Should Bankers Go to Jail?

Required reading for participants in the workshops in San Francisco and Anaheim.

Should Bankers Go to Jail? by Neil F Garfield, Esq., August 20, 2012

BACKGROUND

New York Attorney Marc Dreier was sentenced to jail (20 years) for economic crimes in which he defrauded hedge funds out of $400 Million, some of which was recovered by the sale of seized assets acquired during his lavish lifestyle. Bernie Madoff was sentenced to 150 years in prison for a different type of Ponzi scheme, with the same effects. Drier’s case is more useful in describing the crimes of the banks, assuming the facts are presented and accepted into evidence. When Drier and Madoff were presented to the court as thieves, nobody had any doubt that they were thieves deserving punishment. But the same facts alleged against the Banks are characterized in the media and in court as being far-flung theories.

This article puts some perspective on the crimes of the banks and the people in those banks who directed a vast Ponzi scheme with creeks of additional Ponzi schemes fed by the river of the playbook called “securitization.” The banks securitized nothing, stole from the investor-lenders, stole from the homeowners and stole from the taxpayers, and they continue to do so with apparent impunity.

Drier actually participated in a documentary called “Unravelled.” As I watched him describe his own crimes quite honestly and openly I was struck by two things: First, the similarity between his acts of deception and that of the banks in the world of securitization myths and second, the culture of corruption on Wall Street where the crimes of Dreier and Madoff could go unnoticed even as some very knowledgeable and respected people raised red flags and shot off cannons as an alert.

Drier’s history explains a lot about how the crimes of the banks could have gotten so far out of control. Until Madoff, Drier had pulled off the largest fraud. I couldn’t help thinking that Madoff at $60 billion in fraud, was an excellent foil for the banks who are raking in 3000 times that amount at $18 trillion. Yet they are perceived differently with the banks cloaked in the appearance of authenticity. Perhaps the sheer magnitude of these crimes is daunting and unthinkable, since it would point to the massive dysfunction in our financial sector, our society and our government.

Marc Drier made an observation at the end of the documentary filed during his house arrest. He said that there are people who are truly virtuous and would not do what he did simply because it was wrong and their conscience could not bear the weight of the consequences upon the victims.

But, he said, most people probably don’t do it because of lack of opportunity and fear of getting caught. He had opportunity and the thought that somehow he would repay or cover up his misdeeds. Given the history of the banks, who have both opportunity and the belief that they cannot be caught, and if caught cannot be punished, what is the basis of any policy based upon the assumption that the continuing fraud by the banks will change? On what basis can we say with any sincerity that the banks won’t make the situation worse?

If Drier had hidden his Ponzi scheme, based upon fictitious loans, inside the Ponzi scheme of securitization, also based upon fictitious loans, he might never have been detected, much less convicted and imprisoned, being under the protective cloak of Wall Street’s financial and political power. And if he was thrown under the bus, would his sentence have been nearly as long if it was part of an over-all bank scheme based upon the myth of securitization?

More importantly for this Blog, this comparison should serve as an aid for attorneys who at present are too timid to actually come out and challenge the thieves and call them out for what they have done. It runs to the core of whether and to whom the homeowner’s debt is owed. But even more importantly it highlights the reason why most of the “loans” were never secured and thus could not be foreclosed despite the willingness of the judiciary to allow it.

Drier was one lonely easy fruit to pick off the tree and make a big splash. Same goes for Madoff. The principal differences between Dreier and the Wall Street titans were first, that the persons involved on Wall Street were acting under the guise of an institution and not personally, even though the benefits accrued to them personally and second, these persons of interest are a group that collectively have acquired not only wealth, but political power.

DRIER’S STORY

The facts of the Dreier case are simple. He “borrowed” an existing relationship with a wealthy client (he was the attorney for an extremely wealthy real estate developer) and used it to create a Ponzi scheme.

It started when he created an entity bearing the surname of Solow, his client. Solow by all accounts had no idea that his lawyer was embarking on a fraudulent scheme. Dreier “borrowed” his client’s name (i.e., identity theft) and closed a loan to the company created in Solow’s name for $1 million. Seeing how easy that was he began creating more entities and more deals until he had borrowed more than $400 million from hedge funds, pension funds etc.

Dreier forged, fabricated and delivered documents as being signed by authorized persons within the Solow organization. He even went as far as impersonating actual people with authority and then having in person meetings with representatives of the managed funds he was defrauding. Naturally the money did not go to Solow. It was used to pay himself, employees and those who demanded repayment, but the bigger he got in the world of finance the more the managers of pension or hedge funds were happy to rollover his loans at higher interest rates.

As with all Ponzi schemes (including Joe Banker), his collapsed when the market started to crash and the authenticity of the documents started being questioned. He was arrested, convicted, and sentenced all of which is recorded in a compelling documentary called “Unravelled.” Drier is serving time while Joe Banker is not only free but sitting on the regulatory boards of agencies.

Since the facts of Drier’s guilt are recited by the person who committed them, there is no reason to disbelieve his recital. The Judge made references to Drier being capable of redemption and that he “was no Bernie Madoff.” Hence the lower sentence.

