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Massive Wave Of Lawsuits To Be Filed By The US Against America's Biggest Banks As Soon As Tomorrow
In a move that could either send BAC stock limit down overnight or send it soaring (we are still trying to figure out just what is going on here), the NYT has broken major news that the US is preparing to go nuclear on more than a dozen big banks among which Bank of America, JPMorgan Chase, Goldman Sachs and Deutsche Bank, in an attempt for Fannie and Freddie to recoup $30 billion if not much more. The lawsuit is expected to hit the docket in the next few days: "The suits stem from subpoenas the finance agency issued to banks a year ago. If the case is not filed Friday, they said, it will come Tuesday, shortly before a deadline expires for the housing agency to file claims." Now, taken at face value, this would mean that Bank of America can kiss its ass goodbye as unlike the Walnut Place litigation, this will take place in Federal Court where Article 77 is not applicable. Yet there is something that gives us pause: namely logic, captured by the following words: "While I believe that F.H.F.A. is acting responsibly in its role as conservator, I am afraid that we risk pushing these guys off of a cliff and we’re going to have to bail out the banks again,” said Tim Rood, who worked at Fannie Mae until 2006 and is now a partner at the Collingwood Group, which advises banks and servicers on housing-related issues." In other words: if the banks are sued, and if justice prevails, the end of the world is nigh and cue TARP 2 - XXX. Now where have we heard that argument over, and over, and over before.
From the NYT:
The suits will argue the banks, which assembled the mortgages and marketed them as securities to investors, failed to perform the due diligence required under securities law and missed evidence that borrowers’ incomes were inflated or falsified. When many borrowers were unable to pay their mortgages, the securities backed by the mortgages quickly lost value.
Fannie and Freddie lost more than $30 billion, in part as a result of the deals, losses that were borne mostly by taxpayers.
In July, the agency filed suit against UBS, another major mortgage securitizer, seeking to recover at least $900 million, and the individuals with knowledge of the case said the new litigation would be similar in scope.
Private holders of mortgage securities are already trying to force the big banks to buy back tens of billions in soured mortgage-backed bonds, but this federal effort is a new chapter in a huge legal fight that has alarmed investors in bank shares. In this case, rather than demanding that the banks buy back the original loans, the finance agency is seeking reimbursement for losses on the securities held by Fannie and Freddie.
The prestory is by now known by everyone:
Besides the angry investors, 50 state attorneys general are in the final stages of negotiating a settlement to address abuses by the largest mortgage servicers, including Bank of America, JPMorgan and Citigroup. The attorneys general, as well as federal officials, are pressing the banks to pay at least $20 billion in that case, with much of the money earmarked to reduce mortgages of homeowners facing foreclosure.
And last month, the insurance giant American International Group filed a $10 billion suit against Bank of America, accusing the bank and its Countrywide Financial and Merrill Lynch units of misrepresenting the quality of mortgages that backed the securities A.I.G. bought.
Bank of America, Goldman Sachs and JPMorgan all declined to comment. Frank Kelly, a spokesman for Deutsche Bank, said, “We can’t comment on a suit that we haven’t seen and hasn’t been filed yet.”
The response? Why Paulson-esque Mutual Assured Destruction:
But privately, financial service industry executives argue that the losses on the mortgage-backed securities were caused by a broader downturn in the economy and the housing market, not by how the mortgages were originated or packaged into securities. In addition, they contend that investors like A.I.G. as well as Fannie and Freddie were sophisticated and knew the securities were not without risk.
Investors fear that if banks are forced to pay out billions of dollars for mortgages that later defaulted, it could sap earnings for years and contribute to further losses across the financial services industry, which has only recently regained its footing.
The total litigation amount will not be in the trillions... but will certainly be in the tens if not hundreds of billions.
