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Archive for the ‘Elizabeth Warren’ Category

Everyone needs to pay attention to this.  Washington has been told in no uncertain terms how pervasive and blatant the fraud in the mortgage industry is and how it is continuing.  They have been told outright that taxpayer dollars are going towards covering up this fraud.   Keep in mind the person speaking in the video and  the person that helped compile this report is a sitting SENATOR who ADMITS that there is a massive fraud being perpetrated on the American People.  Yet, I’ve seen nothing done in Washington to protect the taxpers from these criminal lenders/banks.  How long will the American people stand for this?

“Clear and uncontested property rights are the foundation of the housing market. If these rights fall into question, that foundation could collapse.” -Ted Kaufman, Congressional Oversight Panel, November 16, 2010

The Congressional Oversight Panel, the TARP watchdog program formerly chaired by Elizabeth Warren and now helmed by former Senator Ted Kaufman, has released a report detailing the failures in the mortgage servicing industry, and the threats to the overall housing market, financial sector and greater economy. The report is chilling; while it rightly says that we don’t yet know the extent of the fraud involved (they call it “irregularities”), even a small chunk of the mortgage-backed securities market going sour would have major implications for all of us. As Ted Kaufman notes, the private-label MBS market totals $7.6 trillion dollars. You don’t have to see much of that break down before you get to the total market capitalization of the biggest financial institutions on Wall Street.

The report (PDF) tries to get at the enormity of this problem, and tries to wake up regulators who are not seeing the serious systemic risk that mortgage companies have created. The panel clearly doesn’t buy the argument from the banks that this is merely about robo-signers, and once the documents get scrutinized better and put in order, the problem will go away. In fact, they give credence to the theory that the document fraud was and is an attempt to cover up a much larger fraud.

The worst-case scenario is considerably grimmer. In this view, which has been articulated by academics and homeowner advocates, the “robo-signing” of affidavits served to cover up the fact that loan servicers cannot demonstrate the facts required to conduct a lawful foreclosure. In essence, banks may be unable to prove that they own the mortgage loans they claim to own.

The risk stems from the possibility that the rapid growth of mortgage securitization outpaced the ability of the legal and financial system to track mortgage loan ownership. In earlier years, under the traditional mortgage model, a homeowner borrowed money from a single bank and then paid back the same bank. In the rare instances when a bank transferred its rights, the sale was recorded by hand in the borrower?s county property office. Thus, the ownership of any individual mortgage could be easily demonstrated.

Nowadays, a single mortgage loan may be sold dozens of times between various banks across the country. In the view of some market participants, the sheer speed of the modern mortgage market has rendered obsolete the traditional ink-and-paper recordation process, so the financial industry developed an electronic transfer process that bypasses county property offices.

This electronic process has, however, faced legal challenges that could, in an extreme scenario, call into question the validity of 33 million mortgage loans.

It’s a thick report with a lot of data, essentially what we’ve been going through here for months: the chain of title questions, the improper conveyance of the mortgage and the note, the use of MERS as an electronic registry of questionable legality, the breakdown of the securitization process, the bad underwriting standards on loans that banks knowingly put into mortgage pools, the repurchase apocalypse, etc., etc. They point out that not only would the worst-case scenario lead to judges voiding foreclosures based on a lack of standing, it could spell problems for the foreclosure mitigation operations run out of Treasury. Servicers might not be able to legally grant a loan modification under HAMP. It could mean that you’ve been paying the wrong person your mortgage for years and years. It could mean that anyone buying a home could be at risk for having their sale nullified and the previous owners take control of the property.

The panel report makes three recommendations. One, Treasury should conduct new stress tests that take this potential danger into account and look at the exposure of the banks to this crisis. Two, Treasury should take a hard look at the effects of these documentation problems on foreclosure prevention programs like HAMP. Three, lenders and servicers “should not undertake to foreclose on any homeowner unless they are able to do so in full compliance with applicable laws and their contractual agreements with the homeowner.”

It’s a big report, and I’ll add more here if I find anything else noteworthy in it. More at the Washington Post and CNBC. A reminder that the Senate Banking Committee will hold a hearing on this issue at 2:30et today. I’ll be live-blogging the hearing.

UPDATE: I like this phrasing, from page 14:

Effective transfers of real estate depend on parties? being able to answer seemingly straightforward questions: who owns the property? how did they come to own it? can anyone make a competing claim to it? The irregularities have the potential to make these seemingly simple questions complex.

That’s the root of the problem – the actions of a group of companies who effectively broke the housing market, and are now breaking the law in a shortcut to putting it back together.

UPDATE II: From page 29, this is an element I haven’t harped on enough:

Local Actions – Despite the state attorneys’ general national approach to investigating document irregularities, there may be separate state initiatives. Under traditional mortgage recording practices, each time a mortgage is transferred from a seller to a buyer, the transfer must be recorded and a fee paid to the local government. Although each fee is not large – typically around $30 – the fees for the rapid transfers inherent in the mortgage securitization process could easily add up to hundreds of dollars per securitization. The MERS system was intended in part to bypass these fees. Local jurisdictions, deprived of mortgage recording tax revenue, may file lawsuits against originators, servicers, and MERS.

