Not to say I told you so, but....

If anyone really believes the squaliformes are making some kind of massive effort to actually modify existing loans, Countrywide's response in a New Hampshire lawsuit should finally put an end to the mythology that ol' Bean has been hollering about. (Click on the title link, above to see MSNBC's coverage.)

Loan "modifications" aren't being done. Period. Additional agreements primarily designed to protect lenders are being foisted on desperate borrowers in a public-relations effort to protect a handful of key players and the Congresspeople and Senators who are desperately trying to avoid taking responsibility.

So let's see this for what it really is - squaliformes are getting billions from the funny-farm that is Washington who let the squaliformes get away with murder in the first place. And instead of doing the right thing and punishing those responsible, they're waiting for the squaliformes to act responsibly. And lying through their teeth about how much good they're doing. And asking for more. And trying to shift the blame elsewhere.

I'll be up at the Fort Worth Stock Show for a few days; the air there smells a lot less like BS than what's coming out of Washington. FYI - if you can, join us to watching the bull riding; a friend's son-in-law is in the competition.

Finally, the holidays are over

With work and family schedules the months of November and December are almost impossible to conduct court business 'round these parts.

But obviously, that doesn't stop the scammers and squaliformes from working harder than ever, especially with all the doom and gloom hype from the media putting people in a panic.

The major networks and their kin need to take some responsibility for making this the greatest market ever for the promoters of scams - some of which are in the guise of stopping the squaliformes. In the mean time, the squaliformes are getting billions of tax dollars to keep their schemes in operation, supposedly to keep the economy afloat.

They are so powerful and so arrogant that they have pulled the strings of Congress to keep their seats at the gaming tables using OUR TAX DOLLARS and our children and grandchildren's financial futures.

As I have often said, their power is unchecked, and this maneuvering is simply another demonstration of the power they hold over Washington.

And while Washington dances to the tune of Wall Street, less and less attention will be paid to not only the known squaliformes in the financial services industry but the people who keep promoting utterly bogus quick-fixes for the victims of the lenders.

And the lenders are touting their own "self-preservation" loan modifications - more on that shortly, other than to say DON'T SIGN SOMETHING THAT TAKES AWAY YOUR LEGAL RIGHTS! They are using the loan mod programs to shield themselves from being held responsible for illegal acts against consumers.

And there's more to come on this utterly bogus maneuver to make bankruptcy the appropriate place to force lenders and servicers to modify loans - it's yet another way to cover their collective *sses.

In short, 2009 is going to be even worse for the typical, uninformed consumer and borrower, but court will be back in session soon.

The Honorable Judge Roy Bean

Barney and Company Should Be More Cautious

The recent trend in squaliforme political influence buying might reverse if Barney and Company bite the hands that have been feeding them. From data compiled by the Center for Responsive Politics, the picture is pretty telling - Da Boss knows where to spend money.

Source:

They're Outraged!

Well it did get out - and Chairman Frank is "outraged" at Da Boss.

So outraged that he and several other members of the committee are going to hold hearings.

Oh great. More hearings. Every time we have more hearings we get what?

More Hearings.

Like the one before the Fannie Mae and Freddie Mac melt down. (Click the YouTube video at left to see what good hearings do.)

Hope Now Meets Da Boss

Buried toward the back of the New York Times is an article that some people in Washington and especially some from Wall Street are going to find a bit uncomfortable.

It deals with a warning from some hedge funds who are prepared to take action against servicers that are participating in renegotiating loans without their permission.

William Frey of Greenwich Financial is quoted: “Any investor in mortgage-backed securities has the right to insist that their contract be enforced.”

Frey reportedly said he was aware of two other funds in addition to his and Braddock Financial that sent similar letters to lenders.

David Myers of Braddock Financial trotted out the industry-standard warning about how credit would dry up, saying "...if mortgage servicing firms did not strictly follow those contracts, it would delay the recovery of the credit market because investors would be less willing to buy securities in the future."

And as this kind of thing continues to leak out, maybe someone will wake up and see that Hope Now is mostly window dressing intended to get troubled borrowers to contact their servicer and jump on the fast train to foreclosure.

The Honorable Judge Roy Bean

For cryin' out loud, where's the damn remote?

I know it's 'round here somewhere....it's a big one....huge, actually. It's the only one that has a "NEWS" button. Without it, I can't block the nitwit voyeurs and their panicky messages about the stock market and the talking-heads who are fascinated with voter polls.

It also has a "POL" button that turns off all political advertising. The only problem with that function is nothing appears on the screen for about thirty minutes every hour.

If I have both of them set most of what I see are ads for TV programs.

But I really, really need to find it. Soon.

The Honorable Judge Roy Bean

What really needs to happen in Washington

It ain’t pretty. Without allowing Congressional and Senate egomaniacs (many with squaliformes money falling out of their pockets) to put their imprimaturs on it there wasn’t a chance Paulsen’s proposal would wind up as law. And as noted earlier, it had all kinds of truck-sized holes in in.

Hell, if Ol’ Bean sent them the world’s greatest barbeque rib recipe we’d wind up with fourteen platters of mystery meat and avocado-mint ice cream to dip it in.

