Henry CK Liu on debt forgiveness

[karim0028]

Re: Henry CK Liu on debt forgiveness

Honestly folks, were not really here to debate morality; who is right or who is wrong..... Whats happened has happened... I think everyone agrees that shit happened.... The question now seems to be that after the royal clusterfuck, what do you do????

Everyone in this rigged game may be culpable; but after the smoke has cleared, the music has stopped, the lights turned on; and John Q public rubs the haze from his eyes after a decade of drunken debauchery, he seems to be the one with no pants on.... Seems the bankers made off with all the loot.... Bankers have been made whole and main street got the shaft....

Let those mortgages be only collectible against the RE they are collateralized against... ie. make all mortgages non-recourse. Banks get the property, people are debt free..... Seems like a fair trade...

As for bank losses, fuck'em they got the property... They should know better than to give loans for no collateral, and if you say there was collateral.... Well, now there ain't, bank took a risk, deal with it; last i checked they were a for profit (ie. also loss) entity.

[Rajiv]

Re: Henry CK Liu on debt forgiveness

Required reading before making comments on RE Fraud

Foreclosure Fraud – Guide to Looking Up Public Records for Fraud

All of it very good reading.

Two links from it to good articles by Deninger

Tying It Together: Massive, Pernicious Fraud

Let's not mince words here:

The entire finance and real-estate "industry" is filled with massive, pernicious fraud, and we now have only one question remaining - will The Government do its lawful and mandated job, that of prosecuting the bad actors, or has it joined with the fraudsters, become one with them, and thus, declare itself as a gang of mobsters rather than a legitimate government? The latter, of course will beg only the question of what should be an ordinary American's response.

Let's start with what may be one of the most outrageous yet least-actionable examples: Alan Greenspan.

Alan Greenspan, the former Federal Reserve chairman, said Thursday that banking regulators should consider breaking up large financial institutions considered “too big to fail.”

Those banks have an implicit subsidy allowing them to borrow at lower cost because lenders believe the government will always back them up. That squeezes out competition and creates a danger to the financial system, Mr. Greenspan told the Council on Foreign Relations in New York, according to Bloomberg News.

This is the "former Fed President" who winked and nodded at what he knew was an unlawful merger of Citibank and Travelers, then personally advocated and lobbied for the passage of Gramm-Leach-Bliley - the law that not only tore down Glass-Steagall but retroactively made that merger legal.

Citibank, may I remind everyone, has been the largest of the "too big to fail" banks, and has received what is arguably somewhere around $2 trillion in "support", both formal and informal, over the last 20 years. Today, Citibank has outstanding hundreds of billions of dollars in formal government backstops.

Let us next progress to the mess in our Real Estate markets. And here I will take a page from history:

Yes, the public bought. By 1925 they were buying anything, anywhere, so long as it was in Florida. One had only to announce a new development, be it honest or fraudulent, be it on the Atlantic Ocean or deep in the wasteland of the interior, to set people scrambling for house lots. "Manhattan Estates" was advertised as being "not more than three fourths of a mile from the prosperous and fast-growing city of Nettie"; there was no such city as Nettie, the name being that of an abandoned turpentine camp, yet people bought.

Uh huh. And what did they buy with?

During the 1920s and into the early 30s, many of the citizenry of this country chose to live above their means. They chose the interest only loan because it allowed them to purchase a larger home for less money. What happened when the stock market crashed and jobs were scarce, and there was no income? Many of these people were left without homes; as they had chosen to simply pay the interest on their mortgage there was no equity built into their homeownership. When no equity builds, and the income ceases, the bank forecloses and residents are forced from their homes.

Of course in the 1920s there were no computers, and therefore whatever you wanted to sell you had to be able to record in a ledger book and work on a piece of paper or adding machine. This made the concept of 100,000-page "offering documents" impossible, but it sure didn't stop people from "inventing" interest-only loans that would never have their principal paid off.

