FedUpUSA

Archive for the ‘laws’ Category

Folks, read this section of the Florida Law — there are similar laws in most states.

…… It is the further intent of this section to require that foreclosure-related rescue services agreements be expressed in writing in order to safeguard homeowners against deceit and financial hardship; to ensure, foster, and encourage fair dealing in the sale and purchase of homes in foreclosure or default; to prohibit representations that tend to mislead; to prohibit or restrict unfair contract terms; to provide a cooling-off period for homeowners who enter into contracts for services related to saving their homes from foreclosure or preserving their rights to possession of their homes; to afford homeowners a reasonable and meaningful opportunity to rescind sales to equity purchasers; and to preserve and protect home equity for the homeowners of this state.

OK?

Now here’s the problem — there are a lot of services out there that have seized upon the fraud in securitization, origination and other frauds (and there are a lot of them!) to try to sell you various services — from “audits” to “foreclosure defense” and more.

I’m in contact with a fair number of lawyers in this state on a regular basis, including some who are associates of mine locally.  I can’t speak to the results elsewhere but I can tell you this — irrespective of the merits the judges here locally in this county typically will refuse to allow into hearings any sort of alleged evidence on the provenance of the note, transfers and similar things.

So the question becomes three-fold here when it comes to these firms and their services:

• What are you buying?  If what you buy either isn’t admissible directly or doesn’t lead directly to something that is, you’re wasting your money.  Since most people who are going through foreclosure are in trouble because they’re short on money in the first place paying for something that ultimately proves worthless is a horrible thing.  This is especially true when the “something” is expensive!
• What is the track record of the organization in question?  And I’m not talking about puffery either — if someone is claiming to be providing some sort of analysis of a mortgage and its provenance, what do they assert as both their qualifications and their successes?  Note that general claims and words like “may”, “might” or “could” mean nothing — nor do generic charts of various processes.  What you want to see are specific claims that can be checked — how many foreclosures were averted, how many were dismissed with prejudice (so they can’t be filed again a week later!) and similar?  If you’re being led to believe you can get what amounts to a “free house” out of the deal, demand the seller prove that they’re responsible for others having that level of success with case numbers and specifics.  If you’re being sold an analytical investigative product of some kind who’s preparing it and what are their credentials?  If they claim to be an expert what courts have acknowledged them as an expert and in what role?  Again ask for specific case numbers and check it via the clerk of the subject court.  Everyone has a first time being a recognized expert, of course, but if you’re being charged a bunch of money you shouldn’t be the guinea pig — if you’re the test case you should be getting the work for free as if you win there will be thousands of others who will follow you (and gladly pay.)  If you’re paying then you ought to be buying a track record, not a hope!
• If your state has a law like Florida does is this firm recognized in your state and is it in compliance?  Most corporations doing business in a given state have to file as foreign corporations and register.  I did when I ran MCSNet; “mail order” is of course different but we’re talking about buying something specifically tailored to your state here, and as such “mail order” is the wrong model!  It gets tricky with all the convoluted “agency models” that people dream up — the trickier the firm’s business model is the more wary I become. Florida’s law explicitly prohibits a number of things with regards to these firms and their offerings.  Specifically it applies to:
• (b) “Foreclosure-rescue consultant” means a person who directly or indirectly makes a solicitation, representation, or offer to a homeowner to provide or perform, in return for payment of money or other valuable consideration, foreclosure-related rescue services. (ed: Then there are a couple of exceptions – - like licensed attorneys and employees of the government.)
  and it prohibits
  
• (3) PROHIBITED ACTS.—In the course of offering or providing foreclosure-related rescue services, a foreclosure-rescue consultant may not:
  (a) Engage in or initiate foreclosure-related rescue services without first executing a written agreement with the homeowner for foreclosure-related rescue services; or
  (b) Solicit, charge, receive, or attempt to collect or secure payment, directly or indirectly, for foreclosure-related rescue services before completing or performing all services contained in the agreement for foreclosure-related rescue services.
  Got it?
  Any firm that takes your money before it performs or completes the entire set of services you contracted for appears to be facially breaking the law in Florida.  And these laws are no joke — the Florida Statute in particular can levy a $15,000 per occurrence penalty and criminal charges are possible as it’s part of the consumer protection statute.  You’re not going to go to jail as a buyer of these services but the entity you buy it from might well get sued out of existence leaving you with nothing but a smoking hole in your checking account.

There are undoubtedly legitimate firms that provide real help to real people in this regard.  But there are also a lot of firms peddling crap.  I’ve seen some of it.  I’ve also seen evidence of what looks like an agency (and in a couple of cases even multi-level marketing type!) corporate structure that leave me asking where the accountability is going to lie and what knowledge of the actual services and assistance is with the people doing the selling of these services (in other words, how much do they really know — are they actual experts or just salesmen?)

Please don’t take this to mean that I believe that the fraudclosure games are not real by the banks.  They most-certainly are.  I’ve traced enough of this stuff and spent more than enough time digging through PSAs and tracing notes to know that there’s a very high probability that many notes were paid off more than once, were sold more than once, and in many cases the entity trying to sue you for foreclosure isn’t the actual owner of the debt and maybe never was.

But none of this matters unless you can (1) document it and then (2) get a judge to listen.

If you can’t do both you lose.  That’s how it works in court; it’s not, contrary to popular belief, what you see on TV.  Real no-bullshit civil litigation is (a) expensive, (b) NOT a “slam-dunk” in virtually every case and (c) often costs more to prosecute than you can recover.  In other words it is entirely possible to “win” and lose anyway — in fact, that happens a lot.

To achieve both documentation and getting a judge to listen you can’t see “may”, “might” or “could” in a report you need “is“, “did“, “did not” along with words like “violated” (and a statute cite) or similar, along with enough chops to get into court with your evidence — and even that is not a guarantee of success, it’s simply the first log you have to jump over before have a shot at success!

Finally, if you’re thinking you can come into court “Pro-Se” and beat these guys you’re playing with one arm tied behind your back against a guy armed with a chaingun.  The odds are overwhelming that without competent counsel you’re going to get mowed down, lose, and perhaps get sanctioned in the process, adding more monetary injury to what you’re already suffering!

In short folks get a good lawyer before you spend one nickel on any such “services” and listen to him or her.  If he or she tells you that you’re wasting your time and money because the judges won’t hear your case irrespective of the merits then don’t waste your time and money on “investigative reports” that even if they’re valuable will never be admitted into evidence.  That lawyer will also know what your State Law says with regard to solicitations and services of this sort and whether whatever you thinking might help complies with that law.  If it doesn’t then the entity selling it to you is doing an illegal thing and you have to ask yourself why you’d want to buy something you intend to use in a courtroom, directly or indirectly, from someone who is thumbing their noses at the very same court!

