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John O’Brien: Mortgage Settlement Fails to Address Banking Criminal Enterprise

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Yves here. The release by San Francisco county assessor-recorder Phil Ting of a study of document irregularities in foreclosures has put a spotlight on the failure of Federal banking regulators and state officials to do anything beyond cursory examinations of servicers’ bad practices. If a country official with limited resources can show that there are widespread abuses, what is the excuse of state and Federal officials for their failure to understand the depth and severity of these problems?

As Dave Dayen has pointed out, it was two county registers of deeds, Jeff Thigpen in Guiford County, North Carolina, and John O’Brien of South Essex County, Massachusettes, who were the first to look at their own records to see how extensive the frauds were. O’Brien has called his office a “crime scene” and refused to register any more fraudulent deeds. He also performed a study of his own, and the results were released in June 2011. As Dayen reported, the study found widespread failures and apparent fraud, just like the later San Francisco exam:

Register John O’Brien revealed the results of an independent audit of his registry. The audit, which is released as a legal affidavit was performed by McDonnell Property Analytics, examined assignments of mortgage recorded in the Essex Southern District Registry of Deeds issued to and from JPMorgan Chase Bank, Wells Fargo Bank, and Bank of America during 2010. In total, 565 assignments related to 473 unique mortgages were analyzed.

McDonnell’s Report includes the following key findings:
• Only 16% of assignments of mortgage are valid
• 75% of assignments of mortgage are invalid.
• 9% of assignments of mortgage are questionable
• 27% of the invalid assignments are fraudulent, 35% are “robo-signed” and 10% violate the Massachusetts Mortgage Fraud Statute.
• The identity of financial institutions that are current owners of the mortgages could only be determined for 287 out of 473 (60%)
• There are 683 missing assignments for the 287 traced mortgages, representing approximately $180,000 in lost recording fees per 1,000 mortgages whose current ownership can be traced.

Below, John O’Brien gives us his views on the mortgage settlement.

By John L. O’Brien of the Southern Essex District Registry of Deeds – Salem, MA

When you enter my registry you see a sign that reads “The deeds tell the story.” Before the big banks took it upon themselves to corrupt the land recordation system, the deeds used to tell a happy story, one in which people purchased a home and lived “the American Dream.” Today, however they tell a different story one of greed, fraud, and forgery. By now everyone in Massachusetts knows what I have been doing over the past two years to expose and stop the schemes by the Mortgage Electronic Recording Systems, Inc. and their shareholder banks. The accuracy and integrity of the land records in my registry are of the upmost importance to me.

Just this past week the Attorney Generals of this country said they will enter into a deal with the 5 largest banks who have agreed to stop robo-signing, provide principal reductions of between 20 to 25 thousand dollars to a million underwater homeowners. This amount will in no way solve the housing crisis that we are faced with nor even begin to turn our economy around. In addition, the settlement suggests that approximately 750,000 people who have had their homes taken by foreclosure using fraudulent documents will receive a check for $2,000. As Yves Smith has said, “that amount is the new penalty for forgery.” This is merely a slap on the wrists to these lenders. It is my opinion that this deal has been crafted for the banks and by the banks. It is not in the best interest of the consumer, the homeowner, or the taxpayer. Simply put, I do not trust these lenders who have flooded my registry with over 32,000 fraudulent documents to do the right thing. Those homeowners who now have a corrupted title are looking for answers. This deal gives them none. The illegal activity by the banks is nothing shy of a criminal enterprise, where they crossed state lines using the United States Postal Service to deliver the instruments that were fraudulent and contained forgeries.

I will continue to pursue my request for Federal and State grand juries to be impaneled to hold the CEO’s of these banks liable for the crimes that have been committed under their watch. The only thing missing in this illegal scheme that MERS and the big banks came up with was a gun and a mask. I will continue to expose this fraud and work everyday to make sure that the taxpayers are fully reimbursed for the over $44 million dollars in lost recording fees in my district alone by institutions who still believe fees are “for thee but not for me.” A message needs to be sent to these banks that they may think that you are too big to fail but they are not too big to go to jail.

We need a common sense approach in order to get this economy running again. I strongly believe that the hardworking homeowners who have struggled to stay current on their mortgages should be able to refinance there homes, quickly at a fixed rate of 3%. A true national program with these terms would lower payments and infuse millions into our economy immediately.

Let’s not forget that foreclosures benefit no one. When a bank auctions off a home for less than is owed, that becomes the “comp” for the neighborhood. Simply put, your home and those of your neighbors are worth less. It makes far better sense to work with struggling homeowners and to take whatever action is needed to keep people in their homes.

Unless we face the facts and approach this with common sense we will be talking about the same issues a year from now and I am not sure we can wait that long.

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142 comments

  1. Tyzão

    that is so right on — crossing state lines using the USPS

    did he send to you to post here original, or is his original post somewhere else?

    thanks for sharing

    1. KnotRP

      > Let’s not forget that foreclosures benefit no one.

      Actually, it benefited pretty much everyone,
      except the now-bankrupt last-sucker and the
      debt bagholder (pension funds, retiree’s 401k
      holdings).

      That’s why it happened.
      And why it will happen again.
      Rule of law is for pikers.

      1. KnotRP

        …and of course the tax payer, but they don’t know
        it yet because we’re borrowing-and-dumping-into-various-blackhole-malinvestments rather than taxing it, so the
        bill hasn’t arrived and the menu has no prices.

      2. Carla

        “it benefited pretty much everyone”….

        except the whole country. Just leave out the entire country, and yes, then it’s easy to see the benefits to pretty much “everyone.”

        1. KnotRP

          It’s called bifurcation.
          Most of us are tax paying suckers.
          Some of us levered up, and hoovered
          up all future income, and now the
          future has arrived.

          Yes, “everyone is screwed”, except for the beautiful people…

  2. F. Beard

    We need a common sense approach in order to get this economy running again. I strongly believe that the hardworking homeowners who have struggled to stay current on their mortgages should be able to refinance there homes, quickly at a fixed rate of 3%. John O’Brien

    What about non-debtors? Banking has cheated them too.

    A true national program with these terms would lower payments and infuse millions into our economy immediately. John O’Brien

    True but so would a universal bailout ala Steve Keen and much more justly.

    1. LeonovaBalletRusse

      F. Beard, U.S. Treasury Notes signed by Treasurer William K. Black as our only *paper* currency. A sum certain to every U.S. citizen registered to vote, by Social Security number I.D., to an address certain (where registered to vote).

  3. Woodrow Wilson

    This is my County, and the sad reality is, there’s a whole lot of people here that think this issue is STILL about deadbeats wanting free shit.

    I have written about this issue a few times in our regional newspaper and the feedback is 50-50. Once you throw in technical and legal terms, you lose the audience (including my own spouse).

    Ironic, as the Attorney General Coakley’s office just sent me the standard form reply of how good this settlement is:

    “The agreement will settle several of the claims alleged in AG Coakley’s lawsuit against the five banks filed on December 1, 2011. In Massachusetts, this agreement provides for immediate relief and continued enforcement. The banks will provide an immediate infusion of millions of dollars in relief for struggling homeowners. It also allows the Attorney General’s Office to continue to pursue claims against the banks for initiating illegal foreclosures in our state and corrupting our land court system. This settlement does not release any criminal liability or grant any criminal immunity to the banks, and it does not release any private claims by individuals or class action claims.”

    Now there’s whispers from Beacon Hill that some of this money will go to underfunded coffers (i.e. public employee pensions). If true, it’s a clean sweep, as the victims are made to look like perpetrators, and the fraud continues from my State Legislature without a hitch.

    Rule of Law? Where? Not here.

    Still think harsh language is going to work? This is but a microcosm of an issue, in a country corrupt and rotten to the core.

    1. nonclassical

      “rotten to the core”…which is what you get without “transparency, oversight, accountability”, all of which bushit reduced, and now bushbama refuses to accomplish…beyond political-election posture.

      1. Seth

        “Corrupt and rotten to the core” is what you get when you elect a Chicago machine politician (or a Republican) to the White House.

    2. Paul Tioxon

      http://www.bankerandtradesman.com/news148759.html

      A federal court in Kentucky has dismissed a suit against the Mortgage Electronic Registration System (MERS) brought by that state’s county clerks.

      The court dismissed the case “with prejudice” meaning it cannot be resubmitted.

      “There is nothing in the plain language of the statute that indicates that the statute was designed to be enforced by the county clerk,” the court wrote, saying that the registration system was intended to make prospective purchasers aware of potential liens against property. While a failure to do so might give such a purchaser a legitimate complaint, the court ruled, the clerks were not an injured party under the law and could not bring suit.

      THERE SEEMS TO BE NO RECOURSE FOR COUNTY CLERKS IN SOME STATES FOR FAILURE TO PAY FEES. CAN EVERYONE IN KENTUCKY AVOID SUCH FEES?

      1. KnotRP

        Good luck being certain that your next home purchase
        results in a home really titled to *you*, and that you
        actually paid the right party.

        When the rule of law goes, everything goes with it….

