Your Lender is the Federal Reserve System

It is difficult to state with certainty exactly how many ugly mortgage bonds have been purchased by the Federal Reserve. But if you put pencil to paper we can estimate the number. The published figures indicate there was a purchase of several hundred billion in these defective bonds when the financial collapse occurred. To be on the safe side we will use a figure of $300 billion. Since then the published articles indicate that the Fed has been purchasing bonds monthly. The amount of monthly purchases of the mortgage bonds appears to vary between $55 billion and $35 Billion. So if we use an average of $45 billion per month of mortgage bonds that have been purchased by the Federal Reserve. This has been going on for about 55 months. So the total monthly purchase of mortgage bonds is around $2,225 Billion or $2.225 Trillion. Hence the total purchases by the Fed could be reasonably estimated at $2.525 Trillion.

This means that the Federal Reserve owns a substantial bulk of the bonds issued during the mortgage meltdown. Questions abound. The Federal Reserve knows the bonds were defective in a number of respects. But they are purchasing those bonds for the express purpose of propping up the financial system and presumably getting those bonds out of circulation. The question is why did they purchase these bonds from the banks? The banks were merely the intermediaries that created the REMIC trusts that issued the bonds. So are the he trust beneficiaries receiving this money? Nothing in the public domain indicates that the investors were paid by the banks that received this money. Since it was a purchase the bonds still exist which means that the largest investor in many trusts is the Federal Reserve. Is the Fed getting Servicer advances?

But the largest question on my mind is why the Federal Reserve as an agency has not addressed the fundamental economic problem of economic inequality that was caused by a deeply flawed system of defrauding investors and borrowers into entering into loan deals that were (a) different from each other and (b) could never work because of the values used for the loan and property?

If you take the number of Foreclosures that have been rubber stamped through the system plus the bond purchases by the Federal Reserve and add them together, the amount of “help” received by the banks is around $3.5 Trillion. The amount of help given to homeowners is a tiny fraction of that amount. If the Federal Reserve wants economic growth, it should use its potential influence as the largest investor in the bonds to mandate settlements that make economic sense to both investors and to borrowers. This correction stops the financial aid to banks who are keeping the money. But it stimulates investment and incidence in the financial system and the capability of the middle class to spend and stimulate the economy.

The main obstacle to fair settlements is the fact that we are still going through intermediary banks who we know have committed widespread fraud and whose balance sheets and income statements are being artificially inflated by showing values and profits that should not have been allowed. No new law is required. When you defraud investors the normal result upon discovery is restitution to those investors. If the investors (including the federal Reserve) are satisfied and seek no further payment on the debt due to these lenders, then a pro rata reduction of the debt supposedly owed by homeowners is merely the corresponding bookkeeping entry. The federal Reserve has an obligation to use its influence to force these settlements avoiding further displacement and further erosion of middle class wealth.

28 Responses

  1. Neil- to date, neither you nor anyone else has any idea whatsoever which mortgage bonds the Fed is buying, if they are actually buying them. Are they legacy bonds, current GSE bonds, or what? Until someone can identify the bonds which are purportedly being “purchased”, then there is simply nothing to talk about, as their is no starting point. Keep me informed.

  2. Like the Fed printing money….Wall Street printed phantom shares with lots of collusion of the usual suspects. Watch : Wall Street the Movie.

  3. NPV,

    Or, as I have said, foreclosures were meant as a distraction. If you want to pull anything big on people, just keep them destabilized. First, go after their job and ability to earn an income. Then, go after their health, their water, their air and their food. If some still manage to use their brains and rebel, go after the last things that may take them down once and for all: retirement pensions and… a roof over their head.

    Sprinkle with imagined threats of terrorism, stir and cook on low heat for a few years.

    Et Voila!

  4. Npv
    Your not crazy

  5. It seems everyone is finally waking up. When folks told me I was crazy in 2007 for closing my financial establishment and shorting BSC, LEH, MER and most of the OTS regulated banks, I would reply with nothing more than a smirk.