This sort of fraudulent financial game is nothing new. Indeed, it has featured prominently in every major financial collapse. The 1873 and 1929 market crashes and subsequent Depressions were both caused by such games - in railroads in the 1873s in the US and in real estate in Europe, and in literally everything in the US in the 1920s.

Nor are games with titles and other illegalities new:

Speculation was easy-and quick. No long delays while titles were being investigated and deeds recorded; such tiresome formalities were postponed.
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The binder, of course, did not complete the transaction. But few people worried much about the further payments which were to come. Nine buyers out of ten bought their lots with only one idea, to resell, and hoped to pass along their binders to other people at a neat profit before even the first payment fell due at the end of thirty days. There was an immense traffic in binders-immense and profitable.

Uh huh.

And what do we have banks demanding today?

Oct. 13 (Bloomberg) -- Banks will push the Obama administration to expand its mortgage-modification program to allow interest-only periods on reworked loans, seeking to bring more homeowners into the initiative while recognizing concern that it may only postpone defaults, according to JPMorgan Chase & Co.

You mean "seeking to rip off more homeowners and steal their house", right?

Let's continue to be blunt:

A "mortgage" sold to someone without an actual asset backing, where the only "security" is the belief that the price will continue to rise and the "owner" will in fact pay only the interest (or in many cases less than the interest) is not a mortgage at all. An Interest-Only note is not legally a mortgage as no principal paydown is contemplated or made and at the end of the term no conveyance to the putative owner takes place; likewise a "mortgage" where the borrower is qualified on a teaser rate for an "Option ARM" should have brought immediate criminal fraud charges to the purveyor, since there was no reasonable expectation by the firm writing it that the principal would be paid. Indeed, such "buyers" were never homeowners, but rather were simply renting their properties from the bank!

But of course this didn't happen, as that would have upset the "finance" owners of our Congress and Government...... just as it would have in the 1920s....

Now we discover that the same sort of title games common in Florida in the 1920s were being played again. Assignments never recorded, improper assignments "in blank" (in what amounts to a bearer instrument) that do not comport with state law and more
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And also WE THE PEOPLE (Have Had Enough)

THE seminal question for this year - coming into the mid-term elections - is exactly that.

Have you had it?

Are you tired of being bent over the table with 29.9% credit card interest rates while these big banks borrow at zero from The Fed and use that money to speculate in the markets?

Are you tired of "too big to fail" - better stated as heads we (the banksters) win, tails you (the taxpayer) lose?

Are you enraged beyond words with the fact that this economic mess was not an accident - it was an intentional act of willful blindness and perhaps even fraud?

Do you feel helpless to do anything about the fact that Government has willfully and intentionally refused to both clean up the mess and prevent it from happening again due to the presence of huge lobbying interests in Washington DC - paid for by the very same banksters who nearly destroyed this nation?

Do you realize that we have fixed nothing - the bad loans are still there, they are still bad, that millions of Americans have lost their jobs, that the economy is not actually recovering (despite what they say) and that without resolving the actual problems odds are that within a few years, and perhaps within a few months, we will face another crash - this one likely bad enough to destroy our economy and perhaps our government?

Let's look at the facts.

• The testimony being put before the FCIC - the investigatory panel charged with looking into how the housing and foreclosure mess came about, and how our economy was stripped clean by the vultures that infest the banking business in this nation is a matter of record. I, and others, have been documenting this for more than two years. READ THE MISSION STATEMENT AND TESTIMONY OF PEOPLE LIKE MIKE MAYO.
• THE FBI has been warning of an "epidemic" of mortgage fraud since 2004. The banks knew this. Indeed, in 2004 their lobbyists convinced The Bush Administration to SUE to prevent state regulators from protecting YOU, THE CONSUMER, from predatory and unfair loans.
• Since 2006 there have been published stories that stated income loans were laced through-and-through with fraud:
  One lender recently compared 100 stated-income loans with the borrowers' tax returns and found that only 10 of the borrowers were telling the truth about their wages, according to Mortgage Asset Research Institute, a division of data firm ChoicePoint Inc. (September 2006)
  
