(SDIs)
“Systemically Dangerous Institutions”
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Now we’re talkin…
William K. Black and L. Randall Wray
Foreclose on the Foreclosure Fraudsters, Part 1: Put Bank of America in Receivership
Sorry for the long excerpt but it had to be done…
After a quick review of its procedures, Bank of America this week announced that it will resume its foreclosures in 23 lucky states next Monday. While the evidence is overwhelming that the entire foreclosure process is riddled with fraud, President Obama refuses to support a national moratorium. Indeed, his spokesmen on the issue told reporters three key things. As the Los Angeles Times reported:
A government review of botched foreclosure paperwork so far has found that the problems do not pose a “systemic” threat to the financial system, a top Obama administration official said Wednesday.
Yes, that’s right. HUD reviewed the “paperwork” problem to see whether it threatened the banks — not the homeowners who were the victims of foreclosure fraud. But it got worse, for the second point was how the government would respond to the epidemic of foreclosure fraud.
The Justice Department is leading an investigation of possible crimes involving mortgage fraud.
That language was carefully chosen to sound reassuring. But the fact is that despite our pleas the FBI has continued its “partnership” with the Mortgage Bankers Association (MBA). The MBA is the trade association of the “perps.” It created a facially ridiculous definition of “mortgage fraud.” Under that definition the lenders — who led the mortgage frauds — are the victims. The FBI still parrots this long discredited “definition.” That is one of the primary reasons why — in complete contrast to prior financial crises — the Justice Department has not convicted a single senior officer of the large nonprime lenders who directed, committed, and profited enormously from the frauds.
Note that the Justice Department is not investigating foreclosure fraud. HUD Secretary Donovan’s statement shows why:
“We will not tolerate business as usual in the mortgage market,” he said. “Where there have been mistakes made or errors, we will hold those entities, those institutions, accountable to stop those processes, review them and fix them as quickly as possible.”
Note the language: “mistakes”, “errors”, “processes” (following the initial use of “paperwork”). No mention of “fraud”, “felony”, “criminal investigations”, or “prosecutions” for the tens of thousands of felonies that representatives of the entities foreclosing on homes have admitted that they committed. Note that Donovan does not even demand that the felons remedy the harm caused by their past fraudulent foreclosures. Donovan wants them to “fix” “processes” — not repair the harm their frauds caused to their victims.
The fraudulent CEOs looted with impunity, were left in power, and were granted their fondest wish when Congress, at the behest of the Chamber of Commerce, Chairman Bernanke, and the bankers’ trade associations, successfully extorted the professional Financial Accounting Standards Board (FASB) to turn the accounting rules into a farce. The FASB’s new rules allowed the banks (and the Fed, which has taken over a trillion dollars in toxic mortgages as wholly inadequate collateral) to refuse to recognize hundreds of billions of dollars of losses. This accounting scam produces enormous fictional “income” and “capital” at the banks. The fictional income produces real bonuses to the CEOs that make them even wealthier. The fictional bank capital allows the regulators to evade their statutory duties under the Prompt Corrective Action (PCA) law to close the insolvent and failing banks.
The inflated asset values allow the Fed and the administration to ignore the Fed’s massive loss exposure and allow Treasury to spread propaganda claiming that TARP resolved all the problems — at virtually no cost. Donovan claims that we have held the elite frauds accountable — but we have done the opposite. We have made the CEOs of the largest financial firms — typically already among the 500 wealthiest Americans — even wealthier. We have rewarded fraud, incompetence, and venality by our most powerful elites.
If the government does not hold the fraudulent CEOs responsible, who is supposed to stop the epidemic of elite financial fraud? The Obama administration’s answer is the fraudulent CEOs themselves, at a time of their choosing. You can’t make this stuff up.
But ultimately resolving the problems is not the government’s responsibility, said Michael Barr, assistant Treasury secretary for financial institutions.
“Fundamentally, this is up to the banks and the servicers to fix,” he said. “They can fix it as fast as they feel like.”
So who is Michael Barr and why is saying things on behalf of the Obama administration that make it appear to be a wholly-owned subsidiary of the fraudulent lenders and servicers? He’s a Robert Rubin protégé and he’s the senior Treasury official for banking policy.
