Mortgage Servicing Fraud
occurs post loan origination when mortgage servicers use false statements and book-keeping entries, fabricated assignments, forged signatures and utter counterfeit intangible Notes to take a homeowner's property and equity.
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Nye Lavalle
Deep pockets could paper over SIV troubles
By David Nicklaus

David Nicklaus
[More columns]
[David's Biography]

To those who believe in the repetitive nature of history, it's fitting that the subprime mortgage crisis is occurring exactly a century after the Panic of 1907.

That episode ended when the U.S. Treasury persuaded J.P. Morgan to organize a syndicate of his fellow financiers that would extend credit and buy up battered shares.

Today, Morgan's successors again are meeting under Treasury auspices in an attempt to calm a troubled market. But instead of trying to stop bank runs and a stock market crash, they're worried about an obscure creation called the structured investment vehicle.

Banks created more than $320 billion worth of these off-balance-sheet creatures, known as SIVs. They borrow money in the short-term commercial paper market and invest it in a variety of fixed-income securities, some of which are backed by subprime mortgages.

An SIV is very profitable when things go well. But when cracks start to appear, the structure can fall apart quickly. No one is going to buy an SIV's commercial paper if they think it is insolvent. Recently, the subprime mortgage market has deteriorated so fast that it's hard to tell whether the SIVs are solvent.

Enter Treasury Secretary Henry Paulson, who announced the outlines of an SIV bailout plan nearly two weeks ago. Citigroup, Bank of America and J.P. Morgan Chase would set up a new entity to acquire assets of SIVs that have run into liquidity problems.

The banks have emphasized that this entity, which some people are calling a super-SIV, would only buy solid assets, not subprime paper. They're trying to avoid a fire sale, where troubled SIVs must liquidate and everything — good assets as well as bad — gets marked down in price.

"While a number of big banks have written the value of some of their assets this summer, there is still some reckoning to be done," said Carl Tannen baum, chief economist at LaSalle Bank in Chicago. "The super-SIV is designed to assist in that process."

Stuart Greenbaum, an emeritus professor at Washington University's Olin School of Business, says he sees the need for someone to buy the SIVs' assets. "This would provide, if it works, a huge liquidity infusion," he said. "That would conceivably give the system time to work out the problems it has, if they are liquidity problems and not solvency problems."

The trouble is that Citigroup, an organizer of the bailout, also has been the biggest sponsor of SIVs. That's going to hurt the credibility of the super-SIV.

After all, lack of transparency already is the biggest problem with these things. And when one entity created by Citigroup is shuffling paper over to another entity created by Citigroup, it's hard to be confident that the price is the right one.

Scott Colbert, director of fixed income at Commerce Trust Co., thinks the credibility problem is a large one. "It's another way of keeping these things off the balance sheet for longer and hoping to unwind them," he said.

Colbert suggests that instead of creating a new, opaque vehicle to bail out something that's already complex and opaque, the big banks should have put $100 billion into a joint-venture hedge fund to buy assets from SIVs.

That would be similar to the way investment firms handled the successful wind-down in 1998 of Long Term Capital Management, a failed hedge fund.

It also would be in the spirit of J.P. Morgan, who knew that in times of panic, only those with the deepest pockets can restore calm.
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The Fed is covering for these leveraged scams and the insolvency of the banks.
The Fed was asked point blank about Bank of Americas 20-1 debt ratio when the max is around 9-1 and they said they new Bank of America had assets that could compensate for the debt ration. At the time JP Morgans ration was 58-1 far past insolvent that was about two years ago I'll have to see if I can find the buried info.

The answer is yes and the Fed and the government is hiding that from us and waiting for the system to collapse.

Why would they do this because under the fractional reserve fiat system they crank out paper, today hard drive money based on our equity and deposits.

They have nothing to lose and everything to gain by collapsing the economy and liquidating it and starting over or just plain leaving us in chaos and war blaming each other for their looting of our money.

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O -

AAAA Link would be really NICE! PLEASE!!!

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I'm looking for the corresponding article Sprint has nicely shut of my phone and removed access to review my account during the sub-prime investigations. So that's causing me a big waste of time. Just like T-mobile shut off my service while I was filing a GAO report on the connection between mortgage service fraud, Sup-prime and eminent domain takings. The same group of people is involved in the property taking under Kelo. T-Mobile is part of Deutsche telecom a former state supported Telecom  being allowed to help create cell phone, data and telecoms monopoly in the U.S.

