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Is The FHFA Lawsuit Against The Banks Just A Subversive Res Judicata To Bail Out The Banks?

Tyler Durden's picture


That Zero Hedge has a jaded outlook on the world is pretty much clear by now. But even our cynicism is amateur hour compared to that exhibited by some of our readers. Below we present one outlook by reader Joseph, on how the FHFA "lawsuit" against the banks, a development that as we noted before stinks to high heaven from a purely (lack of ) logical standpoint, could be nothing less than Res Judicata in sheep's clothing, whose purpose is simply to facilitate the case for QE (banks tumble), then settlement of the settlement (banks soar), but not before the crony communists have built up a solid equity position in the names, QE3 is firmly in place, and Obama is seen as the crusader against the hated banks. Is it possible? Who knows. We will find out as the affidavits start trickling in.

Some brainstorming from Joseph:

"Issue preclusion" in first suit "fully and fairly litigated" is res judicata in all subsequent cases even if parties are different.


1. Initiate Fed Fannie/Freddie suit and stay all other litigation while bank panic ensues.
2. Drag down market and start QE3 while bank directors shovel money into Obama's campaign.
3. Bernanke buys the shitty MBS and worthless bank stock "to save economy," stocks up, bonuses saved, election won!
4. Throw the suit and lose (on a technicality!) creating res judicata so banks thereafter can win based on res judicata in all the other state and federal cases
5. Banks walk from all litigation winners so screw the attorney generals settlement and the New York state BOA litigation.
6. Taxpayers pick up tab TWICE, once for the original fraud MBS sold to F/F and once for QE3 to "save the economy."
7. Obama is a lawyer and this is basic "con" law.
8. Occam's razor.  Wells Fargo, the one not sued, is the one going down, IMHO.
9. On the other hand, I'm a sick twisted fuck, so what do I know.


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Sun, 09/04/2011 - 15:52 | 1631884 unky
unky's picture

Of course it is. The banks have been on the brick of bancruptcy and sueing them gives the public a reason to funnel money into them and bail them out. You cant bail them out for nothing, that might lead to protests or whatever.

Sun, 09/04/2011 - 17:37 | 1632220 Denninger-is-a-...
Denninger-is-a-douche's picture

Author appears to have a limited understanding of res judicata, issue preclusion, claim preclusion and how they apply.

Although this may have been intended as a quick "brainstorm" squib, it's long on blabber, short on sense.



Sun, 09/04/2011 - 18:39 | 1632429 unum mountaineer
unum mountaineer's picture

okay, i'll bite. What do you feel is/is not really happening here? and how does it look on your end?

Sun, 09/04/2011 - 23:16 | 1633219 the mad hatter
the mad hatter's picture

no it is a song and dance to give the government the illusion of power. the banks own washington.

Sun, 09/04/2011 - 18:40 | 1632430 Tunga
Tunga's picture

An un rebutted Affidavit stands as the truth. If you have something resembling a fact Denninger-is-a...; maybe you should use it to make an argument instead of a baseless insult?

Sun, 09/04/2011 - 19:05 | 1632520 Denninger-is-a-...
Denninger-is-a-douche's picture

"An un rebutted Affidavit stands as the truth" - WTF on several levels. Are you trying to say the author's writings is an affidavit and unless facts are presented to the contrary all assertions are true?

I'm not going to write a treatise here on res judicata and the difference between claim and issue preclusion.  Do the homework yourself.  What the author has penned to that point is incorrect and to the extent the article is based on res judicata and issue preclusion it is wrong.

Here is a fact for you. . . legal interpretation by non-lawyers is nearly always flawed whether in simple nuance or complete misapplication.  For example, your misapplication and misunderstanding of the term affidavit.

Again, not going to do the homework for you but it would be a good idea for you going forward to not blindly take everything written that supports your world view as the truth.

Sun, 09/04/2011 - 20:37 | 1632769 Global Hunter
Global Hunter's picture
Guy asked you a simple question you wanker, you'll catch more bees with honey.  Next time I trust that you our holy overlord of all matters legal will endulge us plebs and peons and edumacate us.
Sun, 09/04/2011 - 21:44 | 1632993 indygo55
indygo55's picture



Mon, 09/05/2011 - 01:13 | 1633461 Denninger-is-a-...
Denninger-is-a-douche's picture

I'm not a bee keeper.  Educate yourself.

Sun, 09/04/2011 - 22:45 | 1633156 XitSam
XitSam's picture interpretation by non-lawyers is nearly always flawed...

So are you a member of the bar?

Mon, 09/05/2011 - 01:08 | 1633449 Maybe-Not
Maybe-Not's picture

Maybe you could offer those of us here to learn something the short version of your point. No one is here to argue with you. Explain the counter argument. If you can't, please go back to yahoo and state your non fact opinions there.


Thank you,


Mon, 09/05/2011 - 02:00 | 1633519 Denninger-is-a-...
Denninger-is-a-douche's picture

I'll give you a hint.

Issue preclusion (collateral estoppel) is used to prevent relitigation of an issue of fact or law already decided by a court against a party.  However it cannot be a bar to a claimant that did not have a full and fair oportunity to litigate the issue in the previous case.  Mutuality of parties is no longer required but isn't really relevant for what would be the defendants in a future case.

Claim preclusion (res judicata) prevents a plaintiff seeking an action against a defendant in which the cause of action (or a cause of action that could have been joined in the first suit) already has a final judgment by a proper court.

Mon, 09/05/2011 - 03:31 | 1633603 connda
connda's picture

Wow...that wasn't too difficult to do, now was it?  You could have just said that the first time you posted.  But, thanks!  I just learned something -- which is one of the reasons I follow ZH.

Mon, 09/05/2011 - 14:09 | 1635112 Tunga
Tunga's picture

"... and lose (on a technicality!) creating res judicata ..." - snip from story.


"... (res judicata) prevents a plaintiff seeking an action against a defendant in which the cause of action (or a cause of action that could have been joined in the first suit) already has a final judgment by a proper court. " - Denninger-is-a...

