ALERT: COMMUNITY BANKS AND CREDIT UNIONS AT GRAVE RISK

Well this warning didn't take long.. When are you people gonna learn. ANYTHING that has Deutsche Bank attached to it , is a loss before it starts. Call your banks and Credit Unions and tell them no deals with Black Rock  IE: Deutsche Bank!!

Investors, hear my warning, you will lose in the end. Last warning.

BlackRock with ETF push to smaller banks

• The roughly 7K regional and community banks in the U.S. have securities portfolios totaling $1.5T, the majority of which is in MBS, putting them at a particularly high interest rate risk, and on the screens of regulators who would like to see banks diversify their holdings.
• "This is going to be a multiple-year trend and dialogue," says BlackRock's (BLK) Jared Murphy who is overseeing the iSharesBonds ETFs campaign.
• The funds come with an expense ratio of 0.1% and the holdings are designed to limit interest rate risk. BlackRock scored its first big sale in Q3 when a west coast regional invested $100M in one of the funds.
• At issue are years of bank habits - when they want to reduce mortgage exposure, they typically turn to Treasurys. For more credit exposure, they habitually turn to municipal bonds. "Community bankers feel like they're going to be the last in the food chain to know if there are any problems with a corporate issuer," says a community bank consultant.

ALERT: COMMUNITY BANKS AND CREDIT UNIONS AT GRAVE RISK HOLDING $1.5 TRILLION IN MBS

by Neil Garfield

I've talked about this before. It is why we offer a Risk Analysis Report to Community Banks and Credit Unions. The report analyzes the potential risk of holding MBS instruments in lieu of Treasury Bonds. And it provides guidance to the bank on making new loans on property where there is a history of assignments, transfers and other indicia of claims of securitization.

The risks include but are not limited to

1. MBS Instrument issued by New York common law trust that was never funded, and has no assets or expectation of same.
2. MBS Instrument was issued by NY common law trust on a tranche that appeared safe but was tied by CDS to the most toxic tranche.
3. Insurance paid to investment bank instead of investors
4. Credit default swap proceeds paid to investment banks instead of investors
5. Guarantees paid to investment banks after they have drained all value through excessive fees charged against the investor and the borrowers on loans.
6. Tier 2 Yield Spread Premiums of as much as 50% of the investment amount.
7. Intentional low underwriting standards to produce high nominal interest to justify the Tier 2 yield spread premium.
8. Funding direct from investor funds while creating notes and mortgages that named other parties than the investors or the "trust."
9. Forcing foreclosure as the only option on people who could pay far more than the proceeds of foreclosure.
10. Turning down modifications or settlements on the basis that the investor rejected it when in fact the investor knew nothing about it. This could result in actions against an investor that is charged with violations of federal law.
11. Making loans on property with a history of "securitization" and realizing later that the intended mortgage lien was junior to other off record transactions in which previous satisfactions of mortgage or even foreclosure sales could be invalidated.

The problem, as these small financial institutions are just beginning to realize, is that the MBS instruments that were supposedly so safe, are not safe and may not be worth anything at all --- especially if the trust that issued them was never funded by the investment bank who did the underwriting and sales of the MBS to relatively unsophisticated community banks and credit unions. In a word, these small institutions were sitting ducks and probably, knowing Wall Street the way I do, were lured into the most toxic of the "bonds."

Unless these small banks get ahead of the curve they face intervention by the FDIC or other regulatory agencies because some part of their assets and required reserves might vanish. These small institutions, unlike the big ones that caused the problem, don't have agreements with the Federal government to prop them up regardless of whether the bonds were real or worthless.

Most of the small banks and credit unions are carrying these assets at cost, which is to say 100 cents on the dollar when in fact it is doubtful they are worth even half that amount. The question is whether the bank or credit union is at risk and what they can do about it. There are several claims mechanisms that can employed for the the bank that funds itself facing a write-off of catastrophic or damaging proportions.

The plain fact is that nearly everyone in government and law enforcement considers what happens to small banks to be "collateral damage," unworthy of any effort to assist these institutions even though the government was complicit in the fraud that has resulted in jury verdicts, settlements, fines and sanctions totaling into the hundreds of billions of dollars.

This is a ticking time bomb for many institutions that put their money into higher yielding MBS instruments believing they were about as safe as US Treasury bonds. They were wrong but because of any fault of anyone at the bank. They were lied to by experts who covered their lies with false promises of insurance, hedges and guarantees.

Those small institutions who have opted to take the bank public, may face even worse problems with the SEC and shareholders if they don't report properly on the balance sheet as it is effected by the downgrade of MBS securities. The problem is that most auditing firms are not familiar with the actual facts behind these securities and are likely a this point to disclaim any responsibility for the accounting that produces the financial statements of the bank.

I have seen this play out before. The big investment banks are going to throw the small institutions under the bus and call it unavoidable damage that isn't their problem. despite the hard-headed insistence on autonomy and devotion to customer service at each bank, considerable thought should be given to banding together into associations that are not controlled by regional banks are are part of the problem and will most likely block any solution. Traditional community bank associations and traditional credit unions might not be the best place to go if you are looking to a real solution.

Community Banks and Credit Unions MUST protect themselves and make claims as fast as possible to stay ahead of the curve. They must be proactive in getting a credible report that will stand up in court, if necessary, and make claims for the balance. Current suits by investors are producing large returns for the lawyers and poor returns to the investors. Our entire team stands ready to assist small institutions achieve parity and restitution.

FOR MORE INFORMATION OR TO SCHEDULE CONSULTATIONS BETWEEN NEIL GARFIELD AND THE BANK OFFICERS (WITH THE BANK'S LAWYER) ON THE LINE, EXECUTIVES FOR SMALL COMMUNITY BANKS AND CREDIT UNIONS SHOULD CALL OUR TALLAHASSEE NUMBER 850-765-1236 or OUR WEST COAST NUMBER AT 520-405-1688.

