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Whistleblower Speaks On Fraudclosure

Tyler Durden's picture





 

Zero Hedge has been approached by an individual who participated directly in the various aspects of what is now broadly known as Fraudclosure. The below narrative recounts his experience in the due diligence process of selecting loans for the MBS pipeline. And far more than just legalese "technicalities" or a broad abrogation of property rights, as he points out there is a far more palpable issue for all those who hold Mortgage Backed Securities or other pool aggregations of mortgage loans: "we have no idea what is in those packages." This coming from the person who helped pick, diligence and sort through the various loans...

Full exposition:

The truth behind the foreclosure crisis. 

Yes,  I am choosing to remain an anonymous coward.  I just have been waiting this shoe to drop for a long time.  The last thing I want to do is have to explain myself and get my ass sued for defamation.  Not worth it. 

This much I can tell you.  We have no idea what is in those packages. I personally packaged billions in MBS which have been placed on public shelves.  Those assets were underwritten by Goldman, Morgan or name your investment bank.   

I started packaging loans as early as 2003, at the beginning of the crisis.  After working for a large aggregator in New York, I joined GMAC.  Those were good times.  I worked directly with the traders to package assets that we would buy from our institutional clients and broker channel.  It was the trader’s responsibility to close the deal with the underwriter.  He would then hand the deal to the securitization group where it was managed by an asset specialist and a securitisation manager.   We take the pool to the ratings agencies, S&P, Fitch, or Moody`s where we get levels of overcollateralization required for the waterfall of public tranche offerings. 

Breakdown

Then, we worked with underwriters of the deal to perform due diligence.  That is where this process breaks down.  They use sampling to verify the makeup of the pools.  There is a lot of pressure to get the deals done in a timely manner so they don’t have time to check every asset.  The most I’ve ever checked on a deal is 30%.   We’ve done some pools that came back very different from what the trader originally told us.  I’ll give a personal example and show how  it relates to the foreclosure crisis. 

I put together a large subprime deal where we said that the percentage of Stated income assets was 10%.  Out of a pool of over 500 assets, we ran our due diligence and pulled a sample of 50 assets, we had over 25% of the assets come back as stated income.  Well, we got another 50 assets and still came back with 22% stated.  It was obvious to me and the underwriter that the stated income levels were higher than originally reported. 

How did we handle this issue?  We threw all the stated income assets out of the deal.  In this case we threw out 22 assets and packaged the deal as 10%.  In fact that is how we would typically handle issues where we had discrepancies.  I told my boss on several occasions that it was a real fishy way of doing things, but as everyone was also doing it, my coworkers, the guys from Goldman, the agencies, I just kind of went along with it.  

We securitized that deal and put 10% stated on the dealbook.  S&P put their name on the package.  Goldman underwrote that deal and sent it out to hedge funds and pension funds.  What the hell? 

That deal was one of the worse deals that we did.  Many other deals did come in as reported. Some might have been only 15%, or 12%  instead of 10% stated.  In most of those cases, we might have only thrown out a couple of assets.  And, it may have mathematically worked out assuming that the sample is representative of the population, but it still leads me to my big problem, that there were far too many instances of incorrectly labelled loans, incorrect documentation such that the pool information which went on the dealbook could be very different from the actual makeup of the pool.

Don’t get me wrong, I’m not saying that all deals are incorrect, most aren’t.   I’m saying that many are, and we have no way of knowing which deals are tainted. Fortunately, most deals have been seasoned a bit which make them easier to value, but the foreclosure documentation is just one instance where my shady scepticism has been vindicated.  I knew there was shit floating around in the pools we were putting together, but the sampling technique and level of due diligence was never going to clean it out. 

Due Diligence of lack thereof

That is one of the big fights that the we had with the i-bank underwriting the deal.  We would always try to reduce the sampling size.  The agencies would stand on the sidelines, and put the stamp of goodness on the pool so long as we were in agreement with the underwriters.

Now going back to the foreclosure mess, when doing the due diligence, we would often find assets that were missing a document here and there (and these were just the ones that we were catching).  We had the same response to the bad docs as we did the stated income discrepancies, i.e. just throw those assets out. 

I’m no expert, but I do know that statistically, if there is a problem with the sample,  there is an overwhelming likelihood of having problems with the population.  If you are checking the meat and find out its bad, you don’t just throw out the piece that you checked.  It means you have a problem.  Check everything. 

During the heyday of securitization, due diligence was something that we tried to limit.  The underwriters were really looking for instances of egregious fraud.  They did not set out to intentionally fraud investors, they just thought that by throwing out the offending assets, the pool would be made whole so to speak

Loan Documents

Foreclosure and other loan docs make the issue more complex.  We would buy assets all over the country and package them up.  Every state has its own laws as to the documentation required.  We do have lawyers who are experts in the ins and outs of loan documents, but in all honesty, we relied on the threat of reps and warrants to help us feel comfortable.  

We didn’t check every single loan document for every single legally required piece of information.  Yea, we’d check for the important things, but we couldn’t and didn’t check for every single clause on every single loan document.  We couldn’t.  And now we are finding out that we should have. 

But, as I said before, we have no idea what is in those packages.  

 


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Tue, 10/19/2010 - 08:52 | Link to Comment BobPaulson
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Tip of the iceberg?

Tue, 10/19/2010 - 09:01 | Link to Comment Bob
Bob's picture

Mortgages Were Fraudulently Pleadged To Multiple Buyers at the Same Time:

http://www.zerohedge.com/article/mortgages-which-can-legally-only-be-sol...

Tue, 10/19/2010 - 10:20 | Link to Comment Noah Vail
Noah Vail's picture

"We didn't intend to defraud anybody." But he knew that if there was a problem with the sample there was a problem with the whole pool bu they went ahead and sold it anyway. The same sorry excuse we hear everywhere. Try telling a jury that he didn't intend to commit fraud with the admission of that knowledge.

 

He's a coward alright, and a scumbag who knowingly screwed investors. I love it, he says "I told my boss this stinks" but then he went right on doing it. He needed the job (money) of course. Just a well paid whore, IMHO.

Tue, 10/19/2010 - 10:26 | Link to Comment Bob
Bob's picture

That's what the small fry are for.

Tue, 10/19/2010 - 10:49 | Link to Comment zot23
zot23's picture

And the rest of us are not Noah?  If you believe the FED is taking us all for a ride and you still pay bills in those funny green pieces of paper, you're a paid whore (and now you know it.) You and I might not be as blackened as our anonymous leaker friend, but no one in a centralized economy is lily white on these issues. 

I give this guy props for coming forward now (even anonymously) to spill the beans.  It's still enough to put his job and his family's bread at a terminal risk.  The only reason he would do this is out of a sense of guilt, a bothered conscience, at what he sees he and his partners did.  If he wanted to CYA he would toe the line and shrug while lamenting the new liars' code, "How could anyone have foreseen this happening?"

I just sincerely hope he can find it in himself to take the next step and give a deposition to a lawyer about what we read above.  There are some state AGs around the country looking for such a silver bullet to help those that have been hurt most in this mess and put the biggest fish they can get behind bars.  It would take more guts and might rip away his anonymity, but if he's serious about putting this right that's what is needed.  

Otherwise, you'd be right and he'd be a coward.

Tue, 10/19/2010 - 10:57 | Link to Comment Bob
Bob's picture

That's fair.  I would add that even a coward would be well-advised to work out a deal with  an AG before somebody else beats him to it and he is hung out to dry. 

Tue, 10/19/2010 - 11:05 | Link to Comment RecoveringDebtJunkie
RecoveringDebtJunkie's picture

I agree that we are all complicit in this destructive, widespread ponzi scheme to some degree or another. Here is an extensive piece discussing that complicity:

http://peakcomplexity.blogspot.com/2010/09/confronting-our-complicity.html

But that's also the key word, degree. A person that recklessly labels loan pools in MBS and helps major banks defraud investors is significantly more complicit than the person who deposits money at those banks or takes loans from them or uses their CCs.

