Confirmed: Official Administration Policy Is to Continue Foreclosures

The Federal Housing Administration Commissioner, David Stevens, has joined David Axelrod in stating that the Administration sees no reason to halt all foreclosures. That’s not a surprise in itself–it was pretty clear that Axe’s statement reflected official Administration policy.

But I’m particularly interested in how Stevens justified this position in an email sent to the WaPo.

“We believe freezing foreclosures for all banks in all states, whether we have reason to believe them to be in error or not, is simply not the prudent step to take in this fragile housing market,” he said.

With approximately one in four homes sold in the second quarter in foreclosure, administration officials worry that a moratorium could have a significant impact on the economic recovery.

“While we understand the eagerness to make sure that no American is foreclosed upon in error, we must be careful not to over-reach and apply a remedy that will make the underlying problem of foreclosures worse,” he added.

First, note where Stevens places the benefit of the doubt. If the Administration has no reason to believe foreclosures to be in error, then it will assume they are not. That, in spite of the mounting evidence that the paperwork problem for homes sold during the bubble is systemic.

Foreclosures have been halted in places where there is an easy means (judicial foreclosures) to expose the fraud underlying the bubble era housing sales, or for companies (like Bank of America) that were pressured to vouch for the whole system. But there is no reason to believe the loans Wells Fargo acquired from Wachovia are any more sound than what BoA has on its books; on the contrary, they’re probably worse. But the Administration position is that we should just carry on with the foreclosures, ignoring the evidence of systemic fraud.

Which is probably, itself, just an effort to avoid admitting to the evidence of systemic fraud.

While the interim paragraph in Stevens’ response to the WaPo is not a direct quote, it seems that he is saying the Administration doesn’t want to halt all foreclosures because they don’t want the housing market to lose a quarter of its sales. That is, they seem to believe that the housing market will freeze up if it doesn’t have a ready supply of below market properties to entice buyers who otherwise would be unable or uninterested in buying.

Now, first of all, it’s not entirely clear that the housing market hasn’t effectively frozen up in any case. Things are so volatile it’s not clear that this quarter would resemble the second quarter in any case.

But given everything else, is it really a good idea to encourage reluctant buyers to buy now? (I say that with a house on the market.)

The calculation also seems to have a crazy understanding of what is causing the ongoing foreclosure problem. Partly, foreclosures are being driven by the lack of jobs–something that won’t be significantly affected whether foreclosures are halted or not (I assume that, given that new construction has been stagnant for a year, a freeze on foreclosures won’t reflect new unemployment in that segment).

Then there’s the fact that mortgages are still far overvalued for houses sold during the bubble. A moratorium on foreclosures won’t affect that in the least.

The other factor that’s driving ongoing foreclosures–that is leading to a festering problem–is the continued decline in housing prices. One of the things driving that is the continued stream of foreclosures coming on the market, driving overall values down. Another is the neglect of banks who take over houses in foreclosures, driving neighborhood property values down. Another is overall lack of confidence in valuations of the market. How is the worry that a house you’re buying might not have clean title going to improve confidence in the market, really? And ultimately, the reason the foreclosure problem has continued to fester is the lack of any systemic effort to revalue the market at a level fair to all parties–the failure to modify enough loans to restore some stability in neighborhoods and therefore the market.

Keeping foreclosures with dubious title in the market will change none of these factors. If anything, it’ll make it worse.

The Administration seems to believe it just needs to keep churning foreclosures through the system at a steady, though not heavy, rate, and eventually this whole thing will blow over. But this foreclosure fraud issue is a sign that’s not going to work. More importantly, it’s a convenient time to do what should have been done, find a solution that is equitable for everyone, rather than trying to preserve the fiscal condition of the banks at the expense of the real people.

But thus far, the Administration doesn’t seem ready to regard it as such.

Update: Yves Smith hits this, noting that it doesn’t matter whether there’s a moratorium imposed, the title companies will effectively impose one.

And we further get another lie, that it’s the foreclosure freezes imposed by banks, and the prospect of more at the state level, that might affect REO sales. That’s another Big Lie; the most pressing impediment, and it’s not getting better any time soon, is title insurers withdrawing from foreclosure sales from banks that have admitted to having affidavit problems. Other title insurers are reported to be writing qualified policies on foreclosure sales.

The other disturbing but revealing report of the morning is the new Obama administration straw man: that it’s not backing a national foreclosure freeze. First, as bank expert Chris Whalen points out, this is eventually going to happen, but on a state-by-state basis. not nationally. But second, look at the deplorable logic. Per the Washington Post, boldface ours:

The Obama administration does not support a nationwide moratorium on foreclosures at this time, Federal Housing Administration Commissioner David Stevens said Sunday in an e-mail response to questions.

“We believe freezing foreclosures for all banks in all states, whether we have reason to believe them to be in error or not, is simply not the prudent step to take in this fragile housing market,” he said.

The statement couldn’t be more clear. “Markets” as in bank/corporate interests uber alles, no concern with the rule of law.

  1. parsnip says:

    Sara gave us a history lesson in her comment on your cramdown diary. Here’s a partial quote. She goes into further detail at the link. She describes the mortgage foreclosure process of the ‘aughts as another front in the war on the New Deal:

    The intention was to return to the pre New Deal structure of most home ownership, by eliminating the straight forward Mortgage Finance structures.

    Pre 1929 crash, virtually all Mortgages were called “Contract for Deed” The terms were usually a five year note, directly negotiated with a banker, at the end of which was a balloon payment, and if the borrower did not have cash to pay out the balloon, The banker could write another Contract for Deed, with changed interest rates. The key was to allow the banker to move interest rates on property where the borrower had equity. If the borrower went into default, then the property was returned to the bank, which could of course resell the property with improvements, leaving the initial borrower stripped of his/her home.

    Now move to the much more fancy present, and take a look at the ARM, the mortgage type that allows for automatic resetting of the interest rates, much like the Contract for Deed did back in 1929. The point of the ARM is just to detach the interest rate from the actual mortgage, though these days the Green Eyeshades Bankers are gone, and instead electronics have replaced him. Makes it much more easy to chop up mortgages into securities, and really obscure who the lender actually is, and at the same time totally dishonor the principle that Mortgage Lenders, Banks that operate as lenders, and certainly the County Property Records Offices, are dealt out of their traditional roles, Namely proper tracking of equity and ownership on the part of the individual citizen in real property.

    In 1929, and a few years thereafter, the system fell apart because Banks had speculated with their own deposits, and by 1933, lost much of that wealth, and could no longer offer a new Contract for Deed no matter the quality of the original purchaser. Eer, the refinance option was off the table, as in today’s language. And of course today’s circumstances are more tangled, because of extra add on’s, such as home equity lines of credit and second and third mortgages, college loan financing, and all the rest — but the principle is exactly the same. Find a way to raise interest, fees, and above all new sorts of payments into the relationship when an actual mortgage is somewhat mature, and use that complexity to wipe out the equity of the initial borrower.

    And in 2008 it fell apart for the same reasons it did in the early 30’s. The credit markets froze up, and refinancing was off the table. The game cannot continue without constant credit refreshment.

    Please go read the rest of Sara’s comment for an explanation of how the HOLC cleaned up the mortage problem following the 1929 crash, resulting in the mortgage system we have all been taking for granted, but which is in peril of being dismantled, returning us to pre-1929 equity-stripping housing.

    • harpie says:

      I’m glad you brought that up, parsnip. It’s a great addition to EW‘s always thoughtful and thought-provoking commentary. I second your “please go read”.

  2. perris says:

    you know, this guy gets up on the POdium and gets the TEEvee to broadcast his SPEECH and I get all excited that MAYbe, juuuuhhsstt MAYbe he will be progressive on an important issue

    and then we find out



    gaDANG it, we REALLY need to primary this corporate TOOL

    • Bluetoe2 says:

      If I’ve said it once I’ve said it a hundred times in the last 8 months. Primary Obama in 2012. People should be looking at Representative Peter DeFazio of Oregon. A real progressive and not a snake oil salesman.

      • Riesz Fischer says:

        Alan Grayson? I’ve been thinking, if he loses his seat (he’s in a very tight race in a traditionally Puke district) he may just be the one to run for president as a third party candidate in 2012.

          • Kassandra says:

            TPTB will not allow a progressive; our democracy is broken. Its obvious that the people matter not a whit, nor our opinions or desires. that was amply proven with the collapse of the PO when 70% of the people wanted the PO and it was bargained away to the hospital chains.
            Look what they did to ensure John Edwards could never run again just because he had a baby with that woman who wasn’t his wife?
            they made sure he was ruined because of his populism, but other have done much worse and they’re still in there.

            • bobschacht says:

              Good point, Kassy. I’ve always thought that the hysterical press blast against Edwards unacceptable sexual behavior greatly exceeded the merits, and succeeded in torpedoing his progressive agenda. Except that it was embraced somewhat (misleadingly) by Obama, which made it all the more acceptable to torpedo Edwards.

              Bob in AZ

  3. Bluetoe2 says:

    Why wouldn’t the support continued foreclosures? Some of the WH’s biggest friends are banks to big to fail.

  4. ekhornbeck says:

    It’s not just foreclosures.

    No piece of real estate that was financed or re-financed in the last 10 years has a clear title.

    Freeze up the market? There is no market.

    • perris says:

      you know, the fed lends money not lenders, they only broker the money the fed loans

      the big “solution” when liquidity dissipated seems to have been to simply lend direct from the fed to the people and to business, let the banks opt in or out

      but nooOOOOoooo…instead he just gave money out with the “please lend this money”

      what did the banks do with that?

      we all know they used it as bonuses, but most people do not know, they LENT MONEY BACK TO THE GOVERNMENT AT HIGH INTEREST (bought bonds)

      free frigging money to the thieves that brought this economy to it’s KNEES, that was the wonderful “solution” this guy came up with


      • Kassandra says:

        Well, to be fair the rethugs and Dems have both been in the game for awhile now. Makes one believe in conspiracies.
        It’s like the wild west in America again and the cops are protecting the bandits.
        Obama is a cruel joke most people still believe in.
        And, I figure, we ain’t seen nothing yet.
        I really got to wonder what they’re going to do with al., the $$$ they’ve Shock Doctrined out of US….besides obscenely enrich themselves.
        Will it go to that moon encampment the US wants the Japanese and China to build? I know Obama is sending deep space probes out to find new planets which may be habitable, they’ve already found one around a red dwarf star.

        All I know is that the world doesn’t have the economic underpinnings to rise from this disaster like we could in the ’30’s with how man has squandered the earth’s resources and turned the ocean into toxic sludge.
        I suppose next will be addressing human overpopulation…….as we all squat in our Obamavilles.Since they know there’s no getting out of THIS one,as they “studied” the Great Depression.

        The next two years are going to be wild esp if they loot Social Security and take down the web businesses. Better make your plans now. I guess those crazy survivalists of the 90’s Clinotn killed weren’t so crazy after all…they just should have gone to another country

  5. klynn says:

    Equity stripping is what this has been about all along.

    Not just stripping you of home equity but betting your and your parents retirement accounts against high risk bundled loans and stripping you of retirement equity.

    What kind of people do this to an aging population?

    The most greedy evil people anyone might imagine. Some folks with their number crunching saw the $$$ of the 1st and 2nd babyboomers aging and saw all that saved up equity to steal on the backs of their children and grandchildren.

    So how many seniors have had their homes paid off to have to dip into their solid equity with a reverse mortgage?

  6. JamesJoyce says:

    Cannibalism, corporate style……

    Simply amazing the extent to which the “corporate interest” is protected, while the live’s and liberties of Americans are decimated. We are witnessing what Jefferson foresaw as the lust for profit, undermining constitutional protections under the color of law!

    First a fraud exacted against America with CDO’s. Then the bailing out of the very corporations involved in fraud. Now the banks who gamed the system continue to fuck Americans, like slave-owners and the “White House,” permitting the systemic rape to continue? Cannibalism, corporate style where the tattered remains of people and their live’s are tossed down into the garbage disposal. What a wealth extraction system! De facto Corporate Sodomy. Why not protect the fucking slave owners? History shows we did?

