Wall Street Banks Pay $50 million To Deal with Guilt Pre-Memorial Day 2011

It's All Better Now that The Big Wall Street Banks

have Apologized...NOT!!!

4,454 soldier deaths in Iraq,

1,598 in Afghanistan and

Jamie (I missed the Vietnam draft

by 3 years) Dimon deeply apologizes...

By Justin Blum
May 26 (Bloomberg) -- Bank of America Corp. and Morgan Stanley units will pay $22.4 million to resolve U.S. allegations that they improperly foreclosed on active-duty soldiers, including some who suffered severe injuries, without first obtaining court orders.

The Bank of America unit will pay $20 million to settle a lawsuit alleging improper foreclosure on about 160 members of the military between 2006 and 2009, the Justice Department said in a statement today. Morgan Stanley’s Saxon Mortgage Services Inc. unit will pay $2.35 million to resolve a lawsuit alleging it improperly foreclosed on 17 service members from 2006 to 2009.

“The men and women who serve our nation in the armed forces deserve, at the very least, to know that they will not have their homes taken from them wrongfully while they are bravely putting their lives on the line on behalf of their country,” Thomas Perez, the assistant attorney general overseeing the Justice Department’s civil rights division, said in today’s statement.

The foreclosures violated the Servicemembers Civil Relief Act, which was enacted to shield deployed military personnel from financial stress, according to the Justice Department.

‘Not Acceptable’

“These errors are not acceptable, and we certainly regret them,” Terry Laughlin, head of Bank of America’s unit managing foreclosures and defaulted loans, said in an e-mail. “While most cases involve loans originated by Countrywide and the improper foreclosures were taken or started by Countrywide prior to our acquisition, it is our responsibility to make things right.”

Morgan Stanley apologizes to the military families affected by the mistakes, Mark Lake, a spokesman for the New York-based bank, said in an e-mailed statement.

“Our servicemen and women deserve the highest level of customer service,” Lake said. “Saxon has taken meaningful steps to ensure it has appropriate policies and procedures in place to comply fully with the Servicemembers Civil Relief Act.”

Last month, JPMorgan Chase and Co. agreed to pay $27 million in cash to about 6,000 active-duty military personnel who were overcharged on their mortgages, cut interest rates on soldiers’ home loans and return homes that were wrongfully foreclosed upon, according to settlement terms filed in federal court in Beaufort, South Carolina.

JPMorgan Chief Executive Officer Jamie Dimon apologized this month for improperly foreclosing on U.S. military personnel.

‘Deeply Apologize’

“We deeply apologize to the military, the veterans, anyone who’s ever served this country,” Dimon said during the New York-based bank’s annual shareholder meeting.

In many instances, the lenders knew or should have known about the military status of the service members, according to the Justice Department. Victims included people who served in Iraq and Afghanistan.

Some of those in the military foreclosed on by Saxon were severely injured in the line of duty or suffer from post- traumatic stress disorder, according to the Justice Department.

Blatant Mortgage Document Fraud: Linda Green, Come Out..Come Out Wherever You Are.

Thanks to and a hat tip for Jim Sinclair for the Channel 7 WHDH investigative reporting on blatant morgtgage document fraud. You can see they're all the same name - but they're not written by the same person. "So what does that mean?" John O'Brien, Register, Southern Essex District Registry of Deeds "It means as far as I'm concerned, they're fraudulent documents."

Marie McDonnell, President of McDonnell Analytics: As I said to Hank in the interview, the extent and scope of the fraud is unimaginable and shocking…even for me, which is saying a lot!

Florida foreclosure judges accusing lawyers of "fraud upon the court."

The Palm Beach Post
By: Christine Stapleton and
Kimberly Miller
April 2, 2011

Angry and exasperated by faulty foreclosure documents, judges throughout Florida are hitting back by increasingly dismissing cases and boldly accusing lawyers of "fraud upon the court."

A Palm Beach Post review of cases in state and appellate courts found judges are routinely dismissing cases for questionable paperwork. Although in most cases the bank is allowed to refile the case with the appropriate documents, in a growing number of cases judges are awarding homeowners their homes free and clear after finding fraud upon the court.

Still, critics say judges are not doing enough.

"The judges are the gatekeepers to jurisprudence, to the Florida Constitution, to access to the courts and to due process," said attorney Chip Parker, a Jacksonville foreclosure defense attorney who was recently investigated by the Florida Bar for his critical comments about so-called "rocket dockets" during an interview with CNN. "It's discouraging when it appears as if there is an exception being made for foreclosure cases."

In February, Miami-Dade County Circuit Judge Maxine Cohen Lando took one of the largest foreclosure law firms in the state to task in a public hearing meant to send a message. She called Marc A. Ben-Ezra, founding partner of Ben-Ezra & Katz P.A., before her to explain discrepancies in a case handled by an attorney in his Fort Lauderdale-based firm.

"This case should have never been filed," said Lando, who referred to the firm's work on the case as "shoddy" and "grossly incompetent." She called Ben-Ezra a "robot" who filed whatever the banks sent him, and held him in contempt of court. She then gave the homeowner the home - free and clear - and barred the lender from refiling the foreclosure.

Attorney Maria Mussari, who represents the homeowner, said she wasn't surprised. "She has become a voice for other judges," Mussari said. "If judges crack down on following the rules, we'll still have foreclosures, but maybe the banks will pay attention and do it right."

Mussari said it's taken a while for the courts to wake up to the foreclosure disorder because homeowners were largely unrepresented and judges overwhelmed. "It's not that they don't care," she said. "They have thousands of cases on their docket and it's the same thing over and over again."

Ongoing scrutiny by the FBI, the Florida attorney general, the Florida Bar, the media and defense attorneys has uncovered countless examples of forged signatures, post-dated documents, robo-signing and lost paperwork.

As a result, defense attorneys are filing more motions challenging the documents. That means judges must spend more time reviewing documents and holding hearings. The situation was complicated last week when attorney David J. Stern, who operated the largest so-called foreclosure mill in Florida, sent letters to the chief judges of Florida's 20 circuit courts announcing that he intended to violate court rules and dump 100,000 foreclosure cases without a judge's order.

"We no longer have the financial or personnel resources to continue to file Motions to Withdraw in tens of thousands of cases that we still remain as counsel of record," Stern wrote, suggesting that the judges treat the pending cases "as you deem appropriate."

Last year, Florida lawmakers gave the courts $6 million to hire senior judges and case managers to reduce the foreclosure backlog. Since the money was awarded July 1, judges have cleared nearly 140,000 cases. As of the end of February, 322,724 foreclosures were still in the system.

