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    Posted: 06 November 2010 12:45 AM

    BofA Wins Dismissal of Mortgage Securities Lawsuit
    By David Mildenberg and Joel Rosenblatt - Nov 5, 2010 8:14 PM CT
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    Bank of America Corp. won dismissal of a lawsuit claiming its Countrywide Financial Corp. unit made false statements about loan origination practices in selling mortgage-backed securities.

    U.S. District Judge Mariana Pfaelzer in Los Angeles gave investors who brought the complaint 30 days to revise it. After they refile the complaint, the court ?will consider further the other grounds? in the bank?s motion to dismiss it, Pfaelzer wrote in yesterday?s ruling.

    Pfaelzer said in her ruling that investors didn?t sufficiently demonstrate they suffered an injury for the securities they bought, and that the statute of limitations had expired for some claims. Those failings must be addressed in the new complaint, she said.

    Bank of America said that, because the judge?s ruling narrows the scope of claims that would be allowed to proceed in a revised complaint, it expects the securities at issue in the case would decline from 427 offerings with a face value of about $352 billion to about 22 offerings valued at about $31 billion, according to an e-mailed statement.

    The suit claimed documents for mortgages originated by Countrywide and later securitized contained misrepresentations and omissions, and didn?t follow the lender?s own guidelines.

    ?The court?s ruling demonstrates the strict legal hurdles plaintiffs face in bringing these sorts of claims,? said Brian E. Pastuzinski, an attorney at Goodwin Procter LLP in Boston representing Bank of America.

    Christina Royce, a lawyer representing the investors, declined to comment.

    The case is Maine State Retirement System v. Countrywide Financial Corp., 10-cv-00302, U.S. District Court, Central District of California (Los Angeles).

    Link: http://www.bloomberg.com/news/2010-11-05/bofa-says-court-ruling-limits-mortgage-securities-in-lawsuit.html?cmpid=yhoo

    Monday this should help support current valuations.

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    Posted: 06 November 2010 01:23 PM #1

    Eric Landstrom - 06 November 2010 03:45 AM

    BofA Wins Dismissal of Mortgage Securities Lawsuit
    By David Mildenberg and Joel Rosenblatt - Nov 5, 2010 8:14 PM CT
    Tweet (2) LinkedIn Share Print Email
    Bank of America Corp. won dismissal of a lawsuit claiming its Countrywide Financial Corp. unit made false statements about loan origination practices in selling mortgage-backed securities.

    U.S. District Judge Mariana Pfaelzer in Los Angeles gave investors who brought the complaint 30 days to revise it. After they refile the complaint, the court ?will consider further the other grounds? in the bank?s motion to dismiss it, Pfaelzer wrote in yesterday?s ruling.

    Pfaelzer said in her ruling that investors didn?t sufficiently demonstrate they suffered an injury for the securities they bought, and that the statute of limitations had expired for some claims. Those failings must be addressed in the new complaint, she said.

    Bank of America said that, because the judge?s ruling narrows the scope of claims that would be allowed to proceed in a revised complaint, it expects the securities at issue in the case would decline from 427 offerings with a face value of about $352 billion to about 22 offerings valued at about $31 billion, according to an e-mailed statement.

    The suit claimed documents for mortgages originated by Countrywide and later securitized contained misrepresentations and omissions, and didn?t follow the lender?s own guidelines.

    ?The court?s ruling demonstrates the strict legal hurdles plaintiffs face in bringing these sorts of claims,? said Brian E. Pastuzinski, an attorney at Goodwin Procter LLP in Boston representing Bank of America.

    Christina Royce, a lawyer representing the investors, declined to comment.

    The case is Maine State Retirement System v. Countrywide Financial Corp., 10-cv-00302, U.S. District Court, Central District of California (Los Angeles).

    Link: http://www.bloomberg.com/news/2010-11-05/bofa-says-court-ruling-limits-mortgage-securities-in-lawsuit.html?cmpid=yhoo

    Monday this should help support current valuations.

    Sorry to insist, but do you mind refreshing or linking to previous post on your two year investment thesis? Just to be able to follow the previous discussion.