Where is the contradiction here? You and Joseph appear to be in agreement.  


Sun, 09/04/2011 - 20:47 | 1632824 anonnn
anonnn's picture

Did the lion lay down with the lamb?


Sun, 09/04/2011 - 15:59 | 1631893 Spitzer
Spitzer's picture

 Is there anyone in government that isn't a lawyer ?

These lawsuits are here to feed the lawyer industrial complex. Just like the recent raid the government did on Gibson guitar co. Get them lawyers employed...

Lawyers are all over TV too(cocky stun c*nts on Fox news like Megan Kelly). They actually think they provide something for soceity when they are actually the biggest destroyers of progress the world has ever seen. They are a joke, they make me puke.

At least the military industrial complex invents things once in a while.

Sun, 09/04/2011 - 16:48 | 1632062 dwdollar
dwdollar's picture

"...they are actually the biggest destroyers of progress the world has ever seen."

Well, I will agree they are fourth... behind bankers, politicians and lobbyists. Though there is quite a bit of overlap.

Sun, 09/04/2011 - 15:55 | 1631894 samsara
samsara's picture

Whenever TPTB/W appears to be doing the 'Right' thing,  Always look for an alternative reason.  Usually 180 degrees different.

Sun, 09/04/2011 - 18:06 | 1632078 Kayman
Kayman's picture

always look for an alternative reason.

So true.  A healthy dose of skepticism is no longer healthy.  Start with obtuse cynicism and you can figure out what the politicians and banksters are doing.

Sun, 09/04/2011 - 15:56 | 1631896 john39
john39's picture

seems like a waste of energy to figure out exactly the mechanism by which the banker cabal plans to continue fucking humanity...  enough to know that, one way or another, they plan to soak the average person with losses, and squeeze anything of value into the their control, while at the same time increasing and centralizing government control. 

Sun, 09/04/2011 - 21:05 | 1632873 rocker
rocker's picture

Think of it this way.  1) QE1/2 pumps the markets up. Banksters and elite HFTs make billions. 2) The economy rolls over. The banksters and HFTs take trillions out of the markets. Hence, with the markets crashing and they should fall hard, as QE3 twist fails.  4) Do we get QE4 with a special annoucement and some swap lines to Europe. The banksters profit again from a simply marvelous recovery in bank stocks, bonuses included.

The question is. Do the markets roll over as they should since none of it helped the real economy, (actually made it worse), or is step 4 engaged and we do get QE4.

It really blows must of us away to think this could happen. But look at it this way. Look at all the Bullshit they have already done. Look at the damage they have inflicted upon the sheeple and how much the elitist have made off of the ills of others. 

Simply Put, these people have No sense of right or wrong. Their code of ethics is witness to ignominy and they do not care at all.

With no conscience for anybody other than the aristocrats that are beholden to, they truly believe Greed is Good.

For myself, I think all bansters bonuses should be clawed back and paid to the treasury. But that will NEVER happen.

They will take back someone's house.  Why is it a one-way street.  Moral Hazard is alive and Well on Wallstreet.

As Joe Kernen said on CNBC to Carl. "Bailing out the Banks is all Good".

Sun, 09/04/2011 - 15:57 | 1631900 dick cheneys ghost
dick cheneys ghost's picture

Makes sense.........Look to the MSM coverage, or lack thereof, and it makes even more sense.........Even tho the NYTIMES broke the story thurs nite, there is virtually zero coverage of the story in todays online version.

Sun, 09/04/2011 - 15:58 | 1631903 resipsaloquacious
resipsaloquacious's picture

If the case was "thrown" on a technicality (example, statute of limitations,), then res judicata or collateral estoppel could not act as a bar to subsequent litigation on the same issue.  Why?  Because the case was not fully and fairly determined on the merits.

This conspiracy theory is absolute rubbish. 

Sun, 09/04/2011 - 16:04 | 1631921 Steroid
Steroid's picture

Logic is the weakest point of irrationality!

Sun, 09/04/2011 - 16:31 | 1632019 falak pema
falak pema's picture


Sun, 09/04/2011 - 16:37 | 1632038 narapoiddyslexia
narapoiddyslexia's picture

Still, they could get a full judgment on this complaint, settle it for pennies on the dollar, and achieve the result the posting describes.

Sun, 09/04/2011 - 16:58 | 1632094 resipsaloquacious
resipsaloquacious's picture

No, they couldn't.  A settlement has no res judicata effect on a subsequent case because the initial was settled and not determined by a Court. 

Sun, 09/04/2011 - 22:43 | 1633151 narapoiddyslexia
narapoiddyslexia's picture

I'll repeat it, more slowly this time. They could get a judgment on the complaint [of necessity, from a court] and then settle the in-hand court judgment, for pennies on the dollar, and achieve the result the posting describes.

Mon, 09/05/2011 - 09:31 | 1634017 resipsaloquacious
resipsaloquacious's picture

OK.  I get your point and it still is completely wrong.  If there obtained a judgment on the complaint and then settled, the settlement could not bar or even have a detrimental affect on subsequent suits.  This is because they technically won the suit, whether a party post-judgment settles the case can have no res judicata effect on a subsequent litigation in the manner that this post suggest.

Res judicata is far more limited than most people understand.  You and the original poster have a misunderstood notion of what it is and what it can and cannot do. 


Mon, 09/05/2011 - 01:03 | 1633443 Bringin It
Bringin It's picture

resipsaloq - Not to get all what-is-is about it, but IMO you misunderstand the author's use of th term throw.

Not thrown - as in thrown out of court on a technicality, but

throw - as in throw the fight, as in intentionally lose the contest.

Here there are not so many lawyers.  People tend to settle things themselves.

Sun, 09/04/2011 - 15:59 | 1631907 dolly madison
dolly madison's picture

I am skeptical too.  Time will tell.

Sun, 09/04/2011 - 22:38 | 1633134 RockyRacoon
RockyRacoon's picture

Skeptical?   I think the whole article is simply weird.   The guy who came up with this half-baked thing is not an attorney.

