This page has been archived and commenting is disabled.

Insurance Companies Sue Bank Of America Over "Massive Mortgage Fraud", Find 91% Of Securitized Loans Are Misrepresented

Tyler Durden's picture


The benchmark for documented mortgage originators' lies is getting higher and higher. First it was the Allstate lawsuit, finding massive fraud in most Countrywide/Bank of America loans, then it was quantified at 70% after Wells Fargo sued JPM's EMC division, now it is all the way up to 91% after a just released lawsuit by the bulk of the world's biggest insurance companies has been made public, in a fresh lawsuit again Bank of America/Countrywide over "Massive mortgage fraud.

To wit, from the lawsuit: "In carrying out its review of the approximately 19,000 Countrywide loan files, MBIA found that 91% of the defaulted or delinquent loans in those securitizations contained material deviations from Countrywide’s underwriting guidelines. MBIA’s report showed that the loan applications frequently “(i) lack key documentation, such as verification of borrower assets or income; (ii) include an invalid or incomplete appraisal; (iii) demonstrate fraud by the borrower on the face of the application; or (iv) reflect that any of borrower income, FICO score, debt, DTI [debt-to-income,] or CLTV [combined loan-to-value] ratios, fails to meet stated Countrywide guidelines (without any permissible exception)." The plaintiff counsel is Bernstein Litowitz, which was made famous from the WorldCom litigation. We doubt they will settle for a few measily pennies on the dollar. As for the list of litigants, it is a veritable who's who of the insurance industry: Dexia Holdings, FSA Asset Management, New York Life iInsurance Company, The Mainstay Funds, Teachers Insurance & Annuity, TIAA-CREF Life Insurance, and College Retirement Equities Fund.

And here is why even the recent recent hike to BofA's Representation legal reserve, which Zero Hedge predicted in October, will be woefully insufficient to cover the tens of billions in incremental damages, monetary and punitive.

The Offering Documents for the Certificates at issue, which were relied upon by Plaintiffs, represented, among other things, that (i) the loans packaged into the Certificates were underwritten pursuant to the Countrywide Defendants’ specific loan origination guidelines; (ii) Countrywide Home (defined below) evaluated the prospective borrowers’ credit standing and repayment ability prior to approving any loan; (iii) when the Countrywide Defendants’ made an exception to the stated underwriting guidelines, they did so on “a case-by-case basis” and only if “compensating factors” justifying the exception were present; (iv) almost every mortgaged property received an independent appraisal which conformed to acceptable standards and formed the basis of its loan-to-value (“LTV”) ratio, an important metric to MBS investors; (v) the loans selected for securitization were chosen “in a manner [not] intended to affect the interests of the certificateholders adversely”; (vi) the “AAA” or other investment-grade ratings assigned to the Certificates were accurate reflections of the Certificates’ credit quality; and (vii) the Certificates’ issuing trusts possessed good title to the underlying mortgage loans. Each of these material representations was false when made, and Defendants knew or recklessly disregarded the falsity of these representations. Plaintiffs relied on the misrepresentations andsuffered losses as a result.

Full filing:



- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Mon, 01/24/2011 - 18:52 | 900431 Quintus
Quintus's picture

And so it begins.....

Mon, 01/24/2011 - 19:00 | 900465 DoChenRollingBearing
DoChenRollingBearing's picture

JUST what I was going to say!

Another line of dominoes... 

Mon, 01/24/2011 - 19:12 | 900523 Ras Bongo
Ras Bongo's picture

Have confidence in me and BTFD!

B. Bernank

Mon, 01/24/2011 - 19:34 | 900622 Joeman34
Joeman34's picture

Alright, I need to ask...  and I don't care how many smart a## comments I receive as a result of this question...


What is 'BTFD'?

Mon, 01/24/2011 - 19:37 | 900634 EscapeKey
EscapeKey's picture

buy the fucking dip

anything less than a 100 point rise is considered a dip these days

Mon, 01/24/2011 - 20:17 | 900769 Cdad
Cdad's picture

LOL! Good one, man.  My neighbors are wondering what is going on down here just now.

Hoot..."anything less than a 100 point rise is considered a dip these days."

This site is hands down the biggest collection of humorous SOBs I have ever encountered [which is what keeps me from jumping off the balconey as the entire freakin' world burns on account of Ben Bernanke].



Mon, 01/24/2011 - 21:58 | 901175 MachoMan
MachoMan's picture

I certainly appreciate the commentary, but you couldn't have been around the interwebs for very long...  we can't even post pictures for christ's sake...  needless to say, there is an incredible amount of "commentary" that is left on the sidelines (not like money on the sidelines).

Mon, 01/24/2011 - 23:51 | 901544 Alienated Serf
Alienated Serf's picture

don't let us stop you, jump my friend!

Mon, 01/24/2011 - 20:16 | 900766 dark pools of soros
dark pools of soros's picture

BTFD is done..  STFS

Mon, 01/24/2011 - 19:45 | 900665 sgt_doom
sgt_doom's picture

Geez, I think this is the first time since reading Zerohedge I experienced a full-on orgasm. (Sorry for the word picture!)

The litigation completely supports all my contentions to date.

