Foreclosuregate: Time to Break Up the Too-Big-to-Fail Banks?

Ellen Brown makes a compelling case for using the Kanjorski amendment to preemptively break up large financial institutions because they pose a threat to our economic stability. - Ilene 

Foreclosuregate: Time to Break Up the Too-Big-to-Fail Banks?

With risky behavior by big finance again threatening economic stability, how can we get things right this time?

Courtesy of Ellen Brown

Originally published in YES! Magazine    

Although downplayed by most media accounts and popular financial analysts, crippling bank losses from foreclosure flaws appear to be imminent and unavoidable. The defects prompting the “RoboSigning Scandal” are not mere technicalities but are inherent to the securitization process. They cannot be cured. This deep-seated fraud is already explicitly outlined in publicly available lawsuits.

There is, however, no need to panic, no need for TARP II, and no need for legislation to further conceal the fraud and push the inevitable failure of the too-big-to-fail banks into the future.

Federal regulators now have the tools to take control and set things right. The Wall Street giants escaped the Volcker Rule, which would have limited their size, and the Brown-Kaufman amendment, which would have broken up the largest six banks outright; but the financial reform bill has us covered. The Kanjorski amendment—which slipped past lobbyists largely unnoticed—allows federal regulators to preemptively break up large financial institutions that pose a threat to U.S. financial or economic stability.

Rep. Grayson’s Call for a Moratorium

The new Financial Stability Oversight Council (FSOC) probably didn’t expect to have its authority called on quite so soon, but Rep. Alan Grayson (D-FL) has just put the amendment to the test. On October 7, in a letter addressed to Timothy Geithner, Shiela Bair, Ben Bernanke, Mary Schapiro, John Walsh (Acting Comptroller of the Currency), Gary Gensler, Ed DeMarco, and Debbie Matz (National Credit Union Administration), he asked for an emergency task force on foreclosure fraud. He said:

The liability here for the major banks is potentially enormous, and can lead to a systemic risk. Fortunately, the Dodd-Frank financial reform legislation includes a resolution process for these banks. More importantly, these foreclosures are devastating neighborhoods, families, and cities all over the country. Each foreclosure costs tens of thousands of dollars to a municipality, lowers property values, and makes bank failures more likely.

Grayson sought a foreclosure moratorium on all mortgages originated and securitized between 2005-2008, until such time as the FSOC task force was able to understand and mitigate the systemic risk posed by the foreclosure fraud crisis. But on Sunday, White House adviser David Axelrod downplayed the need for a national foreclosure moratorium, saying the Administration was pressing lenders to accelerate their reviews of foreclosures to determine which ones have flawed documentation. “Our hope is this moves rapidly and that this gets unwound very, very quickly,” he said.

According to Brian Moynihan, chief executive of Bank of America, “The amount of work required is a matter of a few weeks. A few weeks we'll be through the process of double checking the pieces of paper we need to double check."

“Absurd,” say critics such as Max Gardner III of Shelby, North Carolina. Gardner is considered one of the country’s top consumer bankruptcy attorneys. "This is not an oops. This is not a technical problem. This is not even sloppiness," he says. The problem is endemic, and its effects will be felt for years.

Rep. Grayson makes similar allegations. He writes:

The banks didn’t keep good records, and there is good reason to believe in many if not virtually all cases during this period, failed to transfer the notes, which is the borrower IOUs in accordance with the requirements of their own pooling and servicing agreements. As a result, the notes may be put out of eligibility for the trust under New York law, which governs these securitizations. Potential cures for the note may, according to certain legal experts, be contrary to IRS rules governing REMICs. As a result, loan servicers and trusts simply lack standing to foreclose. The remedy has been foreclosure fraud, including the widespread fabrication of documents.

There are now trillions of dollars of securitizations of these loans in the hands of investors. The trusts holding these loans are in a legal gray area, as the mortgage titles were never officially transferred to the trusts. The result of this is foreclosure fraud on a massive scale, including foreclosures on people without mortgages or who are on time with their payments. [Emphasis added.]

Why Wasn’t It Done Right in the First Place?

