People Who Were Wrong Are the Winners — SO FAR

First of all I don’t think Geithner caused the financial crisis. He certainly contributed to it but it probably would have happened even if he had not undercut Sheila Bair at every opportunity; and yes he should have listened to other people who were saying that the corruption on Wall Street had reached epic proportions.

Second, I think that neither Geithner nor his predecessor, Hank Paulson, as Treasury secretaries, had a real understanding of the crisis at any time up through today. And their bosses, Presidents Bush and Obama were even more clueless. And while they are probably culpable for their negligence and mismanagement of the crisis, the foreclosure madness would have occurred anyway.

Third, it is my belief that the culprits on Wall Street with all their tentacles stretched out across the globe were unstoppable by anyone except a good government with the resources to actually get to the bottom of it. What was missing was the desire to get rid of the problem and the naivete of the leaders in government in failing to notice that the entire banking industry was engaged in faking transactions and documents — and failing to ask why that was necessary.

Fourth my opinion is that the fault lies with the failure of anyone in government to learn anything relevant about the industries they were supposed to be regulating. If they had done so, starting in 1983 when derivatives became adolescent, the adult would have been far more tame and the crises would have been averted entirely.

Homeowners did not create the crisis. Tens of millions of homeowners did not congregate in a room thinking up 450 loan products when there were only 4 or 5. And saying they had bad judgment would absolve almost any perpetrator of economic crime because his victim was too stupid.

The laws were already in place. It was knowledgeable people that were missing. We needed and had faithful servants of the people — but as a society and as a nation each country contributed to the enormous problem that has now been created. And we will keep paying for it as banks take over all commodities we hold dear and “legally” corner the markets with stolen cash and property.

In Nocera’s article on Bankrupt Housing Policy, he points out that ” in the course of perusing another new book about the financial crisis, “Other People’s Houses,” by Jennifer Taub, an associate professor at Vermont Law School, I was reminded of an effort that took place in the spring of 2009 that could have made an enormous difference to homeowners, one that would have required no taxpayer money and might well have become law with a little energetic lobbying from the likes of, well, Tim Geithner. That was an attempt, led by Dick Durbin, the Illinois senator, to change the bankruptcy code so that homeowners who were underwater could modify their mortgages during the bankruptcy process. The moment has been largely forgotten; Taub has done us a favor by putting it back on the table.”

He goes on to say that he had correspondence with Sheila Bair who was undermined and stomped on by the Obama administration for even thinking about relief to homeowners. She was head of the FDIC and prevented from doing her job by a bankrupt policy of save the banks and damn the homeowners. “Because, as Bair told me in an email, “It would have been a powerful bargaining chip for borrowers.” Without the ability to file for bankruptcy, underwater homeowners unable to pay their mortgages were helpless to prevent foreclosures. With it, however, servicers and banks were far more likely to negotiate the debt load. And if they weren’t, a bankruptcy judge would rule on the appropriate debt to be repaid. For all the talk about the need for principal reduction, this change would have been the easiest way to get it.”

According to Adam Levitin, in the same article by Nocera, this should have been a “no-brainer.” I take that too mean that as I have explained above, brains were in short supply during the worst of what we have yet seen of the economic crisis that most of us think is not even half over. Obama may be leaving the crisis as his legacy not because he caused it but because he didn’t do anything about it — or at least anything right.

And I obviously agree with Nocera’s ending comment — “Why is it that the fear of moral hazard only applies to homeowners, and not to the banks?”

Gretchen Morgenson says Geithner admitted he was inept at times. ““We were human.” But this fails to address head-on the possibility that he was a captured regulator, a man locked into the mind-set of the very bankers he was supposed to oversee.”

Gretchen reports without objection from Geithner — “Last week, I asked Sheila C. Bair, the former chairwoman of the Federal Deposit Insurance Corporation, for her recollection of these events. She replied with an email recalling that in 2006, she attended her first Basel Committee meeting, the international negotiations that Mr. Geithner was referring to. While there, she pushed unsuccessfully to raise bank capital levels.

Why was she unsuccessful? “I was actively undermined by the Fed, the New York Fed and the comptroller of the currency,” she said. “I later complained to Tim about the way his representative on the Basel Committee had undermined me. He was unapologetic.”

