A power play is underway in the foreclosure arena, according to the New York Times.
On the one side is Eric Schneiderman, the New York Attorney General, who is conducting his own investigation into the era of securitizations – the practice of chopping up assets like mortgages and converting them into saleable securities – that led up to the financial crisis of 2007-2008.
On the other side is the Obama administration, the banks, and all the other state attorneys general.
This second camp has cooked up a deal that would allow the banks to walk away with just a seriously discounted fine from a generation of fraud that led to millions of people losing their homes.
The idea behind this federally-guided “settlement” is to concentrate and centralize all the legal exposure accrued by this generation of grotesque banker corruption in one place, put one single price tag on it that everyone can live with, and then stuff the details into a titanium canister before shooting it into deep space.
This is all about protecting the banks from future enforcement actions on both the civil and criminal sides. The plan is to provide year-after-year, repeat-offending banks like Bank of America with cost certainty, so that they know exactly how much they’ll have to pay in fines (trust me, it will end up being a tiny fraction of what they made off the fraudulent practices) and will also get to know for sure that there are no more criminal investigations in the pipeline.
This deal will also submarine efforts by both defrauded investors in MBS and unfairly foreclosed-upon homeowners and borrowers to obtain any kind of relief in the civil court system. The AGs initially talked about $20 billion as a settlement number, money that would “toward loan modifications and possibly counseling for homeowners,” as Gretchen Morgenson reported the other day.
The banks, however, apparently “balked” at paying that sum, and no doubt it will end up being a lesser amount when the deal is finally done.
To give you an indication of how absurdly small a number even $20 billion is relative to the sums of money the banks made unloading worthless crap subprime assets on foreigners, pension funds and other unsuspecting suckers around the world, consider this: in 2008 alone, the state pension fund of Florida, all by itself, lost more than three times that amount ($62 billion) thanks in significant part to investments in these deadly MBS.
So this deal being cooked up is the ultimate Papal indulgence. By the time that $20 billion (if it even ends up being that high) gets divvied up between all the major players, the broadest and most destructive fraud scheme in American history, one that makes the S&L crisis look like a cheap liquor store holdup, will be safely reduced to a single painful but eminently survivable one-time line item for all the major perpetrators.
But Schneiderman, who earlier this year launched an investigation into the securitization practices of Goldman, Morgan Stanley, Bank of America and other companies, is screwing up this whole arrangement. Until he lies down, the banks don’t have a deal. They need the certainty of having all 50 states and the federal government on board, or else it’s not worth paying anybody off. To quote the immortal Tony Montana, “How do I know you’re the last cop I’m gonna have to grease?” They need all the dirty cops on board, or else the whole enterprise is FUBAR.
In addition to the global settlement, Schneiderman is also blocking an individual $8.5 billion settlement for Countrywide investors. He has sued to stop that deal, claiming it could “compromise investors’ claims in exchange for a payment representing a fraction of the losses.”
If Schneiderman thinks $8.5 billion is an insufficient, fractional payoff just for defrauded Countrywide investors, then you can imagine how bad a $20 billion settlement for the entire industry would be for the victims.
In that particular Countrywide settlement deal, it looks like Bank of New York Mellon, the New York Fed, Pimco and other players negotiated on behalf of defrauded investors. They told the Times they were happy with the deal, but investors outside the talks told Gretchen they weren’t happy with the settlement.
Schneiderman apparently listened to those voices instead of the Mellon-Fed-BofA crowd, which infuriated the insiders who struck the actual deal. In a remarkable quote given to the Times, Kathryn Wylde, the Fed board member who ostensibly represents the public, said the following about Schneiderman:
It is of concern to the industry that instead of trying to facilitate resolving these issues, you seem to be throwing a wrench into it. Wall Street is our Main Street — love ’em or hate ’em. They are important and we have to make sure we are doing everything we can to support them unless they are doing something indefensible.
This, again, is coming not from a Bank of America attorney, but from the person on the Fed board who is supposedly representing the public!
This quote leads one to wonder just what Wylde would consider “indefensible,” given that stealing is pretty much the worst thing that a bank can do — and these banks just finished the longest and most orgiastic campaign of stealing in the history of money. Is Wylde waiting for Goldman and Citi to blow up a skyscraper? Dump dioxin into an orphanage? It’s really an incredible quote.
The banks are going to claim that all they’re guilty of is bad paperwork. But while the banks are indeed being investigated for "paperwork" offenses like mass tax evasion (by failing to pay fees associated with mortgage registrations and deed transfers) and mass perjury (a la the “robo-signing” practices), their real crime, the one Schneiderman is interested in, is even more serious.
