Mortgage Backed Security Holders Stir……A Little…

Institutional investors who purchased mortgage backed securities issued by Countrywide, now Bank of America have sent a demand letter requesting that Bank of America repurchase their mortgages for non-performance.

What makes this a big deal is just who is writing this.

Pacific Investment Management Co. [PIMCO], BlackRock Inc. and the Federal Reserve Bank of New York are seeking to force Bank of America Corp. to repurchase soured mortgages packaged into $47 billion of bonds by its Countrywide Financial Corp. unit, people familiar with the matter said.

A group of bondholders wrote a letter to Bank of America and Bank of New York Mellon Corp., the debt’s trustee, citing alleged failures by Countrywide to service loans properly, their lawyer said yesterday in a statement that didn’t name the firms. The New York Fed acquired mortgage debt through its 2008 rescues of Bear Stearns Cos. and American International Group Inc.

Bank of America responded that it would, "defend its shareholders," which might make for an interesting conflict between two groups of too big to fail financial institutions.

In either case, it makes Congressional Deus Ex Machina hail Mary play less likely, since the constituencies that normally bribe lobby the House and Senate appear to be fairly evenly divided.

My guess is that this is actually not as big a deal as it sounds.

I agree with Yves Smith, that this is primarily posturing:

• This is not litigation, it's just a nastygram that was release.
• The claim appears to be an extension of a claim against trusts.
• They are claiming that the lack of due diligence was because the former Countrywide is not going after Countrywide, that sold the loan.
• That BoA/Contrywide has been too slow in forclosing. (!?!)

Still, if it prevents Congress from bailing out the banksters, it would be a good thing.^™

The full press release from the bond holders is below the fold:

DADT Injunction Stands (for now)

In response to the government's request that she stay her injunction against Don't Ask Don't Tell, Federal Judge Virginia Phillips has refused a stay:

A federal judge formally refused on Tuesday to let the Pentagon reinstate its ban on openly gay men and women in the U.S. military while it appeals her decision declaring its "don't ask, don't tell" policy unconstitutional.

A day after tentatively siding against the Obama administration, U.S. District Judge Virginia Phillips issued a written decision denying a government request to lift her own injunction barring further Pentagon enforcement of the ban.

Needless to say the Obama Administration will attempt to have the injunction stayed on appeal, taking it first to the United States Court of Appeals for the Ninth Circuit, and then to the Supreme Court, and they will do so on an expedited basis.

Because the Obama administration is desparate for the witch hunts in the military to proceed without pause.

Even if they feel that they have a constitutional duty to fight the case, this injunction will not, according to Barack Obama's own words, he does not believe will do any damage to the military.

The only reasons to pursue this are cowardice and bigotry, and at this point, I am inclined to favor the latter as an explanation, because at this point, with two weeks to go in the election, the all the gay baiting that is going to be done has been done.

Realistically, when you look at administrations inaction on these matters, combined with Obamas public statements opposing gay marriage, I think that we have to believe that this is motivated by bigotry.

The Funniest Military Video Ever

It starts with a survey of the concepts, but at about 2:20, it gets hysterically funny.



H/t Juha Boren for the tip.

Surprise, the Pentagon Lied Again

This time, it was not that the wedding party that they bombed was a terrorist base camp. This time, we get the updated report, and it is determined that the DoD found no compromise of its intelligence capabilities from the Wikileaks documents dump:

The unauthorized release of tens of thousands of classified U.S. military records from the war in Afghanistan last July on the Wikileaks website did not result in the disclosure of sensitive intelligence sources, according to a mid-August assessment by the Department of Defense that has just been made public.

“The review to date has not revealed any sensitive intelligence sources and methods compromised by this disclosure,” wrote Secretary of Defense Robert M. Gates in an August 16 letter (pdf) to Senate Armed Services Committee Chairman Carl Levin.

We get lied into a war. We get lied to during the war. We have a war on whistle blowers who reveal the lies.

Without accurate information, the public can never weigh in in the policies of its government, and this is a very bad thing.

Here is a Big Surprise

The astroturf group Concerned Taxpayers of America represents just two of said taxpayers:

A few weeks ago, a group called Concerned Taxpayers of America emerged out of nowhere and started to spend large sums of money attacking Rep. Peter DeFazio (D) in his re-election bid in Oregon. At the time, both DeFazio and his opponent, Tea Party favorite Art Robinson, claimed complete ignorance of the group, and DeFazio even tracked it to a townhouse in the Capitol Hill neighborhood of Washington to demand that the group identify itself — but to no avail.

