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QE3 stays in port ... for now.
With economic indicators flashing red all over the place, the Obama administration may be looking at some bad news this spring on economic growth. If they’re looking to the Fed to toss them a lifeline, they may be waiting a while. Despite some expectations that the Federal Reserve might embark on a third round of [...]
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Yesterday, I had a chance to interview an honored CPAC guest, Member of the European Parliament Daniel Hannan. Unfortunately for me and for all of us, the audio did not record properly on the video, a problem I only discovered long after CPAC packed up for the day. Since I was the cameraman as well [...]
I was born and raised in the Northeast… born in Manhattan… father’s family from Boston with too many Harvard grads to count… and I grew up in Pittsburgh. As a result… well, it’d be more than safe to say that I’ve never been at risk of being confused with a Southerner. To my knowledge, after meeting me, nary a soul has later posited: “I forgot to ask, is Martin originally from Alabama or Mississippi?”
Truth be told, people from the Northeast are not bothered in the least by the fact that they’re never mistaken for Southerners. Truth be told, as soon as many Northeasterners hear an opinion uttered in a Southern accent, we get tempted to respond by saying things like, “Thanks Ebb. Now go on… don’t you have a lunch counter to segregate, or something like that?”
All right, calm down… it’s a joke… sort of… but my point here is that I’m familiar with the pompous air of intellectual superiority invariably inbred in the stereotypical cartoon Northeasterner, but let’s face it… you held onto the whole segregation thing far too long, and whenever there’s controversy over whether evolution should be taught alongside “creation science,” in public schools, it’s never coming out of Philadelphia.
Alright, I’ll stop fooling around… you know what I’m saying, and besides my point is that while I perhaps used to be capable of leaning that way when it came to southern accents, once I turned 18 years of age, enlisted in the United States Air Force, and found myself sans hair wearing fatigues and combat boots and saluting second lieutenants like they were four-star generals, all that Northeastern intellectual superiority crap flew straight out the window… of the pick-up truck for which I was now inexplicably longing.
You meet and come to respect all kind of folk when you serve in the U.S. military, and before you know it you’re craving SOS on toast, and saying, “Thank you, Ma’am,” with Gomer Pyle-like enthusiasm for the extra scoop of sausage gravy ladled onto your plate.
The fact is, joining the service, as we used to call it, does wonders to wipe any sort of superior smirk of your face, no matter how it got there in the first place. You act like an idiot at the NCO Club bar, as I did once just after my 21st birthday, and a Master Sargent cured me of that little behavioral shortcoming with just one punch to my not-so-superior nose. Say what you will about his methods, but that man knew how to get a point across.
So, why was I telling you about all this? Heck if I know.… no, wait… I remember… it’s because although I grew up in the Northeast, over the years I’ve learned to love the English language as spoken by those that hail from our nation’s southernmost states. It’s not that I still didn’t cringe just a little every time Jesse Helms stepped to the podium, but I sure do love the way Southerners communicate with each other.
I remember sitting at the counter of a Waffle House in the Florida panhandle one time, watching these two women waitresses interact as they went about their work serving us all breakfast one morning. One woman was clearly the more experienced of the two, and you could tell that she was in charge, even though they were both taking orders and refilling coffee cups as they communicated back and forth with each other as needed.
The less experienced waitress was having a problem with the coffee maker and figured she’d solicit help from her more experienced co-worker by calling out to explain the specific nature of the problem she had brewing. Without missing a single beat in the tempo of the dialog, her more experienced co-worker replied in a tone and cadence straight off of the Steel Magnolia’s set: “Why Sugaah, I’m sure I don’t caahar.”
And that was that… the problem got solved and I can’t remember how… it didn’t matter… and I returned to my biscuits and gravy.
See, the New York City version of that same sentiment would have been something like, “Hey, what do I look like, Mrs. Coffee over here? Figure it out yourself, bafangool.” And then, silently… the patrons would have immediately divided into two camps, with half agreeing that the less experienced waitress was in fact, bafangool… and the other half thinking the more experienced waitress was a jerk… picking back up a dollar or two that they were about to leave her as a tip before she had revealed her true self through her chosen reply.
“Why Sugaah, I’m sure I don’t caahar,” was a much better way of saying things. It was Southern speak for… “F#@k you,” but in a way that didn’t make anyone feel like taking sides.
So, why am I going the long way around the barn telling you this story? Well, because of Federal Reserve Chairman Ben Bernanke, silly. Aren’t you following me yet? Okay, let me spell it out for you.
Yesterday, the Federal Open Market Committee or FOMC, which is a group of Federal Reserve Bank presidents and members of the Fed’s Board of Governors, that since being established by the Banking Act of 1933, meets eight times a year to set “monetary policy” by establishing the Fed’s short-term “open market operations,” which is what they call it when the Fed buys and sells U.S. Treasury securities.
