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Fannie, Freddie To Pursue Putbacks, Subpoena JPMorgan, Among Others, In Seeking Loan Level Detail

Tyler Durden's picture


First it was the New York Fed, now the FHFA itself (regulators of Fannie and Freddie) is getting involved in putbacks. The WSJ has just reported that the GSEs have hired law firm Quinn Emanuel as the "agency considers how to move forward with efforts to recoup billions of
dollars on soured mortgage-backed securities purchased from banks and
Wall Street firms... The FHFA hasn't disclosed the targets of its subpoenas, though some
banks have acknowledged receiving them, including J.P. Morgan Chase
& Co.
The probe is focused on so-called private-label securities
that were originated by mortgage companies, packaged by Wall Street
firms and then sold to investors." Not to be confused with RoboSigning, which is at the heart of the Fraudclosure and could serve as a catalyst to what some claim as the unwind of the multi-trillion MBS market in a worst case scenario, this is a parallel effort that seeks to get banks to repurchase far more of misrepped and miswarrantied mortgages. As we previously disclosed, it is precisely this ongoing action that Bank of America and Wells Fargo have been (under)reserving against: and if the GSEs, together with the FRBNY, Pimco, BlackRock and who knows who else, are sensing the current moment as one of terminal weakness for the mortgage servicers, who knows how many billions in mortgages could be putback to the TBTF banks, who are luckily flush with still fresh taxpayer cash and trillions in excess reserves. Either way, it appears that while the New York Fed is going after BofA, the GSEs are about to dine on Jamie Dimon. Either that, or all this is a smokescreen to promptly settle all current and future possible litigation in an adversarial process involving government entities, and thus streamlined to a mutually amicable resolution.

More from the WSJ:

The FHFA's efforts could ultimately lead to a settlement that would avoid protracted legal battles, analysts said.

"There's going to be much more incentive to negotiate seriously and quickly than if they had done this seven months ago, when people were blithely ignoring the fraud," says William K. Black, a former federal bank regulator who is now an associate professor at the University of Missouri-Kansas City School of Law.

Estimates about banks' ultimate exposure vary considerably because it isn't clear how aggressively investors will pursue claims, or how successful they will be. Banks could face between $55 billion and $179 billion in repurchase demands from investors, according to Compass Point Research & Trading, a Washington boutique investment bank. Estimates from FBR Capital Markets say repurchase demands could be lower, between $24 billion and $51 billion.

The FHFA subpoenas could mark the beginning of a new attempt to recover losses on soured mortgages from banks.

Of course, the GSEs' involvement in this mess could open them up even wider to potential liability:

So far, most efforts to force banks to repurchase mortgages have focused on mortgages that Fannie and Freddie bought and guaranteed themselves, and not from mortgage securities issued by Wall Street firms.

The mortgage giants are sorting through their growing pile of delinquent loans to find sloppy or fraudulent loan underwriting that constitutes a violation of representations and warranties.

Those repurchase demands have risen as delinquencies mushroomed. Fannie and Freddie have put back $6 billion in mortgages during the first half of the year, and banks could face another $22 billion through 2012, according to a report published Tuesday by analysts at RBS Securities Inc. Banks, for their part, have grown more aggressive in recent months in challenging those put-back efforts.

For those unsure how the GSEs can pursue legal action against banks for basically doing their work for them, the WSJ explains:

While Fannie and Freddie don't make loans directly, they support housing markets by buying mortgages from banks and then selling them to investors as securities, providing guarantees. But during the housing boom, Fannie and Freddie augmented their role in the housing market by purchasing privately issued securities as investments. They became two of the largest investors in those bonds.

Those securities were often backed by subprime loans and mortgages that required little or no documentation of borrower incomes, which deteriorated sharply once home prices fell. Fannie and Freddie couldn't purchase those loans directly, but they were allowed to invest in slices of the securities that carried triple-A ratings.

Fannie and Freddie purchased $227 billion of bonds backed by subprime and other risky loans in 2006 and 2007. The value of those securities plunged as the housing boom turned to bust, and losses have accounted for around 9% of the firms' capital hole. So far, the government has injected $148 billion to keep the mortgage giants afloat.

So why subpoenas?

Some analysts say Fannie and Freddie, which touted their unparalleled mortgage-market expertise, could be hard-pressed to argue that they didn't know what they were buying.

But the subpoenas could help Fannie and Freddie access loan files for the mortgages backing their bonds and to demonstrate that the loans didn't conform to underwriting guidelines.

The loan files "are really the Holy Grail here," says David Grais, a New York securities lawyer who represents the Federal Home Loan Banks of San Francisco and Seattle, which have sued Wall Street firms to buy back soured mortgage securities.