Gretchen has not been given the resources to prove the corruption on Wall Street, but she knows it is there and as the fourth estate the NY Times should have provided her with a blank check for what would have been a Pulitzer or even a Nobel prize. for now we can only agree with her — “We were the lenders of last resort and should have been paid an enormous premium for the use of our money. We were not.”

There are suddenly a spate of articles on what went wrong because Geithner wrote a book and is selling it enhancing his own fortunes while he presided over the worst hit the middle class has had in our history.

Here is what investigators should have been looking for:

Behind door number 1 were the fools. These are the money managers who for reasons the defy explanation did no due diligence and bought empty mortgage bonds issued by a trust that was never going to receive the money, the loans or the property.

Behind door number 2 were the wolves of Wall Street including all the different brokers, dealers, banks, rating agencies and insurers, all the mortgage brokers, real estate brokers, and closing agents and title companies all in league to take as much money as they could out of the system and the hide it behind shadow money equivalent to ten times all the actual money in the world.

Behind door number 3 are the victims. These are the people who knew nothing about mortgages, derivatives or anything else. In the end they were convinced by super salespeople that they could never understand how they could afford the loan nor could they even understand why they must do it anyway. In Florida alone 10,000 such sales people were convicted felons. And yet when we talk of moral hazard we speak of people, and not banks. Why is that?

15 Responses

  1. Need some assistance. I need to find specific laws that state that it is illegal for Servicers and thier attorneys to create fraudulent Allonge’s and Assignments in order to foreclose on a homeowner. Thanks

    Last week Veterans Today. Com reported how Iran is dealing with its top bankster criminals. By hanging them.!

    One of its commenters linked this video claiming George Carlin was Iran justice ministry advisers.

    We need to implement that here.

    George Carlin – Death Penalty

  3. Geithner, Summers, Bernanke, Greenspan & rest of them are ANTHRAX virus & “the most evil financial terrorists” who planned the whole thing which got off the ground with Summers’ secret memorandum he called “THE END GAME” as revealed & explained by Greg Palast: …

    Keiser Report: CIA, NSA & Economic Espionage (E498)

  4. Dear Pam Bondi,
    There are two lawyers out of Coral Gables Florida named Andrew Braaksma supervised by Paul McKenna who we believe may have broken State and Federal Laws. We also believe that they may have severely violated many rules of the Florida Bar. We also believe that they are destroying the integrity of our courts and our legal system. They along with their clients (US Bank and SN servicing) have uttered forgery and submitted Forged deeds in court and that is a crime because they know and have now seen the evidence. Very credible well known highly respected Notaries have come forward with sworn affidavits proving that the documents they used are forged. If these document are in fact forged and have crossed state lines which we believe they have, then why aren’t these people being prosecuted for federal anti forgery crimes? I have spoken to many victims of US Bank that are saying the same thing that their deed are forged, How can this keep going on In America? We have to file a criminal conspiracy lawsuit against these attorneys when it is clear that the state should step in a stop them from what they are doing. We believe that RICO charges may apply, please defend the good people of Florida against this type of fraud on our courts. Most people will lose their homes when they shouldn’t, most people lost their homes because the banks have a mountain of money and they beat down anyone who fights them. They just keep hiring other attorneys who can claim that they didn’t know the documents were forged, but you know most are, the OCC knew they are and any reasonable person now knows that crimes are being committed by the banks and no one is going to jail. The Board of Directors of US Bank, SN Servicing and their attorneys like Andrew Braaksma and Paul McKenna need to be prosecuted if they have broken the law. Please investigate these men and put a stop to this. Ray Shelton

  5. Neil- of course when we “speak of moral hazard, we speak
    Only of the borrowers, never the banks”. This is just another crystal-clear example of how stacked the deck is against the borrower. The judges as well as a good percentage of attorneys really must be idiots. Plain and simple, people with an IQ comparable to the common sea sponge, or toasters and other small household appliances. I mean enough is enough. Can’t they extrapolate outward to infinity and see the damage and looming consequences of their actions or lack thereof? Foreclosures, broken homes, suicides, deteriorating neighborhoods, insolvent or poorly performing pension funds due to purchases of MBS bogus REMIC’S?
    Get on your horse and do something . In too busy paying
    My ” mortgage”

  6. Can you blame the Banks? No! Because they know the Judge District Attorney and the SherifF wont do anything.


  7. Bank of America wrote to us in an unsigned letter that the alleged mortgage was sold to Specialized Loan Servicing LLC (SLS). This company today sent something like a monthly statement showing money owed in which it states, ” This statement is for compliance and/or information purpose only and does not constitute an attempt to collect debt. Specialized Loan Servicing LLC is required by law to inform you that this communication is from a debt collector. However, the purpose of this communication is to comply with the truth in lending act regulation Z requirements for periodic statements.”

    Could someone kindly explain in legal context what the statement in quote mean? Why would a debt collector sending something in which it is saying that this is not an attempt to collect debt. What is the motive behind sending this?

  8. Why aren’t people as concerned about people like us that were never in arrears on their mortgage and actually paid it off early? Also MGL ch 244 sec 14 was ignored because they couldn’t send a NOD because we weren’t in default, and never sent a Notice of Sale nor did they publish the sale in the newspaper! Unethical Lawyers & Judges are the ones that are allowing our homes to be illegally stolen!

  9. Dont blame the banksters Geithner etc…. Blame ourselves for allowing a Judge who has a financial Social etc…. relationship with the bankster to continue……… We can’t continue playing the fool.

    This has to come from the property owner(s) community.

    Nuremberg Trials.

  10. What kind of an attorney would let his/her client walk into a courtroom when the Judge has a financial interest (or a any relationship with the opposing side)in the outcome? That is not in your favor.

    That is called walking into an ambush.
    So no wonder the banksters are getting away with it. It doesnt take a genius to figure it out. You have no chance. Just like any team playing against the Harlem Globetrotters.


  11. Sheila Bair could not properly deal with the situation because she got blood on her hands with the Washington Mutual Bank sell or non sell to JPMorgan.

    She cannot rewrite history as if she was the good cop! Bair left with a job where she could have done the right thing for homeowners, but when she alleged to sell $308 billion in assets for $1.9 billion, but this con gave cover to Wells Fargo illegal handling of all the government insured loans!

  12. Husband had a Heart Attack, doing well. Hell has NO FURY like a woman stolen from! Many a Blessing

  13. Just like Neil Asks for us to check originations we must also do our due diligence as to the Judges.


  14. here’s Part 2.

    Sincerely, Lauren Tratar

  15. In all due respect Neil, you are still a victim of naivete. People have been cunningly indoctrinated to “believe” in old U S of A and the alleged “ethics” and our moral superiority. A

    When you further and deeper though, when you open your eyes to not only foreclosures, but beyond that to the extensive loss of pension funds, the manipulation of LIBOR of gold and silver prices, of American manufacturing jobs being sent overseas, of the intentional ‘dumbing down’ of our children, the rising cost of college until it is out of reach of an average American, the inability to go bankrupt on student debt, the crucifixion of Unions, the absurdities touted by both Democrats and Republicans, the privately owned Fed’s manipulation of interest rates and our monetary supply thereby affording them access to create bubbles and burst them when ‘necessary” while simultaneously touting that bubbles are natural…..

    You must ask yourself: “What is the effect of these ‘causes?” And the answer is CONTROL. Why is the judiciary not following their vows? Why are they allowing the big banks in 2008 get bigger through the acquisition of the ‘sacrificial lambs’, Countrywide and Wamu? How could Chase acquire Wamu’s assets of 320 BILLION for a mere $1.9 billion?

    When I initially heard what I deemed to be “conspiracy theories” about a larger ‘agenda’ unfolding by a ‘cabal of power’, I thought that these people must simply be delusional, ‘believing’ what they read on the Internet and interpreting it as “truth.” So, as an author of books on Amazon and Barnes and Noble, I went to Google Scholar and decided to go to the Source and read books from the 1700’s-1800’s-1900’s and OH MY GOD….. these people weren’t “crazies”, they had indeed discovered the real truth…

    Attached is Part 1 of a lecture I gave at a local college. If you want to consider a more encompassing perspective, please view for until and unless you can identify the problem, you cannot solve it. Part 2 exceeds the 25k allowed so I will send it separately.

    You are a brilliant lawyer and I know, want to help homeowners but in order to do so you must be aware of the bigger picture.


    Lauren Tratar

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