Therefore, it must be correct.

Tue, 01/25/2011 - 12:04 | 902769 whatz that smell
whatz that smell's picture

1) blood in the water

2) lawyers

3) feeding frenzy

4) bank holiday

5) guantanamo bay

6) waterboarding

Mon, 01/24/2011 - 20:07 | 900733 SheepDog-One
SheepDog-One's picture

Its been beginning every day for 2 years though.

Mon, 01/24/2011 - 22:47 | 901347 carbonmutant
carbonmutant's picture

SCOTUS is waiting for this one...

Tue, 01/25/2011 - 09:05 | 902017 Pee Wee
Pee Wee's picture

It has already been decided...

Their decision affirmed that corporations enjoy all rights as citizens without any pesky rules.

The Stevens court is a slam dunk for corporate unaccountability and criminal payola.  The guarantee is on the box.

"TBTF?  No problem."

Mon, 01/24/2011 - 23:40 | 901477 Quixotic_Not
Quixotic_Not's picture

And so it begins...

Not likely...

Here's a message I got from a "friend":

I've been covering Manhattan Fed and "Supreme" court since 1996, as a member of the press corps...

This suit is 99% likely to go in BofA's favor for several reasons.

1>  Firm that filed it is hardly the caliber of firm that will represent BofA (yes, that matters).

2>  It was filed in the wrong court, it will be removed to Manhattan Fed shortly, where unless it gets Rakoff it will be STRONGLY placed in BofA's favor, as TBTF really does mean something to most progressive judges.

3>  BofA isn't the really culprit here; Countrywide was (specifically Mozillo) and the US DOJ has done nothing to criminally go after them, or in fact any of the bankster hoards that went from looting the US Economy to the US Treasury in 2008.  BofA will claim clean-hands and the plaintiffs will get pennies on the dollar, just like the GM senior bond holders did (if they were lucky).

Gotta say though, I do enjoy all the knee-jerk reactions on the Internet chat forums (Twits Unite!) - You would think by now that you all would figure out who is off limits (i.e. TBTF) and that not a DAMN thing will change until the (R) & (D) kleptocracy is voted out of existance.

Not too much chance of that with all childish antics of even the so-called "informed"...

Tue, 01/25/2011 - 00:04 | 901578 Alienated Serf
Alienated Serf's picture

eh. while he is spot on about removal from New York County Supreme (shame, NY state judges are elected in meaningless campaigns after nomination by the machine, and are not owned by banks like the feds, in fact they can eve be [gasp] populist!!) it is not "the wrong court,"  as NY Sup. is a court of general jurisdiction and 99% of these dealings are governed by NY law and select NY as the venue.  maybe he is a reporter, but not a lawyer.

as far as washing their hands of the Orangegutan and Countrywide, I am not so sure about that.  we would have to see the merger docs, but if you buy a blatantly fraudulent/criminal entity and the fraud could/should have been discovered by due diligence you are gonna be at least partially on the hook.  additionally, while criminal convictions are helpful, it hardly precludes prevailing in civil court.  additionally, i'm sure there are multiple agency investigations into these deals going on.  that can be used as leverage to get some cash if the gov plays ball.

it will be years till we know anything, and the fed judiciary really is in bed with the banks. 

Tue, 01/25/2011 - 00:17 | 901591 Quixotic_Not
Quixotic_Not's picture

It won't be years, it'll probably be swept under the rug in less than one...

There is definately a pattern established regarding the fed judiciary dealing with TBTF, except when an ol' school judge gets assigned, as in what happened with the SEC v. BofA three card monty back in 2009 when Rakoff refused to rubber stamp the TBTF hokum...

By did the SEC get caught by surprise!

If anyone thinks this will significantly injure BofA, you haven't been paying attention over the last decade  ;-)

P.S.  I'll believe that the fed judicial system isn't the best money can buy when they drag Angelo in to be

Even the MSM isn't on the case regarding one of the biggest individual fraudsters in history, he makes Madoff look like chump change!

Tue, 01/25/2011 - 00:17 | 901600 Alienated Serf
Alienated Serf's picture

it will be around for awhile, the lawyers must get their vig.

this case may not alone do anything to BOA, but institutions turning on banks is a good thing.  

but yeah, i pretty much give up.  unless their is a massive popular call for retribution on the banks, nothing will happen.  would take a large percentage of americans becoming informed and active, and that is not going to happen.

Tue, 01/25/2011 - 01:45 | 901735 eatthebanksters
eatthebanksters's picture

Time will tell, but the tide has gone out and TBTF banks are out of favor...the Bernank capitulated about a month ago when he let a report done by Fed analyst be published (was on ZH) saying they were mistaken to support the TBTF banks at the beginning.  They finally figured out the shit is going to hit the fan, why continue to run up a bill that will never be repaid.  I think BAC is toast, death by a thousand needles...

Tue, 01/25/2011 - 02:40 | 901793 Quixotic_Not
Quixotic_Not's picture

I think BAC is toast, death by a thousand needles...

And I think BAC was the perfect vehicle to launder the ill-gotten proceeds from CountryWide for Mozillo and his cadre.

