"We Can Either Have a Rational Resolution to the Foreclosure Crisis or We Can Preserve the Capital Structure of the Banks. We Can't Do Both"

George Washington's picture

Washington’s Blog

The quote of the day comes from Damon Silvers, a member of the independent Congressional Oversight Panel:


We are faced with a choice here.


We can either have a rational resolution to the foreclosure crisis or we can preserve the capital structure of the banks. We can't do both.


In other words, we either let the giant mortgage and foreclosure crisis drag both the economy and the rule of law down, or we can rein in the giant banks.

Other great quotes from yesterday's Congressional Oversight Panel hearing:

  • Now do you wish to retract your statement that there is no systemic risk in this situation? And the word is "risk" -- not "certainty" -- but "risk"? And I would urge you to do so, because these things can be embarrassing later. [COP Panelist Silvers]
  • I hope that ... if the Treasury comes back to us and is discussing whether or not we need to deploy further public funds to rescue Bank of America, or such other institutions as might be affected by these events, that we get a similar kind of indifference to their fate after it's too late. Because it strikes me that in light of the mathematics I've gone through with you, it is not a plausible position that there is no systemic risk here. [COP Panelist Silvers]
  • "So, I mean, it sounds like Treasury as of today has not done even a back-of-the-envelope sketch as to what the potential put-back rights could be to the TARP financial institutions," COP Panelist J. Mark McWatters said, referring to the risk big banks face from investors forcing them to buy back dicey mortgages.
  • America does not have to continue in a "crisis." We do not have to tolerate abuse of the legal system, systematic errors, bloated fees, and chaos in the housing and financial sector. [Harvard and Iowa law school professor Katherine Porter]

Here's a video of the whole hearing.

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Downtoolong's picture

America does not have to continue in a "crisis." We do not have to tolerate abuse of the legal system, systematic errors, bloated fees, and chaos in the housing and financial sector. [Harvard and Iowa law school professor Katherine Porter]


Agreed. For over a year now my primary goal has simply been to sell my house in one city and buy a house in another city where I plan to move. I don’t care what the absolute price level of houses is as long as I make the exchange and transition at current market price. I have no mortgage on my home which should make the process even simpler. Even so, there’s no escaping the wrath these banks and mortgage lenders have brought upon the housing market. What would have been a 2-3 month process three years ago has now become a seemingly endless saga for me to try and execute. I’m tired of having my life on hold waiting for the banks and financial sector to sort out their problems. Even with all the support we have given them, and all the trouble they have caused, they are still only willing to step up and do something about it when it includes a big fee and profit for themselves.

Common_Cents22's picture

the choice is similar to the car performance upgrade triangle.


price, performance, reliability.    pick any two at the sacrifice of the third.

RockyRacoon's picture

Like any contractor will tell you:  You can have the job done good, fast, and cheap.  But you only get 2 of the 3 choices.

Psquared's picture

Will Bill Black take up arms?

Will Simon Johnson and James Kwak take up arms?

Will Rick Santelli take up arms?

Will Sarah Palin take up arms?

Will Karl Denninger take up arms?

Will Tyler Durden take up arms?

If the people who are the most outspoken critics of the government and the FRB policies are willing to risk their life and property to save America then we have a chance.

"To whom much is given, much is required"

Blah Blah Blah's picture

John Hancock signed his name on the Declaration of Independence, as large as he did, such that there would be no mistake who's side he was on.

They risked everything........so we could screw it up?

Unlawful Justice's picture

We are faced with a choice here.

We can either have a rational resolution to the foreclosure crisis or we can preserve the capital structure of the banks. We can't do both.


Mr Silver,  

You know the answer to your own question and you don't like either answer.

Banks will not volunteer to decapitate there're own head to save the system.   You have to do it for them, or lose yours.  Doing nothing is also another option!!!.   What a PICKLE.

Mutual assured destruction of both banksters and lawmakers but neither is going to compromise as neither can see a benefit of doing so.  Delay the inevitable, but it's still inevitable.   Be assured there will be blood, the question is who?




jal's picture

The universe has 10^80 particles.

What happens when the universe is only made of $? :-)


zeroman's picture

YOU GUYS DON'T GET IT. In spite of all the "talk" they have to protect the banks or they jeopardized the primary dealers who are absoutely necessary to keep our ponzi financial whoredom going.  They can talk tough but when faced with utter financial armaggedon, they will all cower to the banks because they have an incestuous relationship that requires they work together or be killed

Yophat's picture

Exactly!  and the worst that will happen is a banking roll up into one with a government license plate!

