Imagine - there's no MBS...intimacy not remoteness...

What if Naked Capitalism is correct? It would seem then to open up certain MBS trusts, trustees and/or servicers and sponsors (plus the long list of counsel and audit attestation firms to same) to not the hoped for, under NY trust law, bankruptcy remoteness rather intimacy - such that creditors of certain filers may turn out to have valid, reachable claims on them thar mortgages (those never properly securitized.)

WONDER IF THE FED IS HOLDING ANY OF THAT BRAND????
Wonder if they're done with the intense due diligence yet; over 2 years too late.
Hmmmm.

Looks like could be quite a GLOBAL showdown at MBS (and the BS may turn out to just that) corral.

Ending the siesta on the taxpayers' dime - one easy to read blog at a time.
McFid.

Will SEC ever look for insider trading at the US Treasury re: it's exit from Citi shares...or will C shareholders have to take the first shot?

Given that the twins in Washington have inflated the financial markets with hooey these last few years - it's curious as to why exactly now the US Treasury sold off it's stake in C shares; albeit at a healthy "nominal" profit to the Treasury. [Just thinking crazy out loud - except what other returns might the underwriters, aka taxpayers, be entitled to under a theory of constructive trust?]

And is there anything to look at insofar as some banks may, in the past, have overshot their own manuals, standards and the law, in certain instances when it came to mortgage underwriting, MBS secutizations considering a certain courageous man's testimony before the FCIC backed up by his Nov 2007 email to certain senior execs....hmmmm.

Wonder what awaits us from the FCIC come December 15?
NOW - there might be a reason, that the US Treasury sold off them thar C shares - just thinkin' crazy outloud again...

Ending the siesta on the taxpayer's dime - one easy to read blog at a time.
McFid

DHS' See something say something 5 years late for some...

Given the damage to our economy since 2004/5 - not exactly by foreign terrorists this time but by enabled perps at all levels of government it's too bad - DHS didn't have a wider mandate; that of extending its authority over domestic regulators; perhaps it's not too late...

Ending the siesta on the taxpayers' dime - one easy to read blog at a time.
McFid

STDs ask "To be or not to be: MBS?" Go ask MBS (and related derivatives)Sponsors, Trustees, Servicers and MERS

STDs… Who’s servicing whom? MBS - To be or not to be? Ask MERS.

STDs setting the stage for unprecedented, widespread legal show down over competing claims to property titles; global shock waves. Risks to homeowners, renters and investors in any Real Property, MBS or derivative security.

The American legal hallmark is Due Process under the Law. Writ LARGE, will homeowners’, renters’, and real property owners’ prevail over banks’, servicers’, MBS CMBS investors’, Fannie, Freddie Mac and Ginnie Mae’s interests. Will or which States', counties' and cities' judicial, law enforcement and fiscal officers fully defend property owner’s and renters' due process rights or cave into investors’ and ultimately their own agendas as public officials with their own jobs to protect? In recent times hedge funds and certain Wall St. investment banks added leverage, traded for proprietary profit and inevitably the latter, in particular were caught holding trillions of MBS and related derivatives. During the 2008 so – called financial crisis the Federal Reserve acquired over $1 Trillion of MBS! Seems Taxpayers’ paid full face value, 100 cents on the dollar from banks largely from a certain Federal Reserve district east of the Hudson (technically via reserve credits – which same banks could substitute out by exchanging previous reserves – but that’s a discussion for another day.) Absent the Fed’s MBS purchases it’s believed certain banks were insolvent; if insolvent generally proscribes them from certain critical functions. Globally, creditors starting with China may be concerned and take adverse action. In epic irony, the homeless may indeed have the last and loudest laugh.

What’s all the fuss about? Indications regarding legal chain (and) claim to title from court decisions, attempted but defective foreclosure filings, allegations of robo-signing and witness testimony before Congress – point to a potential breakdown in the legal formation of MBS such that MBS may in many instances NOT be MBS; STDs result. In sum, this looks not just to be an isolated Florida foreclosure problem, nor a US problem but a global banking to YOUR Street and YOUR house problem!

STDs (Securitization Transmitted Damages) result from faulty MBS’ securitizations which was purposely designed to protect MBS investors by specific steps to ensure that the securities issued by the trust creating the MBS were bankruptcy-remote from sponsors (i.e. not legally reachable).

Mistake #1 - The most basic step was physical possession of the Note by the MBS Trustee (often delegated to a servicer) subject to pooling and servicing agreement (PSA). In addition, both the “mortgage” and “NOTE (“promise to repay”) were always to be kept physically together; this appears to have NOT been done. Stated plainly, mortgages were not properly transferred to the trust designed to hold them. This seems to imply that the original mortgage holders may still be the legal holders, NOT the MBS trust on behalf of MBS investors. Result – servicers may be misapplying borrowers’ monthly mortgage payments to incorrect parties. Original holders may have claims against servicers ultimately borrowers. MBS investors including the Federal Reserve, appear to have claims against banks, MBS sponsors, MBS trustees and/or Servicers.

Mistake #2 – in addition to mistake #1, many sponsors of MBS and appears servicers relied upon a company called MERS (Mortgage Electronic Registration System) however, MERS now and then 1) NEVER handled (by hand) the physical documents nor 2) ever had physical custody of the mortgage and note documents; in sum MERS was a very large database – not a vault. This appears to present a separate and distinct source of clouding of claims of title.

Result – salt in the wound of mistake #1 – further confusing and misapplying borrowers’ monthly mortgage payment to incorrect parties.

Renters – yes, renters as a class, may have claims against servicers et al which causes a reverse chain reaction if landlords’ payments have been misapplied to the incorrect FULL legal owners of the property’s rental units. This can be particularly complex on Condominium and Cooperative properties with multiple original developers, entities and mortgage holders.

STD’s setting the stage for massive claims for breach of fiduciary duty…

Presently, individual trustees, responsible for overseeing all assets in trust, in addition to the issues raised above, seem to be blindly assuming that their mortgage servicers are 1) physically holding their a) mortgage and b) promissory notes & c) and that both documents have been properly kept together, endorsed, assigned and recorded.

Failure to investigate is probable cause later for BFD – breach of fiduciary duty – against any and all who serve as a trustee, with individual personal exposure.

MBS investors - Expert Evaluation of claims for Breach of Fiduciary Duty or Suitability.

There are two levels of suitability analysis that may affect claims evaluation, in addition to the fiduciary duty owed to investors. Investors with claims related to MBS, RMBS, CMBS, CDOs, Synthetic CDOs, and CDS and fiduciary duty can contact Chris McConnell & Associates.

The “whole market went down” excuse is baloney – Resources, Action steps you can take:

Assistance is available to help you better understand the responsibilities, duties and securities industry compliance and supervisory requirements of a bank, trust company, brokerage firm, stock broker, branch manager, financial adviser, investment adviser, hedge fund, mutual fund or derivative security. An expert with over 27 years of actual Wall St and securities litigation and FINRA arbitration experience, AIFA® advanced fiduciary training. An expert who wrote the book on Wall St compensation, incentives, accounting, margin, compliance and managed accounts, modeled one of the first structured products and can help assist you in learning all the ways a securities broker dealer, broker or supervisor may have caused losses or profited from assets in your account; with or without your knowledge or consent.

About Chris McConnell, AIFA® a/k/a McFid*, BFD Expert since 2003

He has over 27 years of combined experience as a recognized expert, including his considerable securities industry experience. Since 2004, Mr McConnell issued annual, 1 page FiduciaryALERTS™ like July 2008's “Denial of Twin-flation™ is not a prudent investment strategy” McFid the combination of his Irish family shield “not for himself” and fiduciary. BFD stands for breach of fiduciary duty. For more information, visit www.fiduciaryexpert.com.

Copyright © Chris McConnell & Associates 2003 to 2010. All rights reserved.

STD’s cause global outbreak of BFD; legal action appears inevitable; jawboning retired. China is ON NOTICE and has a Duty to Mitigate losses...

China owns about $1T worth of US Treasury securities. It is ON NOTICE of the Fed’s BFD. China, for the moment is in legal parlance, and perhaps unwittingly ratifying the Fed’s BFD.

China has not sent a writing to the US Treasury or the Fed complaining about the BFD.

