Citi’s Parsons Blames Glass-Steagall Repeal for Crisis

MOST POPULAR ARTICLES

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary CLICK HERE TO GET COMBO TITLE AND SECURITIZATION REPORT

CUSTOMER SERVICE 520-405-1688

Editor’s Comment: So here we have one of the guys that was part of the team that overturned Glass-Steagal saying that their success led to the failure of our financial system. But then he says it is too late to change what we have done. It is not too late and if we are ever going to correct the financial system and hence the economy, we need to fix what we have done — separate the banks back into investment banks that take risks and commercial banks that are supposed to minimize risks. Instead we have a system where there is a virtually unlimited supply of other people’s money in the form of deposits and taxpayer bailouts that is the engine for leading what is left of the financial system into another ditch, this one deeper and worse.

Think about it. The banks are reporting record profits while the rest of us are experiencing record problems. That means that the banks are reporting gargantuan profits trading paper based upon economies that are in a nose-dive. How is that possible. We have less commerce (buying and selling) and more money being made by banks trading paper to each other. Or is this simply money laundering — bringing back and repatriating the money they stole in the mortgage meltdown and paying little or no tax?

Parsons Blames Glass-Steagall Repeal for Crisis

By Kim Chipman and Christine Harper 

Richard Parsons, speaking two days after ending his 16-year tenure on the board of Citigroup Inc. (C) and a predecessor, said the financial crisis was partly caused by a regulatory change that permitted the company’s creation.

The 1999 repeal of the Glass-Steagall law that separated banks from investment banks and insurers made the business more complicated, Parsons said yesterday at a Rockefeller Foundation event in Washington. He served as chairman of Citigroup, the third-biggest U.S. bank by assets, from 2009 until handing off the role to Michael O’Neill at the April 17 annual meeting.

A Citigroup Inc. Citibank. Photographer: Dado Galdieri/Bloomberg

April 20 (Bloomberg) — Bloomberg’s Erik Schatzker and Stephanie Ruhle report that Richard Parsons, speaking two days after ending his 16-year tenure on the board of Citigroup Inc. and a predecessor, said the financial crisis was partly caused by a regulatory change that permitted the company’s creation. They speak on Bloomberg Television’s “Inside Track.” (Source: Bloomberg)

“To some extent what we saw in the 2007, 2008 crash was the result of the throwing off of Glass-Steagall,” Parsons, 64, said during a question-and-answer session. “Have we gotten our arms around it yet? I don’t think so because the financial- services sector moves so fast.”

The 1998 merger of Citicorp and Sanford I. Weill’s Travelers Group Inc. depended on the U.S. government overturning the portion of the Depression-era act that required banks to be separate from capital-markets businesses like Travelers’ Salomon Smith Barney Holdings Inc. Parsons, who was president of Time Warner Inc. (TWX) at the time, had been a member of the Citicorp board before joining the board of the newly created Citigroup.

“Why didn’t he do something about it when he had a chance to?” Mike Mayo, an analyst at CLSA in New York who rates Citigroup shares “underperform,” said in a phone interview. “He’s a couple days out the door and he’s publicly criticizing the ability to manage the company.”

‘Dynamic World’

Unlike John S. Reed, the former Citicorp CEO who said in 2009 that he regretted working to overturn Glass-Steagall, Parsons said he didn’t think that the barriers can be rebuilt.

“We are going to have to figure out how to manage in this new and dynamic world because there are good and sufficient business reasons for putting these things together,” Parsons said. “It’s just that the ability to manage what we have built isn’t up to our capacity to do it yet.”

Parsons didn’t refer to Citigroup specifically during his comments and Shannon Bell, a spokeswoman for the bank in New York, declined to comment. Mayo said Parsons’ comments show he views the New York-based bank as “too big to manage.”

“This gives more support to the new chairman to take more radical action,” said Mayo, whose book “Exile on Wall Street” was critical of Parsons and the management of banks including Citigroup. “Citigroup needs to be reduced in size whether that’s breaking up or additional asset sales or whatever it takes.”

‘Separate Houses’

Parsons said in a phone interview after the event that it was difficult to find executives who could run retail banks and investment banks in the U.S. because the two businesses had been separated by Glass-Steagall for about 60 years.