While the banks put together tens of billions of dollars in mortgage securities backed by risky loans, the Federal Housing Finance Agency is not seeking the total amount in compensation because some of the mortgages are still good and the investments still carry some value. In the UBS suit, the agency said it owned $4.5 billion worth of mortgages, with losses totaling $900 million. Negotiations between the agency and UBS have yielded little progress.
Bottom line: the gloves are coming off, and while we want to believe that this is the final nail in BAC's coffin (Quinn Emanuel is counsel for the FHFA), we do have a nagging feeling that the US will not purposefully do everything in its power to destroy its banking sector.
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Give me a fucking break. Wrong, wrong, wrong & wrong. You're doing just what the obnoxious, pompous, greedy assholes want you to do. Giving them the benefit of the doubt.
Dr. Ron Paul is scaring the living shit out of these stupid assholes. Why?
Because if he gets in he's going to replace Geithner, Bernanke, Clinton, Holder & on down the line with Austrian economists & lawyers. Think that might shake things up a little bit? Never seen such a bunch of gullible assholes.
Why don't you tell us who you're voting for?
A very nice post thanks for sharing with me.
Consult your doctor before taking any diet pill and inform him about your entire medical history. A patient should strictly follow his/her doctor's advice for dose.
http://www.phenterminehome.com/
OT but hilarious:
http://blogs.riverfronttimes.com/dailyrft/2011/08/speeder_busts_off-duty...
Could be first class theater but if it is, it seems that they are running the risk to open a Pandora box. Any chance that this lawsuit inspire the Europeans?
KILLUMINATI
I find the whole exercise somewhat laughable, since this is like sueing yourself, however if any of these moron bank CEO's could at least lose their jobs, it would be a good start. Somehow, I don't see Dimon or Blankfein getting the boot though. Plus didn't Buffet just dump 5 billion into BAC after talking with el prez, hmm? This smells like political window dressing to me. I mean for the last 3 years we have been watching these banks get paid interest on huge phony reserves, and selling gov. securities back to the fed for make believe profits. Now they get to send some of it back to DC and maybe get bailed out again. Seems like a perverse circle jerk to me.
http://www.youtube.com/watch?v=dx0yK4vlRG8
That was a throwback haha, now for the good stuff. http://www.youtube.com/watch?v=zucBfXpCA6s a bit of Ludwig Van for these clockwork orange moments.
http://www.youtube.com/watch?v=tg6vGpnRXcE
"...it's never fun 'til someone dies"
This is like something Straight Out of one of Prechter's books – when the time comes, the mood swings around, and those the system coddled and protected get attacked, and things that were SOP are recognized as criminal.
Did anyon else notice that some big insuers, that did Not et hit by Irene concersm suffered today? Leaks.
http://www.pbs.org/newshour/bb/business/july-dec11/housing_08-30.html
ANALYSIS AIR DATE: Aug. 30, 2011
Millions of Distressed Properties Stuck in 'Shaky' U.S. Housing Market
What's more, the survey of 20 cities found overall home prices have actually fallen over the last 12 months. And home sales for this year are on track to be the worst in 14 years. And things could get worse yet, once banks pick up the pace on millions of foreclosures, as expected. They have been delayed by a government investigation into mortgage lending practices.
And it's bogged down the whole foreclosure process, to the point where legitimate foreclosures are being kept out of the market. And that's going to create a backlog going forward.
GUY CECALA: Yes. We have somewhere in the neighborhood of four million distressed properties out there. Those are either seriously delinquent mortgages or ones already in the foreclosure process.
And most of those loans have to be pushed through the system at some point. And the longer we take to get through that, the longer the housing market is going to take to recover.
NICOLAS RETSINAS: Well, the state attorney generals are suggesting that, because of malfunctions and a dysfunctional servicing system, banks have to be held accountable, have to modify loans and make payments.
And the banks on the one hand are willing to do that, as long as they know that's the end of the litigation. But there are some attorney generals, like the attorney general of New York, who suggest, no, it's not just the robo-signing, it's not just the bad paperwork, but there are other issues, and we should be able to follow up on those issues also.
