Quelle Surprise! Administration and State Attorneys General Lied, Mortgage Settlement Release Described as “Broad”

North Carolina has posted an executive summary of the foreclosure settlement (hat tip Abigail Field), and it is a a troubling document. The first aspect is the very fact that an executive summary, rather than actual text of an agreement, is what is being released. And it’s not being released for the worst of reasons: the deal has not been finalized. We explained in an earlier post why this is completely outside the pale, and we’ll turn the mike over to Frederick Leatherman for a recap:

David Dayen mentioned that the settlement agreement has not been reduced to writing.

That is astonishing.

Let me repeat. That. Is. Astonishing.

The biggest problem with settlement agreements in particular, and all agreements in general, is reaching a so-called ‘meeting of the minds’ regarding the details and ‘chiseling them into stone’ by reducing them to writing. As I used to warn my clients when I was practicing law, we do not have an agreement until it has been reduced to writing, thoroughly reviewed, and signed by each of the parties. That has obviously not happened in this case.

Experience has taught us that humans dealing in good faith make mistakes, no matter how careful they are, and the potential for mistakes, misunderstandings and subsequent disagreements about the terms of an agreement cannot be overestimated. That potential becomes a certainty when one or more parties to an agreement is dealing in bad faith.

That, my friends, is why we have a law called the Statute of Frauds, which requires that certain types of agreements be in writing or they are invalid and unenforceable.

Needless to say, the odds of misunderstanding rise when you have many parties participating, and when some are very likely to be acting in bad faith (the banks and the Administration).

Second, and even worse, the description of the release in this summary is at odds with what various attorneys general have said about it. See Section VII:

Mortgage Settlement Executive Summary

This is the critical part:

The proposed Release contains a broad release of the banks’ conduct related to mortgage loan servicing, foreclosure preparation, and mortgage loan origination services. Claims based on these areas of past conduct by the banks cannot be brought by state attorneys general or banking regulators.

The Release applies only to the named bank parties. It does not extend to third parties who may have provided default or foreclosure services for the banks. Notably, claims against MERSCORP, Inc. or Mortgage Electronic Registration Systems, Inc. (MERS) are not released.

This is sufficiently general so that it is hard to be certain, but It certainly reads as if it waives chain of title issues and liability related to the use of MERS. That seems to be confirmed by the fact that made by local recorders for fees are explicitly preserved (one would not think they would need to be preserved unless they might otherwise be assumed to be waived). This is exactly the sort of release we feared would be given in a worst case scenario. The banks have gotten a huge “get out of jail free” card of bupkis.

Now it is possible that AGs can pursue claims against the banks via MERS, since executives of MERS have claimed that MERS members have given MERS an indemnification. But tell me how the liability nets out:

MERS shall indemnify and hold harmless the Member, and any employee, director, officer, agent or affiliate of the Member (“Member Party”), from and against any and all third-party claims, losses, penalties, fines, forfeitures, reasonable attorney fees and related costs, judgments, and any other costs, fees and expenses (“indemnified Payments”) that the Member Party may sustain directly from the negligence, errors and omissions, breach of confidentiality, breach of the Terms and Conditions, breach of the Rules and Procedures, or willful misconduct of MERS, or any employee, director, officer, agent or affiliate of MERS (“MERS Indemnified Claim”). Notwithstanding the foregoing, MERS shall not be liable or responsible under the terms of this Paragraph for any losses or claims VC10052000VA resulting from the actions or omissions of any person other than an employee, director, officer (who is also an employee of MERS), agent or affiliate of MERS.

The Member shall indemnify and hold harmless MERS, and any employee, director, officer, agent or affiliate of MERS (“MERS Party”), for any Indemnified Payments which do not result from a MERS Indemnified Claim and which such MERS Party incurs (i) from the negligence, errors and omissions, breach of confidentiality, breach of the Terms and Conditions, Rules and Procedures, or willful misconduct of a Member Party, (ii) with respect to a transaction on the MERS® System initiated by such Member, or (iii) as a result of compliance by MERS with instructions given by the Member, or its designee, as beneficial owner, servicer or secured party shown on the MERS® System (“Member Indemnified Claim”).

The issue here (at a minimum) is that MERS is arguably responsible for running a terrible database (from what we have been able to infer, it is lacking in normal protocols to assure the accuracy and integrity of information, such as audit trails) and in failing to devise procedures that were permissible in all the states in which it operated. That presumably constitutes negligence. In turn, the MERS members were arguably liable for taking impermissible actions, such as assigning mortgages when they did not own the note, or making assignments after foreclosures had been started. So they were also negligent. How do you net out who was responsible for what, and to what degree, since both parties are likely to argue that their indemnification isn’t operative due to the negligence (and also possibly bad faith) of the other party. Put more simply: even with the indemnification of MERS by MERS members, don’t expect it to be easy to pin liability on banks.

While the full terms have not been agreed upon, this seems to call into question the claim that Schneiderman got a carve-out for his MERS suit (and Biden had separately insisted that he had wanted to be able to add banks to his case against MERS).

But even with all these caveats, it’s hard to read the executive summary, which no doubt was vetted by the bank, Administration and AG sides, as meaning other than what it intends to mean: that the banks have been released of the meteor-wiping-out-the-dinosaurs-and-the-MBS-market liability they were most afraid of, that of the monstrous mess they made in their failure to convey notes as stipulated in their own contracts, and with their failure to use MERS as a mere registry, rather than a substitute for local recording offices. That in turns means that various cheerleaders for this deal, such as Mike “Settlement Release Looks Tight” Lux and Bob Kuttner have badly misled readers in their assertions that the release was narrow and the deal is good for homeowners.

And to add insult to injury, they’ve given thumbs up to a deal that, as Pimco’s Scott Simon put it:

“….treats people’s 401(k)s and pensions,” which hold mortgage securities, “like perpetrators as opposed to victims,…

“Think about this, you tell your kid, ‘You did something bad, I’m going to fine you $10, but if you can steal $22 from your mom, you can pay me with that.”

As we said before, this deal has put a price on fraud and document forgeries, and it’s $2000 per loan. And Democratic party operatives want you to believe that’s just dandy, that we should be happy as long as the masses gets some crumbs.

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  1. Eugenia Renskoff

    Hi, I lost my home in November 2005 in Atlanta, GA because of mortgage fraud and predatory lending. Needless to say, this was a horrible experience. I can sympathize with the people who have been displaced between 2008 and 2011. I had no money to sue.There is no way that I would settle for less than full compensation. Eugenia Renskoff

    1. Richard

      I meant to add:

      Perhaps enough pushback on the AGs will get them to step back from this “agreement”. After all, this isn’t a done deal until the ink on the signatures is dry.

  2. aletheia33

    as someone asked here recently, is there some way to stop this deal going through? it’s not signed yet. it’s gotten a fair amount of bad press. some have suggested the reason for trying to ram it through has to do with fear of 15 AGs going their own way. they’ve pushed so hard to get this fix in, doesn’t that mean they’re already, in a sense, running scared?

    are ALL these AGs really looking forward to their states’ voters’ reactions to their signing this?

    surely a lot more folks know about this deal now than did even a week ago and are mighty pissed off. much of the worst information came out after the photo op. can’t the people still stand up to this round of abuse and say enough?

    1. Dave of Maryland

      Can AGs be recalled? Doesn’t Wisconsin have recall mechanics set up and ready to run already?

      1. Saul Gansler

        Impeachment takes 2/3 of the house in some states. That won’t happen. An AG who aids and abets a criminal conspiracy is something else entirely. But since the fox watches the henhouse, whatcha gonna do punk?

  3. jsmith

    I understand the outrage, Yves, but we live in a society where killing citizens without trial, torturing people and imprisoning people indefinitely without trial are now accepted and sanctioned practices.