Friday’s FEC filings, however, finally reveal that the Concerned Taxpayers of America consists of exactly two concerned taxpayers:

………

This sh%$ really needs to stop.

Because No Matter How Bad it is for the United States, It is Good for the Bankers

Timothy Geithner has reiterated his support for Bob Rubin's strong dollar policy:

"It is very important for people to understand that the United States of America and no country around the world can devalue its way to prosperity, to (be) competitive," Geithner added. "It is not a viable, feasible strategy and we will not engage in it."

Answering audience questions before the Commonwealth Club of California in Palo Alto, he said the United States needed to "work hard to preserve confidence in the strong dollar."

The dollar is overvalued, particularly with regard to the Chinese Yuan, and it has been for years.

It's been overvalued, because it makes the US position as a reserve currency more secure, which means more people paying American bankers to hold their money, even as it increases exports and decreases imports, harming the rest of the country.

Once again, when Timothy Geithner has to choose between the country and the banks, he chooses the banks.

This Explains a Lot

Many years ago, Yves Smith worked for Goldman Sachs, AKA the Vampire Squid,^* and she said that Goldman Sachs is actually a cult:

As important, Goldman is a cult. I say that as a former employee, based not just on my experience a very long time ago (boy, am I getting old, more than 25 years ago) but also on reports I get from recruits and what I can infer from press reports. If anything the firm has become more inward looking over the years

The people there honestly believe that working for Goldman is the most elevated calling (Blankfein’s bizarre-sounding “Doing God’s work” remark no doubt resonated within the firm) and doing anything else is a fall from grace. Seriously. People who exit Goldman typically take a year or two to get over it the deeply-inculcated belief that departure = failure (this isn’t my own response; I’ve had a number of men volunteer that to me). Similarly, the first person I met at Goldman, which was through personal contacts, made it clear he was blocked in her career (his boss was too close to her in age) said he couldn’t possibly work for another firm. It wasn’t that he had assessed the tradeoffs and decided on balance it was still better to stay; he literally recoiled on a psychological level from the idea of departing. That sort of deep indoctrination was not at all unusual.

And people who had managed not to imbibe the Kool Aid were viewed with some suspicion. I left as a pretty junior person; the only reason I was remembered was a woman in investment banking in the early 1980s was an unusual commodity. Someone who checked out my reputation years after my departure said the party line on me was “She could have made partner, but we would have had to break her.”

(emphasis mine)

I kind of thought that it was just ordinary greed, but this revelation says a lot.

In the United States these days, we tend to try to describe everything in terms of profit and loss, with greed as a motivator.

But profit and loss do not describe anything. If they did, then the Randroid nut jobs out there would be right, and discrimination would have ended, because it interferes with the most efficient flow of commerce.

Goldman Sachs is a cult, and really do believe that they are doing God's work.

This is so f%$#ing creepy.

^*Alas, I cannot claim credit for the bon mot describing Goldman Sachs as a, "great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money." This was coined by the great Matt Taibbi, in his article on the massive criminal conspiracy investment firm, The Great American Bubble Machine.

This Election is Getting Weird

First, Joe Miller says that the Berlin Wall is a good thing, and now he has his own merry band of Brownshirts

So, it appears that Alaska Republican Senate nominee has hired hired goons to harass the press in order to prevent them from asking him questions, and they just assaulted and handcuffed a journalist:

The editor of the Alaska Dispatch website was arrested by U.S. Senate candidate Joe Miller's private security guards Sunday as the editor attempted to interview Miller at the end of a public event in an Anchorage school.

Tony Hopfinger was handcuffed by the guards and detained in a hallway at Central Middle School until Anchorage police came and told the guards to release Hopfinger.

I keep expecting this crowd to burst into Tomorrow Belongs to Me.

Christine O'Donnell may be the sane one of this lot.

Our political culture is broken in some very profound ways, and I have no clue as to how to fix it.

Deep Thought

H/t The Big Picture.
cartoon

Wasp

Here is the windup


And here is the unforced error

For those of you who don't know, Wasp is a book by Eric Frank Russell. It's conceit is that a man is sent to infiltrate and subvert a planet held by the enemy.

Rather than conventional methods of espionage, like sabotage, the goal of the agents is to engender over-reactions from the authorities which would have them weakening themselves, much like a driver distracted by a wasp can kill himself and his passengers by driving into a bridge abutment.