And there are lots and lots of news media people digging up lots and lots of economists to try and find something to say about all this. Therein lies the problem – economists. As I have told people before, economists are not scientists because economics is not a science at all. It’s a bastard child of statistics and social studies. Some really smart economists will be right some of the time. A gorilla throwing rotted fruit at zoo patrons may even hit someone, too. (Mainly because they both get plenty of chances.)

Richard Shelby (R. AL) even trotted out a list of eminent economists who apparently signed a letter that said the bailout was a bad idea. Most, if not all of them are professors at institutions of higher learning. I noted at least one Nobel Laureate. Shelby, of course, was the Chairman of the Senate Committee on Banking, Housing and Urban Affairs until the Democrats took power and he’s now the Ranking Member. There’s plenty of blame for this debacle that can be assigned to that Committee and now he’s trying to make it look like he’s against helping the squaliformes out of this predicament. It’s their predicament and they’re making it our predicament.

And they have them and us by the you-know-whats. The squaliformes have enough blatant leverage in Washington to literally force the hand of Congress and the Senate. Toss in some political intrigue in the last few weeks of the election cycle and interestingly enough, some of them are more worried about being reelected than they are about attempting to solve the immediate problem.

It will be a squaliforme win. Trust me. There will be fewer of them but the remaining ones will thrive. They always do. And we really don’t have a choice. They will sit on their money and simply refuse to lend it to anyone until Washington gets back in line. And if Washington doesn’t do something, it’s going to get really ugly out here; segments of the economy that have remained untouched by the predatory lending and securitization craze will begin to feel the effect of the squaliformes strangling of the credit market to get their way.

This quid-pro-quo will cost us $700B. If it was handled correctly, we could get some of that back. But then we need to clean house in Washington so they don’t get to come back and do it all again. Any member of Congress or the Senate who has served on the committees that were responsible for financial services legislation needs to do the honorable thing and resign.

The Honorable Judge Roy Bean

The Empire Starts Up?

It’s déjà vu all over again. Washington rides to the rescue of Wall Street and their customers. The House and Senate are cobbling together another labyrinthine bureaucracy with only secretary Paulsen as Emperor. Only the players in the rarified air of high finance will know how to navigate – er, I mean manipulate this new Emperor's court.

And of course the finger-pointing is going on at election year warp speed, with the talking heads in the media doing their level best to spread fear, uncertainty and doubt while they try and make it look like they understand any of it.

Let Ol’ Bean make this short and simple – the folks who got incredibly wealthy and have taken this hit aren’t about to just walk away from the gaming tables they’ve been playing at over the years. If Washington wants to keep the financial services casino open (and they desperately do), then Washington will have to cover the gambler’s markers – again.

This legalized gambling-house they called securitization spread an incredible amount of wealth among the players. So much that there was soon more hubris than real wealth. Creativity finally got the better of them.

Now Paulsen thinks they’re going to hand him some “troubled loans” so they can get on with the business of making better loans.

What Paulsen is going to buy aren’t just “troubled loans.” He’s buying (with our money) pools of mortgages at a price that will have nothing to do with reality. And what no one wants to talk about is the fact that the really bad loans are already on the books of the special servicers at huge discounts from their face value. I can see where this will be going:

Paulsen: How much do you want for that pool?

Servicer: $50 million should do the trick.

Paulsen: Ah, well we have to know the cost basis – we’re working under the Credit Reform Act.

Servicer: $50 million. That’s what the pool is worth.

Paulsen: How much did you buy it for?

Servicer: None of your beeswax.

Paulsen: OK. Here’s the $50 million.

Servicer: Thanks, have a nice day.

A few months later Paulsen tries to sell the pool.

Paulsen: I have a deal for you. I have this pool of mortgages for sale.

Servicer: I know. One of the companies I worked for sold it to you.

Paulsen: We’re working under the Credit Reform Act rules for costing. I can sell this to you for $35 million.

Servicer: I’ll give you $10 million. Today only.

Paulsen: But we both know you got more than twice what it was worth when we bought it. You’ve already cleared $25 million.

Servicer: Aw, shucks.

Paulsen: OK. We’ll take the $10 million for it.

Servicer: Thanks, have a nice day.

It won’t take long to burn through $700 billion.

The Honorable Judge Roy Bean

Another data mining victim class action suit

More and more mis-information about everyone seems to be spreading as the data mining squaliformes obtain and peddle whatever they think has a value. Correct or not, as long as you have something to fulfill an information request and the victim can't reach out and find you it's gather, store and sell.

Well, maybe yet another giant leak in the hopelessly leaky dyke of privacy protection will be looked at in this case (08-cv-5250):

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
SANDRA JEAN CORTEZ on behalf of herself and all others similarly situated
Plaintiff,
vs.