    If our leaders are willing to ignore the Constitution concerning killing, torture and imprisonment, why on Earth should we be surprised that they are going to let the banks off scot-free and without allowing recourse to the courts for those affected by said fraud?

    Again, they can legally take away your very existence, sadistically torture you or throw you away in a box till your death and for some reason we still are surprised at the continued flagrant violations of other aspects of the law?

    The entire document you posted above could have easily just been one Orwellian sentence:

    We must look forward and not back.

    1. Judy C.

      I hate that Orwellian sentence! I was shocked when Obama said it way back when. That’s when I knew for sure that change was not gonna come. We’ve been had.

      We must look forward and not back.

      Sure, just keep sweeping the dirt bags under the rug. Just remember, that some day you cannot keep sweeping it under that rug because there is so much under that rug that it starts to spill out. I think that day is soon here.

  4. Susan the other

    It sounds like this ploy (MERS releasing the members and the members in turn releasing MERS) makes a circus out of proving any wrongdoing, let alone going for damages from the banks through MERS. I don’t see how the crooks can indemnify the crooks. Only in America.

  5. duffolonious

    Haha! On the bright side (for me!) I can use this to argue against my wife wants for buying a house.

    1. nonclassical

      ..report out last week shows at a minimum, another 15 quarters of bankruptcy-
      mortgage foreclosures….just in time for repubLIEcons to put forth Chris Christie..our next president, and future failure…

  6. Lambert Strether

    So, first the press release, then the executive summary. I suppose next comes the full text, and last of all the term sheet.

    It’s like Alice in Wonderland, isn’t it? Sentence first, verdict afterwards!


      Lambert, oh wise one, and you expected……… exactly what in the USA? where the rule of law is no more?

      1. Lambert Strether

        Snow Crash:

        Y.T. seems miffed at Hiro.

        “Look,” he says, “I’m sorry for reminding you of this, but if we still had laws, the Mafia would be a criminal organization.”

        “But we don’t have laws,” she says, “so it’s just another chain.”

        I’m so old I remember the rule of law….

      2. hyperpolarizer

        The rule of law is over; there is no longer even the pretense of a rule of law; the new, official law of the land is simply ‘Bankers Rule.’

        Jesus, even Bush I cleaned up the S&L mess somewhat. We have fallen far and fast.

        I would go so far as to say, ‘America is over.’

        Sorry to be so grim about it.

  7. Westcoastliberal

    Personally I would like to see about 1/2 the AG’s call the Banksters and Obama admin out on this deal and refuse to sign for the obvious reasons.
    These people are taking a dump on 200 years of black letter law, and they’re doing it for way too little money in return. Make that $25 Trillion instead of $25 Billion and we’re talking turkey. Otherwise I’d say buzz off; see ‘ya in court!

      1. Geoff

        “(They sell out cheap) because it’s not their money. It’s like selling your neighbor’s car for twenty bucks. “

  8. Ed

    It’s too bad we can’t do a SOPA-like blackout for this thing. The only way politicians would speak out against the settlement is if they think their jobs are on the line. This issue is so obscure that Mom & Pop voter will just take their $2k and not understand how over their lives they will pay 10x that in taxes to pay this off.

    1. sheepdog

      Make trouble for your AG. I contacted my two local Republican leaning newspapers and asked why AG Harris, a Democrat, was selling out our pension funds. Pension funds are in the public’s eye.

    2. K Ackermann

      I’ve said this before… we need to set up Anti Courts (like the Anti Pope).

      It’s true that it wouldn’t have legal standing, but our first amendment rights still allow us to hold mock trials, and we can put up signs in the neighborhoods of those found guilty in the Anti Court to warn the community that these rotten pricks are on the loose near them.

      We should all act like bankers. If I could afford it, I’d print up 100 trillion in obviously fake bills and ship palettes of the stuff all over the country so anytime someone saw a politician, they’d have fistfulls of cash to stuff in the mouth of the rotten bastards and buy themseves a crime spree.

  9. Jackrabbit

    . . . this deal has put a price on fraud and document forgeries, and its $2000 per loan.

    Is this really accurate? If I understand this correctly, the banks pay $5b and then most, if not all, of the rest of the money comes from investors. But wouldn’t the increased value of the seconds (as you have pointed out) be MORE than $5b?

    So isn’t the price [put on] … fraud and document forgeries actually zero?

    And what is the next logical step for the banks?
    Given that we already hear about the possibility for QE3 targeting MBS, is it reasonable to speculate/expect that these seconds will be labeled “performing” and be sold to the Fed in the coming months (if/when QE3 becomes necessary in the next “unexpected” downturn from our hopium-infused economy)? THAT would be yet another bailout, wouldn’t it? (because the seconds would still be expected to have large losses)

    1. Yves Smith Post author

      Remember, the initial logic of the $25 billion number, if you read the CFPB document presented to Tom Miller, was simple restitution, to recover for the $ the banks had saved by doing a bad job of servicing. Damages are extra.

      The only part of the settlement that is set up as damages is the up to $2000 per borrower payment for foreclosures in a certain time frame.

  10. polyblog

    I’m not a lawyer, and it’s silly to ask, I know…but I thought a contract containing illegal acts or agreeing to overlook illegal acts would be null and void if discovered. It would be better call this a plea deal without consequences.

    1. 2little2late

      Clear title may not derive from a fraud (including a bona fide purchaser for value), unless it occurs during the final phases of Extraction Capitalism where normal rules no longer apply.

  11. Jill

    I’m angry. At least I can understand these middle management politicians (and I do include Obama in that class). Totalitarianism “works” by handing out some of the spoils to their obedient servants. Clearly that is happening here. They are despicable.

    The people I really can’t understand are in the top 20 or 30 percent of the income distribution. For some reason, they are under the impression that they can escape all consequences of the evisceration of the rule of law. Are they on drugs? Seriously, is that what is wrong?

    These are people who if they spoke up now in mass, might be able to turn the corporate corruption back some. I admire you Yves, and others like you who will speak up. But the others are a classic case of “First they came”. They too are despicable.

  12. mezurak

    This is a classic shell operation. MERS has no employees, the banks don’t own MERS. Plausible deniability means no convictions. Just sacrifice MERS as it was designed to be, and the banks are home free.

    1. Walter Wit Man

      Piercing the corporate veil may be difficult, but if any case screams for attempting a piercing it is this case.

      Plus, I wonder if the whole MERS setup could violate antitrust law–the industry looks like it colluded to avoid recording laws.

      What is the definition of a cartel again?

      Plus, it looks really bad that Holder’s firm is said to have advised clients on these matters and Holder hasn’t even said if he was personally involved!

  13. Conscience of a Conservative

    I think most of us are so jaded, that we find it to tiring to get angry, which is of course the point. Even if the document does allow the Federal gov’t or the A.G.’s to go after the banks, if they chose not to prosecute then it’s one and the same.
    The issue is not that home owners should get relief, frankly many should not. The issue is whether everyone in this country is subject to rule of law. And right now it appears that if you are big enough, or enough people benefit or are harmed by your being held to the rules, then rule of law need not apply.

    1. LucyLulu

      Exactly. Until we re-institute the rule of law, how can the economy recover? How can people be expected to have the confidence to invest in markets if their money may be stolen, and they have no recourse?

      From the beginning I impressed on my attorney general (NC) that monetary awards were secondary (to me, esp. as I knew they would be insufficient to make a difference). The most important thing was accountability and that crimes would be prosecuted and that the integrity of the land records be restored. Irregardless of what the terms of the agreement might ultimately be, does anybody still believe that our attorneys general will pursue either?

