Month: October 2010

They Write Letters

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Alan Grayson has written to the FBI requesting a criminal investigation of fraud by the bankers in their foreclosure proceedings.

He is correct when he says that, ” It is time for handcuffs. Fraud does not become legal just because a big bank does it. … This is absurd. This is deliberate, systemic fraud, and it is a crime.”

Full letter after the break:


October 14, 2010

Robert S. Mueller III
Director
Federal Bureau of Investigation
935 Pennsylvania Avenue, NW
Washington, DC 20535

Robert O’Neill
U.S. Attorney
Middle District of Florida
400 North Tampa Street, Suite 3200
Tampa, FL 33602
Dear U.S. Attorney O’Neill and Director Mueller,

When it comes to foreclosures, there is mounting evidence of a state of rampant lawlessness in Central Florida. There are increasing signs that big banks routinely evade laws meant to protect homeowners, in many well-documented cases of ‘foreclosure fraud.’ Despite the demonstrated existence, for instance, of ‘robosigners’ signing affidavits attesting to documents that they have never seen, the parties engaging in such misconduct are not being brought to justice. Big banks are mischaracterizing this as mere ‘technical problems,’ and apologizing only where there is clear and very public evidence of harm.

It is not enough for big banks only to apologize for fraud, perjury, and even breaking and entering – when they are caught. It is time for handcuffs. Fraud does not become legal just because a big bank does it.

On September 20, 2010, after my office found evidence of systemic foreclosure fraud perpetrated by big banks and foreclosure mills, I called for a halt to illegal foreclosures.

Since then, big banks such as Bank of America, JP Morgan Chase, GMAC, PNC and others have suspended foreclosures or foreclosure sales. These banks are still claiming that the massive fraud they have perpetrated amounts to nothing more than a series of technical mistakes. This is absurd. This is deliberate, systemic fraud, and it is a crime.

To give but two of the many available examples, attached is a deposition from an ex-employee of one of the largest ‘foreclosure mills’ in the state, the Law Offices of David Stern. In it, this employee testifies under oath that it was routine for that office to falsify documents regarding military records, in order to move foreclosure cases along more quickly.

The local media has reported on the case of Nancy Jacobini; a contractor for JP Morgan Chase broke into her home after the bank mistakenly foreclosed on it. JP Morgan Chase ‘apologized’ for terrifying her. But , US ; we have a system of laws. I am writing to ask you to enforce them.

The organized and systematic manufacturing of falsified documents to deprive people of their homes is not only a threat to the integrity of the legal system. It also aggravates and extends the weakness in the housing market. Who is going to feel comfortable buying a home if a big bank can simply take it, whether or not that bank has a right to it? Given the securitization of mortgage-backed securities, this misconduct is a threat to our securities markets as well. But fundamentally, this is a question of protecting basic property rights – if you don’t own it, then you shouldn’t try to take it. Without clear property rights, and a legal system that insists on clear proof of those rights before transferring ownership by force, the economy will fall apart.

If perpetrators of perjured affidavits and other systematic criminal activity can get off simply with civil liability – or even less, an insincere bureaucratic apology – the freedom that Americans enjoy will erode quickly in the face of lawless seizures of property. I appreciate your work on the joint Middle District of Florida’s Mortgage Fraud Initiative, and respectfully request that the efforts of your offices turn towards reining in this rampant criminality.

Regards,

Alan Grayson

Member of Congress

Obama Administration Requests Stay on DADT Injunction

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There’s a shocker. They want to continue the witch hunts and persecutions while they are appealing:

The Obama administration on Thursday asked a judge to allow the Pentagon to keep its ban against openly gay men and women in the military while it appeals her decision that ruled the “don’t ask, don’t tell” policy was unconstitutional.

President Barack Obama, Defense Secretary Robert Gates and military leaders have backed ending the policy, but have urged that it be done by the U.S. Congress and military so that there is no disruption to military operations, morale or recruiting.

At a town hall meeting with young voters, a woman pressed Obama on why he wasn’t ending the policy immediately.

“This is not a situation where with a stroke of a pen I can end the policy,” he said and noted that he cannot ignore laws on the books. “This policy will end and it will end on my watch.”