Honestly, in light of the MASSIVE fraud the Banksters got away with over the last 8+ years, Jeffrey Skilling should be released and given damages for being tried & incarcerated...

Tue, 01/25/2011 - 01:46 | 901737 eatthebanksters
eatthebanksters's picture

BTW are you a publicist for BAC?

Tue, 01/25/2011 - 02:33 | 901765 Quixotic_Not
Quixotic_Not's picture

BTW are you a publicist for BAC?

Hardly, just an experienced observer of politically protected organized criminal enterprises.

When it comes to matters effecting "national" security, the writing is on the wall when it comes to TBTF...

And nothing! will break the symbiotic relationship that TBTF have over the (R) & (D) oligarchy at this point (the voting sheeple are too stupid to oust the monsters!)

Currency devaluation, here we come!

(Of course, none of the elite ever saw it coming)

Tue, 01/25/2011 - 13:09 | 903101 Thisson
Thisson's picture


Mon, 01/24/2011 - 18:53 | 900434 cossack55
cossack55's picture

I'll become more interested when it reachs 125%.

Mon, 01/24/2011 - 19:37 | 900635 TheProphet
TheProphet's picture

It's comments such as this that make me wish ZH had a like button.

Tue, 01/25/2011 - 01:27 | 901715 sushi
sushi's picture


Mon, 01/24/2011 - 18:56 | 900445 Dr. Porkchop
Dr. Porkchop's picture

It's fine. They're going to request a court-ordered bonfire.

Mon, 01/24/2011 - 18:58 | 900452 Rainman
Rainman's picture

Somehow the 9% goodmoneys slipped into loans with this den of thieves. Amazing. 

Mon, 01/24/2011 - 20:32 | 900828 QQQBall
QQQBall's picture

yeah, how did that happen - somene's head will roll for allowing 9% to slide through ;)

Tue, 01/25/2011 - 23:05 | 905020 jp12345
jp12345's picture

I wonder if those 9% realize that they probably could've gotten better loan terms than they did...

Mon, 01/24/2011 - 18:59 | 900459 umop episdn
umop episdn's picture

Screw Weakiweaks...we've got ZeroHedge!

Thank you, Tyler!

Mon, 01/24/2011 - 19:22 | 900565 EscapeKey
EscapeKey's picture

WikiLeaks... oh yeah, weren't they going to release some information on BAC? Oh right, that's been forgotten?

Give me a fucking break, all their information is moderated, and undergoing heavy censoring. Isn't that completely going against everything it's supposed to stand for? Oh, instead of being censored by the gov't, Assange censors it.

Fuck you Assange, you're nothing but a shallow, sycophantic, cocksucking media whore.

Mon, 01/24/2011 - 19:35 | 900628 Deathtöngue
Deathtöngue's picture

The wikileaks "banking" leak was actually the Swiss thing you haven't been paying attention to.

Mon, 01/24/2011 - 19:43 | 900657 EscapeKey
EscapeKey's picture

Oh right, so Assange confirming BAC leak must just have been my imagination.

On Wednesday, Assange confirmed in a Times of London interview that the NorthCarolina-based banking giant is next on his hit list.

Anyway, about the Julius Baer handing over infomation - so what? More fuel for my fire. The information will never be released.

Mon, 01/24/2011 - 22:01 | 901185 Dave
Dave's picture

Perhaps Mr. Assange is aware of who he is crossing should he reveal too much. I would tread carefully if I were in his shoes.

Mon, 01/24/2011 - 19:01 | 900462 Kaiser Sousa
Kaiser Sousa's picture

loosing a home...which could have been avoided with a reasonable workout between Bofa...income suffecient but they didnt want that...they saw my area and decided. "fuck it"...why work it out when we been bailed out and can get still inflated sale price from Trustee Sale... i get it...will deal...

got AG & AU which i wasnt gonna sacrifice to save underwater, inlfated home...mother fucking bankers....

they ran serious game on many of us...but how many stacked the metals with their debt coupon dollars......



Mon, 01/24/2011 - 19:48 | 900678 Quintus
Quintus's picture

Sorry to hear that.  

Mon, 01/24/2011 - 20:07 | 900727 Threeggg
Threeggg's picture

Sorry to hear that Brother !

If you have a rich friend have him purchase it for the short sale that might be 60% of the principle value. Then have him sell it back to you for a 10% profit by him asking 10% over the short sale price he payed ------    @ 70% of the principle value  **Would you now qualify** ?

good luck man !

Tue, 01/25/2011 - 03:08 | 901805 OldPhart
OldPhart's picture

Surely you have fire insurance?  Nothing like a fire sale.

Tue, 01/25/2011 - 03:25 | 901820 OldPhart
OldPhart's picture

Surely you have fire insurance?  Nothing like a fire sale.

Mon, 01/24/2011 - 19:02 | 900473 SheepDog-One
SheepDog-One's picture

Blight on America...but this wont prevent the stock from being up a few bucks tomorrow Im sure, or prevent the CNBC cheerleader whores from gushing all over the orgazmatron set tomorrow at DOW 12,000 promised land.
Who cares? No ones going to do a thing to stop the total destruction of the country anyway, as long as stocks go up who cares if a dollar wont even buy you 1 peanut.

