Gretchen Morgenson Weighs in On Wall Street Corruption: “Two Judges Who get It About Banks”

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Competing Transactions:

The One Banks Use Which never Existed


The Real Loan that was Undocumented

You may have noted that in response to my articles and briefs, banks don’t argue with the premise that they have no original money transaction; instead they argue that there doesn’t need to be one. I disagree. For those of you who have been reading my articles over the last week, you will see some familiar comments and facts in this New York Times article. The deeper questions have yet to be asked in mainstream media — why was it necessary for the banks to fabricate documentation — that is, if the transactions they are claiming to enforce were real? My only answer is that the transaction they are claiming to document never existed.

If the transactions represented by banks actually existed, they would never have needed to fabricate documents with forged, robosigned signatures. The fabricated, back-dated, forged, robosigned documents and now robo witnesses are corroboration for the irrefutable conclusion that there is no underlying transaction with the banks. This entire fiasco is simply based upon greed and opportunity.

The banks saw an opportunity to use other people’s money for their own benefit and to the detriment of everyone else involved. They converted themselves from intermediaries, which is their primary role for which they are licensed, to the principal. It is as simple as this: imagine your bank claiming to won your TV set because you signed a check payable to the store that sold it to you. The bank claims they were the real party in interest and they can enforce the warranty on the TV against the manufacturer and even take your TV away from you because “they own it.” What Judges are missing is that banks are intermediaries. They are a middleman not the actual player; but Banks have convinced the court that they are the principal player and that even if they are not the principal real party in interest, it is irrelevant. If we were to keep moving down this path, the entire fabric of our laws concerning contract and negotiable paper will be destroyed.

And the fact that their puppets happen to be named at the closing of the loan does not mean those puppets did anything except look cute. If the money came from someone else, then the paperwork should have disclosed that and more importantly the note and mortgage should have been made out in favor of the source of funds.

The assumption that it is none of anyone’s business how the banks securitized mortgage loans is just plain wrong, and just plain dangerous. It opens the door to far more trips into the moral hazard zone. Judges have been assuming that the note and mortgage were made out in favor of a properly constituted representative of the party who was the source of funds or they are assuming that the numerous parties involved in the loan closing were somehow in privity with the sources of funds. This is not true and obviously not based upon any evidence presented anywhere; but as Judges loosen the ropes that bind us and allow inquiry into the money trail, they will discover, to their horror, that the originating transaction was actually undocumented and the one described by the banks never existed.

The problem the Judges are having is an old one now — well if the party named on the note and mortgage didn’t loan money to the borrower, then who did loan money to the borrower? And the answer has been “I don’t know, but they are out there.” That has been an unsatisfactory answer caused by the failure of the same courts to enforce reasonable discovery requests seeking exactly that information. Hence the frustration of foreclosure defense work for lawyers.

When it comes to writing about Wall Street corruption, Gretchen Morgenson gets very little support from her Employer, the New York Times. If you want to give her more leverage to write more of these articles then start writing letters to the editor and comment on her articles when it deals with Wall Street corruption.

Here is the link to her article: Two Judges That Get It — Gretchen Morgenson

JPMorgan hit by U.S. bribery probe into Chinese hiring

How did the banks get away with it? Bribery takes many forms. It doesn’t need to be a direct payment, but merely something of value to the regulator or law enforcement officer. In this case it is the hiring of children of banking regulators in China. There is no reason why we should think that couldn’t happen here. It did. The revolving door of regulators, law enforcement and the banks has long been known.

Even if it isn’t a bribe, the bank is hiring people and then designating them for important positions in government regulation. Jamie Dimon sits on the Board at the New York Federal Reserve. Being immersed in the bank culture, the people involved come to believe the myths repeated every day. It becomes part of their culture.

The reason why the decisions on banking have been so chaotic is that there is a direct conflict between the real world and the illusions created by the banks. Put another way, the difference is between truth and fiction.

The fact remains that practically no mortgage can be satisfied or released because the ownership is completely deranged. The correction can only come from the courts when they realize and learn that the origination of the loan was a sham transaction, not just a table funded loan, and that the intent was fraud on the investors and homeowners (who were also “investors”). The scheme unraveled precisely in concert with investors ceasing to buy the “mortgage bonds” issued by entities in “street name.” That is the red flag that alerts authorities that the securitization chain was in fact a fraudulent PONZI scheme. The issuers were designated asset pools that had nothing in them, and in most cases were not funded, directly or indirectly. So the mortgage bonds were worthless.

