Archive for October 12th, 2010
As we have said before and we’ll say again, the FOMC’s zero rate policies imply that the dollar and all assets denominated in dollars have no value. Stocks, bonds and other financial assets depend upon income to make these obligations money good. Without a positive return, there is no reason to hold dollar assets.
Non-commercial demand for dollars is collapsing in much of the global economy, in part because the Fed is transferring something like three quarters of a trillion dollars annually from individual and corporate savers to the Wall Street banks. And even this vast subsidy will be insufficient to prevent the ultimate restructuring of the top three U.S. banks. What will Fed Chairman Ben Bernanke and the other members of the FOMC say to Dianna and the millions of other Americans impoverished by their policy errors when we have to break up the top-three U.S. banks anyway?
He will say nothing, and we’re too pussified as a nation to do a damn thing about it.
PS: Institutional Risk Analytics is not a joint full of hacks. If you listen to one place related to bank health and analysis, you listen to these folks. They’re rarely wrong.
Citi held a conference call on the “robosigner” thing yesterday, which I previously referenced.
It’s now been reduced to memo, which Zerohedge got a copy of up on Scribd.
Here’s the salient item:
The underlying issues which have recently erupted involve the proper transfer of paperwork in the mortgage securitization process. Real estate law is “arcane” and requires that paperwork be physically transferred when mortgage ownership is transferred (“assigned”) from one party to another party. It appears that in many instances during the mortgage securitization process over the past few years, the paperwork was not properly transferred. If the paperwork was not transferred in the legally required manner, it raises questions not only about who owns the mortgages in question but also about the validity and tax exempt status of the trusts in which the mortgages reside. All of these issues also bear directly on the role played by the title insurance industry.
No kidding, as I’ve been pointing out for, uh, over a year now, and when it comes to the quality of the base loans, for three and a half years….
Levitin articulated three possible outcomes to the aforementioned issues and assigned an equal likelihood to each. In his best case scenario, these issues are deemed merely technical in nature and are successfully resolved but it takes at least year to do so and all foreclosures are delayed by at least a year. Levitin disputed the claim by banks that these issues can be resolved in a month or so and attributed the banks’ claims to “legal posturing.” In the medium case scenario, litigation ensues and it takes years to sort out these matters. In the worst case scenario, the aforementioned issues become a “systemic problem” which causes the mortgage market to grind to a halt as title insurers refuse to insure mortgages involving existing homes.
In the best-case scenario, the banks are lying (again) and it will take a year to sort out (during which time they will bleed like a stuck pig on their servicing costs and obligations.) In the medium scenario they get sued to Mars and, which he didn’t say but I will, all wind up eating the bad paper which forces them into resolution – shareholders are wiped out and bondholders take a nice chop-chop. And in the worse-case scenario the title companies say “fuggit” and it all blows up instantly.
There’s no scenario under which “it’s all ok” folks.
Want to know why the banks are refusing to turn over paperwork to Fannie and Freddie?
Watch this: if they do, they’re insolvent.
Now go buy some more bank stocks – CNBS and Fox News both say this is “no big deal.”
Ed: If you do, don’t say you weren’t warned when you get this:
The Media is Learning….
Oh, ’tis just a “small paperwork” problem, right?
What if you hired, oh, floor sweepers to sign foreclosure documents?
NEW YORK (AP) — In an effort to rush through thousands of home foreclosures since 2007, financial institutions and their mortgage servicing departments hired hair stylists, Walmart floor workers and people who had worked on assembly lines and installed them in “foreclosure expert” jobs with no formal training, a Florida lawyer says.
Ain’t that special? We now have depositions where people clearly state that they don’t know what an affidavit is, they can’t define a “complaint”, they don’t even know what personal property might be.
And it gets better…. AP is now talking about the real issue underlying all this crap….
But at the center of the foreclosure scandal looms something much larger: the question of who actually owns the loans and who has the right to foreclose upon them.
They forgot one thing:
Whether that right exists all any more, vested in anyone, as a direct and proximate result of the willful actions of the banks – the very institutions that underwrote and then secutitized all these fraudulent loans.