Mon, 01/24/2011 - 20:20 | 900781 Cdad
Cdad's picture

F'n Blight on America...whew!  I cannot believe that place is still open for business.

LOL...."orgazmatron."  Man, I think I have finally blown a gasket, Dog.  I cannot stop laughing....and I am expecting the men with white coats to come here for me soon.

Oh, man...

Mon, 01/24/2011 - 19:02 | 900476 TruthInSunshine
TruthInSunshine's picture

Bank of Amerika has their Bernanke-Geithner-Obama Express Card.

Don't leave home without it.

Mon, 01/24/2011 - 19:04 | 900481 blackbox
blackbox's picture

Nothing to see here. Cramer said so. BAC is "the single best call on our country's return to greatness."

Mon, 01/24/2011 - 19:04 | 900482 Sam Clemons
Sam Clemons's picture

So you're saying BAC is going to gap up tomorrow?

Mon, 01/24/2011 - 19:05 | 900488 6 String
6 String's picture

It doesn't matter: Just change the rules and hide it like everything else. This too retreat as statistical noise.

Mon, 01/24/2011 - 19:09 | 900501 Bob
Bob's picture

About time. 

Mon, 01/24/2011 - 19:25 | 900505 MsCreant
MsCreant's picture

On a long enough time line the probability of default approaches infinity and time stands still.

Mon, 01/24/2011 - 19:25 | 900582 pslater
pslater's picture

+1 Well said!

Mon, 01/24/2011 - 19:11 | 900517 bunkermeatheadp...
bunkermeatheadprogeny's picture

BAC won't get a gift settlement on this one like they did Freddie and Fannie.

Mon, 01/24/2011 - 19:42 | 900654 Bob
Bob's picture

Nor the one with the AG's. 

Mon, 01/24/2011 - 22:17 | 901235 New_Meat
New_Meat's picture

yep, BAC won't.  But remember that Countrywide was shoved down their mouths with about 2 days of due whatever.

That means that there is a Pearl Harbor file for the shovers.  Web has to extend pretty wide.  That means....?

PIMPCO is betting on this going bad for BAC.  BAC current/former fiduciaries are betting on air cover from previous USG and FED officers saying essentially: 'please take care of this, we'll take care of you later.'

as well as saying 'your check is in the mail' or b) or c)...

but there are personal records of all of this.

- Ned

Mon, 01/24/2011 - 19:11 | 900519 Freewheelin Franklin
Freewheelin Franklin's picture

Today, over 90% of the Certificates' ratings have been slashed to below investment-grade, or junk...

Mon, 01/24/2011 - 19:19 | 900556 Rainman
Rainman's picture

I wonder if Chris Dodd's loan made the cut. He must be getting his ass kicked with that Irish house.

Mon, 01/24/2011 - 19:11 | 900521 gwar5
gwar5's picture

Good stuff! The Big Banks moochers and looters need to go down. 

Only way to stop the criminal banks is for a lot of them to go to jail.

They won't like the discovery process.





Mon, 01/24/2011 - 19:13 | 900530 Tic tock
Tic tock's picture

Now would be a good time to take all your money out of a bank

Mon, 01/24/2011 - 19:15 | 900535 Pretorian
Pretorian's picture

From Wikipedia:

Bernanke met his wife Anna, a schoolteacher, on a blind date. She was a student at Wellesley College, and he was in graduate school at MIT. The Bernankes have two children.

((They refinanced their Capitol Hill home in late 2009 because they "had an adjustable-rate mortgage and it exploded." Now they have a 30-year fixed rate mortgage.[23] at a rate of a little over 5 percent. Bernanke and his wife own one car, aFord Focus )))

Mon, 01/24/2011 - 21:29 | 901062 snowball777
snowball777's picture

I'd try that kind of self-abuse, but I'd probaby end up with narcissistic stockholm syndrome.

Mon, 01/24/2011 - 19:15 | 900540 DaveyJones
DaveyJones's picture

scylla and charybdis

Mon, 01/24/2011 - 19:15 | 900541 MiguelitoRaton
MiguelitoRaton's picture

No response in after hours. And why should there be a response? If there is trouble, they get a government bailout + ZIRP. If there is no trouble they just get ZIRP. How can they lose?

Mon, 01/24/2011 - 19:43 | 900558 FunkyMonkeyBoy
FunkyMonkeyBoy's picture

How can they lose? Simple, non-cooperation with the system.

If people get off their asses and remove all their 'money' and then burn the banks down to the ground. Should take about a week to do this max. It's the apathetic people that is the problem not the parasitic banks.

People love their evil captors, it's called stockholm syndrome.

Mon, 01/24/2011 - 20:13 | 900755 SheepDog-One
SheepDog-One's picture

FunkyMonkeyBoy I tell you youre about the only one left with any balls whatsoever. People seem enjoy their Stockholm Syndrome and marvel at their captors ability to feed them shit daily...I guarantee they all still have major bank accounts and use their credit cards daily.

Mon, 01/24/2011 - 20:25 | 900796 Cdad
Cdad's picture

Yeah, but Dog...their savings accounts are dwindling...and many plan to walk away from their maxed out credit card bills.

