Remember the Stress Tests?

/in , /by

The other day, I noted that Administration claims that they were helpless to affect what they now depict as loan servicers’ “sloppiness” but what really amounts to fraud ignores their decision to stop pushing for cramdown–and with it, leverage over the loan servicers.

I think (though I’m less sure of this) they’re ignoring one other source of leverage they once had over the servicers: the stress tests.

First, remember that the top servicers also happen to be the biggest banks. Here is Reuters’ list of the top loan servicers.

  • Bank of America (19.9%)
  • Wells Fargo (16.9%)
  • JPMorgan Chase (12.6%)
  • Citi (6.3%)
  • GMAC (3.2%)
  • US Bancorp (1.8%)
  • SunTrust (1.6%)
  • PHH Mortgage (1.4%)
  • OneWest (IndyMac) (1.4%)
  • PNC Financial Services (1.4%)

And here is the list the nineteen banks that had to undergo stress tests in 2009.

  • American Express
  • Bank of America
  • BB&T
  • Bank of New York Mellon
  • Capital One
  • Citigroup
  • Fifth Third
  • GMAC
  • Goldman Sachs
  • JP Morgan Chase
  • Key Corp
  • MetLife
  • Morgan Stanley
  • PNC Financial
  • Regions
  • State Street
  • SunTrust
  • U.S. Bancorp
  • Wells Fargo

So all of the top mortgage servicers–Bank of America, Wells, JP Morgan Chase, Citi, and even GMAC–had to undergo a stress test last year to prove their viability before the government would allow them to repay TARP funds and therefore operate without that government leverage–which was threatened to include limits on executive pay, lobbying, and government oversight of major actions–over their business. Significantly, all but JPMC were found to require additional capital.

Now, I’m not sure what I make of this. The stress tests were no great analytical tool in the first place. Moreover, the stress tests focused on whether the banks could withstand loan defaults given worsening economic conditions, not whether they could withstand financial obligations incurred because their servicing business amounted to sloppiness fraud.

But in letters between Liz Warren (as head of the TARP oversight board) and Tim Geithner in January and February 2009 discussed foreclosure modification, stress tests, and accountability for the use of TARP funds (Geithner made very specific promises about foreclosure modifications and refinancing which Treasury has failed to meet). And those discussions–and the stress tests–took place as COP reported on the problems with servicer incentives, servicer staffing and oversight, and the lack of regulation of servicers more generally (the COP report came out March 6, 2009; the stress test results were announced May 7, 2009). So at the same time as the Administration was officially learning of problems with servicers, it was also giving those servicers’ bank holding companies a dubious clean bill of health. And with it, beginning to let go of one of the biggest pieces of leverage the government had over those servicers.

Beyond that, I’m not sure what to think of any relationship between the stress tests and the servicer part of these banks’ business. Rortybomb has an important post examining how this foreclosure crisis may go systemic. If it does, these same banks that eighteen months ago promised the government they could withstand whatever the market would bring will be claiming no one could have foreseen that they’d be held liable for their fraudulent servicing practices. Ideally, we would have identified this as a systemic risk eighteen months ago, and based on that refused to let the big servicers out of their obligations (which would have provided the needed incentive for the servicers not only to treat homeowners well, but to modify loans). Had the stress tests included a real look at these banks’ servicing business, these banks might not have been declared healthy.

image_print
  1. pdaly says:

    I’m hoping Elizabeth Warren is making headway on this problem behind the scenes (I don’t think she’s been seen in public recently).

    Or maybe the Administration is first going to try pouring a little of that toxic Corexit onto the problem to see how well the issues disperse.

  2. Arbusto says:

    Cui Bono should be on the lintel of the side entrance to the White House where special interests go and get their wishes are fulfilled. The DoJ, with pressure from Obama, could join the 40 States currently investigating foreclosure irregularities, especially since the MERS program is a cross border operation (RICO anyone?). Bushco were in the vest pocket of Corporate interest. Obamaco, it is abundantly clear, is now in their back pocket

  3. phred says:

    My memory is not the best, but I thought that the stress tests were always just an act in the theater of the absurd that is our current form of governance that allowed everyone to pretend that bailing out criminally enterprising banks as a reasonable course of action.

