Monday, December 10, 2007

Bu$h the FED and Bankers CYA

Bu$h, the FED and The Bankers CYA

“But unfortunately, the ‘freeze’ is just another fraud - and like the other bailout proposals, it has nothing to do with U.S. house prices, with ‘working families,’ keeping people in their homes or any of that nonsense. The sole goal of the freeze is to prevent owners of mortgage-backed securities, many of them foreigners, from suing U.S. banks and forcing them to buy back worthless mortgage securities at face value - right now almost 10 times their market worth. The ticking time bomb in the U.S. banking system is not resetting subprime mortgage rates. The real problem is the contractual ability of investors in mortgage bonds to require banks to buy back the loans at face value if there was fraud in the origination process. And, to be sure, fraud is everywhere. It's in the loan application documents, and it's in the appraisals. There are e-mails and memos floating around showing that many people in banks, investment banks and appraisal companies - all the way up to senior management - knew about it”.
MORTGAGE MELTDOWN Interest rate 'freeze' - the real story is fraud Bankers pay lip service to families while scurrying to avert suits, prison Sean Olender Sunday, December 9, 2007

The Bu$h administration announced their plan to “save” homeowners from default and foreclosure but it was really a PR scam and a ploy to CYA, cover your ass. Most serious economists know the real deal is not about saving working folks homes, the crisis is too far gone for that to happen even if the ruling elites really wanted to; and they don’t! This is another con game the bankers and shysters are playing to make the suckers think they care, but it is really all about minimizing their own liabilities. Go to and read the enlightening article by Sean Olender. There you will get a small piece of the puzzle and glean a better understanding of just how disastrous the situation is. From Mr Olender’s perspective the “Interest Rate Freeze” is merely a cover to counter a recent Federal court ruling in Ohio which threw out a suit by Deutsche Bank which was attempting to foreclose on fourteen properties. The Court noted Deutsche Bank could not provide proof they owned the notes and liens on the said mortgages.
Deutsche Bank like all the other banks facing mounting losses in the mortgage/hedge fund/ derivative meltdown find themselves in the unenviable position of having sold mortgages and other so called “asset backed investment vehicles” (mortgages and bonds) by bundling them up in exotic packages and selling them to suckers looking for lucrative returns on their “investments”. Not only are banks like Deutsche Bank now taking the hit on the defaulting loans, they don’t even have the deeds or rights to the properties to document they hold the liens when they sue the borrowers for default ! A recent court decision in Ohio has put the bankers in a real lurch. “The Court's amended General Order No. 2006-16 requires Plaintiff (Deutsche Bank) to submit an affidavit along with the complaint, which identifies Plaintiff as the original mortgage holder, or as an assignee, trustee or successor-interest. Apparently Deutsche bank submitted several affidavits that claim that Deutsche was in fact the owner of the mortgage note, but none of these affidavits mention assignment or trust or successor interest. Thus, the Judge ruled that in every instance, these submissions create a ‘conflict’ and they ‘do not satisfy’ the burden of demonstrating at the time of filing the complaint, that Deutsche Bank was in fact the ‘legal’ note holder. While the decision is great for homeowners in distress (due to providing a new escape hatch out of foreclosure), it is a big blow to the cause of sorting out the high-finance side of the mortgage mess.”
Stop and think about the implications of this, the bankers since they’ve sold the mortgages to investors, don’t hold the liens, hence they cannot sue the homeowners when they default on the loans! Plus the bankers are also liable and will be sued when the investors discover the bonds and collateralized debt paper they hold is worthless. The Bu$h/Paulson interest rate freeze is a hollow attempt to get the bankers out from under both the crumbling portfolios they’ve sold and the potential suits that will surely come when the investors who purchased them attempt to recoup their money, dollar for dollar.
The Bu$h/Paulson interest rate freeze is an attempt to get borrowers (suckers) who have loans with less the three percent equity (a really minuscule amount) to resign/refinance with a new lender or the FHA. Once the suckers take the bait, the new lender will have access to the actual loan note. That way when the borrowers default (which most will since the rate freeze will not help them if the real reason for their default is a lack of income to pay the mortgage) the banks will have the notes/liens in their possession and not end up with nothing like Deutsche Bank. Keep in mind what happened to Deutsche Bank is the norm across the board, because they don’t possess the liens on the houses since the loans were bundled and sold to overseas investors, other banks, pension funds, hedge funds etc.
The real deal is that Bu$h and Co rather than sincerely trying to help working folks hold onto their homes, are scurrying around like rats on a sinking ship trying to cover their behinds. “Despite Thursday's ballyhooed new deal with mortgage lenders, does anyone really think that it can ultimately stop fraud lawsuits by mortgage bond investors, many of them spread out across the globe? The catastrophic consequences of bond investors forcing originators to buy back loans at face value are beyond the current media discussion. The loans at issue dwarf the capital available at the largest U.S. banks combined, and investor lawsuits would raise stunning liability sufficient to cause even the largest U.S. banks to fail, resulting in massive taxpayer-funded bailouts of Fannie and Freddie, and even FDIC. The problem isn't just subprime loans. It is the entire mortgage market. As home prices fall, defaults will rise sharply - period. And so will the patience of mortgage bondholders. Different classes of mortgage bonds from various risk pools are owned by different central banks, funds, pensions and investors all over the world. Even your pension or 401(k) might have some of these bonds in it.”
