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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Treasury Dept. Seeks New U.S. Power to Keep Markets Stable
March 29, 2008

WASHINGTON — The Treasury Department will propose on Monday that Congress give the Federal Reserve broad new authority to oversee financial market stability, in effect allowing it to send SWAT teams into any corner of the industry or any institution that might pose a risk to the overall system.

The proposal is part of a sweeping blueprint to overhaul the nation’s hodgepodge of financial regulatory agencies, which many experts say failed to recognize rampant excesses in mortgage lending until after they set off what is now the worst financial calamity in decades.

Democratic lawmakers are all but certain to say the proposal does not go far enough in restricting the kinds of practices that caused the financial crisis. Many of the proposals, like those that would consolidate regulatory agencies, have nothing to do with the turmoil in financial markets. And some of the proposals could actually reduce regulation.

According to a summary provided by the administration, the plan would consolidate what is now an alphabet soup of banking and securities regulators into a powerful trio of overseers responsible for everything from banks and brokerage firms to hedge funds and private equity firms.

While the plan could expose Wall Street investment banks and hedge funds to greater scrutiny, it carefully avoids a call for tighter regulation.

The plan would not rein in practices that have been linked to the housing and mortgage crisis, like packaging risky subprime mortgages into securities carrying the highest ratings. (or mortgage servicing fraud)

The plan would give the Fed some authority over Wall Street firms, but only when an investment bank’s practices threatened the entire financial system.

And the plan does not recommend tighter rules over the vast and largely unregulated markets for risk sharing and hedging, like credit default swaps, which are supposed to insure lenders against loss but became a speculative instrument themselves and gave many institutions a false sense of security.

Some of the proposals could actually reduce the power of the Securities and Exchange Commission, which is charged with maintaining orderly stock and bond markets and protecting investors. The proposal would merge the S.E.C. with the Commodity Futures Trading Commission, which regulates exchange-traded futures for oil, grains, currencies and the like.  OMG! THIS is prime cause of the mess! The Commodity Futures Modernization Act of 2000 or CFMA (Public Law 106–554, §1(a)(5) [H.R. 5660], December 21, 2000

The blueprint also suggests several areas where the S.E.C. should take a lighter approach to its oversight. Among them are allowing stock exchanges greater leeway to regulate themselves and streamlining the approval of new products, even allowing automatic approval of securities products that are being traded in foreign markets.  Oh JOY! more arcane derivatives like Credit Default Swaps & shorting ABX betting homeowners will default when fraudsters know defaults are being manufactured by their servicers.

The proposal began last year as an effort by Henry M. Paulson Jr., secretary of the Treasury, to make American financial markets more competitive against overseas markets by modernizing a creaky regulatory system.

His goal was to streamline the different and sometimes clashing rules for commercial banks, savings and loans and nonbank mortgage lenders.

“I am not suggesting that more regulation is the answer, or even that more effective regulation can prevent the periods of financial market stress that seem to occur every 5 to 10 years,” Mr. Paulson will say in a speech on Monday, according to a draft of the speech. “I am suggesting that we should and can have a structure that is designed for the world we live in, one that is more flexible.”

Congress would have to approve almost every element of the proposal, and Democratic leaders are already drafting their own bills to impose tougher supervision over Wall Street investment banks, hedge funds and the fast-growing market in derivatives like credit default swaps.

But Mr. Paulson’s proposal for the Fed echoes ideas championed by Representative Barney Frank, the Massachusetts Democrat who is chairman of the House Financial Services Committee.

Both see the Fed taking a central role in overseeing risk across the entire financial spectrum, but Mr. Frank is likely to favor a stronger Fed role and to subject investment banks to the same rules that commercial banks now must follow, especially for capital reserves.

Under the Treasury proposal, Fed officials would be allowed to examine the practices and even the internal bookkeeping of brokerage firms, hedge funds, commodity-trading exchanges and any other institution that might pose a risk to the overall financial system.

That would be a significant expansion of the central bank’s regulatory mission, which has been limited primarily to supervising commercial banks.

When Fed officials agreed this month to rescue Bear Stearns, once the nation’s fifth-largest investment bank, they pointedly noted that the Fed never had the authority to monitor its financial condition or order it to strengthen its protections against a collapse.

In an unprecedented pair of moves, the Fed engineered a shotgun marriage between JPMorgan Chase and Bear Stearns, lending $29 billion to JPMorgan to prevent a Bear bankruptcy and a chain of defaults that might have brought down much of the financial system.

For the first time since the 1930s, the Fed also agreed to let investment banks borrow hundreds of billions of dollars from its discount window, an emergency lending program reserved for commercial banks and other depository institutions.

But Mr. Paulson’s proposal would fall well short of the kind of regulation that Democrats have been proposing. Mr. Frank and other senior Democrats have argued that investment banks and other lightly regulated institutions now compete directly with commercial banks and should be subject to similar regulation, including examiners who regularly pore over their books and quietly demand changes in their practices.

In a recent interview, Mr. Frank said he realized the need for tighter regulation of Wall Street firms after a meeting with Charles O. Prince III, then chairman of Citigroup.

When Mr. Frank asked why Citigroup had kept billions of dollars in “structured investment vehicles” off the firm’s balance sheet, he recalled, Mr. Prince responded that Citigroup, as a bank holding company, would have been at a disadvantage because investment firms can operate with higher debt and lower capital reserves.

Senator Charles E. Schumer, Democrat of New York, has taken a similar stance.

“Commercial banks continue to be supervised closely, and are subject to a host of rules meant to limit systemic risk,” Mr. Schumer wrote in an op-ed article on Friday in The Wall Street Journal. “But many other financial institutions, including investment banks and hedge funds, are regulated lightly, if at all, even though they act in many ways like banks.”