        1. Nathanael

          Remember: possession is nine tenths of the law.

          If you want a new home, find a vacant one you like, squat in it, and set up a sufficiently hostile military encampment to keep anyone from bothering you. (Preferably do this by getting the support of the local cops.) After a while, file for ownership by adverse possession. This seems to be the only way to get good title to most of the land in the US now….

  4. Judson Witham

    Fake Jurats …. ROBO Signed Fraud …. What Other Laser Printer Faked Counterfeit BOGUS Papers have been employed to STEAL Peoples Money and Homes ? Maybe FAKE Social Security Cards and Fake Drivers Licenses and Fake Postage stamps and Fake $100 Dollar Bills are OK as well !! The problem is the Banking Regulators bare what The PRIVATE Fed Reserve Board Of Governors. Faked Mortgage Documents and Faked Forclosure / Trustee sales papers are FELONIES ….. I would suggest reading some here https://www.google.com/search?rlz=1C1GGGE_enUS370US372&sourceid=chrome&ie=UTF-8&q=Colonias+Bank+Looting+Subprime+Wall+Street+Crime+Land+Fraud

  5. Leviathan

    Yes, there have been widespread crimes, but the prescriptions outlined here are not going to solve the problems of the housing market.

    Many people are simply carrying too much debt. The settlement neither addresses that fact adequately nor punishes those who perpetrated the fraud which led to the obscene/unsustainable debt. It is a lose/lose situation.

    People need the power to walk away without incurring the life-damaging aftershocks to their finances and credit reports (which have, tragically, become the key for many to jobs and apartments, as well as the ability to buy a house or take out a loan of any kind). Give them that power and the banks will find a way to keep the most sustainable loan-owners in place. Those who cannot stay will be free to move on without the years-long drag on the economy.

    This settlement, such as it is, should at long last open the eyes of millions of people who have been waiting YEARS for relief from the government. Now you know: it ain’t coming. Personal courage and ingenuity will have to suffice. Stop whining, stop waiting. Clear the decks and move on.

    1. F. Beard

      Now you know: it ain’t coming. Leviathan

      That depends. If the Depression drags on many things will become possible – many bad, some good.

      Personal courage and ingenuity will have to suffice. Leviathan

      That’s something bankers would recommend – for everyone but themselves.

      1. Leviathan

        F. Beard,
        Having been through this process personally I can tell you that the “survivors” who make it long enough for government agents to “save” their house will still be psychologically and financially destroyed. There’s a reason shows like “The Walking Dead” are popular. Zombies are everywhere.

        A lot of people are saving their house by decimating their retirement savings. Bad idea.

        My main point is that the government has two main objectives, neither of which is “saving” any of us. One is to put off the day of reckoning past November. The other is to prevent another financial seizure (i.e. save the banks).

        You are responsible for saving yourself. If 20k in principal reduction will make all the difference to you, by all means keep paying your mortgage. If not, it’s time for plan B. Yeah, I know the banks preach personal responsibility and self-help for THEE never for ME. What should we do about it? 5 people have hijacked democracy by buying these elections via their Superpacks. Where’s the rioting? We are sheeple. Save yourself.

        1. Ed Sneaker

          “will still be psychologically and financially destroyed.”

          Why? This is an eye opening experience for them. Finally, things make sense, the depravity of the luddites and their institutions of fraud and violence have become clear as a sunny day. The fraudclosed minions were right all the time, their worst fears were correct. Ahhhh, what a relief! This is party time! Fight for freedom ‘Murica!

          1. Guy_Fawkes

            “will still be psychologically and financially destroyed.”

            You don’t know why???? I will tell you.

            I am one of the Patriots who have been fighting this nationwide fight. Here’s the devastation it has wrought to my life:

            -Family torn apart…my Father and sister have abandoned me.
            -Friends have left.
            -Stress has caused weight gain, face rashes, alcohol reliance.
            -And a complete and total loss of my social life.

            So, when you flippantly say “why”? Why not stop and think.

          2. Tony Wonder

            Wow, Guy_Fawkes… all this you blame on an underwater home?!

            I bought my first/only home in 2006. In mid-2010, after it had lost about a third of it’s value, I stopped paying my mortgage.

            Living rent-free for 15 months netted me approximately $26,000 that otherwise would’ve gone to the bank, which I used to pay off small remaining debts (credit card mostly) and to invest in tangible goods with no counter-party risk.

            When it was all said and done, I went on to rent a bigger house in a nicer area for less money. I am now debt-free and feel 100% emancipated. I will not be interested in owning real estate until the system has regained my trust, which does not seem to be on the horizon any time soon. My ex-house is currently on the market asking 50% what I owed, and not selling.

            Take responsibility for yourself and your decisions. The State is not going to help you. The banks are not going to help you. The only people that you can help you are yourself and your friends and family, and it seems like you’re doing a bang-up job of destroying all three.

            I’m sure your situation is different from mine, but I would argue that whatever it was, your priorities were bass-ackwards. A house is just a piece of land with a structure on it; there are many, many more out there, and it is NOT worth losing your family/friends/health/life over. You only get one family, you only get one life, and home is where you make it.

            GET YOUR SHIT TOGETHER MAN. I say this only with love for a fellow human. It starts with YOU.

          3. Leviathan

            I think we’ve got a pretty good illustration going here of the different reactions people can have to losing a home. It ranges from “oh well, sh*t happens,” to “my life is ruined.” If your friends and family can’t or won’t help financially or emotionally, well, the process is gut-wrenching. And that’s a LOT of people, by the way. Guy, I wish you well. It should get better. God willing, it will.

          4. Nathanael

            What F. Beard is saying is, when people have nothing left to lose, they become willing to consider dangerous options which they would not have.

            Joined an anti-foreclosure club yet? People did during the 1930s. These organizations blockaded houses against bankers and police, prevented auctions from happening, etc.

            This is an example of what will happen if things go further. The people dealing with the crisis *early on* find themselves alone, and are psychologically damaged. The people dealing with it later find themselves with hundreds of friends, and are *radicalized*.

    2. nonclassical

      Leviathan,

      please follow the $$$$ and explain HOW MUCH “personal debt” is involved with
      your “theory”?

      You see, the U.S. $6.5 trillion, world $16.5 trillion per year economies have been destroyed for over 3 years already, on the way to 10-20 more…last week
      sources stated there are to be 15 more quarters of extreme numbers of foreclosures and bankruptcies.

      Student loan debt outnumbers credit card debt. Following the $$$$, please show us how your conception could possible cause this sort of damage?

      It can’t-you won’t. First ever FED audit has already shown FED dumped another $16 trillion in banking coffers, secretly. Does your concept of “personal debt”
      responsibility exceed $16 trillion?

      Designated Senate Banking Chairman at the time Robert Johnson has stated the
      value of derivatives, by 2007 totaled $600 trillion, up from total $880 billion, circa 2001. Might be better to follow the $$$$ there-as he also noted 6 U.S. “investment banks” control 95% of…

      1. Leviathan

        I know, I know, the “big picture” is important. Blogs like this are great at keeping it in focus. The little picture is individual families’ mortgage and debt woes. Blogs like this don’t help illuminate these, except through comments. I am talking to people, not economists or central bankers. People who will not be helped by this settlement.

        1. nonclassical

          ..right, Levi..

          when banks-credit card industry lobbied bushitters to make bankruptcy more
          difficult-expensive, I thought, “Wow, a whole helluva lot of Americans are going
          to go bankrupt..”

          here we are…

          1. Min

            “when banks-credit card industry lobbied bushitters to make bankruptcy more
            difficult-expensive, I thought, “Wow, a whole helluva lot of Americans are going to go bankrupt..”

            Well done! :)

    3. Movin'On

      Come on, get on with your lives ya losers, nothing to see here, clear the deck, get a life, yadda, yadda:

      “President-Elect Obama’s advisors feared in 2008 that authorities would revolt and that Republicans would block his policy agenda if he prosecuted Bush-era war crimes, according to a law school dean who served as one of Obama’s top transition advisers.”

      1. nonclassical

        “Movin’”…

        WikiLeaks exposed early on that bushbama had deal with bushitters to NOT do
        transparency, oversight, accountability…to “look ahead-not back”…this from official U.S. transcripts…

        bushbama’s grassroots ex-union organizer exposed “grassroots” were shown the door immediately after elections..

    4. LeonovaBalletRusse

      L, all *credit report* *institutions who assign *credit scores* as the kiss of death to legions should be eliminated, along with other co-conspirators with the .01% Global Reich for their monopoly profits and for the destruction of We the People as a force to be reckoned with.

      “Credit Bureaus” are an integral part of the .01% Global Reich FIX.

  6. Tam

    “Just this past week the Attorney Generals of this country said they will enter into a deal with the 5 largest banks who have agreed to stop robo-signing…”

    This statement makes me wonder if robo-signing is still going on, either by the five banks crafting the deal, or by others.

    With all that’s been going on of late in the good old USA, it hurts me to say, what a pathetic country this is. And my generation, which came of age in the 1960′s, is a total failure.