Monkey is correct...all folk have to do is stop participating.  Listen, IF the revolution comes, it will be the easiest revolution in the history of the modern world.  These criminal syndicate Wall Street bankers are moved by money...and only money.  OK...take it away from them.

Simple.  I keep saying it, and I hope folk finally embrace it.  Close the wallet.  Wait.  Viola...revolution.  This is exactly where we are right now...Average Joes sitting around with little to do and even less money to is all Heaven Sent!

Mon, 01/24/2011 - 21:55 | 901162 Larry Darrell
Larry Darrell's picture

Add to that a massive tax revolution which is easy to implement.

People who still have jobs and are tired of supporting the system need only walk into their employers office and "update" their W-4s.  Claim maximum exemptions, and come next April, just don't file your taxes.

Mon, 01/24/2011 - 23:51 | 901329 hangemhigh
hangemhigh's picture
by Larry Darrell
on Mon, 01/24/2011 - 20:55


Add to that a massive tax revolution which is easy to implement.

People who still have jobs and are tired of supporting the system need only walk into their employers office and "update" their W-4s.  Claim maximum exemptions, and come next April, just don't file your taxes.

sorry, dogg, but you got it half right. do the max exempt thing, cauterize tax flows to the wholly owned subsidiary, have to have the money to pay your taxes when they come due.............if're gulag material.

Mon, 01/24/2011 - 23:11 | 901314 hangemhigh
hangemhigh's picture

TO: Cdad
on Mon, 01/24/2011 - 19:25

Monkey is correct...all folk have to do is stop participating......These criminal syndicate Wall Street bankers are moved by money...and only money.  OK...take it away from them.......Close the wallet.  Wait.  Viola...revolution. 

absolutely correct.  all of the bernanks virtual injections have one save the crime cartel's leveraged, speculative economy from collapsing.  without the cash flows (participation) from ordinary people like the posters on ZH the boyz got nothing to steal and the whole stinking mess comes apart.

it's the embedded belief system that keeps the con afloat

ask yourself, are you better off now than you were before the financial terrorists got their  game on??? 

if not this is for you......
Tue, 01/25/2011 - 00:44 | 901652 cranky-old-geezer
cranky-old-geezer's picture

"without the cash flows (participation) from ordinary people like the posters on ZH the boyz got nothing to steal ..."

... except all the dollar-based wealth you have, via their obedient servants over at the Fed creating mountains of dollars out of thin air, eventually debasing the dollar to worthlessness ...along with all your dollar-based assets.

Tue, 01/25/2011 - 01:20 | 901689 hangemhigh
hangemhigh's picture
TO:  cranky-old-geezer
on Mon, 01/24/2011 - 23:44


"without the cash flows (participation) from ordinary people like the posters on ZH the boyz got nothing to steal ..."

... except all the dollar-based wealth you have, via their obedient servants over at the Fed creating mountains of dollars out of thin air, eventually debasing the dollar to worthlessness ...along with all your dollar-based assets.

the cash flows are tax revenues.  without the timely promise of that essential vigorish, the plutocracy's larcenous bezzle is exposed as just another POS a result, there can be no QE of any kind....the casino is forced to shutter the gaming tables.....power passes from the the crime cartel and their corrupt cronies in congressto the vox populi which supports the entire structure.......................

Mon, 01/24/2011 - 19:17 | 900546 Ras Bongo
Ras Bongo's picture

We should be good for a 0.5 pt loss on the spoos with that kind of news.

Mon, 01/24/2011 - 19:23 | 900574 Misean
Misean's picture

MBIA found that 91% of the defaulted or delinquent loans in those securitizations contained material deviations from Countrywide’s underwriting guidelines.

How typical. They're talking about DEFAULTED or DELINQUENT loans. Pfffflllt! That means that, like what, only 90% of ALL loans were fraudulent. Sheeesh! Talk about trumping stuff up!

Mon, 01/24/2011 - 19:23 | 900575 mick
mick's picture

From what I see of underwriting standards this isn't a surprise.  The surprise would be if the semi-literate fools who worked in retail could have reliably hit guideline lending criteria in any loan.  Passed across my desk today was a 25 year loan, issued 2007, where, according to its terms, the borrower can elect at any time on or after the first anniversary of the loan, to pay LIBOR plus 1.75%, or 1.75%, for the remaining term of the loan.  I guess the fuckwit who drafted the facility letter missed some words out somewhere along the line.  What the hell, it's only money.  No doubt you can guess what the useless borrower wants to pay now.  Can I default the bastards?  No.  

Tue, 01/25/2011 - 09:21 | 902147 pan-the-ist
pan-the-ist's picture

Tell us more.  What can I do to fuck the banks?

Mon, 01/24/2011 - 19:25 | 900578 TeMpTeK
TeMpTeK's picture

The Dow = Hedge against inflation, deflation and insolvency

BTFD........ if you can get one...

Mon, 01/24/2011 - 19:25 | 900584 Catullus
Catullus's picture

Insurance companies, just start a massive liquidation and force the Fed to make you whole on the CDOs.  You've got to be just as crazy as the financial terrorists on this one.

Mon, 01/24/2011 - 19:27 | 900592 buzzsaw99
buzzsaw99's picture

In Fraud We Trust.

