Two MI Counties File Class Action Suit against MERS and Banks for Being Tax Cheats

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Two MI County Registers of Deeds–Curtis Hertel of Ingham (Lansing’s county) and Nancy Hutchins of Branch–have filed a class action suit against MERS, seeking the taxes the banks should have been paying to counties and the state every time they transfer property, plus penalties.

Plaintiffs are seeking money and punitive damages, tax penalties, costs, and attorney fees in the return of unpaid taxes, interest and penalties to Plaintiffs as class representatives of the 83 counties of the State of Michigan.

In addition to MERS, BoA, Chase, Wells Fargo, and Citi, the suit cites parts of the state’s biggest foreclosure mills, eTITLE, 1st Choice Title, and Attorney’s Title and Fannie Mae. The suit argues that the defendants had a duty to record the real value of property transferred in the state, and by failing to do so, they cheated counties out of the taxes on those property transfers.

Defendants, as grantors, makers, executors, issuers and deliverers of deeds or instruments conveying an interest in real property under MCL 207.507, had a DUTY to declare the true value of the property and full consideration given/received on the face of each and every property transfer documents in Exhibit 2, as well as all those other similar filings made by Defendants; or in the alternative Defendants had a DUTY to attach an affidavit to the deeds and instruments stating the true value of the property. Defendants had these same DUTIES with regard to all those other deeds and instruments filed by them in all 83 counties of the State of Michigan over the last 15 years.

Defendants made, executed, issued and/or delivered for recording with the Registers of Deeds in all 83 counties in Michigan, assignments and other real property transfer documents transferring all or part of an interest in real property without stating the actual and true value of the property on the face of the instrument; and without alternatively attaching an affidavit stating the true value of the property interest being transferred. MCL 207.504/MCL207.525(2).

As a direct consequence of Defendants’ failure to properly make, execute, issue, and/or deliver real property transfer deeds, assignments, and other documents recorded in the 83 counties of the State of Michigan transferring property and security interests, neither County nor State Real Estate Transfer Taxes have been paid on thousands of real property transfers filed by/for Defendants across the counties of the State of Michigan as required by law.

When Hutchins filed a similar suit covering just Branch County–a rural county with a population of 45,000–in August, she estimated the county had lost $100,000 in the last 5-10 years. Even in Ingham County alone, with its population of over 250,000, that number is going to be much higher. Add in the state taxes, and the money will start to add up.

But the principle will be even more important: the banks have been cheating counties and states with this MERS scheme. It’s time they finally paid taxes like the rest of us.

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Drowning Government in Antibiotic Tainted Chinese Honey

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Marion Nestle describes that the USDA is cutting back on basic research.

This decision, Neuman reports, “reflects a cold-blooded assessment of the economic usefulness”—translation: lack of political clout in the affected industry—of the 500 or so reports issued by the National Agriculture Statistics Service each year.

I was struck, in particular, by this report on the cutting block.

Annual Bee and Honey Report – Eliminate

Which I believe is this report:

This file contains the annual report of the number of colonies producing honey, yield per colony, honey production, average price, price by color class and value; honey stocks by state and U.S.

Why, at a time when people are struggling to understand colony collapse, would the government eliminate a report on how many colonies are producing honey? This is like eliminating a report on how many canaries die in coal mines just to make sure people don’t become worried about imminent explosions.

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As the Next Phase of the Crash Accelerates, Watch for More Looting

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The earth avoided getting hit by an asteroid last night. Then today, FEMA tested its catastrophic communications system, only to discover some problems. In my own case, the warning signal started skipping, dadadadadadada, sounding like a machine gun, before it switched my jazz to a bad disco station. Outside, there are whistling high winds blowing through the dark afternoon and a threat of snow.

All of which feels appropriate as a set of clowns arrive in the state and prepare to debate over whether they were right to say MI’s major industry–and my state–should go bankrupt.

Jefferson County, AL just did go bankrupt. Finally.

Which sort of feels like the preview to the collapse of Europe. Here’s Brad DeLong:

Time to Spread Foam on the Runway: The Federal Reserve Needs to Act Now to Firewall Off the Eurocrisis

I have been complaining for some time now that Reinhart and Rogoff think that the time is always 1931 and that we are always Austria–that the great fiscal crisis is about to erupt and send us lurching down toward Great Depression II. Well, right now guess what? The time is 1931, and we are Austria.

And he quotes Paul Krugman.

