Why the AGs Must Not Settle: Robo-signing Is Just the Tip of the Iceberg

Ellen Brown

A foreclosure settlement between five major banks guilty of "robo-signing" and the attorneys general of the 50 states is pending for Monday, February 6th; but it is still not clear if all the AGs will sign. California was to get over half of the $25 billion in settlement money, and California AG Kamala Harris has withstood pressure to settle.

That is good. She and the other AGs should not sign until a thorough investigation has been conducted. The evidence to date suggests that "robo-signing" was not a mere technical default or sloppy business practice but was part and parcel of a much larger fraud, the fraud that brought down the whole economy in 2008. It is not just distressed homeowners but the entire economy that has paid the price, resulting in massive unemployment and a shrunken tax base, throwing state and local governments into insolvency and forcing austerity measures and cutbacks in government services across the nation.

The details of the robo-signing scam were spelled out in my last article, here. The robo-signing fraud and its implications are expanded on below.

Why All the Robo-signing?

Over half the homes in the country are now held in the name of an electronic database called MERS ―Mortgage Electronic Registration Services. MERS is a smokescreen behind which these mortgages were sold to trusts that sold them to investors. The mortgages were chopped into pieces and sold as "mortgage-backed securities" (MBS), which traded in a supposedly liquid market. That meant the investors could sell them in the money market at any time on a day's notice. Yale economist Gary Gorton gives this example:

Suppose the institutional investor is Fidelity, and Fidelity has $500 million in cash that will be used to buy securities, but not right now. Right now Fidelity wants a safe place to earn interest, but such that the money is available in case the opportunity for buying securities arises. Fidelity goes to Bear Stearns and "deposits" the $500 million overnight for interest. What makes this deposit safe? The safety comes from the collateral that Bear Stearns provides. Bear Stearns holds some asset-backed securities [with] a market value of $500 millions. These bonds are provided to Fidelity as collateral. Fidelity takes physical possession of these bonds. Since the transaction is overnight, Fidelity can get its money back the next morning, or it can agree to "roll" the trade. Fidelity earns, say, 3 percent.

That is where the robo-signing came in. Foreclosure defense attorneys armed with the tools of discovery have discovered that robo-signing ―involving falsified signatures assigning mortgages back to the trusts allegedly owning them― occurred not just occasionally or randomly but in virtually every case. Why? Because the mortgages had to be left free to be bought and sold on a daily basis in the money market by investors. The investors are not interested in making 30 year loans. They want something short-term with immediate rights of withdrawal like a deposit account.


Why All The Robo-Signing? Shedding Light On The Shadow Banking System

Ellen Brown

The Wall Street Journal reported on January 19th that the Obama Administration was pushing heavily to get the 50 state attorneys general to agree to a settlement with five major banks in the “robo-signing” scandal. The scandal involves employees signing names not their own, under titles they did not really have, attesting to the veracity of documents they had not really reviewed. Investigation reveals that it did not just happen occasionally but was an industry-wide practice, dating back to the late 1990s; and that it may have clouded the titles of millions of homes. If the settlement is agreed to, it will let Wall Street bankers off the hook for crimes that would land the rest of us in jail – fraud, forgery, securities violations and tax evasion.

To the President’s credit, however, he seems to have shifted his position on the settlement in response to protests before his State of the Union address. In his speech on January 24th, President Obama did not mention the settlement but announced instead that he would be creating a mortgage crisis unit to investigate wrongdoing related to real estate lending. “This new unit will hold accountable those who broke the law, speed assistance to homeowners, and help turn the page on an era of recklessness that hurt so many Americans,” he said.


Occupy the Neighborhood: How Counties Can Use Land Banks and Eminent Domain

Ellen Brown

An electronic database called MERS has created defects in the chain of title to over half the homes in America. Counties have been cheated out of millions of dollars in recording fees, and their title records are in hopeless disarray. Meanwhile, foreclosed and abandoned homes are blighting neighborhoods. Straightening out the records and restoring the homes to occupancy is clearly in the public interest, and the burden is on local government to do it. But how? New legal developments are presenting some innovative alternatives.