Tue, 10/19/2010 - 12:32 | Link to Comment Hook Line and S...
Hook Line and Sphincter's picture

Do I smell jealousy?!

Tue, 10/19/2010 - 13:26 | Link to Comment Ripped Chunk
Ripped Chunk's picture

Gross negligence can be found to be tantamount to fraud. Especially when you are supposed to know what the fuck you are doing.

Tue, 10/19/2010 - 13:27 | Link to Comment LiquidBrick
LiquidBrick's picture

I love it, he says "I told my boss this stinks" but then he went right on doing it. He needed the job (money) of course. Just a well paid whore, IMHO.

Yep! Everyone grows a conscious when the heat is on. All of a sudden he is the good guy for blowing the whistle. If he did this 2-3 years ago he could get some credit for being brave but a self admitted coward is just looking for acceptance in society.

This coward can't be trusted to wash cars properly in a car wash with Mexicans and would run off with the tip box.

I wouldn't let him pour me water in a pizzeria.

 

Wed, 10/20/2010 - 01:11 | Link to Comment Moonrajah
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Sir, your horse is too high. Try not to fall off.

Tue, 10/19/2010 - 09:04 | Link to Comment Rogerwilco
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@Bobpaulson

It's the tip of something alright, but it's not as big as an iceberg.

Tue, 10/19/2010 - 09:13 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Tip of the iceberg?

Yes, an iceberg the size of Greenland which is now floating off the East Coast of the USA from Wall Street to Pennsylvania Ave.

Riddle me this Batman. If I had 1,000 units to sell and I wanted to sell 1,500 (and I had no problem with fraud) what would I do? 

That's easy Robin, I would play a game of "Hide the Property" by treating the 1,000 units like a deck of cards, shuffling and re-shuffling them repeatedly until I could place the same property in multiple piles. Thus I could make 1,000 look like 1,500 or even 2,000.

After all, who's gonna check for duplications within different piles. All that will happen is they check within each pile so you just don't double up on units within each pile. ChaChing!

Holly Cash Register Batman.  

Yes, Robin, now you understand why they wanted to bury this in the now taxpayer owned Freddie and Frannie balance sheets. And of course the Fed. 

Tue, 10/19/2010 - 10:15 | Link to Comment mrhonkytonk1948
mrhonkytonk1948's picture

Seems like MERS would have to assign some sort of unique ID to each mortgage simply to operate.  Might be a forensic treasure-trove when the class action guys start looking for the same mortgage turning up in multiple REMICs.

Tue, 10/19/2010 - 10:27 | Link to Comment pan-the-ist
pan-the-ist's picture

I would love to put my perl skills to good use.

Tue, 10/19/2010 - 18:35 | Link to Comment Bob
Bob's picture

How about a little database harvesting?

Tue, 10/19/2010 - 11:41 | Link to Comment NotApplicable
NotApplicable's picture

It's an 18 digit mortgage ID number (MIN).

Tue, 10/19/2010 - 10:40 | Link to Comment LeBalance
LeBalance's picture

How many real ounces of gold back each 100 "ounces" on paper?  We found out that "the paper financial asset" was backed by 1/100 ounce of physical.  (from the CFTC hearings thanks to GATA and Andrew McGuire.)

Cliff Diving?

Tue, 10/19/2010 - 12:58 | Link to Comment Diogenes
Diogenes's picture

Riddle me this Batman. If I had 1,000 units to sell and I wanted to sell 1,500 (and I had no problem with fraud) what would I do?

 

There is another angle on this. According to Catherine Austin Fitts Solaris site, the CIA and possibly other government agencies, have been raising money for years by buying a house and getting up to 10 mortgages with different banks. The banks sell the loans to Freddie and Fannie, they go into default and the government pays off.

She found out about this from a bank executive, even before the mortgage mess, who figured it out from analysing Fannie and Freddie's loss data.

Tue, 10/19/2010 - 13:51 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

I have no problem with Fitts view.

I suspect real estate/mortgage fraud has been used by many parties, both private and governmental, for decades. In fact, I believe it grew to become so widespread and pervasive that it exploded and needed to be buried.

The problem is that it doesn't stay buried.

Wed, 10/20/2010 - 11:50 | Link to Comment BobPaulson
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On top of this I thought some courts had found that partial ownership of a slice and dice of a mortgage does not actually give a bank the right to foreclose. Didn't a judgment like that go through last year against a German bank? This makes junk bonds look like Krugerrand. 

Tue, 10/19/2010 - 09:41 | Link to Comment El Hosel
El Hosel's picture

FLASH CRASH... JPM just traded down to 10 cents...

   Further evidence of fair and orderly markets.

Tue, 10/19/2010 - 09:56 | Link to Comment Dagny Taggart
Dagny Taggart's picture

Yes it did. How embarassing for JPM. I mean, nowadays, we see this happen all the time. But, not to JPM. It's rather like getting caught whacking off in the theatre. They must be mortified.

Tue, 10/19/2010 - 10:19 | Link to Comment CitizenPete
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Vas dat right on zie open?

Tue, 10/19/2010 - 11:26 | Link to Comment El Hosel
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Yeah,

  The S&P 500 jizzed itself in public yesterday, Abby Joe where is the box of tissue?

Tue, 10/19/2010 - 10:04 | Link to Comment Biggvs
Biggvs's picture

IB shows a low of one cent!

Tue, 10/19/2010 - 17:02 | Link to Comment tired1
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Can you provide a source, please? I've looked at some common charts and can't find any reference.

Tue, 10/19/2010 - 10:26 | Link to Comment pan-the-ist
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I'm confused.  Rush said this is Clintons fault, not the banksters.

Tue, 10/19/2010 - 08:55 | Link to Comment Careless Whisper
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this person needs to be in the witness protection program. the criminal bankers don't like it when their fraud is exposed.

Tue, 10/19/2010 - 09:16 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

I assume you're joking.

The captured and complicit Federal Government runs the Witness Protection Program, right?

Yeah, I thought so.

Tue, 10/19/2010 - 10:26 | Link to Comment DaveyJones
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True but this aint no 911. Looks like there's a lot of witnesses to the inner workings. 

Tue, 10/19/2010 - 10:37 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Which is why they will implement a "political" solution.

Sure the people will scream and holler and complain and maybe, just maybe, write their Congress Critter. But in the end, until "we the people" show the powers that be that "we the people are united and willing to stand together" it's understood the powers can do just about anything they want.

THAT was the lesson learned from the bloodless (from the powers that be point of view) coup of 9/11.

Tue, 10/19/2010 - 11:48 | Link to Comment MachoMan
MachoMan's picture

we WILL have a political solution because the emperor has no clothes...  there isn't any money left to throw at the issue...  they can't just buy all the mbs to keep them off of bank books...  the only solution is political.  Further, so long as the states are dependent upon the federal government for financing, then they're captured as well.

Tue, 10/19/2010 - 12:20 | Link to Comment DaveyJones
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I'm not disagreeing at all but I refuse to accept it. At some point comes the breaking. Everyone in debt so everyone gives up the rules. They are the pimps, we are the whores. The collapse of the economy is nothing compared to the collapse of law. The naked protection of powerful criminals. This can not go on. And where does the chain end? Who is the final banker holding everyone by their vitals?   

Tue, 10/19/2010 - 13:48 | Link to Comment MachoMan
MachoMan's picture

I agree the breaking will come.  The problem is, this isn't it.  The breaking is not going to be telegraphed...  it's just going to appear, like the flash crash, while everyone stands around with their jaws open.  In other words, an asteroid is approaching, but we have time to try and figure out how to divert it.  It's the asteroid we don't see that's the problem.