         
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    Posted: 07 November 2010 01:08 AM #2

    BrazilNuts - 06 November 2010 04:23 PM
    Eric Landstrom - 06 November 2010 03:45 AM

    BofA Wins Dismissal of Mortgage Securities Lawsuit
    By David Mildenberg and Joel Rosenblatt - Nov 5, 2010 8:14 PM CT
    Tweet (2) LinkedIn Share Print Email
    Bank of America Corp. won dismissal of a lawsuit claiming its Countrywide Financial Corp. unit made false statements about loan origination practices in selling mortgage-backed securities.

    U.S. District Judge Mariana Pfaelzer in Los Angeles gave investors who brought the complaint 30 days to revise it. After they refile the complaint, the court ?will consider further the other grounds? in the bank?s motion to dismiss it, Pfaelzer wrote in yesterday?s ruling.

    Pfaelzer said in her ruling that investors didn?t sufficiently demonstrate they suffered an injury for the securities they bought, and that the statute of limitations had expired for some claims. Those failings must be addressed in the new complaint, she said.

    Bank of America said that, because the judge?s ruling narrows the scope of claims that would be allowed to proceed in a revised complaint, it expects the securities at issue in the case would decline from 427 offerings with a face value of about $352 billion to about 22 offerings valued at about $31 billion, according to an e-mailed statement.

    The suit claimed documents for mortgages originated by Countrywide and later securitized contained misrepresentations and omissions, and didn?t follow the lender?s own guidelines.

    ?The court?s ruling demonstrates the strict legal hurdles plaintiffs face in bringing these sorts of claims,? said Brian E. Pastuzinski, an attorney at Goodwin Procter LLP in Boston representing Bank of America.

    Christina Royce, a lawyer representing the investors, declined to comment.

    The case is Maine State Retirement System v. Countrywide Financial Corp., 10-cv-00302, U.S. District Court, Central District of California (Los Angeles).

    Link: http://www.bloomberg.com/news/2010-11-05/bofa-says-court-ruling-limits-mortgage-securities-in-lawsuit.html?cmpid=yhoo

    Monday this should help support current valuations.

    Sorry to insist, but do you mind refreshing or linking to previous post on your two year investment thesis? Just to be able to follow the previous discussion.

    Two Americas as an idea as to what to look for:

    http://www.macobserver.com/tmo/forums/viewthread/75570/#486751

    Ancient history of the two Americas:

    http://www.macobserver.com/tmo/forums/viewthread/75371/#484641

    http://www.macobserver.com/tmo/forums/viewthread/75391/P30/#484988

    There are maybe a dozen or more threads where the two Americas thesis is touched on.

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    Posted: 07 November 2010 02:20 AM #3

    Bank of America had a perfect quarter trading with zero loses according to their Q10. Bank of America’s shiny new Calcutta trading desk (legislate that, Congress!) continues to beat everybody earning in Q3 on average $50M per day.


    http://www.sec.gov/Archives/edgar/data/70858/000095012310101545/g24513e10vq.htm

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    Black Swan Counter: 9 (Banks need money, Jobs needs a break, Geithner has no plan, Cuomo’s grandstanding, .Gov needs a hobby, GS works for money, flash crash, is that bubbling crude?).

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    Posted: 08 November 2010 01:11 PM #4

    When BAC ran down to the low $11s, nearly every short covered and many bought call options. Market markers soon realized that the needed to hedge their call-writes buy accumulating the underlying. Hence, a greater than expected rally.

    Now retail shorts are coming in under any manner of excuse but mostly for technical reasons in that the market needs a consolidation-distribution period. MMs will likely begin accumulating during such a period under the thesis that in one year the worst of the ARM recasts and foreclosure overhang will have passed. Litigation is already baked in and as BofA spokesmen have stated, they intend to win the litigation. The unknown is that the next broad market leg up will stem from the big banks raising their dividends. Right now the new dividend guidelines are expected to come out within the month. For shorts, headline risk from dividend guidelines is keeping most pros off of the short side of the trade which is why I don’t expect a drastic pullback for the rest of the year.

    However, money is set aside for an expected pullback on headline risk during next Feb-March as peak ARM recasts dates hit. If all goes well, the market will pull back against QE2 and at that point pros will cover again and go flat out long while call-writing to assign themselves a dividend.

    That’s my BAC playbook at this time and at this moment.

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    Black Swan Counter: 9 (Banks need money, Jobs needs a break, Geithner has no plan, Cuomo’s grandstanding, .Gov needs a hobby, GS works for money, flash crash, is that bubbling crude?).

