The Golden Years—Uncovering Ponzi II

If you liked what they did to the value of your real estate and American jobs, you are going to love what they did to your pension.

And, it’s gone.

Vanished into banksta bonuses just like the credit default swaps that paid them a hundred times the value of a defaulted mortgage.

Many who had pensions, both public and private, will discover that the money owed to retirees exceeds what is available to pay them.  According to the Pension Benefit Guarantee Corporation, (PBGC), created to make sure retirees would get their money, they have a current shortfall of $245 billion.

They only insure 7% of the pensions and last year 147 pension plans failed, and it’s only starting.

For decades, Wall Street eyed the cash accumulating in pension funds and lusted for a way to get it. The problem was always the same, the number one goal of the fund manager is supposed to be to protect the principal first and foremost and accept the yield associated with that. And they did….until underfunding left them with far less principal than they needed to significantly grow the fund without taking bigger and bigger risks.

And, it’s gone.

For some reason there is a widely held myth that pension funds tend to earn a rate of return of 8%. Nothing could be further from the truth. That might be the goal of the fund managers and the expectation of the pension recipients but it isn’t reality.

The scenario is only rosy if the pension fund is fully funded and most are far from it.

In fact, nobody knows how far… except me. I did the math.

We know that the assets are substantially less than what will be needed to meet future obligations. We know that because everybody is talking about Pension Plan underfunding. What no one is talking about is the question of the real value of those so-called assets.

If you think that complex accounting rules exists for the purpose of financial transparency involving other people’s money, well, you would be wrong.

What’s more, according to the PBGC, “the accounting rules often conceal the short-term condition of funds for several years, by which time significant damage can be done, leaving the company with limited options”.

Under Generally Accepted Accounting Principles, (GAAP), pension funds are easily able to disguise their true financial conditions by projecting future returns, (read that as making it up as they go along), and amortizing the losses over as long a timeline as they wish. Thus, they never appear to lose value…only money.

We do know that the 2008-2009 plunge resulted in the following losses:

  • US and Foreign Stocks declining over 50%
  • Commodities declining 67%
  • Real Estate (REITs) declining 68%

These are among the options pension funds invest in as well as debt-backed bonds and derivatives.

Collectively, the total invested in derivatives alone is a whopping quadrillion or $1,000 trillion. This is a crater so big that there is not enough money or other things of value, $135 trillion, on the entire planet to ever come close to filling it.

The stock market is rife with counterfeit stock, there are more precious metal certificates than there is precious metal, and we don’t even know if our gold is still in Fort Knox.

The mortgage bonds are completely worthless and have no value at all. But, when it comes to pension funds, most of those losses have not been accounted for. Extend and pretend.

We know that the mortgage pools themselves were stuffed full of guaranteed to fail loans that were based on vastly inflated values, and loans that did not even exist or were pledged to other pools as well. Because this hasn’t fully imploded yet, the revaluation of the bonds has yet to occur.

Now, in order to cover these losses, which, while not acknowledged are well understood by the fund manager, riskier investments must be sought.

And, here is another one of those moral hazards that have suddenly started to pop up everywhere. It is inherent in the fund manager’s compensation scheme. Typically, they get two percent of the fund for managing the principal and twenty percent of the growth. So, while the fund manager’s compensation has unlimited upside in growth, the potential is severely constrained by the need for absolute security of the principal.

But, hey, pension fund managers are people too, right? Everyone else seemed to be getting rich, why not them?

Leave it to Wall Street to, in the words of Goldman Sachs Capo, Lloyd Blankfien, “do God’s work.” In they ride with the solution to the problem. Think, yeah, like a fucking Trojan Horse.

On the outside, it looked great. You want safety and security, look to the American home-mortgage with a historical default rate of just three tenths of one percent and a solid net return to the investor, and that’s almost too good to be true. And, it was.

Wall Street did not offer the pension funds the opportunity to actually participate in the mortgages, only the illusion.  And, that is an important point. Instead, they offered the “convenience” of bonds backed, they claimed, by pools of these so called “Prime” loans.

In fact, most are backed by nothing at all. Don’t you just love it? Fraud is like murder, after you commit one the threshold drops pretty low. Everywhere along the Ponzi chain if they could turn an illegal profit by breaking the law, they did.

This wasn’t a mistake or an oversight. Section 2. of the Pooling and Servicing Agreement governing the pools of mortgages calls for the notes and mortgages or trust deeds to be properly assigned and endorsed and turned over to the custodian. That was an empty promise from inception.