Tue, 10/19/2010 - 12:51 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

We are so very desperate to deny that we're Zimbabwe that we continue to believe our white knight in shinning armour is just around the corner.

Actually, s/he is just around the corner. But that white knight is you and me and they and them and those and us. Until we shake off our victim mentality and take personal responsibility for our own rescue, the Ponzi will never stop. Never.

This is an extremely positive post because the solution's in our hands. We just don't like it.

Tue, 10/19/2010 - 13:22 | Link to Comment Milestones
Milestones's picture

Exactly as I have posted! We have the Alexanderian sword in our hands confronting the Gordian Knot. We the people only have to seize the moment and USE the damn sword.

This nation and its people have been handed the means to extracate themselves from the reptile if they only have the one ounce of courage it takes to do it.  Milestones

Tue, 10/19/2010 - 14:10 | Link to Comment MachoMan
MachoMan's picture

CD, I agree that we still have to try, but the reason americans' spirits have been beaten down is that we're cognisant of the fact that we're in the twilight of the war...  the wealth gap is basically the fiscal representation of the degree to which the war has been lost.  This wealth is presently being converted at breakneck speed into harder assets, which can be utilized regardless of the underlying economic conditions.  Without any growth available to the world at this juncture, it may very well be the last robbery.  Deep down, we're aware of this...  mad at ourselves for letting it happen... 

I agree that we, collectively, will eventually make an effort to combat the spoils of the wealth gap.  My problem is that it's an ounce of prevention or a pound of cure.  By the time we get around to it, we'll need 10 pounds of cure.  I just hope that we're even capable of making the necessary changes when we've obtained the requisite level of collective will.  I don't put it out of the realm of possibility (and I certainly hope for it), but this time might be different given the world's growth model...  the point where we are on the timeline of the world's business cycle, relative demographics, and attitudes.

We can all help out in our own little ways, but I doubt it will be enough.  For example, paying all local businesses with cash and not requesting receipts to be written...  not accepting credit...  banking locally...  purchasing pms and taking physical delivery...  but, the wealth gap is a startling divide...  I hope we can bridge it AND keep some semblance of objectivity, fairness, consistency, and wisdom in tact.  I strongly doubt that the huffingtonesque suggestions for protest will amount to the level sufficient to make fruitful change...  we'll see if the upcoming elections make any dent in the problem...  but my guess is that the national political process has been captured for decades and the old game of blame the other head of the same snake will continue.

Tue, 10/19/2010 - 17:20 | Link to Comment Geoff-UK
Geoff-UK's picture

Is CD telling us...'we are the ones we've been waiting for?!'

Tue, 10/19/2010 - 13:41 | Link to Comment Fíréan
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The difficulty in getting a political solution is the interests and concerns of the other countries whose banks were defrauded in this matter. Having bailed out their own banks already are they not more likely to look for and go after  the guilty, with intention of recouperating their losses, than to comply with yet another public deception from which they could stand to loose yet again ? This is not just an internal US situation.

Tue, 10/19/2010 - 13:46 | Link to Comment MachoMan
MachoMan's picture

These foreigners/central banks have already stepped in line through swap lines and/or exchanged the mbs for treasuries...  They are solely and completely dependent upon the FED's success and, like the states, will act accordingly and say "how high?" at the word jump.

Tue, 10/19/2010 - 12:41 | Link to Comment apberusdisvet
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A lot of "assisted" suicides coming just like those that happened at F&F.  (just don't tell anyone....sssshhhh!)

Tue, 10/19/2010 - 09:30 | Link to Comment idea_hamster
idea_hamster's picture

Don't worry s/he's safe:

I’m not saying that all deals are incorrect, most aren’t.

Ha ha -- clearly, going off the KoolAid cold turkey is tough -- just a sip every now and then to remind ourselves that the world is going to be OK....

Tue, 10/19/2010 - 09:41 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Withdrawal is a bitch.

As I commented in another thread our worldview controls us. Thankfully our ego tells us it's the other way around. Ironically for those who first begin to reject some long held notions and beliefs, there is this tendency to hold on even tighter to other beliefs as a sort of internal balancing act.

One doesn't enter the scalding hot water of the brave new world quickly. Over time we slowly slip beneath the surface, coming out from time to time for breathers when it becomes too hot to bear.

Tue, 10/19/2010 - 10:20 | Link to Comment mrhonkytonk1948
mrhonkytonk1948's picture

Now, now.  In corporate-speak, the process described by the author is "working smarter, not harder" and "doing more with less" or as a mainstream economist might say, "increasing productivity".  The system will produce EXACTLY this sort of outcome over and over and over as those at the top of the food chain are consumed by greed and those at the bottom with fear.  Or, to paraphrase Dostoevsky, "once Consequences and Accountability are dead, everything is permitted."

Tue, 10/19/2010 - 10:07 | Link to Comment i-dog
i-dog's picture

"I’m not saying that all deals are incorrect, most aren’t."

Hmmmm ... something doesn't smell right to me. Lots of wishy-washy statements that a cross-examining attorney would tear to shreds.

Tue, 10/19/2010 - 08:55 | Link to Comment Raymond K Hassel
Raymond K Hassel's picture

Why didn't I buy those long dated out of the money puts last week? 

Tue, 10/19/2010 - 08:56 | Link to Comment sudzee
Tue, 10/19/2010 - 09:00 | Link to Comment Rogerwilco
Rogerwilco's picture

Your process and methodologies sound surprisingly similar to the way Congress writes laws. FUBAR, and bonuses for the guilty, what a country!

Tue, 10/19/2010 - 09:01 | Link to Comment snowball777
snowball777's picture

Not buying it. 'Real fishy'?! Besides...if what you say is true, you've got a lot more to worry about than defamation (e.g. your impending prosecution for securities fraud). I sincerely hope you are now unemployed because you really, really deserve to live with no source of income for the rest of your life (and just as the keynesian safety net goes poof, bully for you).

 

Tue, 10/19/2010 - 09:15 | Link to Comment SheepDog-One
SheepDog-One's picture

This IS the time these people should get witness protection as insider informants. Defamation or even prosecution is the LEAST of their worries when the diareah hits the HVAC, theres piano wire and lamp posts in all their near futures. REALITY, bitchez!

Tue, 10/19/2010 - 13:03 | Link to Comment Diogenes
Diogenes's picture

There are too many people in the know. It's impossible to kill them all. If prosecutors start to subpoena witnesses and question them under oath there is no way to cover everything up. They have change the law or go to jail.

Or as I said earlier, it's time to burn the banks or burn the constitution.

Tue, 10/19/2010 - 09:02 | Link to Comment mohadiep
mohadiep's picture

Another day, same bitches!

Tue, 10/19/2010 - 09:02 | Link to Comment unwashedmass
unwashedmass's picture

party's over. so which big bank goes down first? Or, along with handing the banks our entire Treasury, are we going to rewrite 1000 years of property law for them?

i bet we rewrite laws and allow the banks to conduct the largest seiure of private property in  human history.

 

 

Tue, 10/19/2010 - 09:07 | Link to Comment mohadiep
mohadiep's picture

tough choice. proberty rights vs. banks.

Tue, 10/19/2010 - 09:16 | Link to Comment snowball777
snowball777's picture

It would be very much like men with their brand of hubris to pick such a fight.

I eagerly await news of their demise in this regard.

Tue, 10/19/2010 - 10:32 | Link to Comment DaveyJones
DaveyJones's picture

Gonna rewrite property law, criminal law, contract law, tort law, securities law, fiduciary law........

Tue, 10/19/2010 - 12:08 | Link to Comment 1100-TACTICAL-12
1100-TACTICAL-12's picture

From what I see on the news this is no big deal... Looks like buisnees as usual BofA to restart foreclosure Mon...

Tue, 10/19/2010 - 09:06 | Link to Comment bisquit21
bisquit21's picture

I'm not a RMBS expert but 500 total loans in a trust sounds like an absurdly low number.  How credible is this anonymous source?

