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Senator Franken Sends Letter To Bernanke, Bair And Holder Demanding Criminal Charges For All Responsible For Biggest Alleged Mortgage Fraud In History
The biggest financial story which continues to get absolutely no mention on CNBC just got its latest multi-step escalation: Senator Al Franken has just blasted a letter to Tim Geithner, Shaun Donovan, Secretary of Housing and Urban Development, Eric Holder, John Walsh, Controller of the Currency, Sheila Bair, and, drumroll, Ben Bernanke, telling the recipients that "each of your agencies has an important role to play in addressing this egregious situation and holding all appropriate actors fully accountable. As such, I respectfully request that you collaborate to conduct a thorough investigation into the alleged misconduct. As part of this investigation, it is crucial that Ally and its employees are held fully accountable for any criminal misconduct." Since if this pervasive mortgage fraud is more than just alleged, the stink will reach to the very top of places like JP Morgan, Ally, and possibly every single bank that has been in the mortgage origination business, something tells us that Ben Bernanke, whose job is precisely to protect the banks' interests will not rush into any investigation for the duration of FASB's existence. It gets better: "Additionally, all homeowners who may have experienced illegitimate foreclosure sales, those who have been forced to defend against illegitimate foreclosure actions, and those who have been harmed must be identified. These individuals must receive proper restitution and compensation, as provided for under the law." And the punchline: "It is critical to confirm that no loans provided through the FHA or in conjunction with the HAMP program were associated with Ally's misconduct." Yes, oddly enough the government is about to lose even more credibility once it is discovered that it worked in collaboration with the biggest mortgage fraud scheme in history.
The letter concludes:
"Concerns have been rasied that Ally's practices are not an anomaly in this industry, and that these bad practices are used by numerous other companies as well. Therefore, I request that you report on the actions your agencies are taking (and plan to take) to improve oversight of mortgage servicers overall. In particular please inform me of steps that you will take to ensure that similar misconduct is not currently occurring within other mortgage service companies and how future improper activity can best be prevented."
We will spare you the Donkey Kong graphic today.
Full letter:
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You don't get it. I'm betting that in a lot foreclosures, NO ONE has any idea WHO the note holder really is! Wrap 1000s of mortages in an MBS, slice it into tranches via CDOs, take remaining tranches and slice into other CDOs, wrap CDOs into CDO^2, then place in a CDS box, followed by more CDO wrappings, multiply this idea by 100s of financial firms doing the same thing! Capiche?
Yeah I get it but I am actually surprised that that's enough to make the situation impossible. I live in a house, on a street, in a town in county in a state in a country and it's pretty easy to find me.
I guess the legal point that could use some clarity here is: does ownership of the actual loan get split up as the cash flows get split up among different tranches of MBSs CDOs etc. etc? and if so when, how and under what conditions? Can one party even "own" a loan while others have full claim on the cash flows?
I know no one ever expected mass defaults on these things but MBSs have been around for a long time and somesmall percentage of the loans that went into them defaulted. This can't possibly be a completely overlooked and unexamined area within the legal framework of securitization. No provisions were ever made in this history of MBS to convert bad debt into equity?
Yves Smith on Naked Capitalism has a couple of good blog poses yesterday and today about the legal implications of MortgageGate.
Children, fools and drunks tell the truth.
The court jester had a political function to tell truth to power.
At least someone is saying it.
If TBTF banks are going to be named mortgage fraudsters, then they should include The Federal Reserve, Barney Frank, and Chris Dodd as co-conspirators. But alas, that is not on the docket for this dog and pony show.
Start w/orange jumpsuit for his colleague Dodd following immediately with Barney the Frank.
I'm amazed sometimes that so many smart people can't see past their political penises to understand what they are seeing. Whether you are Democrat or Republican or Independent or Anarchist, you need to disolve the lens and see the reality.