That raises the question, why were the notes not assigned? Grayson says the banks were not interested in repayment; they were just churning loans as fast as they could in order to generate fees. Financial blogger Karl Denninger says, “I believe a big part of why it was not done is that if it had been done the original paperwork would have been available to the trustee and ultimately the MBS owners, who would have immediately discovered that the representations and warranties as to the quality of the conveyed paper were being wantonly violated.” He says, “You can’t audit what you don’t have.”

Both are probably right, yet these explanations seem insufficient. If it were just a matter of negligence or covering up dubious collateral, surely some of the assignments by some of the banks would have been done properly. Why would they all be defective?

The reason the mortgage notes were never assigned may be that there was no party legally capable of accepting the assignments. Securitization was originally set up as a tax dodge; and to qualify for the tax exemption, the conduits between the original lender and the investors could own nothing. The conduits are “special purpose vehicles” set up by the banks, a form of Mortgage Backed Security called REMICs (Real Estate Mortgage Investment Conduits). They hold commercial and residential mortgages in trust for the investors. They don’t own them; they are just trustees.

The problem was nailed in a class action lawsuit recently filed in Kentucky, titled Foster v. MERS, GMAC, et al. (USDC, Western District of Kentucky). The suit claims that MERS and the banks violated the Racketeer Influenced and Corrupt Organizations Act, a law originally passed to pursue organized crime. Bloomberg quotes Heather Boone McKeever, a Lexington, Ky.-based lawyer for the homeowners, who said in a phone interview, “RICO comes in because the fraud didn’t just happen piecemeal. This is organized crime by people in suits, but it is still organized crime. They created a very thorough plan.”

The complaint alleges:

53. The “Trusts” coming to Court are actually Mortgage Backed Securities (“MBS”). The Servicers, like GMAC, are merely administrative entities which collect the mortgage payments and escrow funds. The MBS have signed themselves up under oath with the Securities and Exchange Commission (“SEC,”) and the Internal Revenue Service (“IRS,”) as mortgage asset “pass through” entities wherein they can never own the mortgage loan assets in the MBS. This allows them to qualify as a Real Estate Mortgage Investment Conduit (“REMIC”) rather than an ordinary Real Estate Investment Trust (“REIT”). As long as the MBS is a qualified REMIC, no income tax will be charged to the MBS. For purposes of this action, “Trust” and MBS are interchangeable. . . .

56. REMICS were newly invented in 1987 as a tax avoidance measure by Investment Banks. To file as a REMIC, and in order to avoid one hundred percent (100%) taxation by the IRS and the Kentucky Revenue Cabinet, an MBS REMIC could not engage in any prohibited action. The “Trustee” can not own the assets of the REMIC. A REMIC Trustee could never claim it owned a mortgage loan. Hence, it can never be the owner of a mortgage loan.

57. Additionally, and important to the issues presented with this particular action, is the fact that in order to keep its tax status and to fund the “Trust” and legally collect money from investors, who bought into the REMIC, the “Trustee” or the more properly named, Custodian of the REMIC, had to have possession of ALL the original blue ink Promissory Notes and original allonges and assignments of the Notes, showing a complete paper chain of title.

58. Most importantly for this action, the “Trustee”/Custodian MUST have the mortgages recorded in the investors name as the beneficiaries of a MBS in the year the MBS “closed.” [Emphasis added.]

Only the beneficiaries—the investors who advanced the funds—can claim ownership. And the mortgages had to have been recorded in the name of the beneficiaries the year the MBS closed. The problem is, who ARE the beneficiaries who advanced the funds? In the securitization market, they come and go. Properties get sold and resold daily. They can be sliced up and sold to multiple investors at the same time. Which investors could be said to have put up the money for a particular home that goes into foreclosure? MBS are divided into “tranches” according to level of risk, typically from AAA to BBB. The BBB investors take the first losses, on up to the AAAs. But when the REMIC is set up, no one knows which homes will default first. The losses are taken collectively by the pool as they hit; the BBBs simply don’t get paid. But the “pool” is the trust; and to qualify as a REMIC trust, it can own nothing.

