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Visit a thesaurus and next to the word conspiracy you will find the following synonyms.... cabal, complot, confederacy, connivance, countermine, counterplot, covin, disloyalty, fix, frame, game, hookup, intrigue, league, little game, machination, perfidy, plot, practice, put-up job, scheme, sedition, treacherousness, treachery, treason, trick, trickery.

Not all suggest indictable offenses, nor will this diary suggest criminal action by the parties.  I remain a supporter of Obama as I have been since 2008.  He has not had the benefit of a lot of time to undo the damage caused by the Bushies.  He is dealing with an incompetant Senate leadership.   Supportive as I remain, I won't stand idly by while information such as I describe below becomes available; and the administration needs to hear the criticism, not just from the right.  This 'breath of fresh air' is starting to remind me of the northern New Jersey atmosphere where I grew up.  The Hope I felt on January 20th in January is waning.

I blame the economy and the continuing Afghanistan situation squarely on the previous Administration still.  I tend to think that Barack Obama has allowed himself to be co-opted by the same military/industrial complex that has influenced every Administration since Eisenhower.

I do believe that the most critical mistake future historians will attribute to Barack Obama is his allowing the infiltration of Wall Street Robber Barons into his Administration.  This diary will highlight a few egregious examples.

In his current Rolling Stone article “Obama’s Big Sellout”, Matt Taibbi argues that President Obama has packed his economic team with Wall Street insiders intent on turning the bailout into an all-out giveaway. Rather than keeping his progressive campaign advisers on board, Taibbi says Obama gave key economic positions in the White House to the very people who caused the economic crisis in the first place.  You can see Taibbi explain this if you don't have the article yet here....

 http://www.youtube.com/...

Transcribed from the Dec. 10, 2009 Rolling Stone:

Despite being perhaps more responsible for last year's crash than any other single living person - his colossally stupid decisions at both the highest levels of government and the management of a private financial superpower make him unique - Rubin was the man Barack Obama chose to build his White House around.

There are four main ways to be connected to Bob Rubin: through Goldman Sachs, the Clinton Administration, Citigroup and, finally, the Hamilton Project, a think tank Rubin spearheaded under the auspices of the Brookings Institute to promote his philosophy of balanced budgets, free trade and financial deregulation. The team Obama put in place to run his economic policy after his inauguration was dominated by people who boasted connections to at least one of these four institutions - so much so that the White House now looks like a backstage party for an episode of Bob Rubin, This Is Your Life!

At Treasury, there is Geithner, who worked under Rubin in the Clinton years.  Serving as Geithner's "counselor" - a made-up post not subject to Senate confirmation - is Lewis Alexander, the former chief economist of Citigroup, who advised Citi back in 2007 that the upcoming crash was nothing to worry about.  Two other top Geithner "counselors" - Gene Sperling and Lael Brainard - worked under Rubin at the National Economic Council, the key group that coordinates all economic policymaking for the White House.

As director of the NEC, meanwhile, Obama installed economic czar Larry Summers, who had served as Rubin's protégé at Treasury.  Just below Summers is Jason Furman, who worked for Rubin in the Clinton White House and was one of the first directors of Rubin's Hamilton Project.  The appointment of Furman - a persistent advocate of free-trade agreements like NAFTA and the author of droolingly pro-globalization reports with titles like "Walmart" A Progressive Success Story" - provided one of the first clues that Obama had only been posturing when he promised crowds of struggling Midwest-erners during the campaign that he would renegotiate NAFTA, which facilitated the flight of blue-collar jobs to other countries. "NAFTA's shortcomings were evident when signed, and we must now amend the agreement to fix them." Obama declared.  A few months after hiring Furman to help shape its economic policy, however, the White House quietly quashed any talk of renegotiating the trade deal.  "The president has said we will look at all of our options, but I think they can be addressed without having to reopen the agreement," U.S. Trade Representative Ronald Kirk told reporters in a little-publicized conference call last April.

The announcement was not surprising, given who Obama hired to serve alongside Furman at the NEC: management consultant Diana Farrell, who worked under Rubin at Goldman Sachs.  In 2003, Farrell was the author of an infamous paper in which she argued that sending American jobs overseas might be beneficial to the U.S. as to the destination country, probably more so."

Most accounts of the inner circle of economic advisors don't include financier George Soros, well known as a major finance source in the elections of 2004 and 2008; a vowed enemy of George Bush, a major funder of MoveOn and other progressive organizations.  George Soros is also the major shareholder in OneWestFSB, the bank that was formed to absorb the shuttered IndyMac bank that failed in 2007.  Now, 2007 is obviously a time when the previous administration was in office, however, Soros and his team took the reins of the new bank in March of 2009.  

At that point in time, I had nothing bad to say about Soros, although he does have a checkered past due to past financial dealings in England and elsewhere; his Wiki page is comprehensive, yet curiously has no mention of Barack Obama.  So where's the conspiracy you might ask...