The FOMC sets the target for the “federal funds rate,” the interest rate that banks charge each other for overnight loans, and that target rate impacts the interest rates charged on various loans to both businesses and consumers, which in turn impacts the U.S. money supply.
(If that’s all Geek to you and you’re interested in learning more about how it all works, here’s a link to a Wikipedia page about the FOMC, or send me an email and I’ll be happy to help you translate it from finance geek to regular English.)
Anyway, the FOMC releases transcripts of it’s meeting minutes and slide presentations five years after they’ve taken place, and yesterday the 2006 meeting transcripts were made public. (You can find the entire year of 2006 FOMC transcripts, etc. HERE. However, please consult your physician before reading too much of them, as certain combinations of medications and FOMC transcripts can lead to depression and suicidal thoughts… I’m pretty sure.)
That’s why you’ve seen a flurry of articles over the last 48 hours talking about how Bernanke, who assumed the throne in 2006, following the Reign of Greenspan that had lasted as long as anyone could remember, had totally blown it as far as seeing what the housing bust would bring.
Now, first let me just point out that none of this should be considered “news,” unless of course you’ve been incarcerated in Kazakhstan until quite recently, and even then, I have it on good authority that many Eastern Block prison guards were involved in flipping condos in Tampa, so you should have even been able to keep up with U.S housing market news from there.
That Bernanke blew it as related to the housing bust is legendary, although at this point, he’s blown it on so many other pivotal events that criticizing him for this is about like going after Joseph Stalin for overlooking the idea of a Bolshevik dental plan for Siberia’s Gulag-imprisoned dissidents.
Quite a few of my readers obviously felt as if this newly released evidence that Bernanke had in fact blown it would exert a vindicating influence on my psyche, as I’ve been known to rail on about how Bernanke couldn’t keep a hot dog stand on Atlantic City’s boardwalk open for the summer, let alone handle the responsibilities of guiding our country through what will someday be understood to have been, the Great Depression Part Deux… so, many sent me links to the plethora of “Ben blew it” type stories.
I, however, had already visited my personal physician and had him write me a note excusing me from having to expose myself to the 2006 FOMC transcripts… hey, I turned 50 this year and you just have to start limiting the risks you take at a certain point. I mean, no one lives forever, and although I once went out on Lake Erie in a metal canoe during a lightning storm after drinking, as I recall, about half a gallon of Thunderbird wine, I was like 18 at the time and thus invincible.
Today if I tried something like that, I’d need to stop for Dramamine and TUMS at the very least, and then I’d realize that I didn’t really have the right shoes on, talking myself out of the whole thing and ending up back at the room in time for “The Daily Show,” with Jon Stewart, and perhaps some skim milk and Nilla Wafers if I felt like I needed a treat.
After maybe a dozen calls alerting me to the FOMC’s release of 2006 meeting transcripts, and another 25 people sending me links to this new evidence of Bernanke’s boobery, I somehow weakened and clicked on one that took me to AP ‘s coverage of the apparently earth shattering news.
Here’s how the story began…
WASHINGTON (AP) — Ben Bernanke presided over his first meeting as Federal Reserve chairman in March 2006 believing the nation’s economy could pull off a “soft landing” from falling home prices. Three months later, Bernanke had begun to grasp that he and others had underestimated the risk housing posed to the economy.
Okay, so… no. That’s not even true. Three months later than March of 2006 Bernanke realized he had underestimated something related to risk to the U.S. economy? No, sir… not a chance in the world that’s even close to correct. In fact, there’s so much wrong with that sentence, that I don’t even know where to begin, so all I’m going to say is…
“Why Sugaah, I’m sure I don’t caahar.” And let’s move further into AP’s article…
Newly released transcripts of Fed meetings during Bernanke’s first year as chairman show that, among Fed officials, he often expressed the most concern about housing. But no official, according to the transcripts, recognized the extent of the damage a housing bubble would cause. A year later, the housing market’s collapse helped send the nation into its worst recession since the Great Depression.
Nope… again that is not a correct statement. Do you see the inconsistencies here? A minute ago the article said that Bernanke had realized something three months after March of ’06, which would have been June of ’06. Now the article is saying that it was a year later that the housing market collapsed, sending us hurdling towards rampant overuse of Depression era metaphors.
Let’s keep going…
In fact, Treasury Secretary Timothy Geithner, then a Fed official, expressed confidence in September 2006 that “collateral damage” from housing could be avoided.
Well, big beans for Timmy. In September of 2006, the housing bubble had barely even started to deflate… credit was still flowing like boxed wine at a Sunday afternoon Open House in Phoenix. Heck, Bear Stearns wasn’t even institutionally lying to clients yet, and someone was able to convince BofA CEO Kenny Lewis that Countrywide was worth $4 billion.
