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Banks Beef About Fraudclosure Settlement As Stocks Rise on the News

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I’ve pointed out how effective a non-negotiable posture can be, at least until the other side pulls out its ammo or threatens to walk from the deal. Most people in negotiations go on the assumption that the other side is reasonable or at least sincere (even if sincerely deluded) and will offer concessions on the assumption the other side will reciprocate.

The poster child of the usual outcome of offering concessions to a party who is non-negotiable is can be summarized in one word, as in “appeasement” circa 1939. And the ridiculous part is that the banks are being allowed to cop a ‘tude when the other side holds all the cards.

Let’s get this straight: this “settlement” should not be a negotiation. Virtually all the items in the 27 page outline of mortgage settlement terms that was leaked yesterday simply restates existing law or existing contractual obligations. If the officialdom wants to rely on mechanisms beyond the courts (since some judges are more pro-bank than others, which can produce the dreaded disease of “uncertainty”), the same results could be achieve by rulemaking without regulators or state attorneys general providing any releases from legal liability to the banks.

As banking/mortgage expert Josh Rosner said in an e-mail to clients:

Very high level sources within the CFPB point out that every item in this AG proposal could be required of servicers by CFPB rule-making. This begs the question, why release servicers and banks from claims and tie state Attorneys General for items that can be had free?

Following on that point, Iowa AG Tom Miller has apparently been unwilling to discuss the substance (even with the AGs) of the releases of claims he is asking the AG’s to sign onto. From the term sheet is seems that it is likely he is seeking to release claims not only related to robosigning but to other servicer practices and likely to front end assignment and underwriting issues.

The White House has supposedly begun to assist Miller in an arm twisting campaign to pressure state AGs to sign onto the agreement and release claims. We have heard that President Obama supposedly had a private meeting with Tom Miller and at least one Democrat AG who has been on the fence regarding the deal. For the White House to pressure state representatives appears to blur the lines between federal and state interests.

But instead of recognizing that their days of rule-breaking might be coming to an end, servicers are complaining bitterly, as Kate Berry tells us in an American Banker article:

Privately, mortgage servicers are fuming.

The proposed settlement agreement with state attorneys general and federal regulators, the companies will tell you, is unfair and impracticable.

I’ll spare you several paragraphs of the “but they were deadbeats and no one was hurt by robo-signing and all our foreclosures were warranted.” Well, if you normally operate as judge, jury, and executioner, and it’s too costly for borrowers to counteract predatory servicing, in your little self-referencing world, everything will look hunky-dory and challenges to your authority will be deemed to be improper and unwarranted. For borrower to fight “servicer driven foreclosures” on the issue of erroneous charges and the impermissible fee pyramiding requires hiring costly expert witnesses. That’s something beyond the reach of broke borrowers. So they fight the cases based on issues of standing, which allows the banks to preserve the myth that their records are always accurate. Estimates I’ve gotten from attorneys fighting foreclosures of how many cases they handle are the result of servicer driven foreclosure ranges from 50% to 70% (note that people who fight foreclosure more often than not feel they are the victim of origination or servicing abuse, and they want a mod, not a free home).

The interesting next bit is that Berry undermines the banks’ biggest excuse for not giving mods (emphasis ours):

Lawyers for the servicers maintain that the proposal does not distinguish between loans a bank services for itself and a loan it services for others. And servicers insist they don’t have the authority under the pooling and servicing agreements governing securitizations to do a great deal of what the proposal calls for them to do.

The servicers say they are not authorized by PSAs to make principal reductions on loans held in private-label securities, as the draft settlement calls for them to do, so the companies argue it is unclear if a proposed government settlement would override such contracts.

Industry lawyers are saying the AGs are “shooting the messenger.” But the industry has been pinning the blame for the glacial pace of loan mods on the alleged straightjacket of the PSA for several years now. And when pressed, officials quietly acknowledge that no one at a servicer ever goes back to the investors asking for authority. (It’s also worth noting that the regulators’ term sheet does try to address the issue. If a borrower requests a modification and the servicer believes the PSA prevents one, the servicer must still perform a net present value test and, when that test indicates a mod would be less costly than foreclosure, present that result to trustees or other authorized parties to obtain consent for a modification.)

