FedUpUSA

Archive for the ‘Democrats’ Category

Arianna, this one’s for you – incoming…..

As we get ready for John Boehner to take the gavel from Nancy Pelosi on Wednesday, I find myself thinking back to the last time a Republican speaker took control of the House from a Democrat — and reflecting on how far down the wrong road we have traveled since then.

You’re right about us going down the wrong road.  This, unfortunately, was the last thing in your article you were right about.

“The balanced budget is the right thing to do,” he said. “But it does not in my mind have the moral urgency of coming to grips with what is happening to the poorest Americans.”

For the incoming Republican speaker, reducing poverty and lifting the poor into the middle class was a moral imperative beyond the left vs. right battlefield — not just the purview of lefties, socialists, and community organizers.

Oh really?  So let’s see – we have tried it that way for what….. 15 years?  What did we get?

• An internet bubble, which exploded.  Predicated on fraud, it cost US Citizens (and others) a few trillion dollars in saved funds, put into companies that were worth zero.  You can count the prosecutions of said people responsible on the fingers of one hand.  Most-notably, you can’t find any of the bank executives that were involved in bringing these firms public and earning their fees from same among the indicted, say much less charged or convicted.

• A housing bubble, which exploded.  Also predicated on fraud, this one cost virtually all US Citizens.  Millions of foreclosures, goading people to spend beyond their means, and now, once again, no indictments of the big bank executives.

We also “charged it” on the credit card.  In point of fact, President Clinton was the last one to have any smattering of discipline when it came to spending, and virtually all of that was imposed by those same Republicans you hate so much.

So now, with poverty higher than it was 16 years ago, with greater income inequality, and with the middle class struggling to hold on, what will Speaker Boehner make his number one priority? According to the Washington Post, it’s “cutting spending,” followed by repealing the healthcare law, and “helping get our economy moving” (no specifics on how he plans to do that).

Yet we saw on 60 Minutes that he’s very aware of how fragile the American Dream has become, telling Lesley Stahl, “I can’t go to a school anymore. I used to go to a lot of schools. And you see all these little kids running around. Can’t talk about it.” And he choked up when he did try to talk about “making sure these kids have a shot at the American Dream, like I did. It’s important.”

And why can’t you go to school any more?  If we’re talking about college, it is precisely because the government started handing out “Free Cheese” – and allowed the banksters to treat student debt as a loan that would be shackled around your neck for life.  This in turn caused the schools to turn a college into a luxury playground, complete with gilded dorms, er, “housing units” and $200+ textbooks.  Even in subjects such as a mathematics, which, last time I checked, hadn’t changed with regards to things like Calculus in far longer than I’ve been drawing breath.  Yet every year there’s a “new edition”, edited for the purpose of forcing kids to blow yet another $200 – per class – or more.  Ordinary people simply can’t afford that.

But the trajectory of our political discourse over the last decade and a half has meant that taking on poverty has gone from a moral imperative and shared national objective to an afterthought — or no thought at all.

And exactly how do you take on poverty Arianna?  Do you teach people that sitting at home sucking on the government teat is the way to prosperity?  Do you protect those who sell debt to students that they cannot possibly pay by passing laws that make that debt non-dischargeable?  Do you promote a housing bubble that drives house prices beyond those of modest means, goad those people into taking on debts they cannot pay, and then evict them when they lose the house that was priced at 3x what it should be?  Do we refuse to recognize wage and environmental arbitrage that leaves us with only jobs that ask “would you like fries with that?” instead of engineering, hard science, and blue-collar production – all so we can have $200 TVs instead of $400 ones and you can run your yap on an iPhone application that runs on hardware built by virtual Chinese slaves and peddled to US consumers as yet another debt ponzi (who think that phone costs $100 – yet another “pulled forward demand” game)?

All of this is part and parcel of the Liberal Left, along with the Radical Right.  Neither side will tell the banksters to go stick it up their tush and die in a fire.  Neither one will get rid of the illegal immigrants that depress wages in the United States, nor deal with the wage and environmental arbitrage that dumps raw chemicals into rivers and lakes – in China – all so we can have our “cheap consumer goods” while the workers there live in conditions that our former African Slaves would consider beneath them!

None of this is on YOUR radar Arianna.  No, instead you want to “soak the rich and give to the poor”, but in point of fact we’ve been doing that now for the last three years.  $1.7 trillion in budget deficits is proof.  How much more do you think we can put on the credit card Arianna?  Are you one of those who thinks there’s no limit?

