BOA DEATH WATCH: Ironic Twist for Zombie Banks

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CITI and BOA Headed for Extinction

Editor’s Notes and Analysis:  

The bottom line here is that I have yet another prediction and I am just as certain of this as the ones Brad Keiser and I issued in September, 2008. Actually it is the same prediction all over again and for pretty much the same reason. I am not just boasting when I say that every single prediction, description and process I have been writing about has turned out to be dead on right despite the jeers it received when published. I actually have some people running through the books and the more than 3,000 Blog Articles to list those predictions, give you the cite, and describe the outcome.

In, 2007 when the DOW was around 14,000 I predicted that it would crash with a low in the 5,000 range, a rebound and then equilibrium in the 7,000 range. If you don’t want to wait for our article on our predictions and their accuracy, go look it up for yourself right here on this blog. And the reason was that the banks were playing a trick on the market and our society. They were merely the conduit for a financial transaction between investor lenders and the homeowner borrowers. They had forced appraisals into uncharted territory that we won’t see again for at least 30-40 years.

The trick was that they created a paperwork trail that they controlled absolutely, and financial trail of self-dealing that remains hidden to this day. Those deals are now dead branches hanging off of a dead tree. By originating the loans with “bankruptcy remote” vehicles the banks made it appear as though the transaction was set in stone (or rather on paper) and the appearance of the documents was like any other real estate transaction — so even seasoned professionals (at first) didn’t have a clue what was going on).

The paperwork was all about a story of a financial transaction that never happened. With very few exceptions none of the terms, conditions and recitals in the promissory note, mortgage (Deed of Trust), Settlement statement (HUD-1), Good Faith Estimate (GFE) or other disclosures  had any basis in fact. There was no financial transaction between the named parties. Consumers take out loans all the time with the assumption that the originator of the loan is the creditor in the transaction and that they are getting money or value from that originator.

Consumers also assume that the terms of repayment offered to the lender were the same as the terms offered to the borrower. And therefore the consumers assume that if the “Loan” is secured on personal property or real property, that the collector calling them  has every right to demand payment and enforce the repossession of the personal property or the foreclosure of the real property. But this wasn’t the case.

The investor lenders took it as an article of faith that banks with reputations dating back into the 1800’s wold want to keep that reputation intact. In fact the quasi public rating agencies made the same assumption. And everyone assumed that NOBODY would want to make a loan that was required to fail in order for the banks to make the ungodly amounts of money they made.

As we predicted over the last 3 years, the ratings of the big banks that led the way down the securitization rabbit hole, are headed toward junk status. As one article in the New York Times puts it, think about what would happen to your life if your credit rating went from 850 to 600 or lower. The debts of the major banks have now been reduced to near junk status and they are still headed down.

The reason these rating agencies have struck down the ratings is that they too were tricked at the front end when they gave investment grade ratings for pension funds to invest — without such ratings, the pension funds, City operating funds, sovereign wealth funds, were not allowed to make the purchase. So the game was on at the beginning to buy their way into the agencies with fishing trips and other inducements and threats, to get the rating necessary in order to receive money from public and private pension funds and trusts.

Now those rating companies have done what they should have done at the beginning. If they had done the due diligence, the entire scheme would have failed on the front end, and if the appraisers were more strictly regulated under threat of huge penalties and liabilities, the transactions would have failed on the back end.

As stated on these pages for months, these big banks are neither big nor banks. They claimed ownership of loans for the sole purpose of trading an ever widening tree of what were once legitimate hedge products wherein an investor protects themselves as to risk of loss by paying a premium that will reduce the return they’re getting but virtually eliminates the possibility of risk.

With loans, it was a simple proposition. Armed with a Triple A rating from the ratings companies, investment bankers sold loans, bundles and bonds forward when there was nothing to sell. Armed with fraudulent appraisals, documents, and disclosures, originators would offer fictitious loan products that bore no relationship to the loans offered to the lenders.

Now the rating companies have examined the books, records and process of these loans and arrived at the same conclusion we reached in 2008. None of these loans were owned by the banks, none of the obligation was subject to any documentation in favor of the actual lenders, and the “assets” on the books are pure fairy tails because they never owned the loans or the bonds. And because of a rule that allows banks to report markdowns for assets held in the United Stated states, but allows them to ignore the write-downs for “foreign” investments, they are able to lie about the assets nd ignore the incredibly huge liabilities facing these banks.

