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• On This Day In History December 23 by TheMomCat
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• Investigating Fannie & Freddie But Not The Banks by: TheMomCat
• The Colbert Nation Super PAC Presidential Primary by: ek hornbeck
• Get Out Of Jail Free by: ek hornbeck

This is an Open Thread

Crossposted from The Stars Hollow Gazette

(h/t Calculated Risk)

Details of Mortgage Servicing Settlement Between Banks and AGs Begin to Emerge

By Massimo Calabresi, Time Magazine

December 23, 2011

In return for the $5 billion in cash and the $20 billion in credits, the banks would be released from claims against them for servicing and foreclosure abuses that might be brought against them by the states and the federal government. The states also release the banks from origination claims, that is, claims they might face for all the fraud and duplicity they engaged in when they made bad loans at the height of the housing craze. The banks do not get immunity or a release of for individual claims by homeowners-just a release from past practices State- and Federal-initiated claims. They also don’t get released for securitization abuses of the kind Citibank and Goldman Sachs have been investigated for.

The Iowa AG’s office, which led the negotiations, is bracing for criticism of the deal. The limited payments are likely to be criticized, as is the release for origination abuses. The state negotiators say all the originators are already out of business and that in most cases the claims would be too old to prosecute. Arguments over what the banks would and wouldn’t get off the hook for are what led several liberal State AGs to bolt from the deal. The $25 billion version of the price tag drops to $19 billion if California stays out of the deal, which looks likely. Other states that have dropped out have been in talks with Housing and Urban Development chief Shaun Donovan about coming back into the fold: in particular, Donovan has been in talks with New York State Attorney General Eric Schneiderman in recent weeks in the hope of getting him back into the deal, but that also seems unlikely.

Crossposted from The Stars Hollow Gazette

Have I mentioned yet that banksters are stupider than you and I?

About the only way they can find to make money is to borrow it from Central Banks at low or non-existent rates of interest and lend it back to governments at significantly higher rates.

This is why Modern Monetary Theory is so appealing.  Why not just cut out the bloodsucking middlemen?

Oh, in theory they lend that money to producers of goods and services.  In fact, not so much.  Take for instance the European Central Bank’s outstandingly “successful” auction.

Where will the ECB’s billions go?

Felix Salmon, Reuters

Dec 22, 2011 09:50 EST

Norris’s bullishness is based on what you might call the Sarkozy trade – the idea that a huge amount of the ECB’s new lending will end up being invested in Eurozone government debt. He calls it “an obvious, virtually risk-free, option” for the banks who borrowed ECB funds.

…

(T)he prudent course of action, for Europe’s banks, is to use this ECB money to pay down their own debts. Doing so would address a big funding risk, and would also help derisk their balance sheets in the eyes of the world and of Basel.

The big question, then, is how long the ECB is going to be doing this kind of thing. If this operation is a signal to the market that the ECB will be the lender of last resort to European banks for at least the next couple of years, then the banks don’t need to worry so much about their own financing needs and can lock up the funds in two- or three-year government bonds as Norris and Sarkozy anticipate.

…

If I were running a European bank, I’d fill up on ECB lending now, when it’s plentiful, because you never know for sure when that limit might be reached. That’s what happened yesterday. But I’d definitely think twice before turning around and lending it all back out again to Italy or Spain. Yes, that trade is a profitable one. But the one thing that European banks need more than anything else right now is liquidity. Profits come second.

So the 2 choices on the table right now are stealing money using the ‘Carry Trade’ to extort it from governments and calling that ‘profit’ OR simply using it to write off the Trillions of crap they already have on their bloated, insolvent books.

Crossposted from The Stars Hollow Gazette

No Joke.

Last night I had TDS/TCR duty and while I found this story incredibly funny, it’s also very serious and topical.

(h/t qm1pooh)

The question on everyone’s mind, indeed the only question of any political significance whatever this election cycle is whether Stephen Colbert’s Stephen Colbert’s Colbert Super PAC™ will be allowed to sponsor this year’s South Carolina Republican Primary.