BLK | Thu, Nov 14

BlackRock with ETF push to smaller banks • The roughly 7K regional and community banks in the U.S. have securities portfolios totaling $1.5T, the majority of which is in MBS, putting them at a particularly high interest rate risk, and on the screens of regulators who would like to see banks diversify their holdings. • "This is going to be a multiple-year trend and dialogue," says BlackRock's (BLK) Jared Murphy who is overseeing the iSharesBonds ETFs campaign. • The funds come with an expense ratio of 0.1% and the holdings are designed to limit interest rate risk. BlackRock scored its first big sale in Q3 when a west coast regional invested $100M in one of the funds. • At issue are years of bank habits - when they want to reduce mortgage exposure, they typically turn to Treasurys. For more credit exposure, they habitually turn to municipal bonds. "Community bankers feel like they're going to be the last in the food chain to know if there are any problems with a corporate issuer," says a community bank consultant.

Full Story: http://seekingalpha.com/currents/post/1412712?source=ipadportfolioapp

WE THE PEOPLE DEMAND THE TRUTH!

NO MR. BERNANKE -NOT SOME OF THE INFORMATION NEEDS TO BE RELEASED- ALL OF IT NEEDS TO BE RELEASED. WE WERE THE VICTIMS AND PROTECTING TO BIG TO FAIL BANKS IS OVER. WE THE PEOPLE DEMAND THE TRUTH!

"The truth is that they stopped the review process and "Settled" because the regulators were under a mandate to protect the banks. They were finding far too many wrongful and illegal foreclosures. The investigator testified that the sampling they used was not random but rather designed to show how few foreclosures were illegal. But even that showed that at least 6500 homeowners had been illegally foreclosed and evicted. The banks and regulators were sitting on a time bomb so they swept it under the rug with "settlements" to cover up the widespread pandemic rush to illegal, wrongful foreclosures where strangers tot he transaction took title to property at a foreclosure sale by submitting a "Credit bid" in which they had absolutely no interest or authority."  ---- Neil F Garfield Livinglies.me

Not long ago, if someone told you that the government would review the foreclosure process, find that many people were foreclosed illegally and wrongfully --- perhaps up to 90% --- and then step in to protect the banks with a pennies on the dollar settlement WITHOUT TELLING THE FAMILIES THAT WERE WRONGFULLY FORECLOSED THAT IT HAD BEEN DETERMINED THAT THEY WERE ILLEGALLY AND WRONGFULLY FORECLOSED --- you might have said, it can't be true --- things are not that bad.

Besides, you might say, how could the foreclosures have been illegal and wrongful to the point that the banks would agree to pay any settlement, even if it was pennies on the dollar. After all, as Judges are want to say "You took the loan, you didn't pay, you lose your house."

But in open session sworn testimony before the Senate Committee on banking and finance, under questioning from Senator Warren (see recent post for the video) that is exactly what the investigator admitted. In fact, it gets worse --- they entered into the settlement to get this out of the way fast and sweep it under the rug.  And, the investigator admitted that they had not yet notified those whom the agency had already found had definitely been illegally and wrongfully foreclosed and evicted from their homes. Worse, the investigator admitted that no decision had been made when or if those families would be notified.

So here we have the government withholding information of civil and perhaps criminal wrongdoing, not informing the victims that they not only have a cause of action for damages, but that the proof is already in the hands of the regulatory agencies. And perhaps worse, this admission comes AFTER Bernanke assured Senator Warren that the victims would be notified.

So Judges, lawyers, borrowers and investors across the land and indeed across the world are still laboring under the misapprehension that when the dust settles the home will still be foreclosed. Not so.

If the real creditor has not stepped up to enforce the debt there can only be one reason --- they have already been paid. And if they have already been paid, then the balance due from the borrower to that creditor is zero. And if someone else paid it, the most they COULD have is an action in contribution or unjust enrichment against the borrower; but they don't have that right because they expressly waived it. Nonetheless, the Federal reserve is "buying" these mortgage bonds, supposedly backed by mortgage loans that we have now seen were paid or unenforceable at the rate of $85 Billion per month.

The presumption ought to be, based upon the filings of the regulatory agencies, the settlements and the sworn testimony before Congress, that the foreclosure is suspect and Judges should stop ramming these wrongful foreclosures down the throat of lawyers whose objections and arguments are dismissed without a thought. We don't have to wait for the evidence before we decide. The time to decide is now because the evidence IS in.

And even if you can't get the information from the regulatory agencies who claim the results to be confidential even though they admit what is in them, aggressive lawsuits against the pretender lenders should lead to huge awards to borrowers and their attorneys. What are you waiting for? Stop wasting time by delaying the cases so that the client gets another month of free rent and start being the aggressor in discovery, pleading and litigating.

Watch Elizabeth Warren Grill Regulators Over Illegal Foreclosures

A Brief Refresher on Glass Stegal From Barry Ritholtz

http://www.housingwire.com/fastnews/2013/07/18/bernanke-regulators-will-release-some-details-foreclosure-reviews

Lies of the Banks Coming Back to Haunt Them

by Neil Garfield

Now that Federal Reserve is nearly done buying the worthless mortgage bonds, the banks have shown that they are in fact making money hand over fist and the government is feeling less fearful about toppling the financial system with financial regulation.

Based upon my interview with a highly placed well-informed source who prefers to remain anonymous, it appears as though the playing field and the goal posts have been moved.

The starting point is the sale of worthless mortgage bonds to investors under false pretenses. It isn’t just that the underwriting standards that were to be applied to the mortgages were not followed; the problem is really that the money from the investors was never deposited into an account that was legally or even apparently owned by the investors or the asset pool shares that they thought they were buying.

The banks were claiming the investment shares (mortgage-backed securities) to be their own despite the clear money trail and paper trail showing that at no time were the investors informed that they were lending their money or their right to the mortgage loans to the banks and their co-venturers.

Then the banks claimed losses on those investment shares and collected from insurance, credit default swaps, other hedge products, and the taxpayers.

Then the banks claimed insolvency that threatened the entire financial system despite having received money from investors, part of which was never invested in anything related to mortgages or mortgage bonds. The threat of insolvency and the threat to the entire financial system was taken seriously by people in government that should have known better and perhaps did know better.