The lenders were trying to have it both ways; and to conceal what was going on, they dropped an electronic curtain over their sleight of hand, called Mortgage Electronic Registration Systems or “MERS.” MERS is simply an electronic data base. On its website and in assorted court pleadings, it too declares that it owns nothing. It was set up that way so that it would be “bankruptcy-remote,” something required by the credit rating agencies in order to turn the mortgages passing through it into highly rated securities that could be sold to investors. According to the MERS website, it was also set up that way to save on recording fees, which means dodging state statutes requiring a fee to be paid to establish a formal record each time title changes hands.

The arrangement satisfied the ratings agencies, but it has not satisfied the courts. Real estate law dating back hundreds of years requires that to foreclose on real property, the foreclosing party must produce signed documentation establishing a chain of title to the property; and that has not been done. Increasingly, judges are holding that if MERS owns nothing, it cannot foreclose, and it cannot convey title by assignment so that the trustee for the investors can foreclose. MERS breaks the chain of title so that no one has standing to foreclose.

Sixty-two million mortgages are now held in the name of MERS, a ploy that the banks have realized won’t work; so Plan B has been to try to fabricate documents to cure the defect. Enter the RoboSigners, a small group of people signing thousands of documents a month, admittedly without knowing what was in them. Interestingly, it wasn’t just one bank engaging in this pattern of coverup and fraud but many banks, suggesting the sort of “organized crime” that would qualify under the RICO statute.

However, that ploy won’t work either, because it’s too late to assign properties to trusts that have already been set up without violating the tax code for REMICs, and the trusts themselves aren’t allowed to own anything under the tax code. If the trusts violate the tax laws, the banks setting them up will owe millions of dollars in back taxes. Whether the banks are out the real estate or the taxes, they could well be looking at insolvency, posing the sort of serious systemic risk that would bring them under the purview of the new Financial Stability Oversight Council.

No need for disaster

As comedian Jon Stewart said in an insightful segment called “Foreclosure Crisis” on October 7, "We're back to square one." While we’re working it all out, an extended foreclosure moratorium probably is in the works. But this needn’t be the economic disaster that some are predicting – not if the FSOC is allowed to do its job. We’ve been here before, and not just in 2008.

In 1934, Congress enacted the Frazier–Lemke Farm Bankruptcy Act to enable the nation’s debt-ridden farmers to scale down their mortgages.  The act delayed foreclosure of a bankrupt farmer's property for five years, during which time the farmer made rental payments. The farmer could then buy back the property at its currently appraised value over six years at 1 percent interest, or remain in possession as a paying tenant. Interestingly, according to Marian McKenna in Franklin Roosevelt and the Great Constitutional War (2002), “The federal government was empowered to buy up farm mortgages and issue non-interest-bearing treasury notes in exchange.”  Non-interest-bearing treasury notes are what President Lincoln issued during the Civil War, when they were called “Greenbacks.”

The 1934 Act was subsequently challenged by secured creditors as violating the Fifth Amendment’s due process guarantee of just compensation, a fundamental right of mortgage holders. (Note that this would probably not be a valid challenge today, since there don’t seem to be legitimate mortgage holders in these securitization cases. There are just investors with unsecured claims for relief in equity for money damages.) The Supreme Court voided the 1934 Act, and Congress responded with the "Farm Mortgage Moratorium Act" in 1935. The terms were modified, limiting the moratorium to a three-year period, and the revision gave secured creditors the opportunity to force a public sale, with the proviso that the farmer could redeem the property by paying the sale amount. The act was renewed four times until 1949, when it expired. During the 15 years the act was in place, farm prices stabilized and the economy took off, retooling it for its role as a global industrial power during the remainder of the century.

We’ve come full circle again. We didn’t get it right in 2008, but with the newly empowered Financial Stability Oversight Council, we already have the ready-made vehicle to avoid another taxpayer bailout, and to put too-big-to-fail behind us as well.

---

 

Ellen Brown wrote this article for YES! Magazine, a national, nonprofit media organization that fuses powerful ideas with practical actions. Ellen is an attorney and the author of eleven books, including Web of Debt: The Shocking Truth About Our Money System and How We Can Break Free. Her websites are webofdebt.com, ellenbrown.com, and public-banking.com.

