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FHFA Releases Statement Refuting Allegations It Is A Bunch Of Corrupt Morons
One of the very first questions that spread like wildfire in the aftermath of the FHFA's $196 billion lawsuit against 17 banks (and alleged settlement with Wells Fargo), is just how cluelessly idiotic and beyond incompetent must Fannie and Freddie have been to allow themselves to be duped to the amount of not $1, not $2, but hundreds of billions of dollars worth of mortgages, for which they are now demanding a pound of flesh. Well, here comes the original refutation, which is supposed to make it all better: "At the heart of the suits is FHFA’s conclusion that the actual mortgages backing many of the securities had characteristics that differed in a material way from what had been represented in securities filings. Under the securities laws at issue here, it does not matter how “big” or “sophisticated” a security purchaser is, the seller has a legal responsibility to accurately represent the characteristics of the loans backing the securities being sold." Get it? Like every other mom and pop out there, the FHFA was simply duped by the originators: after all who expects an investor to check even the basest of logical premises in a market in which negative growth rates would lead to a #Ref! result. As for allegations that the FHFA will blow up the world should it pursue this litigation, here is what they had to say: "Some have claimed that these suits will disrupt economic recovery, or endanger the targeted banks, or increase their cost of capital. While everyone is concerned with these important issues, the long-term stability and resilience of the nation’s financial system depends on investors being able to trust that the securities sold in this country adhere to applicable laws. We cannot overlook compliance with such requirements during periods of economic difficulty as they form the foundation for our nation’s financial system. Therefore, through these lawsuits, FHFA turns to the courts to adjudicate the violations that it has alleged in its complaints." Who would have thunk it: faith in the rule of law is actually required from a systemic basis. Well, how about someone actually go to jail?
Finally, for all those quant bugs who wish to know just how big the final settlement will be, here it is:
At this time, it would be premature and potentially misleading to estimate the size of any potential recoveries. However, press reports that FHFA is seeking nearly $200 billion in damages or recoveries are excessive; such numbers reflect the original amount of such securities purchased, not the losses incurred or the potential recoveries at the end of this process. In particular, use of original unpaid principal balance as a measure of potential recoveries is incorrect as it does not equate with the losses incurred and it does not reflect the repayments of principal that have already occurred or the remaining value of the securities.
In other words, all the FHFA needs to do is hire Brian Lin, who will prove to everyone involved that just under $200 billion in securities will be compensated by a settlement amount of a few hundred dollars, based on perfectly "reasonable" assumptions.
And there is your Res Judicata.
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Sorry, the law forced our hand! (But in reality we're just trying to give the impression of doing something.)
OT:
http://www.bloomberg.com/apps/quote?ticker=GGGB1YR:IND
Awesome. Just wow! Look at 1D...
1D is impressive. Thanks for calling attention.
Every time something about Greece comes out, I think of the movie 300. Greece at one time was really all that. Now it is not even a real country due to their representatives.
Does Res Judicata mean they're about to dick slap the taxpayers one more time.
Actually i think we have more of a Raz al Ghul than a Rez Judica myself.
Probably fair and balanced, as the names Larry Summers and Mohammed El-Ehrian seem to pop up quite a bit.......
Never forget that all misrepresentations and or fraudulent ratings of mortgage securities were executed on the behalf of US EMPIRE - so that cheap and easy credit could fulfill its one and only purpose - namely - to pump up the empty shell called the US economy, which does not produce value, but rather extracts value from all other regions of the world.
US and USD military-financial hegemony is an extractor enterprise - and - depends entirely on various and successive credit blown bubbles to "legitimize" - i.e. FOOL & BAMBOOZLE - the rest of the world into pretending that it still has faith in "the full faith and credit of the US..."
Recent US bubble sequence: Saving & Loan scandal, tech bubble, housing bubble, stocks & bonds bubble (still in effect and still un-popped).
Every US "defense" - i.e. WAR-contractor, soldier, secret spy and or murderer, home security and TSA agent should thank all of the participants of these bubbles - including now Fanny & Freddie - for absorbing the PR "blows" associated with being THE GARBAGE COLLECTORS OF US EMPIRE - for without them there would be no conduits for the US Corporate-Federate Empire's engineered liquidity flows to pay for their collectivist war games & citizen monitoring scams.