He offered no exculpatory explanation for his acts and admits that what he did was illegal and that his 20 year sentence was just. He feels bad that what he did hurt his family and he offers some display of remorse as to the institutions that were defrauded, but he still tends to minimize the severity of the crime because he stole from institutions not widows and orphans. His own lawyer shot down that theory when he reminded Drier that such an argument to minimize the sentence he would receive would inflame the Judge who understood perfectly well that all of these funds were managed for the benefit of widows and orphans, retired people etc.

So now let’s look behind the curtain and see the facts as we know them, as summarized below. Instead of using institutional names I am simply referring to the entire group of “Wall Street” entities, companies and people as “Joe Banker.”

You might remember the torrent of advertising for borrowers at unbelievable terms to refinance or purchase a home. The cost of such advertising is easily far beyond the benefits that would accrue to a lender from loaning money at or about 5%. A quick glance at those numbers should dispel any notion that conventional loans with conventional risk of loss could possibly sustain such a promotional campaign, much less the enormous profits reported by Joe Banker.

It can be fairly asked how institutions managing vast pension funds could not wonder how Joe was making so much money. But Joe did have legitimate other businesses like Drier did in his law firm. And on Wall Street where many deals are done with a nod of the head and a handshake, such a culture was bound to attract people like Joe into a milieu where  moral hazard was an empty phrase. If anyone gets caught doing something illegal they pay a fine or get acquired by some other investment bank or securities broker. It is all very gentlemanly where Joe polices himself and gives himself a slap on the wrist when he is caught doing something illegal. He knows he is not going to jail like Drier did.

JOE BANKER’S STORY

Joe Banker went to the same institutions that Drier went to, asking to borrow money the way Drier did — based upon false representations and documents.

Like Drier, Joe’s first act was the creation of entities, some legally formed and some existing only on paper as “common law trusts” most of which did not have a bank account or trustee bank account. Joe never had any intention of establishing such bank accounts, trust accounts or using the money in the way that the funds thought they would be used. But like every Ponzi scheme he was confident that he could keep this elaborate scheme going indefinitely.

Like Drier, Joe fabricated the necessary documents —- mortgage bonds issued by the “trusts.” Interest and principal would be paid by borrowers seeking to finance the purchase or equity in their homes. Joe had his lawyers write up a Prospectus and a Pooling and Servicing agreement to make it all look like common offerings of securities, including ratings and insurance from the best and most trusted names in the financial world..

Like Drier’s financial statements, Joe’s Prospectus did not contain real mortgages from real people. It contained spreadsheets of non-existent loans. But Joe was smart, so he inserted wording in the prospectus that the attached list of loans was not the complete list and that either many or all of those loans would be replaced by real loans. It is not known whether any institutional fund investor ever noticed this, but it is known that they thought their money was going to fund mortgage loans giving a level of diversification in mortgage loans that reduced risk of loss to nearly zero.

More importantly the investor-lenders thought their money and their expected payout was safe. The reason that it was safe was that it wasn’t Joe asking them for money it was millions of borrowers. That is what Joe told them. Instead Joe took the money and paid out only when the demand for funding was unavoidable in order to keep the scheme going. Just like Drier and Madoff.

Hence, like Drier, the institutional fund investors believed that the money would in fact be used to fund or purchase mortgage loans. The documents presented assured the investors that the loans would be underwritten by established lenders using the standards of underwriting and due diligence that has always prevailed when someone would go to a bank and ask for a home loan. Joe’s real intention though was to create and force an environment where bad loans would be made based upon fraudulent property appraisals and fraudulent underwriting changing the applications to look like a real person with a reasonable credit history would be the source of repayment, collateralized by the property itself if the borrower did not repay. All of that was a lie.

THE STRUCTURE OF FRAUD

None of those things were true. Insurance was made payable to Joe Banker who represented himself as the lender, when like any other banking transaction he was really only the intermediary to facilitate the transfer of funds. The loan documents created fictitious transactions in which Joe was the lender. Joe made sure there were no documents for the actual transaction in which the loan was funded. This undermined the ability to foreclose legally, but Joe was convinced that if he presented himself as a  banker that any Judge would presume he was the lender and continue processing foreclosures as Judges have done for hundreds of years — largely as a clerical function in which no critical thinking was required.

The property appraisers were given instructions to present an appraisal report that put a value on the property $20,000 above the contract amount despite abundant evidence that prices were out of line with median incomes, specific earnings of the borrowers, and very recent sales activity that showed values far lower than those used in the loan. With no underwriting committee (normal lender procedure) demanding verification of the appraisal, it was easy. And if the appraiser balked at those instructions he would never work again.

The facts now known are that some loans were the result of proper underwriting but that most loans had no underwriting standards applied at all — with the removal of committees of Boards of Directors verifying the appraisal value and the ability of the borrower to repay the loan.

The loans that were conventionally underwritten were used to show the rating agencies and insurers the quality of the mortgage bonds. The others, constituting the vast majority of all loans were unverified as to value or viability, with many such loans were clearly headed for default the moment they were funded. Hence the rating agencies were made part of the conspiracy, knowingly or unknowingly. The same applied to insurers who would guarantee the interest and principal of the mortgage bond.