    I’m not sure anyone thought the banks involved in the shitpile were healthy then any more than they are healthy now. The trick was to help them limp along long enough until the Feds had transferred enough wealth onto their balance sheets that everyone could keep whistling a happy tune.

    • emptywheel says:

      Yes. They were always theater. So it’s possible they didn’t include the impact of servicing loans in the review because they didn’t want the bad news.

      Nevertheless, it was a moment when the Obama Admin dealt away leverage it had over the banks.

        • geminorange says:

          dealing away leverage is what Obama does best

          I always thought dealing involved getting something of value for what you give up. Well, I guess “a campaign contribution” counts.

      • phred says:

        Sadly that statement can be pretty broadly applied to many of our constitutional protections. Gutted forms providing a facade for the pillaging of our country by the political and corporate elite.

        Smile for the naked girly camera at the airport, and for the school administrators that hijack your school issued laptop to watch your every move surreptitiously, and … and … and …

        Where will it stop?

        • bobschacht says:

          Where will it stop?

          Perhaps there will be an opportunity to use the “stopgap” provisions of the new FinReg bill much sooner than expected?

          RE: Elizabeth Warren being quiet lately rather than out on the campaign trail: I wonder if she’s about to come out with some boffo declaration on behalf of consumers about mortgages utilizing provisions of the FinReg bill?

          Obama could put it out as “There’s a new sheriff on Wall Street!” That could be a game changer in the upcoming elections.

          Bob in AZ

        • Teddy Partridge says:

          That would make Wall Street sad, though, which we’ve seen makes them petulant and cranky. Obama doesn’t like making the MOTUs cranky and unhappy.

        • econobuzz says:

          Obama could put it out as “There’s a new sheriff on Wall Street!”

          This has to be snark, right?

  4. BoxTurtle says:

    Simply because we don’t know what ObamaLLP got in return doesn’t mean they got a bad deal. I bet they traded for information.

    Boxturtle (‘We ain’t got a warrant, but we want Abdul Smith’s records. Quietly’)

    • MadDog says:

      Simply because we don’t know what ObamaLLP got in return doesn’t mean they got a bad deal. I bet they traded for information…

      Your comment reminded me of this from Bob Woodward’s State of Denial book on pages 323-324:

      …Townsend had a more delicate counterterrorism issue to mediate. Over the years, Tenet had negotiated agreements with telecommunications and financial institutions to get access to certain telephone, Internet and financial records related to “black” intelligence operations. Tenet personally made most of the arrangements with the various CEOs of the companies. They were very secret, among the most sensitive arrangements, and based largely on informal understandings. Tenet had been very good at this, playing the patriot card and asking CEOs to help on matters of national security.

      After 9/11, as the FBI got more and more involved in counterterrorism operations in the United States, their agents often went to the corporations with subpoenas to obtain the same or similar telephone, Internet or financial records. In addition, the new Department of Homeland Security, which had been created in late 2002 to bring together 22 federal agencies as diverse as Customs, the Coast Guard and the Secret Service, wanted in on this action.

      The CEOs began saying, look, we’ll do this once but not three times. The FBI’s formal subpoenas tended to trump the other efforts.

      The main conflict was between the FBI and the CIA. Part of the arrangement Tenet had made involved the CIA’s National Resources Division, which had personnel stationed in a dozen major U.S. cities so that the CIA could interview and recruit foreigners visiting the United States. The NRs, as they were called, apparently were involved in making arrangements so other intelligence agencies, such as the National Security Agency, could get access to the information and records the corporate CEOs had agreed to provide.

      The conflict was so intense that Townsend called FBI Director Robert Mueller and acting CIA Director John McLaughlin to the White House and asked them to resolve the conflicts. She then periodically with them until each appointed a senior official to coordinate so that corporations were not bombarded with multiple requests.

