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Dick Bove On The Foreclosure Settlement: There Is No Sanctity Of Contracts; Only Fools Meet Their Financial Commitments

Tyler Durden's picture




 

In a moment of surprising clarity this morning (or perhaps driven by simple ulterior motives as his favorite bank may well be unprepared to cover even this moderate cash payment from existing reserves, as we warned back in January) perpetual bank optimist Dick Bove had some harsh words for the now finalized bank settlement, which he called the "mortgage deal from hell" - "Those people lucky or smart enough to stop making payments on their homes may get their loan balances reduced. Other beneficiaries of the agreement may be homeowners who have seen the value of their houses drop below the size of their mortgages. They get a freebie that other homeowners who have paid their mortgages down will not get....Homeowners who made large down payments on their homes or made the terrible mistake to pay down the principal on their mortgages do not qualify. Homeowners who made minimal or no down payments will get the windfall benefit of a lower principal repayment or a cash payment." And the true bottom line: "There is no sanctity of contracts in the United States. Only fools meet their financial commitments. The non-payers are the truly enlightened." And that is the summary of modern US society in a nutshell, and explains why despite all the deleveraging, inflation still remains a potent threat as the bulk of a household's mandatory continues to be merely discretionary, with everyone else footing the bill. Finally, as Rick Santelli pointed out subsequently, the banks are paying for this settlement using cash proceeds from previous bank bailouts which have not yet been paid out. So to be even more blunt than Dick and Rick -the US taxpayers bailed out the banks, which are now using  the balance of said proceeds to pay a settlement which amounts to the tune of $2,000 per every person foreclosed on in the past 3 years, in order to assure their vote for Obama, while in the process trampling contract law, as no longer will anyone in America honor anything printed and signed.

 

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Thu, 02/09/2012 - 13:20 | 2142399 Jim in MN
Jim in MN's picture

Regardless of the immorality and treachery in this announcement, and the issues facing foreclosed and underwater homebuyers, the biggest impact will be on the rest of the housing market.

 

If the banks have escaped liability for fraud, what happens next?  What are the implications for mortgage brokers and most importantly, prospective homebuyers?  

 

Kinda says to me that it doesn't matter what you have on your contract.  Your 'quaint' rights to ownership, and vaguely related debt servitude level, will be decided upon by a group of elite scum in a nice wood-paneled room in NY or DC.

As Zappa put it,

And Number One ain't you,

You ain't even Number Two

Why would anyone want a piece of that? 

Thu, 02/09/2012 - 13:21 | 2142404 curbyourrisk
curbyourrisk's picture

FUCK DICK Bove and the rest of the Commie Cronies in this administration.

Thu, 02/09/2012 - 13:24 | 2142429 Spigot
Spigot's picture

Good God! Extreme American Corruption. All I can say is "Sow the wind, reap the whirlwind." There is no doubt now that the "elites" are a criminal class.

Thu, 02/09/2012 - 13:24 | 2142430 SmoothCoolSmoke
SmoothCoolSmoke's picture

If the banks are getting away another fast one w/ this deal then I blame the stupidity of Ma and Pa USA.  They have no concept of the #s involved here.  To them $26B sounds like a real can of whoop-ass has been opened on the banks.  And the MSM will portray it in those tones:

(Brian Williams) "the banks will have to pay a STAGGERING $26B"

then,

"Elsewhere, Greece has reached a deal...." 

and

"on WS the Dow was up 23 on improving news everywhere"

and Ma and Pa trundle off to bed............ fat, dumb, and...fat.

 

Thu, 02/09/2012 - 16:21 | 2143332 Alpha Monkey
Alpha Monkey's picture

Nah, didn't you hear that douche, American's aren't dumb, they totally understand the complexities of mortgage finance as well as had insight into the back office dealings of the banks and then plotted their evil scheme to get houses for as little as $5000 down and never make a payment!!! MUAHAHAHA!!! 

But seriously, ignorance is a glaring problem in that arena.

Thu, 02/09/2012 - 13:27 | 2142451 Jim in MN
Jim in MN's picture

By the way, Ron Paul won the city of Saint Paul, Minnesota.  Santorum took Ramsey County but only by 64 votes, and his supporters were up in the suburbs (damn you Arden Hills).

