WHAT “BANKS” REALLY DO

Jamie Dimon, pompous ass of JP Morgan Chase, has gotten himself into an awkward situation. Losing $2 billion dollars, or was it three, or four or more, maybe much, much more. Somewhere in that massive financial fog known as derivatives, $865 trillion has gone missing so what is a couple of billion?

His difficulty at the moment is in defending his position that regulations that would have prevented this loss are unnecessary.

But what if it’s way more than a few billion? Could this be the first schism that foretells the avalanche of Euro and other nation defaults?

It isn’t so much that I’m sure that it’s coming, it is more that I do not see any way it can be avoided.

I spend way more time than I would like talking about the global economic meltdown, just now drawing to the close of its first quarter, and the thieving, rotten bastards who have flung us into an economic abyss.

We have a long way to go before anything ever improves because before anything can get better we have tochange the system.

I’m not talking about tinkering with the system. There is nothing at all wrong with the system; it is working perfectly for the people who designed it, own it and run it; and, Brother, that ain’t you and me.

This thing they call capitalism and a free market economy couldn’t be anything further from it. The problem is that only about one out of a thousand people actually know anything about banking.

I was once one of you. I thought banking was sort of obvious and mundane. People need a place to keep their money. Innovation needs capital to create productivity.

Back in the day, it was all pretty local and that was about it. Bankers were still the richest guys in town and anyone who ever played Monopoly knows that you want to be the bank.

Those who really understand banking don’t talk about it in public. They are either part of the secret society or they have learned that, in discussions of the economy, if one actually knows how the banking system works and attempts to illuminate others, it will earn them a reputation for being odd.

Knowing the secrets of banking is like seeing a UFO. Who would ever believe you?

And, that is part of the problem. Released from our shackles, we can see that the shadows on the wall are not reality, but they are all we have ever known.

I used to think I was pretty savvy. But, I’m just country boy smart, not felonious smart. I had no idea what was going on. None. Even when I had been to the bottom of the rabbit hole, I was stunned and dumbfounded for six months. It was just so hard to believe.

And then, where do you even begin to tell the story? Let’s take the simplest part first.

The Banks that I am referring to aren’t really banks in the traditional sense; they are more akin to a cartel. They are called ‘‘investment banks”, but financial intermediary would be a better definition. Among the largest are Bank of America, Citibank, Deutsche Bank, Goldman Sachs, JPMorgan Chase, UBS and Wells Fargo.

Banks borrow money at 0% and buy Treasury Bonds that pay them 3.5% interest.

Who would be stupid enough to loan money at 0%? The Federal Reserve Bank.

What is The Federal Reserve Bank?

Despite the title, it isn’t a federal agency or a bank, and it does not reserve anything. It is a private corporation that has taken control of our monetary system. Really! Why is Wall Street an island of prosperity in a global sea of poverty?

Where does the Federal Reserve get the money they loan the banks at 0%?

They make it up.

Who pays the interest on the treasuries the banks buy with the phony money created for them by the Federal Reserve Bank?

The American taxpayer. I told you it was hard to believe.

For now, we’ll skip the history of how this came about. Believe me you are not ready for that. More recently, the Financial Services Modernization Act of 1999, also known as the Gramm, Leach, Bliley Bill, and the Commodity Futures Modernization Act of 2000, brought home the bacon for the banks.

Let’s pause for a moment and reflect on the above.

A private corporation makes up dollars to essentially give to banks guaranteeing them enormous risk free, tax payer funded profits.

For all of the money being pumped through the system, it creates not one job nor does it build a house or a microchip, and the value is steadily reduced as the supply continues to grow.

So there it is. The big banksta business plan in a nutshell. A direct tax-payer funded gift to the bonus babies of Wall Street. From us to them. They call that capitalism and the free market economy. I call it corporate welfare and organized crime.

But, they couldn’t stop there. When you can just go to the fed window and get all of the taxpayer funded cash you can carry, where’s the fun? Where’s the challenge?

