The Fed Bought FRAUD

 

By Greg Hunter’s USAWatchdog.com

 

By Greg Hunter’s USAWatchdog.com

In the wake of the financial meltdown of 2008, the Federal Reserve announced it would buy mortgage-backed securities, or MBS.  The January announcement by the Fed said it would buy MBS from failed mortgage giants Fannie Mae and Freddie Mac in the amount of $1.25 trillion.  At the time, the Fed said in a press release, “The goal of the program was to provide support to mortgage and housing markets and to foster improved conditions in financial markets more generally.”   (Click here for the full Fed statement.) It did provide “support” to the mortgage market, but did it also buy fraud and cover the banks that sold it?  The evidence shows, at the very least, it bought massive amounts of fraud.

We now know the Fed definitely bought valueless MBS because it has joined other ripped-off investors to demand Bank of America buy back billions in sour home debt.  A Bloomberg story from just last week, featuring Philadelphia Fed President Charles Plosser,  reports, “The New York Fed, which acquired mortgage debt in the 2008 rescues of Bear Stearns Cos. and American International Group Inc., has joined a bondholder group that aims to force Bank of America Corp.to buy back some bad home loans packaged into $47 billion of securities.  On the one hand, the Fed has “a duty to the taxpayer to try to collect on behalf of the taxpayer on these mortgages,” Plosser said today at an event in Philadelphia.”  

Mr. Plosser lamented the “difficult spot” the central bank is in because it is both bank regulator and plaintiff.  He said, “Should we be in the business of suing the financial institutions that we are in fact responsible for supervising?” (Click here to read the complete Bloomberg story.) To that question, I ask shouldn’t the Fed have done a much better job of supervising the big banks in the first place?  The whole financial and mortgage crisis from sour securities to foreclosure fraud is in the process of blowing sky high.  The entire mess is clearly the biggest financial fraud in history!  It looks to me like the regulators were just supervising their pay checks being deposited into the bank.

And remember, the $1.25 trillion of mortgage-backed securities the Fed bought from Fannie and Freddie?  How much of that is fraud?  William Black, the outspoken Professor of Economics from the University of Missouri KC, says all the big banks were committing “major frauds”in the mortgage-backed security market.  Black says, at Citicorp, for example, “. . . 80% of the mortgage loans it sold to Fannie and Freddie were sold under false representations and warranties.” (Click here for the complete Black interview.) Black claims the frauds increased at some banks, and it is sill going on today!   (I admit I used this same video in a recent post.  I use it again, because it is the single most important and damning indictment of the big banks out there.  Professor Black defines the size of the entire fraudulent mortgage mess.)

If he’s right, and I think he is, that means the Fed just spent the last 20 months (the  program ended in August 2010) buying a trillion dollars in mortgage fraud!  That is a staggering amount even for the most powerful central bank in the world.   Could the Federal Reserve have bought that amount of fraudulent MBS and not have known it?  Could the Fed have been buying that amount of rotten worthless debt to cover the banksters in the syndicate?  Who knows if we will ever find that out because the Federal Reserve cannot be independently audited. And who knows what else it bought in sour debt to bail out their banking syndicate buddies because the Federal Reserve cannot be independently audited! It has never been audited in its 97 year history.  I know one thing, if the Fed is going to keep its banking cartel alive, it is going to be forced to print massive amounts of money out of thin air to buy a heck of a lot more fraudulent mortgage-backed securities.  That’s what worries and scares me the most.

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Re: The Fed Bought FRAUD

Big Banks Told Not To 'Fix' A Fraud

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Ohio's attorney general threw a wrench into the banking industry's push to quickly restart foreclosures by fixing faulty paperwork, and pressed them to modify mortgage loans.

In two letters released Friday, Attorney General Richard Cordray criticized a number of banks and loan-servicing companies, including Wells Fargo & Co.; Ally Financial Inc.'s GMAC Mortgage; Bank of America Corp.; and J.P. Morgan Chase & Co. Mr. Cordray said the banks are trying to paper over fraud committed in foreclosures with temporary fixes that don't address underlying problems in the banks' practices.

