Published on May 13, 2012
Rep. Alan Grayson questions the FED inspector General where $9 TRillion dollars went... and Inspector General Elizabeth Coleman hasn't a clue...Dunno whether to laugh or cry - I am still getting over the shock and have watched 4 times - LISTEN carefully to what she says - THEY HAVE NO JURISTRICTION to investigate the fed!!!
Wall Street banks took down the economy by creating hundreds of billions of dollars of mortgage-backed securities that were toxic and often designed to fail. They knew that it was just a matter of time before mortgage foreclosures would destroy the value of those securities. Yet, all the largest U.S. banks packaged and sold toxic mortgages to investors all over the world, who were told these were sound investments. Sometimes the very same banks joined with hedge funds to profit by betting that the toxic securities would collapse. Meanwhile, they pumped up the housing market until it burst all over us.
Because of this fraudulent activity the entire economy crashed, killing 8 million jobs in a matter of months due to no fault of those displaced workers. It was the biggest, most corrupt and most profitable casino in human history. And now 2012 has passed without a single person responsible for the mess losing his or her job, or forfeiting their outrageous pay packages. As the New York Times recently reported:
Regulators, prosecutors, investors and insurers have filed dozens of new claims against Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and others, related to more than $1 trillion worth of securities backed by residential mortgages.
Estimates of potential costs from these cases vary widely, but some in the banking industry fear they could reach $300 billion if the institutions lose all of the litigation. Depending on the final price tag, the costs could lower profits and slow the economic recovery by weakening the banks’ ability to lend just as the housing market is showing signs of life.
The banks are battling on three fronts: with prosecutors who accuse them of fraud, with regulators who claim that they duped investors into buying bad mortgage securities, and with investors seeking to force them to buy back the soured loans.
“We are at an all-time high for this mortgage litigation,” said Christopher J. Willis, a lawyer with Ballard Spahr, which handles securities and consumer litigation.
Efforts by the banks to limit their losses could depend on the outcome of one of the highest-stakes lawsuits to date — the $200 billion case that the Federal Housing Finance Agency, which oversees the housing twins Fannie Mae and Freddie Mac, filed against 17 banks last year, claiming that they duped the mortgage finance giants into buying shaky securities.
Last month, lawyers for some of the nation’s largest banks descended on a federal appeals court in Manhattan to make their case that the agency had waited too long to sue. A favorable ruling could overturn a decision by Judge Denise L. Cote, who is presiding over the litigation and has so far rejected virtually every defense raised by the banks, and would be cheered in bank boardrooms. It could also allow the banks to avoid federal housing regulators’ claims.
At the same time, though, some major banks are hoping to reach a broad settlement with housing agency officials, according to several people with knowledge of the talks. Although the negotiations are at a very tentative stage, the banks are broaching a potential cease-fire.
As the housing market and the nation’s economy slowly recover from the 2008 financial crisis, Wall Street is vulnerable on several fronts, including tighter regulations assembled in the aftermath of the crisis and continuing investigations into possible rigging of a major international interest rate. But the mortgage lawsuits could be the most devastating and expensive threat, bank analysts say.
“All of Wall Street has essentially refused to deal with the real costs of the litigation that they are up against,” said Christopher Whalen, a senior managing director at Tangent Capital Partners. “The real price tag is terrifying.”
Anticipating painful costs from mortgage litigation, the five major sellers of mortgage-backed securities set aside $22.5 billion as of June 30 just to cushion themselves against demands that they repurchase soured loans from trusts, according to an analysis by Natoma Partners.
But in the most extreme situation, the litigation could empty even more well-stocked reserves and weigh down profits as the banks are forced to pay penance for the subprime housing crisis, according to several senior officials in the industry.
There is no industrywide tally of how much banks have paid since the financial crisis to put the mortgage litigation behind them, but analysts say that future settlements will dwarf the payouts so far. That is because banks, for the most part, have settled only a small fraction of the lawsuits against them.