Sun, 09/04/2011 - 16:03 | 1631918 decon
decon's picture

I'm not a lawyer but typically charges adjudicated in Federal court and State courts even for the same matter don't constitute double jeopardy.  Since the FHFA are federal charges they shouldn't preclude the states from continuing with prosecutions.

Sun, 09/04/2011 - 16:08 | 1631919 anonymike
anonymike's picture

Do 17 big banks that looted the country now have a common enemy against which they can rally their strength? An enemy that is such an economic retard that he just appointed a top economic advisor that thinks raising the minimum wage will increase employment? What will be the unintended consequences as, during an election year, battle is waged between the administration and the owners of the Fed? In this case, the republican establishment battle against Ron Paul to instead nominate a bankster lap-dog could get very ugly, or worse... OR, is this all just more political theatre that will again shift more liability from banks to taxpayers with another hand-slap "settlement" AFTER November 2012, in exchange for support of the current lap-dog? Occam's razor strongly favors the latter. Watch for clues in the months ahead...

Posted 3 Sep 11 at Economic Liberty News

Mon, 09/05/2011 - 01:06 | 1633450 Bringin It
Bringin It's picture

anonymike - you're talkin' sense.

Sun, 09/04/2011 - 16:07 | 1631920 knukles
knukles's picture




And PSS.... Note the one Not Sued, Wells Fargo, happens to have a Big Ginormous Splendid Wonderfully Large Shareholder in the Pink Named Uncle Warren.....
Du-fucking-h, huh?

Sun, 09/04/2011 - 16:04 | 1631923 narnia
narnia's picture

Res judicata would not fail to have MERS front and center.  

My two cents is that we are going to see a very big across the board, undoubtedly poorly conceived settlement for mortgagees.  Banks are then forced to play the game the way the Treasury wants or undoubtedly lose more in court.  Look for Wells Fargo to be the first bank to offer across the board settlement that Obama and Warren have already worked out.

Sun, 09/04/2011 - 22:40 | 1633145 RockyRacoon
RockyRacoon's picture

I think you have it.   The banks are balking, for obvious reasons, to write down principal balances.   They are getting their nuts in the legal vice to do some persuasion.

Sun, 09/04/2011 - 23:54 | 1633235 Pure Evil
Pure Evil's picture

Well, actually the banks need a way to get the toxic mortgages off the books, not so much another bail out. They currently have so much money sitting at the Fed, they actually need a way to get it out into the economy through fractional reserve banking, but find it difficult being loaded down with billions in toxic mortgages.

I think he's got this part right:

Bernanke buys the shitty MBS and worthless bank stock "to save economy," stocks up, bonuses saved

This may be partially correct:

Throw the suit and lose (on a technicality!) creating res judicata so banks thereafter can win based on res judicata in all the other state and federal cases

Need to find a legal way to show that the banks aren't the real owners of the mortgages giving the Fed a reason to buy them up, (Of course it's all a show trial for the sheeple), marxists/fascists are unequaled at staging show trials. And, of course, all it takes is for the Supreme Court to refuse to hear any appeals to these court decisions thereby automatically making these decisions law of the land. If anyone doubts the ability of this being pulled off, all one has to do is go back and study how they pulled off the Resoluton Trust Corporation.

Banks walk from all litigation winners

And restart the fractional reserve banking poinzi scheme again.

Taxpayers pick up tab TWICE, once for the original fraud MBS sold to F/F and once for QE3 to "save the economy."

So true, but this isn't the second time taxpayers have picked up the tab, nor will it be the last.

Obama is a lawyer and this is basic "con" law

Yes, Obama is a good con artist, but this "con" is not his field of expertise

I have no experience or expertise in these areas either, but I would think that the only way to restart the next great frational reserve banking ponzinomics is to eliminate the toxic mortgages on the banks books.

We have to remember that fractional reserve banking is the way the keynesian government, fed banks, and WS interests keep the keynesian ponzi scheme going. Without it these same interests lose power and control over the economy and the sheeple.

Plus, now days, it matters little exactly who the President is, as long as they don't try to overstep their bounds when it comes to the military and the Fed. But, not to worry. With the cost of getting elected President approaching a billion or so dollars, future Presidents will be the bought and paid for whores of WS interests.

Mon, 09/05/2011 - 01:09 | 1633453 Bringin It
Bringin It's picture

Well said Pure E.

Mon, 09/05/2011 - 13:25 | 1634936 narnia
narnia's picture

The GSEs (through the Fed) and the Fed have already purchased $5 trillion in MBS.  This was done without even one act of Congress or as much as a story in the MSM on it. They could just outright purchase the rest of the mortages without a reason or a lawsuit and no one would even bat an eye (outside of ZH).  

If I were looking to re-engineer an after the fact determined appropriate bankruptcy proceeding or force an administrative action & didn't have a conscience, I'd get the other party tangled in a legal mess... one in which I make the rules...  and impose my will on them.     


Sun, 09/04/2011 - 16:06 | 1631928 Everyman
Everyman's picture

If this is a political play, then the UNITED STATES OF AMERICA is DEAD!

There had better be heads rolling for bringing a fradulent suit and illegal case forward, or the banks need to be prosecuted.  It can't be this bad here in the USA, can it?  Are we that corrupt and criminal?

If the skeptics are correct then this country is screwed and the shooting will commence.  Even the powerful an d the posers have to realize that even that goes too far and is just too "in your face" America.

Mon, 09/05/2011 - 01:12 | 1633458 Bringin It
Bringin It's picture

Everyman - check out Pure Evil's post above re. Resoluton Trust Corporation.  This is nothing new.  The difference now is that we are no longer rich enough to trudge on, under the dead weight of the scams.

Mon, 09/05/2011 - 04:06 | 1633625 AldousHuxley
AldousHuxley's picture

welcome to the funeral party



Sun, 09/04/2011 - 16:06 | 1631929 Jack Napier
Jack Napier's picture

I was also wondering why Wells Fargo was the only one left out of the suit. Sure they are one limb of the NWO so impunity isn't surprising, but then why go after JPM and Goldman?