      1. ajax

        I’m not sure. State AGs might be inclined
        to pursue criminal investigations if they had
        the manpower and money to carry the process to
        “no-contest” pleas, plea-bargains or guilty
        verdicts. But AGs might want to later get
        re-elected as State AG or Governor, which will
        elicit their “nice guy” side if, say, all the
        great analysis by Yves and other here at NC
        “goes mainstream”.

        But in the meantime, agitating for the Volcker
        rule might be good. For effectiveness, it’s
        best to understand clearly one’s own arguments
        pro-Volcker, and the banking industry’s
        anti-Volcker arguments. One might be that
        “Finance has gone global. Britain has a
        favorable regulatory regime for international
        investors. Our financial services industry
        here in America has to have an equally
        favorable regulatory regime for us to
        deliver rates of return that can compete with
        the rates of return of our foreign competitors.
        The financial services indistry employs
        x thousand people in America and generates
        y% of our Gross Natural Product”.

        The banking industry has lots of selfish people
        in it. They will hire lobbyists, pr agents,
        advertising agencies and lawyers to maximize
        their wealth.

        Personally, I think Glass-Steagall was very
        wise. So what’s the pros of Volcker rule
        without Glass-Steagall; there must be
        anti-arguments from the bank’s POV because
        they’re so agitated. Making and perfecting
        arguments can be a collective effort, with
        devil’s advocates poking holes in the
        current argument, in order to perfect it.

  14. Seth

    I think Obama has now broken all records for corruption. Bush would have been as bad but this is on Obama’s watch, and given that it’s the biggest fraud ever, Obama gets the title of most corrupt national leader ever.

    Watch him become our first billionaire ex-president.

    1. Conscience of a Conservative

      My take is that Obama is worse than Bush for one simple reason. Much of the left refuses to make a stink since Obama is a Democrat, which means he can get away with so much more.

      The big criticism of Bush jr was that he was too ideological, and if that is true then Obama is too political.

      1. scraping_by

        If you’re confusing “Democrats” with “Liberals” forget it. Most people see through that, even without reading blogs.

        Liberals speak for the majority of Americans: public option health care, taxing the rich, prosecuting economic crime, staying out of war with Iran, etc.

        Democrats are owned by the elite, mouthing different versions of TINA. Putting out noise to drown out the real alternatives. Supporting the elite value of hedonism, as opposed to the elite value of lawless commerce.

        Nice try with the words of control.


    2. scraping_by

      “Watch him become our first billionaire ex-president.”

      Assuming the banksters keep their word. Not a sure thing.

      Indeed, if they can escape being held to hard and fast legal contracts, what does that say about underhanded verbal agreements?

      “Sorry, Barry, do you have it in writing?” And even having it in writing means nothing.

      The irony would be delicious, and do us no good.

      1. different clue

        Of course they will reward Obama. If they failed to pay off a valuable stooge after its term of office, how would they pre-rent the next valuable stooge?

        They don’t need to give Obama a billion. Some number of millions will seem big to Obama. Plus invitations to all the right clubs, like Davos and Bohemian Grove and so forth.
        (I can’t imagine he would be invited to Bilderberg, though. Of what further use would he be to Bilderberg after he is out of office?)

  15. Tom Stone

    Kamala Harris is as smart a politician ( and as unscrupulous) as California has ever produced. She smelled BIG political advantage in going after the banks on this and apparently changed her mind. It took a big carrot and probably a big stick to change her mind, I wonder what they were?

    1. Doug Terpstra

      I suspect Harris’ noise-making was the same as Miller’s early on, for sheer publicity and to stuff her campaign coffers with bribes from banks eager to co-opt her. Politicians like Harris make whores look respectable.

      1. enouf

        wait, .. whores aren’t respectable? Since when? (I must’ve missed the memo).

        You’ve struck a nerve methinks; Consider this: ‘everyone’ that fosters / benefits from / complies with / propogates with / mitigates with / colludes with … ok; their ‘Minions’, alright!? .. _are_ the “whores”.

        If these people are not considered “respectable” in today’s culture, it begs the question then; “WTF am i paying you for!?” , heh


  16. EoH

    One suspects the banks want second and third bites at the apple, especially regarding the scope of their releases from liability and prosecution, without being seen to renege or be greedy. Vain hopes, I know.

    The administration, on the other hand, wants the public to imagine the deal is done and that Mr. Obama should get credit for it, and to imagine that Mr. Obama has righted the ship of state and its financial engine. Sadly, it remains listing about twenty degrees to starboard, holes remain below the water line, and Mr. Obama doesn’t want his crew to be seen bailing water for fear of seeming in trouble. The odds that that sort of leadership will save anyone but the first class passengers are poor.

    Anyone in the business or who follows this superb blog knows that announcing a term sheet as if it were a done deal is a bait and switch. The deal itself hasn’t been agreed and is likely to be far worse for ordinary Americans, and better for the MOTU, than this deceptive term sheet would have us believe.

  17. LeonovaBalletRusse

    YVES, you did read the piece at http://www.truth-out.org re settlement in Wisconsin and Missouri going to *balance the budget*, didn’t you? The link to this given correctly in your LINKS section today 2/13/12.

    1. citizendave

      Regarding Wisconsin’s governor talking about diverting mortgage settlement funds to patch the state budget deficit, there was an editorial in today’s Racine paper on that subject. (Racine is the state’s fourth largest municipality.) The editorial writer talks about using the settlement money to keep people in their homes. “…Keeping more people in their homes will do more for the economy than plugging the budget. People who remain in their homes gain stability. They don’t join the ranks of the homeless or working poor and exacerbate the drain on the social service system…” and so on.

      What they don’t say is that the pittance being talked about as a “settlement” won’t do much to help anyone afflicted by the mortgage mess.


  18. John Regan

    Yves, I love you but your expectations here are just way too high.


    State AG’s litigate on behalf of their state governments. They have no individual clients, although they often use the rhetoric of “attorney for the people” or some such.

    They don’t have the resources or the incentive to really do anything about the banks’ wrongdoing with respect to individual homeowners or investors. When they undertake these highly publicized lawsuits it’s almost entirely for PR, even wholly symbolic, as this one was and is.

    The trouble here is that they have done more harm than good. Once the state has given a release, well who are the serfs to come in and sue when the state – which runs the courts – have already said it’s all done?

    The only way the bank fraud will ever be exposed fully is by lawsuits filed by independent private attorneys representing investors or homeowners. And this whole fiasco with the AG’s has done nothing but reduce the chances that any such lawsuit(s) will really amount to much.

    Judges will now feel quite justified (if they didn’t before, which they prally did anyway) in tossing them without a trial. Which is another thing that is really, really important to the banks. We don’t want the rif-raf calling us to account, now do we?

    1. LeonovaBalletRusse

      John, I guess that’s why the money went right into the Governor’s slush fund to “balance the budget* and such in Wisconsin and Missouri. What’s not to like?

    2. LucyLulu

      While state AG’s don’t represent individual clients, they certainly take on cases to represent the citizens of the state more broadly. For example, in my own state, the state AG pursued a legal group that was advertising assistance with loan modifications and obtained both an injunction to practice in the state and relief for borrowers who had paid fees for assistance they never obtained. If they had so desired, they could have prosecuted any laws that lender/servicers had violated on a widespread basis.

      Re: link provided:
      Of course there are consequences when debts are not paid. However, if for example, loans were fraudulently obtained or legal standing to collect can not be substantiated (perhaps due to errors/negligence by lenders), should we deviate from long-held contract law to hold debtors responsible? The investors (and all investments incur risk) would not be at fault either, but their beef would also be with the lenders, no? Should we collect from those who are the easiest targets to pursue or those who bear primary responsibility? And shouldn’t acts that may or may not have occurred that would relate to the question of who bears responsibility at least be investigated?

