12/15/2010 archive

Evening Edition

Evening Edition is an Open Thread

From Yahoo News Top Stories

1 EU ready to probe Thaci over organ trafficking claims

by Ismet Hajdari, AFP

20 mins ago

PRISTINA (AFP) – The Kosovo government rejected Wednesday allegations of Prime Minister Hashim Thaci’s involvement in organ trafficking and other crimes, but the European Union said it was ready to investigate.

A Council of Europe report accuses Thaci of heading a group within the ethnic-Albanian guerrilla Kosovo Liberation Army (KLA), which fought Serbia in 1998 and 1999, that set up a network of unofficial prisons in Albania.

It alleges one of Thaci’s allies operated a ring for the “forcible extraction of human organs for the purposes of trafficking” from the prisoners, mainly Serbs.

Title Fraud Smoking Gun Part 2

Well, it’s been longer coming than I expected but we finally have Part 2 of L. Randall Wray’s ‘Smoking Gun’ on Title Fraud available.  My treatment of the first part is here.

This one discusses the fatal flaws in the Securitization procedures for Mortgage Backed Securities and the multi-Trillion dollar exposure of the To Big To Fail Banks to defrauded holders of those worthless scraps of paper.

Worthless except for the fact that they are legally binding contracts which the Banks have agreed (legally) to buy back if there are flaws or fraud in the Banks’ representations of value.

The 2 things that give me some hope in this process is that the players holding the short end of the stick (the ones defrauded by the Banks) are financial heavy hitters who are just about as large as the Banks- PIMCO, Blackrock, The Federal Reserve Bank of New York; AND that the bulk of the action will take place in New York State Court instead of at the federal level where everyone in Washington seems to have been issued kneepads for Bankster Butt-licking.

Anatomy of Mortgage Fraud, Part II: The Mother of All Frauds

L. Randall Wray, Huffington Post

Posted: December 13, 2010 10:58 AM

By itself, all of this is a horrific scandal, involving up to 65 million mortgages — the number of mortgages registered at MERS, most of which presumably were subjected to MERS’s guidelines and extremely sloppy record-keeping. But like Shrek’s onion, it is much more complicated than that — with layer after layer of fraud piled on fraud. There are many angles to be explored, most of them too complex and arcane to be pursued in a short column. Here, in part two, I will discuss the implications for the securities that bundled the fraudulent mortgages registered at MERS. Not only did MERS defraud the counties out of their recording fees and the homeowners out of their homes, but it also helped to perpetrate securities fraud and federal tax fraud. Fortunately for the investors in these securities, the securitization process was fatally flawed, meaning that they can return to the issuing banks and demand their money back. But that implies, of course, that the banksters are hopelessly insolvent — on the hook for hundreds of billions of dollars.

Inevitably, they will turn to Uncle Sam for more handouts. Get ready for more backroom deals made by the Fed and Treasury to rescue firms like Bank of America. If you loved the first three rounds of this financial crisis, you will love the next six rounds as markets pummel Wall Street banks, with Uncle Sam as referee applying the smelling salts to revive it for yet another round (whilst its CEOs skim more billions off the top in compensation). Ultimately, it will not work. Wall Street will go down for the count — but probably not until it drags Main Street through a great depression that your great grandkids will study in the history books. And, by the way, they will laugh at the misguided efforts of the thoroughly compromised one-term Obama administration that focused its efforts at budget-balancing in the face of the worst headwinds America had ever seen.

But, as always with the Wall Street onion, things are worse when we dig deeper. Almost all of the residential mortgage backed securitizations were done under New York state law — which is even stricter than the REMIC requirements. That law wanted to make the securities as safe as possible, “bankruptcy remote” so that if the issuing banks failed, bank creditors could not come after the securitized mortgages — to seize the notes and recover losses. This is why it was essential that the notes and mortgages be physically conveyed to the trustees. Remember that the major banks are also owners of the servicers — so if the servicers retain the notes and the bank fails, the bank’s creditors might be able to claim the notes and mortgages. So according to NY state law it is the “Pooling and Servicing Agreement” that governs the securizations. These require that the notes and mortgages are held by the REMIC trustee. Indeed, they require that the trustee check to make sure all notes are conveyed; if there are any mortgages included in the “pool” without proper paperwork, then they must be replaced by mortgages with notes. All of this is supposed to be certified by the trustee as completed — usually within about six months. (For an excellent explanation of the details, see Yves Smith)

We now know beyond question that the notes were not typically transferred — both MERS’s own document as well as court testimony by top management of servicers make it clear that the “customary” practice was for the servicers to retain the notes. We also know that almost all securitizations were done in NY. And we know that the PSAs required transfer of the notes to the trustees — who were required to certify that this was done. From this we can conclude that a) the trustees either did not perform the certification, or they lied, and b) the securities are no good. Probably most of them; maybe all of them. Fraudulent.