Sun, 09/04/2011 - 16:10 | 1631935 knukles
knukles's picture

Well, teenie tiny things like Well's corporate jets were supposedly used for rendition flights...  Supposedly one of the Big South of the Border Money Launderers...
Some special little thingalmebobs that go Phhhhht in the Night.

Sun, 09/04/2011 - 16:17 | 1631967 Jack Napier
Jack Napier's picture

I figured out the answer to my question. Public relations.

Sun, 09/04/2011 - 16:10 | 1631936 wombats
wombats's picture

Oh Jeez.  That is so twisted and cynical that it just might come to pass. 

Sun, 09/04/2011 - 16:16 | 1631961 FEDbuster
FEDbuster's picture

Wonder if Uncle Warren thought this one up?  Sick and twisted (crooked) is the new normal.  Given that not much happens without Bankster/FED approval.  This move could be VERY orchestrated by the banksters.

Sun, 09/04/2011 - 16:10 | 1631938 oogs66
oogs66's picture

i think the government wants to take over bank of america, and this time will take over management and attempt to drive down banker can hope

Sun, 09/04/2011 - 16:12 | 1631945 Jack Napier
Jack Napier's picture

So they remove failsafes in the SEC and encourage toxic loans with government legislation to create the housing boom/bust which ruins banks that then require tax payer bailouts to survive, and then get their pants sued off so they need another bailout or else get nationalized and propped up by more tax payer dollars. If I didn't know this was how class warfare was done I might think they were crazy.

Sun, 09/04/2011 - 16:12 | 1631946 poggi
poggi's picture

Not as sinister, but another way for all the junk to end up on the fed's balance sheet and accomplish virtually everything Joseph predicts: 

Sun, 09/04/2011 - 16:18 | 1631975 poydras
poydras's picture

One can hope that the end-to-end MBS scam evolves into a RICO case ensnaring politicians, regulators, and the various financial companies.  To date the bad actors have performed exceedingly well at not only avoiding prosecution, but extending the compensation gravy train.

Only a fool would neglect to question the motives and intent.  Perhaps Bill Black can provide some insight.

Sun, 09/04/2011 - 16:19 | 1631978 vast-dom
vast-dom's picture

No shit.


I've been typing here for weeks that teh fed et. al will ALLOW for a mini-crash BEFORE Sept20-21. Been saying this for quite a the only acceptible method of fed intervention that is laballed as "we had no choice" and therefore blame can't be ascribed due to "dire" conditions.


Sun, 09/04/2011 - 16:21 | 1631984 Herbert_guthrie
Herbert_guthrie's picture

These are lawsuits that will be pushed through to an agreement.

How much should the fine be per bank in return for immunity, guaranteed profits, and complete taxpayer backing?

Sun, 09/04/2011 - 16:21 | 1631986 tom a taxpayer
tom a taxpayer's picture

Thirty two planitiffs file RICO action against JPMorgan Chase Bank and Chase Home Finance in Florida.

Can ordinary people bring a RICO lawsuit in certain States?  If so, that could be a game changer. 

Sun, 09/04/2011 - 16:21 | 1631987 tkinfo
tkinfo's picture

The key though is that the major money center banks and brokers worldwide (think from Bank of America to Wells Fargo) are in the process of falling to Zero shareholder equity wise and the stocks will follow to that same Fair Market Value. No matter what the politics and the bail outs (think TARP et al) the bail outs fail because the nonperforming debt is greater then the borrowing capacity of the governments due to the sovereign debt crisis. Our private hedge fund out of San Francisco began the short positions when Citibank broke down at Christmas time 2007 and though we didn't know what was happening then, we've followed the trades lower and over time the smoke has cleared. Poor credit analysis on two fronts, the sovereign debt and mortgage markets, are the straws the broke the camel's back. Fair Market Value on the Dow is 1400, FMV on Gold, $14,000.

Sun, 09/04/2011 - 16:21 | 1631988 tkinfo
tkinfo's picture

The key though is that the major money center banks and brokers worldwide (think from Bank of America to Wells Fargo) are in the process of falling to Zero shareholder equity wise and the stocks will follow to that same Fair Market Value. No matter what the politics and the bail outs (think TARP et al) the bail outs fail because the nonperforming debt is greater then the borrowing capacity of the governments due to the sovereign debt crisis. Our private hedge fund out of San Francisco began the short positions when Citibank broke down at Christmas time 2007 and though we didn't know what was happening then, we've followed the trades lower and over time the smoke has cleared. Poor credit analysis on two fronts, the sovereign debt and mortgage markets, are the straws the broke the camel's back. Fair Market Value on the Dow is 1400, FMV on Gold, $14,000.

Sun, 09/04/2011 - 16:24 | 1631994 tkinfo
tkinfo's picture

For anyone interested, and I know we're just another stone tossed in the pond, I write a blog that coincides with our hedge fund activities at

Sun, 09/04/2011 - 16:24 | 1631995 tkinfo
tkinfo's picture

For anyone interested, and I know we're just another stone tossed in the pond, I write a blog that coincides with our hedge fund activities at

Sun, 09/04/2011 - 16:27 | 1632006 falak pema
falak pema's picture

Come gather 'round people

Wherever you roam
And admit that the waters
Around you have grown
And accept it that soon
You'll be drenched to the bone
If your time to you
Is worth savin'
Then you better start swimmin'
Or you'll sink like a stone
For the times they are a-changin'.

Come writers and critics
Who prophesize with your pen
And keep your eyes wide
The chance won't come again
And don't speak too soon
For the wheel's still in spin
And there's no tellin' who
That it's namin'
For the loser now
Will be later to win
For the times they are a-changin'.

The line it is drawn
The curse it is cast
The slow one now
Will later be fast
As the present now
Will later be past
The order is
Rapidly fadin'
And the first one now
Will later be last
For the times they are a-changin'.