Difficulty obtaining those loan files is one reason why there have been so few efforts by investors to force repurchases so far. Investors need to access the loan files to determine if there has been a specific violation of certain contracts, but they can't petition trustees for loan pools to take action without first identifying that breach.

"It's a real Catch-22 for them," says Isaac Gradman, a San Francisco-based consultant.

Subpoenaing is a uniquely FHFA-based privilege, which however will likely open up a can of worms once all the heretofore private data enters the public domain:

If the FHFA is successful in proving that loan files didn't meet
underwriting standards or that their ownership chain wasn't properly
transferred during the securitization process, that could pave the way
for other investors to make similar challenges, said Joshua Rosner of
investment-research firm Graham Fisher & Co.

No matter how this particular storyline developes, one thing is certain: in the nearly $14 trillion US mortgage market, things will get heated. Throw in midterm elections in some angry politicians, and it will get really interestng.


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Wed, 10/20/2010 - 23:25 | 665989 Jeffrey Lebowski
Jeffrey Lebowski's picture

Just before a ship sinks, all the RATS jump off


After you, Mr. Bernanke

Thu, 10/21/2010 - 00:55 | 666121 erik
erik's picture

maybe H&R Block got one too.  it'll be neat to see what happens to a NTBTF.  their 5 yr CDS hit 820 today.  right in line with Greece & Argentina.

Thu, 10/21/2010 - 01:17 | 666139 jeff montanye
jeff montanye's picture

reminds me of the tobacco companies that never lost a case, until they did.

Thu, 10/21/2010 - 08:26 | 666343 Careless Whisper
Careless Whisper's picture

when the banks loose, they win. mortgages (mbs) are "insured" with credit default swaps. i suspect that for every mortgage default, it is paid for, about ten times.

does anyone have data on the amount of swaps sold on mbs?


Thu, 10/21/2010 - 08:39 | 666364 kaiserhoff
kaiserhoff's picture

Deja vu, all over again.  The counter-party, which may well be AIG won't be solvent.

Thu, 10/21/2010 - 10:30 | 666640 Spigot
Spigot's picture

Howsomeever, the CDS insurers (to parties including GSEs, together with the FRBNY, Pimco, BlackRock and who knows who else) have to pay and pay and pay, my friends :-)

Thu, 10/21/2010 - 08:44 | 666373 snowball777
snowball777's picture

The size of the CDS market was ~$55T at the time of the crisis according to the ISDA.

Thu, 10/21/2010 - 01:37 | 666162 Herd Redirectio...
Herd Redirection Committee's picture

Yep, we are seeing it on the international level with the lack of global agreement on currencies.  Every one knows this is the time to rewrite the rules.  In Germany they are becoming agitated and questioning everything as a result, incl. giving up the benefits of devalued currency that they currently enjoy as the strongest member in the EU

We will see the oligarchs turn on each other more and more, although currently the fear that others will drag you down with them is keeping the charade going for now.  But things have a way of speeding up exponentially, and I'm not just talking about currency debasement.

Any way, check out the new site, PsychoNews,   where we like to point fingers and call things as we see 'em

Thu, 10/21/2010 - 08:28 | 666349 Larry Darrell
Larry Darrell's picture

LOL............sorry Herd, but it looks like the Ministry of Truth doesn't want your facts posted

From the site:

Website Under Review

You are seeing this page because the system administrator of is currently checking this website for malicious content


Fri, 10/22/2010 - 16:20 | 670438 Herd Redirectio...
Herd Redirection Committee's picture

Luckily there still exists some semblance of Free Speech and universal human rights, and after about 24 hours of 'review' we are back online, w/o so much as a peep from the host, why the site was 'under review'!!!  We must be doing something right!



Thu, 10/21/2010 - 07:49 | 666286 High Plains Drifter
High Plains Drifter's picture

Yep, no honor among thieves.

Thu, 10/21/2010 - 08:33 | 666358 pan-the-ist
pan-the-ist's picture

It's too bad this movement was co-opted, or TARP2 would never happen:

(sorry for the huffpo link, I knew it will hurt a few eyes here.)

Wed, 10/20/2010 - 23:27 | 665992 AccreditedEYE
AccreditedEYE's picture


Thu, 10/21/2010 - 00:11 | 666056 SheepDog-One
SheepDog-One's picture

Already priced in and leveraged now what?

Thu, 10/21/2010 - 00:48 | 666106 Glass Steagall
Glass Steagall's picture

This is a fucking farce.

50 trillion dollars world wide chasing 150 trillion plus in derivatives...

Gimme a fucking break.

Unwind all you want. The jig is up.

Thu, 10/21/2010 - 01:50 | 666178 jomama
jomama's picture

luckily, 99%+ of people simply are not paying attention.

Wed, 10/20/2010 - 23:27 | 665993 Spalding_Smailes
Spalding_Smailes's picture


The rug just got stapled to the floor .... Lol' Now what ....?