Tue, 10/19/2010 - 09:14 | Link to Comment daneskold
daneskold's picture

That sounds right.

 

500 loans at $900k average = $450 mm pool.

Certificates were sold in $25,000 nominal face value in the tranches.

Right on the money.

Tue, 10/19/2010 - 10:16 | Link to Comment bisquit21
bisquit21's picture

Geez. I had no idea avg loan sizes reached $900k in subprime deals.  I guess in CA the loans would have to be that large. 

I worked in the CMBS business and I am shocked by none of this.

Tue, 10/19/2010 - 09:10 | Link to Comment dan10400
dan10400's picture

OK, so when they were playing nice, they threw out some fishy assets.   I don't expect those went back to the originator, but most likely went into somebody else's MBS, right?

Tue, 10/19/2010 - 09:12 | Link to Comment Bob
Bob's picture

Of course!  Never waste an asset. 

Tue, 10/19/2010 - 09:17 | Link to Comment snowball777
snowball777's picture

Another one for J. Paulson over here!

Get that man a boo-rrrrreeeto.

Tue, 10/19/2010 - 09:13 | Link to Comment High Plains Drifter
High Plains Drifter's picture

Many courts have ruled in credit card cases, that if the debtor has been making payments on the credit card debt, then the credit card bank can basically prove the debtor owes the debt described , by a legal theory called "account stated"  even though in many cases the credit card bank cannot find any supporting foundational documents such as a signed contract, nor can a credit card bank ever prove they now own the debt because as in these mortgage cases, they too have securitized the debt. I wonder why the "account stated" theory does not work in mortgage cases since in many cases the debtor has been making payments on the debt.

Tue, 10/19/2010 - 09:45 | Link to Comment Glass Steagall
Glass Steagall's picture

The difference is in secured and unsecured debts.

I don’t think anyone is questioning whether or not money is owed for the mortgage: but rather, does the bank in fact have a secured debt that can be foreclosed upon or; does the bank actually have a broken chain of title that reduces their once “secured debt” to that of an “unsecured debt” with no recourse (ability to foreclose).

Yeah, they can chase ‘em for the money owed, but if the chain of title is broken, they can’t take the house to satisfy the mortgage debt.

Tue, 10/19/2010 - 09:57 | Link to Comment hbjork1
hbjork1's picture

GS,

Very interesting.

Thanks!

Tue, 10/19/2010 - 11:40 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

I agree.

But the precedent for papering over this mess with a political solution is how they treated GM/Chrysler bond holders "for the good of the country".

Tue, 10/19/2010 - 11:48 | Link to Comment NotApplicable
NotApplicable's picture

Don't forget the magic 4-letter "F" word known as Fair.

They love that word. It's the mandate that keeps on giving (or taking, depending upon your perspective).

Of course, it's best stated as an acronym, Fuck All Ignoring Reason.

Tue, 10/19/2010 - 12:46 | Link to Comment ThisIsBob
ThisIsBob's picture

Can always get a judgment of debt and execute against the property.  Problem is that the mortgage lien priortity is lost and  thge  bank takes its place at the end of the line.

Tue, 10/19/2010 - 13:36 | Link to Comment Boxed Merlot
Boxed Merlot's picture

Just a question, but wouldn't a "signed in blank" mortgage trump a promissory note, or even my right as I sit in my securitized suburban home dutifully making my monthly payment to a servicing company? 

Seems to me that note is far more valuable than any promise to pay bits and pieces.

If the location of that note is unknown, and trust has been violated, how can restitution Not be an option?

Tue, 10/19/2010 - 10:10 | Link to Comment MachoMan
MachoMan's picture

I made a similar comment in another thread and got shat upon...  watch out for the yokozuna.  You're going to get the whole "but securities fraud is incredibly cut and dry" routine...  (of course, no one else wants to acknowledge that the best securities attorneys in the world/the people who drafted the laws were probably riding shotgun the whole way and this was all planned from the start with copious amounts of plausible deniability, aka other parties to blame).

Tue, 10/19/2010 - 10:17 | Link to Comment Glass Steagall
Glass Steagall's picture

My thoughts - exactly.

I smell a bank holiday baked into this cake. Just long enough for the administration to dish out a nice round of executive orders that will white-wash this whole mess, insulate the banks and perpetrators, and put J6P back in his place.

Tue, 10/19/2010 - 10:38 | Link to Comment DaveyJones
DaveyJones's picture

that's why the little guys have to pay for it all cause it's all the little guys fault

Tue, 10/19/2010 - 11:59 | Link to Comment MachoMan
MachoMan's picture

To be fair, the little guys have to accept responsibility for promising to repay the notes.  Fraudclosuregate will not result in millions of americans getting a house scott free.  Instead, it will simply postpone the inevitable, potentially forcing financial institutions to sue on the notes and/or trot uncle sam out with new "incentives" to ensure the little guys sign the settlement agreement, a new mortgage.  With judgment liens in place, the big guys will ramp up the foreclosures again (hell, they're already starting to anyway).  Accountability swings both ways... 

It's definitely not solely J6P's fault, but virtually all americans/entities are in a mexican standoff for admitting any fault...  gotta start somewhere and then we'll be free to expect/place blame on the part of the banks.

Tue, 10/19/2010 - 12:51 | Link to Comment DaveyJones
DaveyJones's picture

Do any criminal law or federal criminal? Not saying the little guys signed an obligation but the little guys had little to do with this monstorous, international legal and financial crisis. As you said in your comment above, this could not have happened without the coordinated blessing and guidance from the big boys and it's the big boys job to make sure the investor is protected from little guy trying to stiff them. The securitized system presumes this may happen hence the paper trail rules.

Tue, 10/19/2010 - 14:18 | Link to Comment MachoMan
MachoMan's picture

Yeah, we literally do about everything...  but generally only petty criminal stuff. 

Think of this whole mess like getting drunk and having a one night stand with a long time friend, it going poorly, and then seeing her out the next week somewhere...  it's an awkward situation where neither side is willing to admit fault, blame, or whatever happened and both sides just think the best thing to do is not talk about it.  That's where we (J6P) are with the banks...  we need to take the first step and admit fault and then we'll have the capability of expecting the banks to do the same.  Whether they do or don't is irrelevant...  once we can admit our own faults, then we are free to buil a stable foundation from which to make meaningful change.

Tue, 10/19/2010 - 13:24 | Link to Comment iconoclast63
iconoclast63's picture

These gentle reminders that J6P should accept his share of the guilt for taking on the debt in the first place bother me.

In the fraud that is our economy, J6P was forced to stop saving and start accumulating ever increasing levels of debt. In many cases, not to just "keep up with the Jones'", but to keep his head above water, pay medical bills, etc...

To come full circle one simply cannot ignore the fact that in a fractional reserve monetary system debt NEVER stops growing. When the entire system is built upon debt you can't reasonably point your finger at the debtor and make a case for his culpability.

 

Tue, 10/19/2010 - 13:58 | Link to Comment Glass Steagall
Glass Steagall's picture

Couldn't agree more. And I hope you didn't regard my "putting J6P back in his place" comment as anything more than sarcasm.

Frankly, I would love to see anyone (from J6P to Octo-mom) with a loan that went through the MERS sausage making machine to walk away with a quieted title and the banksters left holding the bag. Fuck them and fuck the fraud.

I just know it isn't gonna happen.

"Those who make peaceful revolution impossible will make violent revolution inevitable." - John F. Kennedy
Tue, 10/19/2010 - 14:30 | Link to Comment MachoMan
MachoMan's picture

No free lunches bubba.  For every house J6P gets, a retard dies/an angel doesn't get its wings.  Taxpayers pick up the tab.  Simple as that.

