New Accounting Rules for Banks Could Break Them

The IASB and FASB have been working on accounting rules for the “losses” at the banks. Someone is either in for a surprise or somehow the banks will escape the rules. One thing is certain, that the accounting firms that provide the auditing services and certification of the statements of the mega banks are in bind. If they tell the truth, the bank may fail and the firm itself could be sued because it didn’t spot the problems before and report on them. If they lie, which everyone on Wall Street and maybe even in government wants them to do, they are not living up to the standards of their profession. As the truth is unraveled in courts where more and more borrowers are winning cases, both the bank and accounting firms are going to be caught red-faced.
I still want to know how these banks ended up booking unsold mortgage bonds as assets on their balance sheet. Do they expect us to believe that the investment bank actually advanced money for these bonds? The story being peddled on Wall Street and printed by mainstream media is wrong. When will we stop accepting the word of Wall Street leaders who got us into this mess? Remember these are the same bankers who lied to investors, lied to rating agencies, lied to insurers, lied to the their regulators, lied to the federal government and lied to borrowers. It seems to strain all bounds of reason to actually think that that they are suddenly telling the truth now.
Either investors bought mortgage backed certificates (bogus or not) or they did not. If they did, that money was used to fund mortgage closings downstream and it was used as the personal piggy bank of each investment firm. It follows inevitably to say that the banks were not funding the loans and hence had no risks of default. Yet they claimed the losses anyway.
They used investor money that was supposed to go to funding mortgages to gamble on the quality of the mortgage bonds hoping and making sure they could pull the rug out from under the same people they had sold the certificates. And they made sure that even the best tranche was saddled with making good on the worst tranche so that even those loans would be declared in default for purposes of collecting the insurance that should have gone to the investors, the credit default swap proceeds that should have gone to investors and the taxpayer and Federal reserve bailouts that should have gone to investors.
The creditors, i.e., the actual lenders in the loan transactions, were denied disclosure and payment of money received by their agents on Wall Street who “helped” them buy these bogus mortgage backed certificates. The banks claimed the losses that the investors eventually bore, when they knew they were getting the insurance and bailout money. They should have given the money to  investors and refunded the money that was based upon pure lies. The mortgage assets they carry on their balance sheets are also lies in large measure. You simply cannot convince me or any reasonable person that in the waning days of the mortgage meltdown, when everyone knew this scheme was crashing, that these very smart investment bankers starting buying the mortgage bonds themselves.
In this sense, the investment bankers and the investors must be considered as one entity or at least principal and agent. The money was received, it should have been booked as loss mitigation for the investors and that would have reduced the receivable on the books of the investors. Several investor groups have sued the banks saying as much. And those cases are being settled which means we know that the receivables of the lender-investors has been reduced or eliminated.
Once the receivable is reduced — for any reason relating to payment received in money — the payable must be correspondingly reduced, which means the homeowner doesn’t owe as much as he thinks nor as much as the parties claiming foreclosure. Remember, homeowners didn’t crate this false securitization scheme that covered up a simple PONZI scheme. It was the bankers who did this, seeking windfall. That part of the windfall will now start falling in the homeowners’ direction is simply turnabout is fair play.

This was all passed off as bad judgment — description that is insulting. This was intentional. Wall Street is all about making the money off of other people’s money. And that is exactly what they did. And now they are screwing the investors, screwing the taxpayers, screwing the borrowers and taking the homes too. This goes beyond unfair; it is theft.

New loan loss rules expected early next year

35 Responses

  1. Liz – I’d like to know what website is saying that. thanks

  2. Nice Liz… Thank You for Sharing!

  3. Why must one make this a campaign site? This is Not the Purpose of this Site. Especially coming from those Not Registered to Vote! What is the Law about Voter Registration? Can You Register n Vote the same day? Soooo Confused.

