Category: Corruption

Well, This Has Me Confused

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New York Attorney General Eric Schneiderman has filed suit against the big banks for fraudulent use of the MERS electronic title registry.

He is claim fraud, deception, and illegal evasion of recording fees (to the tune of more than $2 billion on just the fees).

This is interesting. It appears that the settlement, for which Schneiderman is the most prominent hold out would not shut down any suits already filed.

To my mind, this is likely a bad thing, because it implies that Schneiderman is getting his ducks in a row in preparation for signing onto the sellout settlement with the banks.

I just hope that I am wrong about that last bit.

Full release from the AG after the break:

A.G. SCHNEIDERMAN ANNOUNCES MAJOR LAWSUIT AGAINST NATION’S LARGEST BANKS FOR DECEPTIVE & FRAUDULENT USE OF ELECTRONIC MORTGAGE REGISTRY

Complaint Charges Use Of MERS By Bank Of America, J.P. Morgan Chase, And Wells Fargo Resulted In Fraudulent Foreclosure Filings  

Servicers And MERS Filed Improper Foreclosure Actions Where Authority To Sue Was Questionable

 

Schneiderman: MERS And Servicers Engaged In Deceptive and Fraudulent Practices That Harmed Homeowners And Undermined Judicial Foreclosure Process

NEW YORK – Attorney General Eric T. Schneiderman today filed a lawsuit against several of the nation’s largest banks charging that the creation and use of a private national mortgage electronic registry system known as MERS has resulted in a wide range of deceptive and fraudulent foreclosure filings in New York state and federal courts, harming homeowners and undermining the integrity of the judicial foreclosure process. The lawsuit asserts that employees and agents of Bank of America, J.P. Morgan Chase, and Wells Fargo, acting as “MERS certifying officers,” have repeatedly submitted court documents containing false and misleading information that made it appear that the foreclosing party had the authority to bring a case when in fact it may not have. The lawsuit names JPMorgan Chase Bank, N.A., Bank of America, N.A., Wells Fargo Bank, N.A., as well as Virginia-based MERSCORP, Inc. and its subsidiary, Mortgage Electronic Registration Systems, Inc.
The lawsuit further asserts that the MERS System has effectively eliminated homeowners’ and the public’s ability to track property transfers through the traditional public records system. Instead, this information is now stored only in a private database – which is plagued with inaccuracies and errors – over which MERS and its financial institution members exercise sole control. Additional defendants include BAC Home Loans Servicing, LP, Chase Home Finance LLC, EMC Mortgage Corporation, and Wells Fargo Home Mortgage, Inc.
“The banks created the MERS system as an end-run around the property recording system, to facilitate the rapid securitization and sale of mortgages. Once the mortgages went sour, these same banks brought foreclosure proceedings en masse based on deceptive and fraudulent court submissions, seeking to take homes away from people with little regard for basic legal requirements or the rule of law,” said Attorney General Schneiderman. “Our action demonstrates that there is one set of rules for all – no matter how big or powerful the institution may be – and that those rules will be enforced vigorously. Only through real accountability for the illegal and deceptive conduct in the foreclosure crisis will there be justice for New York’s homeowners.”

The financial industry created MERS in 1995 to allow financial institutions to evade local county recording fees, avoid the hassle and paperwork of publicly recording mortgage transfers, and facilitate the rapid sale and securitization of mortgages. MERS operates as a membership organization, and most large companies that participate in the mortgage industry – by originating loans, buying or investing in loans, or servicing loans – are members, including JPMorgan Chase, Bank of America, Wells Fargo, Fannie Mae, and Freddie Mac. Over 70 million loans nationally have been registered in MERS System, including about 30 million currently active loans.

