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Quantifying The Full Impact Of Foreclosure Gate: Hundreds Of Billions To Start

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Thu, 10/14/2010 - 12:56 | 649665 Bob
Bob's picture

If I were stockholders--or auditors--I would demand that the banks hold back all that "bonus money" as reserves against foreseeable losses (whether from write-downs or legal settlements) that would otherwise jeapordize the very survival of the firms. They have no contractual claim for Gov bailouts. 

The news is out.  There is no way the banksters meet their fudiciary duties if they pay out that bonus money. 

Under the circumstances, it would clearly constitute looting the companies.

And it would be prima facie evidence of a premeditated plan to once again blackmail the taxpayers for a bailout to avert "systemic collapse."

Thu, 10/14/2010 - 13:05 | 649691 tahoebumsmith
tahoebumsmith's picture

Unfortunately Bob the Banksters are running the show and the auditors---stockholders--are simply just spectators. This is their game and they will put another gun to Congress's head before they give up that 144 billion.

Thu, 10/14/2010 - 13:09 | 649701 Bob
Bob's picture

Then let them set themselves up for a slam dunk on RICO.  They have a lot of money, but not enough to buy all the parties who stand to gain by breaking ranks.  That's how gangsters go down. 

Thu, 10/14/2010 - 13:10 | 649708 carbonmutant
carbonmutant's picture

 You can only cry "Wolf" so many times...

The real problem is that they may be right and no one will believe them.

Thu, 10/14/2010 - 15:45 | 649750 Bob
Bob's picture

They may be "right" about systemic collapse without intervention, but given that they have once again set it up while further filling their pockets, they will have no tenable argument for being TBTF.  They're undeniably Too Big To Fix.  Let them go into receivership as mortals do. 

Bring back some semblance of capitalism before it's too late.

Thu, 10/14/2010 - 13:39 | 649832 bugs_
bugs_'s picture

In 2008 without TARP and the window these shareholders would have been WIPED OUT.  No seat at the table and nothing to complain about.

Truth be told, these banks are insolvent and those shareholders aren't.

Thu, 10/14/2010 - 19:45 | 651219 pamriallc
pamriallc's picture

re: Systemic Collapse


Capitalism, then, is by nature a form or method of economic change and not only never is but never can be stationary. … The opening up of new markets, foreign or domestic, and the organizational development from the craft shop and factory to such concerns as US Steel illustrate the same process of industrial mutation—if I may use that biological term—that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism.

Capitalism, Socialism, and Democracy, Joseph Schumpeter (1942)

Shawn A. Mesaros, Pamria, LLC

Thu, 10/14/2010 - 12:56 | 649670 crzyhun
crzyhun's picture

Tyler, was this manufactured/created for the benefit of the up coming landslide? Pretty suspicious if you ask me.

Thu, 10/14/2010 - 13:02 | 649682 1100-TACTICAL-12
1100-TACTICAL-12's picture

It is no wonder the Banks have all this cash on the sidlines..

Thu, 10/14/2010 - 15:29 | 650322 pan-the-ist
pan-the-ist's picture

Which landslide is that?

Thu, 10/14/2010 - 12:59 | 649679 Bearster
Bearster's picture

I agree that the banks look to have committed some pretty egregious sins, not least of which is paying their executives such massive bonuses while cutting loan loss provisions ahead of this disaster.

But I think it's important to also say I agree that the people who reside in these homes without paying their mortgages are squatters.  If we want to see a trillion dollars of housing reduced to uninhabitable ruins (with a corresponding impact on the values of neighboring houses) we will let squatters continue to reside in them for years.  During which time they will make no repairs or perform any maintenance.  And move out when the house is wrecked.

I think, regardless of whatever disputes there may be amongst the various MBS tranche holders, underwriters, investment banks, originating banks, and mortgage brokers... it's obvious that the squatters have to be evicted and foreclosed upon!

Thu, 10/14/2010 - 13:10 | 649714 Pedro
Pedro's picture

Keep in mind, however, that the bailout these already wealthy institutions got from the taxpayors devalued these "squatters" money via printing press and contributed to the real estate bubble which contributed to the joblessness in America.  Some of these jobless people would probably be making payments had it not been for this little closed circle of money.

