Obama Goes All Out For Dirty Banker Deal

[Arraya]

http://www.rollingstone.com/politics/blogs/taibblog/obama-goes-all-out-for-dirty-banker-deal-20110824

A power play is underway in the foreclosure arena, according to the New York Times.

On the one side is Eric Schneiderman, the New York Attorney General, who is conducting his own investigation into the era of securitizations – the practice of chopping up assets like mortgages and converting them into saleable securities – that led up to the financial crisis of 2007-2008.

On the other side is the Obama administration, the banks, and all the other state attorneys general.

This second camp has cooked up a deal that would allow the banks to walk away with just a seriously discounted fine from a generation of fraud that led to millions of people losing their homes.

The idea behind this federally-guided “settlement” is to concentrate and centralize all the legal exposure accrued by this generation of grotesque banker corruption in one place, put one single price tag on it that everyone can live with, and then stuff the details into a titanium canister before shooting it into deep space.

This is all about protecting the banks from future enforcement actions on both the civil and criminal sides. The plan is to provide year-after-year, repeat-offending banks like Bank of America with cost certainty, so that they know exactly how much they’ll have to pay in fines (trust me, it will end up being a tiny fraction of what they made off the fraudulent practices) and will also get to know for sure that there are no more criminal investigations in the pipeline.

This deal will also submarine efforts by both defrauded investors in MBS and unfairly foreclosed-upon homeowners and borrowers to obtain any kind of relief in the civil court system. The AGs initially talked about $20 billion as a settlement number, money that would “toward loan modifications and possibly counseling for homeowners,” as Gretchen Morgenson reported the other day.

The banks, however, apparently “balked” at paying that sum, and no doubt it will end up being a lesser amount when the deal is finally done.

To give you an indication of how absurdly small a number even $20 billion is relative to the sums of money the banks made unloading worthless crap subprime assets on foreigners, pension funds and other unsuspecting suckers around the world, consider this: in 2008 alone, the state pension fund of Florida, all by itself, lost more than three times that amount ($62 billion) thanks in significant part to investments in these deadly MBS.

So this deal being cooked up is the ultimate Papal indulgence. By the time that $20 billion (if it even ends up being that high) gets divvied up between all the major players, the broadest and most destructive fraud scheme in American history, one that makes the S&L crisis look like a cheap liquor store holdup, will be safely reduced to a single painful but eminently survivable one-time line item for all the major perpetrators.

snip

Why? My theory is that the Obama administration is trying to secure its 2012 campaign war chest with this settlement deal. If Barry can make this foreclosure thing go away for the banks, you can bet he’ll win the contributions battle against the Republicans next summer.

Which is good for him, I guess. But it seems to me that it might be time to wonder if is this the most disappointing president we’ve ever had.

[Allan from Fallbrook]

Arraya: Something else to think about here. If the banks most at fault were assessed a fine anywhere near their culpability, they’d fail. Pure and simple. Buffett had to intervene to prop up BofA (which makes Buffett’s “visit” to discuss “jobs” with Obama during Obama’s vacation in the Vineyard somewhat suspicious), as BofA was widely reported to be in bad shape.

The mess is not gone, and the crisis is not over. The gov’t and the Fed have papered it over, but the rot is still there.

[Allan from Fallbrook]

Arraya: Something else to think about here. If the banks most at fault were assessed a fine anywhere near their culpability, they’d fail. Pure and simple. Buffett had to intervene to prop up BofA (which makes Buffett’s “visit” to discuss “jobs” with Obama during Obama’s vacation in the Vineyard somewhat suspicious), as BofA was widely reported to be in bad shape.

The mess is not gone, and the crisis is not over. The gov’t and the Fed have papered it over, but the rot is still there.

[Allan from Fallbrook]

Arraya: Something else to think about here. If the banks most at fault were assessed a fine anywhere near their culpability, they’d fail. Pure and simple. Buffett had to intervene to prop up BofA (which makes Buffett’s “visit” to discuss “jobs” with Obama during Obama’s vacation in the Vineyard somewhat suspicious), as BofA was widely reported to be in bad shape.

The mess is not gone, and the crisis is not over. The gov’t and the Fed have papered it over, but the rot is still there.

[Allan from Fallbrook]

Arraya: Something else to think about here. If the banks most at fault were assessed a fine anywhere near their culpability, they’d fail. Pure and simple. Buffett had to intervene to prop up BofA (which makes Buffett’s “visit” to discuss “jobs” with Obama during Obama’s vacation in the Vineyard somewhat suspicious), as BofA was widely reported to be in bad shape.

