Tag: banks

This is about as shameless as it gets:

The Truth in Lending Act from 1968 gives borrowers the “right of rescission,” the ability to undo a home refinancing or home equity loan within three years of the closing if the lender did not make proper disclosures — generally of the loan amount, interest rate and repayment terms. The law makes allowances for mere mistakes by the lender, but otherwise requires strict compliance, as well it should: disclosure is the main — often the only — consumer protection in the mortgage market….

The Fed proposal would change all that. Citing concern over banks’ compliance costs, it would require a borrower to pay off the remaining principal before the lender gives up its security interest. That would be clearly impossible for troubled borrowers. So the Fed’s proposal would benefit the creditor who violated the law rather than the borrower, paving the way for foreclosures that otherwise could be avoided.

In other words, the Fed wants to change the law to force a borrower to pay off his mortgage even if the mortgage bank doesn’t hold a legitimate interest in the house. This is sheer insanity. It should be clear from this that the Fed not only knows about the vast extent of the mortgage fraud, but is seeking to further victimize the victims of it. And it is no longer even pretending to be interested in the fate of the homeowning American public anymore.

The Irish government caved to the EU and IMF “rescue” team and is attempting to put Irish taxpayers for the next three generations on the hook for around $100 billion Euros in order to bail out the American and European banks that made bad loans into the Emerald Isle. This is more than a little ironic; after shedding great quantities of Irish blood in an effort to free themselves from centuries of British rule, the Irish government has placed the Irish people on the verge of serfdom to a much crueler taskmaster.

The EU-IMF rescue deal for Ireland hinges on the publication of the four-year plan and the passing of the budget, the Government has insisted. Minister for Transport Noel Dempsey said this morning the rescue package was contingent on the budget being approved by the Dáil on December 7th…. Minister for Finance Brian Lehihan said passing the budget is vital.

“We need to pass this budget, we need to publish this plan tomorrow, which we will doing,” he said. The plan has been finalised, the budget will be introduced and the necessary funding will be obtained. They’re the priorities for this country at present.”

It is interesting how the people of Iceland’s decision to spurn being “saved” has not been covered by the media. Instead of pledging their future income to bail out their bankers, they are prosecuting them. If the Irish people do not wish to return to serfdom, they will have to follow the Icelandic example and choose to default on the massive bank debts that their government elected to accept last year.

And in the meantime, Spanish bond yields have increased to 224 points over U.S. treasuries, 67 more than one year ago.

The Market Ticker contemplates a murder in Atlanta:

Americans were put into supposedly-safe “auction rate securities” and lost millions of dollars when they could not sell them. Americans were sold various MBS that were allegedly “AAA”, lost money, and have no recourse. Americans were sold homes based on inflated appraisals and knowingly-bogus loans given to them where the banksters involved knew they couldn’t pay, and lost everything.

None of the people responsible for the collapse in 2007-2009 have been indicted.

NOT ONE INDICTMENT.

This, despite the fact that Citibank’s former Chief Underwriter has testified under oath that the Bank knew it was writing crap paper in 2006 and 2007. 60% of the loans were bogus in 2006, and 80% in 2007. Yet they kept doing it, and nobody, including Rubin, who received a memo on the matter, has been indicted and the bank was bailed out rather than being shut down.

Likewise there are myriad complaints about foreclosure fraud – the filing of false affidavits which are in fact crimes – over 170,000 of them in aggregate that have been admitted to.

Again: Not one indictment has issued and not one firm has been shut down.

Gunfire is prevalent among gang members because they do not have any other means of settling disputes. That is, having had their right to recourse under the law removed due to the nature of the activity in question, these gang members instead turn to violence to settle complaints with one another.

Are we seeing the beginning of the same thing in the financial realm?

Denninger is correct and I suspect that the banksters have not thought through the probable ramifications of their actions in attempting to shield themselves from being held legally accountable for their criminal behavior. As with the illegal drug economy, in which disputes are settled with violence because legal recourse is simply not an option, banksters who utilize their political influence to insulate themselves from the victims of their financial rapine are likely to become targets of those whose only hope of justice is to take it into their own hands.

Not every foreign investor or American who has lost their home is going to seek justice; the majority of the latter won’t even show up to court. But some will do so, which is why it is utterly foolish for banksters to attempt to place themselves above the law, because above the law is, by definition, also outside the law.

This is why it is so important that the insolvent banks are shut down rather than bailed out and why the criminal banksters must be arrested and prosecuted rather than granted ex post facto legal immunity. If government abdicates its lawful role, others will eventually fill the void.

Correction: this appears to be number two. I note that two years into the Great Depression 2.0, more banksters have been murdered than indicted.