In order to establish a chain of responsibility that is necessary for legal prosecution, it will be needed to establish that said parties were aware of the illegal situations and did nothing. This letter begins to establish that fact. It says "hey there is a problem, do your jobs" - later at Congressional hearings this letter can be entered into the record, so that when Timmy says " I had no idea things like this were going on" , investigators can call bullshit and produce this letter.
An avalanche starts with a single tiny rock slipping downward, by itself it is not much, if it is sufficient to dislodge other rocks, a cascade of events occurs in a very short length of time.
This letter is the first rock tumbling down an unstable slope. Put your political penis back in your pants and think with the other brain, between your ears.
These guys are trying to tie up the lose ends of the mess left by Wall Street and have skipped a step or two. Going after them and letting the people who created the securatized mortgage instruments, then faked default insurance and faked credit worthiness is stupid.
If Ally is forced to hire hundreds more people, then the cost of winding this mess down goes up and the cost to home owners goes up. They WILL recover their costs, either from existing mortgages or from new mortgages.
A stupid diversion from the real culprits.
brent..:
In many cases, the real culprits are homeowners that wanted more than there real productive capacities would support.
But, if the costs go up, it simply becomes part of the cost of home ownership. The populace will have to scale back their expectations to the level of earlier decades. As that occurs, and it will have to occur, housing will become affordable again.
Where I live, good quality 60,s and into early 80's construction is selling. That means 2,400 to 2,800 square ft above ground with basement. This the $100,K to $200 K category. The 3,000 + sq.ft. (up to 10,000 sq. ft.) recent construction houses are not selling unless they have special features (architechure or location).
I even heard today of a fellow that had bought a 1,400 in a respectable surburban location for mortgage default of $30,000.
It is the new reality.
Here's a personal note on how screwed up the banking system is.
In 2003 I paid off the mortgage on my home. It was held by a large regional bank. It took over a year and finally a call to the vice president of the bank to get the paperwork declaring my home was clear and free of all liens and the mortgage was paid in full.
When I received the paperwork, it had the wrong address on it, it had my name on another property which I did not own. Two months later I received a corrected document. To this day I wonder if they ever recorded a lien against my property when I took out the mortgage in the first place.
This was before the big property boom, I had bought this home in 1987, so I can imagine how screwed up the system became as more property and transactions became ensnared in a very flawed system.
I have had similar experiences in the past when selling rental properties -- wrong address. My latest experience is that somewhere there is a mortgage document that is also questionable.
I think Franken would have got more mainstream press if he would have augmented the titles of the recipients.
Replace: "The Honorable" with ...
The Honorable Mentions Rejects
http://www.youtube.com/watch?v=QRrwre9q5fs
hmmmm....let's see......Bill Clinton would go to prison, Alan Greenspan would go, ACORN would go, just about every member of Congress would go, whomever came up with the CRA (Community Reinvestment Act), union leaders (Stern, Trumpka, etc), Barney Franks, Chris Dodd, and on and on and on ad nauseum.......what a nice dream....mmmmmmmm
The FEMA camps will have to be enlarged to get them all in. Nice try Franken.
Aaahhh. Mortgage squatter gate ....
How inconvenient. The brigade cannot charge a concentrated assembly, and disperse it by sheer force and terror.
Bair is head of the FDIC...
See CNBC hit with Larry Kudlow and Melissa Francis, "AIG Bailout Repay Plan?" -- http://tinyurl.com/2b3mr3t Plugged ZH.
Your correct, CNBC hasn't made comment on this whatsoever. I think this issue is enough to sink the economy, and it has teeth. People can say that fraud was done and in so doing they can sue the hell out of these people.
indictments or it didn't happen
Yeah, yeah - Franken is such an idiot and an ass and ... whatever. Where is the Senator you admire on this issue? Made a lot of statements like this, have they?
Won't post my opinion on Franken or any other Congressman here, it doesn't matter. The issue is the thing, let's talk about that please. Discussing feelings about Senators is mental masterbation: it might make you feel good for a minute, but it's ugly when you do it in public.
PS - Carbonmutant, I love that Deus Ex avatar.
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