    When asked why – I would simply reply leverage.

    When you view capital markets with the laymen perspective – it amounts to the equivalent of the “Casino of Intangibles” Although, there is a winner and a loser on each side of every transaction the CREDIT MONEY never leaves the perceived market, it simply changes hands – from one bullshit balance sheet to the next.

    I have been telling everyone for the past year – you are fighting the wrong battle now. The banks have already won the origination and fraud battle – simply because they got the money, and I am not talking about the TARP crap, which was a simple mezzanine until the real consolidation took place.

    Continued credit expansion requires periods of consolidation, or the money expands outside the casino (Central Banks). The casino allows the alleged capitalists to open ‘mini casinos”, with the appearance that these casinos have monies to fund their own lending, These mini casinos make a couple pennies and in some cases actually believe that they are in control of their destiny (See WAMU).

    In actuality, the credit money and control never left the Main Casino. They simply use the “mini casino” to do the grunt work and go fetch new “credit bets” via mortgages, auto loans, school loans, credit cards, etc.. (all of which are part of the huge Ponzi scheme).

    A quick review of history shows that every consolidation of the “mini casinos” is advanced through public fear. (i.e. – fear of collapse, depression, war and as of late terrorism and other ghost stories). These myths accomplish two goals

    1. It depresses the psyche of the people. The fear concept creates the slow transition, from monetary confidence to economic despair, or in easier terms, greasing the pan of human perception to from the bridge from independence to government reliance.

    2. It utilizes the media to divert attention away from the actual consolidation of the assets from many to a few. If the people are dependent and / or fearful of total collapse or terrorist attacks, or some other bullshit, they are less likely to bite the hand of the alleged leaders that appear to be saviors.

    Start on Wikipedia, and review every consolidation of assets in the history of this Country, and you will see that an artificial panic was the precursor to each consolidation event that has occurred in the history of these united states.

    The FED is not the new lender, (See MBS purchases), they have always been the lender, also see; reserve requirements, and that is why the treasuries swapped to the balance sheets of the banks at .125% interest are placed back at the FRC.

    Finally, look at the difference between creditor / investor and you will understand why the reserve system banks are all beginning to sell the service rights to the alleged mortgage loans.

    Merry Christmas to all who observe, and those who are running up new credit debt as a result of the commercialization of every holiday.



  6. johngualt I see what I think is these players are trying to rescind all these securities because they been caught red handed and the only way to resolve most of this mess.

    Let take JPMorgan and its deal with the Justice Dept where Dimon goes to the Dept and then weeks later the deal gets bogged down because Justice is saying that JPM cannot go back after the FDIC, then that provision is lifted.

    But the government has JPM on the London Whale and energy rigging and a $13 billion plus settlement, and before the ink is dry Dimon is suing the FDIC for $1 billion? That because the FDIC dealt in a dirty deal, and the full disclosure of that deal is not something the FDIC wants to come out because after 5yrs its not out yet.

    WaMu is the deal that blows it open on so many levels and it extends further than just this one seizure or sale/merger as someone just presented a HomeSide Lending deal where this dog lost like $1.9 billion for the National Australia Bank who ended up selling the dog to WaMu. They purchase the bank I was working for in Nebraska, but the deal with HomeSide the software in pricing was off, and they purchase the company in 1997 for $1.25 billion, and by 2001 the had taken a $2.25 billion write off before the sell of the company for $1.9 billion with $1.8 billion unsold mortgage loans. Let see were those mistaken priced loans are at, and how the crazy WaMu handled them.

    Its a small world!

  7. And just in case you were starting to feel sorry for bankers, brokers and all the money makers, fret no more. Funny how this made no headlines anywhere. It is still part of the Big Scheme of Things… And people still waste their time dissecting what happened, how, when, where and why. Guess what? The people below don’t seem to have the same urges to “understand”. They are doers. Of the worst kind but doers nevertheless. And they’re united. Should we learn something from uniting and doing to undo what they created?

