Shock Therapy for Wall Street: JPMorgan Suspends 56,000 Foreclosures; GMAC,BOA,etc

[boutons_deux]

"Investment adviser Christopher Whalen thinks we could soon be looking at more Wall Street bankruptcies. If so, hopefully we won’t fall into the trap this time of underwriting the losses while letting the banks keep the profits. If we the people are picking up the tab, we should insist on owning the banks. "

http://www.truth-out.org/shock-thera...ore63803?print

and

http://www.washingtonpost.com/wp-dyn...105392_pf.html

============

For 100s of years, that's how the capitalists work, lend money against collateral, often at usurious rates (Bank of California 24%/year lending to gold/silver miners of the Comstock load), create a financial crisis, then grab the collateral for little or nothing.

The Banksters Great Depression wasn't due to the homeowners or Fannie and Freddie (right-wingers here criminalize the individuals to hide the crimes of the financial system). It was triggered by an old fashioned bank run on unregulated shadow-banking Lehman, then the entire unregulated, fraudulent, house-of-cards shadow banking system froze up and was exposed as completely bankrupt with $40T+ of bull , unpayable obligations and insurance policies (AIG's fraud).

Basel III did nothing to address the shadow banking system. It did say regulated banks have to increase their capital reserves a little bit .... in 10 years. Self-policing and regulation ALWAYS work.

[boutons_deux]

Company Stops Insuring les in Chase Foreclosures
By DAVID STREITFELD

A major le insurance company has stopped insuring homes foreclosed by JPMorgan Chase, another sign that the controversy over the legal practices of the big lenders is starting to influence the housing market.

The company, Old Republic National le Insurance, told its agents Friday that it would not write policies on foreclosed Chase properties until “the objectionable issues have been resolved,” according to a memorandum sent out by the firm’s underwriting department.


http://www.nytimes.com/2010/10/03/bu...gewanted=print

[Parker2112]

Company Stops Insuring les in Chase Foreclosures
By DAVID STREITFELD

A major le insurance company has stopped insuring homes foreclosed by JPMorgan Chase, another sign that the controversy over the legal practices of the big lenders is starting to influence the housing market.

http://www.nytimes.com/2010/10/03/bu...gewanted=print


The company, Old Republic National le Insurance, told its agents Friday that it would not write policies on foreclosed Chase properties until “the objectionable issues have been resolved,” according to a memorandum sent out by the firm’s underwriting department.

Unless someone else steps in to insure, there will be some super cheap auction prices to follow...with super-shaky le as well...

[boutons_deux]

If Fannie and Freddie would force the financial community to refund the toxic mortgages they sold to Fannie and Freddie (aka, a Fabulous Fabrice sale), we'd see some real comeuppance and blood-letting, and 100s of $Bs in taxpayer relief.

[Winehole23]

The banks can't prove the chain connecting them to the le, so they get another arbiter to pronounce their related paperwork adequate, and proceed against those foreclosed against as if they had good le, which they do not. In thousands and thousands of cases.

[Winehole23]

Or something like that.

[boutons_deux]

October 2, 2010

Count on Sequels to TARP

By GRETCHEN MORGENSON

THE government is pulling a sheet over TARP, the Troubled Asset Relief Program created during the panic of 2008 to bail out the nation’s financial ins utions. With the program’s expiration on Sunday, we can expect to hear lots of claims from the folks at the Treasury that it was a great success.

Such assertions would be no surprise from a political class justifiably concerned about possible taxpayer unhappiness, the continuing economic turmoil and the midterm elections. But if we have learned anything during this crisis, it is that the proclamations emanating from the Washington spin machine must be taken with an extra-hefty grain of salt.

Consider the claims made last summer that the Dodd-Frank financial reform act reduces the threats that large, interconnected banks pose to taxpayers and the economy when the banks are deemed too big to fail. Indeed, as regulators hammer out the rules governing derivatives transactions, it’s evident that the law has created a new set of ins utions that will almost certainly be deemed too important to fail if they ever get into trouble. And that means there won’t really be an effective way to keep those firms from taking big, profitable, short-term risks that are dumped on the taxpayers when the bets fail.