The issue goes beyond fraudulent paperwork to an intentional, far-reaching theft scheme designed to take junk subprime loans and disguise them as AAA-rated investments. The banks lent money to corrupt companies like Countrywide, who made masses of bad loans and immediately sold them back to the banks.
The banks in turn hid the crappiness of these loans via certain poorly-understood nuances in the securitization process – this is almost certainly where Scheniderman’s investigators are doing their digging – before hawking the resultant securities as AAA-rated gold to fools in places like the Florida state pension fund.
They did this for years, systematically, working hand in hand in a wink-nudge arrangement with clearly criminal enterprises like Countrywide and New Century. The victims were millions of investors worldwide (like the pensioners who saw their funds drop in value) and hundreds of thousands of individual homeowners, who were often sold trick loans and hustled into foreclosure when unexpected rate hikes kicked in.
In a larger sense, even the (often irresponsible) people who simply bought more house than they could afford were victims of this scam. That's because in many of these cases, credit simply would not have been available to those people had the banks not first discovered a way to raise vast sums of money dumping crap loans on an unsuspecting market.
In other words: if Bank of America hadn’t found a way to sell worthless subprime loans as AAA paper to the Chinese and the Scandavians in May, you can be sure that it wouldn’t be going back to Countrywide in June to lend out more money for more subprime loans.
And Countrywide, in turn, wouldn’t then have been sending masses of reps out into the ghettoes to offer juicy home loans to undocumented immigrants and refis to confused old ladies on social security.
This is as bad as white-collar crime gets. But to Wylde, it doesn’t rise to the level of being “indefensible.” Until they do something worse than this, we apparently should support the banks, and make sure they don’t have to pay more than a fraction of what they made off of this kind of crime.
What is most amazing about Wylde’s quote is the clear implication that even a law enforcement official like Schneiderman should view it as his job to “do everything we can to support” Wall Street. That would be astonishing interpretation of what a prosecutor's duties are, were it not for the fact that 49 other Attorneys General apparently agree with her.
In Schneiderman we have at least one honest investigator who doesn’t agree, which is to his great credit. But everyone else is on Wylde’s side now. The Times story claims that HUD Secretary Shaun Donovan and various Justice Department officials have been leaning on the New York AG to cave, which tells you that reining in this last rogue cop is now an urgent priority for Barack Obama.
Why? My theory is that the Obama administration is trying to secure its 2012 campaign war chest with this settlement deal. If Barry can make this foreclosure thing go away for the banks, you can bet he’ll win the contributions battle against the Republicans next summer.
Which is good for him, I guess. But it seems to me that it might be time to wonder if is this the most disappointing president we’ve ever had.
The system is broken and we've been duped.
I admit and take responsibility for being one of its fools. I was dazzled by Barrack Obama when he first spoke at the Democratic National Convention. 'There is an intelligent, sincere rising star,' I thought. I defended and supported him as a presidential candidate in 2008. 'He's smart, honest, and has heart,' I told my Hillary-rooting friend. 'He'll turn this country around; wait and see.'
I fell for his altruistic community fund-raising track record and his rise from an underpriviledged upbringing to an educated role model for the black community. I had the audacity of hope for this man.
For me, yes, he is 'the most disappointing president we've ever had.'
I think the only reason Obama is so dissapointing is because in him we fimally see the reality that the whole political system has been a sham from the get go. Now - it is just too obvious not to admit it - and that is the real dissappointment people are feeling.
As the whole sham gets more and more overt, the dissappointment gets worse. I mean really - a campaign whose core value was change? Could it get any more overt than that, when we all know there never was going to be any?
I find it quite refreshing, a relief of sorts. No longer to be even slightly tempted to place my faith in a failed political system. It's funny, I knew this intuitively from the very beginning when I first voted for someone in this two party system so many years ago. It just didn't feel like anything of real substance...
It felt empty, and so it is to this day...
I know what you mean, Chris. Yes, it is a relief because now there's no ambiguity (or ambivalence) to pull one way and another at the same time. It turns out to be a bad play, a sardonic joke. And we took it seriously! Silly us. But that's okay. Clarity has a high value, no matter what it is we're clear about.
Over the past several years this feeling of "it's just a joke" has matured a lot. And I don't mean "it's a joke" in a sarcastic or cynical way. My perception these days of this human world is that it's so bad and crazy (with its inherent beauty and good stuff as well) that we just can't take it too seriously. A world where the innocent and kind are impoverished, imprisoned, riddled with disease, killed... Come on, it's got to be just a quirky, finite drama on the stage of Creation, the depth, import, and extent of which we know little if anything. Not that it doesn't have its purpose -- I think we all sense what that is. But at the same time, in its own terms, it's so rapacious and insane that (I feel) we're called upon to lay our benediction upon it, smile (a joke would not be out of place, depending), disengage from that matrix, and let Something Higher fill our being. I don't mean to wax stupidly sublime here... I'm trying to express something that's hard to put into words. And this is not something that hasn't been expressed here before, in one way and another. It's about perspective. Ultimately, I think we'll come to the realization that it all -- ALL -- has been taking place within our own Mind, our own larger Being. There's no place else for anything to take place. Maybe that's why the deepest beings who have take form here tend to be the lightest ones -- in both senses of the word.