    1. nonclassical

      Tam,

      ..there will, in the future, be plenty of those who “blame” 60′s generation, and
      all manner of others…matter of fact, that is what has been going on-divert blame away from Wall $treet..

      Little as I like bushbama, his rationale is to keep the “system” up and running..
      it can’t be falsely maintained much longer. As people figure out (thanks to the
      far too few Yves, Michael Hudsons, William K Blacks, Amy Goodmans) what has
      actually been perpetrated, and the amounts, they will learn to comprehend the truth..banks have returned, through bought and sold, lobbyist created deregulatory legislation, to domination of the people’s government. Sometimes I wonder how auspicious Howard Zinn’s demise portended..people are largely unaware of their own history-”Wall $treet-A History”, Geisst.

    2. LeonovaBalletRusse

      Tam, robo-signing is ad addictive practice, like CDS-running as *insurance* against inconceivable losses. Banksters and their co-conspirators cannot conceive of taking a loss in actuality. Continued robo-signing and CDS-running are symptoms of their insuperable addiction to hot money.

  7. MattJ

    “Let’s not forget that foreclosures benefit no one. When a bank auctions off a home for less than is owed, that becomes the “comp” for the neighbourhood. ”

    Do people even hear themselves when they say (or in this case, write) that lower prices benefit no one? Of course lower prices benefit someone; they benefit buyers. We had a massive housing bubble; housing is still massively overpriced. Local government, which gets much of its revenue from property tax, doesn’t want prices to correct to their justifiable level any more than do the banks that are on the hook for the losses. Don’t listen to them.

    1. F. Beard

      Local government, which gets much of its revenue from property tax, doesn’t want prices to correct to their justifiable level any more than do the banks that are on the hook for the losses. MattJ

      Deflation does few people good. Even though non-debtors may find their savings buy more, their income may be reduced or eliminated. Businesses go under. Tax rates may go up. More relatives may come hat in hand. Crime goes up. National stability is threatened. International stability is threatened. The danger of trade wars increases.

      And why is any of that necessary when a universal bailout, including non-debtors, would fix everyone from the bottom up? And if the bailout was combined with a ban on further counterfeiting (so-called “credit creation”) then the bailout could be done in a non-inflationary manner and we could rest assured that the problem would not repeat.

      1. OTAY

        F, love your insights but if there’s an inherent problem with asset class deflation then surely it can be reasoned without fear mongering. No were not all going to loose our jobs or our businesses if we allow price discovery in the housing market. It is quite the stretch to insinuate that if we let an over inflated sector deflate to its true support level, local taxes included, the aggregate economy becomes unrecoverable. Could we not reasonably suppose that the greatly reduced payments from new homeowners and reduced taxes are themselves a stimulus with the delta being spent in the real economy thus promoting employment?

        1. F. Beard

          Could we not reasonably suppose OTAYOTAY

          If our money system was reasonable, I would tend to agree. But there is nothing reasonable or just about a government enforced/backed counterfeiting cartel. The bust is no more reasonable than the boom was and a lot more unjust since many innocents are losing their jobs.

          that the greatly reduced payments from new homeowners OTAY

          What new homeowners? Those struggling to payoff student loans in a very tight labor market?

          and reduced taxes OTAY

          Tax rates must go up for State and local governments to account for less volume and the need for greater social spending.

          are themselves a stimulus with the delta being spent in the real economy thus promoting employment? OTAY

          Even assuming people have money to spend why shouldn’t they wait for the bottom? And why would the banks lend until then?

          And then there is the moral issue. Credit creation uses stolen purchasing power -cheating non-debtors- to drive up prices -cheating debtors. BOTH are entitled to compensation.

          EVERYTHING points to the need for a universal bailout EXCEPT (some, not all!) hoary tradition and perhaps some sadomasochistic tendencies.

          1. Woodrow Wilson

            “Tax rates must go up for State and local governments” -

            Here in Massachusetts, property taxes are raised 2.5% every year by law. Municipal “leaders” call this little law quirk “built in” to their budgets.

    2. nonclassical

      Matt,

      You appear unaware of what has happened? Please take the time to explain to yourself (and us) how a U.S. $6.5 trillion per year, world $16.5 trillion per year
      economies could be destroyed for over 3 years already, by a housing market,
      which Fanni-Freddi are said to hold around $3 trillion in mortgages…and they
      are said to hold around 50% of total mortgages.

      For what reason did Treasury Secretary Paulson go to SEC in 2003 to deregulate
      LEVERAGE=collateral needed to be held against their borrowing? What is commonly done with SECURITIES? What do “investment banks” want with securitized mortgages? For what reason did they want more and more? So many here appear to believe the mortgages are the problem..4 million homeowners think so, as they have been-are being foreclosed upon, more to come. The first ever FED audit shows (DeMint, Kucinich, Sanders generated through “Freedom of information act”) FED has secretly dumped another $16
      trillion into banks…

      Please follow the $$$$, show how mortgages could have caused this level of destruction?

      1. MattJ

        nonclassical, I think you are reading something into my comment that I don’t believe and did not intend. I believe that the government and financial system should stop the interventions intended to keep housing prices from returning to their long run level relative to other prices and incomes, but all I was pointing out is how nonsensical it is to say that lower prices benefit no one.

        F. Beard, I would call deflation an overall drop in all prices. I am talking about the relative level of housing prices; housing prices rose dramatically relative to other prices (as measured by overall inflation during the bubble years) and to incomes. It appears to me that the government and the financial system are doing everything they can to keep housing prices from returning to their justifiable, sustainable level relative to other prices and to incomes. If you would like to argue that letting that happen would result in overall deflation, and the consequences you list, go ahead; but that result is not obvious to me. And to argue that the problem can be fixed without either deflation or inflation seems a difficult one to make, but I’d be interested in reading it.

        1. F. Beard

          And to argue that the problem can be fixed without either deflation or inflation seems a difficult one to make, but I’d be interested in reading it. MattJ

          1) Ban further credit creation. This would be massively deflationary by itself as existing credit is paid off with no new credit to replace it.

          2) Bailout the entire population,including non-debtors, equally with new fiat metered to just counter the deflation from 1). Since the total money supply (reserves + credit) would not change then neither price deflation nor price inflation should be expected.

          1. nonclassical

            FB,

            U.S. history appears to portend the “way” U.$. capitali$m “rights itself” is through de$truction of powerful and disempowered interests..otherwise the divide appears too big to conquer…and artificially too big to fail..

          2. amanasleep

            F. Beard says:

            “1) Ban further credit creation. This would be massively deflationary by itself as existing credit is paid off with no new credit to replace it.

            2) Bailout the entire population,including non-debtors, equally with new fiat metered to just counter the deflation from 1). Since the total money supply (reserves + credit) would not change then neither price deflation nor price inflation should be expected.”

            I have thought this should be the approach since 2008, even before I started to read Keen (I thought about only #2 then, without realizing that #1 would also be necessary). I am curious to know your views on the political viability of this approach. #1 requires legislation, possibly a constitutional amendment. Also, #1 must precede #2, right?

            #2 requires no legislation, so could be achieved with combined actions of Treasury + FED + coordination of regulatory agencies. However, the effects of this alone would seem to cause inflation. In itself, this could be ok if the timing and $ amounts involved could be calculated for moderate inflation. Even with a modest overshoot the result could then be countered with Volker style Monetary policy.

            I get that to revolutionize the system, then #1 is required. However, can #2 do some good in the near term? Keen himself seems to imply this.

          3. F. Beard

            I am curious to know your views on the political viability of this approach. amanasleep

            It should be near 100% viable. Who would be hurt?

            I doubt 2) by itself is sufficient. Even Keen talks about the necessity of limiting leverage. Apparently, he can’t bring himself to completely abolishing it.

          4. glassline

            F. Beard,
            As I read your comments I’ve got a sort of overview of what you are proposing, but not totally. Are you saying:

            1. make a new currency which is given to the population (every individual gets the same amount?)
            2. Only gov’t issues currency
            3. Are banks involved in the new currency? If not, do the existing banks continue with whatever business pleases them, but no gov’t backup?
            4. Can old currency be exchanged for new? If not, wouldn’t you expect the old currency to become quickly devalued?

            I just don’t see how this could ever be implemented, look at how hard it is to get basic regulation of the financial system as it is. How in the world would any of our societies elites, who control most of the power, ever agree to go along with this? Violent revolution? I think we are far from that, especially given the tremendous military and police capabilities the gov’t has.

          5. amanasleep

            “It should be near 100% viable. Who would be hurt?”

            Successfully implementing a moratorium on debt issuance will permanently reduce future revenue streams from lending. All current big lenders would oppose this. It is precisely this powerful minority of rent-seekers that oppose “classical” countercyclical fiscal policy now (see Krugman et al. on Bond Market Vigilantes and Confidence Fairies). It would permanently break the power of Big Banking. I am in favor of this, and believe that 99% of the population would also be in favor IF they properly understood this issue.

            Nevertheless I do not see it as politically viable in the current environment.

            “I doubt 2) by itself is sufficient. Even Keen talks about the necessity of limiting leverage. Apparently, he can’t bring himself to completely abolishing it.”