China, now on notice of the BFD, also has a duty to do what? MITIGATE potential losses. Repeat, take steps to reduce its exposure to losses related to its holdings of US Treasuries…hmmm, make that a large HHHHMMMMMMMM.

When, not if China brings an action against the Fed and US Treasury, how will the Fed and the US Treasury defend their actions and themselves, fiduciaries in many circumstances are held personally liable.

STD’s are Securitization Transmitted Damages. Special FiduciaryALERT™ here.

BFD means Breach of Fiduciary Duty.

Ending the siesta on current and future US taxpayers’ and global creditors’ dime – one easy to read blog at a time.

McFid

Will Mr Bernanke with $1T of MBS and the US Treasury owners of C stock support NYC's Mr Liu's excellent fiduciary example? Or do nada?

Yesterday NY City Comptroller John C. Liu, as trustee, custodian and investment adviser to NY City's Pension funds' investment holdings of near $2B of stock in certain bank, has placed a resolution subject to shareholders' approval requiring said banks (JPM, C, BAC, WF) to certify their mortgage securitizations, servicing, custody and foreclosure operations are up to snuff.

Excerpt here:

NEW YORK, NY - New York City Comptroller John C. Liu, on behalf of the trustees of the New York City Pension Funds, is calling on directors at Bank of America Corporation (NYSE: BAC), Wells Fargo & Company (NYSE: WFC), JPMorgan Chase & Co. (NYSE: JPM) and Citigroup Inc. (NYSE: C) to conduct an independent audit of their banks’ mortgage and foreclosure practices. The four banks are the largest mortgage servicers in the country representing 56 percent of the nation’s $10.64 trillion mortgage industry.

Comptroller Liu – the investment advisor, custodian and trustee of the New York City Pension Funds, collectively valued at $106 billion – made the request in a shareholder proposal filed at each of the four banks. The proposal calls for the Audit Committee of the Board of Directors at each bank to conduct an independent review of the bank’s internal controls related to loan modifications, foreclosures and securitizations and to report their findings to shareholders by September 30, 2011.

Will other similarly situated institutional investors follow Mr Liu's excellent example of prudence as "Fiduciary in thought and ACTION"?

See link here to his office press release.

In a post here October 3rd we asked whether the Fed's MBS holdings could be tinged by the tremors of Florida's Foreclosure news. And whether fault lines could extend to global creditors of the US as far away (or perhaps closer than we ever imagined) as China.

My office issued a Special FiduciaryALERT "A new STD you don't want; Near the end of Money" after reports that certain investors had initiated put back requests to Bank of America for faulty MBS. Prior to that a JP Morgan analyst estimated over $1T of MBS and related derivatives may face exposure.

HOW COULD THE FED SIT IDLY BY and do NOTHING - WHEN IT HAS OVER $1 T OF not publicly traded, MBS (RMBS, CMBS and related derivatives) O-N T-H-E B-O-O-K-S??? What part of ON does Mr Bernanke NOT get??? Which I remind readers that it allegedly paid 100 cents CASH (taken from the Taxpayers' wallet) TO banks largely in a certain Federal Reserve District east of the Hudson. Now Known as the Wall St Full Employment Act (including full salaries, full bonuses, full tax-free health care coverage and full and free vacations.)

Mr Liu get's it, alone among the nations' public fiduciaries should be appointed IMMEDIATELY to a newly created function as the Joint CHIEF FIDUCIARY OFFICER of both the US Treasury and the Federal Reserve. Since 2008, the Fed and the US Treasury are investors in private securities. Derivatives and MBS in the case of the Fed and common stock and other forms of stock and securities in the case of the US Treasury FOR AND ON BEHALF OF the US taxpayer; that means they must use a prudent fiduciary expert-level investment process as we wrote in September 2008 here and here in October.

Perhaps Congress, FOR AND ON BEHALF OF THE US TAXPAYER will wake, recognize the obvious - require the Fed to consider the fiduciary duty to use care, to deliberate AFTER investigating, the soundness of investments and strategies. Then to use skills possessed (or acquired) to evaluate same; to continue to investigate, perform expert-level due diligence and monitor periodically - failure to perform any of the above is a BFD (Breach of Fiduciary Duty) by the Fed officials upon the US Taxpayer aka US Treasury.

Soon the Fed et al may be faced with reflection.

Ending the siesta on the current and future US Taxpayer's and Domestic and Global Creditors' dime - one easy to read blog at a time.

McFid

Unless it is prudent not to do so...wither diversification FROM the "Reserve Currency" k/n/a US Dollar? By the Fed and 18 Primary Dealers

Prudence does not require PREVENTION but mitigation of the risk of large losses and IS the central decision in managing assets. Diversification is THE way to accomplish the required mitigation; unless under the circumstances it is prudent not to do so.

When the Fed and certain banks largely in a certain Federal Reserve district east of the Hudson, most of whom also double as the Primary Dealers, next check Google Earth they may awake from their slumber and see billions of person units of intellectual, productive, consumer, indeed capital power - in contrast to that which underpins the present Reserve Currency.

So as penned here a few weeks back will the Fed, with a fiduciary duty of undivided loyalty owed to both the US taxpayer and EVERY current and future American citizen and certain banks which owe a fiduciary duty to their shareholders BUT not their creditors unless in the zone of insolvency seek as prudence would require to DIVERSIFY FROM THE HERETOFORE ALMIGHTY US DOLLAR?

When costs of future outlays may be driven MORE by what happens outside our borders than within compared to the asset mix of the portfolio established to fund them.

Of one thing I'm sure, as penned in 2008's FiduciaryALERT "Denial of Twin-flation™ is not a prudent investment strategy" 20 years from now some beneficiaries WRIT LARGE and their litigation counsel are going to ask.

Or are there ulterior motives of which we may have to continue, correction be forced to guess; due to the inexplicable, unilateral Fed, its "programs" and in particular its Chairman Mr Bernanke, brought to us by (fill in the blanks) and bought and paid for by (fill in the blanks)...AND WE CONTINUE TO INDULGE THIS BEHAVIOR AND PAY FOR IT...perhaps our enabling of this scene reflects the collectively waning respect for the ALMIGHTY US DOLLAR. Get it yet Ben? Please call a spade a shovel - for ONCE in your life!

You've charted all Beneficiaries WRIT LARGE on a path of lawlessness; Parties which created this situation are not "dead beat homeowners" but (Fill in the blanks) when YOUR duties as Fed Chairman was to ensure that YOUR law - based duties as Regulator of Last Resort were glossed over, but paid for 2x. Better start noodling on a cure for cancer or clean energy; in the mean time - you could start by telling the whole truth of what got us here and the necessity of and names of (Fill in the Blanks), nature and extent of all direct and indirect "programs" by looking in the mirror VERY closely.

Is it too revealing? Market and MEDIA clearing information...Is the Fed Carrier #1?

Nature abhors a vacuum. Applies to the financial media. Replacement media will step forth into the void self created by the present talking heads unless outlets start calling a spade a shovel.

Media's Job 1 is holding players fully accountable - when knowable, that means connecting the dots based upon known data. Still financial media outlets continue to overwhelming showcase, favor long bias. Intentional corruption inherent in the financial media is rampant, beholden to sponsors' interests is fraud. ONLY when the Media fills the market with balanced, correct and complete information will we have something closer to reliable "market clearing" transactions in the so - called capital markets then all sectors of the real economy. Accounting gimmicks need to be revealed for what they are. This would create a temporary period of adjustment however, 1) a thesh hold comfort level will start to form and 2) what else is there to disclose? Squarely and widely addressing these concerns once and for all is paramount and represent what's needed to get the economy going again. Indeed the new stock bull market some have called for this week could be born in overcoming naysayers' legitimate concerns.

Which so called NEWS organization will publish a real set of indices to deduct all artificial Federal Reserve, FDIC and US Treasury, SEC and FASB support both direct and indirect from so called "market prices"? Why? Because as stated here in May 2009 "Stock Bond Markets deserve (like Roger Maris) an asterisk*" it's knowable, doable, and the right thing. The NYSE has reported margin financed stock buying for decades so that investors see by deducting the amount of margin how much long stock value is fully paid for.