Some PSAs do prohibit mods, some limit them, and some have no restrictions. The fact that the industry has never mad any effort to reduce principal is due to two reasons. First, their fees are set as a percentage of outstanding principal, so a principal mod works directly against their economic interests. Second, as we have discussed before, writing down a first mortgage would require a writedown of a second mortgage, and banks usually hold seconds on their own books. That writedown would be a hit to capital.

But it appears investors think this settlement is a great deal. And it is. Even if the banks wind up incurring the dreaded $20 billion among them and get a broad waiver from liability (not private suits, but regulators and AGs are far more logical parties to pursue some actions than others), this will be a steal.

As Barry Ritholtz pointed out:

Today’s bank rally lets you know exactly what the Street thinks about the proposed mortgage settlement. The big up could reflect the belief that it is a giveaway/bailout, and lets the banks get off scott-free from their criminality.

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30 comments

  1. attempter

    The poster child of the usual outcome of offering concessions to a party who is non-negotiable is can be summarized in one word, as in “appeasement” circa 1939.

    Yes. By now we know that the banksters and their government flunkeys will not negotiate with the people. We keep expecting them to be reasonable. That is, people keep believing these promises of “reform”, and therefore refuse to walk away from the table of what’s obviously an incorrigible kleptocracy. Many even continue to negotiate in the form of “voting” for one or the other among a set of proven criminals, even though we know what the result will be.

    This government is unresponsive beyond redemption, while these corporations are pure psychopaths. To put it in the language of the post both are non-negotiable. And yet we the people hold all the cards. So when are we going to recognize these facts, end this appeasement cycle of reformism, voting, and zombifying faith in a failed system, and walk away from the table, walling up the criminals in the cell behind us?

    1. Mark P.

      Well, Attempter, enough of ‘we the people’ would probably need to get on the same page. I also don’t see that merely ‘walking away from the table’ will actually ‘wall up the criminals in the cell behind us.’

      Not that I don’t largely agree with your attitude, but these are revolutionary platitudes you’re reciting. Sometimes I think that the Internet — even sites as worthy as Naked Capitalism — bring us to a point of diminishing returns, where all our ranting serves to deflate energies that might be turned towards actual opposition.

      Still, I like Mr. Adams’s post today, which strikes to the heart of the problem of negotiating with the current U.S. regime. What we need are stronger strategies and tactics, since the ones we have aren’t changing the enemy’s behavior.

      Along these lines, one of the primary architects of U.S. Cold War nuclear strategy was the game theorist Tom Schelling, who was responsible for basic ideas like arms control as an implicit adjunct to deterrence, and installing a hot line between the U.S. and the Soviet premiers (yes, honestly, someone once had to think these things up!) However, Schelling had begun as a young economist working for the Marshall Plan post WW-II, and thereby had become interested in bargaining theory and how parties took non-negotiable positions in order to get their way. Hence, he became largely responsible for the whole ‘madman theory’ thing (though this goes back at least as far as Machiavelli).

      In deterrence theory, a threat must be credible to have deterrent power. Hence, ‘precommitment’ is a strategy discussed by Schelling, in which a party to a conflict strengthens their position by cutting off some options to make their threats more credible (for instance, an army burning its bridges behind it making retreat impossible, or Hernándo Cortés ordering his men scuttle their ships so as to eliminate any means of desertion.) Strategies such as burning bridges eliminate possibilities, thus increasing the chance of conflict.

      The ideal is to force to one’s opponent into a non-negotiable position where they have one clear last chance to avoid war. Of course, that also means that one must credibly appear to be ready to go to war.

      http://en.wikipedia.org/wiki/Thomas_Schelling
      http://en.wikipedia.org/wiki/Thomas_Schelling#The_Strategy_of_Conflict
      http://en.wikipedia.org/wiki/Madman_theory

      1. attempter

        I’m sorry that I failed to encompass my entire project in a single comment, such that it’s just “platitudes”. But I think overall I’ve written a little more than that.