But clearing backlogs isn't what judges should be focused on, said University of Miami Law Professor A. Michael Froomkin. "Substantive justice still needs to be done, and that's very hard sometimes," Froomkin said. "When I read stories about judges looking at things more carefully and holding attorneys accountable, to me, the system is doing what it needs to do."

A closer inspection of cases by judges would slow down the foreclosure train, but the result may be preferable to mere expediency. "Justice," Froomkin said. "The outcome, I hope, is justice."

Alan White, a law professor at Valparaiso University in Indiana, who has studied the foreclosure issue nationwide, said judges had few reasons to doubt banks in the beginning of the foreclosure avalanche. "They had a lot of credibility," White said. "Now, when a bank says it owns a mortgage, judges are skeptical."

White said a smattering of "maverick" judges began poking holes in foreclosures years ago before the media and lawmakers seized on problems in the fall. The judicial momentum has built since then.

"The combined impact will clearly be to change practices and to reduce the amount of corner-cutting the banks and their lawyers are engaged in," White said. "It could mean foreclosures get slower. It could also encourage banks to pursue alternatives to foreclosure."

The professors agree it's difficult for judges to pick out problems in foreclosure cases that are undefended. Homeowner advocate is not their role. "They don't fix things," Froomkin said. "They decide cases."

Judges question the process… and they let

the foreclosure attorneys have it.

From a Feb. 11 hearing in Miami-Dade regarding a Homestead foreclosure. The hearing ended with Judge Maxine Cohen Lando finding attorney Marc A. Ben-Ezra in contempt.

Lando: 'I don’t care what the banks — your clients — are telling you. Your job is to give your clients legal advice and you’re not doing it. You are acting as a robot for a plaintiff who is not even giving you the information you need to file a proper foreclosure.’  Lando: 'This level of practice is shoddy. It is grossly negligent. It is worthy of a judge looking at, and saying, what is going on here? How dare you file something like this.’

From a May 6 hearing in Miami-Dade. The hearing ended with Judge Jennifer Bailey awarding the home to the owner and barring the lender from attempting to foreclose again on the condo.

Bailey: 'And see, the really interesting thing to me as a judge is in no other species or kind of law would that be remotely acceptable, or, frankly, anything short of malpractice. But somehow in Foreclosure World everybody thinks that that’s just fine, that you all can know absolutely nothing about your files and walk in here and ask judges for things left and right without even knowing what’s going on.’

From an April 7 hearing in Pinellas County. Judge Anthony Rondolino set aside his prior ruling awarding summary judgment to the bank. Rondolino: 'I don’t have any confidence that any of the documents the court’s receiving on these mass foreclosures are valid.’

Articles by Christine and Kimberly about the fine

Folks at Chase Home Finance (JPMorgan Chase)

Chase demands Ben-Ezra & Katz turn over foreclosure files

Court: Chase owes owes $4 million for files

Judge Rakoff not happy with SEC and their "without admitting or denying wrongdoing"

The New York Times
DealBook
March 22, 2011

Woe be to the S.E.C. lawyer who next draws Judge Jed S. Rakoff.

The Manhattan federal judge has again criticized the Securities and Exchange Commission over the way it strikes securities settlements.

On Monday, Judge Rakoff approved a $3 million agreement between the S.E.C. and Vitesse Semiconductor and three former executives over the improper accounting of revenue and the backdating of stock options. At the same time, he had plenty to say about the commission. He again chafed at what he described as the S.E.C. treating the court as a “rubber stamp.”

More significant, much of his opinion was aimed at the boiler-plate language hated by investors but found in nearly every securities regulatory settlement: “without admitting or denying wrongdoing.”

Wall Street firms prefer that language as a defense in shareholder lawsuits, and no doubt it makes it easier for regulators to achieve an enforcement action.

In his opinion, Judge Rakoff gave a quick primer on the history of the settlement practice, finding it origins earlier than what the agency itself said was standard from 1972 on. its legacy has been something less than desirable, he concluded:

The result is a stew of confusion and hypocrisy unworthy of such a proud agency as the S.E.C. The defendant is free to proclaim that he has never remotely admitted the terrible wrongs alleged by the S.E.C.; but, by gosh, he had better be careful not to deny them either (though, as one would expect, his supporters feel no such compunction). Only one thing is left certain: the public will never know whether the S.E.C.’s charges are true, at least not in a way that they can take as established by these proceedings.

This might be defensible if all that were involved was a private dispute between private parties. But here an agency of the United States is saying, in effect, “Although we claim that these defendants have done terrible things, they refuse to admit it and we do not propose to prove it, but will simply resort to gagging their right to deny it.”

In the case of Vitesse, Judge Rakoff found the terms of the settlement to be fair, reasonable and in the public interest, even while noting that “the proposal raises difficult questions of whether the S.E.C.’s practice of accepting settlements in which the defendants neither admit nor deny the S.E.C.’s allegations meets the standards necessary for approval by a district court.”

The judge’s skepticism about securities settlements came to the fore in September 2009, when he rejected a proposed $33 million settlement between the agency and Bank of America over its acquisition of Merrill Lynch.

Quoting from Oscar Wilde’s “Lady Windermere’s Fan,” the judge noted in his ruling then that a cynic was someone “who knows the price of everything and the value of nothing.”

He wrote:

The proposed Consent Judgment in this case suggests a rather cynical relationship between the parties: the S.E.C. gets to claim that it is exposing wrongdoing on the part of the Bank of America in a high-profile merger; the bank’s management gets to claim that they have been coerced into an onerous settlement by overzealous regulators. And all this is done at the expense, not only of the shareholders, but also of the truth.

In February 2010, the judge reluctantly approved a revised $150 million settlement with the bank.

Dylan Ratigan: Where are the handcuffs? Fraud in the financial system. Oh, by the way, Angelo Mozilo WALKS!!

February 17, 2011 on the Dylan Ratigan Show: Where are the handcuffs? Thousands jailed during the S and L crisis. Why not know? Charles Ferguson, director of the "Inside Job" share with Dylan Ratigan that everyone within the Obama Administration refused an interview request for the "Inside Job" documentary.

Visit msnbc.com for breaking news, world news, and news about the economy

If this interview didn't get you blood boiling, how about news the very next day!

Mozilo's actions in the mortgage meltdown

which led to $67.5-million settlement against him

did not amount to criminal wrongdoing,

federal prosecutors have determined

Los Angeles Times
February 18, 2011
By E. Scott Reckard
 


As the former chairman of Countrywide Financial Corp., Mozilo helped fuel the boom in risky subprime loans that led to the crippling of the banking industry and the near-collapse of the financial system.

A federal grand jury in Los Angeles began probing Mozilo in 2008, and four months ago he agreed to pay a $22.5-million fine and to repay $45 million in what the government said were ill-gotten gains to former Countrywide shareholders. The payments settled a civil action by the Securities and Exchange Commission.