Through their membership in MERS, these companies avoided publicly recording the purchase and sale of mortgages by designating MERS Inc. – a shell company with no economic interest in any mortgage loan – as the “nominal” mortgagee of the loan in the public records. Instead, MERS members were supposed to log mortgage transfers in the MERS private electronic registry. The basic theory behind MERS is that, because MERS Inc. serves as a “nominee” (or agent) for most major lenders, it remains the “mortgagee” in the public records regardless of how often the loan is sold or transferred among MERS members. Thus, although MERSCORP has only about 70 employees, MERS Inc. serves as the mortgagee of record for tens of millions of loans registered in the MERS System.
MERS has granted over 20,000 “certifying officers” the authority to act on its behalf, including the authority to assign mortgages, to execute paperwork necessary to foreclose, and to submit filings on behalf of MERS in bankruptcy proceedings. These certifying officers are not MERS employees, but instead are employed by MERS members, including JPMorgan Chase, Bank of America, and Wells Fargo.
MERS’ conduct, as well as the servicers’ use of the MERS System, has resulted in the filing of improper New York foreclosure proceedings, undermined the integrity of the judicial process, created confusion and uncertainty concerning property ownership interests, and potentially clouded titles on properties throughout the State of New York. In fact, several New York judges have questioned the standing of the foreclosing party in cases involving MERS loans and the validity of mortgage assignments executed by MERS certifying officers.
The lawsuit specifically charges that the defendants have engaged in the following fraudulent and deceptive practices:
  • MERS has filed over 13,000 foreclosure actions against New York homeowners listing itself as the plaintiff, but in many instances, MERS lacked the legal authority to foreclose and did not own or hold the promissory note, despite saying otherwise in court submissions.
  • MERS certifying officers, including employees and agents of JPMorgan Chase, Bank of America, and Wells Fargo, have repeatedly executed and submitted in court legal documents purporting to assign the mortgage and/or note to the foreclosing party. These documents contain numerous defects, including affirmative misrepresentations of fact, which render them false, deceptive, and/or invalid. These assignments were often automatically generated and “robosigned” by individuals who did not review the underlying property ownership records, confirm the documents’ accuracy, or even read the documents. These false and defective assignments often masked gaps in the chain of title and the foreclosing party’s inability to establish its authority to foreclose, and as a result have misled homeowners and the courts.
  • MERS’ indiscriminate use of non-employee “certifying officers” to execute vital legal documents has confused, misled, and deceived homeowners and the courts and made it difficult to ascertain whether a party actually has the right to foreclose. MERS certifying officers have regularly executed and submitted in court mortgage assignments and other legal documents on behalf of MERS without disclosing that they are not MERS employees, but instead are employed by other entities, such as the mortgage servicer filing the case or its counsel. The signature line just indicates that the individual is an “Assistant Secretary,” “Vice President,” or other officer of MERS. Indeed, these documents often purport to assign the mortgage to the certifying officer’s own employer. Moreover, as a result of the defendants’ failure to track the designation of certifying officers and the scope of their authority to act, individuals have executed legal documents on behalf of MERS, such as mortgage assignments and loan modifications, when they were either not designated as a MERS certifying officer at the time or were not authorized to execute documents on behalf of MERS with respect to the subject loan.
  • MERS and its members have deceived and misled borrowers about the importance and ramifications of MERS’ role with respect to their loan by providing inadequate disclosures.
  • The MERS System is riddled with inaccuracies which make it difficult to verify the chain of title for a loan or the current note-holder, and creates confusion among stakeholders who rely on the information. In addition, as a result of these inaccuracies, MERS has filed mortgage satisfactions against the wrong property.
The lawsuit seeks a declaration that the alleged practices violate the law, as well as injunctive relief, damages for harmed homeowners, and civil penalties. The lawsuit also seeks a court order requiring defendants to take all actions necessary to cure any title defects and clear any improper liens resulting from their fraudulent and deceptive acts and practices. 
The matter is being handled by Deputy Bureau Chief of the Bureau of Consumer Frauds & Protection Jeffrey K. Powell, Assistant Attorney General Clare Norins, and Assistant Solicitor General Steven C. Wu, under the supervision of First Deputy Attorney General Harlan Levy.