Then it was decided that the Federal Reserve would cure the insolvency issue by purchasing the worthless mortgage bonds at full value. They purchased it from the banks who it no time actually owned close bonds nor did the banks own any of the loans that supposedly “backed” the mortgage-backed bonds.

Then it was revealed that the banks were making a lot of money while the rest of the economy went into a nosedive. Any economist who is questioned on this subject will respond that it is very unlikely for intermediaries who act as conduits for transactions to make money when economic activity is on the decline.

If they are reporting profits it is from fictitious transactions. In this case fictitious transactions are “trading profits.” In reality the banks are feeding part of their ill-gotten gains back into the bank, and claiming it as profits. When the chips were down and the banks had to show that they were strong enough to exist at their mega size, they came up with the capital without any problem.

Now that they came up with the capital and the profits, they have demonstrated that the extra restrictions that regulators want to put on the banks will neither damage the bank’s profitability nor threaten the financial system.

But the Banks know that their ability to come up with money all stems from the fact that they lied to everyone and stole trillions of dollars and that it did not come from ordinary banking activities. SO they are currently in a bed they made for themselves: they don’t want the restrictions to be too restrictive because it might have a negative effect on their legal earnings, but they have proven the opposite with their illegal earnings --- which is precisely what the regulators were waiting for.

Hence the banks are stuck with whatever regulations are put on banks --- especially those who claim ownership over transactions in which they acted only as intermediaries --- or they must say that the regulations would be harmful because the truth is they didn’t really make the money that they reported as net income.

This doesn’t come as news to the Federal Reserve who knows that it is purchasing worthless bonds. But the Federal Reserve cannot say that the bonds are worthless because it would then be seen as quantitative easing which is inflationary. The whole reason the money supply was expanded so much without inflation going wild is that the Federal Reserve was merely “buying bonds” and not just giving out money. But the bonds were completely worthless. So the truth is that the Federal Reserve was and still is giving out money in quantitative easing.

This chain of events served to undercut the middle class portion of the economy completely, denuding them of jobs, houses and even prospects, creating blighted neighborhoods, declining tax revenues for municipalities and this bankruptcies like the City of Detroit. If the law was applied as it is applied to everyone except the big banks, then they would be charged with mortgage fraud, securities fraud (because the exemption does not apply if you don't follow the rules of issuance of a mortgage bond) and compensatory damages would be due to the following people with percentages of the total money advanced for each $1 of mortgage:

1. Investors: 125%
2. Insurers: 85%
3. Credit default swaps: 400%
4. Miscellaneous hedge products: 25%
5. Borrowers: 15% (100% of the payments and down payment)
6. Taxpayers: 5%
7. Federal reserve: 100%

Thus the situation was likened by my source to an old joke about lawyers, the punch line of which is that the dog screws everyone in the room and runs away with the steak.But the real problem is that by participating in this deceptive scheme, the Federal Reserve, put the burden of the loss on homeowners whose mortgages were paid in whole or in part by the financial sector including the Federal Reserve.

It isn’t just that the ownership of the loan has become completely convoluted; the real issue is money, to wit: the credit transaction with borrower has been long since extinguished by these devices used by the banks and the Federal Reserve, and vehicles like the Maiden Lane entities.

The amount of money owed on those mortgages is in reality far less than the the amount demanded by the banks --- which means that modification is possible for nearly every loan, whether delinquent or not, because the principal has already been reduced by payment. THIS IS WHY I SAY FOLLOW THE MONEY TRAIL BEFORE YOU FOLLOW THE PAPER TRAIL. THE PAPER TRAIL IS ONLY RELEVANT IF IT MATCHES THE MONEY TRAIL. OTHERWISE IT IS IRRELEVANT.

In the marketplace where loans are being refinanced and where mortgages are being foreclosed, these facts are carefully kept out of the mainstream conversation. But more and more judges are starting to ask questions because the behavior of the banks is just not consistent with a creditor who wants their money.

They seem to want the foreclosure judgment or sale but they are not so interested in the property. AND THAT is because the foreclosure puts the seal of approval from the state on a bunch of lies that were proffered to the courts and to the recording offices. It is the foreclosure judgment and sale that starts the clock ticking on wrongful foreclosures. Once time has run out on those actions, the banks are home free and the Federal Reserve, the unwitting or witting accomplice goes on their merry way while more than ten million families lose their homes, jobs and prospects.

If the Courts start finding that the mortgages are invalid, that their enforcement is defective or impossible, and that the debt is in doubt because there is no proof of the account receivable and the loss must belong to SOMEBODY, the current plan collapses. As I stated in 2007 based upon my own direct knowledge and the knowledge of industry sources who were active in the bundling, selling and trading activity associated with mortgage loans, the entire crisis would have been averted if the banks were held to account because the accounts due from the borrowers had been reduced without their knowing it just as the account due to the investors had been reduced without them knowing it.

This brings us back to what seems like a quaint solution now. I said we should forget blame and just let bring everyone to the table and share the losses and risks. People get to stay in their homes, the investors get a return on their investment, the banks earn fees, and companies like AIG won't be in danger of toppling. But then, the catastrophic shift in wealth inequality would also never have happened. And the super rich would have been revealed, if they were bankers, as common thieves with keys to the vault.