Armed with the highest possible safety rating and insurance for repayment of interest and principal, it was easy to sell the mortgage bonds to the investors who gobbled them up for their higher than the normal yields available to such managed funds.

An objective analysis of the facts now reveals that the ratings and insurance were procured by lies, fabrication and forgery of non-existent borrowers, or existing borrowers with non-existent credit histories and nonexistent incomes.

The managed funds were sitting ducks. If they did not buy these higher yielding bonds then their performance would be out-paced by the reports of other managed funds. They were compelled to buy. And so they did buy some $13 trillion in mortgage bonds, most of which were never even printed: instead they were confirmed by reports from Joe.

Joe had a virtually unlimited supply of money based upon the performance driven managers of the managed pension, retirement and other funds. Everything was in place — just like Drier when he took his first step and created fictitious financial statements for an entity that had no money but which bore the name of a wealthy successful real estate magnate in New York.

The similarity also is revealed in that Drier forged names and fabricated supporting documents. The difference is he did it himself instead of hiring employees through layers upon layers of corporations and instructions to sign documents they knew nothing about on behalf of entities they didn’t know on behalf of persons  whom they did not know. They would be the patsy if it came out that the documents were fabricated, forged and lacked any semblance of authenticity or value. The arrest warrants, if it came to that would be directed at the signors.

In the snowstorm of false documents the fact that the documents were all based upon nonexistent financial transactions was lost. Joe had created the perfect crime which created the perfect storm. The real transaction in which money exchanged hands was hidden from the investors and borrowers. Like Drier, as the intermediary for his client Solow, it appeared as though Joe had the proper authority from the depositor/client investors, and that the documents were valid and “self-authenticating.” It would all work out until anyone demanded to see the actual people and the actual monetary transactions — just like Solow and Madoff’s investment firm that never made a single trade. In litigation, that demand for the real facts and the disclosure of actual monetary transactions is called discovery.

IDENTITY THEFT

The most important similarity is the intent to use a few good borrowers’ credit history and use them in ways that could not be imagined by those borrowers. Joe “borrowed” (ID Theft), the names and reputations of the actual borrowers who had credit scores over 800 and used them to sell Mortgage Bonds that were supposedly composed entirely of such high-quality loans and borrowers. It was all a lie.

I can see no difference between Drier borrowing Solow’s name and Joe borrowing the identity of thousands of innocent and ignorant borrowers. Neither Solow nor those borrowers knew the facts. The only difference being that Joe had no relationship with the borrowers (unless they were already doing business with Joe as depositors in Joe’s Bank) and Drier did have the attorney client relationship with Solow.

The sale of the bonds resulted in huge infusions of cash which Joe held in escrow, without regard to the “common law trusts” nor was any “trustee” of such trust even allowed to see the money much less manage or distribute it. Those “trustees” acted from outside their trust divisions  because there simply was no trust account. Thus from the start, Joe took the money into his own account and control and never delivered it to the “trust.” We now know that the named trustees not only knew their names were being used but were being paid for it even though there were duties to perform.

Joe created his own “mortgage origination” business and sponsored others to do the same in order to move the money around and justify, at least in part, taking all that money from the managed funds for pensioners, retirees, and other institutions depending upon the safety of the investment and the interest it would generate, knowing that the flood of money and the removal of underwriting standards would allow real estate prices to rise even as values were unchanged. The higher the price, the more money that could be moved.

DOCUMENTING NON-EXISTENT TRANSACTIONS

When you boil it down the notes and mortgages were made payable to nobody. The payees were never lenders and never had a loan receivable account for the loans — even if they were an established institution that also made legitimate loans. It was the ultimate cover story. The “secured party” was not the lender either and in many cases wasn’t even the lender named on the note. This would inure to the benefit of Joe, not the investor. Instead of directly naming himself he created entities that would be the equivalent of an empty space (MERS, e.g.) where the payee’s name would appear and another empty space where the mortgagee or beneficiary’s name should appear in order to perfect a valid lien against the property. The notes and mortgages appeared valid on their face and so were accepted for filing in the county records and later for use in foreclosures.

Joe used his own bank to originate many of the loans. In those cases he was in fact named as the lender and payee and secured party. Thus Joe was able to trade and move loans around as though he owned them despite the fact that all the money for the loans came from the investors. 96% of the documented “loans” were fictitious, with the lender being an innocent investor, left without any documentation except the Prospectus and Pooling Servicing Agreement which of course was never recorded.

Amongst these trades were the “sale” of loans that were alter deemed “toxic waste” in which the interest was as high as 16%. With a promised rate of interest of as little as 5% to the managed fund, Joe could lend out $100,000 and then take $200,000 as profit in the sale of the loan to the “trust.” It worked as long as one did not notice that hidden in the bundles of documented loans were toxic waste worthless “loans.” The price of the sale of the bundle of “loans” was based upon the average interest rate, so a 16% worthless loan for $100,000 could be sold for much more as a 5% conventional loan.