Be smart folks.  Foreclosure and fraudclosure is a serious business and there are a lot of hinky games being played out there.  The banks are definitely not innocent and they are also often wrong.  But adding to your own financial problems by paying good money for something that winds up being worthless simply is adding self-inflicted injury to the screwing you’re already taking.

I like all my readers, and as such please don’t make that mistake.

Disclosure: Tickerguy is not an attorney but he’s employed ‘em in the past as the CEO of an Internet firm and both used to hang out with some pretty high-power civil litigators and still does talk with them from time to time.  If you need legal advice get out your checkbook and pen and prepare for a nice hole to magically appear on your ledger — it nearly always does when real legal advice and activity is involved.

I’m chuckling here….

Attorney Lynn Szymoniak had spent a career investigating insurance fraud when a bank moved to foreclose on her Florida home in 2008. Almost four years later, the fraud she said she uncovered by combing through mortgage documents earned her $18 million.

Szymoniak, 63, is among six whistle-blowers who will pocket $46.5 million as part of a $25 billion national foreclosure settlement that state and federal officials reached in February with five banks, including Bank of America Corp. and JPMorgan Chase & Co. (JPM), according to the U.S. Justice Department.

Got it?

No?

Let me spell it out for you folks who work for a big bank: If you have knowledge of the bank doing something that has caused the government to get screwed, you can sue in the name of the government and get a big chunk of the recovery.

It’s called “Qui Tam” and it exists for the very purpose of giving people just like you, dear Wall Streeter, an incentive to blow the whistle on any fraud that has the effect of stealing from the government.

So as you lose your bonuses this year, Dear Wall Streeters, consider all the things that were done previously over the last few years.  Selling junk mortgages to Fannie and Freddie while clamiing they were good, cramming FHA approvals, any sort of scam or scheme — so long as the government got hosed, you can go after it as a Qui Tam action and get to keep a big chunk of the recovery for yourself.

Yes, you’ll never work in the banking industry again.

But if you get a $10+ million payday do you really care?

I suspect not.

In recent days, the fact that Mitt Romney has millions of dollars parked down in the Cayman Islands has made headlines all over the world.  But when it comes to offshore banking, what Mitt Romney is doing is small potatoes.  The truth is that the global elite are hiding an almost unbelievable amount of money in offshore banks.  According to shocking research done by the IMF, the global elite are holding a total of 18 trillion dollars in offshore banks.  And that figure does not even count any money being held in Switzerland.  That is a staggering amount of money.  Keep in mind that U.S. GDP in 2010 was only 14.58 trillion dollars.  So why do the global elite go to such trouble to hide their money in offshore banks?  Well, there are two main reasons.  One is privacy and the other is low taxation.  Privacy is a big issue for those that are involved in illegal enterprises such as drug running, but the biggest reason why people move money into offshore banks is in order to avoid taxes.  Some set up bank accounts in foreign nations because they want to legally minimize their taxes and others set up bank accounts in foreign nations because they want to illegally avoid taxes.  You would be absolutely amazed at what some large corporations and wealthy individuals do to get out of paying taxes.  Unfortunately, the vast majority of the rest of us don’t have the resources or the knowledge to play these games, so we get taxed into oblivion.

So why do they call it “offshore banking”?

Well, the term originally developed because the banks on the Channel Islands were “offshore” from the United Kingdom.  Most “offshore banks” are still located on islands today.  The Cayman Islands, Bermuda, the Bahamas, and the Isle of Man are examples of this.  Other “offshore banking centers” such as Monaco are actually not “offshore” at all, but the term applies to them anyway.

Traditionally, these offshore banking centers have been very attractive to both criminals and to the global elite because they would not tell anyone (including governments) about the money that anyone had parked there.

These days some governments (particularly the U.S. government) are trying to change this, but we certainly will not see the end of offshore banking any time soon.

The amount of money that goes through these offshore banks is absolutely astounding.

It has been estimated that 80 percent of all international banking transactions take place through these offshore banks.  $1.4 trillion is being held in offshore banks in the Cayman Islands alone.

One article in the Guardian estimated that a third of all the wealth on the entire globe is being held in offshore banks, and others believe that as much as half of all the capital in the world flows through offshore banks at some point.

Obviously, all of this tax avoidance means that governments around the world are missing out on a whole lot of money.

It has been estimated that the U.S. government is missing out on $100 billion a year because of these offshore banks.  Others would put that figure significantly higher.

Avoiding taxes is a game that the global elite have mastered.  They are playing a whole different ballgame than you and I are.  They don’t just sit there like idiots and get blasted with taxes.  Instead, they hire the best experts and they employ every trick in the book to hold on to as much money as they possibly can.

These days, taking advantage of offshore tax havens is not that complicated to do.  The following is from a recent Politico article….

A plausible scenario plays out like this: I hire an accountant. Doing her job, my accountant tells me that if I sign a few legal documents and route my money through a small Caribbean island, I could keep more of my paycheck and pay a lower tax rate. I may have earned my money in the United States, but legally I can claim that it was, in fact, earned in a tax haven.

If it is legal, perhaps more of us should look into this.

After all, if playing these kinds of games is good enough for Mitt Romney, then why isn’t it good enough for all the rest of us?

During a campaign stop recently, Romney said the following….

“I can tell you we follow the tax laws”

I certainly believe him when he says that.  But it is what he said next that is troubling….

“And if there’s an opportunity to save taxes, we like anybody else in this country will follow that opportunity.”

I certainly believe him when he says that too.

ABC News recently revealed that Bain Capital has established an astounding 138 different offshore funds in the Cayman Islands.

Something has got to work pretty well to want to do it 138 times.

But Bain Capital was also very busy over in other offshore banking centers as well.

One of the largest shell companies that Bain set up down in the Caribbean was called Sankaty High Yield Asset Investors Ltd.  It did not have an office in Bermuda and it had no staff in Bermuda.  But it helped clients of Bain Capital avoid a whole lot of taxes.

The following comes from a 2007 Los Angeles Times article….

In Bermuda, Romney served as president and sole shareholder for four years of Sankaty High Yield Asset Investors Ltd. It funneled money into Bain Capital’s Sankaty family of hedge funds, which invest in bonds and other debt issued by corporations, as well as bank loans.

Like thousands of similar financial entities, Sankaty maintains no office or staff in Bermuda. Its only presence consists of a nameplate at a lawyer’s office in downtown Hamilton, capital of the British island territory.