But the criminal investigation has wound down without indictments of Mozilo or others at his Calabasas company, according to people familiar with both the prosecution and the defense teams, all of whom spoke on condition of anonymity because they were not authorized to discuss the matter.

"Sometimes the public thinks all you have to do is to indict someone and that's it," one of the federal sources said. "But you have to be able to prove your case, and it can be worse losing a case than not bringing one at all."

The 72-year-old Mozilo hung up the phone when contacted for comment at his home in the Lake Sherwood golf community of Ventura County.

The criminal investigation into Mozilo was never announced publicly, and as a rule federal prosecutors make no formal announcement when such cases are closed.

One defense attorney, however, said the government would probably keep a close watch on civil litigation by Countrywide shareholders against Mozilo and could still decide to bring charges depending on what develops in those cases.

"He may have to testify, and you never know what may come up," the attorney said.

Asst. U.S. Atty. Stephen A. Cazares, who spearheaded the Countrywide criminal probe, could not be reached for comment. A spokesman for U.S. Atty. Andre Birotte Jr. said the office would have no comment "at this time." If you dare to care, keep reading









Federal prosecutors have shelved a criminal investigation of Angelo R. Mozilo after determining that his actions in the mortgage meltdown — which led to $67.5-million settlement against him — did not amount to criminal wrongdoing.

3,800 Bankers Went to Jail after S and L Crisis. Dylan Ratigan asks where are the handcuffs today?

February 4, 2011
Dylan Ratigan and Nevada Attorney General Catherine Cortez Masto discuss why several states are suing Bank of America over mortgage and consumer fraud.

3,800 bankers went to jail resulting from the S and L crisis and today, not one bankster has seen a jail cell during this massive mortgage fraud commited by Wall Street Banks. Link to other Dylan Ratigan videos addressing the very same topic.

Visit msnbc.com for breaking news, world news, and news about the economy

Merrill (Bank of America) Pays $10 mil to hop over the Chinese Wall

Remember the Chinese Wall, you know, the wall that separates Wall Street proprietary traders and those placing client orders. Like when you call your financial advisor to place a trade assuming it is between you and the advisor. Yeah right! Oh your order was filled, however you paid more than you had to because the information was shared with the proprietary traders so they could buy ahead of you, make a few pennies and sell you their shares at a higher cost.

Remember though, these are the fine folks that received a TARP bailout in order to prevent financial armageddon and it was good for we Main Street folk. When they get caught with their hand in the cokkie jar, just write out a check and admit to NOTHING!

By Jonathan Stempel
1/25/2011

(Reuters) - Bank of America Corp's Merrill Lynch unit agreed to pay $10 million to settle U.S. Securities and Exchange Commission charges that it fraudulently misused customer orders so it could trade for its own benefit.

The settlement stemmed from SEC charges that Merrill used the order information to place proprietary trades on a desk it no longer operates. The SEC also accused Merrill of charging hidden trading fees to institutional and wealthy customers.

Merrill did not admit wrongdoing in agreeing to settle.

"It's a slap on the wrist," said David Robbins, a partner at the law firm Kaufmann, Gildin, Robbins & Oppenheim LLP in New York and a former compliance chief at the American Stock Exchange. "This penalty is like a traffic ticket. If the desk had still been around, you can be sure the sanction would have been to close it down."

According to the SEC, from February 2003 to February 2005 Merrill operated a proprietary trading desk on its equity trading floor in New York known as the Equity Strategy Desk.

It said that while Merrill told customers their orders would generally be kept private, traders on the Equity Strategy Desk would learn information about orders from institutional clients and use it to place trades with Merrill's own money.

"Investors have the right to expect that their brokers won't misuse their order information," Scott Friestad, associate director in the SEC enforcement unit, said in a statement. "The conduct here was clearly inappropriate."

The SEC also found that from 2002 to 2007, Merrill charged undisclosed fees to some institutional and high-net-worth customers when filling orders for "riskless principal trades."

Such trades occur when a broker-dealer receives a customer order, conducts a contemporaneous offsetting trade, and then "allocates" the securities to the customer, the SEC said.

Bill Halldin, a Bank of America spokesman, said in a statement that Merrill has adopted "a number of policy changes" to separate proprietary trading from other trading, and has improved training and supervision related to principal trades.

The SEC said the $10 million penalty took into account remedies taken by Merrill after Charlotte, North Carolina-based Bank of America acquired the company at the beginning of 2009. Bank of America is the largest U.S. bank by assets.

"The fact Merrill didn't self-regulate is the bigger problem," Robbins said. "I hope other firms will see this as a signal to stop trading on confidential customer information."

Bank of America agrees to pay $137 million for bid-rigging practices (you have an account w/them because...???)

Bank of America's Statement on Bid-Riggin Charges

The bank said in a statement that it has taken steps to ensure

"these or similar practices would not occur again." 

By DAN FITZPATRICK
The Wall Street Journal
12/7/10

Bank of America Corp. agreed to pay $137 million to federal and state authorities for municipal bid-rigging practices in the late 1990s and earlier this decade.

The agreement with 20 state attorneys general, banking regulators, the Department of Justice and the Securities and Exchange Commission is part of a larger push by the nation's largest bank by assets to rid itself of an array of legal headaches predating the financial crisis.

Earlier this year, the Charlotte, N.C., bank agreed to pay $108 million to settle charges that mortgage lender Countrywide Financial Corp. improperly charged customers before Bank of America purchased the firm in July 2008. The bank also reached a $150 million settlement with the SEC after the agency accused the bank of failing to disclose information during the acquisition of Merrill Lynch and Co.

Bank of America still faces a civil fraud lawsuit from New York Attorney General Andrew Cuomo, who accused the bank of deliberately misleading shareholders about ballooning losses at Merrill. It also is wrestling with several probes into its foreclosure practices, and mounting demands from mortgage investors that it repurchase large piles of troubled mortgages.

Bank of America's participation in a larger plan to fix prices in the municipal-bond derivatives market began in 1997 and lasted until 2004, according to the Justice Department. The scheme affected governments seeking to invest money earned through the issuance of municipal bonds.

Former employees colluded with bidding agents to have certain sales steered toward them, providing kickbacks to brokers and intentionally submitting losing bids "to foster the appearance of competition," said a group of state attorneys general that participated in the settlement.