“One of the things we faced when we tried to find new leadership for Citi, there wasn’t anybody who had deep employment experience in both sides of what theretofore had been separate houses,” he said. Chief Executive Officer Vikram Pandit is trying to change that, Parsons said. “I think if you ask Vikram he’d say probably his biggest challenge long-term is developing the management.”

Banks are growing because corporations and other clients want them to, and management must meet the challenge, he said.

U.S. Bailout

“People have a sort of a notion that ‘well, we can decide that’s too big to manage,’” he said. “But it got that way because there was a market need and institutions find and follow the needs of the marketplace. So what we have to do is we have to learn how to improve our ability to manage it and manage it more effectively.”

Citigroup, which took the most government aid of any U.S. bank during the financial crisis, has lost 86 percent of its value in the past four years, twice as much as the 24-company KBW Bank Index. (BKX) Most shareholders voted this week against the bank’s compensation plan, which awarded Pandit about $15 million in total pay for 2011, when the shares fell 44 percent.

Shareholders’ views shouldn’t be “given the same level of weight” as those of the board and management, Parsons said. Companies “shouldn’t make the mistake of putting them in the driver’s seat.”

To contact the reporters on this story: Kim Chipman in Washington at kchipman@bloomberg.net; Christine Harper in New York at charper@bloomberg.net.

To contact the editors responsible for this story: Colleen McElroy at cmcelroy@bloomberg.net; David Scheer at dscheer@bloomberg.net.

 

32 Responses

  1. @Jan Van Eck,

    Because of the perverse incentive our government keeps giving to foreclosers, rather than reward them for actively participating into modifications, i am not completely sure that US Bank lost anything.

    In fact, I would bet anything that, regardless how it acted, US Bank was going to profit from whatever transactions.

    It is going to blow. May take a few years, a few months, a few weeks but it will blow. No other possible outcome.

  2. Mary asks in this thread:

    Is it proper (legal), under NY Trust law for a securitization Trustee to be substituted with the Custodian of that same Trust ?

    Answer: most likely not, as the Custodian would likely have a conflict of interest in assuming Trustee duties.

    The authority for doing anything inside a trust is contained in foundational documents establishing the Trust. That Instrument would set forth the procedures for succession, and eligibility of a successor trustee. If there is none, then I could not see how a Custodian could be “substituted.” Under what authority?

  3. To “Enraged” and others: the photo of the Ibanez house was set out (and posted by others) merely to demonstrate the utter vapidity and non-existent business judgment rampant in the banking industry. It made zero sense for anybody to go chasing around in some courtroom over this valueless shack. Remember that it was sold to Mr. Ibanez and financed only because as a sub-prime it provided extra profits and fees to the originators (and at an inflated price, to his detriment, of course). In a conventional market, it would not sell for even half.

    To no surprise, today the house is a wreck. As an abandoned property, it had no value to USBank. They chased after it simply because they are too stupid to get out of their own way. Anybody with any brains would have stamped that note “Paid,” handed it to Mr. Ibanez in exchange for release from claims, and wished him a nice day. Idiots chose to slug it out, and got badly burned. You get that behavior with profoundly stupid people; many such profoundly stupid people work at banks and their law firms.

    I disagree with the respondent analysis provided on the posted website. Such analysis presumes a logical pattern to USBank behavior. I see none. I see only stupid people.

  4. I re-post the notorious quote from Citicorp top manager:

    Chief Executive Officer Vikram Pandit is trying to change that, Parsons said. “I think if you ask Vikram he’d say probably his biggest challenge long-term is developing the management.”

    I would disagree. Vikram Pandit’s biggest challenge is finding managers willing to work in New York who are not morally hollow, corrupt, vain, and self-absorbed SOB’s.

    Since those guys do not exist, Citicorp and its counterparty banks will continue to be cesspools of personal depravity. The solution is obvious: transport those managers to Guantanamo for indefinite internment, and break up the banks.

  5. @JenninGA,

    The servicers are legally required to produce what you ask under QWR but… who’s going to force them? The court? Don’t make me laugh! Even when you’re in suit, they refuse to answer discovery. We’ve been waiting for proper documentation of my transfer(s) for over a year. All they send over and over is the same assignment from my previous servicer to the one I have sued, with the loan number crossed out and the new number written by hand underneath. No assignment, no date, no notarization, nothing.

    To think that I paid them for 4 years really irks me to no end but… I’ll get my money back. By hook or by crook (probably more by crook than hook…) I will get it back!!!