Romney is just out today with a plan to cut 5% of all Federal spending, but zero cuts on US military. If the US population elects a republican president based on such policy - the world can rightfully conclude that US EMPIRE is collectivist, war mongering, submissive slaves of the US corporatist elite - AND - that the final phase of US EMPIRE will be sponsored - not by widely distributed, tax-revenue generating liquidity - but by crushing the bones of the old, the sick, the poor, the unemployed, low income, minimum wage recipients as well as 50 Million food stamp recipients - all of whom jointly make up around 80% of the US population.
IF the republicans can pull off this scenario - which they preach every day for the upcoming election cycle - they will truly have engineered the collective suicide of the US empoverished masses - without the masses ever discovering it - quite a feat; to fool the fools - a massive century long brain washing campaign, substituting collectivism and nationalism for dignity, brotherhood, equality and freedom.
The rich daily tell US citizens that "we're all in the same boat" - while simultaneously screaming "we want the last 2% of US assets which you, the poor, still control". THAT - is the essence of the US - and it is based on two fraudulent propaganda and brainwashing tricks - namely the fraudulent claims that:
1 some people are worth 300 to 3,000 times more than others (Executive to labor compensation ratio)
2 everybody should pay the same PERCENTAGE of income in tax
My response to these claims are:
1 the income gap between executives and labor is: greed & exploitation manifest, i.e. pure evil - and the 300 to 3,000 times "extra" pay to executives is unearned - execs have no higher IQ than for example teachers - but merely "leverage" their access to capital by setting their own salaries.
2 the only REAL tax anyone ever pays is the sweat and effort of their labor - all else is scams/leverage - and furthermore, to exemplify this common sense principle so even a moron can understand it: 10% tax on a $20,000 income leaves $18,000 post-tax income to live off - which btw = US median individual income - whereas 10% tax on a $2,000,000 (TWO MILLION) income leaves $1,800,000 (ONE MILLION AND EIGHT HUNDRED THOUSAND) post-tax income to live off.
YOU DECIDE - if you and your nation should continue on the path to final destruction - i.e. government continuing to serve the rich - whether under dems or reps, who each kill the masses with their own particular brand of perverted and deceptive concepts and deceipts, plain lies, theft and murder - and suck the last drops out of the 80% majority of the US, who have zero net worth - OR return to a godly, brotherly fair and balanced society with decent income ratios and consequently adequate meassures of common interest to sustain the "one nation".
Good luck & sound consideration. You will need it.
I fucking agree.
and why isn't someone, somewhere, somehow SUEING FHFA? or at least making a few of them disappear, like forever.
because the GSEs are stuffed full of black people. It was a diversity jobs program for blacks for decades now. Half the workforce of these places is black. Not minority, black.
gorem,
you are correct-----how can these dudes claim that they did not do the due diligence required and they just had to take the salesman's word for it? What about fiduciary responsibility---what about simple self-respect? I am having a difficult time believing that when this goes to appeal that any decision against the banksters will be upheld. These dudes were pros and should not have bought the shit if they had not read the fucking offering statement and checked it's veracity----fiduciary responsibility to the citizens, if nothing more.
I'm very tired of seeing my 'fellow americans' so hungry for fault-finding that they will eat any piece of shit thrown their way----------
a great question is yours: "and why isn't someone, somewhere, somehow SUEING FHFA?"
Thanks for the post---a damned good question om
I for one look forward to the crushing of entitlements. I work at a medicaid clinic one day a week. Entitlements, fake disability claims, welfare and housing subsidies have just made our poor people lazy.
It doesnt mean I support empire. I support individual liberty.
Socialism can suck the shit out of my ass. So can all those fat lazy poor people I see. If some of them would work half as hard at finding a job as they do trying to get a disability check we might become a semi virtuous self reliant people again
certain demographics have always been considered stereotypically lazy. This is why they tend to be so poor
Corporate entitlements, which are not corporate paid and are not insurance programs, magnificently outperform individual entitlements (IN COST TO US TAX PAYERS), which are individual-paid and insurance programs.