The mess is not gone, and the crisis is not over. The gov’t and the Fed have papered it over, but the rot is still there.

[Allan from Fallbrook]

Arraya: Something else to think about here. If the banks most at fault were assessed a fine anywhere near their culpability, they’d fail. Pure and simple. Buffett had to intervene to prop up BofA (which makes Buffett’s “visit” to discuss “jobs” with Obama during Obama’s vacation in the Vineyard somewhat suspicious), as BofA was widely reported to be in bad shape.

The mess is not gone, and the crisis is not over. The gov’t and the Fed have papered it over, but the rot is still there.

[Arraya]

On that note:

http://theautomaticearth.blogspot.com/

Soon as it started, we knew it had to end. You can’t fake it forever.

Much as I’d like to see the end of the extend and pretend game, I’m sort of pretty convinced that it’s the only thing left standing between the world as we knew it and the demise of the financial and political system that went along with it. And there’s a whole bunch of skin in the game that ain’t preparing to give up all that easily.

snip

Now, let’s get this straight. Is banning short selling equivalent to telling outright lies? No it’s not. But it IS equivalent to not telling the truth. And that is, whatever you may think about this, a strange thing to be confirmed in official policy when it comes to what publicly traded companies are worth.

Remember free markets, how they are supposed to be efficient and rational and all, based on full information for all participants? Well, all of these things, FASB 157, IFRS9, and any and all short-selling bans, they serve one purpose and one only: to obscure the facts from the public, so they can never make any decisions based on full disclosure.

Financial institutions are not only permitted to withhold information from their shareholders, they’re actively assisted -and one might add encouraged- in doing so.

And that’s not going to change. The bordering-on-criminal-negligence deal on mortgage fraud the US government is preparing for its banks is only the last example we need to bring that home. Just another detail that confirms the overall pattern.

The big flipside of it all, as I said before, is that you can’t fake it forever. And once you realize that you will never get full information on the value of bank assets, you’re going to sell their stocks and never go back. Unless, and here we are in our Wile E. Coyote moment, you’re the sort of investor that bets on governments forking over ever more taxpayer funds in order to make you hold on to those stocks.

We can all try and determine what Bank of America’s financial situation is really like, and Henry Blodget does a reasonable job of it in The Truth About Bank of America. The point is, though, that it’s all just a guessing game for even the most in the know experts, since the government has freed all banks from their legal commitments concerning both fair value and the truthful disclosure of information related to it. Yes, it may be somewhat interesting to know whether Bank of America has $50 billion or $200 billion in undisclosed liabilities. But the political system has guaranteed that you’ll never find out the real number. Until, perhaps, the bank goes poof.

Which means that’s it’s not about Bank of America. It may be the worst of the bad apples, but so what? The entire basket full of them is rotten to the core. It’s about political systems that break their own laws in order to facilitate the continued provision of misinformation concerning publicly traded institutions.

And as much as you may or may not trust or mistrust the financial markets, they are the only option left for finding the truth about these institutions.

[Arraya]

On that note:

http://theautomaticearth.blogspot.com/

Soon as it started, we knew it had to end. You can’t fake it forever.

Much as I’d like to see the end of the extend and pretend game, I’m sort of pretty convinced that it’s the only thing left standing between the world as we knew it and the demise of the financial and political system that went along with it. And there’s a whole bunch of skin in the game that ain’t preparing to give up all that easily.

snip

Now, let’s get this straight. Is banning short selling equivalent to telling outright lies? No it’s not. But it IS equivalent to not telling the truth. And that is, whatever you may think about this, a strange thing to be confirmed in official policy when it comes to what publicly traded companies are worth.

Remember free markets, how they are supposed to be efficient and rational and all, based on full information for all participants? Well, all of these things, FASB 157, IFRS9, and any and all short-selling bans, they serve one purpose and one only: to obscure the facts from the public, so they can never make any decisions based on full disclosure.

Financial institutions are not only permitted to withhold information from their shareholders, they’re actively assisted -and one might add encouraged- in doing so.

And that’s not going to change. The bordering-on-criminal-negligence deal on mortgage fraud the US government is preparing for its banks is only the last example we need to bring that home. Just another detail that confirms the overall pattern.

