Quelle Surprise! 50 State Attorneys General Settlement Talks Beating a Retreat

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As readers know, we’ve been very critical of the 50 state attorneys general mortgage “settlement” talks. The reason has been very simple. The leader of the negotiations, Tom Miller of Iowa, early on cast his lot with the Administration’s banking regulators, who are at best cognitively captured and at worst corrupt, rather than siding with the rule of law or the interests of the nation’s citizens. He took their lead and pushed for a quick resolution, when any “settlement” by definition depends on the prosecutors having a real case with decent odds of serious damages as a cudgel to bring the perps to the table and extract real concessions from them.

In the absence of doing investigations to develop a case, all the banks have to “settle” is robosigning abuses, which since they are sorta cleaning those up anyhow, does not add up to any kind of threat. Thus all the banks have to do is the obvious: call Miller’s bluff.

This update from American Banker (hat tip Mike Konczal) shows the Miller-led effort retreating from the only meaningful concessions, that of serious fines and/or principal mods (note we had not been a fan of this approach to principal mods; any bank funded mods would be too shallow to make any real difference. It would have been better to have any bank fines go to building infrastructure to do real principal mods that would come out of the mortgage securitizations, as well as pay for banks to write down their second mortgage portfolios):

After months of stalemate, the state attorneys general have proposed new terms to the top five mortgage servicers that drop some controversial provisions of their first attempt at a settlement, including a push to force banks to reduce principal on thousands of mortgages…

Banks have privately said that they will not agree to a fine above $10 billion — far below a discredited $20 billion figure floated in the press two months ago — arguing that regulators have not provided evidence that servicing problems led to wrongful foreclosures.

The AGs are considering using whatever money they receive from banks to start a “cash for keys” program to help troubled borrowers move out of their homes and speed the foreclosure process by providing them cash incentives to leave. The funds are also expected to be used to promote mortgage counseling and offer some forebearance to troubled homeowners.

While banks have not agreed to the new terms, they do appear much more beneficial than an offer made in February, which demanded sweeping changes across the servicing industry, including principal reductions. By dropping that requirement, banks have already scored a key victory, observers said.

There is one useful demand that still remains: that the banks end dual track (moving forward with foreclosures when they are also considering a mortgage mod). There is also a new requirement, of letting borrowers who applied for HAMP and were denied a permanent mod to reapply for HAMP (given that most people in that position were foreclosed upon, since they were hit with arrearages and fees when they were turned down for a permanent mod, this is a bizarre concession to request, it seems to have no practical value limited PR value but will allow the banks to act as if this is a real imposition and ask to have something else traded against it).

This demand sounds promising but is actually a huge Trojan horse, and I am troubled it is being included:

The revised term sheet raised some new issues, including a proposed requirement for more documentation concerning the basis of knowledge for a foreclosure and notes and assignments. The state AGs are seeking to require documentation on the appropriate transfer and delivery of endorsed notes and deeds of trust at the formation of a mortgage-backed security. Essentially, servicers would have to document that they not only have positions with the MBS but document that the securitization was formed properly.

The servicers are not going to want to assume responsibility for certifying events beyond their control. It was the originators and the trustees that were responsible for making sure that the securitization was done properly, and the liability for the failure to form the securitization probably rests most heavily on the trustee, who provided multiple certifications that they got all the assets (forgive my being approximate in my use of legal terminology, but conceptually this is accurate).

This ask sounds troublingly like it is setting the stage for a broad waiver of liability for mortgage abuses, a step we have roundly opposed. No one has any business giving broad waivers when they don’t know what bad conduct they may be forgiving. And the ample evidence of abuses in the improper application of payments and the use of junk and pyramiding fees suggests there are a lot of bad practices the servicers would love to have forgiven before anyone can attach a dollar tag to what they really are worth.

The only good news is the article also reports that there may be no deal, and says that some AGs are reluctant to accept an agreement when they don’t know the extent of the abuses. Having this come to naught would be the best outcome for the public at large.