  4. I just had to share this comment from another weblog that we should not ignore.

    I think everyone has missed the boat on assignments and the verbiage the bank uses in the endorsements. The banks always use “without recourse” in their endorsement;.” this type of endorsement negates the banks responsibility to pay for the Note and leaves ONLY the original signer (you) financially responsible. But this is a 2 edged sword. The very act of allowing the bank to add “without recourse” means the 2nd bank has now AGREED they ONLY have the right to collect PAYMENT for the debt but forsakes the right to foreclose because they have become a HOLDER and NOT a HOLDER IN DUE COURSE.
    The liability protection garnered by using “without recourse” is purchased with the powers afforded by the IN DUE COURSE right. The fraud then lies with the trustee who violated their fiduciary responsibility by allowing the Note to be endorsed “without recourse” which stripped parties of their rights. Once the trustee did this they voluntary forsook their position and authority and lost the power to control or oversee any future acts.
    In essence, the trustee is nothing more than the thug that does the wet work for the mafia we call the bank.
    Since the DoT states the “debt evidenced by the Note” and the Note has been invalidated by the bad endorsement there is no evidence of any debt.


    I already told you—ANON can’t and won’t post here anymore because of litigation issues. She posted quite a bit here a while ago.

  6. I want value too… Anon please talk to me also…please.

  7. Why doesn’t Anon just type her own response? Does she only work through her global network of blog-typists? Wow, this site even has some mystery to it.

    Cheerio folks, and lets see what Obama does in his second term. I bet he sells out homeowners again!!!

  8. Shadowcat, guess which part of society the third asset pool is meant for. The settlement bank in England has already made it clear that sovereigns will have to absord losses over the next decade to reduce leverage and the constant strain on reserves.

  9. Yeah, ok…good luck with that.

  10. Whatever. If you need that to have some value, go right ahead. Doesn’t take anything away from me.

  11. I don’t care if you don’t believe me, but she is fine…her phone works.

  12. Whatever… I know she isn’t fine. No power there. No heat. Long lines top get gas. We’ll connect somehow. Always have in the past.

  13. Wow, enraged—it’s you who are pathetic…how do you think I have instant answers from her when someone has a question? You need to check your motives…and your sanity. I don’t need to prove anything to you.

  14. She knows it’s you calling, Enraged

  15. US standard setter FASB had been working with the IASB to create a single expected loss model for financial instruments as part of the project to converge IFRS. The two accounting boards have since split, with FASB advocating upfront recognition of losses, distancing itself from the IASB’s ‘three bucket’ approach.

    The first bucket, under the IASB’s plan, would contain ‘healthy’ assets, those for which banks expect a reasonable return and need only make minimal provisions. Bucket two is reserved for assets with some level of impairment, but which are not completely useless, while bucket three is for assets that are undeniably ‘bad’.


  16. Will the new rules of accounting apply retroactively to so-called accounting procedures used to fleece the middle class?

  17. “ANON is fine. Someone I know has been texting her.”

    HAHAHA! So full of it! Anything to look “connected”. Pathetic! And immature…

  18. Carrie.
    Can you use my situation as an example. My note says BOA was the lender of 400,000 of which I also put down 100,000 hard cash. Now 5 year layers they say Freddie is the investor and they are serviced/collection scumbags. Now I understand that boa loaned me no money but are you saying the fraud goes back to the note of the seller who sold me the house, who by the way I see has MERS everywhere I look in the county records.

  19. You Think I’m a Pension Funds Manager? LOL! Your Better at Jumping to Conclusions than Ivent! DCB are you Rolling on the Floor? Heeheehee …..

  20. I hope she is fine, we took a beating in lower NY.

  21. Let’s go back to the 70’s when Fannie and Freddie had a monopoly. Even the GSE’s were whacked up by the Reserve system banks. Look at which bank sold (lol) practically 90% of their loans (lol) to fannie and, which banks sold their loans to freddie at the same percentages.

    It is all a scam and your politicians are in on it.

  22. I raised money for Elizabeth Warren, she should shoot for the Volker rule instead when she is elected. She is a good woman and we could use ten more of her in office.

    Lord knows, us fellows have been making a mess of things, except bombing desolate mountains under the guise of the great boogey-man terrorist, which we are extremely good at. (sic)

  23. No—she’s not wrong…she has proof. You are not going back far enough. It is what it is…but, the cover-up continues.

  24. Carie, once again ANON is wrong. Foreign investors (actual investors) knew nothing as well. The pension managers (just like the mutts here) were easily bought with dinners and trips to junkets in exotic places. Many folks who run municipal pension funds are directly from Wall Street and the guys running the trade unions, are guys who worked in the field with their hands and listened to the advisory companies, just like here.

