Helping Homeowners In Michigan
Archive for October 17th, 2010
October 17th, 2010 | 
Author: The Bernanke Speech
When Federal Reserve Chairman Ben Bernanke gives a speech about the U.S. economy, it gets a whole lot more attention than when Barack Obama gives a speech about the U.S. economy. Why is this true? Well, it is because Bernanke has a whole lot more control over the U.S. economy than Obama does. It is the Federal Reserve that controls monetary policy and interest rates. It is the Federal Reserve that can create money out of thin air. It is the Federal Reserve which is going to have the most influence over whether there will be inflation or deflation. So when Bernanke gives a speech, world financial markets listen. On Friday, news of the Bernanke speech sent gold and silver soaring towards new highs and send the U.S. dollar tumbling once again. This new Bernanke speech was yet another very strong indication that Helicopter Ben is getting ready to fire up the printing presses in an attempt to get the U.S. economy moving.
So is it a good thing for an unelected, virtually unaccountable private central bank called the Federal Reserve to have more power over the U.S. economy than the president of the United States?
Of course not.
But that is the way our system works.
So what did Bernanke say during his speech in Boston that was so earth shattering?
Well, you can read a full transcript of what Bernanke said right here. The following are a few key excerpts from Bernanke’s remarks….
*”Although output growth should be somewhat stronger in 2011 than it has been recently, growth next year seems unlikely to be much above its longer-term trend. If so, then net job creation may not exceed by much the increase in the size of the labor force, implying that the unemployment rate will decline only slowly. That prospect is of central concern to economic policymakers, because high rates of unemployment–especially longer-term unemployment–impose a very heavy burden on the unemployed and their families. More broadly, prolonged high unemployment would pose a risk to consumer spending and hence to the sustainability of the recovery.”
Clearly, Bernanke feels as though unemployment is way, way too high and that lowering unemployment is now the number one policy priority of the Federal Reserve.
So how will this be accomplished? After all, interest rates are already kissing the floor and that hasn’t brought the U.S. economy back to life.
Well, as most financial analysts are anticipating, the Fed could launch a substantial new round of quantitative easing.
But wouldn’t that cause a rise in the inflation rate?
Well according to Bernanke’s speech, the U.S. economy is supposed to have a certain amount of inflation….
*”Similarly, the mandate-consistent inflation rate–the inflation rate that best promotes our dual objectives in the long run–is not necessarily zero; indeed, Committee participants have generally judged that a modestly positive inflation rate over the longer run is most consistent with the dual mandate.”
Do you understand what Bernanke is saying there?
He is actually saying that the goal of the Federal Reserve is not to have a zero inflation rate. Rather, he says that we should expect to always have at least some inflation and that this is normal.
In fact, in his speech Bernanke said that inflation in the United States is currently too low….
*”…inflation is running at rates that are too low relative to the levels that the Committee judges to be most consistent with the Federal Reserve’s dual mandate in the longer run.”
Inflation is too low?
Is he joking?
No, sadly he is not.
Instead, he seems ready to break out the money hoses and start showering dollars from every street corner….
*”Given the Committee’s objectives, there would appear–all else being equal–to be a case for further action.”
“Further action” being code words for the “quantitative easing” that we have all been anticipating.
The funny thing is that in the nearly 4,000 word Bernanke speech there was not a single word about the value of the U.S. dollar.
This month the U.S. dollar has been plummeting like a rock, but apparently it is not an important consideration for Bernanke.
In essence, Bernanke’s message is that the focus is on trying to “fix” the U.S. economy and if it is necessary to jack up the rate of inflation and to radically devalue the U.S. dollar then that is what we are going to do.
Bernanke also did not mention the foreclosure fraud crisis which threatens to throw the entire U.S. mortgage industry into a state of absolute turmoil.
But the rest of the financial world is definitely starting to take notice of this crisis.
All of this uncertainty is already starting to take a huge toll on U.S. bank stocks. Several of the largest U.S. banks have seen their stock prices significantly decline in recent days.