I’m sure you all remember this segment from 12/7-

where Stephen reveals his negotiation to place a simple non-binding referendum question on the 2011 South Carolina Republican Primary ballot.

In order to address the issue of Corporate Personhood, the enfranchised People of the Sovereign State of South Carolina declare that:

   ( ) Corporations are people.

   ( ) Only people are people.

As Stephen reveals today in his explosive guest editorial in The State, South Carolina’s leading newspaper for publishing explosive guest editorials by Stephen Colbert, South Carolina has 2 (count ’em) TWO State Mottos-

   Animis opibusque parati – “Prepared in mind and resources.”

   AND

   Dum spiro spero – “While I breathe, I hope.”

Oh, and that his Stephen Colbert’s Colbert Super PAC™ has made a firm cash offer of $500,000 to become the official sponsor of the South Carolina Republican Primary.

This is no joke.  Stephen has in fact written “No Joke” on the memo line of each check.

ek you say, how can someone “sponsor” a Primary?

Civium Coniunctionem

Please remember to say that like Hermione and not Ronald.

For years the South Carolina Republican Party has paid for the expenses of each county.

Colbert Sought Naming Rights For South Carolina Primary

By Reid Wilson, National Journal

December 22, 2011 11:20 AM

Until 2008, the state Republican Party had paid for the entire primary process, renting the polling places and voting machines, printing the ballots and providing the volunteers. In 2008, the state paid for both parties’ competitive primaries.

No joke: Stephen Colbert wants naming rights to S.C. GOP primary

Richard Fausset, L.A. Times

December 22, 2011 9:28 am

This month the State newspaper in Columbia, S.C., reported that Colbert offered to help cover the costs of the Jan. 21 presidential primary, the first in the South, if the state GOP would change its name to “The Colbert Nation Super PAC Presidential Primary,” just as Frito-Lay has paid to affix “Tostitos” to “Fiesta Bowl.”

He also asked the party to support placing a referendum question on the January ballot asking voters whether they believe “corporations are people,” an issue at the heart of the Citizens United case, or “only people are people,” an assertion echoing a 1984 Depeche Mode hit.

The State’s Gina Smith reported that the GOP passed on the naming rights, but agreed to put the question on the primary ballot in exchange for a pledge of a “significant contribution” from Colbert’s PAC.

Then, however, the South Carolina Supreme Court struck all referendum questions from the ballot.

That wasn’t the end of things. South Carolina’s GOP is also caught up in a complicated drama over how much of the primary it should pay for, and how much of the tab should be picked up by the government. Matt Moore, the executive director of the state GOP, has said he believes that a recent court ruling makes the state and counties “solely responsible for the primary.”

South Carolina GOP rebuts Stephen Colbert on primary naming rights

By MICHAEL A. MEMOLI, Sacremento Bee

Published: Thursday, Dec. 22, 2011 – 12:00 am

Ultimately, the South Carolina Supreme Court decided that the state’s counties had to foot the bill for the cost of the election. And Colbert is offering again to step to the plate, under the same conditions he offered before.

“The counties need the money, and Colbert Super PAC wants to give it to you; call it a Christmas Miracle,” he says.

op. cite–

The South Carolina Republican Party confirmed they had been engaged in talks with Colbert, talks sources said have continued for months. And party chairman Chad Connolley did visit Colbert in New York, a spokesman confirmed.

Colbert’s not giving up on S.C. primary

Reuters

Dec 22, 2011 21:10 IST

Colbert said talks continued with the state party over plans including still selling them the naming rights or whether the GOP would petition to get his referendum back on the ballot. When that failed, he said he reached out to the state Democrats, who agreed to seek to reinstate the referendum. At that point, the state Republicans declined Colbert’s money because they “were concerned about the sanctity of the primary election.”

“If nothing else good comes from this, we have at least narrowed down the exact value of sanctity – somewhere between $200,000 and $400,000,” Colbert wrote.

Colbert wrote that he thought the issue was dead, until learning that South Carolina’s Republican party had reneged on almost all funding for the primary, which prompted him to offer to cover the counties’ $500,000 shortfall.

