Another Bailout in the Making?

[beauanderos]

Foreclosuregate cont.

The Foreclosure Crisis shows no signs of abating, and the controversy seems to grow day by day, as new details emerge. As top bankruptcy attorney Max Gardner II put it: "This is not an oops. This is not a technical problem. This is not even sloppiness," and as a result the problem is "endemic, and its effects will be felt for years." His remark was in response to reassurances given by Bank of America CEO, Brian Moynihan. Brian, you know what pathological lying is a sign of, right?

So whats the big deal with this Foreclosure Crisis, some banks have tried to foreclose on homes, and now the courts have told them they are NOT ALLOWED to foreclose, because of missing paperwork. Can't the paperwork be found, or completed now? The answer is an emphatic NO. Ultimately this will likely lead to another banker bailout! Its a long story, but... It all goes back to the heyday of the Real Estate Bubble, 2005-2008. Banks were getting very creative with ways to cash in on the bubble, and as a result took shortcuts and also attempted to set up tax-avoidance schemes.

One of these schemes went by the name of MERS. It is basically an electronic database, set up to "[dodge] state statutes requiring a fee to be paid to establish a formal record each time [a property's] title changes hands." Hmmm... The arrangement was good enough for the ratings agencies, but the courts have rightly ruled that MERS has 'broken the chain of title". As Rep. Alan Grayson put it: "As a result, loan servicers and trusts simply lack standing to foreclose. The remedy has been foreclosure fraud, including the widespread fabrication of documents."

Without the ability to foreclose, the lenders will have to consider modifying the loans of people who are unable to pay. This means accepting lower payments, or decreasing the amount owing. That in turn means recording massive MASSIVE losses for the banks, enough even to render them insolvent. No big deal, right, the banks will just demand another bailout? Exactly. And that is exactly why Foreclosuregate is a big deal.

The Economist tried to explain that it has happened in part due to "a securitisation process that is even more broken than anyone imagined". As a result of the fraud that has been uncovered "banks are [being] forced to buy back growing piles of poorly underwritten loans". That means banks tried to pass along bad debts to others under the guise of 'investments', but are now ending up stuck with them.

Now if that meant bankruptcy for these Wall St. banks, and unemployment for the ones responsible for this mess everything would be alright. But Wall St. has shown time and time again that they have significant pull in Washington, and surely they are concocting the means for the taxpayer to put Humpty-Dumpty together again! The next leg of this crisis will either be bankruptcy for the Too Big To Fail banks involved in this mess, or it will be ANOTHER bailout of Wall St by the already cash-strapped American citizen.

http://psychonews.site90.net/foreclosuregate.html

[AGCoinHunter]

I see QE2 was announced today. Hell why dont we just go ahead and do round 3 and 4 while we are at it. Its just paper and God knows we have a lot of trees.