Here's another part of the path to theft by Ponzi scheme Nye and I are referring to.

Fraudulent U.S. Bank Derivatives Behind Parmalat's Insolvency
by Michael Edward

It is currently estimated that at least $17 BILLION (*updated estimate) of Parmalat funds have simply disappeared and cannot be accounted for. The way this came about is a complex web of high risk derivatives based on worthless bonds which, in turn, were founded through offshore shell companies. IF this derivatives scandal is ever fully exposed, the collapse of U.S. and European banks, and the U.S. and European economies, will be eminent. After derivative based scandals like Enron and WorldCom, this just may be the pin that bursts the financial balloon.

Starting in 1997, Parmalat entered into numerous North and South American company acquisitions. The purchase of these companies created large bank debts for Parmalat primarily through Bank of America, Citicorp, and JP Morgan Chase. By 2001, these Parmalat buy-outs were already drowning in red ink. Initially, the banks hedged these losses with high risk interest swap derivatives.

It is no coincidence that the 3 U.S. banks directly involved with the Parmalat scandal are those who hold the highest amount of derivatives:

1 - JPMORGAN CHASE BANK - $33 Trillion, 700 Billion
2 - BANK OF AMERICA - $13 Trillion, 800 Billion
3 - CITIGROUP - $11 Trillion

The result was more red ink due to risky speculation on interest and exchange rates, so the banks created a Ponzi scheme with derivatives they brokered to other banks and investors, such as U.S. pension funds; all based on worthless Parmalat bonds. In reality, they created a financial scam as a means to offset the losses on their Parmalat debts and losses. But the scheme got out of hand when greed apparently took over. Now, those same banks are attempting to lay the entire blame on Parmalat. However, it appears that Parmalat was a victim of these bank schemes along with hundreds of thousands of investors.

Part of this bank scheme was to rate the derivative-based Parmalat bonds as "sound financial paper." Bank of America was a partner in most of Parmalat's acquisitions, and Citicorp purportedly created the fraudulent accounting system through mail drop shell companies formed in offshore jurisdictions.

One of these shell companies was Bonlat, re-organized in the Cayman Islands after having been closed down by the Netherlands Antilles government. Bonlat “invested” $6.9 Billion in high risk interest swap derivatives founded on the falsely high-rated bonds created by the banks for Parmalat. Another shell company, Buconero LLC, was a subsidiary of Citibank. The Italian name Buconero means Black Hole. How ironic it is that Citibank chose this name.

"The Parmalat fraud has been mainly implemented in New York, with the active role of the Zini legal firm and of Citibank," said San Diego lawyer Darren Robbins. "We believe that Citigroup, by creating instruments like the sadly famous 'Buconero,' has played a fundamental role in helping Parmalat to fake their balance sheets and hide their real financial situation."

The entire operation was a well organized fraud from its inception. Through Zini, North and South American firms that had been acquired by Parmalat were sold. Later, Parmalat re-purchased those same companies. The money for the re-purchases came from the shell company derivatives based on the worthless Parmalat bonds. The sole purpose of the offshore shell companies, such as the Citibank subsidiary, was to create liquidity on the Parmalat books. Because of that falsely created paper liquidity, the banks could keep brokering derivatives based on even more worthless bonds they were rating as sound financial investments.

Former Parmalat CEO Tanzi stated to Italian prosecutors that "[the fraudulent bond system] was fully the banks idea." Parmalat's former financial manager, Fausto Tonna, altered Parmalat's books to provide a false security for the bonds. According to the former CEO, "It was the banks which proposed it [altering the company books] to Tonna."

In June 2003, the Parmalat board had a new director, Luca Sala, who came from Bank of America. In order to apparently cover up the fraudulent bond-based derivatives they had brokered, on December 19, Bank of America announced that a Parmalat account allegedly worth $3.9 billion did not exist, which brought the Parmalat insolvency to the public. How coincidental that in early December, the new financial manager at Parmalat was Alberto Ferraris from Citibank.

It appears to be far more than evident that the spirit of the great Italian fraudster, Carlo Ponzi, is alive and well in the U.S. banking system.

Reproduction by non-commercial and non-profit groups encouraged. Otherwise, International Common Law Copy Rights 2004 by WorldVisionPortal.Org

Last edited by Gnosty on Wed 11 Feb, 2004; edited 1 time in total

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 Re: Your bet, Mr Bernanke-$230 trillion   (Not rated)       19-Oct-07 12:02 pm   
>>one hell of a time to bluff...<<
FED will cut the Discount Rate within the next 60 days

Get ready to refinance during the down tic, after that it will have to go up for the lifetime of the boomers.