  7. JADodd says:

    The update about the fact that title insurance companies are refusing to insure title upon the sale of foreclosed properties is the real issue. The real question is will the poor unsuspecting buyer be placed in the position of having to pay a higher premium for title insurance because the Banksters have screwed this whole thing up. My bet is yes.

  8. Peterr says:

    I’m still blown away by Axelrod’s comment: “I’m not sure about a national moratorium because there are in fact valid foreclosures that probably should go forward.”

    The word “probably” is not one that auditors and count clerks like to use. “The property in question probably belongs to A” is not terribly comforting to A. “The homeowners have probably paid X in principal and Y in interest” is not terribly comforting to a bank auditor. If you’re using words like “probably,” that’s a very big clue that you’re in a very big hole — especially when you’re measuring the size of the mess in billions of dollars.

    Which brings to mind Molly Ivins’ famous Rule of Holes: if you’re in one, quit digging.

    That’s kind of the idea of a moratorium: quit digging, until we can get a handle on scope of the problem.

    Sadly, you’re right, Marcy. Axelrod’s comments are clearly the Administration’s approach.

  9. oldgold says:

    What do you think a foreclosure moratorium would accomplish?

    During the farm crisis in the 1980’s one was imposed in Iowa and it accomplished damn little but deepen and prolong the crisis.

    • JamesJoyce says:

      “What do you think a foreclosure moratorium would accomplish?”

      Precludes putting “people” on a piece of “Arctic Ice,” and pushing them out to sea with now food, water or shelter? Leveraged economic servitude of a people to corporations via wealth extraction?

    • perris says:

      What do you think a foreclosure moratorium would accomplish?

      moratorium would force cram down and that would be the best thing for both the lender and the borrower

      the borrower would be offered his property at market value, the lender wouldn’t face the prospect of auction and selling at lower then market value

      the market would not be flooded with homes and prices would be more stable

    • Peterr says:

      The entire housing market is built upon verification.

      Who is the buyer? The bank wants to verify that they are who they say they are, that they have the money they say they have, and that they are a decent bet for being able to make the payments to pay off the loan under the agreed upon terms.

      Who is the seller? Do they actually own the property? If not, who holds a lien against it? How much is that lien, compared with the sales price? If the sales price is less than the lien, will the lien-holder allow the sale to go forward?

      If you can’t verify who owns a property, you can’t buy it.

      If you can’t verify the amount owed on a loan, it can’t be paid off.

      If a bank can’t verify that they are in fact the owner of a loan, and they can’t verify payments made or missed by the borrower, they are the biggest fools in the financial world.

      And if they falsely claimed under oath they could do these things in front of a judge . . . ? One bad signature falsely attested to in court is a crime. Millions of bad signatures is a criminal conspiracy of epic proportions.

      Either the industry will submit to a national foreclosure moratorium, or the courts will impose one on them, one case at a time.

      • MichaelDG says:

        Exactly. And here’s hoping that as it moves forward more judges will do just what they have to, given the black and white nature of the thing. I think that’s one reason the banks are doing the moratorium themselves. It’s not political at that point. It’s just property law. And they are on the wrong side of it.

        • oldgold says:

          “The black and white nature of the thing.” What is black and white about this?

          “It’s just property law.” What aspect of property law are you referencing?

        • econobuzz says:

          I think those things can be verified.

          Well then, we have uncovered the root of your misunderstanding. They CAN’T be verified.

        • Mithras61 says:

          Part of the problem with foreclosure at this point is that many of the things Peterr is talking about CANNOT be verified. That’s why the fraud is going on.

          Honestly at this point, anyone who insures a title deed is asking for trouble.

          Anyone who buys a foreclosure is probably a fool, because the title WILL be clouded because of the fraud. We don’t have any way at this point to identify the ACTUAL note-holder on the mortgage in the case of huge numbers of mortgages across the country (pretty much any of the mortgages that was put into an MBS in the past 15 years or so is “questionable” at this point).

          Anyone who buys any “distressed” property may be walking a thin line. The property is secured by a note held by some unidentifiable entity (investors, MBS trust, MERS, who knows?) by the current seller, and without being able to identify who holds the current note, it cannot actually be paid off.

          • oldgold says:

            In a judicial foreclosure you have the equivalent of a quiet title action.

            Those titles are as good as they get.

            • Synoia says:

              Not true. A judicial foreclosure presumes that the chain of title in not clouded, and the current owner is being deprived of his property by a person who legally can bring that action.

              If the foreclosure action is brought by a person who does not have the legal standing to foreclose, then the proceedings are based on fraud, and than is a cloud on title from that point forward.

              A quiet title action has no defendant. That’s why it is quiet, I suspect not of the future action over this behavior of the bank will be defendant free.

              What cannot be verified is the link between the security for the note (the property) and the note itself, because of the opaque nature of the transfer of the note, by bypassing local records and state laws by the use of the MERS system.

            • Mithras61 says:

              In a judicial foreclosure you have the equivalent of a quiet title action.

              Those titles are as good as they get.

              1) A judicial foreclosure presupposes that there was no fraud during the foreclosure. Since we know that there is fraud going on, that is no longer a valid assumption.

              2) 27 states have non-judicial foreclosure. Those states will have all titles in the system subject to fraud during foreclosure the same as in states that DO have judicial foreclosure.

              Essentially, until we clear up a few things, all titles will be clouded. The things we need to clear up are:

              1) Does title assignment through MERS break the link between title and note?

              2) Who holds the notes in the system that are in the MBS trusts (that is, who has the right to foreclose)?

              3) How do we handle titles & mortgages when the original note was destroyed/lost or in which the original note was not perfected as required before being assigned to the MBS trust?

              4) In the case of link breakage between the title and the note, who takes the loss (who is owed the money & has the assignment)?

              5) How do we validate that the owners of the notes have received or not received payments (especially in light of affidavits that payments are not being properly credited)?

              6) How many of the titles and notes are impacted by missing essential documents or the loss of essential documents, since many documents were in fact destroyed or intentionally omitted from the files during the transfer to the MBS to help cloud the actual value and risk in the MBS?

              7) How do we handle the properties affected by the answer to 6?

              I’m sure there are more questions, but not being a lawyer, these are the only ones that come to me based on my real estate agent training (which has not been used/updated recently and was originally 20 years ago).

              • oldgold says:

                A moratorium does nothing to answer the questions you pose.

                Moving forward with judicial foreclosures will.

                Are you asserting the mortgagors have been defrauded? If so, how and is it material. Or, are you asserting the assignees of the mortgagees were defrauded?

                Do you think the alleged fraud should result in the debt and security interest being disappeared?

                As a realtor, your industry colllected fees on the sale of these home that were financed with subprime martgages, what is your industry’s responsibilty, if any?

                • perris says:

                  oldgold, it is certain people have been foreclosed for no reason

                  the lenders have broken the law to make their forclosure claims, I am amazed you want that to proceed

                  • oldgold says:

                    People are being foreclosed for no reason? Well, it is possible, but if that is happening at a level necessary to impose a national moratorium, I would shocked.

                    • canadianbeaver says:

                      That point seems to be missing from EVERYONE’S arguments online. IF these people are keeping up with their payments, then nobody would be foreclosing on them. Fraud or no fraud from the banks, the bottom line is there are thousands of people in homes they could never afford. All the blogs pointing fingers at banks, really does nothing to change that. People that work at McDonald’s cannot afford a new home. Period. These people all seem to be arguing it’s the bank’s faults that people can’t pay their mortgage. Hogwash. Sure banks are illegally bundling these mortgages but like you and I are saying and nobody is getting, is banks don’t foreclose when you make your payments. Matters not where the money is going, or whether banks lied. No payments made, no house.

                    • Mithras61 says:

                      You are mistaken. There are at least two stories that have appeared here in the last few days of people who owed NOTHING (as in PAID CASH FOR) and were foreclosed upon using fraudulently created documents. There is a deposition linked in this thread of a paralegal who swore that the offices in which she worked routinely disregarded payments made. The cases happen to be in two states where judicial foreclosure is happening and the justices were unwilling to examine the legitimacy of the affidavits in those cases. How many more people have been financially ruined or simply don’t have the money to publicize their situation?

                      Based on the fact that BofA has halted foreclosures nationwide and the other major lenders have stopped them in states where judicial foreclore is required, it seems that the BANKS have questions about the legitimacy of their operations sufficient to halt them in places where they can get judicial sanctions for their actions. Perhaps it would be wise to stop them in other places until we can determine how far the cancer has spread.

                    • oldgold says:

                      If it happened twice or 100 times, that would not justify a national moratorium.

                      If someone has been foreclosed for no reason, other remedies besides a national moratorium are available.

                    • Mithras61 says:

                      The problem isn’t legitimate foreclosures. The problem is that the foreclosure process is happening through the creation of fraudulently attested documents. The instances in which it happened are tied closely to the instances in which notes aren’t being produced (e.g. – evidence of standing), frauduent chains of assignment are being created out of whole cloth and entire files are being generated with not a single original document in them. The problems are indicative of a very widespread pattern of fraud and abuse of the system, and of a judicial system that is intentionally and knowingly abetting the fraud. The banks themselves have imposed moratoriums in states where a judicial hearing is required. They have refused to do so in states where it is NOT required. This alone suggests the problem is pretty bad.

                      How bad does it have to be before it is time for a nationwide moratorium?

                    • oldgold says:

                      You are now accusing the “judicial system of intentionally and knowingly abetting the fraud?” Hmmm. That is a pretty strong allegation.

                    • Mithras61 says:

                      Yes, it is. It is alleged and appears to be supported by affidavits in cases in Florida and Louisiana at the present time.

                    • Mason says:

                      You are now accusing the “judicial system of intentionally and knowingly abetting the fraud?” Hmmm. That is a pretty strong allegation.

                      Yes, and that is exactly what is going on and why we absolutely must have a national moratorium on real estate foreclosures.

                    • Peterr says:

                      “Matters not where the money is going, or whether banks lied.”

                      I know a number of judges who would disagree with that statement.

                      Bankster: “Your honor, when I signed those documents affirming that I had reviewed the entire contents of each foreclosure file, and submitted them to your court, I lied. But that doesn’t matter, right?”

                      Judge: “Maybe not in your workplace, but it sure as hell matters in my courtroom. With regard to the perjury charges against you, I accept your admission of guilt. Now then, let’s set a date for sentencing. And remind me again, how many of these false statements did you make to the court?”

                      I’m not trying to say that everyone who was foreclosed upon should get their house back or anything like that. But to scream about holding home buyers are accountable for the poor financial decisions that put them into foreclosure WHILE AT THE SAME TIME giving a pass to the lenders who failed to properly handle the paperwork involved, whose business practices led them to illegally cut corners in filing changes of ownership with the appropriate county clerks, and who perpetuated a MASSIVE fraud upon the legal system by the use of robosigners is mindlessly one-sided.

                      By all means, let’s hold folks accountable — but that means holding everyone accountable.

                    • Peterr says:

                      Glad we agree on that.

                      Is it too much to ask that the legal system declare a pause in the rush of foreclosures, so that we can sort out the false affidavits from the true ones?

                    • oldgold says:

                      Once again, how does a moratorium acccomplish that?

                      Other courses of action may better address the issue you are concerned with. This may be true at both a micro and macro level.

                    • Peterr says:

                      If a plant is dumping toxic waste into a river and gets caught doing it, the EPA has the authority to shut down the plant immediately. The plant owners can fight this, and they can argue that the responsibility is someone else’s (builders who built the plant poorly, for instance). But what they don’t do is keep pumping toxic waste while the investigation is carried out, responsibility is assigned, and solutions crafted. You shut down the system.

                      There is no question that there is a non-trivial amount of fraud being perpetuated by the financial industry. The argument is over the size of the fraud and the best remedy. The former, of course, will be a large factor in determining the latter.