ACCUITY, FORMERLY, THOMSON FINANCIAL PUBLISHING
AND SOURCEMEDIA, INC.
Defendants

1. This is a consumer class action based upon Defendant’s widespread violations of the Fair Credit Reporting Act, 15 U.S.C. §§ 1681-1681x (FCRA). Defendants are Investcorp companies, an investment entity and hedge fund incorporated in the Kingdom of Bahrain. They have taken it upon themselves to supposedly identify -- for a fee -- terrorists, narcotics traffickers and money launderers with whom American businesses must have no dealings. Defendants assemble and maintain a private database of information purportedly about persons on certain U.S. government watch lists, including the list of suspected terrorists, narcotics traffickers and money launderers promulgated by the Office of Foreign Assets Control (OFAC list). Defendants regularly sell their own reports purportedly concerning such persons from their private database to third parties. The reports are used and are expected to be used in connection with ordinary consumer credit, employment, insurance and other transactions. Persons whom Defendants identify in their reports as being on the OFAC list are understood to be legally ineligible to conduct any business in the United States, cannot be employed, cannot receive any insurance or extension of credit, and may even be subject to arrest. Notwithstanding the fact that Defendants are in the business of regularly selling highly critical character and credit information in their reports to be used in daily consumer transactions within the United States, Defendants fail to assure the accuracy of this information or to comply with the FCRA in any respect. As a result, consumers such as Plaintiff Sandra Jean Cortez, who are not actually on the OFAC list or any government watch list, are routinely misidentified in Defendants’ reports as suspected terrorists, money launderers and narcotics traffickers, and thus are considered ineligible for credit or for conducting any business in the United States. Also due to Defendant’s noncompliance with the FCRA, innocent consumers wrongfully identified as being on the OFAC list have no means of discovering, disputing or correcting the erroneous information Defendants are selling about them. In this class action, Plaintiff seeks to represent consumers similarly situated to her who have been misidentified by Defendants in their reports to U.S. businesses as being on the OFAC list, when in fact they are not.

5. Defendant Accuity (Formerly TFP Thomson Financial Publishing) is an Investcorp business entity which maintains a principal place of business at 4709 Golf Road, Skokie, Illinois 60076.
6. Defendant SourceMedia, Inc. (SMI) is an Investcorp business entity which, like Accuity, maintains a principal place of business at 4709 Golf Road, Skokie, Illinois 60076, and whose corporate headquarters are located at One State Street Plaza, 27th Floor, New York, New York 10004.
7. Defendant SMI owns, operates and controls Defendant Accuity and its operations. Upon information and belief, the executives and employees at Accuity are employees and/or agents of SMI.

II Factual Allegations
A. Defendant’s Sale of Caution and Watch List Reports
8. Defendants assemble and maintain a series of caution and watch list screening databases. Through Accuity’s Global Watch List (GWL), Defendants maintain a comprehensive collection of information from all major legal sanctioning bodies, law enforcement agencies and financial regulators from around the world. Defendant Accuity’s database is purportedly comprised of the U.S. Treasury Department’s OFAC list, enhanced with some of the Defendant’s own proprietary sources. This service also includes the NS-PLC (Palestinian Legislative Counsel) list.
9. Pursuant to OFAC’s requirements and regulations there is a legal responsibility that financial institutions and businesses exercise due diligence to verify that they are not extending credit or employment, or doing any business with, individuals on the OFAC list.
10. Defendants sell reports to financial institutions and other businesses that purportedly help those entities to identify terrorists, narcotics traffickers and money launderers and to thus comply with OFAC’s requirements and regulations.
11. Defendants specifically sell OFAC list reports and information to institutions such as Trans Union, LLC, a national consumer reporting agency.
12. Defendants sell to Trans Union, LLC and other businesses an OFAC Advisor Alert pertaining to a particular individual, and identifying such individual as being a match to the OFAC list.
13. Defendants know that the OFAC Advisor Alert is used and expected to be used as part of a screening or credit background check in consumer transactions, such as credit, employment and insurance transactions.
14. By regularly selling such information for a fee with the anticipated or expected use of such reports by the entities referenced above, Defendants operate as “consumer reporting agencies” (CRAs), consumer reporting agencies “that compile and maintain files on consumers on a nationwide basis,” and national specialty consumer reporting agencies (NSCRAs) as defined by 15 U.S.C. § 1681a(f), a(p) and a(w), respectively.
15. Among other things, the FCRA regulates the collection, maintenance, and disclosure of consumer report information by CRAs and NSCRAs.
16. Despite the fact that Defendants assemble and compile consumer information for sale on a nationwide basis, Defendants will not disclose the same to the American public or the persons about whom they sell reports the contents of those reports.
17. Further Defendants do not maintain any toll-free telephone numbers or any other means available to consumers to dispute and correct any errors on the reports Defendants sell about them.
18. Importantly, Defendants do not comply with the FCRA’s requirement of following procedures that assure “maximum possible accuracy” concerning the information in their reports.
19. As a consequence of their failure to comply with the FCRA in any way, Defendants routinely make mistakes, misidentifying innocent consumers as being on the OFAC list, when in fact they are not on the OFAC list, and further have no procedure for correcting such harmful mistakes.