      For example, one must have possession of the promissory note to collect on a debt (well, depends on state, but for simplicity, we’ll assume). If one has lost the note, one can file an affidavit of lost promissory note. However, if one has intentionally destroyed the note, there is no recourse under the law. One has forfeited their ability to collect the debt. What if lenders destroyed promissory notes? I have it from a reliable source at a large lender that large numbers were routinely destroyed before the collapse of the bubble. Should they be exempted from the law?

      1. John Regan

        Oh, Lucy.

        AG’s go after those fly-by nighters because they are easy targets. And their main focus is the state itself as an entity, although they will occasionally set up funds to compensate “victims”, sort of like a low level class action.

        There’s a world of difference between some cheesy consumer scam and taking on the crimes of high finance, by people and institutions that can fight back. If anyone was serious about it they would be creating whole new divisions in their offices, not to mention anticipating all the collateral effects in county clerks’offices where land title records are kept.

        Also, it varies from state to state, but where I come from the AG is not a proaecutor, the office generally doesn’t prosecute people criminally.

        >>Of course there are consequences when debts are not paid. However, if for example, loans were fraudulently obtained or legal standing to collect can not be substantiated (perhaps due to errors/negligence by lenders), should we deviate from long-held contract law to hold debtors responsible? The investors (and all investments incur risk) would not be at fault either, but their beef would also be with the lenders, no? Should we collect from those who are the easiest targets to pursue or those who bear primary responsibility? And shouldn’t acts that may or may not have occurred that would relate to the question of who bears responsibility at least be investigated?<>What if lenders destroyed promissory notes? I have it from a reliable source at a large lender that large numbers were routinely destroyed before the collapse of the bubble. Should they be exempted from the law?<<

        I don't know why the lenders would destroy their notes. What's really at issue is that someone with personal knowledge has to sign an affidavit at some point if there's no note, and this kind of thing really slows them down and costs them money. The fraud on the court here is the robo-signing to get around this problem.

        But underneath, there are even more problems. Pretty much insoluble ones. That's why I advicate that we should just cashier the whole mess and start over. With sound money. That would be better.

  19. Linus Huber

    It seems the exact opposite of what is required to stop future fraught is being implemented. The only way to get misbehaviour under control to make it punishable on a personal level and as high up in the hierarchy as possible. Nothing short of that will stop the continued fraught by the financial institutions.

  20. EoH

    Any “settlement” that puts the burden on consumers and local governments to litigate against the world’s biggest banks is, um, not a level playing field. It overwhelmingly favors large banks and the Sullivan & Cromwells and Shearman & Sterlings who do their litigation; it disfavors shareholders and it dumps the slops on the people this administration will be claiming this settlement is intended to help.

  21. Lambert Strether

    Eric Schneiderman’s executive offices:

    120 Broadway
    New York City, NY
    (212) 416-8000

    The Capitol
    The Capitol Albany, NY
    (518) 474-5481

    1. LeonovaBalletRusse

      Do you really think he gives a damn what we think? Recall George Carlin:

      “They don’t give a F#%K about you! They don’t care about you at ALL! at all, at all…. And now they want your PENSION! your Social Security!”

  22. kris

    Unless USA has become USSA, there is no chance on earth this excrement becomes a legal deal.
    The whole western civilization depends on USA guaranteeing freedom.If USA actually has become the United Soviets States of America, I would be really sad, sad, sad.

    1. different clue

      CSSA might be a better acronym. Corporate Soviet States of America. People who think they can extract law enforcement out of an lawless Legal Enforcement System should go right ahead and try, and others can support them to one degree or another.

      Meanwhile, people might start thinking about how to reconfigure their handling of time and money so that if (oh if only . . . ) millions of people did the same things together, they (“we”) could degrade and attrit and eventually undermine-to-extermination the large bussiness entities and sectors and their class comrades and political servants who have designed this kleptonomy and work these rackets.

      1. enouf

        My original, long-time used fav is;

        CCCP — Corporate Commie Capitalist Pigs

        (for clarification, ‘commie’ ss in the soviet-style totalitarianistic (oligarchical/plutocratic) kind, ..not the Marx’s theoretical kind).


  23. Sean DeVries


    Love your site but…

    “Securitization claims, including claims of state and local pension funds, and including investorclaims related to the formation, marketing or oering of securities, are fully preserved.”

    So how exactly is this a broad waiver of the “MBS-based claims”?

    The PSA’s govern the conveyance of the notes into the MBS vehicles and the PSA’s are the governing documents for the securitization vehicles so isn’t this in fact maintaing the “MBS-based claims”?

    Did I miss something?

    Thank You!

    1. YankeeFrank

      You missed this:

      “The proposed Release contains a broad release of the banks’ conduct related to mortgage loan servicing, foreclosure preparation, and mortgage loan origination services. ”

      Its that last bit — “mortgage loan origination services” that releases the securitization “practices”.

      1. Sean DeVries

        While I fully understand the potential for three-card monte shenanigans, and do not really doubt that they will occur…
        the actual wording of the “press release/summary” seems to preserve claims based on the transfer of notes to the trusts.

        “and including investorclaims related to the FORMATION, marketing or oering of securities,”

        The formation of the securities would seem to cover the transfer process as the security doesnt become operative until the closing or cutoff date anyway (right?)…

        Origination based claims would be things like fraudulent loan applications, mis-leading advertisements for the loan programs, putting fixed income elders into Option ARM’s that sort of thing. Origination, while connected to securitization, is not the same thing.

    2. Yves Smith Post author

      The part you cited is three card monte. There is no defined term “securitization claims” and they just gave away the really huge liability risk earlier. Securities law claims are close to useless, the statute of limitations has expired for almost all deals. Obama and Holder and the enforcement chief of the SEC all have said it is just too hard to prosecute senior execs, so any prosecutions will be show trials of middle level managers, heads of smaller fry, or maybe a token unit head at a big bank to look a smidge more serious.

      1. proximity1


        …”Obama and Holder and the enforcement chief of the SEC all have said it is just too hard to prosecute senior execs, “….

        So much for, “Yes, we can!“, huh?

        So, then, how about this, since it appears that as for the rule of law, it’s “No, we can’t!

        if reason and rights are disdained and dismissed, the disdainful are inviting the wronged to resort to force against them. It’s as simple as that. Let them recall:

        … We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights,[75] that among these are Life, Liberty and the pursuit of Happiness.

        — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed,

        — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness.

        Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn, that mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed.

        But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.

        (emphasis added)

  24. LeonovaBalletRusse

    YVES, you know my “political persuasion,” so keep that in mind when you investigate the Editorial (title below) that appeared as a link in the comment section to Bill Black’s blog on Jamie Dimon at New Economic Perspectives:

    “Why the Establishment Candidates WON’T Prosecute” — “From the Libertarian Presidential Debut, 2/11/2012 in Orlando Florida” — an Editorial by Karl Denninger posted 2012-2-13 10:52 on The Market Ticker site.

    There is a video clip and a *stark truth* Editorial, recommended to NC. Tragic.

    LINK: http://market-ticker.org/akcs-www?post=201911

    YVES and LAMBERT, please give us your opinion.

    1. LucyLulu

      Typically I have a great deal of respect for KD. We’ve been known to have our difference of opinions, but he’s very sharp and his instincts are good. But he’s off-base on this one. I responded on Karl’s TF blog rather than here under a different user name. Can you guess who? (If Karl doesn’t delete my post, wouldn’t be the first time.)