“It’s just a mail drop, essentially,” said Marc B. Wolpow, who worked with Romney for nine years at Bain Capital and who set up Sankaty Ltd. in October 1997 without ever visiting Bermuda. “There’s no one doing any work down there other than lawyers.”

The amount of money being funneled through Sankaty today is absolutely stunning….

Today, Bain Capital manages $60 billion in assets, according to a spokesman. The total includes $23 billion in Sankaty debt and credit funds. Half a dozen Sankaty affiliates now are active in Bermuda, corporate registry records show.

The Sankaty debt hedge funds are organized as partnerships in Delaware that produce taxable business income by investing in fixed-income bonds and other debt instruments. Under tax law, even tax-exempt U.S. institutions may face a 35% tax if they invest directly in such hedge funds. By investing instead through a Bermuda corporation, the taxes are legally blocked, experts say.

Of course all of this is perfectly legal.

So nobody gets into trouble for any of this.

By keeping money offshore, even those managing these kinds of funds can avoid being taxed.

Victor Fleischer, a tax professor at the University of Colorado Law School, recently explained how this works….

“The idea behind some of the Cayman Island strategies was that the income that the fund managers receive for managing the money would be kept offshore in the Cayman Island — and the chief benefit is that you can defer when you recognize that income until a later date and you can reinvest the money from the Cayman islands and none of those reinvested funds get taxed until you bring them back either”

So was Romney doing this?

We may never know unless he shows us his tax returns.

What we do know is that Romney has millions of dollars of his own personal wealth invested in offshore tax havens.

The following comes from ABC News….

In addition to paying the lower tax rate on his investment income, Romney has as much as $8 million invested in at least 12 funds listed on a Cayman Islands registry. Another investment, which Romney reports as being worth between $5 million and $25 million, shows up on securities records as having been domiciled in the Caymans.

But Romney does not just have money invested down in the Cayman Islands.  Apparently his money is invested in a whole host of offshore tax havens.

The following quote comes from a Reuters article….

Bain funds in which Romney is invested are scattered from Delaware to the Cayman Islands and Bermuda, Ireland and Hong Kong, according to a Reuters analysis of securities filings.

So is there anything wrong with this?

Well, it depends on how you define “wrong”.

What Romney is doing is perfectly legal.

But it also stinks.  Washington lawyer Jack Blum recently told ABC News the following about Romney’s finances….

“His personal finances are a poster child of what’s wrong with the American tax system”

So now we may have a few hints as to why Romney may not want to release his old tax returns.

But as noted above, what Romney is doing is just small potatoes compared to what the ultra-wealthy do.

The U.S. Congress has been trying to clamp down on offshore banking, but the ultra-wealthy are always two or three steps ahead of them.

The ultra-wealthy will go to just about any extreme in order to avoid paying taxes.

In fact, the Washington Post has reported that an increasing number of wealthy individuals are actually deciding to renounce their citizenship rather than face the wrath of the IRS.

The ultra-wealthy aren’t really concerned that much with national citizenship anyway.  If they want to influence an election, they can have far more influence by donating a few million bucks to a “Super PAC” than they can by casting the few votes that they have.

In a previous article, I described how the ultra-wealthy use offshore banks as a “shadow banking system” that plays by rules that most people don’t even know exist….

It is a shadow banking system that most Americans don’t know anything about. Most Americans don’t have the resources to be able to set up shell companies in half a dozen different countries so that they can “filter” their profits.  Most Americans don’t know a thing about complicated tax avoidance plans that tax lawyers use such as the “Double Irish” and the “Dutch Sandwich”.  Most Americans would have no idea how to eventually have most of the money that they make end up in Bermuda so that it can avoid taxes.

Most among the global elite simply do not care that U.S. debt is climbing into the stratosphere.  All they care about is keeping as much of their own money in their pockets as they possibly can.

Of course there are always exceptions to this rule.  Warren Buffett recently wrote a check to the U.S. Treasury for a little more than $49,000 to help pay off the national debt.

But considering the fact that the U.S. national debt is increasing by more than 100 million dollars an hour, that didn’t exactly do much to help.

Our system is deeply broken and the global elite are getting away with bloody murder.  Over the decades, they have carefully crafted the rules so that as much wealth as possible is funneled into their pockets, and they have carefully crafted the rules so that as much wealth as possible stays in their pockets.

Of course if we got rid of the personal income tax and the corporate income tax entirely and replaced them with a completely new system we could get rid of all of this game playing once and for all.

But what do you think the odds are of that happening?

The Economic Collapse

On December 13, 2011, the Wall Street Journal published an article entitled “Banks in Push for Pact.” It was an obscure article buried in the real estate section.  The article contained this clause:  “Under the proposal, banks would be released from legal claims tied to servicing delinquent mortgages as well as certain mortgage-origination practices….”  Opponents of this proposed amnesty for mortgage-origination fraud have charged repeatedly that the federal government and Tom Miller, the Attorney General of Iowa, who is leading the settlement negotiations, support the amnesty.  Previously, Miller’s key lieutenant, but not the Obama administration, angrily denounced the charge.

The Four Levels of Control Fraud Involving Mortgages

Home lenders, particularly those making liar’s loans, typically committed endemic “accounting control fraud” on multiple levels.  Control fraud occurs when the persons controlling a seemingly legitimate entity use it as a “weapon” to defraud.  Accounting is the “weapon of choice” for financial control frauds.  Mortgage frauds can be grouped into four levels, each of them exceptionally widespread:  loan origination fraud by the lenders and their agents, the fraudulent sale of fraudulent mortgages, the fraudulent pooling and sale of collateralized debt obligations (CDOs) in which the underlying was largely fraudulent mortgages, and foreclosure fraud.

Loan Origination Fraud

The classic economics article describing such frauds is George Akerlof and Paul Romer’s “Looting: the Economic Underworld of Bankruptcy for Profit” (1993).  The recipe” for accounting control fraud by a lender (or purchaser) has four ingredients.

1. Extreme growth by making (or purchasing)
2. Loans of extremely poor quality at a premium yield
3. While employing extreme leverage, and
4. Providing grossly inadequate allowances for loan and lease losses (ALLL)

Origination fraud involved a series of mutually supportive frauds: inflating the borrower’s income, inflating the appraised value of the home, providing grossly inadequate allowances for loan and lease losses (ALLL), and failing to recognize losses on fraudulent loans held in portfolio.  It was also common for federally insured lenders to file false reports with and make false statements to the regulators.  Lenders that made liar’s loans were “accounting control frauds.”  Their CEOs cause them to create perverse incentives to suborn the supposedly independent experts to provide opinions that inflate values and understate risk in order to aid and abet the underlying accounting fraud.  These perverse incentives create a “Gresham’s” dynamic in which bad ethics drives good ethics out of the marketplace.  The result is “echo” fraud epidemics.  Each of these frauds constitutes a federal felony.  Most of the frauds I have described are also felonies under state law.  Collectively, there were millions of origination frauds with a total dollar amount of fraudulent originations well in excess of $1 trillion.