      It raised a number of serious legal questions. The CIA was forbidden by law from gathering intelligence in the United States. One official I spoke with said that the arrangements made by Tenet gave access only passive databanks from the American telecommunications and financial institutions. To gather specific information about specific individuals required either subpoenas, court-authorized FISA (Foreign Intelligence Surveillance Act) warrants or operations under the controversial Terrorist Surveillance Program (TSP), authorizing the National Security Agency to eavesdrop on international phone or Internet communications to and from suspected al Qaeda operatives and their affiliates. Nonetheless, the Tenet arrangements were part of the murky world of intelligence gathering in the 21st century that raised serious civil liberties questions and also demonstrated that the laws had not kept pace with technology…

  6. wavpeac says:

    It seems as if the Obama administration has made a concerted effort in keeping the fraud a “secret”. They certainly have known for some time that these loans were full of fraud because people like Bill Black had actually done sample stress tests in years past and found this to be true of a majority of the loans. Obama has to have known…there are reports to the FDIC that go WAY back. People have been making complaints about this stuff since about 2003. If Elizabeth Warren has known, Bill Black has known and people like Bill Moyers has known…why doesn’t Obama know? We know Bush knew and was actively covering it up. Remember the A.G scandal…E.W didn’t you do a diary about how the Rove had pressured the A.G’s not to investigate this stuff.

    Obama has known for a long time that this was going on. The problem is that the extent of the fraud and the problems it creates in reconciling the fact that African American Families were the biggest victims of these predators…plus what it will do the economy…put Obama in a bad place. Furthermore, he bailed out the criminals…now he is supposed to admit it??

    It’s not going to happen. The cover-up must continue. The stress tests were just a way to get everyone to stop looking at the fraud.

    • thatvisionthing says:

      Isn’t that what doomed Eliot Spitzer aka “The Sheriff of Wall Street”? In February 2008, as governor of New York, he wrote a column about how the federal government was stopping state investigations of system fraud (Predatory Lenders’ Partner in Crime — How the Bush Administration Stopped the States From Stepping In to Help Consumers) . Next thing you know he’s gone. Greg Palast wrote about it a month later:

      This week, Bernanke’s Fed, for the first time in its history, loaned a selected coterie of banks one-fifth of a trillion dollars to guarantee these banks’ mortgage-backed junk bonds. The deluge of public loot was an eye-popping windfall to the very banking predators who have brought two million families to the brink of foreclosure.

      Up until Wednesday, there was one single, lonely politician who stood in the way of this creepy little assignation at the bankers’ bordello: Eliot Spitzer.

      Who are they kidding? Spitzer’s lynching and the bankers’ enriching are intimately tied.

      • captjjyossarian says:

        Yeah, I suspect the bad guys have control files on more than a few(almost all?) of our political leaders…. which probably explains some of the pod people behavior.

  7. thatvisionthing says:

    ew, your lists look like one I just saw on Daily Kos, BREAKING: Fannie to Servicers: Don’t Mention Mers:

    The following organizations are Shareholders of MERS.

    American Land Title Association (an originator of MERS)

    Bank of America (used to be Country Wide?)

    CCO Mortgage Corporation

    Chase Home Mortgage Corporation of the Southeast

    CitiMortgage, Inc.

    Commercial Mortgage Securities Association

    Corinthian Mortgage Corporation

    EverHome Mortgage Company (A unit of Bear Stearns?)

    Fannie Mae

    First American Title Insurance Corporation (an originator of MERS)

    Freddie Mac

    GMAC Residential Funding Corporation

    Guaranty Bank (Closed. Now Compass Bank

    HSBC Finance Corporation

    Merrill Lynch Credit Corporation

    MGIC Investor Services Corporation (provides market-leading mortgage credit and prepayment risk analytics to lenders)

    Mortgage Bankers Association (an originator of MERS)

    Nationwide Advantage Mortgage Company

    PMI Mortgage Insurance Company (I’ts a PAC, but you have to pay $14.98 to see the list of it’s contributors. Interesting)

    Stewart Title Guaranty Company (Precursor to MERS? It’s global.

    SunTrust Morgage, Inc. (Owned by Sun Trust Bank)

    United Guaranty Corporation

    Washington Mutual Bank (Now owned by JP Morgan Chase)

    Wells Fargo Bank, N.A.

    WMC Mortgage Corporation (A subsidiary of GE Money. Electronic data management.)

    Here’s the 2009 list of the Board of Directors:

    MERS Board of Directors (most are CEOs or Principles):

    Ed Albrigo Freddie Mac
    R.K. Arnold MERSCORP, Inc.
    Barry Bier GMAC Residential Holding Corp.
    John Courson Mortgage Bankers Association
    Henry Cunningham Cunningham & Company
    S.A. Ibrahim Radian Group
    John Johnson MortgageAmerica, Inc.
    Leo Knight National City Mortgage
    Pat Lamb P 1st National Bank of Arizona
    Ron McCord First Mortgage Company, LLC
    Michael Petrie Mortgage & Investment Corp.
    Kurt Pfotenhauer American Land Title Association
    Bruce Posey Streeter Brothers Mortgage Corp.
    John Robbins Vertice Lending
    Deborah Schiavo Highland Advisory Partners
    Marianne Sullivan Fannie Mae Washington, D.C.
    H.G. Waddell United Guaranty Residential Insurance Co.
    Michael Young Cenla Ewing, NJ

    I believe these list may have been edited since I first found it in 2008. I think I remember Country Wide being on the list

    Is that obvious? MERS=Fannie/Freddie=Banks = SystemFraud? Noting also that the foreclosure mills are the clients of Freddie, they are foreclosing in the service OF Freddie? At least Daniel Stern in Florida, that’s what was in the Mother Jones rocket docket story.

  8. Gitcheegumee says:

    I asked this on another thread. Perhaps I can get a response here.

    Has there been foreclosures on commercial real estate?

    I recall reading that the commercial real estate market was the NEXT big domino to fall. Seems to me that their could be a LOT of fraudulent financing,there,also.

    • Teddy Partridge says:

      I wouldn’t be at all surprised to see this title/foreclosure fraud issue over residential mortgages be the smoke and mirrors to enable a commercial paper bailout after the election. “Oh my, we need a little juice over HERE, too, to stay afloat, Mr Geithner, sir. May I have another?”

      • Gitcheegumee says:

        Teddy, you are reading my mind,I tell ya!

        BTW, does anyone remember the story that broke this past summer aabout BofA and Wells Fargo laundering billions of $$ in Mexican Drug Cartel money. Bloomberg did a piece on it.The top three laundries were Wachovia(now Wells Fargo), BofA, and HBSC.

        Banks Financing Mexico Gangs Admitted in Wells Fargo Deal – Bloomberg
        Jun 29, 2010 … Smith Discusses Drug Money Laundering by U.S. Banks …. Five days later, Wells Fargo promised in a Miami federal courtroom to revamp its …
        http://www.bloomberg.com/…/banks-financing-mexico-s-drug-cartels-admitted-in-wells-fargo-s-u-s-deal.html – Cached►Wall Street Is Laundering Drug Money and Getting Away with It …

        Jul 16, 2010 … Wachovia was acquired by Wells Fargo in late 2008. The bank’s penalty for laundering over $380 billion in drug money is going to be a …
        http://www.alternet.org/…/wall_street_is_laundering_drug_money_and_getting_away_with_it/ – CachedThe Banksters Laundered Mexican Cartel Drug Money | The Economic …

        Jun 29, 2010 … A new report, outlined by Bloomberg, implicates three Banksters laundering money for the Mexican drug cartels. They are Wells Fargo, …
        http://www.economicpopulist.org/…/banksters-laundered-mexican-cartel-drug-money – Cached

        • Gitcheegumee says:

          Here’s an excerpt from the Economic Populist piece:

          Banksters Laundered Mexican Cartel Drug Money

          Submitted by Robert Oak on Tue, 06/29/2010 –

          All of that death and mayhem on our Southern Boarder(sp) and in the U.S. over the illegal drug trade of course brings in the Banksters to launder the money.A new report, outlined by Bloomberg, implicates three Banksters laundering money for the Mexican drug cartels. They are Wells Fargo, HBSC and Bank of America. Seems when a DC-9, carrying 5.7 tons of cocaine was busted in Mexico, the police found just a little bit of other stuff.The smugglers had bought the DC-9 with laundered funds they transferred through two of the biggest banks in the U.S.: Wachovia Corp. and Bank of America .Wachovia, now owned by Wells Fargo made a habit of laundering Mexican Drug Cartel money.This was no isolated incident. Wachovia admitted it didn’t do enough to spot illicit funds in handling $378.4 billion for Mexican-currency-exchange houses from 2004 to 2007. That’s the largest violation of the Bank Secrecy Act, an anti-money-laundering law, in U.S. history — a sum equal to one-third of Mexico’s current gross domestic product.

          Drug traffickers used accounts at Bank of America in Oklahoma City to buy three planes that carried 10 tons of cocaine, according to Mexican court filings.Federal agents caught people who work for Mexican cartels depositing illicit funds in Bank of America accounts in Atlanta, Chicago and Brownsville, Texas, from 2002 to 2009.(Excerpt,Economic Populist)

          TOP servicers,indeed.

  9. oldoilfieldhand says:

    Thanks Marcy!
    I thought at the time that the stress test was a way for the Treasury to funnel taxpayer money into banks secretly to boost their bottom lines, primarily because of poor judgment and speculation. Didn’t the test show just how dependent upon fraudulent and over inflated loans the banks were and how close to insolvency they were at the time? Did we ever find out how much which banks got? Wasn’t that kept secret to protect the banks from succumbing to loss of customer confidence which might initiate “runs” on the banks when people discovered what the banks were doing with their hard earned savings? Maybe all this was dream…

  10. Teddy Partridge says:

    I’m sure this will all work out well now that Bank of America has decided to stand behind all those CountryWide loans as its own title insurer. They’d only do that, of course, if no other title insurer would stand behind them.

  11. parsnip says:

    ew, everyone, this comment by 1der on David Dayen’s HAMP post earlier today may be a big clue as to what the government is doing to bail out the banks, and why foreclosures are exploding in numbers and speed, with the condonation of the WH:

    The Administration is doing it’s job if that job consists of covering Wall Street and the Banksters toxic assets. I’ve beat this drum for a while but think that what I’m finding here in Baltimore ties into all of this. 2 more examples: First in June a home with an original debt of $146,715 that defaults/foreclosed on and sold at auction “to the highest bidder” for $167,500. That high bidder happens to be you and me through HUD. HUD (us) then resells our new asset to a non-profit for the low, low price of $36,000 (an 80% loss). In July another row home with original debt of $180,000 is sold on the courthouse steps “to the highest bidder” for $194,000. We are that high bidder again through FHAMortgage, we then sell our newer asset for a 42% loss, $113,471.

    I’ve also read of cases where foreclosure mills have foreclosed on homes for banks, but in fact Fannie owned those mortgages. Fannie has ordered a speed-up of its foreclosures, and they use the David J. Stern mill. Someone needs to look into what’s going on at the GSEs, FHA, etc. And who is buying the discounted homes from Fannie?

    Is it possible that our criminal government has ordered Fannie to help bail out the banks by these, and possibly other schemes? Is this their solution to the banks’ problem, and the reason for David Axelrod’s Sunday statements?

    • oldoilfieldhand says:

      THANKS! Now I really am freaking out! It’s no wonder the government doesn’t want to spend money creating jobs for people, they will have to bail out the banks again. All the bankers will have to do is cry “We didn’t know, who could have predicted that would happen?” Hello third world status. I guess the European countries that didn’t buy into the Euro will be the big winners.