  6. @ enraged

    RE: I QWR’d everything in sight and obtained just about… nothing! –

    I agree that at some point I will end up in court but for now I too am “QWRing” like crazy.

    I am not sure what they are required to respond but many of the things I ask get do not even get addressed – instead they give me some info that I did not request.
    Just got a letter this week in which my new servicer,(this makes #3) states “we are unable to provide the copy of the transaction history prior to 3/08”.
    It was servicer #2 that made and filed the fraudulent assignment for my property and did all sort of fraudulent actions from the moment I was switched to them mid 2008.
    So, would this mean I cannot get records of my transaction history for my loan that originated in 2005 and was “serviced” by my “original lender” until mid 2008 when the servicing was first transferred before the original lender filed ch 11? I thought the servicer – was required to send you information if you requested it in a QWR? I asked for a complete transaction history of the loan from them since I dispute whom they claim as beneficiary as well as the amount?

    What can I do if they say they are unable to provide the information? Wouldn’t that be in my file somewhere????

  7. Sorry, no disrespect to any “pro se’s”—you guys are my heroes—seriously! I just didn’t have it in me for various reasons…

  8. @Enraged

    Thanks, but I AM “moving on” and I’m not “bitter”. I am however, deeply concerned about the rampant injustice on all levels in all parts of the world…not just here. The whole worldwide system is coming to a brutal collapse due to sociopathic materialism and self-serving entities, and a bunch of little “pro se’s” are not (realistically) going to stop it…a crash and burn of epic proportions is inevitable when selfish greed and lust for power rules the world.

  9. @ enraged….thank you for link and the attorney name Richard A. Roman….This may help me in my case…Much appreciated…

  10. Off Topic, but would like to know answer if anyone can:

    Is it proper (legal), under NY Trust law for a securitization Trustee to be substituted with the Custodian of that same Trust ?

  11. An interesting foreclosure trial transcript discussing mortgage notes, assignment, who is actual owner of the note, PSA and witness examination.

    Case was dismissed.

    The Court :

    Then the testimony that I hear is that Deutsche Bank is actually the owner — I don’t — and then there’s additionally, there’s something, this two-page document that is titleless. Although, in reference to the two pages on one page it says, this assignment is not subject to the requirements and refers to this piece of paper. It has language in it, words in it that seem to be some kind of an assignment, which is blank and attached to a second piece of paper that has the word, assignment of mortgage. But here, again, is suspect and not — does not appear to be part of an actual assignment. It’s different from the assignment that’s filed to the court file.
    So it’s for that reason that I am dismissing the case at this point.

    http://mattweidnerlaw.com/blog/wp-content/uploads/2012/04/03222012AmericanHomeMortgage1.pdf

  12. Banks keep playing dirty. They won’t quit. Know why? Because they still can. As the say goes, give someone a rope long enough and, eventually, he will hang himself. Obama has given them the rope. Let’s see how long it takes for them to start hanging…

    Wednesday, April 18, 2012

    Chase Accused Of Strong-Arming Appraisers For Restricted Info, Blacklisting Those Refusing To Cooperate
    In Phoenix, Arizona, KPHO-TV Channel 5 reports:

    •Clay Gregory is a Valley home appraiser who is spending a lot of time at home these day, but it’s not by choice. “I was put in a position where they pretty much demanded information from me or they were threatening me not to use me anymore,” Gregory said.

    •Gregory claims he’s been blacklisted by Chase Bank, making it extremely difficult to find work. The appraiser told CBS 5 News that Chase sent him a letter a couple months ago demanding data on an old appraisal and citing possible violations. Chase apparently needed information on the home which they were buying back from a foreclosure.

    •The only problem was Gregory would be breaking state and federal law by sharing info with Chase because the bank was not the one that hired him. A number of new laws were put in place in 2009 to prevent conflicts of interest between lenders and appraisers to help avoid another housing crisis.

    •”It doesn’t matter at Chase,” Gregory said. “They want what they want and if they don’t get their way they put you on an ineligible list.” Gregory opted to follow the law and now, instead of appraising eight to ten homes a week, he’ll visit maybe two.

    •Another Valley appraiser John Dingeman is facing a similar situation. His letter from Chase arrived a couple weeks ago, stating that Dingeman had 21 days to respond to questions about an old appraisal or he would find himself on the ineligible list.