We have a different policy view. We believe that only the government can stop fraud from growing to catastrophic levels and that among the government’s highest responsibilities is to provide the regulatory “cops on the beat” with the competence, resources, courage, and integrity to take on our most elite frauds. We believe that anything less is a travesty that causes tens of millions of Americans to be defrauded and poses a grave threat to our economy and democracy.
Prompt Corrective Action
First, it is time to stop the foreclosures until the banks and servicers adopt corrective steps, certified as adequate by FDIC, that will prevent all future foreclosure fraud. They must also adopt plans to remedy the injuries their foreclosure frauds have already caused, and assist the FBI, Department of Justice, and legal ethics officials investigations of their officers’ and attorneys’ frauds and ethical violations.
Second, it is time to place the financial institutions that committed widespread fraud in receivership. We should remove the senior leadership of the banks and replace them with experienced bankers with a reputation for integrity and competence, i.e., the honest officers that quit or were fired because they refused to engage in fraud. We should prioritize the receiverships to deal with the worst known “control frauds” among the “systemically dangerous institutions” (SDIs). The SDIs’ frauds and fraudulent leaders endanger the global economy.
We propose Bank of America for the first receivership. In the last few weeks, the SEC has obtained a large (albeit grossly inadequate) settlement of its civil fraud charges against the former senior leaders of Countrywide. (Bank of America acquired Countrywide and is responsible for its frauds.) Fannie and Freddie’s investigations — with their findings reviewed by their regulator, the Federal Housing Finance Agency (FHFA) — have identified many billions of dollars of fraudulent loans originated by Countrywide that were sold fraudulently to Fannie and Freddie through false representations and warranties. The Fed, BlackRock, and Pimco’s investigations have identified many billions of dollars of fraudulent loans provided by Countrywide under false reps and warranties. Ambac’s investigation found that 97% of the Countrywide loans reviewed by Ambac were had false reps and warranties. Countrywide also engaged in widespread foreclosure fraud. This is not surprising, for every aspect of Countrywide’s nonprime mortgage operations that has been examined by a truly independent body has found widespread fraud — in loan origination, loan sales, appraisals, and foreclosures. Fraud begets fraud. Lenders that are control frauds create criminogenic environments that produce “echo” epidemics of control fraud in other professions and industries.
We have been amazed that, as one financially sophisticated entity after another found widespread fraud by Countrywide in the entire gamut of its operations, the administration, the industry, and the financial media act as if this is acceptable. Countrywide made hundreds of thousands of fraudulent loans. It fraudulently sold hundreds of thousands of loans through false reps and warranties. It fraudulently foreclosed on large numbers of loans. It victimized hundreds of thousands of people and hundreds of financial institutions, causing hundreds of billions of dollars of losses. It has defrauded more people, at a greater cost, than any entity in history.
Bank of America chose to purchase Countrywide at a point when it — and its senior leaders — were infamous. Bank of America made some of these Countrywide leaders its senior leaders. Yet, Bank of America is not treated as a criminal entity. President Obama, Attorney General Eric Holder, Donovan, and Barr cannot even bring themselves to use the “f” word — fraud. They substitute euphemisms designed to trivialize elite criminality. The administration officials do not call for Bank of America to be the subject of a criminal investigation. They do not demand that Fannie, Freddie, Ambac, the FHFA, and Pimco file criminal referrals about Countrywide’s frauds. They do not demand that Fannie, Freddie, and the Fed refuse to purchase or take as collateral any mortgage instrument from Bank of America. No one at the Harvard Club in New York moves to kick Bank of America’s officers out of their club! The financial media treats Bank of America as if it were a legitimate bank rather than a “vector” spreading the mortgage fraud epidemic throughout much of the Western world.
For the sake of our (and the global) economy, our democracy, and our souls this willingness to allow elite control frauds to loot with impunity must end immediately. The control frauds must be taken down and their officers removed promptly. Receivership is the way to begin to reclaim our souls, our economy, and our democracy and Bank of America has the track record that makes it a good place to start. It is sufficiently large and powerful that its receivership will send the credible signal that America is restoring the rule of law and that even the most elite frauds will be held accountable.
