Monday, October 25, 2010

Uncharted Foreclosure Mess

We've never been here before. A land where foreclosures are rampant and there's a good chance many rules have been broken by the banks along the way. How do you think they'd deal with us if we broke the rules? I've collected a batch of articles from the past few days that will shed some light on the problems, but I'm afraid I don't have a simple easy solution for this one.

Foreclosuregate: Time to Break Up the Too-Big-to-Fail Banks?: "

by Ellen Brown

Looming losses from the mortgage scandal dubbed "foreclosuregate"
may qualify as the sort of systemic risk that, under the new financial
reform bill, warrants the breakup of the too-big-to-fail banks. The
Kanjorski amendment allows federal regulators to pre-emptively break up
large financial institutions that-for any reason-pose a threat to U.S.
financial or economic stability.

Foreclosure Moratorium Is Only Sane Response to Shocking Wall Street Mortgage Scams

Don’t Believe The Bank Lobby: Foreclosure Fraud Is Bad For Homeowners And The Economy

Banker-Run Third Way Opposes Foreclosure Moratorium On Banks

Foreclosuregate Fallout: How Bad Can It Get For Wall Street?

The Elephant In The Foreclosure Fraud Room: Second Liens

The Monster: How a Gang of Predatory Lenders and Bankers Fleeced America, and Launched a Global Crisis

Update: Wall Street wrecker/savior, electric-kool-aid-in-a-can-man and my current favorite author Matt Taibbi confirms my fears:

"The truth, and I'll get into this in detail when the magazine piece comes out, is that this foreclosure fiasco is a story about wide-scale bureaucratic fraud, with a kind of mortgage counterfeiting and a gangbang mentality with regard to the securitization process has infected the entire system. Since mortgages and mortgage-backed securities are in everything — in your pensions, in insurance portfolios, on the balance sheet of the Fed and its bailout facilities (making all Americans stakeholders in subprime notes) — a wave of phantom and/or mismarked mortgages has the potential to wreck the entire economy, which is why everyone from Ben Bernanke on down is shitting bricks as this story (and disclosures like this BOFA thing) unfolds. This business is, believe me, a LOT worse than even Bank of America is admitting, and it's not confined to just a few reckless banks. Anyway, more to come later."

I really like how he lays it all out there. Thank you Mr. Taibbi, I will plug your new book later.

Update: James Howard Kunstler chimes in.

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