Rogue Foreclosures: The Larger Threat [View article]
Mike - - -
Thanks for the update on this problem. Anecdotal stories and one of a kind examples of judges here and there blocking foreclosure actions because of no evidence of legal standing of the plaintiff have been floating around for a couple of years now. The question of how many foreclosures are completed improperly is far from answered. Yves has done well in keeping this question open and this post is a welcome addition.
The entire history of mortgage securitization and the rescue of the perpetrators of various frauds (from lying buyers and deceitful mortgage brokers through the formulators and peddlers of opaque MBS and derivative securities) is a walk of shame. While many of the operations in this arena have been above board, hundreds of billions of activity have simply been fraudulent.
Is it any surprise that the required documentation for proper ownership interest has been glossed over or, in some cases, just ignored?
Initial Claims Down: But Is It Enough? [View article]
Dirk - - -
I found your concluding comment very interesting:
<<If we try to save money by cutting off extended benefits, it is likely that we will simply have to spend more money on losses at Fannie and Freddie, so the savings would be an illusion.>>
So much of the effort to cushion the impact of the recession is composed of an interrelated web of interdependencies. I think your comment can be related to the old car transmission repair shop ad pushing the idea of preventative maintenance: "You can pay me now or pay me much more later."
Unfortunately the relationship between amounts paid now and amounts paid later is not so clear in the government support efforts for the economy
Talbott on Banks and the Fed: The Trillion Dollar Fraud [View article]
Rumpole - - -
To my knowledge no authority of the government to examine the books of the Fed has ever been authorized. The Fed is not a government agency. It is an organization of banks to whom the U.S. government gave a blank check in 1913.
Goldman Sachs: The Tip of the Iceberg [View article]
Don - - -
I appreciate that you will continue to write comments on what I write. It will help provide balance to the discussion because some on my commenters think I am not liberal and criticize me from the left. What's curious is that I don't look at finance and economics through a political lens. I find much to admire in the work of people like Steve Keen and other Austrians, but did not feel I needed to cite them in light of the discussion we have had here.
I will always acknowledge with thanks when something I have said is found to be counter factual and will make necessary corrections. Ultimately I am trying to present analysis, but admit I do get off the data track and on the opinion track when trying to follow a news story.
Goldman Sachs: The Tip of the Iceberg [View article]
Don Furio - - -
I regret not taking more positions in banks over the past year. There were many excellent trades, some for long term capital gains, that could have been made. I wasn't as smart as you and missed out.
I do not regret expressing my opinion that a serious error has been made in addressing the shortcomings of our financial system. To avoid extending a long winded conversation, my views are aligned with those of Simon Johnson, Paul Volker, William Black and Joseph Stiglitz (among others).
I am not investing in banks today because I can not trust that their financials will not change with another flick of the accounting pen. I believe that their leverage exposure continues to be hidden through "tricks" with repos and other off-balance sheet maneuvers. I will look for opportunistic trades for possible short term gains but financials will not be in my core portfolio until things are clearer for me.
In other words I think the dancing referred to by Chuck Prince continues and the game of musical chairs continues with government bailout protection.
I am very aware that the Abacus offering was synthetic and have so stated in several articles, but not in every one. I have read the Abacus offering circular and have a reasonable understanding of the material contained therein. My understanding is not authoritative, however. If you determine that I have made factually inaccurate statements, please make correct ones. I am a participant on Seeking Alpha to learn from other contributors and readers, not just to share what I have learned.
Goldman Sachs: The Tip of the Iceberg [View article]
Don - - -
I have been bearish on banks since August, 2008 when I sold my last positions in BAC. Actually I was bearish for all of 2008 since I started lightening up on everything financial in January.
I have not invested in anything financial for more than 18 months except for a number of opportunistic short term trades.
I am not investing in anything financial at the present either.
The division of the SEC doing the derivatives investigations was formed in early 2009. Before that this was apparently not a concern for the SEC. You'll have to ask Chris Cox (former head of the SEC) what was going on in 2008 and earlier.
One of the problems I have with the proposed financial reform bill is that it calls for an industry funded $50 billion resolution fund. The existence of this fund (in that amount) is tantamount to creating an implied government bailout guarantee. After all, the implication is that the government endorses a $50 billion amount being sufficient. And that is an obvious pipe dream.
When you have huge firms with assets totaling well over a trillion dollars each, a bankruptcy resolution fund less than 5% of the average assets of each firm is not likely to fund the resolution if only just one of them fails. It is ridiculously inadequate if two or more fail at close to the same time.
Goldman Sachs: The Tip of the Iceberg [View article]
I can't rule out the timing being politically motivated. However, this was not sprung out of thin air overnight. The SEC notified GS that the Abacus affair was under investigation nine months ago. I have found obscure news items and several detailed blog posts about Abacus and other CDS/CDO investments of a similar suspect nature. These have appeared over the past 6-9 months. I wasn't alert enough to have noticed them in real time, only this weekend, after the fact.
Whether or not the timing is political, the detective work at the SEC has been going on for some time. I do not know, but suspect, that there are other similar cases under investigation by the SEC. The big question is whether the SEC has the manpower to look into these matters on a system wide basis. I expect they are constrained by resources.