"It is not acceptable for a party who believes they submitted false court documents to merely replace those documents. Wells Fargo and any other banks are not simply allowed a 'do-over,' " he wrote in the letter to Wells. The other letter was sent to Ohio judges, who were asked to notify Mr. Cordray when banks file substitute affidavits.

He demanded that the banks vacate any court order or motion that was based on improper paperwork. In an interview Friday, Mr. Cordray said the banks would "be well-served to work out a settlement with the borrowers to modify the loans and work out payments."

Mr. Cordray's letters come as several banks say they have reviewed their foreclosure procedures and are resuming evictions. But his insistence that they go beyond replacing affidavits by employees who have been labeled "robo-signers"—who didn't adequately review underlying foreclosure documentation—threatens to upend banks' efforts to resolve their foreclosure problems.

Mr. Cordray's strategy gives clues to the goals of a 50-state probe, which was announced two weeks ago. Led by Iowa Attorney General Tom Miller, the effort was joined by top law-enforcement officers from all 50 states in response to reports of widespread errors in foreclosure filings and allegations of robo-signing.

"The banks are committing fraud on the court, essentially perjury, and then saying 'Whoops! You caught me! Here's some different evidence and use that instead,' " Mr. Cordray said in an interview Friday. "I know a lot of judges are not going to take kindly to that."

Bank of America declined to comment. A Wells Fargo spokeswoman said Friday the company intends to cooperate with Mr. Cordray's inquiries and doesn't "believe that any of these instances led to foreclosures which should not have otherwise occurred." She added that Wells Fargo has "chosen to submit supplemental affidavits out of an abundance of caution."

Tom Kelly, a J.P. Morgan spokesman, said the company is still reviewing foreclosure documents for mistakes and hasn't refiled any new or replacement affidavits. Gina Proia, a spokeswoman for GMAC, said her company is "not proceeding with foreclosure sales in Ohio or any state using a defective affidavit."

The aims of the 50-state probe were initially unclear. Some attorneys general, however, made reference to a 2008 settlement in which Bank of America agreed to an $8.4 billion loan-modification program after its Countrywide Financial unit was probed for predatory lending practices.

Mr. Cordray declined to discuss the 50-state investigation or the conversations he has had with other attorneys general about the matter. Mr. Cordray, a Democrat, faces a Republican challenger for his office in Tuesday's general election.

Wells Fargo Chief Financial Officer Howard Atkins said in an Oct. 20 television interview that he was "confident with our policies and controls" related to foreclosures and that "the person at Wells who signs a foreclosure file is the same person as the person who reviews the file, and it is not always done that way in the industry."

But on Oct. 28, Wells announced it was resubmitting affidavits for 55,000 pending foreclosures, suggesting that some of the paperwork might be flawed. In March, a Wells Fargo employee named Xee Moua said in a sworn deposition in a Florida foreclosure case that she signed between 300 and 500 foreclosure documents a day, without reviewing the numbers on the loan files for accuracy.

Asked if she verified the appropriate information, she said, "That's not part of my job description."

—Ruth Simon, Dan Fitzpatrick and Vanessa O'Connell contributed to this article.Printed in The Wall Street Journal, page B1

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Re: The Fed Bought FRAUD

Isn't it interesting that the Fed has never been auditied in its 97 yr old history?    They seem to be able to do anything & everything without accountability.   They can falsely prop up the big banks whenever they chose the right moment.   They can print money ad infinitem to the ultra detriment of the people they are supposed to serve.   They serve the inner core of selfish banksters - or should I say "Gangsters" & Wall St. boys, who are supposed to get a Christmas bonus equivalent to 1% of the GDP -  simply amazing -  beyond words.     Please tell me how long can this CHARADE continue?   How long will it be before our standard of living drops dramatically?