This is the way the euro ends.

Not with a bang but with bunga-bunga.

Seriously, with Italian 10-years now well above 7 percent, we’re now in territory where all the vicious circles get into gear — and European leaders seem like deer caught in the headlights.

[snip]

I still find it hard to believe that the euro will fail; but it seems equally hard to believe that Europe will do what’s needed to avoid that failure. Irresistible force, meet immovable object — and watch the explosion.

The crash is starting to accelerate again.

With that in mind, it’s worth reading this Misha Glenny piece.

Capricious, unreliable and ideologically driven were some of the more printable epithets hurled at George Papandreou in his final week as Greek prime minister. We should look at the motives of his detractors before taking such critiques at face value. While engaged in titanic political struggles at home and abroad, he has been quietly trying to tackle one of the most intractable root causes of the Greek tragedy – crime and corruption.

As the new Greek government struggles to convince Europe of its resolve to cut the country’s bloated public sector, it also has to decide whether to face down the real domestic threat to Greece’s stability: the network of oligarch families who control large parts of the Greek business, the financial sector, the media and, indeed, politicians.

[snip]

The oligarchs have responded in two ways. First, they have accelerated their habitual practice of exporting cash. In the last year, the London property market alone has reported a surge of Greek money.

Second, they have mobilised hysterical media outlets which they own in order to denounce and undermine Mr Papandreou at every opportunity, aware he is the least pliable among Greece’s political elite.

Their aim is clear – they are waiting to pounce on the state assets which, under the various bail-out plans, the Greek government must privatise.

I’ve long suspected this crisis has been regarded by some–if not planned–as a means to accomplish in developed nations what their fellow Oligarchs in developing nations used to pull off via geography: the wholesale looting of their countries. And with it, dismantling the social contract on which modern democracy has depended.

Who needs democracy when you can force more austerity onto a country to shield the banks? Who needs democracy when you can add city after city to the ranks of those led by Emergency Financial Managers.

Yeah, the Occupiers have inspired some real fear among the looters. Small-d democracy won some battles last night in Maine and Ohio. But that’s not enough, without real vigilance, to stop the looters.

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Richard Blumenthal Asks Eric Holder Where the Foreclosure Prosecutions Are

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It took until Richard Blumenthal’s turn in Eric Holder’s appearance before the Senate Judiciary Committee today before Holder got asked about foreclosure fraud. Blumenthal generously suggested that, “I know the foreclosure crisis is on your agenda,” and then asked if we’ll ever see a prosecution on robosigning and other fraud.

Holder responded, at first, by pointing to states Attorney Generals, claiming they are conducting investigations. I do hope he’s thinking of Eric Schneiderman, Beau Biden, and Catherine Cortez Masto, because the ones working on the settlement are pointedly avoiding any real investigation. Holder then further dodged, suggesting DOJ might find other ways–like civil suits–to hold these banks accountable.

Finally, and perhaps most interesting, Bluementhal asked why DOJ had not intervened in the Bibby, Donnelly v. Wells Fargo suit, a whistleblower suit against Wells Fargo, BoA, Chase, Ally, and others for the illegal legal fees the banks charged homeowners, including veterans.

Holder hedged in response to that question, promising he’d find out who had made the decision not to intervene and the basis for the decision.

Unfortunately, Blumenthal pointedly avoided asking for a 30 day response to that request. So an explanation for why DOJ isn’t helping to sue banks for the illegal fees they’ve charged will probably come long after DOJ settles for those illegal fees.

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Jamie Dimon Owns Obama’s Testicles

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Jamie Dimon owns Barack Obama’s testicles. That’s the only explanation I can think of for why, rather than firing his JP Morgan Exec Chief of Staff for being incompetent, Obama simply shifted him over to serve as the public face of his Administration.

Ten months into his tenure as chief of staff, [Bill] Daley’s core responsibilities are shifting, following White House missteps in the debt-ceiling fight and in its relations with Republicans and Democrats in Congress.

On Monday, Mr. Daley turned over day-to-day management of the West Wing to Pete Rouse, a veteran aide to President Obama, according to several people familiar with the matter. It is unusual for a White House chief of staff to relinquish part of the job.

[snip]

The new set-up effectively makes Mr. Rouse the president’s inside manager and Mr. Daley his ambassador, roles that appear to better suit both men’s talents.