  25. Hugh

    This is the healthcare debate con replayed. String as many of the rubes along for as long as possible and then settle on the original corporate friendly terms. In the healthcare debate, progressives like myself pointed out that the only real solution was Medicare for All and that the public option was a con to dupe gullible liberals. But Obama and the Democrats were able to co-opt the unions, the liberal orgs, and the elite blogs into supporting and not resisting their healthcare push. But they never put down in writing what the public option was and as time went by the possibilities for what a public option might look like became increasing small and existed mostly in the imaginations of its supporters. At the end, Obama and the Democrats unceremoniously dumped it because they were close enough to a finish that they no longer had to worry about any meaningful liberal resistance.

    The mortgage settlement is more of the same. Get liberals on at the beginning, put nothing in writing about what a settlement must contain, draw out the process, use the Schneiderman feign to make the liberals continue to have hope, then start the big unravel with first the narrow release followed by the broader one.

    It is really quite masterful. Obama gets liberals to invest their credibility in a process he knows is a sham. He avoids their opposition during the process and at its end puts the onus on them to explain why they bought into a process that was so obviously phony and that progressives and others told them was phony. That is they are spending so much of their time explaining themselves and getting mad at their critics on the left that they don’t bother to mount any last minute resistance or try to hold Obama and the Democrats accountable. It is really game, set, and match: Obama or to put it another way Obama 1, the 99% zero.

    1. kris

      Even Obamacare is having legal problems.
      But this one is basically theft from pension funds. Kudos to Yves to fight for this and shed all this light on this pile of elephant manure. But….actual theft, as Pimco says?????? This is too far, just too far.
      There is no way, no freaking way, this deal will be signed an nobody sues. I expect 1 trillion lawsuits, but it won’t be signed. It’s just too grosssssssssss.

  26. matt weidner

    Hey, let’s focus on the good parts. That’s damn fine graphic and logo design on that nifty page. Don’t bother with the boring, black and white details of some blah blah blah wordy settlement agreement, give me some pretty pictures and graphics…watch the birdie, three card monty, where’s the bean?

  27. wb ellis

    The NC summary is very odd, and reads a lot like public policy speak and maybe not enough like a program requiring a financial re-underwriting of thousands of loan documents.  It has all the meticulous detail on how the program will serve, who it will serve, how much money each segment will get, and even the tough talk on program enforcement ideas, but ultimately seems like too much info about the wrong stuff.   
    The hard part of this will be the last step in getting the cash across the finish line into the hands of each qualified recipient.   This isnt some homogenous population of households, who’ve been impacted in some equal way by these banks.  Each household has unique set of circumstances, a unique potential for taking on specific monthly pmts going fwd, and each will have some unique role in contriguting to their own financial predicament,  The challenge for banks will be how to treat an assymetric group of benefficiaries in an even-handed, consistent, fair, way.   I expect banks to be exposed to new liability of prejudice, or negligence in deploying this thing.   All of which points to a pretty slow process, and long wait til the last dollar is handed out.

  28. kris

    Exact description of Obama’s mental condition comes from 18th century:

    “He who is in love with himself has at least this advantage – he won’t encounter many rivals.”
    Georg C. Lichtenberg

  29. Timothy Gawne

    Why are we surprised?


    There are two species of ‘liberals’. Those who stupidly, or venally, support the corrupt Obama administration. And those who are always ‘surprised; when – for the 100th time – Obama sells us out for money… BUT THEN THEY REFUSE TO DO ANYTHING ABOUT IT.

    Support Ron Paul! To heck with his libertarian nonsense – at least he believes in the rule of law!! Or DEMAND that Kucinich challenge Obama in the primaries. Or run yourself. Or anything positive.

    Stop the whining. At the very very least, every such missive should end with a specific suggestion for a real alternative that we can support. If every liberal disappointed with Obama the whore of Wall Street ended their articles with a suggested alternative perhaps we could coalesce around a real alternative.

    Why did the democratic AGs cave? Why did Kucinich not challenge Obama the corporate shill? Because they know that people like you won’t support them, and it’s pointless.

    Ralph Nader saw this coming. He gave us a choice. And you people treated him like garbage, because you were good little sheep and didn’t ‘waste’ your vote on a decent person. Now people like Nader have quit. Because they see how pathetic we all are. Maybe we really deserve what we are going to get.

    Ron Paul 2012. Big government, small government, details, details. First let there be truth and law. Unless you would care to suggest someone else real that we can support? Whining is not an effective strategy.

    1. LeonovaBalletRusse

      OCCUPY Charlotte for We the People’s choice:

      BILL BLACK/YVES SMITH 2012: We the People’s JUSTICE NOW!
      Chris Hedges: Secretary of State
      Abigail Field: Attorney General: Dept. of Justice
      Catherine Austin Fitts: Secretary of Housing/Local Loans
      Max Keiser: Chief of Staff
      Gretchen Morgenson: Press Secretary

      If now now, when?

    2. Maximilien

      Timothy: “Stop the whining. At the very very least, every such missive should end with a specific suggestion for a real alternative that we can support.”

      Cato the Elder ended his speeches, no matter the subject, with the exhortation “Furthermore I think Carthage must be destroyed.” I will do as Cato did.

      Henceforth I will end every comment I make (regardless of topic) with a reverberating: “Furthermore Wall Street must be destroyed. Furthermore the big banks must be destroyed. Furthermore the large corporations must be destroyed. Furthermore the military-industrial complex must be destroyed. Furthermore….”

      Sorry, Timothy, I take that back. That’s far too wordy. Gotta work on it. Cato’s was much pithier. But then, Cato only had Carthage to worry about.

  30. LeonovaBalletRusse

    YVES, & LAMBERT, I call your attention to more *extra-legal* means of *governing* under the Obama-Banker-M-I Dictatorship. Just out today:

    http://www.therealnews.com — Blog by Danny Schechter, 13 Feb 2012:


    Note: this permits ops and their agents *outside the chain of command*. Not only the funding of Obama’s Wars but the waging of them is by the Shadow Military–off the books and off the record. See how easy it is? Just by private *fiat*– as if from the Pope.

    I guess our *government* is an extra-legal *Shadow Government* in toto.

    We used to wonder how this happened elsewhere. Now we know.

  31. Jonathan Schorsch

    I’m sure this comment will be buried with all the others. Perhaps I missed it, but if someone could please offer some actions we can take to fight to prevent this “agreement” from going forward, I would be most grateful: online petitions, ongoing campaigns, anything?!

    1. LeonovaBalletRusse

      JS, do you detect the suddenly bold and rapid momentum of *extra-legal* arrangements being revealed lately? It likely is because of the aggressive criticism of Yves Smith, William K. Black, Abigail Field, et al.

      The criminal gang at the top is getting very bold quickly, and this change in momentum is new. Yves and others have been reacting with daring on the heels of every announcement; but it’s tough to keep up with gangsters whose game is up now for all to see.

      Eric Holder ain’t about to bring RICO against his bosses and pals. What to do?Alert American Patriots/Resistance on You Tube to economic malfeasance? Wait for martial law to be imposed? Fly the American flag in the *distress* position on every pole in the nation and pray for the Allies to come to our rescue?

      NC has been working to expose malfeasance for awhile. Now that it has been taken seriously by others, what can Yves do against the Security State?

      What would YOU suggest, Jonathan Schorsch?

      1. LeonovaBalletRusse

        Jonathan, there is a recent video at http://www.moveon.org featuring an interview with the maker of the documentary, “Inside Job.” He talks about the possibility of a RICO suit. But is Holder about to file it? Who else could?

        Maybe you’ll get some ideas from that interview. Invent!

        1. Blunt


          I truly love your energy, although at times it appears to veer off past just energy and into full-fledged mania.

          At some point try to become aware that even when some of us agree with you on the big things that your irrepressible desire to make post after post after any and everyone else’s post tend to be a form of trolling that’s actually more effective than those made by the obvious banker shills that come aboard.