Thu, 10/14/2010 - 13:15 | 649731 LeBalance
LeBalance's picture

thing (1): the holder of the note is unknown in many cases, so there is "real" concern as to whom to pay.

Under those circumstances it is not legally required to pay anyone until those who were supposed to have correct paperwork get it right.

thing (2): as the veils of "mortgage" fraud get lifted many will realise that banks did not risk skin in the promise to pay at any point.

Under these circumstances, you might think about not sobbing openly for the bank and just point the finger and laugh at the mushroom cloud.  Bring mushrooms, it will be a nice time to make smores.

Thu, 10/14/2010 - 13:40 | 649841 Tortfeasor
Tortfeasor's picture

Man, you must make some effed up s'mores.  

Thu, 10/14/2010 - 13:20 | 649752 diesel1104
diesel1104's picture

What's the definition of a squatter?  Someone who paid 15% down and has paid mortgage fees for years including taxes and insurance, or a shell MERS company who has no consideration and has "sold" the asset to other well paying entities without proper title?  There is such a thing as contract law and rule of law.  If one principle breaks the law by breaking the contract, the contract becomes null and void.  The offending entity can not then go back and claim damages when the contract is not followed.  We have hundreds of years of case law concerning this.  

Thu, 10/14/2010 - 14:15 | 649988 UGrev
UGrev's picture

I think people forget that these home buyers did pay something and/or continued to pay until they were underwater. Meanwhile, the banks were committing, unadulterated, fraud. Yeah, squatting is bad.. but I think flat out fraud on the back of predatory lending is much, much worse.

Thu, 10/14/2010 - 14:42 | 650084 1100-TACTICAL-12
1100-TACTICAL-12's picture

Even if these so called "squatters" bit of more than they could chew, you have to admit they were allowed & encouraged to do so. Peer pressure form the banks . I vote for the people, time for the banks to get fucked for a change.

Life is not & will never be fair...

Thu, 10/14/2010 - 15:41 | 650389 pan-the-ist
pan-the-ist's picture

Let me begin by saying "I TOTALLY AGREE WITH YOU" (in caps even.)

However, on the other end of this is a pensioner who has his money tied to a AAA MBS that will lose money if the property fails to generate any revenue.

If the forecloser fails, the MBS looses (even more) money.

Thu, 10/14/2010 - 16:53 | 650753 groucho_marxist
groucho_marxist's picture


plus, many of them have put money into these properties, done up keep, etc. and now are being compared to vagrants who just happen to settle onto a property; this is both untrue, and feeds the misinformation that they are criminals who move in. The reality is more like they are transformed into criminals by a criminal system that was set up with the express purpose of robbing them. In truth, the properties are more likely to be wrecked if the people in them are forced out, rather than encouraged to stay and maintain the properties.

I'm just waiting for the fires to start because people are being driven from their homes. Sometimes the appropriate response to rampant criminality is "crime."

Thu, 10/14/2010 - 15:42 | 650398 moneymutt
moneymutt's picture

how many people would be underwater if they banks had never created MBS, CDS, CDO's and mortage companies like Countrywide and mortgage brokers had never committed fraud.

House prices went sky high because of the easy money available to buy houses, not cars, not food, but houses. How made the easy money, the FED and private financial industry. Who lied to get more people to invest in MBS, thus raise house prices, the banks.

I'd feel some sense of moral outrage if people were keep gold they took out debt to buy just because they thought they get rich, but if we exclude invertors, most homeowners were just buying a house, one because they needed shelter, wanted their kids go to decent school etc and just did not want to get left behind as houses were getting more and more expensive. Sure, they wanted house to go up in price, but would have been okay if it just flatlined.

But they get a way overpriced asset because of actions of others. They are underwater now due to bad, risky financial practices of banks.

I heard some one on TV dicussing, "would our dads walked away from a mortgage?" the thing is that except for a few regional flare ups, most of our dads never had the tempations or the problems we did, their house did not appreciate much, it was not easy to get credit to buy, and their houses never dropped in price 30,40, 50 percent in a matter of just a few years. Our dads could always get jobs, even without college education.