(Besides, when Tim said that he thought we could avoid “collateral damage,” he was probably referring to FDIC Chair Sheila Bair. I’m told that was his pet name fore Sheila… “Collateral Damage.” Don’t look at me like that, that’s what I was told… prove I wasn’t.)
Back to the AP article…
… Geithner, who was then president of the Fed’s New York regional bank, expressed more confidence that the economy could weather the troubles in housing, saying the issue would be the impact on consumer and business spending.
The discussion by the members of the FOMC, the Fed board members in Washington and 12 regional bank presidents, gave no indication that any of them foresaw the devastating impact that the collapse of the housing bubble would have. The country fell into a deep recession and severe financial crisis that led to the loss of more than 8 million jobs.
Stay with me here… are you starting to see where this is going?
So, first of all we see that Tim Geithner is a babbling brook. He’s talking about the economy “weathering” a cooling off of the housing market and how the issue would be some resulting impact on “consumer and business spending.” Why is he saying that?
“Why Sugaah, I’m sure I don’t caahar.” Let’s keep going…
Bernanke and other Fed officials have said that they failed to see the severity of the shock waves from the housing bust. But the transcripts of their closed-door discussions in 2006 provide new details about how the central bank was responding to the unfolding crisis.
No they don’t. The transcripts don’t provide any “new details about how the central bank was responding to the unfolding crisis,” unless maybe this reporter is 11 years old and everything he reads is to him, a “new detail.” The transcripts could provide any such new detail, because the crisis hadn’t happened yet.
The “crisis,” we’re all referring to today didn’t begin until August of 2007. The official “recession,” didn’t officially begin until December of 2007, and it wasn’t announced as having begun in December of 2007… UNTIL NOVEMBER of 2008.
And the article wraps up with…
The transcripts of the final meeting of the year, in December, showed that Bernanke was still expecting that the economy would experience a “soft landing” in which growth would slow enough to cool inflation but not drop into a recession.
You see, as I’ve written many times in the past, our “CRISIS” has never been the deflating of a housing bubble. It would have been… but it wasn’t. It would have been… but in July of 2007… a year after the housing bubble started deflating in earnest, the sudden downgrading of debt securities tied to mortgages caused investors to turn cold essentially overnight, the credit markets froze solid making loans far less available overnight… and soon very near entirely unavailable.
Home prices went into a free fall, and various fleeting stimulus programs and tax incentives notwithstanding, they continue in that free fall today.
As more and more homeowners found themselves underwater, owing more than their home’s value… life events such as job loss, divorce and illness/injury started fueling foreclosures, which added to the other forces that were also creating record numbers of foreclosures… and the deflationary spiral slowly but steadily gained speed incinerating to-date more than $10 trillion in consumer wealth and eroding state revenues at an increasingly alarming pace.
The reporter who wrote the story for AP News referenced above, simply lacked the knowledge base to interpret the FOMC meeting transcripts.
The transcripts, in a way, do show that Bernanke and the Fed missed the housing bust, but only because the housing bust was entirely eclipsed by the global credit crisis, and that’s what we’ve been dealing with ever since the summer of 2007.
Want to have some fun? Come with me… follow the bouncing boobs, Ben Bernanke and Hank Paulson… and don’t forget to watch the dates… with compiled quotes courtesy of austrianfilter.blogspot.com.
March 28th, 2007 – Ben Bernanke: “At this juncture . . . the impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained.”
April 20th, 2007 – Paulson: “I don’t see subprime mortgage market troubles imposing a serious problem. I think it’s going to be largely contained. All the signs I look at show the housing market is at or near the bottom.”
June 20th, 2007 – Bernanke: (the subprime fallout) “will not affect the economy overall.”
July 12th, 2007 – Paulson: “This is far and away the strongest global economy I’ve seen in my business lifetime.”
October 15th, 2007 – Bernanke: “It is not the responsibility of the Federal Reserve – nor would it be appropriate – to protect lenders and investors from the consequences of their financial decisions.” (That was the last time we heard from Bernanke on this subject until February of 2008.)
February 29th, 2008 – Bernanke: “I expect there will be some failures. I don’t anticipate any serious problems of that sort among the large internationally active banks that make up a very substantial part of our banking system.”
February 28th, 2008 – Paulson: “I’m seeing a series of ideas suggested involving major government intervention in the housing market, and these things are usually presented or sold as a way of helping homeowners stay in their homes. Then when you look at them more carefully what they really amount to is a bailout for financial institutions or Wall Street.”
March 16th, 2008 – Paulson: “We’ve got strong financial institutions . . . Our markets are the envy of the world. They’re resilient, they’re…innovative, they’re flexible. I think we move very quickly to address situations in this country, and, as I said, our financial institutions are strong.”