Is America In Decline? 24 Statistics About The United States Economy That Are Almost Too Embarrassing To Admit
Does anyone really want to hear that America is in decline? For decades, most of us have been raised to believe that the United States is “number one” and that anyone who doubts that fact is a “gloom and doomer” that should just pack up and move to “Russia” or “Iraq” or some other country where things are not nearly as good. But does it do us or future generations any good to ignore the very serious signs of trouble that are erupting all around us? The truth is that it is about time to wake up and admit how much trouble we are actually in. The U.S. government is absolutely drowning in debt. The entire society is absolutely drowning in debt. We are being slaughtered in the arena of world trade, and every single month tens of billions of dollars (along with large numbers of factories and jobs) leave our shores for good. Our infrastructure is failing, our kids are less educated and our incomes are going down. We have serious, serious problems. At one time, the U.S. economy was so dominant that it was not even worth talking about who was in second place. That is no longer the case in 2010. Our forefathers handed us the greatest economic machine in history and we have allowed it to fall apart right in front of our eyes. A national economic crisis of historic proportions is getting worse with each passing month, and yet most of our leaders seem to be asleep at the switch.
So is American in decline? Well, read the statistics below and decide for yourself. The reality is that when you start connecting the dots it gets really hard to deny what is going on.
Urgent action must be taken if things are going to be turned around. It is time to get our heads out of the sand. It is not guaranteed that the United States will always be the greatest economy in the world or that we will even continue to be prosperous.
For many Americans, it will be incredibly difficult to admit that our nation has become a debt addict and an economic punching bag for the rest of the world.
But if we are never willing to admit what the problems are, how are we ever going to come up with the solutions?
What you are about to read below is going to absolutely shock many of you. But hopefully it will shock you enough to get you to take action. We desperately need to change course as a nation.
The following are 24 statistics about the United States economy that are almost too embarrassing to admit….
#1 Ten years ago, the United States was ranked number one in average wealth per adult. In 2010, the United States has fallen to seventh.
#2 The United States once had the highest proportion of young adults with post-secondary degrees in the world. Today, the U.S. has fallen to 12th.
#3 In the 2009 “prosperity index” published by the Legatum Institute, the United States was ranked as just the ninth most prosperous country in the world. That was down five places from 2008.
#4 In 2001, the United States ranked fourth in the world in per capita broadband Internet use. Today it ranks 15th.
#5 The economy of India is projected to become larger than the U.S. economy by the year 2050.
#6 One prominent economist now says that the Chinese economy will be three times larger than the U.S. economy by the year 2040.
#7 According to a new study conducted by Thompson Reuters, China could become the global leader in patent filings by next year.
#8 The United States has lost approximately 42,400 factories since 2001. Approximately 75 percent of those factories employed at least 500 workers while they were still in operation.
#9 The United States has lost a staggering 32 percent of its manufacturing jobs since the year 2000.
#10 Manufacturing employment in the U.S. computer industry is actually lower in 2010 than it was in 1975.
#11 In 1959, manufacturing represented 28 percent of all U.S. economic output. In 2008, it represented only 11.5 percent.
#12 The television manufacturing industry began in the United States. So how many televisions are manufactured in the United States today? According to Princeton University economist Alan S. Blinder, the grand total is zero.
#13 As of the end of 2009, less than 12 million Americans worked in manufacturing. The last time that less than 12 million Americans were employed in manufacturing was in 1941.
#14 Back in 1980, the United States imported approximately 37 percent of the oil that we use. Now we import nearly 60 percent of the oil that we use.
#15 The U.S. trade deficit is running about 40 or 50 billion dollars a month in 2010. That means that by the end of the year approximately half a trillion dollars (or more) will have left the United States for good.
#16 Between 2000 and 2009, America’s trade deficit with China increased nearly 300 percent.
#17 Today, the United States spends approximately $3.90 on Chinese goods for every $1 that China spends on goods from the United States.
