Tag: banks

A county in Massachusetts has the mortgage bankers’ scam engine in its sights:

Essex South Register of Deeds John O’Brien announced today that he will be seeking over $22 million dollars from the Mortgage Electronic Registration System, “MERS” which represents several major banking conglomerates. O’Brien bases the $22M number on the fact that the Salem registry has recorded over 148,663 MERS mortgages since 1998. After a careful review of a number of these mortgages O’Brien said it became very clear to him that MERS had assigned mortgages to other entities at least twice without paying a recording fee. Based on this information the taxpayers have been defrauded out of $22,299,450 in Southern Essex County alone.

That’s one way to start addressing the pension hole in a lot of local government budgets. This would appear to be one of the reasons MERS has announced that it is getting out of the foreclosure business. Of course, they’re already guilty of an incredible number of fraudulent actions and responsible for billions in unpaid recording fees, so this ex post facto handwashing isn’t going to change anything.

The Mortgage Electronic Registration Systems company (known as MERS), which has been at the center of legal problems affecting the securitization of home mortgages and foreclosures, has given up one of its principal corporate objectives. It is now instructing its members to cease foreclosing on residential properties in the name of MERS, and to begin immediately to register all assignments of mortgages with local county recorders of deeds.

In which the utter foolishness of appeasing banks seeking bailouts is again made clear:

The Republic of Ireland will have to go to the IMF/EU for another €15bn – on top of the €35bn already earmarked – to save the banking system, according to the government-appointed chairman of Anglo Irish Bank. In a bombshell revelation, Alan Dukes said we will need 40pc more, or €50bn, to properly clean up the banks. The former finance minister also sensationally suggested €75bn would be needed to fund the existing NAMA operation and a so-called ‘NAMA 2’ to take more bad loans from the banks.

All this to avoid forcing the people who own the banks from realizing their losses. Economists and governments have it precisely backwards. They aren’t saving the global economy by repeatedly bailing out the banks, they are actually killing it by foolishly feeding the debt monster right when it is on the brink of starvation.

The solution is simple. Don’t save the banking system. It’s like an oncologist trying to keep his patient alive by saving the cancer.

It will be interesting to see how the White House and the Congress intervene to keep their masters in business and out of prison:

“The Massachusetts Supreme Court just dealt a negative ruling to the banks in the closely-followed Ibanez case, which challenged securitization standards. It’s pretty straightforward: The banks didn’t have the proper parwork to foreclose, says the court. Hence, no legitimate foreclosure.”

Oh oh. That’s exactly what I argued at the time.

If the details look like what this appears to be, the banks are totally ****ed on their securitized paper. This decision is from the State Supreme Court and thus is final within the State, and makes it likely that MBS holders will now sue en-masse for the sale of fraudulently-constituted securities (that is, there are no mortgages in the MBS they were sold!)

It’s perfectly clear that the mortgage banks and sellers of “mortgage-backed” securities that were not, in fact, backed by actual mortgages have committed the second-biggest financial fraud in American history. The amount of money that they have stolen from investors and the IRS absolutely dwarfs the amounts that are enough to imprison smaller fish for more than a decade.

Needless to say, it is highly unlikely that a single banker will ever do any prison time despite the fact that they are absolutely and provably guilty of massive criminal fraud and tax evasion because the USA is now an aristocracy with democratic trappings. The financial elite are, quite literally, above the law. If you steal $100 from a convenience store, there is no question that you will be punished much more severely than a banker who steals billions of dollars.

It is hard to escape the observation that America has become the Land of the Frauds and the Home of the Banks. But in the meantime, Zerohedge has more details on the Massachusetts bank-slapping.

“Plaintiffs’ claims that the Land Court’s ruling will cause widespread confusion or significant cost to innocent parties are greatly exaggerated, and such reasoning does not warrant ignoring the plain requirements of the law designed to protect Massachusetts consumers. Indeed, it is the foreclosing entities themselves who will bear the greatest cost of clearing titled from their invalid foreclosures. Having profited greatly from practices regarding the assignment and securitization of mortgages not grounded in the law, it is reasonable for them to bear the cost of failing to ensure that such practices conformed to Massachusetts law.”

Cue the Commerce Clause….

Karl Denninger notes what is fast becoming apparent to everyone:

“The 50 state attorneys general probing U.S. foreclosure practices will first settle with the five largest loan servicers, including Bank of America Corp. and JPMorgan Chase & Co., Iowa Attorney General Tom Miller said.”

Oh, so 150,000+ bogus affidavits – each an alleged count of perjury (and perhaps forgery) will lead to a felony criminal charge, right?

“The group isn’t pursuing a criminal investigation, Miller said. “Our focus is to reform the servicing process and that’s inherently civil, not criminal,” he said.”

I see. So the standard is that if you’re a bank, you can break the law…. This is sorta like how it wasn’t criminal to launder drug money – if you’re a bank, or wire money to a prohibited nation (for alleged terrorist uses) – if you’re a bank, or to be involved in a massive bribery and other associated events scheme over a sewer system – if you’re a bank, or to rig bids in the municipal debt markets – again, if you’re a bank.

Well, it seems to me that if this is the standard for a bank, then the people are well within their rights to decide that the precise same standard shall apply to conduct directed at a bank.