John O’Brien is Register of Deeds for Southern Essex County, Massachusetts. He calls his land registry a “crime scene.” He is mad as hell and he isn’t going to take it anymore. A formal forensic audit of the properties for which he is responsible found that:

Only 16% of the mortgage assignments were valid.
27% of the invalid assignments were fraudulent, 35% were “robo-signed,” and 10% violated the Massachusetts Mortgage Fraud Statute.
The identity of financial institutions that are current owners of the mortgages could be determined for only 287 out of 473 (60%).
There were 683 missing assignments for the 287 traced mortgages, representing approximately $180,000 in lost recording fees per 1,000 mortgages whose current ownership could be traced.

At the root of the problem is that title has been recorded in the name of a private entity called Mortgage Electronic Registration Systems (MERS). MERS is a mere place holder for the true owners, a faceless, changing pool of investors owning indeterminate portions of sliced and diced, securitized properties. Their identities have been so well hidden that their claims to title are now in doubt. According to the auditor:

What this means is that . . . the institutions, including many pension funds, that purchased these mortgages don’t actually own them . . . .


Saving the Post Office: The Models of Kiwibank and Japan Post

Ellen Brown

Neither rain nor sleet nor snow may have stopped the Pony Express, but the nation’s oldest and second largest employer is now under attack. Claiming the Postal Service is bankrupt, critics are pushing legislation that would defuse the postal crisis by breaking the backs of the postal workers’ unions and mandating widespread layoffs. But the “crisis” is an artificial one, created by Congress itself.

In 2006, Congress passed the Postal Accountability Enhancement Act (PAEA), which forced the USPS to put aside billions of dollars to pay for the health benefits of employees, many of whom hadn’t even been hired yet. Over a mere 10 year period, the USPS was required to prefund its future health care benefit payments to retirees for the next 75 years, something no other government or private corporation is required to do. As consumer advocate Ralph Nader observed, if PAEA had never been enacted, USPS would now be facing a $1.5 billion surplus.

The USPS is a profitable, self-funded venture that is not supported by the taxpayers. It is funded with postage stamps—one of the last vestiges of government-issued money. Stamps are fungible and can be traded at par; and they are backed, not by mere government “fiat,” but by labor. One stamp will buy the labor to transport your letter 3000 miles.

The USPS is one of the few businesses the government is allowed to operate in competition with private companies; it is the only U.S. agency that services all its citizens six days per week; and it is perhaps the last form of communication that protects privacy, since tampering with it is against federal law. In 1999, it employed nearly a million people; and today, it employs over 600,000. Where are those workers to go, when the post office is no more?


Money Power World Rule

Stephen Lendman


Right: Jacob Schiff, the Rothschild lieutenant who funded
communist revolution and the Japanese invasion of China.

The late Georgetown University historian Carroll Quigley said in his book titled, "Tragedy and Hope":

"(T)he powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent private meetings and conferences."

By controlling democratic and despotic governments as well as others in between, they've moved closer to absolute global control of money, credit and debt to dominate economies, politics, commerce, and imperial adventurism. As a result, they've benefitted handsomely at the expense of nations and popular interests.

Josiah Stamp, former Director of the Bank of England said:

"Banking was conceived in iniquity and was born in sin. The bankers own the earth. Take it away from them, but leave them the power to create money, and with the flick of the pen they will create enough deposits to buy it back again." "However, take it away from them, and all the great fortunes like mine will disappear and they ought to disappear, for this would be a happier and better world to live in. But, if you wish to remain the slaves of bankers and pay the cost of your own slavery, let them continue to create money."

Aesop said "We hang the petty thieves and appoint the great ones to public office." Bankers with money power are the most pernicious of all.


The Way To Occupy A Bank Is To Own One

Ellen Brown

The campaign to "move your money" has gotten a groundswell of support. Having greater impact would be to "move our money" -- move our local government revenues out of Wall Street banks into our own publicly-owned banks.

Occupy Wall Street has been both criticized and applauded for not endorsing any official platform. But there are unofficial platforms, including one titled the 99% Declaration which calls for a "National General Assembly" to convene on July 4, 2012 in Philadelphia. The 99% Declaration seeks everything from reining in the corporate state to ending the Fed to eliminating censorship of the Internet. But none of these demands seems to go to the heart of what prompted Occupiers to camp out on Wall Street in the first place – a corrupt banking system that serves the 1% at the expense of the 99%. To redress that, we need a banking system that serves the 99%.

