Timothy Geithner's new plan, like all his other plans, seems designed to shovel billions into the coffers of the very same bankers who got rich on the mortgage bubble. When the public gets a glimpse of the tip of this giant iceberg, as they did with the AIG bonuses, they're dismissed as angry rubes who Just Don't Understand How Things Work. But his latest scheme is proof that they are absolutely right.
Despite Geithner's contention that banks are simply "burdened with bad lending decisions," most Americans understand at this point that there was serious fraud involved in the inflation of the mortgage bubble. The Justice Department and the FBI are currently investigating Countrywide for accounting fraud, insider trading and consciously lending money to people they knew couldn't afford to repay it. Meanwhile, AIG is suing Countrywide because they have to pay off hundreds of millions of dollars in insurance claims because Countrywide just flat out lied about the mortgages they were issuing:
United Guaranty said in the complaint that it had reviewed loan files that showed that most mortgages covered by 11 policies for asset-backed securities were either underwritten in violation of Countrywide's own guidelines or contained defects, such as missing documents, misrepresented credit scores or false social security numbers.
And who has the privilege of paying off AIG's insurance policies? That would be American taxpayers.
Stanford Kurland was the President of Countrywide during its salad days, when the predatory lending practice of low introductory "teasers" inflated Countrywide's mortgage portfolio from $62 billion to $463 billion. Bank of America, which bought Countrywide last year, has already paid out $8.7 billion to settle suits brought by states because of Countrywide's fraudulent practices, including hidden fees and false claims like "no closing costs." The Illinois suit examined one mortgage broker's sales of Countrywide loans and found the "vast majority of the loans had inflated income, almost all without the borrower's knowledge."
Just like any Ponzi scheme, the first ones out get rich. And Stanford Kurland got rich on Countrywide, cashing out to the tune of $200 million.
So where is Kurland today? Is he in jail? Well, no. He's going to get rich out of Timothy Geithner's new scheme. From the New York Times:
[A] dozen former top Countrywide executives now stand to make millions from the home mortgage mess.
Stanford L. Kurland, Countrywide's former president, and his team have been buying up delinquent home mortgages that the government took over from other failed banks, sometimes for pennies on the dollar. They get a piece of what they can collect.
"It has been very successful -- very strong," John Lawrence, the company's head of loan servicing, told Mr. Kurland one recent morning in a glass-walled boardroom here at PennyMac's spacious headquarters, opened last year in the same Los Angeles suburb where Countrywide once flourished.
"In fact, it's off-the-charts good," he told Mr. Kurland, who was leaning back comfortably in his leather boardroom chair, even as the financial markets in New York were plunging.
Stanford Kurland and the Countrywide Crew have never been held to account for their part creating this financial crisis, and now Geithner's plan makes them rich all over again. Geithner worked hard to cut out provisions in the Senate stimulus bill that would have limited millions in AIG bonuses, and how he's refusing to endorse Congressional plans to tax them. He seems to believe that there is an elite class of bankers in this country who must make money no matter what happens, who should never be held to account, and whose interests should always come first in any plan the government devises.
Do you get a chance to make money in this "off-the-charts good" investing opportunity? Noooo, these loans that nobody has to pay back aren't being offered to the public.
The public understands what's going on all too well. The same thieves who brought us the mortgage crisis are above the law and back again to pick our pockets again in broad daylight, thanks to the tireless efforts of Timothy Geithner on their behalf.
Jane Hamsher blogs at firedoglake
Funny that the U.S. Government has to give them money inorder to get into the BANK BOOKS so they can find the ILLEGAL ACTIVITY .
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America's banking was begun with a fraud by a shameless swindler...
It...
Is...
Not...
A...
Crime.
Here are two common sense ideas that aren't getting traction. First, if the problem was caused by deregulation, have about re-instituting the regulations and enforcing them? How about some laws governing these institutions so they don't buy these risky loans and troubled assets?
Second, if these institutions are "too big to fail" and we need to bail them out, why not just split them up into smaller units, so they aren't "too big to fail", and they won't be blackmailing the government anymore? Why not enforce anti-trust laws? Why not keep companies small, so they are more competitive?
Why isn't anyone even talking about these ideas and instead, they are all talking nationalization and bail-out? There is no traction for these ideas because no big money interests are promoting them via their lobbyists or think tanks or campaign contributions.
They have the gold. They right rules. All with help from their public-private investment Party, The Demo-Republican Party.
Why isn't Glass-Steagall being introduced as legislation? It is common sense for Congress to do so. So far, we have only heard hot-air investigations with no indictments (Auto Executives, Rove has been subpoened how many times?, etc...) from Congress. Oh, and various myriad plans to save the rogue-financial industry, all designed to confuse us until one looks different enough from all the others to pass.
Smoke is being blown up our buttocks. Yet, we seem to like it. Which is why, nothing changes.
His plan, by fluke, just might work. Of course, the average American will then be able to choose among the millions of new McJobs created when the economy recovers. Hence, most will be poorer, but happy, than they are today. They will be happy because the at least have a job putting peasant tortillas on the table instead of watching their children starve.
Something is better than nothing, after all. At least until the price of tortillas are hiked forty percent.
I have some experience in this field and initially thought how I could tap into this as a business, then I read that it is only based on recommendations (from whom?) and that you have to have some serious financial backing in order to participate. It is time to allow some new people in the game who have life experience in dealing with the current economy and hopefully will not allow greed to corrupt, but at least they would be new to this rather than the same old guard.
Can anyone do basic math? What's our exposure and ROI vs that of the banksters who buy these derivatives back from us?
http://www.voxeu.org/index.php?q=node/3264
"The Good Bank approach
Under the Good Bank approach, the state creates a new bank, the Good Bank, which gets the deposits and the clean assets of the old banks. The old bank gets compensation equal to the difference between the (known) value of the clean assets it loses and the value of the deposits it gives up. The state may also inject additional public capital into the Good Bank, or it may invite in additional private capital. Government financial support is given only to new lending, new investment, and new funding by the Good Bank. The legacy (ex-)bank has its banking license taken away and simply manages the existing stock of toxic assets. The legacy (ex-)bank does not get any further government support."
Capitalism is not the end-all, be-all of human existence. Instead, we should socialize some aspects of our economy. Health care, education, and basic infrastructure are but some limited examples. Private companies can still participate in such areas, of course. However, their role would be limited. The companies can still make money. They would just be unable to deny you basic needs based on their bottom line.
I would rather pay the government an equitable amount every month for guaranteed basic health care than some corporation that denies you, I, and everyone due to "prior existing conditions" or a mistake on the paperwork. Alas, too many Americans cower in fear of The Red Scare while modern industrialized countries (other than ours) do provide these services while remaining a capitalist society.
One more item. The health of a society is determined by how well we treat our less fortunate. If you do not believe that and care only about yourself, get the hell out of America and go live in Zimbabwe.
President Obama suggested to the Wall Street crowd "to get out of New York" in order to understand better the havoc they created.
May I suggest to President Obama to get out of the WH for a day and smell the populist coffee? He'll realize very quickly that the popular anger is not only real, but it is based on real and solid reasons.
The way things are now, Barrack Obama is setting himself up to be a one term President. And God knows I really do NOT want that to happen
This month our loan was sold back to Countrywide.