Yophat's picture

money is what makes the world function.  money is created by debt.  whoever controls credit controls the world.  crisis is just an effort to consolidate power.

imagine a government bank being the only source of new credit in 6 months.....then try to imagine who would stand in their way!  Won't be the corporations which control and finance the politicians!  Won't be anyone who wants to function economically in society with the rest of society!

Now how many are we talking about?  Who's got'em covered? fyi - FEMA, DHS, NORTHCOM, DIA, CIA, FBI, ATF, NSA, and the rest of the alphabet soup!

NSA is building a computer room in Utah for $1.5 billion....that's 23% of Utah's 2011 state budget.....for a computer room - to do what????  fyi - Texas and several other states are getting them too!

NotApplicable's picture

We can only hope it's for porn. Sadly though, they'll find other ways to get their rocks off.

Bob's picture

You mean the relentless search for a terrorist in every American home?



Yophat's picture

LOL....worked for the SEC.....but sadly I think you are right!

covert's picture

this is a small part of a much larger problem. laws are seldom enforced no matter how bad and dire the crime. judges usually issue just a slap on the wrist for even the most major felonies.



Yophat's picture

nobody has the balls to revolt anymore....and DHS would be on 'em like flies on stink if they did!

FEDbuster's picture

I am interested in seeing how (and if) they catch the guy in DC taking pot shots at the Pentagon and Marine buildings. 

Disgruntled veterans have marched on DC in the past, and it didn't end well: 


Yophat's picture

exactly....and technology has made a 100 fold leap since then!

If anything works to break the governments back.....it will be like what we are seeing in Europe right now (riots due to broken promises - the realization by the people that the government cannot make good on its promises).....no organization....just angry people destroying infrastructure and shutting down lengthy supply chains!

FEDbuster's picture

Or a critical mass of American's saying a collective "fuckit" and defaulting on all their debts at once.  Tossing off the chains of debt slavery would wreck havoc on the Banksters.

calltoaccount's picture

here's another approach:

Nobody says it more clearly or courageously than David DeGraw in this video (despite the over-amped music and graphic). 




DeGraw's platform for real change:


The Economic Elite Vs. The People of the United States of America


It's time for 99% of Americans to mobilize
and aggressively move on common sense political reforms.

We will obviously have many differences on how our country should be run, but we can all come together to dismantle the Economic Elite by making several pivotal political reforms. As long as the game is rigged in favor of the Economic Elite, we will all lose. So let's find common ground and focus on several obvious battles that we need to win, and can win:


Election Reform 

* Electronic Voting: First and foremost, no private corporation should be able to tell us who has won an election without providing an auditable paper trail. Many Democrats felt that Bush stole the 2000 and 2004 elections, and many Republicans felt Obama stole the 2008 election. Of course people are going to feel that elections are stolen when you have a private corporation secretly counting the votes; it is the inevitable result when you can't verify the election results. In the past few years companies that count the votes have been consolidating, and one company, ES&S, now secretly controls the majority of all our votes. As voting watchdog Brad Friedman stated, “With the ES&S takeover of Diebold/Premier, their nearest competitor, the privately-run election Goliath now has an un-overseeable lock on virtually every election in the United States of America.” It is common sense to say that this is way too much power to be put into one private corporation. 

* Campaign Finance: The stunning ruling by the Supreme Court to allow unlimited political spending by the Economic Elite has made a bad situation even worse. We must level the playing field by enacting laws to prevent the overwhelming influence of big money interests in controlling politicians who are forced to pander to them for the ever-increasing need to raise more and more money to have any shot at winning public office. Statistics show how much the Economic Elite already dominate this process: over 90% of the time the candidate who simply spends more money on their campaign wins the election. 

* The Two-Party Oligarchy: We must end the two-party system by funding and voting for alternative parties. It is absurd and completely outdated to only have two dominant political parties in a technologically advanced nation of 309 million people. The two-party paradigm is obsolete and creates a system easily manipulated, as the past decade proves with the co-option of the Democratic and Republican parties. We can give our money and support to whomever we like - Libertarians, Tea Party, Progressives, Greens, Independents and the many soon-to-be-created political groups. However, it is pivotal that we immediately cease support for both the Republican and Democratic parties. We understand the there are representatives from both parties who are fighting for our interests, but they are very few and easily marginalized by paid-off party leaders. 