B. The Experience of The Representative Plaintiff
20. Plaintiff is but one innocent consumer who Defendants misidentified in a report as being on the OFAC list when in fact she was not on any such list.
21. Due to Defendants’ lack of any procedures to assure the accuracy of the information they sell in their reports, Representative Plaintiff Sandra Jean Cortez was unfortunately misidentified by Defendants in their reports as being on the OFAC list as a known narcotics trafficker.
22. Specifically, Defendants sold a detailed Advisor Alert report to Trans Union, LLC in connection with a credit transaction for an automobile that Plaintiff was seeking to purchase and also in a rental transaction for an apartment that Plaintiff was seeking to rent, among other transactions, stating in the reports, among other things, that Plaintiff was on the Government’s OFAC list.
23. This is grossly inaccurate as Ms. Cortez has never been designated as being on theOFAC list by the Treasury Department or otherwise, and her name and personal identifying information does not match the OFAC list.
24. Rather, there is a Columbian national and suspected narcotics trafficker with the name Sandra Cortes Quintero and a date of birth more than thirty years after Ms. Cortez’s, whose name does not appear on the OFAC list. Defendants’ standard and uniformly applied matching logic has resulted in incorrectly mixing up Plaintiff, and many other innocent Americans with a similar name to Plaintiff’s, with the Columbian national Sandra Cortes Quintero.
25. Because of Defendant’s failure to abide by the FCRA in any way, Ms. Cortez has been unable to obtain and review the information that the Defendants are reporting about her, dispute this gross inaccuracy with the Defendants, and ascertain all of the sources to whom Defendants have sold this information and the dates on which such information was sold.
26. Defendants do not notify or disclose to the American public or any of the individuals about whom they sell a report as being on their watch lists that they have reported such information. Neither Ms. Cortez nor any of the class members as set forth below are aware of the existence of the Defendants’ identity. It was only through Ms. Cortez’s retention of counsel that she came to learn of the Defendants.
27. Because of Defendants’ policy and practice of not accepting disputes or allowing corrections, Ms. Cortez was left without a means to have the Defendants cease reporting inaccurate information about her and has suffered credit, reputational and other harm.
28. At all times pertinent hereto, Defendants were acting by and through their agents, servants and/or employees who were acting within the course and scope of their agency or employment, and under the direct supervision and control of the Defendants herein.
29. At all times pertinent hereto, the conduct of the Defendants, as well as that of their agents, servants and/or employees, was malicious, intentional, willful, reckless, and in grossly negligent disregard for federal laws and the rights of the Plaintiff herein.

Attorneys for Plaintiff and the Class
LARRY P. SMITH & ASSOCIATES, LTD.
LARRY P. SMITH
120 W. Madison
10th Floor
Chicago IL 60602
(312) 222-9028

FRANCIS & MAILMAN, P.C.
JAMES A. FRANCIS
JOHN SOUMILAS
Land Title Building, 19th Floor
100 South Broad Street
Philadelphia, PA 19110
(215) 735-8600

DONOVAN SEARLES, LLC
DAVID A. SEARLES
1845 Walnut Street, Suite 1100
Philadelphia, PA 19103
(215) 732-6067

AmeriDebt and DebtWorks case being resolved – sort of

The FTC’s case against Andris Pukke has netted over $12M in repayment to many of his victims, in part thanks to some diligent work on the part of the court receiver (Robb Evans & Associates) to hunt down assets he attempted to hide offshore as well as with friends and family. Pukke spent a month in prison in May of 2007 for contempt of court for the maneuvers.

But given the fact that the $12M is being divided up among about 287,000 of the nearly 460,000 victims, that means the average recovery is about $42 although the more they paid the more they are supposed to get. (According to an earlier state lawsuit filed in St. Louis, the average victim was charged about $327.)

What most people have forgotten about this monumental scam is that back in May of 1996, Pukke and his wife formed AmeriDebt in the same month he pleaded guilty to mail fraud charges involved in his previous scheme to defraud consumers by falsely promising “debt consolidation loans,” then not providing them. He was sentenced to probation.

In 2001 and 2002, his brother Eriks' company, Debticated Consumer Counseling, another nonprofit credit counseling operation in Huntington, N.Y., dolled out $5 million to DebtWorks. Debticated went out of business in 2003.

Pukke (shown above, at right being sworn in before testifying in Senate hearing in 2004) lived lavishly from the allegedly “not for profit” scheme. In addition to his home in Maryland, in 2005 he purchased a $6.4M home in Laguna Beach, California. At one time he was involved with a land development project in Belize.

If anyone is wondering why there are more and more of these kinds of things cropping up everywhere, one only has to consider the timeline of the Pukke case and the kind of lives they get to live during their run.

This particular Echeneidae Collectoris thrived off of a lot of people who were already victims, and the fact is there is still an endless supply of them being created every minute.

The Honorable Judge Roy Bean

When your debit card becomes a credit card

Wachovia has been caught with their hands in the pocketbooks of their checking account customers, this time playing fast and loose with when and in what order items are applied to accounts.

In the suit, filed in Florida seeking class-action status, the complaint demonstrates something most people have seen – when you have overdraft protection the bank will process the larger item(s) first in order to multiply the number of “service” or “convenience” fees.

For example, let’s say you pop the debit card into the machine one afternoon and it shows a balance of $205.00. You pull out $20.00. You then hit the gas station where you’re basically robbed at the pump of $65.00. You still have a balance today in your account of $120.00, right? At least you figure there will still be enough to cover than $95.00 automatic payment for your cable service.

