Janet Tavakoli Explains How Banks Converted US Housing Into "Fraud As A Business Model"

Tyler Durden's picture

Janet Tavakoli shares a presentation she prepared for the Federal Housing Finance Agency Supervision Summit earlier today, in which she attempts to explain to politicians how banks made fraud into a "business model" and how the damage can be repaired. It may not be easy: as she says, MBS became a "widespread interconnected ponzi scheme" - "Securitization professionals at several financial institutions knowingly bundled fraud riddled loans into RMBS. New investors needed to pay-off old investors. To delay being busted, they escalated and sped up the fraud. This required more “complexity” and the involvement of more cronies. Many CDOs and virtually every CDO-Squared were more fraud to cover-up fraud." Of course, the same can be said about the global economy, as now everyone is aware that the global Keynesian system is nothing less than Madoff's scheme taken to the infinite degree. But nobody will ever go to jail for that. For any remaining questions on the motives, the schemes, the payoffs, and, most importantly, the players, both the protagonists and the bribed co-stars, the below presentation attempts to answer all. And, unfortunately, Ms. Tavakoli's suggestion for how to fix this, which is remarkable precisely the same one we have been espousing since our advent, will never happen as it means the end of the Ponzi and the elimination of trillions in generationally stolen middle-class wealth.


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Sudden Debt's picture

Thank GOD for Human creativity!

Dirtt's picture

Since you brought God into this mess...

This is perhaps the greatest heist since the extinction of the dinosaurs.

casino capitalism's picture

“The best way to destroy the capitalist system is to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.” —John Maynard Keynes

dnarby's picture

Get the quote right.

Lenin is said to have declared that the best way to destroy the capitalist system was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.

HarryWanger's picture

Pretty decent/ok 10 yr. auction just announced.

SheepDog-One's picture

Really, who announced that? Bartiromo 'Um, remind me again, is it bond yield goes up its 'good' or 'bad'?

HarryWanger's picture

Indirects showed up to grab it at about average. Not too bad considering.

traderjoe's picture

Now that you've been outed as a shill/troll here simply for your own "psychology experiment" on perma-bears, why are you still posting?

Please ZH'ers, know that HW is here to mock you, to toy with you, all for his own little boy emotions. 

bronzie's picture

you mean the Harry Wanker is a troll?  say it isn't so!

DaveyJones's picture

i think the american flag should assure us his intentions are entirely philanthropic ......

Ripped Chunk's picture

"psychology experiment"

Good one. When you have delusions of adequacy like Harry, it is hard to be understood by others.

Mr Lennon Hendrix's picture

From cnbc:

Treasurys Continue Tumble After Mediocre 10-Year Sale:

Investors hesitantly bought up $21 billion worth of 10-year Treasury notes as the government faces stiffening winds for its debt sales.

HarryWanger's picture

Really? Yields reversed and headed lower.

spekulatn's picture

Now please advise on the mess we call Fannie and Freddie.



Mr Lennon Hendrix's picture

Janet is so hot right now!

SheepDog-One's picture

Better, more believable headline- 'How turn your termite eaten rat infested ramshackle house into an 'Architect Disgest' cover picture in 3 easy steps'! Yea right...

Only solution now is tear down, fumigate, rebuild from foundation up.

plocequ1's picture

I rent and i love being a slave to my Landlord. I will never ever buy a house.

SheepDog-One's picture

At least youve got zero maintenance worries...when something breaks just call in the middle of the night!

Widowmaker's picture

Show me bonus-blood running down the fucking street!


Ripped Chunk's picture

Soon if the Sheeple get off their asses.

Jason T's picture

Now thats how you make a power point presentation.  

buzzsaw99's picture

She is not our friend, she just wants to trick people back into the casino.

Herd Redirection Committee's picture

We're dealing w/ criminals, she admits as much, but her plan is for bad debts to be written off, and restructured, and ratings agencies to be reformed.

Yes, that would be a good start, and thanks for the report, but that is a long way short of everything that needs to change.  She hasn't addressed TBTF, fiat currency, usury, seigniorage (paying the Fed to issue currency).


PsychoNews: Exposing the Oligarchy, one Psycho at a time.