Mon, 01/24/2011 - 19:28 | 900595 stormsailor
stormsailor's picture

nobody seems to care.  we have had these kinds of financial news stories for the last 2 years, nothing ever happens and the market just yawns and goes up another 100 points.


if the federal government can't handle any of these tbtf corporations, how will the courts, states, municipalities or people handle them. 


the only thing that will stop this crap is riots, lynchings,  and anarchy.


good luck with that, the super bowl is less than 2 weeks away and american idol is back on. 


my new bumper sticker "have you mangled your banker today"?

Mon, 01/24/2011 - 20:15 | 900761 SheepDog-One
SheepDog-One's picture

Nothing seems to happen because people still use these banks, they may bitch a little bit but will they close their Blight on America accounts? Ohh NOooo best to just marvel at your captors ability to cornhole you daily. America is just 1 big Stockholm Syndrome basket case.

Mon, 01/24/2011 - 23:34 | 901491 ColonelCooper
ColonelCooper's picture

I'll tell you what, Sheepdog.  I financed my house through my local bank.  They in turn sold the note to Countrywide.  BOA took it over, but now is simply servicer of the Mortgage for Fannie. 

The hardest thing I do every month is make that Goddamned payment.  But my question to you is: Am I doing it because it's the right thing to do?? OR Stockholm Basket Case?

I can come up with a laundry list a mile long for both sides of the argument.  Yet the end result is that I will make my payment, one week early, one more month... after month.... after month.

Mon, 01/24/2011 - 19:28 | 900597 Xibalba
Xibalba's picture

What 'documents'?

Mon, 01/24/2011 - 19:32 | 900613 OpenEyes
OpenEyes's picture

When reading headlines like this, I always wonder if perhaps this will be the proverbial straw that broke the camel's back..  Will this finally be the event that starts the cascade, the coming-apart of the ponzi.  But, alas, they never seem to be.  The scam just continues.  

Mon, 01/24/2011 - 19:33 | 900620 Prof Gulliver
Prof Gulliver's picture

Wow. This is serious. First JPM went bankrupt because I bought a roll of silver dollars. Now tomorrow BAC drops to zero.

Mon, 01/24/2011 - 20:05 | 900726 Joe Sixpack
Joe Sixpack's picture

All because you bought a house!

Let's see, buy a horse-drawn carriage and Wells Fargo goes under?

Mon, 01/24/2011 - 20:30 | 900821 Hephasteus
Hephasteus's picture

No that's GMAC.

Fargo would probably be movie star heroine or coke.

Tue, 01/25/2011 - 02:10 | 901766 RichardP
RichardP's picture

The Wells Fargo logo is a Stagecoach pulled by horses.

Tue, 01/25/2011 - 04:40 | 901869 Hephasteus
Hephasteus's picture

Ya but the stagecoach just has drugs for the rock bands and movie stars. Oh and crappy worthless diamonds.

Mon, 01/24/2011 - 19:37 | 900633 CU1981
CU1981's picture

State AG's will issue yet another "Get outta jail FREE" card.


Go back to sleep sheep ....

Mon, 01/24/2011 - 20:22 | 900786 El Hosel
El Hosel's picture

   Headlines will show that we have a 9% increase in legitimate banking... Party on.

Mon, 01/24/2011 - 20:37 | 900839 Rainman
Rainman's picture

+ 12,000

Mon, 01/24/2011 - 23:36 | 901495 ColonelCooper
ColonelCooper's picture

Line of the Goddamned day.

Tue, 01/25/2011 - 04:41 | 901872 Hephasteus
Hephasteus's picture


Mon, 01/24/2011 - 19:41 | 900641 random shots
random shots's picture

The market will continue to go up for a prolonged period of time so that TBTF banks can yell from the rooftops "We f**ked all of y'all, we will do it again, and you will let us!" The sad part, noone will care because the market (in nominal terms) will be up. Dow 36k, bitchez!

Mon, 01/24/2011 - 19:43 | 900656 InconvenientCou...
InconvenientCounterParty's picture

The courts are the wildcard. Most judges have disdain for politics and economics. They've been known to study history though and I bet most would like to make history.


Mon, 01/24/2011 - 20:17 | 900772 SheepDog-One
SheepDog-One's picture

Whoever thought a Chicago court would kick the great Rahm Emanuel, Obamas butt boy, off the mayor race ticket? And for those who say it will get reversed in a higher court, I just read where the state court will be even tougher to get past than the appelate.

Mon, 01/24/2011 - 20:55 | 900906 Rainman
Rainman's picture

...yes, it is shameful what the courts have done. Decades of mayoral corruption down the drain with no obvious heir apparent. Sad.

Mon, 01/24/2011 - 21:21 | 901034 Fearless Rick
Fearless Rick's picture

Wow! Can I either,

a. Come to live with you, or,

b. Have some of whatever it is you're smoking, snorting or drinking?

The judges I know want only to clear their calendars to make more time for loafing, fund-raising and golf.