The truth is that this could be the biggest challenge for big U.S. banks since the 2007 financial collapse. Just consider the following very troubling signs….
*JPMorgan announced on Wednesday that it has boosted its reserves by a billion dollars in order to cover faulty mortgages that it was obligated to repurchase from Fannie Mae, Freddie Mac and private insurers. In all, JPMorgan has set aside approximately 3 billion dollars for potential mortgage repurchases.
*But a few billion dollars may not be nearly enough for many of these big banks. According to an estimate by Branch Hill Capital, Bank of America could be forced to repurchase up to $74 billion in mortgages.
*The losses from this crisis could be absolutely staggering. Analyst Dick Bove is projecting that U.S. banks could lose a combined 80 billion dollars as a result of this foreclosure fraud crisis.
The truth is that it would be hard to understate just how much of a financial mess this foreclosure fraud crisis could possibly become. A recent article by Nomi Prins did a great job of discussing some of the potential implications of this crisis….
If foreclosed homes couldn’t be sold because of fraudulent paperwork or had to wait for more detailed inspections, you can imagine how difficult selling assets stuffed with faulty loans might be. If it’s tough to find a title for a foreclosed home, think how tough it is to back the related loan out of a pyramid of securities sitting on top of it.
See, the loan that might be analyzed in a foreclosure situation could be part of a chain connecting the underlying home to 20 or 50 different securitized assets, all depending on it for either the interest payments the loan was supposed to provide, or the value of the foreclosure property if those payments stopped (in Wall Street speak, the “recovery value”). If a foreclosed property isn’t selling, it’s not recovering any money back to any asset waiting for it. Think what that can do to the value of toxic assets living at the Fed and the Treasury Department.
This foreclosure fraud crisis is extremely complicated, but the reality is that this could be the thing that breaks the back of the U.S. financial system. For much more on the specifics of this crisis, please check out the following articles that I have previously posted….
#3 The Real Horror Story: The U.S. Economic Meltdown
The truth is that the U.S. economy is headed for extreme danger and what Bernanke wants to do is douse it with gasoline and light it on fire.
Once the Federal Reserve starts down the road of trying to “stimulate inflation” in order to get the U.S. economy going, it is going to be really hard to turn back around again.
But the truth is that this is what the U.S. Federal Reserve has always done. They have always destroyed the value of the U.S. dollar. The U.S. dollar has lost over 95 percent of its value since the Federal Reserve was created in 1913, and now Bernanke says that we need to actually accelerate the pace of the destruction of the dollar in order to “help” the economy.
In the end, this whole thing is going to fall apart. In the end, all of the juggling and fancy financial moves by the Fed are going to fail.
The U.S. financial system is a pyramid of fraud built on a mountain of debt. By definition it is unsustainable. At some point it is going to dramatically collapse. The only real question left to answer is when it will happen.
Posted in Banks, Corruption, Debt, Economic Crisis, Economy, Federal Reserve, Financial System, Foreclosuregate, Foreclosures, Fraud, Money | 
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House Stealing: Tickerguy's Perspective
Conejo Capital Partners has published “the other side of the story”, and it makes several good points – some of which I believe deserve exposition and discussion:
On January 28, 2010 the property was sold thru a public auction at the trustee sale held at the Ventura County Court House. Each month this same process occurs thousands of times across the nation as a method for banks to take back or dispose of the property that is not being paid for. Conejo Capital was the “successful” bidder. Shortly thereafter the former bank issued the title and it was legally recorded with Conejo Capital Partners LLC as the new owner of the property. At the time all we knew about the property was that the former homeowners purchased it in 2001 for $539,000, and that they later refinanced it, pulling equity out, resulting in debt of roughly $1,000,000.
We start here. How do we wind up with someone who purchased a home for $500,000 then pulling another $500,000 in what amounts to phantom equity out?
Well, that’s simple: We had Wall Street banks that were more than happy to trade on this phantom, false, and maliciously-inflated “equity”, driven by a central bank and cronies in Washington DC that were all too happy to look the other way at rampant lawlessness for nearly a decade.
