Sunday, October 24, 2010

Big Problem for Banks: Due Proces

Earlier this week, Bank of America, the nation’s largest consumer bank, reported its third-quarter earnings. It was a very good quarter; putting aside an accounting charge — a very large, $10.4 billion accounting charge, admittedly — the bank reported $3.1 billion in profits. It was the third consecutive quarter that Bank of America had earned more than $3 billion.

During the ensuing conference call Tuesday morning, there was the requisite chest-thumping from Brian Moynihan, the chief executive, and Chuck Noski, the chief financial officer. But there was also something else: tough talk about two big legal problems the bank faces as a result of the subprime bubble. Not surprising, it was the latter that caught my attention.

Like everyone else, I’d been reading with amazement the stories about one of those legal problems: the robo-signing scandal that has ensnared all the banks with mortgage servicing subsidiaries, Bank of America included. That’s the scandal in which a tiny handful of employees had signed — or allowed others to forge their signatures — on thousands of affidavits confirming that the banks had the legal right to foreclose on properties they serviced. In truth, they had often never seen the documents proving the bank had that legal right. In some cases, the documents didn’t even exist. As a result of the mounting publicity, many big banks had halted all foreclosures while they reviewed the legality of their affidavits.

Mr. Moynihan said that, at Bank of America, at least, the foreclosure halt in 23 states that require judicial proceedings was over. It had reviewed some 102,000 affidavits and — guess what? — no big problem! “The teams reviewing data have not found information which was inaccurate” or that would change the plain facts of foreclosure — namely that the homeowners it wanted to foreclose on were in serious arrears.

Thus the bank’s central position is that, since it is so doggone obvious that the homeowners can’t pay their mortgages, the fact that the affidavits might not have complied with the law shouldn’t cause anyone to break into a sweat. At one point Mr. Noski actually said, “I think it’s a big issue because people are losing homes. It’s not a big issue” for the servicers. Glad he cleared that up.

The prospect of a second legal assault is more recent. Shortly before the earnings call, Bank of America received a letter from a lawyer representing eight powerful institutional investors, including BlackRock, Pimco and — most amazing of all — the New York Federal Reserve. The letter was a not-so-veiled threat to sue the bank unless it agrees to buy back billions of dollars worth of loans that are in securitized mortgage bonds the investors own.

Mainly, they are saying that Bank of America was servicing loans in these bonds that the bank knew violated the underwriting standards that the investors had been led to believe the bank was conforming to. What’s more, they said, the bank had never come clean about all the bad loans, as it was required to do. Therefore, say the investors, the bank has a contractual obligation to buy back the bad loans.

During the conference call, Mr. Moynihan and Mr. Noski made it clear that Bank of America was going to use hand-to-hand combat to fight back these claims. “We’re protecting the shareholders’ money,” Mr. Moynihan said. Mr. Noski questioned whether the investors even had the right to bring the case. “We continue to review and assess the letter and have a number of questions about its content including whether these investors actually have standing to bring these claims,” he said.

So there you have it. Having convinced millions of Americans to buy homes they couldn’t afford, Bank of America is now revving up its foreclosure efforts on these same homeowners. At the same time, having sold tens of thousands of these same terrible loans to investors, it is going to spend tens of millions of dollars on lawyers to keep from having to buy back their junky loans.

Apparently, being the biggest bank in the country means never having to say you’re sorry.

Felix Salmon Explains Why Lawsuits Are Flying At Banks Who Turned Crap Into Triple AAA (Mortgage Mess TV) »

Video: Felix Salmon says investment banks face massive legal risk due to the way they built their mortgage bonds. He explains EXACTLY how banks built these bonds - with lies and cover-ups every step of the way.

Runs just 2 minutes.

Story background:

80% of Citigroup's mortgages were defective

Chris Whalen Explains Foreclosures, Loan Put Backs & Bank Risk

David Faber: Mortgage Put-Backs Don't Require Fraud Just Inaccuracy

---

Video: Felix Salmon says investment banks face massive legal risk due to the way they built their mortgage bonds.

I’ve been getting a lot of good feedback about my post yesterday on the way in which just about every major investment bank in the world might have huge legal risk surrounding the way that they built their mortgage bonds. The stock market in general might be relatively sanguine about the mortgage mess, but bank stocks are falling, and I suspect that the worst is yet to come. Certainly the tail risk to the banking industry as a whole is as high as it’s been since TARP was first unveiled.

---

« MUST SEE PHOTO: Double the Stimulus Double The Fun »

Spotted near Chicago

Obama is spending $200 million on stimulus signs. 1-minute clip to prove it.

#

Video: Be a Citizen Watchdog -- $192 million for stimulus signs

I realize that the video mentions $20 million, but as you will see in the above link, some have pegged the total number at almost $200 million. And for the record, I trust Republicans no more than Democrats. Both play the same lying game, and both are addicted to the Washington spending machine.

Darrell Issa has put together the following website:

---

Making The American Wage Slave

No where does it say you have to get a mortgage to buy a house.

But the federal government through the phony-auspices of preventing economic collapse is funding the banks so they can throw people out of their homes, and so that the price of housing does not collapse from its ridiculously inflated level, so people have to get a mortgage -to buy back into a home due to this government-sponsored artificially high price of a home.

This is not benefiting the consumer or the economy. The economic collapse is simply accelerating. And the consumer is losing economic where-with-all every week due to the accelerating collapse of the economy.

More people are ending up homeless, and the banks are requiring ever more bailout funding from the federal government to keep the ruse of recovery going.

These trillion dollar hail Mary passes being repeatedly thrown at the bankers are hardly rebuilding the economy. The original assertion was that the 700 billion TARP dollars urgently needed to be thrown with no questions asked at the bankers, would prevent economic Armageddon.

It looks like economic Armageddon to me with all these people living homeless in this country, so many desperate for work, and more and more futures being destroyed due to our government's ridiculously corrupt banking bailout efforts -that can only be taken to be meant to create wage slaves of everyone who is still working.

No where does it say you have to get a mortgage to buy a house.

In fact, with the massive glut of housing in this country, all of it being financially-backed by Freddie Mac and Fannie Mae, two government sponsored boondoggles meant only to give most-favorite treatment to the banking industry during this massive deflationary-depression-downturn, with that massive glut of housing, anyone who still has the money and interest enough to buy a house -should be able to buy a house -naming their own price.