Seriously, Susan G. Komen is Looking Worse and Worse

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It looks like their latest gaffe, in which they defunded Planned Parenthood, was masterminded by Ari Fleischer:

Ari Fleischer, former press secretary for George W. Bush and prominent right-wing pundit, was secretly involved in the Komen Foundation’s strategy regarding Planned Parenthood. Fleischer personally interviewed candidates for the position of “Senior Vice President for Communications and External Relations” at Komen last December. According to a source with first-hand knowledge, Fleischer drilled prospective candidates during their interviews on how they would handle the controversy about Komen’s relationship with Planned Parenthood.

Fleischer’s relationship with Komen and the Planned Parenthood controversy was previously undisclosed. He confirmed to ThinkProgress his recent role in filling a key communication position at Komen. Fleischer stressed, however, another communications firm (Ogilvy PR) was retained by Komen to deal with crisis communications over the last few days and he has not been involved.

Seriously, this just get better and better.

Komen for the Cure isn’t a charity, it’s yet another Republican full employment program masquerading as a charity.

I’m Expecting an Alien Tort Claim Act Against Apple

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William Black makes the convincing case that the widespread abuse of contractors’ employees in the manufacture of Apple products is the product of deliberate management decisions:

Apple has released a report on working conditions in its suppliers’ factories. It highlights a form of control fraud that criminology has identified but rarely discussed. I write overwhelmingly about accounting control fraud because it drives our recurrent, intensifying financial crises. The primary intended victims of accounting control frauds are the shareholders and the creditors. Other private sector control frauds target customers (e.g., George Akerlof’s 1970 article on “lemons”), and the public (e.g., the unlawful disposal of toxic waste, illegal logging, and tax fraud).

Anti-employee control frauds most commonly fall in four broad, but not mutually exclusive, categories – illegal work conditions due to violation of safety rules, violation of child labor laws, failure to pay employees’ wages and benefits, and frauds based on goods and loans provided by the employer to the employee that lock the employee into quasi-slavery. Apple has just released a report on its suppliers that shows that anti-employee control fraud is the norm. Remember, fraud is hidden and is often not discovered and Apple did not have an incentive to make an exhaustive investigation. Apple calls its inquiries “audits” and it is apparent that most of its information comes from reviewing written and electronic records at its suppliers. That is exceptionally revealing. The suppliers know that they can defraud their employees with such impunity that they don’t even bother to get rid of records that prove their frauds. Apple has resisted making public its suppliers and the report refused to identify which suppliers committed which violations – often for years despite repeated, false promises to end their anti-employee control frauds. Two other facts are evident (but not reported). First, Apple rarely terminates suppliers for defrauding their employees – even when the frauds endanger the lives and health of the workers and the community – and even where Apple knows that the supplier repeatedly lies to Apple about these fraudulent and lethal practices. Second, it appears unlikely in the extreme that Apple makes criminal referrals on its suppliers even when they commit anti-employee control frauds as a routine practice, even when the frauds endanger the worker’s and the public’s health, and even when the supplier repeatedly lies to Apple about the frauds. Apple’s report, therefore, understates substantially the actual incidence of fraud by the 156 suppliers (accounting for 97% of its payments to suppliers).

The ATCA has been used in cases like this, and what is clearly a policy of deliberate blindness to these abuse by Apple, seems to me to bean opening for a very well deserved lawsuit.

But They Still Suck

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So the Susan G. Komen Race for the Cure has sort of backed down:

The Susan G. Komen for the Cure Foundation announced Friday that it would revise a new policy that barred the organization from funding Planned Parenthood, a move that had thrust the breast cancer foundation into a national controversy.

Komen apologized “to the American public for recent decisions that cast doubt upon our commitment to our mission of saving women’s lives.”

The foundation said that Planned Parenthood would now be eligible to apply for grants. It did not, however, address other reasons Komen has cited for why it might choose not to approve such grants.