    They’re still getting richer. Can you say the same thing?

    Investment Banking November 6, 2013, 8:01 pm

    Wall St. Bonuses Over All Are Predicted to Rise 5 to 10% (Bond Traders Excluded)

    Lucas Jackson/Reuters

    Bonuses for top bankers are expected to be flat, according to one survey.When it comes to compensation, it looks as if 2013 is going to be remembered as a pretty good year to have worked on Wall Street, unless you are a fixed-income trader.

    Financial advisers, asset managers and underwriting investment bankers can expect their 2013 bonuses to rise as much as 15 percent, according to a closely watched compensation survey to be released on Thursday. Over all, Wall Street employees can expect year-end bonuses to grow 5 to 10 percent on average, the second consecutive year of increases, according to the survey, produced by Johnson Associates.

    Bonuses for bond traders, who had a terrible year because of interest rate instability, could drop by just as much or more.


    “Defeasance first became a part of the commercial mortgage-backed securities (“CMBS”) world during the early 1990s as a mechanism to make pricing on CMBS more favorable and is now a fixture in the CMBS industry……..
    REMIC Defeasance Requirements
    Under a special REMIC rule, a release of the REMIC’s lien on real property collateral will not cause the related loan to cease being a qualified mortgage provided the defeasance transaction satisfies four

    ♣ First, the borrower’s loan documents must “allow for” the defeasance.
    ♣ Second, the borrower must pledge substitute collateral comprised of “government securities” within the meaning of the Investment Company Act.
    ♣Third, the defeasance transaction cannot occur within the period ending two years after the
    REMIC’s startup day (see below).
    ♣ Fourth, the defeasance transaction must be undertaken to facilitate the sale of the related real estate collateral (jg: isn’t this because these trusts may not own real estate?) or some other customary commercial transaction, (such as a refinancing) (jg: look, Carie! might be applicable to your theories) and cannot be part of an arrangement designed to collateralize the REMIC with obligations that are not real estate mortgages………….”

  9. Then again, in the Big Scheme of Things…

    Unreal. Hard to fing a culprit in such a display of collective, team-work incompetence. But hey! You pay for all that service and knowledge. At least you know where your money has been going for over 50 years…

    CFTC Announces It Is Undercounting Size Of Swaps Market By As Much As $55 Trillion
    Submitted by Tyler Durden on 12/19/2013 08:21 -0500

    Commodity Futures Trading CommissionGross Domestic ProductTransparency

    What is $55 trillion between friends? Very little according to the CFTC. In perhaps the biggest under the radar news of the day – to be expected with every watercooler occupied by taper experts – the WSJ reports that the Commodity Futures Trading Commission said Wednesday that technical errors at two so-called swaps data repositories, which collect and supply regulators with transaction data, have led the CFTC to misreport the overall size of the swaps market by undercounting its size. Isn’t it curious how all these “glitches” always work out in the favor of preserving market calm and confidence and away from spooking investors and speculators? Either way, a better question is how big was the so called undercounting? The answer: as large as $55 trillion!

    Regulators aren’t sure how much the repositories are undercounting. One CFTC official familiar with the matter said the discrepancy could be as high as $55 trillion, though another official said the figure is closer to $10 trillion once regulators cancel out certain transactions to prevent double counting…

  10. Well… if the past 3 years are any indication. Ocwen’s victims should expect their $29.97 in a few short months. And the bulk of the money may very well go to where big settlements have gone so far… Any idea?,0,3061881.story#axzz2nyBlCPXB

    Ocwen Financial Corp. reaches $2.1-billion mortgage-servicing settlement
    Bloomberg News
    December 19, 2013, 2:32 p.m.

    Ocwen Financial Corp., the biggest non-bank in the mortgage-servicing industry, will provide $2.1 billion in relief for homeowners to settle regulators’ claims over abuses in its handling of borrowers’ loans.