Bloomberg reports Gary Shilling believes that even at an average historical 14 x P/E ratio stocks are presently overvalued, and despite the debasing QE2, the dollar may strengthen due to the Euro's present unattractiveness. Mr Shilling's statements seem to indicate he has the or most of the information; so why not publish it?

Certainly the Fed 3.0 (third bank of the United States), is in a word OBESE in three ways 1) near $2T from QE1 gorged further by QE2 to near $3T balance sheet AND with questionable valuations, 2) possessed of all information, or at least it should be, should and could publish this information; or 3) is it too revealing, grotesque, distasteful, pornographic and/or just off charter?

Or will nature take care of this one too? As asked many times when will we see Fed 4.0 (fourth incarnation of the Bank of the United States) with a new face? What's to hide? The Fed's INTENTIONAL withholding of the nature, extent and names of counterparties is in a word FRAUD. Four Frauds upon 1) current and future taxpayers, 2) domestic and global creditors, 3) US States which are grossly prejudiced and 4) because creditors are investors means the Fed is THE party enabling a breach of fiduciary duty to beneficiaries of those investors' funds - globally!

Is the Fed carrier #1?
Is the Fed simply 1) rebranding, 2) re-securitizing and 3) re-transmitting housing bubble securities under the US Treasury label the world over? Maybe? How will the Fed defend itself in a lawsuit brought on behalf of the US Treasury or global creditors??? Hmmmm...

As a prominent legal expert states "fiduciary duty is an extremely broad concept and likely to cause liability to be found in new situations"...Large HHHHMMMM....

Is it any wonder the Economist reports China may go on it's acquisition spree while Greenbacks still have value? Here excerpt "To reject China’s advances would thus be a disservice to future generations, as well as a deeply pessimistic statement about capitalism’s confidence in itself." and here?

Ending the siesta on the taxpayers' dime - one easy to read blog at a time.
McFid

Courtesy of Mr Bernanke the return of slavery...

Generations will look back and wonder - what was Mr Bernanke allowed to do.

How did QE2 become both LAW and JUDGMENT? Yes, in the full light of day, QE1 and now QE2 shackle taxpayers and pensioners as financial prisoners - beholden to creditors of the US Treasury including foreign patrons - ALL to continue the bailout of the system or so we've been told.

In two fell swoops QE1 and QE2 both unilateral programs from the FED, make that a beholden- to-the-financial-system" professorial, indeed likable but inept Fed Chairman. And a monetary judgment, a veritable tax upon us all without even a jury.

The only system that seems being fixed (at least for the 5th time) are the bond traders, the NY Fed and the Federal Reserve itself. Capitalism has been thrown under the proverbial bus (at least for the 5th time) RIGHT IN FRONT OF OUR EYES AND WE PAY FOR THIS?

FDIC's Bair recently stated the obvious "markets need to clear".

BOND holders' culture of entitlement may as it should be coming to an end - the end of the notion that return of principal were a God - given right. That due diligence must be performed for a reason.

Germany's Angela Merkel, speaking in Seoul, where she is attending the G20 summit, Dr Merkel acknowledged her demands have upset the markets but insisted it was unfair for taxpayers to be saddled alone with the cost of sovereign rescues. “Let me put it simply: in this regard there may be a contradiction between the interests of the financial world and the interests of the political world,” Dr Merkel said.

“We cannot keep constantly explaining to our voters and our citizens why the taxpayer should bear the cost of certain risks and not those people who have earned a lot of money from taking those risks.”

The title of this post should include "& future generations of taxpayers", alas.

McFid

Time’s up on money…Money gave Time an STD. Time is now asking for money.

Today Naked Capitalism reports that American Banker has a story out on MBS trustees being caught in the cross hairs of S-E-C-U-R-I-T-I-Z-A-T-I-O-N, REAL concerns about the duties of MBS trusts, trustees, servicers and custodians under pooling and servicing agreements, many under NY state trust law. It seems servicers were happy to collect fees, but that some trustees forgot to oversee the servicers and custodians pooling and custody of TRUST ASSETS many of which seem were left at the station…a long time ago. So we ask why is there such a thing as a trust or a trustee? We know the answers.

This writer issued a Special FiduciaryALERT™ last month “Near the end of Money” when, not if the STD (Securitization Transmitted Damage) goes VIRAL? Trillions of dollars of Mortgages, thought evidenced by original notes and deeds on every house, every apartment in this country are under pinned by the instrument/s of mortgage finance faced with unrelenting scrutiny. If property ownership is in question, and it sure seems headed that way, then property taxes (and collections by states and cities) on same ain’t going up; but down.

Many states and cities have already done what was once unthinkable and cut back spending and jobs. When the MAIN source of funding looks to go a little further south some states like California may seek a bailout from Congress or declare bankruptcy. The nuclear chain reaction, due to the just in time, funding mechanisms may spark which may fly first to the multi-trillion dollar Municipal bond market including tax exempt and its brethren; taxable money market funds. Will the Fed’s emergency extraordinary CPFF vintage September 2008 be called up for re-enlistment?

We were all taught that time is money; namely that the tick tock of interest waits for no one. Yet implicit in this time is money concept is the inescapable renter, those thoughts and/or action which occupy, takes our time? What is the purpose, the end desired result? Is it a prudent purpose or the opposite a speculation?

It seems to me, in terms of time we, collectively, are speculating. When in terms of money we must constantly find better use. When it comes to us, possessed of an information advantage, our collective duty to future generations rises to a fiduciary duty.

Questions about real, productive use of time. What capacity are we building or should we be thinking about?

How does the money industry’s soothsayers including lobbyists, regulators/ions, economists, overwhelmed by speculation, within the non-stop churn of currency, commodities, debt and stock trades, analysis and reporting cure any cancer, put food in the mouth of a starving child here in the US, teach a student to play the violin? (Yes of course a few make laudable genuine efforts, but why not more?) Or the latest craze seems "social media" tools (and games) and to what end? Whose seemingly main purpose is to aggregate, then monetize as many devices and users' digits, eyeballs and time together with cool stuff; seems largely more media for media’s sake.

To what maximum effect?

How are the advantaged, more fortunate, better educated bankers, hedgies, P/E types, attorneys, analysts, traders, brokers, advisers using their time, to what socially useful end – now watching, tending money? The unemployed, UNDER employed – how are they using their time? The homeless, how are we allowing/enabling them to use their time, literally surviving on the streets and gutters? Some of whom could be the next fill in the blank, carrier #1 transmitter of the next deadly infectious disease to inventor of clean air - based energy. True, maybe.

Time has come…will time or money prevail, join hands and work better together to do the right thing? For now time is money, money can not in the end buy time…ending the siesta on the taxpayer’s dime – one easy to read blog at a time.

McFid

End of an era 1) US Treasury Benchmark 2) Reserve Currency 3) Prudence amidst an unseen, historic LOST opportunity

The Fed's Rogue QE2 stimulus looks to end the era of the benchmark 10 Year US Treasury.

And soon to follow the US Dollar as the world's reserve currency.

A reserve currency is based on authentic finance and economics; not the whims of one man, no matter the man's credentials, scholarship, stated intended policy aims or failures to properly dissect cause and effect, much less proper and reasonable and let's add for the record prudent exercise of "authority".

Much digital ink devoted to votes of no confidence re QE2 are already on the record.

QE2 initial effects seem nothing more than supplemental ballast for banks' balance sheets ahead of technical if not outright defaults abroad or within certain US states and cities.

The opportunity of a lifetime - wasted:

The best ACTION the Fed could have taken - was that based on surprise - to force Congress' hand - by signaling a reigning IN of the money supply. As stated here a few weeks back; upon the Fed's survey of the 18 primary dealers ahead of the official QE2 announcement. Some pushed back - yet I maintain what course diversifies taxpayers risks? As the Fed had in QE1 already printed up $1.7T in new CASH whose transmission effects appeared in those other places; not with standing the half life of same.

Not this man; seems increasingly co-dependent in his relationship with popular lime light. When one word under girds the Fed's raison d'tre, long held and deserved moniker "the worlds' central bank"....INDEPENDENCE.