Next we need to remove the rest of the “too big to fail” institutions — we call them systemically dangerous institutions, or SDIs — to reduce the global systemic risks that they pose. We are rolling the dice with disaster every day. The SDIs are inefficient, so shrinking them will reduce risk and increase efficiency. We need to follow three types of policies with respect to SDIs.
- They cannot grow larger and compound the systemic risk they pose.
- They must create an enforceable plan to shrink to a level and functions such that they no longer pose a systemic risk within five years.
- Until they shrink to the point that they no longer pose systemic risks they must be regulated with far greater intensity than other banks. In particular, control fraud poses so severe a risk of triggering another global financial crisis that there must be no regulatory tolerance for control frauds at the SDIs. One of the best ways to reduce their risks is to mandate that high levels of executive compensation be paid only after sustained and superior performance (at least five years), and with “claw back” provisions if compensation was obtained by fraudulent reported income or seriously inadequate loss reserves.
Appointing a receiver for an SDI will be a major undertaking for the FDIC, but it is also well within its capabilities. Contrary to the scare mongering about “nationalizing” banks, receivers are used to returning failed banks to private ownership. Receiverships are managed by experienced bankers with records of competence and integrity rather than the dread “bureaucrats.” We appointed roughly a thousand receivers during the S&L and banking crises of the 1980s and early 1990s under Presidents Reagan and Bush.
Here is how it works. A receiver is appointed on Friday. The bank opens for business as normal (from the bank’s customers’ perspective) on Monday. The checks clear, the ATMs work, and the branches all open. The receiver’s managers direct the business operations, find the true facts about the bank’s operations, senior managers, and financial condition, recognize the real losses, and make the appropriate referrals to the FBI and the SEC so that the frauds can be investigated and prosecuted.
The receiver is also a well-proven device for splitting up banks that are too large and incoherent by selling units of the business to different bidders who most value the operations.
ABSOLUTELY CHECK OUT THE REST HERE…
Job well done…
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4closureFraud.org
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I sure could use some…
[…] SDIs – Foreclose on the Foreclosure Fraudsters, Part 1: Put Bank of America in Receivership […]
Contracts and signatures have no lawful meaning. They defrauded us with or without your signature. They defrauded us no matter how much proof of income provided. We are the victim and the accused. NEVER AGAIN!
When You Go VOTE. Remember this Video. How the Republicans wanted to help homeowners.
I am neither Rep or Dem.
http://www.c-spanvideo.org/videoLibrary/clip.php?appid=595230185
My tribute to the CEO of Bank of America – Die Banker Die – http://www.youtube.com/watch?v=YGFZ1Jj3ui8
This whole system set up as a monetary system, supposed to be a fair and complete system for the trade industry. It was not set up as a true safe system that can be used without fraud. All the big players are the FED, the Banks, and industry. As far as being a system compatible for actual living beings to use to trade time, labor,and material in exchange for like value. But it was all just a scam being set up for the banks and elite to ransack the people of their money and material possessions, nothing more and nothing less. All the system is set up for is the total takeover and control of the masses of people who are the victims of the largest fraudulent scam ever committed on a scale so large that they are now in control of the government, the people, and anyone who gets in their way. We are being worked like clump of clay, and moulded into the controlled environment that was planned years ago, when the Federal reserve was invented, along with the banking system. What the people have to realize is that they got caught and are now using mind control and mass conspiracy’s to hide the real facts. The reason they don’t want to put a stop to mass fraud and deceit is because if the banks fail their plan fails. That’s what they can’t have happen, so they use the legal system to manipulate the facts to turn around the war. Yes we are at war, with our own government, and it will not be in our favor (the people) versus the elite and the government it controls. We are being stonewalled and we the people are being set up for the kill. The government has been building underground cities, to house and feed their families and the families of their cohorts, all at the expense of the people who are paying for this plan, by foreclosing on all our homes and bankrupting the people so resistance is futile. Soon all the people who are reading this will see the results of this plan, as you all will be the result of their plan, when we are totally defenseless against the coming disaster that may well come, with the next wave of our SUN spot explosions that are due around 2012-2013. This will be of such enormous power that the electrical grid will be bombarded with electrical ions that will overload all transformers on the grid, and will start enormous fires, and will shut down every piece of sensitive equipment that is largely depended on for modern day survival. They will take all the booty they stole from us people and run underground and be protected from the destruction of all above ground living things. We were talked into the modern day inventions so we would be helpless and would die off with the lack of food and medical needs that will collapse when the time of destruction comes. I know you wont believe what I say here, but if you choose to listen then you may very well be able to survive, and maybe even conquer the under-grounder and their evil ways. Yes they will be underground and safe for the time being but do you think they can survive without the SUN, for long? They wont it will cause major problems with vitamin deficiency and will cause major birth defects and health problems before the ride out the disasters above the ground. They can have all their man made environments, as I don’t want any part of any life that was devised without the creator. This is their downfall, they forgot to include the one and only thing that may be able to save them. If only they would repent of their sins against man, and the will get through the mess they are creating, and starting a new world without the sins that are here and now. Let’s fix the problem now before they have the total control of “The People”. We are not chattel for the banks, we are the OWNERS of them! Do something to take bake your life, and stop worrying about all the money and toys you have, you wont need them where we are headed in a few years.