“Our original desire was to fulfill our fiduciary duty to our donors by not funding grant applications made by organizations under investigation,” a Friday statement said. “We will amend the criteria to make clear that disqualifying investigations must be criminal and conclusive in nature and not political. That is what is right and fair.”

“We will continue to fund existing grants, including those of Planned Parenthood, and preserve their eligibility to apply for future grants, while maintaining the ability of our affiliates to make funding decisions that meet the needs of their communities,” the statement continues.

What they are saying that they aren’t cancelling current grants, which they never said they would, and Planned Parenthood can apply for grants next year, but there are “no promises”.

There may be grants to Planned Parenthood next year, but they will eventually cut them off, assuming that these folks aren’t (hopefully) a dead corporatist charity walking.

Btw, in the, “It sucks when an angel pees down the barrel of your rifle,” department, a documentary, called “Pink Ribbons, Inc.,” is hitting theaters in Canada, and film festivals in the United States as I am typing this.

The film alleges that Komen is “Pink Washing” companies that are suspected of exposing the population to carcinogens that might cause breast cancer, among other things.

In the Interest of Fairness

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And because I respect Yves Smith a lot, I have to note that she takes issue with the Pro Publica report about Freddie Mac betting against homeowners:

A new ProPublica story, “Freddie Mac Betting Against Struggling Homeowners,” treats the fact that Freddie Mac retains the riskiest tranche of its mortgage bond offering, known as inverse floaters, as heinous and evidence of scheming against suffering borrowers.

The storyline in this piece is neat, plausible, and utterly wrong. And my e-mail traffic indicates that people who are reasonably finance savvy but don’t know the mortgage bond space have bought the uninformed and conspiratorial ProPublica thesis hook, line, and sinker.

Basically, she says that what we are looking at are normal hedges against interest rate fluctuations, and this was one part of this strategy, and, “Looking at one position in isolation is meaningless.”

Additionally, she implies that this might be a hit job from the Obama administration, because FHFA head Edward DeMarco, who supervises the GSEs in receivership, is not moving aggressively to refinance troubled mortgages, and he’s signed off on some of the big paydays for officials at Fannie Mae and Freddie Mac.

Additionally, FHFA has become increasingly aggressive about forcing banks to take back fraudulent mortgages (Put-backs), which opens a multi-billion dollar can of whup ass on the big Wall Street banks, which almost certainly puts DeMarco on Timothy “Eddie Haskell” Geithner’s naughty list, and leaking this to the press is very much the Treasury Secretary’s style.

Truth be told, I don’t know who is right, though if I were betting, I would take wrong and evil for both DeMarco and Geithner, but I’m a cynic.

That’ll Teach Him

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The British are finally cracking down on the Banksters.

What are they doing? They are rescinding knighthoods:

The former chief executive of the Royal Bank of Scotland, Fred Goodwin, has been stripped of his knighthood by the Queen for his role in the creation of the biggest recession since the second world war.

With unceremonial haste, a committee of five senior civil servants took away the knighthood given to Goodwin by the last Labour government in 2004 for services to banking.

The chancellor, George Osborne, welcoming the move, said: “RBS came to symbolise everything that went wrong in the British economy over the past decade.”

The move provoked a cacophony of calls for honours to be stripped from other miscreant bankers, politicians and regulators. The campaign to humble Goodwin was reignited by the Daily Mail a fortnight ago and then hastily backed in a highly political move by David Cameron as he sought to show he will side with the public against crony capitalists and bonus-seeking bankers.

You know, I thought that Geithner’s charades about supporting ordinary homeowners were lame, but the Brits have taken lame to a while new level.

More Change We Cannot Believe In

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It turns out that while under federal receivership, and under the direction of the FHFA, Freddie Mac has simultaneously made it more difficult to refinance your mortgage and invested in risking and hard to sell financial instruments that profit from you not being able to refinance:

Freddie Mac, the taxpayer-owned mortgage giant, has placed multibillion-dollar bets that pay off if homeowners stay trapped in expensive mortgages with interest rates well above current rates.

