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The following sounds crazy until you realize the large nuggets of truth contained in the accompanying statement "We've made war upon ourselves."Seems like a clear case of taxation without representation.
The industry that nuked the economy now making making windfall profits on the victims of their greed. Ain't capitalism wonderful?
Jim Kirwan makes the case that one of our major problems right now is that we've made war upon ourselves. I have to concede that it certainly seems like it's true now and it's one of the warnings I gave to a Business Management class I was teaching at the time of 9/11 about how overreaction without knowing the facts (which were being obfuscated by the MSM before Building 7 was "pulled" as they reported) and mindlessly believing what we were told by the "leaders" may lead to much worse events in the future. (Emphasis marks added - Ed.). . . we have to look at what we know is planned for January first 2011. That would be the trifecta of massive new taxes (across the board) that will virtually destroy whatever is left of ordinary people this year.
To insure that the new taxes will crush the society and at the same time insure that the government gets back all the money it believes belongs to them, and does not remain in the hands of those that have earned it, the government plans to end Social Security altogether in December (probably on Christmas Eve or New Years Eve in some kind of secret session). The reason that I believe this (ending of so much of our personal financial security) to be more than just a rumor is: "Because we did not react LAST YEAR when Social Security cost-of-living raises were denied, to the same 58 million that have just been told that they will NOT be getting a cost of living increase in 2011 either. This emboldened the criminals-in-government to proceed with their plans to strip us of our resources and throw us all into the trash, before we can use any of that money to survive their coming tax-storms.”
Economics professor Joe Stiglitz was interviewed byAmy Goodman on the foreclosure morass on Democracy Now! just several days ago where he spelled out his concerns that something very dire was ongoing (some editing and emphasis marks were inserted in the text - Ed.).This chapter of our lives began with the GATT Global-Trade Agreements for Europe that were rammed through Congress on a fast track by Bill Clinton. This opened the door to global-greed and theft on a scale made possible only by the new technologies that allowed for the transfer of trillions of dollars at a keystroke, to anywhere in the world—in utmost secrecy.
This has been followed up by other regional trade-agreements until the world has now been encircled and chained to these documents that have enslaved and at the same time silenced so many of the safeguards that once protected ordinary people from the power of the filthy-rich wherever their influences sought to control entire nation-states. But long-before GATT, Nation-states as such had all become just particles in the dust of history.
Because ‘nation-states’ are now obsolete in every way, despite the left-over relics of their national flags which these ‘counties’ once took so much pride in. The end result of this silent global-coup has been that there is no longer any protection for people anywhere from this gargantuan behemoth that is still waiting at the front door of our lives and is demanding that we surrender everything to it and to its deviate owners.
In the United States we welcomed in the New Millennium by publicly allowing George Bush to steal the White House — and everything after that — including 911 became part of this self-generated War Upon Ourselves!
Time after time we have NOT questioned anything that has transpired inside this government: And each time we have failed to challenge what is being done to us (whether in the name of the farce of national-insecurity, or in the name of the now totally-corrupted economy) we have collectively been complicit in bringing about the end of our own way of life, piece by bloody piece!
We’re just weeks away from the coming selection on November fourth and despite the actual State of this Nation — the $4 to $6 TRILLION dollar wars (in Afghanistan & Iraq) have not even been mentioned on the so-called campaign trail, which was no oversight: That much money could not only fix this economy, it could turn around the entire global economy, with enough money left over to even do what we have refused to do to help Haiti, Pakistan, and all the other places that we have secretly-slated for total annihilation. But this was never part of the plan for global domination.
What was and is part of the plan is to transfer the remaining wealth in this country to the most-evil-plots that were put in place by Reagan, Bush 1& 2 and Clinton, in the run-up to allowing Obama to finish shutting down the USA. And all the while the self-absorbed public has remained very soundly asleep-at-the-wheel. The politicians are only figureheads, the bankers, and the lobbyists are just players on the global-board: The public is in reality in-charge because if the public refuses to go to work, or refuses to go-along then this entire house-of-marked-cards would come crashing down within days — yet no one ever seems to think of this—much less have ordinary people ever dreamed of doing the one real thing that would end this for all the criminal-elites. Individually we must say learn how to say "NO."