As you recall, Daley was hired as a sop to the banks, who thought endless bailouts weren’t enough bounty from this and the prior Administration and successfully demanded having one of their own in the White House gatekeeper position. And so, after fucking up the debt ceiling, and fucking up the introduction of Obama’s jobs push (and overseeing the passage of three trade agreements that will send jobs overseas), Daley has been moved into a figurehead role.

Here’s a snapshot of the kind of people whom Daley is sucking up to as “Ambassador”: the architect of the housing bubble-and-crash, the embodiment of corruption in the GSEs, and a guy who helped pass a law that will help his wife’s insurance company, only to leave to work for the Chamber of Commerce and a private equity firm.

Lately, Mr. Daley has been trying out his new role, deploying his back-slapping persona in Washington social circles. He recently held a private reception at his Ritz Carlton residence for a small group of D.C. elites, including former Fed Chairman Alan Greenspan, former Fanne Mae Chief Executive Jim Johnson and Yousef Al Otaiba, the United Arab Emirates ambassador to the U.S.

Former Sen. Evan Bayh (D., Ind.) said an invitation to lunch with Mr. Daley in his West Wing office was the first time he had heard from him.

So at a time when Obama’s campaign wants to pretend he’s taking a tough line with the 1%, he’s refusing to fire 1%er Bill Daley when he proves to be incompetent. Does this mean the banksters will effectively retain their own personal gate-keeper?

And FWIW, I believe Pete Rouse was and will be the best of the three Chiefs of Staff Obama has had, so I approve of that move. Though I question the wisdom of making the move just in time for another government shutdown, which is due up in the next few weeks.

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Blind American Concern Troll Finds Nut

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You may not be able to say this every day, but hats off to the Washington Post’s Richard Cohen. In an op-ed for Tuesday’s print edition that first hit the online version late Monday, Cohen analogizes the Masters of the Universe on Wall Street to scummy used car salesmen:

As a mere youth, I bought a used car in New York to drive to California to be with the woman of my dreams. Inexplicably, she decided to rush back to New York, so I promptly took the car back to the dealer. He made a shockingly low offer. The car had been in an accident, he explained. The chassis was bent. I was flabbergasted. I had just bought the car from him. If the chassis was bent, it was bent when I bought it. The salesman offered me a take-it-or-leave-it shrug. He probably now works on Wall Street.

That the morality of the used car lot has been adopted by Wall Street is now abundantly clear. Citigroup recently settled a civil complaint in which it was accused of selling mortgage-related investments that it knew were dogs. It was so certain that the investments were the financial equivalent of my used car that it bet against them — heads I win, tails you lose — and even selected the investments themselves, choosing from a cupboard of depleted and exhausted financial instruments. An investment in the Brooklyn Bridge would have been safer.

Go read the whole piece. Seriously.

Cohen punches Wall Street, Goldman Sachs, outrageously crooked and belligerent New York cops, Citigroup, JP Morgan Chase and the SEC. It is a once in a lifetime thing of Cohen beauty.

Next thing you know America’s Concern Troll will be slinging hash down at Zuccotti Park with the #OWS denizens.

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A Rancid Foreclosure Fraud Settlement Trial Balloon, Herbert Obamavilles, What Digby Said & The Import of the Occupy Movement

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I do not usually just post simply to repeat what another somewhat similarly situated blogger has said. But late this afternoon/early this evening, I was struck by two things almost simultaneously. Right as I read Gretchen Morgenson’s latest article in the NYT on the latest and most refined parameters of the foreclosure fraud settlement, I also saw a post by Digby. The intersection of the two was crushing, but probably oh so true.

First, the latest Foreclosure Fraud Settlement trial balloon being floated by the “State Attorney Generals”. There have been several such trial balloons floated on this before; all sunk like lead weights. This is absolutely a similar sack of shit; from Morgenson at the NYT:

Cutting to the chase: if you thought this was the deal that would hold banks accountable for filing phony documents in courts, foreclosing without showing they had the legal right to do so and generally running roughshod over anyone who opposed them, you are likely to be disappointed.

This may not qualify as a shock. Accountability has been mostly A.W.O.L. in the aftermath of the 2008 financial crisis. A handful of state attorneys general became so troubled by the direction this deal was taking that they dropped out of the talks. Officials from Delaware, New York, Massachusetts and Nevada feared that the settlement would preclude further investigations, and would wind up being a gift to the banks.

It looks as if they were right to worry. As things stand, the settlement, said to total about $25 billion, would cost banks very little in actual cash — $3.5 billion to $5 billion. A dozen or so financial companies would contribute that money.