Mr Bernanke is deservedly under attack. He owes this response to current and future taxpayers, creditors and underwriters lest the 18 Primary Dealers resign or file actions against the Fed for breach of fiduciary duty including failure to disclose MATERIAL information; and we'll decide what's material - not the Fed! So Mr Bernanke let the, make that all information flow forth, the first breaths of Fed 4.0!

Ending the siesta on the Taxpayers' dime - one easy to read blog at a time.

McFid

Have the bond market vigilantes...been bribed?

On the receiving end of an "Offer they can't refuse?"

Who will regulate the Regulator of last resort?

The FDIC's Sheila Bair stated the undeniable today ~"markets need to clear".

Let me repeat "markets need to clear".

What part of markets need to clear are accomplished with the Fed's QE2 + reinvestment of income from QE1 whose total may add up to $900 B?

When will the elected assert authority and REVOKE the Fed's unilateral theft of power of:

Every branch of government - Congress, Executive and Judicial

At every level - State, County and City

And every current plus future generations of US taxpayers.

When? What more action do you need to see? Largely for the benefit of certain banks in a Federal Reserve district east of the Hudson.

And we continue to watch and PAY FOR THIS?

How long that gonna last?

McFid

F words: Fraud, Fiduciary duty, Future generations, Fiat money, Fed 4.0, the Finger apply to us and call for a “ClawbackCoalition”.

The title of my blog is “Fiduciary in thought and ACTION” for a reason. There are sufficient experts and money to file the appropriate actions – join me in ACTION. Give the Fed another "F" word - the finger. Or are we content just to watch and write about the unilateral Fed's increasingly complicit behavior fbo banks largely in a certain Federal Reserve district east of the Hudson? Past as they say is prologue.

WE elect. The elected appoint officials on our behalf starting with the Cabinet and Federal Reserve to insure due process and the rule of law is respected. Laws and regulation were plenty before the so-called financial crisis.

Fraud’s roots occurred upon the first failures to document borrower income or assets later ratified by securitzation trusts. Why? Banks must adhere to "safety and soundness" practices, Mr Bernanke alluded to this in a 2007 speech here. Fraud became manifest with banks' off balance sheet transactions and in the first instances of leverage. Why? Leveraged assets are, by definition, owned but NOT fully paid for assets. The trillions of dollars amount of not paid for MBS et al assets were THE rocket fuel propelling house prices; period. Off balance sheet assets were there for a reason; to hide. Hiding, material information is a fundamental affront to disclosure.

Until we actualize our individual and collective respect for the law, until prosecution, recovery and reform actions are filed we can write all we wish, with the same less than satisfactory effect – nada.

The first suggested is an immediate amendment to the Federal Reserve Act.

1. Resize and increase the number of Federal Reserve Districts (not changed since 1913 – true).
2. Abolish the position of Fed Chairman; effective immediately.
3. Abolish the default NY Fed President as Vice Chairman of the FOMC
4. Rotate SOMO’s (System Open Market Operations) out of NY to other (new) Federal Reserve districts.
5. Establish, from the new number of Federal Reserve districts, a commission of Governors, selected by Congress to vote on and approve FOMC and Open Market measures.
6. Establish the GAO as the sole source of data for Fed decisions.
7. Abolish the Federal Reserve staff which produce data or research.
8. Require explicit explanation for any measures as to why fiscal needs are not met by Congress, name committees responsible. Budget line item by line item.

Second, put back ON balance sheet all federal programs starting with Social Security and other pet projects.

Why? 1) The now voiceless, future generations of Americans are being taxed without representation. 2) Present creditors and current taxpayers may be defrauded.

Ending the siesta on the Taxpayer's dime - one easy to read blog at a time.

McFid

Mr Bernanke, the ANTI -capitalist; betrays his own writings & speeches; and must be stopped; Fed 4.0 should be under SARBOX...

Mr Bernanke wrote in 1991 here with Ms Lown about the 1990s credit crunch; following the...1980s real estate bubble. Tell me, the scale of the 2000 era bubble was not readily observable? The 1980s bubble was like a child's Saturday night bubble bath compared to the ocean of bubbles in the 2000s.

Mr Bernanke's 2003 college textbook, Principles written while he taught at Princeton, exhorts students to see all around them as economic trade offs - one reviewer states "economic naturalists" - incredible. A few rhetorical questions 1) Were there were NO houses in Mr Bernanke's neighborhood that were flipped - while he was there? 2) Mr Bernanke was not aware of any house flipping - anywhere? 3) Mr Bernanke was not aware of the hockey stick spike in house prices - while it was happenin'?

Before he became Fed chairman in Feb 2006 what information did he seek, was he provided or had access to; which did he consider or dismiss? Mr Bernanke himself stated that he first worked at Standford correction Stanford in the late 1970's then THE hotbed for information's impact on all facets of economic decisions....hmmmm but I digress. Then comfortably intellectually conclude that banks (both commercial and investment) could continue orchestrating the mortgage finance lending charade. And in contrast to his consensus style.

Was he unaware of minimum 2,000 X economic leverage upon underlying collateral (the borrower's house), stunningly both on margin and at the margin was building up an untenable, a veritable multi trillion dollar wave of mortgage backed securities whose crest inevitably would, not if, come crashing back down.

2,000 X leverage comes as result of zero down mortgages which equal 100 x leverage for the borrower which then are pooled together by certain investment banks into MBS, some make that many later leveraged 20 (or 30, 40, 50 or more) to $1.

Except Mr Bernanke, to this day refuses to let the wave crash on its creators, he stubbornly persists in floating certain banks in a Federal Reserve district east of the Hudson above the thunderous roar of the tsunami amidst allegations and investigations of wide-spread: failures to produce original "wet ink" notes and deeds, improper foreclosure affidavits, robo - signing, submitting false / fake documents to certain courts, submitting multiple claims upon same property, junior or 2nd lien (HELOC et al) favoritism, questionable initial trust securitizations and re-securitizations; favoring servicers rights over investors - among the grist behind the NY Feds' and PIMCO's sizzling beef with Bank of America.

In sharp contrast to his October 4, 2006 self - titled speech"Will we treat future generations fairly? I won't even dignify the title by making a comment - it would insult readers.

Although the thrust of his comments is laudable, albeit toothless platitudes about entitlements, savings - as they say in Brooklyn - tell me something I don't already know.

It's the choice of words in the title - that reminds me he was not paying close enough attention, rather seems to have dismissed the underlying causes of growth - can you spell cash out refi's? That gets me.

Most GLARINGLY in a 2007 speech Mr Bernanke states "2 channels" excerpted here:

#1 - "The first channel worked through the banking system. As emphasized by the information-theoretic approach to finance, a central function of banks is to screen and monitor borrowers, thereby overcoming information and incentive problems. By developing expertise in gathering relevant information, as well as by maintaining ongoing relationships with customers, banks and similar intermediaries develop "informational capital."

#2 - "The second channel through which financial crises affected the real economy in the 1930s operated through the creditworthiness of borrowers. In general, the availability of collateral facilitates credit extension. The ability of a financially healthy borrower to post collateral reduces the lender's risks and aligns the borrower's incentives with those of the lender."

Mr Bernanke is and was clearly in his own self styled bubble:

1) lets start with "By developing expertise in gathering relevant information"

tell me as late as 2007 he was unaware of the extent of Subprime, No doc, doc lite or Alt A mortgages, so called NINJA loans, then securitization and Wall St Leverage of same; not to mention further derivatives based on same like CDOs and synthetic CDOs?

2) Securitizations, by definition, dislocate banks / originators away from borrowers and nearly prevents his statement "Central function of banks is to screen and monitor borrowers" - huh...you're kidding me right?

3) did Mr Bernanke forget to recall that in April 2006 his Federal Reserve Board announced a MAJOR change to keep track of a certain kind of Commercial Paper - that being Asset Backed Commercial Paper. Was this simply an ode, odor or something to be known as the "ABCP trackers full employment act"?

And that the plethora make that $1T of the new CP varietal was backed by what? All manner of MBS and their dependencies. Is it a surprise - that the emergency CP program and the FDICs hastily arranged $250k deposit guarantee were a necessity?

What was known, knowable, unknown and unknowable by Mr Bernanke at the time? It seems a lot; for which we deserve nothing less than - the whole truth.