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  1. Charles Scouten

    What about corruption of bank balance sheets via the dishonest practice of listing illiquid assets (e.g., MBS) at inflated values? Mark to market enables the practice, but all of us pay for it. Mark to market doesn’t work absent an active, open, and fair marketplace. Why not trust the market? Create a marketplace for trading illiquid assets, and require FDIC-insured banks, the GSEs, and pension funds under Erisa to sell a small part of their illiquid assets each year. Then adjust balance sheet (and capital requirement) based on actual sales proceeds. Bank officers would stop their foolishness quickly, faced with this requirement.

    1. Yves Smith Post author

      The banks don’t hold MBS. They hold HELOCs. The MBS were sold to investors.

      The HELOCs are at inflated values. The banks can play all sorts of games to keep them looking current (they can put them on negative amortization and accept trivial payments and that way claim they don’t need to write them down). Their need to avoid writing down the seconds means they don’t want to do principal mods. Hard to keep a second lien at 100% on the dollar when the first mortgage has been written down

      1. Hu Flung Pu

        Banks don’t hold MBS? If you take a look at Note 3 (“Securities”) of a large number of bank 10-Ks, you’ll see that Agency MBS are on almost every bank balance sheet in the country. In most cases, they’re the largest component of the securities portfolio.

        Are you trying to say that the banks don’t typically hold portions of the MBS that are created out of the mortgages that they (via a subsidiary, typically) originate and sell? That I can agree with.

        1. Paul Tioxon

          How long do they hold them? Is this a seasoning requirement before assigning them to an investor or trust? Are you seeing notes from another bank or the 1st mortgage they originated, and then prepared to be sold off?

          1. Hu Flung Pu

            I think you’re confusing “loans available for sale” with “securities available for sale.” Loans available for sale would be (in this instance) mortgages originated but essentially being warehoused until sold, eventually to be packaged together and securitized. Securities available for sale (almost everything is classified as AFS these days as there’s not a lot “held to maturity” anymore) include most of the securities on a bank’s balance sheet – including MBS, treasuries, corporate bonds, etc. But, make no mistake, MBS (particularly Agency MBS) are typically the single largest class of investment securities on a bank’s balance sheet. In very general terms, the typical bank holds a typical MBS on its balance sheet for a couple/few years – but obviously this depends on a lot of factors (e.g., the interest rate environment, the bank’s liquidity needs, etc etc).

          2. Cedric Regula

            Sure banks own MBS. They need yield producing assets so they can be a bank. Problem is they bought MBS in the market from another bank and got screwed. Now F&F MBS was less of a problem because default rates and terms were better. But I did read during the subprime crisis regional and smaller banks held around $60B in subprime (private label) CDOs. These and more from the large bank/IBs were pawned off on the Fed when Ben did Maiden Lane I&II&III and his other special programs. Course lots of that was retrained inventory the IBs underwrote but couldn’t even sell the first time.

            Then there is “mark-to-make believe” accounting for what remains on banks’ balance sheets and also all the bad second mortgages and home equity stuff. The USG decided that’s better than Sabranes-Oaxley where banks are concerned. The banks agreed and continued to pay record bonuses the past 3 years. This way all bank employees can continue to receive S&P 500 senior VP pay. This is important so they don’t lose any good talent anywhere. Like to the NY Yankees maybe. Or we get a Lady Gag-Gag.

            All make sense now?

          3. Hu Flung Pu

            Cedric, I’m pretty sure that 98% of all NC readers are aware of the information you present in your post. I’m not at all certain, however, what your post has to do with my pointing out the simple fact that banks indeed hold MBS on their balance sheets. Perhaps you enjoy typing… which is certainly fine by me…

        2. Yves Smith Post author

          Agency MBS are government guaranteed, remember? The huffing and puffing is all about private label securities. The defaults on private label deals in 2006 and 2007 are expected to reach 40%. For Fannie and Freddie deals, it’s only 2%. The aggregate numbers are large because Fannie and Freddie are so big.

          Also, Fannie and Freddie contracts give them a lot more rights to push the servicers around than the private deals did.