Freddie began increasing these bets dramatically in late 2010, the same time that the company was making it harder for homeowners to get out of such high-interest mortgages.

No evidence has emerged that these decisions were coordinated. The company is a key gatekeeper for home loans but says its traders are “walled off” from the officials who have restricted homeowners from taking advantage of historically low interest rates by imposing higher fees and new rules.

Yeah, there was no coordination here.

Just aggressive tightening of refinancing standards (further down in the story) that have put people, “in financial jail,”  and as it was ramping up on its risky bets, it also, “quietly announced that it was raising charges, called post-settlement delivery fees, for refinancing.”

But we aren’t going to see a recess appointment to replace the acting head of FHFA, Edward DeMarco, with someone who might reign in executive bonuses or work for home owners.

Yes, ML Global is allowed to steal

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The point about the “loss” of ML Global customer accounts is not that it was lost, but that it was looted as the company collapsed, but it’s all “no harm, no foul,” and there are no criminal investigations:

Federal officials looking for an estimated $1.2 billion missing from customers of MF Global Holdings Ltd. feel more and more that a lot of it may never be located, according to a report citing sources familiar with the probe.

What’s been learned so far suggests that a good deal of the money may have “vaporized” because of scrambling in trading in the week before MF Global filed for bankruptcy protection Oct. 31, the Wall Street Journal reported, citing “a person close to the investigation.”

This money was stolen, most likely by Jamie Dimon’s peeps at JPMorgan.

Even if you cannot prove criminal intent, you can get back this money, if you are willing to actually pursue it.

Still, Jon Corzine being frog marched out of his offices in hand cuffs would be a good thing.

H/t Atrios.

Someone Flipped on the Scott Walker Prosecutions

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It has been announced that former Scott Walker aide Darlene Wink is cooperating with prosecutor:

Two staffers who worked directly for Gov. Scott Walker while he was county executive were charged Thursday with illegally doing extensive political work while being paid by taxpayers to do county jobs.

One of the two, Darlene Wink, cut a deal with prosecutors under which she agreed to provide information in a related investigation about the destruction of digital evidence and to aid in further prosecutions. This is the first indication that the multifaceted John Doe investigation may be pursuing charges of evidence tampering.

Milwaukee County prosecutors also made the surprising disclosure that top Walker aides set up a private Internet network to allow them to communicate with one another by email about campaign as well as county government work without the public or co-workers’ knowledge.

They set up a VPN to break the law? 

This is pretty f%$#ing brazen, and it has the advantage locating all the offending communications in one place, which might, as the article says, provide investigators with a trove of information as they pursue other angles in the case.”

It gets better, because it looks like it wasn’t just politicking on the job, but they are also looking things like bid rigging as well.

Of course, Scotty Walker is saying that it isn’t his fault, “Walker’s campaign said he had a policy against county employees using government resources to do campaign work.”

Dude, your guys set up a private network.  It simply does not get any more official policy than that.

I am smelling burnt bread in Wisconsin, because Scott Walker is toast.

H/t Susie Madrak.

Duke, Meet Newt

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In the middle of the Republican establishment’s heads exploding over the possibility of a Newt candidacy, Gingrich has been endorsed by former Congressman, and convicted felon, Randall “Duke” Cunningham:

Jailed ex-Congressman Duke Cunningham wants Newt Gingrich to know he’s got the Republican presidential candidate’s back.

Cunningham apparently has been watching the Republican presidential primary debates while spending 100 months in a Tucson, Ariz. federal prison. Cunningham, a Republican who represented northern San Diego, pleaded guilty to conspiracy and tax evasion in 2005 in one of the biggest federal bribery scandals in recent memory.

Cunningham tells Gingrich in an electronic message he says he sent to the candidate last month that his fellow prisoners, and their families, support Gingrich

Heh.

Well, We Have Mixed News on the Scott Walker Front

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The good news is that some of his former staffers are facing more charges:

A new round of criminal charges is coming soon against at least a couple of Gov. Scott Walker’s former county staffers for doing extensive campaign activity while on the taxpayers’ dime, sources say.