    •”Appraisers are losing revenue, losing livelihood,” Dingeman said. “It’s defamation of business character. If they did a bad appraisal, that’s one thing, but for someone like me that follows the letter of the law, to place me on ineligible list so I can’t work – that’s just wrong.”
    ***

    •CBS 5 News plans to turn its investigation over to the state attorney general’s office this week to see if there is anything officials can do to hold these banks accountable for their actions.

  13. Very interesting explanation from blogger Jan Van Eck, found on
    http://www.msfraud.org/ibanez-why-the-banks-fought-all-the-way-to-the-supreme-court-to-steal-this-house.html

    If you click on that link, you get to see the house too…

    4/19/12
    From Jan Van Eck:

    In case anyone was ever curious as to the actual bricks-and-mortar house that everyone was fighting over in the Ibanez case, here it is in all its glory:

    Keep in mind that it is in the Puerto Rican migrant section of Springfield, MA, a city so poor that it ended up in receivership. On a really really good day, before the “crisis,” it was maybe worth $50,000 if you could finance with dubious papers. Today, zero.

    What on earth was US Bank thinking?

    U.S. Bank litigated all the way to the Massachusetts Supreme Court to steal this house and lost!

    The Answer From Deadly Clear:

    It’s the securitization scheme they are fighting for… see the patent (one of thousands) posted on DeadlyClear last night. Behind the curtain is a casino, trading every bit of debt they can seize. Debt is the commodity – if the homeowners win – they are dead. The bank has to fight. They need the property to create more debt to continue trading… even if it remains stagnant like the house in the photo – it gets repackaged and resold, swapped… even among themselves… a façade.

    FYI – the Bloomberg shots the UH guys have been running for the last 2 weeks are very telling… all of these trusts we are looking at are less than half active – meaning the banks are winding them down and most the tranches are being paid off. These are half or less full of the amount of active loans and value. I imagine this is why Obama thinks foreclosures are good for the economy – because they’ll empty all the trusts and then it will be okay to start all over again.

    If U.S. Bank had won the case, this would have been their prize? From Deadly Clear’s explanation above

    and the picture below, you can now understand why the “litigation to the death” is never about the house.

    THE IBANEZ HOUSE

  14. @Dee,

    I found the following recent decision involving an El Paso plaintiff against a slew of banks and a judge issuing an order authorizing the plaintiff to re-enter his home and the defendant to pay $15,000 in plaintiff’s legal fees. I also found that the plaintiff’s attorney is Richard A. Roman.

    Might be worth contacting him.

    http://www.msfraud.org/LAW/Lounge/Huml-v-Fannie-MERS_order_4-12.pdf

  15. New Hope For Struggling Homeowners!

    I don’t know what they’re worth as a law firm but the article makes some good points.

    http://www.mahanyertl.com/mahanyertl/new-hope-for-struggling-homeowners/1653/
    by Brian Mahany

    We have been saying for several months that the tide is beginning to turn against big banks and mortgage lenders. Many courts are beginning to get fed up with the abusive practices of lenders. Recently several state supreme courts have been weighing in on a wide variety issues including missing paperwork, forged affidavits, questionable title and abusive foreclosure or loan modification practices.

    When a state supreme court decides a case, the decision takes on considerable weight. As the highest court in the land, a state supreme court decision is generally binding on all trial courts in that state. We were happy to learn that the Oklahoma Supreme Court decided 7 cases this month in favor of homeowners.

    The facts in each of the cases were similar. In each case, the court ruled that in order to bring a foreclosure action, the plaintiff must prove that it has the right to enforce the promissory note. No note means no standing to bring the complaint.

    It’s in the details that the Oklahoma cases become important.

    Many lenders have problems producing the note and mortgage. In recent years, most lenders sell the mortgage shortly after the closing. Banks rarely hold their own paper any more. The mortgages are often packaged, securitized and sold several times. In that process, paperworks frequently is lost. The lost or incomplete paperwork issue was addressed by the court.

    The Oklahoma Supreme Court opinion is helpful to homeowners in several ways.

    First, the court reaffirmed that the plaintiff must prove it has the right to enforce the note. Courts shouldn’t simply rely on an affidavit from a lawyer saying the bank or servicer has the right to enforce the note. They must prove it.

    Next, the court said that the foreclosing party needs to have the note. Just having an assignment of mortgage is not enough. (Often the servicing bank will draft an assignment of mortgage. That requires the lender’s signature. The note, obviously, contains the borrowers signature. If documents are missing it is much easier for a lender to forge a mortgage assignment than to forge a homeowners signature.)