Part of why this is, can be found in what the public chooses to fill their individual minds with—and that is not a pretty site. Part of the reason that The War Upon Ourselves is never mentioned, in the same sentence as “elections” is that so many people in this country still-support these unilateral and illegal occupations by continuing to buy stock in those corporations that are waging The War Upon Ourselves. So despite the fact that they are about to lose everything they have to an out-of-control government — they still cling-tightly to what has become their ticket to the good life, which became so profitable by the killing of millions of people the world over. That combined with the total disinformation arm of the government (the media); is why the WAR hasn’t even been mentioned in the selection-news surrounding the so-called elections of November the fourth, 2010.
"In response to BofA’s decision to foreclose on 100,000 more homeowners ."A very important (and largely unconsidered on the national stage) political history lesson is imparted to us below by Bernard Weiner, who wants us to know that today's system of the increasingly common bondage/penury of the lower classes has not been accidental. If you were puzzled or outright confused by the popularity of the bragging-about-their-extremism Goldwater Movement of 1964 (when they did not have a prayer of winning), this essay spreads some golden light. Don't miss it (emphasis marks added - Ed.).The inter-agency federal investigation was announced a day after BofA and GMAC Mortgage said they’re resuming foreclosures in the twenty-three states where a court's approval is needed to foreclose. Ten days ago, Bank of America had imposed a nationwide halt on foreclosures following revelations (that) employees at several lenders had approved thousands of foreclosure affidavits and other documents without proper vetting.
The multi-agency task force on financial fraud, led by investigators in the Justice, Treasury and Housing departments, are exploring whether banks broke the law and misled federal agencies when using fraudulent documents to foreclose on people’s homes.
The federal probe coincides with an effort by investors to hold firms accountable for selling securities composed of improperly serviced mortgages. Late Tuesday, a consortium of eight investors, including the Federal Reserve Bank of New York, demanded that Bank of America buy back some $47 billion worth of troubled home loans packaged into bonds by Countrywide Financial, which is owned by Bank of America. The New York Fed is also considering suing Bank of America.
AMY GOODMAN: Would you support a foreclosure moratorium?
JOSEPH STIGLITZ: Well, I think probably the answer is yes. The fact is that they’ve generated so many bad mortgages, so many fraudulent mortgages. And by the way, this problem of fraud has been known for a long time. The FBI started reporting on this years ago. I talk about that problem in my book. It’s not just risky lending. It was fraudulent, predatory, all these — and so, we have a backlog now. And we shouldn’t be surprised that our legal system is not capable of processing the numbers of foreclosures that have to be processed. We’re talking about probably something in the order of magnitude of three million, three-and-a-half million foreclosures actions this year. Last year, the estimate was about two million lost their home; the year before, two million. Our system isn’t geared to do that.
But there’s a more — there’s a deeper point that I’d like to raise, which is the following. You know, in a democracy like ours, people have to have confidence in the fairness of our legal system. And if they feel that the legal system is stacked against them, then voluntary compliance — our whole social fabric starts fraying. And I think a lot of Americans have come to the view that the system is stacked against them.
It began, in a way, with the bankruptcy law that was passed back in 2005 that, in effect, reintroduced bondage in America. I mean, people haven’t realized how bad that law was. If you owe a hundred percent — you know, amount of money that’s equal to a hundred percent of your income — you have a $40,000 income, you wound up with a credit card debt and other debt of $40,000 — for the rest of your life you may be working 25 percent of your time for the banks.
The way it works is very simple. They can take 25 percent of your income — you know, it used to be easy that you could go bankruptcy and you get discharged of the debt. They made it very difficult. So, you can pay 25 percent of your income every year to the bank, but then the bank can charge you 30 percent interest. So, the end of the year, you owe more money than you did at the beginning of the year, even though you gave 25 percent of your income to the bank. Now, this is an example of something that is clearly socially unjust.
AMY GOODMAN: This was passed when the Republicans were in control.
JOSEPH STIGLITZ: That’s right.