Most property in the town I live -is not even worth paying for the property tax, -literally!

But go online to these banks that have such a huge backlog of foreclosed housing. Look at their REO lists, if you can find their REO list. And what are they talking about?

They are selling mortgages.

These banks are not selling the real estate they own that is crumbling to dust and mildew in this country.

The banks are selling mortgages, while hiding the real estate they own because it is a huge embarrassment that so much real estate is empty -in the hands of so many corrupt and bailed-out bankers -who have no capacity to maintain or keep vital, such an expansive inventory list of vacant housing.

The banks are sitting back demanding buyers FIRST find a mortgage deal. And then the bank will talk to you about the housing they want to sell you, the housing they own, and the price they want you to pay for it -over the next 30 years of your life -and your wage slavery to the banks.

No.

This new wage slavery is being wholly sponsored by the financial malfeasance of the federal government through Freddie Mac and Fannie Mae.

This is the government's economic plan for recovery of the American economy? Repeatedly throwing trillions in bailout money at the banks -so that the banks in this country can put the next generation of Americans so far behind the financial security eight ball that they have to slave for the next thirty years just to keep a roof over their heads?

Go fuck yourself, TimGeithner, Barack OBama
and Ben Bernanke.

7 banks closed in Fla., Ga., Ill., Kan., Ariz.

WASHINGTON (AP) -- Regulators on Friday shut down a total of seven banks in Florida, Georgia, Illinois, Kansas and Arizona, lifting to 139 the number of U.S. banks that have fallen this year as soured loans have mounted and the economy has sputtered.

The Federal Deposit Insurance Corp. took over the banks, the largest of which by far was Hillcrest Bank, based in Overland Park, Kan., with $1.6 billion in assets.

A newly chartered bank subsidiary of Boston-based NBH Holdings Corp. was set up to take over Hillcrest's assets and deposits. The new subsidiary is called Hillcrest Bank N.A.

The FDIC and Hillcrest Bank N.A. agreed to share losses on $1.1 billion of the failed bank's assets. Its failure is expected to cost the deposit insurance fund $329.7 million.

Also shuttered were First Bank of Jacksonville in Jacksonville, Fla., with $81 million in assets; Progress Bank of Florida, based in Tampa, with $110.7 million in assets; First National Bank of Barnesville in Barnesville, Ga., with $131.4 million in assets; Gordon Bank of Gordon, Ga., with $29.4 million in assets; First Suburban National Bank in Maywood, Ill., with $148.7 million in assets; and First Arizona Savings, based in Scottsdale, Ariz., with assets of $272.2 million.

Ameris Bank, based in Moultrie, Ga., agreed to assume the assets and deposits of First Bank of Jacksonville. Bay Cities Bank, based in Tampa, is buying the assets and deposits of Progress Bank.

United Bank, based in Zebulon, Ga., is assuming the assets and deposits of First National Bank of Barnesville, while Morris Bank of Dublin, Ga., is assuming the deposits and $11.5 million of the assets of Gordon Bank. The FDIC will retain the rest for eventual sale.

Seaway Bank and Trust Co., based in Chicago, is assuming the assets and deposits of First Suburban National Bank.

The FDIC was unable to find a buyer for First Arizona Savings, and it approved the payout of the bank's insured deposits. The agency said it will mail checks to depositors for their insured funds on Monday.

In addition, the FDIC and Ameris Bank agreed to share losses on $60 million of First Bank of Jacksonville's loans and other assets. The FDIC and Bay Cities Bank are sharing losses on $82.6 million of Progress Bank of Florida's assets, while the agency and United Bank are sharing losses on $107.3 million of First National Bank of Barnesville's assets.

The FDIC and Seaway Bank and Trust are sharing losses on $116.6 million of First Suburban National Bank's assets.

The failure of First Bank of Jacksonville is expected to cost the deposit insurance fund $16.2 million; the failure of Progress Bank of Florida is expected to cost $25 million; that of First National Bank of Barnesville, $33.9 million; that of Gordon Bank, $9 million; First Suburban National Bank, $31.4 million; and First Arizona Savings, $32.8 million.

Florida, Georgia and Illinois are among the states hardest hit by bank collapses, stemming from the meltdown in the real estate market that brought an avalanche of soured mortgage loans. The shutdowns Friday brought the number of bank failures in Florida this year to 27, and to 16 each for Georgia and Illinois.

With 139 closures nationwide so far this year, the pace of bank failures exceeds that of 2009, which was already a brisk year for shutdowns with a total of 140. By this time last year, regulators had closed 106 banks.

The pace has accelerated as banks' losses mount on loans made for commercial property and development. Many companies have shut down in the recession, vacating shopping malls and office buildings financed by the loans. That has brought delinquent loan payments and defaults by commercial developers.

The 2009 total of bank failures was the highest annual tally since 1992, at the height of the savings and loan crisis. The 2009 failures cost the insurance fund more than $30 billion. Twenty-five banks failed in 2008, the year the financial crisis struck with force; only three succumbed in 2007.

The growing bank failures have sapped billions of dollars out of the deposit insurance fund. It fell into the red last year, and its deficit stood at $15.2 billion as of June 30.

The number of banks on the FDIC's confidential "problem" list jumped to 829 in the second quarter from 775 three months earlier, even as the industry as a whole had its best quarter since 2007, making $21.6 billion in net income. Banks with more than $10 billion in assets -- only 1.3 percent of the industry -- accounted for $19.9 billion of the total earnings.

The FDIC expects the cost of resolving failed banks to total around $52 billion from 2010 through 2014.

Depositors' money -- insured up to $250,000 per account -- is not at risk, with the FDIC backed by the government. That insurance cap was made permanent in the financial overhaul law enacted in July.

French pension reform vote passed by parliament

Controversial legislation that has provoked a wave of strikes narrowly makes it through upper house

Lille pension reform demonstration A protester in Lille wearing a mask depicting French president Nicolas Sarkozy at a demonstration against the government's pension reforms, which have been voted through the upper parliament. Photograph: Sylvain Lefevre/EPA

The French parliament has narrowly given its approval to the pension reforms which have caused a wave of strikes, demonstrations and protests across France, leading to traffic chaos and petrol shortages.