Once again the ruling elites are shafting us and no one will go to jail. At best, Congress may hold sham investigations but no one will go to jail (much like the so called military and intelligence failure that led to 9-11) The mortgage/credit/monetary collapse is merely a larger version of the Enron scandal which was facilitated by the collusion of Bu$h cronies, Wall Street and Arthur Anderson’s creative accounting schemes. It will make the Savings and Loan debacle where the Bu$h family (brother Neil, Daddy Bu$h and brother Jeb) along with a host of others made out like the bandits they are look like a romp in the park. This whole mortgage/credit/monetary collapse was deliberately orchestrated from the top in collusion with: Alan Greenspan and the Federal Reserve Bank, certain select Wall Street investment banks, the bond rating services, the mortgage companies (and their brokers/employees), the insurance companies and the corporate media talking heads/shills. They were all in on it. Now they are trying to cover their tracks, trying to absolve themselves from obvious culpability for the consequences that will surely come. They are trying to limit the suits that will come once the pension funds, bond investors and various hedge funds realize this was all a giant Ponzi scheme and they try to recoup some of the money they lost when they purchased these exotic toxic waste “investment vehicles” that have now turned into worthless scraps of paper.
“So with this decision, it appears confirmed that investors in the mortgage debacle may in fact own nothing---not even the bad loans they funded! It seems their right to the cash flow from the underlying properties does not extend to ownership of the properties themselves; thus clouding the recovery picture considerably. Charney further remarked to us: This opinion, once circulated and adopted by state and Federal courts across the country, will stop the progress of foreclosures, at first in judicial foreclosure states, across America, dead in their tracks. We agree with additional remarks Charney made pointing out that this decision has major adverse implications for the prospects of an amicable financial workout for the various investor contingents in mortgage-backed securities (MBSes). Doubt is cast on where the full write-downs will eventually land, and this uncertainty can only be expected to further harm the market value of MBS and MBS-based synthetic securities, already in shambles purely due to rising underlying delinquencies. Investors in these securities might have assumed---wrongly, it turns out---that they actually owned some ‘real estate’ in these deals. To paraphrase Jim Cramer, ‘They own nothing!’” Deutsche Bank Foreclosures Tossed Out of Ohio Federal Court - "They Own Nothing!"
The real deal about the Bu$h/Paulson rate plan is this: “The plan, as all financial fixes have been under the present ‘Theatrical Economics’ is to delay, deceive and spins the inevitable.
The situation is already dire, and cannot be blamed primarily on adjustable mortgages. Holding rates at the teaser levels for the least worthy borrowers only delays the eventual failure at best by a few months because the foundation of economic conditions is deteriorating simultaneously. The legality of who may make this decision is clouded by the fact that the securitized form of the problem raises the question of legally who does the money lent really belong to and furthermore who has the right to postpone, to wrap around and opine of what class of mortgagee will receive the questionable but meaningless reprieve. The major beneficiary of this delay, defraud and spin scenario will be the legal community trying to sort out who has the right to do what to whom. Already a case has been heard and decided wherein the owner of a securitized debt instrument was determined not to have the legal right to foreclose. It only follows that a group of the same do not have the right to make changes in the agreement between the primary borrower and the primary lender. What a hell of a mess the derivative geniuses have made of the financial world. I do not think the father will forgive them, as they knew exactly what the outcome of their actions would be and did not give a damn. The fix contains little that will make a lender more comfortable with the borrower. Whatever benefit, beyond THEATRICS, is hard to quantify... There is a simple question. That question is can the same people who got you here, get you out of here. The answer is a glaring NO. The reason the answer is NO is that every tactic so far discussed is either hyper inflationary or a delay and deceive action. There simply is NO fix to the worlds largest F up created by the bubble man and his merry investment banker derivative dealer elves. All they can do is postpone and ultimately make worse as that is what postponing always does of a problem that has no solution. Very simply the little guy is screwed and some big guys have and are going down with the crowd.” The Longer The Drum Roll The Shorter The Plan
Author: Jim Sinclair
Don’t go for the media and government okey-doke. Don’t go for the smoke and mirror media show. You should know perfectly well by now Bu$h and Co. don’t give a damn about us. All this is designed to do is cover their own asses, protect the bankers from an avalanche of law suits so they can try to rip the people off even more.



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