So for my part, my home town is on the side of good.  I am proud.

Thu, 02/09/2012 - 13:53 | 2142614 Calmyourself
Calmyourself's picture

Yeah well in the general Al franken would beat him in commiepaul, Chris Coleman anyone??

Thu, 02/09/2012 - 13:27 | 2142453 Rosie BRB
Rosie BRB's picture

Sheeples keep consuming with an extra $2g and 3% on all their crappy debts extended to oblivion. The notion of consumer bankruptcy and being tossed in the Street gets changed. What's the big deal? So if you got a job you're not a bad customer for these banks with all the hickies they get you on and taxpayer funded operating costs. No job = no home. Simple.

Thu, 02/09/2012 - 13:28 | 2142456 juggalo1
juggalo1's picture

It's a sad day when contracts are set aside en masse.  Unfortunately the social consequences of not doing this may be worse.  Is it fair?  No.  Is the economy and the nation better off for having done it.  Probably.

Thu, 02/09/2012 - 13:29 | 2142467 A Lunatic
A Lunatic's picture

So.......who will be the proud new owner of BOA..........JPM? This looks more like bank consolidation than consumer protection to me............

Thu, 02/09/2012 - 13:30 | 2142471 The Old Man
The Old Man's picture

Obama is on the neon God telling us the good news. The "extroidinary good work" his subordinates have done.

We've been Obaminated. The fraudulant economy is making us the toast.

Thu, 02/09/2012 - 13:35 | 2142473 ebworthen
ebworthen's picture

OMFG

Obummer spouting off about the "settlement" with Eric "Three Blind Mice" Holder and a bunch of other puffy faced lackeys behind him to crow about BULLSHIT.

You are FULL OF IT!!!!

You SOLD OUT THE POPULACE!!!

You DID NOTHING YOU ASS!!!

Thu, 02/09/2012 - 15:27 | 2143089 krispkritter
krispkritter's picture

You arrive home to find a bill from the IRS in the mailbox, your key doesn't work in the front door because the locks have been changed, you reach for your wallet only to find it gone, suddenly your ass starts to hurt like you've just been buggered by a Blue Whale...and then the moment of enlightenment hits you...just seconds before the IRS SWAT team knocks you unconscious with the butt of an M4 and starts to haul you away to indefinite detention...

Thu, 02/09/2012 - 13:33 | 2142488 devo
devo's picture

Once you pay off your mortgage, you get to pay rent (i.e. ever higher property taxes). Buy a house, it's a great investment!

Thu, 02/09/2012 - 13:40 | 2142540 ParkAveFlasher
ParkAveFlasher's picture

All these foreclosed homes need to be kept in an "excited" state - like the bias signal before magnetic tape is recorded upon - in advance of congressional redistricting.  Once redistricting is done, the fate of these homes will be decided.

Not agreeing with this essentially feudal madness, just voicing my opinion.

Thu, 02/09/2012 - 13:41 | 2142549 Bansters-in-my-...
Bansters-in-my- feces's picture

If you stand for this you are part of the problem....

Ooops...gotta go,Star search is on.

Thu, 02/09/2012 - 13:42 | 2142555 JLee2027
JLee2027's picture

The whole "credit score" game was started by the banks. Its part of their control system. It weakens with every default and will pass away when the banks and paper ponzi go.

Thu, 02/09/2012 - 13:48 | 2142582 kralizec
kralizec's picture

"Only fools meet their financial commitments."

No shit?!  I guess this is the first time that has been discovered!

Thu, 02/09/2012 - 13:48 | 2142586 slewie the pi-rat
slewie the pi-rat's picture

anti-Bove if only b/c of that shirt & tie, those of us who question slimeballz whenever they pontificae need to ask, here:

is there any downside to this deal? 

kamela:  say it ain't so, darlin!

Thu, 02/09/2012 - 13:49 | 2142597 powersjq
powersjq's picture

Puh-lease. No contract can long surive fundamental changes in the conditions that it made worthwile for all parties to undertake it in the first place. A contract is only a formal recognition of an agreement. But the agreement came about because of the extant conditions. This is why all long-term contracts regularly go through work-outs, so that the agreements can be reconciled with the changed conditions.