    FInally, the court said that the lack of standing (missing note) can be raised at any time. That can be extremely important in foreclosure cases. Often borrowers seek legal counsel after a judgment of foreclosure has issued. Many folks don’t seek legal help until well into the foreclosure process. By the time a lawyer gets the case, discovery periods have elapsed and often there is already a judgment of foreclosure. The Oklahoma court said as long as the case isn’t closed, its not too late to challenge jurisdiction.

    Postscript- There are tens of millions of homeowners under water. Many are facing foreclosure. Unfortunately, there are few lawyers that truly understand how to fight big lenders and even fewer actually willing to do so. If you are facing foreclosure, seek professional assistance as soon as possible. Don’t settle for a bankruptcy lawyer or a fly by night foreclosure “rescue” consultant. Foreclosures can be won but it’s not easy.

    The average cost for a lawyer to file an answer and defend a foreclosure action is between $2500 and $5000. While there are some highly qualified lawyers that do this work, we think the only thing big banks understand is a counterclaim and aggressive lawyer.

    Everyday we receive calls from homeowners across the U.S. Although we write about foreclosure defense, we rarely take such cases. Our primary purpose in writing is to provide general information and offer hope. The cases we do take are lawsuits against banks and lenders for illegal lending, loan modification and foreclosure practices. If you sufered a particularly bad experience, we certainly want to listen.

    Our mortgage fraud team is currently co-counsel in the largest federal false claims act case in the nation, the $2.4 billion action on behalf of HUD against Allied Home Mortgage. Large or small, suing banks and getting justice for victims of predatory lending and foreclosure practices is what we enjoy.

    For more information, email attorney Anthony Dietz at adietz@mahanyertl.com or attorney Brian Mahany at brian@mahanyertl.com. For immediate assistance, contact Brian by phone at (414) 704-6731 (direct). All inquiries are held in strict confidence.

    Mahany & Ertl, America’s Fraud Lawyers. Offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine & Minneapolis, Minnesota. Services available in many jurisdictions.
    .

  16. @Carie,

    The reason the servicer was so confident is that he knew who he was dealing with: someone not represented by counsel, who didn’t have a crack at approaching a court on any of the issues and that he would gobble up in one bite.

    When some of us beg, plead, encourage people to file something, be it bankruptcy or anything else, it’s because we KNOW that without the benefit of legal procedures (i.e., discovery, production of documents, etc.), people will NEVER obtain any info. I QWR’d everything in sight and obtained just about… nothing! No, let me rephrase: I got as many “Your request is being taken under advisement and we will handle it soon” as i sent QWRs. Nothing more. Nothing, nada, zip, zilch. Not one piece of paper. Not one follow up letter. Nothing. Hey: the law states that they to acknowledge the QWR letter within 30 days. States nothing about following through with it.

    95% of all foreclosures ARE NOT FOUGHT in court. Still today, the number is the same as it was 5 years ago. I was hoping that it had gone down, that people were starting to see the light. I was wrong.

    From that, it is very easy to infer that 95% of all homeowners fail to contact anyone: their representative, their senator, their AG, their president, they contact no one. You want results? Squeak. Squeak the right way. Can’t find foreclosure defense? File bankruptcy!

    People on this site complain that filing bankruptcy is too costly. From what i understand, there are guidelines on how much an attorney may charge for bankruptcy. It may not save the house but, at the very least, it gives you the opportunity to ask the questions.

    People choose to throw the towel. Think about it: 95% do nothing. They are part of the problem. Had more people reacted right off the bat, I am confident that we would be much farther advanced in the resolution of this mess. Keep this in mind: Boyko threw banks out of his court and gave 14 houses to homeowners as early as 2007! Same for that other Ohio judge (Hoffman or a name like that) in 2008. Ditto for NY. Ditto for many other district court judges. Did all of them find in favor of homeowners? Hell no! Guess why? No one was filing but the banks. And most people simply caved in!!! Or flexed pro se their little muscles around exotic theories that made all judges think: “That guy is not serious. Otherwise, he would have gotten an attorney.”

    You need to stop rehashing and you need to pick up and move on. Otherwise, you’re going turn into some really bitter person in a few years.

  17. @ANON

    “…records are not publicly available.”