The genesis of this problem came there, but nobody – and I do mean nobody – wants to talk about that or take responsibility for it. Why not?
There are hundred of billions of reasons why, and they’re paid to Wall Street “talent” every year.
On Saturday October 9th the Earls and their attorney followed thru with their previous threats and took the law into their own hands. They hired a locksmith to break into the Mustang home. They had arranged to have t.v. news cameras filming their actions, and then proceeded to hold a press conference stating that they were within their rights and that we (Conejo Capital Partners) had somehow violated the law. All along the Simi Valley Police Department sat idle and refused to get involved no matter how much proof was offered supporting our legal rights and position. We were told that we needed to resolve it in front of a judge even though it had already been decided.
Why are you surprised? More to the point, why is anyone surprised?
Look, this is what happens when you sit idly by and countenance rampant and outrageous lawbreaking: The people decide they’ll do it too!
As for the police telling you that they won’t get involved, cry me a river. There’s a lady here in Florida who was not in foreclosure, the bank did not have a judgment of possession, and they hired a company to break into her home and change the locks – with her inside. That’s breaking and entering anywhere, it’s a serious felony, and in Florida at least a homeowner confronted with this is within his rights to shoot the people doing it. Yet when the Sheriff responded he refused to arrest the perpetrators.
It sounds like Conejo ran into the same problem. I’d be sympathetic, but I can’t be so long as they do not demand that the same sanction attach to all the illegal bank activities in regard to these repossessions as well.
Of course, Conejo didn’t do that.
Two wrongs don’t make a right – just more wrongs. But the lesson here isn’t that a couple and their kids “re-took” possession and claim their original foreclosure was “illegal.” I don’t know if it was or wasn’t – what I know is that the chain of lawlessness didn’t start with them, and it is impossible to condemn their actions standing alone.
If the foreclosure was unlawful and initiated with “robosigned” and bogus documents then it was. The Earls apparently attempted to demand a jury trial on the facts (including these facts) and were told to go to hell. Someone hasn’t read their Constitution lately – it says that for all controversies exceeding $20, you have a right to a trial by jury (7th Amendment). It doesn’t say that if it’s inconvenient for a bank and might expose criminal fraud for which bank officers could be imprisoned the judge can tell you to pound sand. That, standing alone, broke the chain of lawful behavior in the instant case.
This is where lawlessness leads us – to more lawlessness. Once you commit a lawless act against someone and are not punished for it you have invited them to retaliate with complete disregard for the law in their response. You are only required to deal ethically and morally with an ethical and moral entity across the table – one who ignores the law loses their right to demand that respect in return.
This mess begins with the securitization and sale of these mortgages in the first instance. It begins with whether or not the original banks actually transferred the notes at all (there’s plenty of evidence they did not) and whether the representations and warranties were complied with when these securities were sold to investors (we know in many cases – if not all – they were not, from FCIC sworn testimony.)
We have turned a blind eye to these lawless acts for the better part of a decade – not one indictment has issued for securities fraud over these matters. And it’s not just mortgages – we know banks were involved in ripping off communities such as Jefferson County, we know they are alleged to have been involved in rigging municipal debt offerings (which raised the cost of living for everyone through higher taxes) and yet not one bank officer or bank itself has been placed under indictment for any of it. Further, the FBI warned in 2004 of an “epidemic” (their words) of mortgage fraud, and instead of it being prosecuted the agents were pulled and reassigned.
We have had two sequential administrations – Bush and now Obama – that have intentionally refused to prosecute any of this lawless behavior. This refusal continues to this very day with admissions in depositions under oath of the commission of literal tens of thousands of felonies per month (each instance of falsely swearing before a court is a separate count of fraud upon the court and, in the case of “robosigning”, forgery – affixing a notary’s signature by other than the actual notary.) Yet despite this having been confirmed in multiple depositions going back several months not one indictment has issued thus far and Attorneys General talk about not wanting to “upset” the banks or the “economy.”