                      A moratorium would allow space for the appropriate DOJ/Treasury/other govt bodies to carry out a coordinated investigation, and do so without giving one bank/financial services corporation any preference or disadvantage relative to their competitors. Set up a special multi-agency task force, and let them craft a way to sort the properly documented foreclosures from the improperly.

                      Nothing fancy has to be invented here. This is basic accounting and recordkeeping. But it does require actually wanting to make it happen, and right now, the banks don’t want folks to see how bad their industry’s practices have been and the government (both parties, and executive and legislative branches alike) doesn’t want the voters to see that they were (a) asleep at the regulatory switch, (b) colluding with the financial industry in turning a blind eye, or (c) both.

                    • Mason says:

                      IF these people are keeping up with their payments, then nobody would be foreclosing on them.

                      No, that’s absolutely not true. The banks have changed the locks on homes that were occupied by families that had never missed or been late on a payment and followed that up by seeking forfeiture with fraudulent forged documents.

                      Using fraudulent and forged documents, banks also have foreclosed on people who had paid off the notes and no longer owed any money to the banks.

                      You need to read up on this before you make false statements that misrepresent the problem.

                    • knowbuddhau says:

                      Hooboy. Consider yourself shock-doctrined. Where’ve you been, under the biggest rock in the country? Yes, people have had their whole houses stolen, and yes, our public servants are acting as thugs for the thieves.

                      I won’t bother with trying to do what EW already did in this excellent post, ie, adducing evidence and including links, since you apparently are presently impervious to evidence against your assertion.

                • Mithras61 says:

                  A moratorium does nothing to answer the questions you pose.

                  Moving forward with judicial foreclosures will.

                  In states (the minority of them) that have judicial foreclosure, yes it will clear up the title, provided that the documents that are being used fraudulently in the proceedings are appropriately identified as such.

                  Are you asserting the mortgagors have been defrauded? If so, how and is it material. Or, are you asserting the assignees of the mortgagees were defrauded?

                  Do you think the alleged fraud should result in the debt and security interest being disappeared?

                  I think that fraud has been happening in many different parts of the system, and that the borrowers and investors were the primary (but not sole) ones BEING defrauded. I am asserting that there are reports of fraud from lenders, borrowers, banks, foreclosure mills and more (that is, fraud is RIFE throughout the system), and that we need to have a deeper investigation into this than can be done by a single court or state AG.

                  As a realtor, your industry colllected fees on the sale of these home that were financed with subprime martgages, what is your industry’s responsibilty, if any?

                  Firstly, I am not in real estate. I was trained as an agent back in the early ’90s, and decided after completing my training that it was not an industry I would willingly be involved with.

                  Secondly, the agents and brokers are working as representatives of the seller. So far as I know, sellers have not been accused of defrauding anyone, and agents (while frequently sued by buyers) are also not the ones typically involved in fraud (although there are some individuals who have been involved in some deals that can be classified as fraudulent). Those who HAVE been involved need to be prosecuted for their involvement. I don’t see anything that suggests that agents or brokers were involved on the same scale as the banks, investors and foreclosure mills, however.

                • knowbuddhau says:

                  Dude, it keeps families in houses in the oncoming winter, doesn’t that count for something? How’d you like to have your whole house stolen, and have your own public servants act as thugs for the thieves?

                  What’s the purpose of our society: going through the motions of what everyone knows to be a fraud of biblical proportions, no matter the human cost? Or promoting the general welfare and all that?

                  What’s the point, that you had a previous experience with a moratorium, found it a bad one, and then made an assertion from which you now just won’t back down?

                  I say we stop the wholesale theft of homes, it’s an effing no-brainer.

                  • oldgold says:

                    I will agree with you on two things:

                    1] I am for doing whatever is necessary to provide shelter to dispossesed human beings. If that means a moratorium, I am for it. {But, that is not what we have been talking about. Rather, it is the allegation tnat there is fraud afoot of such a nature that a national moratorium is a necessary remedy.}

                    2] I would not want my house stolen.

  10. Knut says:

    The Administration is scared shitless over the prospects of a mortgage lending freeze-up pushing the banking system back into a Lehman Brothers default crisis. If the balance sheets go belly-up in the open (as opposed to going belly-up in the closet as is now the case), banks will stop lending and we will be back where we were in the fall of 2008. This is a train wreck.

    The view at the top is, if they don’t save the banking system again, the economy will collapse. It might just, but there isn’t anything they can do about it now. That time was when they had a chance to permit or impose cramdown.

  11. MichaelDG says:

    My hope is that this train wreck cannot be stopped by a political call from anyone. As in any huge crime that is falling apart, the various players will start pointing fingers and ratting out the next guy. Or in hopes of keeping their own hands clean some will pretend they never had anything to do with it in the first place, like the title insurers and turn on the rest of them. But if that’s what it takes to get this thing cleaned up I’m more than happy to see it. It has to fall apart. If it is based on bogus, greedy, amoral casino thinking there is no way to fix it. Indeed, who were these people? Greed is Good crowd?

  12. wavpeac says:

    More than a moratorium, there must be a full press investigation. That’s THE single most important thing here. We’re not done with the truth and this is precisely why Obama won’t be imposing a moratorium. He enabled the fraud. It continued after the bail out. It’s still happening now. He’s between a rock and a hard place. If he uncovers it, the economy will dive for the second dip of a double dip recession during elections. AND you know republicans and tea baggers will say he helped the fraud with the TARP money…out one side of their mouths, while on the other side they will be blocking investigations and any regulations imposed.

    But it’s wrong. Just once I’d like to see this man take a stand and do the moral thing.

  13. canadianbeaver says:

    What needs to be done, is to continue with the foreclosures and arrest the bank fraudsters that loaned megamoney to people that had absolutely no hope in hell of ever paying for it. That is what needs to happen. An honest correction. You can’t change a mortgage so a person can afford it, that never could. It doesn’t work. What we are seeing is thousands of people making squat, with big mortgages. If I make $15/hour, I cannot afford a $300,000 house. That’s the bottom line. People have to face the music. Banks loaned it to people that could never afford it, then sold the risk. Pain has to come into play here, or this will never get fixed.

    • JamesJoyce says:

      “Banks loaned it to people that could never afford it, then sold the risk. Pain has to come into play here, or this will never get fixed.”

      The reality is working people on the edged could not afford a rise in the cost of living associated with $147.00 per barrel oil. Rating analysts where well aware of the fact when CDO’s where presented to them for ratings. “AAA,” until the house of cards collapsed.

      America is like a “fucking drunk,” in a state of total denial to the real cause and effect relationships which determine a quality of life or lack thereof!

      • Kassandra says:

        It truly does resemble addictive behavior with no thought to anyone but the sick self.
        I believe we’re being run by addicts in need of treatment. too bad Betty Ford Clinic doesn’t take people addicted to money and power.

    • beth meacham says:

      Millions of mortgage defaults are happening because the previously well-employed borrower has been laid off, her job shipped to China. It’s not all badly-written loans.

      A countable number of foreclosures are happening because the loan servicing companies keep very poor records.

      What I do not understand is why the banks want possession of millions of properties that cannot be sold in the current economic environment.

      • Night Owl says:

        What I do not understand is why the banks want possession of millions of properties that cannot be sold in the current economic environment.

        Because every dollar of mortgage paper value is leveraging 10x+ in CDOs.

        Foreclosing on the properties allows the banks to maintain the fiction that the mortgages were actually worth the value they sold them at, so they never have to mark down the value of the mortgage paper to actual market value of the property. If they did have to mark to market, every dollar of markdown means at least 10x that amount in the markdown of the value CDO backed by the mortgage.

        That’s why the banks are so against cramdown, because they know that the losses they take on the mortgages will be multiplied tenfold on their CDO clients’ assets sheets.

      • Mason says:

        What I do not understand is why the banks want possession of millions of properties that cannot be sold in the current economic environment.

        Two reasons, both are felonies:

        1. The banks have known that they are really insolvent as they lack the promissory note and the mortgage documents that they are required by law to produce in order to receive the payments and foreclose on the properties. Due to Geithner and the Obama administration’s largesse, the banks have been permitted to avoid insolvency and liquidation by permitting them to list their non-existent financial interest, which literally isn’t worth the paper its written on, at the fair market value of the property. Increasing unemployment has resulted in buyers defaulting on their monthly payments. To create the appearance of having the necessary paper to foreclose, the banks decided to create the documents that are missing from their files. Although this may have seemed like a good idea at the time, it was an extremely risky course of action because their solution may best be described as a conspiracy to commit massive nationwide fraud through the systematic use of forged documents bearing forged signatures and forged notary seals. By the way, the original documents are missing because the original lenders were pressured by the banks to make the loans so that they could acquire, slice, dice, bundle, and sell them in the world casino to make billions. They didn’t give a damn about making money on the original loans because that was chump change to them and they didn’t want the original paper available anywhere in case some potential buyer wanted to review the underlying documentation. That would have blown the cover on their main scam. Their fraud also extinguished the possibility of obtaining any equitable relief because you have to have clean hands and they don’t.

        2. The banks were getting uneasy as time was dragging on and they were afraid that their massive fraud would be discovered, so they decided to foreclose on all of the loans with their phony worthless documents so that they could get some money out of the deal, as opposed to zero, and they were hoping that they would escape responsibility and liability if they could just foreclose on everyone and unload the properties before the roof fell in.

        But alas their dreams of riding a tsunami of foreclosures over the menacing reef of insolvency, unemployment, assorted congressional investigatory unpleasantries, and federal grand jury investigations, to reach the promised land, also known in duh biz as firm financial footing, are going poof.

        I’m absolutely stunned that Obama and his cabal have decided against a moratorium on the pathetic ground that somewhere within a Mt. Everest sized pile of foreclosure files there might be a legitimate file or two containing a complete set of legitimate documents.

        Of course, there wouldn’t be any way to know that by just looking at the documents without an investigation because the documents and signatures are forged on the vast majority of them. Obama’s solution also is a giant fuck-you to every distressed homeowner in non-judicial foreclosure states as it places the onus on them to secure their own justice.

        The good news is that Obama’s decision is political suicide, so he’s toast for 2012, unless he reverses himself immediately. Apparently, he’s too stupid to see the terrible danger in which his hubris has placed him.

        Couldn’t happen to a nicer guy, IMO.

        • Gitcheegumee says:

          Both Rahm Emmanuel and Thomas Donilon were at FANNIE MAE

          FDL was circulating a petition to have Emmanuels activites at FANNIE MAE investigated by Eric Holder,last December.

          Now, Thomas Donilon* ,formerly of FANNIE MAE has replaced Jim Jones as National Security adviser.

          *He worked as Executive Vice President for Law and Policy at Fannie Mae, the federally-chartered mortgage finance company, as a registered lobbyist from 1999 through 2005.[8] This line on his resume raised eyebrows when his appointment to the Obama transition team was announced, given that the company had been seized by federal regulators.[9]WIKI

          Maybe its just me, but this doesn’t seem Kosher.

    • wavpeac says:

      This is not entirely true. The truth is that there was a systemic violation of TILA and RESPA laws while the FDIC was stripped to become Homeland Security. This systemic behavior had to do with stopping communication, fees for things like cashing checks and property inspection, bogus legal fees from foreclosure mills, etc…These behaviors “forced” foreclosure. I don’t think we can know without an investigation who might have been able to make their payments or who would not. Until we look at these behaviors we cannot know the impact they have had on foreclosure. There was motivation to put people in foreclosure and these companies did everything they could to “make” it happen. This included force home owners insurance, and messing with escrow accounts.

      We need an investigation. This administration does not want this whole story told. We need to find out how many of these homes were just not affordable by the borrower and how many would have been affordable if the banks had not tripled the fees, and engaged in RESPA law violations like refusing to give pay off amounts until the week before foreclosure.