The bank said in a statement that it has taken steps to ensure "these or similar practices would not occur again."  Complete Article

Professor Bill Black: There were millions of acts of fraud; Fire Eric Holder, Bernanke and Geithner

Dylan Ratigan and Professor Bill Black

Two of the most grandchildren friendly

humans on the planet

Professor Bill Black on Dylan Ratigan:

"Credit Suisse says that by 2006 49% of all mortgage originations were liars loans. When independent folks study fraud, it is in the 80-90% fraud range. That means there were millions of acts of fraud. Those loan frauds occurred because the banks created incentive structure for the loan brokers to bring them the absolute worst of the worst loans, and to lie on the application forms...

These frauds came from the banks, and they propagated through the system through a series of echo epidemics...This fraud spread through the system and that's why we have a crisis in foreclosures. This stems from the underlying fraud by the lenders in mortgage loans to the tune of well over a million cases a year by 2005."

The Fed should not be in charge of any investigation into mortgage fraud, due to its "massive" conflict of interest, to the tune of $1.5 trillion in MBS/agencies held on the Fed's books, which would be immediately null and voided if rampant MBS fraud is indeed uncovered.

Bill Black's conclusion: "fire Holder, fire Geithner, fire Bernanke, get people in who will enforce the rule of law." (Eric Holder, Attorney General)

Office Depot to Pay $1 million to settle SEC fraud charges...No Admissioin nor Denial of Allegations

The company's selective sharing of

information "gave an unfair advantage to

favored investors at the expense

of other investors"

(...this is how Wall Street Rolls...are you feeling confident?

Just write a check... no need to admit nor deny...)

By Marcy Gordon
Bloomberg/Business Week
10/21/10
Office Depot Inc. has agreed to pay $1 million to settle federal charges that it overstated earnings and shared information with a select group that it failed to include in public filings.

The Securities and Exchange Commission on Thursday announced the settlement with Office Depot, which neither admitted nor denied the allegations.

The company was accused of overstating earnings in mid-2006 through mid-2007. It was also accused of letting a select group of investors and analysts know that it wouldn't meet earnings estimates for the second quarter of 2007.

In addition to the company fine, chief executive Stephen Odland and former chief financial officer Patricia McKay agreed to pay civil penalties of $50,000 in connection with the charges for sharing information.

In the second quarter of 2007, Office Depot executives made a series of one-on-one calls to analysts, the SEC said in a civil lawsuit filed in federal court in Miami. The executives didn't directly say that Office Depot wouldn't meet analysts' expectations, but signaled that information by referring to recent public statements by companies with a similar profile about the impact of the economic slowdown on earnings, according to the SEC.

Analysts lowered their earnings estimates in response to the calls.

Odland and McKay neither admitted nor denied the allegations. The SEC said the executives encouraged the company to conduct the calls but didn't participate in them directly. Others in the company made the calls even after McKay was told that some analysts had concerns about the lack of public disclosure, the SEC said. Six days after the calls began, Office Depot made an SEC filing announcing that earnings would be reduced because of weakness in the economy. Before the filing was made, Office Depot's share price had fallen sharply.

The company's selective sharing of information "gave an unfair advantage to favored investors at the expense of other investors and, as today's action shows, is illegal," SEC Enforcement Director Robert Khuzami said in a statement.

Office Depot...Our Values

Integrity

We earn the trust and confidence of associates, customers, suppliers and shareholders by being open, honest and truthful in all that we do.

Innovation

With a culture of creativity and a thirst for intelligent risk-taking, we aspire to do what has never been done.

Inclusion

We approach all opportunities and challenges by respecting the diverse thoughts, beliefs, backgrounds, cultures and energies of all associates, customers and suppliers.

Customer Focus

We fuel our customers' dreams by anticipating and listening to their needs and passionately delivering on our promises. Failure is not an option, as we promise to "wow" on recovery.

Accountability

We are responsible for achieving and sustaining unprecedented results that create extraordinary value to our shareholders and stakeholders through personal commitment, sensible thrift, collaboration and shared leadership.



Mozilo Settles with SEC on Countrywide Fraud Charges...and of course settled without admitting or denying any wrongdoing

I settled without admitting or denying any wrongdoing.

That's how it works in our system especially given

the $450+ million 5 year compensation package I received

...to bad for all of you..

By: Alex Dobuzinskis
10/15/10
Oct 15 (Reuters) - Former Countrywide Financial Corp Chief Executive Angelo Mozilo has agreed to settle a lawsuit with securities regulators, ending one of the highest profile enforcement actions to come from the financial collapse.

Mozilo, along with former Countrywide President David Sambol and former Chief Financial Officer Eric Sieracki, appeared in a Los Angeles federal court on Friday morning where the settlement between the U.S. Securities and Exchange Commission and all three executives was announced.

Mozilo will pay a $22.5 million civil penalty, plus $45 million in disgorgement, according to U.S. District Court Judge John Walter.

All three defendants settled without admitting or denying any wrongdoing

Dell: Cost of accounting fraud...$100 million and approved by Judge

Michael Dell did not have to admit

nor deny wrongdoing in the settlement

and stated the company has made efforts to

improve its accounting and disclosures

(do not attempt this at home, as publically traded CEOs

are professionals...they do not go to jail)

By William McQuillen
10/13/10
Oct. 13 (Bloomberg) -- Dell Inc., the world’s third-biggest maker of personal computers, won a judge’s permission to pay $100 million to settle accounting-fraud claims brought by the U.S. Securities and Exchange Commission.

The accord reached in July allows founder Michael Dell to remain chief executive officer after paying a $4 million fine. U.S. District Judge Richard Leon approved the settlement today at a hearing in Washington.

Dell, 45, and the personal-computer maker failed to tell investors about “exclusivity payments” received from Intel Corp. in exchange for shunning products made by rival chipmaker Advanced Micro Devices Inc., the SEC said in a complaint filed in July. The payments allegedly helped Dell reach earnings targets from 2001 to 2006.

Dell, appearing in court, told Leon he had nothing to do with the company’s settlement when asked by the judge how he avoided a possible conflict of interest with his own accord.

“It was appropriate for all that to be handled by independent directors,” Dell said.

The exclusivity payments were at issue in an antitrust lawsuit filed against Intel by AMD, a New York state probe of Intel’s business practices, and a Federal Trade Commission suit brought against Intel in December. Dell, based in Round Rock, Texas, said in June that it had set aside $100 million for the SEC settlement.

Efforts to Improve

Without admitting or denying wrongdoing in the settlement, the company has made efforts to improve its accounting and disclosures, Michael Dell said.

Dell’s former CEO, Kevin Rollins, and James Schneider, the company’s former chief financial officer, agreed to pay fines of $4 million and $3 million, respectively. Schneider was suspended from appearing or practicing before the SEC as an accountant for five years. The SEC, as urged by the company in its settlement proposal, spared Michael Dell similar punishment.