Rothschild control- this will blow you away

Could gaining control of the Central Bank of the Islamic Republic of Iran (CBI) be one of the main reasons that Iran is being targeted by Western and Israeli powers? As tensions are building up for an unthinkable war with Iran, it is worth exploring Iran’s banking system compared to its U.S., British and Israeli counterparts.
Some researchers are pointing out that Iran is one of only three countries left in the world whose central bank is not under Rothschild control. Before 9-11 there were reportedly seven: Afghanistan, Iraq, Sudan, Libya, Cuba, North Korea and Iran. By 2003, however, Afghanistan and Iraq were swallowed up by the Rothschild octopus, and by 2011 Sudan and Libya were also gone. In Libya, a Rothschild bank was established in Benghazi while the country was still at war.
Islam forbids the charging of interest, a major problem for the Rothschild banking system. Until a few hundred years ago, charging interest was also forbidden in the Christian world and was even punishable by death. It was considered exploitation and enslavement.
Since the Rothschilds took over the Bank of England around 1815, they have been expanding their banking control over all the countries of the world. Their method has been to get a country’s corrupt politicians to accept massive loans, which they can never repay, and thus go into debt to the Rothschild banking powers. If a leader refuses to accept the loan, he is oftentimes either ousted or assassinated. And if that fails, invasions can follow, and a Rothschild usury-based bank is established.
The Rothschilds exert powerful influence over the world’s major news agencies. By repetition, the masses are duped into believing horror stories about evil villains. The Rothschilds control the Bank of England, the Federal Reserve, the European Central Bank, the IMF, the World Bank and the Bank of International Settlements. Also they own most of the gold in the world as well as the London Gold Exchange, which sets the price of gold every day. It is said the family owns over half the wealth of the planet—estimated by Credit Suisse to be $231 trillion—and is controlled by Evelyn Rothschild, the current head of the family.
Objective researchers contend that Iran is not being demonized because they are a nuclear threat, just as the Taliban, Iraq’s Saddam Hussein and Libya’s Muammar Qadaffi were not a threat.
What then is the real reason? Is it the trillions to be made in oil profits, or the trillions in war profits? Is it to bankrupt the U.S. economy, or is it to start World War III? Is it to destroy Israel’s enemies, or to destroy the Iranian central bank so that no one is left to defy Rothschild’s money racket?
It might be any one of those reasons or, worse—it might be all of them.

Boa desperate again

WHY ARE THE BANKS FIGHTING TO GET AS LITTLE AS POSSIBLE FROM EACH "FAILED" LOAN?

A drama is playing out in the state of Massachusetts. Bank of America is pretending to be the lender or the authorized servicer or both. But it outsourced the task of dealing with borrowers seeking modification. The company that was used is Urban Lending Solutions (ULS).  A deposition was taken from a knowledgeable source from within ULS.  The attorney  taking the deposition was merely looking for evidence of a script prepared by Bank of America that ULS employees were to follow. Not only was the script uncovered but considerable other evidence suggested institutional policies at Bank of America that were in direct conflict with the requirements of law, and in direct violation of the settlements with the Department of Justice and the banking regulators.

The transcript of the deposition was sealed at the request of Bank of America, which the borrower did not interpose any objection. Now there are a lot of people who want to see that deposition and who want to take the deposition of the same witness and other witnesses at ULS who might reveal the real intent of Bank of America. The question which is sought to be answered is why the mega banks are fighting so hard to take less money in a foreclosure sale then they would get in a modification or even a short sale. The policy is obvious. Borrowers are lured into a hole that gets deeper and deeper so that foreclosure seems inevitable and indefensible. Even after a successful trial modification the banks are turning down the permanent modification, as though they had the power to do so.

Now a number of attorneys are preparing motions to the trial court in Massachusetts to unseal the transcript of the ULS employee. Bank of America is opposing these efforts on the grounds of "confidentiality" which from my perspective makes absolutely no sense. Why would Bank of America share confidential information or trade secrets with a vendor whose only purpose was to interfere with the modification process? My opinion is that the only information that Bank of America wishes to keep secret is that the instructions they gave to ULS clearly show that Bank of America was not interested in anything other than achieving a foreclosure sale in as many cases as possible.

In nearly all cases the modification of the loan more than doubles the prospect of proceeds from the loan and in some cases approaches 100%. Thus the full-court press from the megabanks to go to foreclosure is a mystery that will be solved. My sources from inside the industry together with my own analysis indicates that the reason is very simple. The banks took in money from investors, insurers, counterparties in credit default swaps, the Federal Reserve, the Department of the Treasury and other parties based on the representation of the banks that (A) the banks owned the mortgage bonds and therefore on the loans and (B) there was a loss resulting from widespread defaults on mortgages. Under the terms of the various contracts within the false chain of securitization and the Master servicer had sole discretion as to whether or not the value of the mortgage bonds and the asset pools had declined and had sole discretion as to the amount of the loss caused by the defaults.

As a general rule of thumb, the banks computed value of the collateral at around 25% and therefore received payment to compensate the banks for a 75% loss. They received the payment several times over and then sold the mortgage bonds to the Federal Reserve for 100% of the face value of the bonds. It can be fairly estimated that they received no less than 250% of the principal amount due on each of the loans contained within the asset pool that had issued each mortgage bond. While they had to create the appearance of objectivity by showing a number of the loans as performing, they intentionally overestimated the number of loans that were in default or were in the process of going into default.

Let us not forget that while nobody was looking the Federal Reserve has been "purchasing" the worthless mortgage bonds at the rate of $85 billion per month for a long time and doesn't appear to have any intention of stopping that flow of money to banks that have already received more than 100% of the principal due on the notes. And lest you be confused, the money the banks received should have gone to the investors and should never have been by the banks.

Since the banks received 250% of the principal amount due on the loan, and actual recovery from the borrower of 100% on the loan would leave the banks with a liability to all of the third parties that paid the banks. The refund liability would obviously be 150% of the principal amount due on the loan and the banks would be required to turn over the hundred percent recovery from the borrower to the investors adding to their liability.

But if the case goes through a foreclosure sale, the banks can take a comfortable position that the number of defaults and the depth of the loss was as great as they represented when they took payment from insurers and other third parties. The liability of 250% is completely eliminated. Thus while it might appear to be in the bank's interest to take a 60% recovery from the borrower instead of a 25% recovery from a foreclosure sale, the liability that would be created each time alone was modified or settled would dwarf the apparent savings to the pretender lender or actual creditor.

The mere fact that they went to great lengths to seal the transcript indicates how vulnerable they feel.