The big flipside of it all, as I said before, is that you can’t fake it forever. And once you realize that you will never get full information on the value of bank assets, you’re going to sell their stocks and never go back. Unless, and here we are in our Wile E. Coyote moment, you’re the sort of investor that bets on governments forking over ever more taxpayer funds in order to make you hold on to those stocks.

We can all try and determine what Bank of America’s financial situation is really like, and Henry Blodget does a reasonable job of it in The Truth About Bank of America. The point is, though, that it’s all just a guessing game for even the most in the know experts, since the government has freed all banks from their legal commitments concerning both fair value and the truthful disclosure of information related to it. Yes, it may be somewhat interesting to know whether Bank of America has $50 billion or $200 billion in undisclosed liabilities. But the political system has guaranteed that you’ll never find out the real number. Until, perhaps, the bank goes poof.

Which means that’s it’s not about Bank of America. It may be the worst of the bad apples, but so what? The entire basket full of them is rotten to the core. It’s about political systems that break their own laws in order to facilitate the continued provision of misinformation concerning publicly traded institutions.

And as much as you may or may not trust or mistrust the financial markets, they are the only option left for finding the truth about these institutions.

[Arraya]

On that note:

http://theautomaticearth.blogspot.com/

Soon as it started, we knew it had to end. You can’t fake it forever.

Much as I’d like to see the end of the extend and pretend game, I’m sort of pretty convinced that it’s the only thing left standing between the world as we knew it and the demise of the financial and political system that went along with it. And there’s a whole bunch of skin in the game that ain’t preparing to give up all that easily.

snip

Now, let’s get this straight. Is banning short selling equivalent to telling outright lies? No it’s not. But it IS equivalent to not telling the truth. And that is, whatever you may think about this, a strange thing to be confirmed in official policy when it comes to what publicly traded companies are worth.

Remember free markets, how they are supposed to be efficient and rational and all, based on full information for all participants? Well, all of these things, FASB 157, IFRS9, and any and all short-selling bans, they serve one purpose and one only: to obscure the facts from the public, so they can never make any decisions based on full disclosure.

Financial institutions are not only permitted to withhold information from their shareholders, they’re actively assisted -and one might add encouraged- in doing so.

And that’s not going to change. The bordering-on-criminal-negligence deal on mortgage fraud the US government is preparing for its banks is only the last example we need to bring that home. Just another detail that confirms the overall pattern.

The big flipside of it all, as I said before, is that you can’t fake it forever. And once you realize that you will never get full information on the value of bank assets, you’re going to sell their stocks and never go back. Unless, and here we are in our Wile E. Coyote moment, you’re the sort of investor that bets on governments forking over ever more taxpayer funds in order to make you hold on to those stocks.

We can all try and determine what Bank of America’s financial situation is really like, and Henry Blodget does a reasonable job of it in The Truth About Bank of America. The point is, though, that it’s all just a guessing game for even the most in the know experts, since the government has freed all banks from their legal commitments concerning both fair value and the truthful disclosure of information related to it. Yes, it may be somewhat interesting to know whether Bank of America has $50 billion or $200 billion in undisclosed liabilities. But the political system has guaranteed that you’ll never find out the real number. Until, perhaps, the bank goes poof.

Which means that’s it’s not about Bank of America. It may be the worst of the bad apples, but so what? The entire basket full of them is rotten to the core. It’s about political systems that break their own laws in order to facilitate the continued provision of misinformation concerning publicly traded institutions.

And as much as you may or may not trust or mistrust the financial markets, they are the only option left for finding the truth about these institutions.

[Arraya]

On that note:

http://theautomaticearth.blogspot.com/

Soon as it started, we knew it had to end. You can’t fake it forever.

Much as I’d like to see the end of the extend and pretend game, I’m sort of pretty convinced that it’s the only thing left standing between the world as we knew it and the demise of the financial and political system that went along with it. And there’s a whole bunch of skin in the game that ain’t preparing to give up all that easily.

snip

Now, let’s get this straight. Is banning short selling equivalent to telling outright lies? No it’s not. But it IS equivalent to not telling the truth. And that is, whatever you may think about this, a strange thing to be confirmed in official policy when it comes to what publicly traded companies are worth.

Remember free markets, how they are supposed to be efficient and rational and all, based on full information for all participants? Well, all of these things, FASB 157, IFRS9, and any and all short-selling bans, they serve one purpose and one only: to obscure the facts from the public, so they can never make any decisions based on full disclosure.