        My point in this comment is that I’ve argued exactly this position for over two years now, ever since I started commenting on the rackets, and every subsequent piece of evidence has confirmed this position.

        But as you say, not everyone is yet on the same page with this realization. So I don’t see how it’s possible to deflate energies which haven’t even been mustered yet. Some people do find themselves in action, and consciousness comes later. But for most, consciousness has to come first. Real action is impossible while one still believes in things like the Democratic party, or government regulation of rackets, or the existence of the finance sector itself.

        By walking away and walling the criminals up behind us I mean we can dispense with them completely. We need them for nothing. We’ll be better off in their complete absence. So we should reject all their claims to authority and legitimacy. A good start, for example, would be a bottom up debt jubilation movement. Even better would be a total rejection of the legitimacy of all bank debt and REO.

        Those aren’t revolutionary platitudes. Those are policy suggestions whose rational and moral superiority to the status quo are self-evident, and which would certainly work far better in practice, if by working we mean the prosperity (and democracy) of those who actually do the productive work of civilization.

        But I gather that you concede a priori that this enemy has a legitimate point of view, that we need him, that we have to negotiate at all, and that it’s possible to “negotiate” with those whose entire record proves they are totalitarian criminals with whom no agreement could ever be reached.

        Even where one sees no immediate action one can take, in our minds we can at least burn those ships.

        Meanwhile in reality there are no bridges left for us to burn, since the enemy burned them all unilaterally. Today there are only the implacable flamethrowers of this onrushing enemy.

        1. CaitlinO

          We couldn’t agree more with all of your points. When we became aware of the impending bust in the summer of 2007 and saw that the soulless banks had done it again, we decided we didn’t want to play anymore. Since then we have dedicated 20% of our gross pay per year to paying down debt. We finally received our orginal blue ink note and deed of trust by FedEx last Monday.

          We drive older cars, eat out rarely, don’t have big screen TVs or granite countertops, but we are completely free of the tentacles of the vampire squids.

          Anybody can do this. We only continue as slaves of this corrupt system if we choose to.

        2. Michael H

          The attempter is right in that “consciousness has to come first”, and “we should reject all their claims to authority and legitimacy”.

          The correct attitude towards kleptocracy is one of total rejection, total refusal. The rest can follow, first we have to change our attitude toward these Little Eichmanns.

          As for the MSM, if Himmler himself were President, the American media would be falling all over themselves to lick his boots.

          While predator drones in Afghanistan slaughter children for the crime of collecting firewood, Obama asks us to “sharpen our instincts for empathy.”

          These criminals don’t deserve any respect, and we have to stop letting them define our lives.

          “So generation after generation of men in love with pain and passivity serve out their time in the Zone, silent, redolent of faded sperm, terrified of dying, desperately addicted to the comforts others sell them, however useless, ugly or shallow, willing to have life defined for them by men whose only talent is for death.”
          — Thomas Pynchon (Gravity’s Rainbow)

          1. attempter

            I think in character and mindset Obama’s a lot like Himmler. (Bush seems to have been more like Goering.)

            But since the media’s like the Goebbels Ministry, they never notice.

        3. Mark P.

          attempter wrote:

          “I gather that you concede a priori that this enemy has a legitimate point of view…”

          No. I observe that the reality is that this enemy currently pulls many of the levers of power: politicians’ campaign funds, Federal access, policing budgets, the ability to target persons and institutions via punitive litigation, like that.

          “…that we need him ….”

          Well, if we could tear down the whole existing banking system, we should. I’ve wondered whether it could be entirely replaced with automated software.

          But regarding the ‘walking away’ thing: personally, I’ve avoided debt slavery (except for a mortgage, which is hard to avoid) and possess more than one passport, which would enable me to live in quite a few places — and nevertheless commodity and food prices are rising globally.

          And that’s the point. Neofeudalism may also be an ideology, but it’s first of all a material project to arrogate to a very few power over the summed resources and powers of humanity as a whole. Obviously, money is power: the measure of the sum of human resources that a particular faction or individual has the power to arrogate to itself. And it’s not actually that easy to walk away from the neofeudalist grab, which is globally spread.