    About seven years into this scheme, many oversea fund guys wanted to pull the plug and would not buy the MBS evolving out of earlier pools. When the smarter funds discovered AIG was the counter-party to almost 70% of the crime, shit hit the fan, and this began in 2006. The rest was just make-believe and reduced guidelines for everyone to cash out (except homeowners and investors.

    We let Hank (the criminal) Greenberg manuever the Treasury through Geithner (NYFRC) under the threat of his China buddies selling their ten year and six month maturities.

    This would have crippled the money markets, and thus Hank got to keep some of his ill gotten stock, instead of letting AIG go, and having all of them walk the bread line with us.

    After Maiden Lane II, LLC got rolling and the short term mezzanine was in place via TARP, the NY Fed had the authority to shoot off the lock. The Reserve System Banks were allowed to pick and choose which national banks they wanted, and the US Taxpayer finaced this entire consolidation.

    None of this was shocking, in fact this is part of a corrdinated business model, that as natural contraction eliminates excess from the markets through socilization of the losses.

    Homeowners better wake up because Obama is going to win, and he will start building his parachute immediately after the new year.

    Homeowners are going on the street next spring, judicial or not!



    Elizabeth Warren Suggests Breaking Up The Banks By Reinstating Glass-Steagall

  26. ANON is fine. Someone I know has been texting her.

  27. Still can’t get a hold of Anon and getting increasingly concerned… She’s right where Frankenstorm caused the most damages.

  28. November 1, 2012
    With obviously no U.S. Department of Justice to speak of…

    Four major crimes against America. Millions of victims. Zero executives jailed.

    By Pete Kotz – Houston Press

    Still, banks keep paying $350 millions here, $1.2 billions there… we’re talking real money! Where is it all going? I still haven’t seen one cent of it!

  29. Moving along just fine. Pretty soon, we’ll know how much Romney has stashed away. Gorgeous day indeed.

    Swiss banker plea seen intensifying U.S. tax dodge inquiry
    Published: Monday, 5 Nov 2012 | 7:00 AM ET

    * Former banker seen pleading guilty in Florida

    * Plea could signal he is cooperating in tax dodge probe

    * Swiss banks said to be seeking end to investigation

    By Lynnley Browning and Katharina Bart

    Nov 5 (Reuters) – These are gloomy times for once super-secret Swiss banks, with a tax evasion probe by U.S. authorities grinding on and a former Swiss banker expected to plead guilty in a Florida court on Tuesday to helping wealthy Americans dodge U.S. taxes.

    Christos Bagios, formerly employed by Credit Suisse and UBS AG , is accused of helping rich Americans evade t a xes. He pleaded not guilty last month but is expected to change his plea to guilty.

    If he does, lawyers said, it would signal he is cooperating with U.S. investigators in a wide probe of Swiss banks, including Credit Suisse.

    Bagios’ cooperation could prolong a costly and embarrassing inquiry that has tarnished Swiss banking secrecy, even as the banks have tried to bring it to an end.

    Bagios, a Greek citizen and Swiss resident, was arrested in New York in January 2011 and accused of helping about 150 U.S. clients hide as much as $500 million from the tax-collecting U.S. Internal Revenue Service while he was employed at UBS.

    He has been under government detention for nearly two years in a rented apartment in Miami and forced to wear an ankle monitoring bracelet. Matthew Menchel, a lawyer for Bagios, declined to comment.

    In the international financial world, Swiss banking secrecy has long provided a haven of privacy and discretion, but that legacy is under pressure. The United States and other nations, dealing with severe budget deficits, are tightening tax law enforcement and demanding more openness and cooperation from tax-haven nations including Switzerland.

    Credit Suisse and other banks are pressing the Swiss government to hand over data that the U.S. authorities want on American clients suspected of offshore tax evasion, according to U.S. and Swiss persons briefed on the matter.