The only hitch would be that the borrower actually paid off the loan, but this was so rare that Joe was able to cover up the pay-off under the cloak of a reported sale or refinancing. The extra money Joe was making just by funding toxic waste loans was staggering, amounting to as much as three times the actual loan.

Neither the lender-investors nor the borrowers knew the real facts, each having been promised entirely different terms. If Joe had not interfered in the lending process with which he was entrusted by the managed funds, the existence of the loan and the difference in terms would have come to light. Real Questions would have been asked and Real Answers would have been required. Like Drier, the scheme would unravel in the same way as all Ponzi schemes unravel.

Had the borrower been aware of the existence of Joe in the transaction and of his enormous “compensation” (required to be disclosed under federal and state lending laws), no reasonable borrower would have completed the deal. If the investor-lenders knew, they would have demanded their purchase of the “mortgage bonds” be rescinded and possibly sued for fraud, which they now doing in increasing numbers. It may be fairly stated that in nearly all cases, no fund manager knew that his managed funds were being used to fund toxic waste mortgages and the rating agencies would have withdrawn their ratings, which they eventually did. And the insurance companies would have rescinded the insurance contract and demanded repayment for anything they paid, which they too are doing in increasing numbers.

The above-described unravelling is eerily similar to Drier’s case and in some ways like the Madoff case who was sentenced to 150 years in prison. Eventually, the pyramid falls when people start asking real questions and demanding real answers and proof. The loss falls on innocent investors and homeowners who like in most Ponzi schemes include people who are completely wiped out financially.

The irony and brazenness with which Joe reported to government officials that the loss on loan defaults was causing the entire financial system to fail resulted in an additional $700 Billion Troubled Assets fund being given to Joe to keep afloat while he was already floating in money. Befuddled bureaucrats and elected officials eventually gave Joe $17 trillion in loans or bailout to cover “the loss.” This created an even larger number of losers — the taxpayers.

FRAUD UPON FRAUD

The ironic twists that have emerged is first, that Joe “borrowed” the loss and identity of the investors to receive payment of insurance, bailouts and the proceeds of the bets Joe made. Then he reported to the investors that the loan was theirs, now that it had failed — exactly the opposite of what was stated in the Prospectus and Pooling and Servicing Agreement. So Joe stole the identity of the borrower and the stole the identity of the investors all to his enormous profit showing up frequently as pornographic sized bonuses for people to keep their mouths shut, thus interfering with criminal investigations.

As to intent, the facts now reveal that Joe knew exactly what he was doing and the consequences because he entered into “bets” in the securities markets that the mortgage bonds would fail even as he was selling the bonds with great assurances to the investors as to their quality, rating and insurance back-up — payable to Joe instead of the investors.

Joe was betting that the housing market prices would collapse to real values and that he would make a fortune on each loan that failed. Joe bet as much as 40 times on the same loans that they would fail. Thus a loan of $300,000 was worth $12 million when it failed. Failure of the loans could only be proven by foreclosure, auction and losses reported to investor-lenders. If they were modified or settled, Joe would not get his $12 million, he would get nothing. This is why Joe created the elaborate scheme on top of the existing scheme where he would appear to be considering modifications while he was in fact leading the borrowers down the path to certain foreclosure.

Drier got 20 years, Madoff got 150 years, how much should Joe get?

The government seized all of Drier’s assets and all of Madoff’s assets and gave as much back as possible to the inured parties. Seizing the mortgages by eminent domain might seem like a good idea, and maybe it is, but it pays Joe even more money than he already has made. And it appears to legitimize the menu of illegal activities in which Joe was engaged. I think full seizure and auction is a better idea. What do you think?

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29 Responses

  1. We are all led to understand that the principal theory of consumer bankruptcy in America is that it provides a “fresh start” to debtors, …as the United States Congress created title 11 (the Bankruptcy laws) to set forth certain rights to which citizens are legally entitled. When the administrator of the bankruptcy case fails to act or acts in bad faith, (for example supporting pretender lenders) resulting in an “invasion” of the Debtor’s rights under title 11, such failure is an injury in and of itself…however, now we have come to learn those banks are basically “too big for trial” as phrased by Senator Warren !!!

    Therefore it appears, that avenue of helping consumers and holding the banks accountable is not available.

    Alternatively, might a remedy be found under 42 USC 1983 for homeowners who find themselves under the jurisdiction of the bankruptcy courts?

    In that, the Office of the United States Trustee, a component of the United States Department of Justice being charged with oversight of the bankruptcy system, might well stand to answer for the lack of enforcement by the USDOJ. For example, in cases where a claim is filed and bankruptcy trustee “neglects” to oversee possible pretender lender type conduct by those “too big for trial” entities, the bankruptcy trustee might be more diligent when administering the claim process, thereby helping that individual homeowner and at the same time a remedy under 42 USC 1983.

  2. [...] their securitization Ponzi scheme without worrying about details like ownership and chain of title. According to trial attorney Neil Garfield, properties were sold to multiple investors or conveyed to empty trusts, subprime securities were [...]