As for the comment above, I think you're arguing the exception and not the rule.  What has presently killed us is not spending for necessities...  what killed us was J6P/wannaberichguy desiring a mcmansion through entitlement theory.  This desire was met with a powerful drug...  the most powerful...  credit.  (and its subsequent securitization/fraud).  Not apportioning any blame to J6P is like not apportioning any blame to a meth addict, but rather blaming the dealer for everything gone wrong.  Not so simple...  this problem is vastly more complex than that. 

In other words, you can talk about the job losses and increases in the cost of living and the "system" all you want, but in the end J6P was not entitled to own a mcmansion/house and made an individual choice to go into debt up to his eyeballs.  It's this entitlement theory that has to be striken from our collective consciousness before we can ever have any hope at rebuilding.  The banks will get theirs...  but their path to renaissance is their own...  they can either come with us or get left behind.  However, our first step involves admitting our fault...  admitting that we have a problem...

(technically speaking, I'd like to see a comparison between debt generated through common expenditures for necessities and discretionary spending.  My guess is that discretionary spending vastly dwarfs the necessity spending on a personal level and your thesis is blown to hell).

Tue, 10/19/2010 - 15:32 | Link to Comment iconoclast63
iconoclast63's picture

I agree, it is vastly more complex. For example, J6P's sense of entitlement is driven by advertising and marketing. The media, which is an integral part of the corporate oligarchy, CREATES our culture and guides the lemmings to their inevitable slaughter.

When everything we see around us is put there on purpose to make us covet and consume, the only crime we can be accused of is not seeing through the propaganda.

I look at the system from the top down. I see the almighty corporation as the dominant institution of our age. I see the banks as the most powerful of these institutions. When the most powerful institutions on earth are purveyors of perpetual debt, it can be no surprise that many among us will be destined for insolvency.

Ultimately, whether or not J6P borrowed money for survival or extravagance is of little consequence. He was merely living in the system that has been designed, from the top down, to enslave us all with debt.

The game is rigged. When the banks are forced to swallow losses they are merely reaping what they have sown.

I was in retail finance for almost 30 years. I have intimate knowledge of the inner workings of the credit juggernaut. I have seen first hand the reckless abandon with which the financial institutions have traded sound underwriting standards for short term gains. I actually witnessed a banker sit at my desk and, using a razor blade and elmers glue, rearrange the numbers on a paycheck stub to help a buyer qualify for a loan he would have never qualified for otherwise.

I read a piece this morning by Karl Denninger that made the point that the finance industry created this mess by breaking the law, and, once begun, the expectation of the rule of law was broken down completely.

When the banksters took over our country in 1913, J6P's ability to accept responsibility for the state of the world around him began to diminish in many very real ways, and it will continue to diminish until the crimes of the financial elite are finally washed from the landscape.

J6P can be accused of not truly understanding the world around him and how power operates, but in my humble opinion, not much more than that.

 

Tue, 10/19/2010 - 15:40 | Link to Comment Glass Steagall
Glass Steagall's picture

+1

Could not have stated it more eloquently.

Tue, 10/19/2010 - 16:46 | Link to Comment MachoMan
MachoMan's picture

While I agree that our understanding of psychology and its application with marketing has created many instances in which purchase decisions are largely manipulated, ultimately your analysis must fail because of the rudimentary concept of responsibility.  We have signals of all kinds bombarding us from every direction...  how is it that some manage to ignore them?  If some can ignore them, just how compulsory are these manipulative marketing techniques/propaganda?  Is ignorance of the state of affairs an excuse when the information is available for all to discover the level of propaganda and manipulation?

I think what you're advocating is exactly what created the american sleepwalker, the nanny state.  This same contemptuous view of humans as being incapable of understanding the world around them sufficiently enough to avoid even the most rudimentary of pitfall is staggering.  This is exactly the type of world view that feeds bureaucracy, removes parents from their natural roles and substitutes school in their place, and ultimately robs us of our true self realization and independence.  We are bears.  Just like bears, when we find a dump, we exploit it.  In the meantime, we lose the ability to fend for ourselves in the wild should the dump cease to provide twinkies and burritos.  We become reliant upon the dump and lose all ability to be truly independent.  (this is especially true with the banking system).  Please do not advocate creating any more dumps for us...  I believe we've had our fill.  It's time for some tough love.

Further, you act like the present credit bubble is the first credit burst rodeo...  as if, when the same pervasive marketing techniques didn't exist, that consumers didn't take out too much credit and speculate in areas that ultimately went south.  What you've stumbled upon is something that routinely happens...  regardless of the degree of propaganda...  and the solution lies with our insatiable desire for credit...  for immediate satisfaction...  for the hope of unimaginable wealth despite all mathematical certainty.  We'll learn this lesson the hard way, like our great grandparents...  and our great grandchildren will learn it the hard way too...  presuming we can keep up with the maintenance on all our world killing technologies in the meantime... 

I'm just curious here...  help me out.  Let's say I'm J6P and I make $50,000 a year.  I go to financial institution and I want a loan.  I saw my dream mcmansion and it only costs $400,000.  My payments are roughly $2200/month.  Now, does it take a rocket surgeon to figure out I can't afford it when my take home is $2600/month?  Or that I am at substantial risk of default should I ever lose any income?  The system was designed to present us a difficult choice...  an offer that we are probably predisposed to accept.  But, the fact remains that some of us were capable of avoiding the mess while having nothing to do with creating it.  Some of us vigilantly act to understand the world around us and avoid salesmen, however cloaked (why I don't go to church). 

In the end, unless you're advocating J6P is physically incapable of declining the banks' offers, I don't think you have a leg to stand on.  J6P got caught being a terrible speculator.  If everything would have worked out and the housing market not blown up, then J6P would have expected to take ownership of the property he mortgaged, upon paying off the note.  Unfortunately, this didn't happen.  J6P does not get to eat his cake and have it too.  Either he has the opportunity to own the home through his own speculation or he never entered the contract due to a lack of capacity.  The former is what J6P expected throughout all of this (and still does), the latter is a creation of apologists in an attempt to revise history and force puzzle pieces to fit.

Again, we begin the renaissance when we finally admit we made mistakes.  This acknowledgment will be the key to building a sound foundation from which to create a new era.  So long as we fail to acknowledge our past mistakes, we are doomed to repeat them (and we keep repeating them).    

Tue, 10/19/2010 - 17:03 | Link to Comment iconoclast63
iconoclast63's picture

M,

You asked:

"Is ignorance of the state of affairs an excuse when the information is available for all to discover the level of propaganda and manipulation?"

The answer is NO. But, once again, it's more complex than that. Having devoted much of my life to educating family, friends and total strangers to the obvious criminal nature of the world around them, I can say from experience, absent a total breakdown in the structure of our society, almost no one will ever learn.

There is simply too much competition! From cradle to grave we are inundated with "mainstream group think". Starting with entertainment programming aimed at babies to public schools, to most forms of higher education, people are discouraged from developing any capacity to think critically.

I do agree with you that J6P should, in an ideal world, take better stock of the world around him and reject the authority figures that encourage bad decisions, I just wish there was a way to make that happen without devolving into a Mad Max movie.

Wed, 10/20/2010 - 10:07 | Link to Comment MachoMan
MachoMan's picture

What you're proposing is exactly why the bears, J6P, have no ability to fend for themselves.  As the level of consumer protections increase, there is a direct decrease in J6P's awareness.  As the amount of attention J6P must pay to his environment decreases, there is a direct decrease in J6P's awareness.  This is the problem with the nanny state, it doesn't start out with ignorant slobs, but it creates them.

Effectively, you're proposing a world view with no end...  one in which J6P's volition is slowly eroded and replaced with the "wisdom" of the state.  I think that era has come to a screeching halt.  The pains from credit contraction will not be all bad. 

Tue, 10/19/2010 - 17:28 | Link to Comment zero intelligence
zero intelligence's picture

mmmmmm.....twinkies and burritos .... mmmmm ..... yum!