Not really. What you don’t know is the bank is holding three of your smaller transactions (one for $19.50, one for $17.00 and another for 23.00) because the bank’s system knows you have that automatic bill-payment scheduled for $95.00 tomorrow. Rather than process and pay those three small ones and get one overdraft protection fee for the single $95.00 transaction, they will wait until the auto-pay one is done, leaving a balance of $25.00. Then come the three smaller ones which provide them with triple the “convenience fees” and all of a sudden you’re way in the hole. What it amounts to is usurious interest on the advanced funds they paid those three charges on.

Advice – don’t trust the balance you see at the ATM machine and don’t use an automated payment system!

And if you have a checking account at Wachovia and want to get in on the lawsuit, Google “Alters Boldt Brown Rash” the Florida law firm who filed the case.

The Honorable Judge Roy Bean

What goes ‘round comes ‘round

When a uber-squaliforme like C-BASS/Litton Loan is allegedly being scammed using some of the exact same kinds of maneuvers it perpetrates against borrowers, this Judge has to grit my teeth and bite my tongue – sort of.

In what has been going on for many months in the Texas Federal District Court (Southern), a read of some of the pleadings and claims reveals what’s now left of C-BASS (something called “Pledged Properties II”) doesn’t see the irony of having someone do to them what they had Litton do to borrowers all these years.

It’s far too complex to explain the intricacies of property and transfer tax liens here, but suffice it to say, what’s left of C-BASS was making RICO claims against a number of parties that allegedly obtained a foreclosed property with some fast legal(?) footwork that seems to have some of the footprints of how Litton operates against borrowers.

The story starts with a condo owner’s association foreclosure sale in July of 2007 and it degenerates into thousands of pages of legal wrangling over who did or didn’t do what and when. I hope I’m not the only one who see’s the irony in some of these pleadings by counsel for C-BASS:

“In addition, neither Plaintiffs, nor Plaintiffs’ counsel could obtain the payoff information on the transferee tax lien held by (Defendant “D”).”

“By preventing Plaintiffs from obtaining the payoff amount and paying off the transferee tax lien, (Defendant “D”) was able to foreclose the Real Property as a result of the (Defendant “T”)’s “failure” to pay the attorney’s fees and costs within five (5) days. At the foreclosure sale, (Defendant “D”) received $106,500.00 from (Defendant “I”), which equates to a net profit of $94,131.05 from (Defendant “D”)’s wrongful foreclosure.

“Additionally, once (Defendant “D”) sold the Real Property at the [tax lien] foreclosure sale, Plaintiffs’ only hope to redeem the Real Property from (Defendant “I”) was to pay (Defendant “I”) 125 percent of the purchase price or $133,160.00 within 180 days of (Defendant “I”)’s deed being recorded in the Real Property Records of Harris County. See Tex. Tax. Code Ann. § 32.06(k), (k-1). Here, (Defendant “I”) would make a net profit of $26,632.00 by and through the wrongful foreclosure, and Plaintiffs are out $133,160.00 as a result of the entire scheme. Unfortunately, Plaintiffs’ last day to redeem the Real Property has passed during the course of this litigation.”

It’s going to get interesting if and when there is a ruling on this one. If the defendants are anywhere near as clever as C-BASS’ counsel alleges, this won’t be the only case like it, in fact, they infer among the pleadings that the practice is being used against other mortgage holders.

The Honorable Judge Roy Bean

More trouble from insider selling of data – Countrywide

One of Countrywide’s senior financial analysts was arrested last month for selling the private information of 2 million Countrywide customers and applicants. Rene Rebollo, Jr., stole the data in 20,000 name increments, pocketing what investigators say is over $70,000 for the data.

One of Rebollo’s customers was paid $4,000 to get 38,000 names from Rebollo, but the ultimate buyer turned out to be an FBI plant that was put on the trail after Countrywide discovered the scheme.

The worst part of this recent breach is that it included not just social security numbers but loan application information, including credit report data. Most of the data was being sold to people in the mortgage industry to use as leads for new loans.

A class-action suit has been filed in the Central District of California (Federal Court) by Finkelstein Thompson, LLP's San Fransisco office on behalf of Edmond and Michelle C. Moses (lead plaintiffs).

As ol' Bean always says, anything you want to know can be bought somewhere.

Blaming the Passengers

I’m starting to get more than just a little annoyed at the holier-than-thou crowd and Monday morning quarterbacks in the "news" media who are buying the industry-driven mantra that the problems in the debt markets and the economic fallout are because of mortgage lending to people who shouldn’t have gotten loans.

Trust me – it’s their PR machine at work, diligently trying to shape public opinion and point the finger at the consumers as opposed to the perpetrators. The stakes are high - as in trillions, so you can’t expect the folks who actually run Washington to shy away from getting the media to help them in pointing fingers at easy targets.

And it’s starting to work. Alleged “news” pieces are starting to appear in places other than chatrooms, forums and blogs, citing complaints from people about a bailout – as if the bailout was for the real victims. And lo and behold, “experts” are being drawn on to get the word out in the mainstream news.

But the reality is, any bailout is for the industry and the investors – NOT the borrowers. Most individual borrowers have one home to lose. The industry is facing trillions of dollars of rapidly vaporizing wealth they created for themselves and are reluctant to see stop coming their way.

Tossing ordinary people who have been taken advantage of under the bus is sickening. The industry’s well-crafted defense is taking hold in the media – people are supposedly to blame for taking out loans they didn’t qualify for and then not being able to pay for them.