Financial institutions are not only permitted to withhold information from their shareholders, they’re actively assisted -and one might add encouraged- in doing so.

And that’s not going to change. The bordering-on-criminal-negligence deal on mortgage fraud the US government is preparing for its banks is only the last example we need to bring that home. Just another detail that confirms the overall pattern.

The big flipside of it all, as I said before, is that you can’t fake it forever. And once you realize that you will never get full information on the value of bank assets, you’re going to sell their stocks and never go back. Unless, and here we are in our Wile E. Coyote moment, you’re the sort of investor that bets on governments forking over ever more taxpayer funds in order to make you hold on to those stocks.

We can all try and determine what Bank of America’s financial situation is really like, and Henry Blodget does a reasonable job of it in The Truth About Bank of America. The point is, though, that it’s all just a guessing game for even the most in the know experts, since the government has freed all banks from their legal commitments concerning both fair value and the truthful disclosure of information related to it. Yes, it may be somewhat interesting to know whether Bank of America has $50 billion or $200 billion in undisclosed liabilities. But the political system has guaranteed that you’ll never find out the real number. Until, perhaps, the bank goes poof.

Which means that’s it’s not about Bank of America. It may be the worst of the bad apples, but so what? The entire basket full of them is rotten to the core. It’s about political systems that break their own laws in order to facilitate the continued provision of misinformation concerning publicly traded institutions.

And as much as you may or may not trust or mistrust the financial markets, they are the only option left for finding the truth about these institutions.

[Arraya]

On that note:

http://theautomaticearth.blogspot.com/

Soon as it started, we knew it had to end. You can’t fake it forever.

Much as I’d like to see the end of the extend and pretend game, I’m sort of pretty convinced that it’s the only thing left standing between the world as we knew it and the demise of the financial and political system that went along with it. And there’s a whole bunch of skin in the game that ain’t preparing to give up all that easily.

snip

Now, let’s get this straight. Is banning short selling equivalent to telling outright lies? No it’s not. But it IS equivalent to not telling the truth. And that is, whatever you may think about this, a strange thing to be confirmed in official policy when it comes to what publicly traded companies are worth.

Remember free markets, how they are supposed to be efficient and rational and all, based on full information for all participants? Well, all of these things, FASB 157, IFRS9, and any and all short-selling bans, they serve one purpose and one only: to obscure the facts from the public, so they can never make any decisions based on full disclosure.

Financial institutions are not only permitted to withhold information from their shareholders, they’re actively assisted -and one might add encouraged- in doing so.

And that’s not going to change. The bordering-on-criminal-negligence deal on mortgage fraud the US government is preparing for its banks is only the last example we need to bring that home. Just another detail that confirms the overall pattern.

The big flipside of it all, as I said before, is that you can’t fake it forever. And once you realize that you will never get full information on the value of bank assets, you’re going to sell their stocks and never go back. Unless, and here we are in our Wile E. Coyote moment, you’re the sort of investor that bets on governments forking over ever more taxpayer funds in order to make you hold on to those stocks.

We can all try and determine what Bank of America’s financial situation is really like, and Henry Blodget does a reasonable job of it in The Truth About Bank of America. The point is, though, that it’s all just a guessing game for even the most in the know experts, since the government has freed all banks from their legal commitments concerning both fair value and the truthful disclosure of information related to it. Yes, it may be somewhat interesting to know whether Bank of America has $50 billion or $200 billion in undisclosed liabilities. But the political system has guaranteed that you’ll never find out the real number. Until, perhaps, the bank goes poof.

Which means that’s it’s not about Bank of America. It may be the worst of the bad apples, but so what? The entire basket full of them is rotten to the core. It’s about political systems that break their own laws in order to facilitate the continued provision of misinformation concerning publicly traded institutions.

And as much as you may or may not trust or mistrust the financial markets, they are the only option left for finding the truth about these institutions.

[Anonymous]

The AGs initially talked about $20 billion as a settlement number, money that would “toward loan modifications and possibly counseling for homeowners,” as Gretchen Morgenson reported the other day.

For those that aren’t familiar with investment fraud, here’s a key thing to remember: When the scam collapses, the money is gone.

The article confirms this reality just a few sentences later:

To give you an indication of how absurdly small a number even $20 billion is relative to the sums of money […]

So maybe they get back $20 billion out of a few trillion lost? How many pennies on the dollar is that?

