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Former Ameriquest Employee fired after he reported illegal activity, sued under the whistleblower provision of the Sarbanes Oxley Act of 2002

Former Ameriquest Employee fired after he reported illegal activity, sued under the whistleblower provision of the Sarbanes Oxley Act of 2002


Those of you who’ve had any dealings with Ameriquest may find this interesting…


Via William McCloskey

William McCloskey worked for Ameriquest from November 2004 till March 2005. William was fired after he reported illegal activity behind the walls of his Ameriquest branch, which virtually mirrored all of the widespread reports about the company (to local detectives, the PA Attorney General, the S.E.C. and the F.B.I).

William sued Ameriquest Mortgage Company under the whistleblower provision of the Sarbanes Oxley Act of 2002. The act pertained to publicly traded companies and issuers of securities under Section 15(d) and 12h-3 of the Securities and Exchange Act of 1934.

[WJM 7]

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Secrets of the Bailout, Now Revealed – Gretchen Morgenson

Secrets of the Bailout, Now Revealed – Gretchen Morgenson


I’ve always said if walls could talk in these secretive rooms, look no further than Gretchen to shut it down with a story.

NYT-

A FRESH account emerged last week about the magnitude of financial aid that the Federal Reserve bestowed on big banks during the 2008-09 credit crisis. The report came from Bloomberg News, which had to mount a lengthy legal fight to wrest documents from the Fed that detailed its rescue efforts.

It is dispiriting, of course, that we are still learning about the billions provided to various financial firms during the crisis. Another sad element to this mess is that getting the truth requires the legal firepower of an organization as rich as Bloomberg.

[NEW YORK TIMES]

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Cummings Requests Hearing on Secret Government Loans to Rescue Banks

Cummings Requests Hearing on Secret Government Loans to Rescue Banks


New Bloomberg Report Estimates that Banks Reaped $13 Billion from Below-Market Rate Loans

Washington, DC (Nov. 28, 2011) – Today, Rep. Elijah E. Cummings, Ranking Member of the House Committee on Oversight and Government Reform, sent a letter to Chairman Darrell Issa requesting that the Committee hold a hearing with Federal Reserve Chairman Ben Bernanke and officials from the nation’s largest financial institutions that benefitted from trillions of dollars in previously undisclosed government loans provided at below-market rates.

“Many Americans are struggling to understand why banks deserve such preferential treatment while millions of homeowners are being denied assistance and are at increasing risk of foreclosure,” said Cummings.

Cummings requested the hearing in light of a report in Bloomberg Markets Magazine that revealed that the Federal Reserve secretly committed more than $7 trillion as of March 2009 to rescuing the nation’s top financial institutions, and that these banks “reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates.”

According to economists cited in the Bloomberg report, this “secret financing helped America’s biggest financial firms get bigger and go on to pay employees as much as they did at the height of the housing bubble.”  The Bloomberg report disclosed that total assets at the largest six banks increased by 39% and executive compensation increased by 20% over the past five years.

According to the Bloomberg report, information about these secret loans was withheld from Congress as it debated reforms ultimately included in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and banks also failed to disclose this information to their shareholders.

The full letter follows:
November 28, 2011

The Honorable Darrell E. Issa
Chairman
Committee on Oversight and Government Reform
U.S. House of Representatives
Washington, DC 20515

Dear Mr. Chairman:

    I am writing to request that the Committee hold a hearing with Federal Reserve Chairman Ben Bernanke and officials from the nation’s largest financial institutions that benefitted from trillions of dollars in previously undisclosed government loans provided at below-market rates.

    In the past, the Oversight Committee has played a prominent role in investigating the actions of government entities and private sector corporations that led to the financial collapse.  On October 23, 2008, for example, former Federal Reserve Chairman Alan Greenspan testified before our Committee, stating:  “I made a mistake in presuming that the self-interest of organizations, specifically banks and others, was such that they were best capable of protecting their own shareholders.”

Yet, a report yesterday in Bloomberg Markets Magazine disclosed that the Federal Reserve secretly committed more than $7 trillion as of March 2009 to rescuing the nation’s top financial institutions.  As a result, the banks that received these loans “reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates.”  This report was based on 29,000 pages of Federal Reserve documents obtained under the Freedom of Information Act after a protracted legal dispute.

    According to economists cited in the Bloomberg report, the scope of these previously undisclosed loans resulted in a financial windfall for the banks.  For example, Dean Baker, co-director of the Center for Economic and Policy Research, stated:  “getting loans at below-market rates during a financial crisis—is quite a gift.”  Similarly, Viral Acharya, an economics professor at New York University, stated:  “Banks don’t give lines of credit to corporations for free.  Why should all these government guarantees and liquidity facilities be for free?”

    The Bloomberg report disclosed that this “secret financing helped America’s biggest financial firms get bigger and go on to pay employees as much as they did at the height of the housing bubble.”  According to Federal Reserve data cited in the report, total assets held by the six largest U.S. banks increased 39% from 2006 to 2011.  In addition, based on data from the Bureau of Labor Statistics, employees at these banks received more than $146 billion in compensation in 2010, an increase of nearly 20% from five years earlier.  According to Anil Kashyap, a former Federal Reserve economist, “The pay levels came back so fast at some of these firms that it appeared they really wanted to pretend they hadn’t been bailed out.”