  3. [...] securitization Ponzi scheme without worrying about details like ownership and chain of title.  According to trial attorney Neil Garfield, properties were sold to multiple investors or conveyed to empty trusts, subprime securities were [...]

  4. jail not good enough for these “jolly ol asses” lifes commin back to kick em, When you named this site ” livinglies” it is very clear who you might have been thinking about.
    Jail no, leave them penny-less, it will mean more. take it all , the houses, the travel, the boats, the planes, jewlery, beds, baths, food shelter, leave them in the cold.
    That is how they left us without a thought of shame in their hearts.
    My family was devistated, I wish the same for them.
    Downey Savings and Loan X owners, x managers, x co-workers how do you sleep at night? We were a family of nine, now we are no more

  5. @DANDie
    The problem is that the US Supreme Court said its a constitutional right—so you have an uphill battle on a frontal assault–constittional convention/
    .But there is more than one way to skin a cat—–frequently people are called upon by contract especially in govt servce to waive the 1st amendment freedom of speach—also privacy—-waivable if the govt wants to conditiona privilege upon it.

    So if Congress wants to muzzle these barking dogs it can do so by putting conditions on govt related funding–or other privileges–ie a natl bank. That the entity must waive this newfound constitutional right because the exercise of the right is damaging to the nations well being and safety—-if the entity wants to continue shoveling cash—it can give up federal contracts—federal protections

    so wouldnt introduction of such a bill cause a cash landslide into congress—but they can keep the money and shake em down another day—this is the way to do it

  6. @JG
    Replying to your hypothetical, simply from an historical perspective, the tyrants generally spring not from the ranks of politicians with no real constituencies but for press manifestations–but from military-supported influence. Generals that get tired of seeing inefficiency, graft and demoralization in his troops.

    Some spring directly from the officernon-bureacrat ranks: virtually every middle easterner of any length of control–true despots: Examples Col. Gadaffi, Col. Assad, Col Hussein—-then there is the raft of generalismos from Franco to Pancho Viya.
    Im not sure about Mussolini—Hitler was a contractor for the military post war as an inflitrator of the right wing militia-types. Later fancied himself a military guy.

    France had its Naploean—general of Generals. Going back every european king or displacer of kings prior to about 1600 was a general. Most of the top shelf Roman long-lived emperors doubled as generals.
    They benefit by the confidence people place in them–especially guys that are trained to handle guns–never relies on people like us but as props. Need a martyr or two—-need flagwaivers—-mostly though to make their words stick–they need boots on ground.

    The DHS constitutes a useful domestic army presence–necessary to make sure people keep sending in tax money—roads open—utilities operating. Utilities is the present focus of protection–so I guess there would be a large utility emergency management operation necessary.
    I like the name Department of Homeland Security—with Secret Service at top —its the functional equivalent of the Geheima Stats Polizei–aka Gestapo. So the machinery is in place. Now there just needs be a real live general to get control of that because as in Germany the officercorp is a conservative lot—and in the US generally speaking the military does not like to use its troops on citizens–bad PR, its a wonder Douglas Mac arthur did it. But he wanted to be a tryrant too—and got there as far as the japanese are concerned.

    So we have thousands of generals, the machinery–now they just need demoralized troops—feelig like theyv gotten all screwed up fighting a couple viet nams—for the same useless outcome. Economic meltdown–generals need to look to the homefront to see where the threat to the nation–to their solemn pledge to protect and defend the constitution and nation. The risk that politicians create when they play at war is that they will fail and lose control of that machine —certainly id put my trust in the pentagon over any other agency—being the lesser of evils–if it come to being amidst collapsing govt services.

    Sure the bureacrats still print and mail checks, half printed at the fed—they show up for work–but they are not providing the glue that holds all the moving parts together–at least not when the financial world is aggressively destablizing the legal system, the economic systems and the fundamental integrity of govt.

    Oh I forgot Washington, Jackson, Col.Teddy Roosevelt and benign dictators Grant Eisenhower, Harrison others???? a lot of Hispanick Americans would point to Generalismo Santa Anna–who still stands in Mexico City pointing the way North to his people.

    where is our general?

  7. Absolutely nothing will happen until local District Attorneys and State Attorney Generals are politically pressured to do what they are sworn to do…. stongly prosecute fraud of persons and (banking) corporations for these crimes agains “real people.”

    The assinine idea that a corporation is a “person” must be finally and permanently done away with. Any use of “corporate status” to avoid the (“veiled”) prosecution of individuals who are criminally involved must be addressed before the proscution. “Pierce the veil!”