    Under the agreement with the Consumer Financial Protection Bureau and 49 states, Ocwen will spend $2.1 billion on foreclosure compensation and “principal forgiveness modification programs” for people who are behind on payments or whose homes are worth less than they owe, the company said Thursday in a regulatory filing. The Atlanta company will also follow specific guidelines on servicing mortgages and face independent monitoring of that work.

  11. We are dealing first with borrowers borrowing money to purchase or refinance a home, and who ever lends this money must be able to do so under US Laws and must be regulated as a home mortgage lender.

    Neil on the right track as the Note says the Lender may transfer the Note. The Lender or anyone who take this Note by transfer and who is entitled to receive payment under this Not is called the “Note Holder”

    Now we got a post home mortgage closing transaction, where it is a fact that the government insured loan that are placed into the Ginnie Mae Mortgage Backed Securities (MBS) are done so with the relinquishing of the endorsed in blank Notes. Ginnie Mae is not a home mortgage lender and is not authorized to accept a payment, and also Ginnie Mae does not purchase, as they not invested a single red cent!

    No there may be other issues with Fannie & Freddie however its very straight forward with Ginnie Mae how the crime is committed, and the best example is WaMu 1.3 million government insured loan Wells Fargo was and are mortgages servicing.

    Wells Fargo pretends to be the Lender of these loan but has been caught, where they tell the county land recorder that they are the holder of the Note, but the are in possession of the Note as the custodian of record only and not as the “holder in due course” and have no right to file or have filed on their behalf by MERS or anyone else an assignment to them as they have not purchase the debt.

    What happen after the home loan closing does not have anything to do with the homeowners who acting in good faith, and out of a crime the criminal cannot benefit from the crime. Stick a fork in them as they are done!

  12. I am going to take a minute to say that Soliman is RIGHT,
    and Neil, you are mistaken.
    Your argument is completely backwards.
    Solly knows how this worked…..

    And, Solly, I’m going to refer to your comments made to me at 1:30 a.m. from almost 6 years ago:

    You stated that the homeowner was one of the parties to the investment scheme and that the home was used to provide the SECURITY to obtain the CREDIT for the secured borrowing it undertook, and thusly the HOMEOWNER was entitled to his share of the profits from the sale of the homeowners’ note to the downstream third parties.
    You said it was in the note. It certainly is. ds
    and then you said this……..
    The account holding your equitable interest succeeded by (1) having siesed the estate of title, (2) irrevocably transferring it into trust to trustee (3) converting real property equity into common stock (4) rendering it free of all liens and encumbrances (4) causing your claim to be subject to all previously entered liens of record (5) and now subject to an offshore holding (6) pledged as bank notes to foreign bank interest who are international central banks (7) for obligations owed the member bank (8) who financed the off shore entity (9) as a defunct SPE/SPV entity (10) under a highly deceptive merger and acquisition’s scheme amongst member banks.

    I owe my further understanding to some other very brave people.

    IWANTMYNPV: can I get with you on a conference call someday soon?

  13. TheFederal Reserve has been the problem since its creation, in 1013. According to Karen Hudes, it is on its way out.

  14. The below is a link to an excellent movie. Near the end there is a reference to foreclosures and an explanation that I haven’t heard before. Excellent Movie!! Worth it…Watch and learn more about criminal behavior of Wall Street/Bankers.,p0,d0

  15. this movie is very informative…the end references the impacts/reasons for forclosure that I haven’t seen spelled out in this way. Excellent Movie!,p0,d0

  16. Hi…im just another homeowner fighting in the trenches but agree completely with mr garfield…the question is, how do we make them DO what is right? Class action by the American people?

  17. The Federal Reserve is involve heavily because in addition to the buying of over a trillion dollars in MBS, they lent out $16 trillion in those secret loan Congress had to sue to get the records to thank to Sen Sanders and Rep Paul.