The Bloomberg report explained that Congress lacked access to information about the secret Federal Reserve loans while it debated reforms ultimately included in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.  For example, former Senator Judd Gregg stated:  “We didn’t know the specifics.”  Similarly, Senator Richard Shelby stated:  “I believe that the Fed should have independence in conducting highly technical monetary policy, but when they are putting taxpayer resources at risk, we need transparency and accountability.”  According to Neil Barofsky, the former Special Inspector General for the Troubled Asset Relief Program, “The lack of transparency is not just frustrating; it really blocked accountability.”

When Congress passed the Dodd-Frank Act, it required the Government Accountability Office to “conduct a onetime audit of all loans and other financial assistance” from December 1, 2007, to July 21, 2010.  Although GAO issued its report in July, it analyzed assistance—including mortgage-backed securities purchased through open market operations—with peak outstanding balances of only $3.5 trillion.  Even with respect to these amounts, GAO concluded:

The context for the Federal Reserve System’s management of risk of losses on its loans differed from that for private sector institutions.  In contrast to private banks that seek to maximize profits on their lending activities, the Federal Reserve System stood ready to accept risks that the market participants were not willing to accept to help stabilize markets.

    In addition to withholding information about these loans from Congress, banks also apparently failed to disclose this information to their shareholders.  For example, Kenneth D. Lewis, the Chief Executive Officer of Bank of America, told shareholders on November 26, 2008, that the company was “one of the strongest and most stable major banks in the world.”  According to the Bloomberg report, however, he failed to disclose that “his Charlotte, North Carolina-based firm owed the central bank $86 billion that day.”

    Many Americans are struggling to understand why banks deserve such preferential treatment while millions of homeowners are being denied assistance and are at increasing risk of foreclosure.  Unfortunately, officials from many of these financial institutions declined to comment about these loans, including officials from Goldman Sachs, JPMorgan, Bank of America, Citigroup, and Morgan Stanley. 

For all of these reasons, I respectfully request that the Committee hold a hearing with the Federal Reserve chairman and officials from each of these financial institutions to examine these issues in greater detail.  Thank you for your consideration of this request.

                        Sincerely,

                        Elijah E. Cummings
                        Ranking Member

[ipaper docId=74060982 access_key=key-qgfj6rxm5qliut1229p height=600 width=600 /]

Source: http://democrats.oversight.house.gov

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Secret Fed Loans Gave Banks Undisclosed $13B

Secret Fed Loans Gave Banks Undisclosed $13B


After you read this, come back and read Matt Taibbi’s story: Woman Gets Jail For Food-Stamp Fraud; Wall Street Fraudsters Get Bailouts

See if any of this makes any sense?

 

Bloomberg-

The Federal Reserve and the big banks fought for more than two years to keep details of the largest bailout in U.S. history a secret. Now, the rest of the world can see what it was missing.

The Fed didn’t tell anyone which banks were in trouble so deep they required a combined $1.2 trillion on Dec. 5, 2008, their single neediest day. Bankers didn’t mention that they took tens of billions of dollars in emergency loans at the same time they were assuring investors their firms were healthy. And no one calculated until now that banks reaped an estimated $13 billion of income by taking advantage of the Fed’s below-market rates, Bloomberg Markets magazine reports in its January issue.

Saved by the bailout, bankers lobbied against government regulations, a job made easier by the Fed, which never disclosed the details of the rescue to lawmakers even as Congress doled out more money and debated new rules aimed at preventing the next collapse.

[BLOOMBERG]

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IN RE: EXEC. COMPENSATION INVESTIGATION BANK OF AMERICA -MERRILL LYNCH DEPOSITION OF KEN L. LEWIS

IN RE: EXEC. COMPENSATION INVESTIGATION BANK OF AMERICA -MERRILL LYNCH DEPOSITION OF KEN L. LEWIS


EXCERPTS:

Q. At the point in time of this board
meeting, though, you were relating to the board
that you felt you had a commitment from the Fed and
the Treasury to make good on whatever harm is
caused by the increased losses at Merrill Lynch; is
that right?

A. I had verbal commitments from Ben
Bernanke and Hank Paulson that they were going to
see this through, to fill that hole, and have the
market perceive this as a good deal.

MR. CORNGOLD: Isn’t the only way to
fill that hole, though, to give you money,
not to give you money that you would have to
pay back at some interest rate with some
potential equity interest, too?

THE WITNESS: No. I think you have to
separate the fact that, yes, there is still
some short-term paying -it’s more
short-term paying now than we would have had
had all this not happened, but longer term we
still see a strategic benefit. So we saw it
as a short term versus a long term impact on
the company.

MR. CORNGOLD; When you entered into the
initial contract with Merrill Lynch did you
get a fairness opinion about the transaction?

THE WITNESS: Yes.

