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One More Windfall for the Banks

Editor’s Comment:  

If it is any comfort, the chief financial officers and treasury management officers of cities and counties are starting to realize that they are victims of the banks and that most of these bankruptcies (Stockton CA for example) or near bankruptcy were completely avoidable. Their complaints are sounding more and more like the complaints of homeowners. And they are both right. Those debts should not be paid at all until the amount of the debt can be ascertained in real dollars and the identity of the actual losing party — whether they are defined as creditor or not —- can be ascertained. I don’t think any of the cities, counties or the homeowners and businesses whose debts were subject to false claims of securitization should pay anything to anyone until the governments and law enforcement figures it out. 

The federal government is the only one with the resources to go through all the data  and come up with at least an approximation of the truth of the path of the money. The Courts, Judges and Lawyers are woefully under-resourced to take this mess apart. The only reason that Too Big to Fail is believed by anyone is that nobody fully understands the consequences and actual money impact of the false cloud of derivatives created by the banks exceeding all the money in the word by a wide margin. We have let the Banks minimize the actual currency in favor of looking at a cloud of illusions created by the banks which they and only they want treated as real. We will find the same things operating on student loans where the intermediated banks actually never funded the loans but claim a guarantee from the Federal government. 

These debts should fall squarely on the banks, whether they fail or not, until we get a real accounting of the real transactions in which real money exchanged hands. And that is the mantra of my seminars for lawyers, paralegals, homeowners, city and county officials coming up at the end of this month as I travel through Phoenix, Stockton,  Anaheim etc. 

There is no possibility that  actual debt is $800 Trillion because all the money we have in the world amounts to only $70 trillion. So the loans were part of a chaotic, complex series of dots on a scatter diagram wherein all the data was an illusion except perhaps one of the hundreds of dots on each loan, bond or mortgage. And they certainly were not secured because the terms of repayment and the amount of the loan were off from the beginning as was the index from which they took data to change the so-called payments dude on loans that perhaps never existed but certainly do not exist now. 

The door that opened just a crack has been the Libor rate scandal in which the banks, led by Barclay’s, set interest rates based upon actual and perceived movement of interest rates in the markets. As in other things, these rates were as bogus, since 2008 as the Triple AAA ratings offered to investors in Mortgage-Backed Bonds and the appraisals offered to homeowners. 

City and County officials, once completely blind to the realities of the situation and skeptical of homeowner claims that the mortgages, foreclosures and auctions were rigged, are now realizing that their loans, interest rates, and terms were rigged just like homeowners’ were and that the trap they supposedly are in is an illusion just like the premises upon which Wall Street convinced them (city and County officials) that these loan products were viable and correct implementation of sound fiscal policy.

It wasn’t sound fiscal policy, they weren’t good loans and had the officials actually understood what Wall Street was doing —- creating false demands for services and infrastructure as well as complex financial products that were doomed from the start, they would never have gone ahead with these bonds or loans. Now the whole municipal market is as screwed up as the mortgage and housing markets and we know the banks are to blame because they have already admitted everything necessary to blame them. 

Besides prosecuting claims against the banks for civil and criminal penalties, everyone needs to contemplate the consequences of the status quo and whether they want to change it. One such game changer is eminent domain takeovers of  those toxic mortgages that “seemed right at the time.” But more than that, the cities and counties must look to experts who understand the derivative market (as well as anyone can) and realize that their debt, like everyone else’s debt is an illusion created in the cloud of credit derivatives now estimated at $800 trillion while the total amount of real credit and currency is only $70 trillion. 

Like Homeowners, they must realize that while they borrowed the money, the loan or liability created by the loan or bond was an illusion already paid in full at the time they incurred the obligation. That seems impossible but so does the news on these subjects as one digs deeper and deeper. The banks collected up all the money made under these circumstances and gave their people bonuses amounting to 50% of the profit of each financial institution. Inside that “profit”were trading profits claims by trading fake paper claimed to be owned by the banks while the paper was in the cloud of derivatives that is 10-12 times all the money in the world. 

That debt has long since been paid in full. The only question remaining is whether we can identify the actual people who have lost actual money and what we are going to do for them. But paying the banks on the loan or bonds is certainly not one of the alternatives that should be considered because, like the bailout, it just gives them one more windfall.

Rate Scandal Stirs Scramble for Damages

As unemployment climbed and tax revenue fell, the city of Baltimore laid off employees and cut services in the midst of the financial crisis. Its leaders now say the city’s troubles were aggravated by bankers’ manipulation of a key interest rate linked to hundreds of millions of dollars the city had borrowed.

Baltimore has been leading a battle in Manhattan federal court against the banks that determine the interest rate, the London interbank offered rate, or Libor, which serves as a benchmark for global borrowing and stands at the center of the latest banking scandal. Now cities, states and municipal agencies nationwide, including Massachusetts, Nassau County on Long Island, and California’s public pension system, are looking at whether they suffered similar losses and are weighing legal action.

Dozens of lawsuits filed by municipalities, pension funds and hedge funds have been consolidated into a few related cases against more than a dozen banks that are involved in setting Libor each day, including Bank of America, JPMorgan Chase, Deutsche Bank and Barclays. Last month, Barclays admitted to regulators that it tried to manipulate Libor before and during the financial crisis in 2008, and paid $450 million to settle the charges. It said other banks were doing the same, but none of them have been accused of wrongdoing.