Robert Reich does:

Republicans are telling Americans a big lie, and Obama and the Democrats are letting them. The Big Lie is that our economic problems are due to a government that’s too large, and therefore the solution is to shrink it.

Oh really?  I suppose you would like to deny this?

This isn’t evidence that the government is too large?

The short-term solution is for government to counteract this shortfall by spending more, not less. The long-term solution is to spread the benefits of economic growth more widely (for example, through a more progressive income tax, a larger EITC, an exemption on the first $20K of income from payroll taxes and application of payroll taxes to incomes over $250K, stronger unions, and more and better investments in education and infrastructure.)

Sorry, the short-term solution is to force the bad debt into the open and by doing so force recognition of its true value.  The long-term solution is as I’ve noted above – remove the special exemptions for debt on education, forcing the colleges to either go broke or reduce costs dramatically so you can earn your way through working part time flipping burgers, along with putting a stop to wage and environmental arbitrage with wage and environmental-parity tariffs.  Flush all the bad debts and make those “rich bastards” on Wall Street eat their own cooking.  They’ll choke on it and go broke.  Good.  Now you get your “vengeance” and, more-importantly, there will be new banks that are set up by ordinary people and entrepreneurship along with capital formation will once again return.

You know, the process by which we create jobs?  Yeah.

Exponential equations are mathematical facts.  The curve they produce is a fact.  That periodic recessions and bankruptcies are necessary in any system where capital can be lent is also a fact, and that fact extends to the “fat cats” who are doing the loan-making!  Every act that protects the foolish from the consequence of their folly is one that attempts to violate the laws of mathematics.  Such attempts, which are often mis-named “regulatory capture”, are how you get depressions instead of recessions, as you try to prevent those who do imprudent things (both in business and as individual acts) from having to face the music for their foolishness.

The big lie is, in fact, stating that such exponential functions and “protection” for any group – whether it be “the less fortunate” or “the fatcat banker” can proceed apace for any sort of “indefinite future” without periodic purges that restore these functions to the baseline.

The longer this lie goes on, and both The Left and Right are equally-complicit in spewing it, the worse the outcome for our nation.  And make no mistake – since I presume that both Arianna and Robert are intelligent, I therefore am forced to conclude that these lies are not told out of ignorance but rather with an intent to deceive – and destroy.

The primary problem with partisan politics is that the true “Big Lie” is the willful refusal to deal with the reality of exponential functions.  These functions are not suggestions – they’re mathematical laws.

And whether we like it or not the longer we allow this lie to be told, and the longer we continue to play the game of allowing people like Arianna and Robert to spew these lies, along with Boehner, the more pain we will inflict on the nation and its population as a whole.

FiredogLake is reporting this morning that six Senators have demanded criminal and regulatory action by the FHFA regarding the blatant fraud in the mortgage industry. 

The six Democrats – Sherrod Brown, Barbara Boxer, Sheldon Whitehouse, Debbie Stabenow, Tom Harkin and Mark Begich – pushed back on the idea that these are merely technical errors, as the FHFA letter intimates, rather than systematic violations of the law:

There have been attempts to dismiss the reported violations as minor technical paperwork errors, and to employ the defense that these were harmless errors because the homeowners were in foreclosure and would have lost their houses anyway. These are not technicalities, they are not isolated cases – it is likely that over 200,000 foreclosures have now been suspended – and these improprieties cast doubt on the foreclosures in question.

Rather than a few rogue employees disregarding company policy, the policies themselves were flawed, indicating that there is a systemic problem with the manner in which loss mitigation and foreclosure operations are being conducted by most, if not all, mortgage servicers. This pattern of behavior has undermined the integrity of the housing market, creating uncertainty for home sales and the availability of title insurance.

We shouldn’t be reassuring the banks and their servicers that they’ll make it through this all right, we should be filling out criminal charges. The banks basically never changed their policies from the questionable lending practices of the subprime mortgage scandal – they couldn’t be trifled with basic legal procedures, and they hired a bunch of incompetents to push the paperwork. When the defaults rose, the same gang of idiots failed to provide any relief for homeowners through mortgage modification. And now they’re breaking the laws surrounding foreclosure, to cover up for their other fraudulent activities with proper mortgage assignment.

