Yearly Archives: 2011
Bombshell Admission of Failed Securitization Process in American Home Mortgage Servicing/LPS Lawsuit
Wow, Jones Day just created a huge mess for its client and banks generally if anyone is alert enough to act on it.
The lawsuit in question is American Home Mortgage Servicing Inc. v Lender Processing Services. It hasn’t gotten all that much attention (unless you are on the LPS deathwatch beat) because to most, it looks like yet another beauty contest between Cinderella’s two ugly sisters.
Read more...Bryce Covert: Recession Has Lit the Fuse on Explosive Student Debt
Yves here. I’ve been surprised that student debt has not become more of a social issue, particularly given high unemployments rates among new graduates. Perhaps that time is coming soon.
By Bryce Covert, assistant editor at New Deal 2.0. Cross posted from New Deal 2.0
Troubling long-term trends have gotten even worse as schools, government, and families cut back and student loans skyrocket.
This week’s credit check: Average student debt can spiral up to $100,000 with interest and late payments. Room and board charges at colleges have doubled in actual dollars since 1982.
Read more...Auerback/Parenteau: Jackson Hole will be a Black Hole for Those Hoping for QE3
By Marshall Auerback, a portfolio strategist, hedge fund manager, and Roosevelt Institute Fellow, and Rob Parenteau, CFA, sole proprietor of MacroStrategy Edge, editor of The Richebacher Letter, and a research associate of The Levy Economics Institute. Cross posted from New Economic Perspectives
Those leading the charge for “fiscal consolidation” now seem positively shocked by the violent gyrations in the stock market, as expectations rapidly seem to be shifting toward an “L” shaped recovery or worse – a possible global recession. To those of us on this blog who have consistently downplayed the prospects of global recovery in the midst of widespread private sector AND public sector retrenchment, none of this sadly comes as a surprise. We are, as Bill Mitchell noted recently, experiencing a “self-inflicted catastrophe”, largely because of dangerously destructive myths in regard to the efficacy (or lack of it) in regard to fiscal policy. But in spite of the shrill rhetoric of the fiscal austerian brigades, the markets are beginning to intuit that a nation cannot have a fiscal contraction expansion when all other spending is flat or going backwards and yet that remains the general trajectory of policy.
Read more...Links 8/24/11
More on the Opacity of Bank of America’s Financial Statements
Yesterday, I made a basic point about the financial statements of banks and other financial firms, citing Steve Waldman, who said it better than I could:
Bank capital cannot be measured. Think about that until you really get it. “Large complex financial institutions” report leverage ratios and “tier one” capital and all kinds of aromatic stuff. But those numbers are meaningless. For any large complex financial institution levered at the House-proposed limit of 15×, a reasonable confidence interval surrounding its estimate of bank capital would be greater than 100% of the reported value. In English, we cannot distinguish “well capitalized” from insolvent banks, even in good times, and regardless of their formal statements.
The illustration of Steve’s point was that investors freaked out on Monday about an estimate that Bank of America might need to raise $40 to $50 billion in equity. The idea that the market would be surprised (as in not know that and simultaneously regard that figure as plausible) says a great deal about how little confidence investors have in their knowledge of big financial firms.
Read more...Should Banks Be Public Utilities?
We discuss what the role of banks should be, given how much government support they have, on Real News Network. Enjoy!
Read more...Tom Ferguson: The English Riots – Just Meaningless Sound and Fury?
By Tom Ferguson, Professor of Political Science at the University of Massachusetts, Boston and aSenior Fellow at the Roosevelt Institute. Cross posted from New Deal 2.0
Zizek misses the point: Austerity politics is a social and economic disaster.
In a recent essay, Slovenian theorist and literary provocateur Slavoj Zizek attempts to unpack the political meaning of the riots in England. These broke out in response to the shooting of Mark Duggan by the Metropolitan Police and then spread rapidly from London to other cities. Zizek argues that the riots amounted to an exercise in sound and fury signifying nothing — symptoms of an “ideological-political predicament” in which opposition can only be expressed through meaningless bursts of violence.
Read more...Links 8/23/11
Why is Bank of America’s Stock Cratering Yet Again? It’s the Extend and Pretend Endgame
Yesterday, the S&P 500 ended flat, yet Bank of America continued its truly impressive implosion, with its stock tanking 7.89%. It is now trading at a market cap of $65 billion, versus a book value of common equity of roughly $215 billion.
Market commentators were having so much fun discussing the meltdown that FT Alphaville even dedicated a post to the “The Bank of America Explanation Game.” This was its tally, and the post includes an explanation for each:
Read more...Satyajit Das on the Botox Economy
As much as I like Satyajit Das’ books (his new offering, Extreme Money, is just out and was reviewed favorably in the Financial Times), I wish he’d get on TV more often. His being in Sydney puts him at a bit of a disadvantage.
This clip is amusing.
Read more...Mirabile Dictu! New York Times Tells Obama Administration Off, Backs Schneiderman on Mortgage Settlement
The editorial in today’s New York Times may be a sign that the tide is turning. The elites are starting to break ranks with the mortgage industrial complex.
Gretchen Morgenson reported yesterday that the Obama Administration was pressuring the New York Attorney General Eric Schneiderman to drop his opposition to the so-called 50 state attorney general mortgage settlement. The short form is the banks want a “get out of liability for almost free” card, which is patently absurd. Not only have they caused a colossal economic train wreck, but sadly, they remain such central actors that they need to be involved in remediation. Letting them off cheaply would be tantamount to putting a band-aid on gangrene.
Read more...Lender Processing Services Law Firm Targeting April Charney, Foreclosure Defense Pioneer
You know the powers that be are pretty desperate when they feel compelled to go after a Legal Aid attorney.
Admittedly, April Charney is no ordinary Legal Aid attorney. She was one of the first lawyers to focus on the question of whether party showing up in court really was the right party and whether it could demonstrate that it had the right to foreclose.
In some ways I’m surprised this hasn’t happened sooner, but pro bank members of the Florida bar are apparently orchestrating an effort to get Charney fired from Legal Aid of Jacksonville, which on its face is absurd.
Read more...Links 8/22/11
Corrupt Obama Administration Pressuring New York Attorney General to Support Mortgage Whitewash
It is high time to describe the Obama Administration by its proper name: corrupt.
Admittedly, corruption among our elites generally and in Washington in particular has become so widespread and blatant as to fall into the “dog bites man” category. But the nauseating gap between the Administration’s propaganda and the many and varied ways it sells out average Americans on behalf of its favored backers, in this case the too big to fail banks, has become so noisome that it has become impossible to ignore the fetid smell.
The Administration has now taken to pressuring parties that are not part of the machinery reporting to the President to fall in and do his bidding. We’ve gotten so used to the US attorney general being conveniently missing in action that we have forgotten that regulators and the AG are supposed to be independent. As one correspondent noted by e-mail, “When officials allegiances are to El Supremo rather than the Constitution, you walk the path to fascism.”
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