  8. @dcb – well, we can’t count on a “tyrant” because at now half a billion a pop, one would never get elected. And one in any other post would get 86′d for oh, pick a reason. Wonder how that “rogue enforcer” who tried to nail Standard C is faring or will fare. How aggrevating that one can’t just live his life and pay his taxes. Isn’t that why the U.S. claims wars are ultimately fought? I’m holding out hope for Obama’s second term even though I believe he wanted (and badly) a different legacy, one he is never going to achieve for the interference of these events. It’s been a long time, but at the time of Viet Nam, I remember thinking wouldn’t it be grand if the U.S. espoused principles at home worth fighting for. My brothers served in that “war” and one of them still has ptsd. And for what? Our rights at home have done nothing but deteriorate with legislation being more and more influenced by a few, the special interests monopoly. Imo, and humbly so in light of my lack of acumen on the subject as a matter of fact (skipped areas of education), the same rat-b’s who endorsed and profitted from VN or their successors have taken total control over this country. They probably already had it, or mostly, but its manifestations are now truly intolerable. Maybe we need a lot of “tyrants”. Maybe we need tyranny. 5 to 10 years from now, many, many more will have lost their homes (at this rate), their most precious assets and a large source of well-being. With no change in legislation or enforcement of existing legislation, they will just continue the massacre of anyone less able to fight. They may find a new face for it, but it won’t stop. And why not if there is nothing to stop it? We have to find ways to hit and hurt back. When I think of the people I know, my friends and family, I’m forced to acknowledge that most of them live their lives in ignorant bliss. How many strong are we, those who would engage in “tyranny”?

  9. FINALLY A STATE THAT ACTUALLY USES THE MONEY AS GOD AND ANY RATIONAL PERSON WOULD HAVE INTENDED IN GOOD FAITH

    “The HomeCorps program is a comprehensive strategy developed by the AG’s Office to provide direct assistance to distressed borrowers and help communities recover from the foreclosure crisis. Two of the grant initiatives announced today will fund broad-scale, statewide initiatives to provide direct assistance to distressed borrowers in partnership with the AG’s Loan Modification Initiative, which has been assisting borrowers with obtaining loan modifications since April. In addition, 18 recipients will receive grant funding as part of the HomeCorps community revitalization effort focused on assisting Massachusetts communities and mitigating the impact of the foreclosure crisis.

    The Massachusetts Association for Community Action (MASSCAP) will be awarded a two year grant totaling $7.4 million to administer the Borrower Recovery Initiative. Beginning in September, the grant will fund 19 borrower recovery sites supported by 21 case managers across the state to work directly with families and individuals to prevent homelessness, provide assistance to families transitioning from homeownership following foreclosure, and provide financial education and counseling to individuals and families facing eviction. The sites will receive referrals from the AG’s Office and the funding will enable direct assistance for up to 2,400 households over the course of the 2-year grant term.

    The Massachusetts Legal Assistance Corporation (MLAC) and the National Consumer Law Center (NCLC) will be awarded a two year grant totaling $6 million to administer the Borrower Representation Initiative. MLAC and NCLC will use the grant to fund 14 locations statewide staffed by 19 attorneys dedicated to foreclosure-related cases and will deliver direct legal representation to homeowners facing foreclosure or eviction.

  10. Absolutely yes!!! They should have all assets taken away, including their asses… ..er horses. Then whipped in public and sent to penal servitude for life, as in hard work breaking stones without gloves.

  11. The recent piece on the Galopagos software describes exactly how they manipulated it—but that piece suggested that the investment bankers were the frauders and the ratings agencies the facilitators

  12. @ENRAGED

    When i refer to taking risks –i mean it in the broadest sense. Thats why I used Al Capone as the example. These guys generally speaking that we are talking of —the big casino gamblers “investment” bankers vs true commerical bankers—–they quit putting their own money at risk when they were allowed to convert from partnerships to public corporations in early 90′s. That was the beginning of the slippery slope—and corresponded to their wiping out the S&L competition for commercial banks.

    I refer to taking personal risk yes—and if the govt is to allow these gamblers to play with other peoples’ money –they will until as all gamblers–they go belly up on excesses and bad bets–further concentrating power and wealth—-then more –then more.

    So if they do not have personal financial risk–they must bear personal risk of loss thru govt action–siezure of assets disgorgement—for civil actions and of course criminal action.

    But I really think that this is unlikely ansent a really nasty collapse and ascension of some sort of anti-globalist nationalistic tyrant. That has proven to be the breaking point for these activities before. The only civilized alternative is investigation and punsishment of this cadre by the international court of justice for crimes against humanity. There is no death penalty there–so any actually taken prisoner must support themselves in prison—i like the idea of the Aleution island resorts.

    Or some unfenced location north of the arctic circle—where they have a polar bear feeding station–let the bears patrol the perimeter—-no satellite communications. silence–secrecy–like the siberian Gulalgs–

    Absent this risk for gambling with other peoples money then –next stop is a tyrant. Tyrant did not always connte evil—often they were perceived as protectors of the citizens being pillaged by the upper class–eg those who overthrew the French monarchy were tyrants–culminatinting in Nappy.A tyrant –are there any other historical precedents?

    some say Andrew Jackson was a tyrant for tearing apart the National Bank–forerunner to the Fed Reserve—-Jefferson hated the idea but didnt stop it–Jefferson talked but was no tyrant–Jacksonmade it happen and was a tyrant–but beloved by the people

    but what of europe?