CIABS's picture

it would be nice to have a non-scribd link for this.

Big Red's picture

You can download "them" as pdf's or txt's. May need to sign in to scribd first, but use your fake/throwaway email account(s) if concerned.

fajensen's picture

Bla.Bla.Bla. Like Obama. Bring some RICO charges, THEN talk!!

Revolution_starts_now's picture

Don't you mean "Guillotine"?


Just tell it's french bitchez......

lieutenantjohnchard's picture

read all 50 pages. alot of folks ought to be squirming.

bruiserND's picture

I read it too.


Took 15 minutes ...very well done.

I then sent the power point presentation to everyone I know.

Life of Illusion's picture

Janet’s prepare for restructuring ,,,NOT GOING TO HAPPEN!

Prepare for debt peonage and massive inflation.

apberusdisvet's picture

Hmmm.  I guess we will all hear about this on the evening news.  Right?  Or perhaps in the FT or WSJ?  How about IN YOUR FUKKIN DREAMS.

Cdad's picture

Capital will NOT reform to improve this shitty economic mess until these bankers are prosecuted in open court.  Many of them.  The criminal syndicate known as Wall Street is what stands in the way of American recovery.  Them, and members of congress that have members of congress for far too long.

We can talk all day long...but it won't matter...until the house is cleaned.  PERP WALKS!  JAIL TIME!  CLAW BACKS!  TRUTH!!!

Rick64's picture
Janet Tavakoli Explains How Banks Converted US Housing Into "Fraud As A Business Model"

 Before you repair it you might want to get rid of the criminals.

Henry Chinaski's picture

Such an effort is doomed to failure since she proposes that the FHFA take actions that are "reality based."

tony bonn's picture

there are a couple of interesting items in the presentation. in addition to the little cat fight between janet and meredith, i credit janet for calling crap on crap. which is to say she doesn't buy the ignorance defense - highly paid, highly educated, highly responsible people committed fraud and criminal activities. although she didn't say it, i will: fraud is a sign of a loser and inferior intellect....these people lack the ability to succeed on merit so resort to crime to feed the lusts which their intelligences cannot.

the other problem with her presentation is that there is no mention of prosecution. whatever other remedy is needed CANNOT proceed without massive prosecution of the criminals. any remedy which does not include prosecution is itself a fraud.

as william black has noted, there has been widespread dna level control fraud throughout the breadth and depth of the government and industry....those seeking justice must cry loudly....

vote_libertarian_party's picture

I can't believe the organizers let her make that presentation.


Is she still alive? 

something fishy's picture

I like her solutions, especially the part about writing off bad loans. This seems

like it's so obvious, just take the loss and you clear the way for renewed growth

going forward.  With all the bailout money received from the gov't, it seems like

banks should be able to do this, even if they are broke, but at least write off as much

as they can realistically. If they are waiting for asset prices to rise again, I think

ironically it's unlikely until the bad loans are cleared out.

DisparityFlux's picture

I'm starting to see a pattern here...

There are layers upon layers of crooks between me and my right to life, liberty and the pursuit of happiness.

Call Jeanne d'Arc, Superman, Dirty Harry, Elliot Ness or the Ghostbusters,  I don't care who, just fix the damn problem so we don't have to live in banksta's paradise as immoral accomplices or indentured servants.

pyite's picture

Please stop with the !#^% scribd already


huckman's picture


What ever happened to Ellen Brown?  You would have thought her youtube series would have gained traction big time. Especially part 5.

Web of Debt - Ellen Brown - 1 of 5

Village Idiot's picture

...and fuck the banks.

GoldbugVariation's picture

That presentation is far too hysterical.  Will have zero effect on policy makers.

This should all be explained more simply.  The key point is that these loans have lost money.  Therefore, someone has to pay for that.  The foreclosed, bankrupt, unemployed and asset-poor (former) homeowner can't cover the loss.  Therefore, should the loss now fall on:

(a) the lender who made the loan in the first place, and its agents;

(b) the investment bank which packaged and sold the MBS;

(c) the suckers who bought the MBS;

(d) the govermint.

It's that simple.


huckman's picture

Precisely.   Then the debt will officially be defaulted debt.  As it should be.