Some significant events are in progress, extremely important developments in the grand pathogenesis that reflects the deep decay and deterioration in the US financial structure. The most recent events pertaining to mortgage loans, home foreclosures, and disclosed fraud carry great potential to open extremely wide cracks in the American social order. Revealed systemic fraud is slowly coming into the open. Civil disobedience has already entered the arena of popular protest. However, the recent events surrounding illegal home foreclosure seizure of properties elevates the exposed fraud to a very clear high new level. This is a boil ready to break open, releasing financial puss.
The cases where people have been removed from their homes, even when no bank loan exists (as in owned free & clear), by means of fraudulent, forged, and counterfeited documents, has finally provoked RICO law provisions. Witness organized crime extended from Wall Street, whose roots lie most likely in Fannie Mae itself. The legal industry has finally joined the fray in class action lawsuits. Defense citing errors made have been met with accusations of fraud, quite a different game.
The Racketing Racketeer Influenced & Corrupt Organizations Act of 1970 was designed to fight organized crime. RICO has been invoked in class action lawsuits in at least two states in the past month, each related to mortgage fraud, securities fraud, and illegal property seizures. At the center of the firestorm lie JPMorgan Chase, Bank of America, and GMAC (now called Ally). Little did the USCongress realize that RICO laws might be used to fight profoundly deep criminal fraud on Wall Street. When the criminal activity is tracked with some forensic analysis, the roots are found with REMICs, those perverse financial instruments that functioned as umbilical cords to Fannie Mae in past years, acting like powerful centrifuges. They fed the housing bubble and mortgage finance bubble, each valued over $10 trillion in size. Bear in mind that RICO has been used primarily against mafias and crime organizations dealing with gambling, drugs, and prostitution, where property seizures are routinely carried out. Abuses have been seen in states like Florida, where motorboat owners guilty of owning small bags of marijuana have lost their boats in legal seizure. It seems that selective enforcement is obvious. The target within the crosshairs has moved to Wall Street banks and Fannie Mae under the USGovt protective wing. These are dangerous times.
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Recent cases threaten to encourage the Strategic Defaults and highly charged Civil Disobedience which could actually contribute in powerful ways to commercial chaos, popular disorder, public disruptions, creeping distrust, and even systemic failure. Hundreds of thousands of people are not making their mortgage payments, intentionally stopping payments, many when they do have the ability. Over 250 thousand Bank of American mortgage holders have stopped making monthly payments, in open defiance and some financial distress. The topic of Strategic Default, together with challenges (even with attorneys) to the banks to produce legal property titles, has grown sharply in practice. The RICO cases underway threaten to toss an accelerant on that fire. Henry David Thoreau would certainly be observing closely, perhaps smiling, at the current developments of citizen action against corrupt bank practices, mortgage bond fraud, and forgery of securities as well as critical legal documents. His essay had a profound effect on me when young, when cruel abuses were observed within my catholic school locally and the Vietnam War globally. Of course, the Jackass does not sponsor, endorse, or encourage any such action, believing that the highest level bankers should receive their due. The question is what is due? Objective reporting of the news, such as the viral news of the fraudulent home foreclosures, seems to have escaped the mainstream news, a consistent theme that hints of syndicate sympathy or culpability. The last thing a network news systems wants is to encourage civil disobedience. They prefer to promote vast herds of docile sheep.
For four years, the Jackass has claimed that Fannie Mae lies at the core of a grand criminal fraud enterprise, serving as the central clearing house for USGovt agency sponsors of magnificent fraud. Their tools are mortgage loans, mortgage bonds, REMICs, and more recently the MERS title database. Real Estate Mortgage Investment Conduits were a necessary piece to the housing and mortgage bubble, from which extends colossal fraud. The REMIC acted like a mortgage futures contract, clear of any supervision or regulatory oversight and thus permitting an open door government green light signal to systemic fraud. Imagine a leveraged futures contract on twin bubbles where unbridled fraud was common. Recall that $1500 billion went missing from 1988 to 2000 in two HUD regional offices. One was Houston and the other was Oklahoma City, the home grounds for sitting presidents. The missing funds have fed black bag funds and diverse illicit financial operations. Few connect any association between the pyrotechnic events in April 1995 by Timothy McVeigh to big rooted branches and critical data records, an open question. The entire set of prima facie and secunda facie and tertia facie aspects of the mushrooming story are to be covered in the October Hat Trick Letter reports. But honestly, this is a huge moving target, whose capture is better described as herding cats on an open field.