      Did I not say 6 years ago that this story would come to a head and it was bigger than any one was saying. My little micro story is only a little part of it, and certainly I did not know the big story…but I was absolutely right about everything I predicted regarding these loans. I will say it again…it’s fraud..and it’s not just about people borrowing more than they could handle. I have read complaint after complaint online where this is NOT what happened. Where people lost their homes to out and out fraud! Bad accounting, wrong escrow amounts. It’s so frustrating. I can’t prove beyond a shadow of a doubt that millions lost their home to fraud, but I know what happened in my case and I have been right for years now warning that there would be an eventual melt down because of what I was seeing my lender, a big name Homecomings, and now GMAC(still says gmac on my paper work!)is and has been doing to people.

      There needs to be a criminal investigation.

      • ottogrendel says:

        It certainly seems that perhaps the hallmark of the Obama administration is that no one (Bush WH, BP, banks, military/intelligence community/Homeland Security, etc.) will be held accountable. How can you affect “Hope and Change” without cleaning house and without honestly exposing causes? It is almost axiomatic that whatever any WH says publicly, the opposite is true.

  14. janeeyresick says:

    We believe freezing foreclosures for all banks in all states, whether we have reason to believe them to be in error or not, is simply not the prudent step to take in this fragile housing market,” he said.

    Horrific reveal of the administration’s values and priorities with that statement – market “prudence” trumps jurisprudence. Propping up a market is of more concern than halting and investing the most sweeping, pervasive, systemic fraud that has ever washed throughout the entire banking, housing and securities industry. Gotta push through those foreclosures, “whether we have reason to believe them in error or not.”

    This administration does not possess the will or the guts to do the right thing apparently, and will take the path of least resistance that favors their corporate paymasters who would like this whole thing to just go away, although, it won’t. While the administration looks away, the 40 state AGs looking after their constituents by combining knowledge and manpower may make the White House and Holder completely irrelevant, as they choose to be anyway.

    A sad sorry, commentary. By their actions (or lack thereof) shall you know them.

  15. dhfsfc says:

    Let’s put the merits aside, just for a moment.

    From a procedural point of view, a moratorium would work to help a class (the mortgage-holders), to conduct discovery of the facts relating to their banks, and their mortgages. Since most of the banks employ similar procedures, servicers, etc., a moratorium, and subsequent mass-discovery, would be the only cost-effective method for mortgage holders to determine whether they are affected by fraud. Otherwise, discovery is cost-prohibitive for individual mortgage holders, and it would be virtually impossible to discover fraud. This is the same reasoning behind a class-action, and would possibly forstall expensive class suits against the banks.

    Considering the fact that the government rushed towards these banks with outstretched arms full of money when they were about to fold just two short years ago, you would think they would be willing to cooperate with a six-month moratorium. In addition, many of these banks don’t actually want to re-take the properties they are entitled to, and the more fore-closed properties there are, the lower housing values, and their own net worth, will go.

    This SHOULD be a win-win. But on the merits, if there was massive fraud, or at least incompetence, going on, it’s going to be a win-lose, with the loser being the Banks. I suspect that’s what the Banks know, and the Administration must know it as well.

    • econobuzz says:

      But on the merits, if there was massive fraud, or at least incompetence, going on, it’s going to be a win-lose, with the loser being the Banks. I suspect that’s what the Banks know, and the Administration must know it as well.

      Very well put.

      • Fractal says:

        But on the merits, if there was massive fraud, or at least incompetence, going on, it’s going to be a win-lose, with the loser being the Banks. I suspect that’s what the Banks know, and the Administration must know it as well.

        Very well put.


    • Fractal says:

      Otherwise, discovery is cost-prohibitive for individual mortgage holders, and it would be virtually impossible to discover fraud.

      I don’t want to start a bicker-fest, but this is wrong. There are many examples of successful discovery efforts by solo attorneys defending against fraudulent foreclosures. The costs are often paid by the losing bank when the court realizes the bank acted fraudulently and/or in bad faith. There is a specific federal rule of civil procedure to allow/encourage courts to order the banks to pay the expenses for taking deposition(s) of the agents who committed the fraud. Rule 56(g), Fed. R. Civ. P. The exhibits to the Ohio AG’s class action complaint include at least one example of a 56(g) sanctions order. Also, class actions are by no means the only method for investigating foreclosure fraud. Attorneys working for a single foreclosure victim broke open the cover-up of Mr. Stephan, one of the notorious “affidavit robo-signers.” Again, an exhibit showing this is included in the Ohio AG’s class action complaint.

      • dhfsfc says:

        Thanks, you’re right about that.

        The question is, how many people being foreclosed on actually hire lawyers, and how many can’t afford to and simply fold. I think the banks are counting on a large number of the latter.

        In any case, winning foreclosure cases piecemeal isn’t the best alternative. And given the extensive evidence of fraud, why not investigate?

  16. cbl2 says:

    interesting that neither of the two WH statements make any reference to the passage of Dodd Frank – that is Messaging 101 in an election year, and yet not a peep

  17. cbl2 says:

    p.s. longtime firedog and partner extraordinaire oldnslow has been talking about the Title Companies and Title Insurance since the very first Fraud post

  18. indiepro says:

    The Administration’s Position: It is far better for many fraudulent foreclosures to go forward, than for one legit one to be held up.

  19. ShotoJamf says:

    Which is probably, itself, just an effort to avoid admitting to the evidence of systemic fraud.

    in other words, let’s not start peeling this onion. We wouldn’t want to prove beyond any doubt that the foreclosure fraud is systemic.


  20. econobuzz says:

    The last thing this administration wants is discovery of the percentage of these loans that involve fraud. Their whole approach to TBTF and saving the banks is built on an implicit assumption of no fraud.

        • oldgold says:

          I am trying to be polite as well.

          Some folks are tossing around legal terms and concepts in a manner that is less than informative. I am trying to get them to tighten their arguments so as to determine if there is any there there.

          But, then, what would I know about this?

          • sapphirebulletsofpurelove says:

            I think your accusations of begging the question on this are cynically rhetorical.

            Just my opinion. It appears you think that nothing untoward has gone on, so why look into it? Exactly the administration’s take. Beyond frustrating.

            • oldgold says:

              I am not accusing anyone of anything except for using legal terms and phrases with less care than one might hope for.

          • Peterr says:

            The point of a moratorium would be to eliminate the “if’s” around this whole mess.

            Banks with good books should be able to get their foreclosure files cleared relatively quickly. Those banks without good books . . . not so much.

            But until the “if’s” are gone, no one can be sure they are getting a clear title, or working with a reputable bank. That’s the point I was making @17.

            • Synoia says:


              There are few or no “good books”.

              And the banks are still originating mortgages which name MERS as the beneficiary, which has been ruled by the court as incorrect.

              • Mithras61 says:

                Part of the problem is that only 23 states have judicial foreclosures, and the remainder do not. The fraud has been taking place in BOTH types of states.

                The moratorium won’t clear title. The investigations that are allowed time to happen by the moratorium will do so, but they will have to have time to answer the questions I posed above as well as any others that come to light during the investigations.

                The thing is, there has been fraud on both the origination and the foreclosure end of the mortgage deal, and I (and presumably many other folks) feel that until we can sort out the good from the bad and answer some questions about how to handle the results, we should really be putting a halt to the whole scam.

              • Fractal says:

                How do moratoriums clear title?

                Court orders in judicial foreclosures do that.

                I think oldgold was right about that. There are more than a few experts urging a similar perspective. I highly recommend this post over at creditslips, apologies if somebody already mentioned it. Note also the excellent comments to that post.

      • dhfsfc says:

        I’m pretty sure that’s what all the people who will be on the streets (thanks to the banks) will want to know.

        That’s why we need a moratorium.

  21. demi says:

    Note to mods. David Dayen’s current post says comments are closed. Even going through the FDL tab at the top. Thanks.

  22. jodo says:

    This was the whole point in bringing in Summers, Geithner, and re-appointing Bernanke. They were there to cover-up or ignore the systemic criminal fraud in the mortgage and finance industries. They would have implicated themselves in the meltdown had they done anything different. Summers has done his job so it’s time to move on to avoid any acountability.

  23. klynn says:

    So would this stance by the Federal government make the Federal government liable in the cases where there is fraud?

  24. parsnip says:

    The speeded-up cascade of foreclosures at this point is not only equity-stripping the borrowers being foreclosed, but also the MBS shareholders, in other words, our pension funds. The servicers/foreclosure mills are paid $6,000 per foreclosure by contract with the MBSs. This means the servicers keep the money from those still making their monthly mortgage payments, and pay themselves for foreclosures, before sending what’s left (if anything is left) to the MBS trustees!

    There may be another angle in play. Will Fannie & Freddie buy the REOs off the banks in the end? That’s a good inducement to foreclose like mad.

  25. Bobster33 says:

    this is another case of Obama BP syndrome. If he buries his head in the sand, it will go away.

    As for the title insurance moratorium, I thought that 45 states were the ultimate arbiter of the title insurance. In one of David Kay Johnson’s books, I seem to remember that he stated the states ultimately set the rates for title insurance and are the ones ultimately on the hook if the whole thing falls apart. Can anyone shed light on this?

  26. 1der says:

    Axelrod’s comment: “I’m not sure about a national moratorium because there are in fact valid foreclosures that probably should go forward.”

    As I see it from my own research as a land surveyor here in Baltimore’s Urban Hell Hole it’s the government backstopping the shitty MaidenLane I-II & ? that the geniuses at the Fed through Timmy’s NY era created for the Banksters Toxic Assets.

    I don’t have the time to do extensive research, lately less enthused, so this example may seem like small potatoes: March 2008 FannieMae/Wamu mortgage for $85K – foreclosed and sold at auction to “highest bidder” in May 2010 for $71K, buyer was Federal Home Loan Mortgage Corporation – last month FHLMC sold with Special Warranty for $10 Thousand dollars.

    FHLMC’s Charter states: It is the purpose of the Federal Home Loan Mortgage Corporation—
    (1) to provide stability in the secondary market for residential
    (2) to respond appropriately to the private capital market;
    (3) to provide ongoing assistance to the secondary market for
    residential mortgages (including activities relating to mortgages on
    housing for low- and moderate-income families involving a reasonable
    economic return that may be less than the return earned on other
    activities) by increasing the liquidity of mortgage investments and
    improving the distribution of investment capital available for
    residential mortgage financing; and
    (4) to promote access to mortgage credit throughout the Nation
    (including central cities, rural areas, and underserved areas) by
    increasing the liquidity of mortgage investments and improving the
    distribution of investment capital available for residential mortgage

    A RE attorney or title professional could certainly make better sense of this. My research also tells me that this has been going on for some time and is not just limited to cheesy little row homes in working class neighborhoods.

    I wonder what reasons the government has to keep all this under wraps?

    • Synoia says:

      1. Because the Residential Mortgage Backed Security market is the larges on the planet.
      2. The Feds cannot impose a moratorium on foreclosures. That is government interference in a private contract, and we all know that’s sacrosanct.

      Foreclosure is the fear of loss that keeps people paying mortgages.
      People need to keep paying mortgages, there is a valid debt. The debt holders have messed up the linkage between the loan and security the property, and maybe the ownership of the debt, but the debt exists and needs to be paid.

      • Mason says:

        People need to keep paying mortgages, there is a valid debt. The debt holders have messed up the linkage between the loan and security the property, and maybe the ownership of the debt, but the debt exists and needs to be paid.

        No, you’re wrong. The original lender sold the note and the mortgage to another financial entity, which cashed out the lender extinguishing its interest. F

  27. SmileySam says:

    In Davids post on this issue is this quote which makes more sense to me than this instant questioning of motives.

    On another note, I would say that the White House wouldn’t announce support for a foreclosure moratorium until they actually put in place a foreclosure moratorium. If Axelrod casually announced his support yesterday without anything in place, the result would be mass chaos. Congress is more in place to call for a national moratorium (they’re also up for re-election, which doesn’t hurt), and many Democrats are doing so. My view is, let’s wait a couple weeks while these developments cycle through the system. I think we may see things move dramatically.

    Here is the link to the rest of the much calmer reaction.