Colbert guest editorial: Naming rights, state mottoes and the GOP primary + video

By Stephen Colbert – Guest Columnist, The State

Thursday, Dec. 22, 2011

I assumed that was the end of the story, but last week I saw that the South Carolina GOP has reneged on funding any part of the primary, save for the legal minimum percentage of candidate filing fees, leaving the financially strapped counties on the hook for $500,000. That’s money that counties need for emergency services, infrastructure repair, and to complete the wall to keep out North Carolinians. Once again, our first-in-the-South primary is in jeopardy.

…

Colbert Super PAC will cover the counties’ $500,000 shortfall. In return, I ask for only two things: that you support the Democrats’ petition to get my referendum back on the ballot, and that you grant me the pre-negotiated naming rights, which, I think we can all agree, you now own. To paraphrase Ronald Reagan, “You paid for that microphone!”

Do not despair

Oh, and you may resume breathing.  Stephen has left us this message of eksmas cheer (op. cite)-

Dear Colbert Super PAC Members And Incorporated MemberCo’s,

Colbert Super PAC got you a Christmas present, but it didn’t arrive in time. You want to know what it was anyway?

I was going to give you the South Carolina primary. I was so sure you’d like it, I didn’t even ask for a receipt.

I’ve explained it all in an opinion piece that’s just been published in “The State” newspaper in Columbia, South Carolina. You can take a look here.

Sorry it didn’t get here in time. Remember, it’s the thought that counts. So next year I’m going to give you thoughts.

Whatever holiday you celebrate this season:

Merry Christmas from Colbert Super PAC!

   Stephen Colbert

   President And Fourth Wise Man

   Americans For A Better Tomorrow, Tomorrow

^{Contributions to Americans for a Better Tomorrow, Tomorrow (“ABTT”) are not deductible as charitable contributions for federal income tax purposes. ABTT may accept unlimited corporate contributions, unlimited individual contributions, unlimited labor-union contributions, and unlimited PAC contributions. Contributions from foreign nationals and federal-government contractors will not be accepted. *Federal law requires ABTT’s best efforts to obtain and report the name, address, occupation, and employer of any individual who contributes more than $200 in a calendar year.}

A holiday tradition at my house, I enjoy them any time of year.

Cranberry Canes are basically a stuffed yeast bread roll up, like a Cinnamon Roll.  It’s the presentation of twisting the prepared strips and putting a crook at one end that gives them their distinctive appearance.  There are 3 basic elements-

Dough:

Filling:

Frosting:

Preparation:

Crossposted from The Stars Hollow Gazette

Obama and Geithner: Government, Enron-style

Matt Taibbi, Rolling Stone

POSTED: December 20, 10:06 AM ET

The notion that what Wall Street firms did was merely unethical and not illegal is not just mistaken but preposterous: most everyone who works in the financial services industry understands that fraud right now is not just pervasive but epidemic, with many of the biggest banks committing entire departments to the routine commission of fraud and perjury – every single one of the major banks, for instance, devotes significant manpower to robosigning affidavits for foreclosures and credit card judgments, acts which are openly and inarguably criminal.

Banks and hedge funds routinely withhold derogatory information about the instruments they sell, they routinely trade on insider information or ahead of their own clients’ orders, and corrupt accounting is so rampant now that industry analysts have begun to figure in estimated levels of fraud in their examinations of the public disclosures of major financial companies.

Beyond that, as Jeff points out, Obama is simply not telling the truth about the supposedly insufficient penalties available to regulators. Employing the famous "mistakes were made" use of the passive tense, Obama copped out in his December 6 speech by saying that “penalties are too weak.” As Jeff points out, what Obama should have said is that “the penalties my own regulators chose to dish out were too weak”

…

What makes Obama’s statements so dangerous is that they suggest an ongoing strategy of covering up the Wall Street crimewave. There is ample evidence out there that the Obama administration has eased up on prosecutions of Wall Street as part of a conscious strategy to prevent a collapse of confidence in our financial system, with the expected 50-state foreclosure settlement being the landmark effort in the cover-up, intended mainly to bury a generation of fraud.