Our roster of bailout candidates includes the clearinghouses, created under Dodd-Frank, that are meant to increase the oversight of derivatives trading. Because most derivatives transactions are expected to go through these clearinghouses, they will be “systemically important” under the law. As such, Dodd-Frank specifically provides that “in unusual or exigent cir stances,” the Federal Reserve may provide such en ies with a financial backstop, including borrowing privileges.

Remember this: Financial backstop is just another term for a taxpayer bailout. And the major banks and brokerage firms are the members of the clearinghouses, so a backstop would essentially be for them.

According to the Bank for International Settlements, the entire derivatives market had a gross credit exposure of $3.5 trillion at the end of 2009. Obviously, even a small fraction of that amount could represent a sizable call on the taxpayers if a clearinghouse hit the skids.

So much for eradicating too-big-to-fail.

That’s not to say there aren’t upsides to clearinghouses. First and foremost, they will improve transparency in this huge market, requiring participants to disclose how much they have at stake financially. Regulators didn’t have such reports in the recent crisis and were severely hampered by the fact that derivatives trading existed largely in a black box.

In times of trouble, clearinghouses also allow hobbled firms to unwind and quickly reassign their positions to other, healthier players. Another good thing.

But clearinghouses sometimes collapse, as Craig Pirrong, professor of finance at the University of Houston, points out.

“Clearinghouses are intimately connected with the financial system and overall banking system, so the idea that clearinghouses reduce the interconnectedness of the financial system is incorrect,” he said. “They are big, interconnected and they can fail when we have big market shocks.”

In the Gold Panic of 1869, which caused New York markets to seize up, the clearinghouse for the gold exchange failed. And in the 1987 stock market crash, members of the Chicago Mercantile Exchange, the Chicago Board of Trade and the Options Clearing Corporation received emergency infusions, Mr. Pirrong said.

“It’s a dilemma,” he added. “On the one hand, it is very important that clearinghouses have the ability to get liquidity support in the time of a crisis. But if a clearinghouse is convinced that Ben is at my back, they might not be as prudent or cautious as they might otherwise be” — referring to Ben S. Bernanke, the Fed chief.

Walker F. Todd, a lawyer and economic consultant in Chagrin Falls, Ohio, was assistant general counsel and research officer at the Federal Reserve Bank of Cleveland from 1985 to 1994. He’s also an expert on the widening financial safety net — a net that offers taxpayer backstops for the ins utions that got us into this mess and will most likely, alas, get us into the next one.

He says he is disturbed by the explicit backing of derivatives clearinghouses provided in Dodd-Frank. “There is no reason whatsoever for exposing taxpayers and ordinary citizens to paying for the gaming losses incurred through over-the-counter derivatives,” Mr. Todd said.

(b: of course, the reason is that the financial sector has rigged the game against taxpayers)

But with the backstop now firmly in place for clearinghouses, the Fed will be able to pay off derivatives players directly, rather than indirectly as it did in the disastrous rescue of the American International Group.

Given the multiple bailouts of 2008, it is to be expected that the line of ins utions clamoring to join the cannot-fail party will grow longer. That’s the definition of moral hazard — if you rescue one group, others are sure to want the same treatment and behave in a way that ensures they’ll get it. The losses that taxpayers may endure in the next debacle, meanwhile, mount higher.

“THE crisis is about loss redistribution,” said Edward J. Kane, professor of finance at Boston College and an authority on regulatory failures. “In a crisis, these ins utions have much more power with the government than taxpayers do and they will make it seem in the interests of responsible officials to rescue them, whether that’s Congress, the Treasury or the Federal Reserve. But the notion that you can always throw these losses on the taxpayer in the long run is very, very dangerous.

There will come a time when the taxpayers will come close to revolt.”


http://www.nytimes.com/2010/10/03/bu...gewanted=print

dumb, fat-ass, infomercialed I'm-Gonna-Be-A-Billionaire-One-Day Americans revolt?

A few of them are Mad As And They Take It Again And Again as they are held down and gang raped.

Angle's 2nd Amendment bubba remedies against fully militarized SWAT police and against posse-comitatus-is-so-quaint military?

Anybody see the fully armed SWAT team tear up a house of anti-war, etc dissenters on trumped-up terrorist charges? Pure, naked intimidation.

Nah, Americans are sheeple getting buggered by their financial sheep herders. The financial Class War is over and American non-wealthy losers are poor, indentured slaves and serfs.

[Yonivore]

Bonanza for real estate lawyers...