It used to be more or less the business model of a bank not to make loans that wouldn't get repaid. It was only when the banks figured out how to make money by making bad loans that huge numbers of people started getting loans that would never be repaid. Don't you guys remember how hard the homebuilding and mortage industries pushed this stuff? It was extant social conditions, not personal character, that determined the behavior. After all, we know that are all susceptible to behaving badly given certain conditions. It's precisely the role of good government and sound social institutions to maintain social conditions condusive to good behavior (however that's defined).

This free-floating moral commentary is lame. Read up on the Fundamental Attribution Error, people.

Thu, 02/09/2012 - 13:50 | 2142604 Ned Zeppelin
Ned Zeppelin's picture

Everyone falling for the spin that this settlement is bad because it is bailing out the greedy shiftless homeowners is two cans short of a sixpack.

Banks and robosigners are walking from systemic criminal acitvities, paying fines that are either miniscule or funded by others, and laughing as Sanetlli-esque criticisms of the unfair benefits to lying cheating homeowners are the big story of the day. The entire thing is a f-ing joke, friends. 

Thu, 02/09/2012 - 13:53 | 2142618 zerotohero
zerotohero's picture

There are days like these that make me think about waving the white flag - go out by a brand new fully loaded big ass vehicle, boat, bigger house with too many bathrooms, all stainless highend appliances, wideass screen tv, bowflex, motorcycle, Dr. Ho's miracle massage, Snuggie........................................................................

Thu, 02/09/2012 - 14:00 | 2142670 CooperativeCredit
CooperativeCredit's picture

Dick Bove sounds like an absolute corrupt jerkoff. Bail out the people, not the banks!

Thu, 02/09/2012 - 18:06 | 2143710 Quick
Quick's picture

" Bail out the people, not the banks!"

 

It's too late - the banks have already been bailed out - and it continues !!

Thu, 02/09/2012 - 14:06 | 2142702 jmc8888
jmc8888's picture

When the sheeple figure it out, if they figure it out, they got paid 2000 dollars to have their home wrongfully seized from them.  Here ya go, instead of having a home the rest of your life, or whatnot, you can have 1-2 months free rent somewhere else. 

If the sheeple figure it out before the election, it very well could cost him THE election.  Afterall this does affect tens of millions of people who should have gotten their home free and clear, and instead will lose it, and get $2,000. 

It never is an issue of whether or not the people deserve the home for free.  The contracts were broken from the lender side.  The only way in the fucked up process to go forward legitimately, is for those homes to be given free to those that reside in them.  That's a bankster problem, since they created it.

Impeach Obama

Glass-Steagall

 

 

Thu, 02/09/2012 - 14:12 | 2142743 Jumbotron
Jumbotron's picture

I pledge allegiance to the Logo

of the Fascist States of Amerika

And to the Banks to which they bow

One Fiat Currency, issued by Bernanke, divisble by 10's

With slavery and serfdom for all.

 

Thu, 02/09/2012 - 14:32 | 2142823 Jumbotron
Jumbotron's picture

I absolutely do not believe in the "Reptilian Humanoid" conspiracy theories of David Icke....

but after watching that sickening video of "I suck my own' Dick Bove....I'm willing to change my mind.

What an absolute piece of shit human being.

Thu, 02/09/2012 - 18:04 | 2143699 Ned Zeppelin
Ned Zeppelin's picture

Bove serves up tripe for the offal-pushers at CNBC.

Thu, 02/09/2012 - 14:32 | 2142812 New_Meat
New_Meat's picture

"There Is No Sanctity Of Contracts"

Gotta' break private property rights; Justice Ginsberg will 'splain all of that to ya.

- Ned

Thu, 02/09/2012 - 14:37 | 2142838 Jumbotron
Jumbotron's picture

There Is No Sanctity Of Contracts"

Funny how it's the global elite capitalists doing the communists' dirty work.  Who would have thunk it.  A lot of veterans from the Korean and Viet Nam wars much less the "unknowns" of the Cold War are tripping out in their graves right now.  Watch for unexplained earthquakes all over the country.

Thu, 02/09/2012 - 14:34 | 2142826 StockHut
StockHut's picture

Can someone please punch David Faber.

Thu, 02/09/2012 - 14:41 | 2142862 ZeroPoint
ZeroPoint's picture

fuck Obama. Let him pay my rent.