The servicers are now "misplacing" all the documents, including the notes, associated with the mortgages on which they are foreclosing. The hope is that MERS and the mortgage servicing banks can get the properties, dispose of them in firesales, and pay pennies on the dollar to securities holders before they discover they’ve been scammed from here to Pluto. Hence it would seem the notes were not really lost, but rather are being destroyed to cover the fraud. And if this is true, MERS and the big banks are conspiring to commit foreclosure fraud as they destroy documents and create new counterfeit paper trails.

To recap, MERS’s own documents demonstrate beyond question:

  1. The notes were never transferred, as required by Federal and NY state law, to the trustees of the REMICs;
  2. At best, the notes were retained by the mortgage servicers as directed by MERS (many never left the mortgage brokers, many of whom are now bankrupt);
  3. MERS claims to own the notes and therefore the mortgages to speed foreclosure;
  4. Actually, MERS does not hold the notes, which are held by servicers, but MERS instead “deputizes” employees of the servicers so that it can claim notes are transferred “in house” to avoid paying recording fees as well as avoiding maintenance of clear chains of title;
  5. On foreclosure, the documents are “disappeared” because they demonstrate the notes were never endorsed and transferred as required by law, with MERS and the servicers filing “lost note affidavits” to dupe the judges into allowing illegal foreclosures to proceed and to dupe securities holders so that they do not demand restitution;
  6. Servicers ensure homeowners default, as they “lose” mortgage payments, credit them to the wrong accounts, or helpfully recommend to homeowners that they stop making payments–all of this is to speed foreclosure to ensure securities holders do not realize they have been duped as they are paid pennies on the dollar for toxic securities;
  7. This also ensures that the investment banks that originated the toxic securities win their credit default swap bets they placed against the homeowners, with favored hedge fund managers like Paulson also winning CDO bets on failures;
  8. The faster the foreclosures can be processed through manufacture of fraudulent documents by Robo-signers, the lower the chance that MERS and all of its clients will be brought to justice.

There is a community of interests that can bring together the securities holders (including PIMCO and the NYFed) and the defrauded homeowners to stop the illegal foreclosures. The best thing for the investors is to demonstrate that the securities are fraudulent because the underlying mortgages did not meet the representations and because the notes were not legally transferred.

Since the securities investors will be able to force the banksters to take back the securities, the loss minimizing solution for banks is to stop the foreclosures that are depressing real estate prices. That can then buy time to modify the mortgages to ensure homeowners can stay in the homes and service their debt. Instead, the banks are pushing for Congress to retroactively legalize the frauds they perpetrated against counties, borrowers, and investors. As always, Wall Street wants someone else to pay for its crimes — and is willing to destroy the property rights that are fundamental to a system based on private property in order to protect CEO compensation on Wall Street.

Here is the alternative solution President Obama needs to consider.

  • An immediate moratorium on foreclosures of any mortgages that are, or ever were, registered at MERS;
  • Declare all outstanding fraudulent securities null and void, require securitizing banks to make restitution to investors, and sue the banks for restitution of the back taxes owed by REMICs;
  • If this makes the banks insolvent, begin to resolve them, shutting them down;
  • Prohibit Fannie and Freddie and any chartered bank from dealing with MERS, which is an organization formed to perpetrate fraud;
  • Investigate MERS for fraudulent activity, require restitution of all county recording fees that were evaded, and punish the guilty;
  • Formulate a policy to help homeowners who have been victims of lender fraud, with a goal of reducing mortgage payments to something they can afford; and
  • Let Congress know he will veto any legislation that legalizes the fraud perpetrated by MERS, by mortgage servicers, and by originating and securitizing banks.

These actions will help to restore the rule of law, while punishing the guilty. And stopping (illegal) foreclosures will reduce the pressure on real estate prices. By itself this will not put the US on the road to recovery, but it is certainly a step in the right direction.

Wray promises a Part 3.

Objectively Worse Than President McCain

Is it Time for Democrats to Fight Obama?

Cenk Uygur, Huffington Post

Posted: December 15, 2010 10:43 AM

You want to hear something really depressing? If John McCain had won the presidency, there is almost no chance he could have gotten the Bush tax cuts extended for the rich. Think about it. How was a Republican president going to get an overwhelmingly Democratic Senate and House to pass those tax cuts that they hated under Bush?

No, only a Democratic president could get a Democratic Congress to agree to tax cuts for the rich. So, in this sense, progressives are worse off for having a Democratic president than a Republican one.