But those who are hopping on the blame-game bandwagon won’t admit that the majority of people who were taken advantage of were led into adjustable rate mortgages for one reason and one reason only: There was yet another loan in the making; either the borrower would have to refi before the ratchet up or it would explode and be foreclosed on and yet another loan would be created for that property. To keep that machine churning required monumental fraud.

Spare me the “they’re just irresponsible” paintbrush. Yes, some borrowers are. But given who the squaliformes targeted and lured into the sausage machine it is nothing more than financial bigotry to simply say “they shouldn’t have signed that.” Guess what, in a lot of cases they didn’t even sign anything that was legally viable. But that didn’t stop servicers from turning the crank on the manufactured default/rapid foreclosure process, without which the machine would have clogged up and ground to a halt.

And worse, the majority of Americans who didn’t need to worry about fighting the credit scoring debacle sat back and enjoyed artificially low interest rates while the sub-prime victims (many of which should never have been there) drove profits into the stratosphere for the squaliformes and made millionaires among the legalized gamblers on Wall Street.

So give the whining about allegedly irresponsible subprime borrowers a rest - you’re blaming the passengers on the train for the sleeping engineer and the resulting crash.

The Honorable Judge Roy Bean

Jerry Brown is "Shocked!" Yea, Right.

Is it their political position and isolation from the real world that causes Attorney’s General to make sudden discoveries of old news? Or are we just supposed to assume they are running a few years behind the rest of us when it comes to the Squaliformes operating, or even based, in their state?

After filing suit against Countrywide in June, California’s Attorney General Jerry Brown put on a new song and dance about Bank of America’s newly-owned company just last week – he was “shocked.”

Shocked? Yes: "These shocking new details provide further evidence of Countrywide's dangerous lending practices,” Brown said. He was so “shocked” that he added twenty new charges to the suit.

But what he didn't mention was his sister's position on the CW board.

Shocking!

In 2001, while Mayor of Oakland, referring to the “Don’t Borrow Trouble” educational program Brown said: “Predatory lending is a reprehensible practice. This educational campaign will equip Oaklanders to make better financial decisions.”

Guess what, Jerry - that was PR fluff that you and a bunch of politicians got roped into.

Back in March of 2007, Gareth Lacy, Brown’s spokesman, said the attorney general has an “active and open investigation” that’s a continuation of probes into predatory lending practices that began a couple of years ago – as in 2005. And now, here we are in 2008 and Jerry Brown is “shocked.”

Yea, right. On this side of the Pecos, we'd wire up the ol' 'lectric fence and wrap this allegedly shocked nimrod in it to let 'im find out what a real jolt is.

The Honorable Judge Roy Bean

The Obama/Prtizker PR Machine Fires Back (with Blanks)

The PR machines and political supporters are busy, scrounging the net and blogs for anything that might be detrimental to a political candidate or a powerful Squaliforme.

Take the first published comment to the previous post. Then take the blog the author points to for what it's worth - they're firing blanks.

Let’s dissect this flimsy public-relations exercise:

Claim 1: “Penny Pritzker had no ownership in Superior. She did not profit or receive compensation, except minimal directors' fees. She and her extended family lost a great deal of money from this investment.”

OK, let’s see just how that works – “[she] and her extended family lost a great deal of money from this investment,” yet Penny Pritzker allegedly had “no ownership in Superior"??? Unfortunately, the author of this fluff piece misses the dichotomy, especially when claim 2 is made:

“She and her extended family agreed to pay the largest amount in the history of U.S. banking to the federal government: $460 million although they owned just 50% of the bank.”

You can’t have it both ways – the Pritzkers either did or didn’t own 50% of the bank and Penny is, after all, part of that “extended family” that “lost a great deal of money from this investment.” If we are supposed to be concerned that they, as half owner, paid while the other half didn't, that was their decision, which brings me to,

Claim 2: “They made the agreement because "it was the right thing to do."

Wrong again – they made the agreement so they would not have to spend years in court and expose themselves and the bank’s management to civil and potentially criminal liability. It wasn't quite the 'get out of jail free' card they expected; it would have been a nearly $40 Million dollar windfall if their and the FDIC's legal strategy against Ernst & Young had worked out the way they had planned.

“Because of these payments, uninsured depositors are expected to receive 80% of their uninsured funds.”

And we are to conclude what from that? Eventually those uninsured depositors are expected to “only” lose 20% of their deposited funds.

And let’s take another look at claim 3: “When Penny Pritzker was chairman of the Superior Bank board of directors, Superior received high ratings from the Office of Thrift Supervision.”

Wow. That’s a relief. The people asleep at the switch were consistently asleep at the switch.

“Her primary focus as chair was to ensure that poor performing commercial loans Superior inherited from its predecessor, Lyons Savings & Loan, were cleaned up."

My “so what” light is blinking, and if anyone believes a Chairman's focus was that narrow I have some ocean-front property over here on this side of the Pecos I'd like you make an offer on before you get to see it. And they didn't 'inherit' poor performing loans - they BOUGHT Lyons and those poor performing loans with their eyes wide open.

"When this was completed in 1994, she left the bank board but did continue as a member of the board of directors of the bank holding company.”