Wed, 10/20/2010 - 23:48 | 666026 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Harry saw the futures go red and needs a moment to go get his bear costume on.

Thu, 10/21/2010 - 00:05 | 666044 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

Zed?  It's Maynard.  The spider just caught a coupl'a flies.

Thu, 10/21/2010 - 00:09 | 666050 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Bring out the gimp!

Thu, 10/21/2010 - 00:15 | 666062 Spalding_Smailes
Spalding_Smailes's picture



Thu, 10/21/2010 - 05:54 | 666247 66Sexy
66Sexy's picture

cmon squeal! squeal!

Thu, 10/21/2010 - 00:35 | 666086 Sausagemaker
Sausagemaker's picture

What now? Let me tell you "what now". I'm gonna call a couple of hard, pipe-hitting Feds to go to work on the homes here with a pair of subpoenas and a ink jet. [to Zed] You hear me talking, hillbilly boy?! I ain't through with you by a damn sight! I'm gonna get hyper-inflationary on your ass!

Thu, 10/21/2010 - 01:03 | 666130 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

"I'm gonna get hyper-inflationary on your ass!"


Thu, 10/21/2010 - 01:42 | 666170 Best Satan in Town
Best Satan in Town's picture

Ben's dead baby, Ben's dead.

Thu, 10/21/2010 - 02:17 | 666191 jomama
jomama's picture

the gimp's sleeping.

Thu, 10/21/2010 - 00:46 | 666094 palmereldritch
palmereldritch's picture


Thu, 10/21/2010 - 09:30 | 666473 JLee2027
JLee2027's picture

Harry saw the futures go red and needs a moment to go get his bear costume on.


Thu, 10/21/2010 - 11:05 | 666758 Milestones
Milestones's picture

Thanks for the morning laugh. No coffee involved fortunately.  Milestones

Wed, 10/20/2010 - 23:32 | 666001 Cistercian
Cistercian's picture

 Swan, black.

Wed, 10/20/2010 - 23:46 | 666024 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

The new and popular drink!

Thu, 10/21/2010 - 08:00 | 666297 johngaltfla
johngaltfla's picture

Nah. It's priced in and besides, all the paper is AAA. The ratings agencies told us so.

Wed, 10/20/2010 - 23:33 | 666002 f16hoser
f16hoser's picture

I would love to see "Zombie Banks" feeding on each other! That would be worth the price of admission!

Wed, 10/20/2010 - 23:39 | 666010 whatsinaname
whatsinaname's picture

ought to get new homebuyers mighty excited eh?

Thu, 10/21/2010 - 08:47 | 666377 snowball777
snowball777's picture

About my prospects to buy several years from now, yes.

Thu, 10/21/2010 - 10:13 | 666606 MachoMan
MachoMan's picture

Hopefully you pick the right currency pony and can manage to keep enough of it around to take advantage of deleveraging.

Wed, 10/20/2010 - 23:42 | 666012 Karl Yentz
Karl Yentz's picture

Big fat smoke screen for the biggest fleecing of Amerika yet to come!

Thu, 10/21/2010 - 03:57 | 666227 Punderoso
Punderoso's picture

I have seen this math somewhere before.  Wasn't it used by the BLS for determing the unemployment rate? Oh wait, this was used for projecting the costs of Obamacare. No, I got it, this is how you calculate how many jobs that were saved or created!

Thu, 10/21/2010 - 00:52 | 666113 Glass Steagall
Glass Steagall's picture

Joo got it, meng.

Thu, 10/21/2010 - 09:31 | 666477 JLee2027
JLee2027's picture

Big fat smoke screen for the biggest fleecing of Amerika yet to come!

You can only fleece the uninformed and/or greedy.  You cannot fleece the alerted and angry muther fuckers we have become.

Thu, 10/21/2010 - 10:14 | 666610 MachoMan
MachoMan's picture

what about 95% of americans were opposed to tarp do you not understand?

Wed, 10/20/2010 - 23:43 | 666018 carbonmutant
carbonmutant's picture

Dennis Kneale says it's just a paperwork error...

Thu, 10/21/2010 - 00:02 | 666038 tallystick
tallystick's picture

Back in 2009, Dennis Kneale said the same mortgage was sold multiple times into different MBS.