While this has started to become an election issue, with familiar battle lines, it should be noted that only Barbara Boxer among these six is up for re-election. I do think this issue resonates and is pretty clear:

To Cuban-born Jose Martinez, 65, a lifelong Republican from the Miami area who works in liquor manufacturing and export, “It seems like a joke that we are a country with laws and the banks keep stealing.”

As for remedies, the Senators suggest forcing the servicers to work with homeowners to modify loans, to impose “tailored moratoriums” for certain lenders as per their authority as regulators of banks and non-bank institutions that are the parent companies of the servicers, and to “review and reform” the financial incentives that make it beneficial for the servicers to foreclose. They are looking at the issue in a comprehensive way and beyond the “technical errors” argument which is clearly false.

 As has been tediously and thoroughly documented on this website now for more than 2 years, there is no ‘procedural error’ – this was blatant, intential and orchestrated fraud from the very top down to the bottom of the mortgage industry.  While it is easy to just ‘blame homeowners’ , the fact is, homeowners were not the predators. 

This is WRONG HEADED thinking!  It is NOT illegal to default on a debt, but it IS a CRIME to commit fraud – and the latter is what the banks have done, the former is what the homeowners have done.   While there is no denying that there were some homeowners that lied on their mortgage applications, that number pales in comparison to the number of lenders, brokers and banks that lied to prospective buyers in order to put them into homes they knew darn well they couldn’t afford.  The more mortgages they could write, the more money they made.  Prospective buyers were no longer people they were helping to purchase a home in a price range that was sustainable, they were a profit stream.  Often times it wasn’t the buyer who lied on the application at all, it was the lender who altered documents before submitting the loan for underwriting without the knowledge of the buyer!

The other problem with the idea of blaming the homeowner is that the homeowners were NOT the experts.  The lenders were – and when they told people ‘this is how you do it’ and ‘yes you can afford this’ and ‘this is a fantastic deal’ – how were laypeople supposed to know better?   Being naive and uneducated about the home-buying process is not a criminal act.  All these creative toxic loans were crammed down the public’s throats which caused home prices to skyrocket far out of the reach of average wages. While inflation in food, energy, clothing and everything else also increased at a historic rate at the same time, wages were FALLING.  Often times, people had NO CHOICE but to take on more credit than they were comfortable with because the government policies were not only creating rampant inflation, but they were mandating that banks lend to people who they deemed ‘underserved’  – minorities, poor people, the unemployed - basically the government forced banks to lend to those who could not afford to pay.  For reference, at the peak, home prices had inflated to more than 7 times wages.  This is historically and definitively unsustainable….yet banks were processing loans with 60% DTIs and this was advertised to the public as acceptable! 

Nowhere was this more evident than in the State of Ohio.  The State itself attempted to kick subprime lenders out of Ohio because it had become exceedingly clear that the predatory lending practices were entrapping people by putting them into loans they could not pay for and ultimately ending up with entire neighborhoods where the vast majority of houses were in some stage of foreclosure.  Unfortunately, the Federal Government told the State of Ohio, that they could not stop these lenders from operating in the State because that would be ‘discrimination.’  So, basically the federal government gave these lenders a license to commit fraud and forced the State of Ohio to accept it. 

As for the lenders, at first they weren’t so sure that lending to those that couldn’t pay would be such a great idea.  So, to offset this risk in lending to people they KNEW couldn’t pay, they came up with mortgage backed securities and other ‘creative investment vehicles’ that they could buy and sell like stocks.  As fast as they could bundle and pool these things together, they would sell them to individual investors, pension funds and anyone who was looking for big returns….because after all, home prices only go up, right?  Thing is, long after people got weary of taking on more debt, the demand for mortgages became driven ENTIRELY by the banks THEMSELVES because the toxic instruments they created were a cash cow….as long as home prices were going up – they kept inflating the values of the securities so they could continue to profit from them. 

It was when ALL private sector demand stopped because no one could take on any  more debt, that the wheels started to come off back in late 2007.  Then the banks and Wall Street were bailed out with taxpayer money and we’ve now seen them again inflate the prices of fuel and commodities with their taxpayer money that they gamble with – but because the hole is so large, the over $1 Trillion in taxpayer money is not enough to prevent the over $14 Trillion in leveraged security instruments from imploding.