Paul Krugman tells us that what seems to be a fad is actually just more carefully planned destruction of the lower classes; more propaganda from the MSM owners. Does anyone remember Ms. Hillary visiting the UK and saying that she certainly hoped they would not be reducing their defense budget in light of this economic draught? I do. (Emphasis marks added - Ed.)Extremism as a Cherished Value For the first time in the modern era, extremism and incitements to violence were given political cover as they were introduced by a presidential candidate into American's civic bloodstream. "Extremism in the defense of liberty is no vice," said Goldwater, to cheering GOP convention delegates.The corporate/fundamentalist forces behind the Goldwater candidacy knew their candidate would not win, could not win, in a country still deeply appreciative of popular liberal policies coming out of post-World War II reconstruction in the 1950s.The aim of these wealthy forces was to purge the GOP of its moderate voices and create an ideologically pure, HardRight party that through education, political activism and constant agitprop would eventually triumph over "decadent liberalism." Clearly, they were thinking long term, and it paid off: Ronald Reagan's victory came 16 years later, in 1980. How did they do it?
Buying Their Way to Victory
In the years after the Goldwater debacle, billionaire conservative tycoons bought up mass-media outlets - book-publishing firms, newspapers, cable news networks, etc. They funded their own think tanks, with their in-house academic types churning out intellectual-sounding arguments. They supported with millions of dollars rightwing student groups on college campuses. They sponsored how-to-win-election workshops for potential candidates. They donated huge amounts to centrist news networks, such as PBS (look at who supports "The News Hour" these days: Chevron, Pacific Life Insurance, Archer Daniels Midlands, et al.), to help dilute the tenor of objective journalism. Liberals, meanwhile, were, as usual, dazed and confused, in denial about what was happening to them and supremely over-confident that their fortress of power was unassailable. A native fascism could never happen in America, they believed, since reason would win out over demagoguery and extremist, authoritarian, Big-Lie politics.
Right. The GOP could always count on one third of the electorate - by and large, the fundamentalist, anti-science, anti-change, more authoritarian base - and were able to lure a goodly number of independents and libertarians to their cause on certain issues, aided by an increasingly badly-educated citizenry easily influenced by the mass-media's emphasis on fluff and nonsense and biased reporting (read: Fox News).
Whack an "Enemy"
Every movement needs a hated enemy. Having one helps stir the emotions, which means lots of small donations from millions of scared citizens, which means a huge mailing/recruitment list to build from. In the post-World War II period, up until the Communist Party imploded in the Soviet Union in the late-'80s, the Republicans' favorite bete noire was "godless communism," both abroad and internally. "Socialism" was included under the hated rubric "communism," just to be sure, and then "liberalism" was conflated with "socialism," to destroy that brand.
In the 1990s, the conservatives' enemies of choice have included homosexuals and blacks and browns; later those "enemies" morphed into "terrorists," "immigrants" and, for too many, "Muslims." Quick version: the Other.
You can always count on "God, Guns & Gays" to help you win votes.What is being played so skillfully by the power-composers of the Right (with Karl Rove as conductor extraordinaire) is the instrument of change as something to fear. The calm, comfortable world that most middle-class whites grew up in is quickly cracking apart. More and more ethnic and social minorities are moving out of their real and perceived "ghetto mentality" and proudly moving into the social, political and cultural mainstream, jockeying for power and influence just like everybody else.
Internationally, similar changes are happening, as formerly subservient countries and leaders chafe under U.S. hegemony and begin to push back. American exceptionalism is taking a beating.
Our Era's Great Depression
All this is genuinely unsettling, disturbing, scary to many, some of whom feel - thanks to incendiary language and incitement to action by rightwing leaders - encouraged to initiate violence against leader-identified "enemies" (and often against journalists who ask pointed questions).
Don't those people and nations know their "place"? And then a "perfect storm" of social/political/economic collapse occurred in the last years of the CheneyBush Administration:
* Virtually unregulated, rapacious capitalism led to a meltdown of the financial system, showing up most visibly in desperate failures of the huge investment houses, which had been selling unsecured debt instruments in a massive Ponzi-like scheme. The ramifications of such giant failures affected economies in countries worldwide, and led to austerity programs negatively impacting mostly the working and middle-classes. (Unlike docile Americans, millions of Spaniards and French and Belgians and Greeks have erupted into open opposition in the streets.)
* The mortgages at the heart of these unsecured debt instruments ("derivatives," "credit default swaps") were peddled by unscrupulous lenders, and when the economy and real-estate values tanked, the buyers of homes were left holding the bag.
Of course, virtually none of those in the banks and corporate offices who sold those instruments were ever punished.
In our current plutocratic system, rarely do leaders in positions of power ever have to pay a real penalty for their bad, or even illegal, acts. Either they are given a free pass ("too important to fail") or they find a "bad apple" scapegoat.