Because Mr. Paulson’s proposal would affect scores of deeply entrenched industry groups, it is likely to provoke bruising turf battles in Congress among agencies and rival industry groups that benefit from the current system of regulation.

Administration officials acknowledged on Friday that they did not expect the proposal to become law this year, but said they hoped it would help frame a policy debate that would extend well after the elections in November.

In a nod to the debacle in mortgage lending, the administration proposed a Mortgage Origination Commission to evaluate the effectiveness of state governments in regulating mortgage brokers and protecting consumers.

The bulk of the proposal, however, was developed before soaring mortgage defaults set off a much broader credit crisis, and most of the proposals are geared to streamlining regulation.

This proposal would consolidate a large number of regulators into roughly three big new agencies.

Bank supervision, now divided among five federal agencies, would be led by a Prudential Financial Regulator, which could send examiners into any bank or depository institution that is protected by either federal deposit insurance or other federal backstops. It would eliminate the distinction between “banks” and “thrift institutions,” which are already indistinguishable to most consumers, and shut down the Office of Thrift Supervision.

Any effort to merge the Commodity Futures Trading Commission with the S.E.C. is likely to provoke a fight between the agencies as well as the companies they regulate.

Yet another proposal in the blueprint would, for the first time, create a national regulator for insurance companies, an industry that is now regulated by state governments.

Administration officials argue that a national system would eliminate inefficiencies of having 50 different state regulators, who have jealously guarded their powers and are likely to fight any encroachment by the federal government.

Paulson clearly does not view defrauded foreclosed homeowners, homeless people, abandoned and deteriorating properties, devastated neighborhoods as systemic risk of any serious magnitude.  Reading this, one would think he remains on Goldman Sachs' payroll. 
 
 


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Concerned
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While the plan could expose Wall Street investment banks and hedge funds to greater scrutiny, it carefully avoids a call for tighter regulation.

Aww, that's the ticket...
Put a wolf in charge of the henhouse.  How nice.
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4 justice now
Why can't they simply enforce a few of the laws that we already have?
 
Don't worry, I do know better. I'm just being sarcastic as usual.
 
Although, I do believe it maybe time to start selecting our government officials via some type of lottery. That way, it just might even be possible to actually attain somebody who possesses at least a fraction of an infinitesimal amount of integrity and courage.
 

 
4what?
 
 
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Speaking to the issue at hand, none of them are going to be doing
us any favors.

They don't even understand the problem so there is not much hope they
can resolve it.

Once you get on board with one of them they no longer have to work for your vote and they can keep the focus on raising campaign dollars.

The very minute one of them wins the election, the fund raising for the
next term begins.

Unfortunately, we don't have the clout to force the issue.  Who lobbies
for the borrowers?

I guess we just have to hope whoever is elected won't turn another blind
eye to the fleecing of borrowers to satisfy the greed factor.  There are
an awful lot of blind eyes representing us.

Dee
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Bishop
The proposal is about consolidating what is now an unwieldy environment whereby any "loose cannon" out to make a name or career for himself might exercise his regulatory powers to further expose the fraud.

By limiting the number of "annointed" to positions of regulatory power the power establishment do not have to fear a "probe" or an inquiry by any "state" agent with subpoena power to obtain documentation that exposes the fraud.

As an example, witness the recent case of New York Attorney General Cuomo's inquiry into alleged improprieties by Fannie Mae, Freddie Mac and WAMU. There the cover-up by the Office of Federal Housing Enterprise Oversight Committee alleged that Cuomo's probe undermined there jurisdiction. The OFHEO agency was the agency that levied $200mm in "fines" against Fannie Mae for "accounting improprieties." Afraid that Cuomo's probe would uncover some impropriety on the part of OFHEO, the challenge to Cuomo's jurisdicition and probe was collaterally attacked via the U.S. Justice Department. Amazingly, Cuomo called off his dogs and the problem went away.

The fear of exposure of the depth and scope of the fraud forged this new proposal to "consolidate" the regulatory apparatus. It simplifies the energy needed to quash any untoward questions posed by the politically upwardly mobile.
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This is also another move to eliminate state regulators:

Quote:

Yet another proposal in the blueprint would, for the first time, create a national regulator for insurance companies, an industry that is now regulated by state governments.

Administration officials argue that a national system would eliminate inefficiencies of having 50 different state regulators, who have jealously guarded their powers and are likely to fight any encroachment by the federal government.


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    As I understand it, the Federal Reserve System is an association of private
banks, it is not a government entity, so here we have an example of the
Federal Government delegating its policing authority to a private corporation.
    I guess we shouldn't be surprised since "our" leaders have already given
to the Federal Reserve Corporation a monopoly on the issuance of currency
in blatant violation of the letter and spirit of the Constitution.
    Recently, "our" leader, Mr. Bush decided to credit every taxpayer with
a $600 special tax refund. I wonder where he intends to get this money,
will the Treasury print up US Notes directly and save the taxpayers the
interest? Or will he sell interest bearing US Notes and Bonds on the open
market, further indebting the tax payers to pay back at least twice the
amount of the refund.
    What the commercial banks do, is  they buy these interest bearing
government Notes and bonds at the highest interest rate they can get
and then they turn around and hypothecate them to the Federal Reserve
banks for a credit or freshly printed Federal Reserve Notes which they
then loan to the consumer at the highest interest rate they can get.
The whole system is a rip-off to the taxpayers and the borrowers. It only
benefits the commercial banks. The treasury should issue the Notes
directly to the public, interest free when it experiences a deficit. This
would free up alot of money to solve the myriad problems that face the USA!
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