The sworn depositions of MERS CEO R. K.  Arnold and Bank of America V.P. Linda DeMartini prove that. The former swears they never intended to do the assignments, and the latter swears that the notes and deeds were never sent to the Custodian.

One of MERS correspondence with its members specifically says that MERS and MERS alone will determine the beneficiary after the Trustees sale.

That means that with absolute certainty, the party bringing the foreclosure is not the beneficiary because that is determined after the trustee’s sale. The beneficiary is not the party bringing the foreclosure because MERS has no idea who the Beneficiary is. No assignments, remember? The properties apparently are just distributed to members based on some sort of equity arrangement. This one goes to Chase; this one goes to Wells Fargo, and this one to B of A.

What else do you need to hear? Hey, Judge, here are two people who know, who can confirm that every robo-signed document is nothing but a forgery. Game, set, match.

The only purpose for which robo-signed documents are created is to commit fraud upon the court. Think about it. There is no other possible explanation for the existence of robo-signers other than to commit fraud upon the court when necessary.

Ninety-six percent of all fraudclosures go uncontested. Nobody thought they would get busted. Now it is too late to stop. All of the recent consent decrees against the servicers are being violated. But, the odds favor no punishment so why stop?

MERS and B of A employees said under oath that they didn’t intend to follow the law, and they didn’t follow the laws of New York governing the Trusts or the Pooling and Servicing Agreements they created in an attempt to make the whole thing appear real.

Who ya gonna believe? No one has contradicted ole’, R.K. but he was replaced by an old title guy. Talk about your unholy alliances. Watch for even more dirty deeds seeping out of MERS.

B of A came out quickly and said, basically, that moronic, lying little Linda doesn’t know her ass from two warm loaves of bread.

During her ten year career, she knew enough to achieve the following: She worked as Customer Service Representative; Supervisor; Trainer; Training Developer; Manager of Policies and Procedures Writers; Communications leader; Senior Team Leader; and at the time of the testimony, she was the number 3 Officer in Charge of the Litigation Unit.

Yup, sounds like a prevaricating nit-wit to me alright. Good thing they found out about her before she was there very long.

I ask again, who are you going to believe? Working for them must be about as much fun as doing business with them. Hey, Linda, how’d it feel when that bus rolled over you?

I cannot tell you how much I would like to bitch-slap that perse-lipped smirk off of Brian Moynihan’s gnarly Irish gob.

I’d settle for Lloyd Blankfien, though. I saw a recent picture of him along with a caption that he likes to play Blackjack and is a big fan of rapper 50 cent. Really?

Hey, Lloyd, recognize these lyrics from your fave?

“I got places to go, got people to see,

The penitentiary ain’t the place for me.

I’m warning you, do not tempt me.

I’ll run up and squeeze it, put a hole in ya, hole in ya.”

You should have listened carefully to the lyrics, Lloyd. You’ve tempted a lot of people. If you hear fast footsteps behind you, you just have to wonder. Am I about to make a lot of people’s day? Well don’t you, Lloyd?

A lot of gangstas have their own stories being told in rap so it got me thinking.

Okay, Lloyd, get your hip-hop head hummin’ and check these rhymes I busted just for you.

The bankstas all wanna’ be gangstas,

 The gangstas all wanna’ rap.

The jocks all want to be rock stars

And the rock stars want to act.

The actors, they like to smoke that crack

Blankfien, he likes to play Blackjack

You’ll dig life behind bars

That’s all they do is play cards

You ripped all my homies cheese

Hid it somewhere in Belize

Brought my country to its knees

You like a bad disease.

You won’t get no fuckin’ pass

A Crip will cap your ass

You ain’t no bad-ass banksta

You nothin but a wanksta.

Don’ worry; I’m not quitting my day job. Or at least I wouldn’t if I had one. Where were we? Oh yeah, the mortgages.

Nobody cared about the mortgages and the notes. It was a side show. The mortgages were just a sort of window dressing to create the impression that there really was a good reason to hand over gobs of pensioner’s money to Wall Street. Obviously, there wasn’t.

To understand what was going on, you have to realize that the bonds and not the mortgages were the end game. You don’t really need actual borrowers to form a pool of mortgages and issue bonds. You only need borrowers if you intend for the loans to be paid off. They did not.