• The Wall Street and large commercial banks did not include these disclosures in their offering circulars for securitized debt.
• Wall Street entities knew they were at risk but bought "protection" (CDS, or "credit default swaps") from firms who they knew or should have known could not pay, including but not limited to AIG. This "allowed" them to consider assets they knew or should have known were rife with fraud as "money good".
• Wall Street and "big lender" loan programs in the housing market during the years 2000-2007 all "assumed" that house prices would rise forever at a rate higher than inflation. The key point is that even if they had, which is mathematically impossible, it doesn't change the fact that the borrower, that is you the citizen, still was going to lose their house when they reached the limit of their borrowing capacity. The bank's only concern was designing a program that they would be protected by - not whether it was suitable for you nor whether you would have (or continue to have) a home.

None of this was a "mistake" or an "accident". It was not an "unforseen event."

Government agencies were aware of and sounded the alarm as early as 2004. Brooksley Born, chair of a federal regulatory agency (the CFTC) raised hell on complex derivatives ("CDS" and similar instruments) in 1999. She was attacked by everyone in the banking industry including Alan Greenspan and literally run out of town. She was right.

The banking and Wall Street institutions, through a combination of the above, "made" billions of profits that never really existed. They then paid that money - money that didn't actually exist AND NEVER WOULD - out in bonuses, dividends and stock price appreciation.

Starting in 2007, it all came apart, first with two hedge funds at Bear Stearns, then Bear Stearns itself, then Fannie Mae, Freddie Mac, Lehman Brothers and AIG.

In the fall of 2008 Ben Bernanke and Henry Paulson, Chairman of The Fed and Treasury Secretary (who had refused to heed the warnings of the FBI and others for the previous four years) corralled a bunch of Representatives and Senators in The Capitol. We were told that the government "had to bail out the banks" to prevent the financial system from collapsing. By anywhere from 100:1 to 300:1, the American People said "let 'em burn." The government refused once again to listen, and together with The Federal Reserve propped up the banks instead of forcing them to eat their own cooking. Rather than use the money appropriated to force these institutions through bankruptcy and shut them down, paying off the depositors that were insured, these failed institutions were instead mish-mashed together into even bigger financial companies and then given government backstops.

Nothing has been fixed.

The bad debt is still there.

Unemployment has skyrocketed, the banks have cranked up credit card interest rates to 29.9% and are feasting on zero interest Federal Reserve money which they use to speculate in the financial markets, paying out well over $100 billion in aggregate in bonuses for the last year.

We are told this is and was "necessary."

I might accept that - if it came with the closing of all of these institutions. Each and every one of them. If it came with the permanent barring of every executive involved from ever serving as so much as a janitor in any financial institution - worldwide - ever again. If it came with a full forensic audit of each and every one of these institutions and officials by the FBI, with every instance of fraud that was uncovered presented to a grand jury.

But it has not.

Instead, firms like Countrywide Financial and Washington Mutual were absorbed into Bank of America and JP Morgan/Chase. Those who were "too big to fail" not only were not dismantled, they were made bigger and more powerful.

Wall Street may effectively own Washington DC and the politicians but they do not own us.

WE THE PEOPLE ARE UNDER NO OBLIGATION TO ACCEPT THIS.

WE HAVE RIGHTS.

WE THE PEOPLE have the freedom to associate - or not.

WE THE PEOPLE have the right to demand legal tender in payment of debts owed us.

WE THE PEOPLE have the right to demand that these institutions eat their own cooking on each and every one of the loans they securitized and peddled during these years without fair and full disclosure to the buyers that these loans were rife with fraud.

WE THE PEOPLE have the right - and the ability - to take personal, lawful action with specific, lawful political and business-oriented goals, including permanent structural changes that will end "too big to fail" and "rip off the consumer on demand" policies, including the full reinstatement of Glass-Steagall which will END financial speculation and dealing in all of its forms by firms that have access to Federal Reserve credit and/or any sort of public backstop.

