It's time to cut the crap.

As was pointed out in an article that neatly summarized the last three and a half years of Tickers into one article published on the 14th, L. Randall Wray, Professor of Economics, said:

What President Obama must understand is that fraud is endemic at every level of the home finance food chain. We were long told that securitized mortgages cannot be modified because of the complexity involved—modification of most mortgages would require consent of the holders of the securities that each have a piece of the mortgage. But actually it is impossible to tell how many—if any—of these securities holders have a legitimate claim on any of the mortgages. Simply imposing a moratorium will not be enough—it will just give the banks time to manufacture false documents, encouraging even more fraud. Meanwhile, half of all homeowners with mortgages are already underwater or are within spitting distance of being underwater. Many of these are drowning because the epidemic of fraud perpetrated by financial institutions destroyed our economy and caused housing prices to collapse.

That's right.

Here is my list of charges and specifications related to this.  I will leave you all - including especially the politicians - with something to think about for a bit as well.

In no particular order:

• In 2004 The FBI said there was an "epidemic" of mortgage fraud.  The government ignored it and in fact reassigned FBI agents away from investigating.
  
  
• In the 2000s The Federal Government intervened and prevented States from enforcing their own anti-predatory-lending laws, which at the time would have put a stop to many of the no-doc and other "serial refinance" lending practices - practices that by any reasonable person's interpretation were intended as fraudulent asset-stripping schemes.
  
  
• The banks created "No Doc" and "Option ARM" loans, along with 2/28 and 3/27 "Teaser" subprime lending.  Borrowers didn't ask for this, they were fed it by the financial industry.  The industry lied to consumers about their ability to afford what they were purchasing by qualifying borrowers at these teaser rates, not to mention further abuse when, once they had the mortgage, selling them car loans and such but only counting their current "teaser" payment in their debt service requirements.  I have long argued that these programs were fraudulent from the start as none were intended to result in payments for 30 years ending in the ownership of a house without a note; their intent was to strip fees by forcing serial refinancing.
  
  
• Property appraisers were involved as early as 2000 and threatened with black-balling if they did not play along with ever-higher "valuations."  There are over 10,000 appraiser signatures on a petition from the early 2000s asking the Federal Financial Institutions Examination Council to stop this abuse.  It was ignored.  Intentionally inflating appraisals is fraud.
  
  
• The securitizers - all big banks - packaged loans they knew were trash into securities that ratings agencies blessed with "AAA" approvals, and by their own admission those agencies worked with the securitizers to give the ratings desired, never looking at the loan detail tapes.  We now know that this packaging of trash in violation of the offering prospectus was known at the time it was done because testimony in front of the FCIC by Clayton under oath has documented same.  Further, FHLB lawsuits have documented that huge percentages of the loans in pools they were sold violated the guidelines in the prospectuses. Intentionally putting loans you know violate guidelines you claim the loans conform to into a security would appear to be securities fraud. 
  
  
• Bill Black has repeatedly stated that the big banks were all run by management as "control frauds" - that is, they used accounting tricks to manufacture false profits which they then paid out in bonuses to top management and "talent."  The latest data, showing well over $100 billion in compensation for this calendar year, is evidence that this is still going on.  This continues unabated and was covered up with $700 billion of taxpayer funds along with "gun-to-the-head" accounting changes forced through FASB by Congress.
  
  
• Foreclosuregate has documented hundreds of thousands of "robosigned" documents where the person attesting to the truth of the contents is a "special signer" that allegedly works for a dozen parties at interest yet doesn't seem to be paid by most (if any) of them, and sometimes is paid by both parties to a suit at once, a clear conflict of interest and disqualifying act, never mind that they never read the material attested to.  To add to it, notary signatures appear to have been forged.  That appears to be forgery, fraud upon the court, and perjury - all rolled into one.  Many people were evicted from their homes based on these documents.  Whether the homeowner was paying or not they are entitled to due process of law - a civil right guaranteed in The Constitution that is wantonly violated when "robosigned" documents are filed with courts.
  