John Worland, an attorney for the SEC, said the settlement was appropriate and that there isn’t evidence the company intended to defraud.

“The settlement is appropriate” and “represents a strong example of regulatory enforcement,” Worland said.

The case is Securities and Exchange Commission v. Dell Inc., 10cv1245, U.S. District Court for the District of Columbia (Washington).

Janet Tavakoli: 'This is the biggest fraud in the history of the capital markets'

By Ezra Klein
Washington Post
October 8, 2010

Ezra Klein: What’s happening here? Why are we suddenly faced with a crisis that wasn’t apparent two weeks ago?
 
Janet Tavakoli: This is the biggest fraud in the history of the capital markets. And it’s not something that happened last week. It happened when these loans were originated, in some cases years ago. Loans have representations and warranties that have to be met. In the past, you had a certain period of time, 60 to 90 days, where you sort through these loans and, if they’re bad, you kick them back. If the documentation wasn’t correct, you’d kick it back. If you found the incomes of the buyers had been overstated, or the houses had been appraised at twice their worth, you’d kick it back. But that didn’t happen here. And it turned out there were loan files that were missing required documentation. Part of putting the deal together is that the securitization professional, and in this case that’s banks like Goldman Sachs and JP Morgan, has to watch for this stuff. It’s called perfecting the security, and it’s not optional.
 
EK: And how much danger are the banks themselves in?
 
JT: When we had the financial crisis, the first thing the banks did was run to Congress and ask for accounting relief. They asked to be able to avoid pricing this stuff at the price where people would buy them. So no one can tell you the size of the hole in these balance sheets. We’ve thrown a lot of money at it. TARP was just the tip of the iceberg. We’ve given them guarantees on debts, low-cost funding from the Fed. But a lot of these mortgages just cannot be saved. Had we acknowledged this problem in 2005, we could’ve cleaned it up for a few hundred billion dollars. But we didn’t. Banks were lying and committing fraud, and our regulators were covering them and so a bad problem has become a hellacious one.
 
EK: My understanding is that this now pits the banks against the investors they sold these products too. The investors are going to court to argue that the products were flawed and the banks need to take them back.
 
JT: Many investors now are waking up to the fact that they were defrauded. Even sophisticated investors. If you did your due diligence but material information was withheld, you can recover. It’ll be a case-by-by-case basis.
 
EK: Given that our financial system is still fragile, isn’t that a disaster for the economy? Will credit freeze again?
 
JT: I disagree. In order to make the financial system healthy, we need to recognize the extent of our losses and begin facing the fraud. Then the market will be trustworthy again and people will start to participate.
 
EK: It sounds almost like you’re saying we still need to go through the end of our financial crisis.
 
JT: Yes, but I wouldn’t say crisis. This can be done with a resolution trust corporation, the way we cleaned up the S and Ls. The system got back on its feet faster because we grappled with the problems. The shareholders would be wiped out and the debt holders would have to take a discount on their debt and they’d get a debt-for-equity swap. Instead we poured TARP money into a pit and meanwhile the banks are paying huge bonuses to some people who should be made accountable for fraud. The financial crisis was a product of our irrational reaction, which protected crony capitalism rather than capitalism. In capitalism, the shareholders who took the risk would be wiped out and the debt holders would take a discount but banking would go on.
 
Janet Tavakoli is the founder and president of Tavakoli Structured Finance Inc. She sounded some of the earliest warnings on the structured finance market, leading the University of Chicago to profile her as a "Structured Success," and Business Week to call her "The Cassandra of Credit Derivatives." 

Alan Grayson sends letter to Geithner and Bernanke demanding a foreclosure freeze

What is happening is fraud to cover up fraud.

Alan Grayson is back with a vengeance and rips off a letter to the usual suspects including Geithner, Bernanke, Sheila Bair and the lovable Mary Schapiro of the Financial Stabillity Oversight Council (FSOC).

Alan notes a well documented wave of foreclosure fraud sweeping the country and asks FSOC to appoint an emergency task force on foreclosure fraud as a potential systemic risk. Mr. Grayson states the obvioius: origijnators and services didn't keep good records of who owed what to whom because the point was never about getting paid back.

There are now trillions of dollars of securitizations of these loans in the hands of investors. The trusts holding these loans are in a legal gray area, as mortgage titles were never officially transferred to the trusts. The result of this is foreclosure fraud on a massive scale, including foreclosures on people without mortgages or who are on time with their payments. Alan Grayson letter PDF

Judge Accepts SEC Settlement with Citgroup and makes a couple of funnies

Kudo's to Judge Ellen Segal Huvelle for holding the SEC and Citigroup accountable and for not merely signing off without a few sarcastic yet poignant comments:

1. “If you are so enamored of their proposals, I should have some assurance that they will be in place for a period of time and they will not change them,”
2. “I can’t really in good faith say that this figure is right or wrong.”
3. None of the penalties were likely to prove to be an adequate deterrent,
4. a $100,000 fine is not a deterrent in corporate America to do a better job.”
5. “I’ve never seen Citigroup’s heart. I’ve seen its building, but not its heart.”
6. “They’re supposed to be obeying the law,” she said, “without writing it down.”

By Edward Wyatt
The New York Times
WASHINGTON — A federal judge said Thursday that she would accept the $75 million settlement between the Securities and Exchange Commission and Citigroup over the bank’s failure to adequately disclose its exposure to subprime mortgage debt in 2007.

But Judge Ellen Segal Huvelle of Federal District Court for the District of Columbia told lawyers for the government that she wanted the S.E.C. to certify that the remedies Citigroup claimed to have put in place to prevent a similar failure were adequate and would remain for a given period of time.

The judge also directed that the settlement agreement be reworded to make clear that the $75 million would be used to compensate shareholders who suffered losses because of Citigroup’s misstatements, and she told the S.E.C. and the bank to return in two weeks with new language that did that.

In addition, the bank must return with adequate assurances that the changes it has installed will make it unlikely that the problem will happen again.

“If you are so enamored of their proposals, I should have some assurance that they will be in place for a period of time and they will not change them,” Judge Huvelle told the S.E.C.’s lawyer, Erica Y. Williams.

Judge Huvelle also raised questions about why the S.E.C. did not include senior managers of Citigroup, other than the company’s chief financial officer and director of investor relations, in its case, voicing frustration that few if any of the people who were in charge were being cited or significantly punished.

But S.E.C. and Citigroup lawyers argued that other senior managers were not involved in the decision whether or not to disclose the subprime exposure and did not certify the federal filings that included the information.

The hearing resulted from the judge’s review of a proposed settlement in the S.E.C.’s case against Citigroup arising from the collapse of the subprime mortgage market and subsequent financial crisis. In August, the judge declined to accept the proposed settlement and asked the parties to return with evidence of why it was adequate and why only two Citigroup executives were charged with misconduct.