            Why not? In my mind, a one time settling of debts, coupled with better regulation of leverage (expansion of the weak start in Dodd-Frank), would allow a proper exit from our current regime of global over-savings and under-utilization of production capacity (both physical and human). GDP and inflation rise, FED and IRS step in to raise rates or tax as necessary.

            I would tend to agree that abolishing leverage is not reasonable or necessary. In presentations, Keen seems to argue that there is nothing wrong with leverage per se. The problem is the use of leverage to finance asset speculation.

          6. F. Beard

            1. make a new currency which is given to the population (every individual gets the same amount?) glassline

            The currency would be US Notes (Greenbacks) created without any borrowing – not even from the Fed. Every adult citizen gets the same amount.

            2. Only gov’t issues currency glassline

            Of course. Only the US Government should issue US Government money.

            3. Are banks involved in the new currency? glassline

            The banks would be forced to accept the US Notes at par with Federal Reserve Notes at least until the bailout was complete.

            If not, do the existing banks continue with whatever business pleases them, but no gov’t backup? glassline

            No, the banks would not be allowed to create “credit” else they might leverage the new fiat into a new bubble. After the bailout the banks would be set free but with absolutely no government backup.

            4. Can old currency be exchanged for new? If not, wouldn’t you expect the old currency to become quickly devalued? glassline

            The US Notes would be full legal tender till the bailout was over. That might take years if we decided on no change in the size of the money supply and did not allow much prepayment.

          7. glassline

            F. Beard
            The problem I see with your concept is that it sounds like it would basically destroy the current business of banks. Given the apparent difficulty of our current elite to even let banks take a loss, how do propose to execute this plan. Banks fight tooth and nail against basic regulation.
            I’m not sure, but seems like your plan if it worked correctly would some equalize claims on the productive capacity of our society, and radically so. This entails a transfer of wealth from rich to poor (or top 10% to bottom 90%). There is a cost to this in terms of disruption to the system from inherent conflicts of power. I also don’t see any reason that a new financial structure wouldn’t be gamed by a similar set of elites to work in there advantage.

          8. F. Beard

            The problem I see with your concept is that it sounds like it would basically destroy the current business of banks. glassline

            Yes, but the current business of banks is counterfeiting, not honest lending. A ban on further counterfeiting (“credit creation”) plus a universal bailout would force the banks to switch to honest lending AND provide them with the funds to do so.

          9. glassline

            F. Beard, another (critical) question on your bailout concept (does it have a name?) You say after the bailout banks could return to an unregulated state with no govt backing. Historically hasn’t there always been runs on banks, along with ponzi schemes, speculative leverage based investing and the like? There will always be the temptation to participate as people are gamblers, risk takers, hustlers, marks etc… we can say to bad for you if you lose your money, but why can’t we just do that now? We can’t seem to do it. Unless stopped by force the wicked and the greedy will continue right along. If we stop them with the force of the state (law) then we have a powerful state. It will be run by imperfect. corruptible humans, not saints. It could very well be worse than what we have now. Utopian attempts to reshape society have gone awry time and again.
            I think Oboma is temperamentally a conservative, whose instinct is to not change things to much unless the circumstance demand it. There’s a lot to be said for this approach I think.

          10. F. Beard

            You say after the bailout banks could return to an unregulated state with no govt backing. Historically hasn’t there always been runs on banks, along with ponzi schemes, speculative leverage based investing and the like? glassline

            Banking is inherently crooked. It is a form of gambling and theft. It requires usury. Government should have nothing to do with it except to punish fraud and insolvency.

            As for the publics need for safe money storage, the Federal Government itself should provide that service for free (as a public good). As for the need for the population to invest, usury-free money forms such as common stock should be encouraged but for private debts only.

          11. Nathanael

            “Given the apparent difficulty of our current elite to even let banks take a loss, how do propose to execute this plan. ”

            Honestly, I don’t see it happening until bankers start being dragged out of their burning homes, murdered, and their bodies torn apart, with 90% of the nation cheering. After the thirtieth or fortieth banker is murdered with “no witnesses” among hundreds of involved people, perhaps something will start to change.

            I’d like things to improve without that, but the austerity-mad elite bankers seem to have a death grip on our government, *and* seem to be unwilling to accept *any* checks on their behavior. Accordingly, things will simply get worse until the public fury at them goes past boiling point.

            If we can get their death grip off of our government we can reign them in without killing them.

        2. glassline

          F beard, sorry to keep pushing you, I’m just thinking here.
          When label what banks do now ( fractional lending) as counter fitting you playing a semantical hand wave game, not making a real argument. Counterfitting has a usual definition and fractional lending does
          Not fit it. By calling it that, you are trying to make the case that it is so wrong that it should be illegal. Thats a more intellectually honest way to make your argument. Not only is it not illegal, it is not even considered immoral in the US exept by a very small fringe (like yourself). Fractal Lending is not categorically similar to Counterfitting as it does not rely upon deception to be practiced.
          If you trying to convince people of the value of your ideas, I don’t think the appeals to biblical authority are helping. I might be wrong on this as we do have a lot of Christians in these parts. But the bible says all sorts of weird things, if an idea has merit you should be able to make the case is more universal terms. Otherwise it comes off as you just asserting its right and ignoring the political and persuasive work needed to actually get an acceptance by enough people of influence to implement it. I still dont see who has the necessary pose to make such a radical change in the power structure short of a belligerent populist ruler who capitalizes on unrest in the populace to cram them through.
          Am I making any sense here?

          1. F. Beard

            Counterfitting has a usual definition and fractional lending does Not fit it. glassline

            What does counterfeiting do? ans: It steals purchasing power. Fractional lending (more precisely “credit creation”) does the same thing on behalf of borrowers and the banks.

            Otherwise it comes off as you just asserting its right and ignoring the political and persuasive work needed to actually get an acceptance by enough people of influence to implement it. glassline

            Well, my ideas on money come from the Bible and I am not willing to plagiarize it.

      2. LeonovaBalletRusse

        Actually, *lack of money equity* is the problem. All they have is debt equity, brought to the nth power by robo-signing and compound derivates, especially naked derivatives.

        In my day it was CLEAR that *pie in the sky* could not be banked on, except by racketeers. Now this fact has been demonstrated. Bring RICO.

    3. Leviathan

      Right on, Matt. The real problem with trying to prop up bubble prices, of course, is that it doesn’t work. Finger, meet hole. Cartoonists should always portray Bernanke as a little dutch boy trying to hold back the sea.

      Or look at it this way: while the dike holds, anyone with a brain should run for their lives.

      1. F. Beard

        The real problem with trying to prop up bubble prices, of course, is that it doesn’t work. Leviathan

        And neither does converting A/C (the boom-bust cycle) to DC (steady growth) with a rectifier and a capacitor work either EXCEPT IT DOES.

        By providing a rectifier (forbidding further credit creation) and a capacitor (an appropriately metered bailout), housing prices could be stabilized with no danger of another bubble.

    4. Yves Smith Post author

      It benefits only first time buyers. And as we have reported, there are fewer of them than you’d expect because many young people who’d normally be looking to buy are up to their eyeballs in student debt.

  8. Tom Crowl

    How can you expect serious investigation of the TBTF banks when they’ve insulated themselves with a govt/corporate interlocking cadre of Boards, Regulators and Politicians?

    Take Wells Fargo for example… do you thing they would ever be seriously investigated? Who’s going to get Mitch McConnell to back an investigation of a bank on whose Board his wife sits? (Elaine L. Chao, former Secretary of Labor under Bush) and who’s largest stockholder is an Obama buddy?

    The greatest threat from the duopoly isn’t the phony issues they divide us with…

    Its the stuff they agree on that’s destroying the country, the rule of law… and even Democracy itself.

    1. LeonovaBalletRusse

      TC, there was a book out in 1980 called “Everybody’s Business” which showed how incestuous corporations were, with constantly revolving doors and good ole boy networks in place from board-to-board, ratcheting up *executive compensation* continually–insiders sharing the spoils from inside information, from generation to generation of *insider DNA* in perpetuity.

    1. Judson Witham

      I called John’s Office early on and everybody I spoke to in his office was the same way PRO Family and Pro The Truth … Great Folks. I have spent many years fighting this fight and have discovered …. The Culprits involve Lawyers, Sheriffs Deputies, Judges, Prosecutors, federal Agents, and many many of the Law Firms owned by Public Officials. The Crimes have been going on for Decades <====<<<

      https://www.google.com/search?rlz=1C1GGGE_enUS370US372&aq=f&ix=seb&sourceid=chrome&ie=UTF-8&q=Colonias+Bank+Looting+Subprime+Wall+Street+Land+Fraud+Corruption

      1. Leviathan

        Okay, let’s say this is true and massive fraud has been going on for decades. For the record, I think it more likely that demographic trends were artificially spiked in the 90s and the real fraud began only about a decade ago. In other words, I’m with you but only halfway.