Don't think consumers to be smarter or way more moral than banks.

Thu, 10/14/2010 - 14:50 | 650108 midtowng
midtowng's picture

What do you think happens to empty houses? They stay pristine? No, they degrade. They leak and mold.

The people who bought those houses may not have been able to afford them, but they actually wanted to live in a house. Chances are they will do upkeep on them as long as they think they will keep them.

Thu, 10/14/2010 - 13:04 | 649687 detersbb
detersbb's picture

Please do not fall for the coming re-finance move if you hold a mortgage unless you are presented with and put your finger on the actual wet ink signed promissory note.  Demand it, or tell them that all further negotiations of refinancing will only be commenced with Santa Clause, the Easter Bunny, or the Tooth Fairy.


No note, no foreclosure, period. 


Yeah, I know lets create a new debt instrument that will be taken care of to be used as documentation going forward to foreclose on?


Do fall for it!

Thu, 10/14/2010 - 13:05 | 649690 ZakuKommander
ZakuKommander's picture

This may not be as big a deal as some think.  Remember, we all understand that just because a foreclosure takes place does not mean that the bank who obtains the property is putting it on the market and cashing in.  Many, many foreclosed homes are just left sitting, out of the market so as not to depress prices.  So sitting in a delayed foreclosure case and sitting in a holding situation wouldn't necessarily cause the books of the bank to be cooked any more or less.

Now of course without foreclosure the homeowner (so to speak) remains in place, paying nothing, and using his or her money to buy gadgets.  A good thing for retail, no?  

Don't count on the "missing documents" problem leading the banks to losses, either.  The law will come up with a fix, so no major financial donor is left out in the cold.  This is America.

Thu, 10/14/2010 - 13:34 | 649809 Bob
Bob's picture

We'll soon find out in no uncertain terms just what America is.  People are now watching this shit. 

Thu, 10/14/2010 - 13:41 | 649854 ZakuKommander
ZakuKommander's picture

Watching . . . and then voting in our one party system.

Thu, 10/14/2010 - 16:23 | 650600 pan-the-ist
pan-the-ist's picture

Sounds reasonable

Thu, 10/14/2010 - 13:05 | 649692 Smokey1
Smokey1's picture

All the bank fraud should be prosecuted as capital offenses. Life w/o parole is too good for most of those worthless jerks. The very same mfkrs that pay themselves millions in bonuses on top of this most recently discovered cesspool of shit.

Thu, 10/14/2010 - 13:18 | 649739 LeBalance
LeBalance's picture

Coinage Act of 1792, "degradation of the currency is punishable by death."

And they did just "print" up a promise to pay from thin air.  But of course the person requesting the mortgage did request it and is therefore equally culpable.

And so are those who use a credit card which prestoes money from thin air.

That's pretty much everyone.

So everyone needs to go to the gallows!

See you there!

Fri, 10/15/2010 - 06:35 | 652137 VodkaInKrakow
VodkaInKrakow's picture

Nice, gallows humour.


I doubt that many in the world amongst the lower classes know that banks are allowed to leverage, nevermind that banks are allowed to create money out of thin air on an Excel spreadsheet. More and more are waking up to that fact, however.


The person taking the loan is not equally culpable. That is the system that they are forced into. No loan, no home. And let us rid ourselves of the FICTION that you just have to save, save, save - that with all those abundant million dollar jobs that provide million dollar jobs - that anyone can get if they just TRY, TRY, TRY - exist for every American and the people of the world.


That is a lie that too many believe.


Gallows? The proper way or let them hang there for a few minutes. BRING BACK THE GUILLOTINE! And make sure you blink five times after your head rolls!

Thu, 10/14/2010 - 13:08 | 649700 curbyourrisk
curbyourrisk's picture

SNL Financial.  Everytime I see that name I think John Belushi in a bee outfit.

Thu, 10/14/2010 - 13:12 | 649723 Joe Davola
Joe Davola's picture

Johnny's buzzing off, Johnny's buzzing off!