I suspect the Abacus case may be a trial horse to determine if the SEC approach here should be replicated or modified. I believe that other entities (besides GS) will be targeted.
Goldman Sachs: The Tip of the Iceberg [View article]
Arthur - - -
This is a $1 billion shady deal. It is probably prototypical of hundreds of billions. There is no transparency in these markets because they are non-competitive closed door transactions.
When the history of this era is written, future students will find our stupidity in tolerating this situation quite amazing. Some of us are already on the same page with those future students.
I am hoping that more of these manipulative arrangements will be uncovered in the next few months so that the pattern that allowed speculative over-leverage to run out of control can be defined and appropriate rules established to keep it from happening again.
I used the word eventually because I fear that there may be limited discovery in the current time frame and it may be the future students who see all the details.
Mortgage Delinquencies Continue to Rise [View article]
Mark - - -
Thanks for continuing to add to this discussion. Including GSE mortgages in the LPS data makes the private sector underwriting look even worse, as you point out in your comment.
Your data:
<<$3T of private label – 30% delinquent <<$1T FHA/VA – 15% delinquent <<1T+ on bank balance sheets – 5% delinquent
says it all.
Private label scams (see robert.b.ferguson comment) are gross disasters and mortgages banks retained were much better underwritten, although I expect that provisions were made for much less than 5% delinquency.
The latest Fannie data release of 5.5% delinquency is much lower than your FHA/VA number. Is Fannie that much better or am I looking at an accounting trick in their report?
Aftershocks from the Massachusetts Earthquake [View article]
untrusting investor - - -
I have seen the numbers you noted and have reviewed the compendium of "The Statistical History of the United States". Since 1960, the government has grown in number of civilian employees under all presidents except Clinton and the cost of government civilian payrolls has grown equal to or faster than the rate inflation, for all presidents except Clinton. Republicans may have a poorer government growth record than Democrats, but I have not felt it worthwhile to examine that in detail.
I think that once we go down that road, too many people start thinking in terms of ideology and can lose sight of the importance of trying to focus on ideas.
I'm not criticizing you for pointing out the factors you did. I, personally, do not like to go there because I hope that people will look at my analysis efforts without my adding a political lens that might distort what the numbers are really saying.
Aftershocks from the Massachusetts Earthquake [View article]
GoodLife - - -
You used the word "hidden" and that may be the key operative word. Bernancke has declared the intention of ending QE. The economic pain of doing so may not be tolerated politically, so some round about maneuvering may be employed.
BofA Settlement With Fannie and Freddie: Part of a Trillion Dollar Fraud [View article]
Just posted a GEI News Brief on the AG - Big Bank settlement: econintersect.com/b2ev...
Rogue Foreclosures: The Larger Threat [View article]
Thanks for the update on this problem. Anecdotal stories and one of a kind examples of judges here and there blocking foreclosure actions because of no evidence of legal standing of the plaintiff have been floating around for a couple of years now. The question of how many foreclosures are completed improperly is far from answered. Yves has done well in keeping this question open and this post is a welcome addition.
The entire history of mortgage securitization and the rescue of the perpetrators of various frauds (from lying buyers and deceitful mortgage brokers through the formulators and peddlers of opaque MBS and derivative securities) is a walk of shame. While many of the operations in this arena have been above board, hundreds of billions of activity have simply been fraudulent.
Is it any surprise that the required documentation for proper ownership interest has been glossed over or, in some cases, just ignored?
Initial Claims Down: But Is It Enough? [View article]
I found your concluding comment very interesting:
<<If we try to save money by cutting off extended benefits, it is likely that we will simply have to spend more money on losses at Fannie and Freddie, so the savings would be an illusion.>>
So much of the effort to cushion the impact of the recession is composed of an interrelated web of interdependencies. I think your comment can be related to the old car transmission repair shop ad pushing the idea of preventative maintenance: "You can pay me now or pay me much more later."
Unfortunately the relationship between amounts paid now and amounts paid later is not so clear in the government support efforts for the economy
Talbott on Banks and the Fed: The Trillion Dollar Fraud [View article]
To my knowledge no authority of the government to examine the books of the Fed has ever been authorized. The Fed is not a government agency. It is an organization of banks to whom the U.S. government gave a blank check in 1913.
Talbott on Banks and the Fed: The Trillion Dollar Fraud [View article]
Goldman Sachs: The Tip of the Iceberg [View article]
I appreciate that you will continue to write comments on what I write. It will help provide balance to the discussion because some on my commenters think I am not liberal and criticize me from the left. What's curious is that I don't look at finance and economics through a political lens. I find much to admire in the work of people like Steve Keen and other Austrians, but did not feel I needed to cite them in light of the discussion we have had here.
I will always acknowledge with thanks when something I have said is found to be counter factual and will make necessary corrections. Ultimately I am trying to present analysis, but admit I do get off the data track and on the opinion track when trying to follow a news story.
Thanks for continuing this exchange.
Goldman Sachs: The Tip of the Iceberg [View article]
I regret not taking more positions in banks over the past year. There were many excellent trades, some for long term capital gains, that could have been made. I wasn't as smart as you and missed out.