Sun, 09/04/2011 - 17:53 | 1632260 Kayman
Kayman's picture

Jerry Rubin donned a suit.

Plus ca change....

Behind every great fortune is a great crime. But the criminals hide their deeds by using political whores.

There is the young Robert Zimmerman and then there is the other guy.

You sink when you're stoned....

Sun, 09/04/2011 - 18:01 | 1632297 Jumbotron
Jumbotron's picture

In a word....


Sun, 09/04/2011 - 16:32 | 1632024 bakken
bakken's picture

Paranoia.......   Uncle Warren has Wells Fargo roll over for a big number, kills his competition, and then when the his buddy O is re-elected, Fargo debt is rescheduled to..about nothing.


Benny will then fade him his BOA  "LOSS".

Sun, 09/04/2011 - 16:38 | 1632045 agrotera
agrotera's picture

Joseph, thank you for articulating what we the people smell!!!  "We the people" are rather, "we the plebian patsy pawns"for our captured government owned by the privately owned federal reserve cartel.

Mon, 09/05/2011 - 09:18 | 1633958 chindit13
chindit13's picture

Where have you been?

Get your butt back here and comment more.  The break in the action is over.  All that will be is happening now.

Sun, 09/04/2011 - 16:40 | 1632048 Perseid.Rocks
Perseid.Rocks's picture

Couldn't these suits be dismissed as frivolous since the government already has regulatory authority over the banks, and already has legal right to claw back all the bailout monies ? Just sayin'

No reason to file suit now other than to preempt the tidal-wave of private suits that are unfolding right at this very moment.

Sun, 09/04/2011 - 16:45 | 1632060 topcallingtroll
topcallingtroll's picture

Never ascribe to conspiracy what can also be explained by incompetency.

Our system is not as centralized as many. It could be there is no grand plan and this is the beginning when every actor thinks it is now every man for himself. Too many claims and political agendas and not enough money for them all leads to fighting over the scraps.

Bond funds, banks, politicians, the Fed, Fannie, FHA, FDIC, and various attorneys general all duking it out with each other with shifting alliances of convenience.

Sun, 09/04/2011 - 16:48 | 1632070 FubarNation
FubarNation's picture

Speaking of banks why no story rumors that Barry et al. will be stroking mortgage rates down to 2% to 'save' homeowners?

I would usually call bullshit on a rumor like this but I shit you not I walked into my bank last week and the manager asked me if I wanted to refi for 5 years at 2.45%.  Yep 2.45%.  I asked him if he was fucking with me and he said nope.

Makes me almost wish I had a mortgage.  2.45%.  Wow.

Also makes me wonder if Warren got the word about this on his friendly call with Barry before he plinked down a few billiion on BAC.  Think what this gov't rate imposition would do for the banks.  Blast off.

Sun, 09/04/2011 - 18:00 | 1632292 laomei
laomei's picture

fixed or arm? if it's arm, it's a scam

Sun, 09/04/2011 - 16:53 | 1632085 Cheyenne
Cheyenne's picture


"Issue preclusion" in first suit "fully and fairly litigated" is res judicata in all subsequent cases even if parties are different.


Not true. Res judicata only bars a party to the original suit.


"Under res judicata, a final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action." (emphasis added).


1. Initiate Fed Fannie/Freddie suit and stay all other litigation...


On what grounds would you stop ALL other litigation? It's not res judicata. Nor is stare decisis applicable.


No, this looks more like an effort for a caught-red-handed to limit damages. Get a final judgment quickly, at a certain dollar amount. When the real and much larger damages are revealed later, and the (same) plaintiff comes back to court, THEN you'll see the defendant plead res judicata.

Mon, 09/05/2011 - 16:15 | 1635689 unununium
unununium's picture

That sounds much more believable.  But the problem for BAC is that the damages as sought will kill them, so it's hard to see why future damages matter.

In the piling-on department, Nevada has also sued BAC in recent days to undo the 2008 settlement, thereby allowing the Silver State to sue for deceptive lending, marketing and loan servicing practices.  Haven't seen that mentioned on ZH.

Sun, 09/04/2011 - 17:01 | 1632099 dwdollar
dwdollar's picture

"That Zero Hedge has a jaded outlook on the world is pretty much clear by now."

If you're not jaded you're naive.  Those who are jaded understand how the world really operates.

Sun, 09/04/2011 - 17:00 | 1632100 Tunga
Tunga's picture

Very interesting. Thanks Joseph and ZH. 

When the 1st Amendment fails; use the Second.


Sun, 09/04/2011 - 17:12 | 1632143 bankruptcylawyer
bankruptcylawyer's picture

i liked the thinking, i myself posted a very cynical comment. 

i wasn't as inciteful ( i love the comment of wfc being screwed) but my basic comment pointed to a simpler motivation. 


1) obama can say he is suing the banks to look honest in the re-election. he has to do 'something' that he can give speeches about so that he can maintain a facade of creditibility to the hopium public


2) the banks don't care because they are going to get bailouts from many sources, including 'qe3' , operation twist, the new mortgage refinance bailouts...etc.etc......


the only real threat here is the escalation of the legal fees being paid by wall street. that IS starting to rack up. precisely when revenue generating deal volume is dying off. 


of course, evnetually even the wiley coniving bankers will stumble and the whole charade wil be unmasked. but who knows when .



Sun, 09/04/2011 - 17:44 | 1632239 knukles
knukles's picture

The Street'll start paying the lawyers with Unsecured Barely Promissory Notes which in turn they'll Collateralize Slice and Dice, purchase AAA ratings on the senior pieces comprising 99.99% of the deals in order to re-liquify their external counsels prior to partnership distributions, therby recapturing much of what was theretofore paid to legal counsel in the form of underwriting fees and expenses.  
Can't any of you folks think like a fucking sociopath Wallstreeter?

Sun, 09/04/2011 - 18:36 | 1632413 Dburn
Dburn's picture

1) obama can say he is suing the banks to look honest in the re-election.