    But the government of Switzerland, where bank secrecy is enshrined in law and tradition, has pushed back.

    “The banks are frustrated because their hands are tied with the secrecy laws, and they are pressing the Swiss government for a resolution,” said Milan Patel, a tax lawyer in Zurich and a former senior attorney at the U.S. Internal Revenue Service.

    “Some banks want to cooperate and get this over with, but the Swiss government hasn’t been able to come up with a mechanism,” said Patel, who has clients involved in the dispute.

    Mario Tuor, spokesman for the Swiss State Secretariat for International Financial Affairs (SIF), declined to comment.


    Banks under criminal investigation by U.S. authorities include Credit Suisse, which received a target letter last July saying it was under a U.S. grand jury investigation.

    Zurich-based Julius Baer and some cantonal, or regional, banks are also under scrutiny. So are UK-based HSBC Holdings and three Israeli banks, Hapoalim, Mizrahi-Tefahot Bank Ltd and Bank Leumi .

    In February, Wegelin, Switzerland’s oldest private bank, was indicted .

    Bagios, who worked at UBS from about 1999 through 2008, then at Credit Suisse, is expected to change his plea to guilty on Tuesday to charges of selling tax evasion services to Americans and cooperate with U.S. authorities, lawyers said.

    Patel said U.S. authorities would use the expected plea “to put pressure on Credit Suisse.”

    Victoria Harmon, a spokesperson for Credit Suisse in New York, declined to comment. Spokespersons for UBS, Julius Baer and HSBC declined to comment.

    Charles Miller, a Justice Department spokesman, also declined to comment.

    Swiss banking secrecy was relaxed in 2009 in a U.S. tax evasion case involving UBS, which paid a $780 million fine and handed over more than 4,500 American client names.

    U.S. officials say the UBS case, now closed, remains a template for resolving the current disputes. But Switzerland has argued that the UBS case was strictly a one-off matter.


    Support among some Swiss banks for handing over client data to U.S. authorities represents a new approach. It comes as efforts by Swiss officials to craft a settlement with the United States have stalled. Such a settlement would cover the entire Swiss banking industry, with billion-dollar fines and a handover of some client data. In return, the Swiss government has sought guarantees of no further criminal proceedings.

    But the U.S. Justice Department has rejected this “global settlement” idea, according to U.S. and Swiss government sources and tax lawyers close to the matter.

    Instead, each bank under criminal investigation must “negotiate its own deal” with the Justice Department, said a U.S. person briefed on the matter.

    Michel Derobert, secretary general of the Swiss Private Bankers’ Association, a trade group in Geneva, said: “I don’t think a global deal is very realistic.”

    He said the banks “will find some solution for themselves.”

    A Swiss official who declined to be identified said that “nothing is happening” with regard to a global settlement.

    William Sharp, a tax lawyer in Zurich and Tampa, Fla., with bank clients mired in the probe, said that “since the global settlement talks have stalled, many Swiss banks are pressing their own cases to settle all U.S. legal issues.”

    Credit Suisse wanted to hand over some client names last spring, but the bank was stopped by FINMA, the Swiss financial regulatory agency, according to a U.S. person briefed on the matter and Douglas Hornung, a tax lawyer in Geneva.

    A spokesperson for FINMA declined to comment.

    “The Swiss banks are frustrated as much with the Swiss government as with the U.S.,” said Urs Schenker, a tax lawyer and managing partner at Baker & McKenzie in Zurich. “It’s important to them that the government takes action, but the banks are somewhat limited.”

    (Reporting by Lynnley Browning in Connecticut, Kevin Gray in Miami and Katharina Bart in Zurich. Editing by Kevin Drawbaugh.)


  30. from anonymous:

    “…First, servicer only acquires collection rights on behalf of the investor/current creditor – servicer is not the creditor. A servicer cannot acquire any interest when they are acting as a servicer for another.
    Second, any refinance that was conducted under the guise of a mortgage refinance when, in fact, in was just a modification of a (false) prior default, with the prior mortgage never validly discharged, is not a mortgage refinance at all.

    And, therefore, the note fails to fall under the UCC, as no negotiable note actually exists.

