings with the bank. The manager printed out the details of my account and showed it to the police.

    The police found no cause to arrest me but did give me a verbal warning that I shall not tresspass on the banks property, nor use its atm. I am very bothered by all this.

  16. Thanks for this post Neil. It warms my heart to see that there is at least one person ( AG) that has some decency and respect for right and wrong. We the citizens need to round up the rest of them, stoke the fires in the town square, and tie the criminals to the stakes before we let it burn.


  18. I have know Neil & this blog from the very beginning , he has press this point over & over finally some AG’s are getting it .

    Maybe this is ”Our Pecora Moment ” when the banks finally have to answer for their crimes.

    Thank you Neil for all the hard work and great blog.!

  19. AG Masto, a true American hero!

  20. Burn baby, burn! May the BofA officers get what they deserve.

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