#18 According to a new study conducted by the Economic Policy Institute, if the U.S. trade deficit with China continues to increase at its current rate, the U.S. economy will lose over half a million jobs this year alone.
#19 American 15-year-olds do not even rank in the top half of all advanced nations when it comes to math or science literacy.
#20 Median household income in the U.S. declined from $51,726 in 2008 to $50,221 in 2009. That was the second yearly decline in a row.
#21 The United States has the third worst poverty rate among the advanced nations tracked by the Organization for Economic Cooperation and Development.
#22 Since the Federal Reserve was created in 1913, the U.S. dollar has lost over 95 percent of its purchasing power.
#23 U.S. government spending as a percentage of GDP is now up to approximately 36 percent.
#24 The Congressional Budget Office is projecting that U.S. government public debt will hit 716 percent of GDP by the year 2080.
Please share these statistics with as many family members and friends as you can. It is time to get real. It is time to admit that we have some really big problems.
America is in decline and the situation is getting worse by the day. If we are not willing to admit how bad things really are, then we are never even going to have a chance to find the solutions that we need.
I’m getting tired of this, so I’m going to trot out the proof and stick it under everyone’s nose.
We keep hearing that these “lost document” affidavits and similar are just “sloppiness.”
They are not. They are hard evidence of fraud, with the only decision left to be made being one on exactly where the fraud happened.
I’m going to show you a document – a Pooling and Servicing Agreement – from one MBS Trust. There are literally thousands just like this. I’ve read dozens. Those that were sold to the public are all filed on the SEC’s web page, and can be found either on EDGAR or SECINFO. Every single one that I’ve read contains a certification that is, in form and substance, identical to that below.
This specific example is one that others have picked on and happens to be right from the top of the bubble around 2006 – and it also happens to be from our favorite Vampire Squid, Goldman Sachs.
Here is the CERTIFICATION form that the Trustee, post-closing, covenants and represents he will execute for the benefit of the buyers of these MBS (that is, your pension fund, your insurance company that is funding your annuity, your retirement account’s bond fund, etc):
Re: Trust Agreement, dated as of April 1, 2006, between GS Mortgage Securities Corp. and Deutsche Bank National Trust Company
Ladies and Gentlemen:
In accordance with Section 2.02 of the above-captioned Trust Agreement (the “Trust Agreement“), the undersigned, as Trustee, hereby certifies that as to each Mortgage Loan listed in the Mortgage Loan Schedule (other than any Mortgage Loan paid in full or listed on the attached Document Exception Report) it has received:
(A) The original Mortgage Note, endorsed in the form provided in Section 2.01 of the Trust Agreement, with all intervening endorsements showing a complete chain of endorsement from the originator to the last endorsee.
(B) The original recorded Mortgage or a certified copy thereof.
(C) Except with respect to each MERS Designated Mortgage Loan, an executed Assignment of Mortgage endorsed in blank in the form provided in Section 2.01 of the Trust Agreement; or, if the Trustee has actual knowledge that the related Mortgage has not been returned from the applicable recording office, a copy of the Assignment of Mortgage (excluding information to be provided by the recording office).
(D) Except with respect to each MERS Designated Mortgage Loan, the original or duplicate original recorded assignment or assignments of the Mortgage endorsed in blank showing a complete chain of assignment from the originator to the last endorsee.
(E) The original or duplicate original or certified copy lender’s title policy and all riders thereto or, any one of an original title binder, an original preliminary title report or an original title commitment, or a copy thereof certified by the title company.
Now why are we filing “lost note” affidavits?
There are no “lost notes” ladies and gentlemen.
The Trustee never got the notes, in which case he filed this certification and in doing so committed fraud upon the MBS investors,
- The Trustee has the notes and doesn’t want to produce them because there is something in there that could lead to the foreclosure being dismissed (E.g. TILA violations) or the Trustee being sued (e.g. he took the note even though it violated their representations and warranties relating to loan quality), in which case the fraud is upon the court in the instant case.
Pick one, but either way someone has been defrauded.
It is literally impossible for it to be otherwise.
When will the damn media and prosecutors start STOMPING on this crap?