All of that leads to stagnation and sluggishness. And as Guy said, the pipeline isn't clear anymore....
http://www.pbs.org/newshour/bb/business/july-dec11/housing_08-30.html
Yes I'm guessing someone is going to take the bullet. No way that Obama's "job" stimulus will pass without a big bank going down. They are getting desperate. Loved this band before they disbanded: http://www.youtube.com/watch?v=yStaY9BuF3s&feature=player_embedded
Awesome.
There are a lot of balls in the air but I'm not sure which way they are going to fall.
On 2nd glance, this seems to be all puff and no inhale.
Here's the quote from the top of page 2 in the NYT article:
"The suits are being filed now because regulators are concerned that it will be much harder to make claims after a three-year statue of limitations expires on Wednesday, the third anniversary of the federal takeover of Fannie Mae and Freddie Mac."
---
IF it's $50 billion total, which is a high-end working guess, that's $4.2 billion per bank (IF 12 get sued, and the NYT says 'more than a dozen'), which is just enough to appease the angry electorate (as though they are even paying attention to the details - which they aren't, especially since Dancing With Palin is due to start up in the next few weeks) but not enough to damage any of the 12 banks being sued.
This will not kill ANY of the banks. Nor will it lead to any new bailouts. Extend and pretend is alive and well. This is barely a speedbump on the Motherfucking Bernank's Kick The Can Highway.
Daily Bail, the article mentioned them filing a suit against UBS to recover at least $900M and that people with knowledge of this suit say it will be similar in scope so it may not even be $4.2B per bank. It'll look good to the masses and to many of them it will sound like an assload of money but it will probably end up being nothing more than something to use on the campaign trail. Maybe they'll even pull the old "Have the banksters come to D.C. and scold the ones that use private jets" strategy out of the playbook.
Yeah, you make a good point...not much to this story. A placeholder lawsuit as the liability clock strikes midnight, leaked to the NYT, with a bold headline, and little else. The ShitOnTocracy lives on. Dimon, Moynihan, Blankfein and Pandit exit stage left, arms extended, smiles broad.
True enough, but each case, each deposition, each new email showing fraud piles up, just as has been with fraud closure...this is not end game, but it is bother nail in coffin
TD, NYT has low SNR in the past. most likely BS
http://www.southparkstudios.com/clips/151313/everyone-vs-everyone
Good one. Thanks - I needed that this morning.
Is it Happy Hour yet?
THis is interesting, very interesting (not surprising, but shows desperation):
From The Telegraph and AEP: Central Bank dollar deposits have shot higher than during the Lehman crisis.
Central banks and official bodies have parked record sums of dollars at the US Federal Reserve for safe-keeping, indicating a clear loss of trust in commercial banks.
Data from the St Louis Fed shows that reserve funds from "official foreign accounts" have doubled since the start of the year, with a dramatic surge since the end of July when the eurozone debt crisis spread to Italy and Spain.
DailyBail-
"Motherfucking Bernank's Kick The Can Highway."
Just got a Banzai visual on that one, can anyone confirm? over
What an evil mess the wall street banksters and the fed create.
Interesting comments tonight .... some thoughts:
Let's leave the more complex conspiracy theories out of the discussion. These people are neither smart enough or disciplined enough. They are very greedy and immoral.
Keep your heads down. Take care of your loved ones. Good night.
barliman
The save Obama offensive is rolling out of camp
Europe is on the verge of completely unraveling, perhaps chaotically. Lets see, we have wikileaks, bank lawsuits, europe coming unglued. Black swans everywhere. Now all we need is a false flag event and viola....war, marshall law. Damn I'm getting some popcorn.
Ready for a full out naplam attack followed by a carpet bombing, dont it before, makes a nice video
Not that hard to guess what Obama needs to save his ass....
to big to fail...to stupid to stop...Where is the IRS in this.????....let'm die...we can all get off the fence and resume the dream...