          Your sheer volume suppresses everything else.

          Hell, and I like most of what you write!

          1. Doug Terpstra

            I love Leonova’s penetrating streams of consciousness, and I do hope s/he proves to be irrepressible. I see much of the comments here like a brainstorming, where openness and synergy are intense and powerful but also fragile. Blunt is a good handle, BTW.

          2. aletheia33

            @ doug terpstra

            seconded, and well put. this site is a rare forum/frog pond. i am sure i post too much sometimes and hope to be forgiven. but i rarely see a comment that doesn’t contribute something, however left field, to the evolving, unusually constructive conversation here, one that has become indispensable to this reader for many other reasons as well, which i’ve noted probably too often here already.

            left field, after all, as a location, allows a lot of time for reflection, rumination, synthesis, and clarification. by which i do not mean to suggest leonova is “from left field.” now that i think of it, i’d say nc itself is from left field in a felicitous way (by which i mean nothing to do with political “left” however apropos that might seem).

            even the trolls’ comments become grist for insight-yielding grinding here.

            i figure this is all due to yves’s fine sensibility in moderating the site, as well as some of our own efforts at doing so in the comments. not to mention the apparent high caliber of many of the minds that weigh in here.

            all that said, *leonova,* i do find it *hard* to follow your meaning when you sprinkle your comments with lots of *asterisks*.

  32. CaitlinO

    Whoa .. .. .. they’re released from mortgage origination fraud? I thought reports had said that was not being addressed here. Isn’t origination fraud the front door of investigating securitization fraud?

    And what about the mention of third parties offering ‘default or foreclosure services for the banks?’ This sounds like LPS, David Stern, Shapiro et. al. to me. Infamous robo-signers/robo-notaries Linda Green and Tywanna Thomas worked at DocX (LPS), B. Perez at Quality Loan Service Corporation, etc. They’re exempted from the release but they’re small fry – no big dollars to be recouped there. Can’t the banks just say going forward that they’re not to blame for future violations, it’s their agents who are at fault?

    Unless I’m misreading something here, I think this is a major problem for consent decree enforcement. It would seem to make it impossible to charge future violations and fines against the banks, just against the mills they hire.

    It also concerns me that the banks are raising that old shibboleth that the state AGs don’t have the right to sue them regarding mortgage servicing and practices since the banks are national. This is how they successfully evaded local regulation of sub-prime lending in the run-up to the crash.

    There’s no remorse, no commitment to change, just more gaming of the system to allow unimpeded looting.

  33. François

    Yves — you’re always great. One caveat however: I wouldn’t call Kuttner a “cheerleader” for the deal. I think he was reserving judgment for the time being. Much like Morgenson. These are the good guys. Let’s save the real ire for the bad guys — there are lots of them.

    1. Yves Smith Post author

      No, you misunderstand the role of the American Prospect. Three years out of four, it acts like an honest broker of the progressive persuasion. Presidential election years, it carries water for the Democratic party while trying to preserve the appearance of objectivity. I’ve seen Kuttner in other venues pushing settlement happy talk.

    2. Hugh

      I had to google it and it wasn’t easy to find, but the 50 state “investigation” into foreclosure fraud began back on October 14, 2010, some 16 months ago. Now for nearly all of that time it has been obvious that there was no investigating going on and that Miller and the other Ags had sold out to the banks, with the Administration’s blessing. It is unbelieveable that Kuttner could seriously be “reserving judgment” on such a farce.

      As I have written before, bad faith is not about what someone believes but what they should have known. For me, Kuttner giving creedence to a process that he had to know by this late date had none is classic bad faith acting.

      A central part of the rationale for the existence of and the benefits for elites is that they should know and understand more than the rest of us. But when members of the elite show that they are so far behind the curve that they can’t even catch the obvious, even after it has been extensively discussed, well if this is one of the elite’s “good guys”, who needs them?

      1. JTFaraday

        Kuttner is not dumb. He was talking about the effects of deregulation long before the crisis hit. He’s criticized Krugman along just the lines of criticism just directed at him.

        I suppose people like himself, Reich, Krugman, must still be able to see their own interests aligned with the “One percent” interests represented by the D-Party.

        You really don’t fade in and out of “dumb” like that. So, because they are not dumb, they have become criminal enablers, just like Obama.

        Because we KNOW Kuttner, Reich, Krugman et al, are not dumb, it is time for us to start calling them by their right name.

        (Arguably, Obama *is* dumber than that, and I don’t want to let him off either).

  34. CaitlinO

    Section VI is also interesting. It says the AGs will be in charge of dispersing funds from the banks to ‘foreclosure relief and housing programs.’

    That’s going to be quite a trick in those states (MN and MO) whose governors have already said the settlement money is going to be used to balance state budgets.

    1. LucyLulu

      For those in WI and MO, that may be the angle to pursuit……. holding your AG’s feet to the fire to stick to the agreement about releasing the funds only where designated. That’s assuming the final agreement actually designates the money goes to housing related agencies. Recall that each state will have their own custom agreement. Still, I’d start on my attorney general right now if I lived in one of those states. But then I’m a PITA.

  35. Kokuanani

    Yves, there appears to be a word missing [“claims,” perhaps?] in the following above:

    ***That seems to be confirmed by the fact that made by local recorders for fees are explicitly preserved ***

  36. CaitlinO

    Correction: The states that have announced they will use bank amnesty funds to balance state budgets are WI and MO – so far.

  37. Bravo

    I, too, would like to see the conversation here evolve to decisive action that might be taken to change the outcome here. I am not an attorney. So let me first pose a question to those who are. To get to the bottom of the chain of title issues from the originator, all the way back to the PSA agreements (the trail that is alleged to run through the mysterious MERS box), what would prevent class action quiet title suits from being filed in state courts? That would seem to be where collective homeowner leverage will lie.

    The class of homeowners could continue to make their payments into escrow, pending confirmation by the servicer to a judge, that borrower payments are in fact being advanced by the servicer to a securitization trust that in fact complied with the provisions in the pooling and servicing agreement that in fact entitle it to receive those payments?

    By continuing to make payments into escrow, the “didn’t make payments” argument is nullified. Informed and responsible borrowers can surely see that all is not on the up and up here. They have a right to know that their servicer is in fact forwarding their payments to the party that has the legal right to foreclose on their house. If the servicer proves it up, then release the escrow payments to the servicer. If not, then the judge establishes a modification that is far more equitable to the homeowner than is suggested in this alleged settlement, and the payments are redirected to the party that has the right to foreclose. Put the conflict and primary losses where they ought to be…..as an issue to be “settled” by the SEC between investors in the MBS and those who did not comply with securities laws when the securities were created.

    If this is not the answer for homeowners to fight back collectively, what is?

  38. Greg R

    Have the mainstream media types no shame?

    Ok, so their methodology is to download the can-o-facts for the settlement every morning and write their article on the bus on the way to school. But don’t they feel just a little duped when the can-o-facts says 1M out of 11M will be impacted, and 3 days later it says 2M out of 11M? How about when every can-o-facts says “narrow release” and this exec summary says “broad release”???

    You would think after being repeatedly bitten, they would at least start every article with a disclaimer. “This settlement has not been finalized, so I don’t really know all what’s in it……. Oh, and BTW, neither do the Attorneys General.”

  39. Tyzão

    I believe we are essentially witnessing institutional decay and the disintegration of the American government structure. The very fact that the state AGs have individually taken authority over the sphere of influence for each state by simply becoming a party to the agreement served to supersede the authority of the Federal Government and the Attorney General. Why does there even need to be a 50 state agreement? Is there some State Rights or Home Rule issue that requires a binding agreement at the state level? Isn’t there a federal law which the AG can prosecute under, and then the state AG’s who chose, will line up behind him, or not, and then let the chips fall where they may.