The message could not be more clear: So long as you make lots of tax revenue (and money for yourself), it’s ok to rip people off, subvert justice and mislead courts and we won’t send you to prison even though your conduct is felonious.
The media and others wish to spin this as “technical errors.” Nonsense. These are serious crimes. They do not become “technical errors” because some large financial institution committed them. Breaking and entering is a felony irrespective of who does it – the offense does not suddenly disappear if a monster bank is the perpetrator who directs an agent of theirs to commit the offense.
Until and unless all of these lawless acts receive indictments in response I will not condemn anyone who chooses to act in exactly the same form and fashion as is done to them, and in my opinion neither should anyone else. It’s that simple – either the law applies to all or it applies to none. There is no middle ground.
I cannot countenance what the Earls’ have done. But at the same time, a trial by jury is a civil right respected in the US Constitution. The moment they were denied their civil rights they were left with no recourse through lawful behavior and thus had only the choice of a stick in the teeth or to act with the same lawlessness that was served upon them.
They decided upon the latter course and I argue that was their right to do in the instant case. The government can change my opinion on that any time they’d like – it can remove the Judge who refused their right to a trial by jury, restoring same, and it can indict and place in the dock the robosigners who forged documents in their original foreclosure. Due process of law and Constitutional Rights are not suggestions, and until they apply to all I refuse to selectively endorse their application against only “little people.”
Forgery and fraud are not complicated offenses, nor is breaking and entering. The lawless behavior began with the financial institutions involved and if lawless acts resulted in an alleged conveyance of a title from a standpoint of justice – whether a gavel banged or not – from an ethical and moral standpoint it simply never happened.
No person should be buying Real Estate or proceeding with foreclosures until (1) the lawlessness stops and (2) those who violated the law all the way back to the origination of these securities are indicted and put in the dock for their offenses. The conveyance of real property interest is both a state matter and subject to strict scrutiny – so says 200+ years of jurisprudence in The United States. Those who buy allegedly in good faith but have received nothing due to these “robo” enterprises have no gripe with the people who did not get their fair day in court – their gripe is with the firm(s) that contracted with the robosigning outfits along with the quite-possibly bogus title chains they were trying to cover up.
We are not far away from a complete and total breakdown of lawful behavior among the population of this nation. If it happens, it will not be because of people like the Earls. While I cannot recommend a lawless response to any insult suffered by people like them I will understand what has happened and why – and who’s to blame.
This has and will in the future occur because the government has refused to enforce long-standing laws against “favored people”, allowing the general public to be asset-stripped mercilessly through various connivances and frauds, even though such conduct is blatantly unlawful – and the people have simply had enough of being treated like a turkey drumstick at an amusement park.
The blame for this incident and those like it rests squarely with Mr. Holder, President Obama, Tim Geithner, Ben Bernanke, President Bush, Hank Paulson and the 50 States Attorneys General who have all refused, collectively, to prosecute the rampant lawlessness in our financial system for the previous two decades – and are still refusing today.
Posted in Banks, Corruption, Economic Crisis, Economy, Financial System, Foreclosuregate, Foreclosures, Fraud, Government |
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Here's The Devious Reason Why Banks May be Releasing A Wave of Mortgage Modifications
I’ve been hearing a story this past week that intrigues me. I can’t prove it, but I would love to know if it were true. I will throw this out to the blog world and see what comes back. Who knows, we may get some clarity on a key issue.
I have heard this story directly from a few folks in Nevada. I know someone in NY who has a similar story. But when I heard from yet another person in Florida this morning I said, “There must be something to this”. My sample of information is too small. I want to know if this is a coincidence or is there something bigger and nefarious afoot.
There has been (from my narrow perspective) a flood of approved loan mods in just the last few weeks. People who were on the edge and not paying a mortgage get a letter in the mail that says their application has been approved. After weeks and months of hanging on a phone and waiting for an axe to drop some relief arrives.