          “…that we have to negotiate at all, and that it’s possible to “negotiate” with those whose entire record proves they are totalitarian criminals with whom no agreement could ever be reached.”

          In reality, war is a form of negotiation and sides win or lose, and then settle. Sociopaths in power are a fact of life: FDR and then Truman negotiated with Stalin, for instance, first as an ally, then as an enemy.

          One looks for a big deterrent. Besides their ability to buy people and institutions, the TBTFs have just such a big bomb: that $65 trillion of derivatives that could abruptly unwind if one of them went down and thus bring down the whole system. An interesting thing — which never gets mentioned — is that since the monolines are mostly out of the game the TBTFs must now largely be the counterparties to each others’ risks.

          They’d have to be, wouldn’t they? As far as I understand it, there’s nobody much else left in the room. If anybody could educate me further on this score, I’d appreciate it.

          1. attempter

            Why should any of us be scared of the derivative meltdown? It has to happen sooner or later, and we’d be much better off if it had happened in 2008.

            As for the fight to destroy kleptocracy, while it’s true that we could have Russia’s February, or Egypt’s, at any time, for the time being it looks like the basic plan, the only one that can work, is to purge as many rents as possible from our lives, withdraw from the system wherever we can, rebuild our communities and become more self-reliant wherever we can, engage in resistance and civil disobedience wherever necessary.

            It’s a long, gradual process of erosion of the old and bad, building of the new within the old. But wherever necessary, we first have to change our minds.

          2. monday1929

            Jim Willie has done some early work on that. I believe his thesis is that the purchase of Treasuries, (which keeps interest rates low, which prevents the implosion of the National Ponzi)is embedded in all those derivatives.
            The lack of attention to that Elephant is astounding. While the failed banks and failed bankers (and they must be called that, and often)claim everything “nets out” and the only risk in that 600 trillion is about $434.00 and 84 cents, I believe 5-10 Trillion in concealed losses already resides there, with another 10-20 Trillion which will appear in the next leg down. This is a National Security matter, and they will kill anyone who threatens to upend it. It is why the Constitution has been shredded.
            If we could view bernanke’s and geithner’s nightmares, it is this derivative iceberg we would see.

      2. LeeAnne

        Mark P said: “Not that I don’t largely agree with your attitude, …” and “… where all our ranting serves to deflate energies that might be turned towards actual opposition.”

        Obviously you haven’t read Attempter’s blog where his articles identify and cover issues of the day in depth. Use of the word ‘Attitude’ strikes me as an attempt to trivialize the work, and worse, that you use as cover for attempting to discredit the Internet in general.

        Its been the PR ploy among the bosses and their minions in mainstream media MSM since the first of their appearances before Congress, to speak only in ‘feelings.’ When, with any rule of the law in force over Wall Street finances, we would be seeing daily perp walks; not just one very big scary looking dark-skinned man. Sorry, I forgot about the dozen or so insider-information bust without mention in any media that Congress employees are exempt from ‘Insider Trading Laws.’ Just another perk for the job, eh? Health care pales by comparison.

        “… the Securities and Exchange Act does not apply to members of Congress, according to Craig Holman, legislative representative at government watchdog group Public Citizen.

        “Any inside, non-public knowledge they gain can be acted upon,” Holman tells Minyanville. “Some of the stories are just… breathtaking.”

        Greenspan was sorry and made a mistake of some sort. Hank Paulson ‘was working hard.’ Likewise, Timmy and Bernanke, testifying before Congress used similar words, if you can legitimately refer to someone with an exemption from US rule of law as having testified. And who, by extension of their exemption from US rule-of-law by the US Congress (lest anyone forget), exemption from the rule-of-law regarding finance (fraud) of all 57 member banks of the BIS (Bank of International Settlements -the Central Bank of all Central Banks) who (they are persons, right?) are included in the banks and financial institutions (arguably any corporation or high net worth client of a bank of the IMF 192 member countries of the UN, also arguably covered by the exemption from finance rule of law (fraud).

        Family and friends of the bosses.