BOA is  dead man walking masquerading as what was once a bank. It cannot recover. Neither can Citi, and there is a big question mark over JP Morgan Chase. Two Banks are about to fall like the twin towers — BOA and Citi. Besides a total loss for the shareholders and most of the creditors, it will release millions of homes from the threat of foreclosure and allow for recovery of millions of homes that were illegally foreclosed. The rating agencies have realized that the foreclosures were merely a device to mask the loss and throw it onto investor lenders. But the rating agencies understand fully now that the pension fund would be violating law and contract by taking loans already declared in default. So for the lawyers out there — there was an offer, no acceptance (nor any possibility of acceptance), and no consideration for the transaction the banks want to use to pitch the loss onto the investor.

That loss cannot be thrown onto the investors because the deal the investors bought was not executed. They didn’t get a good loan within 90 days. Now when a Judge enters a foreclosure order or judgment, the Judge doesn’t realize that he has opened a can of worms. because the main interest (the loss of real creditors) was just litigated without notice or the ability to appear. And the implication of each such order and judgment is that the loan actually made it into a pool, when there were no pools, there are no pools, and the money the dealers took from the government (a) should have been paid to the investors (b) should have been paid only to the extent of their loss — not a multiple payment when the loan or “pool” failed and (c) and those payments (over leveraged in every case) exceeded the amount of the loan to the borrower or the obligation to the investor.

By entering that order, the Judge is saying to investors that THEY are deadbeats unworthy of due process. By entering that order, the Judge has ruled that contrary to the provisions of the pooling and servicing agreement, prospectus and the Internal revenue Code, he is making a factual and permanent finding that the investor must NOW accept and did accept a defaulted loan that would have been rated below junk.

There is an old expression that applies here. “You can’t pick up one end of the stick without picking up the other.” You can’t screw the homeowner borrowers also without screwing the investors — pension funds etc.. The rating agencies have come to what is a startling conclusion for them — the assets are not real and the liabilities are grossly understated. The rating for these “banks” is about to be cut to junk status or below. Citi and BOA are headed for extinction sometime in the next 6 months (last time we said 6 months it was 6 weeks, when we predicted the fall of the banks, and the order in which they would fall).

So that is the prediction — no matter who is elected to the White House or Congress or legislatures or state law enforcement the banks and the regulators stepped on a rake in 1998 and it is now coming up to bash their head into tiny pieces that more than 7,000 performing and conforming banks are ready and willing to clean up. BOA and Citi are done.





31 Responses

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  3. Thanks I know just mispelled in my hurry and not paying attention and and not thinking. Did not misspell it on purpose, however he thinks he has a diamond ass.

  4. @Shelley

    I’m sure he thinks he has a Diamond ass, but Jamie’s last name is Dimon. 😉

  5. BOA deserves to rott in hell,and go to jail for all the harm they have done to good hard working American People,They will get no money or tears from me,Dropped dead BOA…

  6. the TBTF no longer consider balance sheet insolvency to be a problem…of course they are insolvent, but they don’t have to care…the only thing they care about is cash flow (extraction i call it)…as long as they can continue to extract for the cartel no problem…they may morph into different entities if the legal stuff gets too tough…but otherwise they wont go down except in a civil war…

  7. It is hard to keep a possitive attitude, negative wont get us anywhere but defeated. AND THAT CAN NOT AND MUST NOT HAPPEN. I would like to shove a pitch fork up Jamie Diamonds ass, too! Our government has been spoon feeding him at the wrong end.
    They need to use a sharp fork at the other end….. his ass!.

  8. I agree it is frustrating. We have not been given much hope for justice, we just have to keep hoping for justice. The con can only go so far.

  9. Amen E Tolle

    NGs happy outcome won’t happen in a million years. If and when those banks go ( how many years have these predictions languished?) l, the next set of thieves will move up to the trough

  10. ToLLe,

    I second you on that one…

  11. Neil wrote, “Two Banks are about to fall like the twin towers — BOA and Citi. Besides a total loss for the shareholders and most of the creditors, it will release millions of homes from the threat of foreclosure and allow for recovery of millions of homes that were illegally foreclosed.

    Can anyone add to this mix? Why wouldn’t we expect a JDB to step in here and assume these mortgages? These guys have played fast and loose on every count, why expect the threats to wind down now? They’re all rat bastards. I expect nothing less from their demise save for more of the same thieving bullshit.

  12. Perhaps we can send a messenger with a foreclosure notice and sale at auction date to post on every door of the BOA stadium the morning of the convention. I know just dreaming. Well they do it without legal right to do it. Frankly the people own the stadium, the tax payers have lent them our wealth- unfair money.