MR. CORNGOLD: From whom?

THE WITNESS; Chris Flowers something.

MR. CORNGOLD: And did you get a
fairness opinion from anyone about the
transaction that you entered into with the federal government and the Fed?

THE WITNESS: No. MR. CORNGOLD: Did you consider whether you had a legal obligation to do that? THE WITNESS: I would rely on the advice of the general counsel for that.

MR. CORNGOLD: But when you say that, does that mean that you asked and got advice, or that you didn’t ask but relied
THE WITNESS: I would rely on somebody bringing that question forth, and nobody did.

Q. Did you ask anyone to look into whether the oral, verbal commitments from the Fed and Treasury were enforceable?

A. No. I was going on the word of two very respected individuals high up in the American government.

Q. Wasn’t Mr. Paulson, by his instruction, really asking Bank of America shareholders to take a good part of the hit of the Merrill losses?

A. What he was doing was trying to stem a financial disaster in the financial markets, from his perspective.

Q. From your perspective, wasn’t that one
of the effects of what he was doing?

A. Over the short term, yes, but we still
thought we had an entity that filled two big
strategic holes for us and over long term would
still be an interest to the shareholders.

Q. What do you mean by “short term”?

A. Two to three years.

Q. So isn’t that something that any
shareholder at Bank of America who had less
than a three-year time horizon would want
to know?

A. The situation was that everyone felt
like the deal needed to be completed and to be able
to say that, or that they would impose a big risk
to the financial system if it would not.

MR. LAWSKY: When you say “everyone,”
what do you mean?

THE WITNESS: The people that I was
talking to, Bernanke and Paulson.

MR. LAWSKY: Had it been up to you would
you made the disclosure?

THE WITNESS: It wasn’t up to me.

MR. LAWSKY: Had it been up to you.

THE WITNESS: It wasn’t.

MR. CORNGOLD: Why do you say it wasn’t
up to you? Were you instructed not to tell
your shareholders what the transaction was
going to be?

THE WITNESS: I was instructed that “We
do not want a public disclosure.”

MR. CORNGOLD: Who said that to you?

THE WITNESS: Paulson.

MR. CORNGOLD: When did he say that to
you?

THE WITNESS; Sometime after I asked Ben
Bernanke for something in writing.

Q. When did that occur?

A. Which one?

Q. When did Mr. Paulson state that he did
not want a public disclosure?

A. It was sometime late in the year. I
think it’s actually in the minutes.

MR. LIMAN: If you have the next set of
minutes it might help the witness.

Q. What’s your best recollection of what

Mr. Paulson said to you on that point?

A. That was the conversation that I
mentioned that I went to Bernanke to ask the
question, and he didn’t call me back but Hank did.
The request was for a letter stating what they
would do, and he had those two elements in there.
But the thing that we’re talking about is that he
said “We do not want a public disclosure.”

Q. A public disclosure of what?

A. Of what they were going to be doing for us until it was completed.

[…]

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Bernanke: U.S. “close to faltering”

Bernanke: U.S. “close to faltering”


(Reuters) –

The Federal Reserve is prepared to take further steps to help an economy that is “close to faltering,” Fed chairman Ben Bernanke said on Tuesday in his bleakest assessment yet of the fragile U.S. recovery.

Citing anemic employment, depressed confidence, and financial risks from Europe, Bernanke urged lawmakers not to cut spending too quickly in the short term even as they grapple with trimming the long-run budget deficit.

[REUTERS]

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The Fed’s BIG Little $90,000,000,000 Secret

The Fed’s BIG Little $90,000,000,000 Secret


Federal Reserve Lending Revelations Intensify Criticism Of Central Bank’s Secrecy

HuffPO-

In the midst of the global financial crisis in 2008, the Federal Reserve lent Goldman Sachs, Credit Suisse and Royal Bank of Scotland at least $30 billion each at interest rates as low as 0.01 percent with no public disclosure of the details, Bloomberg News reported on Thursday.

The latest revelations about the covert infusions of credit provided by the Fed to some of the world’s largest banks has amplified accusations that the central bank is a power unto itself, operating according to its own devices and in the interest of major financial institutions — and beyond accountability to taxpayers.

“It just points out that this was about secrecy to protect banks basically from embarrassment from transparency, which is not supposed to be what the Fed’s about,” said Dean Baker, co-director of the Center for Economic Policy and Research, in Washington.

“That is the fundamental problem with the Fed,” Baker added. “They’re supposed to be an agency of the government, not an agency of the banks. But reflexively, there they are protecting the banks, again and again and again.”

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In HBO’s ‘Too Big to Fail,’ the Heroes Are Really Zeroes

In HBO’s ‘Too Big to Fail,’ the Heroes Are Really Zeroes


°oO°°O°°Oo°’s

ProPublica-

HBO’s “Too Big To Fail”—I just caught up with it last night; thank you, HBO On Demand—is extraordinarily revealing about the financial crisis. Only its revelations are almost entirely inadvertent.