The "so what" light is still blinking. If anyone believes there isn't any control exercised by a holding company over the executives of the companies it owns, I have another one of those ocean-front properties available. Holding company ownership has protections AND privileges, including picking up the phone and holding people you know on a first-name basis accountable for things.

“Superior Bank was required to comply with applicable federal and state fair lending laws and practices. This was the bank's policy."

Ah, yes, the PR mantra of the squaliforme - "we're so regulated we couldn't do anything wrong."

"In addition, the bank's operating philosophy insofar as directors were aware was to follow ethical business practices. Loans and loan policies were overseen by the bank's management, officers, and employees.”

(Emphasis added 1): The magic "I didn't know" defense. I wonder which member of the legal team came up with that one!

(Emphasis added 2): In other words – "we’re not responsible for the people in the company we owned." What part of Board of Directors and holding company oversight responsibilities do you believe they should get a pass on?

“Board members of the holding company, Coast to Coast, were responsible to shareholders; Superior board members and officers were responsible for the bank.”

Now my BS detector is on full. This is one of the stupidest ploys I've seen in corporate PR dances in a long time. Let's see, the holding company owners were responsible to whom? Uh, just themselves. Sure. That makes more sense. And the people they as owners put on the Superior board were responsible for the bank. The owners were more than happy to risk hundreds of millions of dollars and not bother to keep an eye on what was going on. They trusted the Superior board and the officers - they must have; they bailed them out and protected them from further investigation and prosecution via the settlement. Now comes the PR slam, that it was the Superior board members and the bank officers that were responsible. Not the owners.

“Losses related to Superior subprime (whether through foreclosures or to bond investors through securitizations) were minimal compared with losses of other subprime lenders after 2001.”

Allow me to translate: "Someone else got caught and lost more than we did so we're not to blame. Besides, we didn't do anything wrong anyway, remember?"

“Unlawful lending has been widely investigated; no regulatory body has alleged Superior violated fair lending practices.”

That's clever - 'no regulatory body has...' that we know of, of course because of the terms of the settlement which bar any such investigation. But at least one court has. Check out the New York Supreme Court summary judgment ruling in favor of a borrower, noting that LaSalle had engaged in predatory lending. (LaSalle Bank N.A. v. Shearon Case (No.100255/2007, 2008 WL 268449).

Unlawful lending was not widely investigated in the Superior meltdown. It was hardly being investigated at all at that time. It was widely complained of, particularly in inner-city and minority communities but not much was actually being done. It was simply one tip of one iceberg the regulators were refusing to do anything about as the subprime heyday was ramping up and the money flowed into Washington.

“In 2004, Penny Pritzker was named as a director of LaSalle Bank Corporation and federal regulators did not object to her serving on the board of a national bank.”

Wow. Penny got on board with another major Squaliforme (not long before it was purchased by BofA) and the lap-dog regulators didn’t object. We should all be more impressed, eh?

Granted, the authors of the alleged 'facts' about Superior Bank blog are simply doing their job on behalf of the Obama campaign, but until the people who want to be elected to office rid themselves of the wealthy sub-prime squaliforme friends and supporters, they deserve nothing but scorn and even more exposure.

As the title of my previous post says, "....More Need to Go."

The Honorable Judge Roy Bean

One Down, More Need to Go

Well Squaliforme champion Phil Gramm's mouth finally did him in, which should improve McCain's chances of being elected this fall. In a typical 'let them eat cake' moment, the Godfather of predatory lending and bank deregulation spoke a partial truth - but it wasn't well crafted enough and revealed the mind-set that permeates the Washington lobby culture. Gramm will have to go back and suffer in his role at UBS.

Now the Obama campaign needs to step up to the plate and dump Penny Pritzker - legendary former owner of the sup-prime predatory lending squaliforme Superior Bank. Pritzker and Dworman (the owners) are still handing out multi-million dollar payments every year to the FDIC (part of the deal where no one had to admit any wrongdoing at Superior).

But the settlement was a pretty good gamble for the Pritzkers. The FDIC went after the auditors, Ernst & Young for compensatory damages in excess of $500 million and $1.5 billion in punitive damages. If the FDIC had gotten two billion dollars, Pritzker and Dworman would have been entitled to almost $500 million under their settlement agreement with the FDIC - without having to spend anything in chasing Ernst in court.

But their strategy fell apart when the courts decided the FDIC (as receiver) and Ernst were bound to settle their issue in arbitration. Instead of $500 Million, Pritzker and Dworman wound up getting only $30 Million back.

$460 Million sounds like a lot of money. But it was $100 Million there in 2001 and the rest of over 14 years, or roughly $25.7 Million per year - minus the $30 Million from Ernst. I won't bore you with the time-value-of-money view but you can bet they did.

But the FDIC paid out roughly $700 Million in the fiasco. And over a thousand depositors in the bank had amounts of more than the $100,000 threshold that weren't covered, so they're out of luck to the tune of $40 Million - their suit against the owners and managers was dismissed in 2004.

So if you feel sorry for the Pritzkers and Dwormans having to pay $25+ Million per year for a few years, imagine how quickly you'd be be behind bars if you ran a company that did what Superior Bank did.