The rest — an estimated $20 billion — would consist of credits to banks that agree to reduce a predetermined dollar amount of principal owed on mortgages that they own or service for private investors. How many credits would accrue to a bank is unclear, but the amount would be based on a formula agreed to by the negotiators. A bank that writes down a second lien, for example, would receive a different amount from one that writes down a first lien.

Sure, $5 billion in cash isn’t nada. But government officials have held out this deal as the penalty for years of what they saw as unlawful foreclosure practices. A few billion spread among a dozen or so institutions wouldn’t seem a heavy burden, especially when considering the harm that was done.

The banks contend that they have seen no evidence that they evicted homeowners who were paying their mortgages. Then again, state and federal officials conducted few, if any, in-depth investigations before sitting down to cut a deal.

Shaun Donovan, secretary of Housing and Urban Development, said the settlement, which is still being worked out, would hold banks accountable. “We continue to make progress toward the key goals of the settlement, which are to establish strong protections for homeowners in the way their loans are serviced across every type of loan and to ensure real relief for homeowners, including the most substantial principal writedown that has occurred throughout this crisis.”

Read the full piece, there is much more there.

Yes, this is certainly just a trial balloon, and just the latest one at that. But it is infuriating, because Read more →

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America’s Privatized Repression

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Corey Robin has an important post on America’s privatized repression. He starts by describing how, after watching a panel on Occupy Wall Street in which she appeared, the freelancer who got arrested while she was covering the Brooklyn Bridge arrests lost her relationship with the NYT.

Two Fridays ago, I attended an excellent panel discussion on Occupy Wall Street sponsored by Jacobin magazine. It featured Doug Henwood and Jodi Dean—representing a more state-centered, socialist-style left—and Malcolm Harris and Natasha Lennard, representing a more anarchist-inflected left.

Lennard is a freelance writer who’s been covering the OWS story for the New York Times. After a video of the panel was brought to the Times‘s attention, the paper reviewed it as well as Lennard’s reporting and decided to take her off the OWS beat.  Despite the fact, according to a spokeswoman for the Times, that “we have reviewed the past stories to which she contributed and have not found any reasons for concern over that reporting.”

Even more troubling, Lennard may not be hired by the Times again at all. Says the spokeswoman: “This freelancer, Natasha Lennard, has not been involved in our coverage of Occupy Wall Street in recent days, and we have no plans to use her for future coverage.”

Robin goes on to note that this kind of repression–and not outright government repression–is really the core of social control in this country.

Such political motivated firings fit into a much broader pattern in American history that— in my first book Fear: The History of a Political Idea—I call “Fear, American Style.” While people on the left and the right often focus on state repression—coercion and intimidation that comes from and is wielded by the government (politically driven prosecution and punishment, police violence, and the like)—the fact is that a great deal of political repression happens in civil society, outside the state.  More specifically, in the workplace.

Think about McCarthyism. We all remember the McCarthy hearings in the Senate, the Rosenbergs, HUAC, and so on. All of these incidents involve the state. But guess how many people ever went to prison for their political beliefs during the McCarthy era? Less than 200 people. In the grand scheme of things, not a lot. Guess how many workers were investigated or subjected to surveillance for their beliefs?  One to two out of every five. And while we don’t have exact statistics on how many of those workers were fired, it was somewhere between 10 and 15 thousand.

There’s a reason so much of American repression is executed not by the state but by the private sector: the government is subject to constitutional and legal restraints, however imperfect and patchy they may be. But an employer is not.

Now Robin lays out this argument in the context of frustrations that anarchists and libertarians don’t get this.

In the last few months, I’ve had a fair number of arguments with both libertarians and anarchists about the state. What neither crew seems to get is what our most acute observers have long understood about the American scene: however much coercive power the state wields–and it’s considerable—it’s not, in the end, where and how many, perhaps even most, people in the United States have historically experienced the raw end of politically repressive power. Even force and violence: just think of black slaves and their descendants, confronting slaveholders, overseers, slave catchers, Klansmen, chain gangs, and more; or women confronting the violence of their husbands and supervisors; or workers confronting the Pinkertons and other private armies of capital.

It’s an important point, particularly as you distinguish between the Tea Party and Occupy Wall Street. The former, because it emphasizes the oppression of government power, will tend to increase oppression in this country as it ultimately helps the Koch brothers accrue more power. Which is undoubtedly why big corporations have funded it. Whereas the latter–to the extent that it focuses on banksters–points to the real source of power in this country.

