New Jersey Court Invokes Golden Chicken of Law

Not only did this court get it wrong, it apparently knew it was getting it wrong and so ordered that the case could not be used as precedent.

Steve Mnuchin, now Secretary of our Treasury, was hand picked by the major banks to lead a brand new Federal Savings Bank, called OneWest, which was literally organized over a single weekend to pick up the pieces of IndyMac. By the time of its announced failure in the fall of 2008 IndyMac was a thinly capitalized shell  conduit converted from regular commercial banking to a conduit to support the illusion of securitization.

The important part is that in terms of loans IndyMac literally owned as close to nothing as you could get. OneWest consisted of a group of people who don’t ordinarily invest in banks. But this was irresistible. Over the shrieking objections of FDIC chairwoman who lost her job, OneWest was allowed to claim (a) that it owned the loans that IndyMac and “originated” and (b) to claim 80% of claimed losses which the FDIC paid.

see OneWest “Wins” Again

Thus OneWest claimed losses vastly exceeding the “investment” by certain members of the 1% whom I won’t name here. This enabled them to do 2 things. Claim 80% of the fictitious losses from loans that were not owned by Indymac and the foreclose to collect the entire amount.

Mnuchin was put in charge of “operations.” He ran nothing and basically did as he was told. He knew that the IndyMac residential loan portfolio was at practically zero, he knew that the 80% claim was fictitious, and he knew that neither IndyMac nor OneWest, its supposed successor owned the loans. Nonetheless the “foreclosure king” was entirely happy with foreclosing on homeowners who were caught in a world of spin.

The investors in the OneWest deal split the spoils of war. To be fair they didn’t actually know the truth of the situation. Mnuchin painted a very rosy profit picture that would happen over the short-term and he was right.

As with WAMU, Countrywide et al, the business of IndyMac was largely run through remote vehicles posing as mortgage brokers, originators or just sellers. These entities did exactly what IndyMac told them to do and in so doing IndyMac was doing exactly what it was told to do by the likes of Merrill Lynch, and indirectly Bank of America, Chase, Goldman Sachs, and Citi.

As the descriptive literature on securitization says, all vehicles are remote and special purpose so as to protect everyone else against allegations of wrongdoing. But there was nothing remote about these companies. Yet here in this decision in New Jersey the court predicated its ruling on the proposition that none of the players were liable for any of the unlawful activities of their predecessors.

It’s decisions like this that leave us with the knowledge that we have a long way to go before the courts get curious enough to apply the law as it is — not as the courts and others say it is.

8 Responses

  1. Mnuchin is a f******g criminal, and so is Wilburrrrrrrrr Ross.

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  2. In Illinois foreclosure judges get “donations” from foreclosures lawyers – and of course rule in favor of banks, regardless of how much fraud is committed upon the Court. Until JUDGES held personally liable for money laundering and aiding securities fraud, forgery, perjury and other crimes – nothing will change. Banks do not award properties to themselves. judges do. Foreclosures crisis was created by Judges.

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  3. Hmm— the state fraud claim is allowed to stand. Lower court was reversed on this. Legisman is right on this.

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  4. Looks like this is the kind of thing homeowners and their lawyers fail on 3 The parties apparently agree that IndyMac was the mortgage originator despite the heading on the mortgage application saying “Optima Home Mortgage.”

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  5. How much further can this be reduced to the smallest denominator, this should be it, but Neil says the courts have a long way to go, just like this golden chicken, it’s wrong and the knownit, yet have no problems making this a ruling, sounds a lot like our family courts.

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  6. Once again, it’s clear Mr. Garfield doesn’t understand what the holdings are in the cases he’s reading. He states: “….the court predicated it’s ruling on the proposition that none of the players were liable for any of the unlawful activities of their predecessors.”

    When in fact the court held: “…defendants would have standing to bring a CFA claim against OneWest.” “…Accordingly, we reverse the trial court’s order striking defendants’ answer and remand for further proceedings on the CFA claim.

    It’s unmistakable, the court held that OneWest was in fact “liable” for the “unlawful activities of their predecessors.” Unmistakable, for those of us who know how to read and understand holdings.

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  7. Steve Mnuchin family the one has lack of conscience on people financial life!

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  8. I believe this article may have some errors? Mnuchin knew very well what was going on and was instrumental in organizing One West Skank!

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