    For those who look, a flash allows one to see farther.

         
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    Posted: 13 November 2010 05:03 AM #5

    http://online.wsj.com/article/SB10001424052748704865704575610881542970548.html?mod=WSJ_hp_LEFTWhatsNewsCollection

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    Black Swan Counter: 9 (Banks need money, Jobs needs a break, Geithner has no plan, Cuomo’s grandstanding, .Gov needs a hobby, GS works for money, flash crash, is that bubbling crude?).

    For those who look, a flash allows one to see farther.

         
  • Posted: 13 November 2010 03:08 PM #6

    Eric Landstrom - 08 November 2010 05:11 PM

    When BAC ran down to the low $11s, nearly every short covered and many bought call options. Market markers soon realized that the needed to hedge their call-writes buy accumulating the underlying. Hence, a greater than expected rally.

    Now retail shorts are coming in under any manner of excuse but mostly for technical reasons in that the market needs a consolidation-distribution period. MMs will likely begin accumulating during such a period under the thesis that in one year the worst of the ARM recasts and foreclosure overhang will have passed. Litigation is already baked in and as BofA spokesmen have stated, they intend to win the litigation. The unknown is that the next broad market leg up will stem from the big banks raising their dividends. Right now the new dividend guidelines are expected to come out within the month. For shorts, headline risk from dividend guidelines is keeping most pros off of the short side of the trade which is why I don’t expect a drastic pullback for the rest of the year.

    However, money is set aside for an expected pullback on headline risk during next Feb-March as peak ARM recasts dates hit. If all goes well, the market will pull back against QE2 and at that point pros will cover again and go flat out long while call-writing to assign themselves a dividend.

    That’s my BAC playbook at this time and at this moment.


    Cogent.

         
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    Posted: 16 November 2010 09:32 PM #7

    Bank of America art in lobby, telling you WHO THEY REALLY THINK THEY ARE, and by extension who YOU WILL BE!

    This is the first of three in the order of timing of events. You see the classic Masonic checkered floor as part of the landscape that they control. You see the classic blond-haired, blue-eyed Arian ?youth? in the classic Masonic heel-to-heel 90 degree stance. Take note to the burning bush blowing dead West. I see this as the Western World being burned and this is the current state of the dismantling affairs of the U.S. while Americans (in general) go unaware. I see this because of the white man right next to the burning bush and he is wearing a red sweater and blue jeans. Red, white and blue. He represents the majority of unaware Americans and remains distracted via the book he is reading while the bush (which again represents the Western World) is burning to the ground right next to him. Now, take a look at the female puppet on strings being controlled. Could this mean that the next President will be a woman? Most important is the group of characters at the bottom-left. This clearly shows a colonial forefather arguing with modern day ?suits?. This is highly suggestive of constitutionalists arguing with the ?New World? unfolding. Notice they are pointing to the Masonic Arian as the subject at hand? This suggests the Tea Party Movement and the fight against the coming-out of World Government. This is (now) in the first of these three key time eras.

    {my comment, Tan: the burning bush represents God as a burning bush at Mt. Sinai talking to Moses, juxtaposing it against the NWO/Egyptian pyramid with the smoke blowing WEST, is symbolic of the Egyptian practice of the dead being buried to the WEST of the Nile where the sun sets…ergo, the Christian/Jewish God is DEAD. }

    This is clearly inside the FEMA camp ?era? we will soon move towards. You can see the back wall and you can see the side wall with barbed wire. You see the Elite above circling free and naked in their wealth and disgusting power while being separated from the chaos below via the net. They continue to oversee. Key characters in the crowd are Hazmat and Marines carrying rifles. You see all races and creeds as well as a Catholic Bishop, a Nun, a handcuffed man, a gas masked person, etc. You see an active burning industrial building in the background suggesting a crematory (think of the possibility of a mass of dead infected people from a biohazard release.) You see the classic Nazi gold eagle and flags. You see blank street signs suggesting you have nowhere to go. You see blank protest signs suggesting you have no voice. You see a cameraman in the dead center of the bottom of the painting with his camera looking right back at you (with your camera.)