* With the economy in the toilet, and the Republicans resisting any stimulus or other effective measures to help the working and middle-class climb out, fewer and fewer Americans had any cash to buy big-ticket items and many, with no jobs and the safety-net shredded and their pensions and retirement savings cut in half, had to struggle just to keep afloat.
That meant factories were shuttered, in addition to those that had been closed because of "outsourcing" of jobs to China, Mexico, India, et al. during the Clinton and Bush presidencies.
Millions were laid off and, due to the resulting loss of tax revenues, cities and states were out of monies to finance everything from police and firefighters to helpful civil servants. As I write this, an estimated 10-18% of the workforce (roughly 20 million citizens) are unemployed, and having extreme difficulty finding jobs. More than 35% of American children are living in poverty. And this current Great Depression is projected to last many years, maybe a decade or more, as a result of Republican machinations and Democratic timidity.
Millions of Jobless Recruits
. . . the possible ramifications of having millions of unemployed young men, many of them under-educated, feeling like rejected losers. As we know from what happened in Germany in the 1930s, these angry, frustrated masses of young men and their parents become perfect fodder for extremist demagogues. What's most frightening, these likely recruits, energized by their rage and emotions, feel comfortable inside a balloon of voluntary ignorance, eager to support such political nitwits as Sarah Palin, Christine O'Donnell, Carl Paladino, Sharron Angle, Rand Paul, Ken Buck and the rest.
Simple example: When asked whether they support Obama's new health-care approach, many of these newborn rightwing activists rant about how the government shouldn't be in the business of helping people via entitlement programs. But they get very angry if there is any talk about cutting back or eliminating their agriculture subsidies or Social Security checks or Medicare coverage.
When their hypocrisy is pointed out to them, it becomes clear that they feel they deserve the government help but the Others, especially minorities and the poor, do not. Racism and classism are alive and well in the American polity.
Today, many young, unemployed men (and their parents), devoid of hope, wind up recruited by militias and political groups of one sort or another, and are encouraged into action by far-right demagogues like Glenn Beck, Rush Limbaugh, Sean Hannity, and Sarah Palin to channel their anger into the Tea Party movement allied with the Republican Party.
Their "enemies," they are led to believe, are minorities, journalists, "the government," gays, Muslims, liberals, immigrants, "moderate" politicians, the supposed SocialistMuslimNaziStalinist in the White House, et al. In other words, every angry citizen can pick a convenient enemy to hate and act against.
Timid and Asleep at the Wheel
Normally, the party in power would provide energized correctives to pull the confused, frustrated masses back toward the middle. But the Democrats, and especially President Obama, have been mostly clueless as to how to combat this movement, which is based on lies, arrogance, duplicity and threats of (and actual) violence. In any event, their halfway-effective responses were always many months too late.
Only in recent days, for example, has Obama even begun to energize his base to fight back in the midterm election, now two weeks away. He's only partially successful since he and his spokesmen have belittled the Democrats' progressive base for nearly two years now, using it as a convenient punching bag as he tried to lure Republicans and Independents to his side.
Obama was at least a year late in recognizing what progressives knew mere weeks after his inauguration: that there was no way he ever would be able to gain GOP support for any of his programs.
The Republicans had one goal and one goal only: destroying his presidency in order to regain their political power, and all the perk$ that go with that power. If, in their desire to overturn all the social advances of the New Deal and Great Society, our current Great Depression gets worse, if millions more lose their jobs, if the government goes bankrupt, well, that is just the "collateral damage" the country will have to bear in the name of Freedom.
Mirroring Cheney-Bush Policies
Obama had run a campaign in 2008 based on major structural change; transparency in governance; moving away from CheneyBush policies with regard to respect for the Constitution, civil liberties, disengaging from the previous administration's bullying approach in foreign/military policy. But once in the White House, he continued many of the worst policies begun by his predecessor in amassing presidential power unchecked by Congress or the courts.
For example, he has assumed the right, with no checks on his authority, to order the assassinations of Americans suspected of alliances with terrorists. And he has enlarged, rather than diminished, U.S. operations in Afghanistan, and found a way to authorize "extraordinary renditions" to other countries especially skilled in torturing prisoners.