I thought the same thing. Why now? There has been a plethora of incidents that were as obvious as a liquor store hold-ups complete with dead bodies and witnesses saying "OMG, look" as they video tape it from 22 different angles. Yet nothing was done. They closed down some internet gambling sites. "Hey, that's financial? Right?"

It's not that they didn't know, they knew, so it was important that the lie was so big, most would never believe it.

Some "Clues"

1. Whistle blowers handing thousands of pages that demonstrated systemic fraud from the Triple AAA rated securities known as CDOs that were stuffed with cow shit to the Robo-signing incident.
2. The FBI warning in 2004 about wide spread mortgage fraud which in turn caused the remaining agents to be transferred to anti-terrorism units. Mueller , under testimony, said they didn't have the agents to carry out the investigations. So Mueller or Bueller , why didn't you take it to the press?
3. Then like almost an afterthought Mueller added; "we are currently adding 850 agents". Yet he wasn't specific if the veteran agents, who knew white collar crime, would be transferred back into the white collar crime division. Many of them had retired in disgust over the last 10 years. 850 Rookie FBI agents won't know shit.
4. This site laying out the various scams step by step so even a someone deaf and dumb could understand what was happening.
5. The statement of all statements: Bill Daley, former Vice Chairman of JP Morgan and with stock holdings in most of the TBTF banks, became his Chief of Staff (president?). Obama traded his Chief of staff who got Chicago for doing his job taking over from the brother of Bill the banker.
6. One more "tell"was when Taibbi wrote about Christie Mack, wife of John Mack, got 220 Million from the fed to invest in student GUARANTEED loans in the TALF program There is much more, but I'm not buying a "Sunni awakening" that happens just in time to get leaked depositions out to the public before the election.

This is a political move. Even if Obama loses the election, the Banks win because the GOP, complete with the tea bag party, have made it clear they intend to do nothing about the Banks. Heads the Banks win, Tails we lose.

My best guess is that if the real facts came out, Govt officials would fall like dominoes as being complicit to the crimes by selling policy changes that allowed the mess in the first place.

Cash and Carry Government.

Hasn't anyone seen the "Crazy Eddie" like ads for Laws and policy changes? You know:

"Two; Two Laws for the price of one
If you buy today we'll throw in one slickly targeted policy change. Your write it, we sign it.
Terms: Cash upfront with a 1% discount for used bills or Gold that can easily be stored in our freezers, and we mean big ass motherfucking freezers.
Sorry folks, we can't take the discounts from American Express anymore.

Sun, 09/04/2011 - 18:53 | 1632490 Cheyenne
Cheyenne's picture

Fantastic post, Dburn. Let's begin adding to your grave list:

+ almost commonplace demonstrations here, at nanex, and (dare I speak his name?) good ole Karl of quote-stuffing, which are per se crimes (with present technology)--conclusive demonstrations. Five months, and yet we've heard nothing from the Scotland Yard of DOJ/SEC about their investigations into these crimes?

You wanna know where that seemingly out-of-the-blue request for HF source code came from? See id.

Now that they got us all distracted, we're supposed to forget about what's supposed to be a real investigation.

Sun, 09/04/2011 - 19:02 | 1632511 Cheyenne
Cheyenne's picture

And I guaran-fucking-tee-you that the protective order in that S.E.C. HFT business calls for the destruction of source code obtained during litigation, which instruction, if obeyed literally, would result in... the destruction of history itself?

It's a sad fucking day when you're asking yourself these kind of questions. But we've seen some really really strange and questionable bullshit going on unquestioned for the last 10.00 years.

Happy Labor Day.

Sun, 09/04/2011 - 23:56 | 1633282 Dburn
Dburn's picture

(Thanks for the nod)

If the banks are involved, we are forced to bet on the banks as they  have a exemplary string of victories with only a few minor setbacks to keep the looting button on and the prosecution button off. They need the people in Public Office that will protect them from legal remedies for  civil and criminal crimes going backwards and looking forward. The ultimate responsibility to pay for their mistakes belongs to us. They , after-all, are the entitled ones.

It always gives me a kick when I see certain people here railing about the 50% who don't pay income tax.

Total Nonsense since the govt implemented the tax direct program by all the policies that were created in taxation to allow for outsourcing  to create monopolies and duopolies  in virtually every sector. Never has the anti-trust laws gathered this much dust and prices have gone up so fast. From Abbott labs buying a patented version of a vitamin called niacin and repackaging it to be a blood thinner that has no more effect whatsoever than a $6.00 OTC Vitamin called , strangely enough, Niacin. The price for Abbott's version $150 per month. They paid 3.4 Billion for that patent.

What's a part-time worker to do? So lets put all the nonsense away about how 50% of this country is paying for half the govt budget, the other half borrowed. The people that say this are either light on IQ or a direct beneficiary of the current system. The banking crisis was merely the unveiling of what's  going on behind closed doors for the last 31 years or so. State Government along with the Federal Govt have always sold policy and laws.

Another stark example comes from our old freind Citibank. See at one time, when people had a conscience in the country, there was a thing called Usury. That capped the interest rates that anyone could be charged and by doing so made it harder to get credit , which would have helped people recognize earlier that they were getting fucked on their wages. Well Paul Volcker came along to give us the hard medicine we needed.

Citibank got caught right in the middle . They could only charge their customers for credit cards 14%. Suddenly their cost of money soared to 18%. Looking death right in the eye, Citibank did what any frantic person ( Citizens United) would do. Citibank called their lobbyists who promised to look for a solution. Within a very short time they had one. It seems South Dakota was having a huge blue light special on legislation in those down days of the bitter medicine recession. In exchange for Citibank opening up credit card centers giving thousands of of jobs to a state that had less than 500,000 people, they would remove usury . Citibank was then free to charge any interest rate they wanted.

This was the dawn of easy money. I was around then. The country went from either no credit available or at a nose bleed interest rate to Citibank sending out 25,000 pre-approved cards at a time to certain zip codes in moderate income areas to field test a theory the middle class values would keep the default rate minimal while at the same time allowing them to test the increased productivity associated with not fooling around with all those nasty applications.

