Buffett's Pet Bank Joins The Fraudclosure Circus: Wells Caught Lying About Affidavit Practices After Clerk Admits She RoboSignedSubmitted by Tyler Durden on 10/13/2010 - 19:42
The last bank, and arguably the one that has the most to lose, Wells Fargo, which up until now has fervently denied it engaged in robosigning and thus refused to halt foreclosures, has just been caught red-handed by the FT. In a sworn deposition, which will certainly lead to a foreclosure halt by Warren Buffett's pet bank, and confirmation that WFC was merely lying like everyone else on Wall Street, the Financial Times has obtained legal documents that prove Wells was merely one of many. Per the FT: "Legal documents obtained by the Financial Times suggest that Wells Fargo, the second-largest US mortgage servicer, also used a “robo signer”. Unlike its rivals, Wells Fargo has not halted foreclosures. The San Francisco-based bank said on Tuesday it was reviewing some pending cases, but it has maintained that it has checks and balances designed to prevent serious procedural lapses." Now that Wells' checks and balances end up neither checking nor balancing, perhaps it is time for Charlie Munger to tell the shareholders of Wells to "suck it in", as the bank is about to be faced with a rather simple dilemma: beg for TARP 2 (and confirm that Munger, and his partner, are nothing but a bunch of pathetic senile hypocrites) and thus more taxpayer bailouts, or see a huge portion of its shareholder value (and thus Charlie Munger's precious, precious money) about to be wiped out.
INCIDENT: The traditional Swiss finishing school taught young women etiquette and social graces, but international bank regulators are talking about something much tougher when they refer to a “Swiss finish” for global banks.
Just how tough became clear last week, 4 October, when a Swiss commission proposed that its two giant banks, UBS and Credit Suisse, be subjected to capital requirements of up to 19%, nearly three times as tough as the 7% capital-to-assets ratio recently suggested by the Basel Banking Committee as a minimum global standard.
Paging Bob Pisani: Mutual Funds See 23rd Sequential Outflow, As Redemptions Accelerate, Hit $80 BillionSubmitted by Tyler Durden on 10/13/2010 - 17:50
Sorry CNBC and Mr. Pisani but there is no way to spin this. ICI has just reported the latest in what is now a weekly farce: nobody wants a piece of this market. Nobody. Retail is out permanently, as was confirmed by the 23rd sequential outflow from domestic equity mutual funds, this time redeeming $5.6 billion, the highest since the beginning of September, right before the Fed full blown stock ramp intervention began. And that brings the total YTD mutual fund redemptions to $80 billion. Sorry bankers - no greater fool, no hot potato. The jig is up. Have fun selling AAPL at $50,000,000 to each other (and of course ENIAC) in subpenny increments. Everyone else will stick to bonds and gold. Lights out.
From Nic Lenoir: "To me this market in general screams deja-vu 2008 all over again. USD is trading very weak, commodities are through the roof, everybody is focused on decoupling, and the ECB is talking hikes when the Fed is in easing mode... You better hope somehow the leading indicators on the ISM are all wrong and it will not go below 45 otherwise... well we all know what happens."
Yesterday, with a modest dose of sarcasm, we pointed out the latest salvo by the fiat regime against gold, in the form of one Op-Ed by Edwin Truman, who very seriously suggested that America should sell all of its gold to plus less then 3% of its massive (and growing) debt hole. Returning the favor of "all seriousness" we said that this is "dumbest idea we have ever heard." Today, Jim Rickards, shares his view on this modest proposal in a far more politically correct manner, via a King World News exclusive. Here are Rickards' follow up thoughts on this most ridiculous suggestion we have heard in all of 2010.
As long noted, the long gold trade continues to outperform stocks. The daily "beta" in gold, as wrong as this statement is, continues to be higher than stocks, with risk assets underperforming gold on a daily basis now, which incidentally closed at a fresh all time high spot level north of $1,370. And yes, gold has far outperformed the stock market rally since September. In short: stocks, priced in gold, are down -0.76% for the day. This is better known as visualizing the Fed's dollar devaluation in relative and absolute terms. With each passing day, the upside in stocks lags the loss in purchasing power. Which is precisely what the Fed is hoping to achieve.
RANsquawk Market Wrap Up - Stocks, Bonds, FX etc. – 13/10/10
Meet The Foreclosure "Experts": Hair Stylists, Walmart Floor Workers And Assembly Line Workers, All Hired To "Defraud Homeowners"Submitted by Tyler Durden on 10/13/2010 - 15:54
This is just surreal: the Associated Press has put together a must read profile of all the people who the mortgage servicing industry has been scrambling to get together since 2007. The outcome, and stereotypes, are stunning: "In an effort to rush through thousands of home foreclosures since 2007,
financial institutions and their mortgage servicing departments hired
hair stylists, Walmart floor workers and people who had worked on
assembly lines and installed them in "foreclosure expert" jobs with no
formal training, a Florida lawyer says." And it gets even scarier - these "experts" pretty much all confirm they participated in fraud, either willingly or unwillingly: "In depositions released Tuesday, many of those workers testified that
they barely knew what a mortgage was. Some couldn't define the word
"affidavit." Others didn't know what a complaint was, or even what was
meant by personal property. Most troubling, several said they knew they
were lying when they signed the foreclosure affidavits and that they
agreed with the defense lawyers' accusations about document fraud." And here is punchline: " In what is perhaps a
sign of things to come, a Simi Valley, Calif., couple and their nine
children broke into their foreclosed home over the weekend and moved
back in, according to television station KABC of Simi Valley. The family was evicted
from their Spanish-style two-story in July. The home has been sold, and
the new owner was due to move in soon." And this is a problem that will go away in a few months?