The senate voted 177 to 153 to approve measures including a rise in the official retirement age from 60 to 62. The lower house, the national assembly, had earlier given its assent.

The vote came after the right-of-centre government of President Nicolas Sarkozy used emergency clauses in the constitution to push through the reforms. The reforms had stalled in the senate after opposition members tabled hundreds of amendments leading to three weeks of debate.

Following tonight's vote, one final vote will be taken by both houses next week, after which the reform becomes law. "This is a serious moment, because it is clear, responsible and courageous," labour minister Eric Woerth said as he ended the debate in the senate. He added: "It is not by looking to the past that we will preserve our social model."

Jean-Pierre Bel, the opposition spokesman in the senate, warned the government: "You haven't finished with pensions. You have ignored what the French people have expressed, you have listened to none of our proposals. Your reform is unfair."

Sarkozy's government used a special constitutional clause to speed up the vote in the upper house after senators spent more than three weeks debating various clauses and amendments, many of them advanced by members of the Socialist party opposition and aimed at derailing the reforms.

Legislators – mostly opposition Socialists – submitted 1,237 amendments, but Sarkozy's conservative UMP party and its allies have a majority and dismissed nearly all of them.

Afterwards, the Socialist party leader Martine Aubry criticised the "heavy measures" used by Sarkozy.

Pierre Laurent, the leader of the Communist party, said: "This ultimate provocation will not stop the will of the people, and cannot but increase the protests."

Since September, the proposed reforms have provoked riots and demonstrations which have affected France's transport system, and seen schools, colleges, ports and airports blockaded, and led to the pumps running dry at petrol stations.

And today the government sent in riot police to clear the blockades at some of France's 12 oil refineries.

Student unions have called for a further day of action next Tuesday, urging students to organise sit-ins at their schools and colleges. They say the protests are aimed at showing they can mobilise supporters during the half-term holidays, which begin this weekend.

Sarkozy has said that overhauling the pension system is vital to ensuring that future generations receive any pensions at all. It is a choice many European governments are facing as populations live longer and government debts soar.

But French unions say that retirement at 60 is a hard-earned right, and claim the working class will be unfairly punished by the reforms. They also fear that pensions is the first step in dismantling an entire network of benefits that make France an enviable place to work and live.

French pension reform vote passed by parliament

Lille pension reform demonstration

A protester in Lille wearing a mask depicting French president Nicolas Sarkozy at a demonstration against the government's pension reforms, which have been voted through the upper parliament. Photograph: Sylvain Lefevre/EPA


The French parliament has narrowly given its approval to the pension reforms which have caused a wave of strikes, demonstrations and protests across France, leading to traffic chaos and petrol shortages.

The senate voted 177 to 153 to approve measures including a rise in the official retirement age from 60 to 62. The lower house, the national assembly, had earlier given its assent.

The vote came after the right-of-centre government of President Nicolas Sarkozy used emergency clauses in the constitution to push through the reforms. The reforms had stalled in the senate after opposition members tabled hundreds of amendments leading to three weeks of debate.

Following tonight's vote, one final vote will be taken by both houses next week, after which the reform becomes law. "This is a serious moment, because it is clear, responsible and courageous," labour minister Eric Woerth said as he ended the debate in the senate. He added: "It is not by looking to the past that we will preserve our social model."

Jean-Pierre Bel, the opposition spokesman in the senate, warned the government: "You haven't finished with pensions. You have ignored what the French people have expressed, you have listened to none of our proposals. Your reform is unfair."

Sarkozy's government used a special constitutional clause to speed up the vote in the upper house after senators spent more than three weeks debating various clauses and amendments, many of them advanced by members of the Socialist party opposition and aimed at derailing the reforms.

Legislators – mostly opposition Socialists – submitted 1,237 amendments, but Sarkozy's conservative UMP party and its allies have a majority and dismissed nearly all of them
.
Afterwards, the Socialist party leader Martine Aubry criticised the "heavy measures" used by Sarkozy.
Pierre Laurent, the leader of the Communist party, said: "This ultimate provocation will not stop the will of the people, and cannot but increase the protests."

Tarpley: US exports depression to China

Click this link ..... http://revolutionarypolitics.tv/video/viewVideo.php?video_id=12954&title=tarpley--us-exports-depression-to-china

On US Elections - 'It's more of the same' - Gerald Celente on The Financial Sense Newshour 19 Oct 2010

Click this link ...... http://revolutionarypolitics.tv/video/viewVideo.php?video_id=12953&title=on-us-elections----it-s-more-of-the-same----gerald-celente-on-the-financial-sense-newshour-19-oct-2010

Nation's Biggest Banks Each Hold over $20B in Foreclosures: Report

New data released this week shows that the nation’s largest banks are holding monstrous volumes of soured home loans. Not only has the housing crisis left major lenders knee-deep in an ocean of non-performers, but added exposure to early delinquencies means they could sink even deeper.

According to an analysis by Weiss Ratings, an independent ratings agency covering the financial sector, JPMorgan Chase, Bank of America, and Wells Fargo each reported more than $20 billion in single-family mortgages currently foreclosed or in the process of foreclosure as of midyear.

In addition, Weiss found that for each dollar these banks held of mortgages in foreclosure, there were an additional $2 in loans in the pipeline that were 30 days or more past due.

Among all U.S. banks, JPMorgan Chase has the largest volume of mortgages in foreclosure or foreclosed with $21.7 billion. On top of that, the company has $43.4 billion more in mortgages past due.

Compared to JPMorgan, Bank of America has a somewhat smaller volume of foreclosures — $20.3 billion — but it has a larger pipeline of past-due mortgages at $54.6 billion.

Wells Fargo’s foreclosures come to $20.5 billion, with $48 billion in overdue home loans. According to Weiss, including all foreclosed and delinquent categories, Bank of America has the largest volume of bad mortgages among U.S. banks, with $74.9 billion, while Wells Fargo has the second largest with $68.6 billion.

Other banks, despite their large size, are less heavily exposed to mortgage difficulties. Citibank has $6.3 billion in foreclosures and $19.2 billion in past-due mortgages, or a total of $25.6 billion.