This is a lie. Obama, with a stroke of a pen, could end the separations, and if Congress passes something (ha!) then it is his pen that will sign the bill.

When we look at Obama, one has to wonder whether he, or those people closest to him, like Valerie “gay is a lifestyle choice” Jarrett say about gays when they are having their private moments.

I’m beginning to think that the policy here is to find a path to do the least possible without fatally alienating the party.

If Obama were a Republican, we would be talking about his homophobia right now.

Foreclosures Hit a New Record in September

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I wonder how many of them were fraudulent or otherwise in error:

More than 100,000 U.S. homes were seized by lenders in September, a record number that probably will decline in coming months as major banks halt repossessions and review their foreclosure practices.

Lenders took over 102,134 properties last month, RealtyTrac Inc. said in a report today. That was the highest monthly tally since the company began tracking the data in 2005, surpassing the August record of 95,364. Foreclosure filings, including default and auction notices, rose 3 percent from the prior month to 347,420. One out of every 371 households received a notice.

I’m dubious of that the, “number that probably will decline,” as, “major banks halt repossessions and review their foreclosure practices.”

The banks will rush the moratorium, and in any case the moratorium will be very porous, because the banks are evil, so I expect the numbers to rise.

Describing the Green Party to a T

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In Illinois the Green Party Candidate for Governor, Rich Whitney, had his name misspelled on voting machines. It reads Rich Whitey.

I know that there are “people of color” in the Green Party. The late Ed Boyd, an African American, ran for governor in Maryland in 2006, but received no party support, because they were focusing on (equally doomed) the Senate candidacy of rich whitey Kevin Zeese.

Ed Boyd was kind of pissed, but that really is how the Green Party rolls. It’s the comfortable pretending to afflict the comfortable.

Your Bank Foreclosure Fraud Update

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Barry Ritholtz opens a can of whup ass on a clueless Diana Olick (@ 8:20 but watch the whole thing)

First, some perspective.

When I went to UMass, there was a murder case in the Amherst area. Someone bought some land, and they met on the property to exchange deed and money, and when he got the deed, he shot the seller, and took back the money.

At the time, I wondered how someone could be so stupid to think that this would still work.

The requirements of real estate transactions are such that, even if they never find the body or suspect you of murder, you won’t get the property, and it’s been that way since well before the Civil War, and possibly since before the Revolutionary War in Massachusetts.

That’s what all these transactions are about. They are the product of hundreds of years of social and legal development in order to ensure that someone does not just shoot you and take the deed.

But the bankers just want to shoot you and take the deed, so they take short cuts.

It’s why Barry Ritholtz calls the foreclosure fraud an assault on the basic property rights that make capitalism work in our society.

On a slightly less philosophical level, read Rortybomb’s Foreclosure Fraud for Dummies, Part One, Part Two, and Part 3. It’s clear, it’s concise, and it helps you understand just what is going on here with the fraudulent paperwork.

Additionally, Felix Salmon points out that the entire mortgage backed securities process was a deliberate fraud perpetrated on investors:

………

This is where things get positively evil. The investment banks didn’t mind buying up loans they knew were bad, because they considered themselves to be in the moving business rather than the storage business. They weren’t going to hold on to the loans: they were just going to package them up and sell them on to some buy-side sucker.

In fact, the banks had an incentive to buy loans they knew were bad. Because when the loans proved to be bad, the banks could go back to the originator and get a discount on the amount of money they were paying for the pool. And the less money they paid for the pool, the more profit they could make when they turned it into mortgage bonds and sold it off to investors.

Now here’s the scandal: the investors were never informed of the results of Clayton’s test. The investment banks were perfectly happy to ask for a discount on the loans when they found out how badly-underwritten the loan pool was. But they didn’t pass that discount on to investors, who were kept in the dark about that fact.

………

In any case, it’s clear that the banks had price-sensitive information on the quality of the loan pool which they failed to pass on to investors in that pool. That’s a lie of omission, and if I was one of the investors in one of these pools, I’d be inclined to sue for my money back. Prosecutors, too, are reportedly looking at these deals, and I can’t imagine they’ll like what they find.