So Crowley was right and do what thou wilt is now the whole of the law. And you wonder why I am so convinced that America is on the verge of collapse. The present US combines the worst of the aristocratic system with the worst of the democratic one. All that it really lacks is the worst of monarchical system. I have little doubt that will come along soon enough. It didn’t take long for the American financial aristocrats to exempt themselves from the law, after all.

The bank industry claims the worst is over:

As the financial crisis of recent years recedes, the FDIC has been predicting that 2010 will be the high-water mark for bank implosions. “Going forward, the FDIC looks to see fewer failures,” agency spokesman Greg Hernandez said.

Some industry observers agreed. “I think we’re over the hump of the problem but far from the end,” banking consultant Bert Ely said. Gary B. Townsend, president of Hill-Townsend Capital, said the industry is not just out of the woods, “we are far beyond the woods.”

By one measure, the trouble is already abating. On average, the banks that failed this year were much smaller than those that failed last year. The banks that failed this year had assets totaling $92.1 billion, a decrease of 45.7 percent from the $169.7 billion in assets of the banks that failed in 2009.

It’s true that the average assets and deposits held by FDIC-seized banks were much smaller in 2010 (157 banks, $587 million assets, $500 million deposits) than either 2009 (140, $1.2 billion, $995 million) or 2008 (25, $14.9 billion, $9.4 billion). Average assets also declined in a similar manner. However, the number of unofficial problem banks has grown from 545 banks at the end of 2009 to 919 now. That represents about 12 percent of all the banks in the country and does not include the four giant banks that are facing enormous putback penalties thanks to the fraudulent unbacked-securities they sold during the housing bubble.

In other words, color me very skeptical.

It’s only three years into the crisis. They’re clearly on the cutting edge of business journalism with their groundbreaking news of a growing number of failing banks. At this rate, they’ll discover the Great Depression 2.0 towards the end of 2013:

Nearly 100 U.S. banks that got bailout funds from the federal government show signs they are in jeopardy of failing. The total, based on an analysis of third-quarter financial results by The Wall Street Journal, is up from 86 in the second quarter, reflecting eroding capital levels, a pileup of bad loans and warnings from regulators. The 98 banks in shaky condition got more than $4.2 billion in infusions from the Treasury Department under the Troubled Asset Relief Program….

Seven TARP recipients have already failed, resulting in more than $2.7 billion in lost TARP funds. Most of the troubled TARP recipients are small, plagued by wayward lending programs from which they might not recover. The median size of the 98 banks was $439 million in assets as of Sept. 30.

This little table shows the real problem at hand. It’s from the spreadsheet of bank failures that I’ve maintained for the last two years and shows the number of failed banks along with the number of problem banks with a high risk of failure published by Calculated Risk. These “problem banks” are an unofficial tally, but the list tends to precede the official FDIC list of problem banks with a fair degree of accuracy.

2007: 76 problem banks, 0 failed banks
2008: 252 problem banks, 25 failed banks (33%)
2009: 545 problem banks, 140 failed banks (56%)
2010: 919 problem banks, 157 failed banks (29%)

This is why I expected more than 200 failed banks in 2010. I didn’t expect a seizure rate of 56%, but I did assume it would be over 40% given the continuously rising number of problem banks. However, the percentage of problem banks that were seized by the FDIC fell from 56% to only 29% this year. However, the number of problem banks continued to rise, so even if the percentage of problem banks seized by the FDIC remains around 30% in 2011, that would indicate 276 bank failures in 2011. And at the 2010 average of 262 million in bad assets per bank failure, there would be $72.3 billion in bad bank assets going up in smoke and $130 billion+ in deposits, nearly 2% of total deposits, put in jeopardy.

In other words, don’t trust the recovery crowd. Temporarily papering over a problem is not the same thing as fixing it.

Ron Paul isn’t backing down:

Audit the Fed in 2011

Since the announcement last week that I will chair the congressional subcommittee that oversees the Federal Reserve, the media response has been overwhelming. The groundswell of opposition to Fed actions among ordinary citizens is reflected not only in the rhetoric coming out of Capitol Hill, but also in the tremendous interest shown by the financial press. The demand for transparency is growing, whether the political and financial establishment likes it or not. The Fed is losing its vaunted status as an institution that somehow is above politics and public scrutiny. Fed transparency will be the cornerstone of my efforts as subcommittee chairman.

Ron Paul is correct. What Congress can make, Congress can unmake. And since the Federal Reserve has destroyed more than 95% of the purchase value of the dollar despite its mandate to maintain price stability, it cannot reasonably hide its books behind its self-serving, self-declared need for independence any longer.

One in four mortgages shouldn’t be confused with one in four houses, but it’s still an awful lot of homes underwater:

CoreLogic reports that 10.8 million, or 22.5 percent, of all residential properties with mortgages were in negative equity at the end of the third quarter of 2010, down from 11.0 million and 23 percent in the second quarter. This is due primarily to foreclosures of severely negative equity properties rather than an increase in home values.

During this year the number of borrowers in negative equity has declined by over 500,000 borrowers. An additional 2.4 million borrowers had less than five percent equity in the third quarter. Together, negative equity and near-negative equity mortgages accounted for 27.5 percent of all residential properties with a mortgage nationwide.

This isn’t over. This isn’t even CLOSE to being over, no matter what the market enthusiasts would have you believe. They’re like starving sharks desperately shouting about how warm and wonderful the water is, hoping you’ll ignoring the billowing clouds of blood underneath them.

In which Jon Stewart attempts to figure out if Ben Bernanke is printing money or not: