Once again, the great and courageous William K. Black is being honored, praised and applauded today on various financial websites, for his continued hammering of the poisoned and fraudulent key financial markets in our nation.
Regardless of certain, 'Wall St. Dallas Cowboy Cheerleaders,' that try to discredit Mr. Black in my diaries, (and we know who you are) Mr. Black is one of the greatest and most highly respected financial experts in the United States, and I for one am thankful that he has the tenacity, integrity and experience to fully understand that unless our nation faces up to the destruction of our housing markets, and the rampart fraud that continues, what we are likely to face is beyond comprehension.
This nationwide problem is not going away, ever, until we face it, and until the Banks/Lenders and Wall Street have been held accountable for the systemic FRAUD TO COVER UP FRAUD, which is ruining our nation.
Recent posts about William K. Black:
William Black Tears Larry Summers Apart, Again Calls Out Obama To Place Bank Of America In Receivership
Submitted by Tyler Durden on 10/28/2010 11:36 -0500
William Black continues with his campaign to not only bring sanity and transparency to an administration wrapped in secrecy, legacy cover ups and fraud, but to finally do what had to be down two years ago: bring down the big banks, force a balance sheet restructuring at the TBTFs, and force a systemic reset which is the only thing that could bring the much promised "change for good" to this country. " Don't talk about doing the right thing -- do it -- and do it to a major contributor. Don't do it because it's a contributor, but because a bank that commits tens of thousands of frauds should immediately be placed in receivership." We once again hope that more people like Bill Black (if not he himself) will decide to run for president, and make the difficult choices necessary to begin the impossible task of truly fixing the mess this country finds itself in.
No Mr. President, Larry Summers Did Not Resolve the Financial Crisis for a Pittance, He Just Papered Over the Problem, originally appearing in Huffington Post. I passed up the obvious title: "Heckuva Job Larry!" That was the moment of President Obama's appearance on The Daily Show with Jon Stewart that set all Americans cringing. Yes, he really said that Summers "did a heckuva job." The candidate that was gifted the opportunity to run against the legacy of one of the worst presidents in U.S. history has, as president, used Bush as his role model to continue many disastrous policies. It was strangely fitting that he would channel Bush's infamous praise ("Heckuva job Brownie") for the FEMA chief who failed New Orleans so badly in the hurricane.
President Obama understandably wishes to focus attention on the economic disaster he inherited from President Bush. But Jon Stewart's question to him, which led to the president's gaffe, correctly asked about the message that Summers' appointment sent about the administration's commitment to fundamental change.
For the full article see link below:
http://www.zerohedge.com/...
President Obama's appointment of Summers as his chief economic advisor made the administration's overall response to the crisis predictable. (Robert Kuttner gives a detailed explanation of the policies that Rubin's protégés championed in his new book, A Presidency in Peril.) The response would follow the disastrous Japanese model that has harmed their economy and damaged their integrity. The dominant characteristics can be summarized quickly: (1) the government would act for the benefit of the largest financial firms and their CEOs, even when they directed massive frauds, by (2) engineering a cover up of the banks' losses and the CEO's misconduct; (3) the administration would use the fictional reports generated to conduct the cover up to declare victory (due to their brilliance); and (4) the same strategy would impair the recovery. (For more on the cover up, see here and here.)
And worse, the losses are still there. They're just being hidden under the rug, but just like shoveling rotting fish under the carpet, it doesn't make it stink less - it just makes it hard to see them - for a while.Extort is the correct word too. And the ugly part of it is that a loan that has a loss embedded in it when made only gets worse over time. That is, the recovery value always deteriorates in the general sense, as each month's payment is not made. This is why "the first loss is the best loss" when it comes to these issues; there's no way out of the box other than to admit to what happened and swallow.