Obama can rightfully point to a good many solid initiatives that a President McCain never would have pushed for, but, overall, Obama has come across as pretty much a conventional Washington Beltway politician, consistently siding with corporate agendas, jettisoning his campaign attitude and promises far too quickly along the way. No wonder his base is only partially in the Democrats' corner for this election. So many of the Obama stalwarts in 2008 - students, African-Americans, progressives - have abandoned him because they feel he abandoned them, early and often.
Emerging from the Crazy
One can hope that a galvanized Get-Out-the-Vote campaign by the Democrats will be able to salvage some key races and keep the most egregiously lunatic candidates from moving into the Senate and House. But even if the Dems manage to extract some good news in this midterm election, it seems clear that the shift in momentum and power-relationship does not bode well for American society in the next decade.
In short, unless some electoral GOTV miracle occurs on November 2 . . . as America continues to wallow in its despair, social spasms, energized political flailings. We are entering the choppy waters of dire straits. We don't know how many years will go by before Americans might experience "buyer remorse," before they decide they've had enough and return to their senses, before the epidemic of crazy runs its course.
In the interim, one can expect that revolutionary attitudes and forces will be building strength against politics-as-usual in America. While some of that is devoutly to be wished, we'll all be going on a wild roller-coaster ride. As Tiny Tim might have said: "God help us everyone!"
Bernard Weiner, Ph.D. in government and international relations, has taught at universities in California and Washington, worked as a writer/editor with the San Francisco Chronicle for two decades, and currently serves as Co-Editor of The Crisis Papers (www.crisispapers.org).
In the spring of 2010, fiscal austerity became fashionable. I use the term advisedly: the sudden consensus among Very Serious People that everyone must balance budgets now now now wasn’t based on any kind of careful analysis. It was more like a fad, something everyone professed to believe because that was what the in-crowd was saying.I'm not against religion you understand. I think in a free country that everyone is free to do or say anything they desire as long as they don't cause harm to others by it. I just wish other people would share my opinion. Wouldn' life be simpler then? From The Progressive (emphasis marks added - Ed.):And it’s a fad that has been fading lately, as evidence has accumulated that the lessons of the past remain relevant, that trying to balance budgets in the face of high unemployment and falling inflation is still a really bad idea. Most notably, the confidence fairy has been exposed as a myth. There have been widespread claims that deficit-cutting actually reduces unemployment because it reassures consumers and businesses; but multiple studies of historical record, including one by the International Monetary Fund, have shown that this claim has no basis in reality.
No widespread fad ever passes, however, without leaving some fashion victims in its wake. In this case, the victims are the people of Britain, who have the misfortune to be ruled by a government that took office at the height of the austerity fad and won’t admit that it was wrong.
Britain, like America, is suffering from the aftermath of a housing and debt bubble. Its problems are compounded by London’s role as an international financial center: Britain came to rely too much on profits from wheeling and dealing to drive its economy — and on financial-industry tax payments to pay for government programs.
Over-reliance on the financial industry largely explains why Britain, which came into the crisis with relatively low public debt, has seen its budget deficit soar to 11 percent of G.D.P. — slightly worse than the U.S. deficit. And there’s no question that Britain will eventually need to balance its books with spending cuts and tax increases.
The operative word here should, however, be “eventually.” Fiscal austerity will depress the economy further unless it can be offset by a fall in interest rates. Right now, interest rates in Britain, as in America, are already very low, with little room to fall further. The sensible thing, then, is to devise a plan for putting the nation’s fiscal house in order, while waiting until a solid economic recovery is under way before wielding the ax.
But trendy fashion, almost by definition, isn’t sensible — and the British government seems determined to ignore the lessons of history. Both the new British budget announced on Wednesday and the rhetoric that accompanied the announcement might have come straight from the desk of Andrew Mellon, the Treasury secretary who told President Herbert Hoover to fight the Depression by liquidating the farmers, liquidating the workers, and driving down wages. Or if you prefer more British precedents, it echoes the Snowden budget of 1931, which tried to restore confidence but ended up deepening the economic crisis.
The British government’s plan is bold, say the pundits — and so it is. But it boldly goes in exactly the wrong direction. It would cut government employment by 490,000 workers — the equivalent of almost three million layoffs in the United States — at a time when the private sector is in no position to provide alternative employment. It would slash spending at a time when private demand isn’t at all ready to take up the slack.