Occupy San Francisco has now endorsed a plan aimed at doing just that. In a December 1 Wall Street Journal article titled “Occupy Shocker: A Realistic, Actionable Idea,” David Weidner writes:

[P]rotesters in the Bay Area, especially Occupy San Francisco, have something their East Coast neighbors don't: a realistic plan aimed at the heart of banks. The idea could be expanded nationwide to send a message to a compromised Washington and the financial industry.It's called a municipal bank. Simply put, it would transfer the City of San Francisco's bank accounts—about $2 billion now spread between such banks as Bank of America Corp., UnionBanCal Corp. and Wells Fargo & Co.—into a public bank. That bank would use small local banks to lend to the community.

The public bank concept is not new. It has been proposed before in San Francisco and has a successful 90-year track record in North Dakota. Weidner notes that the state-owned Bank of North Dakota earned taxpayers more than $61 million last year and reported a profit of $57 million in 2008, when Bank of America had a $1.2 billion net loss. The San Francisco bank proposal is sponsored by city supervisor John Avalos, who has been thinking about a municipal bank for several years.

Weidner calls the proposal “the boldest institutional stroke yet against banks targeted by the Occupy movement.”


Pulling Back the Curtain on the Wall Street Money Machine

Ellen Brown

We have been distracted here and in Europe by a sudden panic over our “sovereign debt” crises, when the real crisis is that our debt is NOT sovereign.

On November 27, Bloomberg News reported the results of its successful case to force the Federal Reserve to reveal the lending details of its 2008-09 bank bailout. Bloomberg reported that by March 2009, the Fed had committed $7.77 trillion in below-market loans and guarantees to rescuing the financial system; and that these nearly interest-free loans came without strings attached.

The Fed insisted that the loans were repaid and there have been no losses, but the Bloomberg report said the banks reaped a $13 billion windfall in profits; and “details suggest taxpayers paid a price beyond dollars as the secret funding helped preserve a broken status quo and enabled the biggest banks to grow even bigger.”

The revelations provoked shock and outrage among commentators. But in a letter to the leaders of the House and Senate Committees focused on the financial services industry, Fed Chairman Ben Bernanke responded on December 6th that the figures were greatly exaggerated. He said the loans were being double-counted: short-term loans rolled over from day to day were counted as separate cumulative loans rather than as a single extended loan.

The Fed, it seems, was doing only what banks and the money market do for each other every day: making “liquidity” available at very low interest rates. In 2008, bank liquidity dried up after Lehman Brothers collapsed, and the banks could not get the cheap, ready credit on which their lending scheme depends. The Fed then stepped in as “lender of last resort,” doing what it had to do to keep the banking scheme going.

Keeping the banking system afloat is all well and good. What is wrong with the existing scheme is that it allows the Fed to play favorites.


The E.C.B. Fiddles While Rome Burns

Ellen Brown

“To some people, the European Central Bank seems like a fire department that is letting the house burn down to teach the children not to play with matches.”

So wrote Jack Ewing in the New York Times last week...

“The E.C.B. has a fire hose — its ability to print money. But the bank is refusing to train it on the euro zone’s debt crisis.

“The flames climbed higher Friday after the Italian Treasury had to pay an interest rate of 6.5 percent on a new issue of six-month bills . . . the highest interest rate Italy has had to pay to sell such debt since August 1997.

“But there is no sign the E.C.B. plans a major response, like buying large quantities of the country’s bonds to bring down its borrowing costs.”

Why not? According to the November 28th Wall Street Journal, “The ECB has long worried that buying government bonds in big enough amounts to bring down countries’ borrowing costs would make it easier for national politicians to delay the budget austerity and economic overhauls that are needed.”