There was no silver bullet. The administration made the losses disappear the old-fashioned way -- with fictional accounting. I have already explained how the administration allowed the Chamber of Commerce, American Bankers Association, and the Fed to enlist the Congress to extort FASB to pervert the accounting rules so that most of the SDIs' losses disappeared. The Fed also took over a trillion dollars in toxic, largely fraudulent collateral -- and carefully avoided conducting due diligence to discover either the value or the fraud incidence of the collateral. In essence, the Fed took the toxic stuff off the balance sheets. Third, integrity is important. I really shouldn't have to explain this. It depresses me that I have to argue that it is wrong to lie. Our democracy, our economy, our society, and our souls depend on restoring our integrity and the rule of law. Randy Wray and I have proposed a step that would demonstrate the president's complete repudiation of Summers' strategy and a return to the rule of law: Place Bank of America in receivership for its tens of billions of dollars in fraudulent loans and its multitude of foreclosure frauds. Don't talk about doing the right thing -- do it -- and do it to a major contributor. Don't do it because it's a contributor, but because a bank that commits tens of thousands of frauds should immediately be placed in receivership.
http://market-ticker.org/...
And then of course we have Yves Smith stating the obvious (the Emperor has no clothes)....
Thursday, October 28, 2010
Obama No Longer Bothering to Lie Credibly: Claims Financial Crisis Cost Less Than S&L Crisis
I’m so offended by the latest Obama canard, that the financial crisis of 2007-2008 cost less than 1% of GDP, that I barely know where to begin. Not only does this Administration lie on a routine basis, it doesn’t even bother to tell credible lies. .And this one came directly from the top, not via minions. It’s not that this misrepresentation is earth-shaking, but that it epitomizes why the Obama Administration is well on its way to being an abject failure.
The reason Obama makes such baldfacedly phony statements is twofold: first, his pattern of seeing PR as the preferred solution to all problems, and second, his resulting slavish devotion to smoke and mirrors over sound policy. The savings & loan crisis led to FDIC takeovers of dud banks and the creation of a resolution authority to dispose of bad assets. That produced costs which were largely funded by the Federal government. I’ve heard economists repeatedly peg the costs at $110 to $120 billion; Wikipedia puts it at about $150 billion. This approach, of cleaning up and resolving banks, has been found repeatedly to be the fastest and least costly way to contend with a financial crisis. The reason Obama can claim such phony figures is that many of the costs of saving the financial system are hidden, the biggest being the ongoing transfer from savers to banks of negative real interest rates, which is a covert way to rebuild bank equity.
http://www.nakedcapitalism.com/...
I just find it absolutely unbelievable in this day and age, that President Obama and team, apparently are so out of touch, that they do not realize, that 'no body' with even half a brain believes the bullshit PR that they are putting out there.
It flies in the face of the reality that Americans are facing day in and day out, as millions continue to receive little if any help at all from the bullshit HAMP program, the Obama's Administration's refusal to join along with 50 State Attorney General's to stop 'the madness,' and the illicit foreclosure mills, while people continue to lose their jobs, directly as a result of what Wall St./the Banks and Lenders did: which was to crash our entire national economy, then got paid off for that little piece of 'criminal activity.'
As a Democrat, I am always looking for new writers, who will and do have the courage, to lead us back to the most basic precepts of our party when I find them, it is what we call in our party, New and Better Democrats. One such writer, is Charles Huge Smith, who I first discovered about a month ago. I first noticed him on one of my favorite daily financial blogs, I visit every morning: http://jessescrossroadscafe.blogspot... The point I am trying to make is that Mr. Smith is an amazing truth teller....and that is why a great spot like Jesses' an great financial website, is so important.
Charles H. Smith gets it totally. He understands the moral rot in our nation, he understands what in the end it will cost all of us, and he has the 'proof of the pudding' to back it up. I am thankful he allowed me again to put another one of his articles on line here. Thank you Mr. Smith.
U.S. Financial Markets: The Well Has Been Poisoned (Anger of the Honest Part II) (October 23, 2010)
When financial markets have become riddled with fraud, embezzlement and corruption that goes unpunished, then institutional players will avoid that market as crooked: the well has been poisoned.
The full consequences of what I termed The Rot Within: Our Culture of Financial Fraud and the Anger of the Honest (October 15, 2010) are now unfolding: the well has been poisoned. One of my most astute correspondents made a critical observation that I've seen nowhere else: once a market has been poisoned by fraud which goes unpunished, then institutional players will avoid that market as untrustworthy.
Without institutional trust and participation, the market then withers on the vine-- exactly what has happened to the U.S. mortgage securities market. The market for mortgage-backed securities has vanished, except for one player: the Federal Reserve, which has bought a staggering $1.2 trillion in the past 18 months to create the facsimile of an active market.