Why is the British government doing this? The real reason has a lot to do with ideology: the Tories are using the deficit as an excuse to downsize the welfare state. But the official rationale is that there is no alternative.
Indeed, there has been a noticeable change in the rhetoric of the government of Prime Minister David Cameron over the past few weeks — a shift from hope to fear. In his speech announcing the budget plan, George Osborne, the chancellor of the Exchequer, seemed to have given up on the confidence fairy — that is, on claims that the plan would have positive effects on employment and growth.
Instead, it was all about the apocalypse looming if Britain failed to go down this route. Never mind that British debt as a percentage of national income is actually below its historical average; never mind that British interest rates stayed low even as the nation’s budget deficit soared, reflecting the belief of investors that the country can and will get its finances under control. Britain, declared Mr. Osborne, was on the “brink of bankruptcy.”
What happens now? Maybe Britain will get lucky, and something will come along to rescue the economy. But the best guess is that Britain in 2011 will look like Britain in 1931, or the United States in 1937, or Japan in 1997. That is, premature fiscal austerity will lead to a renewed economic slump. As always, those who refuse to learn from the past are doomed to repeat it.
Republicans Pray to the Free Market Idol - Bizarre Disconnect
Matthew Rothschild
The free market destroyed the economy, and the free market sullied a sea, and yet this election season, we have one Republican after another singing the praises of the free market system.
There’s a bizarre disconnect in this country over the issue of the free market. Because, after all, it was the free market, and the lack of regulation, that led to the collapse of our economy. The big banks brought the house of cards down by chopping up and rebundling mortgages and by peddling derivatives and credit-default swaps with no government oversight. It was the free market, and the lack of regulation, that led to the disastrous BP oil spill in the Gulf of Mexico.
The free market destroyed the economy, and the free market sullied a sea, and yet this election season, we have one Republican after another singing the praises of the free market system.
Rand Paul: “I believe in capitalism…I will keep government out of the way of business.” (Oct. 17 debate)
Sharron Angle: “Our solutions reside in the free market.” (Oct. 15 debate)
Sarah Palin: “As we shrink the federal government, we can allow the private sector to grow, and those with common sense and a pro-private sector agenda to be in more control of the policies.” (Oct. 19 on Fox)
Christine O’Donnell: “Our free market economy exists because it is the best structure in which the individual can flourish." (Dec. 6, 2009)
But it’s not just Rand Paul and Sharron Angle and Sarah Palin and Christine O’Donnell; it’s virtually every single Republican. We’re not in the realm of the rational here. Even as the free market exposed itself, Republican are still chanting: “All hail the free market.”
And they’re getting away with it because Democrats, with the exception of Bernie Sanders and Dennis Kucinich and a couple others, have not been brave enough to confront the idolatry of the free market.
The free market is a graven image, and until progressive leaders denounce it as such, it will still hold sway over the nation.
If you liked this story by Matthew Rothschild, the editor of The Progressive magazine, check out his recent story "Envious of Sarah Palin and the Tea Partiers."
From the frontlines:Battle Lines Forming in Clash Over Foreclosures New York Times
October 20, 2010 By GRETCHEN MORGENSON and ANDREW MARTIN About a month after Washington Mutual Bank made a multimillion-dollar mortgage loan on a mountain home near Santa Barbara, Calif., a crucial piece of paperwork disappeared.
But bank officials were unperturbed. After conducting a “due and diligent search,”an assistant vice president simply drew up an affidavit stating that the paperwork — a promissory note committing the borrower to repay the mortgage — could not be found, according to court documents.
The handling of that lost note in 2006 was hardly unusual. Mortgage documents of all sorts were treated in an almost lackadaisical way during the dizzying mortgage lending spree from 2005 through 2007, according to court documents, analysts and interviews.
Now those missing and possibly fraudulent documents are at the center of a potentially seismic legal clash that pits big lenders against homeowners and their advocates concerned that the lenders’ rush to foreclose flouts private property rights.
That clash — expected to be played out in courtrooms across the country and scrutinized by law enforcement officials investigating possible wrongdoing by big lenders — leaped to the forefront of the mortgage crisis this week as big lenders began lifting their freezes on foreclosures and insisted the worst was behind them.
Federal officials meeting in Washington on Wednesday indicated that a government review of the problems would not be complete until the end of the year.
In short, the legal disagreement amounts to whether banks can rely on flawed documentation to repossess homes.