Until regulators and prosecutors show some backbone in the all-too-cozy game of not having to admit wrongdoing, none of this kind of abuse is going to stop.

The Honorable Judge Roy Bean

A Letter to Washington

Dear Congressman/Senator ________________:

I see in news reports that there is great consternation on the hill over the financial industry.

Sorry, but you’re more than a decade late. You had your chance. You’ve been told over and over again that the house of cards was just that. You were content to ignore and even take advantage of the situation.

The people you turned into multi-millionaires were more than happy to help keep you in office all these years while the rest of us have been taken advantage of. Ordinary people funded the whole sordid mess with usurious interest rates and shockingly egregious fees and charges that created jobs and incomes for millions of ancillary company employees. The mutation sucked billions of dollars from people who thought they were supposed to own a home and did little more than lure them into paying more in interest than any other part of their budget.

Others have now lost whatever equity they may have had.

Now when the perpetrators of this scheme are whining you want our tax dollars to bail out the crooks you helped put in business? The chutzpah is staggeringly blatant.

It isn’t and never really was about the “American dream of home ownership.” It was the largest debt-creation and wealth-transfer scheme in the history of the world, and it naturally attracted those who knew how to take even further advantage and used their influence to keep the game going.

Now your creation has been exposed for what it really is and everyone who has anything to do with it is going to be running for cover and pointing fingers. That is if they’re still in the country.

And when the smoke clears and everybody who was on the inside breathes a sigh of relief that the Justice Department decided yet again to look the other way for 99.999% of the perpetrators, the lobbyists will take their checks and their marching orders and will go forth. The game will begin yet again.

Unless we all wake up and toss your sorry asses into the dustbin of political history.

The Honorable Judge Roy Bean

The way it is...

If you want to see the true nature of the Squaliformes, here’s another smoking gun:

From SEC investigations into the rating agencies, an email has surfaced that pretty much sums up the whole sordid sub-prime origination, securitization, rating and servicing mess - an email from an employee found in an agency's CDO group quoted his manager as saying that the rating agencies continue to create an "even bigger monster — the CDO market. Let's hope we are all wealthy and retired by the time this house of cards falters."

The Honorable Judge Roy Bean

Dorean Group Guru About to Be Smacked with More Criminal Charges

Kurt Johnson's loopy tirade against anyone and everyone involved (or not!) in his prosecution took on a really stupid approach by filing bogus UCC documents back in July of 2007, including a "UCC Financing Statement" that described a huge list of individuals as "debtors." From the most recent case (08-02325), the US Attorney's office wants to start by getting an injunction to stop at least some of Johnson's nonsense filings, for example - from the complaint:

14. The UCC Financing Statement purports to encumber “assets, land, consumer goods, farm products, inventory, equipment, money, investment property, commercial tort claims, letters of credit, letter-of-credit rights, insurance policies, bonds, chattel paper, instruments, equities, deposit accounts, accounts, documents, security interest, licenses, privileges, beneficial interest, retirement accounts, and general intangibles, and all Debtor’s rights in all such foregoing property, under strict foreclosure rights to the creditor though currently held in Debtor’s possession, at
$10,000,000.00 per actor/debtor and $50,000,000.00 per account to the current indebtedness of $1,230,000,000.00.”

15. Upon information and belief, the UCC Financing Statement was sent to the California Secretary of State through the U.S. Mail.

There was another similar one, but if we skip further down in the complaint, the relevant part is:

23. The UCC Financing Statement and the UCC Financing Statement Amendments were filed by defendant Johnson in an effort to establish invalid liens against employees of the United States and to wrongly and maliciously compel the payment of money by these employees.

24. In order to file a UCC Financing Statement, a debt must be owed to the filer and the debtor must authorize the filing of the UCC Financing Statement. See Cal. Com. Code §§ 9502(a), 9509(a)(1).

And he's apparently not done:

28. The UCC Financing Statement and the Financing Statement Amendment pose an immediate and irreparable injury upon the United States of America by impeding, obstructing and impairing the execution of the official duties of its employees or officers.

29. Upon information and belief, unless enjoined, Defendant will continue to file and record false and fraudulent liens and other documents against employees of the United States. For example, the Bureau of Prisons recently intercepted an additional UCC Financing Statement Amendment prepared by Defendant, which lists additional purported debtors, which was contained in an envelope addressed to the Clerk of the United States District Court for the Northern District of California.

And now, drum roll please....

32. Defendant’s conduct, as described herein, constitutes violations of 18 U.S.C. § 1341 (mail fraud) in that he has formed a scheme or artifice to defraud the United States employees identified above and the public by making material misrepresentations, including but not limited to misrepresentations that the employees are indebted to Defendant, have granted Defendant a lien in their property, and have authorized the filing of a UCC Financing Statement. Defendant has used the U.S. mails and commercial interstate carriers to further his fraudulent scheme. Defendant has used the mails in furtherance of his fraudulent scheme with the specific intent to deceive or defraud.

Johnson got an extension of time to reply and that should be as laughable as the other filings he's cobbled together, but all in all it indicates there will probably be more mail fraud indictments soon, and the best part is the case got attached so Alsup will be hearing it!

Yep, Johnson's got 'em right where he wants 'em - again.

The Honorable Judge Roy Bean