Empire is collectivism - and as such - eliminates individual liberty.
Any real and serious proponent of individual liberty must vigorously denounce and boycott empire.
Empire is the prime instrument of the elite - it will not go away - it must be crushed.
Demand a complete stop of all tax payer funding of US EMPIRE - NOW.
RON PAUL 2012.
It's your fault. You sold it to me.
Banzai, please draw FHFA and the banksters having a massive criminal orgy w/ Ben wearing a $ hat dropping KFC buckets of dollars over the bed please.
This just reaks of shit to me.
yeah, i smell it, too. great point.
The US can pretty much do whatever it wants to do to exact revenge, I guess even be a victim.
burning shitterz
I am guessing that this is just a preventative measure to ensure that no further litigation will occur on this matter. If FHFA sues and fails, no one else will be able to sue either.
Not unless they were compulsory parties to the FHFA suit... Each case rests upon its own merits... If the GSEs fuck up their suits, then they will set dick for precedent... Any subsequent suits by third parties would simply point out the differences in their cases from the FHFA screw up.
A settlement does nothing to private suits... and a settlement doesn't set damning precedent.
I'm having a hard time figuring out where res judicata is going to come from in any material way... obviously if the supreme court issues an opinion as to particular aspects of the FHFA suit that are necessary and universal bases for other private suits, then that's one thing... but we're a helluva long way from that... So long in fact that private suits may come and go in the meantime...
One of the tells is going to be the discovery process... those materials should be fair game for subsequent/contemporaneous suits... if FHFA does little to no discovery, then you get at least part of your answer. (this type of suit would require nothing short of a mountain of discovery and hundreds of depos all across the world).
um...precedent is only relevant for matters of law, not fact.
And who is arguing otherwise? (although, similar facts help get applicable law get applied more easily in your case).
Maybe. I'd say the ratings agencies should be brought in as co-defendants by any party, probably the banks, though the feds will immediately target S&P for obvious reasons..
This will make headlines, then get tied up in court for years. They'll work out some cozy settlement behind doors for a slight fraction of actual losses. The people have their nonsense theater of revenge, and absolutely nothing gets done.
Paul,
You get a green vote from me!
We may be surprised that other cultures' bank, who normally would just shrug off the loss will be encouraged to sue, also. We may be surprised to learn that these 'foreign banks' were given funds during the crisis of '08 to keep them quiet---a payoff for the screwing they recieved from their fellow clubmembers from the US who they had known for a couple of decades.
I agree with you that this is being brought forward in a hurried and incomplete manner for presidential political reasons as well as to let the banks off the hook, but it may get a lot uglier than this point of view presumes.
I am a know-nothing and do-nothing oldman, but this is intriguing om
and this will drug out in the court system for 20 yrs, then theyll get their 200 billion, and by that time a loaf of bread will be 500 billion.....
The crooks will all sue and blame each other in the end.
one crook points his finger at another crook and says its his fault............
It's not important that they are corrupt. What's important is if they are a bunch of corrupt midgets or not.
What happened to honor among thieves? They are starting to eat their own.
yep, just like Gibbons described in 'the decline and fall of the roman empire'. great read, but it only took 2 months to finish it....
We may not have that much time.
The chrisopher walken book on tape of it
Only takes.
4 months.
To listen to.
Like the courts really rule by law, the AGs are even trying to change the law just for the banks. It is all just BS.
nothing more than bread and circus's with a sprinkle of crony protectionism
Diversions to make everyone forget about 'that QE thing' that markets have been running on the promise of for 8 months. Wow what a trainwreck comin.
I really think distraction is all they have left to keep it going
What do you mean "comin"
Since 2008 it's been one long train wreck.....
What do you mean "comin"
Since 2008 it's been one long train wreck.....
What, you mean people who buy shares of companies whose value has been boosted by past massive fraud have to worry about the possibility of lawsuits? Oh, that's so so unfair! Those meanies!
fhfa already setting up banks for slap on the wrist...potential recoveries my ass
Kinda funny no ones even mentioning QE3 which has been priced in to this bubble who knows how many times since January...I think all these stories are diversions.