It always enriches the attorneys.

[RandomGuy]

The banks can't prove the chain connecting them to the le, so they get another arbiter to pronounce their related paperwork adequate, and proceed against those foreclosed against as if they had good le, which they do not. In thousands and thousands of cases.

Essentially.

This mess will take years and years, and due to this, I would say it is likely never to be fully resolved. The echos of this mess will be felt when my grandkids get their first house.

[RandomGuy]

Fidelity National issued a statement saying it did not believe the problems with the foreclosure process would have “a material adverse impact.”

Mark P. Stopa, a lawyer in Florida who represents defaulting homeowners, said that if more le insurance firms began to shy away from insuring foreclosed properties, the entire housing market could suffer. The prices of foreclosures would plummet, because lenders will not issue a new mortgage without le insurance.

The lawyer is right. This has got to be keeping a lot of people up at night.

Seems to me to have the potential to "domino" through the financial system.

Losses on mortgage issuers balance sheets are tied to how much capital they can recover from foreclosures.

If conditions suddenly erode the projected value of that, then you have to start writing down your assets as a bank even faster.

[TeyshaBlue]

The lawyer is right. This has got to be keeping a lot of people up at night.

Seems to me to have the potential to "domino" through the financial system.

Losses on mortgage issuers balance sheets are tied to how much capital they can recover from foreclosures.

If conditions suddenly erode the projected value of that, then you have to start writing down your assets as a bank even faster.

I hope it completes what our financial bailout postponed....a cleansing tinged with a not insignificant amount of unrequited revenge.

I mean, what could be more malicious than fabricating loan docs from whole cloth and then using them to steal homes?

Alan Grayson cites a case in FL where a guy paid CASH for his property and then was sued for foreclosure by bird bankers.

It can't get much worse than that.

Let's set the pyre and let it do it's work.

[boutons_deux]

"Losses on mortgage issuers balance sheets are tied to how much capital they can recover from foreclosures."

They been lying for years that the toxic mortgages on their balance sheets were valued correctly at the mortgage price, rather than post-bubble selling price, and as if the mortgages were all being paid and going to be paid in full.

The financial sector is a total fraud.
Nobody does anything about it.
They "settle" cases rather than imprison the criminals.

[boutons_deux]

Texas AG moves to halt foreclosures

Texas Attorney General Greg Abbott called for a halt on foreclosures Monday amid nationwide scrutiny over the way they are processed.

Notices to suspend foreclosures were sent to 27 loan servicers doing business in Texas, including Bank of America and JPMorgan Chase, the attorney general's office said. It did not have the full list of companies available late Monday.

http://www.mysanantonio.com/news/tex..._104323339.htm

======

Does this mean Perry and TX can now be denounced as "business unfriendly" ?

After all, how's a poor bank supposed rape and pillage citizens if not by creating a financial crises and a depressed economy and then grabbing assets and collateral on the cheap?

Hey, that's just free market capitalism going about its Black Art.

[Stringer_Bell]

I don't understand what was wrong with the government bailing out the homeowners to begin with?

This would all be so much easier if EVERYONE got some balls and stopped paying loans/credit cards/etc etc to the banks - send a message, see what the banks do about it when the American public gives them a finger.

[TeyshaBlue]

I don't understand what was wrong with the government bailing out the homeowners to begin with?

This would all be so much easier if EVERYONE got some balls and stopped paying loans/credit cards/etc etc to the banks - send a message, see what the banks do about it when the American public gives them a finger.

They'll likely get bailed out again. Precedence is a .
When they can leverage cash at 1% and then just sock it away, essentially, they're giving the American public the finger.

[Wild Cobra]

We don't need bailouts, we need jobs to return. Anyone who bought a place they cannot afford, that's their mistake. Now I do sympathize with those who lost jobs.

Rather than the government focusing redistribution of wealth, shouldn't it be exercising the powers outlined in the cons ution, regarding trade? Shouldn't it be fixing policies that tax ability to pay rather than what is spent? The problem with taxation, is it cause less of that activity. When you tax employers, they move their operations to places that cost less. When you tax the really wealthy, they simply change the income type, because they can, and taxing income only reduces the amounts the rich from pay themselves incomes. They take other payments like dividends, capital gains, etc, or simply live off their incorporated funds and pay themselves nothing.