Who cares?
Here's an article about more than a dozen young Chinks who all got their quarter million high performance sports cars impounded for a week because they were street racing in Vancouver.
http://www.driving.ca/vancouversun/sports+cars+valued+million+impounded+...
Anyone dare to guess just how much money is being made in China?
Anyone not yet PISSED that Americans have lost their jobs so that the Noveau Riche Chink Kids can drive these super expensive toys?
Kids, 18 to 21 year olds about 20 of them driving a range of high performance cars. No consideration for anything. The fees are peanuts to these kids. Mommy and Daddy gonna pay anyway.
So, keep shopping "Made in China" and support the life styles of these idiots.
Gee. You mean getting tons of money for fraud through bailouts (also a fraud), screwing everybody over, mark to fantasy, selling off your assets, all while being a member of an oligopoly, while running a business that in fact you aren't even really needed for it to be provided (aka worthless middleman) and still being broke many times over still doesn't ring the registers of these idiots? They still, after all of this, when confronted with the realities of the crimes ponder beforehand that they would bail them out again if they actually did their job at all and looked under JUST one corner of the fraud?
All of this happens, and you're not even asking for them to make you whole? Another indication?
Every day is a better day than the next to cut the losses (of course before you cancel via Glass-Steagall the outlays and thus reduce the losses). Yet they'd rather pander to these assholes because they don't have any idea of where to turn? Even now? (well of course...I just wanted to spell it out to make them look as stupid as they are)
At least Charlie Brown falling for Lucy's football trick was a cartoon.
The ineptness of those manning positions in our gov't is sadly all too real.
Glass-Steagall you bankster whores gov't officials. There is no need for these banks to stay around. Any 25 year old with a liberal arts degree, and no banking experience, can run a bank that isn't fraudulent by it's very nature. It's when you include the fraud you need all the experts with spiffy titles and degrees from monetary idolizing colleges. A nobel prize doesn't hurt either, does it? Three years later and not one brain cell created or synapse connected on what to do. It's fucking obvious fucktards. Let the fraud burn the fraudulent.
Agree, Glass Steagall is the obvious answer.
Let the great finger pointing begin...
This could indeed bring the house down. Remember the crash that happened in 2000 when Enron was finally investigated. At that point the whole house or cards came down.
Likewise the 1987 share market crash, when the SEC accidently did its job...once the arrest begin everyone squels on everyone else.
Is this the misdirection for the pending mortgage/consumer bailout? it seems too obvious.
They'll spin it like that, but I think this is operation "Hide the dead bodies". The consumer bailout will be another banker bailout. The banks are still stock full of shit, and they are going to pick a patsy and transfer all the bad assets to it before it goes in the ground. My guess is that BAC will be the giant coffin for all the other banks.
Well after 4 or 5 years after the crimes were committed and 8million Americans losing their homes and causing the Greatest Depression the case is finally presented. So sometime in say, I would guess the president after the next ones term, they will settle for a lousy 5 billion out of court for trillions in losses, bailouts and damages. Only 30billion? Give me a break, Countrywide alone had 800 Billion in mortgages. Just a way to never be able to sue a bank for anything to do with a mortgage again. BEND OVER>
If only the NYX would print your rejoinder along with the hype about the lawsuits.
Though I would imagine that the law firms that are bringing the suits in this are simply awaiting a petty cash (to the banks) offer to go away.
And the trickle down theory will see to it that the american taxpayer pays for it. This is known as Musical Chairs with the public the last person standing.
Unemployment figures and bank chaos, the market is f*cking toast on opening. Tight.
Fuck, I'm not short on anything!
mini short futures...buy tops sell bottoms, keeps me alive. cause no new highs anymore, even with QEwhatever
...of course EZ first, Trichet's ticker (heart) must be about to explode
DAX futures down -3%
their banks. see you in 8hrs.
i am gone
Sue them. Break them down to the pink sheets. Nationalize them for two years then turn them over to bond holders as highly regulated utilities. These TBTF banks are a cancer on business and consumers.