  
• It appears to now be established that at least some of the notes that are required to be conveyed in wet signature - that is, original documents - to the Trusts for these MBS never were.  If the note is not conveyed by the closing date of the trust, the securities issued are no good - they're an empty box and worse, are disqualified for IRS tax pass-through treatment.  This is not some pesky regulator's rule, this is black-letter IRS code.   I have on good information and belief from multiple original sources as well as media reports that the notes are in fact sitting in originator's warehouses or were intentionally destroyed.  Indeed, in 2009 it was confirmed that Florida Banks intentionally destroyed originals.  There are thus no endorsements and the trustees do not have the notes.  How is this not "Tax Fraud" along with fraud upon the purchasers of those MBS when you represented in the Prospectus and/or Pooling and Servicing agreements that you had actual conveyance of the notes?
  
  
• There is also a competing theory that the notes weren't assigned because MERS was used to try to dodge REMIC rules - that is, at default the note would be assigned to the lower-rated tranche that is to bear the loss.  However, this also appears to contravene IRS regulations, and worse, they still don't have the original paperwork bearing the original conveyances as required.  To top it off some courts have held that since MERS never receives any payment stream or other pecuniary interest in the mortgage it cannot be a grantee - that is, the assignment is invalid.
  
  
• Banks have hired people to go "secure" property they have no legal right to enter.  As a consequence people have had their homes broken into and locks changed even though no foreclosure action had yet given the bank possession, and in at least one case no foreclosure was active against the property at all.  This is a felony - breaking and entering - as the person being hired has no legal right to be there nor to enter the premises.
  
  
• Banks conspired with corrupt officials in Jefferson County Alabama on their sewer system and the result has been cost overruns that have hit the population with an escalation in sewer costs of more than four hundred percent.  Several officials have been convicted or pled guilty to crimes, but not one bank officer or bank has been indicted, even though the record appears to show, and it has been reported in the media, that at least one bank was "bought off" by another to prevent it from competitively bidding the debt contracts!  That sure looks like bid-rigging and bribery at minimum - all forms of fraud.
  
  
• Friday a Tampa-area mortgage banker went to prison for up to 15 years for 150 fraudulent loans.  On the same day Angelo Mozilo was fined $67 million, but will only pay $20 million himself - Bank of America will pay the rest. Mozilo will keep more than $100 million he gained from knowingly selling his Countrywide stock while the all of the above was going on.  Sarbanes-Oxley required him to know of these frauds, both perpetrated on others and in control of the firm, and carries criminal (imprisonment) penalties.  Yet Mozilo skates with a fine where he pays less than a third of it himself, he keeps nearly all of the loot, and a guy who executed just one hundred and fifty (not the millions that Mozilo did) fraudulent loans goes to prison for 15 years.   That's outrageous - if the Tampa guy got 15 years, why didn't Mozilo get 150 or more?
  
  
• The Federal Reserve has responded to the "malaise" caused by these frauds not with enforcement actions against the banks but rather by intentionally destroying the return available to savers on fixed incomes, attempting to force the people to pay for the banker's schemes.  They even admit intending to force people to spend instead of save, and to "force them out the risk curve" - that is, force people to risk losing their wealth in a stock market collapse so as save those who committed the acts above.  This is an outrage and one that our government has every right and ability to put a stop to right now - but instead of doing so, they smugly let Bernanke talk about "Quantitative Easing" while grains skyrocket in price - basic foodstuffs that everyone needs, and those on fixed incomes are especially hard-pressed to absorb.
  
  
• In addition The Federal Reserve's acts have destroyed capital formation.  With the threat of monetary debasement, inflation, and no intent or action to stop the above schemes and scams nobody in their right mind would place their capital at risk to create jobs when they are forced to deal with a banking system and banks that have a track record of stealing anything that is not nailed down so they can bonus it out to their "talent."

There has been no criminal prosecution of any of these frauds or schemes - not even the outrageously easy to prove ones such as the "robosigning", where each individual act constitutes a separate offense and documentation of the event has been available in the form of depositions for months. 

There has been no demand from our Congress or President to Ben Bernanke to stop with his monetary debasement and instead clamp down on those who committed the above acts. 