  13. August 20, 2012

    Fraud claims vs Moody’s, S&P, to go forward: U.S. judge

    Source: Thomson Reuters

    A Manhattan federal judge on Friday refused to dismiss a lawsuit seeking to hold credit rating agencies responsible for misleading investors about the safety of a risky debt vehicle that they rated.

    U.S. District Judge Shira Scheindlin denied a bid by Moody’s Investors Service and Standard & Poor’s to dismiss the claims, saying a jury could reasonably infer the agencies acted fraudulently over their activities regarding the Cheyne structured investment vehicle.

    Friday’s 89-page opinion also dismissed substantive fraud claims against Morgan Stanley, which marketed the SIV, but let stand claims the bank aided and abetted the alleged wrongdoing. “

    Morgan Stanley not only substantially assisted the rating agencies in perpetrating a fraud, but actively encouraged them to do so,” the opinion said.

    “Plaintiffs have offered evidence suggesting that despite misgivings, Morgan Stanley manipulated the Cheyne SIV modeling process to create the ratings it desired,” the opinion said. The bank “can be liable for aiding and abetting fraud, but not fraud.” Morgan Stanley spokeswoman Mary Claire Delaney declined to comment.

  14. @DCB

    “That is the essence of taking risks”. I have no problem with bankers taking risks… so long as it is with THEIR money. But here is the thing: I don’t want MY tax money being used for their room-and-board. Isn’t there some desert island we could drop them all off on and let them devour each others…? Somewhere north of Siberia?

  15. Does Joe Banker need to go to Jail?
    Not just yes, but hell yes!

  16. A single jaywalker commits a crime. If everyone does it, it becomes common practice. Who can we throw in jail? The top guy? The top ten? The top tier? Everyone including the robosigners and notaries who knew what they were doing was/is wrong? Bank fraud became a movement with power. It was done by all banks and bank like entities. Jail for banksters? Never gonna happen!

  17. Yes, bankers should go to jail. The comment below is awaiting moderation on another thread, thought I’d try it here:

    Check out my favorite part of MERS’ weak and pathetic response to the Bain decision:

    “As we have maintained consistently, MERS is an agent of lenders and their successors and assigns. In fact, the opinion written by Justice Tom Chambers states: ‘nothing in this opinion should be construed to suggest an agent cannot represent the holder of a note. Washington law, and the deed of trust act itself, approves of the use of agents.’ The opinion also states: ‘MERS notes, correctly, that we have [the Court has] held ‘an agency relationship results from…consent by one person that another shall act on his behalf…’’”

    Apparently MERS has a reading comprehension problem–the two quotes above are regarding agency law in general, NOT MERS in particular. It’d be like a murderer issuing a press release in his defense saying “The judge’s order said that owning guns is permitted by the laws of this state,” as if that because owning guns is legal, murder with a gun is therefore also legal. WRONG! Go back and read it again ya bastards–especially the paragraph directly below the one YOU cited:

    ” But Moss also observed that “[w]e have repeatedly held that a prerequisite of an agency is control of the agent by the principal.” Id. at 402 (emphasis added) (citing McCarty v. King County Med. Serv. Corp., 26 Wn.2d 660, 175 P.2d 653 (1946)). While we have no reason to doubt that the lenders and their assigns control
    MERS, agency requires a specific principal that is accountable for the acts of its agent. If MERS is an agent, its principals in the two cases before us remain unidentified.12 MERS attempts to sidestep this portion of traditional agency law by pointing to the language in the deeds of trust that describe MERS as “acting solely as a nominee for Lender and Lender’s successors and assigns.” Doc. 131-2, at 2
    (Bain deed of trust); Doc. 9-1, at 3 (Selkowitz deed of trust.); e.g., Resp. Br. of MERS at 30 (Bain). But MERS offers no authority for the implicit proposition that the lender’s nomination of MERS as a nominee rises to an agency relationship with successor noteholders.13 MERS fails to identify the entities that control and are
    accountable for its actions. It has not established that it is an agent for a lawful principal.”

    Washington SuCo’s got your number, MERS!

  18. for heavans sake just take away their money, and their mansions,and their boats and their cars ect- asset strip them as they did to all of us. this being what they value most, poetic justice.

  19. @ALL

    The problem is called “selective enforcement”. See WIKI definition below:
    “Selective enforcement is the ability that executors of the law (such as police officers or administrative agencies, in some cases) have to arbitrarily select choice individuals as being outside of the law. The use of enforcement discretion in an arbitrary way is referred to as selective enforcement or selective prosecution.”

    Historically, selective enforcement is recognized as a sign of tyranny, and an abuse of power, because it violates rule of law, allowing men to apply justice only when they choose. Aside from this being inherently unjust, it almost inevitably must lead to favoritism and extortion, with those empowered to choose being able to help their friends, take bribes, and threaten those from they desire favors.

    However, the converse can also be true. Police officer discretion is sometimes warranted for minor offenses, for instance where a warning to a teenager could be quite effective without putting the teen through a legal process and also reduces costs of governmental legal resources. Another example is patrol officers parked on the side of a highway for speed enforcement. It may be impractical and cost prohibitive to ticket everyone who is going any amount over the speed limit, so the officer should watch for the more egregious cases and those drivers who are showing signs of driving recklessly.”