Mr President Obama, WHERE ARE YOU? Is thisthe promise that you made to the american people? If you don’t do something……… NOW ………. IT WILL BE TOO LATE and we will all be screwed and you will lose the house and the senate and then the presidential election……….and then we can have facism!!!!! I can just see my grandsons now, marching to the beat of a military government! What a future!!
Heeellllooooo……………… This is the change he promised. He wont change a thing, and as far as the fraud goes he is president because of fraud perpetrated against the people who stupidly voted for him, with little concern for their own future. HE IS A Muslim sympthiser, and all along he was continueing the scam on the public for years. This master plan takes time to work it’s evil into sociaty. They even have people who are paying their mortgages like good little boy’s and girls, fooled into the scam. All of you are fooled into thinking that this is the way life is supposed to work, you pay the banks 3times the value of your home so they can get rich while they take your NOTE and sell it several times for three or four times the amount of your mortgage, and what do you get? You get Zilch, nada, noithing in return, as they are banking on the fact that you will die before you pay off your home, or you default before you find out about the fraud you paid for, or they just file foreclosure before you know what happened, and steal your home so they can collect on all the bailouts and insurance you pay for in mortgage insurance, to guarentee them payback several hundred thousand dollars over the money owed. You fools………Open your eyes and see for yourself like I did, you’ll find all the fraud on the papers you signed, all you have to do is write a written qualified request for your Note and mortgage and you will get nothing but smoke screens. There wont be any physical paper work to see. Ask for the request even if you are not in default, you will see.
The gov’t has made a decision. The Moral Hazard of the banks going into receivership is greater than the Moral Hazard of ignoring states’ property laws. Therefore mitigate forces pushing for receivership and turn your head to state laws. This conclusion is especially true with consideration of how slow states will react. More time is what banks and the govt want.
Basically there are two fields of force pushing on the banks. If states start pushing harder, expect investors (and gov’t) to create countervailing pushing on the banks (get going with foreclosures again, sue for push back of more unsecured investments previously know as mortgages.) If states wish to win (protect property rights), they will need to counter the push by banks and the gov’t. NY’s approach with lawyers is an example. The banks and govt will accept this because it gives the banks more time.
How apropos this all is in the season of “Trick or Treat”… they are dangling so much low hanging fruit in front of the American people but no one seems to be grabbing… just like low rate refinance of mortgage’s the majority did not take the bait… at some point one will get caught speaking out of both sides of their mouth and the time has come… you can not have it one way and then tomorrow another way. Reality has hit home for many many Americans! The majority are hard working honest people they want to keep their job’s or god bless those looking find a job.
In all my years I have never seen so much horse crap thrown at the wall to see what will stick over the last three years… The ramifications for all this shit shifting is harming many many innocent people, Granny on a fixed income cant pay her tax bill on a house with a paid off mortgage, no worry your local over bloated government will sell that tax lien to a shell company on Wall Street that will make it impossible with outragious intrest for Granny to ever get out from under the debt.
Jane or John Doe out of work for an extended period dispite the TARP Job Creation Myth, missed a car payment, what ever cause they needed to put food on the table or better yet pay the MORTGAGE to keep a roof over their head, finally get a job interview and the Credit Reporting Agencies will make dame sure a potential employer knows everything about you… a risk to hire, Jane or John Doe will not get the job they need and would do well, so the spiral downward continues…
The beat either goes on, or the real beating of the drums begin!