Comments

[Parag]

Traditionally, bank failures were related to asset quality. However, because it was inconceivable to most observers that bankers had forgotten the ingrained lessons of two generations of lending, "the economy" took the brunt of the blame for the deterioration of the banking system.
http://www.financemetrics.com/why-did-most-banks-fail/

[Mariposa de Oro]

"Federal regulators now have the tools to take control and set things right. "

My Sheeple-Think Warning System just sent up a red flag.....Government Will Make it All Better????  And another thing, why does the woman believe that the same wizards responsible for the mess (gov regulators) will now be able to fix it?

More likely it'll just be nationalized...

http://logisticsmonster.com/2010/10/16/nationalizing-the-housing-industry/

[BostonTettierOwner]

Fed will buy all mortgage related debt , ULTIMATE QUANTITATIVE EASING

All this debt is someone's  asset or liability appearing on the balance sheet , fed will buy all paper from the institutions holding it , its like buying bonds . In my irrelevant opinion this will cause no inflation because the extra $$$ will flow into paying off non mortgage related debt , credit card debt for example. Furthermore such a move will cause some social tensions due to the fact that big chunk of the population will simply feel cheated , busting their asses for ages paying   mortgage and seeing irresponsible neighbors gettin a free lunch. I think it has been a plan for a while already , MSM launched the case recently to prepare the public. Deflation wont be stopped and society will be shaken in its fundations.

Lose , lose situation

[BostonTettierOwner]

all this debt is someone's  asset or liability appearing on the balance sheet , fed will buy all paper from the institutions holding it , its like buying bonds . In my irrelevant opinion this will cause no inflation because the extra $$$ will flow into paying off non mortgage related debt , credit card debt for example. Furthermore such a move will cause some social tensions due to the fact that big chunk of the population will simply feel cheated , busting their asses for ages paying   mortgage and seeing irresponsible neighbors gettin a free lunch. I think it has been a plan for a while already , MSM launched the case recently to prepare the public. Deflation wont be stopped and society will be shaken in its fundations.

Lose , lose situation

[Sudden Debt]

People who don't pay up on their morgage need to be kicked out as fast as possible.

If they don't want to, force them.

FUCK THIS SHIT!

They are destroying the financial system by looking into loopholes to live like communists! And we all know what happend to the communist system!

So what if there where some mistakes in the paperwork

So what if the robosigned them

THEY DIDN'T PAY UP!

[BostonTettierOwner]

Fed will buy all mortgage related debt , ULTIMATE QUANTITATIVE EASING

[underh20]

How can they buy something that no one owns....

[covert]

what's missing is a careful examination of the covert market influences at work here. the banks are not any longer legally allowed to protect personal property, so is fee driven for convenience.

http://covert2.wordpress.com

[11b40]

Help me out here, because I really don't know much about the securitization end game.

So, all the mortages were sliced, diced, pakaged and sold all over the world, right?

What are they worth today?  Say I am a Spanish pension fund, and I bought $100 million in CDOs in 2007 - what is the current value likely to be?  I was expecting an income stream, too, right?  What's been happening to that cash flow?  Do I have SUBSTANTIAL losses?  If I do, why can't I turn around and sue the pants off the fine folks who peddled the garbage to me under fraudulent terms and conditions?  Maybe even sue the ratings agencies?

If I am right, it seems far beyond the ability of a lame-duck Congress to pass a doc signing retroactive law and just shove the whole thing under the rug.  Yes, the banksters are powerful, but some other really powerful players all around the world seem to have been burned big time.  Or, am I wrong?

[underh20]

How come attorneys aren't jumping all over this.  If you have a mortgage and note assigned after the closing of the trust (in violation of the PSA), or never assigned at all, the trust has no right to collect mortgage payments.  <My situation.>  They have no rights to the mtge lien nor the underlying note.

Why aren't attorneys moving in mass to help people get invalid liens removed from their titles?

There are a lot of people who are current who would pay an atty to get this done.

[Escapeclaws]

"MERS is simply an electronic data base. On its website and in assorted court pleadings, it too declares that it owns nothing. It was set up that way so that it would be “bankruptcy-remote,” something required by the credit rating agencies in order to turn the mortgages passing through it into highly rated securities that could be sold to investors. According to the MERS website, it was also set up that way to save on recording fees, which means dodging state statutes requiring a fee to be paid to establish a formal record each time title changes hands."