If they sold securities that were fraudulent they deserve to be sued and jailed as well. If this destroys the theiving bank it is what they deserve.
Bail out the depositors, wipe out the shareholders and move on.
If the whole banking system goes down, so be it. Replace it with one where the bankers know if they start chiselling their ass is grass and the courts are a lawn mower.
I am holding onto hope that is the direction we are heading also.
So, Diogenes, you are suggesting it wasn't just a fluke when JPMorgan Chase, in 2003, paid $135 million to SEC for penalties in helping Enron to mislead its investors, and when JPMC, in 2005, paid $2.2 billion to settle lawsuits by investors for helping Enron commit fraud, and when JPMC, also in 2005, paid $2 billion to investors who sued them for selling them $5.1 billion worth of WorldCom bonds, when WorldCom's books were know to JPMorgan Chase to be fraudulent?
Hmmmm....perhaps you are on to something, me thinks????
I'll peg the settlement at $1 billion - make that check out to CREEP-2012.
LOL!!!!!!
Who rated these securities?
S and P
Moodys
Two others i cant remember.
Skank & Spoor, Moodily's, you know, their employees?
Fannie and Freddie put the "AAA" stamp on their rumps.
Thankfully, i evaded the branding session, not gonna see me on the Chicago "lean hogz" list ;0
- Ned
Scuttlebutt or head says Guillotine sales will become heated. Interest is just beginning to swell, as folks buy them for yard ornaments. Some buying triple blade platinum, spring release industrial models for heavy production throughput.
platinum blade b a good way to carry through the "Terror".
And, well, don't cha' all know that this was an early version of industrial automation? Put all of them skilled swordsmen out of work? Was a Union/Guild thing.
Why it turned beheading into an "assembly line" and killed all of them union jobz. Automation Rulez!
T'wer a German who had to perfect the frog project. N'est ce pas?
[Ed. On the topic of putting folks out of work:]
NYC had like 80k folks who were paying 1/2 of the entire tax base. Last count: less than 1/2. Mayor Boomberg and the Gov. not doing the right thing if they wish to gain $$$$.
- Ned
Pirates filing lawsuits against pirates....Arrrrgghhhh matey!
http://www.cnbc.com/id/44411981
everybody relax, all is well, big ben says banks are well capitalized to handle the 200 billion in exposure to greece ireland and portugal........whats that you say? what about italy, france, spain?? oh....welll...uhhhh...
Time to start operation switchback, or stealth QE4, better known as currency swap lines with foreign central banks.
While the mo-mo's in the US wait for the critically acclaimed and highly anticipated debut of the theatrical production better known as QE3, or more commonoly refered to as Dr. Benards Hopium elixir, the great professor Dr. Bernank Franc-en-turd will reveal the mysteries of his mystical monetary occultism, and, as we speak, through the lost art of necromancy, try to the revive the dead corpse fromally known as the US economy through the conjuring of demons and evil spirits from their abode at Marriner S. Eccles Federal Reserve Board Building previously known as the Gates of Hell.
Whips will be followed by carrots.
It will take away the trust and inerest of end-users over banks. I cannot rely on any bank now. I recommend http://www.forecastfortomorrow.com/ as their tips are very accurate. I have been using them for years.
Maybe they'll do the heavy lifting for us and destroy each other
Hopefully.
old proverb' its easier for your enemies to distroy your enemies, then for you to destroy your enemies'......
Fnma and Fre have a bureaucracy of 200 people whose sole purpose is to regulate and monitor fannie and fred.
So much for the worth of bureaucrats and their box checking.
Is this form dated appropriately?
Is this form signed by the right person?
Do all blanks requiring numbers have a number in them?
Ok fan and fred. You are in compliance.
If FNM and FRE win, the lines to the court filing offices are going to exend around the block.
This all reminds me that 'Cops' episode where 1 crack dealer called 911 on another crack dealer for ripping him off.