        Still, the question then becomes what do we do now? I’m going to set aside the whole question of prosecuting the perps because I no longer believe it can happen. Let’s focus on cleaning up the mess. You applaud the people who say the best way to do this is to hand out loan mods to millions. But that will just leave a decade+ of grotesquely distorted prices in place, won’t it??? Do we correct the problem for all by letting home prices fall to match incomes, or do make debt slaves of future homeowners to prevent mass foreclosures among current debt slaves?

        1. Woodrow Wilson

          “Still, the question then becomes what do we do now?” -

          In an era of Bon-Bon eating, American Idol watching, glad/hope is doesn’t happen to me America, nothing.

          In another era, the criminals would be given Due Process (maybe not in these cases) and either subsequently or summarily shot or hanged.

          We are living in an era of complete corruption, at every level of our own government, and they’re not even hiding it anymore. Enjoy!

          1. nonclassical

            Wiliam K Black addresses this issue in his discussions on how he and others handled S & L scandal..(where do we go from here).

            Without accountability, transparency, oversight, there is simply no deterrence..

            Personally, we just bought a wood stove…and don’t think to retire in U.$…downward spiral of state revenues to cause de$truction none have seen
            in our lifetimes, in that “future”…

            as fundamentalists continue di$a$ter capitali$m..

          2. Leviathan

            Want to know why there will be no prosecutions? Because banks can point to hundreds of speeches, directives and laws ordering them to loosen lending standards. Please, no speeches about how poor people didn’t cause this calamity. I KNOW that. But the waters are very muddy. Legally nothing would stick.

            As I said before, remediation is another matter altogether, but this settlement demonstrates that no serious remediation is forthcoming, just payoffs and bribes between one interested party and another (pols and banks, mostly).

        2. Brooklin Bridge

          To let one injustice prevail on one group to benefit another is simply to perpetuate injustice in the name of justice and call it a day.

        3. LeonovaBalletRusse

          L, the overt putsch for *easy credit* in 1970–the linch pin of the *insider* profiteering scam with the public as suckers–was the first sign of the CONSPIRACY of *finance* insiders to fleece the public. The second sign was the overt putsch into *retail brokerage* (initiated by Merrill Lynch), for which Wall Street Week was the instrument of seduction of a financially ignorant and *vain* Boomer market into *playing the market*, and which created demand for *investment* by Boomers especially in *mutual funds* which proliferated extraordinarily to meet *demand* created by *seductive marketing* disguised as *advice from experts*.

          Glass-Steagall was eliminated, regulations that had protected the public were scrapped, and this opened the doors to PUBLIC *investment*–via mutual funds and other *institutional brokerage* systems–in DERIVATIVES. This FOLLY was forbidden, against the law, in 1980.

          The RECORD is filled with the *smoking guns* of INTENT to defraud and exploit the public. Bring RICO.

      1. Brooklin Bridge

        If you want to honor honesty in an individual, the very last thing to do is elect them to public office in this country.

        If you want to exploit their honesty, on the other hand, electing them is a good idea for you will indeed be paid in kind.

      2. Carla

        “The man is a national hero.”

        Yeah, that’s what I thought about Spitzer, when he was fighting Wall Street.

        And that’s what I thought about Schneiderman, when he was fighting Wall Street.

        You know what? I don’t believe in national heroes anymore. We’re going to have to do the hard work of saving each other and ourselves. Occupy is a place to start.

  9. Schofield

    Society owes a debt of gratitude to you Yves for continuing to keep the Bankster’s Great Mortgage Fraud under the spotlight. In an honest world the Steve Keen Debt Jubilee has merit in the sense that it reverses what was essentially the Bankster’s imposition of taxation without representation using the means of blowing a house price bubble that derived from their licence from society to create money from nothing. Essentially it was this illegal taxation imposed by greed and a stupid Neo-Liberal mantra that “the market always knows best” (The Invisible Hand can never be Underhand) that crashed the global economy. Now this taxation should be reversed by reducing the debt burden on mortgage holders back to a sensible level that will stimulate the economy. The senior managers of banks (including shadow banks) suspected of fraud should be investigated and sent to jail if found guilty.

    OK. All this is fine and dandy if we had an honest world. We do not. Both the Democratic and Republican parties have been deeply corrupted by the Banksters using campaign funding, insider dealing and lucrative job offer bribes not to rock the boat. Nothing less than the formation of a third party dedicated to removing the corruption sickness afflicting this nation is going to succeed. From an international perspective failure by the citizens of America to support such a party will ultimately lead to America becoming subservient to Chinese Communism as China’s economy overtakes that of the United States and their currency replaces the dollar as the world’s reserve currency because of their greater military strength. Those who have taken the trouble to read up on the history of the Chinese Communist regime will know that its absence of rights leads to a level of corruption even worse than Western Banksters.

    1. nonclassical

      Well said, Schofield..

      but getting rid of ALL campaign contribution$ would also return the people’s government to them-us all..

      $$$$ is not $peech-$$$$ is PROPERTY…Supreme Court=”Citizen’$ United” is the fraud..no surprise fraud extends to U.$. legal $y$tem..as Yves continues to
      effuse……

    2. LeonovaBalletRusse

      S, it’s so much more than this. We are in the grips of a Global Reich of Organized Crime Syndicates, whether based *occult* or in out-right *mafia* (Chinese, Sicilian, ‘nDragheta, Russian, etc.) strategies and practices, or both.

      See Michael Ruppert on YouTube, among countless others by now. There must be some grain of truth in the immeasurable crimes in the world of finance exposed by multiple parties on the internet. One of the latest:

      “Lord James of Blackheath FOUNDATIONX UPDATE February 16 2012″ (allmoderncons on Feb 17, 2012). — address in the House of Lords –

      http://www.youtube.com/watch?v=eL5hqvTWkYg&feature=player_embedded

      Compound CDS are NOT *insurance*. This was an illusion/is a delusion, or just a huge racket gone bad. Who will be left standing?

      1. LeonovaBalletRusse

        YVES, with Lord Blackheath address in the House of Lords connect DOTS:

        http://www.youtube.com

        “East Asia 2007 – Global Risks” (WorldEConomicForum on Jun 24, 2007) [begin 6:50/1:09:14 -- yes, everybody knew it]];

        “”Interview with Mochtar Riady, founder & Chairman of the Lippo Group” (NUSBizSchool on Nov 4, 2011); Riady *grew up in China*;

        “New World Bank Managing Director Sri Mulyani Indrawati” (WorldBank on Jun 8, 2010);

        [N.B. hard-core fundamentalist Christian connection] –

        “Education and the Child – James T Riady” (nayarvineet on Mar 29, 2010);

        “project religion by UPH COLLEGE SOCIAL” (MarceINMonic on Feb 26, 2011);

        “uph college final project english.mp4″ (rylezra on Dec 11, 2010)–Note: Was OBAMA’S mother a CIA asset, as has been alleged?

        “Remarks by John Riady-Generation 21-Washington DC” (kbridc on Jun 10, 2011)–N.B {3:10}: “company in SPAIN” – [9:30]: “The TRIPLE HELIX INNOVATION” — cf. TRIPLE HELEX at Research Triangle Park, N.C.;

        “The Passion of the Christ by UPH College (Part one)” – see credits at end – (profohms on May 5, 2011).

        YVES, for Authoritarian *Christian* Americans, SINGAPORE has been hailed as the *model for democracy* that the U.S.A. should follow since 1970′s, and this was an idea pushed by business schools at major universities in USA.

        The Riady-Geithner-Greenspan NY Fed-HSBC connection stressed by Lord James Blackheath in YouTube link in reply posted above this one. Geithner speaks Chinese, Riady *grew up in China*.

        IF Barack Obama’s mother was indeed a CIA asset, then Indonesia’s love affair with their *kinsman* (and fellow Christian?) as our President may pose a Security Issue, in light of the revelations of Lord James Blackheath–for might it not explain Obama’s obedience to banksters and other Money Men, while refusing to prosecute them for fraud, while *looking forward not backward*?

        This is not a *rabbit hole* but a very, very deep *rathole*.

    3. jonboinAR

      Okay, Schofield. Put your money where your mouth is. Form it. Right now. I will join you. I made a feeble effort that went nowhere last year, and I got distracted and that was it. Form a new party. Now. How many of you who kvetch about “them” here will join it, actually DO something? How about you, Leonova? Let’s go!

      What do we do? I promote Bernie Sanders. He seems to be a good man.

  10. grayslady

    “When a bank auctions off a home for less than is owed, that becomes the “comp” for the neighborhood.”

    Actually, that price doesn’t become the “comp” for real estate tax purposes–at least where I live–and that’s part of the problem. Homeowners are still being assessed for tax purposes as though the homes are worth far more, because the local school districts refuse to do the belt tightening that would make it painfully obvious to everyone how the decimated real estate market has affected district finances.

    1. nonclassical

      grayslady,

      ..you are intoning “downward depressionary spiral”, of less wages, less tax base
      for government to operate the commons…schools, construction, roads, etc.

      Schools are yet another fundamentalist scapegoat..having taught in other western democracy and U.S., I hasten to point out public schools here don’t compare favorably, in abilities to create ECONOMIC opportunity. Noone I know
      went to school to create “educational opportunity” (well, other than we liberal arts-Philosophy-PolySci-Education types).