PRACTICE MEMO TO FORECLOSURE DEFENSE LAWYERS

As a condition precedent I would suggest that in all cases where we feel the deposition transcript would be helpful I think it would create more credibility if you issued a subpoena duces tecum directed at Urban to produce the witness whose deposition was sealed in the existing case and to bring those records that were requested or demanded at that deposition. One of the questions that needs to be answered is whether the witness witness is still working for Urban, whether the witness has "disappeared", and whether his testimony has changed --- thus we would need the other deposition to test credibility and perhaps get exhibits that BANA either didn't object to, which means they waived confidentiality. If they do not move to quash the subpoena then they might also be arguably waiving the confidentiality objection.

If they do object, you have two bites of the apple --- if they move to quash they must state the grounds other than than it will damage their chances in litigation. The trial court would then hear the objections and of course each if the cases that could benefit from unsealing the deposition results in a hearing, then several judges would hear the same objection. The likelihood is that the objection would attempt to bootstrap the order sealing the deposition as reason enough to quash the subpoena. That in turn puts pressure on the Massachusetts judge to release the transcript.

The more Motions filed the better. So I would suggest that we reach out through media to get as many people as possible with separate motions saying that sealing the deposition is causing a disruption in due process. Since Urban reached out on behalf of BANA --- an allegation that should be made in opposition test the motion to quash the subpoena in each case --- exactly what confidential information needs to be protected? Has the Massachusetts court heard a motion in liming preventing the use of the deposition at trial? If not, then the objection is waived since the Plaintiff will clearly use the deposition at trial, if there is one.

The other issue is that BOA can't simply allege confidentiality rather than strategy in litigation. They must state with particularity what could be possibly confidential. There is no attorney-client privilege, there is no attorney work product privilege.  At first Bank of America disclaimed any knowledge or relationship with ULS.  When it became obvious that the relationship existed and that ULS was using Bank of America letterhead to communicate with borrowers they finally admitted that the relationship existed and then went one step further by alleging confidentiality and trade secrets so that the contract and instructions between Bank of America and ULS would never see the light of day., For a company that BOA disclaimed any knowledge but who used BOA stationery they were clearly an agent of BANA. What exactly could Urban have other than information about modification and foreclosure? I would also notice or subpoena BANA to produce the person who signed the contract with Urban and to bring the contract with him or her. Who received instructions from BOA? Where are those instructions? Were they produced at the sealed deposition.

 If the Massachusetts court does not unseal the transcript, doesn't this give BOA an opportunity for a do-over where they fabricate documents that are different from those produced in the sealed deposition?

What were the instructions to Urban? What was the goal of the relationship between BOA and URban? Where are the scripts now that we're produced in the sealed deposition?

Were the instructions to Urban the same as the instructions to all vendors assisting in the foreclosure process? Why did BOA even need Urban if it had proof of payment, proof of loss,  proof of ownership of the loan? We want to know what scripts were used by Urban and whether the same scripts were distributed to other vendors whose behavior could be plausibly denied. Discovery is a process by which the party seeking it must only show that it might lead to the discovery of admissible evidence. THE POINT MUST BE MADE THAT THE DEFENSE FOR WHICH WE ARE LOOKING FOR SUPPORT AND CORROBORATION IS THAT THE POLICY AND PRACTICE OF BOA WAS TO MOVE PEOPLE INTO DEFAULT BY TELLING THEM TO STOP MAKING PAYMENTS. WE WANT TO SHOW THAT THEIR GOAL WAS FORECLOSURE NOT MODIFICATION CONTRARY TO THE REQUIREMENTS UNDER HAMP AND HARP AND THAT RATHER THAN PROCESS MODIFICATION OR SETTLEMENTS THE POLICY WAS TO DERAIL AS MANY AS POSSIBLE TO GET THE FORECLOSURE EVEN IF IT MEANT THAT THE INVESTORS WOULD GET LESS MONEY? Why?

The instruction was to use the promise or carrot of modification to trick the homeowner into (a) acknowledging BOA as the right party (b) stop making payments causing an apparent default and causing an escrow shortage (c) thus assuring the foreclosure sale despite the fact that BOA never acquired and (d) thus assuring that claims against them from investors (see dozens of law suits against BOA) and from insurers and counter parties on credit default swaps and payments from co-obligors based on the "default" that BOA fabricated --- payments that involved more than the loan itself in multiples of the supposed loan balance.

This is an important battle. Let's win it. There is strength in numbers. We might find the scripts were prepared by someone who used scripts from other banks and that the banks were in agreement that despite the obligations under HAMP and HARP and despite their ,rinses in the AG and OCC settlement, their goal is to foreclose at all costs because if the general pattern of conduct is to settle these loans and make them "performing" loans again it is highly probable that for each dollar of principal that gets taken of the table there is a liability or claim for $10. This would establish that the requirements of HAMP and HARP has resulted in negotiating with the fox while the fox is in the henhouse getting fat.

FEDERAL RESERVE LOSS 9 TRILLION DOLLARS!

READ AND SHARE THIS NOW!

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CAN YOU SAY LIAR!

The Bank Of International Settlements Warns The Monetary Kool-Aid Party Is Over

When a month ago the Central Banks' Central Bank, aka the Bank of International Settlements (or BIS) in Basel where the MIT central-planning braintrust meets every few months to decide the fate of the world, warned that the Fed-induced collateral shortage is distorting the markets, few paid attention. That the implication behind said warning was that QE can not continue at the current pace, was just as lost. A few short weeks later following the biggest plunge in markets since 2011 in the aftermath of Bernanke's taper tantrum, some are finally willing to listen.
However, they will certainly not like what the BIS just released as a follow up, both in the form of the BIS' 83rd Annual Report, and the speech by Jaime Caruana to commemorate said annual meeting. For the simple reason that it reads like a run of the mill Sunday morning Zero Hedge sermon, which says, almost verbatim, that the days of kicking the can via flawed monetary policy are now over, and that the time for central banks to end the monetary morphine drip has finally come.
The BIS message, as summarized by the FT, is that "central banks must head for the exit and stop trying to spur a global economic recovery... cheap and plentiful central bank money had merely bought time, warning that more bond buying would retard the global economy’s return to health by delaying adjustments to governments’ and households’ balance sheets."
Here is a better summary of the BIS' unprecedented U-Turn on its 5 year long monetary strategy, in its own selected words:

Can central banks now really do “whatever it takes”? As each day goes by, it seems less and less likely... Six years have passed since the eruption of the global financial crisis, yet robust, self-sustaining, well balanced growth still eludes the global economy. If there were an easy path to that goal, we would have found it by now.

