Due to scheduling conflicts, I am unable to appear on the Neil Garfield Show tonight. Click on the links for past shows — there are hundreds of them!
Nobody realized that investment securities brokers were seeking to convert themselves into a printing press for hypothetical money. They were allowing investment banks to securitize imagination. Any hypothetical event, movement or data can be securitized. Anything can be an asset class just because some investment bank says so.
Hat tip to Ian
When they revoked Glass Steagal and allowed the sale of certificates that were legally redefined as non-securities under the Securities Exchange Act, they were taking advantage of accounting rules that started changing in the 1960’s (off-balance-sheet transactions, greater allowance for accepting management figures etc).
Nobody in Congress or the Oval office understood what they were doing — including Clinton, Bush, Obama, Trump, and Biden. None of them had any experience, training, or certification in securities brokerage, analysis or underwriting. No legislator or Chief Executive of government ever imagined that the creation, issuance sale, and trading of securities on a nonexistent business would ever occur.
Even consumer advocates like Porter and Warren barely understand the real issue at stake here.
Nobody realized that investment securities brokers were seeking to convert themselves into a printing press for hypothetical money. They created exchanges where their hypothetical money could be exchanged for real money leaving them with her real money and everyone else holding a hologram of an empty paper bag.
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The government was allowing investment banks to securitize imagination. Any hypothetical event, movement or data can be securitized. Anything can be an asset class just because some investment bank says so.
PRACTICE NOTE: Look at the headers and metadata. If you don’t know what that means, find someone who does know. In a recent case I reviewed the headers revealed the absence of the company that was supposedly reporting the data.The data was supposedly reported by FNMA but the headers showed it was an Equator platform of Altisource, a spinoff of Ocwen Loan Servicing. Ocwen has no access, knowledge or contact with any company who has been named as “claimant,” “beneficiary,” “or Plaintiff.”So it cannot produce a report from the designated “Creditor” showing the balance on the loan account (because the loan account does not exist).The presumed “principal” (FNMA in this recent case) most likely has no knowledge or control over the litigation with the homeowner and probably has no relationship with the attorneys who are pursuing the foreclosure.
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Neil F Garfield, MBA, JD, 75, is a Florida licensed trial and appellate attorney since 1977. He has received multiple academic and achievement awards in business, accounting and law. He is a former investment banker, securities broker, securities analyst, and financial analyst.
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FORECLOSURE DEFENSE IS NOT SIMPLE. THERE IS NO GUARANTEE OF A FAVORABLE RESULT. THE FORECLOSURE MILLS WILL DO EVERYTHING POSSIBLE TO WEAR YOU DOWN AND UNDERMINE YOUR CONFIDENCE. ALL EVIDENCE SHOWS THAT NO MEANINGFUL SETTLEMENT OCCURS UNTIL THE 11TH HOUR OF LITIGATION.
But challenging the “servicers” and other claimants before they seek enforcement can delay action by them for as much as 12 years or more. In addition, although currently rare, it can also result in your homestead being free and clear of any mortgage lien that you contested. (No Guarantee).
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And of course, always a hat tip to Java! Another man of courage and strength.
Spelled DEREGULATION. Not just by revocation of Glass Steagal Act but also by implementation of the Commodities Futures Modernization Act of 2000 signed into law by Bill Clinton – just before he left office.
All was connected to politics and forced implementation of the Community Reinvestment Act (CRA). All connected. The goal was to get home ownership into the lower and middle class that had been long ignored. The only problem is – you don’t saddle the low/middle income group with high interest rates – while the upper class gets the best rate on the market.
All backfired with massive fraud, derivatives, robo-signing and false foreclosure. You can’t foreclose on a mortgage that does not exist by accounting in the first place. All these people deserve restitution for being conned with their lives and dignity being destroyed. No one was regulating. It is not the “thought” behind it that was wrong. It is not the “securitization” that is wrong in theory. The problem is, without regulation, everything went haywire – out of control. No one was watching what being done.
Biden wants to bring in all back. He will use another program – but, in effect, will be the same CRA. This time, the people will be smarter. Adjustable rates? Interest Only? No – get your regulation in order first. Sorely lacking even to date.
And, always, a “hat tip” to Ian!!!!! He is always a voice here of common sense. Thanks to you too Hammertime! Also a voice of reason and strength. OH – and Neil is right – I recall Gretchen. Disappeared. You speak out – you are shut down. Same for many more.
Because. Cowards in Government.
Pretty good – “…hologram of a paper bag” We’re beyond educating the govt, judges, courts about securitization I believe although this article and recent ones laying out the details much better.
Around the time of election finance industry ignoring and financing criminality was laid out but buried w the election.
Now the global oligarchs are getting exposed and again finance and securitization has enabled them.
If politicians from both parties don’t get our system is broken they’re part of the problem and traitors.
Example of Credit Suisse –
“An investor presentation for the deal, seen by the Financial Times, explains that one of the main goals of this division is to “create a positive brand impression of CS by financing the principals’ favourite business tools (business jet) and luxury toys (yachts)”.
While banks regularly engage in so-called significant risk transfer transactions to reduce the capital they hold against loans, the derivative deals usually involve staid corporate or mortgage portfolios that form the bread and butter of bank lending.”
https://www.ft.com/content/1a09d4e6-e3d6-40f9-903f-2771ad7e4e0a