  28. orionATL says:

    reading ian welsh this morning

    i found a reference to a post:

    by karl denninger.

    i only know real-estate finance and real-estate law in a layman’s way,

    but i liked the tenor and the detail of denninger’s suggested remedy.

    i recommend a good look.

    personally, i am deeply suspicious of the sudden, co-ordinated i do not doubt, halt in bankruptcy processing by large banking corps.

    it has the stench of economic blackmail about it, saying to the obama admin and congress:

    bail us out or we’ll damage the recovery by bringing the housing market to its knees.

  29. ottogrendel says:

    Business to federal government: “Stay out of the foreclosure issue. A moratorium is not in our interest.”

    Federal government to Business: “OK, boss.”

    The latter’s job is precisely to “preserve the fiscal condition of the banks at the expense of the real people.” Supporting Business theft is their job. It’s what they get paid for in the form of campaign contributions. They are not our friends. But “them bosses need all the help they can get.”

  30. dhfsfc says:


    Just curious. What is it that you have against home buyers who were defrauded, and why do you insist that the banks’ rights never be questioned?

    There is currently evidence of fraud on a large scale by some banks. All the rest of us are arguing is that discovery of the methods used by all banks is warranted, and that the only way to do discovery sufficient to uncover the fraud is for a moratorium to be instituted, while someone investigates who is affected, and who is not. Without a mass moratorium, and mass discovery, each homeowner is on his own, and since these are people who are unable to pay their mortgages, they are unlikely to be able to hire a lawyer to investigate if their mortgage is fraudulent.

    How can you argue that people must put forward firm proof of fraud, before any discovery is taken? Or should they all just put in fraud complaints, piecemeal, and tie up the legal system? How does that benefit anyone?

  31. knowbuddhau says:

    Or if not shock-doctrined, maybe our own homegrown economic hit men have hit home.

    Tell me, o wise firedogs, am I the only one to whom the following sounds exactly like what we’re going through right now?

    John Perkins on “The Secret History of the American Empire: Economic Hit Men, Jackals, and the Truth about Global Corruption”

    AMY GOODMAN: Well, before we go further, “economic hit men”—for those who haven’t heard you describe this, let alone describe yourself as this, what do you mean?

    JOHN PERKINS: Well, really, I think it’s fair to say that since World War II, we economic hit men have managed to create the world’s first truly global empire, and we’ve done it primarily without the military, unlike other empires in history. We’ve done it through economics very subtly.

    We work many different ways, but perhaps the most common one is that we will identify a third world country that has resources our corporations covet, such as oil, and then we arrange a huge loan to that country from the World Bank or one of its sister organizations. The money never actually goes to the country. It goes instead to US corporations, who build big infrastructure projects—power grids, industrial parks, harbors, highways—things that benefit a few very rich people but do not reach the poor at all. The poor aren’t connected to the power grids. They don’t have the skills to get jobs in industrial parks. But they and the whole country are left holding this huge debt, and it’s such a big bet [sic] that the country can’t possibly repay it. So at some point in time, we economic hit men go back to the country and say, “Look, you know, you owe us a lot of money. You can’t pay your debt, so you’ve got to give us a pound of flesh.”

    And if the EHMs don’t corrupt the leaders, the CIA jackals are sent in to assassinate. And if that fails, we invade.

    The baddest news in the land at the moment, IMO, is that options 1 & 2 aren’t working so well anymore. Witness the failed coups in South America (and our one success in Honduras). So we’re seeing raw power grabs, public opinion be damned. And soon, I expect these will look like the good old days.

    It pains me to say this, but we’re way behind the power grab curve, oldgold. We need to bring our games up beyond their level, or it’s lights out for all of us.

  32. dstrong says:

    Clueless Morons! Another issue the right will demagogue because this President is so bought and paid for by the banks, and clueless when it comes to understanding what is upsetting Americans so much they are willing to let Birchers take over the government. Sometimes you wonder if they really want to win in November.

  33. qweryous says:

    There is an additional point concerning the ‘peoples’ ( homeowners and potential homeowners) faith in the residential housing financial system:

    Those making payments for 20 or 30 years must have faith and be able to trust that the payments go to the right party, that they are properly recorded; in short, they must have faith in the party on the other side of the transaction.

    It is for most in this country, the most expensive purchase, and their biggest investment for the future.

    The party on the other side of this transaction is in fact; any and all slicers, dicers, recorders and processors now involved in originating, recording and servicing the residential mortgage.

    Now it is clear to most that have been paying attention that the trust has been violated by at least some of the players some of the time.

    Perhaps a few here may comment they are “Shocked- I tell you- Shocked: that forgery and theft by deception is going on here. Who could have known? There are laws…”

    Whether or not any particular property has been foreclosed; or is subject to foreclosure, rightly or wrongly, is not the issue.

    Whether any particular mortgage is under water, even though payments are current, is not the issue.

    Whether recent sales of properties are brought into question due to the title problems is not the issue.

    The issue is “Would you buy a used car from this industry?”

    Or- having found out that you did buy a house from these folks, would you do it again? How can you get out of this situation ( doing business with questionable characters)?

    No faith and no trust in the fundamental fairness of the residential housing market will devastate the residential housing market.

    • Mason says:

      No faith and no trust in the fundamental fairness of the residential housing market will devastate the residential housing market.

      Yup, and trying to figure out what a property is worth today and what it will be worth tomorrow without a relevant stable point of reference to compare it to is a total crap-shoot.

  34. Mason says:

    Maybe its just me, but this doesn’t seem Kosher.

    Hey, Gitch.

    What’s up?

    Somebody is in a pickle. It ain’t you and it sure as hell ain’t kosher.

    • Gitcheegumee says:

      Hey Mason,how’s it goin’?

      I say some very sour pickles-and guess who’s gonna be expected to bend over and pucker up,once again?

      BTW, those “fusion centers” that are relinquishing more and more banking info (among other private information)to the government and private corporations should be of note.

  35. patriotparty1 says:

    Digging, Digging ,a little deeper each day.

    Let’s see. Obama and dems hate Wall Street bankers. Wall Steet bankers were Obama’s biggest campaign contributors. Obama tries to convince the country to hate Wall Street bankers because they are bad, bad, evil republicans. Wall Street is in New York. Most New Yorkers are democrats. Most Wall Street bankers vacation in Martha’s Vineyard and the Hamptons. Obama hangs out with Wall Street bankers in Martha’s Vineyard every year on vacation. Wall Street bankers are his biggest contributors, that is other than labor unions. Gee, I think most Wall Street bankers must be democrats. Which means that the bad,bad, evil, big business, America killing, job killing, economy killing Wall Street bankers are not republicans at all but are in reality democrats.

    Wall Street bankers are NOT backing Obama with the record money they did in 2008. Wonder why?

  36. abinitio says:

    The real issue is that the TBTF banks committed securities fraud when they created many of the RMBS. That’s what Obama is afraid could unravel. Which means many pension funds and insurance companies could face significant shortfalls as the RMBS gets haircut to what they are actually worth.

    Obama and the TBTF banks are working I am sure at fever picth to figure out how to saddle the taxpayer with these losses. A complicated kabuki through Fannie and Freddie seems most plausible since they can obfuscate the reality. CNBC and the other corporate media will play along. Note that the RMBS market is around $5-6 trillion.

  37. captjjyossarian says:

    no concern with the rule of law

    Yup, and far too little concern for the general welfare of the public too.

    Foreclosures should have been halted right when the bubble burst back in 2007/2008. What would this have done to the banks? Who cares, we should have nationalized them and given management the boot. And we still should nationalize them and give management the boot.

    I don’t think that the general public is going to forgive establishment for this cruel treatment. The Obama admin is tearing our society apart by allowing this banking nightmare to continue.

  38. wavpeac says:

    It’s amazing to me how emotional this discussion gets even when a majority of the folks getting upset are not even losing their homes to fraud! Wow. What are you so afraid of? I am afraid of losing my home, even when I have equity and even when I am current with my payments because my mortgage company engaged in a series of behavior aimed at “forcing” foreclosure instead of resolving two late payments. So that today I am left with over 10,000.00$ in fees desp

    • janeeyresick says:

      I see this predatory behavior trying to force people into foreclosure who do not have to be in that position if the banks made an actual good faith effort to work out a temporary arrearage. Too often their focus seems to be, how can they leverage a small lapse and in order to make it too enormous for the homeowner to overcome?

      I have an acquaintance who has come to me for advice. She is behind in her mortgage for the first time. She was in a modification process. While in the modification process, unknown to her, her loan was sold to another servicer, which stinks of bad faith to me, prima facie. Then she was denied the modification (of course, the loan was sold) and the new servicer demanded an increase in her insurance coverage, which coverage was fine for years with the old servicer. Suddenly, it’s unacceptable. It seems obvious to me that the new servicer’s goal is to drive my friend of a friend into foreclosure. We live in a non-judicial state. I advised her to see a bankruptcy attorney because in our state the process of foreclosure can be over in the blink of an eye. My foaf is not underwater by the way, she has about 50K in equity which will be eaten up in interest, penalties, late fees, and other additional and excessive charges in an instant. This is what is going on, Americans being driven out of their homes and having them seized by predatory servicers.

      This is what HAMP was supposed to correct and forestall. Geithner was in charge of HAMP, which miserable failure is a reflection on the miserable failure he himself is as Treasury Secretary.

      Geithner and Obama are just locking the doors and protecting the perimeters of an empty barn – the horses left a long time ago.

  39. Mason says:

    People need to keep paying mortgages, there is a valid debt. The debt holders have messed up the linkage between the loan and security the property, and maybe the ownership of the debt, but the debt exists and needs to be paid.

    No, you’re wrong. The original lender sold the note and the mortgage to another financial entity, which cashed out the lender extinguishing its interest. According to well established legal principles dating back to English common law, any party that seeks to foreclose on a property has to be able to produce the note, the mortgage, and relevant transfer documents to it to show that it is entitled to collect the payments and foreclose on the property if the buyer is in default, according to what constitutes default in those documents. If the party claiming the legal basis to foreclose does not have those documents, it has no legal basis to collect payments or foreclose on the property for non-payment. Any potential safety valve remedy through some equitable principle is impossible if the party seeking equitable relief does not have clean hands. Creating fraudulent documents with forged signatures is not clean hands.

    Many, if not all, of the banks seeking foreclosure have no legal right to receive payments, no legal right to foreclose for non-payment, and no ability to convey a fee simple deed if the note is paid-in-full because they have no legal or equitable interest in the property to convey.

    The banks are shit out of luck, insolvent, and deserve to be taken over and liquidated. By rejecting the idea of a national moratorium on foreclosures, the Obama administration is siding with the wrongdoers in this massive financial ripoff just as it sided with the wrongdoers in the Bush administration by looking forward and not backward.

  40. Fractal says:

    trying to preserve the fiscal condition of the banks at the expense of the real people.

    Marcy, this is just so effing outrageous. Thank you for jumping on this along with DDay and Yves and so many elected officials (Pelosi; Reid; Towns; Grayson; AG of Ohio lawsuit; AGs of Florida, Connecticut, California, investigations). It is now blindingly obvious that Obama serves the criminal banks, not the people. As a few diaries said last month, Obama abandoned the Democratic party.

    It is stunning to me to see how quickly FDL has become the true representative of the people, against the White House and the banks. We need to bolster our funding, alliances & network security and buckle down for a long war.

    I like what Knut said @20:

    The view at the top is, if they don’t save the banking system again, the economy will collapse. It might just, but there isn’t anything they can do about it now.

    I’m sure others pointed out in comments I didn’t read yet that the White House will never be allowed to bail out these fuckers again.

    Right Now on Dylan Ratigan: state AG explaining need to investigate foreclosure fraud.

  41. WilliamOckham says:

    Whatever one thinks of the morality of the various players, we have a real national problem that is outside of ability the current home financing system to deal with. If there isn’t an effective national policy, we will likely see another credit freeze up. Title companies won’t write policies when they don’t know (and won’t know for years) whether the title to properties are clear. It doesn’t do anyone any good to have this amount of uncertainty in the market.

    This is not going to be easy to clean up and a freeze on foreclosures is the simple first step. What comes next will be much harder. Unfortunately, it looks like we’re going to lurch towards disaster because Washington is too afraid of the bankers and their allies.

  42. thatvisionthing says:

    Re this quote of Yves Smith:

    Per the Washington Post, boldface ours:

    The Obama administration does not support a nationwide moratorium on foreclosures at this time, Federal Housing Administration Commissioner David Stevens said Sunday in an e-mail response to questions.

    “We believe freezing foreclosures for all banks in all states, whether we have reason to believe them to be in error or not, is simply not the prudent step to take in this fragile housing market,” he said.

    The statement couldn’t be more clear. “Markets” as in bank/corporate interests uber alles, no concern with the rule of law.

    Sorry I haven’t read the 122 comments so far, and maybe this is the obvious thing everyone has said 122 times, but, dude… isn’t this grounds for impeachment? Isn’t the President’s express and only enumerated job to protect the Constitution, and law — not markets? Tell you what I like about this one. They can make up fake intelligence and poof up monsters to start wars and torture and wiretape and get around law in inconceivable ways, and get away with it by saying they’re protecting us the people, to which we can’t coherently argue back… but this is clearly not protecting us people and every single one of us feels it and knows it.

    Impeachment seems to be on my table.

  43. Fractal says:

    Impeachment seems to be on my table.

    Yves Smith is doing incredibly valuable work. Let’s not tangle her up in some extraneous political maneuver, she is already on record demanding political leadership to protect us from criminal banks.

    As for impeachment, why not read the grounds in the constitution and come back with the one you think applies.

    Others suggested above (122 comments ARE a pain to cover) that the White House (WH) does not really have the power to command banks to abandon their property (assuming the banks will claim they aren’t frauds). What most of us were hoping for, I suspect, was that the interagency meetings at the WH last week would produce a joint investigation of foreclosure fraud by all relevant federal enforcement agencies (FBI, DOJ, SEC, FTC, FDIC, Federal Reserve, OCC, OTS, etc.). For Axelrod and the FHA guy to go public with the opposite message was just a slap in the face.

    • bmaz says:

      Heh, listen, I got as many problems with Obama and his governance as most any progressive/liberal/whatever wandering the grounds. That said I do not see impeachment as either viable or appropriate.

      However, I think you, like many people, appear to cite the hallowed “grounds in the Constitution” without really understanding what they say or mean. The entirety of what the “grounds in the Constitution” are is as follows

      The Constitution, Article II, Section 4:
      The President, Vice President and all civil Officers of the United States, shall be removed from Office on Impeachment for, and Conviction of, Treason, Bribery, or other high Crimes and Misdemeanors.

      The Constitution, Article I, Section 3:
      The Senate shall have the sole Power to try all Impeachments. When sitting for that Purpose, they shall be on Oath or Affirmation. When the President of the United States is tried, the Chief Justice shall preside: And no Person shall be convicted without the Concurrence of two thirds of the Members present.

      Judgment in Cases of Impeachments shall not extend further than to removal from Office, and disqualification to hold and enjoy any Office of honor, Trust, or Profit under the United States, but the Party convicted shall nevertheless be liable and subject to Indictment, Trial, Judgment, and Punishmnet, according to Law.

      And, for the record, the legal term of art “high crimes and misdemeanors” means simply whatever Congress at the time says it means. It does not have to be any particular criminal offense, or even a criminal offense at all. It can be whatever it is declared to be.

      • Sara says:

        “Heh, listen, I got as many problems with Obama and his governance as most any progressive/liberal/whatever wandering the grounds. That said I do not see impeachment as either viable or appropriate.”

        bmaz, had you been around in the 30’s and something of a vaguely pro FDR liberal type, your mental conditions would have been worse. Remember, FDR propounded that sometimes his right hand didn’t know what the left one was doing.

        I sometimes visualize odd pairings, and while I have no idea what bmaz looks like in person, I once sat him down for hard tack political lessons with Louis Howe, as of about 1934. (Louis Howe, for those who don’t know was FDR’s Political Guru between 1912 and Howe’s death in 1936.)

        Ultimately the question is Obama compared with the Joy of Arizona, McCain and Palin I guess. That was the ultimate choice. I think I shall have to arrange another bmaz/Howe meet up.

    • thatvisionthing says:

      Sorry for not reading the 122 comments before I posted — I often print them all out and read them later, but I wanted to post my reaction when it was timely. Pretty much I love all the commenters here. And I respect what you said about not muddying Yves’ waters, I’ll think about that. My news was simply ‘BLINGGG!! Impeachment just showed up on my table, how about you?’

      My own personal table. It’s just that I imagined it suddenly showed up on a lot of people’s own personal tables, all at once, just like that. Rule of law is the president’s job, as in preserving, protecting and defending it, not suspending it and glossing ti and making it up on his own, Yves’ point I think. Secrecy took war and torture and wiretapping off our personal tables in many ways, I think, but not this. Waaay not this.

      • thatvisionthing says:

        Yves last Wednesday:

        Using dubious arguments to overturn well settled law to get the banking industry out of a monster mess it created is a Faustian bargain. It makes it abundantly clear what is really at stake here, which is the rule of law. Banks that were quick to defend unjustifiable pay deals by invoking “sanctity of contract” have no inhibition about ignoring their own contracts to pad their bottom line, and ultimately, the wallets of top executives.

        Rather than deal with the considerable consequences of these abuses, the banks are prepared to bulldoze well settled state laws to give them an easy way out. And I’m not basing my view on this story alone; I had a conversation yesterday with a Congressional staffer who matter-of-factly said (but with little understanding of the underlying issues) that Congress would intervene on behalf of the industry, via its authority over national banks.

        The result is that we institutionalize kleptocracy while keeping largely gutted forms of due process as theater. The powers that be hope that the broad public will remain unaware of what is really at work.

        My bold. If that’s the result, then the President is not doing his job, and neither is Congress.

  44. Sara says:

    I remain amazed at the “oh no, you could not do that” approach around here, and just not remembering our own History.

    FDR closed the banks the day after he took office. Four, March, 1933. Actually 40% were already closed due to state actions.

    The announced reasons for the closure to the country four days later in a Fireside Chat. You can read it on the Web.

    As banks were inspected, and found sound, they began to reopen. Much of the system found sound was up and running within two weeks. Most Historians estimate the Bank Holiday’s impact was about three weeks, when in many cases people could not use their bank accounts.

    However in FDR’s Fireside Chat he called for people to put their money back in sound banks — and the next morning they were lined up to do so.

    Things can happen quickly and neatly if you want them to.

    The key second step in this is what HOLC Accomplished in about a year and a half — What ever you call it, get the rotten stuff out of the system, and cover it with a simple financial instrument. That is where you do what in this generation we call “Cramdown” and pay attention to state and local revenue issuse, mind you, how we fund schools, police, fire, garbage collection, safety and all that.

    HOLC did indeed end up with tons of Rental Property in the 1930’sm but it was gradually sold out of inventory as markets for it developed. When it was sold, it most frequently became a performing asset on the books of a bank that was being reorganized to health. The point was to stand still, figure out the problem, develop the kind of clean mortgage model paper for all around, banks, lenders, borrowers, and then transition.

    Back in the 30’s many people rented HOLC property for a couple of years with a purchase agreement, awaiting the property coming to market once a Bank or S&L was certified, insured, and ready to go. So folk who had to wait a few months for a good bank to organize, didn’t make final payments until 1954, instead of mid 1953. Not all problems are instantly resolvable, but if you have a system working right, and above all people understand how it is intended to work, it likely begins to work well.

    If you don’t know that something like this happened before, and that a program under the Reconstruction Finance Corporation did a good deal to resolve it between 1933 and 1935, then please stop crapping on Obama. I have no idea whether he has been working on this while dealing with other things on his plate — I do know that he had to be very careful in the way he brought on Elizabeth Warren, without a Senate Fight, and I think she is the right expert to move a consumer fair transparent system in the next year or so. And beyond Obama — so many of us, and so so many in the US bought into the crappy system that was Casino and Asset Stripping, we need to think that through too. We are not beyond guilt, certainly not the kind of guilt you get from not knowing a little American Economic History. Many many of us probably thought we could get in there and make a little off the new games in town. We have much to rethink.

    • Gitcheegumee says:

      The Scripps Library has ALL the Presidential speeches-some in audio.

      The FDR Fireside chats are ALL included.

      I am most impressed by the June 1936 Madison Square Garden Speech.

      Presidential Speech Archive – Miller Center of Public Affairs
      Presidential Speech Archive. The Scripps Library, through cooperation with various presidential libraries, has been collecting some of the most important … – Cached – Similar

      (Bmaz, I AM working on my linking skills. I better getback to work…*G*)

      • Gitcheegumee says:

        Correction: That June,1936 “Economic Royalists “FDR speech was in Philadelphia,Pennsylvania.

        It is deja vue all over again.

      • Sara says:

        Linking skills or not, the first Fireside is profoundly important as a moment of turning from distrust to trust in US History.

        If people want a little more to read about all this, I would suggest the recent biography of the Mellon Family, by David Cannadine. One of my favorite British current historians, lush stuff on Colonial Life, Churchill, and life in the ranks of governing British Soldiers and all — and then a fling at Churchill and his circles. And oh yes, a dip into the world of appeasement in the 1930’s. But then he crossed the pond and did a Mellon Family Biography, and oh Hoo! It is all there, the whole economic theory, all the proctice.

        Remember, Mellon was Treasury Secretary during the 20’s, and under Harding, Coolidge and then Hoover had free hand to put in place all his economic policy and thought.

        For those who like “revenge” served up on Occassion, everyone will like the last chapter of that Mellon’s life, where FDR invites Mellon to the White House a few weeks before Mellon died, accepted the Fine Arts Collection that became the base of the National Gallery in DC, Accepted the money to build the building, plus the endowment, and in return offered Mellon one cup of fine China Tea. The Roosevelts among other things, were in the Tea Trade. Anyhow, I recommend good political biography, the Mellon book takes time, but what a read.

    • Fractal says:

      If you don’t know that something like this happened before, and that a program under the Reconstruction Finance Corporation did a good deal to resolve it between 1933 and 1935, then please stop crapping on Obama.

      I do know much of the history of the Depression-era activism by FDR, which is the reason why I am crapping on Obama for letting his Axel-tool come out on public teevee and slap us in the face for asking for a foreclosure moratorium. I tend to think Marcy is also crapping on Obama. I won’t speak for her, but look again at this graf in the main diary:

      The Administration seems to believe it just needs to keep churning foreclosures through the system at a steady, though not heavy, rate, and eventually this whole thing will blow over. But this foreclosure fraud issue is a sign that’s not going to work. More importantly, it’s a convenient time to do what should have been done, find a solution that is equitable for everyone, rather than trying to preserve the fiscal condition of the banks at the expense of the real people.

      But thus far, the Administration doesn’t seem ready to regard it as such.

    • bobschacht says:

      Thanks for the history lesson, Sara! We need to learn whatever we can from previous disasters of similar kind. I am glad that we have a consumer advocate (Elizabeth Warren) among the dozen or so Presidential Assistants who are trying to sort this mess out.

      Bob in AZ

  45. prostratedragon says:

    It is deja vue all over again.

    And how. Unfortunately I can’t seem to lay my hands on that youtube I bookmarked back during the last Social Security debate of William Gazebo Barkless’s magisterial solo piano treatment of “Bolero.” It would be the perfect theme music for one of the comment subthreads here.

    So, I’ll have instead to offer some things that I hope will prepare us for EW’s next post on the subject: Forclosure Fraud For Dummies, Part 4. There are links there to the first 3 parts. I’ve read Part 1, and am giving the whole series its own bookmark folder.

    Also, via Atrios, some helpful reminders from Moe Tkacik of just how we got to this point so suddenly in the first place.