And now that the facts are being slowly revealed, the depth of malfeasance by the banks is being recognized for what it is — but the government is sticking with its policy of “no prosecution.” Until the government steps up to the mike and says outright that the scheme was a fraudulent scheme in which the borrowers were used as pawn to steal money from investors, most people are not going to believe it. Until respectable economists and legal scholars step up and say that the loan transaction described in the note never existed and was a strawman transaction that should have been revealed to the borrower, this tragedy will stop.

Study the Assignment and Assumption Agreements executed before the first loan application was ever accepted for review. Track the money from strangers showing up at closing as though it was the money of the designated payee on the note and mortgage. The rest will be easy. But until regulators see the public as their boss instead of the banks, don’t expect any help from outside the courtroom.

JPMorgan hit by U.S. bribery probe into Chinese hiring

INVESTMENT OPPORTUNITY: Why Do Banks Walk Away When Proof is Required?






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The selection of an attorney is an important decision  and should only be made after you have interviewed licensed attorneys familiar with investment banking, securities, property law, consumer law, mortgages, foreclosures, and collection procedures. This site is dedicated to providing those services directly or indirectly through attorneys seeking guidance or assistance in representing consumers and homeowners. We are available to any lawyer seeking assistance anywhere in the country, U.S. possessions and territories. Neil Garfield is a licensed member of the Florida Bar and is qualified to appear as an expert witness or litigator in in several states including the district of Columbia. The information on this blog is general information and should NEVER be considered to be advice on one specific case. Consultation with a licensed attorney is required in this highly complex field.


Editor’s Analysis: If you loaned money to someone and you lost the note or correspondence reflecting the terms of the loan would you forget about getting the loan repaid? Of course not. You would sue anyway and proves that you either directly loaned the money to them or that you paid real money to acquire the debt. You would get a judgment and you would record that judgment in the county records as a lien against any real property in the name of the borrower.

In the states that have passed laws and regulations regarding the collection of debt and the foreclosure of mortgages requiring the party seeking to collect on the debt or foreclose on a mortgage to show that they in fact own the debt and requiring the attorney to verify the debt, note, mortgage, and default, foreclosure activity and collection activity has dropped like a stone. This corroborates the basic premise of this blog.  Despite all efforts to create the appearance to the contrary, there is no debt, note, mortgage or default —  at least in terms of seeking collection and foreclosure.

The apparent presence of money arriving at the loan closing is a red herring that has thrown off the borrowers, their attorneys, and the courts. But the money never came from anyone with whom the borrower was led to believe to be the source of funding of the loan. Therein lies the problem for the Wall Street banks. If you follow the money trail it simply does not and cannot match up with the paper trail. That is why we have consistently told attorneys to hit hard and hit fast with subpoenas directed at producing competent witnesses and real proof that the loan was funded or acquired by anyone in what we now know is a false securitization chain.

As a trial lawyer with decades of experience I can tell you with great assurance that most cases are decided on the basis of who controls the narrative. It is through that lens that all of the so-called facts are perceived by the court. If you failed to object or moved to dismiss pleadings that omit any allegations or attachments showing financial injury to the party initiating collection or foreclosure proceedings, then you are allowing the narrative to slip away from you. The pretender lenders will fill the void you have created with proffers of facts and conclusions that are unsupported by anything in the record.

Analyzing the foreclosure activity on a national basis clearly shows that those states which require the actual proof and verification by the attorney have eliminated the logjam in the courts because there are no claims. There is only one satisfactory explanation for this phenomenon. If the claimants had anything resembling a canceled check, a wire transfer receipt, an ACH confirmation, or a check 21 confirmation, the change in the laws and regulations of those states requiring proof of payment and proof of loss (which are the elements of proof of ownership) would have produced no result in terms of the number of foreclosures filed or the number of servicers claiming to have the authority to collect monthly payments.

Therefore the only logical conclusion is that they do not have anything resembling proof of payment, proof of loss or proof of ownership. This leaves them in the naked possession of attempting to collect or foreclose on a nonexistent or unenforceable debt, note, mortgage or default.  it looks like criminal fraud and civil fraud to me.

 As for collection, the servicers are clearly relying upon the paper trail in the so-called securitization chain.  If the debt cannot be established through proof of payment and proof of risk of loss than the paper trail in the securitization chain is  a sham.  If the debt is not established there is no payment due.  if the debt is not established and there is no payment due, the claim of status as a sub servicer or Master servicer is without merit.  For these reasons  it is incumbent upon the attorney for the borrower to submit a challenge either in court or in accordance with federal law governing collections,  mortgages and foreclosures.