Nothing particularly unusual about that. Mods are granted all the time. But I was struck by the timing. The foreclosure story is exploding around the banks. It is not possible to see where this will end but it is a certainty that it will cost the banks big time.
What might a banker do if he was sitting on a pile of defaulted mortgages and now the traditional route of foreclosure was blocked? Adding to the problems of the bankers is that there is no assurance that they even have a valid claim to foreclose given that so much of the paperwork is tainted.
One possible response would be to get all troubled borrowers to reaffirm their debt, the second is to get the trouble borrowers back to paying something on the mortgage, even if it were a fraction of what was formerly owed on a monthly basis. A loan modification would achieve both results. When a borrower signs up for a loan mod they sign new papers. A portion of this process will re-establish any loan balance that is due. The language in the mod could have new foreclosure terms that eliminate the banker’s problem with past tainted documentation. Once a borrower makes a few months of new lowered payments they are, in effect, confirming their acceptance of the new terms.
Most Mods go bust in six months. So little is accomplished from the lenders perspective. But what if the lenders motivation for doing a Mod was not to get a borrower to a loan balance and monthly nut that they could pay, but rather the motivation was to circumvent the foreclosure trap the lenders are in? A Mod could legally resolve the problems.
The story I have been hearing is that tens of thousands of Mod letters have been sent by servicers in the past few weeks. Anyone who had an application pending is all of sudden getting the happy news in the mail.
Question to the audience: Has anyone else heard or seen evidence of this?
If this were to be true is would be a very big slap in the face of the banks. For years they have been fighting off Mods. But when the tables turn on them due the unforeseen explosion and chaos in foreclosure the banks turn on a dime and go into mass Mod mode. Should that be the case it would prove (once again) that the banks will do anything to screw their customers. The mod is just a vehicle to perfect the mortgage lien.
Bruce Krasting
bkrasting@gmail.com
Posted in Banks, Corruption, Economic Crisis, Economy, Financial System, Foreclosuregate, Foreclosures, Fraud, Mortgage Modificaton |
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More FHLB Fraudulent Misrepresentation Suits
Today the Federal Home Loan Bank of Chicago will file complaints against several defendants regarding some of the private-label mortgage-backed securities (MBS) they sold us between 2005 and 2007. We contend that the quality of the loans that comprise the pools of securities cited in today’s complaints was inconsistent with the description in the pre-purchase documents prepared by the underwriters and issuers of the securities. Relying on the pre-purchase documents, we invested in these securities with the understanding that we were purchasing higher-quality instruments than turned out to be the case. After careful consideration, we have concluded that we have an obligation to you, our members, to do everything we can to recover the value lost from investing in these securities.
Sold a box of chocolates, with a nice certification that it was in fact “AAA” chocolate.
What was actually in the box was dogcrap formed into the shape of chocolate, and coated with just enough chocolate so that on routine visual inspection and a quick sniff, all appeared to be in order.
It was only when a bite was taken later that the truth was discovered…… in this case, to the tune of a half-billion dollars out of $4.3 billion originally invested – in losses thus far.
Now that’s not a huge amount of money…. but then again, $4.3 billion is a tiny slice of the more than $1 trillion in the private-label securities out there, and an even smaller piece of the whole, including GSE paper that may also be contaminated.
We force the seller of eggs with a few that have salmonella in them to recall all of them and eat the expense of doing so. Why is it again that the Federal Government does not force all of this crap back on the securitizers?
Oh, and as for “systemic risk”? The Kanjorsky Amendment to the Dodd/Frank bill, which is now law, provides for prospective seizure and resolution of systemically-important financial institutions that would impose a risk on the system should they collapse, if there is a plausible reason to believe that such an outcome could be in the offing.
It’s time to use this authority and fix this problem.
Posted in Banks, Corruption, Economic Crisis, Economy, FHLB, Financial System, Foreclosuregate, Foreclosures, Fraud, Government, Money |
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There is only one answer for the world economic situation; monetary reform.
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