The well has been poisoned. The only mortgages being traded are those 100% guaranteed by the U.S. government: in effect, the risks intrinsic to a corrupted market have been shifted to the taxpayers, while the criminals who profited from the fraud and embezzlement got away scot-free.
Here are the correspondent's comments:
RE: Will bankers Go to Jail for Foreclosuregate?:
When I was in the Wall Street game, our small-cap fund was for a time in the top 5% of performers. I got bored and left, which is a longer story. Anyway, I observed a phenomenon about fraud. First it happened. Then it was widely publicized. Then it was prosecuted, and some big names were jailed. At that point, it was safe to go back into the water.
This happened in a few industries prior to the mid-1990s, at which point basic law enforcement was neutered and there were no more fraud prosecutions that mattered. I have always thought that the lack of fraud prosecutions for Internet/telecom fraud was a significant reason why the NASDAQ has never made a significant recovery to anything close to its peak reached in March 2000.
Watch carefully on the foreclosure frauds. If real jail terms are handed out to some (doesn't need to be all) big players, that will be a green flag. The public at large won't see it or believe it, but the professionals will. I am not predicting that this will happen. In fact, I'm quite skeptical that it will. However, any intelligent skeptic considers all the possibilities.
This is why no institutional investor will touch private-market mortgage securities with a 10-foot pole. The U.S. government and the Fed had a stark choice: either impose the rule of law and indict and convict hundreds, if not thousands, of people who perpetrated and profited from the systemic fraud and embezzlement at the heart of the mortgage and mortgage-securities industries, or socialize the corrupted, poisoned markets and use taxpayer funds to prop up the wizened shell of a stripmined market and reward the criminals with freedom.
They chose to reward the criminals and prop up a simulacrum market with only one buyer: the Federal Reserve. You can go to the the Fed's balance sheet and see the $1.2 trillion in mortgage-backed securities it owns. There is no effort to hide the brazen socialization of what once was a private-sector, free market.
When the well has been poisoned, the only players dumb enough to drink from it are the taxpayers, who have no choice as the politico toadies of the investment banking/financial Power Elites have funneled some $13 trillion in cash, backstops and guarantees into their "partners" who fund their campaigns and write the laws via their lobbyist proxies.
The Fed isn't dumb--it's desperate. The markets, systemically riddled with collusion, cronyism, fraud, embezzlement, misrepresentation and outright lies, have no participants except Central State proxies and "marks" who sadly still believe the ceaseless propaganda about "rising corporate profits," "recovery" and "a free-market economy." Hahahahaha--free market! Please don't make me laugh that hard, I might hurt myself.
If you are so confident in the "transparency" and trustworthiness of the mortgage securities market, please tell us how many private institutional investors are buying mortgage securities which aren't 100% guaranteed by the Central State.
The same distrust has poisoned U.S. stock markets. The high keening cry to "get into the market while stocks are cheap" which has been spewed daily for months on end on network TV and other channels of raw propaganda has been ignored by the "retail investor," a.k.a. the top 20% of Americans who have financial wealth to preserve and invest.
For 24 straight weeks, retail investors have been pulling tens of billions of dollars out of U.S. mutual funds and plowing hundreds of billions into low-yield Treasury bonds.
Why? Because they sense the stock market is hopelessly, deeply corrupt and by comparison Treasuries are trustworthy. You won't make a lot of yield in Treasuries, thanks to the Fed's zero-interest rate policy (ZIRP) which is designed to drive money into risky assets, but then you won't lose 40% like you did in 2008-09 or 2000-2002 in the stock market.
We can also see how insiders are responding to the knowledge that the well has been poisoned: they're selling 500 shares for every share they buy. This unprecedented cascade of insider selling has been noted elsewhere many times, as has the declining expectations for the "recovery" of U.S. CEOs.
Those who know the most are selling their shares as fast as they legally can, and are publicly expressing their lack of faith in the tricked-up "recovery."