The movie is set up in the Hollywood conventional way: A gang of misfits, each with a special expertise, is brought together for an impossible mission. There’s Treasury Secretary Henry Paulson, steely eyed at the moment of truth. There’s New York Federal Reserve head Timothy Geithner, the athlete (he doesn’t just jog, but also plays what appears to be squash). And then there’s Federal Reserve chairman Ben Bernanke, the professor with a heart of gold and secret knowledge of the Great Depression.

Ostensibly it’s a story of their success against all odds. Michael Kinsley, reviewing the movie in the New York Times, labeled Hank Paulson [1] the “hero” of the account.

Except that the movie actually depicts something entirely different: failure upon failure. “Too Big To Fail” The Movie isn’t the story of how the Three Musketeers saved the global economy. It’s a story of how the three didn’t see the financial crisis coming; hadn’t prepared for it; made mistake after mistake as it was cresting; and then, in their moment of triumph, made their most colossal blunder of all.

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MAX GARDNER | Why Don’t AGs Want to Get to the Bottom of the Mortgage Mess?

MAX GARDNER | Why Don’t AGs Want to Get to the Bottom of the Mortgage Mess?


via Max Gardner

Gretchen Morgenson’s column in the New York Times yesterday points out a connection we should all be making:  the high-speed, no time to think or do things right mindset of the mortgage industry is to blame for a lot of the problems we’re facing today, and that same mindset seems to be controlling the actions of the Attorneys General right now.  Tom Miller, the Iowa Attorney General leading the talks, told us just last week, “We’re going to move as fast as we can.”

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ARE YOU KIDDING? Fed Investigation Can’t Find 1 Homeowner Wrongfully Foreclosed Upon

ARE YOU KIDDING? Fed Investigation Can’t Find 1 Homeowner Wrongfully Foreclosed Upon


Fed Report Finds No Wrongful Foreclosures By Banks, Consumer Advocates Slam Methodology

Shahien Nasiripour
Shahien Nasiripour HuffPost Reporting shahien@huffingtonpost.com

WASHINGTON, D.C. — A months-long investigation into abusive mortgage practices by the Federal Reserve found no wrongful foreclosures, members of the Fed’s Consumer Advisory Council said Thursday.

During a public meeting attended by Fed chairman Ben Bernanke and other regulators, consumer advocates on the panel criticized federal bank regulators for narrowly defining what constitutes a “wrongful foreclosure.” At least one member of the panel voiced concerns that the public would not take the Fed’s findings of improper practices seriously, since the wide-ranging review did not find a single homeowner who was wrongfully foreclosed upon.

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CONGRESSMAN BRAD MILLER LETTER TO STOP MORTGAGE SERVICER FRAUD

CONGRESSMAN BRAD MILLER LETTER TO STOP MORTGAGE SERVICER FRAUD


The Honorable Timothy Geithner Secretary of the Treasury Department of the Treasury 1500 Pennsylvania Avenue, N.W. Washington, D.C.

The Honorable Edward DeMarco Director (Acting) Federal Housing Finance Agency (FHFA) 1700 G Street, N.W. 4th Floor Washington, DC 20552

The Honorable Sheila Bair Chairman Federal Deposit Insurance Corporation 550 17th Street N.W. Washington D.C., DC 20006

The Honorable Ben S. Bernanke Chairman Board of Governors of the Federal Reserve System 20th Street and Constitution Avenue N.W. Washington, DC

The Honorable Mary L. Schapiro Chairman Securities and Exchange Commission 100 F Street, N.E. Washington, DC 20549

The Honorable John Walsh Comptroller of the Currency (Acting) Administrator of National Banks 250 E Street, S.W. Washington, DC 20219

Dear Secretary Geithner, Chairman Bair, Chairman Shapiro, Acting Director DeMarco, Chairman Bernanke and Controller Walsh:

We are writing to urge that any exception to the credit risk retention requirements of section 941 of the Dodd-Frank Act include rigorous requirements for servicing securitized residential mortgages.

The Act requires that securitizers retain five percent of the credit risk on mortgage-backed securities. The requirement is the subject of a study by Christopher M. James published by the Federal Reserve Bank of San Francisco dated December 13, 2010, and entitled “Mortgage-Backed Securities: How Important Is ‘Skin in the Game’?”, which finds that the requirement will have the intended effect of reducing “moral hazard” and significantly reducing the loss ratios on mortgage-backed securities.

The Act provides for an exception, however, for “qualified residential mortgages” and for other “exemptions, exceptions, and adjustments” to the risk-retention requirement. We strongly urge that you use great care in allowing any exception to the risk retention requirement, and that you be vigilant in assuring that any exception not defeat the purpose of the requirement. Recent experience in financial regulation has been that seemingly modest, reasonable exceptions have swallowed the rules and allowed abusive practices to continue unabated. In considering any requested exception under section 941, please remember that the advocates for rule-swallowing exceptions to other financial regulation have not been entirely candid with regulators or legislators on the likely effect of those exceptions.