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M.E.R.S. DATABASE – THE WEAK LINK
The mushroom has a primary point of vulnerability that has received very little attention. The Mortgage Electronic Registration Systems (MERS) was originally an innovative process that simplified the way mortgage ownership and servicing rights were originated, sold, and tracked. MERS is a property title database, intended by Wall Street and Fannie Mae to serve as a repository that kept order when mortgage bonds were traded fast and furious. In recent court cases in at least three states, the MERS database failed to attain legal standing in mortgage foreclosure challenges. The holder of the note (home loan) could not combine with the MERS database (title holder) to win property seizure. The system began to unravel. Now in at least one state, the MERS database is directly cited in a criminal fraud class action lawsuit that invokes the RICO statutes. MERS is the financial system’s Achilles Heel. Maybe a big bank like Bank of America might collapse, fall into ruin, and dissolve from proof of racketeering, its assets confiscated by aggrieved parties to fraud. Obviously, Bank of America along with several other big banks have been dead for a long time, since October 2008 in my estimation. If not for the lax and complicit accounting rules by the Financial Accounting Standards Board, which permit banks to declare their own fictitious value for their balance sheet assets, imposed in April 2009, the big banks would undergo liquidation. They cling to control of the USGovt financial purse, its USDollar printing press, its conduits to financial centers, and its extended arm to legal prosecution control. Big bank liquidation is tantamount to liquidation of the entire US financial structure, its power and privilege, in plain words.
MERS has gained unwanted damaging attention in the legal arenas, and it will not go away. The class action lawsuits will establish the high ground, grow in number, and gain attention. The proof of the malfeasance, fraud, and forgery will be incredibly easy, breathtaking in implications, and shocking to the sleepy public. The risk of civil disobedience is acute. The directly associated risk of commercial degradation from contract law moving toward a field of abandonment is also acute. The domino effect carries risk to the business and thus the social fabric of the American society. The United States is on the verge of events leading to potential systemic failure. Few attribute causality to the Fascist Business Model broad implementation and secretive endorsement, but it lies at the center. The permitted criminal activity, not just with bond fraud, mortgage fraud, and property theft, extends far beyond white collar crimes. Take for instance the suspicious suicide of Freddy Mac CFO David Kellermann, found hanging by the neck in his Virginia living room in April 2009. He knew too much and wanted out, some believe. His suicide probably had assistance. My sources tell of a wave of middle level murders, where bankers have been systematically eliminated. The victims knew too much about the money trails, but lacked a critical level of protective support from rank. They are the dead mules. They were high enough to have knowledge, but not high enough to avoid being expendable. MERS is the errant tool. RICO is the thick cloud. Fannie Mae (FNM) is the grand sewage pit laced with fraud. The news is rarely reported unless they must since it is already widely known. The mainstream news finds itself competing desperately with the competent intrepid internet sources. In a strange attempt to force an equation from a disorderly situation, let it be simply stated that
MERS + RICO + FNM = CHAOS + FAILURE + DEFAULT
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FASCIST BUSINESS MODEL CRUMBLES
One is left to wonder if it is possible that foreign creditors can invoke RICO laws and take over USGovt assets as part of a USTreasury default process? They might do so agency by agency, but start with the helm on Wall Street. By next year, national parks and lands will be sold off to creditors. The deep fraud is easy to prove. Identification of the participants is much more difficult. The movement of prosecution and perhaps restitution will begin with private homeowners, the vassals in the lost field of dreams. A crucial connection on legal obligation is the formal USGovt guarantee of USAgency Mortgage Bonds, which make them full blood brothers to USTreasury Bonds. They just pay a different yield, although we are witnessing a convergence between mortgage rates and USTreasury yields. The Fannie Mae cesspool is certain to drag down the global confidence and prestige of the USTreasury Bond itself, a process underway. Perhaps the USCongress can hastily include a rider on some war appropriation bill or jobless insurance bill or some other bill that is approved but not examined, which exempts USGovt agencies and Wall Street firms from RICO prosecution, even ex-post facto to cover past pecadillos. Harken back to Hank Paulson as USTreasury Secretary, trying to explain Wall Street bond fraud as errors of judgment. The ploy did gain some traction, but the recent lawsuits over mortgage fraud, forged foreclosure documents, and more, run the risk of opening the RICO window to the organized crime that is central to the US financial system. Its three loci of activity are the USFed, Goldman Sachs, and JPMorgan. This is just the financial wing of the syndicate. Apart from that is the war wing, with a common conduit in the USFed.