Thu, 10/21/2010 - 00:18 | 666066 Spalding_Smailes
Spalding_Smailes's picture

Whatever rising anger Eisman felt was offset by the man’s genial disposition. Not only did he not mind that Eisman took a dim view of his C.D.O.’s; he saw it as a basis for friendship. “Then he said something that blew my mind,” Eisman tells me. “He says, ‘I love guys like you who short my market. Without you, I don’t have anything to buy.’ ”


That’s when Eisman finally got it. Here he’d been making these side bets with Goldman Sachs and Deutsche Bank on the fate of the BBB tranche without fully understanding why those firms were so eager to make the bets. Now he saw. There weren’t enough Americans with shitty credit taking out loans to satisfy investors’ appetite for the end product. The firms used Eisman’s bet to synthesize more of them. Here, then, was the difference between fantasy finance and fantasy football: When a fantasy player drafts Peyton Manning, he doesn’t create a second Peyton Manning to inflate the league’s stats. But when Eisman bought a credit-default swap, he enabled Deutsche Bank to create another bond identical in every respect but one to the original. The only difference was that there was no actual homebuyer or borrower. The only assets backing the bonds were the side bets Eisman and others made with firms like Goldman Sachs. Eisman, in effect, was paying to Goldman the interest on a subprime mortgage. In fact, there was no mortgage at all. “They weren’t satisfied getting lots of unqualified borrowers to borrow money to buy a house they couldn’t afford,” Eisman says. “They were creating them out of whole cloth. One hundred times over! That’s why the losses are so much greater than the loans. But that’s when I realized they needed us to keep the machine running. I was like, This is allowed?”

Thu, 10/21/2010 - 01:39 | 666166 StychoKiller
StychoKiller's picture

The holders of all those CDSs are gonna be like a Gahan Wilson cartoon I once saw, in which there's a single soldier standing in the rubble after a holocaust:  "I won!  I think..."

Thu, 10/21/2010 - 07:19 | 666275 Plainview
Plainview's picture

Great excerpt Spalding; what a completely absurd situation.

Thu, 10/21/2010 - 08:51 | 666389 trav7777
trav7777's picture

I wrote several lengthy pieces on synthetic debt over on TF back in 2008.

Synthetic debt became the only way to drive credit growth; a CDS is kind of like a reverse bond except with no initial capital.

Thu, 10/21/2010 - 01:31 | 666157 Miles Kendig
Miles Kendig's picture

Another top pick from Denice The Menace

Wed, 10/20/2010 - 23:44 | 666019 pan-the-ist
pan-the-ist's picture

WOOT!1!!! Get 'em Freddie, you too Fannie!!!

Wed, 10/20/2010 - 23:45 | 666022 pan-the-ist
pan-the-ist's picture

The silver lining in all of this is that we can expect even more new homes to be built putting even more downward pressure on prices through lack of demand.

Wed, 10/20/2010 - 23:45 | 666021 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Fed buying CNY to celebrate the news.

Wed, 10/20/2010 - 23:49 | 666028 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

This is getting to be like a big ole Square Dance.

Thu, 10/21/2010 - 00:07 | 666045 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

That was great!  Woop woop woop!

Thu, 10/21/2010 - 00:09 | 666052 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture


Thu, 10/21/2010 - 00:03 | 666039 Mr Lennon Hendrix
Mr Lennon Hendrix's picture


Thu, 10/21/2010 - 00:04 | 666041 RobotTrader
RobotTrader's picture

QE2, QE3, QE4, etc.

More $$$$$$ for the PigMen and all the lawyers handing this mortgage mess.

620hp Porsche 911 sells out in 2 months.

Thu, 10/21/2010 - 00:14 | 666061 SheepDog-One
SheepDog-One's picture

No money, Q/E*__* already priced in, tranched, and re-leveraged 40X about 1,300 DOW points and 50 bond auctions ago, crash and burn bitchezez.

Thu, 10/21/2010 - 00:43 | 666100 Minion
Minion's picture

Not smart to conspicuously consume that which they stole from the taxpayers......

Thu, 10/21/2010 - 08:52 | 666391 snowball777
snowball777's picture

Napoleonic complexes are expensive in more ways than one.

Thu, 10/21/2010 - 09:06 | 666414 trav7777
trav7777's picture

but...but...the elites would NEVER want to inflate the currency

Thu, 10/21/2010 - 00:05 | 666043 doolittlegeorge
doolittlegeorge's picture

If the..."man" shall we call him?...does not knee cap this and soon he might find "all those divisions surrounding his city as our protector surrounding his residency."  as our protector of course!  and maybe his as well!!!!  

Thu, 10/21/2010 - 00:14 | 666059 Careless Whisper
Careless Whisper's picture

i love the smell of subpoenas in the morning.

Thu, 10/21/2010 - 00:23 | 666073 Short Squeeze
Short Squeeze's picture

Insert Barney Frank joke here.

Thu, 10/21/2010 - 00:54 | 666118 frankTHE COIN
frankTHE COIN's picture

Barney will accept only Rare Girth insertions from China.

Thu, 10/21/2010 - 02:31 | 666197 Problem Is
Problem Is's picture

<insert> Barney Frank <insert>

Barney IS a joke.

