Category Archives: Banking industry

Marshall Auerback: Don’t Get Angry – Get Some Real Change

President Obama can solve the economy’s problems and win back his base, but he has to get with the program first.

For once, let’s praise President Obama (marginally), not bury him. As Bo Cutter has already argued, in the aftermath of the elections, the president probably did the best he could do on taxes. Ideally, the issue shouldn’t have even been something to haggle over in the first place had the Democrats (including the president) dealt with it before the midterms.

That said, the president’s petulant rant directed at his base was pathetic and misconceived in the extreme. The “No Drama Obama” guise clearly does not extend to his now frustrated supporters. Obama still genuinely does not have a clue as to why he has lost the trust of so many progressives. Many would have been prepared to cut him some slack if he had given them anything over the past two years, rather than a perpetuation of Rubinomics — an economically regressive blend of crony capitalism and deficit reduction fetishism.

To deal with income inequality, you need something more radical. You need reforms such as caps on executive pay and probably a system that simplifies the tax structure (to avoid creative tax avoidance), along with a broad base and a few basic, low rates to ensure a modicum of compliance….

Treasury Bars Use of TARP Funds to Help Borrowers Facing Foreclosure

If you had any doubts about whose side the Administration is on, this story should settle all doubts. From the Nation:

Consider this: the recent Fed audit revealed over $3.3 trillion in emergency assistance to the banks and other corporate behemoths during the financial crisis–no strings attached….
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On MBIA’s Suit Against Morgan Stanley on a Second Lien Deal Gone Bad

n theory, I’m a wee bit late to the item at hand, a suit by failed mortgage bond insurer MBIA against Morgan Stanley on a second mortgage deal. But in practice, I’ve not seen any commentary on it and the suit has some interesting wrinkles.

Before we get to the details, however, a general issue: looking at this case is like deciding which of Cinderella’s bad sisters is less ugly. While mortgage bond originators and sponsors did not cover themselves in glory in the later years of the subprime business, MBIA is no prize. Of all the monolines, MBIA was the most dubious. In addition to the general, and now well known problem with the industry business model, that they were running at such high leverage levels that they could not take on any real risks, MBIA has its own special cause for concern, namely a less-than-arms-length reinsurance operation. And management has major ‘tude. I’ve never read investor reports that were as haughty and obviously truth-stretching as MBIA, and thus any claims it makes about the merits of pending litigation need to be taken with a fistful of salt.

What Should the 50 State Attorneys General Investigating the Mortgage Crisis Do?

I hope readers will give their comments and ideas on the inquiry underway by the attorneys general of all 50 states into foreclosure “improprieties”, to use the term of art, and other mortgage market abuses. Given that real estate is a state law matter, and some state governments are less captured that Washington DC, this […]

Another Erroneous Securitization-Industry-Defending Post by Paul Jackson

It’s worrying to see Paul Jackson, the creator of the generally-respected Housing Wire, damage his brand by continuing to provide misleading and erroneous commentary in an area of keen interest to his readers, the foreclosure crisis.

One could have hoped that Jackson would have learned to question his sources after unwisely sticking his neck out for them in a his article “A Crime of Omission” in which he sided with forgers against the critic of servicers. A takedown of his post by our Richard Smith was validated less than seven hours later by an extensive, exclusive Reuters article that not only validated Richard’s post, but all of our previous reporting on the company at issue, Lender Processing Services.

But Jackson has offered another erroneous defense of securitization industry bad practices in the form of “BofA, the MBS unwind, and the other side of the coin.”

Mirabile Dictu: The Treasury Flexes Some Muscle on the Volcker Rule?

As readers know, this blog has LOOONG been a critic of the Treasury Department’s stance towards big dealer banks, both in the Paulson era and from the very get-go of Geithner’s tenure. So on those all-too-rare occasions when Treasury seems willing to meddle in a real way with the “heads we win, tails you lose” arrangement the financial services industry has managed to devise with broader society, it’s important to applaud those efforts.

Admittedly, it is premature to declare victory, but the fact that Treasury is even taking a serious stance on the so-called Volcker rule is a surprise.

Some Lenders Sell Foreclosed Homes Without Obtaining Title

When you thought you’d seen every possible stuff-up in mortgage land, a new one comes to light.

When the housing market correction started, most savvy observers pointed out that prices needed to revert to long-term relationships with rentals and income levels. And many have also pointed out that it is reasonable to expect prices to overshoot on the downside.

Evidence of the latest self-inflicted wound comes via e-mail from Lisa Epstein of ForeclosureHamlet.org…

Lender Processing Services Produced More Bogus Foreclosure Documents Than It ‘Fessed To

Readers may recall that this site broke the story of litigation against Lender Processing Services, the biggest player in foreclosure management on behalf of mortgage servicers. These cases, launched earlier in the fall, accused the company of taking impermissible legal fees. These class action lawsuits were joined by the US bankruptcy trustee for the Northern District of Mississippi, both for herself and on behalf of all US bankruptcy fees, which meant she felt the issues set forth in the case had merit and were serious. In November, an additional class action case was filed against LPS, this time securities litigation, charging the company with making false and misleading statements to investors from July 29, 2009 to October 4, 2010, including “deceptive and improper document execution and preparation related to foreclosure proceedings.”

Subsequently, as our Richard Smith detailed earlier today, Housing Wire’s Paul Jackson attacked critics of LPS, including this blogger, of going off half baked in accusing the company of engaging in document fabrication. A Reuters investigation published today supports the critics’s case, revealing that document creation was far more extensive that the company has suggested.

Collateral damage – more than Paul Jackson’s reputation at risk

Events during this financial crisis have repeatedly displayed a degree of disrespect for various pundits’ authority; every so often another pulpit is toppled. So spare a thought for the pundits, the most unmourned of crisis casualties. One skips through the roll of slight miscues (“Lehman repo looks solid”, April ’08), shame (“believe Fuld, Lehman bears […]

Guest Post: All together now? Arguments for a big-bang solution to Eurozone problems

By Daniel Gros, Director of the Centre for European Policy Studies, Brussels. Cross posted from VoxEU. Muddling through isn’t working. This column argues that troubled Eurozone nations should simultaneously open restructuring talks while continuing to service their debts normally. Germany, France, and other core Eurozone nations would have to stand ready to recapitalise the banks […]

Ireland About to Give Another Sop to the Banks, a Bad Assets Fire Sale?

Reader Swedish Lex, who was involved in the famed and generally well regarded Swedish banking industry cleanup of the early 1990s, read an innocuous-sounding Financial Times story the same way I did. Not only are the banks who lent recklessly to Ireland’s overheated property sector being shielded from most of the consequences of their stupidity […]

Adam Levitin Shreds American Securitization Forum Defenses

It isn’t clear why the American Securitization Forum decided to walk into a buzzsaw, but the carnage is proving to be an amusing spectacle. For readers who have not followed this wee saga, mortgage securitization abuses are increasingly looking to be a mess of Titanic proportions. The securitization industry created complex and specific procedures for […]

Will Thousands of Foreclosures Be Voided Because Non-Lawyers Prosecuted Them?

If you thought robo signing was bad, you ain’t seen nothin’ yet. The website 4ClosureFraud presents the gory details of a potential major new front in the foreclosure mess. A Pennsylvania foreclosure mill, Goldbeck McCafferty & McKeever, is accused by Patrick Loughren of allowing non-attorneys to file and prosecute foreclosures. A DailyFinance story gives the […]