So ultimately it is the rating agencies that expressly and knowingly engineered the MERS scam. Once again, where there is fraud, they are front and center.

[Sudden Debt]

It's time to go long on Bank stocks. BAC for example is below 12$! THAT'S a screaming buy!

If you don't buy those now, you'll be crying like babies when they jump back.

There are just to many of you guys who only want to see the negative things and miss out on everything that passes right in front of them.

Me, I'm going to make some money starting on monday ;)

[Akrunner907]

Is it just me or does anyone else wonder why Obama vetoed HR 3808? 

On October 7, 2010, the White House announced that President Obama will not sign H.R. 3808, the Interstate Recognition of Notarizations Act of 2010, and will return the bill to the House of Representatives.  The Interstate Recognition of Notarizations Act of 2010 was designed to remove impediments to interstate commerce.  The White House stated, "While we share this goal, we believe it is necessary to have further deliberations about the intended and unintended impact of this bill on consumer protections, including those for mortgages, before this bill can be finalized." 

By not signing the legislation, Obama almost guaranteed that we will follow the path that could lead to the destruction of many banks and bond holders.  So what am I missing?

[blindman]

Obama, force real competition in U.S. banking by allowing the creation of banks like JAK Bank October 16th, 2010 by
http://maxkeiser.com/2010/10/16/obama-force-real-competition-in-u-s-banking-by-allowing-the-creation-of-banks-like-jak-bank/

.

end the fed

[underh20]

I have a property that was improperly securitized. No mortgage or note to trust per the PSA.

I am current.

Can I just petition the court do remove the mortgage/lien and void the note.

What is going to happen??

[digalert]

Of course we break up the banks and put some of them on chain gangs.

End the FED now. See "the secret of Oz":

http://www.youtube.com/watch?v=D22TlYA8F2E

[max2205]

Time to quit rooting for the underdog.

[OutLookingIn]

 Under this present administration and in this current financial climate, the TBTFs are not going anywhere. The only way these mammoth entities will be broken up is when they crash and burn. Unfortunately, taking a lot of innocent people down with them. That's when all the "hindsighter's" in this corrupt administration, come out of the woodwork and decry the 'fact' that they didn't see 'it' coming, that's why they didn't act sooner. Oh, and by the way. We need another couple of trillion dollars to contain the damage!

[Jake3463]

Well Obama has prevented a great depression, saved the financial crisis, and fixed the healthcare mess in America.

If you don't believe him you are just a racist tea bagger.

Sarcasm off.  The present administration like the last administration has no ability to admit they made a mistake.

The President got sold by an idea of Geithner and Summers, which in theory was correct, but in practice was never going to happen.  They believed they could bring back the housing values to bubble values and this shit would matter.

Basically Barack believed Geithner and Summers that they could kick the shit can again like the last 5 residents of the Oval Office did.  They were wrong.

[Pondmaster]

Has anyone ever lost a title to their vehicle ? It takes the Sec'y of Sates office over a month , sometimes 3 months to get a new one to you . So this bank mortgage mess cleaned up in a few weeks ? Fail !

[RockyRacoon]

Time to Break Up the Too-Big-to-Fail Banks?

Need one read further than the title?  Answer:  Yes.

The article, and it's a fine one, just reinforces a preconceived notion.

[Bluntly Put]

When securitizing these loans, the banks should have had the owners sit down with an authorized agent of the first investment pool that was purchasing the mortgage. Then signatures obtained from both parties and the middleman, the bank. Subsequently as each title is transferred another signing party should have taken place to maintain a clear chain of signatures as the note was passed. I know the banks wanted to speed up the process sort of like high frequency trading algorithms but property rights are fundamental to our republic.

The banksters should be behind bars. The states can handle each foreclosure and each current and up to date mortgage on a case by case basis to re-establish clear title to the property. Sure it's another depression for 20 years but we all know that with the level of mal-investments created by artificially low interest rates set by the Fed we would have pain to deal with anyway.