        Of course, it was sham testifying, even though we saw it on the TV. Didn’t we? Just like we were told they did things in the big bad Soviet Union.

        Then, in another comment you mention Obama and HFT.

        Surely its just an oversight in an otherwise articulate comment that you failed to mention the PPT that plunged the Bush/Paulson/Bernanke stock market down 700 points in a tactic to effect the financial 2008 coup d’etat. It was a daring move worthy of a desperate situation where as it turns out Obama has proved he’s their man, but no one could be absolutely certain about that; therefore, the timing of the coup d’etate.

        So blatant was his behavior, even the Chinese commented their disapproval and amazement of Hank Paulson’s self serving in that official capacity; literally commuting to and fro China to do deals for Goldman Sachs to personally reap the benefits of selling out America and Americans.

        Mission accomplished.

        1. DownSouth

          LeeAnne said: “Use of the word ‘Attitude’ strikes me as an attempt to trivialize the work, and worse, that you use as cover for attempting to discredit the Internet in general.”

          I think Mark P. pretty much exposed his hand in his comment below when he said: “Nor is it only with…American homeowners that this administration and Washington as a whole have colluded…”

          1. Mark P.

            To be exact, I wrote: ‘Nor is it only with the U.S. housing market and American homeowners that this administration and Washington as a whole have colluded with and actively supported the financial industry’s predations on ordinary Americans.’

    2. DownSouth

      attempter,

      There were some great sources linked in comments yesterday that might help you put a little more empirical lead in your bullets, for instance when you charge that “these corporations are pure psychopaths.”

      Probably the most preeminent authority on psychopathology is Dr. Robert Hare. He designed the standardized questionnaires (PCL-R and PCL: SV) used to probe for psychopathology.

      Robert Hercz wrote the following, which are excerpted from this article he wrote after interviewing Hare:

      • Hare has said that if he couldn’t study psychopaths in prisons, the Vancouver Stock Exchange would have been his second choice.

      • Psychopaths love chaos and hate rules, so they’re comfortable in the fast-moving modern corporation.

      • “A lot of white-collar criminals are psychopaths,” says Bob Hare. “But they flourish because the characteristics that define the disorder are actually valued. When they get caught, what happens? A slap on the wrist, a six-month ban from trading, and don’t give us the $100 million back. I’ve always looked at white-collar crime as being as bad or worse than some of the physically violent crimes that are committed.”

      • Know your own weaknesses, they advise, because the psychopath will find and use them. Learn to recognize the psychopath, they tell us, before adding that even experts are regularly taken in.

      Here are some responses Hare gave in this interview with Dick Carozza:

      • Much more problematic are fraudsters whose activities reflect a virulent mix of personality traits and behaviors including grandiosity; sense of entitlement; a propensity to lie, deceive, cheat, and manipulate; a lack of empathy and remorse; an inability to develop deep emotional and social connections with others; and the view that others are merely resources to be exploited – callously and without regret. These white-collar psychopaths often are heavily involved in obscenely lucrative scams of every sort. They lead lavish lifestyles while their victims lose their life savings, their dignity, and their health – a financial death penalty as one law enforcement officer put it. The public and the courts have difficulty in appreciating the enormity of the damage done by these social predators, and because their crimes often do not involve direct physical violence, they may receive comparatively light fines and sentences, and early parole. The money obtained from their depredations is seldom recovered, leaving the victims and the public bewildered and convinced that crime certainly does pay when committed by those whose charm, egocentricity, and deception disguise a flabby conscience.

      • They want many of the same basic things that the rest of us want, but, in addition, have an inordinate need for power, prestige, wealth, and so forth. They differ from most of us in terms of how much they “need,” their sense of entitlement to whatever they want, and the means with which they are willing to achieve their ends. They also differ dramatically from others in the communal nature of their needs and goals. That is, the sense of altruism, concern for the welfare of family, friends, and society, and the social rules, expectations, and reciprocity that guide most people are irrelevant to psychopaths. They operate according to their own self-serving principle: look out for number 1, no matter what the cost to others, and without guilt or remorse.