Tyler, any chance of doing a piece on the persons involved? What is Franklin Raines' relationships with these banks? How about Michael Williams? I note that the top of FNM reads like a who's who of the financial services industry. Someone up-thread said he smelled something really bad here. Me too - but its not this lawsuit in particular I find stinky - it is the revolving door and the foolishness of government that led it to franchise a for-profit business to do its bidding. This is a mess folks. First, the GSEs were privatized (was it Nixon?) so they could pay their execs better while indemnifying government in the event the business went south. Then, out of the blue, in Dec. 2009, the ex governor of the NY Fed, currently holding the office of Secretary of Treasury, made an enormous gift to his friends - he guaranteed, without Congressional authorization, all GSE debts. I am not certain what gave him this authority, but nonetheless, he did it. Now, or course, the GSEs must sue the loan originators, because they were frauds and Timmy is looking at a couple hundred billion in liabilities. This is danmed near entrapment as according to some inside the industry, the GSEs were begging for loans to securitize. Who is obligated to do the due diligence on a securitization - the originators of the underlying mortgages, or the securitizers (GSEs)? You see, had the GSEs done that diligence and rejected a pasal of mortgages, mortgage quality would have improved and the crisis would have been lessened.
The stinkiest part is the broad corporo-government unwillingness to unwind all of this. I suspect this reluctance is due not simply to the fear of uncovering incompetence, the public is used to incompetence, but corruption - serious, multi-billion-dollar corruption. Dear Mr. Holder, if you wish to uncover corruption, look no further than the GSEs and FHFA. A lawsuit simply does not feed the bulldog.
Far better, steelhead23, might be a piece on the typical private equity bankster and debt-financed billionaire, and the typical process whereby they acquired those debt-financed billions.
Say, where a private equity bankster such as Peter G. Peterson and company, of Blackstone Group (which, BTW, still pays capital gains tax when they took their firm public and should by rights be paying the corporate tax rate), does a leveraged buyout "pump and dump" on a company, putting down only 10% while taking out loans against their target company for the remaining 90%, against said targeted company as collateral, then take out further loans against targeted company, paying themselves super-sized management fees for saddling said target company with colossal and unpayable debt, then they sell it to some crony, who together with the private equity banksters has loaded up on zillions of CDSes against said bonds of targeting company, and then when it goes bankrupt they all make zillions, and what happens to targeted company?
More bankrupted companies, more and more unemployment and more and more debt.......
The dismantling of the American economy......
Uh...Place Holder isn't touching GSEs because half their employees are "my people."
Are you kidding?
When your 90 million bonus is at stake, it helps if you don't read the fine print when selling your soul to Satan.
Before the trial starts there will be a "settlement" for oh, say $35million and that will be that. Done, wrapped up with a big bow tied around it and everyone can say it's finished.
No one goes to jail or gets executed which is what should happen but then this is America so we can't expect justice to be done.
Let's get real, with these type of players, you only have two choices, suicide them, or let them off with slaps on the wrist with payoffs to keep quiet.
When you know way too much information, you either find yourself with two holes in the back of your head in some D.C. park, or crashed into the side of a mountain, a la Clinton. (Vince Foster, Ron Brown)
Or, you end up dying before you can be brought to trial exposing your Texan Oval Office connections. (Ken Lay)
Or, you wake up one day to find one or more of your children suicided. (Madoff)
I want Raines, Balnk-FIEND, Demon, Mazil-dildo, et al, sent to the big house and repeatedly double-penetrated by their cellmates for their horrific economic crimes. And be given facials and circle jerks too. Once we go into the "next" recession, there ain't no mo' arrows in the quiver for Uncle Ben to shoot. Then there's gonna be some real fucking pain.
Two points.
!. People on this board need to look up and THINK ABOUT res judicata. A suit brought by FHFA, litigated to final judgment, bars FHFA and its privies, no one else. The notion that it borrows private lawsuits and other causes of action is just ridiculous.
2. While what Tyler highlighted is telling--"Some have claimed that these suits will disrupt economic recovery, or endanger the targeted banks, or increase their cost of capital"--a lie we've heard too many times, what is curious is the posited alternative, namely, adherence to a truth somewhat higher than rank speculation about what "WOULD" happen:
"the long-term stability and resilience of the nation’s financial system depends on investors being able to trust that the securities sold in this country adhere to applicable laws. We cannot overlook compliance with such requirements during periods of economic difficulty as they form the foundation for our nation’s financial system."