The charges – which should be filed by District Attorney John Chisholm’s office in the next week or two – will be part of the long-running John Doe investigation of Walker’s aides and associates during his tenure as Milwaukee County executive.

Already, the probe has led to multiple felony charges against Walker’s onetime deputy chief of staff, Tim Russell, and former county veterans official Kevin Kavanaugh. They are accused of taking more than $60,000 in donations intended for Operation Freedom, an annual event at the county zoo for veterans and their families.

Russell’s domestic partner, Brian Pierick, was also hit with two felony counts for child enticement.

That’s the good news.

The bad news is that under Wisconsin law, until a date is set for the recall election, Walker has no limits to his fund raising, and the Koch suckers have been showering him with money:

The Walker campaign announced on Tuesday that he raised $4.5 million in just the period from December 11 through Jan 17, and has over $2.6 million on hand. In all, he has raised $12 million since January 1, 2011.

“Governor Walker’s message of moving Wisconsin forward continues to resonate with voters,” said communications director Ciara Matthews. “It is this message, and the success of the governor’s reforms, that have inspired people to contribute to his campaign in overwhelming numbers. These donations will allow us to fight back against this baseless recall and ensure Governor Walker can continue to lay the foundation for a more successful Wisconsin and keep government working on the side of taxpayers.”

The press release notes that the donations came from a total of 21,443 contributions, including 16,406 of contributions of $50 or less. But under the surface, it becomes clear that Walker has been taking advantage of a key aspect of the state fundraising law for recalls — that until the election is officially triggered, the targeted incumbent can bring in unlimited donations.

That’s a f%$# load of money. It’s like $2½ for each man, woman, and child in the badger state.

The optimist in me hopes that the money wont matter. The pessimist in me …………

Jon Stewart Must Love Newt

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He does look a bit stunned though

Because the obvious hypocrisy and venality that is Newt must make his job easier.

Stewart’s observation to Newt’s fake outrage:

You imagined your wife, while she was dealing with having MS, would be open to you having sex with another lady you’d already been having sex with for six f%$#king years!” Stewart said. “I think you’ve got a pretty good imagination dispicability-wise.

And then there is Gingrich’s claim to be running as an outsider:

You are the Washington outsider? When Washington gets its prostate checked, it tickles you.

Watch the video. It’s a good way to spend 8 minutes and change.

Well, Here’s One Announcement Obama Won’t Make at the SOTU

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He might be making some comments about working toward a sellout to settlement with the big banks and the mortgage services.

The reason that he won’t be touting the settlement is because there is no settlement:

FOR IMMEDIATE RELEASE
January 23, 2012

STATEMENT FROM [Iowa] ATTORNEY GENERAL TOM MILLER [Obama toady Lead AG in the negotiations]

(CHICAGO, Illinois) State Attorneys General from both parties, along with our federal partners, are today discussing the details of the progress we have made so far in settlement negotiations, including the terms we must still resolve. We have not yet reached an agreement with the nation’s five largest servicers, and we won’t reach a settlement any time this week.

As you can tell, I not a big fan of the settlement, and I think we can thank the people who have opposed the deal as currently structured, most notably Yves Smith, who has done yeoman work on teasing out the details and communicating what it all means for months, the recent condemnation of the deal by AFL-CIO President Richard Trumka is also significant. (And, as an FYI, everyone’s favorite right wing nuts, Judicial Watch, has filed suits to get related documents)

This resembles the groundswell that led to Obama vetoing HR 3808, which allowed some states shoddy documentation practices to go national.

With the increasing complaints from consumer activists about the settlement.

What are the problems?

Well on the micro level (courtesy of Yves Smith), it gives the banksters an incentive to pawn the losses off against the the mortgages that they recapitalized, avoiding the hit themselves, and giving it to pension funds, it incentivizes targeting the largest loans, and so benefits the richest, and there are no meaningful mechanisms to enforce good behavior from the mortgage servicers.