The rules adopted pursuant to section 941 must, of course, require rigorous underwriting standards for “qualified residential mortgages” or any other mortgages excepted from the risk retention requirement, but underwriting requirements are not enough. The rules must also address the servicing of securitized mortgages. Much of the turmoil in the housing market, which is largely responsible for the painfully slow recovery, is the result not just of poorly underwritten mortgages, but of conduct by mortgage servicers.

We direct your attention to the “Open Letter to U.S. Regulators Regarding National Loan Servicing Standards” dated December 21, 2010, and signed by 51 people with extensive knowledge of mortgage servicing (the “Rosner-Whalen letter”). We strongly urge that you consider closely the recommendations included in that letter.

The Rosner-Whalen letter makes sensible recommendations regarding the treatment of payments by homeowners, “perverse incentives” in servicer compensation, mortgage documentation, and foreclosure forbearance during mortgage modification efforts.

We especially urge that any exception require that servicers modify mortgages pursuant to established criteria to avoid foreclosure where possible. The statute governing “Farmer Mac” mortgages provides a useful example of such criteria. See 12 U.S.C. 2202a (“Restructuring Distressed Loans”). Foreclosures are catastrophic for homeowners, holders of mortgage-backed securities, the housing market, and the economy as a whole.

The conduct of servicers is largely responsible for much unnecessary hardship. A requirement that servicers modify mortgage according to established criteria to avoid foreclosure can avoid that hardship in the future. Neutral, established criteria will also avoid “tranche warfare” between classes of investors.

We also especially urge that any rule for securitized mortgages require that servicers not be affiliated with the securitizer. There are obvious potential conflicts of interest, and no apparent countervailing justification. At a recent hearing of the House Financial Services Committee, several witnesses from major servicers were unable to offer any advantage in being affiliated with securitizers, other than to offer “full service” to customers. That justification is entirely unpersuasive. Homeowners may select the bank with which they have a credit card or a checking account, but they have no say in who services their mortgage.

In fact, community banks and credit unions have been reluctant to sell the mortgages that they originate to “private-label securitizers” for fear that the mortgages will be serviced by an affiliate of a bank, and the servicer will use that relationship to “cross market” other banking services to the homeowner. Requiring that servicers be independent of banks, therefore, would advance the goal of increasing the availability of credit on reasonable terms to consumers.

The Dodd-Frank Actives provides you ample authority to reform servicing practices, and regulation of mortgage securitization will be ineffective without such reform.

Sincerely,

Rep. Brad Miller [and others]

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WHALEN-ROSNER OPEN LETTER TO U.S. REGULATORS REGARDING NATIONAL LOAN SERVICING STANDARDS

WHALEN-ROSNER OPEN LETTER TO U.S. REGULATORS REGARDING NATIONAL LOAN SERVICING STANDARDS


Re: National Standards for Loan Servicing

Dear Colleagues:

We the undersigned write to you regarding the urgent need to develop national standards for originating, selling and servicing mortgage loans. The private residential mortgage securitization market is frozen as to new issuance. The housing market is suffering from a dearth of credit, which is causing a serious lack of confidence among potential homebuyers.

Widely reported servicer fraud, whether in the foreclosure process or in the systematic assessment of illegal fees against homeowners, is also a serious problem. It’s bad for investors, it’s bad for homeowners, and it’s ultimately bad for a sustainable residential mortgage securitization market and the U.S economy. Fraud is also a symptom of the disease affecting our broader financial system, namely the lack of accountability in the loan servicing industry and the resulting impairment of the value of securities sold to investors.

Continue reading below…

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Grayson Sends Letter to FSOC Regulators on Foreclosure Fraud and Calls for Foreclosure Halt

Grayson Sends Letter to FSOC Regulators on Foreclosure Fraud and Calls for Foreclosure Halt


October 6, 2010

The Honorable Timothy F. Geithner   .The Honorable Sheila Bair
Secretary                                                        . Chairman
Department of the Treasury           . Federal Deposit Insurance Corporation
1500 Pennsylvania Avenue,          . NW 550 17th Street, NW
Washington, DC 20220                     . Washington, DC 20429

The Honorable Ben S. Bernanke                 .  The Honorable Mary Schapiro
Chairman                                                              . Chairman
Board of Governors of the Federal Reserve System    .Securities and Exchange Commission
20th Street and Constitution Ave,                                      .NW 100 F Street, NE
Washington, DC 20551 Washington, DC 20549

The Honorable John G. Walsh                                  .The Honorable Gary Gensler
Acting Comptroller of the Currency                     .Chairman
Office of the Comptroller of the Currency Commodity Futures Trading Commission
250 E St. SW                                                                    . 1155 21st St. NW
Washington, DC 20219                                                .Washington, DC 20581

The Honorable Ed DeMarco                                     .The Honorable Debbie Matz
Acting Director                                                             .Chairman
Federal Housing Finance Agency                         .National Credit Union Administration
1700 G Street,                                                               .NW 1775 Duke Street,
Washington, DC 20552                                              .Alexandria, VA 22314-3428

Dear Secretary Geithner and members of the Financial Stability Oversight Council (FSOC),

The FSOC is tasked with ensuring the financial stability of the United States, which includes identifying and addressing possible systemic risks. There is a well-documented wave of foreclosure fraud sweeping the country that presents such a risk. Bank of America and JP Morgan Chase have both suspended foreclosures in 23 states where that fraud could be uncovered and stopped by the courts. Connecticut has suspended foreclosures.