          1. Hu Flung Pu

            I’m not disagreeing with you at all here. I’m merely pointing out that your original statement that “The banks don’t hold MBS” is incorrect. They do. In large quantities. I think you meant to be more clear with your statement, that’s all.

  2. Richard

    By the time the negotiations are over, your worse fears will be realized. In exchange for nothing, the AGs will give the banks a blanket liability waiver.

    1. DownSouth

      Yea. And given the awesome legal and negotiating skills of the AGs, the taxpayers will probalby have to throw in an extra $40 billion payment to the banks to boot.

    2. Jim A

      I’d actually bet that a few of the AGs will defect. Of course the Financial Industry will try and show that only NY law matters since that was where the mortgages were securitized and the poo got put in the sausage.

  3. Francois T

    Is that how low this country has descended? The public officials in charge of upholding the Laws cannot be goddamned bothered to, well, uphold the laws?

    And the miserable “elites” wonder what’s the matter with the unwashed masses?

    For a quick and dirty answer, just ask Marie-Antoinette!

    1. LeeAnne

      Very interesting link. And how do you feel about the too big to farts faced with not a day in court nor a human being in any of the bank’s Human Resources pool named against the finding of drug money laundered three hundred and eighty BILLION dollars with just enough publicity for cover against a real investigation.

      No, the too big to fails are above the law criminals. There is no such thing as ‘fraud in finance.’ That’s a paraphrase of a statement made by Greenspan while FED head.

  4. esb

    Thank God the disgusting concept of principal modification has been sent to its grave.

    Speaking as a person who makes the bulk of his living from generating capital gains (and knowing full well just how difficult picking proper entry and exit points always is regardless of the asset class involved) the idea of gifting soemone into a position from which he can later book a capital gain disgusts me. And do not be deluded into thinking that the dreams that the American dreamers were dreaming with their housing adventures were anything BUT dreams of capital gains.

    1. francis

      Most just wanted a home for their family, and believed they were safe to buy one. You are a little creep.

    2. Just A Theory

      Speaking as a person who makes the bulk of his living from performing productive work (and knowing full well just how difficult it is to remain productive in the face of ever decreasing regard for employees who generate such output) the idea of gifting soemone into a position from which he can pay less than half the amount of tax that I pay by shuffling money via capital gains disgusts me.

    3. furiouscalves

      so you would not be party to a securities fraud class action if you were ripped off in a trade you made? go pound sand.

      speaking of class. i believe that all single family residences in the country with or without a mortgage deserve damages for this stuff.

      lets use numbers that are out there and make it real. so far 20 just became 5, so lets say 10 and be nice. so, 10 billion a year for 30 years at current rates. – they still come out paying less than the damages done. oh and the state A.G.s can get a point or 2 if they can close this thing. and 20 percent down!

      here is what i am curious about as well, so is this extra bit added about putting chain of title stuff back on the originators and the trustees – is it just going to lead to cannibalism? in that i mean TBTF eating TBTF and some kind of M.A.D.? is this the only way for servicers to get a waiver… at the expense of other parts of the business getting nicked by another TBTF servicers? or is it also once again the plan to continue to put his back on the GSE’s – which would be us citizens in the end? or am i way off?

    4. F. Beard

      Thank God the disgusting concept of principal modification has been sent to its grave. esb

      There is no need for principal modification. Instead every American adult should be sent a huge and equal check of new debt free full legal tender fiat – United States Notes.

      That way, underwater homeowners could pay down (off?) their mortgages and savers would receive compensation for years of suppressed interest rates.

      At the same time as the bailout, the banks should be put out of the counterfeiting business via a 100% reserve requirement. The Fed should be abolished too to prevent any new money creation outside the US Treasury.

      And after the debt is cleared, then fundamental reform in money creation should occur.