The bank I talked to didn’t even attempt to excuse its behavior. It just said that Clayton’s taste-testing was being done by the bank — the buyer of the loan portfolio — rather than being done on behalf of bond investors. Well, yes. That’s the whole problem. The bank was essentially trading on inside information about the loan pool: buying it low (negotiating for a discount from the originator) and then selling it high to people who didn’t have that crucial information.

We should be looking at throwing these folks in jail. (read the whole thing)

In terms of shoes dropping, we now have Wells Fargo initiating a review of its foreclosures, and J.P. Morgan announcing in an investor call that it has stopped using MERS as its agents in foreclosures, which indicates that the big banks have real concerns about the legality of what is basically a database containing an incomplete record of scanned images:

JP Morgan Chase is a valued member of MERS. They currently have their correspondent loans registered on the MERS System. They do not, nor have they ever, registered their retail loans on the MERS System. As members of MERS and for loans registered on the MERS System, banks have the option of foreclosing in their own name, or MERS foreclosing for them.

Notwithstanding the people out there who are maintaining that this is just a bit of paperwork, one of the more savvy banks out there is clearly concerned.

610 Grand, Not Enough

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The lawsuit against the Lower Merion school district for spying on children with webcams has been settled for $610,000:

The Lower Merion School District will pay $610,000 to settle lawsuits over its tracking of student laptop computers, ending an eight-month saga that thrust the elite district into a global spotlight and stirred questions about technology and privacy in schools.

School board members voted unanimously Monday night to pay $185,000 to the two students who claimed the district spied on them by secretly activating the webcams on their laptops.

Someone should have gone to jail over all of this.

The fact that there was not a serious criminal investigation of this, with dozens of school officials under scrutiny is a disgrace.

Holy Crap

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LoL Cat approves of the investigation

State Attorney Generals have opened investigations into foreclosures.

No, really, I don’t mean that some of them, I mean all of them. All 50 state Attorneys Generals have opened investigation:

Top legal officers of all 50 states opened a joint investigation into home foreclosures, saying they will seek an immediate halt to any improper practices at banks and mortgage companies.

The states will conduct a coordinated inquiry into whether banks and loan servicers used false documents and signatures to justify hundreds of thousands of foreclosures. The group intends to establish independent monitoring, Iowa Attorney General Tom Miller, who is leading the probe, said today in a statement.

Great googly moogly!

Every single one of them.

Still, I expect that the net result of all this will be that there will be changes in the law to wallpaper this all over, and leading the charge for banker amnesty will be the White House.

Seriously, when you have Virginia State AG Ken “Misuse my office to abuse climate academics” Cuccinelli joining in on this, the political and legal landscape is pretty unambiguous.

While it is clear that the United States needs a functioning credit system, it does not need these banks, who f%$#ed our whole country (with out lube), but little Timmy Geithner* is determined to shield the people who broke the law and defrauded the their customers, because he* is completely unable to see behind the needs of the megabanks.

*But remember, the Cossacks work for the Czar.

Good Riddance

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I was listening to a hagiography on Michelle Rhee, now former Chancellor of the DC public schools on NPR today, and I had to change the channel.

She got test scores up by focusing on nothing but, and the evidence is that, in one of the most disadvantaged school districts in the nation, she had no interest at all in early education, basically ignoring it in her 5 year plan.

As Matthew Yglesias noted 2 years ago, “A certain type of person isn’t interested in any education improvements that don’t involve picking fights with teacher’s unions, and this seems to me like perhaps an example of Rhee suffering from that affliction.”

Basically, she spent a lot of time being an asshole, because that’s what got her the good press, and teaching to the test, along with a headlong embrace of gentrification, were what caused the bump in her numbers.

Not Feeling Hopey Changey

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The Obama administration has lifted the moratorium on deep water drilling in the Gulf.

Well, at least this means that Mary Landrieu has dropped her hold on Obama’s OMB chair, right?

Wrong.

It appears that she wants to be sure that the EPA and the Department of the Interior are sufficiently compliant:

“I am not going to release my hold on Jack Lew. Instead, I will take this time to look closely at how [Interior] is handling the issuing of permits and whether or not drilling activity in both shallow and deep water is resuming. When Congress reconvenes for the lame duck session next month, I will have had several weeks to evaluate if today’s lifting of the moratorium is actually putting people back to work,” Landrieu said in a prepared statement Tuesday after the Interior Department announced the lifting of the deepwater ban ahead of schedule.