The volume of foreclosures and delinquencies held by other large banks, such as U.S. Bank ($9.5 billion), PNC Bank ($8.9 billion), and SunTrust ($7.3 billion) is even smaller.

Martin D. Weiss, chairman of Weiss Ratings, said, “In addition to the volume of bad mortgages, the vulnerability of each bank to the foreclosure crisis depends on the capital and loan loss reserves it has set aside to cover losses and other factors such as its earnings, liquidity, reliance on less-stable deposits, and the quality of its overall loan portfolio.”

Among banks with $1 billion or more of mortgages already foreclosed or in process of foreclosure, Weiss found that Wells Fargo has the greatest exposure to bad mortgages in proportion to its capital. For each dollar of Tier 1 Capital, the bank has 75.4 cents in bad mortgages, or a ratio of 75.4 percent.

The equivalent ratios for JPMorgan Chase, Bank of America, and SunTrust are 66.8 percent, 66 percent, and 57.6 percent, respectively.

Weiss explained that losses on foreclosures and past-due loans will first be absorbed by the banks’ loan loss reserves, but then they may have to dip into capital.

“Considering that many large banks also take other kinds of risks beyond strictly home mortgages,” Weiss said, “these are very large exposures that could directly impact shareholders and even the safety of depositors.”

Reflecting both their exposure to foreclosures and the other economic factors, the JPMorgan, BofA, and Wells all merit a rating of D (“weak”) or lower from Weiss Ratings, indicating vulnerability to financial difficulties and instability if conditions continue to deteriorate.

The Chances of a War with China are Rising

The United States conducts monetary policy the same way it conducts foreign policy; unilaterally. When Fed chairman Ben Bernanke signaled last week that he was planning to restart his bond purchasing program (Quantitative Easing) he didn't consult with allies at the IMF, the G-20 or the WTO. He simply issued his edict, and that was that. The fact that the Fed's policy will flood emerging markets with cheap capital, pushing up the value of their currencies and igniting inflation, is of no concern to Bernanke. He operates on the same theory as former Treasury Secretary John Connally who breezily quipped to a group of euro finance ministers, “The dollar is our currency, but your problem.”

Bernanke's 15 report could have been reduced to nine words: Inflation is too low and unemployment is too high. That said, Bernanke is not going to sit back hemming and hawing until congress figures out that the economy needs more support. He's going to put downward pressure on the dollar until inflation rises to the target 2%, increasing the prospects for lower unemployment, a narrowing of the current account deficit, and a faster rebound. Economist Edward Hugh sums it up like this:

“Unemployment in the United States (which is currently at 9.6%, and may reach 10% by the end of the year) is causing enormous problems for the Obama administration. The US labor market and welfare system are simply not designed to run with these levels of unemployment for any length of time. In Japan the unemployment rate is 5.1%, and in Germany it is under 8%. So people in Washington, not unreasonably ask themselves why the US should shoulder so much extra unemployment and run a current account deficit just to maintain the Bretton Woods system and the reserve currency status of the US Dollar.

My feeling is that the US administration has decided to reduce the unemployment rate, and close the current account deficit, and that the only way to achieve this is to force the value of the dollar down. That way it will be US factories rather than German or Japanese ones that are humming to the sound of the new orders which come in from all that flourishing emerging market demand.”

Bernanke has drawn the same conclusions as Hugh, but that doesn't mean his strategy won't inflict considerable damage on US allies. It will. His beggar-thy-neighbor QE program will force trading partners to implement capital controls and other protectionist measures to maintain price stability. QE will also lead to more competitive devaluation as the world's largest economies fight for a bigger share of the export market. The impending clash could bring about the dissolution of the present trade regime and a sharp reversal of 30-years of globalization.

Bernanke's biggest problem is China. China was America's darling when it was loading up on Treasuries and fueling a historic consumption binge that filled Wall Street's coffers. But now that the purchase of US debt is preventing the Fed from implementing its monetary policy, Bernanke wants a change. Unfortunately, China is not cooperating. It's piling up foreign exchange reserves at record pace to maintain the dollar peg which is widening the current account deficit to precrisis levels. The yawning trade imbalance is pushing the world towards another crisis, which is why Bernanke and Co. are determined to persuade China to let its currency to appreciate to narrow the gap. (China's foreign exchange reserves surged to $2.65tr in the 3rd quarter)

Bottom line: The Fed cannot jump-start the domestic economy if the trade deficit continues to grow. It's impossible. The stimulus just gets flushed down the plughole. China is soaking up the lion's share of global demand by underbidding the US on everything under the sun. That's the real effect of the dollar peg, it gives China an unfair advantage over its competitors. A free-floating currency helps to level the playing field (even if US labor is competing with some of the world's worst paid workers) Bernanke's announcement last Friday, is just the first shot fired over Beijing's bow. There will be more to come. This weekend's meeting of the G-20 provides Treasury Secretary Timothy Geithner with the perfect opportunity to put the spotlight on China and to rail against currency manipulation. Many expect him to make a strong statement demanding changes to the policy.

An update by Reuters on Wednesday confirms the US position. Here's a blurp:

“The United States wants Group of 20 finance chiefs to commit to allowing market forces to set currency values and will discuss using targets for trade to measure progress, a senior U.S. Treasury Department official said on Wednesday.

Ahead of weekend G20 meetings in Gyeongju, South Korea, the U.S. official made clear Washington wants currency levels to be a focal point of the meetings and sees current account surpluses and deficits a vital part of the discussion....

From our perspective we believe these issues are fundamentally, inherently linked and that it is important for the G20 to be able to undertake cooperative action facilitating orderly adjustment of imbalances and also ensuring more effective adjustment of exchange rates in line with economic fundamentals," the official said.” (“U.S. wants G20 commitment to allow currency rises”, Reuters)

Neither the Obama administration nor the Fed want a full-blown trade war with China. They'd rather see China “assume its position in the global system”. (as US diplomats aver) But that means that China will have to compromise on, what it considers to be, a matter of national sovereignty. And, there's the rub. China is a proud nation and doesn't want to be told what to do. But that's not how the system works. Behind the facade of free markets and international institutions, lies an imperial system ruled from Washington. That leaves Beijing with two options; they can either bow to US pressure and fall in line or shrug off Washington's demands and continue on the same path. If they choose to resist, relations with the US will grow more acrimonious and the probability of conflict will rise.