In July, the S.E.C. charged Citigroup with material misstatements of its exposure to subprime mortgages. The company advised investors in conference calls in 2007 that it held $13 billion in subprime investments when in fact it held more than $50 billion.

The commission also brought administrative proceedings against Gary L. Crittenden, the company’s chief financial officer at the time of the misstatements, and Arthur Tildesley, then director of investor relations, for their roles in the wrongful disclosures. Mr. Crittenden agreed to pay $100,000 and Mr. Tildesley agreed to pay $80,000 as part of their settlements.

Judge Huvelle said that given the S.E.C.’s economic analysis in reaching the $75 million settlement, “I can’t really in good faith say that this figure is right or wrong.”

But, she added, “there is nothing here to address the flawed systems” that caused the company to so vastly misstate its subprime exposure. None of the penalties were likely to prove to be an adequate deterrent, she added.

“Seventy-five million dollars will not deter anyone from doing anything,” she said. Referring to the individual fines, “a $100,000 fine is not a deterrent in corporate America to do a better job.”

Brad S. Karp, a lawyer representing Citigroup, sought to assure Judge Huvelle that the company had significant incentive not to violate securities laws, given that it signed statements promising not to do so and noting that it has changed its entire senior management team since the events of 2007.

Mr. Karp added that because the evidence shows that Citigroup had not intentionally concealed its subprime exposure, “Citi’s heart was in the right place.”

“Don’t overdo it,” Judge Huvelle warned, evoking laughter in the courtroom. “I’ve never seen Citigroup’s heart. I’ve seen its building, but not its heart.”

The judge also rejected the idea that signed statements not to violate securities laws were of little value. “They’re supposed to be obeying the law,” she said, “without writing it down.”

Another Day...Another set of fraud charges: SEC Charges Minneapolis Attorney and San Francisco Real Estate Lending Fund Promoters with Misleading Investors

Washington, D.C., Sept. 21, 2010 — The Securities and Exchange Commission today charged a Minneapolis-based attorney and two San Francisco-area promoters with defrauding investors in a real estate lending fund by concealing the financial collapse of the fund's sole business partner.

The SEC alleges that Todd A. Duckson, an attorney who resides in Prior Lake, Minn., and Michael W. Bozora and Timothy R. Redpath, who reside in Marin County, Calif., raised more than $21 million from investors in the Capital Solutions Monthly Income Fund after the fund's sole business partner defaulted on its obligations to the fund. The SEC alleges that after this May 2008 default, the fund - whose sole business was to make real estate loans to a single borrower - had no meaningful income and was using new investor funds to pay existing investors.

"The fund's real estate lending strategy failed due to the collapse of the fund's sole borrower. Instead of disclosing this fact, Bozora, Redpath, and Duckson falsely claimed that the fund was positioned to profit from the U.S. real estate downturn," said Robert J. Burson, Senior Associate Regional Director of the SEC's Chicago Regional Office. "Investors were entitled to know true facts rather than the misleading positive spin that Bozora, Redpath, and Duckson provided."

The SEC alleges that after the default, Duckson, Bozora, and Redpath told investors that the fund was poised to take advantage of attractive lending opportunities provided by the collapse in the U.S. credit and real estate markets, when in fact the fund' s business strategy had failed.

According to the SEC's complaint filed in federal court in Minneapolis, Bozora and Redpath launched the fund in 2004 and, through August 2009, raised approximately $74 million from approximately 450 investors from across the U.S. After the May 2008 default by the fund's sole borrower, the fund foreclosed on the borrower's real estate projects. The SEC alleges that in late 2008, Bozora and Redpath asked Duckson, who was acting as the fund's outside counsel, to take over managing the fund. The SEC alleges that Duckson then began managing the fund while Bozora and Redpath continued to raise money from new investors. The SEC alleges that Bozora, Redpath, and Duckson failed to disclose the default and foreclosure to investors for several months.

The SEC alleges that Bozora, Redpath, and Duckson eventually made some disclosure of the default and foreclosure, but they minimized the impact of these events and continued to misleadingly promote the fund's ability to make new loans. In fact, the fund's ability to make new loans was limited. After the default and foreclosure, the fund was required to use most of its assets to maintain its existing real estate portfolio acquired through the foreclosure and to pay existing investors.

The SEC's complaint also charges True North Finance Corporation, a Minneapolis real estate lending company that merged with the fund in 2009, and True North's Chief Financial Officer Owen Mark Williams with accounting fraud. The SEC alleges that in 2008 and 2009, Williams caused True North to overstate its revenues by as much as 99 percent. The SEC alleges that True North improperly recognized revenue on interest from borrowers who were not paying True North and were in poor financial condition. The SEC further alleges that True North's recognition of revenue was contrary to its own revenue recognition policy, which stated that it would not recognize revenue where payment of interest was 90 days past due.

The SEC is seeking permanent injunctions, disgorgement, prejudgment interest and civil penalties against all of the defendants, and officer-director bars against Bozora, Redpath, Duckson, and Williams.

Citigroup Defends SEC Settlement and 'There was no 'villain' in this story'

'There was no 'villain' in this story'

Give Grandpa a break!

By KARA SCANNELL
Wall Street Journal

Citigroup Inc. defended its settlement with the Securities and Exchange Commission over its disclosure of subprime mortgage exposure, setting the stage for a federal judge to decide whether to approve the deal.

In court papers filed Monday, Citigroup said the $75 million fine it agreed to pay in the settlement was appropriate because the SEC's case didn't involve allegations of mismanaging assets or misvaluing them.

The SEC sued Citigroup and two executives for failing to disclose nearly $39 billion in subprime mortgage assets during 2007. The executives separately settled the matter by paying fines of less than $100,000, without admitting or denying wrongdoing.

Last month U.S. District Judge Ellen Segal Huvelle asked both sides to explain why she should approve the deal. She questioned the penalty, noting it would come from current shareholders' pockets, and the decision to single out two individuals.

The SEC has already offered its defense of the deal, and a hearing has been set for next week.

Citigroup said it disagreed with the SEC's decision to sue and initially fought paying a penalty, but it urged the judge to give "substantial deference" to the SEC's decision and terms of settling the case.

"There was no 'villain' in this story," lawyers for Citigroup argued in court filings. In explaining why it filed charges against those two executives, the SEC said it was because they were most closely tied to the disclosures. That, the defense said, shows the "weakness" of any potential case against all of the people, including former Chief Executive Charles Prince and Robert Rubin, the former chairman of the executive committee, who knew about the bank's exposure to subprime assets.