But Robin’s point is important for another reason.

Private repression–as opposed to force, the actual physical violence Robin describes at the end–depends on integration into the system. Not only does it depend on the plausibility that someone can get a job in this economy–which, for some people, is not plausible. But it increasingly depends on integration in some dominant areas of the economy, banking with Bank of America, for example, as opposed to a local bank that has itself been screwed by the government’s determination to help the big banks at the expense of the local banks.

Because the concentrated centers of power in this country have gotten so removed from any accountability to the people they’re looting, it increases the possibility that people can opt out of the system that is key to enforcing their compliance.

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How the Fed Helped Qaddafi Keep His $200B in Loot

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I suggested yesterday that the West will be playing dumb about the extent to which Qaddafi looted the Libyan people becomes known.

But what about how Qaddafi looted us–or, at least, the Fed?

As this article laid out, one of the means by which Qaddafi was looting was the Central Bank of Libya.

Moammar Kadafi secretly salted away more than $200 billion in bank accounts, real estate and corporate investments around the world before he was killed, about $30,000 for every Libyan citizen and double the amount that Western governments previously had suspected, according to senior Libyan officials.

The new estimates of the deposed dictator’s hidden cash, gold reserves and investments are “staggering,” one person who has studied detailed records of the asset search said Friday. “No one truly appreciated the scope of it.”

[snip]

Most of the money was under the name of government institutions such as the Central Bank of Libya, the Libyan Investment Authority, the Libyan Foreign Bank, the Libyan National Oil Corp. and the Libya African Investment Portfolio. But investigators said Kadafi and his family members could access any of the money if they chose to. [my emphasis]

Central Bank of Libya was a significant owner (and is now a 59% owner) in the Arab Banking Company, which got $35B of loans during the crisis.

Arab Banking Corp., the lender part- owned by the Central Bank of Libya, used a New York branch to get 73 loans from the U.S. Federal Reserve in the 18 months after Lehman Brothers Holdings Inc. collapsed.

The bank, then 29 percent-owned by the Libyan state, had aggregate borrowings in that period of $35 billion — while the largest single loan amount outstanding was $1.2 billion in July 2009, according to Fed data released yesterday. In October 2008, when lending to financial institutions by the central bank’s so- called discount window peaked at $111 billion, Arab Banking took repeated loans totaling more than $2 billion.

Yet all the time the ABC was borrowing $2B chunks of money, Qaddafi was sitting on $200B, which he could have used to provide the bank liquidity.

Mind you, this kind of looting was no doubt going on–and is no doubt going on today, as big banks refuse haircuts in Europe and housing fraud settlements–more generally. Qaddafi is just the very ugly face of how the Fed lending allowed people and corporations who had been looting for some time were able to keep that loot.

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Obama’s “Get Out of Jail for Helping 1.36% Card” for Banksters

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Yesterday, I described how the Obama Administration was going to charge the banks just $8 billion for immunity from a whole new swath of crimes. Shahien Nasiripour has more details which make the deal look even shittier. First, the proposed deal does appear to provide states immunity not just from robo-signing and the lies banksters made at origination, but also for their securitization errors.

In return for getting the banks to agree to the refinancing scheme and give up higher interest income, the states would release the banks from civil claims related to loan originations, the stage at which many homeowners say they were duped by unscrupulous lenders.

Last month, state prosecutors proposed to effectively release the five big lenders from legal liability for allegedly wrongful securitisation practices related to the banks’ treatment of loan documents. Taken together, the release from liability over poor origination, securitisation, servicing and foreclosure practices could amount to an effective grant of immunity for the banks from civil claims, people familiar with the matter said.

And in exchange, the banks would pay 80% of their $25 billion penalty into a fund that the same people who botched HAMP would use to help just 1.36% of homeowners who are underwater on their homes.

About 150,000 borrowers could benefit from the refinancings, as the vast majority of US home loans are owned by investors and government-controlled mortgage giants Fannie Mae and Freddie Mac. By comparison, nearly 11m US borrowers are underwater, according to CoreLogic, a data provider. The average underwater homeowner owes $258,000 on his mortgage.

In other words, all the settlement would do is help those who crashed our economy stay in business. The vast majority of their victims–and the US economy–would continue to pay the price for their crimes.

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