Maybe Obama knows he's a one term president - it's slash and burn...
There goes liquidity and here comes the crash.
Let's see, es 1195 -5 , QI $42.17 + .53, yg 1847 + 21 . Looks like a theme is developing.
False flag?????
Big one, in the next couple months. Bet on it.
sure has the feeling of the shit hitting the fan tomorrow. shiny things following suit.
but the fuck do i know?
Yea now at the speech Obutfuck can say "my administration has already begun lawsuits against the big banks". Whatever, you win!
This doesnt pass the smell test..Im just getting confused who's side everybody is on, we need shirts and skins or something..
btw, dont AIG got everybodys back with insurance anyway?
Got lawyers?
"it could sap earnings for years and contribute to further losses across the financial services industry, which has only recently regained its footing."
Record bonuses the last few years suggests the industry hasn't missed a step, much less only recently regained its footing. Perhaps---among other things---firms who paid out more in bonuses than they earned might have had some small impact on those "sapped earnings".
Given that firms NPV'd the expected profit from deals and paid bonuses based on that projected value, coupled with the fact that penalties and compensation would tax the financial viability of many Wall Street firms, suggests that the latest greatest swear word on Wall Street might be: CLAWBACK.
Five char for the day
http://capital3x.com/?p=633
More PR is all. Guess what they sue the banks to make the administration look good and then we taxpayers will once again bail the fucks out. I try not to rant but this is just more bullshit. This is all about making them once again loan money, refinance some that cannot pay their mortgages, allowing the bank to now have a clear fricking title seeing how they do not have one on alot of the housing. This kicks the states attornies out of the lawsuit and wallah business as usual. I will believe they are helping the people out when I see it. Oh this will be just like bailing out every state that is in serious trouble using the legal system instead of another TARP or QE. The sheeple will cheer and the states will continue to spend like they are crack addicts.
OT - Anybody catch CNBC trying to interview Sir Bob Geldof this mornning. So brutal they cut to commercial. Didn't even come back to end the segment...just kept on commercial break until that useless 6AM show started.
"...the US is preparing to go nuclear on more than a dozen big banks..."
HA HA HA HA HA -- Fat f**king chance! HA HA HA HA hee hee phew.
BoA may be the sacraficial cow to be slaughtered and absorbed by one of the others. The others will get some sort of penalty, but nothing that hasn't already been discussed. It is an election year folks the prez must 'do something'. Of course killing off any one of the banks, though celebrated by the masses, will result in a huge loss of tax payer money due to the huge bailouts they received ( see: http://www.zerohedge.com/news/bill-buckler-puts-things-back-perspective-... ).
This is pure politics for election cycle time.
Always remember all is contained in the present eternal moment. There is no need to spend time digging into the past or trying to look into the future. Simply learn to live fully in this present eternal moment which contains the allness of all. When you do this you will never be dissatisfied or disgruntled, for you realise you hold right there in the palm of your hand your all in this eternal moment.
Here is a thought... What if ZH is Bernanke's extension of himself and the Obama adminstration, including previous FED chairmen and administrations before this one, and all this propaganda is orchestrated I mean, how is it that ZH always seems to be one step ahead of everyone else and even the world goverments at times. ZH always knows when there will be unrest a day or weeks aheads in Europe... Also knows when the shit is going to hit the fan in the US. Hmmmm. Could be that all TD's are really just the CIA or economic hitmen with different assignments in the world to create and expose havoc and make our goverment trillions in the process. OMG, why didn't I think of this before! Could it be we are the sheeple in all this? I find it hard to believe that the few TD's that dish out this information daily can continue to be ahead of the world consistently. Bernanke and Co. are smarter than I thought. I think we are led to believe we have this 14 trillion deficit, but in reality we probably have cut it down to nil, but just to keep the world at bay thinking we are in trouble we still say we have it on our books. Come on guys, the US didn't get to where it is by accident. The good part of all of this the Bernanke throws us bones everyday just like I give my dog a bone every day.