What if, and this is where I lose most people, so stay with me, what if the real goal all along has been a global economic collapse?

Why would they want that to happen?

Because they own massive Credit Default Swaps that pay them for virtually every credit failure imaginable.

The recent Greek bailout, now unavoidably eroding, was achieved in order to prevent a “Credit Event” triggering the payout of unknown sums the likes of which do not exist anywhere on the planet.

To the bond holders who took a 50% haircut it seemed like a “credit event” had occurred, but because the “voluntary” haircuts avoided, for the moment, a Greek default, the 15-member committee, known as the Determination Committee, within the International Swaps and Derivatives Association (a private group of derivatives dealers and bankers) ruled otherwise.

One of the most fascinating aspects of banks is that they just make the rules up as they go along.

In doing so, they postponed the global economic collapse until a real default occurs somewhere. And, it will.

The problems facing the banks that hold the Greek bonds are exacerbated by the banks inability to accept reality about its worthless bonds.

They have yet to account for the losses on their books and argue that they don’t have to because they have insurance on them via the CDS. Which aren’t going to pay them.

One can only wonder what bank balance sheets will look like if they have to pay out on the CDS paper theywrote. Given the total amount of money involved, it is unlikely that insurance companies such as AIG, other banks, and hedge funds will be able to pay them.

The mortgage bonds sold by banks to investors are a similar story. The bonds are backed by nothing at all. They were never properly securitized, the values are fiction, and the same mortgages are pledged to multiple pools.

Once you start breaking the law to make money, it would be a bad business decision to stop. Viewed in that context, one must realize that these people will do whatever they can get away with. And they have been allowed to get away with almost everything.

The recently signed consent decrees are another example of bank defiance of the law in that they continue to employ the same unlawful practices that they agreed to cease.

It’s been five years since I wrote my first column suggesting that mortgage servicers were foreclosing on homeowners who were not in breach of their agreements.

At that time, I knew nothing of debt securitization, credit default swaps or derivatives.

My earliest investigations led quickly to one important aspect of all of this, and in September of 2009, I wrote, “Sixty Million Mortgages May Have Fatal Flaws”, one of the earliest articles exposing the murky MERS connection and the looming title problems.

As amazing as that is, that wasn’t the story, just a side bar. But, it raised the question of the real reason for MERS existence.

Now we know that Wall Street had designed a number of new mortgage products containing features that, based on their studies of mortgage risk, would lead to dramatically higher default rates than those of past mortgages. You read that right. They studied the risks associated with mortgage lending and wove into these new loans the very seeds of default.

For decades, the foreclosure rate for residential mortgages hovered under one half percent.

According to a recent report from the Mortgage Bankers Association, “The combined percentage of loans in foreclosure or at least one payment past due was 12.63 percent on a non-seasonally adjusted basis.”

What about the performance of those new and improved mortgage loans designed by risk actuaries for Wall Street securitization? How are those performing?

Well, if we were in the business of minimizing risk, at minimum we might want to hire some better actuaries.

The delinquency and foreclosure rates are up astronomically for the newly improved mortgages.

The delinquency rate was 19.67 percent for subprime fixed-rate loans and 22.40 percent for subprime adjustable-rate loans.

The foreclosure rate for subprime ARM loans was 22.17 percent.

Either those actuaries are chimpanzees or the loans are performing even better than expected.

They were designed to be unsustainable.

Now we know why. They bought insurance on these products that paid them huge bonuses if the defaults occurred.

I’ll concede that there are those of you out there who know way more about this than I do and you are probably itching to set me straight on a thing or two, but the outcomes of bank practices speak for themselves.

Cities filing for bankruptcy, states facing bankruptcy, nations on the brink of collapse, global unemployment, austerity, fraudclosures, food stamp use and poverty rising right here.

Who gets the credit for that?

The next time someone says that we need the banks because they are the innovators who create jobs and fuel the economy, tell them that they are really parasites sucking the very marrow out of humanity. Because that is what banks really do.