    This is the final sequence preceding the FEMA camp era. Here you see the surviving slave population working below to acquire the wealth of the world. The shovel heads are rich gold in color suggesting gold as the resource to secure. Look at the next level of architecture above ground. You see the higher-level (educated/skilled) slaves re-building the ?New World? while the Elite sleep restfully above in the hills continuing to oversee all operations. Although the basic architecture is similar to the current architecture of society, the picture is highly suggestive of the ?rebuilding era? due to the clear portrayal of clean landscapes and ?work? underway. This is the final era they are working towards once most of us have been eliminated and the ?New World? is underway being rebuilt. What does ?EQ? stand for on the red sign?

    Source: Prison Planet Website

    [ Edited: 16 November 2010 09:41 PM by TanToday ]

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    “Even in the worst of times, someone turns a profit. . ” —#162 Ferengi: Rules of Acquisition

         
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    Posted: 18 November 2010 01:07 PM #8

    Most banks ready to submit their plans for review to raise dividends and share buy-backs.

    Our large domestic banks reinstating dividends will be the catalyst for the next secular bull rally, IMO.

    Disclosure: the Swiss Family Landstrom is net-long financials.

    [ Edited: 18 November 2010 01:16 PM by Eric Landstrom ]

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    Posted: 18 November 2010 03:02 PM #9

    Barney Frank stated that homeowners shouldn’t expect to get a free house over document issues.

    http://voices.washingtonpost.com/political-economy/2010/11/rep_frank_homeowners_should_no.html

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    For those who look, a flash allows one to see farther.

         
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    Posted: 01 December 2010 01:43 AM #10

    There is a valid criticism that it is short-sighted and financially dangerous to own banks with the unfolding mess in REMIC products, representation and warranty violations, headline risk from Wikileak fall-out and and importantly, the very real coming peak in 2011 of foreclosures that paint a bleak overhang on markets going forward.

    The REMIC issue is something of a gaff on everybody’s face. The REMIC law was intended to expand homeownership by allowing entities to securitize mortgages and mortgage backed bonds while avoiding the capital gains taxes. As we recall to securitize a mortgage the mortgage is placed into a trust. However, it isn’t practical for trusts to retain the actual mortgage paper because the trust doesn’t service the mortgage itself. As such, investors into these trusts signed agreements to retain rights of the mortgage but not the actual paper itself. In RE this is common for a seller of RE to retain certain rights of the RE being sold and this practice of withholding something doesn’t raise any eyebrows. That is, until the whole system did its level best to implode. In foreclosure court, only the holder of the paper can legally foreclose. But the legal owner of the rights in the case of REMICs doesn’t hold the mortgage paper, only the rights. And so clever defenses have mounted a “show me that you actually have the paper and legal right to foreclose game.” Sigh.

    More amusing is that if a trust never sees the paper they are investing into and only views a prospectus, the question has been raised whether or not these trusts really were in point of fact backed by real mortgages (conforming or not) or whether these investors were sold thin air and banks owe a boatload of back taxes. In yet another procedural gaff, because the paper hasn’t been directly linked to the trust itself, mortgages have likely been sliced and diced in a variety of ways into different pools and after the fact people were apparently trying to stuff mortgages into these trusts as proof they were there in the first place. At the heart of the issue is the question of whether or not mortgages were actually pooled into trusts that were then sold by banks when in point of fact no mortgages were actually packaged at the time of the sale. The tax issue is that two years after the closing date of a REMIC, the REMIC loses its tax exempt status if new mortgages are added. Whoops: no stuffing after the fact!

    Now let’s put this into our investment context.

    Out on the web there is a vocal group that has been harping on REMIC issues of conveyance into trusts time and time again and their case sounds good until one steps away from the problem and considers what would happen if their bearish case came to pass and every contested REMIC was court ordered to be put back at par value. Which is to say that I’m aware of the REMIC issues of conveyance into trusts and Karl Denninger’s ticker on the subject from November 13th that has been plastered all over the internet. For their part, Moody’s came out on the 16th pushing back against the robo-signing risk while also noting that they believe ability to enforce the letter of the law against accepted industry procedures in the securitization of mortgages and tax exempt status of trusts is “low and extremely low.” Moreover, last week before the Thanksgiving holiday Congress held a hearing to streamline foreclosures. Apart from Karl’s outrage (http://market-ticker.org/akcs-www?post=172390), the gist is that common sense will likely prevail rather than the rule of law and that people who don’t pay their mortgages won’t get a free house and that buyers into those trusts agreed to allow the servicer to retain the notes on behalf of the trusts. 