Stop blaming the wrong people and processes. The problem is the way we tax.

[Stringer_Bell]

We don't need bailouts, we need jobs to return. Anyone who bought a place they cannot afford, that's their mistake. Now I do sympathize with those who lost jobs.

Stop blaming the wrong people and processes. The problem is the way we tax.

So you're saying we should close the tax loopholes that allow the rich to manipulate the system? Now there's a novel idea! Too bad the little people don't fund political campaigns like the rich, no politicians will bite the hand that feeds.

As for the people that bought places they couldn't afford, you also have to take into account the people that could afford their homes but because of all the rising costs of living and property - they can't stay there, meanwhile the houses stay empty because no one is buying. I don't think the "they couldn't afford it to begin with" allegations are as widespread or true as they were when this crisis started - the truth is coming out that a lot of good people that work hard and make payments are losing their left and right. It's disgusting.

[boutons_deux]

"we need jobs to return."

mgmt has decided, in the best interest of their stockholders, that jobs aren't going to return.

Shipping jobs overseas and engineering jobs out of their companies, increasing the hours and responsibilities of the remaining intimidated employees, is in the best interest of the stockholders.

There was a study that showed the top 50 mgmt bonus managers were also the top destroyers of jobs.

There was a guy who quit mgmt after sitting in a meeting where the bonus receivers had to decide, because profits were down, either to lay off 3500 people or reduce their bonuses. They laid off 3500 people.

[Wild Cobra]

"we need jobs to return."

mgmt has decided, in the best interest of their stockholders, that jobs aren't going to return.

Shipping jobs overseas and engineering jobs out of their companies, increasing the hours and responsibilities of the remaining intimidated employees, is in the best interest of the stockholders.

There was a study that showed the top 50 mgmt bonus managers were also the top destroyers of jobs.

There was a guy who quit mgmt after sitting in a meeting where the bonus receivers had to decide, because profits were down, either to lay off 3500 people or reduce their bonuses. They laid off 3500 people.

All likely true, and it's because our liberal tax loving government is making it too expensive to base operations here.

[boutons_deux]

So China's predatory devaluation of the their currency along with the ty product quality, and their ty, underpaid employees has nothing to with US mgmt buying/building in China rather than building in USA?

and for you, it's all the fault of US employees not willing to be "globalized" into low-paying, low/no benefit jobs so they can compete with Chinese and Indians?

We shudda figured when the US corps + US govt were pushing so hard for so many years for globalization and free (for US export, not US import), somebody was gonna get screwed, and it was the US workforce.

[MannyIsGod]

All likely true, and it's because our liberal tax loving government is making it too expensive to base operations here.

Yes, WC. This is all because of Obama. Every bit.

[Wild Cobra]

So China's predatory devaluation of the their currency along with the ty product quality, and their ty, underpaid employees has nothing to with US mgmt buying/building in China rather than building in USA?

It does somewhat, but i refuse to play your game of blaming chine when we have issues we can rectify here. Like it or not, we are in a global market. Until we change our tax structure to make business viable here in the USA again, stop blaming others. We need to address our own downfalls first.

and for you, it's all the fault of US employees not willing to be "globalized" into low-paying, low/no benefit jobs so they can compete with Chinese and Indians?

We can compete without lowering our standards. You seem to treat everything as absolutes, refusing to see the various shades of gray. we will never be able to compete as long as we tax production. No matter what you due, short of walling ourselves off from the rest of the world.

We shudda figured when the US corps + US govt were pushing so hard for so many years for globalization and free (for US export, not US import), somebody was gonna get screwed, and it was the US workforce.

Are you saying they didn't know? Liberals in government love harming America. It gives them more people who then in turn look to government to redistribute the wealth of others. it keeps them in power and wealthy, to have people need them.

[Wild Cobra]

Yes, WC. This is all because of Obama. Every bit.

No, liberals in general, over the last 40+ years.

[MannyIsGod]

Yes, our oh so liberal country. Cuba scoffs our liberalism.

[CosmicCowboy]

It's not liberals/conservatives or even relative tax rates. It's communication, bandwidth and the global economy. The moral of the story is don't pursue a career that can be outsourced and unless you have education and skills then get used to a basic subsistence lifestyle because we are rapidly reaching a tipping point where the productive members of society can no longer afford to subsidize the non-productive.