In the coming days and weeks I will outline specific, lawful actions that I hope each and every financial blogger, writer and columnist will take up and push as the key item for the remainder of this year and, if necessary, beyond - all with the intent of accomplishing these goals.
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[GRG55]

Re: Henry CK Liu on debt forgiveness

And a sobering commentary this week from Dr. John Hussman:

Discharge and replace Ben Bernanke and Timothy Geithner.

Since the beginning of the credit crisis, both of these bureaucrats have proven themselves to be ardent defenders of bank bondholders but a danger to the interests of the public and to the clearly defined prerogatives of Congress under the U.S. Constitution. Defending the public emphatically does not require the public to defend the bondholders of mismanaged financial institutions against loss. Both Bernanke and Geithner have made repeated end-runs around Congressional spending authority in defense of these institutions...

...There are far more thoughtful, principled candidates for leadership of the Federal Reserve and the U.S. Treasury. Martin Feldstein comes immediately to mind, though his conservative leanings toward tax policy may make it difficult for a Democratic administration to advance him as a choice...

...Finally, with due respect to Warren Buffett who, when asked about Bernanke's possible non-confirmation, answered "Let me know a day ahead of time so I can sell some stock," I suspect that a full completion of that sentence would have been "specifically, Wells Fargo." Without a doubt, Bernanke has been a great benefactor of bank stockholders and bondholders. This does not mean that his policy approach has been good for the country. The full assessment of Bernanke and Geithner's impact on the U.S. economy will most likely take years, as the probable inflationary effects of their massive fiscal and monetary experiment take hold in the second half of this decade.

Given the revolving door between Wall Street and Washington D.C., there is every prospect that Bernanke and Geithner will have an easy time obtaining employment among the firms that benefited from their tenure. It is interesting that Neel Kashkari, who headed the TARP and worked on the rescue of Fannie Mae and Freddie Mac, was just hired by PIMCO (which was among the largest holders of their subordinated debt).

How to spend $1.5 trillion without Congressional approval

Step 1: Federal Reserve purchases $1.5 trillion in Fannie Mae and Freddie Mac securities, creating $1.5 trillion of monetary base to pay for these purchases.

Step 2: U.S. Treasury quietly announces unlimited 3-year support for Fannie Mae and Freddie Mac on December 24, 2009, exploiting a loophole in a 2008 law that was originally written to insure a maximum of $300 billion in total mortgage principal (not losses, but principal).

Step 3: Within that 3-year period, we can expect the U.S. Treasury to issue $1.5 trillion in new Treasury debt to the public, taking in the $1.5 trillion in base money created by the Fed in Step 1.

Step 4: U.S. Treasury then hands that $1.5 trillion in proceeds from the new debt issuance to Fannie Mae and Freddie Mac.

Step 5: Fannie Mae and Freddie Mac use the proceeds to redeem the $1.5 trillion in mortgage securities held by the Fed, thus reversing the Fed's transactions in Step 1, without the need for any other "unwinding" transactions (watch). The base money created by the Fed comes back to the Fed, and the mortgage securities purchased by the Fed disappear, by burdening the American public with a new, equivalent obligation in the form of U.S. government debt.

Outcome: The Federal Reserve closes its positions in Fannie Mae and Freddie Mac securities, the quantity of outstanding Fannie Mae and Freddie Mac liabilities declines by $1.5 trillion, thus allowing their remaining assets repay the remaining liabilities without a $1.5 trillion hole of insolvency, and the outstanding quantity of U.S. Treasury debt expands by $1.5 trillion in order to protect the lenders, while ordinary Americans continue to lose their homes and jobs.

Throughout this crisis, the ultimate objective of Bernanke and Geithner has consistently been to protect the bondholders. This objective will not change unless the leadership changes.

[ThePythonicCow]

Re: Henry CK Liu on debt forgiveness

Honestly folks, were not really here to debate morality; who is right or who is wrong....

Nice opening. I notice however it is followed up by a passionate case indicting the bankers :rolleyes:.