Why the FED should be required to be under SARBOX:

As compromise to Ron Paul's proposed full blown FRTA, because the Fed and its underlings didn't see, know or care what the bonused bank examiners (true)- see here were doing from 2003 to 2006 - the Fed MUST certify all its processes have been checked and double checked.

But first a small question for Mr Bernanke, he stated "he failed to see the flaws in the financial system" which led to the so-called financial crisis. This I'm afraid appears too easy a mea culpa; no one is perfect, however, IS it true that no one at the Fed pointed out concerns about about the BUBBLY 'er I mean "flaws" which Bernanke dismissed; therefore did he, himself consciously decide NOT to see a few flaws? And this - flaws are flaws, what about the OBVIOUS rocket that was house prices compared to the past 30 years or better yet past 200 years? These are not flaws - they are right in front of your eyes RUDIMENTARY observations! So I and a few other taxpayers would like the answers.

The Fed will be subject to Section 404 and to make sure they get the point and have a little skin in the game - will be subject to section 304 - the CLAWBACK OF PAYCHECK SECTION; to bad it can't be retroactively applied to the beginning of BB's ovesight.

And the Federal Reserve Act should be amended immediately to delete the office of Fed Chairman; and replace it with a commission. Any further unilateral abuse of power and money must be stopped now.

In sum, Mr Bernanke, appears to be in some state of confusion as he did not and seems can not connect his own dots. This man must be stopped.

Is QE2 not a fix for the real ecomomy but a Bond rescue aka pre-emptive attack on the STD virus?

Have we overlooked the obvious, and over analyzed the "economic impact" of QE2?
The Fed, unlike any other investor, has near perfect information, including from its own $1T of MBS, trillions of dollars worth of special programs and facilities and its everyday supervision of banks.

QE2 is unquestionably a monumental, extraordinary measure. It's been a grand total of 3 correction ~9 weeks from signal to implementation which can be summed up in a word; rapid. Yet with much public dissension among Fed governors, economists and foreign officials; the WSJ has a good summary here http://online.wsj.com/article/SB10001424052748704865104575588683125522068.html?mod=WSJ_article_LatestHeadlines

"It's the economy stupid" is a Bill Clintonism, CONSUMER spending is ~ 2/3 of the "economy". Surely the Fed cannot be unaware the problem is how to stimulate aggregate final demand at the consumer level.

However, buying bonds, does what? Puts cash in the hands of Professional Investors who do one thing - keep it in the washing machine aka "the markets"; it does not create businesses, it does not create jobs; it DIRECTLY inflates bond prices, indirectly all other assets.

Little of this "QE2 Cash" finds its way to most consumers.
Consumers, are rightfully frightened, need jobs for income, once in a job, need to feel secure it will last for longer than 6 months. Now a distant secondary source of income comes from savings and investment accounts. In the past, such income came largely from tapping the "equity in their house" NO MORE. Wages from jobs over the past 10 years is flat at best.

Perhaps Mr Bernanke should be more forthcoming and reveal "It's NOT the economy stupid"
QE2 from the get go - seems disconnected from stimulating Final Aggregate Demand; unless the Fed's agenda is different in which it is trying to front run the enormous negative effects of STDs (Securitization transmitted damages) as in this Special FiduciaryALERT


Ending the siesta on the taxpayer's dime - one easy to read blog at a time.
McFid

STD's - squaring two links 1) Only now SEC Oct 29 letter to Banks about potential Mortgage disclosure items 2) Richard Bowen's FCIC testimony

How will certain banks in a Federal Reserve district east of the Hudson react? To:
1) the SEC's letter reminding them of required financial disclosures as here
2) the former senior executive involved with mortgage underwriting at Citigroup, Mr Richard Bowen's testimony at the FCIC in April.

And what does it say about past required disclosures? Of certain CSE's in the SEC's parlance Consolidated Supervised Entities (there goes that "E" word again today).

When in 2003 certain State Attorneys' General pursued Ameriquest here, with earlier class actions against HSBC's Household International in 2001 and Citigroup in 2003. Later FOB's (friends of banks) at the OCC and OTS chimed in with pre-emption protection for others engaged in similarly southerly parts of mortgage origination - reported where? In American Banker of course. Subscribed to by? Your friends at the banks. Which leads me to the rhetorical question - did readers reflect that some or all of the mortgages they were fast securitizing passed muster? Did readers wonder how home values, could rocket up and keep going, could sustain the trajectory? Appears Citigroup's Mr Bowen was one of the few who reflected and spoke up.

Hmmmmmm.....STD's (Securitization Transmitted Damages) believed not limited to MBS, may infect ABS Asset backed securities markets, investors including money market mutual funds in ABS backed commercial paper and consumers - if recent blog posts are accurate; some consumer debt collectors and/or initial ABS securitizations may make their mortgage-related brethren look...slow. And remind us again of the primary regulator.

Ending the siesta on the taxpayers' dime - one easy to read blog at a time.
McFid

Vatican declares "All Entities day," replaces All Souls day; Mormons to perform PPB's on "Entities"; FED 4.0 released; plus free upgrade to NEW money

The Vatican declared All ENTITIES day will replace All Souls day effective immediately.

The Mormons, also announced rapid Posthumous Proxy Baptisms (PPBs) will commence in the wake of millions of recently deceased corporations. And made preparations for the expected surge in new corporate demise. Eclipsing disputes with Jews who disagree with the Mormon's PPBs

Why the change from centuries - old practices?
In January the US Supreme Court overturned two precedents, much of the 2002 "McCain - Feingold" campaign finance laws, under a broad interpretation of the First Amendment protecting Free Political Speech.

Dred Scott, piped in "I shoulda just asked my lawyer to buy a corporate shell - woulda helped me tremendously and possibly saved years trying to speak to the courts."

Ron Paul adds "Perhaps, under Citizens v FEC, we can ask for "free speech" from certain corporations including the...hybrid FEDERAL RESERVE CORPORATION".
As here
http://www.apfn.org/apfn/fed_reserve.htm
http://www.sourcewatch.org/index.php?title=Federal_Reserve_Corporation
http://en.wikipedia.org/wiki/Federal_Reserve_Corporation

At a minimum the near 100-years-old 12 regional bank districts are due for resizing since "The size of each district was set based upon the population distribution of the United States when the Federal Reserve Act was passed. " (1913) - true.

It's not a question of IF the Fed will cease, it's when...
When, not if the Fed is revealed for:

1. failure to spot and curtail the housing bubble,
2. failure to regulate certain financial institutions, o/k/a "the Clearing House Association"
   
3. failure to, as required, recognize and explain to Congress the basic math of 2,000 X financial and economic leverage of zero down mortgages levered by certain banks 20 (or more) to $1 compared to banks' safety and soundness requirements as under authority of the...Federal Reserve,
   
4. failure to exact salary and/or bonus concessions from recipients, largely in a certain Federal Reserve District east of the Hudson, Bail out in contrast to that from auto workers,
5. failure to stop $5B in retention bonuses paid to thousand of stock brokers, employed largely by certain members of a Federal Reserve bank district east of the Hudson,
6. failure to stop AIG from paying out $165 MM "contractually obligated" Bonus payments in contrast to certain auto workers under collective bargaining arrangement (CBAs),
7. >$1T Asset removals for 100 cents on the dollar - CASH - but only from certain banks, largely from a certain Federal Reserve district east of the Hudson,
8. lowering Federal Funds aka cost of money to near ZERO - when the cost of money is never FREE; largely to help only member banks of a certain Federal Reserve District east of the Hudson to RE-liquify their balance sheets
9. Forcing persons, who in the past chose to be prudent and save money for a "rainy day" mostly senior citizens, to live in poverty
10. Flood the "banking system with new money", aka QE2 the debasement of what's left of credibility in the US Dollar; and the Fed is gonna measure effectiveness and success how?
11. Will the Fed's measures of success include an * aka ex-extraordinary efforts to revive and resuscitate "the economy" - as they did to Roger Maris; here from May 2009.
    