      Reading Naomi Klein’s fine work, “The Shock Doctrine-rise of disaster capitalism”, and living 70′s-80′s South-Central America history, one comes to understand what is happening in AmeriKa on a political-disaster capitalism level..Perkins’ book, “Confessions Of An Economic Hit Man” describes it also..

      William Blum’s fine CIA historical provides actual event orientation, of U.S. exploitative political-economic dynamic..that book, “Killing Hope”…truth simply
      IS..difficult as it may be to find…

    2. 2laneIA

      Schools have been decimated by state level budget cuts. “Belt-tightening” is a euphemism for firing teachers, cutting out curriculum and extra-curricular activities, and enlarging class sizes. There are no magic belts that don’t hurt children.

      1. nonclassical

        2lane,

        ..and for di$a$ter capitali$m=”emergency managers” to displace decision making by elected officials..

  11. jsmith

    One of the most serious problems that has infected the United States – or maybe it’s been here since its inception – is the seeming inability of people to act collectively for the betterment of all.

    As regards the mortgage settlement, arguments ALWAYS boil down to “but, but I played by the rules therefore I should get something” and not “maybe we should find a solution that although on its face can be portrayed as helping the irresponsible actually works to the benefit of everyone.”

    Same thing with pensions and on down the line:

    If someone finds out his neighbor’s getting a great pension, that someone automatically will advocate for his neighbor to lose that pension instead of – like a rational person – advocating for EVERYONE to be getting a great pension.

    Instead of trying to raise the living standards and lives of everyone, America is filled with short-sighted and hate-filled idiots who would willingly waste exorbitant amounts of money just to see that their fellow man is not getting something for nothing – no example of this being better than drug testing people for welfare benefits in states like FL.

    With this mindset, Americans are doomed to a treadmill of wage slavery where a few “celebrities” are chosen to be held up as success stories in their respective fields, examples for the serfs to strive after in their never-ending quest to become better than their fellow planet-dweller while their greed-filled selves rot away bound by the unseen chains of their own avarice.

    1. nonclassical

      jsmith,

      ..such is apparently the creed of society based upon “individualism”…quite different from society based upon “the group”..which is also how fundamentalists are scapegoating unions…but there are problems with group
      oriented society also..I have a close friend in Europe, who is wheelchair bound
      since birth..the “group” thinks he “burden$” $ociety…

    1. oldsoul

      Of course MERS business model is illegal. I am so glad that you stated it so simply and directly. It was privately created by the GSEs and funded by the TBTF banks to destroy the public land records and conceal mortgage securization.
      The GSEs (Fannie, Freddie) which are now in US government “conservatorship” are taxpayer funded instruments of mass destruction. The GSEs insured and purchased the mortgage back securities with the requirement that the borrowers mortgage notes be “endorsed in blank” in an effort to allow the circulation of these individual mortgage notes as a counterfeit currency. MERS was created to conceal the securitization of the mortgage notes and allow the mortgage notes to freely flow in commerce under the UCC. None of this is possible in reality or under the law. Mortgage notes are not currency, endorsing them “in blank” does bnot create an interest in land. Land cannot be digitized nor does the UCC apply to real estate. What MERS Vice Capo says should be repeated as often as necessary until it sinks into the minds of lawyers and judges. A private computer data registry is NOT lawfully permitted to take over the public recording function for interests in land. Private parties cannot create a corporation to usurp a public function. This is so fundamental that it amazing me that no state AG has yet pleaded this obvious point and obtained an injunction in his/her state against its operation.

      1. oldsoul

        My apologies for thinking I could edit this after seeing it posted as can be done on some sites. Corrected version:

        Of course MERS business model is illegal. I am so glad that you stated it so simply and directly. It was privately created by the GSEs and funded by the TBTF banks to destroy the public land records and conceal mortgage securization.
        The GSEs (Fannie, Freddie) which are now in US government “conservatorship” are taxpayer funded instruments of mass destruction. The GSEs insured and purchased the mortgage back securities with the requirement that the borrowers mortgage notes be “endorsed in blank” in an effort to allow the circulation of these individual mortgage notes as a counterfeit currency. MERS was created to conceal the securitization of the mortgage notes and allow the mortgage notes to freely flow in commerce under the UCC. None of this is possible in reality or under the law. Mortgage notes are not currency, endorsing them “in blank” does NOT create an interest in land. Land cannot be digitized nor does the UCC apply to real estate. What MERS Vice Capo says should be repeated as often as necessary until it sinks into the minds of lawyers and judges. A private computer data registry is NOT lawfully permitted to take over the public recording function for interests in land. Private parties cannot create a corporation to usurp a public function. This is so fundamental that it IS amazing me that no state AG has yet pleaded this obvious point and obtained an injunction in his/her state against its operation.

        1. F. Beard

          This is so fundamental that it IS amazing me that no state AG has yet pleaded this obvious point and obtained an injunction in his/her state against its operation. oldsoul

          I searched for a man among them who would build up the wall and stand in the gap before Me for the land, so that I would not destroy it; but I found no one. Ezekiel 22:30

          1. oldsoul

            Psalm 15
            A psalm of David.

            1 LORD, who may dwell in your sacred tent?
            Who may live on your holy mountain?

            2 The one whose walk is blameless,
            who does what is righteous,
            who speaks the truth from their heart;
            3 whose tongue utters no slander,
            who does no wrong to a neighbor,
            and casts no slur on others;
            4 who despises a vile person
            but honors those who fear the LORD;
            who keeps an oath even when it hurts,
            and does not change their mind;
            5 who lends money to the poor without interest;
            who does not accept a bribe against the innocent.

            Whoever does these things
            will never be shaken.

  12. kravitz

    New York’s courts don’t seem to be waiting for whatever is in the VaporWare Settlement, or for Schneiderman to get a testosterone injection either.

    There was a little concern a few days ago when a panel moved a case tossed by Judge Arthur Schack to a different court because the bank would not comply with his requests.

    But the NYT is saying today that Judges will indeed be getting the upper hand. A re-emphasis of what Judge Lippman said was happening, and now seems a go. How this jibes with the issue of appeals isn’t clear. But a loyuh(!) I ain’t.

    New York Courts to Intensify Efforts to Prevent Foreclosures
    http://www.nytimes.com/2012/02/23/nyregion/new-york-courts-to-intensify-efforts-to-prevent-foreclosures.html

    “New York State’s courts, frustrated by delays in thousands of foreclosure cases, are planning to speed them along in a new program that would give judges added control and require banks to send officials who have the power to alter loans to keep people in their homes.”

    1. Nathanael

      Don’t mess with the NYS Court of Appeals. We’ve had a dysfunctional legislature for many decades, but our top court has somehow managed to remain pretty honest and fair, and it’s gotten used to throwing its weight around (since the legislature never does its job, the courts usually have to).

  13. Susan the other

    And another thing. Doesn’t title trashing begin to create a precedent to invalidate other types of ownership, like all personal property. Could those other claims of ownership (horses, cruisers, yachts, cars, art, jewelry, especially items bought at auction, etc.) one day fall into this same chaos? The nexus of capitalism and democratic government is property ownership. Without clear legal standing, the whole thing can be fudged.

  14. LeonovaBalletRusse

    “The deeds tell the story.” Is this not the bed rock reality of human civilization, and of de-civilization by banksters?

    “All that is composed shall de-compose” (“The Gospel of Mary Magdalene”)

  15. rps

    “I strongly believe that the hardworking homeowners who have struggled to stay current on their mortgages should be able to refinance there homes, quickly at a fixed rate of 3%.”

    Refinancing again, favors the banks. The new fees are incurred again, and added to the principal of the mortgage. But that’s not even the most egregious crime against the home-ower. To begin over again at a 15yr, 20yr, 25yr, or 30yr mortgage with the bulk of the mortgage payment toward the outrageous interest payments with perhaps a $1 going toward principal is a congame. It’s as if people are paying for a lease on the home in the endless cycle of interest payments again and again. That’s the scam of changing up the interest rates. A never ending cycle of paying interest to the banks with a new mortgage.
    It’s astounding when home-sellers claim they made “x” amount of dollars over the original purchase price of the house. The reality is after adding up the interest payments, RE taxes, maintenance costs, repairs, remodeling, etc…home-sellers do not make a profit, and will not make a profit, they lose. Houses are money pits.

    1. Leviathan

      In light of the truth you have discovered I will share with you my family’s new mode of housing. A company that stages expensive but empty homes “hires” people with nice furniture to move in to stage the place. You are charged a fee (aka rent) of about one-third the market rate. You live there month to month with no lease and may, if the place sells, need to move with 30 days notice–to another big, empty, expensive house nearby. The move is paid for by the company. In return you agree to keep the place show-ready at all times. So far hardly anyone has wanted to see it, as it has been on the market at a ridiculously high price for several years.