The housing bust is ugly, don't buy the story from those who have a self-interest in saying the bottom has been reached. Nearly $1 trillion in ARMs will get reset in the next 3 yrs.

The situation that is the root of the problem has been going on for a long, long time. The depression era folks with a good background in math and the how the government printing presses have pumped money into the system have been warning about what we are seeing today for a long time, unfortunately most have died off or are too feeble to continue to warn. I hope the worst fears of people from that generation do not materialize now, and maybe some of the controls will work.

Here is the real reason the FED cut the Discount Rate:

1. JPMORGAN CHASE BANK - $36,805,757,000,000 (Assets $628,662,000,000) Risk Ratio 58.5:1 ($58.54 of derivatives per $1 of assets). Credit exposure to Risk-Based Capital Ratio 844.6% OTC Derivatives 92.6%

2. BANK OF AMERICA - $14,869,220,000,000 (Assets $617,962,000,000) Risk Ratio 24:1 ($24.06 of derivatives per $1 of assets). Credit exposure to Risk-Based Capital Ratio 221.7% OTC Derivatives 83.4%

3. CITIBANK - $11,167,882,000,000 (Assets $582,123,000,000) Risk Ratio 19:1 ($19.18 of derivatives per $1 of assets). Credit exposure to Risk-Based Capital Ratio 267.1% OTC Derivatives 96.4%

4. WACHOVIA BANK - $2,326,465,000,000 (Assets $353,541,000,000) Risk Ratio 6.6:1 ($6.58 of derivatives per $1 of assets). Credit exposure to Risk-Based Capital Ratio 80.6% OTC Derivatives 70.2%

5. HSBC BANK USA - $1,353,741,000,000 (Assets $92,958,000,000) Risk Ratio 14.5:1 ($14.45 of derivatives per $1 of assets). Credit exposure to Risk-Based Capital Ratio 288.5% OTC Derivatives 88.7%

6. BANK ONE - $1,232,095,000,000 (Assets $256,787,000,000) Risk Ratio 4.8:1 ($4.79 of derivatives per $1 of assets). Credit exposure to Risk-Based Capital Ratio 58.7% OTC Derivatives 96.1%

7. BANK OF NEW YORK - $561,694,000,000 (Assets $89,258,000,000) Risk Ratio 6.3:1 ($6.29 of derivatives per $1 of assets). Credit exposure to Risk-Based Capital Ratio 77.7% OTC Derivatives 78.1%

8. WELLS FARGO BANK - $557,161,000,000 (Assets $250,474,000,000)

Risk Ratio 2.2:1 ($2.22 of derivatives per $1 of assets). Credit exposure to Risk-Based Capital Ratio 26.7% OTC Derivatives 66.3%

9. FLEET NATIONAL BANK - $443,708,000,000 (Assets $192,265,000,000) Risk Ratio 2.3:1 ($2.30 of derivatives per $1 of assets). Credit exposure to Risk-Based Capital Ratio 20.2% OTC Derivatives 64.1%

10. STATE STREET BANK - $369,843,000,000 (Assets $80,435,000,000) Risk Ratio 4.6:1 ($4.59 of derivatives per $1 of assets). Credit exposure to Risk-Based Capital Ratio 161.0% OTC Derivatives 89.2%

JPMORGAN CHASE is far past the point of no return. To put it in simple terms, JPMORGAN CHASE, BANK OF AMERICA, CITIBANK, and HSBC are already insolvent many times over. They have no liquidity, yet they are still operating as if they do.

This has now gone way beyond the imminent bursting of the US financial debt bubble... it has become an explosive financial weapon of mass destruction.

In other words the FED is the greatest threat to humanity and the Iraq war is diversion to keep us preoccupied while  the sup-prime  lenders, wall street crooks  and the Fed  buries all of mankind into debt slavery and new age feudalism.

We need a parallel  monetary system right now Ron Paul has several workable and realistic plans for restoring a stable saving based system which creates wealth for the common people. I was talking to and investment manager working on Ron Paul's campaign recently and a big time hedge fund manger a few months. His financial plans are not pie in the sky theories invented by some college professor they are real life plans that will work and accepted by honest members of the financial community.

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