There has also been little done on the state level, especially in those states that allow for non-judicial foreclosures such as Michigan and California.  Banks and lenders are allowed to foreclose with impunity without ever having to show any proof of anything in a court of law.  There is every reason to believe that the rather underhanded attempt by Congress to enact HR 3808, which passed through both Houses of Congress in record time, with no debate on a voice-only vote was meant to force judicial states to accept electronically signed affidavits from non-judicial states.

So here's my question America: Why do we put up with this?

We have heard empty promises for years.  Instead of real action what we get is dog and pony shows, exemptions from the rules, regulators who are left in their positions after they help banks back-date deposits (and thereby increase FDIC losses), regulators willfully ignoring bad lending and government lawsuits to prevent the states from doing their job of protecting the citizens.  Instead of regulating our Treasury Secretary and Federal Reserve Chair corral Congress in a room in the dark of night and threaten literal tanks in the streets if they do not bail out the very firms that committed these acts and are now about to fail as a consequence!

If the government is going to be part of an organized looting operation, including literal threats of martial law imposed on the citizens, then for the citizens to ask the government for help and protection is nothing more than a waste of time.

We keep hearing about "Task Forces" and "the government is looking into it."  They've had more than three years to look into it, and more than six since the FBI warned.  There has been no effective action and I maintain that so long as we the people allow the government to say things instead of doing them, that's exactly what will happen and you, the common citizen, will continue to get hosed.

If the politicians and law enforcement will not act on the above abuses and in fact promote and protect them then one must ask: Do the people have effective non-criminal recourse on their own?

I believe they do.

What if you refused to do business with the banks - at all - until actual, effective action and redress of these grievances occurred?

There has already been a "Move Your Money" attempt.  That's good. 

What's better is refusing to pay. 

At all. 

Think it though folks - a huge percentage of people in this country are, from a Bankruptcy perspective, judgment proof.  They live hand-to-mouth, their house is underwater or they rent, and they have little or no assets other than in a retirement account - which can't be seized in a Bankruptcy.  In some states wages cannot be garnished, and in many cases a Chapter 7 bankruptcy can clear your debts.  It's the dirty secret that corporations use to restructure or clear their debts whenever they get in a bind - even if the reason they're there is their own foolishness.

Why shouldn't you do the same thing?

If you're in that position what's to be lost if you tell the banks to stick it where the sun doesn't shine?  Your FICO score?  That's going in the toilet anyway if you can't pay, right?  If you're $100,000 underwater on your house, have no equity in anything beyond a retirement account and live hand-to-mouth what's to lose?  While taking on debt with no intent to pay is fraud, choosing not to pay at a later date is not a crime, and in a Bankruptcy much - if not most - of your debt is in fact wiped out.

Yes, you will lose the house you can't pay for anyway.  You might lose the car that you're probably $10,000 or more upside down on.  But you'll also lose the debt.  Declaring bankruptcy is a serious matter (and giving the finger to your creditors is likely to wind up there) but if you're scraping by with your fingernails, given what we know about the banking institutions in this nation and our government's refusal to protect consumers and stop the screwing you are taking literally on a daily basis, why are you putting up with it when you don't have to?

Consider this - why would you continue to do business with an entity you judge to be unethical? 

Whether you agreed to pay isn't material any more than it was for the Mortgage Bankers Association, which appears to have jingle-mailed their headquarters building! 

Again: Why should you behave any differently than the example they set for you?

I argue that you have no ethical or moral requirement to behave ethically with an entity that intends to screw you via any means it can manage to legally get away with.

If the government won't stand up and perform it's duty, then it's up to the people to decide - do you want to keep being ripped off on a serial basis along with having your retirement repeatedly trashed while the so-called "regulators" laugh with the banksters and thumb their noses at you, or are you going to go get some legal advice to figure out if you really are judgment proof (for a whole lot of people the answer is "yes") and if you are stand up and say "No More Damnit!" - and pay NOTHING?

One of the two most-liberating words in the English language is "You."  I'm sure you can figure out what the other one is.

I believe it is time for each and every one of us to individually, having consulted with professional legal and accounting advice, to evaluate the above, it's impact on our lives, the costs and benefits of telling the banks to go screw, and whether we, personally, are going to allow it to continue - or whether we're going to send back our bills for debts to those institutions with a picture of our middle finger enclosed.