Kinda like "give us more of those junk triple AAA rated CDOs", for the middle class. As long as the house was appreciating and once the Dow broke through the 1000 barrier in 1982 people didn't mind running their cards to the hilt as they saw their net worth explode exponentially upwards under the false air of a debt stimulated recovery and ultimately a debt stimulated economy. They just always seemed to have a liquidity problem. No Biggie. In comes debt to fill the gap which in turn pulled GDP forward. Hell the govt was doing it. Why not? As the years progressed Wall Stareet came-up with more and more scams to get Americans into debt they could never escape from. Americans just didn't realize that the downward push on wages was also pushing them to the end of the cliff.

After a few decades of it, the people who should have known better fully believed in the power of leverage. "Other Peoples Money" was a stock phrase that seemed to apply not only to business but consumer shopping too. You were in if you had OPM.

So we now are faced with rolling back three decades worth of bullshit numbers that no lawsuit or legislation will stop. "No matter what accounting system your on, eventually your gonna meet Jesus". We just didn't know that the Govt was Jesus for the right kind of people. So, here we sit, embittered malcontents hanging on to Gold and Guns and bitching about something that everyone who knew finance and business cycles knew was coming but didn't  or couldn't do shit about.

The worst part is, they still think we are crazy as loons.

Just a anecdotal note: I have a few generic scripts that I buy from Costco every 60 days or so. In the last 60 days the generics went up 129%. This is probably due to the age of the drugs and the grey marketers. But the idea that FDA is now stopping re-importation from places with much better pricing, makes me ill. I need some drugs man.

Sun, 09/04/2011 - 23:32 | 1633244 williambanzai7
williambanzai7's picture

It is my understanding that Obama and Tim are not pleased that this litigation was commenced.

It was commenced now primarily to preserve the right to litigate since the statute would otherwise expire this week. Wells Fargo signed a waiver, that's why they were not sued.

We are talking about billions of dollars of claims here.

No one in his right mind would allow those claims to vanish without a quid pro quo. Certainly not the guy who runs the FHFA. He is a Bush appointee. Why would he put his neck on the block to save Obama?

Mon, 09/05/2011 - 00:10 | 1633326 Dburn
Dburn's picture

I understand the different party routine with the appointee of the FHFA. Didn't the GOP promise to protect the banks in exchange for campaign contributions?
No one in govt acts in a vacuum. You actually can reverse this and say this was a GOP plan to keep unemployment up and the stock market down by having the financial sector drag the street back down. Hell Bair was a Bush appointee and was far more to the left and willing to stand up to the banks than her bosses. Her appointment ended July 1 of this year.

The idea that someone filed the lawsuit  this because they did wrong? You have to be kidding me. Where was the guy when he was appointed by Bush? He has had years of evidence pile up. If I thought there was substance to this suit, I'd be one happy guy. It's all air. Obama's job approval numbers are on the same trajectory as Bush's. They may have seemed unhappy to certain people, but, they were cheering. At least now he can have some shred of a piece of charred wood to stand on for his re-election.

There is no way anyone can convince me that anyone in Govt is going to stick their neck out even if it's to hopefully undermine Obama. Yes the SOLs were running out, so they had to get the suit filed. By why now? Why not a year ago? Six months ago? Maybe someone felt that they had to file because the GOP was going to use the banks in their campaign against Obama with a wink and a nod, especially if the economy doesn't improve.

Sun, 09/04/2011 - 17:24 | 1632179 gwar5
gwar5's picture

What I definitley don't want to see is the sort of thing outlined in this article. But I do expect TPTB will try to do some package deal that papers over everything and benefits the usual parasites, by whatever means. Pardon the pun. 


Sun, 09/04/2011 - 17:31 | 1632199 gwar5
gwar5's picture

Oh, one flaw I see in this scenario is that Obama is already a political goner. So is the American socialist agenda. Banks are too smart to go down with Obama like they should. The banks will have to throw Obama under the bus (tactfully, of course), not double down on him. TPTB cannot afford to throw all their eggs in the Obama basket.


Sun, 09/04/2011 - 17:25 | 1632181 Eireann go Brach
Eireann go Brach's picture

I think these reasons above are only scratching the surface! This is another stunt by Obama to win more votes, and his recent meeting with Buffet won Wells immunity! Why Buffet put that much money into B of A knowing full well that they would be sued 2 weeks later, means that the banks will come out of this suit in a better position than before! Otherwise Obama fucked old Warren and did not tell him about the suit, and we all know he told him! This will end in tears because the cancer in the system is now incurable and this administration and the banks have too much bad blood, bad karma and debt on their hands now. A Massive crash of the financial system is now within 6 months!

Sun, 09/04/2011 - 17:44 | 1632232 dwdollar
dwdollar's picture

Of course Obama told Warren beforehand. Obama doesn't have many public figures willing to take the heat for him. Is he going to screw the few who will?  Please... That means only one thing. The fix is in. Warren believes he's buying at the bottom.

You think you're so smart Warren. You haven't got a fucking clue about the severity of the crisis. You're old age is clouding your judgment. This isn't 1960 you old buffoon. America is on the way down. Not up. Down. Get it?

Sun, 09/04/2011 - 17:38 | 1632214 rawsienna
rawsienna's picture

Funny how FHFA is suing banks over securities purchased by GSE portfolio (not their guarantee business) that they never should have purchased to begin with.  This lawsuit has NOTHING to do with the guarantee business. These are mostly AAA rates secuitizations of either subprime or Alt A loans that did not qualify for agency guarantees!!!  Remember when GSE's reported they did not have any subprime exposure. Turns out they had hundreds of billions just in secutization form (fyi - without the bid for the AAAs from the agencies many of these subprime deals could never get done). That is the real scandle.  Where is Barney Frank now?