Thu, 10/21/2010 - 07:01 | 666268 let x equal x
let x equal x's picture

Please don't use the words insert and Bawney Fwank in the same sentence.  Oops , I just did and threw up again...

Thu, 10/21/2010 - 00:26 | 666077 Short Squeeze
Short Squeeze's picture


Thu, 10/21/2010 - 01:04 | 666132 Glass Steagall
Glass Steagall's picture

i love the smell of subpoenas in the morning.

That's fuckin' funny.

Thu, 10/21/2010 - 00:17 | 666065 Caviar Emptor
Caviar Emptor's picture

Bob Guccione, founder of Penthouse Magazine, died in Plano TX tonight. Let us pause for a brief salute. 

Thu, 10/21/2010 - 01:08 | 666134 Glass Steagall
Glass Steagall's picture

RIP, Bob.

Thanks for the mammary's.

Thu, 10/21/2010 - 01:43 | 666172 jeff montanye
jeff montanye's picture

no.  thank hugh for the mammaries.  thank bob for the centers of the universe (from which we all came, to which about half (give or take) constantly return).

Thu, 10/21/2010 - 00:20 | 666067 ILikeBoats
ILikeBoats's picture

Prediction: gold and other commodities will drop as banks sell everything not nailed down in order to raise enough cash to hold in reserve. 

I would not be surprised to see this have ripple effects worldwide - after all, foreign financial institutions that bought the MBS'es might have some nasty mark-to-reality surprises; thus I would figure they would increase cash against any sudden losses as a purely defensive measure.

Am I right on this or barking mad?

Thu, 10/21/2010 - 00:21 | 666071 Spalding_Smailes
Spalding_Smailes's picture

I hope your right my VXX bet is killing me ....Lol'

Thu, 10/21/2010 - 01:18 | 666141 Minion
Minion's picture

During the sell-off in April / May, VIX poked the lower bollinger band about a week before the action started.  It also did this 5 days ago.  This is considered a topping signal by Prechter & Co, who is short with MAXIMUM LEVERAGE.  :D

Thu, 10/21/2010 - 00:47 | 666105 Barmaher
Barmaher's picture

You've got to have it to sell it.  The're currently getting squeezed by big buyers demanding physical.  They've got plenty of paper gold, though.  Could precipitate a decoupling between physical and paper if they dump billions in GLD.  Wouldn't break my heart!

Thu, 10/21/2010 - 03:54 | 666225 Ethics Gradient
Ethics Gradient's picture

Even if you have it to sell, a buyer is a fairly critical component of a sale...

Thu, 10/21/2010 - 07:43 | 666282 Bob
Bob's picture

Seems like they would need increased reserves alright.

How about not paying out $144B in bonuses their companies can't afford?

Thu, 10/21/2010 - 00:24 | 666075 lolmaster
lolmaster's picture

two options:

1) scam to usher in MEGA TARP 2 ($10T+)

2) scam to scuttle the ship just in time for repubs to take over

i'm really not sure which

Thu, 10/21/2010 - 01:46 | 666174 jeff montanye
jeff montanye's picture

mutually exclusive?

Thu, 10/21/2010 - 08:56 | 666398 kaiserhoff
kaiserhoff's picture

I like MEGA-TARP,  but how about MOTHER OF ALL TARPS?

Shock and Awe, Bitches.


Or maybe just, yo momma TARP

Thu, 10/21/2010 - 00:25 | 666076 Caviar Emptor
Caviar Emptor's picture

What the economy needs now (as if we needed any more ways for banksters to rob the Treasury): banks to do reverse-securitizations, dissecting mortgages from CDO tranches and selling them back to FNM/FRE. Fees to be charged on a per-transaction and percentage basis. 

Thu, 10/21/2010 - 00:30 | 666081 palmereldritch
palmereldritch's picture

Oh, the sound of rollin' dice
To me is music in the air 
'Cause I'm a gamblin' Boogie Man
Although I don't play fair

Thu, 10/21/2010 - 01:33 | 666159 Miles Kendig
Miles Kendig's picture


Thu, 10/21/2010 - 00:39 | 666089 2discern
2discern's picture

Hey maybe that is why JPM is selling off mortgages. Mine is just now serviced (as of 10/1/10) to LBPS out of Beaverton, OR. Never heard of them until this past week. Plus I got info with pay coupon on the 16th of OCt. for a payment due on the first?

Something ain't fish.

Thu, 10/21/2010 - 00:45 | 666101 2discern
2discern's picture

Hey maybe that is why JPM is selling off mortgages. Mine is just now serviced (as of 10/1/10) to LBPS out of Beaverton, OR. Never heard of them until this past week. Plus I got info with pay coupon on the 16th of OCt. for a payment due on the Oct.1?

Something ain't fish.