What would appear to be the first of many to come across the insolvent West:

A slow steady bleed has turned into a mad dash for cash at Allied Irish Banks. Allied Irish Banks has had to rely on Central Bank funding as customers withdraw $18 billion, a stunning 17 percent of its deposit base. Without Central Bank funding, there would indeed be outright panic.

Of course, this can’t happen in the USA where bank deposits are insured by the FDIC… which happens to be in the red.

BG queries about who actually owns the home:

I am a recent convert to your blog. I enjoy your unconventional, but unfailingly thoughtful, opinions.

Here is something for you to ponder. Assume that the evidence shows that the putative owner of a mortgage is not the actual owner of the mortgage, due to improper transfer procedures in the securitization process, such as a failure to properly endorse and record the necessary transfer documents. The implications for foreclosures may be profound, as you and others have indicated.

But think about this from a different point of view for a minujte. Wouldn’t this logic imply that a nondefaulting homeowner, who has been making all of the payments on his home, has in fact not been paying the proper person? Could the true owner of the mortgage sue the homeowner for not making payments to the true owner? The true owner might want to do this because the banks, servicers and other intermediaries might soon all be broke due to the foreclosure problem.

It does imply that the wrong party has been paid, in fact, this is exactly why multiple banks have been foreclosing on some houses. The problem is that in the case of a broken line of mortgage transference, it is not only difficult to ascertain the true holder of the debt, but in many cases the connection of the debt to the title is cancelled by virtue of the note proving the claim being destroyed in the process of the transfer. In such cases, the debt may still be owed to the “true owner”, but it is no longer secured by the home.

So, to answer the rest of BG’s questions, yes, the true owner of the debt can sue the homeowner but is very unlikely to because he has no claim on the house. The reason it makes no sense for the true debt-holder to sue the homeowner is that a bankruptcy filing on the part of the homeowner will discharge that debt without relinquishing the house.

From the Market Ticker:

“JUDGE CURLEY THE HEAD BK JUDGE IN AZ JUST RULED MINUTES AGO THAT THE BANK OF NEW YORK MELLON MUST PRODUCE THE CUSTODIAL RECORDS IN THEIR VAULT IN A CASE AGAINST AN AZ HOMEOWNER, THEREBY PRODUCING THE NOTE AND ALL OTHER DOCS. THIS IS A TRANSFORMATIONAL DECISION.”

Now we’re cooking. This decision changes literally everything – at least for Arizona. If it spreads, and it probably will, it will change everything period.

If BONY doesn’t have the documentation in their custody, with proper endorsements, then there’s gonna be trouble. You can bet the banks will try to bury notice of this way off the front page, but they’re not going to get away with it.

The key issue here has always been whether the people buying these securities were really buying what they thought they were – and maybe whether they were buying anything at all. If BONY can’t produce the documents because they don’t have them, and cannot prove up ownership of the note with proper endorsements, the lid is going to come off this thing.

Between the insolvency, the fraud, and the mark-to-fantasy, it’s always just been a matter of time before Bank of America, Citibank, Wells Fargo, and JP Morgan Chase go down in spectacular flames. TARP didn’t save them, Quantitative Easing I didn’t save them, Quantitative Easing II isn’t going to save them, and even if the new Republican House can be suckered into passing TARP II as their predecessors were, that wouldn’t save them either. I’ve calculated that at least $3 trillion of the $7 trillion they presently report as assets simply don’t exist. The damage has already been done and it’s time to start trying to staunch the bleeding rather than offering more pointless and costly transfusions.

One of the comments there sums up the entire problem with the US financial system in a nutshell: “Welcome to the failure of fiat wealth… where multiple exclusive claims to underlying real wealth will always become extinguished at some point in time.”

That is the key to understanding debt-deflation right there. Multiple competing claims to the underlying wealth.

Here is an example of the difference between the State perspective on the fraud committed by the mortgage banks and the federal one. Ohio Attorney General Richard Cordray is clearly not buying the “technical error” line of defense:

“The big mortgage servicers and financial firms continue to demonstrate their belief that they do not need to play by the same rules as everyone else who uses our court system. The suggestion by Wells Fargo and its colleagues at several other national firms that they can cure fraudulent testimony by simply refiling new affidavits and continuing to proceed toward foreclosures shows they do not recognize the seriousness of the problem they have created. There is no simple ‘do-over’ for false testimony that will be likely to avoid sanctions and penalties imposed by the courts. Their brazen efforts to minimize their financial exposure by sweeping these problems under the rug are an insult to the justice system in this country. These disclosures by Wells Fargo will now become the focus for a new prong of our on-going investigation.”

That giant crack in the wall keeps growing….

UPDATE: I’m not generally a fan of politicians, but I find that I LIKE this guy. A lot. He appears to be about as focused as The Terminator. Here’s hoping he isn’t merely angling for a revenue-enhancing settlement, but actually intends to pursue the fraud to its core.