      While certainly many white-collar criminals are psychopaths, not all rise to that level of psychopathology. Some have antisocial personality disorder:

      The personality disorder measured by the PCL-R is similar to antisocial personality disorder (ASPD), described in the American Psychiatric Association’s DSM-IV. The difference is that the PCL-R places considerable emphasis on the interpersonal and affective traits associated with psychopathy, whereas ASPD is defined more by antisocial behaviors. As a result, ASPD fails to capture the traditional construct of psychopathy and is much more prevalent in community and forensic populations than is psychopathy.

      Other white-collar criminals are sociopaths or have narcissistic or histrionic personality disorders:

      The terms psychopathy and sociopathy refer to related but not identical conditions. Psychopaths have a pattern of personality traits and behaviors not readily understood in terms of social or environmental factors. They are described as without conscience and incapable of empathy, guilt, or loyalty to anyone but themselves. Sociopathy is not a formal psychiatric condition. It refers to a pattern of attitudes, values, and behaviors that is considered antisocial and criminal by society at large, but seen as normal or necessary by the subculture or social environment in which it developed. Sociopaths may have a well-developed conscience and a normal capacity for empathy, guilt, and loyalty, but their sense of right and wrong is based on the norms and expectations of their subculture or group. Many criminals might be described as sociopaths. Narcissistic and histrionic personality disorders are described in DSM-IV, and their differences from psychopathy are outlined in “Snakes in Suits.” Briefly, narcissistic personality disorder involves an excessive need for admiration, a sense of superiority and entitlement, and a lack of empathy. It does not necessarily include the lifestyle and antisocial features of psychopathy, outlined earlier. Histrionic personality disorder is defined by excessive and overly dramatic emotionality, attention-seeking, and a strong need for approval. It lacks the lifestyle and antisocial features of psychopathy.

      The question always comes up: Why are people—-individuals, families, clubs, churches, businesses, and corporations, to entire nations—-so gullible to the entreaties of psychopaths? Two references, here and here, attempt to answer that question:

      The ultimate cause of evil lies in the interaction of two human factors: 1) normal human ignorance and weakness and 2) the existence and action of a statistically small (4-8% of the general population) but extremely active group of psychologically deviant individuals. The ignorance of the existence of such psychological differences is the first criterion of ponerogenesis. That is, such ignorance creates an opening whereby such individuals can act undetected.
      [….]

      “In any society in this world, psychopathic individuals and some of the other deviant types create a ponerogenically active network of common collusions, partially estranged from the community of normal people… Their sense of honor bids them to cheat and revile that ‘other’ human world and its values at every opportunity.” (Lobaczewski, 138)

      “We could list various names ascribed to such organizations… gangs, criminal mobs, mafias… which cunningly avoid collision with the law while seeking to gain their own advantage. Such unions frequently aspire to political power in order to impose their expedient legislation upon societies in the name of a suitably prepared ideology, deriving advantages in the form of disproportionate prosperity and the satisfaction for their craving of power.” (Lobaczewski, 158, emphasis added)

      “Gangs have always provided great opportunities for young psychopaths. Their impulsive, selfish, callous, egocentric, and aggressive tendencies easily blend in with – and may even se the tone for – many of the gang’s activities. Indeed, there cannot be many other activities that produce so many rewards for violent psychopaths, with such impunity.” (Hare, 176)

      Living in a world whose morals and customs are meaningless to them and even seen as oppressive, psychopaths dream of a “happy” and “just” world where their depraved worldview is accepted as reality. They seek, by any means necessary, to achieve positions in government where their dreams can be brought to fruition. If injustice does exist in a society, their statements regarding the ‘unfairness’ of their situation can resonate with those who actually do experience such injustice. Thus, revolutionary doctrines can be accepted by both groups for diametrically opposed reasons.

      1. Richard Smith

        Smack on, DS. BTW I don’t think I could explain why Paul Jackson attracted my attention without using the words “Robert Hare”.

  2. john bougearel

    So,

    What this is boiling down to is that banks are abusing their contractual obligations to foreclose on millions of homeowners in generally good standing to recap their grossly impaired and mismarked balance sheets, or in short their basic insolvency

    Lovely!