Thu, 10/21/2010 - 02:17 | 666190 Problem Is
Problem Is's picture

"Plus I got info with pay coupon on the 16th of OCt. for a payment due on the Oct.1?"

You've been robo-couponed bitchez...

      Your late on your mortgage bitchez....

              NOD bitchez...

                  Rocket Docket Fraudclosure bitchez...

Thu, 10/21/2010 - 02:27 | 666193 Problem Is
Problem Is's picture

Need the Earp Bros to clean up this mess...

Sorry, in all the absurdity... I couldn't resist.

Thu, 10/21/2010 - 00:53 | 666117 Minion
Minion's picture

Pendant continuation pattern:


Wave B of C, down.....

Thu, 10/21/2010 - 00:55 | 666123 Cheyenne
Cheyenne's picture

Uh, Quinn Emanuel doesn't fuck around. I know of 1 possible and 1 definite sociopath, over the course of 15+ years in the profession, and now they both work at QE. Jus' sayin'.

Thu, 10/21/2010 - 01:25 | 666149 Precious
Precious's picture

No worries. The Administration has assurred the liberal media that its not a systemic problem.

Thu, 10/21/2010 - 01:27 | 666152 Moonrajah
Moonrajah's picture

If QE2 and a stealth form of TARP2 goes hand in hand with this whole mess we will have at least a clear public understanding For Whom The Ben Tolls.

Thu, 10/21/2010 - 01:29 | 666153 HarryWanger
HarryWanger's picture

Zzzzzzzz.....huh, what? Oh you woke me up for the same story again? First I get awakened as if China's GDP is some crazy breaking news and now the 100th story about mortgages? 

Ok, back to sweet dreams.

Thu, 10/21/2010 - 01:29 | 666154 gwar5
gwar5's picture

Jumping the shark ahead of a new congress

Fannie and Freddie positioning to get the streamlined settlement on behalf of the 'people' and that will bail them out and assure bonuses. Result: trickle down redistribution solution in time for the 2012 prez elections.

Oh, yeah, the 1% bank tax is going through congress now

Thu, 10/21/2010 - 01:58 | 666160 Miles Kendig
Miles Kendig's picture

As the GSE's look to get their hands on all the paperwork before someone at the MI's does it by mistake.

Anyone wanna sell me some Philly puts?

Go Giants !!

Thu, 10/21/2010 - 02:08 | 666184 Hook Line and S...
Hook Line and Sphincter's picture

So let's see if I get this right; 

  • GSE's/NYFed feed on the TBTF
  • The TBTF are spoon fed$ by the Treserve

These entities are just circle jerking themselves.

Meanwhile, tax payers are strapped down for some S&M action, foreign investors given a toothed BJ, and sovereigns are held down under the cover for a flatulent bouquet.

Eventually, when the fiesta currency devalues to 0, and all party goers who were enjoying doing it to the drunk dumb ass in the back bedroom will be smelling one foul finger.

Oh, the stench of fraud stacked on a fraudulent system!

Readers of this great site should try to slow down and be in the moment right now. Appreciate the blue skies and hug your loved ones today (and that includes all of you with gov ISP's lurking about). The bus has gone over the cliff. You may not feel the seat beneath your butt, but trust me, we are ALL on it. 


Thu, 10/21/2010 - 02:44 | 666205 Djirk
Djirk's picture

"These entities are just circle jerking themselves."

Exactly it seems like the FED and genius lawyers in Washington found a way to legally justify QE.

Europe has a similar debt circle jerk.

Thu, 10/21/2010 - 02:08 | 666185 Problem Is
Problem Is's picture

Wall Street Bankster Night of the Living Dead
All the subprime junk bond zombies Timmay's Aunt Lloyd and Uncle Jamie turned loose are now returning.

The zombies are banging on the House of Dimon at every boarded up door and window...

The Zombies Are Coming For You Jamie...
They're coming to eat your bonus...

Thu, 10/21/2010 - 02:25 | 666198 Hook Line and S...
Hook Line and Sphincter's picture

I can see it now...

Zombie's, Jaime Demon and ilk, Government Employees, the entitlement class, all smelling the fecal covered unicorn of lost fascist dreams of immortality, perpetual fairy nose-candy, and condoms in school for K through 12.

Thu, 10/21/2010 - 02:29 | 666200 Problem Is
Problem Is's picture

Jamie will securitize then privatize those schools and put those little bastards to work to earn his bonus...

Times are tough... All the peasants need to contribute to Jamie's bonus...

Thu, 10/21/2010 - 02:16 | 666189 Catullus
Catullus's picture

Can I get a putback for the government war bonds packaged under WMDs that never existed? I'm sure there are a couple trillion of those bonds as well. 

Thu, 10/21/2010 - 02:31 | 666192 Unlawful Justice
Unlawful Justice's picture

This is world class texas hold'em poker.    