    So let’s us consider the downside if the bears wildest dreams come to pass and the GSEs and banks are all required to buy back various REMICs because the law conflicts with established procedures among Banks. What happens then?

    1) Banks are on the hook to buy back mortgage-backed-securities.
    2) To avoid economic collapse, the tax payer is on the hook and asked to backstop the stupid banks that face insolvency.
    3) Taxes will rise and overall commerce will contract likely exacerbating an already tenuous unemployment environment.
    4) New homeownership will drop because to cover the additional costs of securitization, lenders will charge even more money.
    5) That’ll drop the value of existing homes and more likely put even more people underwater.
    6) The inflation we all know is coming hits, further slowing housing and reducing homeownership.
    7) And a bunch of unhappy Americans wondering how we got into this position.

    What is likely to happen is either a judge or Congress will rule or modify the law to something like the banks may retain the mortgages and not convey their ownership into the trust for purposes of servicing. This is reasonable since REMIC laws exist in order to increase homeownership and such a ruling would align the letter of the law with the intent of the law. 

    CNBC has two articles today that I find interesting:

    The first is a bit of pragmatism regarding the MBS fiasco:

    http://www.cnbc.com/id/40438972

    The second is that famed MM Kyle Bass is value shopping in C and BAC.

    http://www.cnbc.com/id/40214320

    For my part, and I want to be clear on this: banking is dead money until they are allowed to increase dividends and proceed with share buy-backs. Banking is very likely to be a dead sector all of next year but I do expect a better second half the first half. I own banks because I purchased the stock at or near the bottom last year as any option-writing against my position is material. I also want to be clear that I’m in for a dead decade because of sovereign debt issues and poor leadership in government which is to say that I’ve a bearish outlook.

    Supporting documents:

    http://files.ali-aba.org/files/coursebooks/pdf/CL095_chapter_11.pdf

    [ Edited: 01 December 2010 01:17 PM by Eric Landstrom ]

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    For those who look, a flash allows one to see farther.

         
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    Posted: 01 December 2010 11:51 AM #11

    the gist is that common sense will likely prevail rather than the rule of law

    TRAN"SLATION:-> We USED TO BE a nation RULED BY LAW, but some are willing to toss that aside for RULE BY BANKERS a nation held hostage to the of-by-and for” the predator hordes.

    EVERY SINGLE MASS MELTDOWN in my entire lifetime has been caused by Bankster GREED AND AVARICE, without exception. Our nation is now RULED for the sole benefit of the 1% tied to WS and the predator banking system.

    I simply cannot BELIEVE we have a system that PAYS SAVERS nothing, YET CHARGES them upwards of 20% on Credit Cards.

    When I was younger, they called that USURY and prosecuted loansharks for doing so.

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    “Even in the worst of times, someone turns a profit. . ” —#162 Ferengi: Rules of Acquisition

         
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    Posted: 01 December 2010 01:02 PM #12

    TanToday - 01 December 2010 03:51 PM

    the gist is that common sense will likely prevail rather than the rule of law

    TRAN"SLATION:-> We USED TO BE a nation RULED BY LAW, but some are willing to toss that aside for RULE BY BANKERS a nation held hostage to the of-by-and for” the predator hordes.

    EVERY SINGLE MASS MELTDOWN in my entire lifetime has been caused by Bankster GREED AND AVARICE, without exception. Our nation is now RULED for the sole benefit of the 1% tied to WS and the predator banking system.

    I simply cannot BELIEVE we have a system that PAYS SAVERS nothing, YET CHARGES them upwards of 20% on Credit Cards.

    When I was younger, they called that USURY and prosecuted loansharks for doing so.

    Bruce, the intent of the law was to increase homeownership by allowing lenders to spread the risk of loans to interested investors. If the law is getting in the way of an accepted industry procedure and effectively hindering the intent of the law in the first place, then it is highly likely that the law will be changed.

    Your anger is misplaced. Loans that were securitized (and remember that the biggest securitizers are the GSEs, not banks) allowed for low interest rates because they allowed lenders to package risk and distribute that risk. Lower interest rates is the reversal of the usury of the high interest rate my generation and prior generation paid when we bought our first homes.