    I guess that’s why the servicer was so confident when he refused to tell me who my real creditor was, and simply said “We don’t have to tell you that because of privacy laws…”

  18. Alright already! Blame whoever you wish but, for Christ’s sake, (literally: for Christ’s sake!) fix it already!!!!!!

    The Bankers’ Subversion of the Rule of Law, Notary and Land Records editionBy Abigail Caplovitz Field | April 20, 2012

    ShareHi

    For the next couple of weeks, I’m one of the David Dayen subs at FireDogLake–no one person could fill his shoes–and this post ran there earlier today. This version is slightly updated but essentially the same.

    One way to see the double standard at the heart of the foreclosure fraud—one set of laws for the bailed out banks, one for the rest of us—is to focus on the role of notaries public, and then consider that role in light of what our Supreme Court said about notaries in 1984, in a case called Bernal v. Fainter, Secretary of State of Texas.

    First, let’s recap the role of notaries in the foreclosure fraud crisis: Notaries are the people who verify that someone actually is who they say they are when that person signs a document. Because banks and their agents industrialized “Document Execution” as part of their foreclosure business model, notaries did not do their jobs. Notaries’ failure to verify identities has been so complete that many people will sign as one person, say, “Linda Green.” Notaries have also been told to sign documents using one name, and then notarize their own “surrogate” signature. “Well, what’s the big deal?” bank defenders say. Beyond the fact that there’s no “business convenience” exception to following the rule of law, consider Bernal.

    Bernal involved Texas’s requirement that all notaries be citizens; lawful permanent resident aliens need not apply. Bernal challenged the Constitutionality for the citizenship requirement. To rule on the question, the Court had to consider what notaries did, and whether or not what notaries did was so political, so central to representative democracy, that limiting being a notary to citizens was rational. In finding that notaries were important but not political officers of the state, the Court made some observations of note.

    For starters, law-and-order Texas considers the notary job so important it’s in the Texas constitution. The Court noted:

    “the State emphasizes that notaries are designated as public officers by the Texas Constitution. Texas maintains that this designation indicates that the State views notaries as important officials occupying posts central to the State’s definition of itself as a political community.”

    As a result, Texas claimed, lawful aliens could be barred from the job. The Fifth Circuit Court of Appeals explained why notaries were functionally part of the “political community”, as quoted by the Court:

    “With the power to acknowledge instruments such as wills and deeds and leases and mortgages; to take out-of-court depositions; to administer oaths; and the discretion to refuse to perform any of the foregoing acts, notaries public in Texas are involved in countless matters of importance to the day-to-day functioning of state government. The Texas political community depends upon the notary public to insure that those persons executing documents are accurately identified, to refuse to certify any identification that is false or uncertain, and to insist that oaths are properly and accurately administered. Land titles and property succession depend upon the care and integrity of the notary public, as well as the familiarity of the notary with the community, to verify the authenticity of the execution of the documents.” 710 F.2d, at 194.

    Responding to this argument on its way to saying lawful aliens could be notaries, the Court said:

    “We recognize the critical need for a notary’s duties to be carried out correctly and with integrity. But a notary’s duties, important as they are, hardly implicate responsibilities that go to the heart of representative government. Rather, these duties are essentially clerical and ministerial. To be sure, considerable damage could result from the negligent or dishonest performance of a notary’s duties.”

    Lender Processing Services (LPS) bases its business model in part on the industrialization of documentation production and execution. Nevada Attorney General Catherine Cortez Masto sued LPS over its practices, including “fraudulent notarizations.” She also indicted two individuals involved in LPS’s document execution factory. Missouri Attorney General indicted LPS subsidiary DocX for 136 counts of forgery and making a false declaration related to mortgage documents. The AG noted these forged documents were notarized by DocX as well.

    The Attorneys General for Nevada and Missouri aren’t the only public officials taking action because of the “considerable damage” that results from such “fraudulent notarizations”. The state officers in charge of land records have been speaking out and even suing over the damage caused. The two most recently filed actions are by North Carolina and Louisiana. In North Carolina, Register of Deeds Jeff Thigpen (Guilford County) filed suit against LPS, the bailed out banks and their creation, MERS. Thigpen said he wants the banks to “clean up their mess”, noting:

    “It is unbelievably frustrating to expend County resources in an attempt to create an efficient, accurate registry and have these banks wreak havoc on our efforts through fraudulent documents and a secret registry [the MERS system]. If we don’t fix this now, the future impact on land records and property values could be severe and incurable.”