Democrats would certainly have fought a surge in Afghanistan if Bush was in charge. They would be complaining about warrantless wiretapping if Bush continued that program instead of Obama. They would have hated the monopoly that drug companies got in the health care legislation (because they went nuts over it when Bush made the same deal). And they would have gone apoplectic over these huge tax cuts for the rich. But under Obama, the defense contractors, the rich and the powerful have gotten almost everything they wanted and nary a peep was heard from the Democrats in Congress.

Here is the new memo – fight him, he’s not on your side.

As was shown in 2010 and will be again in 2012.

Anyone who claims to care about Electoral Victory is a LIAR!


‘Democrat’ Is No Longer A Brand

Howard Fineman, Huffington Post

Updated: 12-15-10 07:23 AM

As the lame duck tax debate slogs towards its inevitable conclusion — nearly $1 trillion worth of extended and new tax cuts over two years — I’m wondering: what does the brand “Democrat” mean?

The fact that extension is being touted by the White House as a major “get” is a sad commentary on how far to the right our politics is now moving, no matter how many times Tea Party types call Obama a socialist.

Isn’t a nearly $1 trillion bill full of tax cuts and industry giveaways what Republicans do? Isn’t a bill with an absurdly generous inheritance tax break what Republicans write? Aren’t Democrats the “party of the people?” Aren’t they the party that believes government programs and policies have a role to play in leveling the playing field, or at least giving everyone a fair chance? Aren’t the Democrats worried that all of this tax cutting now will starve the social programs they supposedly cherish? Do they know that they won’t be able to push through a change in taxes in 2012 over GOP objections if the economy in fact improves?

And if they do vote “yes” for the most part, what does it signify — other than a desperate desire for survival — about the meaning of “Democrat?”

It means “Coward”.

Thanks for nothing Barack.

Punting the Pundits

“Punting the Pundits” is an Open Thread. It is a selection of editorials and opinions from around the news medium and the internet blogs. The intent is to provide a forum for your reactions and opinions, not just to the opinions presented, but to what ever you find important.

Thanks to ek hornbeck, click on the link and you can access all the past “Punting the Pundits”.

Robert Reich: Why America’s Two Economies Continue to Drift Apart, and What Washington Isn’t Doing About It

America’s two economies are getting wider apart.

The Big Money economy is booming. According to a new Commerce Department report, third-quarter profits of American businesses rose at an annual record-breaking $1.659 trillion – besting even the boom year of 2006 (in nominal dollars). Profits have soared for seven consecutive quarters now, matching or beating their fastest pace in history.

Executive pay is linked to profits, so top pay is soaring as well.

Higher profits are also translating into the nice gains in the stock market, which is a boon to everyone with lots of financial assets.

And Wall Street is back. Bonuses on the Street are expected to rise about 5 percent this year, according to a survey by compensation consultants Johnson Associates Inc.

But nothing is trickling down to the Average Worker economy. Job growth is still anemic. At October’s rate of only 50,000 new private-sector jobs, unemployment won’t get down to pre-recession levels for twenty years. And almost half of October’s new jobs were in temporary help.

Meanwhile, the median wage is barely rising, adjusted for inflation. And the value of the major asset of most Americans – their homes – continues to drop.

Why are America’s two economies going in opposite directions?

Eugene Robinson: A Wiki Hornets Nest

Washington – The most important legacy of the WikiLeaks affair will almost surely be the rapidly escalating cyberwar that the group’s renegade disclosures have sparked. If you think you’re unaffected by unseen “battles” fought with keystrokes instead of bullets, you’re wrong.

At stake are issues of free speech, censorship, privacy, piracy, sovereignty and corporate power. We may know what we think about these concepts, but applying real-world logic to the Internet leads to unacceptable conclusions — such as sympathy for the goons in Iran or China who suppress anti-government political speech. This is, of course, out of the question. Which means sympathy for WikiLeaks nihilists who don’t deserve it.

Megan Tady: Mere Hours Left to Save Net Neutrality

I don’t want to be overly dramatic here, but there are just hours left to save the Internet.

Tomorrow, the FCC stops taking meetings and accepting official comments on its proposed Net Neutrality rules. But until then, we’re using every minute we have to remind the FCC that the public overwhelmingly wants real Net Neutrality, not a fake compromise with the phone and cable companies that will effectively kill free speech and innovation online.

Earlier this month, FCC Chairman Julius Genachowski released a proposal that is Net Neutrality in name only. While details are still scarce, the Genachowski proposal reportedly would not offer the same protections to wireless Internet users as it would to those using wired connections.

On This Day in History: December 15

This is your morning Open Thread. Pour your favorite beverage and review the past and comment on the future.

Find the past “On This Day in History” here.