  5. VM

    I believe you mean they wanted a house for their family – a home is what you make of it.
    That confusion I think is the root cause of all this mess. This fascination with real estate – end of the day no matter what anyone thought they were doing it does not change the reality that end of the day they were buying a pumped up asset with leverage to their eyeballs.
    What I am disgusted with they RE has had to be sold – tax breaks, credits and the created mystic of RE (look how it is called “First Home Buyer” “home ownership”etc. In my opinion “House” as opposed to “Home” would be more accurate & less misleading in such sales pitches.
    A house is a collection of material substances, location etc and can and should be rationally valued (similar to say a car). A home I believe is more spiritual and virtual and is priceless. Confusing the two by the purveyors of mortgages, Real estate brokers et al is disingenuous and not the the buyers were also complicit at least in suspending their skepticism.

      1. VM

        Let me make it clearer then lest you take it as mere semantics quibbling- I suggest that many buyers were complicit perhaps in a tacit manner but nevertheless complicit.
        In essence many sought to buy an cheap option especially with zero down non-recourse debt. Perhaps cash out HELOCs – the seconds in many instances went to boats and stuff.
        Now the call fails & they want the lenders/tax payers to carry the can? If someone either buys a call option or leverages a good portfolio for liquidity and the market moves against them would you suggest making them whole?
        I think all parties share the blame here not the least the buyers. All sides participated in the this mindless binge.

          1. Lyle

            But if the borrowers had just said no the bankers would have had to go back to selling used cars. Recall all the adds about how essentially if you were breathing and had a pulse you could get a loan during that time. It takes two to tango and the borrowers in particular in HELOC and re-fis with money out got something perhaps a vacation or a pool or something else. Actually how much do the folks who owned or worked for New Century or Ameriquest have now? Yes the folks on wall street were complicit, but as All the Devils are here suggests that the borrower is as much complicit as the bankers. Since 75% of the loans were re-fi’s and most of these were cash out, the borrower got value for selling the option, and now the time has come to pay the piper.

          2. Jim A

            These dumba$$ loans had idiots and or crooks on all* sides of the transaction. It’s not really about figuring out who’s sympathetic and who’s guilty. It’s about who can be disuaded in the future by exemplary punishment now. There will always be a new round of FBs willing to borrow their way to the poor house. ALWAYS. The best thing that we can do to prevent them from doing so is to make lending to them a money losing proposition, and to make lying and perjury in the furtherence of those loans a path to a jail term.

            *borowwers, mortgage brokers, banks, securitizers, raters purchasers etc. There’s a veritable rogues gallery of people who were involved in this mess, and very few who were not at least willfully blind to what they were doing.

        1. 4D

          I smell a troll!

          You might have had a point if the bankers played with the cards the free market dealt them.

          Yes many participated in the mindless binge but there were precious few winners and they were ALL blackmailing bankers, aided and abetted by weak officials like these AGs, underwritten by ALL taxpayers.

          1. VM

            Not a troll at all. Just a saver who did not buy because I thought the prices were ludicrous and now I need to in effect contribute to the clean up of banks, mindless buyers et al.

            Please do not give that nonsense about how the bankers should have known better using that as an alibi for avoiding any buyer responsibility. Look I think the banks should not have been bailed out. Similarly the house buyers (nay house speculators) too need to fess up.
            Otherwise in essence you are saying the house buyers are too dumb to be making an ownership decision. Taken to its logical conclusion they them should not be owning….

            I mean what was going on in their mind as they did joyful somersaults on buying over priced lemons – the mortgage banker selling them the snake oil with teasers was a friend of the family? and that of course nice Realtor slithering up and down the pole has their best interests at heart?

            And now thanks such people the interest rates must for ever remain low and not only is the greatest wealth transfer taking place from the prudent on behalf of the profligate but appears you also expect paeans to be sung for what was essentially delusional mass stupidity.
            You cannot really legislate against that. This hoopla and emotional baggage surrounding the myth that is residential RE must end. Now tundulying hat this pickle exists – got to let the prices find bottom. All this back and forth splitting hairs about foreclosures when it is clear the borrower cannot and will not pay the loan will only exaggerate the fall in that questions about titling will cloud future sales of the underlying assets.

          2. del

            The rich minority like to play the jailers in a giant game of Prisoner’s Dilemma, then blame the majority when some of the prisoners defect.