The Fraudulent Sale of Fraudulent Loans

The second level of fraud is the fraudulent sale by the lenders of the fraudulent loans.   This form of fraud required endemic false “reps and warranties.”  Roughly 90 percent of liar’s loans were sold, so this second level of fraud also constitutes millions of federal and state felonies and roughly $1 trillion in fraudulent sales.

The Frauds involved in Pooling Fraudulent Loans to Create and Sell Fraudulent CDOs

The third level of fraud is the sale of collateralized debt obligations (CDOs) “backed” by fraudulent liar’s loans through false disclosures.  This level of fraud constitutes tens of thousands of federal felonies and roughly $1 trillion in fraudulent sales.

Foreclosure Fraud

The fourth level of fraud is foreclosure fraud.  The best known of these frauds involved the commission of hundreds of thousands of felonies through the filing of false affidavits to secure foreclosures (inaptly called “robo signing”).

Massive Foreclosure Fraud Generated the Global Settlement Discussions

It was this last level of fraud that prompted the settlement discussions.  What one must keep constantly in mind when dealing with lenders that are control frauds is that they and their senior officers will be represented by the best criminal defense lawyers.  America still does many things superbly, and we do lawyers really well.  The fraudulent officers who control banks engaged in control fraud will spend bank funds like water for their defense lawyers.  The old joke is that when one is dealt lemons one should make lemonade.  In law school, however, we consider that the “C minus” answer.  When dealt lemons; the best lawyers seek to make Dom Perignon.

Consider the setting – you represent a systemically dangerous institution (SDI) that was the beneficiary of a federal bailout.  Your client has made hundreds of thousands of fraudulent liar’s loans and fraudulently sold the great bulk of them.  If your client is held responsible for these frauds it will have to reveal that it is massively insolvent and face receivership.  Your client is also one of the largest mortgage loan servicers in the world.  A small law firm representing a borrower has taken the deposition of one of your client’s key employees who signed the affidavits necessary to support roughly ten thousand foreclosures a month – and admitted that the key statements she has made in each of those affidavits is false.  The somnolent federal government had finally been forced to admit that the banks have engaged in endemic foreclosure fraud.  The states are also involved.  This would be a nightmare scenario for any normal client.  For an SDI, however, it was an opportunity.

L’audace, encore l’audace, toujours l’audace!

(Audacity, more audacity, always audacity: the white collar defense lawyer’s creed)

One of the secrets to being an extraordinarily effective elite criminal is also true of their lawyers – audacity.  Elite white-collar criminals can frequently get away with grotesque criminal conduct if they use their exceptional advantages provided by wealth, privilege, and seeming legitimacy.   Even within the ranks of elite white-collar criminals, however, the CEOs who control SDIs – particularly during a financial crisis that they caused – are unique in their power to commit crimes with impunity.  They hold the national, even global, economy hostage.  Treasury Secretary Geithner has made this strategy simple by displaying the “Stockholm Syndrome.”  He has fallen in love with the criminals that are holding our economy hostage.  Geithner claims that the fraudulent SDIs are so fragile that they would collapse if they were even investigated seriously for fraud.  He conveniently ignores the fact that the primary reason for the SDIs’ fragility is that their CEOs looted the banks.

They can also use “their” bank to buy the modern equivalent of indulgences for even the most destructive frauds.  There are two non-exclusive means of buying indulgences.  The most obvious means is political contributions.  The finance industry is the leading funder of both political parties. The less obvious means of buying immunity arises from the dysfunctional nature of DOJ policies for (not) prosecuting major firms for serious felonies and the ability of the CEO to use corporate funds to purchase personal immunity from criminal prosecutions.  Five facts about the criminal defense of large firms must be kept prominently in mind when considering the defense of banksters.  First, the CEO will gladly trade off billions of dollars in payments by the bank and its liability insurers in order to secure immunity from criminal charges against the CEO and the senior officers who could implicate the CEO.

Second, the Department of Justice (DOJ) has essentially ceased to prosecute large firms for serious felonies.  DOJ was so traumatized by the consequences of prosecuting Arthur Andersen that it has decided to allow large firms to enter into “deferred prosecution” agreements (in which prosecution is, in reality, perpetually deferred).  Arthur Andersen had entered into two deferred prosecution agreements, and DOJ offered it a third, when AA refused the agreement and went to trial.

Third, while I have referred to the firm as the “client” and the firm and its insurers typically pay for the attorney fees and fines, it is the CEO that can hire and fire outside counsel.  Outside counsel, therefore, are chosen by fraudulent CEOs because they are willing to aid and abet the CEO in looting the real client (the firm).  This is a classic example of the fraudulent bank CEO deliberately creating a Gresham’s dynamic in which the least ethical members of the “independent” profession drive the most ethical out of lucrative representations.  In criminology jargon, control frauds are criminogenic.  Fraudulent CEOs use their ability to make compensation for officers, employees, and independent professionals perverse in order to create environments that cause widespread frauds that aid and abet the lender’s fraud scheme.  To put it in plainer, biblical English:  fraud begets fraud.

Fourth, the settlement payments are typically deductible from taxes.  This means that the defendant’s actual burden of paying the fine is much smaller than the announced amount of the fine.

Fifth, defense counsel typically promise to pay some portion of the fines to the victims of the fraud.  This is a brilliant tactic.  It makes the government attorneys feel good about the settlement and it allows them to bash opponents of the settlement as blocking relief for the victims.  The tactic, of course, is cynical and dishonest.  The weak settlement is what prevents a far greater recovery for the victims of the fraud.  The government does not have to wait for a settlement to aid the victims of foreclosure fraud.

Settlement discussions by counsel for control frauds with the government and shareholders are all about exceptionally able and zealous legal representation of the CEO at the expense of the client, its shareholders, and the public.  Only vigorous regulators and prosecutors can protect the firm, shareholders, and public from looting by these CEOs and the allies they generate.