  46. Gitcheegumee says:

    For out of this modern civilization economic royalists carved new dynasties. New kingdoms were built upon concentration of control over material things. Through new uses of corporations, banks and securities, new machinery of industry and agriculture, of labor and capital – all undreamed of by the Fathers – the whole structure of modern life was impressed into this royal service.There was no place among this royalty for our many thousands of small-businessmen and merchants who sought to make a worthy use of the American system of initiative and profit. They were no more free than the worker or the farmer.

    It was natural and perhaps human that the privileged princes of these new economic dynasties, thirsting for power, reached out for control over government itself. They created a new despotism and wrapped it in the robes of legal sanction. In its service new mercenaries sought to regiment the people, their labor, and their property. And as a result the average man once more confronts the problem that faced the Minute Man.

    The hours men and women worked, the wages they received, the conditions of their labor – these had passed beyond the control of the people, and were imposed by this new industrial dictatorship. The savings of the average family, the capital of the small-businessmen, the investments set aside for old age – other people’s money – these were tools which the new economic royalty used to dig itself in.Those who tilled the soil no longer reaped the rewards which were their right. The small measure of their gains was decreed by men in distant cities.

    Throughout the nation, opportunity was limited by monopoly. Individual initiative was crushed in the cogs of a great machine. The field open for free business was more and more restricted. Private enterprise, indeed, became too private. It became privileged enterprise, not free enterprise.

    For too many of us the political equality we once had won was meaningless in the face of economic inequality. A small group had concentrated into their own hands an almost complete control over other people’s property, other people’s money, other people’s labor – other people’s lives. For too many of us life was no longer free; liberty no longer real; men could no longer follow the pursuit of happiness.

    Against economic tyranny such as this, the American citizen could appeal only to the organized power of government

    The royalists of the economic order have conceded that political freedom was the business of the government, but they have maintained that economic slavery was nobody’s business. They granted that the government could protect the citizen in his right to vote, but they denied that the government could do anything to protect the citizen in his right to work and his right to live.


    • harpie says:

      Ha! For a paragraph, there, I was really thinking “Wow! That Gitcheegumee can write!”

      Thanks for posting that!

        • harpie says:

          ‘This is the biggest fraud in the history of the capital markets’; Ezra Klein interviews Janet Tavakoli. [10/8/10]

          EK: Given that our financial system is still fragile, isn’t that a disaster for the economy? Will credit freeze again?

          JT: I disagree. In order to make the financial system healthy, we need to recognize the extent of our losses and begin facing the fraud. Then the market will be trustworthy again and people will start to participate.

    • Gitcheegumee says:

      The edit screen is jumping all over the place. I tried to whittle some of this down.

      It is an excerpt from the Philadelphia speech aforementioned,its rightful title being “Rendezvous with Destiny”: aka Economic Royalists.

  47. Sara says:

    The Kline Interview is good. The lady understands the problems. I assume that Olbermann will use him this week to try to outline the problems.

    But listen, Obama does not have to give a speech on every issue that comes up, and if he does say something, he may have reasons for letting something ripen up a bit before pushing ahead. There has to be a mite of timing and strategy to it, given the depth of the problem. If he plays it right, he can accomplish much, but he may not want to fan the flames today.

    And Gitcheegumee — when we read (we Historians mind you) a document or speech from the past yes, we may look at the language and all — but we ask the question as to whether it accomplished the aim. FDR wanted to get major league trust in his intent to fix problems at the Systems level. I think he more or less achieved that with that speech, plain spoken as it was.

    Darn glad that folk are catching on to the near Holy Content and Value of formal Real Property Records, held in County Courthouses, and the necessity of getting folk to comprehend this matter. Let’s see, Jefferson was big on such, Before George Washington became a soldier, he was a land surveyor, and threaded through Ben Franklin, you’ll find all sorts of references, plus he made much of his early money printing up the forms for Real Property Transactions. Sacred as Sacred can be. We need to become Fundamentalist Friends of the Founders on this one.

    • Gitcheegumee says:

      Sara, not to put too fine a point on the discussion,or derail the topic at hand, another FDR speech at Madison Square Garden-on Halloween night ,no less, certainly was no treat for the elitist bankers.

      I have posted this speech in the past, but consider the timing germane-and hope others will,also.

      Greed is eternal.

      Speech at Madison Square Garden (October 31, 1936 …

      FDR’s Speech at Madison Square Garden (October 31, 1936) … ER: It was a grand speech. FDR: At least Herbert didn’t start an unnecessary … › Discuss – Cached – Similar

      FDR: I welcome their hatred.‎ – Sep 4, 2009

      FDR Madison Square Garden 1936-Welcoming The Hatred‎ – Mar 4, 2009

      ►Videos for fdr madison square garden speech 1936

      FDR Madison Square Garden 1936

      5 min – Mar 1, 2009

      Uploaded by Gordonskene

      In this campaign speech delivered at Madison Square Garden on October 31, 1936, Roosevelt responded to considerable criticism that the New Deal had not done … – Cached

  48. Sara says:

    And I wanted to add one more comment about Lawyers — mean no evil, but one of the primary reasons most people hire a lawyer in their lives is to write a will, and to review the paper work for a mortgage. It is the plain blue day to day work of the profession.

    So where have they been on this one???

    • Gitcheegumee says:

      The old saying is that lawyers are just like husbands and watchdogs.

      You don’t particularly want them,but they come in damned handy when you need them !

      Bon soir,mes amis.

  49. Fractal says:

    That said I do not see impeachment as either viable or appropriate.

    neither do I, which is why I politely asked thatvisionthing to reflect a little more deeply before tossing out “impeachment.” Check thatvisionthing’s followup @145.

    meanwhile, thanks for the particulars from Article II, section 4.

  50. Fractal says:

    Mike Konczal has been all over the foreclosure fraud epidemic for months. His latest installment is the fourth in a series of diaries with graphics.

    For my money, this is what we should be thinking about:

    if this bad-case scenario happens, which there is a small but reasonable chance it could, progressives need to have a clear sense of what they want in exchange for negotiations when the financial industry comes flying in over the cliff, a list of demands and questions to replace the in-large-part steamrolling of TARP over anyone’s interests but the banks.

    Which is why it is less helpful to suggest impeachment when we need to be thinking about how to exploit the crisis to defend the country’s middle class and progressives in Congress. Are we comfortable with demanding a rerun of what FDR did 77 years ago? Should we be asking for more creative solutions?

  51. orionATL says:

    when experts like sara (history and electorall politics)

    or larry summers (economics and administrative politics)

    spend decades inside “the system”

    one might imagine that they would be able to advise us definitively on this or that issue.

    often, that is not the case.

    not only may the advice be de facto defective,

    but the student-of-the-inside may develops a tilted, out-of-focus view of reality.

    nonetheless, these experts in their fields, rarely display compunction about “predicting and pronouncing”.

    so sara, in all her knowledge and experience,

    and larry summers, in all his wisdom and experience, sometimes end up explaining to us that we must accept, aka “understand”,

    that which those of us without their knowledge
    or experience can neither emotionally nor intellectually accept.

    yet they plow on.

    personally, i doubt that sara’s continued constrained defenses of obama can survive and thrive;

    just as seems clear that larry summer’s repeated artful defense of “markets” – markets that predictably failed under the extreme pressures that they themselves generated –

    did not survive and thrive.

  52. rosalind says:

    ot: he’s baaack!

    Dick Cheney, gaunt, is back on the road, vows more appearances

    Cheney plans a series of lectures around the country through the end of the year. His as yet untitled memoirs, which he’s writing with the assistance of daughter Liz, are being edited.

    He’s adding material on his heart surgery and further thoughts on the Bush administration, which polls now indicate the public sees much like Obama’s.

    And, yes, as the former wrestler promised, he does settle some D.C. scores in the book.

    lord knows he’s got a man-sized safe full of material to aid him in settling those scores.

    (emphasis mine)

    • pdaly says:

      Checked out your link. Gaunt indeed.

      From the comments section at your link, Kellygrrl provides a memorable quote, the height of double entendre:

      have never ever felt for any human what I fell [sic] for this man

  53. pdaly says:

    I’m watching Charlie Rose at the moment. Andrew Sullivan (The Daily Dish) is being interviewed. I’m struck by how different he looks. I knew him when he had bangs and was beardless–he was a good friend of one of my college roommates. So far he has not said anything controversial…

  54. Sara says:

    “personally, i doubt that sara’s continued constrained defenses of obama can survive and thrive;”

    I think it will survive, but maybe change a bit — no way to actually firmly predict. I have been awaiting a fairly smart President for a long time, Smarts combined with a dash of “acquired on the streets” political moxie. I think Obama has the right mix, but again, we’ll see.

    And by the way, I am no way a Summers Type “Insider” If you were in the Civil Rights Movement, then did extensive Grad Work not on Career stuff, but on what intrigued you, Actually taught Students in a large land grant University, Jumped at opportunity to take theory into the field, by working out how you teach in the fields and streams environment, instead of at the beck of the hours bells, and insist that students be honorable, and write their own papers or get death sentences, you are not “like” Larry Sommers.

    When you discover during the Church Committee Hearings way back in the 70’s, that J. Edgar Hoover had one of those Counterintelligence Operations designed to destroy your College (and yes, the documents were discovered, and I got them from Mondale who was on the committee, and his staff shared,) You get damn mad about it, and when your college does collapse, for all sorts of reasons, you shout from the Housetops, and declare yourself for what you are. I AM AN ANTIOCHIAN. I am part of buying my old college out of the corporate maws, and trying to re-open it. Larry Sommers does not need to do stuff like that. Tenure and Wall Street take care of the necessities. I believe in Horace Mann’s famous addage, “Be Ashamed to Die till you have won some victory for Humanity.” I don’t think Sommers shares my views.

    I doubt if Sommers learned about politics by managing political campaigns for years for women trying to break into the circle of Elected Officials. I spent twenty years doing it, mostly as a volunteer. I doubt if Sommers would find the election of Paul Wellstone in 1990 a memorable process that was the greatest “victory” of my political engagements. Spent a year working on what was called a hopeless campaign, and guess what, Senator Wellstone. How it was possible, well sometimes I reflect on that in my writings. I am always going back and asking how things actually work, and how much you can comprehend if you work hard at post-hoc analysis. But then it is the History bit that drives me so much. It is why I spend so much time on FDR, whom I consider a GREAT President. It is the mental process inside his political calculus that intrigues, and since he left few notes on that behind, you have to suss them out. But then I like the New Deal too because it was a huge change era, Cultural, Sociological, Economic, and all the rest. The Bastards have been trying to reverse it ever since.

    American Politics has a lot to do with comprehending timing. If you don’t have the votes, and you don’t have the combination of Leadership plus the kind of mass movements necessary to change, won’t happen. Democracy is about, in the end, getting to coalitions that can forge agreements, and organize the necessary support for what is hopefully contained in your goal. I think being Progressive is about economy of effort — you work on the stuff where you can make progress, and avoid investing too much on what is not necessarily possible at this time. In the 30’s, Civil Rights could not even get the anti-lynching bill on the Senate Floor, and the Senate Committies were such you could not get a hearing. Not a time for a huge investment placed in front of a nailed closed door. The 1950’s and 60’s — very different story. Truman and Humphrey created room in the Democratic Party for hitting the Dixiecrats, and lots of stuff began to happen. You gotta learn how to read something besides your own moral convictions.

  55. JamesJoyce says:

    Depriving people of property under the color of law utilizing “fraud,” is very American. Our history is “littered” with examples.

    “With concern that the waters could overflow the city of New Orleans, on Friday, April 29, the levee at Caernarvon, Louisiana was dynamited downstream of the city, with the intention of increasing the speed of the river as it passed New Orleans and hence reducing the height of the anticipated flood wave (Figure 4). The Caernarvon breach flooded most of St. Bernard and Plaquemines parishes, with the houses and fields of the poor living to the east and south sacrificed for what was considered (at least by the city fathers) a greater good. And while reparations were promised by the governor of Louisiana, the mayor of New Orleans, and other men of industry in the city, little was ever actually given in compensation for those flooded out of the area. Moreover, the dynamiting proved to have been unnecessary, as breaches upstream of the city had allowed the excess flow to pass directly to the sea along the Atchafalaya Channel. However, memories of the dynamiting of the levees run deep and there were many conspiracists living in the Lower Ninth Ward in New Orleans on August 29, 2005, who claimed vociferously that the levees had once again been dynamited with the intention of saving the wealthier and whiter sections of the city.”