    I am trying very hard to believe in Obama, but it is becoming more and more difficult. Grow some kahonees Barak for heavens sake!

    1. lambert strether

      Back in the day, when we had statutes, n stuff, property transfers were handled by localities under the law of their states. So, yes, the state AGs do have to be involved. (I’m not retaining the detail on this, but NY state law is especially important, so the NY AG was thought to have a lot of leverage.)

      1. Tyzão

        Agreed, property is recorded at the court house, a sub-division of the state, and in general requirements for subdivision are also set by “sub-division” regulations, and other codes and ordinances. Still, transfers of mortgage, are a completely separate issue, aren’t they? Wouldn’t that be commerce? When an assignment takes place, hasn’t commerce moved from one state to the next. Just a thought. Also, aren’t their TILA and RESPA laws? Or just the simple act of forgery and fraud, which was widespread, and prevalent across the entire 50 states. This is not a states issue at all, and should not be prosecuted at the state level.

        1. Tyzão

          oops sorry, assignment of the note — I guess in fact the mortgage is somehow tied to place, but isn’t there a federal code governing mortgages and a template which all states were supposed to adopt?

          1. LucyLulu

            I believe you are thinking of the UCC – Uniform Commercial Code. The UCC is composed, among other things, of statutes that govern transactions involving promissory notes. There is a federal UCC and each state has their own UCC which is largely based on the federal version (the UCC codes I have read of 3-4 different states, unless specific modification of federal UCC statute is spelled out in state statutory code, the state UCC defaults to the federal code…. I suspect this is standard). There is also a similar UTC, Uniform Trust Code, which governs trust administration.

        2. enouf


          I *think* earlier, you were referring to;
          as being specific to NY State law.

          I also think mos of us need to realize what Paul Tioxon(?) wrote in a detailed comment here, not long ago, concerning the NBA (National Banking Act) which i have yet to research most of, but *appears* to have come about at the end of the Civil War, and .. well i’m sure the story as to How And Why are another fathomable topic, i won’t attempt to go into detail about that now, but to say basically; Federal Law _supersedes_ States’ Law .. i.e; the best Federalism that $$$ can buy


          1. enouf

            to clarify (or to muddy perhaps even)

            Seems the entire FRB, Central Banking cartel is a Federal Institution, which _supposedly_ allows/creates/fosters a National Currency ,.. um.. See the wikipedia articles, is all i can say.


          2. Tyzão

            No not really, but the Martin Act does seem interesting — what is the history of that Act, I couldn’t find too much from an initial read.

            I was really referring more to the Interstate Commerce Act, and the regulation of waters of the USA as having at least on some level the aspect of public property. How is the transfer of a Note any different? Isn’t it commerce, trade, or an exchange? Isn’t the exchange most often interstate?

            My understanding of the difference when federal and state laws is not just the concept of ultra vires (for example when a federal agency actually owns property in a city or under the authority of county regulations, Jekyll Island, GA is one example of this), it also related to when the activity involves more than one state, jurisdiction, or immediate subdivision of the USA. Florida and New York are two good examples. Just ballpark, 15-20% of all foreclosures are in Florida, and the Trust for the Bank of New York is likely the owner in a large majority of these.

            How is this a state issue at all? Why can’t Eric Holder just start prosecuting? There must be existing case law.

            As for the Central Banking as a Federal Institution, its not clear to me how individuals running it are appointed. It seems the prerequisite for administering such places is working in the banking industry, where I would have expected ones CV, would be a better yardstick for determining who should be running Central Banks.

          3. LucyLulu

            Trusts are governed by the state law in which they are domiciled. MBS trusts were invariably domiciled in either NY (vast majority) or DE because of those states’ favorable treatment of those type of trusts. (And the domicile of other types of trusts, e.g. estate trusts, CAN and often ARE transferred to a different state if there is a change of residency of trustees and beneficiaries.) Promissory notes are also filed with the state when mortgages are made. I’m not sure if the originating state law prevails if the notes are sold or not. The UCC would specify this though. However, conveyance of notes into the MBS trusts is additionally governed by state UTC requirements, as well as individual trust agreements.

            In the case of UCC and UTC, state law trumps federal law.

  40. keepon

    “…an executive summary, rather than actual text of an agreement, is what is being released.”

    Get used to it; it’s the ‘new transparency’ at its finest.

    Does it cover the NDAA Debtors Prisons? Can you say goolag?

  41. wb ellis

     –Very hard to understand why AG’s got so little.  Guarantee they brought their “A” game btw (eg prob highest profile and publicity to date)
    But having no clue about a topic never stopped me from reckless conjecture, so here goes: 
    1.  Bank books are not showing the truth — true value would render many insolvent TODAY.  (remember that banks hold majority of HEL’s at par even if 1st is in neg equity!)
    2.  Early in mtgs, a Fed guy handed out confidential doc showing true valuations on bank books,  it scares everybody in the room.  (he collected each one back…)
    3.  he walks through hypothetical of another banking crisis. huge bank bailouts needed again.
    4.  He closes saying something like “we can either save them now, or we’ll have to later, so put your guns down…”
    —  Of course I could be wrong, but remember the economy continues to be threatened by global slowdown, let alone the massive losses still sitting quietly in US housing sector, let alone a shrinking consumer who’s primary takeaway from last 4 years has been pull in the reins.  

    1. wb ellis

      would just add. that the huge unpredictable legal liability banks face related to mortgage lending has made every little move they make to work through NPL suddenly a precedent that could bite them later.. It makes doing nothing the most attractive choice. It has delayed finding a bottom in RE, so we can kickstart broader economy.

  42. jacksmith

    REALITY!! And A Fix for Unemployment, Homelessness and Hunger

    In addition to fixing healthcare the right way we need a NewDeal. We need a permanent and updated FDR WPA (Works Progress Administration). A Full employment act requiring the government to provide a job for everyone able to work that wants to work at a living wage or better. At safe, meaningful work where they live. Guaranteed by the US government. With free or very affordable excellent healthcare and free or very affordable education and training for advancement or just personal enrichment.

    ( http://my.firedoglake.com/iflizwerequeen/2011/05/16/how-about-a-little-truth-about-what-the-majority-want-for-health-care/ )

    ( Gov. Peter Shumlin: Real Healthcare reform — http://www.youtube.com/watch?v=8yFUbkVCsZ4 )

    ( Health Care Budget Deficit Calculator — http://www.cepr.net/calculators/hc/hc-calculator.html )

    ( Briefing: Dean Baker on Boosting the Economy by Saving Healthcare http://t.co/fmVz8nM )


    As you all know. Had congress passed a single-payer or government-run robust Public Option CHOICE! available to everyone on day one, our economy and jobs would have taken off like a rocket. And still will. Single-payer would be best. But a government-run robust Public Option CHOICE! that can lead to a single-payer system is the least you can accept. It’s not about competing with for-profit healthcare and for-profit health insurance. It’s about replacing it with Universal Healthcare Assurance. Everyone knows this now.

    The message from the midterm elections was clear. The American people want real healthcare reform. They want that individual mandate requiring them to buy private health insurance abolished. And they want a government-run robust public option CHOICE! available to everyone on day one. And they want it now.

    They want Drug re-importation, and abolishment, or strong restrictions on patents for biologic and prescription drugs. And government controlled and negotiated drug and medical cost. They want back control of their healthcare system from the Medical Industrial Complex. And they want it NOW!


    For-profit health insurance is extremely unethical, and morally repugnant. It’s as morally repugnant as slavery was. And few if any decent Americans are going to allow them-self to be compelled to support such an unethical and immoral crime against humanity.