March 18th, 2008 – Bear Stearns Bailout Announced
May 7, 2008 – Paulson: ‘The worst is likely to be behind us,”
May 16th, 2008 – Paulson: “In my judgment, we are closer to the end of the market turmoil than the beginning.”
June 9th, 2008 – Bernanke: Despite a recent spike in the nation’s unemployment rate, the danger that the economy has fallen into a “substantial downturn” appears to have waned,
July 16th, 2008 – Bernanke: (Freddie and Fannie) “…will make it through the storm,” “… in no danger of failing. … they are adequately capitalized.”
July 20th, 2008 – Paulson: “It’s a safe banking system, a sound banking system. Our regulators are on top of it. This is a very manageable situation.”
August 10th, 2008 – Paulson: “We have no plans to insert money into either of those two institutions.” (Fannie Mae and Freddie Mac)
September 8th, 2008 – Fannie and Freddie nationalized. The taxpayer is on the hook for an estimated $1-1.5 trillion dollars. Over $5 trillion is added to the nation’s balance sheet.
September 19th, 2008 – Bernanke: “… most severe financial crisis” in the post-World War II era. Investment banks are seeing “tremendous runs on their cash. Without action, they will fail soon.”
September 21st, 2008 – Paulson: “The credit markets are still very fragile right now and frozen. We need to deal with this and deal with it quickly. The financial security of all Americans … depends on our ability to restore our financial institutions to a sound footing.”
September 23rd, 2008 – Paulson: “We must [enact a program quickly] in order to avoid a continuing series of financial institution failures and frozen credit markets that threaten American families’ financial well-being, the viability of businesses, both small and large, and the very health of our economy.”
Look… are you feeling me here? Do you see what I’m saying? What’s the deal? Are they lying or are they stupid, because there’s no way in the world we should be talking about whether the FOMC meeting transcripts show Bennie and the Feds missed the housing bust.
So, to everyone who sent me the news of the FOMC’s transcripts being released… thank you. I always appreciate it when my readers send me links to news events they think I should know of, so don’t let my sarcasm about the whole thing prevent that from happening in the future. But on this subject, I don’t need to be vindicated… what I need is for people to realize how distorted the coverage of the subject has been from the beginning.
Think about it… the banks and the mainstream media have us looking for love in all the wrong places. We’ve been told to blame borrowers, brokers, servicers… everyone but the bankers who caused the global credit crisis and have continued to defraud… well, everyone involved as they’ve driven our nation’s economy to new lows.
And in the event that you’ve read all of this and still don’t agree, then at this point all I can think of to say to you is…
“Why Sugaah, I’m sure I don’t caahar.”
Mandelman out.
Joseph Vissarionovich Stalin was a part of The October Revolution in 1917… or the Bolshevik Revolution, if you grew up during the Wonder Years here in the USA. Following the death of Vladimir Lenin in 1924, he consolidated power, put down competing factions within the Communist Party and was the Premier of the Soviet Union from 1941 to 1953.
Stalin is known for increasing the power and scope of the state’s secret police and intelligence agencies. After WWII, he became the focus of literature, poetry, music, paintings and film. He was credited with almost god-like qualities, accepting numerous titles, including Coryphaeus of Science, Father of Nations, Brilliant Genius of Humanity, Great Architect of Communism, Gardener of Human Happiness, and others. Leon Trotsky criticized Stalin’s “cult of personality,” so in 1940, Stalin had his secret police in Mexico assassinate him.
As the head of the Politburo, he consolidated near-absolute power during the 1930s, orchestrating the Great Purge of the Communist Party, which was justified as an attempt to expel ‘opportunists’ and ‘counter-revolutionary infiltrators’. Many that were targeted by the purge were sent to Gulag labor camps… others were simply executed after NKVD troikas, which amounted to three people who convicted without trial.
According to official Soviet estimates, more than 14 million were sent to the Gulag between 1929 and 1953, with another 7 to 8 million deported and exiled to remote areas of the Soviet Union. It is estimated that up to 43% of them died of diseases or malnutrition. But, all of that was only the tip of the iceberg… en total, it is estimated that Stalin was responsible for the deaths of some 60 million people. The things Stalin did were so horrific they cannot be comprehended… and in fact, he makes the top three of every list of the most evil genocidal murderers I could find online.
So, you can imagine my surprise when on “Meet the Press” yesterday, when Senator Lindsey Graham was asked why Senate Republicans blocked the appointment of Richard Cordray to head the Consumer Financial Protection Bureau (“CFPB”), he responded by describing the new agency as, “something out of the Stalinist Era.”
Now, it would be easy for me to make fun of this sort of statement… frankly, it’s in my nature to do so… but, I’m going to leave that to John Stewart and the rest of the folks on “The Daily Show”. The truth is… this just isn’t funny any more.
