MortgageGate and Delusion

14Oct/105

MortgageGate and Delusion

As I've been intimating, I was going to write a long piece on this most-destructive-yet banking scandal, but fortunately the piece has been written for me. I want you to read this piece in its entirety, and re-read it if there's anything that you don't understand, and re-read it again to consider the implications.

The author is absolutely correct that the national media are downplaying this, and hoping, as clearly the banks did, that it's going somehow miraculously to go away. It's not, even though it's clear from the comments at the Washington Post, who've tucked away the issue in an obscure corner of the online paper, that many people won't contemplate what it means. Even Barney Frank has a newfound appreciation for what the fraudulent practices regarding notes and other documentation means, particularly with respect to Fannie and Freddie.

How did this come to light? Not through any government agency, even though they must have been aware of the practices. The website 4ClosureFraud found a price listing for the fabrication of mortgage-related instruments, which you can find at Naked Capitalism, who have, overall, the best reporting on this issue. There are some good links there, too.

As I've stated on occasion, the value of script is based on the underlying belief that the government will stand behind the promises that those notes represent. That's why Obama's intervention in Chrysler and GM was so damaging to the US economy. To the White House, it was about jobs, power, and favor currying. But the guy who gets paid in script for busting his ass wants to make sure that the value of his labor is being protected by a system of regulation that punishes malefactors and rewards integrity and playing by the rules. In short, the value of script is secured by trust in the decency of those others who issue and use script. It ceases to function when its discovered to have been underwritten by misrepresentations, lies and fantasies.

Keep in mind that Larry Summers, now departing, was one of the people, along with Greenspan and Rubin, who pushed to get rid of Glass-Steagall under Clinton. Verum Serum has up an intriguing post, too, on how Clinton may have let go Muhammed Atta.

It may be too late to save the dollar. The only plausible way to address the situation, I'm sorry to say, is to find the people who committed and benefited from the fraud, to seize their assets, and to throw them in jail for a long time. Seems to me that RICO might be effectively applied here.

And while I'm on the subject, let me add that the political class have to become subject to the same kinds of obligations regarding misfeasance and malfeasance that apply to folks in the (non-academic) professions. Mercy is abused if fraud is countenanced, and I mean to say that we have excused, overlooked and downplayed rank dishonesty in our "representatives" for far too long.

See also Trevor Loudon's very important piece on Conyers' Marxist comrades. The fundamental warpage of reality represented by creating legal instruments ex post facto and treating them as though they were legitimate is the stock in trade of ideological delusions of every kind.

Freud wrote a famous tract on The Future of an Illusion; if we don't learn to treat the sorry-ass dregs of our political class with the contempt they deserve, we deserve the Obamaist illusion of a future. Not, mind you, that I think psychology offers any way to bridge the gap between "perception" and "reality."

Dan Collins

Dan Collins is a dude who blogs. He used to blog elsewhere. Now he blogs here.

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Tom Usher
October 14th, 2010 - 14:48

We’re going down, Dan, and the majority of the media won’t report it and most of the people don’t understand it. We’ve ceased to be a nation of laws and have become an oligarchy controlled by bankers and politicians that are not held accountable by the courts.

If, and this is a big if, the people of this country realize that there’s a real good chance that the chain of title to their homes has been broken, and that because of this they can make a good argument that they no longer owe any money on it, no one besides suckers and idiots will make another house payment. And once that ball starts rolling there ain’t no slowing it down.

Title insurers are beginning to refuse to insure titles on homes sold out from repossession and it won’t be long before they begin to question the titles of all real estate that isn’t owned outright. No one will be able to sell their house and no one in their right mind will want to buy one.

If a solution to this isn’t found, and quickly, the banking system will come to a screeching halt and the nations economy will stop with it.

And what about the pensioners that have a sizable piece of their retirement income coming to them through their investment in MBS’s. These are based on fraud and will become worthless quickly. Looks like buying stock in dog food might be a good idea.

I think that this is the biggy; the one that we can’t stimulate our way out of. Get ready and prepare yourself and your family as best you can. And pray because America, as we know it, is about to end.

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Bob Reed
October 14th, 2010 - 15:41

REMICs are at the root of the broken chains of title.

REMICs are largely either directly owned by Fannie/Freddie/Ginnie, or were instrumental in the securitization of the same; although there were some REMICs issues soley by investment banks and guaranteed by some third party, like AIG’s credit default swaps.

http://tinyurl.com/37ekzay

http://tinyurl.com/3xfvh9u

http://tinyurl.com/37jbfms

So unsurprisingly we find the GSEs involved in what may become finacial crisis 2.0; funny that, eh?

Unless this gets straigtened out, and quick, not only will some of the folks who took loans they couldn’t afford profit from it, but the breakdown of the compact may motivate some more responsible people, currently in dire straights, to use the technicality to shove off thier debt.

This problem will be “to big to bail[out]” too, which is why Turbo-Timmy isn’t calling for any formal moratorium on forclosure.

And yet another reason why the government shouldn’t have been a major player in the mortgage business to begin with.

I could have seen providing money private organizations to underwrite reducing down-payments so that folks who could afford the payments, but not the traditional 20% down could get into the market, but not the wholesale buying of sketchy loans that went on for 10 years or so.

This will require leadership to get out of; leadership I don’t sense that President “present” has in him…

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Mr. Bingley
October 15th, 2010 - 07:46

Hmmm, not sure why my link to you hasn’t gone through, Dan.

I’m trying, dude.

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- Dan Collins
  October 15th, 2010 - 07:56
  
  That’s all right. I noticed and linked you and sis back.
  
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  - Mr. Bingley
    October 15th, 2010 - 08:17
    
    you are a prince amongst maple sugar barons, kind sir!
    
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