…

Geithner and Obama are behaving like Lehman executives before the crash of Lehman, not disclosing the full extent of the internal problem in order to keep investors from fleeing and creditors from calling in their chits. It’s worth noting that this kind of behavior – knowingly hiding the derogatory truth from the outside world in order to prevent a run on the bank – is, itself, fraud!

…

Obama and Geithner are engaged in the same sort of activity, only they’re trying to prevent a run not on an individual bank, but the entire American financial services sector. Geithner seems really to believe that if fraud were aggressively policed, and the world made aware of the incredible extent of the illegality in our markets, that international confidence in the American financial sector would plummet and our economy would suffer – and suffer, incidentally, on Barack Obama’s watch.

…

(B)y taking a dive on fraud, and orchestrating mass cover-ups like the coming foreclosure settlement fiasco, what they’re doing instead is signaling to the world that not only are our financial markets corrupt, but our government is broken as well.

The problem with companies like Lehman and Enron is that their executives always think they can paper over illegalities by committing more crimes, when in fact all they’re usually doing is snowballing the problem so completely out of control that there’s no longer any chance of fixing things, thereby killing the only chance for survival they ever had.

This is exactly what Obama and Geithner are doing now. By continually lying about the extent of the country’s corruption problems, they’re adding fraud to fraud and raising such a great bonfire of lies that they probably won’t ever be able to fix the underlying mess.

Too little, too late.

Nevada AG Masto Sues LPS for Document Fraud

By: David Dayen, Firedog Lake

Friday December 16, 2011 12:16 pm

LPS did commit the document fraud. But they did it on behalf of mortgage servicers. So you can figure out the next step up the chain here. Masto is closing in on the big banks in a similar fashion as Martha Coakley did in Masachusetts.

LPS stands accused of a “pattern and practice of falsifying, forging and/or fraudulently

executing foreclosure related documents.” Nevada is a non-judicial foreclosure state, so these documents typically were the ones sent to county recording offices. But they were used as the basis for the foreclosure, and the documents were indeed fraudulent. So these are wrongful foreclosures, and thousands of them. The suit alleges that LPS forced employees to notarize up to 4,000 of these fraudulent documents every day. To get this done, they demanded their employees engage in forgery, to keep up the speed on the document processing, and they had their employees notarize documents without knowing the underlying material or without even witnessing the original signing, which is the purpose of notarization.

And LPS lied about this, time and again, attributing the irregularities to “clerical errors” or other back office mistakes. Instead, this was policy. They cut corners to maximize profits and emphasize speed. And that included illegal document fraud.

Masto alleges other violations in the suit, including a kickback scheme whereby Nevadans paid for “attorney’s fees” that went right back to LPS. And by the way, this is not some fly-by-night organization; LPS is the industry leader in providing document processing for foreclosures. They do over half of all the foreclosure documents in the country. And nobody should believe that this sweatshop type of atmosphere was somehow limited to Nevada.

Masto asks in the suit for $5,000 per violation (remember they signed thousands of fraudulent documents every day) and $12,000 per violation if it was directed against an elderly or disabled person. Masto also wants a special monitor to “ensure that deceptive documents and practices are corrected and improper foreclosures are remediated.”

Harris Sues Fannie and Freddie for Information in Mortgage Investigation

By: David Dayen, Firedog Lake

Wednesday December 21, 2011 6:16 am

Kamala Harris, the Attorney General of California, sued government-sponsored enterprises Fannie Mae and Freddie Mac over information on foreclosures in California. Rather than the endpoint of the investigation, this is the beginning of it; Harris wants information out of Fannie and Freddie that they have so far been unwilling to provide.