I write to encourage the FSOC to appoint an emergency task force on foreclosure fraud as a potential systemic risk. I am also writing to ask the members of the FSOC to use their regulatory authority to impose a foreclosure moratorium on all mortgages originated and securitized between 2005-2008, until this task force is able to understand and mitigate the systemic risk posed by the foreclosure fraud crisis.

So far, banks are claiming that the many forged documents uncovered by courts and attorneys represent a simple ‘technical problem’ with foreclosure processes. This is not true. What is happening is fraud to cover up fraud.

The mortgage lending boom saw the proliferation of predatory lending and mortgage fraud, what the FBI called at the time ‘an epidemic of mortgage fraud.’ Much of this was lender-induced.

When lenders – many of whom are now out of business – originally lent money to borrowers, they often did so knowing that the terms of the loans could not possibly be honored. They sought fees, not repayment. These lenders put people in predatory loans, they induced massive amounts of fraud, and Wall Street banks misrepresented these loans to investors when they moved through the securitization chain. They were stealing money from investors, and from homeowners.

Obviously these originators and servicers didn’t keep good records of who owed what to whom because the point was never about getting paid back, it was about moving as much loan volume as possible as quickly and as cheaply as possible. The banks didn’t keep good records, and there is good reason to believe in many if not virtually all cases during this period, failed to transfer the notes, which is the borrower IOUs in accordance with the requirements of their own pooling and servicing agreements. As a result, the notes may be put out of eligibility for the trust under New York law, which governs these securitizations. Potential cures for the note may, according to certain legal experts, be contrary to IRS rules governing REMICs. As a result, loan servicers and trusts simply lack standing to foreclose. The remedy has been foreclosure fraud, including the widespread fabrication of documents.

There are now trillions of dollars of securitizations of these loans in the hands of investors. The trusts holding these loans are in a legal gray area, as the mortgage titles were never officially transferred to the trusts. The result of this is foreclosure fraud on a massive scale, including foreclosures on people without mortgages or who are on time with their payments.

The liability here for the major banks is potentially enormous, and can lead to a systemic risk. Fortunately, the Dodd-Frank financial reform legislation includes a resolution process for these banks. More importantly, these foreclosures are devastating neighborhoods, families, and cities all over the country. Each foreclosure costs tens of thousands of dollars to a municipality, lowers property values, and makes bank failures more likely.

I appreciate your willingness to assess possible systemic risks to the country, and would again encourage you to suspend foreclosures until this problem is understood and its ramifications dealt with.

Sincerely,

Alan Grayson

Member of Congress

Letter to FSOC Calling for Foreclosure Halt

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Global Collapse of the Fiat Money System: Too Big To Fail Global Banks Will Collapse Between Now and First Quarter 2011

Global Collapse of the Fiat Money System: Too Big To Fail Global Banks Will Collapse Between Now and First Quarter 2011


When Quantitative Easing Has Run Its Course and Fails

By Matthias Chang

Global Research, August 31, 2010

Readers of my articles will recall that I have warned as far back as December 2006, that the global banks will collapse when the Financial Tsunami hits the global economy in 2007. And as they say, the rest is history.

Quantitative Easing (QE I) spearheaded by the Chairman of  delayed the inevitable demise of the fiat shadow money banking system slightly over 18 months.

That is why in November of 2009, I was so confident to warn my readers that by the end of the first quarter of 2010 at the earliest or by the second quarter of 2010 at the latest, the global economy will go into a tailspin. The recent alarm that the US economy has slowed down and in the words of Bernanke “the recent pace of growth is less vigorous than we expected” has all but vindicated my analysis. He warned that the outlook is uncertain and the economy “remains vulnerable to unexpected developments”.

Obviously, Bernanke’s words do not reveal the full extent of the fear that has gripped central bankers and the financial elites that assembled at the annual gathering at Jackson Hole, Wyoming. But, you can take it from me that they are very afraid.

Why?

Let me be plain and blunt. The “unexpected developments” Bernanke referred to is the collapse of the global banks. This is FED speak and to those in the loop, this is the dire warning.

So many renowned economists have misdiagnosed the objective and consequences of quantitative easing. Central bankers’ scribes and the global mass media hoodwinked the people by saying that QE will enable the banks to lend monies to cash-starved companies and jump start the economy. The low interest rate regime would encourage all and sundry to borrow, consume and invest.

This was the fairy tale.

Then, there were some economists who were worried that as a result of the FED’s printing press (electronic or otherwise) working overtime, hyper-inflation would set in soon after.

But nothing happened. The multiplier effect of fractional reserve banking did not take off. Bank lending in fact stalled.

Why?

What happened?

Let me explain in simple terms step by step.