The CFPB’s mandate is simply to protect consumers from financial fraud. The idea for the Bureau originally came from Elizabeth Warren, and after a nasty political fight last year, it was written into the Wall Street financial reform legislation and signed into law.
According to Ron Suskind’s book, “Confidence Men,” however, the banking lobby told Treasury Secretary Geithner in no uncertain terms that they’d allow the Bureau’s creation, as long as Ms. Warren didn’t get to run it. So, very nicely done there, banker people. I’m especially glad that I wasted so much time writing articles asking people to show their support for Ms. Warren to their elected representatives.
It’s worth mentioning that the CFPB is about as benign a federal agency as could be imagined… they’ve got it operating under the Federal Reserve, for heaven’s sake. Last week, the agency proposed a simplified credit card application designed to make costs, risks and terms easier for consumers to understand. Here’s a copy of that Stalinist… no… I meant, simplified application:
CFPB Proposed Credit Card Applicaiton
Yeppers, after looking at that application, I see exactly what Senator Graham means now. I mean, maybe that credit card application by itself isn’t the end of the world, but clearly it places us on a slippery slope leading directly to NKVD troikas and tens of millions sent to gulags in… let’s see, where would our version of Siberia be… I don’t know… Alabama?
Now, let us be very clear about what is going on here…
The new Consumer Financial Protection Bureau is one component of a bill that has already been signed into law by the President of the United States. Period. It is the law of our land. If someone wants to change it, there is a legislative process in place for that, so by all means, go to town. The only thing our legislators need concern themselves with is the implementation of our country’s new law. That’s their job, and the American people should be telling their elected representatives to get to work and stop screwing around.
You see, this is why we’re in the mess we’re in today… because we… and I do mean you and me… never seem to demand that this sort of thing stop immediately. When they did away with our usury laws, the laws limiting the amount of interest that can be charged, we said nothing. When some tried to pass laws to limit or prevent predatory lending, we hardly said a word about it.
Now, when right in front of our eyes, the banking lobby is pushing to make the only federal agency whose role is to protect consumers entirely toothless, once again we’re failing to make our voices heard. I know this because if we were making our voices heard, no politicians would dare try to pull this sort of disingenuous crap, especially in an election year.
As it stands, and solely to appease the Republicans/bankers, the agency now reports to the Federal Reserve, which is a far cry from the original intent.
The only group that opposes the CFPB is the banking lobby and the reasons are simple… they want to continue to deceive and mistreat consumers without anyone being able to say a word about it. They’ve been fighting any and all laws that protect consumers for 30 years now, while we’ve been sleeping… no, I mean… shopping… and this is just more of the same corrupt crap.
The only difference is that today, the Republicans… and yes, I do mean ALL of them, with the exception of those representing the Republic of Maine… are now willing to stand up and let the country see that they are here to do the bidding of the banksters. They don’t care who gets screwed over by predatory lenders or deceptive financial product offerings. They’re here to do what Wall Street wants them to do and that’s that. They don’t care what the law says… bankers said no to the CFPB having any power… and no means no.
Until the CFPB’s director is confirmed, by the way, the bureau cannot use the power it received under the Dodd-Frank law… most notably it cannot regulate mortgage originators and payday lenders. Mortgage originators and payday lenders… that’s who the Republicans are protecting by blocking all appointees? Yes.
Currently, the board of regulators for the bureau needs a two-thirds majority to veto decisions. Senator Dean Heller of Nevada has said that the Republicans would oppose confirmation of ANY appointee unless the CFPB is restructured so that a “board of bank regulators is given the power to veto bureau decisions.” Republicans also want Congress to be able to cut funding to the agency. In other words, either the bankers are in control, or there will be no CFPB.
“The reason Republicans don’t want to vote for it is we want a board, not one person making all the regulatory decisions, and there’s no oversight under this person; he gets a check from the Federal Reserve. We want him under the Congress so we can oversee the overseer,” Graham told NBC’s “Meet the Press.”
“This consumer bureau that they want to propose is under the Federal Reserve, no appropriation oversight, no board. It is something out of the Stalinist era,” Graham said.
That’s Mitch’s good side.
This idiotic, dishonest and flagrantly corrupt sentiment was echoed by Republican Senate Minority Leader Mitch McConnell who apparently said on “Fox News Sunday” that the blocking of Cordray’s appointment came as a result of his party opposing a ‘czar’ with unchecked power.
Mitch, Mitch, Mitch… we can all see what this is… it’s you and yours continuing to do the bidding of the Wall Street bankers… it’s you and yours continuing to block anything designed to help Main Street… it’s you and yours perfectly willing to be the proximate cause of untold pain and suffering for hundreds of millions of people in this country.