The Proposed Deal: The $1 Trillion Lagniappe

The obvious deal that criminal defense counsel for banks always seek is to trade a showy amount of fines for de facto or even formal immunity for the CEO and other senior officers who led the frauds and became wealthy through the frauds.  Here, the defense counsel were far more audacious – they are demanding immunity not only from prosecution, but even from investigation, and they are demanding immunity for crimes they committed that have never been investigated by the state and local prosecutors.  The foreclosure fraud cases, while enormous, are by far the least of the banksters’ worries.  The potential loss exposure from the foreclosure fraud is measured in the tens of billions of dollars.  The potential loss exposure from fraudulent home loan originations is in the trillions of dollars – and a trillion is a thousand billion.  The banks’ CEOs are demanding, for a puny $25 billion, a release from liability for foreclosure fraud.  That is obscene on multiple levels.  Even President Obama concedes that the banks treat such fines as a mere “cost of doing business” (by which he means the “small tax on the wealth obtained by elites through doing fraudulent business”).  The senior officers involved in the fraud should be imprisoned.  Giving them immunity, allowing them to keep their bonuses “earned” through fraud, and keeping them in leadership roles are all despicable acts that should be anathema to every prosecutor.

But what came next went beyond scandal as usual.  The banks then demanded a lagniappe – a little something extra, for free, in a New Orleans restaurant – they wanted immunity for loan origination fraud.  The slight difference is that this lagniappe is worth trillions of dollars to the frauds.  It sickens me to inform the reader that the Obama administration is eager to provide the frauds with this lagniappe.  The Department of Housing and Urban Development (HUD), led by Secretary Shaun Donovan, is actively pushing this scandalous deal, with strong support in the background from Treasury Secretary Geithner.  The silence of Attorney General Holder, and President Obama, on this travesty is exceptional.

Worse, the banks are seeking immunity even from investigation of the over trillion dollars in mortgage origination fraud – and the Obama and Bush administrations’ supposed “investigations” of mortgage origination fraud by the large lenders that made the mass of liar’s loans are all unworthy of the word “investigations.”  It would take roughly 100 investigators, working for years, to do a serious investigation of any of the largest liar’s loan lenders.  There has never been, remotely, such an investigation by the federal government of the any large liar’s loan lender.  The Obama administration is reported to support the fraudulent financial CEOs’ dearest dream – de facto immunity even from investigation of over a trillion dollars in fraudulent liar’s loans origination.

The Republican Party and its candidates for the Party’s presidential nomination are not criticizing Obama’s proposed formal surrender to crony capitalism.  They only wish they were in complete power and could cash in even more heavily on the tidal bore of campaign contributions flowing out of the finance industry.

Miller, and everyone involved, knows there was endemic origination fraud

Miller no longer denies that he has joined the administration in favoring the banks’ most cherished dream – amnesty for originating a trillion dollars in fraudulent home loans.   Indeed, the settlement is designed to prevent even investigations of the mortgage origination fraud.

I confess that I am so naïve that I would have believed it impossible that any federal or state governmental entity would enter into such an abject surrender to crony capitalism.  Once I learned that they were seriously contemplating such a travesty I could not believe that Miller would support it.  I believed his lieutenant’s (Mr. Madigan’s) denunciation of criticism of the proposed amnesty.  (I have reviewed Madigan’s comments in preparing this piece and I see that they were artfully crafted to be disingenuous.) The testimony of Thomas J. Miller, Attorney General of Iowa, at a 2007 Federal Reserve Board hearing shows that he knows that the lenders engaged in massive origination fraud.

Over the last several years, the subprime market has created a race to the bottom in which unethical actors have been handsomely rewarded for their misdeeds and ethical actors have lost market share…. The market incentives rewarded irresponsible lending and made it more difficult for responsible lenders to compete. Strong regulations will create an even playing field in which ethical actors are no longer punished.

Despite the well documented performance struggles of 2006 vintage loans, originators continued to use products with the same characteristics in 2007.

Miller, T.  2007.  “Comments to the Federal Reserve Board ofGovernors on Adopting Regulations to Prohibit Unfair and Deceptive Acts andPractices under the Home Ownership and Equity Protection Act (HOEPA).” (August 14).  Miller was correct. We know that it was overwhelmingly lenders and their agents that put the lies in “liar’s” loans.  We know that 90 percent of liar’s loans were fraudulent.  We know that the industry massively increased the number of liar’s loans after warnings that the loans were endemically fraudulent.  The growth rate of liar’s loans was so rapid (over 500% from 2003-2006) that these fraudulent loans caused the housing bubble to hyper-inflate.  We know that no government entity ever caused any entity to make or purchase (and that includes Fannie and Freddie) liar’s loans.  Indeed, the government repeatedly warned of the dangers of liar’s loans.  We know that by 2006 roughly one-third of all home loans made that year were liar’s loans – which means there were millions of fraudulent loans made annually and, collectively, trillions of dollars in fraudulently originated home loans.

What must be done

Our economy and our democracy cannot succeed under crony capitalism.  Please join me in writing to Congress, the administration, your state attorney general, the media, and any court that must approve this proposed settlement.  It is a disgrace.  President Obama is, of course, correct that some actions can be illegal but exceptionally unethical and damaging.  He is about to take precisely such an action in derogation of his oath of office to defend and protect the constitution of the United States of America.  The fraudulent CEOs of the banks that became wealthy by causing the financial crisis and the Great Recession are treating us as fools who will give trillion dollar plus gifts to the least deserving, most arrogant, and least ethical elites.  Have we fallen so low as a people that we will allow this to happen?

Please join me in supporting the Attorney Generals of New York, Delaware, and California who have opposed this settlement.  As for President Obama, I hope that he will make this New Year’s resolution:  “I resolve to honor my oath of office and faithfully execute the laws of the United States and defend its constitution, which is premised on justice and the rule of law.  No person, no matter how elite, is above that law.  I have today asked Messrs. Bernanke, Geithner, and Donovan for their resignations because of their support for bailing out the elite banks and granting de facto amnesty to fraudulent financial CEOs.  I, and my new Attorney General and new Secretary of the Treasury, have mutually resolved to make the vigorous prosecution of the elite financial frauds that drove the ongoing crisis our mission. ”

William K. Black – New Economic Perspectives

Consumer bankruptcy attorney Linda Tirelli holds up mortgage documents from one of the civil cases she is handling in her White Plains, New York office, December 14, 2011.

(Reuters) – Four years after the banking system nearly collapsed from reckless mortgage lending, federal prosecutors have stayed on the sidelines, even as judges around the country are pointing fingers at possible wrongdoing.

The federal government, as has been widely noted, has pressed few criminal cases against major lenders or senior executives for the events that led to the meltdown of 2007. Finding hard evidence has proved difficult, the Justice Department has said.

The government also hasn’t brought any prosecutions for dubious foreclosure practices deployed since 2007 by big banks and other mortgage-servicing companies.

But this part of the financial system, a Reuters examination shows, is filled with potential leads.