This is why I have suggested the business plan wherein investors produce hard money offering same to the court registry in bankruptcy or civil litigation. The investor(s) would offer to refinance the entire mortgage balance if the claimant can prove title to the loan — which means that the claimant, starting with origination of the loan would be required to show proof of payment all the way through the assignment or “securitization chain” in order to determine which party should be paid off and which party therefore could execute a release or satisfaction of the loan and mortgage. It’s no bluff on the part of the investor or the homeowner who jointly present the offer to pay off the debt in full. It is calling the bluff of the pretender lender.

If the claimant is able to do so, then they get every penny demanded. If they are not able to produce such elemental proof, the case is still over because they have admitted lack of standing, lack of subject matter jurisdiction, and lack of a qualified party to submit a credit bid at auction. In that case, the homeowner’s agreement with the investor is to execute a note and mortgage in an amount not exceeding 50% of fair market value of the real property at a fixed rate with 30 year amortization.

The return on investment is nearly infinite. GTC|Honors, a trade name of General Transfer Corporation owning this blog, will provide the legal work and packaging of the loans for resale into the secondary market. Since no more than $3 million is required to start this project space is limited to only qualified investors. This is not a formal offering but merely a solicitation of those who may want to receive a prospectus which they can review and decide whether or not to invest. The name of the Hedge Fund will be revealed only to those who request the prospectus and those who demonstrate in advance that they are qualified investors. Management will be by and through GTC|Honors (“Workouts with Honor”) which will receive a fee of 20% of the net profits after payment of all legal, accounting and other professional fees, costs and expenses. By way of full disclosure, the law firm of Garfield Gwaltney, Kelley and White will be getting part of the legal fees.

Proceeds of investment will be used strictly for formation and operation of the Hedge fund, and shall not be used for any salaries paid to management directly or indirectly. Management includes Neil F Garfield, and such other persons designated by him to share in management responsibilities. Do not send money without first receiving the prospectus and consulting with an attorney, accountant or other professional trusted adviser.

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Continuing The Worship of Money

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Editor’s Comment:

The high priests of money located at the NY Federal Reserve and in Wall Street banks serve as the people nearest to the god of money and therefore are far more persuasive than the rest of us. We are all believers. And in that lies the undermining of the spiritual foundation of our society, our country and our future.

The trickle down theory artfully presented by one of Romney’s partners at Bain Capital makes a brilliant case filled with logic and faith in the system. The fact that there are parts of a theory that work, is hardly a reason to accept the whole theory. Romney’s partner is successfully arguing for capitalism, with which I agree — up to a point (firefighters, police, ambulance etc). Where the argument breaks down to simply absurd is that income inequality is somehow good for us and that we should be thankful for it.

If income inequality were a good thing then U.S. Prosperity, employment and economic power would be at an all time high. Instead they are at a serious low point and without further stimulus will move into recession mode which is where Europe is now, with mmost people agreeing that austerity was a bad idea.

But we listen to this nonsense because of our worship and submission to money and those that have it. And so we stagnate despite the white elephant in the living room. For the past 35 years the financial sector has been sucking money out of the system instead of putting it into the economy — which is the ONLY rational for even having a financial sector (banks, in particular). Having an economy grow where the richest 1% received 93% of the benefit is crazy.  Treating those people with extra tax incentives to do more of the same is insane.

We are a society of people serving we hope higher causes, ideals and spiritual hopes and dreams. We exist as a society not for the sake of money but for the sake of peace, prosperity, the general welfare and fairness (read our constitution — if you don’t like what it says, then you must amend it because it states the foundation and basis of our society).

Instead we let the high priests of money direct our society, our government, our thoughts and even our faith. That they stole a gargantuan amount of money from the citizens directly and indirectly as taxpayers is now known widely and yet we continue to believe.

We need more stimulus. But so far all stimulus proposals stop at the door finance instead of examining the underpinnings of our society, our government and our high priests. The largest chunk taken out of the economy amounting to trillions of dollars should simply be put back in — practicing fairness and pursuit of happiness and the general welfare of the citizens. And the way to put it back in is to stop (not slow) the foreclosures, reverse the 5 million foreclosures that were illegally obtained and work out a fair settlement on the money where everyone shares in the burden if rebuilding our society.

That stimulus will hurt nobody and cost nothing except to the banks that stole the money and homes. That stimulus of merely returning collective wealth from where it was stolen will result in spending and investing as any healthy society would have us do. And it would result, without tax increases, in fully funded social security, Medicare, Medicaid, police, fire and rebuilding our road, power, water and other infrastructures that are an embarrassment to all Americans.