* Getting on the Ballot: Republicans and Democrats have created rules to make it increasingly difficult for opposing political parties to even get on the voting ballot. We must make this process easier and invite new parties onto the ticket. 

* Debate Commission: The Democratic and Republican control over who is allowed to participate in the nationally televised debates gives the two parties an insurmountable advantage over any other parties. If you are not even allowed to participate in them, you have no shot at winning. Along with this, all candidates should be given a fair share of television coverage. 

* Voter Registration: If you are a citizen, you should be automatically registered to vote. 

Governmental Policy Formation 

* Secrecy, Transparency and Accountability: Government secrecy is at the root of most of our current societal and economic problems. When decisions are made in secrecy, corruption will most often be the result. By throwing light and investigation on the government policy process, we can easily expose the Economic Elite's agenda and limit their influence. As part of this, all legislation and conference reports must be posted online prior to Congressional debate and vote. 

* Lobbying: Along with campaign finance, political lobbying is another way the Economic Elite can easily manipulate our political process financially, in what amounts to legalized bribery. In 2009, a record amount of money was spent lobbying Congress, and now with the new Supreme Court ruling, lobbyists will have even more power to manipulate the political process with what amounts to buying the laws of our nation. Lobbying activities behind closed doors must cease entirely and equal time must be given, transparently, to all the parties directly affected by the law being written. 

* Shutting the Revolving Door: No politician should be allowed to profit from government laws or policies which they have written or supported. The practice of leaving a major company to become a politician who then creates and/or supports laws that directly benefit the corporation he or she used to work for, or, conversely, politicians who leave public office to take a high-paying job for a company they have benefited, is a grotesque abuse and manipulation of the democratic process. The revolving door between politics and big business is worse than it has ever been and has corrupted the government like never before. 

Information Platforms 

* Media Concentration: Having a few large multinational corporations dominating the overwhelming majority of our news and information system will never lead to an informed citizenry. Only ten multinational corporations dominate our mainstream media system. These companies are run by 118 individuals who actively work to propagate Economic Elite rule. The people who run these media companies also sit on other corporate boards that often represent a major conflict of interest. Having only 118 people in ten companies dominating a system that creates public opinion for 309 million people is absurd. We must break up this information cartel and support a more diverse and vibrant independent press that fosters real investigative journalism. 

* Net Neutrality: The free and open architecture of the Internet is vital to our success. Without an open Internet our most powerful medium for research and communication, and key organizing tool, will be lost. The Internet must be protected from growing forces that seek to control it by limiting our access to information and our ability to communicate on a mass scale. 


* Medical Costs: We have disagreements on how to best provide healthcare, but we all agree that whatever the method, the result needs to be lower costs. We have the most expensive healthcare system in the world and we now pay twice as much as other nations. Other than creating huge salaries for health industry-related executives, there isn't any reason why we should be forced to pay such outrageous sums of money for second-rate care. No American should die due to lack of money, or have to face bankruptcy in order to get life-sustaining treatments. 

* Food and Water Supply: Our food and water supply systems have become a major health hazard. The amount of harmful chemicals found in both our food and water have reached record levels and is causing alarming levels of sickness in a growing number of people. 

Real Economic Competition 

* Most Americans Believe in Competition: If a person works hard, is productive and good at what they do, most everyone believes that they should make more than a person who sits around looking for handouts. However, just as in sports, to maintain a competitive environment you have to have rules in place that prevent people from having an unfair advantage. For those who believe in competition, in capitalism and free markets, you have to acknowledge that what we have now is not a free market based on fair competition. It is a rigged market, where larger institutions like Goldman Sachs and JP Morgan have an unfair advantage. We cannot allow them to be beyond the law, manipulate the market and then receive taxpayer funds to increase profits and risk-taking while smaller companies, outside of Economic Elite circles, have to play by a much stricter set of rules. 

You can't have free market capitalism when you have government policies favoring companies that have more political clout than others. What we have is socialism for the rich and trickle down economics for the rest of us. We have a market systemically designed to funnel money into the pockets of the richest. If the past few years have proved anything, they have proved that our economy is much more like a pyramid scheme than a free market, where the more money you have, the more money you make. So whatever your economic beliefs and theories might be, let's all come together to admit that our "free market" is an illusion. We need to make the economic playing field fair so that we can have real competition. 

