Quantitative Easing 3: The Biggest, Baddest Bank Bailout Ever

Excuse me, did I miss something? Did I hear Bernanke say that the solution to reversing the depression would be to dilute the value of the dollar by buying unlimited toxic assets from the banks?

In my humble country boy ignorance, I feel like that fella is all vine and no tater.

But when looked at from behind the veil, it is the logical next step in The Wealth Transfer Initiative.

As all but the least informed know by now, the big banks have been teetering near collapse because what they are showing on their books as assets are actually Mortgaged Backed Securities with no mortgages backing them except for those that are already in default.

One of my favorite pieces of the MBS Ponzi scheme is that mortgages would only be assigned to the pools after they defaulted in direct contravention of the very rules that govern mortgage backed securities. This is one of the amusing little sidebars that, like “robo-signing”, has yet to be comprehended by many people.

In the case of robo-signing, it wasn’t that minimum wage workers were fabricating and forging documentation necessary to prove ownership of the obligation, it was why they were even needed in the first place. The answer is because the documentation had been destroyed so that references to the same loan could be made in multiple pools.

The execution of an assignment of the deed of trust, along with the note years after the trust closed is evidence of massive fraud. The trust by its own rules must receive the documentation within ninety days of closing and the loan must not be in default.

The practice of lobbing the defaulted mortgages back over the fence into the pools is proof of the above. Are there any real prosecutors left out there?

The trustee would be failing in his duty to protect the investor if he accepted defaulted mortgages into a performing pool. It’s all part of the MBS shuffle and it is so prima facie criminal that the only explanation why nothing is happening is because everybody is in on it.

Targeting Pensions: The Real Motivation for Mortgage Backed Securities

There are so many dots left unconnected by media that it looks like a map of towns with no roads connecting them.

One of the things getting little attention is the real “why?” behind MBS in the first place.

The problem in explaining the collapsing global economy is the massive size and mind-boggling complexity underlying a crime wave so vast and so entrenched in governments that corruption now taints everything.

The reason no one gets prosecuted except the tiniest fish is that they are all on the same side. Most lawyers work on that side, not our side. The judges, the sheriffs, the bankstas, the corporations, the regulators, the media and the politicians are mostly on their side.

For convenience in sucking in even more money for their side, collection agencies are working right out of district attorneys’ offices and splitting whatever they can squeeze out of a terrified public. Your tax dollars really at work.

You want to know why no real financial criminals are being prosecuted by DAs? They are too busy extorting money from poor people. Tell me the system isn’t fucked.

I hate to tell you what’s happening next, but even as we speak, tax returns are being compared to loan applications. They are going after mortgage fraud alright, but only the borrowers. If you have a stated income loan, you can expect a knock on the door.

Those who walked away from upside down properties are also being scrutinized.

The journalists who still speak the truth are marginalized, fired or arrested. The lawyers who take the wrong clients are disbarred.

They are coming for us next, mark my words. Three years ago I wrote that when everything was understood and tallied up, it would prove to be the biggest transfer of wealth in history. I’m not sure what worse than that would look like, but now I’m wondering if looting wasn’t just the first step. Just because I’m paranoid doesn’t mean they aren’t out to get us.

Insatiable greed is the “Why?” behind MBS creation.

A certain type of person wonders, “Where is there a lot of money and how can I get it?”

It’s called Willie Sutton’s Law. Willie Sutton was a famous bank robber who, when asked why he kept robbing banks answered, “Because that’s where the money is.”

Thirty years ago the money was piling up in pension funds as the “greatest generation” concluded a life time of work. Those bloated funds had long been lusted over by financiers who jealously saw the money as doing nothing.

It had to be safe. The principal could not be put at risk. But, that need for absolute preservation of the principal, limited the ability of the fund to grow at more than a one to two percent annual return.

That made pension fund managers ripened fruit to be plucked, and pluck them they did. A whole lotta plucking still goin’ on.

Pension fund managers are paid two percent of the fund and 20% of growth. See the moral hazard here? The big money is in generating astronomical returns, not babysitting the fund.

By now, you can guess what’s going to happen next. Here comes Wall Street with a line of bullshit that only a greed mongering, resentful pension fund manager would ever believe.

A zero risk proposition they say. Nothing safer than Triple A rated American home mortgages with a historical default rate of three tenths of one percent.

But, the pension fund doesn’t own the actual mortgages, just a right to a blend of revenue streams purported to be the monthly payments from the borrowers.

At this point, the pension fund takes an enormous pile of pensioner money and gives it over to Wall Street in exchange for monthly payments and the return of the principal when the mortgages are paid off.

This would work if there were real borrowers making real payments. Instead, Wall Street just kept all of the money and would cut a check to the pension fund supposedly representing payments from the borrowers. For show, a few loans got made but there were never enough borrowers relative to the amount of cash wanting in to the game.

There are four ways to get more loans: change underwriting, create equity (false appraisal), pledge a loan multiple times to multiple pools, or make up borrowers. The latter is by far the easiest and was the preferred method in areas of low appreciation.

Or, as the convicted Chairman of Taylor, Bean and Whitaker, Lee Farkas, once remarked. “I could rob a bank with a pencil.”

Here’s what he said, “It’s very common in our business to, to sell — because it’s all data, there’s really nothing but data — to sell loans that don’t exist.”

The automation of loan underwriting allowed lenders to simply reverse engineer a loan application to determine what information would need to be supplied by the borrower to obtain underwriting approval.

Real borrowers often signed blank loan applications or signed an application where all of the information had already been filled in.

Creating equity creates more loans through refinancing and stimulating construction of more homes needing loans.

Pledging loans to multiple pools is an easy way to leverage a single loan. But, in each of these scenarios, the pools were limited by the finite number of borrowers.

The made up borrower frees Wall Street from the messy business of actually making loans and lets them keep all the money for their bonuses.

As evidence, there is a separate category of mortgage defaults called, “First Payment Defaults.” Who defaults on the first payment? Dead people and Wall Street.

Wall Street wanted the pools to default so they could collect on the insurance of multiple times the loan amount and avoid ever having to pay the money back to the pension fund.

The only problem is that a lot of those mortgage pools don’t really have any assets.

So to bailout the banks, from having to account for the missing money, Bernanke will buy these bags of air and call it asset buying.

None of this puts any real money in circulation and no more mortgages or jobs are going to be created as a result of this, but the bankstas will be back in bonus heaven.

Somebody, please explain this to me in terms I can understand.

I almost liked it better when I didn’t know anything. Everybody told me to “just follow Buffett”, “do what Buffett does; you can’t go wrong with the Buffett strategy”, so that was all I did.

Now, I find out that there’s a Warren Buffett. So I guess there’s no point in giving up Margaritas this late in the game.