THAT is the summary of the true depths of the fraud we are dealing with.  Long after real demand for home mortages stopped, the banks continued to leverage these instruments, fraudulently inflate their values and sell them to investors.  Because profits depended upon doing this in bulk, the rule of law was abandoned in transferrence of title.  MERS (Mortgage Electronic Registration Systems) was invented by the banks themselves in order for them to more rapidly offload these ‘investments’ without the pesky business of continuity of the chain of title of the collateral (that would be your home).  Now, quite frankly, no one with any sort of mortgage transaction since 2002 can be sure of whether or not their title is clear, nor can they be sure they are actually paying the entity to which they truly owe money! 

Meanwhile, the banks and lenders are foreclosing as quickly as they can, often times facilitating this process with ‘recreated’ (forged) documents, robo-signers and false affidavits as has been documented extensively here on FedUpUSA.  Multiple courts across the country have discovered much of this fraud, and some banks have now claimed to be temporarily halting foreclosures to ‘sort out this procedural error’, but even that is a lie.  Foreclosures especially continue unabated and at an accelerated pace in non-judicial states where the lenders can be sure they never have to prove their standing or right to foreclose.  Essentially, what the banks are doing amounts to asset stripping the public.  They deceived the public with the loans themselves, the loans began to default, so they got Congress to give them more than $700 Billion in bailout money and now that the fraud is beginning to be exposed, they are taking possession of the collateral as quickly as possible, even if they have no legal rights to do so.  Asset stripping at every possible level.  This will continue until or unless we stop it.

Clearly the enormous economic crisis we face today was largely created by the banks/lenders and Wall Street and the stupid policies of our government.  Homeowners were the victims here.   At the very least they deserve: 

#1.  Their day in court to discover exactly WHO owns their mortgage; they have a right to know to whom they are actually indebted (and it is not the servicers).  This is a legal right of every debtor under the FDCPA – The Fair Debt Collection Practices Act

#2.  The opportunity to negotiate with the actual party to whom they are indebted  (in most cases, the servicer was ALREADY PAID when the note was sold and has absolutely no motivation or consideration for negotiating a fair market price – this is why HAMP was such a failure!)

#3.  The opportunity to have clear title to the asset that they purchased – and if that title is not clear, they are entitled to restitution under USC 15 § 1641 , which allows for the sanction of expunging  interest on the debt which encumbers that property wherein a title has been fraudulently transferred.  In addition, wherein the chain of title has been broken, there should be a release of that collateral, making the mortgage loan an unsecured debt (like a credit card), which also makes the debt dischargeable under Chapter 7 Bankruptcy.

As for the political angle of all this - it sure seems to me that the Republicans are vastly missing here.  Is it that they truly want to snatch defeat from the jaws of victory this November?  The surest way to lose much of the momentum they have been building this election cycle is to be completely silent on the issue of fraud, or worse, seen as defending fraud!  I make no secret of the fact that I am and always have been a staunch conservative and I believe that part of that ideology includes a moral and ethical obligation.  Hasn’t the Tea Party been demanding a return to principles over politics and party?  This election hinges upon which party gets their constituents to the polls and up until this point all the enthusiasm has come from the re-engergized Tea Party groups.  I am now seeing some of the liberal base become re-engergized in response to the issue of the massive fraud that has been perpetrated upon America by the banking sector and Wall Street.  Certainly, the fact is not lost on me that much of the blame for enabling this to happen resides with Congress and much of the way was paved by liberals with their mandates to loan to those that could not afford it.  It also is not lost on me that Wall Street and the banks gave more to Democrats in the past 4 years than any time in history.  Coincidence?  I think not.  But in a strange twist of irony, we now have Democrats leading the way in pursuit of the prosecution of fraud in this industry. 

So, why are Republicans missing?  This could be an issue that they slam-dunk Democrats with – but we have only deafening silence.  Could it be that Wall Street and the big banks are now giving all that money to the GOP?  Will Tea Party voters allow Republicans to be bought, in direct conflict with the values that they have been espousing?  Can the Republicans afford to risk losing voter support to gain all that Wall Street money they’ve long been missing?

Somebody better wake up – we have only 3 weeks to go.  Either all this effort by the Tea Parties to clean up our government and demand morals and ethics will be wasted as we end up with more of the same crap we have had just under a different label or the Tea Partiers really DO stand for something.  Either the Republicans are worth surviving as a party with principles or they are not.

When You’re A Kleptomaniac, Stealing Looks Normal

Posted by Karl Denninger

The WSJ has an interesting article that deserves some exposition:

As debate started in the Senate Thursday on the broad overhaul, some administration officials and lawmakers said they worried the amendments could backfire, steering lending and trading in complex financial instruments to hedge funds and other finance companies that are less regulated than banks. There are also fears that tight limits on U.S. banks could put them at a competitive disadvantage, because similar restraints don’t exist for their overseas rivals.