    This is a matter of National and Global security. There can be NO MORE EXCUSES.

    Further, we want that corrupt, undemocratic filibuster abolished. Whats the point of an election if one corrupt member of congress can block the will of the people, and any legislation the majority wants. And do it in secret. Give me a break people.

    Also, unemployment healthcare benefits are critically needed. But they should be provided through the Medicare program at cost, less the 65% government premium subsidy provided now to private for profit health insurance.

    Congress should stop wasting hundreds of millions of dollars of taxpayer money on private for profit health insurance subsidies. Subsidies that cost the taxpayer 10x as much or more than Medicare does. Private for profit health insurance plans cost more. But provide dangerous and poorer quality patient care.



    This is what the American people are shouting at you. Both parties have just enough power now to do what the American people want. GET! IT! DONE! NOW!

    If congress does not abolish the individual mandate. And establish a government-run public option CHOICE! before the end of 2011. EVERY! member of congress up for reelection in 2012 will face strong progressive pro public option, and anti-individual mandate replacement candidates.

    Strong progressive pro “PUBLIC OPTION” CHOICE! and anti-individual mandate volunteer candidates should begin now. And start the process of replacing any and all members of congress that obstruct, or fail to add a government-run robust PUBLIC OPTION CHOICE! before the end of 2011.

    We need two or three very strong progressive volunteer candidates for every member of congress that will be up for reelection in 2012. You should be fully prepared to politically EVISCERATE EVERY INCUMBENT that fails or obstructs “THE PUBLIC OPTION”. And you should be willing to step aside and support the strongest pro “PUBLIC OPTION” candidate if the need arises.

    ASSUME CONGRESS WILL FAIL and SELLOUT again. So start preparing now to CUT THEIR POLITICAL THROATS. You can always step aside if they succeed. But only if they succeed. We didn’t have much time to prepare before these past midterm elections. So the American people had to use a political shotgun approach. But by 2012 you will have a scalpel.

    Congress could have passed a robust government-run public option during it’s lame duck session. They knew what the American people wanted. They already had several bills on record. And the house had already passed a public option. Departing members could have left with a truly great accomplishment. And the rest of you could have solidified your job before the 2012 elections.

    President Obama, you promised the American people a strong public option available to everyone. And the American people overwhelmingly supported you for it. Maybe it just wasn’t possible before. But it is now.

    Knock heads. Threaten people. Or do whatever you have to. We will support you. But get us that robust public option CHOICE! available to everyone on day one before the end of 2011. Or We The People Of The United States will make the past midterm election look like a cake walk in 2012. And it will include you.

    We still have a healthcare crisis in America. With hundreds of thousands dieing needlessly every year in America. And a for profit medical industrial complex that threatens the security and health of the entire world. They have already attacked the world with H1N1 killing thousands, and injuring millions. And more attacks are planned for profit, and to feed their greed.

    Spread the word people.

    Progressives, prepare the American peoples scalpels. It’s time to remove some politically diseased tissues.

    God Bless You my fellow human beings. I’m proud to be one of you. You did good.

    See you on the battle field.


    jacksmith – WorkingClass :-)

  43. aletheia33

    FWIW, i have pursued the matter a bit further with the assistant AG who has been taking the time to respond to my queries:

    Sent: Tuesday, February 14, 2012 8:48 AM
    [to my assistant ag],

    okay, i take it back, i’m not going away. thanks for your earlier response to me.

    following right along with the process of the settlement, can you tell me what your office is doing right now in terms of finalization of it?
    that is, are the terms still under discussion (negotiation?) in some sense, or has mr. [MY AG] put his signature to something that is binding on his office?
    or is an actual signature not part of this sort of deal–that is, what is the process of getting to completion, and when do you expect completion to occur?

    if you can enlighten me, i’d much appreciate it.



    [our state] has formally agreed to the settlement, through both the AG’s Office and [MY STATE’S DEPT OF BANKING AND INSURANCE]. The actual settlement documents are currently be prepared for filing with the federal court in Washington, DC.

    Sent: Tuesday, February 14, 2012 9:30 AM

    can you elaborate/specify for me what you mean by “formally agreed”?
    has any paper actually been signed to fix this “agreement”?
    does “formal agreement” refer to a handshake, or what?
    this agreement was arranged among mr. [MY AG], the head of [MY STATES BANKING/INSURANCE DEPT], and …. who?
    just wanting to get clear here.


    ASSISTANT AG’S ANSWER (this morning):

    A written sign-on was sent to the multistate negotiating committee.


    thanks again.

    can you further clarify for me (at your convenience, of course):
    what is “a written sign-on”?
    who sent it to the committee?
    is it a legally binding contract that everyone on the committee has now signed?
    if it is something else, can you please clarify for me exactly what it is?
    can it be released to the media?

    i am sorry to keep coming back at you with these kinds of questions.
    as you pointed out to me when you first called me, it is difficult to make oneself understood when negotiations are not transparent, isn’t it? i sympathize with the difficulty you face on this.

    i am just struggling, as a citizen, to get my head around this un-transparent process, as i was never taught how this kind of settlement procedure works in my civics lessons in school, and am having difficulty finding out much about it in any other way.

    your clarification will be much appreciated. thanks!


    …can someone get a copy of this “written sign-on” to yves? i’d be very interested to see what it consists of.

  44. r stolte

    All the above flapping and whining is nauseating. Despite all the collective intelligence among you, the end result still equates to the deer in the headlights thing. Listen, the only reason this pile of excrement has not been etched in stone yet, is because TPTB know full well how incredibly devastating this is, and therefore, they are waiting for a meaningful reaction from the sheeple. If not much push-back is detected, guess what, we and succeeding generations will get what we deserve. These brazen bastards worship money since money is power. But the 99% have the money they need. Rather than surrendering it as usual, how about witholding it from them instead by pledging to stop making mortgage payments until they frame a fair and lawful settlement. I suspect one would be forthcoming in record time. We are at a tipping point here, the task now then is to develop a system to record these pledges, and some organization to execute the plan until the desired result materializes. It’s a matter of choosing an “inconvenience” such as this or perfecting the art of bleating and bending over while trying to maintain your dignity.

    1. Doug Terpstra

      Good advice, offered here often by many commenters —probably the most effective form of rebellion in critical numbers. Almost wish we were still homedebtors so we could stop payments.

    2. two beers

      Nice idea, but I think under the NDAA, Obama would have Holder round up the instigators for terrism. I really wouldn’t be too shocked if in the not-too-distant future, blogs critical of Wall St were shut down as a threat to Das Homeland.

  45. Michael

    Yves, you are misinformed about the enforceability of oral settlement agreements in this case. It certainly isn’t optimal to have a settlement that isn’t memorialized by a single writing, signed by the parties, but an oral settlement agreement is enforceable nonetheless, signed or not.

  46. DL Clem

    Has anyone touched on the fact that the biggest portion of all of the different programs, investigations, trival civil actions brought and contemplated, this suit and that suit and now this 18 month long investigation have one thing in common: They are all designed to use up the CLOCK, to keep people effected by the actions of the Banksters from realizing that the statutes of limitations have almost all but run out. Pay attention people, the clock is running and pretty soon it won’t matter what the agreement says because time will have run out.

    The Banks have alresdy used this one on me and no amount of argument on my part could get the court to admit that although the conspiracy began in 2003, the fact that the conspiracy was still ongoing and that the objectives of that conspiracy had not yet been completed, meant that the clock had not even begun to run on any limitation statutes.

    The rule of law has been destroyed and from the debris the courts continue to pull out bits and pieces that serve only the big money interests.

    Keep your eye on the clock, tic toc.


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