  56. Sara says:

    As to Obama’s Leadership style — he pragmatically leads from both realism and indirection. Watching it can be frustrating if you want someone who picks up the flag, and marches at the head of the column. He is not going to do that, because he is something of a constitutionalist, and believes it is the responsibility of Congress to vote on changes in law — his job is to create coalitions and conditions. He isn’t Gandhi, nor is he Martin Luther King. In this respect he is like FDR — he likes to work the calculus of the vote carefully, inside his head and small circle of trusted advisors, and this irritates folk who believed he would do that mostly in public, have nice public arguments on the net about the calculus. Since few successful political leaders do, one wonders whether some of his supporters comprehended his style in the first place.

    Tiz why I found Woodward’s book so fascinating — carries one story (Afghanistan) forward from Day One till last Summer, and reveals a great deal about how the process, in his hands, actually works. And yes, Woodward’s narrative will eventually get folded into a far more elaborate History — but there is always a first cut, And no matter what you think of Woodward, he does get to sources, and he tells a somewhat inside story. And why do they all go to Woodward? Because he gets published in giant runs, because the TV Pays attention, because most people who buy his books actually read them. I have very little respect for those who consider it their role in life to trash craftmanship — and that is how I feel about some of the Blog list members here who did that last week. Few Authors will return if they are treated that way — and thus far, this Blog has been pretty successful getting guests. Some folk want to ruin that. (and those words are mild given what you get from me if you turn in a paper in class that I can figure you did not write yourself. I tell students up front that I will make certain the deliquency goes into your career record. Got a kid pulled from Boult Law School (for which I had written a strong recommendation,) once when I found the text of a paper that had been handed in in an old Life Magazine, found when I was traveling around Romania in the 70’s, and had to spend a couple of hours in a musty cafe, looking through a pile of odd donated old Magazines, because of a hard rain storm.) JUST NOT HONORABLE.

  57. Sara says:

    Always another add on, I guess.

    I did the history of HOLC simply because I want people to know this happened before, for very similar reasons, and under Reconstruction Finance Corporation, a quite successful fix was organized. Right now I think it important to let people know this, so that at least some, get out the old books on the New Deal, Read up, and realize that TRUST in at least trying is the difference between Anarchy (Teabagging maybe) and putting a decent foundation under things. If some group of people solved a similar problem in the past — then the TRUST can grow, and people will expect it to be useful. If all we get is flutter because you don’t have the fundamentals in order, you contribute to chaos and anarchy. Pay attention to the Systems Problems, not so much the individual and random cases. THIS IS A SYSTEMS PROBLEM A Big Time Systems Problem.

  58. Sara says:

    Gitcheegumee — many types of Political Speech. The Economic Royalist stuff dates from the run up to the 1936 Campaign, and the “Welcome the Hatred” language is red-meat for that campaign.

    The early 1933 speech, go take your cash out from under your bed, and put your money back in audited and re-0pened banks is about Trust building. It is “Are you With Me?” language. Presidents do speeches for both reasons, but we need to distinguish. One speaks in different words for different purposes. Our job is to make the distinctions, and ask all around if the various forms of Political Rhetoric move the process forward. And there was a difference in Audience. The 1933 piece was a huge Radio Audience, probably most American Adults who could access a Radio in March, 1933. The Campaign Rhetoric three and four years later was directed at FDR’s Base. You have to factor all this in when you look at Political Rhetoric. Like/ Dislike is important, but the point is in both instances, why did FDR deliver such different words? Well different Purposes. These are the kinds of questions Historians use when they look at documents in context. How they make us feel today is a very different question from what was the initial intent. (and oh yea, I don’t believe in governing from the gut, the way George Bush did.) I don’t believe in magical guts.

    Harpie @164, I will of course read EW’s posts, and maybe comment. Right now she is in the midst of the maw of the problems, and while she is a very good systems thinker on many issues, she really hasn’t figured out that line of reasoning yet. A whole lot of People have to begin to make the same transition, and for smart people it will come quickly. But we come from slightly different places in the world of analysis, and I think her reflections coming from her personal job changing place right now, will eventually get reworked into something a little different. So no fights, just watch her move it along, Peace is about finding a way to make Conflict Resolutions productive, even if at times you have to highlight some of the elements in a Conflict to make the resolution productive.

    Sometimes it is not a good thing to provoke. Sometimes it is. Not now is my read on this one. (Oh that old time Quaker stuff about being quiet at times in the interests of much beyond the immediate moment.)

    • Gitcheegumee says:

      You mentioned Louis Howe,upthread.

      VERY interesting personna. The power behind the FDR campaign “strategeries”, and by his own admission,one of the four ugliest men in the state of New York.

      PBS did an excellent piece on Eleanor and FDR,and Louis Howe was integral to their legacy.

      • Sara says:

        Howe was the best Political Operative the Democrats ever had, and his work covers 1912 till 1936. Compare him to some of those folk who today introduce themselves as Campaign Strategist, and you will want to slap faces and behinds, and send the offenders off to the Af-Pak border regions, for re-education camp. He invested 24 years of his life in FDR, died poor, left little to his family. That kind of loyalty and investment is a rare thing today, which is in part why we are so politically poor.

        • Gitcheegumee says:

          I was just thinking how the concept of loyalty died right along with the concept of the common wealth(common good) of the people.

  59. orionATL says:


    thank you.

    as always, your comments make fascinating reading.

    the life you have led is clearly one of extraordinary caring, energy, and determination to make good things happen in the world.

    yes, our political problems are systems problems. right now we are in an unstable systems situation of unrestrained animosity and distrust in our system of government.

    whether that accelerating animosity and distrust ends in a bang or a whimper remains to be seen.

    i personally am not confident that a hyper-rational calculator like obama is the right leader for the times.

  60. Sara says:

    I should add, EW and I are from very different generations. I am an old lady who was actually born in the Depression, and EW is a Public Intellectual, younger generation, very different life experiences. All that means is we bring different things to the table. But we have some real similarities, both women, both of us have had to deal with Cancer, and we seem to have some similar tastes in people. And yes, we both got grade A educations, though the difference in age means I have read more books over the years, and she is much better at linking and the Google. In fact, I still keep a yellow legal pad by my computer for notes. Sometimes I even fish out index cards. She doesn’t. All women who do Grad School are not finished out the same. I will slowly slink into the night of real old age — she has perhaps years to move the Public Intellectual forward. We need Public Intellectuals.

    I did some of my slinking over the past ten days. I have Arthritis, and was on the beginning of an attack two weeks ago, when my handiman left a pile of stones in front of my back steps, and I took a terrible terrible full body fall. Upshot, for the past week no functional feet, Massive Swelling, and you can mix the two together, because the effect on your system is the same. So everything I have written in the past week has, of necessity, been from both pain, and serious problems getting to notes, files and books. I am seriously angry at my handiman, who doesn’t seem to be able to do anything properly — but I need his services. But sometimes I work out anger and pain by reading and thinking, and that has been a lifesaver over the past week. I say this because slinking into Old Age is not the same as bringing to maturity a Public Intellectual Identity. Yep, every one gets old — but not at the same time.

  61. Sara says:

    “i personally am not confident that a hyper-rational calculator like obama is the right leader for the times.”

    Well the choice was either Obama or McCain Palin, It wasn’t go back to step one and start the Primary/Caucus over again. Them’s the way the rules tumble. Not all things happen with instant gratification of the needs for the best possible leader in the best of all possible worlds. You live with realities.

    And by the way, the Woodward book really turned me off Hillary. That bear hug with the Bush/Cheney Generals, and the recommendation to just give the Pentagon what it wanted, trust them without a full examination of Tactics and Strategy, is pure piss. But you have to read the book to comprehend all this, and it is a very powerful issue to me. I still go back to George Marshall’s lessons and warnings, if you don’t show reasonable progress in a wartime situation in two years, you take the chance of destroying Civilian Control of the Military, a fundamental of the American Democratic System. Obama’s vetting of every inch of military plans, hard work on terms in his planning, is probably one of the first times the Pentagon has not captured a President, but he imposed Civilian Control on them.

  62. Gitcheegumee says:

    Back to original topic, David Dayen at FDL has a fresh post up with recent developments:

    Foreclosure Fraud Updates: Fannie and Freddie Plan to Penalize Banks, BofA Becomes Title Insurer

    By: David Dayen Tuesday October 12, 2010 8:40 am

    Major developments in the still-unfolding foreclosure fraud scandal this morning:

    • One of the biggest potential losers in the event of the foreclosure market seizing up is Fannie Mae and Freddie Mac, the two government-sponsored entities which have basically been used as a backdoor bailout for the banks over the last few years, buying up mortgage-backed securities when nobody else would. If foreclosures pause, Fannie and Freddie would have difficulty re-selling foreclosed properties, creating more losses. But Fannie and Freddie are telling the servicers that they will have to eat some of the losses.


    NOTE: See comment #108

  63. orionATL says:


    yes, obama was the only choice and he seemed like a very good choice.

    but a few months into his presidency something shifted.

    the first troubling shift came from the conduct of the doj.

    similarly, the fbi and our “intelligence bureaucracy” continued their bush-approved approach to and obsession with terrorism.

    then the strange protracted health care wrestling match mercifully brought to an abrupt end by the election of a republican senator in mass.

    the problems of preventing another great depression done well, but not with sufficient vigor.

    the gulf oil spill revealed an administration that circumscribed media coverage and engaged in deception in much the same way our military does.

    maybe these are cosmetic, trivial matters compared to the serious affairs of state, but i take them as winds pointing a weather vane in a direction i am most uncomfortable with.

  64. orionATL says:

    oh, and sara,

    you will never become a marginal older person no matter how old you live to be

    because you have a lifetime of highly relevant experiences to share,

    as you have shared them with us here from the days of “the next hurrah”.

  65. Sara says:

    I have an Obit, because one of my friends just died. An Antiochian. I hope those who read don’t mind this little OT, but if you ever watch Booknotes on C-Span 2, you perhaps will remember Carla.


    Musing with the news obituaries staff

    « Previous Post | Afterword Home | Next Post »

    Carla Cohen, co-owner of famed Washington, D.C., bookstore, dies at 74

    October 11, 2010 | 4:04 pm

    Carla Cohen, a community activist who co-owned a Washington bookstore that became a city institution and a key stop for writers ranging from Bill Clinton to J.K. Rowling, has died.

    Cohen died Monday of cancer of the bile ducts, the Politics and Prose bookstore announced on its website. She was 74 and died at her home in Washington.

    A former city planner, congressional aide and federal housing official, Cohen founded the store in 1984 with co-owner Barbara Meade.

    Politics and Prose has become a key stop for political and literary figures promoting books.

    A Baltimore native, Cohen graduated from Antioch College and worked for years in Philadelphia and Washington as an advocate for greater local control of housing and of neighborhood planning. In the late 1970s, she was an aide to Robert Embry Jr., assistant secretary for community planning and development in the Department of Housing and Urban Development in the Carter administration.

    After Ronald Reagan defeated Carter in 1980, Cohen was out of a job and decided to start a bookstore, her devotion to reading and current affairs besting her disregard for profit and loss. The money side would be handled by Meade, who answered a classified ad in which Cohen sought a store manager.

    “She had never been interested in running a business, so her friends told her she had to partner up with somebody who could do that,” Meade said.

    — Associated Press

    Carla won her victory for Humanity I think. Her Husband Dick was one of the founders of Common Cause, very active during the post Watergate years working on Freedom of Information matters.

  66. timbo says:

    “would have a significant impact on the recovery” What recovery? The recovery of peoples homes illegally recovered?