11 Responses

  1. […] Read more… Posted in Banks, MERS, News Around The Country, States « Public outrage turns spotlight on bank regulators Registers of Deeds in Five NC Counties Take Issue with Fannie and Freddie’s Tax Exempt Status » You can leave a response, or trackback from your own site. […]

  2. Cities, counties, and states were in on all frauds because hiked property taxes to criminal levels with every hike in prices, or with every bogus appraisal:

  3. @Neil: 2001 to 2007 prices rose between 2 to 8 times around the country, all based on phony appraisals, fraudulent Realtors, lenders, title insurance, escrow, etc. Lenders pushed people to borrow more money to buy a crappy homes which they could buy for much less. Why?? because the bigger the loans the bigger their commissions, hidden fees, and kickbacks… So, lenders had their own teams of appraisers to inflate price balloons…

  4. In the aftermath of the Barclays rate-fixing scandal, the most surprising reaction has been from people in the financial sector who fully understand the awfulness of what has happened. Rather than seeing this as an issue of law and order, some well-informed people have been drawn toward arguments that excuse or justify the behavior of the Barclays employees.

    Read the whole story at The New York Times

  5. The amended complaint abandons the original complaint.
    by Foreclosure Warrior
    The amended complaint abandons the original complaint. The case on point is Vereen v. Alpha Realty & Associates, 846 So. 2d 1161 (Fla. 5th DCA 2003).,10&case=17103326688214574597&scilh=0

    The court held that Vereen abandoned his negligence claim when he failed to include it in the amended complaint. The original complaint, when amended, no longer serves any purpose on the record.

    There may be a contradiction here, though. When the original complaint has a copy of note attached without endorsement, but in the amended complaint a funny endorsement pops up, you can’t refer to the original complaint without endorsement anymore? I believe the concept of departure of pleadings that I wrote about in one of the blogs, overcomes that hurdle.

    The concept of departure of pleadings
    Posted on January 31, 2012 by Foreclosure Warrior
    This is a very interesting case due to the fact that homeowner’s attorney has been using somewhat rare, non-standard arguments. The complaint was filed in April of 2010, and as usual the bank claimed it owned the note. And as is true for every other case, the note attached to the complaint was made to another bank, and it did have an endorsement, but not to the plaintiff bank. In fact, the endorsement was to the now famously bankrupt Lehman Brothers.

    Also attached to the complaint was an assignment of mortgage, which deserves special mention. This was an assignment purportedly from MERS as the assignor, having some address in Ocala, FL. Assignments executed by bank officers of the assignee pretending to be officers of MERS are very common. But what was so special about this one was how openly it was done. It actually stated the assignment was prepared by the assignee’s “assignment preparation department”, having address in Nebraska, was executed and notarized in Nebraska as well.

    The homeowner, pro se, filed a pretty professionally written motion to dismiss and for more definite statement. The main argument was that the complaint was not sufficiently pled and there was a controversy between the allegations and the attachments. 4 months later his motion was denied. The judge, who denied it, was one of those retired judges, who rarely ever granted a motion to dismiss.

    The homeowner hired an attorney who filed answer and affirmative defenses. It contained 6 affirmative defenses:
    1) lack of standing and failure to state a cause of action;
    2) failure to join an indispensable party;
    3) failure to disclose agency authority;
    4) negative averment as to capacity;
    5) negative averment as to authority, validity and/or authenticity;
    6) no right to accelerate and motion to dismiss.

    After nothing was happening for a period of 10 and half months, a new law firm filed notice of appearance and started to push the case forward very aggressively. They filed motion for leave to amend complaint, proposed order granting such leave, motion for summary judgment and affidavits in support of the motion. The court issued a memorandum stating that proposed order cannot be entered ex-parte, there should be a hearing.

    The defense attorney filed a motion for involuntary dismissal for lack of prosecution for over a year and also stated that the proposed amended complaint where plaintiff was claiming it was actually a servicer, not an owner, and where the note was changed: it now contained 2 new endorsements from Lehman Brothers, was a departure of pleadings. Mazza v. Santoni, 855 So. 2d 710 (Fla. 4th DCA 2003). And that it was an admission that plaintiff did not have standing when the complaint was filed.

    At the hearing on the motion for leave to amend and the motion for involuntary dismissal the defense counsel’s argument was well taken, and the judge at some point in time offered to dismiss complaint with prejudice, but he said he could not do it without first granting leave to amend the complaint to be dismissed.

    But the defense counsel was opposed to order granting leave. He was mindful of the January 18, 2012 opinion from the 3rd DCA, Bank of New York v. Rogers. The lower court in that case entered an order granting a defense motion for involuntary dismissal and stating it was the result of plaintiff’s failure to establish its status as the owner and holder of the note. But the appellate court reversed, stating the decision was “directly contrary to an earlier, previously unopposed and subsequently unchallenged order, which substituted party plaintiff”. That unopposed order stated the successor was “the real party in interest”.

    Then, the judge asked what authority he had not to grant leave to amend. He took the case under advisement, pending briefs on the issue to be submitted by the counsel.

  6. Wall Street criminals use stolen money to fund Presidential campaign.

  7. […] Filed under: bubble, CDO, CORRUPTION, currency, Eviction, foreclosure, GTC | Honor, Investor, Mortgage, securities fraud Tagged: Anaheim, Baltimore, bankruptcy, Barclays, bonds, Counties, derivative, DEUTSCHE BANK, JP Morgan Chase, Libor rate scandal, Manhattan federal court, Massachusetts, rate scandal, Stockton CA Livinglies’s Weblog […]

  8. Hoping it all would go away

  9. Thanks Neil, for finally realizing the magnitude of this global crime with the numbers I have been documenting in courts for several years.

  10. WTF took these creeps so long to figure this out

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