1) All the global banks were up to their eye-balls in toxic assets. All the AAA mortgage-backed securities etc. were in fact JUNK. But in the balance sheets of the banks and their special purpose vehicles (SPVs), they were stated to be worth US$ TRILLIONS.

2) The collapse of Lehman Bros and AIG exposed this ugly truth. All the global banks had liabilities in the US$ Trillions. They were all INSOLVENT. The central banks the world over conspired and agreed not to reveal the total liabilities of the global banks as that would cause a run on these banks, as happened in the case of Northern Rock in the U.K.

3) A devious scheme was devised by the FED, led by Bernanke to assist the global banks to unload systematically and in tranches the toxic assets so as to allow the banks to comply with RESERVE REQUIREMENTS under the fractional reserve banking system, and to continue their banking business. This is the essence of the bailout of the global banks by central bankers.

4) This devious scheme was effected by the FED’s quantitative easing (QE) – the purchase of toxic assets from the banks. The FED created “money out of thin air” and used that “money” to buy the toxic assets at face or book value from the banks, notwithstanding they were all junks and at the most, worth maybe ten cents to the dollar. Now, the FED is “loaded” with toxic assets once owned by the global banks. But these banks cannot declare and or admit to this state of affairs. Hence, this financial charade.

5) If we are to follow simple logic, the exercise would result in the global banks flushed with cash to enable them to lend to desperate consumers and cash-starved businesses. But the money did not go out as loans. Where did the money go?

6) It went back to the FED as reserves, and since the FED bought US$ trillions worth of toxic wastes, the “money” (it was merely book entries in the Fed’s books) that these global banks had were treated as “Excess Reserves”. This is a misnomer because it gave the ILLUSION that the banks are cash-rich and under the fractional reserve system would be able to lend out trillions worth of loans. But they did not. Why?

7) Because the global banks still have US$ trillions worth of toxic wastes in their balance sheets. They are still insolvent under the fractional reserve banking laws. The public must not be aware of this as otherwise, it would trigger a massive run on all the global banks!

8) Bernanke, the US Treasury and the global central bankers were all praying and hoping that given time (their estimation was 12 to 18 months) the housing market would recover and asset prices would resume to the levels before the crisis. .

Let me explain: A House was sold for say US$500,000. Borrower has a mortgage of US$450,000 or more. The house is now worth US$200,000 or less. Multiply this by the millions of houses sold between 2000 and 2008 and you will appreciate the extent of the financial black-hole. There is no way that any of the global banks can get out of this gigantic mess. And there is also no way that the FED and the global central bankers through QE can continue to buy such toxic wastes without showing their hands and exposing the lie that these banks are solvent.

It is my estimation that they have to QE up to US$20 trillion at the minimum. The FED and no central banker would dare “create such an amount of money out of thin air” without arousing the suspicions and or panic of sovereign creditors, investors and depositors. It is as good as declaring officially that all the banks are BANKRUPT.

9) But there is no other solution in the short and middle term except another bout of quantitative easing, QE II. Given the above caveat, QE II cannot exceed the amount of the previous QE without opening the proverbial Pandora Box.

10) But it is also a given that the FED will embark on QE II, as under the fractional reserve banking system, if the FED does not purchase additional toxic wastes, the global banks (faced with mounting foreclosures, etc.) will fall short of their reserve requirements.

11) You will also recall that the FED at the height of the crisis announced that interest will be paid on the so-called “excess reserves” of the global banks, thus enabling these banks to “earn” interest. So what we have is a merry-go-round of monies moving from the right pocket to the left pocket at the click of the computer mouse. The FED creates money, uses it to buy toxic assets, and the same money is then returned to the FED by the global banks to earn interest. By this fiction of QE, banks are flushed with cash which enable them to earn interest. Is it any wonder that these banks have declared record profits?

12) The global banks get rid of some of their toxic wastes at full value and at no costs, and get paid for unloading the toxic wastes via interest payments. Additionally, some of the “monies” are used by these banks to purchase US Treasuries (which also pay interests) which in turn allows the US Treasury to continue its deficit spending. THIS IS THE BAILOUT RIP OFF of the century.

Now that you fully understand this SCAM, it is left to be seen how the FED will get away with the next round of quantitative easing – QE II.

Obviously, the FED and the other central banks are hoping that in time, asset prices will recover and resume their previous values before the crisis. This is a fantasy. QE II will fail just as QE I failed to save the banks.

The patient is in intensive care and is for all intent and purposes brain dead, although the heart is still pumping albeit faintly. The Too Big To Fail Banks cannot be rescued and must be allowed to be liquidated. It will be painful, but it is necessary before there is recovery. This is a given.

Warning:

When the ball hits the ceiling fan, sometime early 2011 at the earliest, there will be massive bank runs.

I expect that the FED and other central banks will pre-empt such a run and will do the following:

1) Disallow cash withdrawals from banks beyond a certain amount, say US$1,000 per day; 2) Disallow cash transactions up to a certain amount, say US$10,000 for certain transactions; 3) Transactions (investments) for metals (gold and silver) will be restricted; 4) Worst-case scenario – the confiscation of gold AS HAPPENED IN WORLD WAR II. 5) Imposition of capital controls etc.; 6) Legislations that will compel most daily commercial transactions to be conducted through Debit and or Credit Cards; 7) Legislations to make it a criminal offence for any contraventions of the above.