Both Bank of America and Wells Fargo are refusing to go with the euphoric melt up flow, at least in stocks, and are now wider by about 13 bps each (latest rerack: BAC 177.5 +13.50; WFC 115.50 +12.5) as investors begin fretting about just how serious foreclosure fraud may be, and its impacts on banks. And yes, this is isolated to foreclosure fraud, as all the other non-originator-cum-servicers are flattish to tighter on the day (oddly, Block is wider by almost 100 bps to 515 from 422.5, and we can't quite explain the reason just yet). As we pointed out earlier, when JPM stock was still up for the day, look for this credit weakness to spill over more into stocks as Fed-frontrunners realize that the Fed, with even a $4 trillion balance sheet, where it will be in a year, will be unable to keep all the moving parts on the banks' $15 trillion liabilities in check (not to mention the $18 trillion in shadow liabilities). Bottom line - very soon foreclosure fraud will finally start to be priced into financials first, then everything else. It already has infected credit.
It appears that the next round of the trade war is imminent: per Reuters, Senate Finance chair Baucus has said that the Senate is "poised to follow" the House in passing China currency legislation. Expectations were that this law would not pass for a while and certainly not before the mid-terms. It appears the Senate, in its own attempt to generate some populist Brownie points, and unable to grasp that the whole point with the weak CNY is an even weaker USD. What this is certain to do is escalate an already tenuous situation, and lead to even more jawboning in US-Sino relations. We are confident that the decreasing indirect participation in the recent 3 and 10 year auctions is a direct consequence of what China's retaliation will ultimately look like.
Fed Posts Schedule Of Upcoming $32 Billion In POMOs , As It Withdraws Token $260 Million In Liquidity Via Tri-Party Reverse Repo TestSubmitted by Tyler Durden on 10/13/2010 - 14:08
Today, the Fed withdrew a whopping $260 million in liquidity from the market via a Treasury-backed 5 day reverse repo at a 0.20% stop out rate, which is pretty much what banks earn on their excess reserves confirming that this operation was nothing but a travesty. Much more importantly, minutes ago the Fed announced the POMO schedule for the next month: there are 9 liquidity drowning events coming up in the next month. Expect another $32 billion in AMZN, NFLX and AAPL purchasing power to appear magically out of Brian Sack's left pocket. As is now common knowledge shorting on any day, but especially on these days, is suicide. Which is why all natural shorters will continue piling into gold which has become the only way to formally oppose the Fed. Instead of looking at POMO days as stock melt up days, consider them days in which gold will soar even more (due to the recently discussed higher gold melt up beta compared to risk). Trade accordingly.
Today's $21 billion 10 Year bond closed, as expected, without a glitch, which is normal as the Primary dealers and the Directs once again account for nearly 60% of the take down. The 2.475% high yield was the lowest in 2010, and approaching the lowest on record from early 2010. Yet what was most troubling is that like in yesterday's 3 Year auction, both the Bid to Cover and the Indirect participation have started to decline. At 2.99 the BTC was the lowest since the May 2010 auction, following which every BTC was over 3. Additionally, and more troubling, the Indirect takedown was just 41.5%, a major drop from last auction's 54.7%, which caused both the Primary Dealer back up bid, and the Direct take downs, to jump materially, to 47.8% and 10.7%, respectively. Since the 10 Year should be one of the most preferred spots on the curve for foreign investor interest, the sudden drop is certainly troubling, and may be an early shot of how China plans on retaliating for recent trade war escalations in the US.
The inception of the mortgage fraud crisis has been extensively documented by pretty much all media outlets now. The question that everyone is grappling with is what happens next. Janet Tavakoli writes in with some suggestions, more at the thought experiment level, as to what the next steps in fraudclosure/fauxclosure may be.
The NBER tried to pull a fast one on America a few weeks back when out of the blue it concluded that the recession ended in June 2009. Alas, Google Trends shows otherwise. The attached chart demonstrates the average use of the terms "food stamps", "I need a job", "unemployment claim" and "government assistance" via google trends. Either Americans are really clueless and are completely unable to get the memo that it is now all clear to spend, spend, spend, or the BLS, as John Lohman has suggested, aka the US version of the Ministry of Truth has infiltrated the corpulent and proud NBER Ph.D.s flagbearers.