Basically, MERS was a highly sophisticated form of tax evasion. If county records offices credibly assert that MERS avoided fees on millions of loan transfers, they could seek that money from MERS and its sponsors. For tax-starved municipal governments, many of whom have been screwed by the banks with interest-rate swaps and other deals, this could be the way to get their comeuppance. I eagerly await the first municipality brave enough to try this.

UPDATE III: Good explanation of the Clayton Holdings due diligence scandal starts on page 39.

UPDATE IV: This is a VERY good explanation that adds further to the suggestion that servicers now have a strong incentive to foreclose instead of modify loans.

Another concern involves how HAMP servicers have been calculating the costs of foreclosure under the program’s NPV test. Foreclosures carry significant costs leading up to the acquisition of a property’s title. If, by cutting corners in the foreclosure process, servicers were able to lower the cost of foreclosure artificially, their own internal cost comparison analysis might have differed from the official NPV analysis. In such instances, servicers would have an incentive to lose paperwork or otherwise deny modifications that they would be compelled to make under the program standards.

Conversely, foreclosure irregularities could have the perverse effect of encouraging servicers to modify more loans through HAMP. If foreclosure irregularities lead to additional litigation and delays in foreclosure proceedings, they will increase the costs of foreclosure. Treasury may then update the HAMP NPV model to reflect these new realities. With the costs of foreclosure higher, the NPV model will find more modifications to be NPV-positive, resulting in more HAMP modifications.

Basically, there isn’t much cost associated with foreclosures for the servicers, and so they do the cost-benefit analysis and find them preferable to modifications

FireDogLake

Please take a moment to ask Senator Kaufman what he is going to DO about this fraud that he has discovered (and has written a lengthy report about), which is being perpetrated on a massive scale against the American People:

Contact Senator Ted Kaufman

Also please contact the Senate Banking Committee, under whose perview investigations of the mortgage industry (including MERS), securitization and banking fraud fall.

Under guise of being handed an important role, Elizabeth Warren was shoved aside and tossed a bone by President Obama. One might not know it from the New York Times headline Warren to Unofficially Lead Consumer Agency

Elizabeth Warren, who conceived of the Consumer Financial Protection Bureau, will oversee its establishment as an assistant to President Obama, an official briefed on the decision said Wednesday evening.

The decision, which Mr. Obama is to announce this week, would allow Ms. Warren, a Harvard law professor, to effectively run the new agency without having to go through a potentially contentious confirmation battle in the Senate. The creation of the bureau is a centerpiece of the Wall Street financial overhaul that Mr. Obama signed in July.

Calculated Risk offered a one line comment on his blog “I think Ms. Warren is an excellent choice.”

I certainly agree. Unfortunately, no matter how much Obama tries to spin it, this has nothing to do with a “potentially contentious confirmation” but rather everything to do with Geithner winning the battle to marginalize her.

Marginalization of Elizabeth Warren

Yves Smith at Naked Capitalism hits the nail on the head in her appraisal Elizabeth Warren on Way to Being Sidelined as Head of Consumer Protection Agency, Relegated to “Advisor” Role

The body language of the Administration has been clear from the outset on the question of whether Elizabeth Warren would get its nomination to head of the new financial services consumer protection agency. Despite the occasional public remark regarding her undeniable competence, which really amounted to damning her with faint praise, Team Obama has never been on board with the idea.

The Warren marginalization isn’t about personalities, although the powers that be love to pigeonhole thorns in their side that way. The clashes reflect fundamental differences in philosophy. Geithner, the Administration that stands behind him, and Dodd all are staunch defenders of our rapacious financial services industry, even though they make occasional moves to disguise that fact. Warren, by contrast, is clearly a skeptic, and a dangerous one to boot, because she understands the abuses well and is able to communicate effectively with the public.

Expect Warren to be pushed further to the sidelines, just as Paul Volcker has been (oh, and pulled out of mothballs when the Administration desperately needed to create the appearance it really might be tough on banks. Perhaps they hope her tenuous standing as acting head can be used to keep her in line.

Geithner’s Lapdog

Yves points out an MSNBC headline revised from “Wall Street critic won’t get top consumer job” to the anodyne “Wall Street critic to help set up consumer agency”.

Both versions exist in cyberspace if you check.

However, all you really need to know can be found in a single sentence in the New York Times article. “She will also be a special adviser to the Treasury secretary, Timothy F. Geithner, and report jointly to Mr. Obama and Mr. Geithner.”

An adviser to Geithner?! Good Grief. This is the tune I hear: With a knick-knack paddywack give a dog a bone, Obama just sent Warren home.

I am sure she will do the best she can, but on Geithner’s leash, I rather doubt she will be able to accomplish much of anything.

I hope I am wrong.

Mike “Mish” Shedlock
http://globaleconomicanalysis.blogspot.com

Well, it’s a little late at this point, but it appears that Congress has now awakened to the fact that the Federal Reserve and the US Treasury Department seem to have been complicit in allowing Goldman Sachs to funnel taxpayer funds all over the world.  Certainly this is a landmark case of ‘horse and barn door’ – for anyone paying attention, we were screaming about this here on FedUpUSA when it happened, well over a year ago.  I guess better late than never?  Just remember where all those billions of dollars went for when your kids and grandkids ask you why the US government takes everything they earn.