12. Better "the people (not the systems) at the Fed (on our payroll!) do the - thing that requires NO money - tell the truth, disclose unvarnished information to the public, of who and what created a "false economy" that led to a so-called financial crisis...
    

for who and what it is and who and what it is not, so get READY for the whiz bang release of FED 4.0; the Fourth iteration of the Bank of the United States; with a handy digital coupon to upgrade to NEW MONEY; emerging hopefully to represent all current and future Americans' financial hopes, dreams and INTERESTS; as fiduciaries should or since they serve voluntarily choose to resign.

Ending the siesta on the taxpayers dime - one easy to read blog at a time.
McFid

R.A.M.B.O.s. to the rescue; Stop dancing around the unavoidable problem and the MUSIC of the Fed...

R - Residential Real property

A - Asset

M - Mega

B - Bond

O - Omnibus

S - Securities

The Fed, FDIC, US Treasury, Fannie, Freddie, Ginnie, FHLB, FHA, any state mortgage or housing finance authority issues are eligible too. Banks, Insurance companies including Monolines, and all private institutional mortgage market parties should consider the merits of RAMBOs. It's envisioned comprehensive basket security. An unleveraged public private vehicle, tax - enhanced LONG term vessel designed to hold effective good title for all mortgages and derivatives. The IRS temporarily suspends recognition of gain/loss, the FASB/SEC grants special balance sheet, but ring fenced capital treatment. Ratings agencies are increased to as many as 50. To encourage participation, during an initial limited window period assets may be transferred into RAMBOs at 100% of independent 3rd party valuation, 2 more later windows are envisioned however transfers are subject to haircut of 5% then 10% from the lower of initial and current independent 3rd party valuations.

Investors initial interests are valued proportionately. Public customers get priority and preferred pricing on the IPO of RAMBOs. RAMBOs will issue straight debt, preferred and common equity. Options on RAMBOs will be available.

1-RAMBOS allows the Fed to exit certain inappropriate markets.

2- Allows the swift, necessary wind down, and the end of the "Agencies",

3- Allows assets to return to public "markets" hands,

4-Returns the management of risk assets to professional NON conflicted investors.

5-With the Fed and the Agencies (the political/legislative factors now out of the picture) is hoped to reduce uncertainty, simplify private investors' evaluation, facilitate flow of risk capital, tax enhancements encourage longer holding periods - 7 years

6- Prohibited - Securitization, stripping, or any/all creation of derivatives, pledging, hypothecation or rehypothecation of RAMBos assets; a/k/a the no mini RAMBOs rule.

7-Sends a strong signal to global investors that we have "Capitalist aka Market" plan; open to market daylight.

8-RAMBOs success can be ported to create CRAMBOs for Commercial Real Estate related assets and derivatives.

Clearly there are more issues to consider in any eventual term sheet; but nearly anything is preferred to the Fed's, though well-intentioned, near lethal certainly dangerous masquerades.

Did you catch the Fed's d/b/a notice to "Investor of last resort?"...

And the Fed, like those it rescued sports a balance sheet with $57B or 2% equity supporting $2.3T in assets. Said another way the Fed owns over $2.2 T "worth" of assets that it has NOT fully paid for. And the Fed's leverage is...40 to $1...sound familiar?

So the USD is on path to a new currency but one of the oldest as in:

Seller (China) to US: "We have 10 cargo ships laden with Christmas toys and goodies ready to ship to your port, how do you wish to pay for them?

US (Bernanke) replies; flashing a wry grin "of course, with a smile...:)"

Laughing all the way to the bank - not.

the Xxx factors, not reported...

XXX

All market prices have benefitted to the UPSIDE due to...the Federal Reserves' flood like pumping of cash into the "economy" eclipsing even biblical proportions.

Xx

And home foreclosures rates - look like they are heading sideways...why?

Because the denominator has NOT been reduced to reflect the millions of homes ALREADY foreclosed.

X

TV viewing audience increases.

Social media like Facebook, Facebook and Facebook reports viral increase in users.

Amazon, Apple's book reader devices sales volume increase.

Why? The surge in FREE time, cause = unemployment, part time employment and the age old under-reported under employment. People do not have to wake up in the morning and go to work; creating an abundance / surplus of free time.

XXXX

For the millions of adults here in the US and worldwide dealing with their own unhappiness, depression and or sense of reality via SSRI's. It's estimated that over 30% of the US Adult population (overwhelmingly the segment with health care benefits) are and or have been on SSRI's.

Fed's QE2 survey like Santa Claus checking holiday wish lists; maybe open Factory Outlet stores but first the "F" word

Ann Taylor is going to open 40 new factory outlet stores, maybe the Fed, in quest of new channels of distribution of "securities" can take some space in those new outlets?

NEW Alternatives to any QE 2, 3, 4:

Correction - instead of buying US Dollar based securities like US Treasuries, Agencies

instead buy Euro-dollars, foreign currency (single or baskets thereof), SDR's. And this - in GOLD and other "precious metals" including the nascent REM's (the 17 Rare earth minerals). Since the Fed is already committed to uncharted territory seeking as they should to diversify hoping to both lower risk and costs, but there looms more to consider.

Was the "F" word in the Fed's Survey?

Back to the Fed's "survey," of the 18 Primary Dealers; did the Fed ask about the effect of the "F" word? Fiduciary duty owed to customers? Note Fiduciary duty, unlike suitability requires both Before and After ongoing due diligence, recommending a security to a customer-why? To determine that same is in the BEST interests of the customer.

Not with standing the recent passed Dodd- Frank, fiduciary duty may apply already depending on the unique facts and circumstances of each customer's relationship with the 18.

Wonder if or will the 18 need to look into their respective COLLECTIVE knowledge base' for the answers?

Gross on Bonds dead right. On Bernanke responsibility, dead wrong

In a Bloomberg News report today “This is not a Bernanke scheme, because this is his only alternative and he shares no responsibility for its origin,” Gross wrote.

HUH?
You're kidding me - Mr Bernanke he of little awareness of all around him (when the review of HIS college textbook Principles of Economics published 2003, encourages students to become Economic Naturalists, talk about a primo example of do as I say not as I do). Tell me that real estate values which did not just amble up BUT rocketed in certain LARGE sand - based markets at 2, 3, 4, 5 times or more 200 year historical trend for 3 years or more running were unknown or unknowable??? This was "normal"?
Tell me that Mr Bernanke was not aware of house "flipping" rampant speculation; for goodness sake there was even a freakin TV show called "Flip this house!!!"

Mr Bernanke did NOT have to accept the position of Fed Chair in Feb 2006 did he?
Mr Bernanke admitted himself in print that he failed to see (and connect the dots) of the flaws in sub prime.

MAJOR flaw he missed 2,000 X L-E-V-E-R-A-G-E!
The most basic is 2,000 X financial and economic leverage. Huh? Correct Take a group of zero down (=100 x leverage for the borrower) mortgages, pool them into MBS then an Investment Bank levers them 20 to 1, total leverage = 2,000 X (100 x 20). And remember that to begin with these were often NOT the most credit worthy risks!

Come on Bill wake up; you're so much better than that.

Correct the the Fed's Ponzi scheme is exactly that, virally infecting all asset classes, commodities, food prices, energy NOT JUST BONDS. Distorts global capital flows. Too much newly printed dollars; when even just one extra is too much.

Better to turn off the printing presses, shrink the supply of USD; the opposite of what investors expect. But rightful homage to the ALMIGHTY US DOLLAR. Including returning so - called AAA rated "assets" too long on Fed balance sheet to rightful issuers, creators / owners largely in a certain Federal Reserve district east of the Hudson.

Let the pitchforks pitch forth or why is Obama withholding the truth? Not telling the truth is a BFD!

In March or April 2009 Mr Obama traveled to Wall St to make his case directly to the CEOs' of the Too Big to be allowed to fail club members for financial reform; during that speech he stated "look, I'm the only thing standing between you guys and the pitchforks." Or maybe Obama plans a scary show this Hallowe'en weekend when the PITCHFORKS come out for Trick or Treat!

Mr Obama is fighting for his life - politically. There can be little doubt he knew something when he made the "pitchforks" comment. By definition the CEOs knew that feelings of "pitchforks" were widely held by taxpayers; as there was no debate then or now over the existence of same.