/rantoff
New currency bitchez?
You never know, if that ever happened I would suspect it would come at a time least expected. The fewer that positioned for it the better they can screw us. And since the ratio of profitability has risen to exactly 3 winners per every 3 billion people now would be a prime time for such a bomb.
I can see it now: "As of 10-1-11 you will receive 1 new currency unit per 1000 of your old. Gov't debt will be restructured, all personal debt will be 1000x the original amount." While the mathematics are probably impossible you get the idea. Most of us would get wiped out.
I only read the first 2 paragraphs. Conclusion: The feds have done everything in their power to prop up the banks. Taking them to the brink would be illogic. So.......let's sue the banks to prop up freddy and franny and then we go to the taxpayers to prop up the banks. Again.
Either that or these assholes are even more stupid than I thought. While they certainly are stupid there's no denying they're brilliant at screwing us out of all our money, our future generations money, and hardly one protest anywhere. Has our drinking water really suppressed our hormones that much?
Also.........releasing this news on labor day before a big spending holliday? Let's see........we are 3 weeks away from the next FED meeting. So maybe we're pushing for not only another tarp but Qe as well. Good for the bankers, but the rest of us are gonna be tarped right into a tent.
$30B is nothing compared to the MBS mess, appease the unwashed masses and get the banks off the hook, balance of losses absorbed by taxpayers...
This is nothing more than another bailout disguised as a distraction.
If they allow this lawsuit to proceed it may open up a can o' worms for the entire trading community. Can I now argue that if this case proceeds that any and all of my trading losses "via TD Ameritrade" should be given back to me because I was too stupid to truly understand the companies I was investing in?
Also, this doesn't feel like they are going after any banks to me. It feels like a back door agreed upon (staged) witch hunt where all parties involved (.gov and banks) knew and know what is going on... except for the little guy who thinks "yeah fuck the banks get em..". We are all being played on this one. Sorry the only people who are going to suffer once again are the middle and lower classes. I will now rhyme for you as a fresh morning rain has made me feel quite ripe this lovely morning: "middle and lower classes get your head out of your asses."
Lie: ". . .the losses on the mortgage-backed securities were caused by a broader downturn in the economy and the housing market, not by how the mortgages were originated or packaged into securities."
Puh-leze. Fraudclosure Mortgage-gate is a fascinating story that TPTB are struggling mightily to keep contained, like a mortgage Fukushima. The problem is it is already in progress at too many levels, and also heavily involves the judicial branch and suits in progress under well-established principles of law that cannot be so easily disregarded, and do not conveniently fold in the face of MAD arguments. http://www.reuters.com/article/2011/09/01/us-bankofamerica-mortgage-settlement-idUSTRE7804W020110901
Once you're in court, the judges don't have as much leeway as you might think - hence the best strategy of TPTB is to adopt the Holder attitude and not prosecute or file to begin with. Lawyers understand this - we tell our clients to avoid litigation since once you're in there the outcome is not as predictable as you want, and that is even worse if the evidence is clear that you're guilty or liable - better to cop a plea. Best of all is to own the prosecutor and he doesn't file to begin with. But that isn't going to happen here - too many prosecutors and private parties, like AIG, who simply must file if they want to protect their rights and recover.
I bet the Feds are kicking themselves that they have to file, but the failure to file would be such an obvious dereliction of duty that they have no choice but to file it. And once filed, the elements of the claims are garden variety fraud that will progress inexorably on their own. The fraud is there and cannot be hidden. Where this will lead is some sort of bank-friendly settlement after the banks make suitable mea culpas and promise to behave in the future. You know, the usual bullshit that that Joe 6P would never get away with.
Consent of the governed, oligarchs, keep an eye on that consent of the governed. Anymore I think the Founding Fathers would have already urged the citizenry to take up arms against the New Kings.