Well, in the Kentucky Senate Race, Democrat Jack Conway ran an ad against Randroid nut job Republican Rand Paul bringing up his involvement in an anti-religious group at Baylor, and his frat hazing style "kidnapping" of a coed who he made to bow down to the "Aqua Buddha."

I cannot claim to have a deep understanding of the politics, or the religiosity, of Kentucky, so I cannot speak to the direct effects of the advertisement (1^st video), but I can speak to the secondary effects of the ad (2^nd video) and it ain't pretty.

Rand Paul is acting like a complete bitch, and his bit at the end where he huffily declares that he won't shake hands at the end of the debate.

I'm with Theda Skocpol on the nervous Nellies who are wringing their hands over this:

One reason that Dems do not seem to be able to play hardball -- in a viciously hardball political world -- is that Dems often lack conviction or the will to be eloquently honest (for example, on taxes). But an equal problem is that when someone does play hardball, the rest of the prissy liberal Mugwumps tut-tut them about it.

The professional losing class can go Cheney themselves.

Honestly, I don't care about Rand Paul's religion. My guess is that his protestations of religion are a less than honest, since his idol Ayn Rand loathed religion, but politically, the important bit of electoral politics here here is that Rand Paul seriously lost his sh%$ on camera, and that was the real success of this ad.

BTW, if you wanted to use a cinematic reference rather than a literary reference, I would suggest that Jack Conway just Gaslighted Rand Paul.

Is the USAF F%$#ing Nuts?

Click for full size

---

Lockheed's Concept


Lockheed's "Secret Sauce", an ejector/blown flap lift augmentation system


Boeing's concept uses the Coanda effect in upper surface blowing like its YC-14


A tailless design for a transport, what the f%$# are they smoking


How stealthy will anything be with debris regularly cutting grooves in the skin?

If they are serious about their proposal for a stealthy transport roughly the size of a C-130, the answer is yes.

It's entirely possible to design a STOL aircraft of C-130 or A-400M size that can cruise at conventional jet transport speeds, i.e. more than Mach 0.7 and take off or land in less then 200 feet.

In fact, the A400M comes awfully close to meeting those requirements right now cruising at almost Mach 0.7 with a takeoff and landing distance of about 2500 feet.

That being said, the idea that you want to do all of this, and then triple (at least) the lifetime costs of the airframe by making it stealthy is simply deluded.

While reducing the vulnerability of cargo aircraft to shoulder launched MANPADS is a good idea, experience has shown that the threats are primarily that and small arms fire, the idea that you need to create a reduced radar cross section, as appears to be the case with all (the tailless design is a Northrop-Grumman concept) is really bizarre.

If the enemy has air-superiority in the region, you are simply f%$#ed, and if they are in a position to have radar guided SAMs near your bases, you are, again, simply f%$#ed.

I'm with what Bill Sweetman wrote in the comments:

Everyone, but everyone, writing future airlift requirements for the USAF and US Army is secretly working for Airbus Military. Other than the massive abuse of chemicals there is no alternative explanation for this malarkey.

Whiskey Tango Foxtrot?!?!?!?

Commodity Futures Trading Commission (CFTC) Administrative Law Judge George Painter is retiring, and he has filed a formal complaint of bias against his fellow judge, Bruce Levine:

Commodity Futures Trading Commission (CFTC) Administrative Law Judge George H. Painter made serious allegations regarding fellow CFTC judge Bruce Levine in announcing his retirement.

In a notice sent to complainants and their attorneys, Judge Painter claims that Levine told him that he had promised former CFTC Chair Wendy Gramm “that he would never rule in a complainants favor”. Painter’s notice goes on to say, “A review of his rulings will confirm that he has fulfilled his vow.”

He is invoking 5CFR§930.208, Administrative Law Judge Loan Program--detail to other agencies to request that his remaining cases be assigned to someone, anyone, else, because Levine is the only other administrative law judge at the CFTC.

You can find the PDF of his complaint, along with a copy of an old WSJ article which details a long history of Mr. Levine's wrong-doing, like ex-parte contact with litigants, here.

It would have been nice if someone had ratted out this rat years ago.

H/t Streetwise Professor

And Sarah Laughed*

The first woman scribed Torah written in modern times has been completed. At the siyum (completion ceremony), my brother sounded the shofar.

Cool.