I do not regret expressing my opinion that a serious error has been made in addressing the shortcomings of our financial system. To avoid extending a long winded conversation, my views are aligned with those of Simon Johnson, Paul Volker, William Black and Joseph Stiglitz (among others).
I am not investing in banks today because I can not trust that their financials will not change with another flick of the accounting pen. I believe that their leverage exposure continues to be hidden through "tricks" with repos and other off-balance sheet maneuvers. I will look for opportunistic trades for possible short term gains but financials will not be in my core portfolio until things are clearer for me.
In other words I think the dancing referred to by Chuck Prince continues and the game of musical chairs continues with government bailout protection.
I am very aware that the Abacus offering was synthetic and have so stated in several articles, but not in every one. I have read the Abacus offering circular and have a reasonable understanding of the material contained therein. My understanding is not authoritative, however. If you determine that I have made factually inaccurate statements, please make correct ones. I am a participant on Seeking Alpha to learn from other contributors and readers, not just to share what I have learned.
Goldman Sachs: The Tip of the Iceberg [View article]
I have been bearish on banks since August, 2008 when I sold my last positions in BAC. Actually I was bearish for all of 2008 since I started lightening up on everything financial in January.
I have not invested in anything financial for more than 18 months except for a number of opportunistic short term trades.
I am not investing in anything financial at the present either.
The division of the SEC doing the derivatives investigations was formed in early 2009. Before that this was apparently not a concern for the SEC. You'll have to ask Chris Cox (former head of the SEC) what was going on in 2008 and earlier.
One of the problems I have with the proposed financial reform bill is that it calls for an industry funded $50 billion resolution fund. The existence of this fund (in that amount) is tantamount to creating an implied government bailout guarantee. After all, the implication is that the government endorses a $50 billion amount being sufficient. And that is an obvious pipe dream.
When you have huge firms with assets totaling well over a trillion dollars each, a bankruptcy resolution fund less than 5% of the average assets of each firm is not likely to fund the resolution if only just one of them fails. It is ridiculously inadequate if two or more fail at close to the same time.
Goldman Sachs: The Tip of the Iceberg [View article]
Whether or not the timing is political, the detective work at the SEC has been going on for some time. I do not know, but suspect, that there are other similar cases under investigation by the SEC. The big question is whether the SEC has the manpower to look into these matters on a system wide basis. I expect they are constrained by resources.
I suspect the Abacus case may be a trial horse to determine if the SEC approach here should be replicated or modified. I believe that other entities (besides GS) will be targeted.
Goldman Sachs: The Tip of the Iceberg [View article]
This is a $1 billion shady deal. It is probably prototypical of hundreds of billions. There is no transparency in these markets because they are non-competitive closed door transactions.
When the history of this era is written, future students will find our stupidity in tolerating this situation quite amazing. Some of us are already on the same page with those future students.
I am hoping that more of these manipulative arrangements will be uncovered in the next few months so that the pattern that allowed speculative over-leverage to run out of control can be defined and appropriate rules established to keep it from happening again.
I used the word eventually because I fear that there may be limited discovery in the current time frame and it may be the future students who see all the details.
Goldman Sachs: The Tip of the Iceberg [View article]
I tried to address the issues you raised in another article today:
seekingalpha.com/artic...
Mortgage Delinquencies Continue to Rise [View article]
Shareholders may or may not be protected when FNM and FRE are eventually restructured. It is a crap shoot and, personally, I'm not rolling the dice.
Mortgage Delinquencies Continue to Rise [View article]
Thanks for continuing to add to this discussion. Including GSE mortgages in the LPS data makes the private sector underwriting look even worse, as you point out in your comment.
Your data:
<<$3T of private label – 30% delinquent
<<$1T FHA/VA – 15% delinquent
<<1T+ on bank balance sheets – 5% delinquent
says it all.
Private label scams (see robert.b.ferguson comment) are gross disasters and mortgages banks retained were much better underwritten, although I expect that provisions were made for much less than 5% delinquency.
The latest Fannie data release of 5.5% delinquency is much lower than your FHA/VA number. Is Fannie that much better or am I looking at an accounting trick in their report?
Aftershocks from the Massachusetts Earthquake [View article]
I have seen the numbers you noted and have reviewed the compendium of "The Statistical History of the United States". Since 1960, the government has grown in number of civilian employees under all presidents except Clinton and the cost of government civilian payrolls has grown equal to or faster than the rate inflation, for all presidents except Clinton. Republicans may have a poorer government growth record than Democrats, but I have not felt it worthwhile to examine that in detail.
I think that once we go down that road, too many people start thinking in terms of ideology and can lose sight of the importance of trying to focus on ideas.
I'm not criticizing you for pointing out the factors you did. I, personally, do not like to go there because I hope that people will look at my analysis efforts without my adding a political lens that might distort what the numbers are really saying.
Aftershocks from the Massachusetts Earthquake [View article]
You used the word "hidden" and that may be the key operative word. Bernancke has declared the intention of ending QE. The economic pain of doing so may not be tolerated politically, so some round about maneuvering may be employed.