            *All* sufficiently large populations subjected to Prisoners Dilemma will turn out to have some defectors. The responsibility for the resulting damage therefore lies with the jailers who started the game. They cannot claim they hoped for the prisoners to cooperate amongst themselves 100% with 0% defections, because no such hope could have been honestly held out at the start.

            See also employers who play PD with their employees and replacement blackleg labor, then claim the resulting low wage was “fairly negotiated” with the workers.

        2. Cedric Regula

          Of course there are lots of idiots out there that go crazy if you wave tens or hundreds of thousands of dollars in front of their face. There was an old saying I remember…the easiest job in the world is giving away money. But bankers are supposed to know that and resist the temptation.

          In the end, all the money made available to everyone and anyone was what drove the bubble, and convinced the gullible they actually had all this “money”. That is a consequence of the banker-government complex.

          I remember in 2004-2005 I was receiving pre-approved “home equity credit cards” in the mail on a regular basis. All I had to do was call a number to activate the card and then I could go shopping anywhere I wanted with a $100K in my pocket.

          I meticulously cut mine up into tiny pieces with a pair of scissors, but many others didn’t.

  6. gong

    Hey, heres a fact. The bank has been playing smoke and mirrors. I have the proof. They committed to “single point of contact?” WRONG. I just received the latest correspondence from a new representative, a different one than the original “single point” in february.
    Also, the first letter is postmarked as being from boa headquarters in NC but was mailed from an LA zipcode. The recent one did come from NC, but is three pages of the same falsification of facts that has perpetuated this whole mess from the beginning.
    These are two small examples of the cloak and dagger antics these dirty corrupt business people have perpetuated. They are clearly trying to stall, trying to conceal something. It is almost funny at this point how in the two most recent letters, there are boldfaced contradictions to the information they are providing, which all seems to be a feeble attempt to maintain that they did in fact ever offer a modification, instead of what they actually did which was take and pocket bailout money, sbundle/bungle and “securitize”/dig deeper, and then try to go after me for the money that wasn’t legit to begin with as it was property value based on the inflated market they created. SCAM.
    At least if your going to try to SCAM, do it so you wont get caught.
    For all the complete tools who allege I am a “deadbeat” whatever.
    You are wrong. And also, I am not a victim. I am an educated, intellectual, and I participated in your scheme only to expose your corruption to the greater populous, which I have, in order to erode your credibility and bring to light the depths to which your greed has brought you. And Im just an outside player. There are many more of us who know right from wrong, and the fine craft of ethics who are EMBEDDED in your system and will take you down when you least expect it.
    So. Theres another alarm call.
    All we demand is diligence and a return to ethics in business. Its a simple way to save the world from the unchecked development threat that a corporate based beast poses the globe.
    if it costs me a credit rating, so be it. I never believed in that system anyways, nor did it ever work but for to attempt to create an in-effective fascist system that ultimately never has and never will work.
    Love, your little jedi knight.
    Sweet dreams beastie. You’ve made your bed now lie in it.

  7. pushing buttons

    a letter mailed to AG Tom Miller:

    Sorry for typos!