While even critics of the big lenders acknowledge that the vast majority of foreclosures involve homeowners who have not paid their mortgages, they argue that the borrowers are entitled to due legal process. Banks “have essentially sidestepped 400 years of property law in the United States,” said Rebel A. Cole, a professor of finance and real estate at DePaul University. “There are so many questionable aspects to this thing it’s scary.”
Others are more sanguine about the dispute.
Joseph R. Mason, a finance professor who holds the Louisiana Bankers Association chair at Louisiana State University, said that concerns about proper foreclosure documentation were overblown. At the end of the day, he said, even if the banks botched the paperwork, homeowners who didn’t make their mortgage payments still needed to be held accountable.
“You borrowed money,” he said. “You are obligated to repay it.”
After freezing most foreclosures, Bank of America, the largest consumer bank in the country, said this week that it would soon resume foreclosures in about half of the country because it was confident that the cases had been properly documented. GMAC Mortgage said it was also proceeding with foreclosures, on a case-by-case basis.
While some other banks have also suggested they can wrap up faulty foreclosures in a matter of weeks, some judges, lawyers for homeowners and real estate experts like Mr. Cole expect the courts to be inundated with challenges to the banks’ actions.
“This is ultimately going to have to be resolved by the 50 state supreme courts who have jurisdiction for property law,” Professor Cole predicted.
Defaulting homeowners in states like Florida, among the hardest hit by foreclosures, are already showing up in bigger numbers this week to challenge repossessions. And judges in some states have halted or delayed foreclosures because of improper documentation. Court cases are likely to hinge on whether judges believe that banks properly fulfilled their legal obligations during the mortgage boom — and in the subsequent rush to expedite foreclosures.
The country’s mortgage lenders contend that any problems that might be identified are technical and will not change the fact that they have the right to foreclose en masse.
“We did a thorough review of the process, and we found the facts underlying the decision to foreclose have been accurate,” Barbara J. Desoer, president of Bank of America Home Loans, said earlier this week.
“We paused while we were doing that, and now we’re moving forward.” Some analysts are not sure that banks can proceed so freely. Katherine M. Porter, a visiting law professor at Harvard University and an expert on consumer credit law, said that lenders were wrong to minimize problems with the legal documentation.
“The misbehavior is clear: they lied to the courts,” she said. “The fact that they are saying no one was harmed, they are missing the point. They did actual harm to the court system, to the rule of law. We don’t say, ‘You can perjure yourself on the stand because the jury will come to the right verdict anyway.’ That’s what they are saying.”
Robert Willens, a tax expert, said that documentation issues had created potentially severe tax problems for investors in mortgage securities and that “there is enough of a question here that the courts might well have to resolve the issue.”
As the legal system begins sorting through the competing claims, one thing is not in dispute: the pell-mell origination of mortgage loans during the real estate boom and the patchwork of financial machinery and documentation that supported it were created with speed and profits in mind, and with little attention to detail.
Once the foreclosure wheels started turning, said analysts, practices became even shoddier.
For example, the foreclosure business often got so busy at the Plantation, Fla., law offices of David J. Stern — and so many documents had to be signed so banks could evict people from their homes — that a supervisor sometimes was too tired to write her own name.
When that happened, Cheryl Samons, the supervisor at the firm, who typically signed about 1,000 documents a day, just let someone else sign for her, court papers show.
“Cheryl would give certain paralegals rights to sign her name, because most of the time she was very tired, exhausted from signing her name numerous times per day,” said Kelly Scott, a Stern employee, in a deposition that the Florida attorney general released on Monday. A lawyer representing the law firm said Ms. Samons would not comment.
Bill McCollum, Florida’s attorney general, is investigating possible abuses at the Stern firm, a major foreclosure mill in the state, involving false or fabricated loan documents, calling into question the foreclosures the firm set in motion on behalf of banks.
That problem extends far beyond Florida. As lenders and Wall Street firms bundled thousands of mortgage loans into securities so they could be sold quickly, efficiently and lucratively to legions of investors, slipshod practices took hold among lenders and their representatives, former employees of these operations say.
Banks routinely failed to record each link in the chain of documents that demonstrate ownership of a note and a property, according to court documents, analysts and interviews. When problems arose, executives and managers at lenders and loan servicers sometimes patched such holes by issuing affidavits meant to prove control of a mortgage.