^*Parshas Vayera in Genesis: ⁹ They said to him, "Where is your wife Sarah?" And he replied, "There, in the tent." ¹⁰ Then one said, "I will return to you next year, and your wife Sarah shall have a son!" Sarah was listening at the entrance of the tent, which was behind him. ¹¹ Now Abraham and Sarah were old, advanced in years; Sarah had stopped having the periods of women. ¹² And Sarah laughed to herself, saying, "Now that I am withered, am I to have enjoyment—with my husband so old?" ¹³ Then the Lord said to Abraham, "Why did Sarah laugh, saying, 'Shall I in truth bear a child, old as I am?' ¹⁴ Is anything too wondrous for the Lord? I will return to you at the time next year, and Sarah shall have a son."

I've Never Called Him Stupid, But Now I Will…

Because Barack Obama just met with Condoleeza Rice to discuss foreign policy:

US President Barack Obama met Friday at the White House with former secretary of state Condoleezza Rice for a chat on foreign policy and her new memoir, officials said.

What's next, meeting with Mary Mallon^* to discuss food hygiene?

Discussing haute cuisine, or for that matter how to win a World Cup, with the British?

Seriously, the idea that you are going to have a friendly chat about foreign policy with the worst Secretary of State of all time, who served the worst President of all time, because ……… Hell, I cannot fathom a possible reason for doing this.

What is going on here is a demonstration of either mind-boggling idiocy, or a truly nasty bit of psychological pathology that requires one to get approval from everyone.

^*Typhoid Mary.

Bad Ideas Revisited

The Royal Navy has a problem, which is that with a typical weapons load in a tropical environment, the F-35B STOVL variant of the JSF cannot land without jettisoning some of its (very expensive) stores.

Their solution is the Shipboard Rolling Vertical Landing, for which the Royal Navy has just paid Lockheed $18 million for a viability study, in which the F-35 will land on a carrier deck in a combined wing borne and thrust borne mode, at about 60 kts airspeed without benefit of arrester gear.

So, you have an aircraft weighing something north of 35,000 pounds, which is going to hit the deck at 60+ kts, though the relative speed will likely be closer to 30 kts, and it will then be manually braked to a stop.

What a bloody mess.

Yeah, Like This Name is Accidental

European missile conglomerate MDBA has announced a successful test of its, "Hard and Deeply Buried Target (HARDBUT) Next Generation Multiple Warhead System (NGMWS).

It appears to be rather different in concept from the penetrators developed by the US, which use mass, metallurgy (ES-1 Steel), and specialized geometry to achieve a target kill. Hardbut appears to rely on a tandem warhead to achieve its goals:

The firing was carried out using a representative missile airframe on the long rocket sled test track at Biscarrosse. The live Precursor Charge (PC) was detonated just in front of the massive concrete target and the inert Follow-Through Bomb (FTB) penetrated through and exited the rear face of the target, demonstrating a penetration capability significantly in excess of any warhead currently produced by MBDA. The trial was also designed to assess the robustness of the compact Ruggedized Electronic In-line Fuze (REIF) which will incorporate embedded smart fuzing algorithms. The target and trial set-up were designed to be operationally representative.

(emphasis mine)

So it appears to me that there is a (probably shaped) charge, with a penetrator that follows behind.

H/t Danger Room.

Factoid of the Day

I would not have known, but when you think about it, it's not surprising that over their history, banks have been a money losing enterprise:

He duly notes the key role banks had in the financial collapse and cites "one amazing statistic," namely that "in the aggregate, banks have never made money over time." Instead, "like the airlines, banks historically have seemingly made money hand over fist during good times, but they give it all back when the cycle turns."

But he asks, "How many bankers suffer the same fate when it comes to their own personal financial affairs?" And the answer to that question, Dennis believes, was a major factor in setting the stage for the encompassing financial crisis we've recently suffered through.

The problem is that while banks have not made money over their history, bankers have, because, when the going gets tough, they get to keep their enormous paychecks of the go-go years.

If we did something simple, like saying that remuneration to officers and executives in excess of $400,000.00 a year, the President's salary, would be subject to claims against the company which paid them for 5 years, and then partially subject to claims against a company for the next 10 years, we would find a lot more honesty and probity in the financial industry.