In a filing last week, the SEC said it brought a negligence fraud charge against the two men who allegedly drafted and made the incomplete disclosure to investors after finding no evidence that they intended to deceive investors. The SEC also defended the size of the penalty, noting it fell in line with other recent settlements and would cost current shareholders less than one-third of one cent per share.

In the bank's defense, its lawyers said once it became clear in October 2007 that Citigroup "misjudged the risk" associated with securities it previously believed were safe, it disclosed the size of the portfolio to investors. That disclosure, they said, shows there was no intention to deceive shareholders.

The court filings reveal that Citigroup initially objected to paying a penalty during its settlement talks with the SEC in part because of the cost to shareholders, an issue Judge Huvelle raised. The bank's board ultimately decided to settle and pay a $75 million penalty, according to the filings, to avoid long and uncertain litigation.

Citigroup is represented by Paul, Weiss, Rifkind, Wharton & Garrison LLP and Wachtell, Lipton, Rosen & Katz.

U.S. taxpayers are about to bail out the depositors of a fraudulent Afghan bank (Bill Black)

Thanks to Naked Capitalism for the following post:
Naked Capitalism Site

Monday, September 6, 2010

Bill Black: “Control Fraud” Crushes Kabul,

And the New York Times

Needs to Correct its Correction

By William C. Black, Associate Professor of Economics and Law, University of Missouri-Kansas City, the author of The Best Way to Rob a Bank is to Own One, who also posts at New Economic Perspectives.

The New York Times, in a story entitled “Afghanistan Tries to Help Nation’s Biggest Bank” issued the following correction:

Correction: September 4, 2010

An earlier version of this article, citing American and Afghan officials, erroneously stated that the United States would contribute money to help the Kabul Bank. American officials say the United States is providing technical assistance but no funds for the bank.

Bill Black

The problem is that the “earlier version” was correct – the correction is incorrect. Kabul Bank has been revealed to be a “control fraud.” Control frauds occur when those that control a seemingly legitimate entity use it as a “weapon” to defraud. Control frauds cause greater financial losses than all other forms of property crime – combined. Control frauds can also cause immense damage to a nation because they are run by financial elites that curry favor from political elites. The result is that they are often able to loot “their” banks for years with impunity. They also degrade the integrity of the entire system.

Kabul Bank and Fraud

Kabul Bank is a typical example of a crude variant of control fraud at a major bank. Systems of crony capitalism, such as Afghanistan, inherently create an intensely “criminogenic” environment that produces epidemics of control fraud in the public, private, and non-profit sectors. Kabul Bank, like the (originally Pakistani) Bank of Credit and Commerce International (BCCI) – better known to regulators as the “Bank of Crooks and Criminals International” is reported to have helped everyone – corrupt Afghani government officials, corrupt business leaders, and the Taliban laundering its drug profits to, in part, buy weapons. Like BCCI, Kabul Bank’s managers’ reported frauds and self-dealing blew up the bank by causing massive losses. (If you believe that Kabul Bank is the only bank like this in Afghanistan you are consuming too much of Afghanistan’s leading export).

The CIA tells us that Afghanistan raised roughly $1 billion in revenues last year and expended $3.3 billion. The shortfall, of course, was funded by us (the West, principally the U.S.). Indeed, that understates the case because Afghanistan raised the $1 billion in revenues primarily through customs duties and the U.S. and other Western nations indirectly or directly funded most of those customs duties.

We know certain facts. Afghanistan has no deposit insurance system. Its government has no financial responsibility for bailing out Kabul Bank’s depositors. Nevertheless, Afghanistan’s government has announced it will bail out the depositors. The funds to bail out the depositors will come – indirectly, but surely – largely from the United States Treasury. The New York Times’ initial article correctly stated that the U.S. will bail out Kabul Bank’s depositors. Someone obviously demanded a “correction.”

U.S. Taxpayers Set up for Another Bank Bailout

Whoever that person was lied to the New York Times with the goal of getting the newspaper to lie to its readers. That lie succeeded. It is time for the New York Times to correct its correction and defeat this effort to mislead the public. The U.S. taxpayers are about to bail out the depositors of a fraudulent Afghan bank

SEC says it lacked authority to charge Moody's

Marcy Gordon (AP)
WASHINGTON — The Securities and Exchange Commission has declined to seek fraud charges against Moody's Investors Services over its ratings of risky investments that led to the financial crisis.

But the SEC said it decided against seeking civil charges only because it determined it lacked authority to charge a foreign affiliate of Moody's.

Instead, in a report on its investigation, the SEC warned all credit rating agencies that they could face charges if they mislead investors with deceptive ratings.

Investors rely on the statements these agencies make in their applications and reports to the SEC, Robert Khuzami, the SEC enforcement director, said in a statement.

"It is crucial that (rating agencies) take steps to assure themselves of the accuracy of those statements and that they have in place sufficient internal controls over the procedures they use to determine credit ratings," he said.

The warning is the latest step by the SEC to address the conduct of major financial firms that contributed to the Wall Street meltdown. Goldman Sachs and Co. agreed in July to pay $550 million to settle civil fraud charges related to its sales of mortgage investments. And Citigroup Inc. agreed to pay $75 million to resolve charges it misled investors about billions of dollars in potential losses from subprime mortgages.

The financial overhaul law enacted in July calls for reducing the influence of the big three rating agencies — Moody's, Standard and Poor's and Fitch Ratings. They were discredited in the financial crisis for giving high ratings to risky mortgage securities.

The financial overhaul law also gave the SEC authority to pursue alleged fraud by foreign affiliates of U.S. rating agencies that could have a significant effect within the U.S.

The SEC accused Moody's of failing to disclose ratings misconduct by a European affiliate when it registered with the agency, as required by law at that time. Because the alleged misconduct occurred before the financial overhaul law took effect, the SEC said it lacked jurisdiction to pursue an enforcement case against Moody's.

According to the SEC report, a Moody's analyst found in 2007 that a computer error at the European affiliate had resulted in certain bonds receiving ratings that downplayed their level of risk. A Moody's rating committee later voted against changing the rating, partly out of concern that it would harm the firm's reputation, the SEC said.

A January 2007 e-mail quoted in the report, from a member of the rating committee to the panel's chair, said: "In this particular case we seem to face an important reputation risk issue."

Even "the possibility of a hint that the (computer) model has a bug" should be avoided, the panel member urged.

The committee's conduct violated Moody's risk practices as described in its application to register with the SEC, the agency said.

The report says the SEC will pursue antifraud actions involving deceptive ratings, including cases overseas.

Moody's spokesman Michael Adler said the firm was pleased that the matter was resolved and the SEC wasn't pursuing enforcement action. "We fully support the (SEC's) message that every rating decision must be based only on credit considerations, and we are committed to maintaining robust procedures to ensure that our internal company policies are followed," he said.