Goldman Sachs received a $12.9 billion payout from the government’s bailout of AIG, which was at one time the world’s largest insurance company.

Goldman Sachs sent $4.3 billion in federal tax money to 32 entities, including many overseas banks, hedge funds and pensions, according to information made public Friday night.Goldman Sachs disclosed the list of companies to the Senate Finance Committee after a threat of subpoena from Sen. Chuck Grassley, R-Ia.

 Asked the significance of the list, Grassley said, “I hope it’s as simple as taxpayers deserve to know what happened to their money.”

 He added, “We thought originally we were bailing out AIG. Then later on … we learned that the money flowed through AIG to a few big banks, and now we know that the money went from these few big banks to dozens of financial institutions all around the world.”

 Grassley said he was reserving judgment on the appropriateness of U.S. taxpayer money ending up overseas until he learns more about the 32 entities.

 SETTLEMENT: Goldman Sachs admits it misled investors, pays $550M fine

GOLDMAN CONSENT: SEC vs. Goldman Sachs

JUDGEMENT: Final judgement of defendant

 Goldman Sachs (GS) received $5.55 billion from the government in fall of 2008 as payment for then-worthless securities it held in AIG. Goldman had already hedged its risk that the securities would go bad. It had entered into agreements to spread the risk with the 32 entities named in Friday’s report.

 Overall, Goldman Sachs received a $12.9 billion payout from the government’s bailout of AIG, which was at one time the world’s largest insurance company.

 Goldman Sachs also revealed to the Senate Finance Committee that it would have received $2.3 billion if AIG had gone under. Other large financial institutions, such as Citibank, JPMorgan Chase and Morgan Stanley, sold Goldman Sachs protection in the case of AIG’s collapse. Those institutions did not have to pay Goldman Sachs after the government stepped in with tax money.

 Shouldn’t Goldman Sachs be expected to collect from those institutions “before they collect the taxpayers’ dollars?” Grassley asked. “It’s a little bit like a farmer, if you got crop insurance, you shouldn’t be getting disaster aid.”

 Goldman had not disclosed the names of the counterparties it paid in late 2008 until Friday, despite repeated requests from Elizabeth Warren, chairwoman of the Congressional Oversight Panel.

 ”I think we didn’t get the information because they consider it very embarrassing,” Grassley said, “and they ought to consider it very embarrassing.”

 FINANCIAL REFORM: How Congress rewrote the regulations

FIXED? Will new regulations prevent future meltdowns?

FINANCIAL OVERHAUL AND YOU: Mortgages, debit cards, loans, more

 The initial $85 billion to bail out AIG was supplemented by an additional $49.1 billion from the Troubled Asset Relief Program, known as TARP, as well as additional funds from the Federal Reserve. AIG’s debt to U.S. taxpayers totals $133.3 billion outstanding.

 ”The only thing I can tell you is that people have the right to know, and the Fed and the public’s business ought to be more public,” Grassley said.

DesMoinesRegister

USAToday

Huffington Post published an explosive story Thursday night reporting that Treasury Secretary Timothy Geithner is trying to block President Obama from appointing one of the best consumer watchdogs in the nation to lead the new Consumer Financial Protection Bureau created by Congress to rein in Wall Street. ¹

As chair of the bailout oversight panel, Elizabeth Warren held Wall Street executives’ feet to the fire and proved time and time again that she was not afraid to speak out.

Geithner is a Wall Street insider with long and deep ties to the financial industry. It’s outrageous that he would try to sabotage the nomination of Warren, a respected Harvard professor who came up with the idea of establishing a Consumer Financial Protection Bureau in the first place. It’s clear from his handling of the financial crisis that Geithner is more concerned with protecting his friends on Wall Street than standing up for consumers.

Many Americans are already wary of Geithner because of his handling of the financial crisis. Now many of us are outraged at his latest action. We can mount a public pressure campaign and win this fight but we need your help.

Our allies at the PCCC launched a campaign this morning supporting Elizabeth Warren. They’ve already started to turn the media narrative around and demonstrate that Americans want a real watchdog in charge of Wall Street regulation. If we can get thousands of petition signatures today we can counter Geithner’s attempts to block her appointment.

If we fight back now we can make a difference. Help us create overwhelming momentum for Elizabeth Warren.

SIGN THE PETITION

Note:  I think FedUpUSA readers have seen enough evidence over the past two and a half years that proves beyond all doubt that Timothy Geithner is a criminal – from not paying his taxes to his role in the AIG/Goldman Sachs backdoor bailouts.  Don’t let him have the last say.  Elizabeth Warren is a woman of integrity.  She’s proven time and time again she will stand up for transparency and honesty in accounting for the taxpayers.   She has also been willing to stand up to Congress and fight.  Please help put her in some position of power where she can no longer be ignored.

Whadda ‘Ya Mean It’s Not Over?

Posted by Karl Denninger