Solution:

Maintain a bank balance sufficient to enable you to comply with the above potential impositions.

Start diversifying your assets away from dollar assets. Have foreign currencies in sufficient quantities in those jurisdictions where the above anticipated impositions are least likely to be implemented.

CONCLUSION

There will be a financial tsunami (round two) the likes of which the world has never seen.

Global banks will collapse!

Be ready.

© Copyright Matthias Chang, Future Fast Forward, 2010

The url address of this article is: www.globalresearch.ca/index.php?context=va&aid=20853

© 2010-15 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in bernanke, cdo, chain in title, conflict of interest, CONTROL FRAUD, corruption, FED FRAUD, federal reserve board, foreclosure, foreclosure fraud, foreclosures, geithner, securitization, STOP FORECLOSURE FRAUD, sub-prime, trade secrets, Wall StreetComments (2)

Lehman sues JPMorgan for billions in damages: REUTERS

Lehman sues JPMorgan for billions in damages: REUTERS


Jonathan Stempel

NEW YORK
Wed May 26, 2010 7:56pm EDT

The JP Morgan and Chase headquarters is seen in New York in this January 30, 2008 file photo. REUTERS/Shannon Stapleton

NEW YORK (Reuters) – Lehman Brothers Holdings Inc (LEHMQ.PK) on Wednesday sued JPMorgan Chase & Co (JPM.N), accusing the second-largest U.S. bank of illegally siphoning billions of dollars of desperately-needed assets in the days leading up to its record bankruptcy.

Hot Stocks

The lawsuit filed in Manhattan bankruptcy court accused JPMorgan of using its “unparalleled access” to inside details of Lehman’s distress to extract $8.6 billion of collateral in the four business days ahead of Lehman’s September 15, 2008, bankruptcy, including $5 billion on the final business day.

JPMorgan was Lehman’s main “clearing” bank, in which it acts as a go-between in Lehman’s dealings with other parties.

According to the complaint, JPMorgan knew from this relationship that Lehman’s viability was fast weakening, and threatened to deprive Lehman of critical clearing services unless it posted an excessive amount of collateral.

“With this financial gun to Lehman’s head, JPMorgan was able to extract extraordinarily one-sided agreements from Lehman literally overnight,” the complaint said. “Those billions of dollars in collateral rightfully belong to the Lehman estate and its creditors.”

Lehman also said JPMorgan officials including Chief Executive Jamie Dimon decided to extract the collateral after learning from meetings with Federal Reserve Chairman Ben Bernanke and then-U.S. Treasury Secretary Henry Paulson that the government would not rescue Lehman from bankruptcy.

In the widely expected lawsuit, Lehman and its official committee of unsecured creditors are seeking $5 billion of damages, a return of the collateral and other remedies.

JPMorgan spokesman Joe Evangelisti called the lawsuit “meritless,” and said the bank will defend against it.

Any money recovered could increase the payout to creditors. Lehman has also sued Barclays Plc (BARC.L) to recover an $11.2 billion “windfall” from the takeover of U.S. assets.

In March, a bankruptcy judge approved an accord providing for JPMorgan to return several billion dollars of assets to Lehman’s estate, but giving Lehman a right to sue further.

Lehman collapsed after letting its balance sheet swell through exposure to commercial real estate, subprime mortgages and other risky sectors. With $639 billion of assets, Lehman was by far the largest U.S. company to go bankrupt.

EXAMINER REPORT

In his March report on Lehman’s bankruptcy, court-appointed examiner Anton Valukas said Lehman could raise a “colorable claim” against JPMorgan over the collateral demands.

He nevertheless said JPMorgan could raise “substantial defenses” under U.S. bankruptcy law.

Evangelisti contended that “as the examiner’s report makes clear, it was the ill-advised decisions of Lehman and its principals to take on perilous leverage and to double down on subprime mortgages and overpriced commercial real estate — and not conduct by our firm — that led to Lehman’s demise.”

Lehman, though, maintained that JPMorgan extracted the collateral to “catapult” itself ahead of other creditors.

“A century ago, John Pierpont Morgan used his position atop the world of finance to shore up a teetering firm and rescue the nation from the brink of financial collapse,” the complaint said, referring to the Panic of 1907.

“A century later, when the nation faced another epic financial crisis, Morgan’s namesake firm stripped a faltering Lehman Brothers of desperately needed cash,” it added.

The case is In re: Lehman Brothers Holdings Inc et al, U.S. Bankruptcy Court, Southern District of New York, No. 08-13555.

(Reporting by Jonathan Stempel; Additional reporting by Matthew Goldstein; Editing by Phil Berlowitz, Bernard Orr,Gary Hill)

Posted in concealment, conspiracy, corruption, federal reserve board, foreclosure fraud, jpmorgan chase, lehman brothers, naked short sellingComments (0)


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