You just got called a c*cks*ck*r by Mary F%$#ing Landrieu, and you are supposed to be the umpire, to mangle a Bull Durham moment.

What are you going to do now?

This is what happens when people know you have no guts.

Economics Update

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Click for full size


Small Business Hiring Down


The index still sucks wet farts from dead pigeons

H/t Calculated Risk for the graph pr0n

Oh, those invisible bond vigilantes are at again, with the 3-year Treasuries hitting a record low yield, 0.57%. (!)

Meanwhile the National Federation of Independent Business released its September survey of small business optimism, and the numbers remain grim, essentially flat, up from 88.8 to 89.0 from August, still highly contractionary, and the businesses are looking to lay off more workers.

We also saw 30-year mortgage rates continue to fall, but no one is borrowing, because non one is buying.

They Do This Because They Believe that Minorities Should Not Vote

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I have to invoke this when discussing the travails of anyone named “Kirk”.


In any case, let’s roll tape*

That is why Republicans like Mark Kirk spend enormous amounts of time and effort trying to keep minorities from voting.

The difference is that this time, he got caught on tape:

In a private phone conversation that was secretly recorded, Mark Kirk, the Republican U.S. Senate candidate in Illinois, told state Republican leaders last week about his plan to send “voter integrity” squads to four predominately African American neighborhoods of Chicago “where the other side might be tempted to jigger the numbers somewhat.”

Kirk’s campaign confirmed the candidate was secretly taped last week as he was talking about his anti-voter fraud effort.

Someone taped this discussion, and then released it into the wild.

There are some values of the Republican party that have been present since its founding, like opposition to organized labor, and there are some that are the product of the politically expedient decision to embrace the white racist portion of the electorate with the “Southern Strategy.”

It started with Barry Goldwater, was embraced and extended by Nixon, and finally came to full fruit under Ronald Reagan, who did his best to make bigotry look cool.

In the process, the bigots subsumed the party.

Thus we are left with the Republican definition of “vote fraud”: to them, it means allowing n*gg*rs to vote.

*The “tape” is actually illegal, as Illinois, like Maryland is a 2 party consent state, but that is largely irrelevant to the fact that a rock got turned over, and the slime beneath was revealed.

What Atrios Said:

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When Atrios notes that Barack Obama had nearly complete freedom in designing the Home Affordable Modification Program. The money was allocated largely without strings, and he was free to do anything short of throwing it from a helicopter, or as he so pithily notes, “This program did not require President Snowe to sign off.

Still, as David Dayen at FDL notes, the program was designed to benefit banks and loan servicers, and in fact paid for the sort of foreclosure abuses and law-breaking at the expense of home owners in peril.

This is more than a policy failure, it is a deliberate betrayal of the basic ideals of liberalism, and an embrace of Bush/Cheney style crony capitalism.

If anything comes from the current foreclosure implosion, it will be in spite of the Obama administration, not because of it.

Judge Enjoins Don’t Ask Don’t Tell, Obama Defends DOMA

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A month ago, Judge Virginia Phillips ruled Don’t Ask Don’t Tell unconstitutional, and today, she issued a permanent injunction against the policy, forbidding the military from conducting investigations or proceeding with separations:

A federal judge in California issued a permanent ban Tuesday on the Pentagon’s “don’t ask, don’t tell” policy on gays and lesbians in the military, ordering the Defense Department to immediately halt any efforts to remove personnel because of their sexual orientation.

The government has 60 days to appeal the ruling, which gives the administration until after the midterm election next month to make a decision. But it also presents a problem for President Obama as he tries to rally his Democratic base.

As a presidential candidate, Obama said he would work to do away with the policy. But should the Justice Department appeal the ruling, it could anger many of the president’s liberal supporters, something Obama and congressional Democrats can ill afford.

In a separate case that posed a similar problem, the administration decided Tuesday to appeal two court rulings in Massachusetts that found unconstitutional the federal definition of marriage as between a man and a woman.

The administration filed a notice of appeal to protect the 1996 Defense of Marriage Act, or DOMA, which bars gay marriages, although Obama opposes the law. A Justice Department spokeswoman told the Associated Press that the administration was obligated to defend federal laws when challenged in court.

So we know where this is going. On November 3, when there is no immediate electoral consequence, the DoJ will file an appeal, because, to paraphrase Kanye West, Barack Obama doesn’t care about gay people,

If Congress wants to change the law, there will be no support from the White House, and we know this because there has been no support from the White House, but rest assured he’ll probably sign a repeal if it hits his desk, because it’s the easy thing to do.

Well, This is Nice…

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Now if only he would continue his attacks on corrupt Republicans after the election:

The White House intensified its attacks Sunday on the powerful U.S. Chamber of Commerce for its alleged ties to foreign donors, part of an escalating Democratic effort to link Republican allies with corporate and overseas interests ahead of the November midterm elections.

………

David Axelrod, a top Obama adviser, said on CBS’s “Face the Nation” that secret political donations to the chamber and other groups pose “a threat to our democracy.”

Axelrod also took the unusual step of calling on the chamber to release internal documents backing up its contention that foreign money is not being used to pay for U.S. political activities. Democrats have seized on a report by a liberal blog alleging that dues from chamber-affiliated business councils could be used in that way.

“If the chamber opens up its books and says, ‘Here’s where our political money’s coming from,’ then we’ll know,” Axelrod said. “But until they do that, all we have is their assertion.”

The chamber has vehemently denied the allegations, characterizing them as part of a desperate strategy to stave off a GOP takeover of Congress. The business lobby has vowed to spend up to $75 million on the midterm elections, primarily in favor of Republicans.

On November 3, Obama will be back to kissing their asses.

They should be beating this drum every day.

And the Obama Administration’s Response to the Widespread Foreclosure Fraud by the Banks Is…

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To take the side of the big banks who are ignoring the law, with Obama proxy David Axelrod on Face the Nation saying that he hopes that this, “moves rapidly and that this gets unwound very, very quickly,” meaning allowing the banks to continue breaking the law, while an “administration source is saying that, “the administration was also seeking the servicers’ help with modifying the home loans of millions of borrowers to help them avoid foreclosure.”

The translation here is that because the administration was perpetrating a fraud on homeowners on behalf of the banks with the HAMP, they couldn’t be expected to pursue them when they broke the law.

The most egregious quote is from Federal Housing Administration Commissioner David Stevens:

We believe freezing foreclosures for all banks in all states, whether we have reason to believe them to be in error or not, is simply not the prudent step to take in this fragile housing market

(emphasis mine)

So, even if the banks broke the law, it is the victims who have to pay for this, because the banks own Barack Hussein Obama.

I would suggest that you read Yves Smith here, here, and here. She touches all the bases, and does it better than I am.

This is Getting Ugly Fast…

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Bank of America just suspended all foreclosures nationwide:

Bank of America Corp. imposed a nationwide moratorium on foreclosures and the sale of foreclosed homes after it came under intense pressure from a government-run housing-finance giant worried about documentation problems, people familiar with the situation said.

The bank called the halt as concern mounted from legislators and state prosecutors about procedures used by lenders to foreclose on homes. Many banks use so-called robo signers, employees who sign hundreds of documents a day, without carefully reviewing their contents, when foreclosing on homes. Critics say that could result in improper foreclosures.

Freddie Mac, the government-run mortgage-finance company that along with Fannie Mae owns many of the mortgages serviced by banks, pressed Bank of America to expand its search for problems with the foreclosure documentation process, said the people familiar with the situation.

A year ago, I wrote about potential issues with MERS, and I figured that there might be a fair number of cases out there, but the developments of the past few weeks, which, credit where credit is due, were spotted and covered with far more detail and intellect by Yves Smith than by me, have been remarkable.

This is all falling apart at a far greater speed than did the collapses of Bear Stearns and Lehman Brothers in 2008.

We had low key mainstream coverage on the brokerage houses’ issues in 2007, but the first mainstream coverage of the mortgage debacle is from just a month ago.

I would further note, that what is going on now has NOTHING to do with MERS, which remains the elephant in the room.

This feels like the first few pebbles hitting us from an avalanche.