    I am offering my information to you in support of a strong resolution in favor of myself and other borrowers like myself who have had our financial resilience destroyed and tampered with by the banks. My hope is that somewhere in negotiating a settlement with the banks, there are strong provisions to remedy the overall exploitative and marginalizing behavior of these corrupt and greedy lenders and the systems they operate. I have filed a complaint also with the AZ Attorney General in support of their active case against Bank of America, however, according to the media, the Office of Tom Miller is heading the on going negotiations in Washington DC with the banks. While bank of america may be trying to paint a picture that they have made any effort to deal with any of this in an ethical, remedial manner, the truth is that to this date, I am still receiving literally, deceptive, non resolute, confounding correspondence from the bank.
    Since I lost my job in 2008, I have repeatedly tried to be reasonable with these people. It is clear to myself and many others that there is an effort here to maintain a system of profit that is also clearly responsible for the marginalization of honest, up standing Americans. There is so many lies being spun by these far too powerful individual cabals, but most people are aware that there is a decisive effort to create and implement class disparity. While this may be considered conspiracy theory by some, all I can offer is that though it is subtle, slavery and exploitation are far from gone in this country. In fact, one of the greatest perpetrators of this matter is Bank of America.
    Again, I was raised thinking that home ownership was a good thing. I was literally lured into this situation with the bank at a pretty young age. I did not have the neccessary education and saavy to navigate around it. They also offered an incentive to coherce me to participate. (2,000$ giftcard) on closing. IF I COULD GO BACK< I WOULD JST KEEP DRIVING AND FIND A RENTAL< LIKE I HAD THE DAY I STOPPED INTO THAT GOD FORSAKEN CONDO OFFICE AND SIGNED UP, UNWITTINGLY FOR A FRADULENT FORM OF BUSINESS THAT HAS COST ME MONEY, TIME, AND ENERGY AND EMOTIONAL WELL BEING.
    It seems the attorneys generals are having a hard time finding the banks did anything wrong….
    Originally, the loans for the property were offered by countrywide.
    They declined to finance me due to bad credit.
    They sent me through to bank of america..
    Ponzi Scheme.

    Bank of America then financed the deal with a notorious A.R.M loan, which almost all financial experts question the integrity and sustainability of.
    Also, though I had no Real Estate saavy, the property value was listed at 89,000
    but the loan was written for 99,000.

    There is a discrepancy of at least 10,000$ that went somewhere.

    That is from the outset.
    Also, it turns out, the property in question was known to be liable to damage in the case of haing been retrofitted with faulty pipes, which have since burst.
    They alleged it was "remodeled."
    The bank financed all this.
    At any rate, seperate form those issues, while the bank insists on claiming they have been compliant with HAMP,
    all they have ever done is harass me from the moment I lost my job in 2008 to now, either offering me a modification while threatening foreclosure, demanding late payment and hidden fees initially with the ordeal, and refusing to even resolve a payment plan.

    I dont want to get lost in the details. You need to know that even within the past two months, FEB, MAR, APR, 2011, they have still post poned foreclosure, dual track offered or spoke of modification, threatened foreclosure…
    In feb 2011 I was contacted after they were given the first sheet by one representative.
    Now, two months later, another one.
    Both of the stories they offer does not match up.
    They allege that I contacted them seeking assistance. That is false. They mailed me a notice of eligibility for HAMP. At the same time they were aggressively engaging in collections activity.
    They never notified me of what to send to consider the loans for modification, instead the various representatives both I and family spoke to were given fax numbers to submit financial documentation that contained personal and lawfully protected confidential material. This information was lost and has still not been accounted for.
    Without going on ad naseum, I am simply attempting to present what it really doesnt require even a novice to see is CLEAR evidence of wrong doing/ manipulation/falsification on the part of these organizations. The fraud is in accepting the bailout money, bundling, securitization and sale of loans, and then turning around and trying to collect still, from the borrowers who were exploited in the first place.
    Please. While you still can, put an end to this. Let the banks know that just because they are charged with keeping money, they are not entitled to exploiting and marginalizing other human beings based on a random system of economic class disparity.
    I come from a family of a hard working midwestern woman with good values, and a father who was a major league baseball player. We are not deadbeats, or whatever these shady bankers are trying to perpetuate.
    I am America, and one way or the other, I will prevail over this greedy, shameful spectre that has been allowed for too long to run amok unchecked. And for what? The obscene wealth of a small cabal of financial sector employees?
    I respectfully challenge that the foundation on which this nation was established is far greater than that end.
    Please, give us a reason to believe in this country again. Bring justice, clarity, and fair and balanced remedies to this situation.