    Earlier this week 29 Louisiana Clerks of Court filed a civil RICO suit–yes, a civil organized crime suit–against the bailed-out banks. The Clerks, who manage the land records, allege the banks conspired to use MERS to defraud the state of land recording fees. The Clerks allege that MERS misrepresents Louisiana law, and that MERS fails to work as promised. As a result, the Clerks charge, the parishes were owed fees every time a note was transferred but were not paid them.

    The Clerks flag an important point: critical players in each mortgage backed security are not MERS members. Thus even if MERS did work as MERS claims for MERS member companies, once a mortgage loan reached a securitization process entity that was not a MERS member, even on MERS’s own terms, a mortgage assignment needed to be recorded. Although the Louisiana clerks focus on only the Trustee for the securitized trust, the special purpose entities in the securitization process were not MERS members either. Thus at least two, and often three, recorded assignments were needed for securitized mortgage to maintain the perfection of the security interest if the MERS business model otherwise works to perfect the liens, which the complaint alleges it doesn’t.

    Notarization fraud was not limited to LPS or the bailed-out banks-as-mortgage-servicers-as-MERS. Law firms also engaged in the garbage practice. Maryland notaries who participated were forced to take the Fifth when asked about it.

    Despite LPS’s insistence that “improper” notarizations are irrelevant and “surrogate signing” legal, the indictments tell a different tale.

    Note: Law enforcers have neither indicted or sued a single big banker for this conduct. If the low level folk focused on now are used to flip people up the chain, fine. But if not it’s hard to see how the US can continue to see itself as operating according to the rule of law.

    And no, the practices aren’t harmless even if LPS insists they are. Title is clouded in many places, and in Massachusetts may be flatly invalid. Communities denied millions of revenue in troubled economic times are suffering needlessly.

    The US Supreme Court recognized how crucial honest notary practices are nearly 30 years ago, as did the State of Texas. At the time, a fundamental issue was at stake–the basic freedom to participate in the common occupations of the community–but now something just as fundamental is too–our property rights and land records system. Worse, more is wrong than notary practices, though honest notaries could’ve stopped “surrogate signing” in its tracks.

    Why aren’t all our law enforcers indicting people on a system changing scale?

  19. Let’s see; at the helm of the aol collapse and the head of of the worlds largest insolvent bank. Does this guy really think he can be taken seriously?

    I would only hope that the Board Members of these scam banks are indicted with the officers.

  20. Just remember, Rubin had the inside track and made a zillion dollars after he left the Clinton adminstration.

  21. Absolutely. Thank Phil Gramm. Resulted in deregulation. The importance of this to homeowner victims is that records are not publicly available. We cannot go into court with the records — we must demand them. And, this will be fought against with every ounce of energy by financial institution law firms. Thus, courts do not have the records in front of them. The courts are deciding only on what is publicly available — because that is all the homeowner victim can submit to the court. The court is aware that numerous other records exist. And, they aware that it is nearly impossible for homeowners to obtain those records. Easy win for foreclosure law firms.

    And, why did this occur?? Check it out — read about it. The Gramm-Leahy -Bliley Act, is also known as the Financial Services Modernization Act of 1999 — or the “Citigroup Relief Act.”

  22. Indeed…and he should be forced to build his own outhouse and live in it…

  23. carie, Obama wanted to “give” Summers the job of head of the World Bank. That shows you just how corrupt to the core these guys are.

    “As former chief economist of the World Bank, Summers is well-versed in debates about development and aid. Some of the things he did when he was at the Bank proved controversial—infamously, he signed a memo that said “the economic logic behind dumping a load of toxic waste in the lowest wage country is impeccable.”

    If anything, he and his family should be drop shipped to the same low wage country and stripped of passports

  24. Gentlemen
    If the repeal of Glass Segal is good then repeal of the Sarbanes Oxley Act in the Obama Jobs Bill is even better. The repeal would come at a time when there is greed and insanity in the markets.
    Stanley Putra
    Racine WI

  25. It’s all Larry Summers’ fault…he will NOT “rest in peace”:

    http://en.wikipedia.org/wiki/Lawrence_Summers

    As Treasury Secretary, Summers led the Clinton Administration’s opposition to tax cuts proposed by the Republican Congress in 1999. Also during his stint in the Clinton Administration, Summers was successful in pushing for capital gains tax cuts.[citation needed] During the California energy crisis of 2000, then-Treasury Secretary Summers teamed with Alan Greenspan and Enron executive Kenneth Lay to lecture California Governor Gray Davis on the causes of the crisis, explaining that the problem was excessive government regulation. Under the advice of Kenneth Lay, Summers urged Davis to relax California’s environmental standards in order to reassure the markets.