    Hey—i did not write the WIKI piece–in fact Im a bit surprised by the insightful description re tyranny—but I guess Im close to the mark.

  20. From American Banker today 8/20/12;
    “Listening to Regulators Can Keep Your Bank Out of Trouble: Thomas Stanton
    “The crisis and its immense costs suggest that companies should change their approach and try to listen to their supervisors and consider the merits of supervisory feedback,” writes Thomas Stanton, a former staff member of the Financial Crisis Inquiry Commission.

    Feedback from supervisors can help to improve decisions sometimes merely by posing the right questions and pursuing the answers, Stanton argues. Supervisors can be especially important in providing an independent review of the quality of decisionmaking within a company.

    How can bankers maintain productive relationships with regulators? Leave a comment at BankThink

    clearly those private calls are a big help in determining how far out the ice gets thin. The question is : should those calls be recorded? Should they be available for FOIA? If you ask a question of IRS, a branch of Treasury, there is a very open program Letter rulings that pose questions and provide answers w/o names–ie redacted. Why does this process not work for bankers and servicers and shadow banks and non-banks engaging in financial transactions of dubious character—why are public comments on rules inadequate? In short why must every other industry operate in the open in financial matters relating to treasury–but not financial institutions or casino gamblers or foreign banks—why were Gheithners letters re LIBOR rate fixing concealed so long–are all of them now revealed or just the self-serving ones?

  21. The more you investigate and the more you review the history, you will find that the US Government ” Bill Clinton” and administration initiated the crime. “Bush” and administration promoted the crime, Obama and administration provides the cover up for the crime. Republicans and Democrats are as guilty. Banksters knowingly are guilty. They should go to jail as well. So what are the Romney plans to steal from the tax payer and home owner? Do not trust your bank, your mortgage company nor your government Once they remove regulations they gave the thieves a license to steal. Now please write Phil Graham a thank you letter. Send em all to jail! They are one in the same and nothing more than DC mafia. I am ashamed of the service performed by most Senators, congressman, governors, and attorney generals who sever this country with absolute no integrity over the last 20 years. These scum bags who financially molested and destroyed the lives of millions must be jailed. It is disgusting to say the least !

  22. The problem here as any banker will tell you—is not that JOE did so many things wrong. He didn’t: he carefully evaluated the level of tolerance of the enforcement agencies, made a few calls, got some consults. and determined that his plans enunciated above were not subject to enforcement under the past or present rules. He did not break the rules as they were being enforced. He skated on the edge.

    That is the essence of taking risks–the closer one skates towrds the edge the higher the reward must be to justify the risk-taking. Like Al Capone—carefully evaluated the state and local tolerance for risky behavior—-was rewarded accordingly for “on the edge” conduct, but made a mistake with the bookkeeping and got tangled up with IRS. Thus his rewards were fully justified—he went through the ice–thus earning his outsized rewards.

    Now most bankers would argue–at least the big internatl ones that the problem is not risk taking but the over zealous establishment and enforcemnent of all sorts of rules that hinder the free flow of capital. Certainly StanChart and HSBC, JPM etc can make this argument with sufficiency. A newtork of rules that say —you can launder rogue govt money—drug-dealers money —-monies stolen by govt officials [ie the recent Saudi generals kickbacks paid by the UK DoD] ——you can launder in most cases as StanChart claimed in keeping with the rules–but in a few vague instances the general rule of laissez faire is artificially dampened. So who is to blame–the poor entrepeneur just trying to squeez a few billions —or the govt regulators that say yes 99% of the time to waivers of the intent of the laws?

    Then again theres that UK bribery and kickback thing? Hmmmm—but i guess the bankers argument there is the same—when is a bribe illegal and when is it not? who can tell? Maybe the best witnesses on this would be those special friends of Joes that got those bargain loans—and dont get foreclosed if they have a few bumps in the road.

  23. Obviously yes, but WHO will prosecute?

    I went to our da’s office- they said go to police- i went to police and they said they could not arrest and charge a corporation- so i gave them the name of the loan officer and i gave them the name of the ceo of the corporation- they said no- if someone came into my house and stole something they could be prosecuted- but stealing my house- so sorry- you signed a contract-

    saw the prior da in person and asked him who will prosecute countrywide frauds- he said go the fbi

    called the fbi- they said to summarize in one page with names and phone numbers everyone involved. one page- explaining everything?

  24. Abso-freakin-lutely.

  25. Do bankers need to go to jail?Do bears poop in the woods the answer to both of these would be YES.You do the crime you pay the time ,This is really a no brainer.If anyone of us had done these types of crime we would be doing hard time at the big house.So what makes these guys any different or any better than the rest of us.Put them in lock down until they have repaid every dollar that they took from the American taxpayer and homeowner and don’t make it a cush sentance put them in general population and let’s see how they do with the rest of us.JMHO.

  26. you want my house banksters, than you better pay me back my $100,000 hard cash deposit !!!……i will bulldoze it to the ground before i allow you to steal from me AGAIN !

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