I Hope that He is Wrong, But I Fear that He is Right

John Carney at CNBC says that Congress will make the illegal actions of banks retroactively legal in the lame duck session:

The put-back crisis is not driven by economics. It is driven by legal rights. And there’s simply zero probability that the politicians in Washington are going to let Bank of America or Citigroup or JP Morgan Chase fail because of a legal issue.

So here’s what I expect will happen. The lame duck session of Congress will pass a bill that essentially papers over the misdeeds of the banks that originated mortgage securities. Every member of Congress and every Senator who has been voted out of office will cast a vote for the bill. And the President will sign it.

He is suggesting that you buy stock in Bank of America, because when Congress does this, the stock will rebound.

He's right, the bankers own our government.

It's Bank Failure Friday!!!! (late again)

And here they are, ordered, and numbered for the year so far.

130. Security Savings Bank, F.S.B., Olathe, KS
     
131. WestBridge Bank and Trust Company, Chesterfield, MO
     
132. Premier Bank, Jefferson City, MO
     

Full FDIC list

3 this week, which appears to be more or less on trend, which is a bit over 3, see graph.

My guess is that the final that the final number will be in the 150-160 range, though prognostic record is rather spotty.

So, here is the graph pr0n with trendline (FDIC only):



I would note that are now at the point where the utility of the least squares trendline is diminishing, but I'm keeping it here for historical purposes.

Here is Some Sanity in Defense Procurement

The successor to the over-ambitious Future Combat Systems Manned Ground Vehicle (FCS-MGV)^* the Ground Combat Vehicle (GCV) has now dropped many of the technologies intended for the FCS-MGV, because, even now, 2 years after the cancellation of the program, the programs are still insufficiently mature to be deployed on a combat system:

In an effort to make use of the billions of dollars it invested in the Future Combat Systems (FCS) program, the U.S. Army may have required too many immature technologies in its first Ground Combat Vehicle (GCV) Request for Proposals, according to the Army's vice chief.

"We wanted to look and ensure that we made use of the investment in FCS and that we had the ability to use those technologies," Gen. Peter Chiarelli told reporters at a Sept. 22 lunch in Washington.

However, if you want a vehicle in seven years, "you can't be reaching deep for technologies right now," he said.

………

According to Chiarelli, FCS was canceled in a way so that the Army could still make use of the research and development work done under the program.

"We wanted to ensure that those technologies that we worked so hard to develop could be integrated in to a new ground combat vehicle," he said.

However, "there were a lot of those technologies that aren't at a technology readiness level today where we could integrate them in seven years."

(emphasis mine)

It boggles the mind that the technologies, "aren't at a technology readiness level," when the original intent was to begin fielding the FCS in 2008.

So the technologies in question won't be ready 9 years after they were supposed to be fielded.

Our defense procurement system is seriously broken.

^*Full disclosure, I worked on the Future Recovery and Maintenance Vehicle, FRMV, "wrecker" variant of the FCS-MGV^† from 2003-2006 at United Defense (later BAE Systems after the Carlyle Group sold me to buy Dunkin Donuts).
^†Future Combat Systems-Manned Ground Vehicle. These are the ones that are the tanks and APCs. As opposed to the various unnmanned vehicles, networking technologies, etc. that form the full FCS along with the MGVs.^‡
‡Yes, I have worked everywhere. Maybe I can't hold down a job, but more likely this has been my role as "technical hit man", where you are parachuted in to take care of a specific need.

Your Friday of Muppets

Popcorn!

The Beer Diet

Whiskey Tango Foxtrot? (The Good Kind)

Is an odd data point.

Notwithstanding the poling showing an enthusiasm gap, Democrats are casting their ballot through early voting in greater numbers than Republicans:

But something special is going on in two Ohio Democratic strongholds: Cuyahoga and Franklin counties. I track on this handy web page that other places around the country -- including other Ohio counties -- are so far reporting low single digit early voting rates. In stark contrast, over 112,000 votes have already been cast in these two Ohio counties. As a comparison, this represents over ten percent of all ballots cast in the 2006 election in these counties, with still some time to go.

…

Something is afoot in Iowa. Not only have nearly 120,000 voters already cast their ballot, registered Democrats are returning their mail ballots at a higher rate than Republicans in nearly every Iowa county. This, in part, explains the approximately 5:3 partisan registration advantage Democrats have over Republicans among mail ballots returned so far in the Hawkeye state.

I still see the glass empty, and I stand by my analysis that, win or lose, the Dems don't deserve to win, but this is heartening.