Monetary stimulus alone cannot provide the answer because the roots of the problem are not monetary. Hence, central banks must manage a return to their stabilisation role, allowing others to do the hard but essential work of adjustment.  

Many large corporations are using cheap bond funding to lengthen the duration of their liabilities instead of investing in new production capacity.  

Continued low interest rates and unconventional policies have made it easy for the private sector to postpone deleveraging, easy for the government to finance deficits, and easy for the authorities to delay needed reforms in the real economy and in the financial system.

Overindebtedness is one of the major barriers on the path to growth after a financial crisis. Borrowing more year after year is not the cure...in some places it may be difficult to avoid an overall reduction in accommodation because some policies have clearly hit their limits.

Of course, it would have been more useful for the BIS to reach this commonsensical conclusion some four years ago (or roughly when we started preaching to the choir, which now includes the BIS itself), instead of allowing the global private bank controlled syndicate known as "central banks" to inject $15 trillion into global capital markets in the past 4 years, and nearly $25 trillion (a #Ref! % increase!) since 2000.

Some of the "shocking" and painfully late observations on the chart above:

Since the beginning of the financial crisis almost six years ago, central banks and fiscal authorities have supported the global economy with unprecedented measures. Policy rates have been kept near zero in the largest advanced economies. Central bank balance sheets have doubled from $10 trillion to more than $20 trillion. And fiscal authorities almost everywhere have been piling up debt, which has risen by $23 trillion since 2007. In emerging market economies, public debt has grown more slowly than GDP; but in advanced economies, it has grown much faster, so that it now exceeds one year’s GDP.

Some of the other, just as "shocking" observations: a dramatic surge in artificially low bond yields will result in crippling, systemic losses, amounting to trillions of dollars for bond (and certainly stock) investors around the globe, to the tune of 8% of GDP losses in the US, and a mindblowing 35% of GDP in losses for Japanese investors:

Consider what would happen to holders of US Treasury securities (excluding the Federal Reserve) if yields were to rise by 3 percentage points across the maturity spectrum: they would lose more than $1 trillion, or almost 8% of US GDP (Graph I.3, right-hand panel). The losses for holders of debt issued by France, Italy, Japan and the United Kingdom would range from about 15 to 35% of GDP of the respective countries. Yields are not likely to jump by 300 basis points overnight; but the experience from 1994, when long-term bond yields in a number of advanced economies rose by around 200 basis points in the course of a year, shows that a big upward move can happen relatively fast.

And while sophisticated hedging strategies can protect individual investors, someone must ultimately hold the interest rate risk. Indeed, the potential loss in relation to GDP is at a record high in most advanced economies. As foreign and domestic banks would be among those experiencing the losses, interest rate increases pose risks to the stability of the financial system if not executed with great care.

All of which Japan's "sophisticated", yet joyously cartoonish, "leaders" recently found out when they almost lost all control of the bond (and stock) market.
What's the "wealth effect" solution: why buy stocks but don't sell bonds. Or if selling bonds, do so vewy, vewy quietly. Alas, not even the BIS is dumb enough to fall (or push) for this possibility any longer.
The BIS report goes on, doing all it can to distance itself from those central banks who merely implemented policy that the BIS supported (and encouraged) for the past 5 years, but which has suddenly turned a cold shoulder. It does so by dramatically and rhetorically blasting a litany of questions to which it fully-well knows the answers:

How can central banks encourage those responsible for structural adjustment to implement reforms? How can they avoid making the economy too dependent on monetary stimulus? When is the right time for them to pull back from their expansionary policies? And in pulling back, how can they avoid sparking a sharp rise in bond yields? It is time for monetary policy to begin answering these questions.

Regardless of the politics behind the shift in BIS sentiment, the days of Mario Draghi's "whatever it takes" shriek of desperation are over. Here are some more of the key soundbites from the BIS report:

Originally forged as a description of central bank actions to prevent financial collapse, the phrase “whatever it takes” has become a rallying cry for central banks to continue their extraordinary actions. But we are past the height of the crisis, and the goal of policy has changed – to return still-sluggish economies to strong and sustainable growth. Can central banks now really do “whatever it takes” to achieve that goal? As each day goes by, it seems less and less likely. Central banks cannot repair the balance sheets of households and financial institutions. Central banks cannot ensure the sustainability of fiscal finances. And, most of all, central banks cannot enact the structural economic and financial reforms needed to return economies to the real growth paths authorities and their publics both want and expect.

What central bank accommodation has done during the recovery is to borrow time – time for balance sheet repair, time for fiscal consolidation, and time for reforms to restore productivity growth. But the time has not been well used, as continued low interest rates and unconventional policies have made it easy for the private sector to postpone deleveraging, easy for the government to finance deficits, and easy for the authorities to delay needed reforms in the real economy and in the financial system. After all, cheap money makes it easier to borrow than to save, easier to spend than to tax, easier to remain the same than to change.

Yes, in some countries the household sector has made headway with the gruelling task of deleveraging. Some financial institutions are better capitalised. Some fiscal authorities have begun painful but essential consolidation. And yes, much of the difficult work of financial reform has been completed. But overall, progress has been slow, halting and uneven across countries. Households and firms continue to hope that if they wait, asset values and revenues will rise and their balance sheets improve. Governments hope that if they wait, the economy will grow, driving down the ratio of debt to GDP. And politicians hope that if they wait, incomes and profits will start to grow again, making the reform of labour and product markets less urgent. But waiting will not make things any easier, particularly as public support and patience erode.

Alas, central banks cannot do more without compounding the risks they have already created. Instead, they must re-emphasise their traditional focus – albeit expanded to include financial stability – and thereby encourage needed adjustments rather than retard them with near-zero interest rates and purchases of ever larger quantities of government securities. And they must urge authorities to speed up reforms in labour and product markets, reforms that will enhance productivity and encourage employment growth rather than provide the false comfort that it will be easier later.