Mon, 01/24/2011 - 22:05 | 901192 Ned Zeppelin
Ned Zeppelin's picture

I agree that the judges are a real problem for the TBTFs, on both ends: the foreclosure side, where they are asking that the documents submitted in support of foreclosure merely comport with the ancient principles of common law, thus frustrating the TBTFs attempts to foreclose, and on the other "securities fraud" side, where equally TBTF insurance companies, endowments, state pension funds who have lots of political clout and the finest lawyers in the land will make it very easy for the judges to throw the book at the fraudsters.

My belief is that there are lots more straight arrow, can't be bought judges than there are CONgress critters.  TBTFs, check out the rear view mirror.  

Mon, 01/24/2011 - 23:15 | 901427 DoctoRx
DoctoRx's picture

Ned, do you realize what a rarity you are on ZH?  Maybe numerically given how many judges there are in America vs 535 C-critters, but really . . . In the 2000-3 period, the perp walks and trials were associated with excuses to push stocks down.  Should anything material come from this, perhaps this would be the excuse for TPTB to reload.

Mon, 01/24/2011 - 19:44 | 900661 PulauHantu29
PulauHantu29's picture

No Job, No Asset, No Doc, No Money Downloans were widespread in 2004-2007. Many reported this to the Feds who just turned their heads ...looked the other way.

Mon, 01/24/2011 - 19:47 | 900675 Logans_Run
Logans_Run's picture

What is interesting is that several of these insurers are big mutuals that don't have ready access to the capital markets to do a capital raise. Generally most of these are substantially investors in MBS because of the long duration of the asset in relation to the matching life insurance liability. This shit blows up on them (it already has, most have already written down their tranches of Countrywide and WaMu shit), they have no ready recourse. It could literally cook the whole goose for them. I guess I am not surprised that the mutuals decided to strike first on this and to attempt to hit hard.

Mon, 01/24/2011 - 20:10 | 900742 Joe Sixpack
Joe Sixpack's picture

MBIA are one of the a-holes that rated the garbage AAA to start with. Then they (especially AIG) got bailed out by the Fed. Now they are using the unfair advantage to destroy the whats left of the TBTF (probably by pre-agreement with Ken Lewis and Henry Paulson). It's all going according to plan. Fannie and Freddie are waiting to pick it all up at taxpayer expense (probably a $1 to the $1).

Mon, 01/24/2011 - 20:10 | 900744 Misean
Misean's picture

All the big boyz was promised:

"We'll kick this can a bit down the road and everythings gonna come up roses! BSBernutty been studyin' on this and he and the chorus of ebbublegnomists agree, that it's just a rough patch. Hang tough!"

Well, now the hangin' tough are feeling hanged, and there is dissention in the ranks of the elite...

Mon, 01/24/2011 - 20:24 | 900778 SheepDog-One
SheepDog-One's picture

All it takes is a few of them to turn against their tribe and start throwin down docs on them as well. Dissention in the ranks is never good. Seems its about close to turning ugly in 'all is well' market land. The boyz may not only be feelin hanged by their higher-up pals, but may even be getting dreams at nite about actually getting hanged by mobs of those they screwed over.

Mon, 01/24/2011 - 20:15 | 900765 sabra1
sabra1's picture

i stole all the elites gold!

Mon, 01/24/2011 - 20:28 | 900809 lesterbegood
lesterbegood's picture

We live in a fraudulent dreamworld.


Mon, 01/24/2011 - 20:40 | 900849 LeftCoastRefugee
LeftCoastRefugee's picture

And so it begins:

Aurora Loan services has halted all REO procedures in California effective immediately.


Mon, 01/24/2011 - 20:41 | 900853 mouser98
mouser98's picture

so much for honor among thieves

Mon, 01/24/2011 - 20:45 | 900865 Problem Is
Problem Is's picture

Only 91% ??
It was that low on the fraud? I thought Tangelo would have done better....

Mon, 01/24/2011 - 20:55 | 900904 Seasmoke
Seasmoke's picture

the people just need to hold on and wait out the bankstas, as they will all turn on each other for sure

Mon, 01/24/2011 - 20:58 | 900916 rawsienna
rawsienna's picture

I would like to point out that it was both Countrywide (scum of the earth) along with the borrowers who committed the fraud.  In many cases, borrowers were not innocent victims.  

Mon, 01/24/2011 - 22:08 | 901206 Ned Zeppelin
Ned Zeppelin's picture

So? What's your point? Making the "this is all about deadbeat borrowers trying to get free houses?" argument for the TBTFs? This is not what the problem here.  Read up, and get schooled on what this is all about. 

Mon, 01/24/2011 - 22:25 | 901267 Dave
Dave's picture

Are you serious? The borrowers committed fraud on their loan applications? How could that be?

Tue, 01/25/2011 - 09:41 | 902195 pan-the-ist
pan-the-ist's picture

The banks failed to investigate the borrowers claims, as was required by their own standards.  Should be a slam dunk.

If it were your money lent negligently, would you feel different?

Mon, 01/24/2011 - 21:04 | 900938 plocequ1
plocequ1's picture

Its all good.  Bens got it covered. Beware of loop

Mon, 01/24/2011 - 21:03 | 900939 plocequ1
plocequ1's picture


Mon, 01/24/2011 - 21:33 | 901082 Buck Johnson
Buck Johnson's picture

The insurance companies see a way to get out of this mess and they are taking it.  Because if they can take the insurance and run they will because it's the banks fault sue them on fraud people.