    This was the root cause that exploded the financial crisis.

    Notes were not notes at all — and foreign investors knew it — but, US has REFUSED to investigate. It is why investor lawsuits are settling, but homeowners got nothing more than a bogus 49 state Attorney General settlement — all without investigation. (Settlements do not divulge the fraud).

    Yes, correct, the role that servicers actually occupy is — concealed.

    Servicers will not disclose WHO they are actually servicing for and this is from the onset of the fictitious refinance to the fraudulent foreclosure in question.

    Deregulation has allowed servicers to publicly withhold any information that discloses the actual creditor.

    In fact, disclosure would disclose that the note in question is not a valid UCC instrument but, actually, a modification of the PRIOR mortgage/note. Courts run scared. All they need to hear is the name of bank and they accept this falsity. It does not matter what false capacity that bank is appearing in — including as trustee to a fraudulent trust that holds false and invalid mortgage loans, notes (and UCC instruments). .

    The Court hears “bank” in name, especially with “NA” attached, and they believe it is valid. This is simply not so.

    Court Is not given the opportunity to hear the evidence that the subprime refinance was orchestrated under fraud, and that no valid UCC instrument exists, and that the “Bank”, “NA”, and/or servicer, is NOT the creditor.

    Further, under federal law, which pre-empts state law when there is conflict, the CURRENT creditor must be identified. Servicers are not the creditor if assignment is executed for the ministerial purpose of administering a foreclosure action.

    No legal rights transferred under this scenario.

    Time for attorneys to wake up. Start digging at records, and pursue records disclosure under the Freedom of Information Act as to the GSEs. This may take a federal action to enforce. But, would clearly win on this as it involves the borrowers’ right to the those records.

    When Neil finally understands that this is about homeowner victims, and not “investors”, we may finally get somewhere.

    Until Neil realizes this, we will remain without media help. Neil’s allegiance is not on the same page.

    And, any help to homeowners is bogus — unless the truth is told.

    Help without the truth is simply a continuation of the fraud. Modify???

    Not without disclosure of ALL records.

    To do so without disclosure – is to continue the fraud.

    Fraud upon the court. No Statute of Limitations.”

    (not advice—just fyi.)

  31. “agents on Wall Street who “helped” them buy these bogus mortgage backed certificates”

    Now the Fed is buying them at 40 Billion per month, for 18 months? What the F*** What is this a “circle jerk”?

  32. Yes, Neil—it IS out and out “theft”…and NO—securities investors are NEVER the “creditor”…amazing all these years later and the same things are still being said.

    from anonymous:

    “…Simply put, just because someone produces a note, does not mean it is valid.

    The subprime fiasco was about fraud.

    This is not about predatory loans, although many of the modifications (falsely called notes) were predatory.

    This is about LOAN fraud itself.

    This is about converting a valid GSE loan into a fraudulent “default” loan.

    This is about fraudulent subprime refinances – falsely presented as mortgage refinances.

    A note is not a note if is was procured by fraud, and if the prior mortgage is not discharged.

    And, THIS is what occurred.”

  33. Poppy, nope it was fake money created through fractional lending and forward swaps. Guess who has all the “Notes”, and trsut me that will collapse this Country to execute the swaps.

  34. I’ve been telling you guys that for years. This was not bad judgment, this was a business model that never anticipated the MERS cloak being set back for full view.

    The people of this great nation need to form an aliance amongst one another NOW. Regardless of who wins the presidency tomorrow – the campaign rhetoric knwon commonly as “change”, she’s a coming.

    FASB cannot mask the fraud and that is why the pushed out the former Director, when regulators relaized the extent of the fraud and leverage, not one bank was solvent and they tried to force him to extend the relaxed reserve / mark requirements.

    If we forced the banks to take these assets toward the aisles, they would all be below tier one levels, and all of our politicains and regulators know this.

    The private currency system is still leveraged 40-1 on assets, and this after the 9 trillion swindle at the FRC.

    Get your raincoats guys – the brown stuff is about to hit the fan!!!

  35. So, Neil;

    When places like New Century, originators, borrowed lines of credit that was “investor” money?

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