« Wendy Gramm, Judge Bruce Levine & Criminal Behavior At The CFTC -- Attention Eric Holder, Federal Prosecutors »

If you haven't heard this story yet, be prepared for a new realm of outrage. When you read this keep in mind that the CFTC has only 2 judges.

Quietly last month, CFTC Case Judge, George H. Painter, issued a "Notice and Order" announcing his retirement from his position. In this notice Judge Painter wrote of a conspiracy at the highest levels of the CFTC (within the enforcement division), where a long time judge of 20 years has been working with past CFTC Chairs to rig the enforcement of the law by never (not once in 20 years) finding anyone guilty of market manipulation. We must be talking about tens of thousands of cases, to put the size of these crimes in scope.

Here are Judge Painter's words:

"There are two administrative law judges at the Commodity Futures Trading Commission: myself and the Honorable Bruce Levine. On Judge Levine's first week on the job, nearly twenty years ago, he came into my office and stated that he had promised Wendy Gramm, then Chairwoman of the Commission, that we would never rule in a complainant's favor. A review of his rulings will confirm that he has fulfilled his vow. Judge Levine, in the cynical guise of enforcing the rules, forces pro se complaints to run a hostile procedural gauntlet until they lose hope, and either withdraw their complaint or settle for a pittance, regardless of the merits of the case"

"In light of these unfortunate facts, if I simply announced my intention to retire, the seven reparation cases on my docket would be reassigned to the only other administrative law judge of the Commission, Judge Levine. This I cannot do in good conscience. Accordingly, I recommend that the Commission request the services of an administrative law judge to be detailed to the Commission from another agency."

His request was granted, and his cases were not assigned to Judge Levine.

Wendy Gramm is a former Enron board member, and former head of the CFTC (1988-1993), and the wife of deregulation neocon Phil Gramm. Here's what Barry Ritholtz said about Wendy Gramm:

A reminder to those of you who may be unfamiliar with this particular corporate harlot: Gramm was not only the former CFTC chair, but she was an Enron board member and wife of deregulation architect Phill Gramm, who for reasons unknown to decent society, is gainfully employed as a fluffer at UBS, helping to further besmirch the reputation of that bailed out firm.

Nice one, Barry!

Levine Notice - pdf

Judge Painter Retirement Letter, WSJ Article on Judge Lynch




Group of 20 vows to avoid currency devaluations

GYEONGJU, South Korea (AP) -- Global finance leaders, under pressure to display unselfish policies, agreed Saturday to boost cooperation on rebalancing the world economy to help defuse tensions that had sparked fears of trade conflicts.

The Group of 20 vowed to avoid potentially debilitating currency devaluations and reduce trade and current account imbalances, amid a growing recognition that restructuring the world economy is necessary to accommodate the greater role played by fast-growing China and other developing economies.

G-20 finance ministers and central bank governors met for two days in the South Korean city of Gyeongju ahead of a summit of their leaders in Seoul next month. Just two weeks ago, a G-20 meeting in Washington failed to resolve differences that had stoked worries a possible trade war could trigger another economic downturn.

Nations in Asia and other regions have been trying to stem strength in their currencies amid sustained weakness in the U.S. dollar out of fear their exports will become less competitive. At the same time, China's currency, the yuan, has been effectively pegged to the greenback, provoking criticism it is being kept artificially low and giving the country's exporters an unfair advantage.

Asia relying less on exports for growth is seen as one of the adjustments that nations should make to ensure more stability in the global economy and markets. Stronger currencies, meanwhile, would make imported goods cheaper and boost local spending as a contributor to economic growth.

The G-20, which accounts for about 85 percent of the global economy, said in a statement that it will "move towards more market determined exchange rate systems" and "refrain from competitive devaluation of currencies." It also vowed to cooperate on reducing "excessive imbalances."

"I think it's fair to say for the first time we see the major economies come together and recognize that excess imbalances that persist over a period of time, that can threaten growth and financial stability, need to bring about adjustments in policies," U.S. Treasury Secretary Timothy Geithner told reporters after the meeting.

The G-20 includes both rich countries such as the U.S., Japan and Germany as well as emerging ones like China, India and Brazil. It assumed the role of global economic leader following the 2008 financial crisis.

South Korean President Lee Myung-bak, chair of the upcoming G-20 summit and a staunch advocate of free trade, had implored the finance officials on Friday to come up with what he called a "mutual win-win."

The G-20 also released proposals to give developing nations more say at the International Monetary Fund, part of what it described as an ambitious retooling of the lending institution to make it more representative of shifts in the global economy.

The officials called for greater representation for emerging countries on the institution's executive board by reducing European seats by two and shifting more voting power to developing economies and underrepresented countries.

"It is a milestone in reforming global governance," said Olli Rehn, economic and monetary affairs commissioner of the European Union, which also belongs to the G-20. "Today we have been rebalancing global growth and rebalancing political influence in global governance."

Since the 2008 crisis, the G-20 has coordinated economic and interest rate policies to spur growth and is forging stricter regulation of banks and other financial institutions seen as responsible for the meltdown.

Geithner had pushed in a letter to G-20 members for a commitment to polices that would reduce current account and trade imbalances "below a specified share" of gross domestic product "over the next few years."

But the G-20 statement said that large imbalances - such as China's vast trade surplus with the rest of the world - would be "assessed against indicative guidelines to be agreed." Geithner's proposal had drawn resistance from export-reliant countries such as Japan.

Japanese Finance Minister Yoshihiko Noda, who on Friday called the idea of targets "unrealistic," urged a cautious approach to specific numbers, though he expressed support for "guidelines."

"There are many perspectives on the current account issue," he said. "Every country has a different situation when it comes to surpluses and deficits. So we need to study this carefully."

Geithner said Saturday the U.S. was not pushing for any specific quantitative targets and that the country's stance found substantial support within the G-20.

He also made a point of praising China, which has drawn criticism on the pace of yuan appreciation, saying it was pursuing "very ambitious" changes to its economy and had in recent weeks taken steps to allow its currency to strengthen "more rapidly in response to market forces."

Geithner planned a brief visit to the Chinese city of Qingdao on Sunday for talks with Vice Premier Wang Qishan, according to Treasury Department spokesman Steven Adamske.