* Redistribution of Wealth: Due to the rigging of our economic and political system, vast sums of wealth have been hoarded by the Economic Elite over the past 40 years. This money must be redistributed to the 99% of Americans who have been robbed and exploited. There will be much heated debate over how this money should be distributed, but we all need to agree that we must first hold the Economic Elite accountable and our wealth must be seized from them. 

* Investigations and Prosecutions: The Financial Crisis Inquiry Commission has the power to reveal the inner workings of the financial coup. We must apply intense public pressure and scrutiny to force the Commission into conducting a real investigation. Another urgent priority needs to be a much wider-ranging look at war profiteering. There has been some investigation, but not nearly enough and hardly any prosecution. These are just two of the many investigations that need to be launched. As long as we keep letting the Economic Elite get away with outright theft in broad daylight, we will never be able to restore a nation of law. 

There are obviously other vital issues that need to be addressed, but these are the core common-ground issues that we must urgently rally around and support. Unless we organize and take decisive action on all these issues, we will all suffer the consequences of our collective inaction. Any politician who does not urgently move on these issues must be voted out of office and replaced by people who will aggressively fight on these fronts. 

These are the core issues that keep the Economic Elite in power. As famed military strategist Carl von Clauswitz wrote in his study "On War," it is pivotal to strike at this core structure, at "the hub of all power and movement, on which everything depends."


RockyRacoon's picture

Laudable goals to be sure.  Are we just too far over the hill to even hope for implementation of any of this in a measurable way?

Yophat's picture

I tend to think so.....like herding cats!  Ain't gonna happen.  No unity.....just a bunch of selfish people looking out for #1.  So they are easily broken, distracted, bought off, turned on each other, etc.

Just look at the politics and the whole Left vs. Right facade that so many get engaged in....or the 1/5 of Americans on food stamps.....or the 1/5 of Americans incarcerated.....or the 1/5 of Americans that work for government or the MIC.

It will be riots, chaos, and destruction (do I dare say judgments in the way of natural disasters) that break the back of the beast!


Ancona's picture


The PTB will most likely not permit a "resolution" of BOA, JPM or any of the other TBTF behemoths, because they have accepted too much campaign cash from them.

What I see happening is systemic failure of the TBTF's as a direct result of having to buy back all of the toxic garbage they peddled as AAA to unsuspecting Norwegian pension funds. When that ball gets rolling, you had better not stand in the way, because the American People cannot afford the bill, and will most likely revolt in the face of another bail-out.

A Man without Qualities's picture

Great statement - hits the nail on the head.  The simple fact is the screw up by the banks is too large to be buried and they can't make a quick settlement with the SEC and make it go away. Banking stocks are living in fantasy land, but at the end of the day, they are propping up the prices with other people's money - theirs is all gone.

hedgie's picture

Karl Denninger, who helped create the Tea Party and runs Fed-Up USA, feels that the Tea Party has been largely co-opted by the usual crony capitalists.  Very few Tea Party candidates focus on the original central issue of government support for fraud.

RockyRacoon's picture

KD was on Lawrence O'Donnell's show this evening and was the only articulate one of the "Tea Party" representatives who managed to ream O'Donnell a new one.  

hugolp's picture

100% in agreement.

And I am sure we are 100% in agreement what is the option that is going to happen.

jal's picture


The truth has been told to the lawmakers. These lawmakers have been trained as lawyers. Their assistants have law training. 




Surely they can see that what has happened to  J6P CAN AND WILL end up on their doorstep. It "pay" a lot more to "steal" from the wealthy than to steal from J6P.  The lawmakers are wealthy. 


They will fix the mortgage problem to save their own wealth/assets.




If they cannot see the danger then they will end up being part of the wealth distribution.


Do these lawmakers have any assets into the MERS system.


Why don't you find out for them and let them know that their asset ownership are in danger of disappearing.


That could motivate them to make sure that they make different decissions.


Yophat's picture

My bet is the solution will be government bank (like General Motors) via QE#2 & QE#3 in the next 6 months.  Bring in the iron fist!

More freedom for the illusion of security!  Status quo for the past 100 years!