On the macro level, let’s roll Simon Johnson:

The financial sector has been the Obama administration’s Achilles’ heel. Despite coming to power in the middle of the greatest financial crisis since the Great Depression with a broad mandate for “change,” the administration has consistently deferred to big banks and done its best to keep them in business “as is.”

(Read the rest, really).

The real underlying message much of the disgust with how the government in general, and the Obama administration in particular function is that there has been a failure to stop the looting, and start prosecuting.

Obama’s Assassination Catch-22

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If you are targeted by this administration for assassination, then only you can challenge this in court, but the Obama administration will sniff out your communications with your lawyers in order to find and kill you:

On Saturday in Somalia, the U.S. fired missiles from a drone and killed the 27-year-old Lebanon-born, ex-British citizen Bilal el-Berjawi. His wife had given birth 24 hours earlier and the speculation is that the U.S. located him when his wife called to give him the news. Roughly one year ago, El-Berjawi was stripped of his British citizenship, obtained when his family moved to that country when he was an infant, through the use of a 2006 British anti-Terrorism law — passed after the London subway bombing — that the current government is using with increasing frequency to strip alleged Terrorists with dual nationality of their British citizenship (while providing no explanation for that act). El-Berjawi’s family vehemently denies that he is involved with Terrorism, but he was never able to appeal the decree against him for this reason:

Berjawi is understood to have sought to appeal against the order, but lawyers representing his family were unable to take instructions from him amid concerns that any telephone contact could precipitate a drone attack.

Obviously, those concerns were valid. So first the U.S. tries to assassinate people, then it causes legal rulings against them to be issued because the individuals, fearing for their life, are unable to defend themselves. Meanwhile, no explanation or evidence is provided for either the adverse government act or the assassination: it is simply secretly decreed and thus shall it be.

Exactly the same thing happened with U.S. citizen Anwar Awlaki. When the ACLU and CCR, representing Awlaki’s father, sued President Obama asking a federal court to enjoin the President from killing his American son without a trial, the Obama DOJ insisted (and the court ultimately accepted) that Awlaki himself must sue on his own behalf. Obviously, that was impossible given that the Obama administration was admittedly trying to kill him and surely would have done so the minute he stuck his head up to contact lawyers (indeed, the U.S. tried to kill him each time they thought they had located him, and then finally succeeded). So again in the Awlaki case: the U.S. targets someone for death, and then their inability to defend themselves is used as a weapon to deny their legal rights.

This is deeply repulsive, and, unfortunately, it is the new normal, and the next president, whether it be in 2012 or 2016, will accept this and extend these policies, just as Obama has, and things will get worse again.

Quote of the Day

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Courtesy of the The Rude Pundit:

You got that? The whore who fronts for an industry owned by multinational megacorporations like NewsCorp, Sony, and Viacom is actually attacking BoingBoing.net owners Happy Mutants LLC for using the internet for some evil agenda to steal Chipmunk movies just because they went on a one-day strike. That’s a bit like Ted Bundy accusing a student nurse of having a messy dorm room just before bludgeoning her to death.

He is, of course, describing former Senator Chris Dodd’s pimping for big media in has capacity as chief lobbyist for the MPAA.

Did the CFTC Just Call Louis Freeh’s Corrupt?

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Because this sounds a lot like them saying that he is either corrupt or criminally incompetent:

MF Global Inc. (MFGLQ) commodity customers must be paid before all other claimants, including the bankrupt parent company, according to the Commodity Futures Trading Commission.

Court papers by the trustee for MF Global Holdings Ltd., Louis Freeh, contain “errors and misstatements of law” in arguing that commodity laws, which require that customers be “made whole” first, don’t apply to brokerage liquidations, the regulator said in a court filing today. Freeh, representing the parent company creditors, has said money due to them shouldn’t be “diverted” to customers.