There were similar bonds issued for all types of debt. And tranching, counterparty swaps, MERS, were all created to conceal the fact that the same assets were used over and over again or, as in many cases, existed only in the mind of the perpetrators.

 As was the case with Taylor, Bean and Whitaker, it was pointless to go seeking real borrowers when all you have to do is fabricate them.

Pension funds were prime targets for the phony bonds. Bankstas took the cash and simply kept it with no intention of ever paying it back. That is why the pools that contained the supposed mortgages had to default.

And, it’s gone.

They just made the payments on the bonds out of the stack of cash they kept and the new money rolling in until they could trigger the requisite defaults and collect on the insurance from AIG and others that we subsequently bailed out.

Consider this. Every loan originated for the purpose of pooling is identified by a “MIN” (Mortgage Identification Number) assigned by Mortgage Electronic Registration Systems or MERS.

Curious that the number appears on the application before the loan is approved. Knowing that bankstas have been operating at a larceny level higher than anything previously seen in the history of crime, I take nothing these people do for granted. What might this suggest? Is this part of the crime or part of the cover-up? It’s both.

As early as 2002, demand for prime loans to pool far exceeded the supply and threatened the stream of cash pouring into Wall Street. This led to several crimes.

Among them, the creation of predatory loans intended to fail, inflated appraisals that would create false equity and ensure future strategic defaults, false representations of lending standards, and the creation of hundreds of thousands of loans without a real borrower.

Yep. As bad as those deadbeats are who only made their payments for three or more years or until their payment doubled and their home value dropped by half—what can possibly explain a borrower who never made any payments?  There is an entire category of loans called “First Payment Defaults”.

And, it’s gone.

Who does that? Who gets a loan, moves in, and decides not to make the first payment?

Okay, there was a little street level fraud by some local gangs but the easiest place to do it is from the inside. Why make any payments on a loan that was created simply to default?

What is interesting about securitization fraud is the sheer amount of evidence. We have the documents created to establish the relationship between the investor and the Bankstas. We have the procedures they outlined to avoid taxation. We have the sullied titles. And now, we have the evidence that they never complied with any of it and never intended to.

There was a time when stuff like this was illegal and it is so easy to prove. The Bankstas own documents are all you need.

If this were a murder scene, blood would be splattered everywhere and there would be a clear video of the perpetrators carrying out the crime.

You might think that the Securities and Exchange Commission, those legal-eagles we pay to keep a self-regulating Wall Street in check, are putting in long nights, cataloging thousands of documents and methodically and painstakingly building their case.

Sadly, they are not. They are quietly biding their time until the statute of limitations runs out.

They fill their lonely, boring hours whacking-off to porn on their government issued computers. Are you angry yet? Am I beating this to death? Flogging a dead horse?

If you aren’t angry yet, you will be soon enough. Particularly, if you are a boomer.

There we were, a whole generation with the brass ring in sight.  Flush with equity in stocks and real estate, portfolios of blue chips, bolstered by ERISA protected pensions, insured by the Pension Benefit Guarantee Corporation and maybe even a little Social Security.  We were going to rock retirement like only boomers can do it.

And, it’s gone.

The bankstas beat us to it. Now they’re skiing in Gstaad and eating Caspian Beluga roe on toast points while we clip coupons and postpone our Golden Years indefinitely.

I’m a boomer, but I expect to have to work until I die. That wasn’t the plan. I had a good plan. Work hard. Build a business and create something that would sustain me and not leave me dependent on Social Security.

To that end, I invested in both real estate and the stock market. I wish I had known that the game was rigged and the books were cooked, but it is what it is.

And, it’s gone.

It isn’t so much that I wanted not to work, I just wanted a little more security. As it turns out, there isn’t much security outside of one’s own sense of adequacy and faith.

And, as we head into our Golden Years, we will need a lot of both.

Right now, every entity with a stake in financial services is doing its best to avoid a true accounting. The same deceptions employed to create economic doom are being trotted out to cover-up what I predict will be devastating for pension funds.

I hate to be the bearer of bad news, but no one else was going to tell you until it’s too late to do anything about it. I just thought you should know.

The video below is the briefest, simplest explanation of the financial crisis I have come across. It’s from Southpark. Enjoy!



George W. Mantor
The Real Estate Professor
Founder, American Foreclosure Resistance Movement

“First they ignore you, then they ridicule you, then they fight you, then you win.”  —  Mahatma Gandhi