At great risk is ruin of the threads, tissue, and fiber of the nation. Many have called it the moral hazard in countless citations. The USDollar rests on the faith and trust of the USGovt. Enter systemic fraud and organized criminal activity, demonstrated in open court cases, and POOF, the faith and trust vanish. The USGovt might block some cases for national security reasons, the standard blanket to cover prevalent criminal behavior, a precedent started by Nixon. The same trust and faith underpin the USTreasury Bond complex, the debt securities for the USGovt debt. When the Fannie Mae failed toxic pool was adopted hookline & sinker in September 2008, the USTreasurys took on added risk, infected by the spread of toxic tissue and corrupted threads and absent moral fibers.
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The original roots of the Fascist Business Model are difficult to trace in the United States. They could be from Big Oil, Wall Street Finance, Defense Contractors, even Big Pharma, but with timing in the 1970 or 1980 decades. The Vietnam War and deficit financing went hand in hand, a little recognized phenomenon. Full blossom of the business model, identified by a merger of the state with large corporate interests, took on new meaning after September 2001, when national security trumped everything, including the US Constitution, and certainly civil liberties. What came was license to commit financial crimes with impunity, provided the locus of criminal operations was a large corporation with direct association with the US Govt. Witness the ruinous fruit of the tight embrace endemic to the fascist business model. Witness the lack of prosecution for the perpetrators of criminal fraud. In fact, the larger the crime, the closer to zero is the likelihood of prosecution. Witness the popular backlash in civil disobedience from non-payment of mortgage bills. Witness the entrance finally into the arena of state courts, even some Supreme Courts like in Florida, Kansas, and elsewhere. Again, the defendant banks claim errors and mistakes, when the prosecutors are screaming fraud, forgery, theft, and corruption. A series of public spectacles comes soon.
The Fascist Business Model is so broadly affecting the USEconomy, like a grand latticework, that it is considered part of the American landscape, even grudgingly accepted as part of the system. It is diverse. A culture of fraud is engrained nationally, clearly perceived from foreign vantage points. See Halliburton and the missing $50 billion from the Iraq Reconstruction Fund. The firm is tied to former Vice President Cheney, and is the object of endless fraud accusations, prosecutions, and settlements related to the wars and their provided services. See Goldman Sachs and the 2004 reduction of the unleaded gasoline portion to the GS Commodity Index they manage, as the percentage was taken from 9% to 2%. Coordinated were drops in the price of gasoline, crude oil, and diesel. For some unexplained reason, the USMilitary decided to sell huge amounts of crude oil and diesel fuel at the exact time following the Goldman Sachs index alterations. The events occurred leading to the re-election of Bush Jr. The USMilitary, few realize, is the largest consumer of crude oil and diesel on the planet. See the Seven Sisters from Big Oil and the steady friendships forged with Saudi Arabia and points on the Persian Gulf. See the Citigroup tipoffs to Prince Al-Waleed, whose investments thrived for a while. See the cozy relationships between certain Big Pharma firms and the Swine Flu vaccines. See the British Petroleum oil disaster in the Gulf of Mexico. This one is trickier. The US Environmental Protection Agency engaged in numerous ocean water data tampering examples. Clean-up crews were photographed in numerous instances dumping dead fish, each punishable by a $10 thousand fine, ostensibly with BP at risk. The EPA levied no fines.
The US Coast Guard was involved cordoning off numerous sites where dead whales were disposed of. The public was not permitted nearby access, but that did not stop intrepid photographers from capturing the events on film. Again, BP was at risk of heavy fines imposed. The most egregious violations involve Goldman Sachs and JPMorgan, the agents for the USFed and USDept Treasury. Past actions featured gold leasing from Fort Knox (now empty), for the benefit of Wall Street gold short positions and corresponding USTreasury Bond long leveraged positions. That chapter was labeled the Decade of Prosperity. Insider trading and numerous illicit financial schemes prevail, while front running of policy is constant. These have become important income sources for the twin towers of syndicate finance. See Working Group for Financial Markets, hardly run by an independent pristine office. They operate with full impunity and even access to FBI usage. Refer to the UNIX box and stolen software taken from Goldman Sachs offices in 2009, retrieved dutifully by the FBI, a powerful sophisticated illicit tool used to read incoming stock trade orders.
October 7, 2010