JPMorgan Chase and Credit Suisse, for example, agreed last month to settle mortgage securities cases with the Securities and Exchange Commission for $417 million, but still face billions of dollars in outstanding claims.
Bank of America is in the most precarious position, analysts say, in part because of its acquisition of the troubled subprime lender Countrywide Financial.
Last year, Bank of America paid $2.5 billion to repurchase troubled mortgages from Fannie Mae and Freddie Mac, and $1.6 billion to Assured Guaranty, which insured the shaky mortgage bonds.
But in October, federal prosecutors in New York accused the bank of perpetrating a fraud through Countrywide by churning out loans at such a fast pace that controls were largely ignored. A settlement in that case could reach well beyond $1 billion because the Justice Department sued the bank under a law that could allow roughly triple the damages incurred by taxpayers.
Bank of America’s attempts to resolve some mortgage litigation with an umbrella settlement have stalled. In June 2011, the bank agreed to pay $8.5 billion to appease investors, including the Federal Reserve Bank of New York and Pimco, that lost billions of dollars when the mortgage securities assembled by the bank went bad. But the settlement is in limbo after being challenged by investors. Kathy D. Patrick, the lawyer representing investors, has said she will set her sights on Morgan Stanley and Wells Fargo next.
The Huffington Post’s Ryan Grim reported Tuesday that Sen.-elect Elizabeth Warren, a dogged consumer advocate whose critique of Wall Street excess was a centerpiece of her campaign, will join the Senate Banking Committee. Wall Street spent boatloads of money to prevent Warren’s election, but now, as the Center for Responsive Politics noted, she will have oversight of the rules and regulations under which banks operate:
Dear Friend,
Yesterday's announcement that S.E.C. Chair Mary Schapiro is resigning presents President Obama with a very telling choice and a very important opportunity.
The S.E.C. is one of the top regulators of Wall Street, so the president can and should ensure it's led by a champion for accountability on Wall Street.
But we shouldn't at all be confident the president won't appoint someone more interested in placating Wall Street firms than taking them to task.
For example, the New York Times reported that Sallie Krawcheck, the former head of global wealth management at Merrill Lynch and a former top executive at Citigroup, is being considered for the position.1
President Obama has already named Elisse Walter, a current S.E.C. commissioner originally appointed by George W. Bush, as the new chair of the S.E.C. But Walter, who can serve through 2013 without Senate approval, will in all likelihood be a temporary replacement who serves only until another nominee can be confirmed by the Senate.
So we need to speak out now to push President Obama to name the right kind of person to the job.
M.I.T. economist and New York Times economic blogger Simon Johnson recommends three people to chair the S.E.C.: former TARP Special Inspector General Neil Barofsky; former Senator Ted Kaufman; and the leader of the pro-reform group Better Markets, Dennis Kelleher.2 To Johnson's list we'd add the former head of the F.D.I.C., Sheila Bair.
As Johnson pointed out in a recent blog post, the historical moment we're in requires not just someone who will diligently enforce the law, but also someone who will combat the pernicious Wall Street spin that has become part of the conventional wisdom.
Johnson says:
Goldman Sachs, JPMorgan Chase and Citigroup were all big donors to the Obama campaign in 2008 ... but they did not make the top 10 list this year. Now would be a perfect time for the president to clean up Wall Street with a strong S.E.C. that is focused on enforcing the law and overturning dangerous parts of the conventional wisdom.3
Wall Street has countless well paid spinmeisters and well funded public relations efforts that have sought to absolve Wall Street crooks of any responsibility for the financial collapse. According to their Orwellian version of history, the people who gambled in the Wall Street casino with taxpayer money didn't do anything wrong. And according to their vision, the best thing the government can do to get the economy on track is just get out of Wall Street's way.
That would be a dangerous perspective for one of Wall Street's top cops.