 

Thu, 02/09/2012 - 15:04 | 2142983 Watauga
Watauga's picture

I happened to talk to a Navy officer today who told me that the military has a program (it's been in place for some time, but was expanded in the FY12 NDAA to include all personnel) where, if a solider or sailor bought a house before X date in 2006, and sells it today within 10% of CURRENT market value, the government (i.e., TAXPAYER!) makes up the difference between that sale price and the original purchase price.  So, buy a house in Tampa in 2005 for $300,000.  Current market value is $200,000.  Sell it today for $180,000.  The taxpayer pays the soldier or sailor $120,000.  Wow.  Don't let Obamessiah hear abou this, or he will expand it, by executive fiat, to every potential Democrat voter in the country, documented or otherwise.

Fri, 02/10/2012 - 04:48 | 2144975 navy62802
navy62802's picture

This is a program that has been around for a few years. It is intended to help military families forced to move because of a permanent change of station.

Homeowner's Assistance Program ... http://hap.usace.army.mil/

Thu, 02/09/2012 - 15:20 | 2143058 ljag
ljag's picture

Is it possible to hack a teleprompter? Juzzzazzkin

Thu, 02/09/2012 - 15:32 | 2143107 krispkritter
krispkritter's picture

A machete will work but it won't shut him up...

Thu, 02/09/2012 - 15:26 | 2143091 Sunshine n Lollipops
Sunshine n Lollipops's picture

I was actually holding out hope that the fraudclosure mess was gonna be a problem these miserable cocksuckers couldn't sweep under the rug, that too many average people were affected and that the indignation and uproar from the masses over this blatant, unforgivable fuck-fest would create just one example of justice, if only to give J6P the dreamy illusion that, yes, in America people still matter, even the little ones, that everything isn't a criminal enterprise, that the so-called American dream of home ownership might possibly be sacrosanct and off-limits to the money-grubbing psychopaths that have this country by the fucking throat. 

Silly me.

Thu, 02/09/2012 - 15:58 | 2143214 kevinearick
kevinearick's picture

Cops & Robbers;   Constitutions & Space Cowboys

The economy is crashing because the “lost generations” have one-upped the boomers, by avoiding taxation all together and maximizing credit consumption. Some can learn by observing, many have to learn by making mistakes themselves. Crashing an empire by starving it is a step above the prison mentality, but not much, because there will always be an empire. Sometimes, especially with kids, you have to let them learn the hard way, that harming others, retribution, does not help self, and the best way to stop productive adaptation is to sit in judgment.

Taxation becomes arbitrary, capricious, and malicious over time because there is no way for one person, or a small group to represent the interests of each individual, and an economy is an aggregate of individual efforts and outcomes (learning to skate reduces the reduction). And because the empire is a body of gravity with historical momentum, agency cannot impede it.

The function of agency is to deliver the simple-stupid, least common denominator historical, stuff as efficiently as possible, so individuals may focus on the work at hand, charting a course to the future. At the end of an empire cycle, the economy runs exactly backwards. That armature is like flipping a log, end over end. We wind the clock, to give the empire time, for a purpose.

The body works for the brain, which works for the spirit. THEN the spirit works for the brain, which works for the body. Agency works for us and we work for God, each in our own way. Agency shorts to DC and gets replaced. That is empire History. The point of a constitution is to give agency notice of the condition for replacement. It’s the exit door.

We begin to observe the empire’s half life / curve with the incidence of criminal prosecution. Economies are systems, with distributions of results. On the closed side, there is only the illusion of individual behavior (accounting flips the reduction loss to a gain). Agency makes ignorant assumptions and slots participants into available outcomes. The greater the incompetence of agency, the more prisons it builds to house its “errors,” hiding the ability to learn from its mistakes. As its momentum of gravity builds, criminals are created to feed it, in a positive, supply-side feedback loop. America calls the kettle black.

Even the best cop is a weasel by nature under such conditions in that he must willfully ignore the behavior of fellow tax farmers. The productive arteries harden, financial cancer takes off, the system begins to implode, and the tiniest of “bugs,” pneumonia, fells it directionally, by constraining its oxygen/intelligence.