  13. GlenJo says:

    Geithner made very specific promises about foreclosure modifications and refinancing which Treasury has failed to meet.

    I hate to get to people when it should be all about the process, but Geithner is a big problem. I remember the oath I took to support and defend the Constitution the day I entered Federal service. He seems to have forgotten it.

  14. parsnip says:

    In response to parsnip @ 22

    A further thought on Fannie’s scheme to help the banks, and why the cascading foreclosures. First read this post by Karl Denninger: Here It Comes? (9/18 Real Estate Edition)

    I contend that Fannie is helping to prevent the MBSs from triggering CDSs, due to defaults. I’m guessing that the TBTF banks wrote the CDSs on their own MBS packages. To do this, Fannie makes sure that the MBSs continue to receive their income stream.

    And I remembered where I read about a bank foreclosing on a loan owned by Fannie. It’s the Pocopanni case

  15. fuckno says:

    “Josh Rosner, of Graham-Fisher, put the following out in a note today, claiming violations of pooling and servicing agreements on mortgages could dwarf the Lehman weekend:

    Nearly all Pooling and Servicing Agreements require that “On the Closing Date, the Purchaser will assign to the Trustee pursuant to the Pooling and Servicing Agreement all of its right, title and interest in and to the Mortgage Loans and its rights under this Agreement (to the extent set forth in Section 15), and the Trustee shall succeed to such right, title and interest in and to the Mortgage Loans and the Purchaser’s rights under this Agreement (to the extent set forth in Section 15)”. Also, an Assignment of Mortgage must accompany each note and this almost never happens.

    We believe nearly every single loan transferred was transferred to the Trust in “blank” name. That is to say the actual loans were apparently not, as of either the cut-off or closing dates, assigned to the Trust as required by the PSA.

    Rather than continue to fight for the “put-back” of individual loans the investors may be able to sue for and argue that the “true sale” was never achieved.”

    http://market-ticker.org/akcs-www?post=168930

  16. parsnip says:

    In response to fuckno @ 26

    Karl Denninger has been writing for months or years that the mortgages were never conveyed into the MBSs, and in the post I linked to above (Here It Comes?) he describes the scheme by which the MBSs received their income stream as a part of the coverup. As long as the MBS shareholders got their checks they wouldn’t know they had bought ’empty boxes.’ I think the government is colluding with the banks to maintain this coverup. One reason for the cascading foreclosures is so that the servicers don’t have to continue paying the MBS the moneys owed by the defaulting mortgagors out of their own accounts. But in order to prevent these defaults from triggering the CDSs……..

    Yves had a post about John Paulson last week that made me wonder if the reason the mortgages weren’t properly conveyed into the MBSs was so the packagers could manipulate the MBSs at will after the fact:

    This isn’t the first time Paulson has thrown his weight around to try to impede efforts that would help borrowers. Greg Zuckerman’s book The Greatest Trade Ever recounted at some length how Paulson first made threats and then lobbied to block swapping mortgages out of securitizations to facilitate mortgage modifications.

    Per Zuckerman, In January 2007, Paulson employees heard that Bear Stearns traders had told investors on a couple of occasions that ” ‘It’s not so simple to short mortgages. A servicer can just buy mortgages out of a pool, so you guys will never be able to collect’ ” on the credit default swaps used to make the short wager.

    • fuckno says:

      How the fuck do you throw RICO charges at a ruling Kleptocracy?

      I’m sorry, there need to be mass protests, bodies pouring out into the streets, very fucking soon. The whole Financial System is in it’s last throngs, and afterwards…

    • bluedot12 says:

      If the mortgages were not conveyed to the holders of the CDO or MBS then they could be lost, or the traceability of them. What happens then? So you foreclose and hope you got the right security holder ? So if you say my mortagee defaulted but he really didn’t because it was another MBS, I am gonna be pissed. Is that how this works? O shit, if it is because it is not only the homeowner but the investor who will get shafted, to say nothing of the title insurer or the next buyer of the property.