Tue, 10/19/2010 - 09:13 | Link to Comment sushi
sushi's picture

We need to get the public authorities all over this, determine beyond a shadow of a doubt exactly who performed these frauds, and then shower them with billions of public funds. If this action is not taken there is a good chance they may miss bonus. If that happens then who is going to pay for our election campaigns? Some dispossed family living in a trailer?

Tue, 10/19/2010 - 09:14 | Link to Comment f16hoser
f16hoser's picture

That's ok, Contract Law will handle this. No wait, we no longer have Contract Law in America because Judges and the DOJ have been "Deep Captured" by the banks and corporations. We're doomed!

Tue, 10/19/2010 - 09:14 | Link to Comment williambanzai7
williambanzai7's picture

Why am I not surprised when I read this?

Tue, 10/19/2010 - 09:25 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Why am I not surprised that WB7 is not surprised as he read this?

It must mean that everyone understands there is systemic fraud in our economic, political and social control systems and when the details come out, it's a Ho Hum moment.

What does surprise me a little is that Ho Hum is all we can muster on the outrage scale. Sounds like another mission accomplished for the powers that be.

Ho Hum, what's on TV tonight? 

Tue, 10/19/2010 - 09:30 | Link to Comment snowball777
snowball777's picture

'Productive' alternatives include?

- Anti-social, if not criminal, behavior

- Pooling money faster than international corporations to form PACs to place ads to affect change in an entrenched political farce of a process?

- Beans, bullion, and bullets in a bunker

- Reform the Republic of Letters on the internets

- Form our own currency (need anti-counterfeit tech and some authority for trading same for gold)

- Ex-patriate (but to where?)

Tue, 10/19/2010 - 09:31 | Link to Comment Dagny Taggart
Dagny Taggart's picture

And why I am not surprised that CD is not surprised that WB7 is not surprised?

Tue, 10/19/2010 - 09:42 | Link to Comment snowball777
snowball777's picture

I am completely not surprised that you don't already know why you're not surprised that CD is not surprised that WB7 is not surprised.

Tue, 10/19/2010 - 09:47 | Link to Comment Bob
Bob's picture

Anybody surprised that the French are taking things more seriously?

Tue, 10/19/2010 - 09:57 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Anyone surprised that European riots are back on CNBC TV today, even though they've been going on for over a week?

Tue, 10/19/2010 - 10:30 | Link to Comment Bob
Bob's picture

That does surprise me.  Perhaps I should watch more tv.  Do you think the MSM will put it up as material to spin a message for greater US popular submission to our overlords?

Tue, 10/19/2010 - 10:44 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

From the market/business point of view, it will be heralded as the straw that broke the Ponzi's back, thus explaining the next leg down in the stock market. With just a few weeks to go before USA elections, the push higher has done it's magic, calming the savage beasts with a higher third quarter print on their 401(k)/IRA/annuity etc statements.

Time to move the herd in the other direction since the people won't "see" the stock market again (meaning how it has personally affected them) until mid Jan 2011.

Tue, 10/19/2010 - 10:53 | Link to Comment snowball777
snowball777's picture

Squirrel!

Tue, 10/19/2010 - 09:57 | Link to Comment MsCreant
MsCreant's picture

I AM surprised, that you're not surprised, that CD is not surprised that WB7 is not surprised. I was gonna post that, and you beat me to it. SURPRISE.

Tue, 10/19/2010 - 11:22 | Link to Comment williambanzai7
williambanzai7's picture

This is surprising!

Tue, 10/19/2010 - 11:44 | Link to Comment Dagny Taggart
Dagny Taggart's picture

Too bad our market surprises all come as horror flicks instead of a picnic in a meadow... with a puppy?

Tue, 10/19/2010 - 09:40 | Link to Comment knukles
knukles's picture

Brian Williamson reporting how some institution is trying to make one group of young girls feel better about themselves because they have pretty hair, pretty but in a different way than the different kind of pretty hair that other young ladies of a different group with pretty hair of a different kind have too, with Sesame Street like cartoons.

Was on last nite.  A Must Watch, Cultural Purity/Impurity What the fuck ever Not News Propaganda Piece at Prime Time Newshour (hour or so more the less depending on commercials, product placements, thinly veiled political messages and subliminal messaging.) 

Betcha can catch some more, right now as a matter of fact!

Tue, 10/19/2010 - 12:32 | Link to Comment trav7777
trav7777's picture

how do you feel about 2+2?

I mean they call cripples "differently abled" now.  And girls that are ugly are just differently beautied.  People who are stupid are differently intelligented.

We are ALL unique!!!  Just like everybody else.

Tue, 10/19/2010 - 13:17 | Link to Comment TreadwCare
TreadwCare's picture

Oh NPR ran that story, didn't know it was "institutional".  Sounded like one guy, primary writer for Sesame Street has an African American daughter by adoption and wrote a song for her because she was feeling self concious about her hair (societal pressure).

http://www.npr.org/templates/story/story.php?storyId=130653300&ps=cprs

I took that one at face value.  Nice Dad.  We could use a few more of those.

 

 

Tue, 10/19/2010 - 09:53 | Link to Comment hbjork1
hbjork1's picture

CD:

Nova is on the PBS channels tonight.  Might be worth watching.  Nice break from studying ZH disclosures.

The only thing I really know about the posted disclosure is that the author never had a stastics course.

Tue, 10/19/2010 - 10:40 | Link to Comment Thunder Dome
Thunder Dome's picture

Apathy is a key ingredient that allows for corruption and the eventual demise of a society.

Tue, 10/19/2010 - 10:54 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

One does not need to control large groups of people with force when one can convince the group it cannot (or does not need to) do anything about their situation.

Mission accomplished.

Tue, 10/19/2010 - 10:46 | Link to Comment 11b40
11b40's picture

Seems like the American public needs to "man-up" & "put on our big-boy pants" -- you know, more like the French.  Get out in the streets.  Starting to remind me of my youth.

Tue, 10/19/2010 - 11:01 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Yes, where are the youth of America with regard to this entire Ponzi.

Oh, that's right. Shielded from the war because there's no iDraft, shielded from reality because of all the iDistractions and shielded from personal responsibility because of their parent's iBasement.

When those who truly have little to loose (which is precisely why the youth have been used as cannon fodder for thousands of years) don't act as if they have nothing to lose, it can be said that the society has lost it's soul and become just another malleable amoeba in a long line of muck.

Tue, 10/19/2010 - 11:27 | Link to Comment 11b40
11b40's picture

Truly a man after my own heart, CD!

I tell you now, eliminating the draft will eventually be shown to be one of the biggest mistakes this country ever made.  If there were a draft, we would have been out of Afghanistan in about 6 months and would have NEVER been lied into Iraq.  We would not have a mercenary army to deploy around the world at the bidding of big business, and Haliburton would still be just another oil servicing company - all of these "private contractors" would be on the street or in jail where they belong.

The youth of America, sigh -- what have we done to ourselves?

Just one old soldiers opinion.

Tue, 10/19/2010 - 11:31 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

I tell you now, eliminating the draft will eventually be shown to be one of the biggest mistakes this country ever made. 

From the "we the people" point of view I agree for it essentially removed the "skin in the game" variable and promoted apathy.

From the "we the powers that be" point of view, a truly brilliant move that removed the "skin in the game" variable and promoted apathy.

Tue, 10/19/2010 - 14:36 | Link to Comment MachoMan
MachoMan's picture

You can have a draft AND have a nonconscripted army...  For an unpopular war, they would have never drafted anyone to fight, given the certain conclusion...

So long as people need money and jobs, you'll have them lining up to get them...  if that means being placed in harm's way in an unnecessary war, then they'll still be there fighting it... 