QOTD

I think too often many of us have tried to come up with elaborate financial/economic rationalizations for why the banksters have approached all of this the way they have. The simpler explanation is that they're sociopathic assholes who think that everyone else must suffer for their mistakes.

—Duncan Black

And yes, my prior post segues very nicely into this.

Not Enough Bullets

From an attitude on Wall Street's attitude about foreclosure fraud:

“The first thing that needs to happen, I think, is to get these people out of their homes,” a man wearing a bespoke blue-striped shirt, a Hermés tie patterned with elephants and Ferragamo loafers said recently. “Correct! I’ll explain,” the veteran member of a bank restructuring and advisory team said.

H/t Paul Krugman.

My 2012 Endorsement

I have no connection whatsoever to whoever is printing this shirt.

Economics Update

Unemployment Claims 2008-Present

---

Things aren't getting better, they are just running out of people to lay off.
H/t The Washington Independent.

It's jobless Thursday, and initial unemployment claims are back in the 450K-480K "sweet" spot, with initial claims rising 13,000 to 462K, the 4 week moving average rising 2¼K to 459,000, though both continuing and emergency claims fell.

Seeing as how the number really needs to be below 300,000 for any meaningful recovery in jobs, we remain in a bad place.

In non-existent inflation land, we saw producer prices rise 0.4% in September, though that was largely on food, the core rate was 0.1%, and the price of imports fell by 0.3%, even as the trade deficit rose.

I would note here to all the free trade fetishists, we have a deflation problem in our economy right now, and most of it is being imported.

Meanwhile, the us dollar has fallen to a low for the year.

Kochtopus

The Koch brothers, who have been using their Stalin derived fortunes^* to back the teabaggers, have steadfastly denied any involvement in the movement.

Well, let's role tape:

David Koch told New York Magazine earlier this year, "I’ve never been to a tea-party event. No one representing the tea party has ever even approached me."

But the Guardian reports that footage has emerged showing David Koch at the podium during an AFP gala receiving direct and detailed reports from his astroturf AFP army on their efforts to organize tea parties around the nation.

It appears that, "Never been to a tea-party event," means getting reports from the people you are bankrolling on stage in right wing speak.


^*Really, patriarch Fred Koch made his fortune setting up refining for Josef Stalin.

They Write Letters

Alan Grayson has written to the FBI requesting a criminal investigation of fraud by the bankers in their foreclosure proceedings.

He is correct when he says that, " It is time for handcuffs. Fraud does not become legal just because a big bank does it. … This is absurd. This is deliberate, systemic fraud, and it is a crime."

Full letter after the break:

Obama Administration Requests Stay on DADT Injunction

There's a shocker. They want to continue the witch hunts and persecutions while they are appealing:

The Obama administration on Thursday asked a judge to allow the Pentagon to keep its ban against openly gay men and women in the military while it appeals her decision that ruled the "don't ask, don't tell" policy was unconstitutional.

President Barack Obama, Defense Secretary Robert Gates and military leaders have backed ending the policy, but have urged that it be done by the U.S. Congress and military so that there is no disruption to military operations, morale or recruiting.

At a town hall meeting with young voters, a woman pressed Obama on why he wasn't ending the policy immediately.

"This is not a situation where with a stroke of a pen I can end the policy," he said and noted that he cannot ignore laws on the books. "This policy will end and it will end on my watch."

This is a lie. Obama, with a stroke of a pen, could end the separations, and if Congress passes something (ha!) then it is his pen that will sign the bill.

When we look at Obama, one has to wonder whether he, or those people closest to him, like Valerie "gay is a lifestyle choice" Jarrett say about gays when they are having their private moments.

I'm beginning to think that the policy here is to find a path to do the least possible without fatally alienating the party.

If Obama were a Republican, we would be talking about his homophobia right now.

Foreclosures Hit a New Record in September

I wonder how many of them were fraudulent or otherwise in error:

More than 100,000 U.S. homes were seized by lenders in September, a record number that probably will decline in coming months as major banks halt repossessions and review their foreclosure practices.

Lenders took over 102,134 properties last month, RealtyTrac Inc. said in a report today. That was the highest monthly tally since the company began tracking the data in 2005, surpassing the August record of 95,364. Foreclosure filings, including default and auction notices, rose 3 percent from the prior month to 347,420. One out of every 371 households received a notice.

I'm dubious of that the, "number that probably will decline," as, "major banks halt repossessions and review their foreclosure practices."