I'm fucking ALL in and got shit!  

But man can I put on a bluff

Thu, 10/21/2010 - 02:45 | 666207 Bartanist
Bartanist's picture

My gut says that it is a smokescreen to pre-empt real lawsuits by real people and pension funds heard by a jury of their peers.

Prediction: A blanket settlement will be created screwing mainstreet and protecting Wall Street ... and it will not even put a dent in the $144 billion bogus pool.

Thu, 10/21/2010 - 03:09 | 666218 The Real Fake E...
The Real Fake Economy's picture

what if that's it?  this whole mess was created to spawn a whole new bubble? all the lawsuits and paperwork to be filed will keep lawyers busy for the next 10 years easily.  banks will be paying them, homebuilders, homeowners, mortgage companies, mortgage services, title companies, the government - everyone in America basically.  America isn't building any new fancy technology the world wants, and APPL is the only show in town re-tweaking the same product and re-selling it, so the government is out of ideas.  Just pour work onto the law firms and keep them busy for the next 10-15 years.  Insurance premiums will go up due to lawsuit and class action payouts, so insurance companies will be increasing overhead and see their revenues increased.  the banks will figure out a way to profit from their demise by securitizing the payouts and advising the law firms on going public, issuing debt, expanding, restructuring etc.  white collar america keeps on thriving.  Genius!  in the end, nothing changes.  you've just subsituted "law" as the place to be over "finance" which has had it's run for the last 20 or so years.  time to pass the hot potato. 

Thu, 10/21/2010 - 03:45 | 666219 plocequ1
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Its simple. What ever happens, The solution will be QE and stimulus. 80% of our paychecks will go to our owners.  Done. I'm going back to fucking bed. Goodnight

Thu, 10/21/2010 - 05:13 | 666239 scaleindependent
scaleindependent's picture

You forgot TARP2.

QE is like fractional reserve banking. You kind of need the fraction of capital to loan against.

Same thing with QE.  You need TARP and austerity to support it.



Thu, 10/21/2010 - 04:42 | 666234 kwvrad
kwvrad's picture


Thu, 10/21/2010 - 06:34 | 666259 kwvrad
kwvrad's picture

Me thinks alot of private jets will be leavin for Paraguay shortly

Thu, 10/21/2010 - 06:38 | 666263 papaswamp
papaswamp's picture

I guess Fannie and Freddie needed more money for those $0.68 down home loans. It's as if they want to keep the foreclosure nightmare rolling....subprime it up!

Thu, 10/21/2010 - 07:12 | 666273 TheGreatPonzi
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It doesn't seem to worry the markets. +0.55% on the SPI today.

I don't know who is buying right now. Maybe 10 years later, after the collapse, we'll discover that the FED was buying secretly.

Thu, 10/21/2010 - 07:29 | 666277 unum mountaineer
unum mountaineer's picture

USD below 77? what happens then?

Thu, 10/21/2010 - 07:49 | 666285 Silverhog
Silverhog's picture

I wish someone would take Barney Frank on a one way vacation trip high in the mountains.

Thu, 10/21/2010 - 07:50 | 666288 Species8472
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That was the plan all along. Couldn't let the banks fail, they needed to be bailed out so the buyers of MBS and derivatives could get some $ back!


Thu, 10/21/2010 - 08:30 | 666344 tom
tom's picture

"Fannie and Freddie purchased $227 billion of bonds backed by subprime and other risky loans in 2006 and 2007"

That's interesting. I wonder what the source on that is, how they break down, and why they don't show up in the Flow of Funds, which says GSEs bought $16 billion net of corporate and foreign bonds in 2006 and sold $17 billion net in 2007. (Private ABS are classified as corporate bonds in Flow of Funds data.)

Total issue of private ABS in 2006-2007 was about $1.1 trillion. So Fannie and Freddie were buying one of out of five of the shoddiest ABSs issued at the tail end of the bubble? Brilliant.

Thu, 10/21/2010 - 09:24 | 666457 Lux Fiat
Lux Fiat's picture

Sort of OT.  Has anyone supoenaed MERS?  It would be relatively easy with a dump of all mortgages that they track, and select accompanying data, to see how many mortgages were duplicates, and who were sold the dupes.

Thu, 10/21/2010 - 09:39 | 666504 Cdad
Cdad's picture

Still not seeing this headline anywhere, really.  JPM opens with a $2.5 mini flash crash.  Sell programs push through the whole market from the bell...but things don't move.  Same tone yesterday, over and over again.  CNBC is on two straight weeks with nothing but bullish opinion makers. Earnings winners continue to sell off on the open.  This thing cannot float much longer.

I don't think even D. Tepper could take this market seriously.