    Summers hailed the Gramm-Leach-Bliley Act in 1999, which lifted more than six decades of restrictions against banks offering commercial banking, insurance, and investment services (by repealing key provisions in the 1933 Glass–Steagall Act): “Today Congress voted to update the rules that have governed financial services since the Great Depression and replace them with a system for the 21st century,” Summers said. “This historic legislation will better enable American companies to compete in the new economy.” Many critics, including President Barack Obama, have suggested the 2007 subprime mortgage financial crisis was caused by the partial repeal of the 1933 Glass–Steagall Act. Indeed, as a member of President Clinton’s Working Group on Financial Markets, Summers, along with U.S. Securities and Exchange Commission (SEC) Chairman Arthur Levitt, Fed Chairman Greenspan, and Secretary Rubin, torpedoed an effort to regulate the derivatives that many blame for bringing the financial market down in Fall 2008.

    Summers’s role in the deregulation of derivatives contracts

    On May 7, 1998, the Commodity Futures Trading Commission (CFTC) issued a Concept Release soliciting input from regulators, academics, and practitioners to determine “how best to maintain adequate regulatory safeguards without impairing the ability of the OTC (Over-the-counter) derivatives market to grow and the ability of U.S. entities to remain competitive in the global financial marketplace.” On July 30, 1998, then-Deputy Secretary of the Treasury Summers testified before the U.S. Congress that “the parties to these kinds of contract are largely sophisticated financial institutions that would appear to be eminently capable of protecting themselves from fraud and counterparty insolvencies.” Summers, like Greenspan and Rubin who also opposed the concept release, offered no proof that the contracts would not be misused by financial institutions. Instead, Summers stated that “to date there has been no clear evidence of a need for additional regulation of the institutional OTC derivatives market, and we would submit that proponents of such regulation must bear the burden of demonstrating that need.” In 1999 Summers endorsed the Gramm-Leach-Bliley Act which removed the separation between investment and commercial banks, saying “With this bill, the American financial system takes a major step forward towards the 21st Century.”
    The first response to the CFTC Concept Release was issued as a joint statement from Rubin, Alan Greenspan, and Arthur Levitt who stated that they “have grave concerns about this action and its possible consequences.” Levitt and Greenspan have admitted that their views on this issue were mistaken. Levitt told WGBH in Boston that “I could have done much better. I could have made a difference.” Greenspan told a congressional hearing that “I found a flaw … in the model that I perceived is the critical functioning structure that defines how the world works.” When George Stephanopoulos asked Summers about the financial crisis in an ABC interview on March 15, 2009, Summers replied that “there are a lot of terrible things that have happened in the last eighteen months, but what’s happened at A.I.G. … the way it was not regulated, the way no one was watching … is outrageous.”

  26. Thank you Phil Grahm and Bill Clinton for the destruction of our lives.

  27. “…plus, we own both the government regulators and the politicians, so fuck off.”

  28. The horse has already bolted. Now, he is talking about closing the barn door. Glass Steagall should never have even been considered as something to do away with. It was put in place after the nightmare of the depression. The banks have to be controlled at all time, or they run amok. Put Glass Steagall back.

  29. […] Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud Tagged: 60 minutes, AHMSI, appraisal fraud, attorney general, auction fraud, Chris Koster, credit bids, DocX Indictment, foreclosure fraud, FORECLOSURE SETTLEMENT, foreclosures, forgery, Glass-Steagal, housing market, housing prices, investors, linda green, LPS, Missouri, mortgage fruad, mortgages, Parsons, Robo-Signing, settlement, strategic default, Wells Fargo Livinglies’s Weblog […]

  30. […] Link: Citi’s Parsons Blames Glass-Steagall Repeal for Crisis […]

  31. “…there was a market need and institutions find and follow the needs of the marketplace…”

    translation: “…there was a market GREED and institutions find and follow the GREEDS of the marketplace…”

Leave a Reply

%d bloggers like this: