The Dangers of Disregarding the Uniform Commercial Code

There is a trend nationwide where judges are ruling that broken chains of title are not relevant.

The UCC is one of the least favored courses in law school. Judges hate it because they didn’t pay attention during class. But it’s the law. So the courts are ruling by the seat of their pants instead of following the law. Banks like it for now but be careful what you wish for — these rulings are undermining the marketplace for negotiable instruments.

Eventually lenders and factoring companies are going to come face to face with the “law” they have created through the courts — the UCC doesn’t mean anything and there are no protections against a party with a broken chain pursing a competing claim. The end result is that they will start lending or trading in negotiable instruments or even non-negotiable instruments. That could stop the economy dead in its tracks as the credit markets freeze up because players have lost confidence in the courts applying the rule of law instead of following statutes that have been on the books for generations.

The second problem with the current approach is that it leads inescapably to a constitutional crisis: if the Courts can ignore the rule of law as set forth in a statute, then legislation is final only after a court rules on it. This is a fundamental break with the express provisions of the US Constitution which provides for separation of powers within three independent branches of government — executive, legislative and judicial. This takes us far from the rule of law and into the third world nation context where it is the the rule of men in power that prevails, that changes the laws at their whim, and that enables such leaders to line their pockets with Government money.

Also arising out of their inattention to the UCC — which is adopted into the laws of every state in the union — courts are left with applying their own sense of what SHOULD happen as an end result. And by their reckoning, the most important thing is that the marketplace SHOULD be a place where you can be assured that borrowers repay their debts or suffer the consequences.

Add the political fear factor and you have a mess. The political fear factor is that most judges are laboring under the delusion that ruling for the borrower will cause the entire financial system to crash. This has been the most powerful weapon used by the banks in creating the myth of too big to fail. But as I predicted years ago during the bailout, this policy — of deferring to the thieves that undercut all world markets — will prevent Government or anyone else from pursuing policies of growth.

No judge wants to be responsible, even in part, for the downfall of the entire financial system. The irony is that their rulings are doing exactly that — holding the economy back from a real rebound. Nearly all of the foreclosures were wrongful. As a result the modifications and deeds in lieu of foreclosure were also wrongful — a continuing pattern of converting investor wealth into bank wealth.

Nearly all foreclosures could have been settled under the premise that everyone, including the banks, should share in the losses created by the false claims of securitization. Merely applying the rule of law as it has existed for decades would have stopped the foreclosures, stopped the loss of wealth, and stopped the loss of jobs and income for wage earners. We continue to see a “recovery” that has none of the ear-marks of a strong economy.

The reason is simple. We are a consumer driven economy and many of the consumers now have been stripped of the ability to buy anything. Until that fundamental element is addressed, the economy will never recover in actuality. We will continue to have the bubble and illusion that the economy is strong because the stock market has gone up. But ask any financial analyst and they will say that the stock market itself has taken on all the attributed of a bubble that will burst.

Stocks are over-valued by a factor of as much as 3, which means that for stocks falling into that category, they should be selling at one-third of their current share price. Averaging out the price earnings multiples and comparing it with traditional fundamental securities analysis and you come up with the inescapable conclusion that the DOW ought to be under 10,000.

When that correction happens, the last vestige of the illusion of economy recovery will be gone — because Government never addressed the fundamental element of our economy — consumer wealth and income.

4 Responses

  1. I had several banks tell me the Uniform Commercial Code and the United States Code are invalid. I told the CFPB about this they did nothing.

  2. Why are we putting so much faith in the CFPB?

    Please evaluate my problem wholeheartedly.

    The CFPB truly doesn’t have control of the servicing industry. My plight tells the true story of the destruction a servicer can inflict on a person for almost 2 years.

    At the end of 2014 I requested guidance from Wells Fargo(WF) about my interest rate increase. This simple request has turned into a fight for honesty and having integrity when there’s a mistake. WF has fraudulently destroyed my 800+ credit score, discriminated against me, and broken several key loan servicing laws. All of the allegations against WF are supported by my documents. I want to hold WF accountable for the indiscretions against me. You may find my story and supporting documents on

    The CFPB has just given Wells Fargo a 60 day extension, my time has run out because of the statute of limitations. Please review my new update, I have included my resume to prove I am a real person with a real problem and no one is willing to help.

    This is happening right now!!!

  3. Reblogged this on Deadly Clear.

  4. Reblogged this on UZA – people's courts, forums, & tribunals and commented:
    In respect of fraudulent charters, declarations and treaties, a clear maxim arises – that Fraus omnia vitiate: “fraud vitiates everything”. In other words, an act done in fraud and without authority has no effect, whatsoever; and

    therefore, any reference to an example of historic fraud is not to legitimize it, nor agree with it, but to expose some of the most audacious examples of fraud, perfidy and falsity underpinning claimed western law; and

    Simply put, no trust was created by such fraud, no matter how many times it may be stated to the contrary, as the very claim of authority to form such a trust was founded on fraud

    (a) Negotiation is effective even if obtained (i) from an infant, a corporation exceeding its powers, or a person without capacity, (ii) by fraud, duress, or mistake, or (iii) in breach of duty or as part of an illegal transaction.
    (b) To the extent permitted by other law, negotiation may be rescinded or may be subject to other remedies, but those remedies may not be asserted against a subsequent holder in due course or a person paying the instrument in good faith and without knowledge of facts that are a basis for rescission or other remedy.

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