I dont know how much more the AMERICAN PEOPLE ARE GOING TO BE ABLE TO TAKE and for how much longer!
FBI picks and chooses their cases. Depends on who is whispering in their ears. Obama – same face different mask!
The PROSECUTORS are the ones who REF– USE TO PROSECUTE this fraud!!!
Law enforcement officers want to prosecute, but the PROSECUTORS and our BOSSES stand in the way and tell us to lie to the victims and say that it is a civil matter and to send their complaints to the regulators like the Florida Office of Financial Regulation which took complaints about bankers committing fraud and threw them away for years until a whistleblower leaked information about those crimes to the Miami Herald.
Just like Professors Black and Wray said, IT IS RAMPANT FRAUD from loan origination to securitization and foreclosure. If the prosecutors will not take action, the banksters will crush our economy and steal everything!!!
The blame for this mess rests on the shoulders of the PROSECUTORS, the JUDGES and those in charge who tie our hands and help these crooked bankers steal the homes and life savings of millions of Americans.
Remember, PROSECUTORS who refuse to prosecute crimes are CRIMINAL SCUM!!! JUDGES who refuse to enforce the law which prohibits foreclosure of a mortgage if fraud has been committed are CRIMINAL SCUM!!!
Bravo!!!!!! You are just one of many small groups that want to say just what it is. You are in Law enforcement and it is commendable of you to see past the paycheck to dislodge the fraud. I am fighting the same fraud of the mortgage from the originating to foreclosure, and had told the court in an answer, and vowed to defend my rights, even if it means desperate measures. I never wanted to defraud the lender, but they had the plan to defraud me right from the forged document I was given with my forged signature, even with a good forgery, but they didn’t count on me being left handed and can tell it was a forced signature, what I mean by forced is when you try to forge a signature of a left hander and you are right handed, you can see that the writing started from right to left and vizier versa. my “t’s” are crossed from the left to the right and my loops are left to right, so when you try to forge it you will see where you stop and stare mid signature to replicate it and it does not look like a swift writing, it acquires a squiggly and nervous line which is obvious and clear. I have not heard back from the court again, but I think I will, because they are looking for other ways to get around the forgery’s. They even made three different TIL disclosures with three different interest rates and money borrowed. If this is not fraud then what do you see it as? This is just one of maybe 15 fraudulent documents I have in hand, and probably will get thrown out in court or not accepted as my evidence or defence, but I am going all the way by my self, because I can’t find any Lawyer who will take my case, and in turn will cloud the court with legal mumbo jumbo to discredit me, but I have researched my defences and will put up one hell of a fight.
I wish you all the luck in defending yourself as I have to, and hope you get your defences so they can’t get yours.
that is true-it is rampant fraud-manipulated from the top -what there not telling you is thay have opened all america up to- SHARIA FINANCE-WITH THAT COMES SHIRA LAW-thay are manipulation our banking sestem and our courts to push shira compliance laws .the fed reserve has islam 101 study for all new programs through the new bills that were pushed theough the house -that thay didn’t read! the healthcare bill -the refinance home programes obama is pushing .-there are some lawsuites one -u.s. marine suing fed for promoting islam with aig bailout.-this is just part of the so called -islim is pease program obama is pushing-taxpayers money for the takeover of our country!-sharia insurance firm getting us foundsl-geithner and bernanke -laundering money through an illegal trust-the apointment of kagan knows all about industry known as sharia-compliant finance [scf]thanks to the saudi money giving to the university’s -scf is a creation of the muslim brotherhood as a way of legitimating and advancing sharia’s -gaffney has informative articals.propagasion in our schools an media-obama’s brothers are the muslim brotherhood,his real brothers!he obama along with our tax dollars went to help odinga [his famliy] to pass the africa constitution that promotes ”sharia law” -americans will get back to the constitution or we will live under sharia law-the people will have no voice unless we protect the right to a fare vote!
It is time to take to the streets and let the world know of our anger and disgust at the underhanded and criminal banksters!
Martin Luther King marched in the streets for justice and equality.
We got equality, we are being equally abused by the bankers and our government.