    I want to some day own a business. I want to pay taxes for social services that will support my neighbors in reaching their goals. How can I accomplish this if I am bankrupted by this scheme?
    If you are participating in the manipulation of the future, what sort of world are you creating. There is another way.
    Please. Do what is right.
    Sincerely, (citizen ready to leave)
    born in Minnesota,
    moved to Hawaii in boy hood,
    finished high school in Chicago,
    studied college in Arizona, WA state, Minnesota.
    Currently residing in MInnesota. Waiting for 5 years in lieu of any decisive foreclosure, or resolution on the part of BOA. Is STILL being given the run around, despite what they are saying they will do.
    May perhaps become an expatriate to Sweden or UK or Canada, where at least if the governent and industries are corrupt, they are good at hiding it and people live happily.
    I would prefer to stay in the country I was born to, where my Grandfather who was an Airforce specialist built a world he believed in. However, if this country gives me no reason to honor it, I will leave, and bring honor to a place that warrants it.

  8. F. Beard

    Not a troll at all. Just a saver who did not buy because I thought the prices were ludicrous and now I need to in effect contribute to the clean up of banks, mindless buyers et al. VM

    There is a way to fix both savers and borrowers – an equal bailout check sent to every US adult. Borrowers could pay down (off?) their mortgages and savers would be compensated for years of low interest rates.

  9. JCC

    While the trolls are somewhat good at hiding the pea under the cup, the bottom line is this; The Banks were dishonest at best, outright fraudsters at worst.

    The people who took the obviously rigged loans on houses that could not possibly be worth what was paid for them were just stupid, falling for obvious black propaganda spread by the Banking Cartel/Federal Reserve, and our own Federal Gov’t. A classic example of innumeracy at it’s finest and the Institutions that intentionally promoted it and then took advantage of it.

    But meanwhile the rest of us that had nothing to do with any of this idiocy, that saved our money, and actually had jobs at one time that actually produced something, have been screwed, royally, through higher taxes, loss of jobs, destruction of savings and pensions, and the destruction of hope in a decent retirement at a decent old age, not to mention the destruction of the belief in the Rule of Law and even the appearance of honesty in government and business of all kinds.

    And the State AGs? They are siding with the Banks who will continue, along with our Politicians, to rape us for all we are worth (which isn’t very much anymore) instead of with the people who voted them in, not to mention the Letter of the Law.

    So, boo-hoo “esb” and others that sit on their butts paying less in taxes than what I pay in FICA… go peddle your your version of business, productivity, and hardship to someone who cares.

    1. VM

      “”……The people who took the obviously rigged loans on houses that could not possibly be worth what was paid for them were just stupid, falling for obvious….

      Exactly – the savers and the prudent have been screwed every which way. People talk of how to prevent it while admitting the borrowers “were just stupid”. I don’t understand how you can legislate to protect stupidity or even if it is worth the trouble.

      1. francis

        Uh huh.

        “Goldman and the other banks argued that they didn’t need government supervision for a very simple reason: Rooting out corruption and fraud was in their own self-interest. In the event of financial wrongdoing, they insisted, they would do their civic duty and protect the markets. But in late 2006, well before many of the other players on Wall Street realized what was going on, the top dogs at Goldman — including the aforementioned Viniar — started to fear they were sitting on a time bomb of billions in toxic assets. Yet instead of sounding the alarm, the very first thing Goldman did was tell no one. And the second thing it did was figure out a way to make money on the knowledge by screwing its own clients. So not only did Goldman throw a full-blown “bite me” on its own self-righteous horseshit about “internal risk management,” it more or less instantly sped way beyond inaction straight into craven manipulation.”


        1. francis

          “On December 14th, Viniar met with Sparks and other executives, and stressed the need to get “closer to home” — i.e., to reduce the bank’s giant bet on mortgages.

          Sparks followed up that meeting with a seven-point memo laying out how to unload the bank’s mortgages. Entry No. 2 is particularly noteworthy. “Distribute as much as possible on bonds created from new loan securitizations,” Sparks wrote, “and clean previous positions.” In other words, the bank needed to find suckers to buy as much of its risky inventory as possible. Goldman was like a car dealership that realized it had a whole lot full of cars with faulty brakes. Instead of announcing a recall, it surged ahead with a two-fold plan to make a fortune: first, by dumping the dangerous products on other people, and second, by taking out life insurance against the fools who bought the deadly cars.”


  10. House Goons

    Parties to an illegal contract won’t get much help from the court, which explains plenty.

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