Above all we must return to our faith in our ideals and view money, power and wealth as merely necessary evils that represent the cost of maintaining a society — a cost, I said, not a goal.

Robert Creamer: Big Banks Plan Sneak Attack on Wall Street Reform Law Within Days

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary SEE LIVINGLIES LITIGATION SUPPORT AT LUMINAQ.COM


Editor’s Analysis: Once upon a time, the Banks were content to make an ordinary profit doing ordinary banking things. Now they see us as prey rather than customers to be protected under their risk-averse general policy. Their current policy to to take your money and make it their money. Their current policy is to take your home and make it their home. Their current policy is to take your pension and make it their capital.

The article below picks up on one oef the many ways they are attempting to accomplish their aims without regard to their customers, and frankly without regard to their own shareholders. Management seeks only one thing — more money for themselves and the power and prestige that comes along with it.

Along the way, with government complicity, they have created huge computer networks that are essentially utilities for the banks to transfer funds. Despite numerous efforts by the Department of Justice, they managed to control the rules by making themselves appear quasi-governmental. Small banks and credit unions are scared of Visa, MasterCard etc. They have rules. None of the bank members know what the rules are because they are never actually delivered to any of the banks.

So the name of the game is make the rules, use the infrastructure to control competition, and make it impossible for any competing bank to take market share away from the megabanks because the megabanks get “special treatment.” The megabanks that once started with such innocuous names as Southeast Switch, Inc. in Maitland, Florda, (later called “HONOR”) realized that they could keep the community bankers and credit unions in check while at the same time forcing the smaller banking institutions to PAY FOR the same infrastructure that limits their profitability and their ability to compete with the megabanks.

It’s really the perfect scam. 7000 smaller institutions not only pay the costs of the network system but create a profit for those who prey on unsophisticated customers and smaller banks and credit unions. The supreme irony of this is that a transaction whose actually cost is less than a 1/4 of a cent including communications expense, is now being charged to customers at the rate of $3-$6 and now will be raised to over $10 because of the front end fees and back end fees the mega banks want to charge.

Customers are misled into believing that only by going to BOA can they have the convenience of a bank that is everywhere, when in fact, the network operations that controls ALL transactions is accessible to even the smallest bank. ATM access is possible for the customers of even the smallest bank, without paying any fee in most instances, even if they go to a BOA, Chase or Citi ATM. It is all a lie. Elizabeth Warren wants the public to have access to this information and the banks want Warren’s mouth to be paralyzed. They are not having much luck there so they are resorting to their usual way of doing things — sneaky legislative attacks and sneaky control over state and federal agencies that are there to protect the consumer but instead do as they are instructed by the unknown names and faces at megabanks.

Robert Creamer

Political organizer, strategist and author

Posted: March 24, 2011 08:39 AM
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Big Banks Plan Sneak Attack on Wall Street Reform Law Within Days

Read More: Bank Lobbyists , Debit Card Interchange Fees , Debit Card Swipe Fees , Dick Durbin , Duopoly , Mastercard , Middle Class , Non Competitive Prices , Visa , Wall Street Banks , Wall Street Bonuses , Wall Street Reform Law , War On The Middle Class , Business News

The big Wall Street banks are planning a sneak attack on an essential element of the Wall Street reform law that was passed by Congress last year. They plan to make their move as early as next week.

The target of their attack is the provision limiting the “interchange” fee that the big banks charge retailers and their consumers every time a debit card is used. Right now, so-called “swipe fees” are set by Visa and MasterCard — who control 80% of all credit card transactions. In other words, they are not subject to competitive market pressure of any sort. They are fixed by the Visa-MasterCard duopoly.

According to the Federal Reserve, $16.2 billion of debit interchange fees were paid in 2009.

It is estimated that the financial reform law will save consumers $10 billion of that total. How could that be? Because it should come as no surprise to anyone who has even a passing acquaintance with Economics 101, that fees set by a duopoly have no relationship whatsoever to the costs of the transaction.

They are in fact just one more mechanism that Wall Street has used to siphon an increasing percentage of our Gross Domestic Product out of the pockets of the middle class and into the increasingly-bloated financial sector.

The central problem of our economy — and society — is that virtually every dime of the considerable economic growth of the last twenty years has gone to the top two percent of the population. Wall Street salaries and bonuses have exploded, while middle class incomes have stagnated.

From 1948 to 1980, profits generated by the financial sector represented from 5% to 15% of all U.S. business profits. Then they began to creep up — and finally explode — to an unbelievable 40% right before the Great Recession. They dropped briefly, and by the end of 2009, they were back to 36% .