Thu, 10/21/2010 - 10:54 | 666726 Ned Zeppelin
Ned Zeppelin's picture

Foreclosuregate continues to be the "gate" that keeps on giving, but it is confusing because you could easily think solving one problem solves them all.  Or you can be confused on just what the problem is, to begin with, and thus are easily confused by assurances from a B of A, that all is well, or story headlines that PIMPCO, the New York Fed and Blackrock are suing for putbacks, when in fact all they have done is given the requisite notice that is a prelude to litigation.  It all depends on the particular MBS you are talking about.

"The probe is focused on so-called private-label securities that were originated by mortgage companies, packaged by Wall Street firms and then sold to investors."  This is just one aspect of the story, but it is the place where I am confident most of the original "manufacturing" defects occurred that are now surfacing as the products are "tested" via foreclosure proceedings, aka, where the rubber hits the road.  And those defects are uncurable and therefore lies are required, and the use of robosigners, to get around the problems.  How long before the values of these MBSs are seriously challenged?   How much would you pay for a specific year, make and model of car that was in the news about having serious transmission problems? There arre other cars, such as were to sold to the GSEs for securitization, which may also suffer from various defects, but I'll bet those defects are lot less prevalent (thus minimizing putback exposure), and more easily cured, than those infecting the private label MBSs.

But this uncertainty has to be eating away like cancer at the value of these things called MBSs and their bastard CDO children, synthetic CDO ofsprings, and the credit default swaps that are interwoven among and through all of this.

Thu, 10/21/2010 - 11:18 | 666801 tom
tom's picture

Right, this makes me wonder if Fannie and Freddie didn't buy the original worthless ABSs that Paulson then selected for Goldman to reference in synthetic CDOs.

Thu, 10/21/2010 - 11:39 | 666867 macholatte
macholatte's picture


 Either that, or all this is a smokescreen to promptly settle all current and future possible litigation in an adversarial process involving government entities, and thus streamlined to a mutually amicable resolution.


 and the rest of the sentence....

     ... a mutually amicable resolution and lay it off on the taxpayers again.


 Could this be a corollary to the massive WWI reparations owed by Germany during Weimer, a prelude to hyperinflation which will make the fixed value of such "synthetic assets" minuscule? Then the world reboots with new currency at a billion to 1 ratio, old for new, and the ponzi starts all over.



Thu, 10/21/2010 - 18:41 | 668415 Buck Johnson
Buck Johnson's picture

Tyler you may have a point that this is being done to get a grandiose type of settlement done in order to stop the rest of the financial community from going after them.  And I can't believe that these govt. entities would be going after them like this when they know what state the US financial institutions are in.  It's just crazy for them to do this.  This may be one of two scenarios.  One is that they are going after these banks to make a show of attacking as you said.  Then the banks will allow a moratorium for the time being under the guise of allowing people to pay rent while living in the house.  But the banks will demand that one bill or a better version of that bill to be signed in order to make legal over state lines the document evidence that banks did for years.  This way the politicians win and the people for a short time win and the banks don't get people looking to deeply into what they did.

Of course this could just be a US financial version of Beggar thy Neighbour.  Where the federal and other financial institutions want their money back and be damned what happens to the banks.

Fri, 10/22/2010 - 11:32 | 669758 MachoMan
MachoMan's picture

Effectively, we get a couple more years to extract extravagant bonuses (aka the last spoils of the war) and then you can drown the institutions when we're out of harm's way.  A solid plan given the sovereigns will fall shortly thereafter and the spoils used to fill the power vacuum.  The infighting between the banking entities and the government is simply a different version of the democrat v. republican theatre...  no real difference and, in all likelihood, a simple diversionary tactic.

As public outrage increases, morsels of the banks' hides will be given to quench their thirst....  until no hide is left...  all while their principal actors are busy preparing the rest of the plan/utilizing the spoils in complete ignorance of the plan.


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Thu, 12/02/2010 - 11:28 | 771650 dizzyfingers
dizzyfingers's picture

Is that the same attorney that assisted F. Raines in keeping most of the $90 million bonus whose award to Raines rested on an accounting irregularity that he and other officers of fannie ignored so that they could become rich on the backs of taxpayers?

And now fannie -- a congressional slush fund and lynchpin of the US and world economic collapse -- wants putbacks. 

 Justice doesn't exist anymore. Private property doesn't exist. Contracts don't exist. (Obama destroyed contractual law.)

Perhaps time to think ahead:©

End of the Nation-State 


Fri, 02/25/2011 - 00:55 | 996011 george22
george22's picture

Still not seeing this headline anywhere, really. JPM opens with a $2.5 mini flash crash. Sell programs push through the whole market from the bell...but things don't move. Same tone yesterday, over and over again. CNBC is on two straight weeks with nothing but bullish opinion makers. Earnings winners continue to sell off on the open. This thing cannot float much longer.

I don't think even D. Tepper could take this market seriously.
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