---

Timothy Geithner calls on G20 nations to avert global currency war

US treasury secretary tells G20 members to stop manipulating currencies and urges rebalancing of world economy

US Treasury secretary Timothy Geithner Timothy Geithner: letter sets out 'a possible way forward'. Photograph: Ron Edmonds/AP

US treasury secretary Timothy Geithner has told the G20 nations to stop manipulating their currencies to prevent "excessive volatility" and a global currency war. In a letter to the G20 finance ministers, he also urged them to cap current account surpluses or deficits to rebalance the world economy and said the International Monetary Fund should monitor countries' progress.

The finance ministers of the G20 nations today started a two-day meeting in South Korea.

The dollar fell on the comments, with one trader saying that Geithner appeared to take a more aggressive stance on the rebalancing of the global economy.

Jim Flaherty, Canada's finance minister, backed Geithner's proposals. "Secretary Geithner's letter is helpful. It sets out a possible way forward that has been discussed among participants here and previously," Flaherty said. "No one wants to be confrontational here. No one wants to walk away from here without an agreement on an action plan."

China, which has built up large trade surpluses, is under mounting pressure to revalue the yuan. It has been criticised by the US and Europe for pegging its currency at a low level, which means its exports are cheaper worldwide. The World Bank has warned that a full-scale currency war risked a return to the protectionism of the 1930s, amid fears that growing tension between Washington and Beijing will hold back the global economy's recovery from the worst slump in decades. Other countries, including Brazil, Japan, South Korea, Switzerland and Taiwan have also moved to weaken their currencies.

In his letter, Geithner said: "First, G20 countries should commit to undertake policies consistent with reducing external imbalances below a specified share of GDP over the next few years, recognising that some exceptions may be required for countries that are structurally large exporters of raw materials.

"This means that G20 countries running persistent deficits should boost national savings by adopting credible medium-term fiscal targets consistent with sustainable debt levels and by strengthening export performance. Conversely, G20 countries with persistent surpluses should undertake structural, fiscal and exchange rate policies to boost domestic sources of growth and support global demand."

He called on countries to refrain from manipulating currencies to achieve competitive advantage by either weakening their currency or preventing the appreciation of an undervalued currency – a clear dig at China. He also said the IMF should monitor progress on G20 countries' commitments and publish a semiannual report.

Obama: Republicans would put economic recovery ‘in jeopardy’

President Barack Obama says consumers would lose if Republicans regain power in Congress and try to roll back his hard-won Wall Street overhaul.

He says the GOP's promised repeal of the law would mean the return of a financial system whose near-collapse led to the worst recession since the Depression.

"Without sound oversight and commonsense protections for consumers, the whole economy is put in jeopardy," Obama said Saturday in his weekly radio and Internet address. "That doesn't serve Main Street. That doesn't serve Wall Street. That doesn't serve anyone."

The law passed despite nearly unanimous Republican opposition. It sought to rein in a financial system that had sped ahead of outdated rules, allowing banks, traders and others to take increased risks.

It limits bank overdraft fees and ends abuses such as retroactive interest rate increases on credit card balances. It came in the wake of a $700 billion bank rescue passed in the final months of George W. Bush's presidency. While the bailout is credited with providing stability, it's deeply unpopular with voters angry of taxpayer money being used to help prop up huge banks.

Obama promised that the measure ensures that taxpayers will "never again be on the hook for a bailout."

Obama's address came less than two weeks before elections in which Republicans have a good chance of taking over the House, if not the Senate. The financial regulation measure hasn't been a central campaign issue.

House GOP leader John Boehner of Ohio has called for a repeal, as have top Senate Republicans. But Obama still would stand in the way through his veto power.

In the GOP's weekly message, Sen. John Thune of South Dakota denounced Obama's economic stimulus bill, overhaul of the health care system and plans to allow Bush-era tax cuts for wealthier people to expire.

"We have learned the lessons not only of what hasn't worked over the past two years, but what didn't work the last time Republicans controlled Congress," Thune said. "We are determined to take this country in the right direction."

Added Thune: "Are you better off today than you were two years ago?"

This video is from the White House, published Saturday, Oct. 23, 2010.

Mochila insert follows...

Obama: Consumers lose if financial law repealed

Obama: Consumers will lose if Republicans try to repeal sweeping Wall Street overhaul law

Fed up? Fed out!

Today, I’m going to explain the Federal Reserve System. Hey, where ya goin’?
First: It’s not really federal. Nor are there reserves. (Not many, anyway.) It is a system, however. (Well, a scam, actually, but those behind the 1913 Federal Reserve Act that birthed the Fed bypassed that identifier, for some reason.)

And, prey (that’s you), who backed the act?

Oh, just everyday folks with names like Rockefeller, J.P. Morgan and Rothschild who, a century ago, joined forces to saddle the U.S. with a central bank that, naturally, they’d control, in turn giving them control over the country’s money supply
.
Alas! If only our nation’s framers had been smart enough to anticipate a ploy like this and thus guard against it in the Constitution.


Um, turns out they were. Fresh off the colonies’ disastrous experiences with non-stop printing presses churning out worthless currency both before and during the revolution, the founding fathers made sure to constitutionally preclude both Congress and the states from issuing “bills of credit.” In other words, paper money. Silver and/or gold-backed coinage was to be the name of the game
.
Creating the Fed, which comprises twelve private banks spread regionally throughout the U.S., was an end run around that, with the sleight-of-hand working this way: Congress authorizes interest-bearing IOUs (bonds and notes) to be sold to the Fed, which in turn gives Congress oodles of paper money created from thin air and backed by nothing, an amazing alchemical process authorized by, well, Congress.

Though a dozen banks are involved in the con, er, system, the head bank is and always has been the Fed’s New York branch. (Isn’t it a remarkable coincidence it was mainly the obscenely wealthy Big Apple banking interests that pushed the Fed’s creation in the first place?)


It’s obvious what’s in it for the bankers, but how about Congress? Well, our “representatives” get money whenever they want for whatever they want. This comes in handy for buying votes back home, uh, I mean, for serving their constituents, like agribusiness, Big Pharma, weapons manufacturers, etc. Oh, and also those in the banking industry who, if they screw up the economy by being greedy little pigheads, can be duly punished by being given trillions more faux dough scot-free by, who else?, Congress.Let’s hope this never happens.