Credit replaced the necessity for conscription/cheap fighting labor.  Dangle the carrot in front of them and you can get them to go "willingly" without the need for all the political turmoil (sufficient enough to matter in any fruitful sense).

PS, if you want to go to college, you have to sign up for the selective service...

Tue, 10/19/2010 - 15:15 | Link to Comment 11b40
11b40's picture

I absolutely disagree.  Very few things focus a young man's mind like the thought of having to fight and die in a foreign land.  The hard questions get asked by the youth AND his family -- but, the draft must be a fair as possible, which is why things really got hot on campus when the lottery was implemented in 1969.

Of course it is 'possible' to have a draft and a non-conscripted army.  After all, we did it for many years.  However, it is not possible to fight a graound war without conscripts, unless you bring in mercenaries.

I note that another poster says the draft is a form of slavery & disagree with that, too.  If the war is just, service is a matter of obligation.  If unjust, as a citizen, you still have obligations to resist it.  There is simply no excuse for apathy during wartime in a democratic republic IMHO.

Tue, 10/19/2010 - 16:48 | Link to Comment iconoclast63
iconoclast63's picture

As to your "just war" theory. I challenge you to name one.

 

Our participation in WWI was engineered by the deliberate slaughter of U.S. citizens on the Lustitania orchestrated by England with the full knowledge of the U.S. govt.

*Not Justified*

The attack on Pearl Harbor which landed us in WWII was either known well in advance or least not adequately defended against by FDR's administration. Declassified documents clearly show that the administration was hoping to provoke a Japanese attack and had taken many steps to insure it. From seizing Japanese assets, to sinking Japanese oil tankers, to funding a mercenary air force (Flying Tigers) to attack Japanese planes, to moving the pacific fleet from San Diego to Pearl Harbor. The U.S. govt. made it clear to Japan that it was looking for an excuse to get into the fight. A fight which the VAST majority of Americans wanted NOTHING to do with prior to Pearl Harbor.

Verdict *Not Justified*

If those two wars were not "just" do I even have to bring up Korea, Vietnam or Iraq?

The concept of a "just war" is subjective but in my mind, it should be as simple as defending ourselves and our treaty bound allies from an enemy attack.

In the words of Smedley Butler, retired U.S.M.C. 3 star general and TWO time recipient of the Congressional Medal Of Honor:

"War is a racket. It always has been. It is possibly the oldest, easily the most profitable, surely the most vicious. It is the only one international in scope. It is the only one in which the profits are reckoned in dollars and the losses in lives. A racket is best described, I believe, as something that is not what it seems to the majority of the people. Only a small 'inside' group knows what it is about. It is conducted for the benefit of the very few, at the expense of the very many. Out of war a few people make huge fortunes."

When politicians make the grave decision to send our children to die in foreign lands it's up to us, the SOVEREIGNS, to make sure the cause warrants the sacrifices we are being asked to accept.

 

Tue, 10/19/2010 - 17:03 | Link to Comment 11b40
11b40's picture

I will not debate the just or unjust origins of our past wars.  I will, however, go back to my original premise.  A draft makes these wars far less likely to occur and far more likely to be curtailed when/if they do.  As a nation, we are better off if the burdens of our political mistakes are shared equally, not foisted off on the lower classes while the rest of the country parties on like it's 1999.  Our involvement in Southeast Asia was shortened by the uprising of those facing the draft.  Look at our current involvement in the Middle East - already our 'longest war'.  No draft -- hell, not even any increased taxes or war bonds to pay for this abortion.  What happened to "guns or butter"?

We are safer with a conscripted army than a mercenary one.

Tue, 10/19/2010 - 17:10 | Link to Comment iconoclast63
iconoclast63's picture

Respectfully,

We shall agree to disagree on this one. I understand your argument and will not dispute that the draft did help end the Vietnam War and probably would have truncated to a great extent our participation in the ongoing "abortion" (I like your choice of words here!) in the middle east.

In my opinion, though, the end simply does not justify the means.

 

Tue, 10/19/2010 - 17:05 | Link to Comment MachoMan
MachoMan's picture

I think your analysis is vastly too narrow in scope and broad in application.  Effectively, the only thing a draft does is make the youth mindful of the degree of importance/favorability of a particular war.  A draft will no more rise america's youth out of our slumber than imposing rations on cottage cheese.  As previously stated, all college bound youth sign up for the selective service when entering college...  As far as we're concerned this means "draft eligible" presuming a draft becomes utilized.  In other words, we're already at risk of being drafted.

You want to know what will awaken america's youth?  How about paying for the neighbor's outlandish city retirement?  social security?  medical treatment for fat people? Putting american idol on premium pay channels?  The fact is, america's youth has no skin in the game because we have no jobs.  We've never been involved in the political process...  we've never been asked to really....  not meaningfully anyway.  Your magical generation has left us a cratered country with nothing more than a flag, negative account balance, and somehow a sincere push in the back to "follow our dreams".  Thanks.

America's youth will rise to their slumber as soon as the government checks stop coming in and the baby boomers' boots get too heavy on our necks.  This doesn't have a damn thing to do about conscription.  Maybe that was important for your generation...  we already voiced our opposition to the war, but we're drowned out.  We'll see what happens when we reach our collective tipping point...  but I suspect that will be after legacy policies bankrupt the country and we're left to our own devices anyway. 

Tue, 10/19/2010 - 17:39 | Link to Comment 11b40
11b40's picture

You make many valid points, Macho Man.  I am not proud of how my generation turned out; at least not the upper echelons.  We have dined on the fatted calf and lived through a rare moment in history.  We have borrowed against both our own future and that of generations to come, and I have no idea how we will ultimately pay for it.

However, I still disagree about the draft.  Registering with the Selective Service Board means jack if no one is getting called up.  The day that changes is the day your generation gets more like mine was.  You will get focused over night and start educating yourself in large numbers about the history of the Middle East, and before you know it - BAM, the streets explode and the campuses become hotbeds of protest and anarchy.  Take it to the bank (if there are any open).

And I still say our country is better off with an army made up of conscripts from a broad cross section of the populace than with mercenaries.

Tue, 10/19/2010 - 13:30 | Link to Comment iconoclast63
iconoclast63's picture

To support SLAVERY because it provides a stop gap against other government abuses seems illogical to me.

Just saying ....

Tue, 10/19/2010 - 14:02 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Sorry, but I'm missing your point. How am I supporting slavery? Is that what you're saying? Like I said, I'm missing your point.

Or were you responding to MachoMan and hit the wrong button?

Tue, 10/19/2010 - 14:05 | Link to Comment iconoclast63
iconoclast63's picture

My comment wasn't addressed directly at you as much as the idea.

When people use the argument that having a draft in place would create pressure on the government to behave better it makes my skin crawl. The draft is SLAVERY, after all. No matter how many times it's use has been accepted in the past doesn't change that fact.

Tue, 10/19/2010 - 16:16 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

I believe you are making too many "logical" leaps. My original comment was about the missing youth in America and revolution, missing because of various reasons, one of which was that there was no draft, thus they had no skin in the game, thus they weren't oppressed enough to care to push back. One of many reasons, not the sole reason.

BTW I was drafted and served.

Even the military admits that the younger generation of the 60's and 70's would not have been as proactive against the war if there had been no draft. If you actually read some of the military position papers against the draft not only when it was finally shut down, but every time the discussion begins about bringing it back, the military consistently says a draft will only solidify resistance to "the" wars. They also list many other reason for a volunteer military.

So I was talking about one of many reasons the kids of today are silent. For you to leap from that to "having a draft in place would create pressure on the government to behave better it makes my skin crawl" is your own supposition, not mine. I was talking about people being less apathetic. I was talking about revolution. 

I said nothing about a draft making the government behave. I was talking about apathy and revolution. 

Tue, 10/19/2010 - 15:17 | Link to Comment 11b40
11b40's picture

If you think serving our country is slavery, you don't know shit about slavery.