As with the manufactured debt ceiling crisis in the United States, the E.C.B. is withholding relief in order to extort austerity measures from member governments—and the threat seems to be working. The same authors write:

“Euro-zone leaders are negotiating a potentially groundbreaking fiscal pact . . . [that] would make budget discipline legally binding and enforceable by European authorities. . . . European officials hope a new agreement, which would aim to shrink the excessive public debt that helped spark the crisis, would persuade the European Central Bank to undertake more drastic action to reverse the recent selloff in euro-zone debt markets.”

The Eurozone appears to be in the process of being “structurally readjusted” – the same process imposed earlier by the IMF on Third World countries. Structural demands routinely include harsh austerity measures, government cutbacks, privatization, and the disempowerment of national central banks, so that there is no national entity capable of creating and controlling the money supply on behalf of the people. The latter result has officially been achieved in the Eurozone, which is now dependent on the E.C.B. as the sole lender of last resort and printer of new euros.


Super Committee Deadlock: Heads They Win, Tails We Lose

Ellen Brown


United States Congress Joint Select Committee on Deficit Reduction (WP)

 
It is no great surprise that with only days to go, the congressional “super committee,” given the herculean task of carving an additional $1.2 trillion out of the federal budget, has failed to reach agreement.  Why should six Republicans and six Democrats with diametrically opposed views agree in a few weeks, when Congress couldn’t shake hands on it after months of wrangling, despite the guillotine blade of a federal default hanging over their heads?      

Whether the super committee reaches agreement or not, however, the deficit hawks win.  If they agree, either $1.2 trillion gets cut from the budget or taxes go up by that amount; and the committee co-chair has categorically stated taxes are not going up, so that means the budget will be cut.  If agreement is not reached, $1.2 trillion in cuts automatically kick in, split evenly between domestic and military spending.  Either way, the economy will wind up with $1.2 trillion less in the way purchasing power.  The result will be to reduce demand, kill jobs, and put more people on the streets.
 
For the deficit hawks, however, it all seems to be going according to plan.  The super committee is characterized as an emergency measure that was rushed through to avoid an arbitrarily imposed August deadline for freezing the debt ceiling, but it has actually been in the works for years.  In 2009, it was called the “Bipartisan Task Force for Responsible Fiscal Action”.  That plan died when its Senate sponsors, Judd Gregg and Kent Conrad, failed to secure 60 votes for passage in the Senate.  The Gregg-Conrad bill was criticized as railroading through legislation that would unconstitutionally slash domestic services without congressional debate, but its task force would actually have been LESS autocratic than the super committee, which has sweeping powers and needs only a simple majority among its 12 members to prevail.

What has been forced out of the debate is whether cutting the budget is a good idea at all.


Why Libya Was Attacked

Stephen Lendman


Sirte all but flattened. Thousands killed. - What's so humanitarian
about that? Wasn't the UN Resolution 1973 (2011) about "the
protection of civilians
" and the Security Council's "strong commit-
ment to the sovereignty, independence, territorial integrity and
national unity of the Libyan Arab Jamahiriya
"? Did the UN do
anything whatever to stop the vicious US-NATO attack on Libya?

His faults aside, Libyans supported Gaddafi overwhelmingly. They still do. His spirit drives their revolutionary struggle for freedom. They won't quit until it's achieved.

Obama's March 28, 2011 address at the National Defense University was true to form. It reeked of duplicity, hypocrisy, and ball-faced lies, saying:

"For generations, the United States of America has played a unique role as an anchor of global security and as an advocate for human freedom." "....(W)e are reluctant to use force to solve the world's many challenges." "But when our interests and values are at stake, we have a responsibility to act. That's what happened in Libya...." For decades, Libya was "ruled by a tyrant....He has denied his people freedom, exploited their wealth, murdered opponents at home and abroad, and terrorized people around the world - including Americans who were killed by Libyan agents."

Substitute Washington for Libya and he got it right. America is a rogue terror state, a menacing plague on humanity.

Democratic values, human and civil rights, and rule of law principles are non-starters.

Only corporate and imperial interests matter, not equity, justice, peace on earth, and government of, by and for the people while respecting the sovereign rights of other nations.

NATO's war on Libya was planned many months in advance like all wars. Why is most important, or put another way - cui bono?

Official accounts and media scoundrels never explain. Dozens of previous articles discussed relevant issues and answers, including one summarizing what's most important. More on that below.


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