  17. oldtree says:

    The banks won’t stop foreclosure in the 27 states that a judge doesn’t have to look at the documents. That seems to sum it up nicely. Some of the 23 states even allow copies that they can’t present to a judge.
    What will they tell our lying ears next?

    about their past actions. Working with others. To profit. At our expense. On a daily basis. Knowing they create all the documents from new paper. That they have already been paid for the loan at least once without telling the borrower. That their statements are perjurious and their documents are forgeries. That they are organized crime.

    what do you think, a few more weeks?

  18. bluedot12 says:

    I would have to imagine that the stress tests did not look into whether or not the banks could actually locate the documents, i.e trace the mortgage to any specific security they had or sold. If that is what is being suggested here, that is a whole nuther problem.

  21. PJEvans says:

    Wells Fargo is still not willing to admit that there’s any problem with the mortgages they have. I think that they’re in a lot deeper shit than they want people to know about.

    (I know damned well they’re lying about not having problem mortgages. The people I known who are behind in their payments (no income) are clients owned by WF. I also know, from them, that there were irregularities in their paperwork, and that any reasonable background check would have shown so.)

  22. klynn says:

    Oh Marcy. You have hit the nail.

    Progressives need to make addressing this a top priority.

    @11 comment is important to keep in perspective.

  23. Watt4Bob says:

    I’m having a hard time understanding our seeming reluctance to squarely face the facts here.

    The Wall St. crowd built a tremendous bubble, at the heart of which was a rat’s nest of completely fraudulent investment schemes.

    1. They defrauded each other by hiding the contents of the MBS they bundled.

    2. They achieved #1 by deliberately neglecting to assign the loans that comprised the MSBs they were selling to the associated REMICs in direct violation of the State Law, IRS regulations and contractual obligations.

    3. They created MERS to obscure the facts of their fraudulent behavior and, incidentally to avoid paying the fees associated with the proper registration of titles to local county registrars.

    4. When it became apparent that the forgoing behaviors impeded their ability to foreclose on borrowers without the courts asking embarrassing questions about the broken chain of title, they started employing foreclosure mills to produce fraudulent paperwork with which they perpetrated further fraud, this time on the courts.

    5. The systemic fraud the bankers engaged in has had the effect of breaking the clear chain of title on possibly half the mortgages that exist in our nation, putting the entire real estate market at risk.

    6.The solution being floated by the MOTU seems, so far, to consist of giving the criminals who perpetrated this mess a wholesale pardon for their crimes and a guaranteed right to collect on 100% of the notional value of their illegal, and worthless contracts.

    Final Note;

    We haven’t yet started talking about the $Trillions in CDOs that were created by leveraging these phony, non-existent MBSs built on REMICS holding no mortgages.

    We haven’t yet started talking about the hundreds of $Trillions in CDSs purchased to hedge the precarious positions held in MBSs and CDOs that they knew were a house of cards because they made them themselves.

    We haven’t spent much time talking about the criminal use of ‘Naked CDSs’ by these people to profit from, and assure the destruction of hapless American businesses and of course their competitors.

    We’re about to engage in mid-term elections where we are about to have the privilege of choosing between candidates, none of whom have any intention of representing our economic interests, but every one of which is committed to further enabling the on-going criminal conspiracy I’ve outlined above.

    WTF is wrong with us?

  24. captjjyossarian says:

    I’ve been under the impression that the banks were and still are entirely bankrupt. Why else would the FASB rules still be rigged to hide losses?

    Recent comments from Bill Black on this topic: here

    The problem with this debate is that it has little to do with reality. The banking industry, in alliance with the U.S. Chamber of Commerce, with Bernanke’s blessings (and with no opposition from the Obama administration), succeeded in using Congress to extort FASB to change the accounting rules so that banks do not have to recognize their real estate losses until they sell their bad assets.

    Dunno how anyone can think this is anything less than the crime of the Century.