And, I probably wouldn’t have connected the dots before, but now that Republican Senator Lindsey Graham mentions it… that does sound somewhat “Stalinist” to me.
How about this for a 2012 slogan… “Go Stalinist. Vote Republican in 2012!”
Or, what about… “Protecting Consumers is What’s Killing this Country. Vote for the GOP in 2012!”
No? Okay, how about… “Bankers Know Best… Vote Republican in 2012!”
Or… “Poor People Need Loan Sharks! Vote Republican in 2012.”
Still no good? Sheesh, tough crowd.
I told you this wasn’t funny anymore.
OH, ONE MORE THING…
On December 6, 2011… just a few days ago actually… Minority Leader Mitch McConnell, Ranking Member Richard Shelby, Senate Banking Committee Chair Tim Johnson, and Majority Leader Harry Reid all received a letter from Rep. Elijah Cummings (D-MD)… and then they promptly and completely ignored it. Check it out… it’s worth it.
Congressional Letter in Support of Nomination of Richard Cordray Former AG to Run the CFPB
Mandelman out.
HAMP has permanently modified 521,630 mortgages, at a cost of only $840 million, according to the Financial Services Committee Press Release, distributed late on Thursday. That’s roughly $1610 per permanent loan modification… an amount I would call “pocket change.”
The federal program designed to save homes from foreclosure before this one, had a budget of $320 billion, and modified just one mortgage, last I checked… it may have done a handful more before it was shut down for good. All of the other programs that have been launched have been miserable failures. HAMP is the only one to have saved any homes at all… better than a half a million people are still in homes they would otherwise have lost.
No one has any reliable re-default data, in fact, I’ve numbers in the single digits all the way up to 60%. Like I said, no one has reliable re-default data.
Regardless of the CBO’s projections that HAMP would help another 300,000 homeowners before it’s scheduled termination next year, and the fact that the program is saving homes for only $1610 a piece… the House Financial Services Committee… with our fabulous new House Republicans that have never even lifted a finger to help save a single house during this crisis… has voted to kill HAMP yesterday, by approving H.R. 839, the HAMP Termination Act. Now the bill will move forward for consideration by the full House of Representatives.
According to the Committee’s Press Release:
“There is widespread criticism that HAMP is not working and is only making matters worse for many of the homeowners who participate or seek to participate. In addition to the SIGTARP, the Congressional Oversight Panel and the Government Accountability Office have detailed problems with HAMP.”
But this is what SIGTARP, Neil Barofsky, said in his report to Congress:
“… while HAMP may provide a significant benefit for those who are fortunate enough to benefit from a sustainable permanent modification, given the current pace of foreclosures, HAMP’s achievements look remarkably modest, and hope that this program can ever meet its original expectations is slipping away.”
Look, these guys are nothing but uncaring, insensitive and unknowledgeable jackasses, but then that’s what they’ve been for the last three years, so I’ve stopped expecting anything from them, I guess. They’re in the pockets of the bankers, bought and paid for… all they care about is political grandstanding and they obviously consider us all to be morons… and as I said in my article from a few weeks back, Republicans Prepare to Play Politics With HAMP:
You should all hide your faces from the people who sent you to Washington… you should all be ashamed for everything you have and haven’t done. Your ignorance and insensitivity will be disdained for many years to come. You’ve done great harm to this once great nation and you should be deeply ashamed for what you are trying to do today.
But in point of fact, they are still helping some number of people remain in their homes… so make HAMP better… yes… you owe the American homeowners that and much more. Don’t kill the only thing you’ve done that’s accomplished anything at all, just because it hasn’t done nearly enough… or because you think it will help you get elected in 2012… I assure you that it won’t.
That’s it and that’s all. Obama… do whatever you want… there’s no way I could be more disappointed by you and your administration. You’ve managed to do what I would have thought impossible. I could have flipped a coin between you and McCain/Palin… and not cared on which side it landed.
You utterly failed at helping homeowners, and you haven’t even shown up to save, speak for, or try to fix your own housing rescue program… what a waste of a president you are.
Unbelievable.
Mandelman out.
Editor’s Note: Here is the problem. As I explained to a Judge last week, if Aunt Alice pays off my obligation then the fact that someone still has the note is irrelevant. The note is unenforceable and should be returned as paid. That is because the note is EVIDENCE of the obligation, it isn’t THE obligation. And by the way the note is only one portion of the evidence of the obligation in a securitized loan. Using the note as the only evidence in a securitized loan is like paying for groceries with sea shells. They were once currency in some places, but they don’t go very far anymore.
The obligation rises when the money is funded to the borrower and extinguished when the creditor receives payment — regardless of who they receive the payment from (pardon the grammar).