Sun, 09/04/2011 - 17:48 | 1632248 GCT
GCT's picture

This lawsuit has always been about PR and screwing over the state AG's.  Obama tried to get them, to back off and failed so now the Fed will sue.  Win or loose the Banks win as the fed just stiffed everyone but the banks! 

Sun, 09/04/2011 - 19:03 | 1632512 onlooker
onlooker's picture





  1. A set up to protect the banks from the states and foreign governments.
  2. An even more cynical view would be that the Federal Government will find that

the banks are corrupt dysfunctional and need to be taken over by the Fed to protect the stock holders, and the customers..  

Sun, 09/04/2011 - 19:04 | 1632519 russwinter
russwinter's picture

I am cynical, but the Joseph view is too much so. We are at the bargaining stage where Obama absolutely must deliver a pound of flesh, or people will hit the street and he will never even get nominated, let alone reelected. People see through these phony setups now. I think the Administaration is gunning for large scale debt forgiveness. That would be hugely popular. 

Debt Jubillee or Night of the Living Dead.

Sun, 09/04/2011 - 19:18 | 1632567 MFL8240
MFL8240's picture

I don’t think the people will stand for adding trillions more to the debt.  People are fed up with this crap on Wall Street and in DC and  unless it includes the gangsters gone, like Blankfield, Dimon, Summers, Paulson, Geithner, Bernanke, Greenspan, Rubin, et. Al., indicted for criminal fraud and treason, then the people will not go along.

Obama is done no matter what he says, he is a failure and there is no way this economy will turn with this group of fools in 15 months.

One mans opinion

Sun, 09/04/2011 - 22:52 | 1633165 RockyRacoon
RockyRacoon's picture

I don’t think the people will stand for...

I'll tell you what "the people" know:

1. Banks bad

2. Dancing With the Stars good

Got it?

Mon, 09/05/2011 - 00:01 | 1633316 cfosnock
cfosnock's picture

"I think the Administration is gunning for large scale debt forgiveness." I doubt it as that would affect the banks bottom line

Sun, 09/04/2011 - 19:09 | 1632536 MFL8240
MFL8240's picture

No one will stand for another bailout of these motherfuckers.  These banks must die and the people who stole all of the money and ruined our country will be dealt with by the American people.  

Sun, 09/04/2011 - 19:42 | 1632643 IMA5U
IMA5U's picture

the american people are a bunch of idiots.  good luck on that.

Sun, 09/04/2011 - 22:54 | 1633172 RockyRacoon
RockyRacoon's picture

80% made it perfectly clear that they (we) didn't want any of this bailout BS.   What good did what the people want do?

Mon, 09/05/2011 - 04:10 | 1633627 AldousHuxley
AldousHuxley's picture

voting is for passive agressive suckers.

massive protests and demostration is real democracy in action.

bloody revolution always gets results.



Sun, 09/04/2011 - 19:29 | 1632602 russwinter
russwinter's picture

Pile on the Swiss banks:

9:50 AM In a strongly worded letter to Switzerland, U.S. Deputy AG James Cole demands - by Tuesday - detailed information on citizens using Swiss bank accounts to dodge taxes, or possibly see Credit Suisse (CS) and 9 other banks face criminal charges.

Sun, 09/04/2011 - 20:02 | 1632708 tony bonn
tony bonn's picture

"...On the other hand, I'm a sick twisted fuck, so what do I know...."

far more than you may know.....if anyone thinks that the fountain of fraud indonesian citizen serving as teleprompter-in-chief gives a flying fuck about truth or justice, he is the twisted fuck....

Sun, 09/04/2011 - 20:22 | 1632754 AlmostEven
AlmostEven's picture

Tracking of campaign money in the past year shows Wall Street leaning Republican short, the bankster love affair with Obama is over. Appointing Bill Daley wasn't enough to win them back. Running interference in the fraudclosure scandal was helpful to them, but Obama can't quite seal the deal. Most importantly, the banksters smell blood in the political water, with Bam-Bam's approval rating at an all-time low and Tea Party becoming a formidable political force. Time to buy the Tea.

In retaliation (and in desperation to win back his progressive base), the Prez launches a high-profile suit against the banks (to be dropped or fumbled later?). Makes sense to me. And it makes even more sense that the only banker he doesn't go after is Buffet, the guy who has protected his back for the past 3 years in public and private dealings. Obama's political career should be over in a year or so, but then again, Harry Reid's career should have ended too. Obama needs a Sharron Angle to run against. Nothing else will save him now.

Sun, 09/04/2011 - 21:51 | 1633018 f16hoser
f16hoser's picture
Is The FHFA Lawsuit Against The Banks Just A Subversive Res Judicata To Bail Out The Banks?  DUH!

Lets see; FED prints (taxpayer) money / gives (taxpayer) money to corrupt banks free / Corrupt banks make $$$interest on free (taxpayer) money / Publice gets mad at FED / FED gets mad at corrupt banks / Corrupt banks give some of taxpayer money back to FED / FED happy! / Taxpayer happy but not sure why / Corrupt banks give out huge taxpayer funded bonuses' to corrupt bankers who actually own FED / Taxpayers get mad again / Rinse / Repeat.......




Mon, 09/05/2011 - 00:04 | 1633323 cfosnock
cfosnock's picture

Well I'm glad someone is trying to find out what the angle is on the lawsuit(s). I do not know how the establishment will make money off of this action but I do know its not for the public's benefit.

Mon, 09/05/2011 - 08:13 | 1633746 shacai
shacai's picture

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Mon, 09/05/2011 - 08:14 | 1633749 Jeronimo
Jeronimo's picture

Or all we all just cowards when it comes down to losing that which we have become so comfortable?

Mon, 09/05/2011 - 10:49 | 1634407 svc101
svc101's picture

Having read Sowell's, The Housing Boom and Bust, it now only makes perfect sense that the conclusion he had

hinted at has now come to fruition: The fox has sued the hens for complaining that the foxes were watching them

all along.

Sat, 12/31/2011 - 17:27 | 2023950 dizzyfingers
dizzyfingers's picture

Government lawsuits = lawyer rice bowls.

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