Now we need to demand justice and justice right now!
We have played by the rules, tried to get our needs and concerns addressed and remedied and we have been ignored, overruled and pushed aside in favor of greed.
Plain and simple greed and avarice.
The time for talking and trying to work things out is over.
Martin Luther King and Mahatma Ghandi would be leading the crowds thru the streets if they were still alive, so now it’s time we marched in their memory.
Of course, they are correct, but until we can get ANY governmental authority or judicial rulings to back us up, people are being pushed out of their homes illegally. Our constitution has been shredded and our highest leaders are part of the problem. It’s disgusting…
Wrong,………………Don’t depend on any government to help you put the Banks out of business. There lies the problem, the government and the judicial system was changed every time the power players got into trouble. They used the money you gave them to build their own systems, then they changed the laws one little bit at a time, until it does,nt even resemble the original Law. We were all fooled. We are the blame like the banks are saying, we gave them the keys to the vault and in return locked us out. Now who is in the vault with all our debt they snagged us into, they are not us plain living people. Life does not matter anymore, only material gain for ones own pleasure. Why are our children so intent on killing other children? The same game that was played on us, manipulation. Why does anyone kill another? All for insurance or to gain an estate, a will, money, secrets, hidden agenda’s that are not seen on the surface.
We are convinced that all the programs put into place to save homes are the answer, when in fact the homes are still being stollen and resold, even with the help of government programs. Why? because they were not put in place to help, but to help the Banks get out of the fraud reports. All they have to do is make up false claimes that the borrower is not cooperating, but in fact is stalling for time to file the foreclosure without telling anyone that the borrower was served, and was in fact not even typed up, and sent out. Nomatter what we are being told, the truth is being hidden from us, and our homes are being taken and family’s being broken up, just like our christianity was in the sixties. They are using the same old ploy that has worked for thousands of years, Divide and Conquer. Just like the are doing to take the truth and hide it from the light, they put up a fake scam to hide a scam. Perfect I’d say, except for one thing, they didn’t count on people like me to open my eyes, as they want you all to believe that you can’t handle the problems in the world on your own, your too stupid to take care of your familys, and in return you start believing it, and are being dumbed down to a level below them to keep you blind of the actual power the People actually have against the government to change the world for better. But by the time you smarten up it will be too late, because “WE the People” are not gathering to take back the power of government.
The only way to overcome this worldly danger is to get together and physically take down the whole government without them any wiser. The government is keeping tabs on all of us at this mineut and any plans we may start to build a force to recon with, and they stop us before we get too big to be a threat, so they are destroying the monetary system on purpose and foreclosing on innocent people, and taking away jobs and sending them overseas. This is our blind side, seing the plan behind the problems. First they divided us by the Red and Blue monopaly, then they had several ressions that were not a reality, then they used Republicans against the Dems, to make us argue about something that doesn’t matter. But we are still in belief that Obama is an american born citizen when in fact he is not, so they crashed the mortgage industry to hide the arguments of his legality of being president, as so it goes on and on, and on. Cover up one fraud with another scam, to defraud again and all the while hiding the plan of total control of the people. They protect the president by providing cover with the mortgage meltdown, then they hide the mortgage meltdown with MERS, then from MERS to fraud of the banks, and now cover up the frauds with Laws that don’t work in the favor of the people, only those in power and wealth. Yeah we been duped and duped again. How much longer will you be safe from THEM! They will come for you one way or another, and it will be soon, they are probebly planning the chip implants behind the Mortgage fraud, so you don’t notice the pain, it’s all how you work the scam. Slight of hand dominated by smoke and mirrors, until either the scam is complete or the use another smokescreen. People look behind the curtain and follow the money. Ask yourself wher are all the homes that were saved by the government programs like HARP,TILA,UCC,and all the rest that was supposed to do good, but all I see with my own eyes and senses are people being destroyed by the same programs that were supposed to stop foreclosure. If they don’t get you one way they will get you another. It’s survival of the fittest, and the old and disabled are the first to go. The same people who are defrauding you are your neighbors, and friends that have jobs in government, Law enforcement, Lawyers, and the sherriff who will throw your stuff out in the street. It doesn’t matter who you are, ” If you think they are out to get you,……. Maybe they are”