Oh My! People are running about saying that the banks, particularly the BIG banks, are now mired in a “Foreclosure Crisis” as the discovery of forged, fraudulent paperwork underlying tons of rubber stamped mortgages has forced BofA and others to halt their seizure of homes. But really, wasn't it obvious from the start that all these loans were based on vapor? Isn't that why the banks set up massive boiler room loan origination operations that all mysteriously vanished when the first wave of defaults started to hit the fan? Isn't it why the industry itself coined the phrase “Liar Loans” or NINJA loans (No Income, No Job or Assets)? And didn't all these upstanding bank “officers” who presided over the “origination” and “processing” of these loans all know the transactions were based on very thin paperwork—in many cases, no paperwork, or forged documents churned out by special banking industry “service” companies who would provide any missing document for the low rate of $39.95? And isn't this why all these loans were quickly sliced up and shunted off to fun financial “instruments” called Mortgage Backed “Securities” (What a misnomer!) The idea, from the very first, was to crank up the mortgage machine, “create” millions of bad loans, then wrap them up in fraudulently rated securities and sell them off to pension funds, insurance companies, municipalities, or better yet, sovereign wealth funds and foreign “investors.” Then roll out the Burgie with the bonus money and book those reservations in the Bahamas.
That was our banking industry, all these folks who parade around in suits and ties and nice white shirts and present themselves as upstanding citizens, the backbone of capitalism. But greed, fraud and malfeasance were not enough. The banks were also just plain stupid, and ended up also holding billions of swaps and trades in each other's dirty laundry. So when the loans went bad and the banks all realized they were basically bankrupt, they simply lobbied congress to allow changes to the accounting rules that would let them value all these bad loans as if they were all backed with gold bullion, assigning them any value they wished with their “mark to model” shenanigans. Anything they couldn't twist their way favorably was just buried somewhere in an accounting landfill they called “Level Three,” a place the mafia used to call “the other set of books.” Then someone shouted panic, martial law, and trillions in public taxpayer money was quietly transferred to the banks to bail them out. The Fed balooned its balance sheet by accepting trillions more in toxic paper as “assets” against near zero interest loans, and wonder of wonder, instead of lending again the banks just took that free money at 0.25% interest and went out and bought Treasuries at 4% interest. Who needs the sub prime chumps any longer?
Phase three of the scam, now that the marks realized they had been taken to the cleaners, was to go out and start confiscating all that real estate—property the banks effectively “bought” when they issued the bad loans. And keep one other salient fact in mind—the banks were not using money you and I deposited for safekeeping when they “made” all these loans. That was all long gone. Using the miracle the industry calls “fractional reserve lending” the banks get to simply create money they loan, from nothing. What a job! The banks write bogus loans, using money fabricated on the spot when the loan is “funded,” then they wait a few quarters while they party with the bonus money, and when the loan blows up taking down a family or a few careers when it does, they doctor up a stack of forged documents and “foreclose,” collecting all that prime real estate. Try that in your next Monopoly game.
But the saddest thing about all this is that the SEC, FBI, CIA, BBB, and Attorneies General in all 50 states were apparently deaf, dumb and mute throughout the whole process. Worse yet is that “Change.gov” has done nothing whatsoever to face, fix, or solve the problem, because most of the government is bought, paid for and actually run by – wait for it – ex-bankers! Their work done, they quietly resign their government posts to get back to the real money where they came from.
Folks, I haven't posted for a long while, or written about these issues, because, quite frankly, I told you all of this years ago, right while it was all happening in the boom times of real estate heaven, when all those bankers were in your foyer competing for your “business,” and the slow ones were complaining that “damn, I lost another loan to Ditech.” This is what was going on while Bush and Cheney were launching their oil wars and waving Osama Bin Ladin puppets about, firing up those “terrorist” alerts and coding our days yellow, orange or red while they systematically dismantled the constitution—for our safety, of course.
All the while the real terrorists were sitting in the sanctified chambers of Citibank, Countrywide, BofA, Chase, Wells Fargo, and let not forget Goldman Sachs. Those were the men that destroyed the nation. They did more harm than ten thousand Osamas could have ever imagined, and guess what—they're still getting paid for it, in amounts that topple one record after another, year after year.
Isn't capitalism wonderful?
For the record.... A few article I wrote on the subject back in the good old days.
B.S.O.D. (Blue Screen Of Death)
Nuff said.