The U.S. financial markets have been poisoned, with long-term negative consequences. Only crooks, fraudsters and "marks" (those who still believe the propaganda about the "recovery" and "stocks are cheap" poison) will be left in a stock market propped up by the same socialization of risk which keeps the flimsy facade of a mortgage market from crumbling. High-frequency trading machines create the illusion of a market, and State intervention via proxies and other corrupt games provides the liquidity needed to fund the facsimile of a "rising market" and a "recovery" in the U.S. economy. But the public isn't buying the fraud any longer; they finally "get it": The well has been poisoned and only a fool drinks from a poisoned well.
This is why we can safely anticipate a hollowed-out stock market which trades at a steep discount to its present propped-up levels in the years ahead--until the crooked players are indicted and the financial markets thoroughly cleaned. That will take political will which is completely lacking in the Demopublican-Republicrat status quo. For more on this, please read:
The Loss of Trust and the Great Unraveling To Come
(October 18, 2010)
The Normalization of Sociopathology in America
(October 16, 2010)
The Rot Within: Our Culture of Financial Fraud and the Anger of the Honest
(October 15, 2010)
The Coming Collapse of the Real Estate Market
(October 14, 2010)
Runaway Feedback Loops, Wealth Concentration and Gaming-The-System
(October 13, 2010)
Bernanke's QE2 Heading for the Shoals
(October 11, 2010)
Look Out Below (I've got a bad feeling about this)
(October 8, 2010)
http://www.oftwominds.com/...
Thanks so much Mr. Smith for allowing me to publish another one of your excellent essays.
On Zero Hedge yesterday, Mr. Black again is warning us over and over and over again, about the full repercussions we will face, if we do not deal with this FRAUD, this cancer, this crisis that is eating us alive.
Why Did Banks Give Home Loans to People Who They KNEW Couldn't Pay?
George Washington's picture?
Submitted by George Washington on 10/27/2010 12:47 -0500
William K. Black - professor of economics and law, and the senior regulator during the S & L crisis - explained last month before to the Financial Crisis Inquiry Commission why banks gave home loans to people who they knew couldn't repay. The whole piece is a must-read, but here are excerpts from the introduction; The data demonstrate conclusively that most liar’s loans were fraudulent, which means that there were millions of fraudulent mortgage loans because liar’s loans became common (Credit Suisse estimates that they represented 49% of new originations by 2006). The data also demonstrate that even minimal underwriting of the loan files was sufficient to detect the overwhelming majority of such fraudulent liar’s loans. No honest, rational lender would make large numbers of liar’s loans. The epidemic of mortgage fraud was so large that it hyper-inflated the housing bubble, which allowed refinancing to further extend the life of the bubble (and the depth of the ultimate Great Recession.
In the cases where there have been even minimal investigations (New Century, Aurora/Lehman, Citi, WaMu, Countrywide, and IndyMac) senior lender officials were aware that liar’s loans were typically fraudulent. The lenders could not make an honest business out of selling overwhelmingly fraudulent mortgages. Liar’s loans were done for the usual reason – they optimized (fictional) short-term accounting income by creating a "sure thing" (Akerlof & Romer 1993). A fraudulent lender optimizes short-term fictional accounting income and longer term (real) losses by following a four-part recipe: A. Extreme Growth, B. Making bad loans at a premium yield, C. Extreme leverage, and D. Grossly inadequate loss reserves.
snip..
Because President Barack Obama and the leaders of both political parties are unwilling to address the housing crisis and the wasting effects on the largest banks, there will be no growth and no net job creation in the U.S. for the next several years. And because the Obama White House is content to ignore the crisis facing millions of American homeowners, who are deep underwater and will eventually default on their loans, the efforts by the Fed to reflate the U.S. economy and particularly consumer spending will be futile. As Alan Meltzer noted to Tom Keene on Bloomberg Radio earlier this year: "This is not a monetary problem."
And he is right, this is not a monetary problem, this is a moral problem, as Charles Smith denotes: the Well has been poisoned.
Now the 'INVESTORS' are suing...of course they are...OMFG.. What A 'Big Surprise'? NOT.
FRAUD TO COVER UP FRAUD?
The US population is starting to get restless: investors are beginning to sue, there are protests over HAMP, and foreclosure probes are happening.
HAMP Protests
http://www.huffingtonpost.com/...
Washington Post: Economists: U.S. should remove top bank execs over foreclosure mess
http://voices.washingtonpost.com/...