Practically speaking, it's cost prohibitive to foreclose when you'll be counter sued for some type of unlawful entry should you be successful... and, with it (a gut lock), punitive damages... now, I'd say punitive damages are going to be fairly small, as a matter of law, given compensatory damages have to be pretty small for someone who is in default of his or her note. But, that doesn't mean a judge or jury at the trial level will recognize this... and I strongly suspect the plaintiffs/counter-defendants would have to appeal many of these decisions... (they're going to get curb stomped in court via mob justice). And the cost of appeal would be a dead ass loss... no amount of costs are going to get awarded to the appellant in that case...
So you go duke it out for $10-20k at trial (maybe more w/ experts, etc.) and then the same on appeal, again, maybe 2x+ more... all for a dead ass loss... even if you do get something, your debtor is likely a turnip and his or her attorney took it on contingency for the notoriety and possibility of punitives. You got dick.
So, 1/4 to 1/3 of the average home is going to get eaten in fees to try and foreclose? Best case scenario? Why not just write the shit off...
The other possibility is that you sue on the note... get a judgment and then foreclose...
But, it would also seem that virtually any work around would require the support/approval of the entire chain of assignment... (many of whom may actually not know about the others).
How do you incentivize people who are living rent free to eat their peas? Doesn't seem like there is a viable policy solution other than to simply require bank write downs... and force homeowners to file bk after judgments on the notes... get that debt out of here and let price discovery happen...
I hope I'm not to late for the party.
Buffett probably has a $5 billion question on his mind right about now... something tells me he won't be ponying up any more campaign contributions this year.
BHO
"Hey Warren, I've got a heckuva good opportunity for ya..."
WB
"Does it involve me paying more taxes?"
BHO
"Well no, but you can throw your money down the drain on BAC..."
WB
"I'm all in Mr. President... Call me a Patriot!!"
smells of re-election
lawsuits will be making maximum noise into november and then fade away
The epitome of Hostage Capitalism. But, I still think Donald Trump might have invented it.
And by the way, I couldn’t help notice this was not on Goldman’s Post Jackson Hole list of wild-ass versions of QE3, i.e., funding it with bank fines. Hmm..
I think this is a pressure tactic by Obama to force the bansk to sign the 50 AG settlement. Sign the settlement and cap your losses; otherwise, here's a little taste of what's to come. Yves Smith, Naked Capitalism has commented that there is a "bogus" Labor Day deadline to sign the deal. No coincidence that Labor Day preceeds the last day F.H.F.A. has to file papers in court. I'll bet the banks call his bluff knowing that he'll back off because there's no way he'll have the political capital to bail these criminals out a second time.
Why does it always seem Wells Fargo is not included in these lists? Didn't they sell more loans to FNMA and FHLMC than any bank in America?
YAWN...Yep, the "global settlement" has begun. They'll pay big $$ to make it go away.
If any criminal charges follow, I will be shocked. We'll see, but I'll hold off on popping up the big bowl of popcorn until I have evidence that there is even going to be anything of real substance here for harmed investors, homeowners, etc.
Discover your own snark
http://vimeo.com/28413747
curious what you think of kiva, C.
I know little about it, so this is purely an intuitive response - and bear in mind, I'm not an economist )!!(
#1 The model is ostensibly loaning without usury - but in actual fact, the 'interest' on the loan is an emotional one, for the lender. Thus the design / personal touch of the website. The loaner gets to feel that they're helping poverty, and the borrower gets to feel that global inequality isn't a total monster (sorry - the borrower gets empowered to make positive changes in their lives, and dignity to pay back the loan). It is certainly better than direct Aid/Charity in terms of self driven improvement [see further: non-structural band aids that sometimes make issues worse]. A quick delve into the company produces the ideological roots - Jessica Jackley, member of the CFR, http://www.ted.com/talks/jessica_jackley_poverty_money_and_love.html1
#2 There's been bad press on micro-credit schemes - http://www.economist.com/node/7803631. Interestingly, this problem seems to have arisen from commercial banks, and middle men charging interest, and inability to pay back loans [non sustainable capital investment]. Kiva claims over 98% repayment on loans, however does (honestly) include a disclaimer stating that the middle men sometime repay defaulted loans. Looking a bit deeper, Kiva is using middle men, with an average interest rates of 21%+ . So, it turns out the model isn't true: the wiki page has a list of rates, some hitting 80%. The fact that Kiva doesn't enforce caps on rates itself a pretty large eye opener.