* * *

As governments responded to the financial crisis with bank bailouts and fiscal stimulus, their indebtedness rose to new highs. And in countries that experienced a housing bubble in the run-up to the crisis, households had already accumulated large debts. In the half-decade since the peak of the crisis, the hope was that significant progress would be made in the necessary deleveraging process, thereby enabling a self-sustaining recovery.

However, that never happened.

Easy financial conditions can do only so much to revitalise long-term growth when balance sheets are impaired and resources are misallocated on a large scale. In many advanced economies, household debt remains very high, as does non-financial corporate debt. With households and firms focused on reducing their debt, a low price for new credit is not terribly relevant for spending. Indeed, many large corporations are using cheap bond funding to lengthen the duration of their liabilities instead of investing in new production capacity. It does not matter how attractive the authorities make it to lend and borrow – households and firms focused on balance sheet repair will not add to their debt, nor should they.
And, most of all, more stimulus cannot revive productivity growth or remove the impediments that block a worker from shifting into a promising sector. Debt-financed growth masked the downward trend in labour productivity and the large-scale distortion of resource allocation in many economies. Adding more debt will not strengthen the financial sector nor will it reallocate resources needed to return economies to the real growth that authorities and the public both want and expect.
* * *
Six years have passed since the eruption of the global financial crisis, yet robust, self-sustaining, well balanced growth still eludes the global economy. If there were an easy path to that goal, we would have found it by now. Monetary stimulus alone cannot provide the answer because the roots of the problem are not monetary. Hence, central banks must manage a return to their stabilisation role, allowing others to do the hard but essential work of adjustment.

Authorities need to hasten labour and product market reforms so that economic resources can shift more easily to high-productivity sectors. Households and firms have to complete the difficult job of repairing their balance sheets, and governments must intensify their efforts to ensure the sustainability of their finances. Regulators have to adapt the rules to a financial system that is becoming increasingly interconnected and complex and ensure that banks have sufficient capital and liquidity buffers to match the associated risks. Each country needs to tailor the reform agenda to maximise its chances of success without endangering the ongoing economic recovery. But, in the end, only a forceful programme of repair and reform will return economies to strong and sustainable real growth.

* * *

Ultimately, outsize public debt reduces sovereign creditworthiness and erodes confidence. By putting their fiscal house in order, governments can help restore the virtuous cycle between the financial system and the real economy. And, with low levels of debt, governments will again have the capacity to respond when the next financial or economic crisis inevitably hits. 

* * *

Continued low interest rates and unconventional policies have made it easy for the private sector to postpone deleveraging, easy for the government to finance deficits, and easy for the authorities to delay needed reforms in the real economy and in the financial system.

The BIS conclusion:

Is this a call for undifferentiated, simultaneous and comprehensive tightening of all policies? The short answer is no. Concrete measures need to be tailored to country-specific circumstances and needs. And the timing need not be simultaneous, although in some places it may be difficult to avoid an overall reduction in accommodation because some policies have clearly hit their limits.

Ours is a call for acting responsibly now to strengthen growth and avoid even costlier adjustment down the road. And it is a call for recognising that returning to stability and prosperity is a shared responsibility. Monetary policy has done its part. Recovery now calls for a different policy mix – with more emphasis on strengthening economic flexibility and dynamism and stabilising public finances.

Finally, today’s large flows of goods, services and capital across borders make economic and financial stability a shared international responsibility. Cross-border effects of domestic policy action are intrinsic to globalisation. Understanding spillovers and finding ways to avoid the unintended effects is central to the work of the BIS. And continued discussions among central banks and supervisors – discussions that the BIS facilitates and promotes – are essential for avoiding national biases in policymaking. Such national bias runs the risk of undermining globalisation and thus blocking the road to sustained growth for the global economy.

And yes, the central banks' central bank really did say all of the above. Unpossible the Keynesian Magic Money Tree growers will say: surely there is an error in the BIS excel model...
Those pressed for time, if unable to read the full 204 page annual report, should at least read the following stunning speech from Jaime Caruana, General Manager of the BIS, titled "Making the most of borrowed time." (only 9 pages - pdf here). Because, if nothing else, it validates everything Zero Hedge has said for the past 4 years.

Remember Penny Mac is also know as Country Wide

Remember Penny Mac is also know as Countrywide, the same creeps and thieves, who took homes and bet against them and defrauded the country is at it still, except now their a private hedge fund, which makes them even more dangerous. Why would the SEC and the FDIC, and the US Government allow these thieves to keep going? Anybody got answers? If you ask the government, all you will get is a run around.. same with the SEC.

HUSTLE: A PLAN TO DESTROY HOMEOWNERS AND DEFRAUD INVESTORS: The U.S. Government in its complaint filed against Bank of America details the specific ways in which Countrywide was operating when loans were originated.

"Countrywide rolled out a new streamlined loan origination model is called the "hustle."

In order to increase the speed at which it originated and sold loans to the GSES,  countrywide eliminated every significant checkpoint on loan quality and compensated its employees solely based on the volume of loans originated, leading to rampant instances of fraud and other serious lung defects all while countrywide was informing the GSES that it had tightened its underwriting guidelines."

Countrywide eliminated underwriter review even from many high risk loans. In lieu of underwriter review, countrywide assigned critical underwriting tasks to loan processors who were previously considered unqualified even to answer borrower questions. At the same time, countrywide or eliminated previously mandatory checklists that provided instructions on how to perform these underwriting tasks. Under the Hustle, such instructions on proper underwriting were considered nothing more than unnecessary forms that would slow the swim lane down.

Countrywide also eliminated the position of compliance specialist, an individual previously responsible for conducting a final, independent check on alone to ensure that all conditions on the loans approval were satisfied prior to funding.

The Hustle began in full force in approximately August 2007.