Let’s remember that the financial sector does not make anything. Its goal is to take a little piece of every transaction as money flows through its hands — what novelist Tom Wolff calls the “golden crumbs.”

In the last twenty years, the exploding financial sector has sucked the lifeblood out of the American middle class. It has vacuumed money out of the pockets of people who actually work for living producing goods and services. It has siphoned off virtually every dime of economic growth so that real middle class incomes have actually fallen at the same time the economy has grown. That wasn’t just disastrous for the middle class — it was catastrophic for our entire economy. It meant that there weren’t enough consumer dollars available to buy new goods and services — a problem that was temporarily solved by the credit bubble until it ultimately collapsed and cost eight million Americans their jobs.

To put it simply, the financial sector — and especially the big Wall Street banks — are a huge cancer growing on our economy.

To have an economy that will allow long-term, widely shared, growth — we have to shrink the financial sector and put money back into the hands of companies that produce actual goods and services, and consumers who buy them.

The Wall Street reform law made a big step in the direction of reining in the big Wall Street banks. And a key element of that law was the provision that prevents the duopoly power of those big banks — exercised through Visa and MasterCard — from fixing the price of the fees merchants pay every time you use your debit card.

The new law requires that these fees must be reasonable and proportionate to the cost of running a debit transaction over that network’s wires. But it turns out their actual cost of providing this service is very low. If prices for “swipe fees” were set by the competitive market, they would dramatically fall because of competitive pressure. But since the prices are set through a duopoly they allow gigantic profits for the banks.

Right now Visa and MasterCard — at their sole discretion — set different fee rates for different types of debit transactions. For example, they charge higher fee rates for small businesses than for large ones. Most debit interchange fee rates are set as a percentage of the transaction amount plus a flat fee (e.g., 0.95% + $0.20). The Fed found that the average interchange fee for all debit transactions in 2009 was 44 cents per transaction, or 1.14% of the transaction amount.

The Fed put out a draft rulemaking in December 2010 that suggested options for reform. Both of the options suggested limiting interchange fee rates for the biggest 1% of banks to 12 cents per transaction (down from the average 44 cents per transaction today). This comes close to the 0.2% debit interchange rate that Visa and MasterCard recently agreed to use in the European Union. A reduction of this amount would save U.S. consumers around $10 billion per year.

Now, this proposed rate is obviously not below their costs, since that’s what they agreed to charge in Europe.

But the big banks are desperate to hang onto the gusher of profit that comes out of American pockets.

They have used their enormous lobbying muscle to convince some otherwise decent Senators, that this is really nothing more than a battle between the banks and retail merchants. Baloney. Non-competitive “swipe fees” are just one more way they reach into the pool of money generated by the real economy and set it aside so it can end up as part of some Wall Street banker’s multi-million dollar bonus check. And you can be certain that most retailers don’t eat the costs of “swipe fees.” They pass the vast majority of these costs on to consumers in the form of higher prices.

Nonetheless, next week the big banks hope to get the Senate to pass an amendment “delaying” implementation of this law. This delay would save the banks — and cost consumers — about $10 billion a year, simple as that. The provision’s original sponsor, Senator Dick Durbin (D-IL), promises to lay down on the tracks to prevent them from being successful. But there is still a grave danger that the bankers will succeed.

That’s because the big banks hope to conduct this attack without a great deal of public notice. They have conducted a vigorous PR campaign inside the beltway, but out in the rest of the country, no one has heard word one about this issue.

And this is just the beginning. If they are successful with “swipe fees,” they will be emboldened to try to gut other sections of this critical law.

The big banks do well under cover of darkness. When they are exposed to the bright light of public attention — as they were during the battle over financial reform — consumers had the high political ground. The Wall Street reform bill got tougher as it moved through the legislative process because Members of Congress were afraid to side with Wall Street against ordinary Americans.

Now, the big banks hope to conduct their attack on the Financial Reform Law while the voters are focused on a new war in Libya, a nuclear disaster in Japan, the battle over collective bargaining and March Madness.

Big bank lobbyists are like cockroaches.When you turn on the light they scatter, but they take over if they’re allowed to operate in the dark.

When you’ve finished reading this article, pick up the phone, call your Senator and turn on the light. Tell them to keep Wall Street from gutting this key provision of the Wall Street Reform Law.

Robert Creamer is a long-time political organizer and strategist, and author of the book: Stand Up Straight: How Progressives Can Win, available on

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