Foreclosure-related case files in just one New York federal bankruptcy court, for example, hold at least a dozen mortgage documents known as promissory notes bearing evidence of recently forged signatures and illegal alterations, according to a judge’s rulings and records reviewed by Reuters. Similarly altered notes have appeared in courts around the country.

Banks in the past two years have foreclosed on the houses of thousands of active-duty U.S. soldiers who are legally eligible to have foreclosures halted. Refusing to grant foreclosure stays is a misdemeanor under federal law.

The U.S. Treasury confirmed in November that it is conducting a civil investigation of 4,500 such foreclosures. Attorneys representing service members estimate banks have foreclosed on up to 30,000 military personnel in potential violation of the law.

In Alabama, a federal bankruptcy judge ruled last month that Wells Fargo & Co. had filed at least 630 sworn affidavits containing false “facts,” including claims that homeowners were in arrears for amounts not yet due.

Wells Fargo “took the law into its own hands” and disregarded laws banning perjury, Judge Margaret A. Mahoney declared.

And in thousands of cases, documents required to transfer ownership of mortgages have been falsified. Lacking originals needed to foreclose, mortgage servicers drew up new ones, falsely signed by their own staff as employees of the original lenders – many of which no longer exist.

But the mortgage-foreclosure mess has yet to yield any federal prosecution against the big banks that are the major servicers of home loans.

UNPRECEDENTED FRAUD

Reuters has identified one pending federal criminal investigation into suspected improper foreclosure procedures. That inquiry has been under way since 2009.

The investigation focuses on a defunct subsidiary of Jacksonville, Florida-based Lender Processing Services, the nation’s largest subcontractor of mortgage servicing duties for banks.

People close to the investigation said indictments may come as early as the end of this month. Nationwide press reports had showed photos of what appeared to be obviously forged signatures on foreclosure affidavits.

The Justice Department doesn’t disclose pending investigations, making it impossible to say if other criminal inquiries are underway. Officials in state attorneys’ general offices and lawyers in foreclosure cases say they have seen no signs of any other federal criminal investigation.

“I think it’s difficult to find a fraud of this size on the U.S. court system in U.S. history,” said Raymond Brescia, a visiting professor at Yale Law School who has written articles analyzing the role of courts in the financial crisis. “I can’t think of one where you have literally tens of thousands of fraudulent documents filed in tens of thousands of cases.”

Spokesmen for the five largest servicers – Bank of America Corp., Wells Fargo & Co., JP Morgan Chase & Co, Citigroup Inc., and Ally Financial Group – declined to comment about the possibility of widespread fraud for this article.

Paul Leonard, spokesman for the Housing Policy Council, whose membership includes those banks, said any faults in foreclosure cases are being addressed under a civil settlement earlier this year with federal regulators.

A portion of a mortgage document from one of the civil cases being litigated by New York consumer bankruptcy Attorney Linda Tirelli is seen in her office in White Plains, New York, December 14, 2011.

FALSE STATEMENTS

Justice Department and Federal Bureau of Investigation officials say they have brought mortgage-fraud criminal cases through their “Operation Stolen Dreams.” None, however, were against big banks. All targeted small-scale operators who allegedly defrauded banks with forged mortgage applications or took advantage of homeowners by falsely promising arrangements to get them out of default and then pocketing their money.

Justice Department spokeswoman Adora Andy declined to comment on the absence of prosecutions for foreclosure practices by big banks. She said in a statement: “The Department of Justice has been and will continue to aggressively investigate financial fraud wherever it occurs, including at all levels of the mortgage industry and, when we find evidence of a crime, we will not hesitate to pursue it.”

Some judges have accused banks of falsely stating in court that they are working on loan modifications for homeowners in default.

In a November 30 court hearing, not previously reported, a federal bankruptcy judge in New York accused Bank of America of falsely telling courts and the public that it was working to renegotiate loans.

“Bank of America issues constant press releases about how it is responsive to their borrowers on these issues. They are not, period,” said Judge Robert Drain, in a case involving homeowner Richard Tomasulo, a pharmacist from Crompond, New York. Drain said Bank of America had been telling the court since January that it was working to modify Tomasulo’s mortgage, but hadn’t done so.

“Whoever is in charge of this program and their supervisor, who should be following it, should be fired” because “they are frankly incompetent.”

Bank of America spokeswoman Jumana Bauwens said the bank has completed “nearly one million” modifications since 2008. The U.S. Treasury this year suspended loan modification incentive payments to the bank because it was “seriously deficient” in responding to requests for modifications.

CHEATERS AND LIARS

Foreclosure fraud came to light in September 2010, with evidence that employees of Ally Financial Corp. had committed “robo-signing,” in which low-level workers signed and swore to the facts in thousands of affidavits they hadn’t read or checked.

The affidavits were notarized outside the signers’ presence, in apparent violation of state and federal criminal laws.

Since then, mounting evidence of possible foreclosure fraud has convinced judges and state regulators that servicers have harmed homeowners and the investors who bought mortgage-backed securities.

A unit of the Justice Department that oversees bankruptcy court cases, the U.S. Trustees Program, said in its 2010 annual report that there were “pervasive and longstanding problems regarding mortgage loan servicing,” which “are not merely ‘technical’ but cause real harm to homeowners in bankruptcy.”

Banks, the Trustees Program says, have falsified affidavits by claiming homeowners owe fees for services never rendered and by overstating how much owners are behind on payments.

Former federal prosecutor Daniel Richman, a professor of criminal law at Columbia University Law School, says a central question is who prosecutors would target in criminal investigations. Richman said it would be easy but not worthwhile to charge large numbers of rank-and-file workers who, directed by supervisors, falsely churned out affidavits.

He said criminal investigations would be warranted, but harder to bring, “if there are particular individuals who lie at the heart of this conduct in a very significant way.”

In October 2010, members of Congress pressed the Justice Department to investigate. Attorney General Eric Holder said investigations were best left to the states, with help from the Justice Department.

The Office of the Comptroller of the Currency, the top bank regulator, quickly negotiated settlements with the 14 largest servicers, requiring changes in practices and “remediation” for harmed homeowners. That settlement allows the banks to choose their own contractors to determine who was harmed and by how much.

Lawmakers and homeowner advocates have criticized the arrangement, contending that it will let the banks avoid making all wronged homeowners whole, because the contractors are paid by and answer to the banks.

Since then, the department’s civil division has worked with a shaky coalition of all 50 states, which have been seeking a civil settlement with five banks that are the largest loan servicers. The negotiations center on requiring them to pay $20 billion or more in penalties, only some of which would go to compensate wronged homeowners.