Countrywide also concealed the quality control reports on Hustle loans demonstrating that instances of fraud and other material defects (i.e. defects making the loans in eligible for investors sell) were legion. Countrywide's own quality control reports identified material defect rate of nearly 40% in certain months, rates that were nearly 10 times the industry-standard defect rate of approximately 4%.

  The complaint above is from the United States Atty. for the Southern District of New York gives us a clear picture of the processing of loans without any underwriting standards at Countrywide and other aggregators across the country. The complaint is not authority, but it is a guide for what you can allege and what you can ask about in discovery.

It is time to ask the nuclear question, to wit: in light of the revelations that are already in the public domain with dozens of whistleblowers, is it not reasonable to assume that the aggregators not only knew about fabricated, forged and inaccurate loan applications, but actually intended that result. I ask that question because of the number of attempted prosecutions of people for mortgage fraud, when mortgage fraud was exactly what Countrywide wanted.  They clearly wanted the highest possible volume of loans approved under circumstances where it can only be assumed that they wanted those loans to fail, in order to be paid by insurers, counterparties on credit default swaps, the federal government in bailouts and now the Federal Reserve which appears to be  buying $85 billion in worthless mortgage bonds from the financial industry every month.

  Thus Wall Street collected money from the investors (and took a share of that and put it in their pocket), collected money from borrowers (and took a share of that and put it in their pocket), collected money from insurers which went only into their pockets, collected money from the proceeds of credit default swaps which went only into their pockets,  collected money from the government in the bank bailouts, collected money from the government sponsored entities who guarantee the loans, and are collecting money from the Federal Reserve who are buying worthless mortgage bonds which have little or no interest in any secured loan, residential or otherwise. On top of all of that Wall Street has taken the homes of more than 5 million families and is expected to take the homes of another 5 million families ---  supposedly to cover the "loss"  on mortgage bonds they never owned and mortgage loans they never owned.

And then you have the real question, to wit: why would banks create a scheme that originated loans, most of which were destined to fail in one fashion or another? And the answer is unavoidable and incontestable: they did it because that was the way they could make the most money.

And then the second real question, to wit: why would banks want foreclosures but not want the property?  And the related question is why would they want a foreclosure under circumstances where a modification would produce far greater proceeds to mitigate the loss on a loan that a foreclosure? And the related question to that is why would the largest bank in the world adopt a policy of fraud in order to guide people into foreclosure deceiving them into thinking that they were getting a modification? And the final question related to all of that is why with the modification not become permanent after the borrower has done everything correctly during the trial period?  The answer is extremely simple: the foreclosure process is the largest cover-up in history for the largest economic crime in history; it provides cover for all of the defects, multiple payments that were already received and never disclosed, and the diversion of money and property from investors and homeowners.

 So why are these investors trusting them again is my question.. they don't like money??

What this country needs to get its act together

 Almost a century ago Thomas Marshall, Woodrow Wilson's Vice President, got tired of listening to senators blather on about the nation's needs and uttered the words that made him immortal: "What this country needs is a good five-cent cigar." Today, with 24/7 blathering as our national political pastime, let me adapt Marshall's 1917 remark: What this country needs to get its act together is a good five-alarm financial crisis.

I mean, look around. Except for the Federal Reserve, which has consistently tried to help the economy, misguided though some of its actions may be, about the only real changes our government has made since the onset of the financial crisis were induced by fear. The Troubled Asset Relief Program, which played a vital role in restoring confidence and stability to the financial system, was passed only because the House's rejection of it on Sept. 28, 2008, set off a 778-point plummet in the Dow. That scared the House into reversing itself.

The only parts of the budget sequester -- an exercise in economic idiocy -- that have been modified are the FAA's cutbacks that caused air-travel delays bad enough to scare politicians into action and the food inspectors who were rescued after the meat and poultry industry spoke out in support of them. The sequester, remember, was a doomsday device created to resolve the debt-ceiling crisis in 2011, on the assumption that sequestration was so stupid and damaging that people would do anything to keep it at bay. Yet here it is.



Now, for the third time in two years, we're dealing with a debt-ceiling drama. The previous two times Republicans played this game -- the summer of 2011 and year-end 2012 -- they damaged the country's financial credibility for no discernible gain to themselves. Why they think the third time will be the charm is beyond me. I blame the Republicans (my former party) more than I blame the Democrats (my previous former party) for our national gridlock. But the Democrats are no prizes either.

Take the budget deficit, which is shrinking rapidly. Many Democrats are declaring victory, saying that everything is heading in the right direction; there's no need to cut the growth of Social Security, Medicare, and Medicaid; it's all under control. But if you read the nonpartisan Congressional Budget Office's recent analysis, you see that everything is far from fine for the long term.

Part of the deficit decline comes from the higher tax rates that went into effect this year, and part from the economy's growth. But a good part of the shrinkage is from one-time items that will disappear, such as an increase in this year's income-tax collections because companies accelerated some 2013 dividends and bonuses into last year so recipients could avoid the Jan. 1 tax increases. Another factor is the lower-than-previously-projected interest rates on the national debt. But they won't last indefinitely, because the Fed has already begun warning markets of future rate increases.

I had expected our leaders to have rational conversations after the poisonous 2012 elections were over. I was naive. The Democrats, scenting blood, pretended to reach out to Republicans, but really didn't. Now, smelling blood over Benghazi, the IRS, and media phone records, Republicans aren't even pretending to be playing nice.



Calm down, you say. Stocks are at all-time highs, house prices have recovered, and corporate profits are strong. What could possibly cause a crisis?

For starters, we still have too-big-to-fail banks that depend on short-term financial markets, which could dry up in an instant, as in 2008-09. Some, including my Fortune colleague Sheila Bair, think the government now has the tools to deal with this. I respectfully disagree.

The debt-ceiling question, supposedly on hold until September, has disaster potential too. If we slip over the brink this time, it could spook foreign buyers, run interest rates way up, run stocks down, and spark a financial panic.

I don't want to see a crisis, and I hope our alleged leaders, who aren't stupid, bestir themselves before one strikes. But I sure wouldn't count on it. Too bad for them. Too bad for us.