In setting up the sale of the failed IndyMac business to OneWest, the FDIC put together one sweetheart of a deal. Today I stumbled upon this blog entry authored by Patrick Pulatie; "the CEO for Loan Fraud Investigations (LFI). LFI is a Forensic/Predatory Lending Audit company in Antioch CA, and has been doing homeowner audits since Nov 07. LFI works daily with Attorneys throughout California, assisting homeowners in the fight to save their homes. He and Attorneys are constantly developing new strategies to counter foreclosure efforts by lenders.",  I'll let Patrick explain the details of what he's learned...

OneWest Bank was created on Mar 19, 2009 from the assets of Indymac Bank. It was created solely for the purpose of absorbing Indymac Bank. The principle owners of OneWest Bank include Michael Dell and George Soros. (George was a major supporter of Barack Obama and is also notorious for knocking the UK out of the Euro Exchange Rate Mechanism in 1992 by shorting the Pound).

When OneWest took over Indymac, the FDIC and OneWest executed a “Shared-Loss Agreement” covering the sale. This Agreement covered the terms of what the FDIC would reimburse OneWest for any losses from foreclosure on a property. It is at this point that the details get very confusing, so I shall try to  simplify the terms. Some of the major details are:

OneWest would purchase all first mortgages at 70% of the current balance

OneWest would purchase Line of Equity Loans at 58% of the current balance.

In the event of foreclosure, the FDIC would cover from 80%-95% of losses, using the original loan amount, and not the current balance.

How does this translate to the “Real World”? Let us take a hypothetical situation. A homeowner has just lost his home in default. OneWest sells the property. Here are the details of the transaction:

The original loan amount was $500,000. Missed payments and other foreclosure costs bring the amount up to $550,000. At 70%, OneWest bought the loan for $385,000

The home is located in Stockton, CA, so its current value is likely about $185,000 and OneWest sells the home for that amount. Total loss for OneWest is $200,000. But this is not how FDIC determines the loss.

‘FDIC takes the $500,000 and subtracts the $185,000 Purchase Price. Total loss according to the FDIC is $315,000. If the FDIC is covering “ONLY” 80% of the loss, then the FDIC would reimburse OneWest to the tune of $252,000.

Add the $252,000 to the Purchase Price of $185,000, and you have One West recovering $437,000 for an “investment” of $385,000. Therefore, OneWest makes $52,000 in additional income above the actual Purchase Price loan amount after the FDIC reimbursement.

At this point, it becomes readily apparent why OneWest Bank has no intention of conducting loan modifications. Any modification means that OneWest would lose out on all this additional profit.

On Monday, Barack Obama's Treasury Department announced that the HAMP (Home Affordable Modification Program) would be undergoing some modifications itself, notably, another attempt to "embarrass" banks and loan servicers who have not been doing their fair share of modifications.  Government Incentive Payments currently being made to banks and servicers for initiation of modification proceedings are being held until the modifications are made permanently.  

Regular Huffington Post columnist Richard Zombeck posted this yesterday…

August seems to have been the month for scoldings at the Treasury Department. In August we felt the chilling winds of shame blowing across what was left of our economy when Assistant Secretary for Financial Institutions Michael Barr said, "I think we've been disappointed... about [banks'] performance in helping people in a timely fashion with the respect they deserve under difficult circumstances."

On Friday, after four months without progress, Barr said, "The banks are not doing a good enough job. Some of the firms ought to be embarrassed, and they will be."

What did shame get us? We got to hear the CEO of Goldman Sachs, the company not only responsible for this fiasco but also profiting from it. "I'm doing God's work", they tell us in a disgusting display of self-adulation.
What's changed, that suddenly shame is going to work on the shameless? Have lenders come to the uncomfortable realization that they caused this mess, were bailed out by the same tax payers they've been kicking to the curb, and now it's time to do the right thing? Doubtful.

What we do hear from banks is that they need time to ramp up their "complicated processes" and staff. Raising interest rates doesn't seem to be a problem. My loan jumped to 9.5% on the exact day they said it would. No delay, no mistakes, no misplaced paperwork, no excuses.

Some executives will have you believe that it is a paperwork problem.

"The documents were confusing. Borrowers did not understand the process wasn't closed until the documents came in," Sanjiv Das, chief executive of Citigroup's mortgage unit, said earlier this month. "Even when the documents came in, they were not always complete."

It's hard to believe that enough Citigroup customers are so confused that the entire lending machine is grinding to a halt. Here are the documents required by HAMP: a request form, a tax form, and a pay stub. That and a stamp to mail the stuff are all you need.

There's more to the problem than administrative delays. These banks are all getting billions of dollars of taxpayer incentives to modify loans, but despite that, they continue to abuse and con homeowners

http://www.huffingtonpost.com/...