Thu, 10/14/2010 - 13:11 | 649715 Joe Davola
Joe Davola's picture

Every day I feel like a bigger sap for paying off my mortgage early, let alone making payments in the first place.

Thu, 10/14/2010 - 13:12 | 649724 Charley
Charley's picture


Thu, 10/14/2010 - 13:11 | 649717 goldmiddelfinger
goldmiddelfinger's picture

Squatter class. Hey but kramer says its no worse than the BP oil spill

Thu, 10/14/2010 - 13:12 | 649718 Charley
Charley's picture

Well, now we know what all those excess reserve were for...

Thu, 10/14/2010 - 13:15 | 649730 Pedro
Pedro's picture

How long can the banks hold out?  They have been sitting on these foreclosures already, in addition, they are going to get double whammied because I believe these assets are way overvalued due to the "mark to model" valuation.  How long?  After the election?  The Spring?  Never?  

Thu, 10/14/2010 - 13:20 | 649751 ZakuKommander
ZakuKommander's picture

Never sounds good.

What on earth would lead anyone to believe that anything will change?  A self-imposed foreclosure freeze will not force the banks to revise their "marked to model" valuations.  And the freeze will end when the banks either "find" sufficient documentation, or some law is passed to solve the problem for them

Thu, 10/14/2010 - 13:48 | 649895 Bob
Bob's picture

Let's just lay back and enjoy it?  Who sent you in here to peddle this bullshit? 

There's nothing that better serves the interests of TPTB than cynical resignation.

Thu, 10/14/2010 - 15:44 | 650407 ZakuKommander
ZakuKommander's picture

I see you're chock full of solutions. So which party in our one party system is going to lead us out of the desert?

Thu, 10/14/2010 - 15:48 | 650425 Bob
Bob's picture

Parties have nothing to do with it.  One would think that with your apparent insight regarding parties, you of all people would see that and get over it. 

Let the rule of law be affirmed. 

Thu, 10/14/2010 - 16:30 | 650652 pan-the-ist
pan-the-ist's picture

One party system, working for the banksters.  The liberal party throws a bone to the poor, while the conservative party pretends to be for small government.  I think we all wish for the rule of law, but you have to acknowledge that you shouldn't hold your breath.

Thu, 10/14/2010 - 17:23 | 650799 ZakuKommander
ZakuKommander's picture

Bob, my friend, who do you think controls "the law"?

Hint: TPTB


Thu, 10/14/2010 - 17:24 | 650801 ZakuKommander
ZakuKommander's picture

Not that I don't wish that you were right!

Thu, 10/14/2010 - 18:18 | 650955 Bob
Bob's picture

The jury is still out on that one.  The Courts obviously didn't relish the prospects of sorting out this shit mess, but now they're going to have to.  We'll see if American Judges have as much respect for their obligations as Judges in Columbia and Pakistan, who stood up and did the right thing, even when it them brought mass murders and jailings. 

Thu, 10/14/2010 - 21:27 | 651524 pan-the-ist
pan-the-ist's picture

Gore V. Bush demonstrates all you need to know about the American Judicial system.

Fri, 10/15/2010 - 01:06 | 651923 RockyRacoon
RockyRacoon's picture

Hey, Bob.  The Courts might be the logical choice, but after November we'll see what Congress has to say about it all.  And it won't be pretty the way they railroad the entire judicial process by decree. 

Fri, 10/15/2010 - 07:41 | 652180 Bob
Bob's picture

We'll see if the judicial branch allows itself to be railroaded.  And whether the states will swallow abrogation of their rights.  And whether anything Congress does will be proven constitutional for a multitude of angles.

Thu, 10/14/2010 - 16:56 | 650763 groucho_marxist
groucho_marxist's picture

isn't there a statute of limitations, beyond which the squatters become owners, whatever the banks may claim?

Fri, 10/15/2010 - 01:07 | 651924 RockyRacoon
RockyRacoon's picture

Adverse possession may be an option but I've not heard it mentioned in any legal sense.  Takes too many years for it to manifest in most states.

Fri, 10/15/2010 - 06:42 | 652140 VodkaInKrakow
VodkaInKrakow's picture

As long as they keep paying past, present, and future Administrations and Congress.

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