December 15 is the 349th day of the year (350th in leap years) in the Gregorian calendar. There are 16 days remaining until the end of the year.

On this day 1791, Virginia becomes the last state to ratify the Bill of Rights, making the first ten amendments to the Constitution law and completing the revolutionary reforms begun by the Declaration of Independence. Before the Massachusetts ratifying convention would accept the Constitution, which they finally did in February 1788, the document’s Federalist supporters had to promise to create a Bill of Rights to be amended to the Constitution immediately upon the creation of a new government under the document.

After the Constitution was ratified in 1789, the 1st United States Congress met in Federal Hall in New York City. Most of the delegates agreed that a “bill of rights” was needed and most of them agreed on the rights they believed should be enumerated.

Madison, at the head of the Virginia delegation of the 1st Congress, had originally opposed a Bill of Rights but hoped to pre-empt a second Constitutional Convention that might have undone the difficult compromises of 1787: a second convention would open the entire Constitution to reconsideration and could undermine the work he and so many others had done in establishing the structure of the United States Government. Writing to Jefferson, he stated, “The friends of the Constitution…wish the revisal to be carried no farther than to supply additional guards for liberty…and are fixed in opposition to the risk of another Convention….It is equally certain that there are others who urge a second Convention with the insidious hope of throwing all things into Confusion, and of subverting the fabric just established, if not the Union itself.”

Madison based much of the Bill of Rights on George Mason’s Virginia Declaration of Rights (1776), which itself had been written with Madison’s input. He carefully considered the state amendment recommendations as well. He looked for recommendations shared by many states to avoid controversy and reduce opposition to the ratification of the future amendments. Additionally, Madison’s work on the Bill of Rights reflected centuries of English law and philosophy, further modified by the principles of the American Revolution.

Tax Cuts, Deficits and Bonds! Oh My!

Visit msnbc.com for breaking news, world news, and news about the economy

Moody’s says tax cut deal risks U.S. credit rating

Moody’s Investors Service said in a Monday report that the tax-cut deal hammered out between President Obama and congressional Republicans jeopardizes the Aaa credit rating enjoyed by U.S. Treasury bonds. The package could add $900 billion to the national debt, if it is made permanent, and this increases the chances the U.S. would one day default on its debt.

“From a credit perspective, the negative effects on government finance are likely to outweigh the positive effects of higher economic growth. Unless there are offsetting measures, the package will be credit negative for the US and increase the likelihood of a negative outlook on the US government’s Aaa rating during the next two years,” Moody’s analyst Steven Hess writes.

Hess writes that the higher economic growth from the tax cuts and unemployment benefits might be substantial, but the effect of the growth on budget deficits will be less than the effect of the foregone revenue and increased spending.

He notes that the Congressional Budget Office has found that the package would raise the ratio of debt-to-gross domestic product from 61.6 percent to 68.5 percent by 2012.

Prime Time

I Want a Dog for Christmas, Charlie Brown!.  Some premiers.

As attentive readers know I am firmly of the belief that the time you most need blogs to distract you from the chaos of meat space is during the holidays when you have to deal with the unfortunate realities of your relatives.  It turns out that this year I’ll not have to stray too far from Stars Hollow so I’m prepared to provide my usual public service of creating excuses.

Not everyone is as addicted to mindless entertainment as I am and contributors who consider their time better spent in other pursuits are hereby released from whatever perceived obligations they have.  I’ll try and keep up as best I can, but I expect slowness and disruption of settled routines which always makes me cranky and out of sorts.

And then January 4th we’ll celebrate the Six Month Anniversary of The Stars Hollow Gazette and attempt a return to normalcy (such as it is).


Dave hosts Paul Rudd, Chris Russo, and Joanna Newsom.  Jon has Ricky Gervais, Stephen Stephen Sondheim.  Conan hosts Seth Green, Tim Meadows, and Broken Bells.

BoondocksA Date With the Booty Warrior.

Zap2it TV Listings, Yahoo TV Listings

Evening Edition

Evening Edition is an Open Thread

From Yahoo News Top Stories

1 Assange back in British jail after bail ruling challenged

by Danny Kemp, AFP

1 hr 1 min ago

LONDON (AFP) – WikiLeaks founder Julian Assange won bail from a British court Tuesday over sex crimes claims but must stay in jail for at least another night after Swedish prosecutors appealed against the decision.

The 39-year-old Australian had given a thumbs-up to the packed courtroom in London as the judge granted him conditional bail, one week after being arrested at the request of Swedish authorities.

But two hours later, lawyers for Swedish prosecutors announced that they would appeal the ruling, meaning the case will now go to Britain’s high court and a new hearing must be heard within 48 hours.