One West has been notoriously not doing its fair share.  Last month, a New York judge made headlines when he decreed that the actions of the bank were so onerous that he was outright canceling the $250,000 mortgage obligation of one homeowner in a summary judgment.  Link: http://moneywatch.bnet.com/...

Horror stories about homeowners attempting to deal with bad IndyMac loans abound, like this found in another blog, Link:
http://mandelman.ml-implode.com/...

IndyMac Bank, now One West Bank, whose major shareholders include liberal billionaire George Soros and his young ward, computer industry all-around good guy, Michael Dell, appears to have embarked on a mission to defraud as many people as possible out of their homes through a clever trial loan modification scheme.  Here’s how one homeowner was introduced to the bank’s underhanded tactics.

This is the story of how IndyMac offered a homeowner in the Inland Empire region of Southern California four separate trial loan modifications over the past six months.  Let’s say that they’re family name is Geithner, just for fun… The Geithner Family.  They have two kids.  We’ll call them Danny and Fanny.
The Geithners had owned their home for a decade, having purchased it with 6% down back in 1999.  Their 700 FICO score, as of six months ago, showed that they always made their payments on time. They refinanced a few years back with a loan from IndyMac, who apparently felt that the Option ARM mortgage design was the young family’s ideal option.

Their starting payment was around $1800, but roughly a year later had jumped up unexpectedly to $2200.  When Mrs. Geithner’s father fell, injuring his neck quite seriously, what else could the family do but invite him to move in with them where he could be waited on hand and foot and ultimately nursed back to health.  They decided perhaps they could qualify for the President’s loan modification program.
Since they started working towards getting IndyMac to approve a loan modification, they’ve done absolutely everything the bank asked them to do, made every single one of their payments on time and as agreed, and never touched their noses unless the bank said “Simon Says.”  But now, regardless of all that, their home is due to be sold out from under them on November 19th

The blogger writing this story added….

I’m announcing today that I will write and publish every story I receive about a homeowner being jerked around by IndyMac/One West Bank.  Every single one.  Write to me and I’ll put it out there.  And I’ll ask everyone to forward it along to friends online.  And maybe… just maybe… someone will be listening… someone will care… and someone will force this despicable failed bank’s hand… force them to do what the president’s plan requires them to do: modify a loan when it makes more sense to do so than it does to foreclose.

But why would OneWest ever modify a mortgage when they can make more profit by foreclosing?  OK, so that’s one bank, and it can’t be the same story everywhere, what else is causing so many banks and mortgage servicers to sit on their hands while people caught in the trap of unemployment, underemployment, rising mortgage interest rates, rising credit card interest rates and a bad economy, suffer through an uncertain future….

Mr. Pulatie asks a similar question….

It now becomes incumbent upon me to ask one final question. The Shared-Loss Agreement states the following:

2.1 Shared-Loss Arrangement.
(a) Loss Mitigation and Consideration of Alternatives. For each Shared-Loss Loan in default or for which a default is reasonably foreseeable, the Purchaser shall undertake, or shall use reasonable best efforts to cause third-party servicers to undertake, reasonable and customary loss mitigation efforts in compliance with the Guidelines and Customary Servicing Procedures. The Purchaser shall document its consideration of foreclosure, loan restructuring (if available), charge-off and short-sale (if a short-sale is a viable option and is proposed to the Purchaser) alternatives and shall select the alternative that is reasonably estimated by the Purchaser to result in the least Loss. The Purchaser shall retain all analyses of the considered alternatives and servicing records and allow the Receiver to inspect them upon reasonable notice.

Such agreements are usually considered to be interpreted to the benefit of the homeowner, as with HAMP and other programs. In legalese, it is called “Intent”.

What was the “Intent” of the Shared-Loss Agreement? Was the intent to provide OneWest Bank solely with a profitable incentive to take over Indymac Bank? If so, then OneWest has been truly successful in every manner.
Or was the intent to offer to OneWest Bank a way to be compensated for losses for foreclosures, but with the primary goal to assist homeowners in trouble? If this was the intent, then OneWest has failed miserably in its actions. And if so, could OneWest be actionable by the Federal Government for fraud?

In fact the true “Intent” was to limit losses to the Treasury Department. Each and every loan modification done would save the Treasury, and the taxpayer, from 80-95 cents on every dollar.

Since, technically, One West would get 5-20 cents of any savings, it should have been an incentive to use foreclosure alternatives. But the reality is  that the quick turnaround on foreclosure seems to give OneWest a better return. As a result, OneWest appears to simply ignore the intent and just foreclose (as far as I can tell).
So, OneWest’s failure to modify loans may actually amount to fraud on the Treasury and US taxpayers.