#3 Exchange rates - looking at the target countries, the amounts [I'm seeing $500 - $1000 being common] aren't micro amounts in local terms. However, globally, $200mil is not much. There's also the issue that the middle man can both a) pre-loan [i.e. the 'hook' that you get to select your person / scheme, and feel connected to them is pure hokey PR] and b) can pay back failed schemes from their own profit margins to garner 'high credit standing' with Kiva. i.e. basically, false accounting masked by (you guessed it) their high interest rates. The model is open to serious gaming - and ethically, places the costs on the borrower (risk wise) rather than the lender (the "rich" guys) due to this dynamic. This is, in itself, counter to the alleged aim of the project.
#4 The founder's CVs are incredible. Amazing. Perfect people. Inspirational entrepreneurs for the next generation2. Dramaturgically bent, perchance. However, they're also paying themselves over $100k - Number of Kiva employees and independent contractors* identified as receiving reportable compensation of $100,000 or more [11 / 30]:11 (2008 = 5) +120%- http://www.kiva.org/about/finances .This interview on Jessica's next project http://mixergy.com/jessica-jackley-kiva-interview/3 shows some of the slight concerns I have with the approach - essentially, its a model to dodge investment laws (and lawyers). It is purely predicated on the 'Angel' VC model, only... with potentially much worse fallout if your 'entrepreneur' bails / squanders the cash [no lawyers, no protection, with the website playing the role of the middle man - what could go wrong?].
Summation: potential wolf in sheep's clothing, however I do hope it alleviates poverty. It isn't as quite as grass roots as it pretends, however. Truth in advertising with relation to the video & all - it would have been better if the emotional tugs used weren't.4
tldr;
Hipsters do Charity. Feel ethical. Pay themselves well. Requires investigation on actual mitigation of poverty [above the ideological]. here's wishing it does. Historically, however, usury has proven to be a very bad way out of poverty.
you've summed up my thoughts about it most eloquently. tis a shame, cuz the model (direct open source lending) could be a great idea IF...
and yeah i know all about generation 2.0, work with a few of them on a project i shall soon be 'retiring' from. they've learned from their elders well, as they take deceit & manipulation to a whole 'nother level. they can't stand me cuz i see right through their bullshit, yet don't call attention to it -- just keep on working, mostly doing what they should be doing, if they weren't so busy pretending to be doing it. what they don't realize is (a) i'm learning something that can't be taught but only discovered through the work and (b) their contempt of me is mutual and i've got an ace up my sleeve for the conniving lil' shits.
drama drama drama, where are the kids that realize there's work to be done and no time for drama?
Shut all the banks down. Exterminate them. They are nothing more than dens of theives. They do no legitimate business... none. Sure, on the surface some of their business looks at first glance to be legitimate, but in fact, none of it is. And that's irrelevant anyway. We don't let murderers or other criminals go because less than 100% of their actions are criminal. Terminate all banks. Terminate all financial organizations. Terminate the federal reserve. Terminate all fractional reserve practice. ALL are criminal.
The BS meter is pegged, I'm not usually a ETF or levereged betting man, but what is the most levereged inverse financial ETF?
I'd like to bet that the state wont sue and allow the statute of limitations pass without comment and allow all the perps to walk away with their stolen loot, that has been the plan all along.
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