…

The lawsuits in foreclosure fraud all have their own specialized nature. Martha Coakley has taken on the big banks for stealing homes. Beau Biden sued MERS. Eric Schneiderman is focusing on securitization. Catherine Cortez Masto charged LPS with systematic document fraud. And now Harris has targeted Fannie and Freddie. This puts her in conflict with the FHFA, an independent agency that has at times acted on its own, suing 17 banks over representations and warranties claims and even sharing information between its inspector general and Schneiderman. An FHFA attorney said the volume of information Harris requested was “staggering” and questioned whether Harris had the ability to issue the subpoenas.

The importance of settling that question is obvious: if states can investigate Fannie and Freddie, even if they are under the auspices of a federal conservator, then they have access to the misdeeds of mortgage giants that currently own or guarantee over half of the market. The SEC did just bring civil fraud charges against former Fannie and Freddie CEOs and other executives on securities fraud, but Harris is looking into specific acts against borrowers in her state. If the subpoenas are upheld here, it could open the floodgates.

Meanwhile, there will be no settlement from Tom Miller and his crew by Christmas, as they miss yet another deadline. In fact, the banks are increasing their demands, essentially wanting immunity from CFPB regulations on past mortgage origination. So to those who say that we need a settlement to provide immediate aid to borrowers, well, there isn’t going to be any settlement, because the banks don’t want to give up more than a pittance and they want release from practically all liability.

Tom Miller Can’t Even Lie Well Anymore: Not Only No Deal By Christmas, As Promised, But Banks Upping Demands Even As Attorneys General Leave Table

Yves Smith, Naked Capitalism

Tuesday, December 20, 2011

We’ve commented previously on Tom Miller as the contemporary exemplar of what in the 1960s was called a credibility gap. Readers no doubt know that he is the lead negotiator on behalf of the state attorneys general in what was formerly called the 50 state attorney general [mortgage] settlement. (Notice separately how the state AGs are providing cover for several Federal banking regulators, HUD and the Department of Justice, which are also parties to this deal).

A partial recap: Miller started by promising criminal prosecutions, then reneged. He has refused to do investigations, then had the temerity to try to claim they took place). He said there would not be a big waiver on mortgage liability, when as we discussed, that was the only thing Miller & Co. could offer that would get a deal to the numbers he had unwisely committed himself to (north of $20 billion). And several state attorneys general have walked from the deal precisely because they object to the plan in motion: a big release for an impressive-sounding number, when they have an inadequate idea of how much questionable activity is being forgiven.

Crossposted from The Stars Hollow Gazette

As atrios says- LEAVE THE RICH ASSHOLES ALOOOOOOONE!

Bankers Seek to Debunk Attack on Top 1%

By Max Abelson, Bloomberg News

Dec 20, 2011 12:01 AM ET

The top 1 percent of taxpayers in the U.S. made at least $343,927 in 2009, the last year data is available, according to the Internal Revenue Service. While average household income increased 62 percent from 1979 through 2007, the top 1 percent’s more than tripled, an October Congressional Budget Office report showed. As a result, the U.S. had greater income inequality in 2007 than China or Iran, according to the Central Intelligence Agency’s World Factbook.

…

“Rich businesspeople like me don’t create jobs,” Nick Hanauer, co-founder of aQuantive Inc., an online advertising company he sold to Microsoft Corp. for about $6 billion, wrote in a Dec. 1 Bloomberg View article. “Let’s tax the rich like we once did and use that money to spur growth.”

Two out of three Americans support raising taxes on households with incomes of at least $250,000, according to a Bloomberg-Washington Post national poll conducted in October.

…

“It’s simply a fact that pretty much all the private- sector jobs in America are created by the decisions of ‘the 1 percent’ to hire and invest,” Rosenkranz, 69, said in an e- mail. “Since their confidence in the future more than any other factor will drive those decisions, it makes little sense to undermine their confidence by vilifying them.”

…

Cooperman, 68, said in an interview that he can’t walk through the dining room of St. Andrews Country Club in Boca Raton, Florida, without being thanked for speaking up. At least four people expressed their gratitude on Dec. 5 while he was eating an egg-white omelet, he said.

And here I thought jobs were created by “Small Businesses.”

Update: lambert @ Corrente.  Krugman.  Felix Salmon.