Conclusion

I have presented the story of Indymac/OneWest and what is happening today. But the story does not end with OneWest. There are over 50 different lenders and servicers who have Shared-Loss Agreements executed with the FDIC. Each Agreement offers essentially the same terms. Though other Lenders do not appear to be acting as flagrantly as OneWest, they are all still engaging in the same actions. (Bold type is the diarist's)
What is the solution for this problem?

For homeowners individually, the most successes are being achieved by borrowers who are getting knowledgeable attorneys who will not just threaten litigation, but are also willing to act and file the necessary lawsuits. That tends to bring OneWest Bank to the table.

For the country as a whole, and homeowners in mass, the problem must be brought to the attention of your local Congress Critters. You must hold their feet to the fire. They must know that if they do not respond to what OneWest and other lenders are doing, then they are subject to being voted out of their nice and cushy Congressional Offices.

Will this be easy? No way. After all, the lenders have the money and the ears of Congress. But if we do not draw the line here, then in 10-15 years, the Banks will devise another plan to “loot” the economy, as they do every 10-15 years

That leads me to my final questions.  Did George Soros go to all that time and trouble and expense to get rid of George Bush and bring a Progressive, Democratic government to the fore so he could then make sweetheart deals that rip apart the fabric of the middle class of the United States of America.?

What’s the deal, President Obama?

Originally posted to route66 on Thu Dec 03, 2009 at 05:03 PM PST.

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Comment Preferences

  •  Tip Jar (5+ / 0-)
    Recommended by:
    Chi, nippersdad, Johnny Q, Conure, wolfie1818

    I am quite sure now that often, very often, in matters concerning religion and politics a man's reasoning powers are not above the monkey's. - Mark Twain

    by route66 on Thu Dec 03, 2009 at 05:03:43 PM PST

  •  i have to check my calander (3+ / 0-)

    is it Obama is a sell out day yet?

    Laughter is a force for democracy - John Cleese

    by GlowNZ on Thu Dec 03, 2009 at 05:09:33 PM PST

  •  IMO. (4+ / 0-)
    Recommended by:
    DocGonzo, radmul, Johnny Q, Conure

    All Obama had to do was appoint people who would support and strengthen him. Instead he retained the New World Order Crowd. I don't know why he did this. I wish I did. (Maybe not.)

    "No PO, no bill, no money, no nothin' but hell on earth for these people." -SouthernDragon at FDL

    by nehark on Thu Dec 03, 2009 at 05:31:09 PM PST

  •  I doubt that there is any conspiracy here. (1+ / 0-)
    Recommended by:
    Chi

    Soros is known for keeping his politics and his business dealings strictly separate. Soros is also known for being a cutthroat business man; these are the kind of deals he specializes in and was probably working the deal long before Obama became President. He took advantage of what there was to take advantage of, simple as that.

    Nassim Taleb is a great economist who sees the problems that we face and finds himself so disgusted as to have written a recent (very drama queenish) GBCW on HuffPo. In it he specifically states that he is going to retire to his ivory tower and write books and to take full advantage of Obama's economics team's mistakes. When you live in an environment full of sharks, when it comes to money, you learn to be indistinguishable from the background. I think Soros is just trying to fit into his natural environment.

    A Republican is someone who can't enjoy his privileged position unless he is certain that somewhere, someone is in excruciating agony. I Love OCD

    by nippersdad on Thu Dec 03, 2009 at 05:40:09 PM PST

  •  honestly, I think this is just silly (0+ / 0-)

    Gee, someone who is a wall street banker in the economic division of government.  

    Conspiracy theories abound!

    Afterall, historically, we have not had people from Wall Street be our Treasury Sec. ever...

    Come on.  Sure Geithner is a bit weird.  And sure, Wall street is mostly a con job.  But, frankly, this is a bit over the top.  Even for Matt

  •  That's a Bad Example (1+ / 0-)
    Recommended by:
    kalmoth

    It looks in principle like that deal for Soros was at least as much a giveaway as the rest of the Wall Street bailouts we've heard about. But the example you quote so extensively is bad:

    The original loan amount was $500,000. Missed payments and other foreclosure costs bring the amount up to $550,000. At 70%, OneWest bought the loan for $385,000

    The home is located in Stockton, CA, so its current value is likely about $185,000 and OneWest sells the home for that amount. Total loss for OneWest is $200,000. But this is not how FDIC determines the loss.

    Missed loan payments don't increase the amount of the original loan. If even a single payment was made, the balance would be less, not at all more. Other foreclosure costs don't increase the balance by 10% or more.

    Homes in Stockton didn't plunge to 1/3 their value between 2008 and now.

    That example is impossibly exaggerated. I'm not interested in reading more analysis from someone handling the example so badly. This kind of scam deserves a lot better attention and explanation.

    "When the going gets weird, the weird turn pro." - HST

    by DocGonzo on Thu Dec 03, 2009 at 07:25:50 PM PST

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