I think that you hit it with that line Bob. It's about perspective. George Kavassilas got it right (I believe) when he made the comment about lore vs. law. If we are judgmental and lock into that mindset about finding fault, we entangle ourselves within the illusion of law.
If we see all of this as an amusing drama that creates opportunity for experiential growth then we are in lore instead of law. This has really taken root in me, ever since hearing GK mention that comparison. I really think it all can be reduced to this, lore vs. law.
Freeing up the mind to think outside the manufactured box of established convention of law, I find myself wandering if Obama is amused at all the silliness, or is he still caught up in the idea that what he is doing is important for some reason.
Maybe, just maybe he gets how silly all of this is and he is just rolling with the punches like the rest of us. I find more and more, with left and right brain, that there is absolutely no valid reason to judge anything as right or wrong, good or bad.
I long for a better understanding of lore - I sense it is a journey through the Heart...
I don't remember where I read this, but some nonphysical beings explain the way the universe works somewhat like this:
As holograms of infinite source (i.e. God), each of us has incarnated here to explore every type of experience - pleasant, painful, or indifferent.
Okay, that makes sense to a certain point, but how many millenia must we experience war, rape, hunger, cruelty, etc. before we've satisfied the quest to know what these things feel like? Shouldn't we be way past these physical trials by now?
Where is the prophesized "thousand years of peace?" Sign me up for that. I've had my fill of the other crap.
Part of me agrees with you, Noa -- the humanitarian, the rational one -- and I've said as much myself. But part is inclined to be more charitable towards "us." For one thing, these millenia of blindness and stupidity are just a second or so on the clock of life here on the planet. But even if we take that as being a long time, consider that we've been hobbled for a least the last 5 or 10,000 years by active attempts by those who have more knowledge and power to keep us blind and stupid -- like having a 100 lb. weight chained to our collective leg. We could say that without that "unfair" and somewhat successful attempt to hobble us , we'd be much farther along now -- scientifically, socially, and spiritually. But that weight itself may well be part of the training, as it were. It's likely that we're learning much and acquiring strength because of that weight. We'll throw it off -- because we're all getting more than tired of all the "crap," as you put. So in long run, we'll probably be kinder, smarter, more resilient, and more evolved than we would have been otherwise.
I am thoroughly convinced we will need to stop talking like victims if we are to ever achieve "escape velocity" so to speak. The gravitational pull of the collective psyche is much more a problem than the elusive powers that were.
This is where I really do agree wholeheartedly with George Kavassilas, that we (as sacred and divine sovereigns that cannot be harmed or destroyed) willingly and intentionally contracted with the so called devil, powers that be, incunabula, illuminati, advanced et's with despotic controlling agenda, whatever one wants to call "them", to create an arena, a space for this amazing experiential dynamic.
And the only way to ensure maximum experience is to enter the holographic realm with little to no memory of the set agreement for the experience. Talking like victims (of our own design) ensures that we postpone an awakening to the truth about ourselves and that intentional agreement.
I could easily left brain rationalize why the above statement is bogus and there really are victims. I choose not to because I want so bad for myself and the collective us to achieve "escape velocity" from this very entrenched subconscious psyche that has been developed and reinforced over eons of time. Talking like victims and looking for saviors is spinning our wheels at this point.
I couldn't be more excited about the prospect of where "we" are right now in this awakening process. I am thoroughly convinced that we cannot actually be harmed, for we are Sacred, and the literal meaning of sacred is "indestructible". We signed up for this and we are obviously up to the task or we would not have done so...
That is the logic I can sink my proverbial teeth into at this point... That said, I anticipate experiencing times ahead that will make me feel like shitting my pants, LOL, but I utterly refuse to ever see myself in the "light" of victimhood ever again...
It is utterly counterproductive and has been studied ad nauseum... I chose this! I completely trust I will remember why as soon as I am done with believing that this is happening to me... Two of the most common things we humans say to ourselves and others: "why is this happening to me?" and anything said or believed that projects fault away from one's self on to someone or something else (that one is a double whammy of delusion and judgmental entanglement)...
ohhh what a tangled web we weave...
(and just so no one gets the wrong impression, I speak from a lifetime of experience of putting myself and others through the useless minutia of this childish victimhood brand of crybaby shit... it has gotten me nowhere but the needless insanity of doing the same thing over and over and over again and expecting different results. My favorite brand of insanity is getting extremely mad at inanimate objects as if they could intentionally have anything to do with why it is not going well).