A undated combination graphic shows two versions of a promissory note filed by Wells Fargo & Co. The first, above, does not show that Wells Fargo owns the mortgage loan, and therefore lacks the right to foreclose. The version below, filed later, bears an additional stamp that appears to give the bank ownership. But federal bankruptcy judge Martin Glenn dismissed Wells Fargo’s foreclosure attempt, questioning the validity of these and other documents.

STATES TAKE ACTION

Federal law enforcement has been noticeably absent, even in areas hardest hit by the crisis, such as Las Vegas.

In 2010 the FBI’s Las Vegas office shut down its mortgage fraud task force, which had focused on small-scale swindlers.

Tim Gallagher, chief of the FBI’s financial crimes section, said that the Las Vegas office had asked to transfer agents to other duties.

Impatient with the lack of federal prosecution, states including New York, Massachusetts, Delaware and California have launched their own investigations of the banks.

In November, it became the first state to file criminal charges. The state attorney general obtained a 606-count indictment against two California-based executives of Lender Processing Services.

It accuses the executives of paying Nevada notaries to forge the pair’s signatures and falsely notarize them on notices of default, documents Nevada requires in foreclosure actions. State officials said more indictments are expected.

In an interview, John Kelleher, Nevada’s chief deputy attorney general, said the investigation began in response to citizen complaints.

“We were concerned and then shocked at the sheer number of fraudulent documents we were finding that had been filed with the county recorder,” Kelleher said.

Investigators found “tens of thousands” of false records filed on behalf of big mortgage servicers, he said.

The two executives have pleaded not guilty. In a press release, the company said: “LPS acknowledges the signing procedures on some of these documents were flawed; however, the company also believes these documents were properly authorized and their recording did not result in a wrongful foreclosure.”

BACK HOME IN NEW YORK

The U.S. Attorney’s Office in Manhattan is the federal prosecutors’ office that traditionally has filed the most cases against top banks and financiers. But it hasn’t brought any foreclosure-related criminal cases involving Wall Street’s biggest financial houses or the law firms that represent them.

To date the only step it has taken publicly was an October 2011 civil settlement with New York State’s largest foreclosure law firm.

The Steven J. Baum P.C. law firm, based near Buffalo, New York, in recent years filed approximately 40 per cent of all foreclosures in New York State, on behalf of banks and other mortgage servicers. Court records show that the firm angered state court judges for alleged false statements and filing suspect documents.

Arthur Schack, a state court judge in Brooklyn, in a 2010 ruling said that pleadings by the Baum firm on behalf of HSBC Bank, a unit of London-based HSBC Holdings, in a foreclosure case were “so incredible, outrageous, ludicrous and disingenuous that they should have been authorized by the late Rod Serling, creator of the famous science-fiction television series, The Twilight Zone.”

Another state judge that year imposed $5,000 in sanctions and ordered the firm to pay $14,500 in attorneys’ fees, ruling that “misrepresentation of the material statements here was outrageous.”

But the U.S. Attorney’s office in Manhattan filed no criminal charges against the Baum firm. Instead, it signed a settlement with Baum ending an inquiry “relating to foreclosure practices.” The agreement made no allegations of wrongdoing, but required the firm to improve its foreclosure practices.

Baum agreed to pay a $2 million civil penalty, but didn’t admit wrongdoing.

The law firm said it would shut down after New York Times columnist Joe Nocera in November published photographs of a 2010 Baum firm Halloween party in which employees dressed up as homeless people. Another showed part of Baum’s office decorated to look like a row of foreclosed houses.

“The settlement between the Manhattan U.S. Attorney’s Office and the Steven J. Baum Law Firm resulted in immediate and comprehensive reforms of the firm’s business practices,” said Ellen Davis, spokeswoman for the Manhattan U.S. Attorney’s office.

Earl Wells III, a spokesman for Baum, said the lawyer wouldn’t comment because “he’s laying low right now.”

An HSBC spokesman said: “We are working closely with the regulators to address any matters raised regarding” the bank’s foreclosure practices.

BROKEN PROMISES

The most serious potential foreclosure violations involve falsified mortgage promissory notes, the documents homeowners sign vowing to repay mortgage loans. Courts uniformly have ruled that unless a creditor legally owns the promissory note, it has no legal right to foreclose. For each mortgage there is only one promissory note.

Bankruptcy court records reviewed by Reuters show that at least a dozen radically different documents purporting to be the authentic promissory note have turned up in foreclosure cases involving six different properties in the federal bankruptcy court for the Southern District of New York.

In one, Wells Fargo is battling to foreclose on the Bronx home of Tindala Mims, a single mother who works as an ambulance driver. In September 2010, Wells Fargo filed a promissory note bearing a signed stamp showing that the note belonged to defunct Washington Mutual Bank, not Wells Fargo. The judge threw out the case.

In a second attempt, the court was given a different version of the note. But inspection showed physical alterations. A variety of marks on the original were missing or seemed obviously altered on the second. And the second version had a stamped endorsement, missing on the first, that appeared to give Wells Fargo the right to foreclose.

The judge threw out the second attempt too. Wells Fargo is trying a third time. It declined to comment on the case.

Linda Tirelli, Mims’ lawyer, in October sued Wells Fargo, alleging “fabrication of documents.”

“It seems to me that Washington is deathly afraid of the banking industry,” Tirelli said. “If you’re talking about filing false documents and filing false notarizations, do you really think that the U.S. Attorney would find it too difficult to prosecute?”

The office of U.S. Attorney Preet Bharara in Manhattan has routinely brought charges involving forgery and filing false documents against smaller targets.

In April, the FBI arrested seven employees of the USA Beauty School in Manhattan. Bharara’s office alleged that the seven suspects had forged documents such as high school diplomas, attendance records and applications for financial aid for students taking cosmetology classes.

In August, Bharara’s office filed felony charges against a sports-memorabilia company’s CEO, accusing him of auctioning jerseys falsely advertised as “game used” by Major League Baseball players.

In a press conference, a U.S. Postal Inspection Service official said prosecution was important because “victims felt that they had a piece of history only to be defrauded and left with a feeling of heartbreak.”

Given the record of Bharara’s office, and those of his fellow U.S. Attorneys around the country, to aggressively pursue violations both big and small, the absence of cases involving the foreclosure fiasco seems to stand out.

“Why there hasn’t been more robust prosecution is a mystery,” said Brescia, the visiting professor at Yale.

SOUCE: Reuters: (Editing by Michael Williams and Chris Kaufman; Reporting By Scot Paltrow)

Comes now this morning into my email notification that The Daily Bell has not only ripped off my commentary and opined upon it (legitimate) they further attributed it to CNBC (not kosher folks.)