The banks will rush the moratorium, and in any case the moratorium will be very porous, because the banks are evil, so I expect the numbers to rise.

Describing the Green Party to a T

In Illinois the Green Party Candidate for Governor, Rich Whitney, had his name misspelled on voting machines. It reads Rich Whitey.

I know that there are "people of color" in the Green Party. The late Ed Boyd, an African American, ran for governor in Maryland in 2006, but received no party support, because they were focusing on (equally doomed) the Senate candidacy of rich whitey Kevin Zeese.

Ed Boyd was kind of pissed, but that really is how the Green Party rolls. It's the comfortable pretending to afflict the comfortable.

So, the Solar Panels are Going Up at the White House

He will be putting both photovoltaic\ and hot water panels on the roof.

I'm honestly kind of surprised, seeing as how, less than a month ago, some solar enthusiasts were treated like complete crap for making this request.

I guess that someone thought that maybe that episode was a hippie cock punch too far.

Your Bank Foreclosure Fraud Update

Barry Ritholtz opens a can of whup ass on a clueless Diana Olick (@ 8:20 but watch the whole thing)

First, some perspective.

When I went to UMass, there was a murder case in the Amherst area. Someone bought some land, and they met on the property to exchange deed and money, and when he got the deed, he shot the seller, and took back the money.

At the time, I wondered how someone could be so stupid to think that this would still work.

The requirements of real estate transactions are such that, even if they never find the body or suspect you of murder, you won't get the property, and it's been that way since well before the Civil War, and possibly since before the Revolutionary War in Massachusetts.

That's what all these transactions are about. They are the product of hundreds of years of social and legal development in order to ensure that someone does not just shoot you and take the deed.

But the bankers just want to shoot you and take the deed, so they take short cuts.

It's why Barry Ritholtz calls the foreclosure fraud an assault on the basic property rights that make capitalism work in our society.

On a slightly less philosophical level, read Rortybomb's Foreclosure Fraud for Dummies, Part One, Part Two, and Part 3. It's clear, it's concise, and it helps you understand just what is going on here with the fraudulent paperwork.

Additionally, Felix Salmon points out that the entire mortgage backed securities process was a deliberate fraud perpetrated on investors:

………

This is where things get positively evil. The investment banks didn’t mind buying up loans they knew were bad, because they considered themselves to be in the moving business rather than the storage business. They weren’t going to hold on to the loans: they were just going to package them up and sell them on to some buy-side sucker.

In fact, the banks had an incentive to buy loans they knew were bad. Because when the loans proved to be bad, the banks could go back to the originator and get a discount on the amount of money they were paying for the pool. And the less money they paid for the pool, the more profit they could make when they turned it into mortgage bonds and sold it off to investors.

Now here’s the scandal: the investors were never informed of the results of Clayton’s test. The investment banks were perfectly happy to ask for a discount on the loans when they found out how badly-underwritten the loan pool was. But they didn’t pass that discount on to investors, who were kept in the dark about that fact.

………

In any case, it’s clear that the banks had price-sensitive information on the quality of the loan pool which they failed to pass on to investors in that pool. That’s a lie of omission, and if I was one of the investors in one of these pools, I’d be inclined to sue for my money back. Prosecutors, too, are reportedly looking at these deals, and I can’t imagine they’ll like what they find.

The bank I talked to didn’t even attempt to excuse its behavior. It just said that Clayton’s taste-testing was being done by the bank — the buyer of the loan portfolio — rather than being done on behalf of bond investors. Well, yes. That’s the whole problem. The bank was essentially trading on inside information about the loan pool: buying it low (negotiating for a discount from the originator) and then selling it high to people who didn’t have that crucial information.

We should be looking at throwing these folks in jail. (read the whole thing)

In terms of shoes dropping, we now have Wells Fargo initiating a review of its foreclosures, and J.P. Morgan announcing in an investor call that it has stopped using MERS as its agents in foreclosures, which indicates that the big banks have real concerns about the legality of what is basically a database containing an incomplete record of scanned images:

JP Morgan Chase is a valued member of MERS. They currently have their correspondent loans registered on the MERS System. They do not, nor have they ever, registered their retail loans on the MERS System. As members of MERS and for loans registered on the MERS System, banks have the option of foreclosing in their own name, or MERS foreclosing for them.

Notwithstanding the people out there who are maintaining that this is just a bit of paperwork, one of the more savvy banks out there is clearly concerned.