Tue, 10/19/2010 - 15:30 | Link to Comment iconoclast63
iconoclast63's picture

So being forced, ultimately at gun point, to serve in the military, against my will, is NOT slavery? Please sir, enlighten me.

(and before you sling any insults, I was a volunteer in the U.S.M.C. for 4 years)

Tue, 10/19/2010 - 17:13 | Link to Comment 11b40
11b40's picture

You can choose the path of concientious objector.  You can enlist, as you obviously did, and get a good, relatively safe MOS.  In other words, there are options.  No options exist in slavery.  In addition, your treatment is governed by rules and regulations with recourse if those rules are jot followed.  It is not slavery.

We can just agree to disagree.  I would never sling personal attacks at a fellow comrade in arms.  You can google my user name and guess how my campus protests in the 60's turned out.  I am sure we have the same hopes for our country, and I am equally sure you have pride in your service and feel a stronger sense of "ownership" for your investment. 

Semper Fi

Tue, 10/19/2010 - 11:05 | Link to Comment DaveyJones
DaveyJones's picture

Here here! Take some lessons from the Icelanders. Since this is all about money, why can't the american consumer / worker shut down the economy. Just shut it down. It's all one big hollow criminal joke anyway  

Tue, 10/19/2010 - 11:52 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Since this is all about money, why can't the american consumer / worker shut down the economy.

Because the Stockholm syndrome took hold of the American psyche many decades ago. Joe and Jane have been convinced for so long that what's good for their tormentor is good for them that by the time they wake up to this insanity, they will have found themselves in the middle of a bank robbery with them walking point a la Patty Hearst.

Shock and awe baby. By the time "we the people" have fully assimilated this huge cluster-fuck, we'll be sitting in a pile of dismembered limbs and clotting blood and the perpetrators will be ramping up the next game.

Cleanup on aisle 3.

http://en.wikipedia.org/wiki/Stockholm_syndrome

http://en.wikipedia.org/wiki/Patty_Hearst

There is a way out folks. Are we, meaning you and I, going to lead the way or are we just going to grab a mop and head to aisle 3? 

Tue, 10/19/2010 - 12:50 | Link to Comment Hook Line and S...
Hook Line and Sphincter's picture

The ones who got out on the U.S. streets 40 years ago are now buried deep in their own sin.

The ones who are out on the street now are looking for blow, tang, and a tan.

Tue, 10/19/2010 - 11:45 | Link to Comment Fearless Rick
Fearless Rick's picture

Here's what was on TV last night. I know most people around here have no love for CNBC, but Larry Kudlow had Barry Ritholtz and Chris Whalen on last night and they went at it hard. Clip linked below starts with the infamous Earls, but the rest is excellent.

http://www.cnbc.com/id/15840232?video=1618726207&play=1

Tue, 10/19/2010 - 21:03 | Link to Comment StychoKiller
StychoKiller's picture

So, what's your answer?  Form an armed militia?  Dig a bomb shelter?

Keeping your head down while the bullets fly?

Tue, 10/19/2010 - 11:14 | Link to Comment williambanzai7
williambanzai7's picture

Just to show how agitated I am, I am going downstairs to start a tong war outside the local noodle shop....where is my stick and where is my tong hatchet!!

Tue, 10/19/2010 - 11:21 | Link to Comment His Dudeness
His Dudeness's picture

If the noodle shop owner plants a stick in your ass...

Headline: WilliamBanzai7 Screams With Tong In Cheek

Tue, 10/19/2010 - 11:36 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

I am going downstairs to start a tong war outside the local noodle shop....

Sounds like a scene pulled from "Blade Runner". In fact I thought the only place there were "noodle shops" was in "Blade Runner"?

Who would have thunk? I gotta get out more often.

http://en.wikipedia.org/wiki/Blade_Runner

http://www.imdb.com/title/tt0083658/

Tue, 10/19/2010 - 11:45 | Link to Comment His Dudeness
His Dudeness's picture

"In fact I thought the only place there were "noodle shops" was in "Blade Runner"?

... and Kung Fu Panda

http://www.youtube.com/watch?v=RR4TIYEAmIk

http://www.youtube.com/watch?v=CK40pvZ3bIg

Tue, 10/19/2010 - 11:50 | Link to Comment MsCreant
Tue, 10/19/2010 - 11:58 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Apparently I need to get IN more often. In.......to the theater that is. :>)

Tue, 10/19/2010 - 12:07 | Link to Comment His Dudeness
His Dudeness's picture

Just use your noodle!!!

"Oogway: Quit, don't quit. Noodles, don't noodles. You are too concerned with what was, and what will be. There is a saying. Yesterday is history, tomorrow is a mystery, but today is a gift. That is why it is called the present." -- Kung Fu Panda

Tue, 10/19/2010 - 12:29 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Sir, drop that DVD to the floor and slowly move away.

SLOWLY I said. 

Tue, 10/19/2010 - 13:23 | Link to Comment TreadwCare
TreadwCare's picture

His Dudeness may have children, like me.  Love me some Kung Fu Panda.

Tue, 10/19/2010 - 13:59 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Roger Johnny 5. :>)

Tue, 10/19/2010 - 13:33 | Link to Comment williambanzai7
williambanzai7's picture

My life is blade runner, and there is a noodle shop down stairs that looks just like the one you are talking about in the movie. You would not believe what else is on my street.

Tue, 10/19/2010 - 14:01 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

"They" say insanity is attracted to insanity and in fact it huddles together on dark Hong Kong streets near noodle shops.

Just sayin'  :>)

Tue, 10/19/2010 - 21:05 | Link to Comment StychoKiller
StychoKiller's picture

Most insane folks do not recognize the insanity in their own heads.  Just sayin' :>)

Tue, 10/19/2010 - 09:20 | Link to Comment cycjyf
cycjyf's picture

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Tue, 10/19/2010 - 11:41 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Tyler,

If you're not getting a piece of this action, please pull his/her/its charter. Thank you!

Tue, 10/19/2010 - 17:25 | Link to Comment Geoff-UK
Geoff-UK's picture

This isn't the only a-hole spammer on this website--we need something other than "junk" to indicate actual spam.

Tue, 10/19/2010 - 09:20 | Link to Comment orangedrinkandchips
orangedrinkandchips's picture

i was an underwriter pushing these things to GMAC...further up the river. I think that is key to kick out the stated loans to make it 10%....that is right, that is correct. Not sure if the writer thought that was unethical but actually it was good.

 

As far as audits...cmon...i use to underwrite, manage underwriters and audit this stuff. It's all a put on no matter what. There is always more than 1 way to skin a cat.

What is the hardest part of this kidney stone going through the economy is that not only did they bundle and bungle the loans to investors....saying it's grade A but really grade D but edible...but the insatiable need for return from these CDOs is what kept the fires going. We would push hard each month squeezing out 50MM or so from our group doing Indiana!!! How many houses can you buy in Gary, IN for 50MM?? quite a few....

 

The kicker that leads the next downslide is WHERE ARE THE TITLES?

 

If I owned a tranche with T-bone, he and I owned it solely. First tranche so the rates are lower but we get paid first of all. We own, along with thousands of other investors, this CDO. So T-bone and I technically own 20% of SOME of the assets in that bond.

For arguments sake let's say we never did crash and CDOs were the bomb as in theory...What happens when 1 of the loans gets paid off and/or refi'd with another loser?

Not even like t-bone and I, or any investor in these FUBAR assets, have rights to an entire title! The ownershit is so spread out across the world who know who owns what?

Not to mention who does the back office work to keep the "vault" consistent with the owners and the loans.

 

Big fucking mess....

Tue, 10/19/2010 - 10:25 | Link to Comment kathy.chamberli...
kathy.chamberlin@gmail.com's picture

i think ownershit is way over rated. rent to ownershit.

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