But let’s examine their opinion a bit, shall we?

Dominant Social Theme: By expanding the regulatory state, we can make things better.

Free-Market Analysis: One of the main emergent US dominant social themes is that the government and regulators must step in to clean up the market and make it safe for investors. The idea is that the larger modern marketplace is very necessary for the functioning of modern society and that one must “clean up fraud” so that people will “trust” the market again.

This meme is being enunciated aggressively all over the place lately, and we have done our best to point it out. It is based on a misapprehension and is placing good people into rhetorical boxes where they decry modern finance but turn to the US’s penitentiary-industrial complex for solutions. Here’s more from the article excerpted above:

Uh, no.

Expand the regulatory state?  How about we actually enforce the laws that already exist?  And for those that are not laws but written as laws, how about if we either turn them into actual laws (instead of lying about what they are) or repeal them so that nobody thinks they’re a law when they are not?

It is against the law, for example, to swindle people.  It’s a crime.  And as I pointed out here, the Right side of the aisle, including the Tea Party, refuses to address the fact that our nation’s largest financial institutions are serial violators of the law to the point that nearly all would have committed their “third strike” and be disbanded (the equivalent to life imprisonment) by now.

There is no shortage of laws under which to actually prosecute.

The Daily Bell goes on to sling around the common mud of “fiat funny money” and allege that but for The Fed there would be no problem at all.  This, however, is a lie, for two simple reasons:

1. The Fed is already constrained in what it can do — it has a mandate for stable prices (that is, zero inflation) that it has serially and repeatedly violated for its entire 100 year history, even prior to the implementation of the so-called “dual mandate”, and yet there has been no enforcement.  Why not?  There is no punishment called out in that law, just as there is no punishment called out in the former enabling law for the OTS and thus “backdating” deposits by IndyMac bank didn’t lead to a criminal indictment against either IndyMac or the so-called “regulator” who did it.  A “law” or “regulation” without a punishment for violations is no law or regulation at all — it is a mere suggestion.  As such these so-called “laws” are nothing more than sops for the fools at places like The Daily Bell who love to point to all these “laws” and then claim that “more regulation” is futile.  That would be true if those were actual ineffectual laws but due to the lack of a punishment clause they stand as nothing more than blank pieces of paper.
2. The proffered solution, free market currencies, is just another sop to idiocy.  Government will always denominate its current taxes due in something.  Whatever that something is will be the defacto currency of the nation and will be the majority — by far — currency that is used for transactions.  The “why” is simple: Nobody in their right mind wants to wake up some morning and find that their currency du jour has been devalued by some sort of debauchery and their taxes due but not yet paid have suddenly doubled or more, instantly bankrupting them.  The simplest and “zero cost” way to hedge against such an event is to transact in the currency you pay your taxes in.  Sorry folks, but logic resolves this conflict and it doesn’t go where the Paulites would like; you must employ magical thinking to get to their claimed nirvana.

Indeed, the problem with the “free market” currency solution is that if you do not resolve the actual problem — the lack of The Rule of Law (that is, #1) so-called “free market” people will intentionally create the situation in #2 and get away with it!

That, incidentally, is the history of monetary systems going all the way back to the American Revolution and beyond.  Indeed if you look at historical inflation rates prior to The Fed you will find ridiculous changes in the valuation of the currency over very short periods of time.  10, 20, even 30% swings in valuation were common.  If you happen to believe that the fact that over the long haul the “more or less stable value” was preferable to what we have today you’re cherry-picking your timeline — get it wrong by a year or so and you’d either have made a bundle or been bankrupted.

Unfortunately life doesn’t work this way; you fall in love, you get sick, you get well, you find a job, you lose a job, your roof leaks, you get hit by a bus and you die all on a very unpredictable timeline.  But those who pull the strings through government are more than happy to use your series of unfortunate events to screw you blind and steal everything you have — and absent The Rule of Law, they will.

Our latest little corruption was sent to me here, from the Fed weekly balance sheet:

Where did that $45 billion go?  Oh, in the nice catch-all bucket called “Other”, right?  What’s in “Other”?

Let’s see…. the GSEs are in there (Fannie/Freddie), the IMF is in there, the UN is in there, a lot of things are in there.  So which “other” was this and why wasn’t it identified with specificity?  Oh that’s simple: There is no rule of law when it comes to Fed operations as there is no “or else” to be found anywhere in the Federal Reserve Act of 1913, as amended.

Thus The Fed could “decide” that Fannie and Freddie paper was “ok” to buy, even though the black letter of the law says otherwise.  They could point to their own “interpretation” and since there was no “or else”, if they interpreted wrong, even intentionally wrong, there was no cost to them personally that could be imposed.  Ditto for “Maiden Lane” and their other machinations.

In this case it appears they bailed out someone yet didn’t tell us who it was.  Gee, with all the turmoil in the markets you can’t find someone who needed to be bailed out, can you?

Those who argue for “End The Fed” have yet to reconcile the fundamental nature of the problem: It is not The Fed that is the issue, it is the presence of so-called “laws” with no penalty for non-compliance that is where the problem resides.

In point of fact The Fed’s actual mandate for stable prices is exactly correct.  Followed to the letter we have no debasement of the currency over time, no inflation, and you can save a mere 7% of your income — if your Social Security taxes were then to be merely returned to you in retirement along with that 7% you would have an effective 20% saving rate for retirement and would need exactly nothing beyond that for a reasonable retirement lifestyle similar to that of your working years!  If you saved nothing you would still have a 13% saving rate and we would meet the mandate of the “social safety net” allegedly to be provided.

If the “law” had actually been followed there would have been no ramp in credit compared to GDP because it could not have been funded.  There would have been no Internet bubble, no Housing bubble and no crash.  House prices never would have gone materially over 2x incomes and likely would be between 1x and 2x.  Medical and college costs would be what they were then.  Wages would have risen with productivity but not beyond, and you would have kept that standard of living increase instead of having it stolen by the vipers of Wall Street and the Capitol.  Jobs would not have been offshored and there would have been no incentive to hire illegal aliens and displace American workers.

So why didn’t it happen this way?  That’s easy: There is no “or else” in these so-called “laws.”

Ending The Fed will do exactly nothing without fixing this problem.  Competing currencies will do nothing without fixing this problem.  In point of fact essentially every current economic issue we face is found, at some point, in this singular premise.

Those who continue to beat on the “End The Fed”, “Competing Currencies” and other similar-sounding drums are either missing the mark because they fail to analyze the problem or worse, they’re shilling for those who are looking for yet another way to rob you blind when the current scam, which is about to collapse, comes down around their ears.

Don’t fall for it.