Let me say it again: The money is gone. Just like Maddoff’s money is gone, just like Stanford’s money is gone. There ain’t no getting it back. There is no compensation.

So we can clog up the legal system and spend countless millions in the hope of squeezing out some sort of restitution, but in the end it amounts to nothing.

After the Civil War, Andrew Johnson pardoned or chose not to prosecute the Confederate leadership (including Jefferson Davis.) Some of the greatest traitors in American history were allowed to walk free. Why?

Because it couldn’t fix anything. It wouldn’t bring back the dead, and it would only re-open the wounds.

It’s over folks. The money is lost. A world with perfect justice comes at too high a cost – if it is even possible.

Better to focus our resources on building the future instead of futile attempts to remedy the past.

[Anonymous]

The AGs initially talked about $20 billion as a settlement number, money that would “toward loan modifications and possibly counseling for homeowners,” as Gretchen Morgenson reported the other day.

For those that aren’t familiar with investment fraud, here’s a key thing to remember: When the scam collapses, the money is gone.

The article confirms this reality just a few sentences later:

To give you an indication of how absurdly small a number even $20 billion is relative to the sums of money […]

So maybe they get back $20 billion out of a few trillion lost? How many pennies on the dollar is that?

Let me say it again: The money is gone. Just like Maddoff’s money is gone, just like Stanford’s money is gone. There ain’t no getting it back. There is no compensation.

So we can clog up the legal system and spend countless millions in the hope of squeezing out some sort of restitution, but in the end it amounts to nothing.

After the Civil War, Andrew Johnson pardoned or chose not to prosecute the Confederate leadership (including Jefferson Davis.) Some of the greatest traitors in American history were allowed to walk free. Why?

Because it couldn’t fix anything. It wouldn’t bring back the dead, and it would only re-open the wounds.

It’s over folks. The money is lost. A world with perfect justice comes at too high a cost – if it is even possible.

Better to focus our resources on building the future instead of futile attempts to remedy the past.

[Anonymous]

The AGs initially talked about $20 billion as a settlement number, money that would “toward loan modifications and possibly counseling for homeowners,” as Gretchen Morgenson reported the other day.

For those that aren’t familiar with investment fraud, here’s a key thing to remember: When the scam collapses, the money is gone.

The article confirms this reality just a few sentences later:

To give you an indication of how absurdly small a number even $20 billion is relative to the sums of money […]

So maybe they get back $20 billion out of a few trillion lost? How many pennies on the dollar is that?

Let me say it again: The money is gone. Just like Maddoff’s money is gone, just like Stanford’s money is gone. There ain’t no getting it back. There is no compensation.

So we can clog up the legal system and spend countless millions in the hope of squeezing out some sort of restitution, but in the end it amounts to nothing.

After the Civil War, Andrew Johnson pardoned or chose not to prosecute the Confederate leadership (including Jefferson Davis.) Some of the greatest traitors in American history were allowed to walk free. Why?

Because it couldn’t fix anything. It wouldn’t bring back the dead, and it would only re-open the wounds.

It’s over folks. The money is lost. A world with perfect justice comes at too high a cost – if it is even possible.

Better to focus our resources on building the future instead of futile attempts to remedy the past.

[Anonymous]

The AGs initially talked about $20 billion as a settlement number, money that would “toward loan modifications and possibly counseling for homeowners,” as Gretchen Morgenson reported the other day.

For those that aren’t familiar with investment fraud, here’s a key thing to remember: When the scam collapses, the money is gone.

The article confirms this reality just a few sentences later:

To give you an indication of how absurdly small a number even $20 billion is relative to the sums of money […]

So maybe they get back $20 billion out of a few trillion lost? How many pennies on the dollar is that?

Let me say it again: The money is gone. Just like Maddoff’s money is gone, just like Stanford’s money is gone. There ain’t no getting it back. There is no compensation.

So we can clog up the legal system and spend countless millions in the hope of squeezing out some sort of restitution, but in the end it amounts to nothing.

After the Civil War, Andrew Johnson pardoned or chose not to prosecute the Confederate leadership (including Jefferson Davis.) Some of the greatest traitors in American history were allowed to walk free. Why?

Because it couldn’t fix anything. It wouldn’t bring back the dead, and it would only re-open the wounds.

It’s over folks. The money is lost. A world with perfect justice comes at too high a cost – if it is even possible.

Better to focus our resources on building the future instead of futile attempts to remedy the past.

[Author]

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