The rating agencies' grades of public companies and securities can affect a company's ability to raise or borrow money and how much investors will pay for securities. The big agencies assigned AAA ratings to securities tied to risky subprime mortgages that later went bad and helped cause the housing bust. Afterward, the agencies had to downgrade many of the bonds as home-loan delinquencies soared and the value of those investments sank.

In a Nutshell: Our economy is really an insane asylum run by lunatics (D Sherman Okst)

The Economic Insane Asylum

Submitted by D Sherman Okst on Wed, 25 Aug 2010

In a Nutshell: Our economy is really

an insane asylum run by lunatics.

Common Sense: No problem can be fixed before a solution is formed. No solution can be formed until the underlying problems are clearly identified.

The officials in charge of fixing the economy have not articulated the underlying problems. Worse, many of these officials - directly or indirectly - created or contributed the underlying problems.

It is shear lunacy to expect that the people who screwed up the economy have any chance at fixing what they destroyed.

Identification of the Underlying Problems

Income: Average Real Weekly Earnings, (read: incomes adjusted for inflation), are below what what what they were in 1973. Income wise the average American family is worse off now than they were 37 years (4 decades) ago.

The Dollar’s Value: And it isn’t like we have a stronger dollar now. If we did perhaps we could get buy with less money. No, Uncle Buck is worth 95% less than he was 84 years ago when the “Creature From Jeckyll Island” (read: the “Fed”) came into existence.

Money is supposed to be a store of value. When you boil economics down to it’s core you are left with one law: Supply and demand. Increase the supply of anything and it’s value goes down. Our monetary system is flawed because if it isn’t expanded it collapses and when it is expanded the store of value is obliterated. The Fractional Reserve System is another example of a moronic idea created by greedy lunatics, It was doomed to failure upon inception. Debasing a currency only creates an addiction to debt.

Employment: In 2008 there were about 150 million workers. Today (U3-U6) unemployment is at 22%. The largest problem plaguing unemployment is the fact that most of the jobs lost were jobs that were created because of consumers binging on credit. For instance, in 2008 Americans tapped their home equity for stupid purchases. The best example of this is from Jim Quinn's 2008 article: Consumers borrowed $9,000,000,000.00 (9 billion) dollars (from home equity loans) JUST to blow it on 4 dollar coffees at Starbucks, which has since closed 900 stores. Debt to expand a business or debt to purchase a home is sound debt for an economy. Debt to buy expensive coffees at “Fourbucks” won’t be economically sustainable (as proved by 900 closed stores).

We had a booming economy that was built on a foundation of sand.

Drof/Globalization: (Read: packaging up factories and off-shoring them and the manufacturing jobs that went with them) equated to workers here competing against some poor individuals who make $2 bucks a day in some emerging country that has no work rules or standards). Globalization was an asinine idea. A blueprint for lowering standards here and raising standards there. We can capitalize the “a” in asinine if we consider the ramifications of high oil prices caused by Peak Oil (read: 80 - 150+ dollar a barrel oil).

Backwards: In 1914 Henry Ford helped spur the middle class by paying Ford workers $5 bucks a day (double what the average wage was then). Ford increased the demand for what he was manufacturing by creating a class of workers (read: the middle class) who could afford his product.

Drof: Ford’s plan spelled backwards. Drof is globalization. Removing manufacturing jobs. Borrowing from China et al to replace the lost manufacturing surplus and sticking the tab (read: tax bill for the deficit) on the class you are screwing all while blasting wages backwards by four decades and expecting to have any semblance of a strong economy is an entirely moronic idea dreamed up by lunes.

It is absolutely insane to think you take the blueprint for what created prosperity turn it upside down and expect prosperity. If these lunes were architects they would have built buildings upside down butting roofs underground and basements at the peak of the structure.

Lunatics and we are paying for their insanity now.Link to the complete fix ...GREAT article

Massive Government: The government doesn’t produce anything. Government, while necessary, has an associated cost. The larger it is the greater it’s cost. Our government is now the largest that it has ever been. In no way, shape or form is this efficient.

Corporatocracy: In a nutshell: Corporatocracy has replaced capitalism. I wrote about this in my last article “Why We Are Totally Finished”. Corporatocracy has permitted corporations to influence (bribe and control) the government which then rewarded select sectors for criminal activity. Fraud that led to our economy blowing up. The sectors which literally blew up the economy in 2008 was saved when they should been left to fail. TBTF translates to not regulated correctly to begin with. Nothing holds a gun to our head. Too big means too unregulated to be permitted to grow too big.

Resource Scarcity: As we approach a population of seven billion every resource from water to oil will be taxed to it’s maximum. The driving thrust of www.ChrisMartenson.com‘s "Crash Course" is how economies mine the earth for resources and sell them. Growth of 2-4% per year compounds exponentially proving the economic model of the world unsustainable.

Enron Accounting: Really that isn’t fair, the accounting our government uses would actually make an Enron accountant blush. Our off balance sheet liabilities dwarf our federal debt. All together we have: 13 trillion in public debt, 18-19 trillion if you count the GSE debt (and you should), another 109 trillion in off balance sheet liabilities. 128 trillion between the two.

In Short: Retro wages four decades, rob the currency of 95% of it’s value, take thirty three million jobs away removing as many consumers, do the exact opposite of what built this nation’s economy, make workers work eight months to pay for a bloated government, allow lobbyists to remove voters rights and replace capitalism with corporatocracy, collapse the debt that people had access to use as a bridge between what two incomes bought in and what they need and you can forget about any economic recovery.

Fugetaboutit.

The Fix

The fix is amazingly simple: In a nutshell our elected officials must wake up to the fact that fudging unemployment numbers with bogus Birth Death Models, not counting U6ers or hiring temporary enumerators doesn’t inject money into the economy through consumer spending. Lying about GDP or keeping off balance sheet debt doesn’t fix anything either. And relying on the lunes that created the mess to fix the mess is even more insane.

They need to fire those who created the mess. Pigs will fly before Larry Summers, Ben Bernanke, or Turbo Tax Cheating Timmy Geithner fix anything and everything they broke or failed to regulate.

Then admit we are broke: Everyone but the nitwits on CNBS know this. We spend more than we take in and can borrow put together. Devalue the currency with an official bring us 10,000 old dollars and get one new dollar. All foreign, domestic, public and private would be wiped clean.



KUDOS to D Sherman Okst for a great article and to Zero Hedge for calling the article to my attention! Grandpa encourages all to visit both sites for tremendous insight on the issues facing everyone on the planet and absolutely no CNBC cheerleading!

Financial Sense Site

Zero Hedge Site