Tue, 01/25/2011 - 09:44 | 902205 pan-the-ist
pan-the-ist's picture

Where does the money come from to pay the insurers?  Should the bank use real assets to pay the insurers?  My bank account or yours?

Mon, 01/24/2011 - 22:20 | 901251 johngaltfla
johngaltfla's picture

Only one problem as I see it. If the insurers lose, doesn't this just validate the fact that they are short of the necessary income stream to fulfill the torrid pace of payouts about to hit as the baby boomers start to croak?

I need more popcorn and beer for this upcoming train wreck.

Mon, 01/24/2011 - 22:32 | 901279 plocequ1
plocequ1's picture

Let me guess. The proverbial fictional middle class legendary  taxpayer  will pick up the tab

Tue, 01/25/2011 - 04:42 | 901875 Hephasteus
Hephasteus's picture

Ya. They'll dig em up from their grave and make em pay taxes.

Mon, 01/24/2011 - 23:22 | 901451 hyperbole2000
hyperbole2000's picture

Final outcome:

Everyone gets their house "mortgage free".

Banks go tits up and are nationalized by government.

Government hammers everyone with windfall capital gain taxes from getting their home "mortgage free" (to be paid out on an amortized schedule) which will be used by the government to recaptilize the banks they now own.

Serfdom USA style.

Tue, 01/25/2011 - 07:22 | 901966 shortus cynicus
shortus cynicus's picture

You get similar outcome by hyper inflating currency. Foreigners take care about that.

But ordered "clean up operation" would be much better. The world is tired of this mess.

Tue, 01/25/2011 - 07:34 | 901977 shortus cynicus
shortus cynicus's picture

You get similar outcome by hyper inflating currency. Foreigners take care about that.

But ordered "clean up operation" would be much better. The world is tired of this mess.

Mon, 01/24/2011 - 23:42 | 901511 afriend2u
afriend2u's picture

At some point every mortgage packaging entity this side of the Devil figured out AIG would sell CDSs for pennies on the dollar to cover mortgage instruments the buyer KNEW would FAIL. Then it all became a laughable game. Buy worthless mortgages you knew would fail, package them in such a way as to create an illusion of credit worthiness, market them to unsuspecting investors and then take out "insurance" against their imminent failure. Cha ching!

Mon, 01/24/2011 - 23:58 | 901560 afriend2u
afriend2u's picture

Oh... sorry. I left out the part of the TBFB being bailed out for the residual crap kept on the books.

Fees for packaging and selling garbage... 5 Billion, CDS profit from payoff of guaranteed to fail garbage sold to unsuspecting clients... 8 Billion, Bailout of TBFB who had leveraged up at 40:1 every God forsaken mortgage related instrument they were stupid enough to keep on the books... 1.2 Trillion? Who knows.

Tue, 01/25/2011 - 00:02 | 901574 frugartarian
frugartarian's picture


Tue, 01/25/2011 - 00:04 | 901579 afriend2u
afriend2u's picture

Make that TBTF... the posts lose a little kick when you f'up the abbreviation! How about TBFB... Too Big F'ing Banks  :)

Tue, 01/25/2011 - 00:20 | 901605 bullet357
bullet357's picture

final outcome: same ol same ol sh*t different day.....Pump & Dump on wallstreet ....TBFB keep on making bank on the backs of the Middle class. The insurance company should just put up the big L. on the forehead.  Two words to live by: Food & Ammo.

Tue, 01/25/2011 - 00:23 | 901610 akat
akat's picture

  Is B of A the next to be killed and eaten by it's brother cannibal banksters?  It is starting to look like it.  There really is no honor amoungst thieves.  As they make the request to pass the salt, one can only hope they choke on the bones or are sickened by the putrid flesh of their victim much like B of A is being poisoned by devouring Countrywide and Merrill.  Let's all get bullish on Amerika.

Tue, 01/25/2011 - 01:31 | 901722 eatthebanksters
eatthebanksters's picture

Is this any surprise?  When you take financial engineers who figure out how to game the rating agencies by ubgrading shit to investment grade with the help of swaps and other derivatives, when you create CDO's and synthetic CDO's out of excrement, you still have to start and finish with shit and excrement, neither of which is investment grade.  An old saying goes,"You can't polish a turd."  Moral of the can manipulate the formulas of the rating agencies, but in the end a turd is still a turd.

Tue, 01/25/2011 - 09:00 | 902086 Pee Wee
Pee Wee's picture

In the US the turds polish you.

Tue, 01/25/2011 - 11:22 | 902546 Bob
Bob's picture


Fri, 01/28/2011 - 02:16 | 912168 Quantum doom
Quantum doom's picture

  Some pine for banksters to bite it, cynics cite "corruption trumps justice".

American sheep trudge along, swinging their wooly heads. 

Meanwhile, below the sub basement,  $700 trillion in spoiled derivative bets rustle

ominously, as the gentle breeze of pyramid instability flicks a few stray biils out of the

open lid of the vampire's coffin.....  

Do NOT follow this link or you will be banned from the site!