Neil Barofsky has actually put bankers in jail as both an Assistant U.S. Attorney for the Southern District in New York and as Special Investigator General for the TARP program. A career prosecutor, he is one of the only people this decade who have prosecuted complex financial fraud.Former Senator Ted Kaufman of Delaware is, according to Simon Johnson, "a consistent advocate for financial-sector reform and was one of the clearest voices during the 2010 legislative process that led to Dodd-Frank."Dennis Kelleher is, per Johnson, "a former senior Senate leadership aide with a great deal of political experience, including during the financial crisis and in the negotiations that led to Dodd-Frank, and now runs the pro-reform group Better Markets...No one has been a more effective advocate of implementing substantive reforms."Sheila Bair is widely acknowledged in government circles and the media as one of the first people to identify and accurately assess the subprime crisis. Elizabeth Warren said that Blair "is a strong voice for Wall Street accountability and financial reform...[whose] leadership during the financial crisis made a real difference for working families..."4
You can bet that Wall Street is already lining up support for their preferred candidates. So we can't afford to be silent.
Please speak out and help push Obama to appoint a chair of the S.E.C. who will be a real force for Wall Street accountability. Click the link below to automatically sign the petition:
Thank you for speaking out.
1. "Schapiro, Head of S.E.C., Announces Departure," New York Times, 11-26-12.
2. "Changing the Conventional Wisdom on Wall Street," New York Times, 11-15-12.
3. Ibid.
4. "Sheila Bair, Republican Former FDIC Chairperson, Endorses Elizabeth Warren for U.S. Senate," Elizabeth Warren for Senate Press Release, 10-17-12.
2. "Changing the Conventional Wisdom on Wall Street," New York Times, 11-15-12.
3. Ibid.
4. "Sheila Bair, Republican Former FDIC Chairperson, Endorses Elizabeth Warren for U.S. Senate," Elizabeth Warren for Senate Press Release, 10-17-12.
Dear Friend,
Elizabeth Warren's victory over Scott Brown means that Massachusetts will soon be represented by the strongest voice for Wall Street accountability in the Senate.
But Wall Street-friendly politicians and lobbyists in DC have started a whisper campaign to keep Warren off of the Senate Banking Committee — the one Senate committee that would most directly empower her to fight for consumers and stand up to Wall Street banks.
Don't let Wall Street sideline Elizabeth Warren.
We've seen this before. Elizabeth Warren was effectively blocked from heading up the Consumer Financial Protection Bureau — which she conceived of, advocated for and ultimately helped start up — by DC insiders who didn't want such a strong advocate of banking reform in charge of the Wall Street watchdog she helped create.
She then ran for Senate and won. Now it's up to us to have her back and ensure that when she gets to the Senate she can be the fierce and effective advocate we so desperately need.
Elizabeth Warren is a clear choice for the Senate Banking Committee. She is a respected Harvard professor and one of the country's leading experts on bankruptcy law who spent her career focused on the financial struggles of middle class families.
What's more, she has proven time and again that that she is willing to stand up to Wall Street on behalf of consumers, which is why Washington and Wall Street insiders are trying to keep her off the Senate Banking Committee.
Senate Majority Leader Harry Reid is hearing from banking industry lobbyists and conservative Democrats who don't want Elizabeth Warren on the banking committee. Now he needs to hear from us.
Put simply, there are far too few people in power who are as ready, willing and able to stand up to Wall Street banks as she is.
And whether it's speaking out against a secret bailout of AIG or demanding Jamie Dimon, the CEO of JP Morgan Chase, resign from the Board of the New York Fed, she has continued to carry the torch to this day.
Warren accomplished all of this before she was elected to the Senate. Just imagine what she'll be able to do if she's allowed to fully leverage the legislative and oversight powers of a sitting senator on the main committee for Wall Street legislation.
Speak out to tell Senate Majority Leader Harry Reid to give Elizabeth Warren a seat on the Senate Banking Committee. Click the link below to automatically sign the petition:
Thank you for speaking out.
The lobbies write the bills. More people get in bankruptcy than graduate from college.
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