There can be little doubt Mr Obama, by all accounts a very smart guy and quick study, has been FULLY informed since Fall 2008 (or before) by his aides, Mr Summers, Mr Geithner, Mr Bernanke, Mr Emmanuel (the only senior adviser I believe who actually ever worked on Wall St,) and Mr Paulson in the dark days of Fall 2008 before the election and certainly after he won the election in November 2008. Or have these officials purposely withheld or marginalized certain critical information from the President under national security / currency concerns?

What is preventing Mr Obama from telling the unvarnished truth to the American public aka taxpayers - we're adults - we know there's a problemo that's not going away anytime soon - PLEASE TELL US WHAT YOU KNOW - AND WHEN YOU KNEW IT - NOT DOING SO MAKES IT A BFD! What are the likely parties who caused the never-been-seen-before economic and financial desperation???

BFD means breach of fiduciary duty to present and future generations of Americans including the all military and their families who in too many cases are making the ultimate sacrifice.

Go BIG money; I mean go - take your break...

Progressive Insurance's TV commercials are more than entertaining - they're instructive.
And apply to the Fed's potential redux of LSAPs Large Scale Asset Purchase programs.
See the recent NY Fed paper summarizing past programs' "effectiveness" but I suggest a reminder quoting the famous economist Yogi Berra "the game ain't over 'til it's over...".
When the Fed is NOT discounting the undeniable - that of flooding markets with cash money - so when claiming that certain programs yielded 36% recently - do as they did to Roger Maris and put an *.
See "Stock and Bond markets deserve an *..." from May 2009 here.
Why? Because it's 1) doable, 2) knowable and 3) the right thing to do.

Future Treasury issuance should include a list of all ingredients and secret ingredients - so as to match the intellectual capacity status of the current and future obligees; aka future generations. Why? This writer suggests that future generations may find the wiggle room; 1) in between the two levels of suitability analysis, 2) the new Dodd Frank Act requiring a fiduciary duty on the 18 Primary Dealers related to distribution of same and 3) the centuries - old pre - Revolutionary War maxim "no taxation without representation" to disclaim some or all responsibility for repaying this indebtedness. The current so called secret ingredients inherent in ALL on and off the run Treasury's - are secret for what reason(s)?

Remember that one of the reasons that Mr bernanke HIMSELF cited was he didn't appreciate the flaws as here "“What I did not recognize was the extent to which the system had flaws and weaknesses in it that were going to amplify the initial shock from subprime and make it into a much bigger crisis,” this from 2007.

In parallel, perhaps Mr Bernanke may recognize the need for ALL investors to have ALL and MORE available information? Then investors can make a fully informed decision to invest - in the meantime - they're sitting waiting watching from the sidelines; when the Fed actually needs investors to be on the field; INCREDULOUSY, it's as if the San Francisco Giants correction Texas Rangers would just let Cliff Lee sit the bench and only watch - not actually pitch in the World Series. It's preposterous! The Clearinghouse Association members may in fact benefit from investors return to the "markets" or is there some ominous, unflattering stuff being hidden?

And when the Supreme Court may decide to hear the case against the Fed to disclose such secrets perhaps it may look to its recent controversial decision to unleash political voice to corporate money - from any source - and in secret no less - at least temporarily. Perhaps that voice - may require accountability that certain banks' and NON FDIC insured affiliates of same under the FDIC's TLGP http://www.fdic.gov/regulations/resources/TLGP/total_issuance09-10.html
program aka the "clearing house association"- Fed and FDIC secrets are outstripped by the Public's (current and future generations) right to know...deserving of timely and full disclosure. Or is it a matter that certain bank's franchise may be viewed near or close to the zone of insolvency - then and /or now? Or that the Fed may be similarly recognized?

New Mortgage Refinancings face similar problems?

Bloomberg reports 3rd quarter demand for refi's at some banks are near record levels given all - time record lows on mortgage rates.

The flip side of refi's comes after 3 disclosed issues confronting certain Banks:
1- Improperly documented and/or fraudulent foreclosures and the related 50 state Attorneys' General investigation into same.
2- Put back requests by investors (are not a new thing) due to deviations from reps & warranties; so far in a letter made public PIMCO, and the New York Fed and several others have asked, not sued, BofA to cure certain problems. BofA, although with 60 days to do so has come out swinging - as if there is a lawsuit pending.
3- The less covered but potentially enormous multi - Trillions dollars problemo looms over concerns that INITIAL improper pooling of mortgages into securities aka REMICs later CDO's, reincarnated again as CPDO's, some as reference securities as in Synthetic CDOs and related CDS on all of the above; and finally securities lending of or related to same. Some say opening the door to potential put backs in size; with the Fed being the largest holder at over $1T.
4- The headline - appears a silver lining to banks and borrowers alike - however, given 1, 2, 3 above especially 1 and 3 how do today's banks fulfill the absolutely required final payoff of remaining balance on the old mortgage; obtain the old note marked retired / paid off / satisfied and how do they know that the current servicer holds legitimate title? Along with determining compliance with the FDIC list a few here.

Oh and this little money saver - will the banks' or mortgage brokers suggest that borrowers ask and receive the re-issue rate for NEW title insurance?

Lets hope they do - otherwise today's refi's may emerge as MBS on Murphy's law - on steroids.

"Review lite" - No one put a gun to their head - the Fed's Bank examiners ONLY now doing "Intensive reviews" how about BEFORE buying $2T MBS???

Mr Bernanke stated today that the Federal Reserve will begin an "intensive" review of banks' documentation of mortgages and mortgage securitizations into REMICs real estate mortgage investment conduits - correction improper mortgage foreclosure processes and/or documents. And takes allegations about same "very seriously".

Uh and this tiny problemo - what due diligence was performed by the Fed and/or US Treasury BEFORE they bought, more likely removed $2T MBS and related derivatives from certain banks largely from a certain Federal Reserve district east of the Hudson??? And that most if not all so called "profits" from same are due to...the newly minted dinero; just as if when you walk in the door of a casino - they hand you $1000 dollars in chips - then you walk out thinking you're a winner when you walk out with more than you had in your wallet!

So what were the bank examiners of yore doing? A lite review - it appears. And for that they received full, 100% pay, benefits, pensions and health care - all courtesy of us. And we continue to pay for this?

And today FDIC's Ms Bair joins in to trumpet aka "signal" that:
1- It could take months including a "global solution" for banks "to work things out".
And - Bair acknowledged that there were warning signs that the servicing standards were eroding, which should have caused market participants and regulators to question existing practices. “Servicing fees declined significantly over the past several years,” Bair said. “We should have been asking how servicers were able to achieve such efficiencies without sacrificing quality,” Bair said. “Those kinds of questions were not asked.”

2- That Fannie and Freddie should NOT enjoy the implicit g'mint guarantee as here on Marketwatch

And in particular a commenter on the above story posted this:

Makes sense, thats why it'll never happen. Its in the politicians best interet to keep the on going US Housing Ponzi scheme up and running. We wouldn't want the free markets to determine the price of housing, because gasp, they might go down and ruin the Wall St. bonuses.

There you have it...and remember two things:

1) No one put a gun to the head of any banker:

a) to issue a mortgage

b) to create mortgage backed securities (MBS)

c) to sell MBS to investors

d) to leverage their own holdings of MBS 20, 30, or 40 or more to $1

e) to issue any ZERO down mortgages - which by definition, are 100 times leverage

f) then to leverage pools of "e" 20 to $1 - creating minimum 2,000 X financial leverage!!!

g) to, subject to proof, divert hundreds of billions of customers' money market funds into bank deposit accounts - at their own affiliated ILCs - then to loan same funds NOT to arms - length commercial borrowers as required by charter - BUT to their own affiliated, controlled entities...

2- NO BANKER, upon receiving a bonus check - back in the day a) raised their hand and b) asked or stated if it was too much...huh?

And see this writer's post to the FDIC's request about RIN 46 in December 2009 aka when it comes to "control" report it...

And was it me or did it both sound and look like in his presentation today, Mr Bernanke got kicked south of the belt by those same banksters' STD's er...MBS???

Black on Foreclosures...and then some

Bill Black, UMKC law and econ professor on Bloomberg TV stated Friday October 22 that "of course there was fraud, and cited testimony of a Citigroup mortgage pro that upwards of 80% of certain mortgages were outside its underwriting guidelines during 2006 and 2007." Including an email he sent to Mr Rubin and others with specific concerns dated...Nov 3, 2007.