The Judge agreed. (He had no choice, it is basic black letter law that is irrefutable). But his answer was that Aunt Alice wasn’t in the room saying she had paid the obligation. Yes, I said, that is right. And the reason is that we don’t know the name of Aunt Alice, but only that she exists and that she paid. And the reason that we don’t know is that the opposing side who DOES know Aunt Alice, won’t give us the information, even though the attorney for the borrower has been asking for it formally and informally through discovery for 9 months.
I should mention here that it was a motion for lift stay which is the equivalent of a motion for summary judgment. While Judges have discretion about evidence, they can’t make it up. And while legal presumptions apply the burden on the moving party in a motion to lift stay is to remove any conceivable doubt that they are the creditor, that the obligation is correctly stated and to do so through competent witnesses and authenticated business records, documents, recorded and otherwise. All motions for lift stay should be denied frankly because of thee existence of multiple stakeholders and the existence of multiple claims. Unless the motion for lift stay is predicated on proceeding with a judicial foreclosure, the motion for lift stay is the equivalent of circumventing due process and the right to be heard on the merits.
But I was able to say that the the PSA called for credit default swaps to be completed by the cutoff date and that obviously they have been paid in whole or in part. And I was able to say that AMBAC definitely made payments on this pool, but that the opposing side refused to allocate them to this loan. Now we have the FED hiding the payments it made on these pools enabling the opposing side (pretender lenders) to claim that they would like to give us the information but the Federal reserve won’t let them because there is an agreement not to disclose for 10 years notwithstanding the freedom of information act.
So we have Aunt Alice, Uncle Fred, Mom and Dad all paying the creditor thus reducing the obligation to nothing but the servicer, who has no knowledge of those payments, won’t credit them against the obligation because the servicer is only counting the payments from the debtor. And so the pretender lenders come in and foreclose on properties where they know third party payments have been made but not allocated and claim the loan is in default when some or all of the loan has been repaid.
Thus the loan is not in default, but borrowers and their lawyers are conceding the default. DON’T CONCEDE ANYTHING. ALLEGE PAYMENT EVEN THOUGH IT DIDN’T COME FROM THE DEBTOR.
This is why you need to demand an accounting and perhaps the appointment of a receiver. Because if the servicer says they can’t get the information then the servicer is admitting they can’t do the job. So appoint an accountant or some other receiver to do the job with subpoena power from the court.
Practice Hint: If you let them take control of the narrative and talk about the note, you have already lost. The note is not the obligation. Your position is that part or all of the obligation has been paid, that you have an expert declaration computing those payments as close as possible using what information has been released, published or otherwise available, and that the pretender lenders either refuse or failed to credit the debtor with payments from third party sources —- credit default swaps, insurance and other guarantees paid for out of the proceeds of the loan transaction, PLUS the federal bailout from TARP, TALF, Maiden Lane deals, and the Federal reserve.
The Judge may get stuck on the idea of giving a free house, but how many times is he going to require the obligation to be paid off before the homeowner gets credit for the issuance that was was paid for out of the proceeds of the borrowers transaction with the creditor?
By Bob Ivry
April 14 (Bloomberg) — The biggest U.S. commercial banks will take their fight against disclosure of Federal Reserve lending in 2008 to the Supreme Court if necessary, the top lawyer for an industry-owned group said.
Continued legal appeals will delay or block the first public look at details of the central bank’s $2 trillion in emergency lending during the 2008 financial crisis. The Clearing House Association LLC, a group that includes Bank of America Corp. and JPMorgan Chase & Co., joined the Fed in defense of a lawsuit brought by Bloomberg LP, the parent company of Bloomberg News, seeking release of records related to four Fed lending programs.
The U.S. Court of Appeals in Manhattan ruled March 19 that the central bank must release the documents. A three-judge panel of the appellate court rejected the Fed’s argument that disclosure would stigmatize borrowers and discourage banks from seeking emergency help.
“Our member banks are very concerned about real-time disclosure of information that could cause a run on the banks,” said Paul Saltzman, the group’s general counsel, in an interview yesterday. “We’re not going to let the Second Circuit opinion stand without seeking a review.”
Regardless of whether the Fed appeals, the Clearing House will take the next legal step by asking for a review by the full appellate court, Saltzman, 49, said at his office in New York. If the ruling is unfavorable, the bank group will petition the Supreme Court, he said.
Joined Lawsuit
The 157-year-old, New York-based Clearing House Payments Co., which processes transactions among banks, is owned by its 20 members. They include Citigroup Inc., Bank of New York Mellon Corp., Deutsche Bank AG, HSBC Holdings Plc, PNC Financial Services Group Inc., UBS AG, U.S. Bancorp and Wells Fargo & Co.
The Clearing House Association, a lobbying group with the same members, joined the lawsuit in September 2009, after an initial ruling against the central bank in federal court in Manhattan.