[drchris]

If you lose the deed to your home, do you lose your claim to it?  If you lose the title to your car, do you lose your claim to it?  If the bank loses your note, do they lose their claim to the loan?  No matter what you believe the answers to these questions should be, they HAVE to be consistent.  I wouldn't stop paying my mortgage just yet.

[eatthebanksters]

If, after the destruction of the real estate markets because of bank greed, you are still fortunate enough to have equity in your home, keep making the payments (if you want to keep your house).  If you are underwater burn these fuckers, stop your payments...if 7 million people stop making payments these greedy bastards will get a taste of their own shit - but I guarantee, they'll still get their fat bonuses. 

[Jake3463]

That is hardly the issue.  In order to collect a debt, you need to prove you are owed the debt.  Everyone is granted due process in that.

When a foreclosure proceeding is being conducted, it isn't just the collateral in many cases that is being taken, homeowners might be on the hook for the difference in the sale of the asset and the amount owed.

I think it is reasonable and due process for the bank to prove what was owed.

The additional problem is I think if someone is taking you to court to sue you for a debt, it is reasonable to make sure the right party is collecting the debt and that you aren't going to be sued by another party claiming to owe the debt later.

If I'm purchasing a home, I want to make sure that the person who claims to own the asset actually owns the asset.  I think the expression is I have a bridge in Brooklyn I'd like to sell you.  This entire issue royally screws up the transfer of property and due care should be made that the actual entity that owns the note, is the one that is foreclosing so that another party after the foreclosure isn't screwed with someone claiming the property is collateral on a note they were never paid on and them producing the note.

Lastly, the true issue is not the foreclosures.  We all know this is going back to the origination of these notes, the warranties and disclosure made to investors when they were packaged and sold as Mortgage Backed Securities and lastly whether the mortgages were ever securitized properly.

Please don't confuse a title with a debt.  They are two different asset classes.

[drchris]

My point was that we are talking about paperwork (I think you knew that silly).  The system is archaic to the extent that it depends on the existence of a piece of paper.  People owe money on a loan, and they know it.  They knew who to send the checks to until they stopped paying.  Nobody is seriously claiming amnesia to the fact that they owe money on a loan.  They are hoping to get a free house because of a technicality with physical paper and ink.  It's NOT going to happen.  

The laws will be updated, which is long overdue.  The net result will likely be that foreclosures will be more swift than the 2+ years they get here in New York.  In addition, lending will be even tighter than it is now.  This is a "bite your nose to spite your face" situation unfolding right in front of us. 

[Jake3463]

The foreclosure problem is not a paperwork problem.  When you present the court with a document notarized with an affidavid you read said document and that the contents are correct it is not a paperwork problem.

When you hire Wal-Mart workers and Hair Stylist to process foreclosures who don't understand the basics of a mortgage it is not a paperwork problem.

When you intentionally shred origination documents because you lied on them and sold them to investors as being of higher quality than what they were it is not a paperwork problem.

Nobody is going to get a "free house"

It is reasonable to expect however that the party who is excercising the foreclosure has the right to the property and to the amount they say they are owed.

As for the technology issue, MERS has been abandoned by JPMorgan.

You probably are a worker at a TBTF bank trolling on this board. 

Got news for you, the courts nor the American people are going to buy this logic.

[drchris]

Here is exactly how I expect it to play out:

http://www.cnbc.com/id/39686897

When I was in college, I got a speeding ticket.  The officer misspelled my name and I heard that I could get out of the ticket because of that.  I went to court and the judge asked if I had anything to say.  I said "The officer misspelled my name."  He asked me what the correct spelling was and then wrote in on the ticket.  I got the full fine, but people before me that came in and fessed up were getting reduced to "failure to yield".  I will not be holding back my mortgage payments any time soon and I wouldn't suggest that anyone else should.

For the record, I'm not in finance (electrical engineer).  I don't care if the banks fail, but I doubt this mess will bring them down.  There is no point in arguing about this.  We'll know the outcome soon enough.  

[blindman]

if you had never showed up in court the outcome

might have been better for you.?  i think the judge took

your statement as a confession which you were not required

to make.?

