40 states, attorneys general, bailout, BofA, Chase, Congress, David Axelrod, Dylan Ratigan, financial reform, foreclosure, fraud, insolvent, Karl Denninger, Market Ticker, mortgages, national moratorium, resolution authority, securities, Wall Street, White House
To reiterate, the fraud in foreclosures that we’re seeing now is just the tip of the iceberg. The purpose is to try and cover up, and cover for, the fraud in the mortgage process all the way back to the origination of the mortgages, which were then packaged into securities and fraudulently sold to investors as AAA quality, a rating gained by paying off the ratings agencies. As our parents always told us, one lie requires another one to cover up the first one, which requires another lie to cover up the second one, and so on, and so on, and…….
In my opinion, that’s why the Senate tried to sneak through the legislation that President Obama vetoed—it would have given the big banks protection from liability in this entire mess. As an aside–again just my opinion– but the only reason the president vetoed the bill was because of the attention it received and the light that was shone on its alleged “unintended consequences” (and if you’ll buy that….) My cynical nature when it comes to politicians tells me that “sending the bill back for modifications” translates into, ‘We’ll try again when the heat’s off.’
It’s also why, according to David Axelrod, the hope in the White House is that “this moves rapidly and that this gets unwound very, very quickly.” And why the White House opposes a national moratorium on foreclosures. A moratorium would give investigators and especially some 40 states’ attorneys general time to delve back into fraud and deceit at every level of the process
As Mr. Denninger explained, the only remedy is to force the big banks to buy back the toxic securities that they sold to investors under false pretenses. They can’t do that, which means Chase, BofA, et al, are insolvent. Actually, they’re insolvent now but for the phony profits from peddling this garbage to unsuspecting investors.
There is a provision in the financial reform legislation for resolution authority, that is breaking up large financial institutions that pose a “systemic risk” to the entire economy. Will Congress use it or will they do what they have done in the past and bail out their Wall Street cronies and contributors—again. If Republicans take control of Congress will they hold true to their campaign rhetoric of “no more bailouts” or will they dance to the tune of their big donors on Wall Street?
We may soon find out.