Ultimately, there are no bullies without someone being willing to play the victim...
p.s. and more to the point you just made in post above Bob, here is a passage from the latest Tom Kenyon - Hathors message received by many of us lately via email:
"The paradox and the difficulty is that you live in a dualistic universe, and virtually any action you take is met by a counter-force. This paradox and difficulty is like a metaphorical grain of sand in an oyster; it is irritating. But through the process of self-evolution, the irritation (i.e. duality) becomes a pearl, and paradoxically, something of value emerges from that which was problematic. But each Initiate must create this pearl of self-transformation for him or herself. No religion, no master, no teacher or guru can do it for you."
"It may sound too simplistic but, in our experience, the greatest evolutionary catalyst, and the greatest vibratory field of safety to bridge transition states (such as the one you are collectively entering), is through the heart, your heart."
At last! A little positive news on the banking front...
http://www.democracynow.org/2011/9/2/headlines#5
Banks to Face Federal Suits over Mortgage Securities
The federal agency responsible for overseeing mortgage markets is reportedly set to file a lawsuit against more than a dozen big banks for misrepresenting mortgage securities they sold during the housing bubble that preceded the nation’s financial meltdown. According to the New York Times, the Federal Housing Finance Agency is preparing lawsuits against firms including Bank of America, JPMorgan Chase, Goldman Sachs and Deutsche Bank. The lawsuits will accuse the banks of packaging and selling mortgage securities at inflated prices ultimately borne by U.S. taxpayers when the economy crashed in late 2008.
Goldman Sachs Subsidiary Agrees to End "Robo-Signing"
A Goldman Sachs subsidiary has struck an agreement with New York regulators to end many of its mortgage-related business practices. Goldman reached the settlement with New York State Department of Financial Services as a condition to its sale of its Litton Loan Servicing subsidiary to the firm Ocwen Financial. As part of the deal, Litton will hire an independent consultant to review foreclosures toward potential compensation to borrowers, as well as end the practice of "robo-signing" foreclosure documents without proper vetting.
..what a great rant my brutha, you know how we identify on alot of things that come up here. Well, that one really hit the spot with me. Every move I make these days, i am trying to guess the consequences of it, and what it might bring me. I seem to have caused great bodily harm to myself over this lifetime, only to pull off some miraculous healing process every time. Cuts, chemical explosions, car accidents, cancer,,,did I really do all that to myself ? The recurring theme seemed to be the healing part, as cancer led me to really delve deeper into what we are capable of, you know, the stakes were raised, so to speak...so things have calmed down the last couple of years, and I have tried to help anyone I came in contact with since going through it..then, this past Thursday, i am on my 10 mile or so ride home across New Orleans, in the beginning of the rains that have been here all weekend, and I get run off the road onto a slippery tree grating covered with leaves, and nearly have a major accident. But I manage to keep the bike up, and get away with a broken rib on impact,,yah, that was lucky..so, I fast on friday, pounding enzymes every few hours, and yesterday i am back on my bike, in the tropical storm, and enjoying it ! I will be back at work on Tuesday. i didn't think I needed to nearly kill myself anymore, but there I was, sliding down the bricks in downtown New Orleans,,Ha! I will leave that where it sits.
I read your post the other night, and couldn't comment on it right then, and tonight had to search, as i couldn't remember what post it was in,which brings me to my other point. i like the way this post about the bs in Washington turned into something actually interesting, ha! No offense about the Obama story, I sent it to my brother in Florida who is still trying to decide whether to walk from his house there. I just hate wasting energy reading about that crap, and feeding it, so to speak.But it was great to come back tonight and see Noa's comment with the lawsuit info regarding the people at the center of this, it counters the original story. Of course, it won't save all the people actually being affected by all this, it is just the blame game, with a payoff in the end...I am all for "Escape Velocity".....Peace
Glad you like that term. encapsulated all of it for me when it came to mind. rising through the sludge of my own brand of bs. seems the collective we have bought the lie,
hey, that's mine!
I have to go really bad, why are you in the bathroom right when I have to use it?
why's this always happening to me?
I could do better, but they won't let me.
I'm not as good at this as you are!
blah blah blah blah blah,
all you can eat baby!
this is still a subject that is very delicate and can only be discussed in certain circles (like here), but I truly believe that the romantic dramatic ego notions of victimhood are key to our understanding of reaching that spontaneous escape velocity that is so much a part of our natural order of being, once we get done believing all the experiential illusory stuff that counters that natural order of Being.
We never didn't have the choice... We have to come to the realization that we savor the "stuff", and then fade it with a smile and then a barrel laugh!!!!
So Be It...