[blindman]

agreed,  and when the people realize that the fed is running

a global usury scheme to allow banksters to pillage their

country and future they will be angry.  and call for the  ....

end (of) the fed.   banking does not, cannot, rule by way of

indentured servitude over a people , not for very long.   it just

does not "hold the center".  they will learn. 

[bingaling]

Just a quick question - For anybody who may know . Some are saying that a person with a mortgage can stop paying and get the house free and clear . I have follwed MAko and williambonzai's expertise in this area and that much I believe is true . Now, next question . Can a person also get back all of the payments made to the bank as well ?

B2A5DE8E-17C4-29EB-4B06-4C8A89D4ED7D 1.02.28

[Jake3463]

Doubtful you will get a free house, what will happen is that you will live rent free to the bank can track down the mortgage note to foreclose.  If no mortgage note exist than you will have to discuss the issue with a lawyer.

This entire crisis has little to do with actual foreclosures and more to do with the fact that the entire securitization process was fraudulent.

[blindman]

http://www.youtube.com/watch?v=jtZYdVNflsA&feature=related

.

Tom Verlaine "Bomb"

[MarketFox]

Here is the point....

What would happen in a court of law....IF

1) A crooked individual took away all the interest earnings of retirees...those who have no chance of working again ?

This is exactly what has happened....and this is real folks....

And it is all because of a few greedy individuals who wanted to grab bigger bonuses than their frat brothers...

And to date....although $Trillions are missing....

Not a single prosecution....

THIS IS FASCISM !!!!!!!!!!!!!!!!!

There truly should be many hangings for bankers guilty of TREASON versus the citizens of the US....

And no...this is no joke....

However since the govt. is involved....nothing short of REVOLUTION will stop the nonsense....

[Sudden Debt]

Nop, it's called capitalisme and it's a great system if you're standing on the right side of the line.

[carbon based unit]

ms. brown's article does a fine job of illustrating much of the problem; but for some reason she left out the hopelessly deceitful method by which  the securitizers defrauded investors in MBSs.

that is the gordian knot in this little drama and that is what will make this closing episode of the season out to be the cliffhanger ... a cliff over which all of the biggest banks are now furtively peering for fear of their malfeasance being exposed.

[Zerohedge fan]

Ilene,

You are a great woman. Go on.

This country needs you.

We need to nationalize largest banks. They are nothin' but parasites.

On my part, I am only burnin' my half:

http://www.youtube.com/watch?v=HqcbgSpHMFs

Joker

ps. This our city, now

[Conrad Murray]

1. Let the banks eat the losses and shut them down once they're insolvent.
2. Use whatever proceeds there are from the bank liquidations to make all injured parties as whole as possible with seniority given to screwed-over (ex)homeowners.
3. Government contracts with small, local realtors to sell all ownerless properties.
4. Criminal cases against all fraudsters.

In with the Caturday laughs (my first playlist for ZH):

http://www.youtube.com/view_play_list?p=8584FE99F413E42F

http://i8.photobucket.com/albums/a44/SpiderGirlie/Caturday.jpg

[Eternal Student]

Look, as much as I am disgusted by this global Ponzi scheme, the frauds, etc., etc., none of the things which need to happen are going to happen. There is just too much power and interest in keeping TPTB running the same old con game. The right fixes aren't going to happen until this disaster of a Ponzi implodes.

What is going to happen was outlined in this little trial balloon:

http://www.cnbc.com/id/39686897

"Because the politicians will not let the financial stability of the largest bank in the nation be threatened by contractual rights. Not when there’s an easy fix available that won’t cost taxpayers a dime."

When the gangsters own the laws, they change the laws. The odds are really quite high on this little ploy. All it takes is money, and the Banks have plenty of that.

[williambanzai7]

I think you mean Fraudclosuregate Ellen

You are right, this is yet another manifestation of the distortions caused by moral hazard.

"Who cares about documents and processes, we can do what ever we want."

[greyghost]

NON INTEREST BEARING TREASURY NOTES.......YEP THE LAWFULL MONIES OF THE PEOPLE OF THE UNITED STATES OF AMERICA. THIS CANCER CALLED FEDERAL RESERVE NOTE MUST BE EXPUNGED FROM AMERICAN SOCIETY!!!