The Fed is “reviewing the decision and considering our options,” said Fed spokesman David Skidmore in Washington. He had no comment on Saltzman’s plans.
Attorneys face a May 3 deadline to file their appeals.
“We’ll wait to see the motion papers,” said Thomas Golden, attorney for Bloomberg who is a partner at New York- based Willkie Farr & Gallagher LLP. “The judges’ decision was well-reasoned, and we doubt further appeals will yield a different result.”
Bloomberg sued in November 2008 under the U.S. Freedom of Information Act, after the Fed denied access to records of four Fed lending programs and a loan the central bank made in connection with New York-based JPMorgan Chase’s acquisition of Bear Stearns Cos. in March 2008.
231 Pages
The central bank contends that 231 pages of daily reports summarizing lending activity, which were prepared by the Federal Reserve Bank of New York for the Fed Board of Governors in Washington, aren’t covered by the FOIA. The statute obliges federal agencies to make government documents available to the press and the public. The suit doesn’t seek money damages.
The Fed released lists on March 31 of assets it acquired in the 2008 bailout of Bear Stearns.
The New York Times Co., the Associated Press and Dow Jones & Co., publisher of the Wall Street Journal, are among media companies that have signed up as friends of the court in support of Bloomberg.
The Fed Board of Governors’ “refusal to disclose the names of borrowers renders public oversight of its actions impossible — it prevents any assessment of the effectiveness of the Board’s actions and conceals any collusion, corruption, fraud or abuse that might have occurred,” the news organizations said in a letter to the appeals panel.
The case is Bloomberg LP v. Board of Governors of the Federal Reserve System, 09-04083, U.S. Court of Appeals for the Second Circuit (New York).
To contact the reporter on this story: Bob Ivry in New York at bivry@bloomberg.net.
Last Updated: April 14, 2010 00:01 EDT
In 1974, Congress decided that there was a need to make sure that the various financial institutions, and other firms engaged in the extension of credit, make such credit available with “fairness, impartiality, and without discrimination on the basis of sex or marital status”.
In response, Congress passed the Equal Credit Opportunity Act (“ECOA”). When enacted in 1974, the ECOA prohibited discrimination on the basis of marital status and sex, but in 1976, it was amended to prohibit other bases of discrimination, including race and national origin. Other amendments followed, and today, ECOA prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, age, because an applicant receives income from a public assistance program, or because an applicant has in good faith exercised any right under the Consumer Credit Protection Act.
Congress charged the Federal Reserve Board with interpreting the Federal Equal Credit Opportunity Act (ECOA), and Regulation B was promulgated by the Federal Reserve Board to implement ECOA. As a result, the Federal Reserve Board’s interpretation of ECOA has the force of law.
Everyone still with me on this? Don’t worry, it gets better from here.
This past week, the Treasury Department started sending out what it’s referring to as “Foreclosure SWAT Teams” into banks to take a closer look at their operations. The Obama Administration says it’s cracking down on mortgage servicers that aren’t doing enough to stop foreclosures, which I suppose is one way to phrase what mortgage servicers are not doing.
Well, the SWAT team examiners apparently had quite a few questions, and some of those questions were about ECOA. More specifically, the questions were about Reg B’s “adverse action notice requirements,” and whether they applied to borrowers applying for a loan modification.
In response, the Federal Reserve Board issued a directive to its examiners on December 4, stating that if you have an extension of credit on an application, then there is an obligation to provide an adverse action notice to the borrower who is declined for a loan modification. That means that lenders or servicers have thirty days to provide a notice to homeowners, including up to four principal reasons for the decline. The directive also states:
“We understand that Treasury has directed lenders and servicers… HAMP servicers to provide written notice to a borrower that has been evaluated for HAMP, but has not been offered a trial modification.”
Why is all of this important? Well, it’s quite simple really. The number of times a lender or servicer has complied with this requirement of Reg B, at least as far as I’ve seen or heard, is… hmmm… let’s say… infrequently. And wouldn’t you know it, there’s a statutory fine for not complying with Reg B’s adverse action notice requirement: $10,000, plus attorneys fees.
Assuming you’re an attorney or a homeowner who has lost a home and didn’t receive a letter from your slender or serrvicer explaining why you were declined for a loan modification, within thirty days of being declined, I believe the correct response would be: “Woohoo!”
(If you have further questions, or want a copy of the directive, email me at mandelman@mac.com)
I found a great new site today at www.fedshame.com – It’s a site that has a lot of articles written by different people on the Fed.
This has been an interest of mine for some time but time being what it is, I haven’t had time do more work and posts on the topic of the Fed.
Until I can get to it in more detail, please go check out this site at www.fedshame.com. Good stuff by Aaron Krowne from ml-implode.com
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