Jail time?

Black went on to relate how in this crisis NO ONE HAS GONE TO JAIL; compared to the 1,000 or so who were sent to jail as a result of the 1980s S&L crisis. Perhaps, this writer suspects, that certain regulators, gummint agencies, GSE's and elected gummint officials could, based upon potential industry fingering, be near the top of the list...more to come on this I'm sure.

And this whooops er whopper - in reviewing the 21 pages of the above man's statement to the FCIC - "Citi was criticzed by mortgage originators that it was TOO stringent," that others used outsourced so - called "contract" underwriters to vet mortgages and underlying REQUIRED documentation.

So, when it comes to other banks like BofA, JPM and others who later sold certain mortgage pools to investors or agencies like Ginnie Mae, Freddie Mac or Fannie Mae - how will their and Citi's mortgage underwriting, reps and warranties be viewed? 1) Not with standing past and recent improperly documented foreclosures and 2) the bond trusts which were supposed to own the underlying collateral; I commend this piece today from naked capitalism:

Posted: 24 Oct 2010 12:47 AM PDT

Gretchen Morgenson has written an uncharacteristically cautious piece, “One Mess That Can’t Be Papered Over,” which in a rather abstract manner, discusses the issue we’ve been harping on for over a month, that the trusts that were established to hold the promissory notes for residential real estate loans and the related liens (the mortgage) may in fact not have taken the steps necessary for them to have ownership.

The story only gives a rather hazy account of the issues, and also pulls its punches as to the implications. It does signal the problems could be serious for specific deals, but pointedly steers clear of suggesting they are widespread.

While it’s good to see a recognized writer acknowledge these issues, I’m puzzled as to the sketchy description and the pulled punches. It might simply have been vagaries of deadlines, however, that Morgenson couldn’t confirm as many details as she needed to to run a more definitive piece.

I wish the story line were clearer. The issue, as we’ve indicated, that some, and we have reason to believe many, residential backed mortgage securitizations failed to take the measures stipulated in the governing contract, the pooling and servicing agreement, for the trust to obtain the promissory notes. As we explained earlier:

The pooling and servicing agreement, which governs who does what when in a mortgage securitization, requires the note to be endorsed (just like a check, signed by one party over to the next), showing the full chain of title, and the minimum conveyance chain is A (originator) => B (sponsor) => C (depositor) => D (trust). The note, which is the borrower’s IOU, is the critical document in 45 states. The mortgage, which is the lien, is a mere accessory to the note and can be enforced only by the proper note holder (the legalese is “real party of interest”).

The wee problem is that this apparently never done (I’ve been told one person trying to track down a particular note found it, at Countrywide. The guy who wandered down the corridor to produce it from his files claimed that Countrywide kept all the notes on its deals, and would send them out on request when someone needed them in a foreclosure. If this is true, it indicates there are pervasive and not readily remedied problems. The required endorsements were never done).

Why is this serious? The cure for the mortgage documents puts the loan out of eligibility for the trust. In order to cure, on a current basis, they have to argue that the loan goes retroactively back into the trust. This is the cure that the banks have been unwilling to do, because it is a big problem for the MBS. So instead they forge and fabricate documents.

There are actually two impediments. The first is that the note had to go through parties specified in the pooling and servicing agreement, in recent deals, at least two between the originator and the trust. Why so many moving parts? Because the investors wanted to make sure no creditor of the originator could later come back and demand the loans back, in case the originator failed close to the date of a securitization. In other words, the investors sough “bankruptcy remoteness” and they also wanted no exposure to claims by the FDIC. So the parties in between the originator and the trustee had to be independent (this independence was often nominal; all it took was one independent director) for the sales to be deemed “true sales” (crucial to establishing bankruptcy remoteness).

A second issue was timing. All the notes were supposed to be conveyed to the trust by closing. However, it did have a period post closing for clean-up, which effectively extended the time frame for any particular note to 90 days after closing (for some deals, the post closing period was only 60 days). After that, the exceptions permitted were very limited. And these trust were almost always were governed by New York law. New York law was selected because it is very well settled, but the flip side is it is also particularly unforgiving. New York trusts can operate only as stipulated.

Some of these ideas are included in the Morgenson piece, but I’m not certain this is at all clear to someone who lacks the full picture.

The notes, as Morgenson indicates via a quote from a real estate lawyer, normally remedy breaks in the conveyance chain. But that presupposes we are only looking at real estate law considerations. When you look at the additional complications created by the mortgage securitization, messing up the conveyance chain creates problems that look insurmountable. She eventually gets to the real issue:

For example, the common practice of transferring a promissory note underlying a property to a trust without identifying it, known as an assignment in blank, may run afoul of rules governing the structure of the security.

“The danger here is that the note would not be considered a qualified mortgage,” said Robert Willens, an authority on tax law, “an obligation which is principally secured by an interest in real property and which is transferred to the Remic on the start-up day.” If, within three months, substantially all the assets of the entity do not consist of qualified mortgages and permitted investments, “the entity would not constitute,” he said…

What if a loan originator failed to provide documentation substantiating that what’s known as a “true sale” actually occurred when mortgages were transferred into trusts — documentation that is supposed to be provided no longer than 90 days after a trust is closed? Well, in that situation, a true sale may not have legally happened, and that doesn’t appear to be a problem that can be smoothed over by revisiting and revamping the paperwork.

“The issue of bad assignment has many implications,” said Christopher Whalen, editor of the Institutional Risk Analyst. “It does question whether the investor is secured by collateral.”

In other words, were the loans legally transferred into the trust, and, if not, do the trusts lack collateral for investors to claim?

A mortgage securitzation lawyer, via e-mail, went through some of the ways this might play out:

It’s clear the parties intended a transfer. But it appears that they did not document the transfer. Based on the agreement, they described how the transfer should take place and then didn’t do it, apparently. Unfortunately, while this might have been the intention of the parties, they can’t produce any real, documented evidence that this mortgage is owned by the trust. I’ve provided affidavits that state that the requirements for a mortgage to be part of the trust are clear in the documents, that mortgages can’t be added to the trust after start up (as servicers have tried to argue), and that I see no evidence that this trust owns this loan.

On one hand, the problem is easily cured – the party who is the documented owner of the loan could foreclose (the original lender). The problem with this is that the proceeds of the foreclosed property, including the recoveries intended to reimburse the servicer for advances, would have no mechanism for getting back into the trust.

If the original lender foreclosed, took title and liquidated the loan, accountants would have an issue with how the proceeds could possibly end up back with the trust. The result would be a total loss for the trust for that loan.

The servicer’s attorneys have no desire to go this route – it terrifies them.

The servicer’s attorney’s could argue for some sort of documentary exception – that a mistake was made and the intention was for the trust to own the mortgage – an appeal to equity or fairness. Unfortunately, in many cases, they already submitted an affidavit stating that they had proper title and full right to foreclose in the name of the trust. So going this route would expose them to perjury.

The appeal to equity or fairness, given the intent of the parties to the trust and the relatively minimal harm to the borrower, seems like a logical route – except that a number of judges would argue that fairness might dictate a fair outcome for the borrower, such as a real modification. And you still have the issue of the possible damages and legal expenses for a wrongful foreclosure action.

The big argument people make against this approach is that the borrower is just a deadbeat who has failed to pay their mortgage, so there’s no reason why the borrower should be entitled to some sort of gain or benefit. While this may be true, real estate law is pretty clear – the party holding title is the one who should foreclose. Otherwise, someone else could come along after the improper foreclosure and be the actual title holder and sue the borrower for foreclosure and loan repayment again. The borrower is entitled to protection against this.

Most people assume that the parties followed the terms of the trust agreement – it’s so basic and fundamental to all MBS. It is hard to grasp that they screwed this up. As a result, it takes some work to pull through everything and see what actually happened. Without the mortgage documents showing the current title, combined with the affidavits from the foreclosure attorney, I wouldn’t have believed it myself.

As we’ve been saying, this is going to be difficult to resolve. Yet the powers that be keep acting as if they keep up the “nothing to see here” talk, this problem will abate. That is as likely to succeed as putting a band-aid on a gunshot wound.