Read Judge Michael Seabright’s order here:

Deutsche vs Williams Hawaii Decisions 3-29-12

Info on securitization audits to find who mers tried to illegally transfer your note to…

Call Chloe or Cindy at 540-341-1481     Looking for an attorney ??  We have foreclosure defense and quiet title attorneys in CA, VA, NY, NJ, PA, SC, GA, FL & MD

They would buy an insurance policy (credit default swaps) on many if not most of these RMBS’s so that they could tell investors that their return was guaranteed and that way they could hoodwink Moody’s and Standard and Poors (the bond rating agencies) into giving the pools a triple A rating and this allowed the dirty rotten investment banks to sell this pile of garbage to municipal and corporate retirement programs.

A securitization audit purports to find the RMBS that your promissory note is in and do some detective work to see if the pooling and servicing agreement (which is part of the prospectus for the RMBS) requires that the note be signed or endorsed by each of the parties that the note passed through to get into the pool.   Most of the time this will be the case.    Then we look for whether or not the notes are endorsed.   If not, legally the pool does not own your note.     If the pool doesn’t own your note, do they have legal standing to substitute in a trustee in the land record?     Are they legally allowed to foreclose on you?   Even make an assignment?    Of course not, see Horace v La Salle and GMAC v Ibanez.     Look at the recent bankruptcy cases in New York.

So, another part of the securitization auditing process is to look in the land record at filings made by entities who are stepping up claiming to have standing to foreclose on you by virtue of their filings and describe the challenges the homeowner may be able to make as to the authenticity or potential fraudulent nature of these filings.     Further, some securitization auditors keep a list of known potential robo-signers.   These are individuals…     go here to review what a roboo-signer is..      http://www.legalforensicauditors.com/2011/11/01/what-is-a-robo-signer-take-a-look/

Will type more later, gotta go to court..       BTW none of the above is legal advice, just the opinion of the author..

bankfraudsettletermsheet

bankfraudsettleframework

bankfraudsettlecreditcalc

Further, it appears that all of the whistle blower cases are wiped out in this settlement including the Mackler complaint over HAMP fraud and the Kyle Lagow appraisal fraud case.      At least Lynn Syzmoniak grabbed $18 million for her robo-signer case in this settlement.    She so deserves this settlement for opening all of our eyes to the national epidemic of  robo-fraud.   Rock on Lynn..  wish it were $18 billion….   BTW..  LFA thinks Lynn Syzmoniak rocks..    we met her at the 2010 florida bar meeting in boca about robo-fraud.

This post is password protected. To view it please enter your password below:

Password:

By RUTH SIMON and NICK TIMIRAOS

More than 200,000 financially strapped households will have a chance to sharply reduce their mortgage balances under a side deal negotiated by Bank of America Corp.that could allow the bank to avoid as much as $850 million in penalties.

Under the arrangement, part of the recent $25 billion settlement of alleged foreclosure abuses between government officials and five large lenders, Bank of America will make deeper and broader cuts in balances than other banks.

The plan will offer qualifying borrowers a chance to cut their mortgage balances to their home’s current market value. Other banks are required under the national settlement to cut principal to no more than 120% of the home’s value.

Borrowers who qualify are expected to receive principal reductions averaging more than $100,000, a Bank of America spokesman said. The pact’s total value will depend on how many borrowers take up the offer.

The agreement is the latest twist in the government’s long-running effort to break a logjam in the housing market, by pushing lenders to cut loan balances to make it easier for borrowers to stay in their homes.

The move is likely to generate criticism from investors who own securities backed by mortgages that could be affected by the settlement.

Although many investors support principal reductions when their benefits outweigh the cost of foreclosure, many worry that some of the principal reductions triggered by the settlement will reduce returns on the securities.

Some fund managers feel it is unfair for banks, which serviced mortgages on behalf of investors, to use those same loans to meet their obligations under the settlement. “The fact that a servicer has done a poor job has already impacted borrowers and our

Read the rest here