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    For those who look, a flash allows one to see farther.

         
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    Posted: 01 December 2010 01:24 PM #13

    Eric Landstrom - 01 December 2010 05:02 PM

    Bruce, the intent of the law was to increase homeownership by allowing lenders to spread the risk of loans to interested investors. If the law is getting in the way of an accepted industry procedure and effectively hindering the intent of the law in the first place, then it is highly likely that the law will be changed.

    Sorry Eric, the LAW requires document procedures and recording be done BY THE LAW. That wasn’t followed. THAT is why they have such a mess. In order to securitize these, slice-n-dice, package, repackage and sell, they bent the LAW, spindled the PROCEEDURES, and stapled the FACTS to allow for this horrid mess caused SOLELY by them not really caring about proper and legal norms, knowing they would LIE and lay this all off on trusting and unsuspecting pension funds, teachers unions, and international organizations that WERE SEEKING LESS RISK, thereby buying AAA rated securities INSTEAD of “risky stocks.”

    Your anger is misplaced. Loans that were securitized (and remember that the biggest securitizers are the GSEs, not banks) allowed for low interest rates because they allowed lenders to package risk and distribute that risk. Lower interest rates is the reversal of the usury of the high interest rate my generation and prior generation paid when we bought our first homes.

    Eric, pull your head out of your pocket here for a second. MOST of these were “low rates” as a TRAP, with escalations, resets, and adjustments. They suckered in the suckers with ‘teaser rates” and a few years into these sinkholes were fully expecting them to be reset at MUCH MUCH higher rates. Remember a rate going FROM 3% to 5% “sounds like ONLY” a two percentage point change, peanuts….BUT in reality that translates into a 66.6% INCREASE. That when they got the bills was a killer. Not to mention the liars loans, the stated income fibbers, and the NEGATIVE AMORTIZATION scams as well, where you payments went UP even with stable interest rates over time.

    No my friend, these guys are whores in three piece suits, they are ECONOMY DESTROYERS the Armageddon troops. They move from scam, to scam, from credit card fraud, to mortgage fraud, to sovereign debt fraud, to lying, deceit, and the ONLY reason they are not all in jail is they OWN the powers that be, finance both parties, and can manipulate laws to PRIVATISE PROFITS, and lay off LOSSES TO THE Joe and Mary Blow on Main Street via bailouts paid by taxes.

    We see them completely differently. I see them as lecherous parasites, you see them as the grease that makes everything else work.

    Actually, bust them up, like they did with STANDARD OIL, pass a few laws making it illegal for any bank to be bigger than 1% of the net assets held by ALL United States banking, That would spread out the risk, and defuse their massive power to bribe, sway, influence, and commit financial crimes under the cover of “too big to fail.”

    [ Edited: 01 December 2010 01:26 PM by TanToday ]

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    “Even in the worst of times, someone turns a profit. . ” —#162 Ferengi: Rules of Acquisition

         
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    Posted: 01 December 2010 04:02 PM #14

    Tan, a couple of years ago there were mortgage brokers on every corner. These were the people that were the largest piece of the fraud. I personally know one of the crooks, he actually offered me a job. When I started asking questions, his reply was, we don’t care if they repay or can repay, we sell the paper as soon as it is inked and take our money and run. There were thousands of the operations, some had even become large, which made dealing with the banks easier.

    What I find revolting is the fact that 3 years ago I proposed a rate freeze or modification program. (I had done one several years earlier) Not until the system blew up did things like that start to happen. As I have said in the past and will continue to say, the financial collapse was no accident, the take down of our financial system was the greatest theft in the history of the world.  :-x

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    Adversity does not just build character, it reveals it.

         
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    Posted: 01 December 2010 08:58 PM #15

    mbeauch - 01 December 2010 08:02 PM

    Tan, a couple of years ago there were mortgage brokers on every corner. These were the people that were the largest piece of the fraud.  :-x

    They were merely the conduits to the FRAUDSTERS.

    Look what happened when the BIGGIES got put under the spotlight, they stopped buying these bogus loans. Without THEM to take them immediately off the hands of the originators, OR enforcing standard strict underwriting requirements, the local yahoo’s would not have been able to ORIGINATE this trash trail paper fiasco mess.

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    “Even in the worst of times, someone turns a profit. . ” —#162 Ferengi: Rules of Acquisition