MarketTruth's picture

Bring in the iron fist!

And you had better RIGHT NOW be buying and holding physical gold and silver hand over first.

Yophat's picture

LOL....my absolute last priority at this point!  The bubble is gonna pop hard when people figure out the government will backstop everything.  They will fail of course but that will be another year down the road.

At the end of the day everyone has to eat - in our broken disfunctional agricultural system (destroyed foundation - the soil).....that can be a challenge when leverage goes astray, corporations dissipate, inputs fail to materialize, supply chains break down.

My #1 priority is food - both storage and production.  A lot of other stuff between #1 and dead last like tools, equipment, G&A, etc....

Bob's picture

Few words, simple reality there.  Resolve the mutha fuckin banks?

apberusdisvet's picture

Will the sheeple go for another bailout?  Probably.  Too few of us know what is going on.  If we are going to lynch both the banksters and the corrupt Congress critters, can we toss in a few MSM types for sport.  After all, they are equally to blame.  What would be the bounty on Krugman?

Eternal Student's picture

Sorry, it was those "sheeple" who were against the last bailout, if you'll recall. The opinion was overwhelmingly against it, and Congress' phone lines were flooded at the time. The House actually shot it down, the first time around.

People keep saying that Congress won't go for another bailout. I have to disagree, I think they absolutely will  when there's another repeat of September 2008. Oh, there will be holdouts. But the way to get enough votes is to stick in enough pork for each Representative. If you disagree, please show me once where this strategy hasn't worked. It worked in September of 2008, and I unfortunately see no reason why it won't work again.

The only thing which will keep Congress honest here are the Bond markets. And heaven help us when they do.

Big Corked Boots's picture

The sheeple will go for another bailout - if they are getting bailed out. (or at least, they think they're getting bailed out.)

RichardENixon's picture

"or at least, they think they're getting bailed out"  That's what the PR boys are working on now, how to sell it.

Rick64's picture

Pay me now or pay me later.

williambanzai7's picture

“On the chessboard, lies and hypocrisy do not survive long”
(Emanuel Lasker)

HCSKnight's picture

Once the Tea Party minded "Republicans" get in congress, TBTF is going to mean

Targets Being Taken-out Forever

TheMonetaryRed's picture

Once the Tea Party minded "Republicans" get in congress, TBTF is going to mean

Targets Being Taken-out Forever.

OMG - I hope you don't actually think that!

If you do....wow.

You thought Obama voters were disillusioned? 

If they get both houses, the TPers will raise the debt ceiling $2 trillion in their first Congress, and they will close zero big banks - zero.



Nikki's picture

You win. Tea Party will be coopted in the time it takes for them to open up their brand new Swiss bank account pass book after their first AIPAC speech.

Obama care will never be repealed.
FASB rules never restored.
Illegal immigration will remain.
Nafta. WTO for China. Free trade forever..
Bernanke's sponsors shielded from justice.
Unemployment... Higher.
Federal debt and deficits... Higher.

Anger level amongst the sheeple... Way higher. Promise change in 2012....

ElvisDog's picture

You need to go back and study your old civics textbook. Even if the Republicans take control of congress, Obama and his appointees still control the executive branch and any resolution or oversight of the banks will come from Obama, Geithner, Bernanke, and so on. Obama and his appointees will still be in charge of the FDIC, the SEC, and all over government oversight bodies. The Republicans can hold hearings and issue supeonas but they will not be in charge.

Fed Supporter's picture

Agree 100%, anybody that thinks the Republicans are going to be our fiscal saviors are sadly mistaken. Mark my words, oh I just did.

optimator's picture

The new Congress will simply be bought by the Banksters, and for less money than they were paying the old Congress.  The Banksters can afford it.

Rasna's picture


I think of myself as independent and leaning to Libertarian beliefs, but it was Bush and the Republican led Senate (Yes, with help from corporate Dems) that pushed through TARP...

Any thoughts that the few "tea-party" Republicans are not going to be coopted, or will not vote with the majority in the House is magical thinking at best.

Tapeworm's picture

 From what I have not heard, the big finance wreck in NOT being talked about by the Tea Party candidates. The big issues of fraud and complicity are nowhere to be heard. The PTB have done a bangup job of sidetracking anything of real import.

TexasAggie's picture

The Senate since 2006 had been under democrat control.