      This is not something that I would have opted for before the crash, but since losing our house it it by far the best option available. We can sit out the long, slow real estate “recovery” as long as we like, but live in lovely houses for roughly the cost of property taxes. Most of the time this crappy economy reams you. But occasionally you can make it work for you instead.

    2. Alice

      I agree. We are now at the point where all we are doing is leasing our homes. The titles are all clouded and will never be ‘fixed’. With the lease comes the burden of uptake as we can’t call our absent landlord to take care of the problems. We all know we can’t sell our leased homes. I have been warning people not to buy but perhaps I should change that wording and tell them to sign that 30 year lease and be prepared to pay lots of dollars to maintain that home for their absent landlord.

      I need also warn them that there will be a problem should they decide to move on and won’t be able to get out of that lease. Guess they just notify the landlord’s agent they want out and send them the keys.

      An aside, I read an article a few days ago that stated there is a new market for Investors. “REO Rentals”. They are going to create 1.8 million new jobs, and Investors are pretty excited. Wonder what kind of fancy investment vehicles will be used to get into that market.

      Thirty years leases and REO Rental Investments, only in Wonderland.

      1. Leviathan

        Yes, I love the suggestion that converting REOs to rentals is all about the jobs!!! Not about hiding bank losses or paying off politically connected builders–but JOBS.

        There are lots of places to stuff pork in this scheme: property bundles from Frannie (how much did you pay for that house? who knows, there were dozens!); grants to pay for the renovations (state and federal); who gets the houses, for how much, etc.?? It will all be dressed up in language about the CHILDREN and the JOBS, but the trough is getting cleaned up for some rice slops, that’s for sure.

        1. Loaded Dope

          All those REOs where the previous victim of theft put in years of sweat equity? Abatement, new roofs, couple of kids, triumph n’ sorrow, then came thieves. Oh well, no one’s reporting on where they are now. “Yeah the JOBS!” (Yeah you really don’t get it!)

      2. Leviathan

        Yes, I love the suggestion that converting REOs to rentals is all about the jobs!!! Not about hiding bank losses or paying off politically connected builders–but JOBS.

        There are lots of places to stuff pork in this scheme: property bundles from Frannie (how much did you pay for that house? who knows, there were dozens!); grants to pay for the renovations (state and federal); who gets the houses, for how much, etc.?? It will all be dressed up in language about the CHILDREN and the JOBS, but the trough is getting cleaned up for some rich slops, that’s for sure.

      3. LeonovaBalletRusse

        Alice, but I’ll bet these pesky details won’t stop Lebensraum by the .01% when the time comes to enact the next Anschluss in the Bush Dynasty’s *Homeland*.

      4. Susan the other

        How can they rent “REOs” when the “owned” part is fraud? They don’t own a damn thing. They acquired those houses by forgery and fraud.

  16. Gil Gamesh

    Brilliant post. The USA is the crookedest place on earth (G. Vidal). O’Brien offers more, compelling proof. For millions of properties, title has been clouded. God luck selling, assuming one can find a buyer in the 1st place. The housing “market”, totaled by the Masters of the Universe, will not recover. Period. It’s done and the US economy is toast.

    1. Yves Smith Post author

      This is not what leaked term sheets say, nor is it what people involved in the negotiations told Shahien Nasirpour of the Financial Times last week. The FT has not retracted or corrected the story, and I know separately that Shahien still stands by his reporting. The two examples Kinglsey used fall outside the example (of a partial HAMP credit) used in the term sheet.

      I will alert Shahien to this article in case he has not seen it.

    1. Susan the other

      But a statement like this brag from Tom Miller only undermines the effort to actually get an agreement agreed to and signed. Schneiderman would never make such an obnoxious statement about Miller. But if anyone is laughable, it is Miller. Doesn’t make much sense.

  17. Stupendous Man - Defender of Liberty, Foe of Tyranny

    The statement contains truth, but it also lacks some important truth.

    “As Dave Dayen has pointed out, it was two county registers of deeds, Jeff Thigpen in Guiford County, North Carolina, and John O’Brien of South Essex County, Massachusettes, who were the first to look at their own records to see how extensive the frauds were.”

    The work and efforts of a very limited number of officials, O’Brien, Thigpen and Ting most definitely included, IS IMPORTANT, and worthy of whatever forms of thanks and support that can be mustered. However, they were not the first.

    The first were the pro se litigants that were forced into defending their homes due to the absolute paucity of competent, knowledgeable attorneys. These pro se folks had to do the research on their own, from scratch, read law and procedure, learn to research case law, learn to author intelligible motions and pleadings, stand in court and make oral arguments, etc. They did this with little or no support from ANY sources. Attorneys rarely, if ever, are willing to share much information at all to anyone that is not a “member of the club.” The courts have been particularly hostile, and biased. Law enforcement officials at EVERY level have ignored and disregarded the information, and the complaints filed.

    The best sources of support I found were other pro se litigants, and my law library research librarians. If there is anyone really deserves a gold star it is the librarians. I know they have gladly and willingly assisted numerous pro se litigants in their research, and without their help many of us would have been utterly lost (I’m calling my law library today to extend thanks to the ones, and to the one particular, that has assisted me so much and so graciously.)

    There have also been a few jurists that have voluntarily ruled in accordance with facts, law and rules. The Federal jurists in Ohio in 2007 being the first I know of, with several others that have followed in a very limited number of state courts.

    The defensive BAR is another matter entirely. They did not magically step forward and begin defending foreclosures. No, they waited until some of the pro se litigants met with success and blazed the trail for them. There are a number of attorneys now citing my case. Many of them I spoke with and tried to secure representation through them early in my case. Almost uniformly they said I had no arguments to make and would not, under any circumstances prevail. They are still unwilling to consider my knowledge worthy of consideration. Still most are extremely reluctant to represent folks in foreclosure, even when it is clear there are numerous arguments, defenses, affirmative defenses and counter claims that should be raised.

    In terms of research in the land and court records we again need to be mindful that it was average citizens that were the first to research and discover the facts and patterns of fraud.

    Recorders are in a slightly different position. Prior to the “mess” there was little reason for them to suspect documents being filed in their offices were fraudulent. As well their hands are usually tied by statute. The statutes typically do not endow them with the authority to reject documents, and they usually have no prosecutorial powers. That they are arriving late to the party is not important. They are beginning to arrive, and I choose to embrace and celebrate that fact, and to support them in any ways I can.

    But make no mistake. This has been a grassroots effort and movement. If average citizens had not begun standing their ground, defending themselves and doing the ground level research there would be nothing to report! Additionally non of the other parties that have now reluctantly become involved in advocacy would be doing such.

    I’ve used no names here. The majority of people that have been doing this as citizens and pro se litigants want no credit or notoriety. We just want to be included in the discussions and solutions, and for the things WE KNOW are factual and true to be taken seriously and acted upon appropriately.

    1. oldsoul

      Wonderfully written and entirely true, SMDLFT. I am an attorney with over 3 decades of experience in civil, criminal and bankruptcy litigation.

      I agree that the work of the pro se homeowners created what little law we, an overworked few homeowner defense lawyers, were able to cite as we tried to understand how the courts were hijacked into rubberstamping bank claims through summary judgment in judicial foreclosure states with forged mortgage notes, forged allonges and forged “endorsements in blank” via MERS and the UCC. But a serious mistake was made in the articulation of the law as homeowners pro se and their overworked lawyers replied to bank assertions of standing.

      The UCC does not apply to real estate and a conveyance of an interest in land (including a mortgage) requires a writing (Statute of Frauds.) An endorsement in blank on a mortgage note does not satisfy the requirement that the party to whom the land is to be transferred in foreclosure must be identified. Most lawyers have been unable to get to the core issue that the UCC cannot create rights in lands, so pro se homeowners are to be congratulated for taking the issue as far as they have and will continue to have to do. There are not enough lawyers willing to represent homeowners to stop this travesty of bank fraud with court approval.

      So, please, SMDLFT, get the word out to the pro se homeowner defense network:
      1. The UCC does not apply to real estate by its own terms;
      2. The Statute of Frauds requires that the party taking title to land by mortgage foreclosure must be identified in writing.

      The MERS concealment has crashed. MERS Rule 8 now requires all MERS nominated mortgages to be assigned out of MERS by the note OWNER, for all foreclosure commenced after July 22, 2011 and all bankruptcy proofs of claim brought after that date. Google MERS Rule 8. MERS 8 reveals that MERS, a private data base, does not own the any interest in the mortgage notes. It now requires that only the note OWNER assign the mortgage or deed of trust out of MERS. This is a blatant admission the MERS never had the authority to foreclose in its name, having never been owed any debt which could give it any private equitable right to foreclose. Use MERS own Rule 8 and the Statute of Frauds to show the court that that the note OWNER is not before the Court by “endorsement in blank.” The overwhelming majority of foreclosure cases I have reviewed since 2009 are by fraudulently created assignment from MERS with a fraudulently created endorsement in blank.

      A strong word of caution: The news of the PR settlement with 5 banks has brought a whole new group of predators to the table who will claim to be able to help homeowners. (Not that this wasn’t already a serious problem.)