Interest off bonds isn’t the only perk for the Fed (or bankers in general). But don’t even get me started on fractional-reserve banking. Otherwise I’d have to tell you how a few folks with a soft spot for things like usury will get a charter, start a bank, take deposits and then start loaning “money” at a nine-to-one ratio based on the total of those deposits (now redefined as “reserves,” ninety percent of which are dubbed “excess” and thus, abracadabra, available for lending). That’s right: they’re now loaning dollars that don’t exist. A few strokes on the ol’ keyboard and, voila, instant money!

FDIC Called On To Put Bank Of America Into Receivership

Charging that the ongoing foreclosure fraud epidemic is the work of precisely the same unrepentant bank officers whose fraudulent mortgage schemes crashed the financial system in the first place, two leading critics of the financial industry are calling on the FDIC to put some of the nation's biggest banks into receivership -- starting with the Bank of America -- and make them clean house.

William K. Black, a former regulator and white-collar crime expert who cracked down on massive fraud during the savings and loan scandal of the 1980s, and his fellow economics professor at the University of Missouri-Kansas City, L. Randall Wray, write in the Huffington Post that it's time to "foreclose on the foreclosure fraudsters". They write:

The lenders, officers, and professional that directed, participated in, and profited from the fraudulent loans and securities should be prevented from causing further damage to the victims of their frauds, through fraudulent foreclosures.

They argue that, far from being a coincidence, massive foreclosure fraud "is the necessary outcome of the epidemic of mortgage fraud that began early this decade." The reason for that:

The banks that are foreclosing on fraudulently originated mortgages frequently cannot produce legitimate documents... Now, only fraud will let them take the homes. Many of the required documents do not exist, and those that do exist would provide proof of the fraud that was involved in loan origination, securitization, and marketing. This in turn would allow investors to force the banks to buy-back the fraudulent securities. In other words, to keep the investors at bay the foreclosing banks must manufacture fake documents.... Foreclosure fraud is the only thing standing between the banks and Armageddon."

So the only solution, then, is new management. "We should remove the senior leadership of the banks and replace them with experienced bankers with a reputation for integrity and competence, i.e., the honest officers that quit or were fired because they refused to engage in fraud," Black and Wray write.

They suggest starting with Bank of America, which they call "a 'vector' spreading the mortgage fraud epidemic throughout much of the Western world."

Looming large among Bank of America's sins is its purchase of mortgage giant Countrywide Financial long after it became clear that the company had engaged in massive fraud.

Even the extremely slow-to-anger New York Fed, which bought billions of securitized mortgages that Bank of America improperly represented as fully documented and conforming to underwriting standards, is now demanding that it buy some of them back.


FDIC Called On To Put Bank Of America Into Receivership

First Posted: 10-22-10 02:42 PM | Updated: 10-22-10 03:40 PM

What's Your Reaction?
444
1,152views
Bank Of America

Charging that the ongoing foreclosure fraud epidemic is the work of precisely the same unrepentant bank officers whose fraudulent mortgage schemes crashed the financial system in the first place, two leading critics of the financial industry are calling on the FDIC to put some of the nation's biggest banks into receivership -- starting with the Bank of America -- and make them clean house.

William K. Black, a former regulator and white-collar crime expert who cracked down on massive fraud during the savings and loan scandal of the 1980s, and his fellow economics professor at the University of Missouri-Kansas City, L. Randall Wray, write in the Huffington Post that it's time to "foreclose on the foreclosure fraudsters". They write:

The lenders, officers, and professional that directed, participated in, and profited from the fraudulent loans and securities should be prevented from causing further damage to the victims of their frauds, through fraudulent foreclosures.

They argue that, far from being a coincidence, massive foreclosure fraud "is the necessary outcome of the epidemic of mortgage fraud that began early this decade." The reason for that:

The banks that are foreclosing on fraudulently originated mortgages frequently cannot produce legitimate documents... Now, only fraud will let them take the homes. Many of the required documents do not exist, and those that do exist would provide proof of the fraud that was involved in loan origination, securitization, and marketing. This in turn would allow investors to force the banks to buy-back the fraudulent securities. In other words, to keep the investors at bay the foreclosing banks must manufacture fake documents.... Foreclosure fraud is the only thing standing between the banks and Armageddon."

So the only solution, then, is new management. "We should remove the senior leadership of the banks and replace them with experienced bankers with a reputation for integrity and competence, i.e., the honest officers that quit or were fired because they refused to engage in fraud," Black and Wray write.

They suggest starting with Bank of America, which they call "a 'vector' spreading the mortgage fraud epidemic throughout much of the Western world."

Looming large among Bank of America's sins is its purchase of mortgage giant Countrywide Financial long after it became clear that the company had engaged in massive fraud.

Even the extremely slow-to-anger New York Fed, which bought billions of securitized mortgages that Bank of America improperly represented as fully documented and conforming to underwriting standards, is now demanding that it buy some of them back.

Advertisement

But far from expressing remorse, Bank of America is going on the offensive, announcing it will end its three-week-old freeze on foreclosures in 23 states on Monday, much earlier than expected.

Bank of America officials are claiming they didn't find evidence of unwarranted foreclosures and are vowing to "defend the interests of Bank of America shareholders," and hire more lawyers, the New York Times reported. "It's loan by loan, and we have the resources to deploy in that kind of review," said the bank's chief executive.

Black and Wray write that Bank of America "is sufficiently large and powerful that its receivership will send the credible signal that America is restoring the rule of law and that even the most elite frauds will be held accountable. "

They note that about a thousand receivers were appointed during the S&L and banking crises of the 1980s and early 1990s under Presidents Reagan and Bush. "Contrary to the scare mongering about 'nationalizing' banks, receivers are used to returning failed banks to private ownership," they write.

The new managers would "direct the business operations, find the true facts about the bank's operations, senior managers, and financial condition, recognize the real losses, and make the appropriate referrals to the FBI and the SEC so that the frauds can be investigated and prosecuted," they write. "The receiver is also a well-proven device for splitting up banks that are too large and incoherent by selling units of the business to different bidders who most value the operations."