  13. So true I thought I was the Lone Ranger on this one so nice to see I’m not.thank you Carie.

  14. @pamela

    dregs and sadists…

  15. BoA will just get another bailout — they are just too tight with the regime. Weepy-rinos will fold like a cheap suit and give them anything they want. Besides the DNC will be holding their convention at Bank of America Stadium in Charlotte NC.

  16. Our great judicial system in WA. state at work once more.It’s no wonder that the police around here have a problem with respect being shown to them.Thats not to say there all bad but it seems like the dregs of socierty are now fullfilling these roles.

  17. Two years ago I was sitting out on a brick garden wall outside my salon and watched armored tanks full of soldiers and SWAT teams go by and a dozen police cars thinking it was practice for the vet day parade a day early. The Muckelshoot tribe grounds is behind my salon, whom set off fireworks all the time of the year. My cousin asked me what the noise was and I told him the Muckelshoots set off fireworks all the time. Then I notices out of the side of my eye that men were laying down on the street with their hands tied behind their backs and the police and SWAT team and tanks parked there shooting out every window int two of the houses. I ran for cover. A man called the police a couple of years ago saying he was going to commit suicide due to what the mayor had done to him and I dont know about tanks but the SWAT team pulled up just six blocks from my salon where this man lived and began using his house for taget practice none stop until 4 am. of course found him dead hiding in his cast iron bathtub supposed suicide. While hiding from gun fire. Something is very wrong with this picture. The neighbors were in shock over the overkill, and not helping a distraught man to come out unarmed. He did not threaten anyone harm but himself..

  18. Promoting Marshal law is crazy, outrageous and dangerous!

  19. They should have all failed every single one of them but our government decided that the Constitution was nill and void so that they flourished at our expense and the expense of our people and our economy.Has government learned a lesson from all this….not so much.It’s time to throw a party and take our country back.Throw out all the politicians and everyone in government and do it like it used to be done.No Secret Service protection for life for former Presidents or anything else,you return to regular life as a regular “Joe” after your term is over.This would make people responsible for thier decisions bad or good and the Presidency would not be the farce that it is today.We need to get back to basics and common sense.It’s time to think outside the box.

  20. Well, well, well… Is it that time already?

    Media Promotes Troops On Streets to “Cut Down on Crime”

    St. Louis residents praise sight of military vehicles in neighborhoods

    Paul Joseph Watson
    Monday, June 25, 2012

    Following reports last week that U.S. Army wheeled tanks would be rolling down residential streets and highways in St. Louis as part of a training program, local news media channels featured interviews with residents who praised the sight of troops on the streets as a valuable crime-fighting tool similar to that used in foreign countries.

    As we reported on Friday, the exercise is part of a U.S. Army program run by military police from Fort Meade, Maryland focused around training MPs from St. Louis how to drive heavily armored vehicles “on highways and on city streets.”

    According to a Fox 2 St. Louis report, “people who live and work in the area think the army training is a good idea.”

    Indeed, the report features interviews with two residents, one of whom states, “I think it’s the same way when you go to other countries…they don’t have police officers they have troops, and I think it kind of scares a lot of people…it might cut down on a whole lot of crime because they don’t know if they’re military or the police.”

    “I think it’s fantastic because it might slow down some of the crime rate,” added another.

    In a separate KSDK report, although acknowledging that some had expressed fears about martial law, the news channel emphasized how other residents had vowed to “stop and salute” the tanks as they rolled by.

    While these news channels have framed the idea of troops on the streets as normal and reasonable, others have gone even further.

    A joint drill between military and police in South Florida last month involving troops storming a building in the middle of the night, unannounced to local residents, was characterized by local media coverage not as a frightening example of how Americans are being acclimatized to accept a state of martial law but as a ‘cool tourist story’.

    Why is the news media, in its editorial decision to feature interviews with residents who laud troops on the streets of America in a similar vein to despotic foreign countries, actively promoting the idea of martial law?

    Having U.S. troops perform duties normally ascribed to law enforcement officers is forbidden under section 1385 of the Posse Comitatus Act, which states, “Whoever, except in cases and under circumstances expressly authorized by the Constitution or Act of Congress, willfully uses any part of the Army or the Air Force as a posse comitatus or otherwise to execute the laws shall be fined under this title or imprisoned not more than two years, or both.”

    Why is the news media giving editorial credence to something that is not only completely illegal but fundamentally anti-American and more in line with what you’d expect to see in the former Soviet Union or modern-day North Korea?