In Broward County, Fla., alone, more than 1,700 affidavits were filed in the last two years attesting to lost notes, according to Legalprise, a legal services company that tracks foreclosure data.
When many mortgage loans went bad in the last few years, lenders outsourced crucial tasks like verifying the amount a borrower owed or determining which institution had a right to foreclose.
Now investors who bought mortgage trusts — investment vehicles composed of mortgages — are wondering if the loans inside them were recorded properly. If not, tax advantages of the trusts could be wiped out, leaving mortgage securities investors with significant tax bills.
For years, lenders bringing foreclosure cases commonly did not have to demonstrate proof of ownership of the note. Consumer advocates and consumer lawyers have complained about the practice, to little avail.
But a decision in October 2007 by Judge Christopher A. Boyko of the Federal District Court in northern Ohio to toss out 14 foreclosure cases put lenders on notice. Judge Boyko ruled that the entities trying to seize properties had not proved that they actually owned the notes, and he blasted the banks for worrying “less about jurisdictional requirements and more about maximizing returns.”
He also said that lenders “seem to adopt the attitude that since they have been doing this for so long, unchallenged, this practice equates with legal compliance.” Now that their practices were “put to the test, their weak legal arguments compel the court to stop them at the gate,” the judge ruled.
Yet aside from the actions of a few random judges, little was done to force lenders to change their practices or slow things down. Since March 2009, more than 300,000 property owners a month have received foreclosure notices or lost their home in a foreclosure, according to RealtyTrac, which tracks foreclosure listings.
What finally prompted a re-examination of the foreclosure wave was the disclosure in court documents over the last several months of so-called robo-signers, employees like Ms. Samons of the Stern law firm in Florida who signed affidavits so quickly that they could not possibly have verified the information in the document under review.
Lenders and their representatives have sought to minimize the significance of robo-signing and, while acknowledging legal lapses in how they documented loans, have argued that foreclosures should proceed anyway. After all, the lenders say, the homeowners owe the money.
People who have worked at loan servicers for many years, who requested anonymity to protect their jobs, said robo-signing and other questionable foreclosure practices emanated from one goal: to increase efficiency and therefore profits. That rush, they say, allowed for the shoddy documentation that is expected to become evidence for homeowners in the coming court battles.
For example, years ago when banks made loans, they typically stored promissory notes in their vaults.
But the advent of securitization, in which loans are bundled and sold to investors, required that loan documents move quickly from one purchaser to another. Big banks servicing these loans began in 2002 to automate their systems, according to a former executive for a top servicer who requested anonymity because of a confidentiality agreement.
First to go was the use of actual people to determine who should be liable to a foreclosure action. They were replaced by computers that identified delinquent borrowers and automatically sent them letters saying they were in default. Inexperienced clerical workers often entered incorrect mortgage information into the computer programs, the former executive said, and borrowers rarely caught the errors.
Other record-keeping problems that are likely to become fodder for court battles involve endorsements, a process that occurs when notes are transferred and validated with a stamp to identify the institution that bought it. Eager to cut costs, most institutions left the notes blank, with no endorsements at all.
Problems are also likely to arise in court involving whether those who signed documents required in foreclosures actually had the authority to do so — or if the documents themselves are even authentic.
For example, Frederick B. Tygart, a circuit court judge overseeing a foreclosure case in Duval County, Fla., recently ruled that agents representing Deutsche Bank relied on documents that “must have been counterfeited.” He stopped the foreclosure. Deutsche Bank had no comment on Wednesday.
Cynthia Veintemillas, the lawyer representing the borrower in the case, Patrick Jeffs, said the paperwork surrounding her client’s foreclosure was riddled with problems.
“Everybody knows the banks screwed up and loaned out money to people who couldn’t pay it back,” she said. “Why are people surprised that they don’t know what they are doing here either?”
Meanwhile, another judge on Wednesday indicated that the courts would not simply sign off on the banks’ documentation. Jonathan Lippman, the chief judge of New York’s courts, ordered lawyers to verify the validity of all foreclosure paperwork.
“We cannot allow the courts in New York State to stand by idly and be party to what we now know is a deeply flawed process, especially when that process involves basic human needs — such as a family home — during this period of economic crisis,” Judge Lippman said in a statement.
So there.
Harrruuummmph!
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