Assured Guaranty Sues Deutsche Bank Over Mortgages
http://noir.bloomberg.com/...
Assured said more than 83 percent of 1,306 defaulted loans examined in one of the transactions, ACE’s Home Equity Loan Trust, Series 2007-SL2, breached Deutsche Bank’s representations and warranties. In the second deal, Home Equity Loan Trust, Series 2007-SL3, 86 percent of the 1,774 loans breached the agreements, Assured said.
Faulty Foreclosures, by Adam Levitin
http://www.creditslips.org/...
Bank of America Mulls Dividend Hike
http://www.thestreet.com/...
U.S. probing foreclosure processing firms (uses the criminal word...)
http://www.washingtonpost.com/...
Homeowner says Stern sent retaliatory letter
http://www.dailybusinessreview.com/...
From the last must read article showing how desperate parties on both sides of the table are getting:
A lawyer for a homeowner who went to Florida's attorney general about a law firm's conduct in a foreclosure case claims the firm sent his client a "discriminatory and racially degrading" letter to frighten him into dropping the complaint.
The very bedrock of our nation was our homes and our homes are the last bastion of our sacred dwellings, which have in the past (when integrity and the law meant something in this nation), were sold to us in good faith. Now that is being destroyed right in front of our eyes. What does that represent to you as an American?
What is represents to me is this:
These crooks, liars and thieves came after their own, they dared to 'shit where they ate'...we let them get away with it, so guess, what? they are going to come after even more...because NO ONE IS STOPPING THEM. Next up it will be our pensions, social security and medicare. They will pick the carcass clean. Again I must repeat:
Because President Barack Obama and the leaders of both political parties are unwilling to address the housing crisis and the wasting effects on the largest banks, there will be no growth and no net job creation in the U.S. for the next several years. And because the Obama White House is content to ignore the crisis facing millions of American homeowners, who are deep underwater and will eventually default on their loans, the efforts by the Fed to reflate the U.S. economy and particularly consumer spending will be futile. As Alan Meltzer noted to Tom Keene on Bloomberg Radio earlier this year: "This is not a monetary problem."
No growth, no net job creation, gridlock in our housing markets as our the housing market continues to crash, and homes prices are dropping significantly. And it's only going to get worse.
About 21.8 percent of all owners were underwater as of March 31, the Seattle-based real estate data service said in a report today. At the end of the fourth quarter, 17.6 percent of homeowners owed more than their original mortgage, while 14.3 percent had negative equity three months earlier. It's amazing to see 50% more home mortgages go underwater in just 6 months!
Property values dropped 14 percent from a year earlier in the first quarter, reducing the median value of U.S. single- family homes, condominiums and cooperatives to $182,378, Zillow said. The decline has left about 20.4 million of the U.S.’s 93 million houses, condos and co-ops with loans higher than the properties are worth. The gain in underwater homeowners will lead to more bank repossessions, Zillow said.
Many owners "would be more willing to bear the financial consequences of bankruptcy or foreclosure," Stan Humphries, Zillow’s vice president of data and analytics, said in an interview. "You are going to continue to see home prices fall for the rest of this year and some portion of next year." The recession cut home values by $2.4 trillion last year, First American CoreLogic said in a March 4 report. More than 8.3 million U.S. mortgage holders owed more than their properties were worth and an additional 2.2 million borrowers will be underwater if prices decline another 5 percent, the Santa Ana, California-based seller of mortgage and economic data, said in the report. I think it's already written in stone that homes prices will fall at least another 5 percent before this housing bust is over. Therefore, it is a given that underwater mortgages will increase another 25%.
http://www.economicpopulist.org/...
We are a nation in complete chaos and until we face this FRAUD TO COVER UP FRAUD, we will remain in a state of chaos, or worse. Because if the Republicans get into the White House, god help us all. It sure as hell will be 'Blue Dog Heaven,' then, won't it.
There is always a price for corruption. There is always a price to pay when a nation is in a state of moral rot, and the 'wells' of our financial markets have been poisoned.
Thank for god for people like William K. Black, Mr. Charles Huge Smith, Elizabeth Warren, and the great financial websites, who day in and day out, are standing up for the truth of what is really going on in our country.
God knows no one is Washington DC is.
Thanks as always.
Ms. B.