    As Zero Hedge points out, the idea of troops from Maryland traveling all the way to St. Louis merely to teach other MPs to drive tanks doesn’t make sense unless one factors in the probability that this is an exercise in desensitization.

    I have to say that this event, which is being labeled a “training exercise”, makes very little sense to me. U.S. Army troops all the way from Maryland running open exercises in armored personnel carriers on the busy streets of St. Louis? I know Maryland is a small state, but is there really not enough room at Ft. Detrick to accommodate a tank column and some troops? Are there not entire fake neighborhood and town complexes built with taxpayer dollars on military bases across the country meant to facilitate a realistic urban environment for troops to train in? And why travel hundreds of miles to Missouri? At the very least, this is a massive waste of funds.

    On the other hand, such an action on the part of the Department of Defense makes perfect sense if the goal is to acclimate citizens to the idea of seeing tanks and armed military acting in a policing capacity. Just check out the two random idiots the local news affiliate picked to interview in St. Louis on the subject. Both state that they think the exercise is a “great idea”, because having the military on the streets would help to “reduce crime”.

    The U.S. Army has been reluctant to provide details of the exercise, with army offices in St. Louis and Washington, D.C. refusing to return calls. When asked how residents should respond to the sight of armored vehicles being driven around their neighborhoods, U.S. Army Sergeant Cornelius Ivory discouraged citizens from taking video and photographs of the tanks and urged them not to get too close.

    “They need to know to stay away from it,” Ivory told KSDK.

    Over the course of the last 15 years, Infowars has documented numerous urban warfare training drills across the country which revolve around role playing exercises wherein troops are trained to fulfil law enforcement duties as well as incarcerating Americans in detention centers.

    Exercises like the one currently taking place in St. Louis, scheduled to run until June 28, are part of the transition of the U.S. Army into a domestic police force, a role advocated by Chief of Staff of the U.S. Army, General Raymond T. Odierno in a recent Foreign Affairs piece.

  21. ….and the if the judges armed the banks ruling by unconstitutional bank law ignoring the rule of law including discovery, which enabled the houseing theft and demise of millions of homeowners, None or most of these foreclosures would never have happened. The judges enable the banks to steal. Our judicial system is as guilty as the banks.

  22. I look forward to this prediction coming true as i despise BOA…however didnt someone post here a few months ago that if you have a mortgage with BOA this would be a bad thing? ?????????

  23. iwantmynpv, on June 25, 2012 at 9:16 am said:
    This would be enough to finish off MS, but over-leverage on sovereign debt has already accomplished such. MS will not finish the year as a stand-alone entity, and will either be wiped through BK or sucked in by GS for pennies on the dollar. Goodbye MS, Goodbye Credit Suisse, Goodbye Citi and finally, good riddance BAC. I hope you are all indicted, your personal assets are frozen through RICO actions, and your families are put on the street.

    For the record – told everyone to short at 22 a couple weeks ago, and Credit Suisse First Boston is going next, here is the sleeper short which if they don’t get a bailout by England real soon will also go away.

    HSBC – they have substantial implicit recourse exposure to their private pools and they are the counter on a ton of French Sovereign debt. So, just like those above, goodbye HSBC!

  24. Wow, I posted the same exact thing this morning on the the other topic. Neil, you forgot MS. They are the first to go and need to raise more capital in a shorter time period than CITI and BAC. At least BOA & CITI have deposits to stick in front of insolvency proceedings. MS should be shuttered tomorrow, and for the record, it was less than 6 weeks ago I told everyone to short this dog.

    Enraged, you and i both know that Dimon and Stumpf have things on lock-down right now with Obama and Soros at their side. they ain’t going nowhere unless the indictments start!

  25. Neil says:

    “There was no financial transaction between the named parties.”

    “…a financial transaction between investor lenders and the homeowner borrowers…”

    Sheesh…of course, the investors are are NEVER the lenders or the creditors…sigh.

  26. Bold! How will it be only those two though? Must it not be a cascade of banks tumbling head over feet over head over each other?

  27. Neil, I want Chase to be done too. And Wells. And I want all those judges who condone crime to be done. Doesn’t matter if it is foreclosures or JDB: crime is crime. What does your cristal ball show about that?

    In my estimation, those 1% could never have made it that far without the help of the the 50% sheeples who followed their orders without any conscience. Why should those walk away?

  28. Won’t be too soon!

  29. Can’t happen soon enough. What about WFargo? Sure wish it would be on your list. Enough of this rewarding fraud already!

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