What a novel idea. Enforce existing laws.
How many candidates talk about putting people in jail? Not enough. That should change.
Can someone please tell me how all of these countries got into this currency trick bag? Do all nations who export want their currency devalued? Are we printing money for this reason? Now Switzerland. Didn't we always pride ourselves on the dollar being strong? Shouldn't the pros of having a strong dollar outweight the cons?
Salty Dawg, please read my previous comments and you shold be a bit more enlightened --- it's all about the greedheads.
Can one of the many idiots in Congress ask Demarco what Fannie and Freddie were doing buying private label deals backed by SUBPRIME. What they were thinking when the bought 200bb at spreads of 1month libor plus 15-20 bp? --( the answer is that they funded at libor minus 40 due to perceived govt guarantee - so if you fund cheap you can buy rich assets!!) If these loans were NOT ELIGIBLE to be guaranteed why then were they allowed to purchase them? When the previous CEO's of companies testified before Congress that they had little exposure to subprime did they lie? Like I said in an earlier post, congress goes after Roger Clemens for lying about steroid use but could care less about GSE misleading them on 200bb of exposure.
CRE.
FHFA was being investigated in 2005 after getting caught red-handed cooking their own books, hence, they were probably just too busy with their own illegalities to fret about what someone else was doing. And lucky for them they had Barney Frank and Chris Dodd to put the fix in for them. FHFA is an incestuous cesspool.
The major criminals must have enough paper betweem them and the prison gate that they deserve. A few scapegoats may fall but there is no reason to think we would see any justice in the current state of the country. Remember the murder of CFO Kellerman right before he was to release the report on Bonsuses.
Excuse me Mr. Durden. If we don't expect regulators to stick it to these lying banks, then who?
The modus operandi is to blame all these governmental institutions for doing nothing, and then blame them for something else when they do. It's a no-win deal. They're damned either way. Cynicism at its best.
U.S. Must ‘Stop Punishing Banks,’ Halt Loan Claims, FBR Says
http://www.bloomberg.com/news/2011-09-06/mortgage-claims-by-u-s-impede-recovery-must-be-halted-fbr-s-miller-says.html?cmpid=yhoo
So we shouldn't fire on the U-boat that just torpedoed us, it's our only ride home!!!
If this argument wins out, I'm out of here.
Nice analogy... congratulations.
Well, how about someone actually go to jail?... Barney would be just as successful in there as he has been with his roommate peddling fanny and freddie goods from his DC townhouse. It's the art of the deal.
Zero Down NINJA loans....millions of them. In my spare time for fun I visited builders' offices and buyers were handed mortgages, No Questions asked....thousands.....millions.....
The crash was 100% predictable.
In fact, they are still handing out zero and near zero down mortgages so I don't expect the housing market to turn around for 10-20 years.
Ph please Fan and Fred, technically non Govt private businesses at one time, they were the only sophisticated idiots?! Paulson and GSaca duped others with mortgage junk they knew was junk, then Paulson got duped by a little company in China. Ffraud is fraud, if you commit fraud you are liable...just as perjury is illegal whether or not s,art or dumb jurors fall for it, it is against law. stop
If fraud is.not punishable if your customer should have known better, there is NO trust I. The system. yes the buyer must be ware, but if cheating, lying is legal and allowed, and buyer can trust NOTHING ever, the cost to the economy is huge. There will always be some fraud, but laws against it, ability to hold people liable for lying, tamp it down, keep it in check, to good ends.
George Carlin - They don't give a fu@k about you. His words ring truer today than 4 years ago. We miss you George.
http://lonerangersilver.wordpress.com/2011/08/02/george-carlin-they-dont...
The thing about moral hazard is that if the penalty for stealing is nothing more than you being required to give back what you stole, then YOU'LL KEEP STEALING.
If regulators really want to put a stop to bad behaviour, then the penalty needs to exceed the benefits by several factors (eg, RICO). So it means a bunch of banks go bankrupt. Tough shit.
So it threatens to hammer the economy via credit deflation. Deal with it. That's what the Fedury / Treserve is supposed to be good at.