If Freeh was right, “the senseless result would be to render inapplicable the key regulations of the Commodity Futures Trading Commission in the largest commodity broker bankruptcy in U.S. history,” the CFTC said. The result would “strip” customers of a remedy, after they entrusted their assets to the brokerage relying on rules for segregating customer money, it said.

What is going on here is that someone *cough* JP Morgan Chase *cough* looted customer accounts as MF Global as the company circled the drain, and they hired Freeh to cover up the theft.

Here’s an analogy about US law for former judge and FBI director Freeh:  If you buy a stolen car, you don’t get to keep it.

Am I the only one who thinks that not only is Freeh is being paid to cover up for the thieves who plundered this company in its final days, but that he’s being completely incompetent about covering their tracks.

H/t Atrios.

Another Gem From Matt Taibbi

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His latest is called, “Wall Street: Everything You Need to Know.”

The nickel tour is that this is about one Jeffrey Verschleiser, who went beyond what Obama calls, “Immoral but not illegal.” He engaged in what was pretty much black letter fraud, and not only has he not been called to the dock, he is flush enough to buy all 94 rooms in an Aspen hotel for his daughter’s Bat Mitzvah.

This is a guy who was at the core of Bear Stearns’ corrupt financial transactions that took down the firm, and he was telling his associates that he was “putting lipstick on a pig”, and some of his actions appear to be straight out embezzlement.

Why he is not facing criminal prosecution is beyond me.

Read Taibbi’s piece. It puts it all in context.

Another Example Why the Credit Default Swap is the Toxic Waste of the Financial World

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On an article about how Greek government debt may take down the Euro, we find this little gem:

Lagarde’s demand for a larger haircut smacked into an onslaught of leaks from the bond-swap negotiations between the government and private sector bond holders. First, there were rumors that the banks had largely agreed on a deal. Then there were rumors that hedge funds that had acquired some of these bonds at a discount were refusing to go along with anything. They were betting that they could profit from a default because it would trigger CDS payouts. And if the majority agreed to the haircut, they would also profit because Greece would eventually redeem the bonds.

Now, there are rumors that the government wants to compel these hedge funds to join the bailout majority. Tool: retroactive “collective-action clauses”—if a majority of bondholders agrees to the deal, the recalcitrant minority could be forced to go along.

Of course, the question is how you can make money for this.

It comes down to the fact that there is something called the “naked” credit default swap.

The nickel tour is that a CDS is an insurance policy, you pay your premiums, and in the event of “something” happening, you get a payout for the “loss”.

The reason that I put “loss” in scare quotes is because unlike most forms of insurance, there is no requirement to hold an interest in the continued existence of whatever you are insuring.

This has been case since 1746 (!) when Parliament passed the Marine Insurance Act.

Basically, if I purchase a CDS on something risky, like Greek sovereign debt, I have to pay a lot of money, but let’s engage in a little mental exercise:

  • Assume a billion dollars in a specific debt issue.
  • Buy $1 million dollars in debt at a discount from someone who is scared, let’s say it’s 50¢ on the dollar. So you spend $500,000.
  • You purchase a CDS on the whole issue, let’s assume that it’s a 30% payment, or $300 million.
  • Refuse to accept a haircut, triggering a default, and a full payout on the CDS.
  • So, you spent $300.5 million, and get a $1 billion payout.

This is vulture capitalism at it’s worse.  You don’t just wait for something to die, you figure a way to pluck out the eyes to hasten the demise.

This is a microcosm for everything that is wrong with “Anglo Saxon” hyper-capitalism.

Your Friday Scott Walker Dump

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First, it looks like they will deliver something like ¾ of a million signatures to recall him, about a 50% buffer, some time next week.

What’s more it looks like a major scandal is brewing, we could see major revelations just in time for the recall elections.

First, we have 3 of his aids accused of embezzling from a veterans charity, and one of them was tied to his room mate’s trolling for child sex.

And finally, his 2010 campaign is charged with over 1,000 violations of campaign finance law, and faces over $½ million dollars in fines.

Pass the popcorn.