    And what is more offensive, is that the executive, legislative and judicial branches of our govt are all in collusion with the banksters. So much for checks and balances in our democracy, the banks have captured and co-opted the whole sh-bang.

    This “Settlement Terms” with the banksters frames the brazenness of our publicly elected officials wonderfully.

    1. Mark P.

      We all know this. Nor is it only with the U.S. housing market and American homeowners that this administration and Washington as a whole have colluded with and actively supported the financial industry’s predations on ordinary Americans.

      Another instance of this administration behavior has been the Potemkin stock market that’s been enabled by high-frequency trading.

      For two and a half years, the HFT thing — and the market manipulations it enables — have been embraced and supported by the Obama administration and Washington generally. Indeed, the administration used a HFT company as market maker in order to juice the General Motors IPO. This is despite the fact that such HFT trading must prey primarily on the pension funds or mom-and-pop investors.

  3. Skippy

    The vast majority of the snookered American population being *reduced* in a buy / sell side stand off…whom will blink.

    Skippy…the masses just might go after both…one can wish.

  4. LeeAnne

    The day of the announced 50-member AG coalition to address foreclosures, I felt overjoyed (this is all about feelings, right?) as in Kate Berry’s comment in an American Bankers article that the “Privately, mortgage servicers are fuming. …”

    Problem is I expressed this ‘overjoy’ (finally, there would be justice), right?) on that day to a friend originally from Romania; a practicing dentist in this country I’d guess for at least 20 years, debunked it; cynically, it seemed to me, in accented English, but simply and effectively.

    Why? IMO, because he knows viscerally what it feels like to be living under the heel of a totalitarian regime.

  5. LeeAnne

    How many more ‘shocks’ will it take to accept that totalitarianism has taken over this country. No one is safe. Only the house slaves are protected.

    Anyone can be on a list of some kind secretly that’s interfering with employment, winning a contract, or housing. We’ve already lived for a long time with ‘terror’ that anything should affect our credit rating. Its not a leap to imagine being on some list, secretly.

    We’re here now.

    1. monday1929

      One of the predictions I’ve been wrong on was expecting a major scandal involving “Fair Issac” (FICO). Maybe just early on that.

  6. Max424

    Yves, good post.

    Commentariat, good comments.

    Naked Capitalism; the best site on the web (bar none). If you are too lazy to visit this blog every day, then you can’t possibly know what the hell is going on.

    It’s either that, or you prefer not to know what the hell is going on. Choosing to be ignorant; much worse than being lazy!

  7. Wild Bill, Sr.

    Term Sheet = Federal Bank Bailout

    The Banks will moan and groan publicly but they are laughing their asses off in the office, lobbying money well spent, “Suckers!”

    Taypayers/States will eat this one, again, and the banks will use this as an excuse to increase fees on their customers.

    Big bank bonuses coming in 2012.

  8. john

    This looks like a way to federalize all state mortgage laws so that central political control can be solidified over all property rights in the United States. If banks are allowed to get away with this with real estate and mortgages for real estate, how anyone can argue that markets or property right exist in any meaningful way for citizens escapes me. If politically powerful institutions can do as they please we have arrived at the end of a road to serfdom where our new princes are corporate managements. I hope this dark age is short.

    1. psychohistorian

      Please understand I am attempting to be additive by mentioning that the corporations and banks are owned by the same people at the top of the heap that used to be called princes.

  9. Francois T

    “And the ridiculous part is that the banks are being allowed to cop a ‘tude when the other side holds all the cards.”

    All the cards?

    The banks hold the Royal Flush: unlimited campaign money!

    Politicians, being the cowards they are, take the easy way out; kiss the ^$&%*# of their donors.

    Oh! BTW…did you think for a second that Obama, being the ultimate worshiper of the Rule of Law that he is, does actually care about banks’ systemic fraud?

  10. Daniel Pennell

    Call the Fraud Section Chief at the Department of Justice and let them know you want to know why there are not massive prosecutions.

    202 – 514 – 7023

    If the banks do not want to pay for the get out of jail free card then let them go to jail.

Comments are closed.