On Wednesday, administration spokesmen declined to endorse any dramatic federal action. They declared that they had found no "systemic" threat to the financial system from the foreclosure problems, spoke of "mistakes" and "errors" rather than pervasive fraud and said the banks and servicers now need to "fix" their "processes."

They "cannot even bring themselves to use the 'f' word -- fraud," Black and Wray write. "They substitute euphemisms designed to trivialize elite criminality."

The central problem appears to be that Obama Administration continues to see the mortgage and foreclosure crises primarily through the eyes of the banks -- not through the eyes of the regular people who became their victims, or even the taxpayers who bailed out the very fat-cat bankers who are now back to their tricks.

Black and Wray write:

This nation's most elite bankers originated and packaged fraudulent nonprime loans that destroyed wealth -- and working class families' savings -- at a prodigious rate never seen before in the history of white-collar crime. They created the worst bubble in financial history, echo epidemics of fraud among elite professionals, loan brokers, and loan servicers, and would (if left to their own devices) have caused the Second Great Depression.

The two professors call for "[n]othing short of removing all senior officers who directed, committed, or acquiesced in fraud."

The Securitization Scam: Foreclosures and the Mortgage Electronic Registration Systems (MERS)

The foreclosure crisis has set its sights on MERS, the Mortgage Electronic Registration Systems, which files almost all of the foreclosure actions in behalf of lenders. The problem never anticipated by lenders is that the company has no legal standing to do such things. In addition they broke the law by not requiring a notarized document of transfer of title signed by the seller and buyer. That is because they did not own the loans. Only the owner of the loan can file. Thus, many of the titles are now subject to fraudulent conveyance. This means that foreclosure proceedings could be subject to legal challenge. Another question is could the foreclosures done since 2007 be nullified? How could a settlement be arrived at in a few months when there are millions of homeowners involved. The banks, which obviously deliberately broke the laws, will be responsible for fines and settlement with injured parties could cost them more than $10 billion. While this scenario moves forward the banks still are acting like goons and violating laws, to get people out of homes.

The question is who has the loan paper and that is the note-holder. He or they are the only ones with legal standing to request a court to foreclose and evict. That all changed with the coming of MBS, mortgage backed securities. Loans were bundled into tranches or REMIC’s, a vehicle designed to hold the loans for tax purposes. These mortgages were cut into bits and pieces to satisfy the different tastes and needs of investors. During this process the note was not signed over to the bondholders, because the mortgage may have been split into pieces and no one could know which part would default first. Therefore the MBS held the note.

The MERS system was a bridge and repository for these mortgages, a shadow holder owned by lenders and Fanny Mae and Freddie Mac. The system located mortgages and was involved in the altering of mortgages. The upshot was a broken chain of title. When that happens the mortgage note is no longer valid. The borrower does not know who to pay and so pays no one. Then come the foreclosure mills and that led to falsification of documents to assist the lender, which is fraud. These actions expedited foreclosures and evictions and that was all the lenders were interested in.

There is no question a massive fraud took place. It was identified by the title insurance companies who the lenders are trying to blame this criminality on. The result was the banks went around the title insurance companies and used foreclosure mills, when the title companies wouldn’t play ball.

The banks terrified that they had gotten caught tried to ram through Congress the Interstate Recognition of Notarizations Act to protect themselves and their criminal acts. The scum in the Senate and House used voice votes to pass the bill and because of the massive complaints the President pocket vetoed the measure. He also knew the bill would have been identified as unconstitutional.

The bottom line is the banks had no legal right to foreclose and evict. That means the evicted can get their homes back. The new buyers are screwed because they have no legal standing because the banks sold them a house they did not own. The fraud committed by the foreclosure mills, at the behest of the banks, puts all foreclosures into question and even the status of those homeowners who are currently paying mortgages. That means if homeowners all stop paying their mortgages, they could end up owning their homes.

Peter Schiff: "US in process of collapsing"

Click this link ..... http://revolutionarypolitics.tv/video/viewVideo.php?video_id=12945&title=peter-schiff--us-in-process-of-collapsing

France Shut-down Over Retirement Age Battle

Workers who have contributed to France's steadily increasing wealth over decades are enraged that Sarkozy is re-neging on his campaign promise to not raise retirement age.

source: alternet.org



Rail workers hold flares in Paris as part of nationwide rallies against French government's pensions reform. French protestors blocked key sites and clashed with police Thursday as unions called for further mass nationwide protests against President Nicolas Sarkozy's bid to raise the retirement age.
Photo Credit: AFP - Fred Dufour

French unions step up pressure on President Nicolas Sarkozy to cave in on pension reform, calling for more mass strikes and street protests as parts of the country start to run dry following fuel blockades.
The call for workers to join two new days of nationwide demonstrations next Thursday and on November 6 came after another day of unrest across France that saw protestors blocking key sites and clashing with police.

"Strengthened by the support of workers, the young and a majority of the population... the labour organisations have decided to continue and to broaden the mobilisation," the main unions said in a joint statement.

More than a million people took to the streets on Tuesday, the sixth day of action since early September, to protest the plan to raise the standard minimum retirement age from 60 to 62 and full pension age from 65 to 67.

With no fuel left in more than a quarter of France's petrol pumps, police are playing what unions dubbed a game of cat and mouse with protestors at refineries and fuel depots in a bid to prevent the country grinding to a halt.

Even US pop star Lady Gaga called off two Paris concerts set for the weekend "as a result of the logistical difficulties due to the strikes in France," her website said, "as there is no certainty that the trucks can make it."
Sarkozy earlier Thursday accused trade union leaders of undermining France's fragile economic recovery.
"By taking the French economy, businesses and daily life hostage, you will destroy jobs," he said.
"We can't be the only country in the world where, when there's a reform, a minority wants to block everyone else. That's not possible. That's not democracy," he declared, vowing tough action against rioters.
Workers in key sectors have been on strike for more than a week to protest the reform, which the government says is essential to reduce France's public deficit. Unions and political opponents say it penalises workers.

Youths have been fighting running battles with riot police in several cities, and on Thursday a schoolgirl was taken to hospital during clashes with police outside a high school in the central city of Poitiers.
Police in Lyon fired tear gas when a group of around 200 high school students tried to join a demonstration by CGT unionists. Students threw objects at riot police and plain clothes officers who tried to keep the groups apart.