    This money has to come back into the Fed or it devalues the dollar because the money is electronic transferred (printed) out of thin air! So for Bernanke its been let save the banks and the 10 million foreclosure (up to 20 million, out to 2016?) is the collateral damage this government is willing to take!

    This is the part of what Bernanke always said and that was fully re-capitalized the bank, because he felt that why the Great Depression lasted so long! You could tell, as I wrote the White House in Jan 2009 that this is what was going on. Obama was in I am the new King mod and did not fully understand, who actually run this world or he knew and simply did not do anything to stop the crimes!



    By Michael Rivero


    by Michael Rivero


  19. Apologies for typo, thought I typed the ‘i’ in louise.

    Trespass Unwanted

  20. Louse,
    The idea is great in principal but can’t be applied because there is no money.

    The dollar is a ‘promise to pay’, as much a promise as the promissory notes we signed to get the homes.

    We were stuck in a cycle of fraud, promising to pay and stuffing the accounts with more promises from the dollars we worked for which were promises from our employer to pay us, and promises from the banks who gave us the ‘promises to pay – dollars’ when we took our commercial instrument of digital credits for a job well done to the bank.

    It was just round and round and round.

    Only thing that would have paid for the home was a piece of silver or gold, but they are not set up to receive that as payment and some people have been jailed for trying to spend silver or gold in a world where promises are the only things accepted as ‘legal tender for all debts public and private’

    Trespass Unwanted, Creator, Corporeal, Life, Sovereign, People, Independent, State, In Jure Proprio, Jure Divino

  21. The Treasury pays for the mortgages, they borrow the money from the Federal Reserve, who creates it out of thin air and loans it to the Treasury through the purchase of bonds and charge interest (or not) for the lending. If interest is charged, when the Treasury pays the fed for the loan (that was created) plus interest (if there is any), the fed turns around and gives the interest back.

    It’s that convoluted.
    No one should benefit from another’s fraud.
    Everything is filed in the real estate records including our birth certificates.
    Counties and municipalities bundled the bonds from the victimless crimes in with the mortgage bonds, in my opinion, and sold them so the Fed purchased more than just homes, in my opinion.

    Trespass Unwanted, Creator, Corporeal, Life, People, Free, Independent, State, In Jure Proprio, Jure Divino

  22. The Federal Reserve has always been part of the scam. It is like lending money to yourself. Do we think the Federal Reserve will step up to the plate and fix this mess? How much money is being skimmed off the top at the Fed? Economy does not recover without the real estate market put back on its feet. Houses are not moving around here. They sit on the market for years. Let us pay a dollar to satisfy the debt and receive a satisfaction of mortgage and note paid in full to clean up the title and the mess.

  23. For at least 3yrs I have been in contact with HUD, Ginnie Mae, OCC, Federal Reserve Bank, VA, FBI, FDIC and Justice Dept about this relationship that Wells Fargo had with WaMu and the 1.3 million government loans they were and still are mortgage servicing and are pretending to be the owner of these loan when foreclosing.

    Once you get it that these loan are unaccounted for in the JPMorgan sale it all come together as to the Federal Reserve Bank is behind this crap because they had purchase in crisis crisis over $1 trillion in MBS and are continuing to buy purchase at $85 billion a month this crap where there is no actual underlying collateral!

    Who was the negotiator in the Independent Foreclosure Review Board debacle? It was the Federal Reserve and the OCC when the Fed had the most to profit from this BS settlement! They made sure that the “No Standing” issue was taken out of the settlement at the last moment while Obama was at first talking about the restitution families were going to get, but someone must have told him of the situation the Fed was in, having purchase all the crap, that the last minute change was put in place to not address whether in fact the lenders actual owned the debt!

  24. Reality is The ENTIRE Swindle is a Government INSIDE JOB …. The Government ARE the PERPS ….. We Have a WINNER ……

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