      If you get a lawyer make sure the lawyer understands that the UCC does not apply to real estate and the Statute of Frauds requires a writing identifying the party trying to foreclose on your land. If you have to do this yourself (and most of you will) make sure that you cite the Statute of Frauds and the failure of the foreclosing party to identify the writing by which the foreclosure claimant is trying to take your land via the UCC. The UCC does not apply to real estate transactions.

      The conflation of the UCC with land transactions is the one unfortunate consequence in the developing case law resulting from pro se homeowners being forced into territory where lawyers feared to tread or refused to go in order to profit from and participate in the illegal actions of the banks, the GSEs and their now self-exposed front-entity, MERS. The tragedy of the default of the lawyers who should have stepped in ahead of this criminally-inspired and criminally-executed theft of US homes is the suffering of the individuals, families, communities and the collapse of the Rule of Law.

      We can restore the Rule of Law, but we must get back to the two basic points I set forth above. Here they are again, because I am writing in stream of consciousness:
      1. The UCC does not apply to real estate by its own terms;
      2. The Statute of Frauds requires that the party taking title to land by mortgage foreclosure must be identified in writing.

      Thanks to all who have worked so hard to preserve the Rule of Law. An educated public is indeed essential to the preservation of liberty, along with honest and courageous elected officials like O’Brien, Thigpen and Ting.

      Blessing to you all!

      1. LeonovaBalletRusse

        oldsoul, “not enough lawyers willing to represent homeowners” – Wonder why?

        The strong arm of organized crime reaches far and wide.

        1. oldsoul

          The reach of organized crime? At some levels that is undeniably true and seems to certainly be true for many of those sitting on the bench, almost all of those who work for the big bank law firms with which the regulatory agency attorneys play revolving chairs, much in the same way that bankers play musical chairs with appointments to bank regulatory positions.

          But, most of all, the failure of lawyers to pick up the homeowner defense cause is the result, sadly, of the fact that the homeowners could never afford to fight an adversary which creates its own money. Adding even more difficulty to the financial model for the homeowner client is are the fact that homeowners were financially destroyed before they even realized that they needed to find an honest and courageous lawyer. From fake temporary modifications under HAMP to fake securitization and forensic audits, the burden is added to the unlimited huge resources the bailed out banks have had at their disposal to fight against homeowners, using the collection claim for actual attorneys fees against home equity. There is no new credit available (by design) for citizens and business, so the homeowners have simply not able to afford the minimum necessary legal defense from any but the most expert and efficient lawyers who have the skill to engage in litigation against the banks.
          Foreclosure defense lawyers are also mocked, humiliated and silenced by judges, who give every technicality of civil procedure (quite often erroneously) against the homeowner and in favor of the bank. It is demoralizing and few can stay the course to hone the necessary skills. Most don’t even have the necessary skills to undertake the challenge nor do they have the resources to spend thousands of uncompensated hours doing the research necessary to gain the necessary skills.
          From my experience with the lawyers in one of the states where I am licensed, I observe that the problem is that few lawyers have cross-over skills between transactional law, commercial law, contract law, securities law, bankruptcy law, criminal law and civil litigation. Most lawyers are forced to focus on one area or the other because the law has become very complex and technical. Because I am old (36 years in practice) I was trained as a generalist. If a lawyer has normal overhead costs and a family, there is little opportunity to develop the cross-over skills, which takes a lot of work and research to hone and develop. And most lawyers, being human, can only take so much before their health and businesses fail under the stress of just a few of these cases. At that point, they are no longer profesionally competent to practice in this area even if they ever were.
          Overworked, demoralized, out-funded and defeated, the process can lead to homeowner defense lawyer may facing a threat to his or her livelihood by the lawyer disciplinary authorities. This is the cutting edge of the organized crime scenario. Some state lawyer regulatory authorities are indeed corrupt and will sanction a homeowner defense lawyer for minor deficiencies (everyone has them) have turned a blind eye to the massive crimes being committed by bank lawyers who knowingly manufacture and/or present false documents in court proceedings.
          Only the lawyer who has nothing to lose is really free to attack the system for its corruption. I am one of those, but my children are adults and my home was taken by fraudulent paperwork while I was recovering from a car accident injury. Is “freedom is just another word for nothing left to lose” or, is it the only thing worth fighting for? It is a matter of perspective.

          1. James Cole

            Just to be clear, we’re talking about lawyers who (a) have nothing to lose and (b) will work for clients who cannot pay. Most lawyers have less than nothing to lose, as they are heavily indebted themselves to pay law school tuition.

  18. Rehabber

    I’ve wondered to what end this particular fraud (in the county recorders offices) was perpetrated. I am beginning to think that its a rather nefarious destruction of private property rights, by causing implosions in the land title recording system.

    1. oldsoul

      Your observation is correct. I was working on this puzzle and came to the same conclusion. If this assault on our public land records continues unabated and the anticipated 13 million more home foreclosures are allowed to proceed, we will have the government owning our homes and regulating us through leases. Farewell to the vestiges of the Fourth Amendment. Any complaints? That is what indefinite detention under the NDAA of 2012 is intended to handle.

      I predict that the “Masters of the Universe” are wrong. Not all elected officials can be bribed to violate their oaths of office. The majority of the military will not arrest US citizens on US soil. And the majority of veterans will be on our side, defending us, peacefully, I pray.

        1. F. Beard

          That’s the good news. When injustice is widespread enough then people will realize that there is no need for it.

  19. steelhead23

    I absolutely agree with the author that the evasion of county transfer processing fees is theft, pure and simple. My disagreement is that the settlement fails to deal with this criminal enterprise. The lack of criminal indictments and the preclusion thereof, absent detailed investigation, is a feature, not a bug.

    This leads me to question this nation’s commitment to the rule of law. By now, it should be clear to everyone that the United States is a lawless plutocracy, masquerading as a egalitarian democracy. From warmongering to torture and from robosigning to securities fraud, if you are important and powerful, you are immune from the law. And Americans look down upon those silly N. Koreans who wept over the death of their mistreater. Give me a break.

    1. LeonovaBalletRusse

      steelhead23: “the settlement fails to deal with this criminal enterprise” –

      YVES, I think people are getting the message. Water on the stone does work.

  20. brian

    kamala harris was just named one of obama’s national co-chairpersons for his reelection campaign

    so she will just be so busy
    you will understand if the fraud and crimes exposed in sf never get prosecuted

    the campaign and promoting herself for governor
    no time left

    1. LeonovaBalletRusse

      brian, such an obvious set-up for the *quid pro quo* if he’s *elected*, that it’s outrageously ridiculous. Their criminal deeds are brazen, just like the bull.

      1. oldsoul

        I also saw her name floated in the main stream media as a possible US Supreme Court nominee to replace the aging and rumored-to-be-ailing Ruth Bader Ginsburg.

  21. Javagold

    Bank of America is here to help you….i dont think that scumbags whisper to Perry ever got enough coverage of what is really happening in front of our eyes and ears

    1. LeonovaBalletRusse

      Javagold, NOW do we see how the banksters’ Third Reich came to unfold? This is the reply for our time.

  22. Glen

    I would urge Mr. Thigpen and Mr. O’Brien to pursue whatever legal recourse is available against those responsible for this mess. I realize that available legal action is being limited as we speak. I would urge them to go to the public about how the law has been broken and the public has been defrauded.

  23. charles sereno

    A toast to O’Brien and his band –

    “For we, which now behold these present days,
    Have eyes to wonder, but lack tongues to praise.” (W.S.)

  24. Crazy Horse

    Fellow Liberals and Intellectuals:

    Somewhere in the middle of this endless series of comments in which everyone ignores or dances around the issue of how does a downtrodden majority achieve political power, I thought it might be useful to refer to a few simple definitions:

    I’m sure you can recognize yourselves and your country somewhere in there—-.

    FASCISM: A political system wherein political power is held by a consortium of corporate interests and their chosen government representatives, acting in concert to further their mutual self-interest.
    DEMOCRACY: A political system wherein political power is held by and wielded for the benefit of the majority of the citizenry.
    EMPIRE: A political/economic system that maintains military bases on nations outside its national territory for the purpose of extracting wealth from the subject states for the benefit of the Empire.
    ENERGY RESERVE: A resource located on foreign territory that can be obtained by regime change or direct military action.
    INTELLECTUAL: Someone who engages in endless debate about what the world would be like if only there were no such thing as class stratification, monopoly of force, mass communication, propaganda, and human evil.
    LIBERAL: Someone who wishes everyone would have a nice day, as long as they can make junior partner in their law firm by defending Monsanto’s patents on the entire world’s gene pool.
    CONSERVATIVE: Someone who believes that the only proper role of Government is to initiate atomic warfare and thus bring on the Rapture.
    REVLOUTIONARY: Someone who downloads music on the Internet without paying for it.
    INTERNET: A system used by Homeland Security to enable Enemies of the State to self-identify, thus facilitating the State’s command and control capabilities.
    FACEBOOK: A highly refined form of Internet wherein Enemies of the State provide personal information to enable Homeland Security to assess their threat level and identify Friends who need to be placed on surveillance lists.

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