610 Grand, Not Enough

The lawsuit against the Lower Merion school district for spying on children with webcams has been settled for $610,000:

The Lower Merion School District will pay $610,000 to settle lawsuits over its tracking of student laptop computers, ending an eight-month saga that thrust the elite district into a global spotlight and stirred questions about technology and privacy in schools.

School board members voted unanimously Monday night to pay $185,000 to the two students who claimed the district spied on them by secretly activating the webcams on their laptops.

Someone should have gone to jail over all of this.

The fact that there was not a serious criminal investigation of this, with dozens of school officials under scrutiny is a disgrace.

Holy Crap

LoL Cat approves of the investigation

State Attorney Generals have opened investigations into foreclosures.

No, really, I don't mean that some of them, I mean all of them. All 50 state Attorneys Generals have opened investigation:

Top legal officers of all 50 states opened a joint investigation into home foreclosures, saying they will seek an immediate halt to any improper practices at banks and mortgage companies.

The states will conduct a coordinated inquiry into whether banks and loan servicers used false documents and signatures to justify hundreds of thousands of foreclosures. The group intends to establish independent monitoring, Iowa Attorney General Tom Miller, who is leading the probe, said today in a statement.

Great googly moogly!

Every single one of them.

Still, I expect that the net result of all this will be that there will be changes in the law to wallpaper this all over, and leading the charge for banker amnesty will be the White House.

Seriously, when you have Virginia State AG Ken "Misuse my office to abuse climate academics" Cuccinelli joining in on this, the political and legal landscape is pretty unambiguous.

While it is clear that the United States needs a functioning credit system, it does not need these banks, who f%$#ed our whole country (with out lube), but little Timmy Geithner^* is determined to shield the people who broke the law and defrauded the their customers, because he^* is completely unable to see behind the needs of the megabanks.

^*But remember, the Cossacks work for the Czar.

Good Riddance

I was listening to a hagiography on Michelle Rhee, now former Chancellor of the DC public schools on NPR today, and I had to change the channel.

She got test scores up by focusing on nothing but, and the evidence is that, in one of the most disadvantaged school districts in the nation, she had no interest at all in early education, basically ignoring it in her 5 year plan.

As Matthew Yglesias noted 2 years ago, "A certain type of person isn’t interested in any education improvements that don’t involve picking fights with teacher’s unions, and this seems to me like perhaps an example of Rhee suffering from that affliction."

Basically, she spent a lot of time being an asshole, because that's what got her the good press, and teaching to the test, along with a headlong embrace of gentrification, were what caused the bump in her numbers.

I Haven't Posted, Because I Have Nothing to Say

I really haven't had much to add to the rescue of the Chilean minors miners.

Well, thanks to Nick Mueller,I now have this bit of artwork to share.

My congratulations to the minors and the rescue team.

The mine owners, however, can go Cheney themselves.

Not Feeling Hopey Changey

The Obama administration has lifted the moratorium on deep water drilling in the Gulf.

Well, at least this means that Mary Landrieu has dropped her hold on Obama's OMB chair, right?

Wrong.

It appears that she wants to be sure that the EPA and the Department of the Interior are sufficiently compliant:

“I am not going to release my hold on Jack Lew. Instead, I will take this time to look closely at how [Interior] is handling the issuing of permits and whether or not drilling activity in both shallow and deep water is resuming. When Congress reconvenes for the lame duck session next month, I will have had several weeks to evaluate if today’s lifting of the moratorium is actually putting people back to work,” Landrieu said in a prepared statement Tuesday after the Interior Department announced the lifting of the deepwater ban ahead of schedule.

You just got called a c*cks*ck*r by Mary F%$#ing Landrieu, and you are supposed to be the umpire, to mangle a Bull Durham moment.

What are you going to do now?

This is what happens when people know you have no guts.

Economics Update

Click for full size

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Small Business Hiring Down


The index still sucks wet farts from dead pigeons

H/t Calculated Risk for the graph pr0n

Oh, those invisible bond vigilantes are at again, with the 3-year Treasuries hitting a record low yield, 0.57%. (!)

Meanwhile the National Federation of Independent Business released its September survey of small business optimism, and the numbers remain grim, essentially flat, up from 88.8 to 89.0 from August, still highly contractionary, and the businesses are looking to lay off more workers.

We also saw 30-year mortgage rates continue to fall, but no one is borrowing, because non one is buying.