Because the aging empire now penalizes creative intelligence, and generational reproduction heavily favors replication, the process is self-adjusting relative to individual discretion to abandon the system. The empire increasingly penalizes kids through arbitrary non-conformance laws to the end of exclusion and churn, and its own destruction, assuming that kids have no recourse to the something-for-nothing ponzi economy, to which they are implicitly and then explicitly enslaved.

If you examine population growth over empire time, what you see as outcomes is more adaptive participants having children in the beginning. What you don’t see is the increasing intelligence of the immeasurable exodus at the end. The empire gets dumber with scale, relying upon relatively fewer, more irrational decisions on its path to tyranny. Little calculus is required to both establish agency intent and the profit in its replacement.

Of course the empire faithful fail to see what’s coming until the curve and cliff suddenly appear before their nose, which, due to time to perception and momentum, leaves them stranded in mid-air, above the abyss. It’s an integral/derivative process. Whether an empire lands on a bridge, a roadway, or falls is entirely democratic. All the ignored votes are suddenly counted. The State sells bonds against God’s lottery and fails every time.

Trust is implicitly profitable. Only the empire insurance salesman attempts to argue otherwise. At the end of the empire cycle, the faithful are all insurance salesmen, selling to each other, trapped in prisoners dilemma by their own psychology, aggregated and reinforced by the duplicity of History, in a black hole. At this point, agency may get the simple sh** done, pay us each $3.6M for the current cost of raising a family, or be replaced. We are quite capable of doing all three ourselves.

In God We Trust; all others pay cash. Are you of God? Do you seek the unknown? Eating the empire’s fruit, recognition of good vs. evil, from the tree of knowledge, instead of learning from original sin, is an individual choice, aggregated. Why do you suppose the bully pulpit demands allegiance? Why would it tell you to fear God, the unknown, unless it has something to fear? Fear is a poor foundation for an economy. It fails every time.

Absent intelligence, humanity subjects itself to the tyranny of gravity, with or without an empire. The empire is a timing mechanism. The value of family is timeless, and priceless, because it is the mechanism through which God has granted us the cosmos in which to play. Silly rabbit; tricks are for kids. The turtle is the finish line, the alpha and the omega.

With the Supreme Court Act of granting Corporate individual free speech, after eviscerating it to the individual, first in the Family Law prototype, and then through the body to perfection in the Patriot Acts, and the immediate participation of both Congress and President, agency has placed its full weight on the side of preserving non-performing assets, against the income producers. The stage is set, and we all now watch the final act in the empire’s revolving sh**-show.

There is checkers and there is chess. Agency should stick to its knitting as designed. Who do you think designs the technology that keeps empire time? Clint Eastwood is a great actor and director, but playing the part in a movie doesn’t make him a Space Cowboy does it? Good luck selling GM as American political ingenuity (used car salesmen auctioning diapers in a coliseum built for the occasion).

Why would we allow the idolatwits lost in a desert of their own making control our future? That would be pretty damn stupid.

Thu, 02/09/2012 - 17:17 | 2143556 proLiberty
proLiberty's picture
Section. 10.

Clause 1: No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

 

http://www.house.gov/house/Constitution/Constitution.html

 

Thu, 02/09/2012 - 18:30 | 2143791 swani
swani's picture

Morality is not rewarded in a Banana Republic, it is laughed at. Bribery, fraud, forgery, cheating, stealing, black mail, perjury, those are the skills that need to be taught to all Americans at an early age, if not, chances of survival will be minimal.  

Thu, 02/09/2012 - 20:55 | 2144214 navy62802
navy62802's picture

Boils down to the old quip from Karl Marx.

"From each according to his ability, to each according to his need."

Bove is doing nothing more than highlighting the central reason that Socialism does not work. To paraphrase, there is no motivation to succeed when the government rewards failure ... or in this case imprudent financial management. Every Tom, Dick and Harry is going to stop paying his mortgage now.

Wed, 02/29/2012 - 20:36 | 2210443 oleander garch
oleander garch's picture

A multiple choice question for Oli Garch on the Mortgage Fraud Settlement. http://www.thenakedemperor.com/oligarch/mortgage-fraud-settlement

Wed, 02/29/2012 - 20:36 | 2210444 oleander garch
oleander garch's picture

A multiple choice question for Oli Garch on the Mortgage Fraud Settlement. http://www.thenakedemperor.com/oligarch/mortgage-fraud-settlement

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