Notice the weasel in here.  One part (trading complex financial instruments) should be diverted to hedge funds and other unregulated – and free-to-fail, no-backstopped firms.

The other part (lending) will always be done by banks – you have one on the corner, or a credit union, that will write you a loan, yes? 

Sens. Ted Kaufman (D., Del.) and Sherrod Brown (D., Ohio) plan an amendment that would prohibit any bank from ever holding more than 10% of the country’s deposits and put strict caps on the debt banks issue.

This is the amendment that I highlighted with two Tickers, one text and one, for the “visually inclined”, in video.  This amendment deserves to be law right now – one way or another.

Sens. Maria Cantwell (D., Wash.) and John McCain (R., Ariz.) have worked on an amendment that would force commercial banks to separate from investment banks—revisiting the Glass-Steagall Act of the 1930s.

That plus the above would effectively BE Glass-Steagall. 

I like that a lot.

Obama administration officials have declined to weigh in on any specific amendments, with one exception: a move by Sen. Bernie Sanders (I., Vt.) to give the government more power to audit certain operations at the Federal Reserve. Fed and administration officials have signaled they would fight to stop it at all costs. Mr. Sanders has more than a dozen co-sponsors.

Why should the administration fight such a thing?  What possible purpose – that doesn’t involve scams and fraud – is served by The Fed being able to operate in secrecy?

“Hopefully, common sense and maturity will take control, and the hyperbole and populism, while good for the TV cameras, will be put aside,” said Mr. Gregg said.

Mr. Gregg (and the rest of you) ought to read this (warning – not mine, and full of colorful language.  Not suitable for children and all that:)

“I’m sure you have the answer, you and Ron Paul and all the other pot-smoking libertarian do-gooders have it all figured out. But what I’m saying is, no confidence means end of the confidence game. That’s what Lehman showed. Every single player in finance suddenly had to face the fundamental problem—this whole fu!@ing economy is built on fraud and lies and garbage. So when Lehman collapsed, every single player panicked, going, ‘If Lehman was nothing but a Ponzi scheme—and I know what I’m running is a Ponzi scheme—holy shit, that means everyone else is running a Ponzi scheme too! Run for the exits!’ No one trusted anyone else, everyone pulled out, and the entire global economy collapsed just like that. And that meant your parents, my parents, every teacher, every fireman, every person in the country going into retirement, every price on every asset—wiped out.

Oh.  You mean that “if we scam and screw people enough, then you must let us keep doing that, lest we have riots or even civil war”?

That seems to be the argument that Judd Gregg and others – including Geithner and Obama – are putting forward.

Here’s the problem with the argument: It doesn’t work in the long haul.

It got a lot more vicious and personal than this, but when our verbal slap-fight ended—and he paid the bill—I thought about what he said, and it made a lot more sense. Fraud has become so endemic in this country that it’s woven its way into America’s DNA, forming a symbiotic relationship that can’t be undone without killing off the host. If they push it just a little too hard, the entire American economy could crash, asset values could tank, and that means tens of millions of extremely pissed off retirees and Baby Boomers. As the Wall Streeter put it: “Whoever is responsible for bursting this latest bubble by exposing all the fraud—and tanking all the markets—will not only be out of power for at least a generation, but they’ll all have to get radical reconstructive surgery on their faces and seek political asylum somewhere remote. No one wants to be that guy, and that’s why it’s not going to happen.”

That may be true, but all bubbles to eventually burst, all Ponzi schemes do collapse. The only question is when. For those of us not on the verge of retiring, the sooner we have this day of reckoning and get it over with, the better.

What the author forgets is that for those who are on the verge of retiring, you’d be better off getting it over with now and choosing not to retire, than having it happen once you do and being completely and irredeemably hosed.

In case you’ve forgotten, this isn’t uniquely (or even largely) the fault of one political party or the other.  It’s both.

But here’s the key: The party that does not put a stop to this and gets tagged with obstructing locking all these ignoble, felonious bastards up will be the one that – at best – never darkens the halls of Congress or The White House again.

A Sober Warning To The GOP – And The Democrats

Posted by Karl Denninger

GOP Stuffs Shoe In Mouth: Issa

Posted by Karl Denninger